Here’s to the Crazy Ones: How These Two Friends Built a Business No One Expected
< br>“When we started doing $1,000 days, I’m sitting around with all these guys at work and I’m just thinking, ‘My life is about to change, and I can’t even tell anybody.’”
“We didn’t want to be looked down upon,” says Kory. “We just didn’t need the negativity associated around trying to break away from the norm, which is commonplace where we’re from.”
That feeling – the one that others around you won’t support your unusual business ideas or approve of turning your hobby into a business – is not fiction. It’s reality. And entrepreneurs experience it all the time.
When Brian Chesky, Joe Gebbia, and Nathan Blecharczyk first began pitching the idea of Airbnb to investors, they were laughed out of the room. “Everyone thought that they were completely crazy; no one thought this was a good idea,” says Leigh Gallagher, author of The Airbnb Story.
Ecommerce entrepreneurs, and especially those who build their businesses with the dropshipping business model, face the same uphill battle.
The people around them don’t even understand how their businesses work, let alone believe it’s possible to be successful doing it.
But the ones who succeed, like Rodney and Kory, are the ones who forge ahead anyway. They’re the ones who take a chance on starting a business built on a model their parents have never heard of. They’re the ones who have the courage to stray off the traditional path that funnels you from school to college, then into a 9-5 job. They’re the ones that have the audacity to redefine their careers and their future.
The story of Rodney and Kory’s climb to success is full of the types of situations usually reserved for television scripts. There’s a chance meeting in Central America that plants the seed, and a car accident that caused Rodney to question his future. There’s a meteoric rise to the top, followed by a catastrophic collapse. There’s the months spent hiding their business from family and friends, and the moment they knew that this was about to change their lives.
Let’s start at the beginning.
L-R: Rodney Zachariuk and Kory Szostak
- You Make Money Selling Mugs Online?
- You Guys Took My Credit Card Information?
- Getting Serious: The Testing Phase
- A Close Call Makes Rodney Question His Future
- Kicking Things Off on Black Friday
- Stepping Into the Unknown
- The Happy Holiday Season
- “Mom, I’m an Entrepreneur.”
- Everything That Goes Up…
- Time for a Reboot
- Turns Out, the Future Looks Bright
- How They Built Their Business: 4 Lessons to Take Away
- Use Instagram to Test Product Niches
- The Low-Ticket to High-Ticket Strategy
- The Psychology of Pricing
- Facebook Ads: You’ve Got to Go Your Own Way
- Want to Learn More?
You Make Money Selling Mugs Online?
Looking back, Rodney and Kory might have ended up somewhere very different if it wasn’t for a chance encounter in the back of a cab in Costa Rica.
It was mid-2017, and the pair had been traveling together for two weeks. Kory had left a few days earlier, and now with the trip wrapping up, Rodney was on his way back to the airport to board a plane back home to Vancouver.
On his way to the airport, he agreed to share a cab with a stranger. As they drove, the two got chatting.
“He started talking about what I now know is dropshipping, but I didn’t really know what it was at the time,” says Rodney. “He was saying he was selling mugs online, and I was kind of confused, I was like, ‘You just make money traveling… and you sell mugs online?’”
Sure, the concept was puzzling, but Rodney was intrigued. He began scribbling down notes in his phone.
The idea was buzzing around in his head for a few days after getting home, then life went on and the notes he’d copied down were left on his phone untouched.
You Guys Took My Credit Card Information?
A few months later when Kory came across an article mentioning dropshipping, he called up Rodney. Memories of the guy in Costa Rica came back, and Rodney agreed to try it out.
They were leveling up their skills, but they still weren’t sure if anything they’d learned about setting up a website would work in real life. So they decided to test it.
Just before Christmas in 2017, their friends were planning a bar crawl. Being Christmas and all, the event demanded that everyone come dressed in a santa suit.
Casually, they mentioned the site to their friends.
“We told them we found a really cheap website that they could buy their suits from,” Kory says. “We just wanted to see if we could make it all work and make it seem like a legit website. Lo and behold, one of them bought one.”
