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How Amazon Became a Blessing and a Curse for Beast Gear

April 23, 2021 |  

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Ben Leonard is a fitness enthusiast who found himself in bed with a heart problem in his early 20’s (he’s fit and healthy now). His doctors told him to rest. Said not to go to the gym, he cleared out his bag and noticed some of the accessories he used had worn out prematurely.

The experience sparked an idea. Leonard decided to launch a brand of fitness accessories made to last longer and cost less than the alternatives. He named his fledging company Beast Gear. He borrowed around £1,000 from his father and ordered 250 skipping ropes with the Beast Gear logo emblazoned on them.

Three years later, Beast Gear was turning over more than £4 million — 95% of which was on Amazon. Worried he had become too dependent on Amazon, he decided to sell and got around three times the profit for Beast Gear.

Leonard shares much wisdom in this episode, including:

  • How to build a brand “off Amazon.”
  • A little trick Leonard used to build raving fans on Instagram.
  • How Leonard used a chatbot to grow his list of subscribers.
  • How to improve your ranking on an Amazon search.
  • How to protect your brand.
  • Multiples benchmarks for e-commerce brands.
  • Why selling most of your products on Amazon could drag down your valuation.
  • Why it’s important to “leave some meat on the bones” for an acquirer.
  • What Leonard would do differently if he had the chance to sell Beast Gear over again.

Leonard’s dependency on Amazon as a sales channel depressed Beast Gear’s value compared to an e-commerce brand that sells through a more diversified group of sales channels. Your dependency on a single supplier is one leg of the Switzerland Structure. We’ll give you a score on this value driver — along with a measure on all eight factors that make up your company’s value — when you get your Value Builder Score.

Show Notes & Links

Beast Gear Site

Beast Gear on Amazon

(1:33) John Warrillow: “the Switzerland structure

(4:25) Ben Leonard: “a condition called pericarditis

(12:43) Ben Leonard: “the way to stand out on Amazon is yes, you need to rank when you launch your products, but you need to build a brand, right? Build a brand which has off-Amazon assets. Your website, your YouTube channel, your TikTok, your Instagram, your Facebook, whatever it is, and use these to help you build an evangelical base of fans to whom, will buy your products whenever you launch them, whether they buy them on your own website or Amazon.”

(15:04) Ben Leonard: “you can go on the Beast Gear website now, and you’ll see that there’s a page about how I am an averagely fit guy who’s into fitness equipment.”

(15:11) John Warrillow: “I love the video

(17:32) Ben Leonard: “the YouTube channel was pretty straightforward. Demonstration videos of how to use the products, so immediately you’re busting objections… and you put a link to the demo video in the PDF guide that gets sent through Amazon when they buy the product, so immediately you’re busting problems before they even occur.”

(18:05) Ben Leonard: “Instagram was huge, and there’s a strategy I can talk about which is straightforward, but hard work. And certainly to scale this, the big guys struggle, but it works like a charm when you’re a bit smaller.”

(21:00) Ben Leonard: “[Amazon] reviews are relatively important, but not that important. What’s more important is your add-to-cart frequency, and then your conversion rate. But, what influences your add-to-cart frequency and your conversion rate? Reviews. So indirectly, they are. Customers do care about reviews and ratings.”

(23:17) Ben Leonard: “because they’re in our chatbot now, they’re, effectively they’ve subscribed. So now when I want to launch new products, I can send a broadcast message to my chatbot subscribers to tell them all about it.”

(30:33) Ben Leonard: “we did our homework, and we came to realize that my product was not infringing on theirs, and my product’s protection was sufficient. And not only that, but we figured out that their product had been developed by an entrepreneur like me and then acquired by this enormous organization, and it had inherited the original patent drawings, which were pretty crude. It turned out their own patent didn’t actually protect their own product. So my lawyers politely said, “Go away”.”

(35:02) Ben Leonard: “Amazon, it’s genius, right? They have access to your account, they can see how well you’re performing, and therefore they’re able to offer you a loan that they know you can pay back, and that you’re going to use it to scale your business and therefore scale their business.”

(37:14) Ben Leonard: “The first order I placed with my supplier was for 500 skipping ropes, and then I grew out multiple products. But just before I sold the business, the last order I placed with the supplier for that same skipping rope was 250,000 units.”

(40:29) Ben Leonard: “I had a choice, I could scale the team and put significant amount of work into that, or I could take some money off the table, and make my family financially secure, and move onto the next project. And in some ways, it was a head-vs-heart thing, but it just made sense for me and my family at that time.”

(42:06) Ben Leonard: “the more you sell through a marketplace like Amazon, this is not quite a hard and fast rule, but your multiple tends to be a little lower. Whereas if you are selling more through your own direct-to-consumer website, for instance, or even in combination with, say, bricks and mortar, you would expect a higher multiple.”

(44:31) Ben Leonard: Thrasio

(45:58) Ben Leonard: “they loved what they referred to… as the moat around the business. So, I’d created a suite of products so if any one product went down for some supply chain reason, I had plenty of other products in there. I had plenty of reviews, and I’d built up all these off-Amazon assets.”

(46:49) Ben Leonard: “I don’t think it’s good to max-out growth and then sell. I think you need to leave something for the buyer, leave some meat on the bone. And that gives them … Because they want to accelerate the growth even further and eventually exit themselves, and they need to see something there to want to take it on.”

(50:21) Ben Leonard: “I actually negotiated a side deal where I would develop products for them and take a commission on those, not, that wasn’t part of the share purchase agreement. I negotiated that on the side… I was one of the first people to do that in this space, actually, because I still had a ton of products in my pipeline.”

(53:45) Ben Leonard: “Selling… I wouldn’t have timed it so that I was backpacking around Italy with my wife and six-month-old baby whilst I was having calls with the potential buyer, for starters. I probably would’ve negotiated harder on deal structure.”

(55:59) Ben Leonard: “deal with somebody who’s got experience on all sides of the equation. They’ve done deals, they’ve sold businesses, they understand the accounts, but they’ve also been in the trenches… deal with a broker who has real-life experience of the industry that you are in and can speak to that from a position of authority.”

About Our Guest

Best known as the founder of Beast Gear, Ben Leonard is the classic millennial entrepreneur. He built a business on a laptop, in a cupboard, in his spare time. The difference? Ben grew an international 7-figure business and successfully exited after 3 years; the business holy grail.

Now Ben is doing it all over again and helping others to do the same with his e-commerce consultancy and e-commerce brokerage.

Consultancy: Ben Leonard Ecommerce Mentorship
Brokerage: Ecom Brokers

Connect with Ben:
On Instagram

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Transcript

John Warrillow:

So, when’s the last time you read a book on selling your company? My guess is – you’ve never read a book on selling your company. Why bother when the only books out there read like textbooks; filled with acronyms and terms you’ve never heard of, written by people who make it their job to make themselves look and sound smarter than you. Why bother?

