E238: How to Start Selling Art Online

Gideon Kai is facing a dilemma.

His 74 year old father-in-law just declared that he'll need to start working a day job again to pay bills. Gideon knows he's a prolific artist, but not having displayed his art for anyone outside of family and friends, whatever he earns from selling his work is not enough to cover even his basic needs.

He could not stand seeing such a great artist fall into the oblivion of a day job, so he came to us to ask for help. He knows that with a little direction on marketing, he'll be able to spread the word about the man's art so that he'll no longer have to work a day in his life.

In this episode you'll learn:

• The various business models and strategies suitable for different types of art
• How to test if there's enough demand
• Whether or not Kickstarter is a good idea for testing demand and generating funding
• Logistics – finding a good printer, shipping artworks, and lowering costs down for the end consumer
• Tips on raising capital

This episode is part of our Under the Hood segment where entrepreneurs come to us for a free hour of coaching which is recorded and turned into a podcast.

If you want to be featured on your own Under the Hood episode, you can sign up here.

Resources:

The Trifecta

Full Audio Transcript

Intro: This is Mike and welcome to episode number 238 of the EcomCrew Podcast. Back today with another Under the Hood segment. You guys know how much I love doing these. Gideon is coming on to talk about his business. If you're interested in being on your very own Under the Hood, go to EcomCrew.com/UndertheHood. We'd love to have you on. It'd be awesome to talk about your business and give you some help as well.

If you'd like to take things to the next level, and have me come see you in person and instead of doing one hour over Skype and doing two half days, four hour days talking about your business and giving you actionable advice, head over to EcomCrew.com/roadshow for that. Those episodes are going to start coming out shortly, very excited about that, EcomCrew.com/roadshow if you want to do that. Again we’ll come visit you 100% free of charge, talk about your business, give you actionable advice, I think you'll enjoy it. All right, let's get into today's episode with Gideon under the hood style. Let's do it.

Mike: Hey Gideon, welcome to the EcomCrew Podcast.

Gideon: Thank you. I'm excited.

Mike: It's a unique name. I was having little bit of a hard time pronouncing it earlier.

Gideon: Yeah, people either know it or they don't, so no offense taken.

Mike: No worries. I used to get called all kinds of crazy things. So these are things that don't bother me. But I know some people get upset about so I apologize if I did butcher it. But I am curious, what's origin of that name?

Gideon: Well, it's a biblical name. But other than that, I don't know a lot. I mean, it means something like I think it's Hebrew for like way maker, like someone that like clears the trees sort of thing to make way for something.

Mike: Got you. Very cool, interesting. Cool. So if you listen to any of these Under the Hoods before, you probably know what the whole thing is that we're doing here. But just for those of you haven't, we do a segment on the EcomCrew Podcast called Under the Hood to have podcast listeners call in. And we give them basically an hour of coaching for free that we agree that we’ll record and turn into a podcast. And it's become a very popular segment. We were looking at our statistics the other day, and these are some of the most listened to podcast episodes. They're also it seems the ones that I get the most comments about when I'm traveling.

I just recently got back from Ecommerce Fuel Live recording this, I know this will go out much later than that, but it seems to be the most interesting thing to people. So if you're interested in being on your very own Under the Hood, go to EcomCrew.com/UndertheHood. So Gideon, if you've listened to these segments, I'm sure you have because that's how you signed up. You know the first question I always love to ask is, how did you get started in e-commerce?

Gideon: Yeah, yeah, I know, I love these segments. I've listened to a bunch. I got started in e-commerce, because I was working in a glass factory in a warehouse cutting and tempering glass, and I really loved it. But I have just always had a business mindset. And we would make these insulated glass windows, sometimes really, really big ones, like triple layer, quarter pane glass, all insulated and tempered, and they're like 13, 1400 bucks apiece. And me and a coworker would make six in an hour and I made 15 bucks. So I'm like, for a while I felt japed.

But then Luckily, I started listening to some business stuff and listening to an online philosopher that I really like and realized well, I don't pay for the company insurance, I didn't pay for the million dollar tempering furnace, so I have no risk. So that's part of my benefit. But I was like I think I would prefer to take some risk and get a bit larger chunk of the profit on something like this. So yeah, I started listening to business podcasts, basically, and found some about selling on Amazon.

So like I do just kind of impulsively quit my job and started selling on Amazon. And it didn't go as well as I would like but I do feel like I proved the concept and proved to myself that could do it. So, I basically made my money back in a few months, and then got taken away to some other endeavors. And one of those I want to talk to you about. So that's kind of where we're at. I don't know if there's any more specifics you're looking for.

Mike: No, I think that's good. I had two things I wrote down here. First off, who's the online philosopher you’ve been following?

Gideon: Stefan Molyneux. So yeah, Stefan Molyneux is a Canadian philosopher. And then also, I really like Jordan Peterson. And both of them are really like all about personal accountability and taking responsibility for where you're at, and not whining and blaming other people. So I'm glad I didn't get hung up on that for too long.