“In the end, we sold them so cheaply we didn’t make any money, we lost money,” Rodney adds, laughing.
Months later, they revealed to their friend that it was their store he had bought his suit from. “It all kind of clicked for him, and he’s like, ‘Holy shit, you guys took my credit card information? I bought this Santa suit from you?!’”
Pranks aside, the success of the santa store proved something serious for both of them. This thing works.
Getting Serious: The Testing Phase
In the months that followed, Rodney and Kory packed up and set off on a five-month trip around Asia. As they traveled, they kept meeting digital nomads – those location-independent people who can live anywhere, work anywhere. They were drawn to the idea that they could make their work fit around their travel plans, and not the other way around.
They were excited to dip their toes into the world of online business, so they set up several Instagram accounts around potential business ideas. They had an account for basketball lovers, one promoting jewelry, one for fake house plants, another for tech gadgets, and one for holiday accessories. Their final account was dedicated to fantasy gaming.
As they traveled, they continued to post new content to the accounts, and watched as they began to slowly grow in popularity.
But before they knew it, their trip was over. They returned home to Vancouver, got full-time jobs, and found themselves settling back into their normal lives. Kory found a sales role in a tech company, and Rodney began working in construction while studying for his real estate license.
At night they’d work together on the Instagram accounts, taking notice of which niches seemed to attract the most attention and engagement.
The fantasy gaming account started to pull ahead, gathering followers quickly. By September they were up to almost 4,000 followers. They noticed the sense of community that began to build on their account, where users would leave long streams of comments under their posts, chatting back and forth.
Off the back of the Instagram success, in September they decided to take their next step forward. They began building out a Shopify store around the fantasy gaming niche, filling it with mugs, pins and apparel related to the fantasy gaming world. Then they began testing the reception to different products with their Instagram audience. Their followers quickly responded.
A Close Call Makes Rodney Question His Future
October 30, 2018, is a day that Rodney remembers well. It had been raining that day, and he was working alongside three colleagues at a construction site. They heard a noise and turned quickly to see what was happening. Moments before, a speeding car came flying around the corner, colliding with a Corvette that was passing by. The road was wet, and the force of the impact sent the Corvette barrelling toward where Rodney and the three others were standing.
Suddenly, with the sound of the metal car body crumpling around an immovable object, the Corvette came to a stop. The arm of a piece of heavy machinery had been resting on the road next to the workers. The Corvette collided with the arm, shielding the Rodney and the workers from the impact.
“This was pretty traumatizing,” Rodney says. “It really made me realize that I needed to start doing something more fulfilling with my life.”
Kicking Things Off on Black Friday
While Rodney’s day job was serving up near-death experiences, their fledgling business was beginning to grow. They were making a few sales here and there, all from organic Instagram traffic. Then in mid-November they decided to step it up.
It was just before Black Friday, and they knew that people would be in the mood to shop. If there ever was a time to test the validity of their business, it was now.
They knew they needed to stand out on Black Friday weekend, so they searched around for an idea. That’s when they came up with the mystery pack.
The mystery pack contained a mix of some of their most popular low-ticket products, bundled together for a discounted price.
And really, the idea couldn’t have been a better fit for their audience. Their customers lived for games, and the mystery pack was a little game in itself. Want to know what you’ll get? You’ll have to play the game (and buy the pack) to find out.
As you might have already guessed, the mystery packs were a hit.
“They loved it,” Kory says, grinning.
The store made over $3,000 revenue that weekend, all without spending a cent on advertising.
|Audiences for a fantasy niche store are lovers of dragons, wolves and medieval magic. Fill your store with products featuring mythical creatures and black magic, and try creating a character for your brand that fits within that world. Talk in your audience’s language, and you’ll win their hearts.
On Facebook, you could try targeting your audience around Game of Thrones, Final Fantasy or Lord of the Rings fans.
Fantasy Niche Product Ideas
Stepping Into the Unknown
By now, Rodney and Kory were pouring every spare moment they had into the business. Late into the night they’d be tweaking their website, sourcing new products, and honing their advertising skills. The weekend became precious, the only part of the week where they could dedicate two days of interrupted time into their business.
