Non-Qualified Stock Options, Firing Fast, and the Art of Early Hiring
by Felix Thea Podcasts Feb 20, 2018 30 minute read Leave a comment Email Pinterest Facebook Twitter LinkedIn
For a growing business, the first few hires are the most important. They help define the company’s culture and free up your time as the owner to focus on doing the things only you can do.
But how do you acquire and pay talent early on in your journey?
In this episode of Shopify Masters, you’ll learn from an accountant-turned-entrepreneur who used non-qualified stock options to win over his early employees.
Brian Brasch is the founder of PRx Performance: the pioneer in space-saving fitness equipment.
If you’re a young entrepreneur and you need a lot of help, non-qualified stock options are not a bad way to go.
Tune in to learn
What “non-qualified stock options” are and why you may want to offer it to your early employeesHow to properly and quickly let go of an employeeHow to overcome the challenges of selling a $500+ product
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Store: PRx PerformanceSocial Profiles: Facebook, Twitter, InstagramRecommendations: Bread, Criteo, Social Climax Media, Hootsuite, Quickbooks, Basecamp, Pipedrive, Stamped.io, Store Locator
Offering a “pay-over-time” financing option
PRx Performance uses the Bread app to overcome price as an obstacle to purchase. Customers can pay over time instead of one lump sum that often totals more than $500 for their products.
Felix: Today I’m joined by Brian Brasch from PRx Performance. PRx Performance is a pioneer in space saving fitness equipment. It was started in 2013 and based in Fargo, North Dakota. Welcome Brian.
Brian: Hey Felix. Thanks for having me on today, I appreciate it.
Felix: Yeah, excited to have you on. So tell us about some of your most popular products that you sell.
Brian: So our most popular products on PRx, we essentially invented a complete [inaudible 00:01:14] gym system that goes into your garage, basement or corporate facility, that folds up against the wall when you’re not using it. We’re kind of the Murphy bed of fitness equipment.
Felix: Yeah, definitely seems super useful for anyone that doesn’t have much space and wants to have a full workout, get a full workout. Now, where did this idea come from? What’s your background? How did you get into industry?
Brian: You bet. I’ve got a pretty diverse background, between sales, I was a CPA, I own a manufacturing company. My partner and I were crossfitters, and we were at an event and we saw some equipment failing during a competition. We were like, “Hey, we can make stuff better than that,” so we did.
Felix: How did you come up with that idea? Did you have experience creating products that could be better than what you saw?
Brian: Yeah. Essentially, I had a great team, strong engineers. My partner and I just had a different vision for what it could be. At this time products were expensive. They were slow to deliver and the quality wasn’t great. So you look for speed, quality and price, and we figure we could improve on at least two of those, and that’s all you need to break into a market.
Felix: That makes sense. Now you mentioned that you had a partner, you had a team. Did you already have all this in place from an existing business that you focused on PRx, or was this something that you built a team to take on?
Brian: Yeah. I owned multiple businesses at the time but what I like to do is step and look at the best people. So what we did is my partner and I put in cash, and then what I like to do for startup options is to offer new employees non-qualified stock options.
What that means is I can give them stock instead of cash. It’s a great way to essentially start a business, and then people have a greater upside in the future. So they’re part of the team out of the gate and we can serve cash.
Felix: That makes sense. Now, to create a company, create a business like this, for anyone out there that doesn’t have the background that you have. It sounds like you have background in creating businesses like this. What’s involved? How do even you begin to create a company that offers non-qualified stock options to build a team?
Brian: First I guess I have a saying that before you buy a house you should buy a business. A lot of people, you’re right, they probably have expertise in area. Maybe sales, maybe marketing, maybe operations, they may be an engineer. Whatever it is, just to go out and find some other partners.
If you don’t have that capital you can inject sweat equity and get something like the non-qualified stock options. It’s a way to get ownership in a business to get started. So let’s not try to boil the ocean, let’s get started with a small percentage and then learn the rest of the aspects of the business.
One of my backgrounds is I’m a CPA, so it really helps to know the financials inside and out. And hey, if you don’t have that background, go buy some books on it, read, learn. It’s just about creating a community, and if you have that community just go out there and look for the next idea. So yeah, I pulled that partner together and issued the non-qualified stock options, brought the dream team together and went from there.
Felix: Got it. Now, do you need to, for someone that doesn’t have experience here, is this is something that you can … is it possible just to create non-qualified stock options yourself? Do you need to involve a lawyer? What’s involved?