Mike: Very cool. Yeah, I'll check out those, we’ll put them in the show notes as well, to link up to those. And the other thing I wrote down here, which I think is very interesting, I mean, when you quit your job, you said you quit your job to sell on Amazon. And had you sold anything on Amazon yet or you like quit your job and was like, welcome, dive in and I got to figure this out now?

Gideon: A little bit of both, I’d sold some used textbooks here in there during college, but I'm really, I like to say I'm brave, but some would say it's impulsive. And so I just, once I was catching the vision of like not quite passive income, but not time for money, then I was like, I got to do this. And every hour I spent sweating or freezing in the warehouse was just getting worse and worse. So I was like, all right, I'm giving myself a month to get some inventory put into Amazon, mostly on credit cards. And then yeah, and then I'm quitting. So that's what I did.

And I had — I probably spent about maybe like three grand in inventory during that month, partly, mostly like retail and online arbitrage. Put together a couple of bundles, mostly just of random stuff that I was looking at the statistics for, and getting through some of the gated categories and whatnot. And then, yeah, so I made my money back from all of that over the next few months. But the issue was just that I needed the money for my bills and stuff. So that's kind of why you keep your job while you start something up. But that's not what I did.

Mike: Got you. And it sounds like even though that was moderately successful or whatever, you're not doing that anymore. It's kind of you alluded to the fact that you've moved on to something else now.

Gideon: Yeah, yeah. I've run a podcast/video membership site for my wife, who is like a life coach you could say, even though I kind of don't like the term, that's the best thing for it. And so we put out five videos a week, one for every week day. And just like inspiration, kind of taking accountability and how to get real effective change and digging into principles and really good stuff. So it's kind of a passion thing for me. And we do have about 80 to 90 members, ranging from $11 to $33 per month. And so that's exciting. And it's also a lot of work. But I also have more, I guess, higher ideals for having things a bit more automated. And so the main thing that I'm calling in for is with my other endeavor, which is her dad's art, and how to set some things up some partially automated processes to help get some money going both for me and for him.

Mike: Got you. And I read some notes that Abby had taken when she did a pre interview. So it sounds like you're looking to turn that art into something you can sell online, whether it's — you mentioned coloring books, which I have to say I've experienced selling coloring books online, or prints or canvases and things of that nature.

Gideon: Yeah, it's kind of a — just in case, I'm always curious how people find the stuff that I put out. So I was actually — my brother was listening to the Tim Ferriss show. And he sent me an episode and said that the guy in the episode mentioned that he had listened to EcomCrew when he was getting going, that’s the spy guy selling like spy gear.

Mike: Alan yeah.

Gideon: Yeah. And he mentioned that you guys do really well selling coloring books. And I was like, wait a second, that's what I need. So then I hooked you up and here we are.

Mike: Well, there's 200 and something episodes before this, you could listen to that. We talk about pretty much everything from the ground up on how we started ColorIt and everything that we're doing day in and day out. But definitely you can get into some specifics of how you can go from here, which is probably the only podcast or business person that would show someone else how to compete against them. But I'm pretty secure in our business at this point. So yeah, and we always are trying to pay it forward.

Gideon: Awesome.

Mike: So I mean, let me get some more background information first. You have this father in law; he creates art, what kind of art is this, is it anything specific or is it just what he feels like drawing that day he draws?

Gideon: I don't know if you can see any of the links from the intake thing with Abby, or if you want me to send you any links, it's kind of hard to describe art. But he does a lot of pen and ink. It's kind of his main love. And so it lends itself really well to coloring books, although some of it ranges, well, it ranges from fairly simple to unbelievably complex. And so, some pieces do need altered to be colorable. But he does a lot of buildings, like kind of whimsical sort of buildings, and really like just imaginative pen and ink pieces.

Mike: Yeah, actually, the link wasn't here; it was further off the screen. So I scrolled over and I clicked it and now I’ll see some of stuff, and I mean, this stuff is gorgeous and definitely at another whole level of things that we've put in our books. So I think that this is a great starting point because you need something that’s unique. There’s a bunch of other stuff out there already and all of our stuff has a look and a feel to it. I can tell you that the majority of our audiences are older women and I'm not sure that these types of buildings and stuff necessarily appeal to that audience. I think that that's like really the bread and butter to a coloring book audience is just targeting older women. So if he could make more sketches that might be things that they're interested in, more landscape stuff, or those types of things will work well.

We've also done well with a book that was called Around the World in 50 pages that is basically nothing but stuff like this, or something that kind of has a theme and a story. The other thing I see here, some of this stuff is a little bit too detailed. I mean it's hard to color in in some of these like super detailed areas. I am looking at one here that is called for Susan, for instance, that's got more space that might make more of an interesting coloring piece. So I think that he might need to create some stuff from scratch that fits the format of a coloring book. But he certainly has the talent here to do it. I mean, this stuff is kind of like on a Bradford level of coloring as a drawing, definitely beautiful stuff.