And when Monday morning rolled around, Rodney would head back to his construction job, and Kory would head into the office, and spend the day making sales for someone else.
Kory had been in his tech sales job for three months and was coming up to the end of his probation period. He would soon be offered a permanent position with benefits.
Despite what seemed like an obvious choice, Kory knew that it didn’t feel right to stay on. He’d never seen himself working a desk job, and this taste of it made it clear to him it wasn’t where he needed to be.
Plus, even though it was early days, he sensed that the business had potential. If only he was able to dedicate more of his time to it, he felt like he could turn it into something big. And he couldn’t get that idea out of his head.
So just as he was about to be offered a permanent role, Kory announced he was quitting. He waved goodbye to the stable paycheck, and stepped into the unknown.
To make matters more complicated, Kory had just moved out of his parents’ home and into his own apartment, with its own rent to pay.
“I was like, ‘This is great. I have no job now and I just moved in here,’” says Kory, laughing.
The new-apartment-with-no-job situation was something Kory sensed that his parents would not approve of, so he decided to keep it a secret.
“I didn’t tell my parents [that I had quit] for their sake, as this would have gone against everything they ever taught me. I knew this would sound like the stupidest decision of my life,” he says.
Both Rodney and Kory’s parents didn’t even know they had started a business together, so how could he begin to explain that he’d quit his job to pursue it?
Keeping the lie alive was hard work.
One Friday, Kory invited his parents and grandmother out for lunch, forgetting it was a day he’d normally be working.
When they began to wonder how he was able to have enough time to meet them in the middle of the day on a workday, he quickly made up an excuse about being allowed to leave early.
“But I had quit my job at that point, and I was lying to them the whole time at the table, trying to just not say anything.”
The Happy Holiday Season
With Kory now working full-time on the business, things really kicked off. The Christmas season was rapidly approaching, and they wanted to capture as much of the shopping spirit as possible.
They began running Facebook advertisements, which allowed them to reach a much wider audience outside of their Instagram following.
The mystery packs continued to be a hit. As they pumped more money into ads, their revenue began to skyrocket.
“Christmas was insane,” says Kory. “We jumped from about $3,000 in November to $75,000 the next month.”
Rodney was still working full-time, but had moved into office work as the result of a back injury. The change of work gave him a lot of time to reflect on what he wanted for his life, and what he needed to do to get there. But as he became increasingly disconnected from his day job, things with the business began to get more exciting.
“I was at work and the Shopify ping was just going off like crazy,” he says. “I would look at my phone, I’m like, ‘Oh my God. We just sold $200-$300.’ And I couldn’t tell anybody what was happening.”
So as things were ramping up with the business, Rodney knew the time had come.
“My contract was up for renewal soon and I had to make a decision. I decided that for the sake of my body’s wellbeing, my mental health, and the business, it was time that I went all in.”
Just before Christmas, Rodney stepped out of his job and into the business full-time.
“Mom, I’m an Entrepreneur.”
Christmas had passed and the pair were closing in on $75,000 revenue that month. They knew it was time to tell their parents.
Kory remembers their reaction, “They didn’t know what to say. They were just so confused.”
“It’s a hard concept to explain to them,” adds Rodney. “My parents are pretty old school. So, they were like, ‘What? You’re selling these products and you don’t even touch them? You don’t even hold the products?’”
And it wasn’t just the complexities of the dropshipping business model that confused them, it was the fact that they’d given up such solid jobs to pursue it.
“They were like, ‘Why would you give up this job where you make really good money, are getting benefits, and where you can move up the ladder?’” Kory says.
“I’m pretty sure they thought I was selling drugs, or something,” laughs Rodney.
In the end, the pair accepted the fact that their parents probably wouldn’t get it. They pushed ahead regardless.
Everything That Goes Up…
With the calendar flipping over to a new year, and with the weight of their secret lifted from their shoulders, the pair went into January with full force.
The shopping mood of the holiday season seemed to continue, and they watched as their revenue numbers climbed up and up.