Brian: Yeah, I worked with a law firm out of actually Oregon, and I had never done that before. I had a friend who did it. It worked very well for them. So like anything in life it’s a learning experience, we just went for it.
I’m trying to think, the actual documentation was somewhere around $1,500. Once that was done it was a matter of getting everybody together, and we offered everybody cash too, but I think we had about 12 people help us out of the gate and they all said, “No, I want the options.” A few have already cashed out and there’s quite a few that are holding, knowing that we’re in this explosive growth. I look forward to writing those checks someday when they’re ready to leave.
Felix: Nice. So are there other kinds of stock options that business owners can consider? Or is this, obviously you picked the one that made the most sense for your business, but are there others that can make sense as well?
Brian: Yeah. There’s NSOs and ISOs. I’m not, believe me I’m not an attorney, so I’ll just give that quick qualification. Non-qualified stock options are applicable when you’re not going to hire the person. So you can have an external consultant just come in, do the work. You give them scope, say, “Hey, in the next year I want you to do this. Your options last over four years,” and it’s really all there is to it.
The ISOs are for existing employees, so that’s a little bit more advanced and different. You’re going to be paying tax rates at a different rate. It’s a lot more involved and of course an attorney could take you through it. But if you’re a young entrepreneur and you need a lot of help NSOs are not a bad way to go.
Felix: So now that you have this business setup, you have a way to compensate future employees for joining the business, where did you go out and find the staff?
Brian: You know, you never … That’s kind of the last thing you do. You work your tail off 20 hours until you’ve got nothing left in you, until you can finally think you afford someone. After four years, I mean my partner and I, we’re at the point now where we can finally start taking a paycheck. So you just work, and then you find the best people out there.
If you create a great culture and a great environment and people that have the vision of where you want to go, that’s important. Always consider the culture as well as you’re hiring. But I think we had one or two employees the first year, and then going into two years I think we had three. So we started very slowly.
Felix: Now, culture and environment, these are intangibles that make a big difference in attracting the best kind of talent that you can’t always just pay outright money for. What is the approach that you take to making sure that you have a company that has a great culture and has a great work environment?
Brian: Yeah. It just comes down to people. They say, “Hire slow and fire fast,” and every single person in my company is just amazing. Once you get a few good people in there and you start to create some new fun work areas and create a big bean bag area and, “Hey, this is where we think,” go ahead and just support them in whatever their ideas are and enable them to make decisions on their own. You know, just some key management styles.
Also our recruiting, I think we do something that a lot of other people don’t. Is that we recruit, we always start at our local crossfit gyms. I know this isn’t right for every business, but you start off by getting people who are dedicated, not afraid to work their tails off. They always have … and crossfitters, they’re into nutrition. They’re into health and fitness and growing personally and professionally. So that’s where we start. We haven’t hired every single person from crossfit but it’s a great place to start to find new employees.
Felix: Got it. So do you look for, like you said not everyone is from a crossfit gym that you hire, but do you typically look for people that are already potential customers, people that are already possibly using or would be using a product like yours?
Brian: Absolutely, because then they become passionate about it, and they know, what’s important to them is going to be important to our customers, and that transcends through everyone we deal with, and that’s important.
Felix: Right, that makes sense. Now you mentioned that, hire slowly and fire fast. Based on what you’ve seen, I think … before I got there, it seems like this is one of the biggest issues for companies that are growing fast, is that they are people that aren’t great fit or maybe don’t have the proper skills and leave them on the business for too long because they don’t want to go through the exercise or the act of firing somebody. How do you know when you should fire somebody? What do you evaluate?
Brian: Typically, the writing’s on the wall. First thing is, you should never fire someone unless they don’t already know it’s coming. So if you haven’t truly coached someone, because as the business grows, new opportunities and it’s so much to give people new opportunities and new opportunities to grow. But if someone’s there and they’re stagnant and they don’t like maybe where the company’s going or they don’t feel comfortable growing with the company or they don’t like change, then it’s an opportunity to, I’ve always heard the term promote them outside the company.
But first you’ve got to sit down and say, “Hey, you have more opportunities. You probably have to work a little harder or you have to take some classes. Are you willing to do that? Because this is what we need to keep this, or fill this new position, or this new position that your position’s growing into.” So as long as they know and they’ve had the chance and they’ve be consoled. That’s the important part, is to always be working with them closely.