Gideon: Awesome. Yeah, I actually — he's pretty good at Photoshop considering is 74. He was like one of the first home Mac owners ever. So he's — it's pretty impressive. And he's actually gone through several and cleaned out some of the areas where he's used lines for shading, like you're saying, and he's actually just blown some spaces open.

Mike: Got you.

Gideon: So we've done some operations like that. But it is good information about the sort of like thinking of the audience as older women and what sort of things they might want to — that would appeal to them to color because yeah, some of them are like really sort of hardcore looking buildings and scenes.

Mike: Yeah, a little bit more masculine.

Gideon: Yeah. And then he also has quite a bit that's pretty cutesy. And so the really nice thing is that, I mean, he doesn't do any marketing, or any business. He's been a full time artist for 40 years, basically, just by word of mouth. And so I have a whole pile of his originals that I can scan and will have scanned at high resolution for reproduction and everything. And there's such a variety of scenes and buildings that there's probably a good 20 Plus, that would be more cutesy. And then he also said that he's open to basically whatever needs to be created, then he's on it.

Mike: So, I mean just because I know so much about this industry, I don't have to ask a whole bunch of more questions, because I pretty much know exactly how I would go about this because I've been in it. So I mean, I think the first step that I would do, if I was in your shoes is to get like 10 of your favorite drawings together, like pick 10, because it's a good round number. And I would approach this in an online fashion first, before going down the route of trying to find a manufacturer for a book. As nice as I am, I'm not willing to just give you my manufacturers. That was a hard endeavor to go find that. But it's definitely a pain in the butt to get all that right.

But before you go down the hard road of figuring all that out, you could see if there's response by offering free downloads. And I would start for free because you'll understand if there's actually a demand there by offering for free better than if you're trying to sell it. You'll get more signals from Facebook and you'll get people — it'll go viral, you can start building a name for yourself etc. as an artist and start getting a following. So you could pretty much just copy our Colorit.com/free flow which for that it's 20 drawings, but some sort of a landing page. It looks like your site was made with ClickFunnels anyway. So you already have the software to do it where you send Facebook traffic or social traffic or some sort of paid traffic to a landing page.

It's like, hey, we're giving away 10 coloring pages from this artist, you show the pages, all original handwork drawn artwork, and just see how that does. Can you convert people for 50 cents or less? That's kind of the target we've been using. Our average last year was 38 cents from cold traffic to a lead where they give you their email. And again, you can listen back to some of the back episodes we've done about this and I talk about the trifecta [inaudible 00:17:22] and we'll put these in the show notes as well, the episodes about the trifecta. But seeing if you can get people again, to just sign up and give you their email address and be interested in these for free.

And if you're getting a good response, then I think he has something and if you can't even give them away, then you probably have a problem. It's like the artwork just isn't appealing to the audience that's out there on Facebook. I think this stuff will do well. Just I wish I had an artist like this at my disposal, because this is like on another whole level of artwork than we've been able to create.

Gideon: Right? Yeah, well, and that's part of the thing that really caught my attention and wanting to pursue this, besides him being part of the family, but that it's kind of like — and I've thought of marketing it in this way of like here's an artist that you've never heard of, because he's too much of an artist to bother putting in — to bother marketing and that's true. He basically doesn't do anything but art. And that's how he's always been and everything else in his life besides family is just kind of something pulling him away from doing more art. And so, that's kind of how he's gotten so just amazing, is because that's all he's done.

And I bring that up because I am wanting to pursue selling his art online, broader than just the coloring book. Even if the coloring — well, and I guess I want to run this past you, even if the coloring book wasn't the money maker, if that was sort of the first level of the funnel of building an audience and ideally getting people to buy some high quality signed prints and some original work and commissioning him.

Mike: Yeah, I mean, I would treat those as two separate things. I think the coloring angle is definitely one worth pursuing for sure. But as a part of that funnel, you could definitely offer the original prints and signed prints and things of that nature. But I would have some other top of funnel thing in there as well for getting because like there's another whole community on Facebook that's in the art that you could target that wouldn't be interested in coloring books. So you're going to want to have a different method for them versus the coloring audience.

Gideon: I see. Yeah, that makes sense. So I heard you mentioning just one question then I want to hear more of your thoughts, of course. But I heard you mentioning on a recent episode talking about Kickstarter, and one of his other sons, actually has run a couple of very successful Kickstarters and now runs a multimillion dollar company from that. And so, he's willing to help with the Kickstarter, putting it up. And however he does it so well. And then we were looking at having the coloring book as one of the sort of probably the lowest or almost lowest reward for the Kickstarter, and then going up to the highest reward being that you can purchase one of the original art pieces that is depicted in the coloring book. So is that maybe not a good idea based on what you're saying where people that like coloring books aren't necessarily part of the art world, just that they're part of the coloring world?

Mike: Yeah, I mean, in that case, you might find because there's a limited number of those prints. If it's a book of 30 pages, there's only going to be 30 awards available at that level. So you only need 30 people that also have an interest in art, to want to buy it. But I can say that we tried launching a couple of coloring books on Kickstarter, and it was like one of these like spectacular failure type things. I find that Kickstarter, as a community and the things that tend to do well, these are just stereotypical things. I mean, obviously, there's always outliers to stuff. But in general, Kickstarter appeals to a younger, more millennial, more techie kind of audience, all the products that are on there are technology driven, or travel driven.