Well, The Art of Selling Your Business tries to do exactly the opposite. It features the stories of the founders I’ve listened to for the podcast. I’ve taken their best practices, their secret hacks, and bundled them into a storytelling format so that you can take away the key lessons, the action plan, the field guide, without sifting through the boring textbook, that is, most books on the topic of selling your company. You can get it at BuiltToSell.com/selling.

So if you’re a listener of this show, you know that a dependency on a single customer, employee, or supplier or something, we call it the Switzerland structure, and it can make your company less attractive to a potential acquirer. Why? Because acquirers are allergic to risk, and they view a dependency on a single customer, employee, or supplier as something risky. Supplier, in particular, is one that is often misunderstood or overlooked by entrepreneurs. And we’ve seen this recently on the show, Andrew Gazdecki, who I had on the show a couple weeks ago, became too dependent on the iTunes Store. Adii Pienaar, who was on maybe a couple months ago, became too dependent on the Shopify app store. And my next guest, Ben Leonard, became a little too dependent on Amazon.

And to his credit, he worked really hard to build his off-Amazon brand. He’ll describe how he built the company, really from scratch to £4 million of turnover, when he went to sell it to a private equity group building up a presence in the athletic space. Here to tell you the entire story and how he became less dependent on Amazon is Ben Leonard.

Ben Leonard, welcome to Built to Sell Radio.

Ben Leonard:

Hey, John, thanks for having me. Good to be here.

John Warrillow:

Tell us where in the world you are.

Ben Leonard:

I am in northeast Scotland, little fishing town, or former fishing town, south of Aberdeen.

John Warrillow:

Okay. So how does a guy in a fishing town in the middle of rural Scotland build a fitness brand? This makes no sense to me. So tell me the story, tell me about [crosstalk 00:03:15], how this all came about.

Ben Leonard:

Sure, absolutely. So Aberdeen is affectionately known as the oil capital of Europe, and everybody around here works in the oil and gas industry, and I was no exception. My background is ecology, I’m a fully-qualified whale and dolphin nerd, and my job was to tell oil and gas engineers that, “No, you can’t throw that chemical into the sea.” And I enjoyed it, it was good.

But, in late 2015, early 2016, I got quite ill for the third time with a heart problem, and I’m absolutely fine now, but at that time the doctors told me to take all of the drugs, and for about nine months, stop all of my fitness hobbies. So no more CrossFit, boxing, running, throwing weights around.

John Warrillow:

For those of you listening, I’m looking at Ben on Zoom, and you look about 25. I’m like, how did you get a heart issue at such a young age, what’s the deal?

Ben Leonard:

Yeah, sure. I do look pretty young, which is great. I’ll be the best-looking guy in the care home when I’m in my 80s. So I’m 33 now, so I was in my late 20s, and I got, it’s a condition called pericarditis, which is reasonably common, hospitals will have a few cases a year, and particularly in guys in their 20s and 30s. And usually the first time you get it, they give you some anti-inflammatories, boom, it’s done. But if you get it several times, it can become chronic, and then really life-changing.

And so by the third time, they were like, “We need to nip this in the bud, so stop everything and take all of these drugs.” And so I had to take that very seriously, and I’m absolutely fine now. And at that time, my then-girlfriend, now-wife was studying, and was very busy, and I needed something to keep me connected to those hobbies without actually doing them, occupy my mind, and a project, effectively. And I was sadly tidying out my gym bag, and looking at all the gym gear I wasn’t using, and I thought, “Well, I could do a better job of this.” And something came back to me, a couple years prior to this, I’d been training at CrossFit, and at the end of the session, somebody said, “Oh yeah, we beasted it today.” And I was like, “Beasted it, beast, beast. Beast Gear. That would be a cool name for a fitness brand.”

And I forgot all about it. Until this day, two years later-ish, I was ill, and felt like I could do a better job of this fitness equipment. And so began this process of learning by doing, to develop a brand of fitness equipment.

John Warrillow:

Can I just interrupt, I’d love to know, when you looked at your gym bag and looked at the kit there, what was it that you thought you could do better? Was it the quality of the gear, or the branding?

Ben Leonard:

A bit of both. So the branding was okay, but not particularly exciting. But the problem that I felt existed in this space was that high-quality gear existed, but it was extortionately overpriced. So only available to wealthy people or elite athletes, and I felt like too often I was buying equipment which would break down too quickly, and there surely must be a way to develop high-quality equipment that is not extortionate and is reasonably priced.

And as I began to research this, I did discover that indeed, the products that were on the market, that profits that were being made were enormous, and therefore there was a space for me to come in and sell something at a reasonable price for a fitness enthusiast like me, who was not extraordinarily wealthy, but was nonetheless passionate about my fitness hobbies, and I deserved great equipment at a fair price. So I felt like there was a gap for me there, and as it turned out, there was. So what started as a hobby that may earn me some extra pocket money, give me something to do whilst I recovered, turned out I was pretty good at it. I ended up quitting my job, and scaling that business, and-

John Warrillow:

Fill in the blanks for me, though, Ben, because a lot of people have visions for brands, right, brands are sexy, they’re fun, they’re like, “I’ve got an idea for a cool” … I mean, fitness brands, every 20-year-old guy I’m sure has sort of an idea. But in your case, you took it from this idea, and you actually started the company. And I think, in my mind, I’d be like, it would be expensive to manufacture that stuff, how do you build a brand? Fill in the blanks, what were your first steps to going from the idea to actually have a commercial product that was being sold?

Ben Leonard:

Sure. So of course I couldn’t jump to having a whole suite of products, some of them very expensive, in one fell swoop, obviously not possible. So I started with one product, and then built out from there. So the first product I was able to source pretty cheaply. It was a skipping rope, in the States you’d call it a jump rope, and I was using that in my boxing training and in CrossFit. And similar products already existed, but I was able to find a manufacturer and work with them to improve on what already existed, to make some of the components more robust and working in ways that I felt were a little bit superior to what was out there, but nonetheless, the costs were not too prohibitive. So I was able to get these for just a few dollars per unit when I was [crosstalk 00:08:59]-

John Warrillow:

Where’d you sell them?

Ben Leonard:

Where?

John Warrillow:

Mm-hmm (affirmative).

Ben Leonard:

Starting in the UK, and then-

John Warrillow:

I mean what channel, sorry, what channels did you use?

Ben Leonard:

So we started on our own website and on Amazon. So Amazon, and then we used Amazon or I used Amazon to reach customers right across Europe. And then just before I sold, so three years later, we were using Amazon in the Middle East and in Australia, and I was selling to customers on my own website, which I built on the Shopify platform, to customers in the UK. And my plan at that …

John Warrillow:

By the time you sold the company, just remind me, turnover, roughly where you were?