Most of their products were priced under $10, with an average sale bringing them $12 in revenue. They were processing up to 1,000 orders a day, and were trying their best to keep on top of all the order fulfillment and customer service requests that came along with that.
By the end of January, they’d had their best month yet. They looked at their sales dashboard and saw that big, shiny number staring back at them. They had made over $100,000 USD.
With January over, they began planning for an even bigger February. While they were increasing their advertising spend and preparing for the extra workload, suppliers in China began to closing up their businesses and heading home for the Chinese New Year holidays.
“When Chinese New Year came… everything just came crumbling down,” says Kory.
What’s the Deal with Chinese New Year?
Each year in late January to mid February, people in China celebrate Chinese New Year, or the Spring Festival. On average, suppliers take two weeks off to spend time with their family and friends. This is comparable to people taking extra time off during the holiday season (Christmas and New Years) in North America. Operations of their business will generally pause during this time, so you’ll need to plan to switch suppliers or pause advertising for a short period.
“We were in Hawaii, when we realized and then we were like, ‘Oh my God…’ We were doing close to 1,000 orders a day at this time, and we didn’t realize that there was a month delay with orders being sent. We were just like, ‘Oh my God, how are we gonna fulfill all these orders?’”
For weeks, they faced a tidal wave of customer service emails. People wanted to know where their package was, after it had been delayed for so long. They’d spend hours answering their requests, late into the night.
“We still have nightmares with page upon page of emails saying, ‘Why hasn’t my order shipped yet?’” says Kory.
Time for a Reboot
When the dust settled from the Chinese New Year disaster, they began to evaluate their approach. There had to be a better way, one that could keep them growing, but avoid being crushed under the weight of hundreds of orders per day.
“We scrapped everything at that point, except for our Instagram. We bought a pro-theme on Shopify because we needed a refresh. Then we started moving into higher-ticket items, but with a lower order volume. We couldn’t keep up,” says Kory.
Since then, they’ve hired a content writer who regularly publishes blog posts, helping to drive traffic and build a sense of community on their website.
They’ve also teamed up with a fantasy gaming podcast, and work to cross-promote each other through social media, newsletters, and within the podcast episodes.
“We’ve grown quite substantially online. Now we’re just trying to maintain that. We’ve realized what we’re selling now is more of a brand. It’s not just like a hot product,” says Kory.
“Over the course of the last two months we’ve just been slowly testing new things. We’re just trying to prepare and get ahead of the game for Christmas time, because we know what a crazy time of the year it is now. We want to be ready, because we were so unprepared for Christmas last year.”
Turns Out, the Future Looks Bright
For two people who started with no business experience, it’s been an uphill struggle the whole time. They learned it all themselves, every step of the way. Sometimes it was a battle, fought over long days and late nights crouched over their laptops.
In the end, they wouldn’t trade even their worst moments. “It was literally trial and error the whole time,” says Kory. “But then you look back on it and you’re like, ‘Wow. Look how far we’ve come from when we started.’ It’s beautiful.”
And their families? They’re slowly coming around to the idea that despite what they expected, things have worked out.
Rodney recalls trying to convince his grandmother that everything would be okay.
“Trying to explain the business to my grandma, there’s no chance I can explain to her what I’m doing,” he says. “She’s like, ‘Why would you quit your job? Do you need money?’ And I’m like, ‘No no no!’”
“I finally took her out for dinner last week, and she kind of started to realize, ‘Okay. He’s not struggling now.’”
Kory’s family has come around too, embracing his new ambitions. “They finally realized six months later, we’re still doing this. We’re paying rent for the apartment, surviving, and not asking for money from them. So they’re finally thinking, ‘Okay. You know what? They’re actually doing something serious.’”
In late February they launched another business, Kenekt Marketing. Now they’re leveraging everything they’ve learned from their ecommerce experience to help local businesses build up their digital marketing strategies. “Both businesses are such great opportunities. But we’re trying to slowly build them both up at the same time,” says Kory.
For anyone teetering on the edge, unsure if they’re ready to start, Rodney and Kory have one piece of advice.