Felix: Now, earlier you mentioned three factors that you can compete in. I think, was it speed, quality and price? Were those the three?
Brian: Correct. Better, faster and cheaper.
Felix: Got it. Now how did you decide which ones to focus on first?
Brian: Well, typically when you come into a market … On a side note, I’m actually … When you look at the businesses that are better, faster, cheaper, hopefully you think you can hit all three. Because I guarantee, you’re going to forget about something or you’re not prepared for anything, no matter how much planning and something’s going to miss. You have to have two if you’re going to be successful. So shoot for all three, and you know what, if you get all three then raise your price. Because if you have quality then you should be charging people for it.
Felix: That makes sense. So do you try to hit all three right from the get-go? Do you try to focus your attention on one of the three at first? What’s your approach?
Brian: Hit all three, and then like I said, if you hit them then raise your price. And by the way, it’s never easy to raise your price after it comes out, especially now with the internet. We had people on Black Friday complaining that we had higher prices than last Black Friday, and hey, we lost money last year and we’re not this year. It’s because we’re a quality product and we raised our prices.
So you know, you don’t make everybody happy but the goal is to always hit five stars on every review. I think we’ve got about 400 now and we’re in the high four stars. Then you know you’re doing something right. You’ve got to hit your base margins to make sure you succeed.
Felix: Right. So better makes sense, cheaper makes sense. What does it mean to be faster? Is it shipping? What does faster mean?
Brian: Faster’s the entire customer experience. It’s anywhere from how fast you respond to them on social media, how fast you can answer the phone and get back to them and help them place the order, how fast you can ship, and then what’s your next follow up step? So it’s the whole customer cycle and experience.
Felix: Got it. Now if a business owner wants to focus on that, that factor, and improve the speed in which they engage with their customers, where would you recommend most business owners focus first? Is it in the initial customer service? Where along the experience do you think that there’s the most to be gained?
Brian: Yeah. Absolutely the customer service, because when you start a business they say you should talk to about 200 before you release a product. “What do you think of this? Would you use this? What’s the competition?” And then, “Here’s what we have against them. Do you agree with that? Would you pay this price point?” And then even through you think it’s the best thing in the world, your customer and your prospects need to think that. So once you listen to them, talk to them, go to trade shows, and the owners need to be out there doing that piece of it so they can fine tune it and get it right as fast as possible.
Felix: Got it. Okay, now going to the other two factors, better and cheaper. I’m assuming this comes down to the technology and the manufacturing, the distribution. How did you begin going down this path? Did you design it first? Did you figure out the distribution first? What was the first steps towards improving these two factors?
Brian: Well, because I had a background in manufacturing we started with the design. I had a friend who said, “Hey, I’m opening a crossfit gym. Can you make me a rig which is like 12 feet tall, 44 feet long?” From that lunch, in about eight weeks we delivered a completely functional, and I still think one of the better rigs out today.
It’s so well built and so heavy duty and they had so many other features on that people still [inaudible 00:14:26] offer today. But it cost me about $3,000 to ship, and now people can buy systems from China for 3,000 bucks, so we kind of had to move away from that. But the first thing was the design. Make it right.
A side note, the product that actually launched our business, literally tomorrow I believe, so this is four and a half years ago, I’m going to be getting I think my final version of it tomorrow in overnight mail. It’s a strap slap collar called the Talon that holds on barbells. I don’t know if you remember the old watches, the Swatch watches that slapped around your wrist. That in a barbell collar with magnets on the end. So it’s about a second on, a second off. I know steel, I don’t know where to get these metals, magnets, overmolding, and now I know all that stuff. But it’s taken me four and half years to get there.
Felix: Definitely a long work in progress then. But it sounded like your initial versions at least were ready to, not necessarily to ship but ready for people to use right away. So when you designed these initial versions, what were the next steps towards manufacturing? Because of your experiences you already have manufacturers ready to help out? Or what was next?
Brian: I owned all the laser cutting, robotic equipment, et cetera. To keep things arm length with my existing business I had other partners. I contracted with them, saying, “Hey, I want to make this stuff here. You guys, how many points do you need to make.” We were all [inaudible 00:15:57] around and I could walk out there every day and see how it was going. It just kind of really grew from there. So we had a local manufacturing and then comes the branding and the naming and all that fun stuff.