Ben Leonard:

Sure, we were doing about four million British pounds.

John Warrillow:

Got it. And for those, if you want to do the US conversion, is probably six or seven million US dollars depending on where the pound, US dollar is floating at these days.

Ben Leonard:

Something like that, yeah.

John Warrillow:

Okay. And so of that £4 million turnover, what proportion was going through Amazon versus through your own website?

Ben Leonard:

Yeah, the vast majority, we’re talking 95%. And although-

John Warrillow:

Is going through Amazon?

Ben Leonard:

Yeah. Although it’s important to point out that we’re not quite comparing apples and apples there, because Amazon was reaching customers across Europe, Middle East, and Australia, whereas the website was only serving people in the UK. And my plan was to expand my website capabilities. But then came the time to sell, and so I never got to that.

John Warrillow:

So you started with skipping ropes, and then you did expand the product line to include a number of different accessories in the fitness space. My son does some weightlifting, it freaks me out to see him. But he has these wristband things that he puts on his wrist to do like the trap bar, I don’t know what that’s for, but maybe it’s just cosmetic.

Ben Leonard:

Yeah, a lifting strap, it sounds like. So I expanded the range. Really, it was pretty straightforward. It was a question, so partly I had the advantage of I was the customer. So it made sense to simply produce products which solved problems for that particular group of people, and build a brand around that. So each time I developed a product, it was simply a case of, okay, so what makes sense to, A: complement that product, and B: solve related problems or pain points or challenges for that person.

And I was serving, I guess, three main people. I was serving people who were into strength training and powerlifting and that type of thing, people who were into CrossFit and fitness and conditioning, and just generally going to the gym, and then boxing and combat sports.

John Warrillow:

MMA and that kind of stuff, that type of thing.

Ben Leonard:

Yeah.

John Warrillow:

So 95% of your sales were coming from Amazon. I’ve got so many questions about that, because Amazon, I mean, even the name Amazon, the Everything Store, and the Amazon, it’s just, how do you set yourself apart? I’m assuming it’s all about ranking in the Amazon search algorithm. Is that the main way you kind of pop on Amazon?

Ben Leonard:

That is important. That was important several years ago and it’s still important now, but I think it’s important to think about this side of it. So when third-party selling on Amazon became a thing, and for several years after, it was all about just selling stuff on Amazon, right? But when I started my brand, I didn’t even know selling on Amazon was a thing. I was one of those people who thought when you bought it on Amazon, you were buying from Amazon. So right from the start, I was creating a brand that I was passionate about, and I believe the way to stand out on Amazon is yes, you need to rank when you launch your products, but you need to build a brand, right? Build a brand which has off-Amazon assets. Your website, your YouTube channel, your TikTok, your Instagram, your Facebook, whatever it is, and use these to help you build an evangelical base of fans to whom, will buy your products whenever you launch them, whether they buy them on your own website or Amazon.

And yes, I was getting the vast majority of sales from Amazon, but Amazon provided me with a tremendous opportunity. And I was making efforts to switch the balance a bit to get, drive some more sales off of Amazon.

John Warrillow:

How did you build the brand? I mean, when I think of fitness apparel, my mind goes everywhere from, is it Everlast, like the belts that the weightlifters wear, is that called Everlast, is that the brand?

Ben Leonard:

Everlast is predominantly a boxing brand, but yeah, they’ve branched out to stuff like weightlifting.

John Warrillow:

Okay, so I think of everything from Everlast to Peloton, and Under Armour, and all these brands that are creating lifestyle brands in the fitness space. But I mean, they’ve got hundreds of millions if not billions of turnover. How did you possibly build a brand offline, off-Amazon, against those guys?

Ben Leonard:

So the great thing is, when you’re a small business like me, or … not like me, like my business, we have the benefit of, I like to call it micro-agility. We’re a little nimble speedboat, and we can turn around very quickly. They’re an enormous cruise ship. And cruise ships are wonderful, they can take you to great places, but they take half a day to turn around. And that’s why when you search on, for instance, Amazon, you’ll find that, if you search on Amazon for weightlifting straps, you’ll find that page one and page two is absolutely dominated by small businesses, sometimes just run by somebody on a laptop in their spare room, sometimes with a team. Because these guys are agile, and have learned how to build a brand and communicate directly with their customers in such a way that they build up almost a cult-like following of evangelical fans, right?

People buy from people. And until you’re Nike, they’re not really buying from your brand, they’re buying from you. And so I positioned myself as an average Joe, you can go on the Beast Gear website now, and you’ll see that there’s a page about how I am an averagely fit guy who’s into fitness equipment-

John Warrillow:

I love the video. You were so humble about it, because when I think of like, okay, a fitness brand, this guy’s going to be like 250 and completely buff, and then you’re like, “I’m just an average Joe who’s pretty fit, but I’m not Arnold Schwarzenegger.”

Ben Leonard:

Yeah, that’s part of the idea. We deserve great fitness equipment. If you want to be the heavyweight boxing champion of the world, great. If you’re really overweight and you just want to run your first 5K, also great. You’re all beasts, come join my tribe, you’re welcome. Right?

John Warrillow:

But that’s hard to thread the needle, because appealing to the fat guy who wants to run his first 5K, doesn’t that undermine your credibility as a brand with the guy who wants to be the heavyweight boxing champion of the world? Aren’t those two things competitive with one another?

Ben Leonard:

Maybe, but it worked. And what I would say is that I think, I spotted that the fitness industry was or is still very elitist, and people were tired of being spoken down to and made to feel rubbish because they’re not the strongest or the thinnest or the fastest, and I’m saying, if you are, that’s fantastic, welcome to our tribe. And if you’re not, that’s okay, welcome to our tribe. So long as you’re setting some goals and getting after them, then you are a beast, and don’t let anyone tell you otherwise.

John Warrillow:

You’re obviously a savvy guy, smart marketer, in your own mind, did you know that being inclusive like that would appeal? By saying, “If you want to be the heavy weightlifter, Beast Gear equipment will work for you,” did you know that in the back of your mind, 99.9% of people who buy Beast Gear stuff are not going to be the heavyweight champion of the world, and by saying that you could be, it sort of legitimizes the gear, but at the same time, opens it up for everybody who just wants to get a little fitter.

Ben Leonard:

Yep. And it meant I was able to have extraordinarily fit athletes representing the brand, and use real people, customer-generated, user-generated content in my content to say, “And here’s the social proof of real people doing it, too.”