“Honestly it’s never gonna be the right time to start. You just have to be willing to make sacrifices, like giving up going to the gym or yoga, or seeing your friends after work. It might be waking up early or not taking a lunch break at work and working on it. You have to make the time, because no one else will and no one’s gonna push you to start.”
How They Built Their Business: 4 Lessons to Take Away
Now comes the real down and dirty part where we pick apart Rodney and Kory’s business strategy. We drill down on some of their best tactics, discuss their shift in strategy, and break apart the most important lessons they’ve learned along the way.
In this section, we’ll be covering:
- Using Instagram to test product niches
- Their low-ticket to high-ticket product strategy
- Lessons they learned about pricing strategies
- Figuring out Facebook advertising
Let’s get into it.
Use Instagram to Test Product Niches
Before they’d even started their store, Rodney and Kory were thinking about the smartest, most cost-effective way to go about taking that first step.
So many dropshippers find themselves in the same situation. If they’re playing with a small budget, they look for ways to drive traffic for free, or stretch their budget further.
They might spend time on Reddit or Facebook groups, dropping in links to their store to drive traffic. They might opt to use influencer marketing before jumping into ads. They might try testing products using just $10 a day on Facebook ads. Some of these low cost tactics work well, but some of them can be difficult to pull off.
So if you don’t have much cash to spare and are looking for a way to get things off the ground, follow Rodney and Kory’s example.
Test your product niches using Instagram.
“We did our research and knew the horror stories of testing advertising on Facebook and how much money can be lost in the process. So we created several Instagram profiles in different niches to test audience engagement,” Kory says.
They started off with Instagram accounts built around basketball, jewelry, tech gadgets, holiday accessories, fake house plants, and fantasy gaming. As they grew the accounts with organic content, they paid close attention to which audiences responded most strongly.
Rodney explains their strategy: “Essentially, we wanted people to stay on our Instagram page as long as possible. We wanted them to go to our Instagram page and just continually scroll. So we tried to build a community around it.”
Even once it became clear that their fantasy gaming account was surging ahead, they didn’t jump immediately into paid advertising. They used their Instagram audience to test different products, to see which ones people were most excited about. From that, they were able to determine which products were worth putting money behind.
Their paid advertising chops have increased significantly since the beginning, but they still rely on organic Instagram content to drive free traffic to their store.
“A lot of our sales come through Facebook ads, but the organic Instagram content is almost like the engine in the background, just continually churning,” says Rodney.
The Low-Ticket to High-Ticket Strategy
When they started out, Rodney and Kory stocked their store with low-cost items. They figured, the cheaper a product is, the faster it would sell.
And for the most part, they were right.
They were able to generate thousands of orders of low-cost items over the holiday season, but that came with a price. They were swamped with the extra work that was required to fulfill and manage customer service requests for that many orders.
After Chinese New Year sent everything crumbling down, they redefined their approach and switched to higher-ticket items. It was through this that they were able to reduce their workload, and increase their margins.
It might have happened by accident, but turns out this approach is a pretty good strategy.
By focusing on low-ticket items at the beginning, they were able to draw in a huge amount of visitors to their site. Some of those visitors were just browsing, others added to cart, and a lot of them made a purchase.
In the background, as visitors came streaming into their store in search of low-cost items, the Facebook pixel was working away, gathering data and refining its classification of the ideal buyer for their store. The more data it gathered, the smarter it got at knowing who to target with advertisements.
So by the time they were ready to switch their store to focusing on higher-ticket items, they had already refined their targeting to attract the perfect customer. They were also able to grow their email list to over 40,000 subscribers, allowing them to tap into another free marketing channel.
The Psychology of Pricing
As a customer, when it comes to understanding price – from knowing if you’re about to snag a deal or are getting ripped off – there’s a lot going on in your head that you probably don’t realize.
As a marketer, it’s your job to try to understand what’s going on inside your customers’ heads.
Would a customer be more tempted by a $10 product with free shipping, or a $8 product with $2 shipping?