Felix: Okay. So design and manufacturing was not an issue apparently based on what you’re saying.
Felix: But now you have the product ready to be made, you have a product that could be produced quickly enough. Now what was the steps that you had to take to actually get attention, get people to realize that there’s this product out there that you are trying to compete with, that’s better, faster and cheaper?
Brian: You bet. There’s no substitute, you’ve got to do the road show. You’ve got to get out there. You’ve got to meet with your prospects. After they know who you are and what you’re building, then you’re just trying to sell them. You know, work with them. I mean we lost a lot of money the first two years, but we figured out what people wanted.
Think about it, we started with a slap strap collar. We then moved on to full rigs. And then now, what we’re doing in the space saving niche is completely different from what our vision was initially. So as you grow within a market … And by the way, not to go on a tangent, but if I’m a new entrepreneur I want to look for a growing market. Something at the time like crossfit, it was growing so fast, and when there’s new technology, new trends, if you can jump onboard with that and be quick and agile, the bigger guys, the older guys, they can’t do that. So that was a big piece of it to get our name out there, is make a mark and get on the road and shake hands and get our products out there for testing.
Felix: Yeah. Certainly being able to ride those waves and be able to recognize those waves are key aspects to getting a headstart in starting a business. Now when you, basically in your experience, is this mostly a gut feel, or only a gut feeling on what’s a growing industry? Or are there tools or data that you can work off of to determine if it’s an industry that’s new and ready to explode?
Brian: It was all gut feel for me. Are there tools and research? Absolutely. You can go to the SBA and get some. You can got down to your library. You can do a lot of research. If you want to save money, if you don’t have much cash, don’t just go on gut and talking to prospect, actually do that market research. But I typically never take that step. So I just take a look at, what do we have for competition? What are they charging? What are their differentiators? What can I make it for? If the numbers start to work then it’s like, “All right, how do we build the brand and how do we go to market?”
Felix: Got it. Now you mentioned doing that road show. Was this simply like going to gyms? Actually when you were going to reach out to your customer, where were you meeting them?
Brian: We went to events, competitions. We actually built a rig that we could take and people could use at competitions. So we’d show up there and they’d give us a free booth. So it was a lot of late nights and U-Haul rental trucks and loading everything up and getting there and unloading everything.
We work with steel, so at points we’d have multiple tons worth of equipment we were lugging around. But that’s how you get in front of everybody. Learn, grow, get some sales, build a reputation. If I can emphasize one thing, don’t start too fast. Make sure your product is very mature and that you’re going to get five stars every time somebody gives that rating. Take care of the customer right out of the gate. And if you have to lose money on a sale but keep a customer happy, do it.
Felix: Once you had this product ready to go, I want to talk about distribution. Because you’re selling products, I’m looking here. They’ve got to be, I’m sure they’re not as heavy as what you’re competing against, but they are still pretty heavy. They’re pretty large things to ship. How do you package and ship products like this?
Brian: Well, when we were packaging our rigs, we were building from scratch 13 foot palettes and covering it and protecting it every way we could, and stuff always gets damaged in shipments. So it’s a learning experience. We used to do everything, LTL, or in other words Less Than Truckload, so on large semis. Now we use FedEx. We’re shipping hundreds orders a day and FedEx is ship and sending multiple trucks to our door every day. So it’s really changed the way we ship.
Felix: What kind of unique challenges do you run into when the products that you are selling are large and heavy?
Brian: I guess my background in automotive, I’m kind of used to shipping that stuff. I mean just your typical packaging, lifting, having the right equipment, forklifts, safety training. The nice thing is, they typically rarely run off once you leave them on a customer’s doorstep, because people are expecting to grab a quick box. It’s pretty rare that our stuff … You know, we’ll get our chargebacks but it’s less than 1%, so it’s not a huge deal.
You know, that’s really it, other than we used to ship full gyms to places and we’d say, “All right, make sure there’s 10 people there when it shows up,” and we’d be very careful and coordinate with the trucking companies. But yeah, it’s just about that customer service. Whether you’re heavy or light, just making sure the customer expectations are met and nothing kind of weird happens along the way.
Felix: Any lessons learned, any tips on how you can decrease cost when you are shipping?
Brian: I mean, there’s UPS and there’s FedEx. You definitely want to meet with both and try to negotiate the best rates possible. Always taking a look at how many days it takes to get there. What I’ve noticed too is they typically don’t make you sign a contract, which is good, or a basic contract, it doesn’t totally lock you in but it helps guarantee discounts.