John Warrillow:

So talk about the speedboat tactics. You mention you’ve got a website, I watch the YouTube video on your site, so I’m assuming you have a YouTube channel where you had-

Ben Leonard:

Yeah, yeah.

John Warrillow:

What did you put up on the YouTube channel?

Ben Leonard:

I mean, the YouTube channel was pretty straightforward. Demonstration videos of how to use the products, so immediately you’re busting objections. Somebody contacts you through your chatbot or whatever it is, or Instagram, “Hey, I’m having trouble with this,” well, “Happy here to answer any questions, but first, here’s the demo video,” right? And you put a link to the demo video in the PDF guide that gets sent through Amazon when they buy the product, so immediately you’re busting problems before they even occur. So that was one of the main things [crosstalk 00:17:57]-

John Warrillow:

Got it, so you got a website, you got a YouTube video. What other tactics did you use to build this brand in a sort of nimble way?

Ben Leonard:

Instagram was huge, and there’s a strategy I can talk about which is straightforward, but hard work. And certainly to scale this, the big guys struggle, but it works like a charm when you’re a bit smaller, and here it is; especially if you’ve got a product or a brand which is very Instagrammable, so if you’ve got a food-based brand, or an arts-and-crafts-based brand, or a fitness-based brand that people like to post on something like Instagram, this’ll work great.

So somebody posts themselves in the gym with your product, they’ve just done a deadlift personal best, and they’ve tagged you and they’ve used your hashtag. You’re going to like their post, you’re going to comment on it and congratulate them on doing such a great job. Then you’re going to look at their profile, and take at least 30 seconds to scan through their profile and absorb some facts about them. So let’s say it’s Dave from London, right?

John Warrillow:

Sure.

Ben Leonard:

Now you’re going to private message him. So Dave from London has just posted on Instagram of himself with his new weightlifting belt from Beast Gear, and he’s absolutely stoked about it, and then the brand personally contacts him on Instagram, and they say, “Hey Dave, saw you did a great job with your lifting, that’s fantastic, and I saw your post from a couple weeks back with your squat personal best as well, that was amazing. See you’re in London, that’s my favorite city in the UK, enjoy your training.” Right? The guy’s blown away with the attention you just paid to him.

You’re going to maybe spend a few minutes just having a back and forth conversation. Build up some reciprocity and some goodwill. Hit him with, “Well, Dave, great talking to you. If you want anything else, here’s a voucher for 10% off, head over to our website.” The goodwill he now feels toward you is phenomenal. He has an enormous amount of reciprocity. “Oh, by the way, Dave, where did you get our product?” Dave says, “Well, it was actually on Amazon.” “Well, Dave, if you’ve got a spare 30 seconds, you wouldn’t mind just heading over to Amazon, leaving a review, would you?” And he’s just going to do it, right?

Nike aren’t doing that. Adidas are not doing that, Reebok are not doing that. And there got to a point where I couldn’t do that on my own, so I outsourced it to a team.

John Warrillow:

And Ben, in the early days, were you personally the one responding on Instagram, saying, “Hey, congrats on the squat?”

Ben Leonard:

Yes. But of course, that became unsustainable, and so I had to outsource that.

John Warrillow:

Good for you, that’s the kind of guerrilla marketing that is folklore among entrepreneurs, I love it. Okay, so-

Ben Leonard:

Yeah, it takes work.

John Warrillow:

Yeah, no, I don’t doubt it at all, and it makes passionate fans for your product and obviously tons of Amazon reviews… How important are Amazon reviews to ranking in the search algorithm?

Ben Leonard:

Initially, so I’m going to kind of sit on the fence here. The search algorithm in and of itself, my understanding is reviews are relatively important, but not that important. What’s more important is your add-to-cart frequency, and then your conversion rate. But, what influences your add-to-cart frequency and your conversion rate? Reviews. So indirectly, they are. Customers do care about reviews and ratings. Yes, they are really important.

John Warrillow:

Got it, so I want to go back to building this brand. Again, Peloton, public company, billions of dollars in market cap now, they’ve got all the money that they could possibly want to build fitness apparel brand, how did you compete? So you had Instagram, you had YouTube for the videos on the demos, you had a website. What else did you do to build this brand like a speedboat?

Ben Leonard:

Chatbots were important.

John Warrillow:

What’s a chatbots? Chatbot?

Ben Leonard:

So a chatbot is, most people listening will be familiar with the Messenger app, owned by Facebook, formerly known as Facebook Messenger. And a chatbot is essentially an automated series of messages which you can interact with in Facebook Messenger and it feels a little bit like you’re talking to a human being.

And so I would leverage it like this. Customer would purchase the product, whether they got it on my website or Amazon, doesn’t matter. And inside of the product packaging, but also on the PDF that would be attached to an email when they bought it would be, we call it an insert, but essentially a leaflet saying, “Head over to this link and you’ll get your user guide, including demonstration video, and a voucher to get X% off.”

So they would type in the link, or click the button if they’re on the PDF, and boom, Messenger would open. And it’s great if it happens on your phone, because it looks really good on your phone. And inside of here, we’re immediately going to deliver on what we promised, so we’re going to give them a user guide, a link to the demonstration video. So we’re immediately stopping any possible problems before they started, which will help reduce any potential negative reviews. Then we’re offering people the opportunity to contact us directly there for any customer service issues. So immediately they have a point of contact, so they feel like this brand that I’ve just purchased from cares about me and has actively gone out of their way to give me an easy solution to get access to them.

And because they’re in our chatbot now, they’re, effectively they’ve subscribed. So now when I want to launch new products, I can send a broadcast message to my chatbot subscribers to tell them all about it. Whether I want to drive them back to Amazon or drive them to my website. And if I have an end-of-season sale, I can tell them all about it. Or I can just give them more value by telling them about the fantastic new article I wrote about how to improve XYZ in their training.

John Warrillow:

Love it. Did you set yourself up as a personal brand, like, “Look at me, I’m really fit, look at me, I’m just an average Joe and I can now bench press 250 pounds,” did you personally play the role of sort of the personal brand for Beast Gear?

Ben Leonard:

No. It was always about the Beast Gear brand, but it was just a case of, if you want to look deeper, here I am, and I’m an average Joe. So when you joined up-

John Warrillow:

So it’s just behind the scenes.

Ben Leonard:

… the first couple of emails I’d introduce the brand, I’d introduce myself. But it was never about some sort of story of how I was unfit and then I got fit. I think people are tired of that type of thing, and I just wanted to be, rather than talking about myself all the time, delivering value. So I would create articles and useful content that provided helpful, free, engaging, compelling information, which helped people in their fitness goals.

And in doing so, you’re constantly reminding people about the brand, reminding them that you exist and you’re here to solve problems for them, and keeping the brand top of mind and building this goodwill. So when it is payday and it’s time for them to get some new equipment, they’re going to come back to you.