Gideon: Things that are really like have a high utility.

Mike: Mm-huh, exactly. Yeah. So I mean, and I don't know what the product is it that your brother made. But I'm guessing that if it was that successful, where it's doing millions of dollars now, it probably fits more in that category, or it's the kind of product that when you see it, it's like, holy crap, I had to have one of those. And I'm like, why do I have to wait three months for the Kickstarter be over? I want this thing now. It's hard to get that kind of reaction from coloring book, because we're pretty far down the path now of the coloring fad. And I mean, these are amazing drawings, don't get me wrong, but they're not — there is no drawing that's going to be so amazing that people are going to have that kind of feeling at this point, because it's all been done before.

Gideon: Right? Yeah, yeah, that makes sense. And something he was saying is that there was sort of a peak for Kickstarter where just about everything funded. And it's not that way anymore. So, cool. And then with the I guess, sort of the overall approach with something like this, because even with clearing out some of this space to make it a bit more colorable, I'm thinking of how to kind of implement the style of the art into like the marketing and everything, saying something like, this is for hardcore colorists, or if you're really good or serious about coloring, let's see if you can color this or if that's kind of tacky.

Mike: No, I think it's dead on. I mean, we have a range of books that started almost childish, I mean they're still adult coloring books, but they're like almost childish, and have lots of big spaces and things of that nature and all the way to things that are just about as detailed as is what you have here. I mean, I'm looking at one here called hill houses; it's just a beautiful drawing that would be perfect for coloring. We have stuff that's similar to these size things where it's still pretty small detailed. But I always say this is why there's chocolate and vanilla in the grocery store.

So I mean, while it might appeal to one person, it might not appeal to the other. Some people might like both. But when we release a book that’s got bigger spaces, some part of the crowds are like I'm older, I can't see very well, my hands are arthritic, I appreciate these big spaces. Then the other part of the crowd is like, this is childish. I bought an adult coloring book, not a child's coloring book and they'll complain, which is funny that they even bought it because we show them every page ahead of time. So this is the type of stuff you deal with.

But the point is that this type of artwork is surely not going to appeal to everyone. And the people that do are probably going to be fanatical about it and love it because it is really, really beautiful. I mean, there's no doubt about it. I mean, this is just — your father in law, he knows what he's doing. He is a very talented man. And it comes through.

Gideon: Yeah, yeah for sure. Well, so the other thing that we're looking at with it is because we're thinking of putting it out that way, this is fine art that you color because that's literally what's going on. He's sold these for — one of his bigger paintings, which is usually like a 12 by18, well, the paper is — that art itself is like 11 by 15 inches. He sells those for 1200 usually. And so this is like, let's see how you would color this fine art, let's see if your coloring of this can also sort of count as fine art.

And then we want to do a contest, an ongoing contest where they submit their colorings and then each month, there's a winner that gets assigned print or something really nice. And then out of the 12 from the year there's a winner who gets like an original or a commission piece or something. So I think that that could have some appeal, as long as I don't know, what you're saying with the different audiences between the coloring book and the art because that's clearly assuming that it's a shared audience.

Mike: Yeah, I definitely don't think it's a shared audience, like we were talking about before. But I do love the fan of the month kind of thing. Well, we do this; we call it fan of the month. But you're saying a contest. So we call this contest the fan of the month, where every month people are submitting their drawings colored, and then we pick — we actually pick six every month winners. So we have three staff picks and three random pics. That way, not just the amazing artists get or colorists get selected, but also some random ones as well. But this has been a big hit. And one of the things that makes us really sticky as a company because we are building a lot of brand loyalty and people love coloring our stuff and sending it in through that contest. So you could certainly do the same thing.

Gideon: Yeah, yeah. Well, I guess I'm wondering how much to — because to me, you're like way, obviously, way more of an expert in all of this like ecommerce in general, and specifically the coloring books. So now I'm here questioning like, how big of a deal do you think it is that the audiences are more segmented than I was thinking? And should I really move forward with that in mind?

Mike: Yeah, I mean, I'm always just a big fan of testing and seeing where things go. I mean, where we ended up at, as a company multiple years into this is very different than what we drew out as our original business plan. A lot of it has been, we've been nimble, we've been listening very closely to what our customers are saying. It's one of the reasons why we even created something like ColorIt live, which is our weekly live Facebook, a Facebook live that we do. That’s just like a hotbed of research, right. It's like there's hundreds of people in there just telling you what's on their mind, or what they think of a new product, or if we should do a book like this, or like that. And so those things have definitely helped.

But you got to start somewhere. And my recommendation would just be to pick something narrowly focused whether it's the coloring book or these. I still think even after chatting about this, putting together 10 free downloadable coloring pages with this type of artwork, making a very simple landing page, just something that's like a minimum viable product landing page and running some ads to it and seeing are people interested in downloading them? And if they are, then they probably, let's say 10% of them, 5% or whatever, would probably be interested in buying a full 30 page coloring book of that. And you would know by the time you had 10,000 or 20,000 people that have given you their email that you have a big enough audience that's willing to buy your first run of books. And that would be the way that I would approach it.