But some LTL guys love to lock you into contracts, and I just refuse to sign an LTL contract for the bigger deals. I just never makes sense. There’s so many companies out there willing to give you great rates if you look hard enough.
Felix: Right. Something that’s often overlooks when you can negotiate shipping, you can obviously increase your margins and change your business if you are doing it correctly. Basically your experience, what’s negotiable when approach a carrier? Whether it be UPS or FedEx, what kind of ground can you gain through negotiations?
Brian: Well, it’s the chicken or the egg. You want the best rate and they want volume. So you just need to have a relation about, “Hey, this is our vision. This is where we’re growing. Start me off a little deeper than you would someone with this volume and let’s grow together.”
The one that’s going to work with you, that makes a great partner for long term. So that’s really the best of it. Even like USPS, when our new barbell collar’s coming out, we’re going to try to get that shipping price under three bucks, and I think with USPS we can. So now we’ve got some LTL coming in. We’re going to have FedEx and we’re going to have some USPS going the same day.
Felix: Very cool. Now another factor in your business that might be different than others is the price point. You’re selling products that are pretty high price point for what you would typically buy online. What is the sale cycle like for a product that’s priced, I’m looking at here just at what’s on the front page, $500, $600, $700?
Brian: The typical sale cycle for that, I mean we have some people that buy on the spot but I would say the average person is somewhat around a couple weeks. We had people that waited a year, literally since last Black Friday, just to see what our deal was this year. The issue is after 30 days you’re going to lose the Pixel, you’re not going to have all the tracking data. You can’t really run your conversion rates.
So you know, it’s the more expensive, the longer the sale cycle. I think that’s standard. But adding things like financing allows us to make it a little more palatable for people. You know, break it down into 12 month payments or 36 month payments. We work with a company called Bread. They provide all of our financing. We’re running a 0% promotion rate right now and it’s for 12 months. It’s been a great tool for us. That’s almost 20% of our business.
Felix: Yeah, I noticed that, the 0% APR financing on the header on your page. You mentioned this company, Bread. How do you work with them? How do you get this setup?
Brian: There’s a few companies that offer this. But you want to pick what’s right for you, what you think your customer, how they’ll buy. Again, you need to involve your customers. “Hey, if you could have bought this and get financing, would you do it?” PayPal has some financing built in.
Once you determine the rates, for us we started at six months, 12, 24. We just moved to a 12, 24, 36 because our biggest package used to be 2,000 and now we have some amazing new products, packages run up to 5,000. SO we want to give the people the opportunity to buy that and pay for it over 36 months. You compare that against a gym membership, you can not only be saving money, you’re actually buying something that is, it’s an investment. It’s going to be with you your whole life. We even say that our products, you have to live them in your will. I mean, literally our products last 100, 200 years, so it’s not wrong, nothing goes wrong with the 11 gauge steel made in America, so we’re pretty proud of that.
Felix: Nice. What are the downsides, if any, with offering the financing?
Brian: Well, we don’t really allow the discounts at that level because we’re actually paying Bread for that. You know it’s now 0%, instead of giving the customer a discount we need to take that and actually give Bread a little more than to make it work. Because Bread’s not going to do it out of the niceness of their heart. So it’s just part of the process I guess. We just need to consider making sure we can still maintain minimum margins, et cetera.
Felix: Got it. Now, because the sale cycle can last a few weeks, and in a couple examples a full year, before someone decides to buy, how do you stay on top of mind during that time, when they engage with your product for the first time and are maybe thinking about something similar, looking at your competitors. How do you make that you are still being considered over those few weeks and sometimes months or maybe even a year?
Brian: Yeah. It’s very simple, retargeting. I don’t know if you are aware we were on Shark Tank, actually twice now. Which was a great experience, but if somebody offered me today and said, “Okay. If you could start over, would you choose Shark Tank or would you choose retargeting?” I would choose retargeting every time. While Shark Tank was amazing, first class. I mean, we loved working with Kevin. We wouldn’t want to lose Kevin as a partner. But the benefits of retargeting is … It’s indescribable, just how you stay in front of those prospects and how you can reach them in so many different ways, and to keep your product top of mind. It’s critical.
Felix: Do you do retargeting through Facebook, or what platforms do you use?