John Warrillow:

Ben, I got to ask you. You’re the dolphin guy.

Ben Leonard:

I am the dolphin guy.

John Warrillow:

And yet, hearing you talk, it’s clear you have an incredible sense of human behavior, human buying behavior, human emotion. I would say you’re probably off the charts in terms of emotional intelligence. Where does that come from? You’re the dolphin guy.

Ben Leonard:

Yeah, I’m still the dolphin guy in a amateur kind of way, just not as a professional.

John Warrillow:

No, but what did you do as a kid, what kind of environment did you grow up in? That kind of stuff.

Ben Leonard:

Yeah, it’s interesting. I didn’t know I had an entrepreneurial spark until I did this, and now I have entrepreneurial ideas coming out of my eyeballs, almost so many that I can’t keep up, and they’re kind of in a pipeline [crosstalk 00:25:41]-

John Warrillow:

But your mom and dad must’ve been empathetic, they must’ve been, they were really strong empathy people, no?

Ben Leonard:

I grew up in a really loving, happy household, and I was very lucky in that respect. My parents worked really hard for my brother and I, and we never went without. They came up to the northeast of Scotland for the oil industry, but they both came from pretty modest backgrounds. My mum’s parents, they ran a toy shop, and a sports shop, and my dad’s dad had some of his own businesses, and then he passed away, and his mom was the receptionist in a doctor’s surgery. They worked super hard to get to where they were, and then I was fortunate enough to be able to go to university twice, and get a good job, and then this happened, and everything changed.

John Warrillow:

I’m sure you got tons of advice from your mum over the years, we all kind of absorb it through osmosis. Do you remember one lesson from her that seems to stick out in your mind from your childhood?

Ben Leonard:

Wow. Getting deep. There’s been quite a lot. One from her, I guess, was, I don’t know why this sticks out, because there’s been so many, but this one was: “Least said, soonest mended.” So sometimes it’s better just to, maybe somebody has wronged you or whatever, or you’re upset about a situation. Sometimes it’s better to just be dignified and say nothing, and show a bit of humility, and rise above it, and kind of show who you are by getting on with things in the right way, and perhaps responding in the right way, rather than maybe lashing out, or, “I’ll show you,” that type of thing.

John Warrillow:

I love that. Least said … Say it again?

Ben Leonard:

Least said, soonest mended. I don’t know why that stands out. I think more with my mum it’s not so much things that she sort of said directly, or said, “Here’s a lesson for life,” it was more just the way she always conducted herself, just in being a great person, I think she was really good at raising my brother and I because she grew up with two brothers, so she was really good with boys.

John Warrillow:

She took none of your BS.

Ben Leonard:

Yeah, yeah, precisely. Yeah.

John Warrillow:

I love it. Well, obviously again, the intuition you have around human behavior is clearly, spells out in spades and it contributed to the success of your company. You mention there was a, offline, before we hit record, there was sort of a story around the IP associated with Beast Gear. Can you talk a little bit about that?

Ben Leonard:

Absolutely. So a few products in, right, the brand is taking over nicely. I’ve had an idea for a new product. A product already exists in the market at this time to solve the same problem, to function to solve the same problem, but it could be improved on. And so I developed a better product to serve the same function, but which distinctly looks and appears different.

John Warrillow:

Okay. Are you intentionally not saying the name of the product because you could get in legal trouble?

Ben Leonard:

I don’t know if I would get in legal trouble, but I just don’t want to [inaudible 00:29:21].

John Warrillow:

It’s a fitness brand, fitness-

Ben Leonard:

It’s a fitness-

John Warrillow:

… product …

Ben Leonard:

Yeah. And-

John Warrillow:

You saw it, and you’re like, you can do better.

Ben Leonard:

I can do a better job of this, and it’s ridiculously overpriced. So I designed another one, a better one, and had my design protected in a registered design, by a really, really, really good intellectual property attorney. And my product gets development, starts selling, does tremendously well, overtakes the existing product, because A: it’s better, and B: I’m not ripping people off.

The existing product is owned by an enormous organization, who try to sue me. They send me letters in German. Now, the reason they could do this is because I was selling in Germany. So they could come at me in whatever marketplace they wanted, and they wanted to make my life-

John Warrillow:

Sprechen sie Deutsch, Ben?

Ben Leonard:

Exactly, right? They wanted to make my life as difficult as possible. So they come to me through German lawyers, it’s a Canadian organization, and they basically say, “Stop selling, or we’re going to come down on you like a ton of bricks.” And they wrote to Amazon and had Amazon suspend my product, and unfortunately Amazon tends to shoot first and ask questions later.

So my attorneys took the time, and over a period of two to three weeks, we did our homework, and we came to realize that my product was not infringing on theirs, and my product’s protection was sufficient. And not only that, but we figured out that their product had been developed by an entrepreneur like me and then acquired by this enormous organization, and it had inherited the original patent drawings, which were pretty crude. It turned out their own patent didn’t actually protect their own product. So my lawyers politely said, “Go away, otherwise we’re going to actually go to court and have your patent effectively illegitimized,” which would open up the market to everybody, and they really wouldn’t like that.

John Warrillow:

Ben, I just need to ask you, what is the difference between a patent and a registered design?

Ben Leonard:

Okay, so caveat, I’m not intellectual property attorney, but I understand, it is mostly a European versus North American thing, and that is the difference. So in the US and Canada, you have function patents, essentially, and design patents. And one pertains to function and one pertains to design. In Europe, we have function patents and we have registered designs, which protect the design.

John Warrillow:

Got it.

Ben Leonard:

So anyway, they went away-

John Warrillow:

Finish the story.

Ben Leonard:

… I got my product reinstated on Amazon. I asked them to reimburse me for the lost sales that I had incurred during the time my product was suspended. They went quiet and never came back to me. But my product continued to go strong and became the leader in that space, and I won. It was an incredibly stressful time, but the moral of the story is get your intellectual property defensive strategy in place early, and use professionals.

I see people all the time saying, “Oh, I want to do it myself, it’ll only cost me a few hundred pounds or dollars,” don’t. [crosstalk 00:32:27]-

John Warrillow:

What did it cost you to create the registered design, in legal fees, and then what did it cost you in legal fees to defend it?

Ben Leonard:

Okay, to create the design probably cost me in the region of £1000, so whatever that is in dollars, 1500, 2000 or something. And to defend the whole thing, 10 to £15,000.

John Warrillow:

Got it.