Gideon: Nice. Yeah, yeah, I’ll definitely do that. That's kind of what this ClickFunnels page was. I mean, obviously, there's nothing free on there. But it wasn't actually intended to go to the public; the prices on here are like way lower. This was to raise money for a legitimate website. But anyway, with that like free download sort of thing, is it more — would I skew the data if I added an incentive like having those free downloads be something that they can submit to a contest or something along those lines? Is it better to just leave it as let's see if people want this just because it's free?

Mike: No, I like the idea of incentivizing it more with the contest. I think it'll help your conversion rate. And yes, similar to what you're saying is going to be true where you're going to like kind of muddy the waters a little bit. But I think that the increased conversion rate is better than being concerned about the other part. I think you're going to get way more good, way more mileage out of the fact that having a contest, because people saw at the ColorIt, it's only the people that are actually colored the drawings can submit and that means that they're actually interested in coloring and they liked the drawing enough that they colored it. So that's a pretty — if the contest is to win a print of this thing that means that they really liked it, because they wouldn't bother otherwise. So I actually think it's like a win-win for you to do it that way.

Gideon: Yeah, yeah. True. Nice. Yeah, that's definitely doable. And then what exactly is the data that — how do I interpret that once a campaign or two has gone by? And assuming that the whole thing that it looks like there is general viability, what else would I be looking for from those results?

Mike: Yeah, I mean, you're going to want to be making sure that you're getting your leads,  you’re converting people that are landing on this page, that no more than 50 cents apiece. You want — one of the things that I would do as a part of the sequence is literally ask the question, would you be interested in buying these and see what they say. It never hurts to send out like an automated email as a part of the sequence. We have another podcast about this as well, we don't ever send all the drawings at once. In this case, we would send these 10 drawings I'm talking about, like over a 20 day period.

So drawing one gets delivered, then you send an email about the artist. Drawing two gets delivered; you talk about the concept of his favorite drawing or whatever. And so, there's some marketing, or just other collateral in between the whole cycle. And one of those emails literally can be like, we made these 10 downloads available for free as a test to see if there's interest. If we made a book, would you be interested in buying it? And you can have a button in the email, Yes or no and see how many yeses you get compared to nos, and see if people — I mean, obviously everyone that says yes, isn't necessarily going to buy the book. But everyone that says no, definitely isn't going to buy the book.

You would at least know that there's some interest there. And that's I think a pretty big key before you go out and spend five figures getting books printed, because that's about what it will take to do it. And plus just knowing what I know from the book publishing business now, you're trying to get a high quality book that's going to have artist quality paper. And if you copy any of the other elements of our books, which lots of people have done now with like hardback covers, or something or a spiral binding, this is not something that a typical book printer can do, or even want to do. So you'll spend a lot of time and energy, even just finding a book printer. If it's anything like us, the first one will suck, and then the second one will suck more, and you'll eventually get on the one that's good.

Gideon: Right. Yeah, that's the other thing I was going to ask you actually, because I've looked quite a bit, I'm a photographer as well. So I kind of have a lot of things going on, and I've made some calendars of my photography. And so I've looked quite a bit into print on demand services. But like you're saying, there's not going to be a print on demand service that is doing like custom this and that and high quality paper. There's like three options if you want print on demand, and it's not going to fit the brand of being fine art.

Mike: Yeah, 100% correct. I mean, we went down this path. Many, many times, even with a printer that can print on demand with like the better paper and everything, any of the stock services are out there, you're going to print on the same paper that a Stephen King that was printed on which is not coloring paper. So this is the problem that we ran into. So yeah, we had to find a printer that can actually produce what we wanted, which was basically I mean, I feel like we're the fine art level of coloring books. I'm not sure if you've ever actually you bought our coloring book or held one but they're really nice. I mean, they're literally legitimately artist grade paper.

Yeah, so the paper itself is something that you just won't find — in fact, our paper was specially blended and formulated just for us, we could say that. So it's actually just the way that it accepts all the different types of mediums, like every different kind of paper will accept colored pencils differently, versus markers versus water color. So this is stuff that we had to keep in mind as we were developing our own paper, there's like the tooth and the bite and everything that you had to think about. So we found a combination of things that didn't exist out there that we wanted and made our own paper. So we had to buy a truckload of paper at a time and make it even viable.

But there's still plenty of other paper out there that comes off the shelf, our first books used that. But that's the first step is you got to find paper that matches the quality of the artwork. You don't want to print this on just that beige, thin paper that most books are printed on. That just won't work. You want something that's like gleaming white and thick, that isn't going to bleed in the next page and a bunch of other things that can accept the printing of the artwork and accept the ink of the mediums that are being used without smearing everything. There's just like a ton that went into figuring all that out.