When Rodney and Kory started out, they wanted to make the price of the product seem as attractive as possible, so they hid their costs in the shipping price. But they ran into a problem.
“We realized if they’re ordering more, we were actually making less,” says Rodney.
Imagine this. You’re selling a product for $5, plus $5 for shipping. The product costs you $4 to buy from the supplier, and you pay your supplier $2 to ship the product to your customers.
So if you sell one product, you’ll make $10 revenue, and $6 of that goes to your supplier.
You’ve made $4 profit.
But what if someone wants to buy 10 of them? Now, you’re getting $50 for the product, and $5 for the shipping, so $55 in revenue.
This time, the product costs you $40 and $2 for shipping again. For ten times the amount of product, you’ve only made $13 in profit.
Since then, they’ve switched strategies. They now offer free shipping over $50 (more on that below) and make sure the cost of the product is covered by the product price, plus a healthy margin.
But Rodney and Kory don’t have a blanket rule for pricing their products. They’ve learned through trial and error that each product needs to be thought about individually.
“We sell a bunch of items in our store, probably close to a hundred by now. But each one has its own pricing strategy that works for it,” says Rodney.
Certain products can be sold for a higher price with better margins, which gives them the flexibility to offer them with discounts. They could add the products to their spin-a-wheel app with a deep discount, or offer them at a cheaper price as part of a bundle.
“People love to think that they’re getting a deal,” says Rodney.
The pair also realized the psychological significance of setting a threshold for free shipping. They implemented a “free shipping over $50” rule in an attempt to increase their average order value.
They created bundled items of related products and small add-ons to upsell people. Like the chewing gum that sits next to the register in the supermarket, shoppers found it easy to toss a few smaller items into their cart so they could claim the free shipping offer.
“We saw a huge increase in our average order value, which was massive. I think our average order value before that was $12-14, and now it’s about $35-40,” says Rodney.
With higher average orders, they were able to pour the profits back into advertising to quickly grow the business.
“The margins you make on an order like that – you don’t have to hold your breath until you make your next sale,” says Kory.
Facebook Ads: You’ve Got to Go Your Own Way
Rodney and Kory were both complete beginners when they first stepped into the world of online advertising, and as Kory puts it, “We got our asses kicked with Facebook.”
“We had zero clue how to do anything with ads when we first started,” says Rodney. “On Instagram we were just using the promote button, which we realized is not good, you shouldn’t be doing that. We were just pumping money into that with no real targeting.”
At the beginning, things looked like they were working. They were making sales, and money was appearing in their bank account. But they weren’t paying attention to the finer details.
“We were just pumping more money into it thinking it’s working,” says Kory. “Then we realized that we needed to set up set rules to kill off certain ads that aren’t performing well.”
They started to look closely at their return on ad spend (ROAS), which tells you how much you’re getting back for the amount of money you’re putting in. “We didn’t even know what ROAS was for the longest time,” says Kory, laughing.
Along with this, they also worked to refine their design and copywriting skills, so they could start creating ads that looked like the type of ad they might be tempted to click on themselves.
“We started to become better with Photoshop, and slowly tailored it to get it to the quality that we wanted. We kind of became obsessed with it,” says Kory. “We started to get really good at learning what the algorithm wants to see in the ads, so we’d have a better chance of getting approved, or being shown.”
But even as they began to master Facebook advertising, they often found that the strategies shared in video tutorials or articles didn’t always work for them.
“There’s a lot of free information out there about Facebook ads,” says Rodney. “It’s a great start, but unless you’re selling or mimicking exactly what that person in the video or the blog is talking about, it’s only relevant to your store to a certain extent. That was one of the issues we found.”
“We figured, we need to learn the base idea of how it works. We’ll just get a general understanding of how the strategy works, then we’ll need to tailor it to our store,” says Kory.
And in the end, they’ve found that most of their success comes down to good old fashioned trial and error.
“We’re still always testing new ideas,” says Kory. “Whenever we find a new product, we’re thinking about something we’ve learned from the past in terms of branding it or putting it out there. What do we think is going to work the best for this product? And then if it works, it works. If it doesn’t, we try something else.”