Ben Leonard:

Whereas, if I had nothing or had done it all myself, what I would’ve done myself would’ve been insufficient, and if I had nothing, well, then I would’ve been in big trouble, right? And I see it all the time in the Facebook groups and the forums, with trademarks in particular, people say, “How much will it cost me to do a trademark?” And people will write in saying, “Oh, don’t worry, you can do it yourself for a few hundred pounds or few hundred dollars.” It’s like, well, yes, you can, but what you get will be a trademark, but it won’t be a broad protection of everything you need. And I’m all for bootstrapping your business and saving money. When it comes to intellectual property, you’ve got to get it done by an expert. You just have to.

John Warrillow:

Yeah, well-said indeed, and agreed 100%. So one of the questions that I’ve had percolating in my mind is how did you finance this business? Because as I understand, this kind of business, you’re having it manufactured overseas.

Ben Leonard:

Yep.

John Warrillow:

You’ve got to pay for the container pretty early, usually when it shows up at the port. And then you kind of sell it through, and then you get a check from Amazon months later. This sounds very expensive to finance. How did you do it?

Ben Leonard:

Cash flow can be really tough in this type of business.

John Warrillow:

By the way, just confirm that was the model, like the container, you buy the container …

Ben Leonard:

Pretty much. More or less. So as the business scaled, and my relationship with the suppliers improved, I even went out to China. I manufactured mostly in China and the Middle East, I even went to China to meet some of them, I’d meet them at trade shows in Europe, pre-COVID, and I was able to negotiate better terms. But more or less what you said is true.

I was fortunate in that when I started doing this, Amazon used to pay out on my account every day.

John Warrillow:

Wow.

Ben Leonard:

So these days, people wait a fortnight. And that account-

John Warrillow:

A fortnight is two weeks.

Ben Leonard:

Yes. And even after they started doing that, my account was grandfathered into the daily payment. So I was getting daily disbursements from Amazon, which was extremely helpful. But yes, cash flow can be a big issue, and one of the things I was very grateful for was that after … Because Amazon, it’s genius, right? They have access to your account, they can see how well you’re performing, and therefore they’re able to offer you a loan that they know you can pay back, and that you’re going to use it to scale your business and therefore scale their business.

So they started to offer me loans. I would log into my Amazon account, it says, “You’ve qualified for this loan.” I would take the loan, at an extremely low interest rate. I was able to pay it back, and bingo, they offer you another loan. So that helped me to scale. So all of those things came together in the perfect storm of helpfulness, if you like, which was great. [crosstalk 00:35:33]-

John Warrillow:

But how did you get-

Ben Leonard:

… of the business.

John Warrillow:

That’s important to know. How did you get the first ship financed? Did you borrow money, did you raise some money?

Ben Leonard:

The first order I placed with my supplier was 500 skipping ropes or jump ropes. And it cost me something like two and a half thousand bucks. I think I paid for about half of it, and I borrowed about half from my dad. I was very fortunate that they did that for me. And then during the first year, I suppose, of the business, I think I borrowed around 10 grand off my parents in total, and I recognize not everyone is fortunate enough to be able to do that. But I think if they hadn’t lent me that, I’d proven the concept, and I would’ve borrowed that from somewhere, probably more, in fact.

But then, it really took off, and with the benefit of Amazon loans, I was able to scale the business and eventually got it to a point where I was able to start paying myself and quit my job. So the first 12 months, the real grind, that can be tough.

John Warrillow:

Other than the small amounts from your parents, did you raise any external money before [crosstalk 00:36:45]-

Ben Leonard:

Nope, it was all organic growth, I guess, if you like. To put it in context-

John Warrillow:

God, this is the most fantastic sort of entrepreneurial story, it’s a sexy industry, it’s just awesome. I love it.

Ben Leonard:

I mean, there’s a lot of serendipity, I guess, and things coming together. I don’t want to say luck, because I worked very hard at it, and so that, it’s not, you can’t just put things down to luck. But I want to give you the context, right, of how this grew. The first order I placed with my supplier was for 500 skipping ropes, and then I grew out multiple products. But just before I sold the business, the last order I placed with the supplier for that same skipping rope was 250,000 units.

John Warrillow:

Wow.

Ben Leonard:

So the rapid growth in three and a bit years was, when I had no background in business and started it as a hobby, and I had absolutely no idea where this was going to take me, and I’m just tremendously grateful that it happened that way.

John Warrillow:

How much of your business was skipping ropes? On a percentage basis.

Ben Leonard:

Ooh. Now, bear in mind, I brought out three models of skipping rope, and actually have just helped the new owners launch another one. So it was a large proportion, and by the end, it was something like 40%. Maybe more like 35.

The reason for that was we became very well-known for the initial flagship product, which was called the Beast Rope, and then the Beast Rope Pro, and the Beast Rope Elite, and just launched the Beast Rope Fire. It simply made sense that people were searching for skipping rope, and if we were the ones to offer a range, we were positioned as the skipping rope experts. And it didn’t really matter which one they bought, so long as they bought from us.

John Warrillow:

Did you ever consider just doing skipping ropes?

Ben Leonard:

No, because there came a point at which, because I needed to have something else to sell my customers. So somebody would buy a skipping rope, and then either they were buying a skipping rope because they were interested in CrossFit, in which case I had plenty of other stuff to sell them, or they’d bought a skipping rope because they were interested in boxing, in which case I also needed some other products to sell them. So I didn’t want to just do skipping ropes, because I would struggle to sell them very much else.

John Warrillow:

Got it.

Ben Leonard:

And in any case, I didn’t think that was particularly exciting.

John Warrillow:

Let’s get into the sale, because I could talk to you about this business forever. I think it’s so awesome. Let’s get into the sale. So you topped out, I think, around £4 million turnover. Did you have any sense of what the company might be worth as you were growing it? Had you heard multiples in the industry?

Ben Leonard:

It wasn’t until late 2018 that I really started to give it some thought. And then I made the decision, I remember when I made the decision. I was at a trade show in February 2019 with a friend who wasn’t in the fitness space, it was a fitness trade show, but he was looking at getting into it. And we were having a conversation, and he convinced me, “You really need to start thinking about this, because so much of the business is tied up in Amazon, that if anything were to happen and somebody in Amazon was to press the big red button…” You do hear horror stories, even though I was squeaky clean, playing all the rules, abiding by all the rules, it was very reliant on one sales channel, albeit across multiple Amazon marketplaces, internationally.

John Warrillow:

Sure.

Ben Leonard:

And I was at a point in my life where my wife was pregnant, we wanted to move house, still young. Still very passionate about the brand, but it was growing at such a rate, and I was running around like a headless chicken. I had a choice, I could scale the team and put significant amount of work into that, or I could take some money off the table, and make my family financially secure, and move onto the next project. And in some ways, it was a head-vs-heart thing, but it just made sense for me and my family at that time.

John Warrillow:

Yeah, yeah. What did you think it was worth?