And like I said, I would figure out, can you get people to download this thing first before — we didn't think that far in advance, we just printed thousands of books and started trying to figure out if we could sell them or not. We just delved into the deep end of the pool. But I didn't know any of this stuff back then. It was January or August of 2015 whatever it was.

Gideon: Nice. Yeah. Well, and part of my concern with some of this overall, I know this is sort of like, probably the most common business concern there is but basically that the capital that we need to do it right, isn't going to be available, because we'll do something like cheaper that then ruins the brand or something. So how is there even a way over that hump? Like, should I be looking for like, investors? How do I get over that hump, other than something that is going to be less quality than is ideal?

Mike: Yeah, I think everyone's in a different financial situation. So if you just don't have the means to do it on your own, obviously, then you need to bring outside money. And if that's the case, if I was an investor or looking into invest in this thing, and you came to me and said, hey, look, we've been offering these free downloads for the last six months. And here's the results that we got, 72,000 people signed up for these downloads. This thing has like become viral. And like the answer to the question, would you buy this book if we released the full length book is yes, 42% of the time. And maybe even put some pre orders in, where it's like you do your own Kickstarter to that audience and you raise part of the money.

And then you go to an investor and say, here's these numbers and these dynamics. And if you have a good business case, then it's easy to get money. I mean, I've never had a hard time getting money from investors or from people when I had a good business model, a good business plan, had numbers to show them that they were making a good decision, then that actually becomes easy, believe it or not, at least it has been for me.

Gideon: Yeah, that makes sense, when the data speaks for itself.

Mike: Exactly.

Gideon: Make a sentimental appeal or something.

Mike: Right. I mean, a good example of that from ColorIt when we first got started — not ColorIt, but just for Terran overall, when we were growing, we put six figures of our own money into this business to start with, and it was growing really quickly. And we just ran out of cash, like we didn't have the wherewithal at a personal level to continue to grow the business at the rate that we knew that we could without outside funding. And then when I went to go talk to some people about that, and show them what we were doing to that point with our own money and the initial stuff, it was like a couple of minute conversation and they were like, how do I give you the money? I'm interested in the money [inaudible 00:39:41].

Seriously, I mean, it was really pretty much that easy because the business case was just so overwhelming at that point and we had a history. So I think that using some of the stuff I was talking about here to do that could really help your cause.

Gideon: Yeah, that's a great idea and very good point. I'll be getting on that right away if — I wouldn't say that I'm the best at crunching the numbers from online ads but I've done quite a few of them. And I've got someone that has actually agreed to work for commission doing all of the online ads and marketing. So hopefully that's a good idea. I don't know. But for right now, I think that it it's going to work. My question for you, because I'm looking at the one you mentioned, Around the World in 50 pages, how do you — like is it just sheer volume of the purchase that you make as a company to get that kind of price for the end consumer. I've talked to some printing places about what it would take to do like a 30 page book that's spiral bound and whatnot, which I've been planning on spiral bound before I found you guys, but I really love your books, I'm choosing which one to get right now.

Anyway, so they were saying like upwards of 30 plus dollars if I'm getting like 100 of them. And so I'm like, oh geez, I don't even know if this is going to work until I actually find the manufacturer, I assume overseas and then I don't know how to get the cost down to where people will even want to do it, even want to make a preorder because what if my cost actually ends up being more than they preordered for?

Mike: Yeah, I mean, I can tell you that this is like one of the things that I love about the types of businesses that I like to get into, which is either complexity is my opportunity, or barrier to entry is my opportunity. And I can tell you like I mean, yes, if you go to try to print 100 books, that's going to be what they're going to cost. I mean, I've been through this many times, and we were printing tens of thousands of books. So we've been able to get our pricing down because of that. And we took a pretty big leap of faith when we had our first book printed and had a couple of thousand copies of even on our first run done. And most people just aren't willing to take five figures and just dump it into something that may or may not work, especially something as complex as artwork that is subjective.

But for me, that's awesome, because it's not a product that someone can just buy 100 off of Alibaba. We have a very defensible business and the artwork is copyrighted and the process is hard to replicate. It's something that took us a long time. So I think you're dead on. I mean, so it's going to be a case of — a lot of things in business are chicken and egg. It's like I got this great product, but it's going to cost me 30 bucks to make one. But  I can't produce 1,000 and get the cheaper pricing until I've sold the first hundred, now what do I do? It's definitely a dilemma that I don't have any way to tell you how to solve that.

I mean, that's going to take — for us it just took money, we just we printed thousands of copies of the first book. And there was definitely a chance that that book was going to sit in a warehouse for either forever or eventually get thrown into the dumpster. And luckily, it worked out well for us.

Gideon: Nice. Yeah. I don't know if this is something you necessarily want for the podcast or whatever. But I am very curious if you have any sort of like affiliate rewards or something, if we were to do something like with your guys' gel pens, for example, or any of your other coloring products to say like this artwork is such high quality that we really think it does the best when it's colored with really high quality pens by ColorIt or whatever.