Brian: You name it, we do it. Our largest source of traffic comes organic. Google. We use Criteo. We like to do … I’m trying to remember the terminology. It’s more of a pay by click, so we like the rifle approach rather than shotgun. And then on social, Facebook is massive for us. Pinterest and Instagram have really been growing as well. So pretty much all those aspects.
Felix: What does the ad look like when you are using it for retargeting? Is it just showing the visitor the product they looked at? What have you found effective?
Brian: Yeah. I don’t see everyone. We work with a third party called socialclimaxmedia.com out in New York. This guy, he’s our right hand. To hire someone that understands that inside and out is very expensive. So we work with this gentleman named Jefferson. He manages, he creates. I mean, we send him photos and everything else, but he helps create the ads. He creates the campaigns, and based on what people click on, what their interest is. And then we reach out to them in many different aspects. Again from Facebook to, yeah, difference ads based on wherever they go and what they like to click through. Again, you lose that tracking after 30 days, but a lot of people make a decision in 30 days, so we’ve kind of got that really fine tuned for what works.
Felix: And so you’ll retarget them up until the last possible day?
Brian: Even ongoing beyond that. So yeah, absolutely. We hit that pretty hard. It’s a big, it’s our largest expense by far, is retargeting. But if you look at some of the metrics and what you’re trying to accomplish, your return on ad spend, you get somewhere between an eight or a nine. I personally track percent of spend. It’s great to keep it below 10%, but we’ve been as high as 15. It’s just good to know those numbers and build that into your sale, your SG&A sales, general administrative, making sure that you have that money available for it. That’s the only way you can grow, is just continue to advertise.
Felix: Do you only retarget people that are visiting product pages? Or have hit the add to cart button? Or do you retarget everyone, even people that are just visiting the home page?
Brian: Yeah, everyone. Even more proactively, keywords found in Facebook profiles, et cetera, so that haven’t even been to our page. That’s our main source of seeing how people are communicating with each other. The world is changing. Email used to be what we did before, after hard mail. But email’s not effective. Even, we have a list, somewhere around 30,000 emails. Which is great, but our product, people don’t come back. We don’t have a product that’s an annuity or ongoing product, so they buy it once. So we’re better off going after them and saying, “Hey, tell your neighbors about us.” Because they’re not going to … Yeah, we’re more likely to get a sale from their neighbor than we are from them again.
Felix: Right. So you’re using Facebook and other platforms not just for retargeting but also, I guess, what’s it’s called? Prospecting, where you try to reach the customer for the first time. How do you think about testing those kind of ads? After a certain time of course it makes sense to decide, do we keep this running or do we turn it off? How do you think about that decision?
Brian: Well, every time, and really I leave that up to the Social Climax Media, what they do is … So every time we run a campaign they’ll create a couple different versions of it. Different wording, different photos, and then we’ll also hit different demographics, and then interchange those. So we’ll just keep hitting it different ways, and then eventually we find out what works or what has the highest return. And then it allows us to fine tune the next one.
Felix: Makes sense. I want to talk a little bit about Shark Tank. You came into the Tank seeking, I believe this was the first appearance, $80,000 for 10%. You mentioned you ended up working with Kevin. What was that experience like, getting onto the show? First of all, how did you get onto the show?
Brian: My partner emailed me and said, “Hey, we should be on Shark Tank? The auditions are in Miami a day before we’re going to be at this trade show.” I didn’t call him back. I called Delta and I was like, “Hey, how much to change our tickets back 24 hours?” I was expecting 1,000 bucks each or some stupid answer because it was … We were leaving in a week, and when you change your ticket you basically are buying a new one.
The guy started searching and I said, “We’re trying to get on Shark Tank,” and he goes, “In that case I’ll do it for free.” [crosstalk 00:33:02] The whole thing was, I don’t want to say serendipitous but so many situations came together for us. Because over 70,000 people applied for season seven, and we were one out of 180 that were flown out there, and one out of 120 that aired, and one out of 60 that got a deal, one out of 30 that closed, and then I think one of 10 that actually got a Shark Tank update. So our ratio is, we’re pretty blessed in that whole scenario.
Felix: Very amazing. So you ended up getting a deal with Kevin. Basically by working with him, what are some of the best business advice that you’ve gotten from working with him?