Ben Leonard:

That was hard to say, because multiples in e-commerce, particularly, this is 2019, were and still are lower than a traditional multiple, right? So whereas you might expect a five, six, or 7x multiple-

John Warrillow:

Of EBITDA, or …

Ben Leonard:

Of EBITDA, or sales discretionary earnings, we were talking more in the region of three. And so after I became to understand, just from some general research, that this was the kind of multiple that I might expect, whilst on the one hand I was a little disappointed that that’s just what it was in e-commerce, that still represented a significant sum of money for me and my family. And therefore, I decided to start making moves, this was early 2019, towards selling the business.

John Warrillow:

I’m assuming when you say three times profit for e-commerce company, I’m assuming that’s an e-commerce company that sells the majority of its products through Amazon.

Ben Leonard:

Yeah, yes, exactly. So the more you sell through a marketplace like Amazon, this is not quite a hard and fast rule, but your multiple tends to be a little lower. Whereas if you are selling more through your own direct-to-consumer website, for instance, or even in combination with, say, bricks and mortar, you would expect a higher multiple, yeah.

John Warrillow:

Yeah. And that’s simply just because the dependency on Amazon is dragging down the valuation.

Ben Leonard:

Exactly, and also because when this first kicked off, this whole idea of buying and selling e-commerce businesses, which I still find this quite remarkable. The internet has existed for decades now, and we’ve been buying and selling products online for a long, long time. And yet, up until just a few years ago, people believe that if it didn’t have a door and a roof, you couldn’t buy or sell it. And the idea of … People looked on purely e-commerce businesses with disdain, as not a grown-up, big boy business. Which is simply not the case. And multiples now are higher than they were a couple years ago.

John Warrillow:

Even for Amazon-dependent companies?

Ben Leonard:

Oh yeah, yeah, yeah, yeah. Whereas three was pretty good, now we’re, four is more normal, and even higher, five and a half can be achieved these days.

John Warrillow:

Got it. So early 2019, your buddy’s like, “Hey, man, you’re super dependent on Amazon, you built a great business, you could make yourself financially independent by just selling it. What are you doing?” So he convinces you. What’s the next step?

Ben Leonard:

Yeah, so at this point, so for anyone listening who is in the e-commerce space, you may be aware that there are now venture capitalist groups who’ve raised a whole bunch of money to buy businesses at this point, that ecosystem didn’t exist. I had no idea who would potentially buy my business. So I contacted a broker. This broker I contacted because a friend of mine had, a different friend had sold a couple of businesses through it to private individuals. And my understanding at that point in time was I would use this broker, and they would find either a private individual, or a competitor, or another company who for whatever reason would be interested in buying my business.

As it turned out, it was actually one of the big, we’ll call them an aggregator, big aggregators in the e-commerce space who bought my business, it was, and I’m allowed to say this, it was public domain, it was Thrasio, who are the most famous. They actually formed in September 2018, and they made me the offer in September 2019, just a year after they’d formed.

John Warrillow:

And Thrasio is a private equity group that’s rolling up these e-commerce brands.

Ben Leonard:

Yup, precisely. So they’re rolling up e-commerce brands, so they’ll roll up a bunch of sports brands into a sporting kind of umbrella, and they’ll roll up a bunch of garden brands and pet brands, and then they’ll sell them on for a much, much higher multiple down the line. And they’ve raised something like close to $3 billion with a B, it’s mindblowing.

John Warrillow:

To make these acquisitions. So how did you get connected to Thrasio?

Ben Leonard:

It was the broker. So the broker, they connected me with Thrasio. So these days, everyone in e-commerce has heard Thrasio. So this is mid-2019. Nobody knew who they were. So I’m still grateful to the broker for doing that, and they introduced me to Thrasio, and Thrasio made me an offer, and after a little back and forth, the deal was agreed.

John Warrillow:

Let’s fill in some of the blanks there. So you meet Thrasio, what was their initial reaction? [crosstalk 00:45:39]-

Ben Leonard:

They loved it. They loved it. I was fortunate-

John Warrillow:

What was it they loved?

Ben Leonard:

They loved the brand. And I recall on the call with one of the co-founders, to begin with, he said … The logo of Beast Gear is this kind of angry-looking gorilla. He said, “I love the badass logo.” And they loved what they referred to as, and it’s a term I like to use a lot, as the moat around the business. So, I’d created a suite of products so if any one product went down for some supply chain reason, I had plenty of other products in there. I had plenty of reviews, and I’d built up all these off-Amazon assets that we spoke about earlier, the social media, the YouTube, the chatbots. And I’d built up so much goodwill, and this sort of evangelical following of the brand, that they would buy anything that I launched.

And they saw the upside of taking it to the US. So I was only selling in Europe, and Australia, and the Middle East. They saw the huge opportunity of going to the US.

John Warrillow:

Why didn’t you do that yourself?

Ben Leonard:

I was going to, when I had this conversation with my buddy and I decided that, you know what? The time is right to start thinking about selling. And I think it’s important, I don’t think it’s good to max-out growth and then sell. I think you need to leave something for the buyer, leave some meat on the bone. And that gives them … Because they want to accelerate the growth even further and eventually exit themselves, and they need to see something there to want to take it on.

John Warrillow:

Got it. What was your reaction to … How did the conversation of price come up? Was it oral, was it over the phone, was it in person, or is it on paper?

Ben Leonard:

So the, I believe the offer came through on paper.

John Warrillow:

Had you talked before that though, like had you guys [crosstalk 00:47:21]-

Ben Leonard:

Yeah, so the broker had valued the business at around about 3.3 or something like that, multiple. And I was certain that the potential buyer would come through with a lower offer, because that’s just kind of how it works, it’s like buying a house. And indeed they did, but considering, just to think about the environment, the marketplace for buying and selling e-commerce businesses in 2019, what they came back with, which is more or less a fraction under three, was not, in that environment, a derisory, low-ball offer. And after a little back and forth on deal structure and things like what we included in terms of stock, how much was upfront and how much was on the earn-out, we arrived at a deal pretty quickly.

John Warrillow:

What proportion was on an earn-out?

Ben Leonard:

Ooh, it was, the majority was upfront, I’ve got some numbers in front of me, just a sec. Earn-out was something like 40%, and that might sound pretty high, and it is, considering, again, considering where we are now in this environment, that is high. We’re seeing a much higher percentage upfront now in these deals, more like 80, 90%. But the, what should we call them? The targets that needed to be hit during the earn-out were very realistic and attainable, and in fact we’re going to hit to all of them.

John Warrillow:

What were they tied to? Were they tied to the top line, or-

Ben Leonard:

Yeah, top line, yeah. And the business is going to easily hit all of them. We’re in the second year of the earn-out now.

John Warrillow:

Got it. And with the earn-out, is it a three-year earn-out?