Mike: Yeah, we had an affiliate program for a little while; we ended up getting rid of it. What I’ve realized, first of all, one of the problems with the affiliate program was that 90% of people that signed up for it were throwing out coupons on retail me not types, it was just completely worthless. We were giving up customers or giving customers discounts that were already ready to make a purchase and they were just looking for a discount. And then we had to pay an affiliate commission on top of that.

But what I also realized, even with the people that were good affiliates, even our best affiliate probably wasn't worth the time we had to invest into it. If you, for instance, were to sell like five sets of our gel pens, or 10, or whatever the number is, I mean the reality is that the time it takes to talk to you about it and make the payment and just kind of have that in our orbit is things to be thinking about, like spend that time doing something else that's going to yield us more money. And so that's why we just got rid of — we ended up getting rid of the affiliate program and just spend that time doing other things within our business.

Gideon: Yeah, yeah, that makes sense, awesome. Do you think that it would be worthwhile to have John make a bunch of original pieces, however long that would take, probably several weeks, but that are specifically appealing to the target audience of like older women?

Mike: I do, I mean, just knowing what I know, I think that those will probably perform better. But I've been wrong before. You might want to just take what's there. And the great thing about Facebook is you'll know quickly, I mean, you can spend 100 bucks and have an answer, this is working or this isn't working with relatively small amounts of money. The one thing I would also be thinking about is you want them to be sized for eight and a half by 11 paper because that's what people have at home to print on. So if they're downloads, you want to make sure when people download it and print it, it looks correct when they print it and they'll get their own paper from Michael's or someplace to have higher quality paper to print it on. But you don't want it to be something that's oversized or going to look distorted when they go print it out.

Gideon: Yeah, yeah, true. Speaking of oversized and whatnot, I was wondering if it's a bad idea to do like an oversized specialty sort of coloring book. I mean, it might not be worth investing in the development of it. But assuming it were, it would just be for like the super fans and kind of down the road there's like his original sizes or like I said on 12 by 18 paper. And so there would maybe just be like 10 or 15 oversized ones, and like this really huge, awesome book that you can actually get into all those little details, or if you kind of foresee that being much more of a pain in the butt than anything worthwhile?

Mike: For us, everything was about scale, just being able to produce thousands or sell thousands of copies of every title that we release. I think that there's definitely a market for that, like without question there's people that would love — I mean, think about puzzles as a similar thing. I mean, you got some people that will buy the 500 piece puzzle, or somebody wants the 5,000 or 20,000 piece puzzle that's like super intricate. So there's certainly a market without question for the larger artwork. And you'd have — the great thing about it is you'd have a niche all to yourself. No one else is doing that that I'm aware of at all. So I think that it would probably be well received. But I think you're going to have a hard time with the economics, which is going to basically be like it's going to cost you a fortune to make them because you're producing them as small batch. That becomes the issue.

T: Right. Yeah, I don't know what that — I haven't looked into that enough. But I wonder if it was feasible, just giving them like, yeah, you can buy this, but it's going to be quite a bit of money. And I'm going to run down to the local print shop and have them print it. So it'll be like three weeks. But anyway, I'm just — I just think about all kinds of possibilities. So I got to focus more on what's relevant for right now, which I definitely think the downloadable and printable stuff, that's a really good idea.

Mike: Yeah. And you could even eventually sell those. I mean, we sell downloadable which is awesome because then you have no cost of goods. And that's a way to slowly build cash. If cash is an issue for you, which it sounds like it might be, you maybe, you do the free downloads to start with is to see what happens. And then maybe your follow up sequence to that customer or that person that downloaded is we actually have 50 of these. And if you want the other 50, it's 9.99 or 19.99, or whatever to download the rest of them. And then there's just no cost of goods, then you see how that goes.

And then eventually you can have a printed version where or maybe you have 30 downloads, whatever the number is, because we have a subscription where people pay for downloads, and that works quite well as well. And again, for me, it's awesome, because there just isn't a cost to doing it, just all profit.

Gideon: Yeah, yeah, that's a great idea. That's actually part of when I mentioned I moved away from the retailing and online arbitrage on Amazon into other things, it was partially that because doing this video subscription and podcast, it's like we're doing the same amount of work, whether we have 50 people listening to it, or 1,000,  it's the same amount of work. So that's definitely something appealing to me. So that's a great idea.

Mike: And it just always a matter of getting past that initial level of frustration, because you have few people doing it to start with. But as you grow it’s — I mean, for me to speak to as many people as we speak to now, it's the same amount of effort as when I started when I was talking to myself.

Gideon: Yeah, so, I wonder along these similar lines of this like initial level of funnel, gauging interest, and maybe it would be after it's proven to have some interest based on just like a free download with a contest. Then if there was like a free plus shipping of like a singular, oversized print, or maybe just a regular size print, and where it's just one single page, then I wonder if I could actually get the price within reason to do a free plus shipping for something like that.