Brian: He just throws up the basics, but the most important, blocking and tackling. We’re getting ready to launch and he’s like, “All right, what’s your special?” I go, “What do you mean special?” He’s like, “Okay. You’re going to have their attention for seven days at the most. I want to a Shark Tank special. I want it to end here and do this. I don’t want you to give up more than these margins.” You know, just basic things like that [inaudible 00:34:07] to hear.
It’s just nice having around, and actually his business partner is very present. So when we have more strategic advanced meetings, like we’re getting into the corporate stage right now, he came [inaudible 00:34:26] blown me away. That could more than double our business next year. So it’s just having someone who’s … I think his partner built a $300 billion software business, Kevin’s partner. His name is Alex. It’s just great to work with Alex and the team, a great social media group there as well.
Felix: Awesome. I’m looking at your site here and one things I’ve noticed is that you have in the right hand corner, at the bottom it says, “Message us,” and it opens up Facebook Messenger. Is this something that you’ve added recently?
Brian: Yeah. It’s a great question. Back to my team, I actually can’t answer that one. My marketing manager [inaudible 00:35:06] I do know that we’ve had a click to chat feature for a couple years. But whether that’s a new addition or a part of that. I know we’ve recently switched vendors but I can’t give you the specifics. But if we’re doing it, I’m sure there’s a reason. I put my trust in my people. [inaudible 00:35:24] give more insight on that one.
Felix: So thinking about live chat in general, what do people use to reach out to ask for or ask about during a live chat session?
Brian: You have to realize, people hate to talk on the phone, some people don’t like to type. Whatever you can do to accommodate everybody’s preferences are critical. So allow people to just click a button, have a few words. Done. Give them the quick information that they want. “Hey, I lost my discount code,” or, “Does this come in this color?” And boom it’s done. So we’ve got one person really in charge of customer service. She does an amazing job, but other people are backing up all the time. You know, looking at the chats, making sure that if she’s on the phone they’re covering them. We just try to minimize our response time.
Felix: Speaking response time, I’m sure you had a huge influx of traffic and sales from the multiple Shark Tank airings. What were the results of being on national television?
Brian: The results of national television. I get buddies [inaudible 00:36:34] light-up toilet bowls and filet mignon beef jerky. They can do hundred thousands of dollars the night they air. When you’re not selling a $1,000 piece of fitness equipment, people aren’t going to make a decision that night. They’ll check out your site and we will see our traffic spike to … I’m trying to think back. I think we were like 40,000 viewers our first airing.
It was crazy. When you look at our statistic, it’s mind boggling. But what it did for us is validate us. It’s amazing how just because people see you on TV it validates you. To me what I think the newest form of validation is just ratings. Whether it’s Google ratings, whether it’s your ratings on Amazon. Just when people see four or five stars they know it has to be a great product. But Shark Tank [inaudible 00:37:27]
Felix: Right, that makes a lot of sense. Nowadays with the Facebook running everything, are there other avenues that you’re focused on the marketplace? Sorry, not marketplace, other marketing platforms that you guys are exploring or testing for the first time?
Brian: I mean, we’re getting more, I mentioned earlier, we’re getting more into the Pinterest and Instagram. We use Hootsuite, and so that way everything is much more coordinated if you will. That’s mainly I guess what we’re doing on the marketing aspect of it.
Felix: Got it. So Hootsuite, are there any other tools or apps? Whether they be for marketing or just general business administration that you guys rely on to help run the business?
Brian: Yeah, absolutely. QuickBooks and some inventory plugins that are important. What else? We use Basecamp for project management. We use Pipedrive to manage the larger corporate accounts. I mean, B2C you typically don’t need a CRM solution but [inaudible 00:38:37] more into schools, government, corporate. So it’s important that you manage those relationships, so having something like Pipedrive is critical. And then on Shopify, let’s see, we do product review add-on’s by Stamped.io. We talked about Bread with financing, and then there’s a build your own package product that we added on that’s amazing, and also our store locator as well. So I think that pretty much rounds out our third party apps and additional tools that we use.
Felix: Got it. Now you mentioned that you are now working with corporations, schools and government, and selling to them. What’s that like? How is that different than your experience so far selling direct to consumers?
Brian: Well it’s great, because they’ll buy 10 systems from you at a time instead of one. [inaudible 00:39:33] work with … when distributors come to us, work with them and they seem to [inaudible 00:39:38] relationships and [inaudible 00:39:41] And then on the corporate side we actually have an app now. It’s called PRx Fit. Anybody can go there and download the app [inaudible 00:39:50] workout.