Ben Leonard:

It was two.

John Warrillow:

Two years.

Ben Leonard:

And again, so now we’re seeing, usually earn-outs are more like one year now.

John Warrillow:

Got it. And so the two-year earn-out tied to top line sales numbers …

Ben Leonard:

Mm-hmm (affirmative).

John Warrillow:

Is that right?

Ben Leonard:

That’s correct, yeah.

John Warrillow:

Okay. How did you get comfortable? You hear stories about earn-outs where the acquiring company doesn’t give the budget to the entrepreneur to hit their earn-out, because they missed some sort of goal or whatever. Were you concerned that, or how did you ensure that you were going to have the support of Thrasio to meet those numbers?

Ben Leonard:

Yeah, so there’s a funny one. First of all, I have to get my head around this idea that they’re calling it an earn-out, and yet I’m not earning it. Like they’re doing it, and I have to have my faith in that they’re going to do a good job of it.

John Warrillow:

Right, weren’t you still running the company at the time? During the earn-out?

Ben Leonard:

Nope, nope. Nope. Nope, not at all.

John Warrillow:

Wow.

Ben Leonard:

So I was giving them some advice and helping to launch product … I actually negotiated a side deal where I would develop products for them and take a commission on those, not, that wasn’t part of the share purchase agreement. I negotiated that on the side.

John Warrillow:

Wow.

Ben Leonard:

I was one of the first people to do that in this space, actually, because I still had a ton of products in my pipeline, right? Which is why I knew we were going to hit the targets, because we were going to launch all these new products. And also because I knew that there was tons of growth with what I just launched as well. But the first thing I had to just get around my head was, well, look, how much money am I taking out of the business? How much am I paying myself? How much are they offering me upfront? Divide that number by that number, and that’s how many years it’s going to take me to earn that money. Complete no-brainer, right?

They paid me well over $1 million upfront, and if I wanted I could’ve retired on that, if I had invested smartly. And I haven’t retired, that’d be very boring. But nonetheless, it was, for me and my family at that time, it just made sense, right? And it wasn’t a case of, “Oh, but if I just hang on, I could get so much more.” That wasn’t it, it was just the right thing for us.

John Warrillow:

It sounds like it. People are listening, though, and saying, “Wait a minute, he left 40% on the table?” And 40% earn-out is not unusual at all, there’s lots of people who do that, but they’re still running the company. You left and let them run the company. How did you get your head around that? You must’ve put some guard rails in place to ensure that they were going to [crosstalk 00:51:53]-

Ben Leonard:

Yes. So I have had a significant role in some of the strategy, particularly the off-Amazon stuff on the website. So the split is no longer 95-5, for instance. The website has continued to grow after, because I’ve had input, purely … Advising, basically. Some people, they have their transition period, which is typically they’ll provide some email support and they’ll do some calls for the first several months after the deal is done, then that’s it, they walk away. I have chosen to check in much more frequently in order to advise on the strategy for the brand. The remote team that I put in place on the social media and that type of thing have continued to run with all the kind of micro-agility things that I created, right? And in fact, they’re now pushing them into their other brands. And therefore, I was confident that those cogs would keep turning, right, without me. And therefore, I was confident that this earn-out period would go well, and indeed, it has.

John Warrillow:

Got it. And did they stagger the payments over, did you get a tranche after year one and another tranche at year two, or is it all back-ended at the end of year two?

Ben Leonard:

It was year one and year two. So got the upfront, and then got … So the upfront portion of the share purchase, they bought the entity, the limited company. And then there was the cash in the back and the stock, and then year one payment and year two were halfway through.

John Warrillow:

Got it, got it. If you could do the whole thing again, not building, necessarily, the brand, but selling the company, what would you do differently?

Ben Leonard:

Selling… I wouldn’t have timed it so that I was backpacking around Italy with my wife and six-month-old baby whilst I was having calls with the potential buyer, for starters. I probably would’ve negotiated harder on deal structure.

John Warrillow:

Like what, what would you’ve changed?

Ben Leonard:

More upfront, yeah, more upfront. Would’ve pushed a bit harder on the multiple, I suspect. But having said that, is that even a fair comment considering the environment that this market was in a couple years ago? This has moved so fast, this space is moving at an incredible pace. I don’t want to be too hard on myself for that.

I used a broker, as we mentioned, and something happened during the process where my accountant and I caught a calculation error that they messed up, and they undervalued the business by a significant amount. And after we caught this mistake, I negotiated down their commission. I think I ought to have negotiated harder on that, because when we … After identifying that mistake, which would’ve cost me over a million, right, the commission they were taking, after me identifying this mistake, was higher, still higher, than they would’ve taken before, even after I negotiated them down on the commission. So I ought to have gone harder on that.

John Warrillow:

What advice would you have for another entrepreneur looking to find a great broker or great M&A professional? If you were having a beer at a pub with someone and said, “I really need to find someone good who’s going to take good care of me,” what advice would you give them?

Ben Leonard:

So deal with somebody who’s got experience on all sides. There are a lot of brokers in the space who are great, but they haven’t actually got the lived experience of being an e-commerce seller themselves. They haven’t poured their heart, blood, sweat, and tears into it, and they also are lacking the experience on the accountancy side. So deal with somebody who’s got experience on all sides of the equation. They’ve done deals, they’ve sold businesses, they understand the accounts, but they’ve also been in the trenches as an e-commerce seller.

John Warrillow:

Presumably, I’m assuming you mean for folks listening to this who have an e-commerce brand. I’m extrapolating that to say, deal with someone who understands the industry you’re in.

Ben Leonard:

Yes, exactly. Do that.

John Warrillow:

In your case it might be e-commerce, but another case it might be typical manufacturing-

Ben Leonard:

If you’re listening and you’re not in e-commerce, deal with a broker who has real life experience of the industry that you are in and can speak to that from a position of authority on that. And that was one of the things that led me to where I am now. After the sale of the business, my accountant Alison and I, she played a key role in getting the business “Built to Sell”, if you like, and we put our heads together and realized we could bring something else to this space and offer a little bit more, and we created EcomBrokers to do just that.

John Warrillow:

That’s so cool. So where can people find out more about you, if … Is there a website, or are you a LinkedIn guy? What’s the best-

Ben Leonard:

Yeah, I’m a LinkedIn, look for Ben Leonard on LinkedIn. I love to chat, I’m on Instagram and all the social media channels, my handle is BenLeonardPro. My own website is benleonard.pro, and my brokerage website is ecombrokers.co.uk. It’s a UK domain, but we’re working all over the world.

John Warrillow:

Ben, I appreciate you taking the time. This is a great story, and congratulations.

Ben Leonard:

Thanks so much for having me, John. Cheers.

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