Mike: I like the idea as far as like, I think that it would be all received on the customer. And I think that you're going to have a hard time with the cost structure. We struggle with our free plus shipping offer, and we do it at a very big scale. Doing like an oversized or even just a single sheet, mail to people, it's actually more complicated than you think because you have to ship it flat, you can't crease it. And then like how do you deal with that? So for us, we've had to add like protective cardboard on the outside of it, and then we have the richness of more than one drawling.

So I think that — and then for us, we actually don't make money on our free plus shipping offer, we actually lose money on it. But we actually make money on it because we have an upsell. So when we add in the 11% of people that take advantage of an upsell, it does become profitable. And it's definitely profitable when I look at the long term viability of what those customers become once they get the free plus shipping offer in their hand. Like we have well over 50% of people that take us up on our free plus shipping offer become a repeat customer. The stats are incredibly high, like ridiculously high.

Gideon: Yeah. Yeah interesting, could be a freeish plus shipping.

Mike: Yeah, I mean, you could do a discount or just a special offer.

Gideon: Cool. I mean, I don't actually do a lot of coloring myself. But that would be pretty cool to me. I do find the idea of something kind of oversized on nice paper being really attractive and I think that it does suit his art really well. So it's kind of — I'll tell you just kind of bigger picture is he's looking at possibly getting a job, which would be horrible first of all, because all he does is art and all he's ever done is art. And he should be enjoying the fruits of his labors, which I guess he is, if you consider we haven't done any marketing. But I'm just kind of like, man, I don't want to see him at some kind of job.

So ultimately, I don't really care which direction things go, whether it's even a coloring book at all, like that's what we're pursuing, because we've seen a lot of interest in it just from word of mouth, and I've put one together and I haven't printed it. But there's a bunch of people saying that they'll buy it whenever it's ready, probably like 40, and so that's kind of why we're pursuing this. But ultimately, it's just how can we not lose an amazing artist, and also so many people love his artwork, but so few have seen it, probably one out of four people who even see it will at least buy a print for $75.

Mike: Yeah, it’s miss definitely, like I said, it's beautiful. So I think I mean, there's a pretty good chance here over the next couple of months, you can put together a process and do some testing and find out what's working.

Gideon: Nice. Great, well, thank you on it. That's awesome, there's lots for me to work on. And I definitely do feel more clear. I guess if I could ask you one last question. I mean, I've got a bunch but I'll ask you…

Mike: No worries, we can do one more. I have another — unfortunately, sometimes I use this calendar software, which is so awesome because I don't know if you ever go through this. It's like what time are you available? What time are you available? And you go back and forth for forever, but it allows you to book back to back appointments, which is what's happened here. So like someone else is already digging me over here on Skype like are you ready to meet? So let's do one more question and we can wrap it up from there.

Gideon: Okay, perfect. This is hopefully a pretty clear one. I'm wondering about the general like 80/20 principle, 20% of your work is where 80% of your results come from. So if I could just get your input on what is the 80% in your experience that seems important from where I'm at in the beginning, but ultimately is a distraction, and you kind of wish you would have just jumped on to the 20%?

Mike: That's an interesting one. I mean, what we we've learned in our business is that this concept of especially with coloring, you’re like doing the exact same thing, so it's not even trying to apply to a different niche. But the lead stuff has worked incredibly well for us. I actually just did a presentation right before recording this podcast called leads to sales. We actually don't even do any top of funnel advertising anymore, any other way than capturing leads, getting people into like this free download or some other type of concept, and focusing on that and focusing and building a relationship. And for us, it's well past 80/20 at this point. It’s like 100% is zero, because that's how we run our entire business.

There's definitely the 80/20 rule in terms of like the SKUs that we have. So 20% of our SKUs definitely produce 80% of our revenue, but you don't know what those are going to be at because you're just getting started. So I think that the 80/20 for you like where you put all your effort into and what's going to yield you the most out of this right now is trying to build a following getting early market data to whether there are people out there that care enough to buy this stuff rather than doing the leap of faith that we did to just start making coloring books willy-nilly.

I mean, we were at a different time, though. I mean, like the book that we released was very unique. I mean, it was the first one out there that had hardback covers and spiral binding, artist paper, perforated pages, good blotter, all this different stuff. No one had done it before. So it was something different at that time. So I mean, I would focus on just trying to get those answers. That would be where I put my time and effort.

Gideon: Nice. Okay. Thank you so much, Mike. I really appreciate it.

Mike: Not a problem. Best of luck and as always, if in six months or a year from now, if you want to do a follow up, please look us up. We’d love to do a follow up and see how this stuff has helped you.

Gideon: Yeah, for sure. That sounds great. Thanks.

Mike: Thanks so much, Gideon.

All right guys, that's going to do it for the 238th episode of the EcomCrew Podcast. If you want to get to the show notes or leave a comment, EcomCrew.com/238 you'll find that. We’d love to hear from you. And if you have a chance, leave us a review over on iTunes. We love those reviews. They really help us out a lot, been pushing for more reviews lately. If you get a chance, do it. It really helps. I'll thank you later; I’ll buy you a beer if I see you. If not, I'll give you a virtual cheers on the microphone. Really appreciate that. And until the next one, everybody, happy selling and we'll talk to you soon.