You don’t even need our equipment. There’s a body weight workout you can do when you’re traveling in a hotel room, or if you have our equipment then you can choose, “Hey, do I want [inaudible 00:40:02] worry about strength? Am I looking for endurance?” So there’s some corporate wellness programs that are very stagnant. We’re actually one of the few companies that can not only come in with a mature app, with dynamic programing, and also the actually equipment that really doesn’t take up any space. So if they have a spare office somewhere, they can just throw our equipment in there and throw a TV or kiosk up, or people can use their phones, a few other tools we have beyond corporate wellness program in place.
Felix: What made you decide to go that route, of creating an app?
Brian: We actually have a company that probably should remain nameless, but it’s a Fortune 100 company. They came us. They loved our products and so they wanted to launch actually with 6,000 of their employees, just as a test in three of their offices. We were obviously happy to help, and so it’s been a learning experience for us too. But you know, a lot in life you have to go after people, but this is one of the case where they came after us and we’ve just been responsive and tried to give them everything they need to make it successful, because it’s a great study.
Felix: Did you have to build this app in-house? Was it build by the Fortune 500 company? How was it done?
Brian: I’ve got a friend who’s actually in the business, so we did some white labeling and that allowed us to flip on an app within a few months and worked really closely with him to make it so we can also private label it as well. So it’s one of those things in life, just relationship and right time, right place.
Felix: Got it. Your company’s role, PRx’s role in this is to also provide the content behind the app?
Brian: Exactly, complete managed services. We support a plugin we built into that. We also manage the training and we film all the content as well. So we can actually show workouts occurring in their facilities so it’s more of a seamless integration. People learning how to work out, it’s a lot more clear and concise and it gets people going.
Felix: When you have this app, how is it monetized? Is it by … Well you can tell me, how do you monetize an app that you built that ingrained essentially what it seems like into your business?
Brian: When you say monetize, more or less what’s our revenue model from launching that out?
Felix: Yeah. It makes a lot of sense, you’re creating an app with content that’s focused on attracting your target customers, that’s sometimes displaying your products. So it makes a lot of sense. Is that the main goal of the app or are you selling this to corporations as well? What’s the revenue model?
Brian: You bet. Well really there’s four revenue models. The first one is the free site. It’s good will. It’s getting … It’s marketing. It’s getting people knowledgeable about PRx. Our plan is to always offer that. It’s just a value add. You buy the best equipment and your coach comes with it.
Two is, we have for B2C, we have like [inaudible 00:43:10] dollar a month option where we have [Christine Sabot 00:43:14] who’s 1.4 million followers probably now. She did some programming with us. So we kind of worked with her to launch that programming. It provides, if somebody wants to take it to the next level, she’s there.
And then the last two are kind of the B2B. We can go into, just like a simple gym that may have, they call it an orphan rig. Where there’s a big [inaudible 00:43:39] sitting there and no one’s using it because they don’t have a coach. We can put our monitors up and we can provide instant programming that’s new for the customers and start to get some use out of that rig again.
And obviously the four is more of a revenue model of cost-per-employee. So allow us to roll out programs at less than a dollar a month per employee. So we have four different revenue models there really.
Felix: Very cool. So, prxperformance.com. What are the plans for the next year now? What are you focused on?
Brian: Well, we own the high end sector, which is great. But I think there’s a lot of people out there, both domestically and internationally, that are looking for a [inaudible 00:44:24] solution at a more affordable price. So not giving everything away, we should be able to fill that need in this next year. That, rolling out our barbell collar, and also some of these new corporate strategies. We’ve got our plate full for 2018.
Felix: Certainly sounds like it. Thank you so much for your time Brian.
Brian: You bet. Really appreciate the opportunity again to talk today.
Felix: Here’s a sneak peek for what’s in store the next Shopify Masters episode.
Speaker 3: As I would give these pitches I would realize that people got really excited about features that I knew they weren’t going to use.
Felix: Thanks for listening to Shopify Masters, the e-commerce marketing podcast for ambitious entrepreneurs. To start your store today visit shopify.com/masters to claim your extended 30 day free trial. Also for this episode’s show notes head over to shopify.com/blog.
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About the author
Felix Thea is the host of the Shopify Masters podcast, the ecommerce marketing podcast for ambitious entrepreneurs. Got something to share with Shopify Masters listeners? You can submit your story for consideration.