Newsletter #00062

Happy Sunday!

I’m covering these 6 different topics/questions/idea today, so settle in, grab a blanket and get cozy!

1. How to scale a furniture flipping business?

2. How to balance our fears of starting or lack of capital?

3. Of all the businesses you’ve started, which is the most low risk and high reward?

4. How should I start a portable photo booth business?

5. What are some creative ways I can sell health insurance?

6. I have an elite-level Amazon app developer at my disposal. What should we build?

BTW, the appliance rental video/podcast deep dive with Kyler goes live tomorrow (Monday)! Links here: Youtube - Apple Podcasts - Spotify - Everywhere else.

When I first started my podcast it was like Dave Ramsey but for business questions. For whatever reason I drifted away from that format, but by popular demand I’m bringing it back, at least for a season. I’ll post that format 2-4 times per month and see how it goes.

But I want to answer your question! Can you leave me a quick audio message with your question right here? It can be totally anonymous if you prefer. Chances are very good I’ll answer it, because y’all don’t ask enough questions!

If you already heard or watched the one I published on Wednesday, this email will seem a little redundant. But only about 5% of my newsletter subscribers heard/watched this one, so I want to dive deeper via email. After all, if I cover 6 topics, at least one of them is bound to resonate with all of you.

For more in depth answers, listen to the audio episode I released on Wednesday or the YT video here.

Let’s get started!

1. Furniture Flipping Business

Before you can even ask about scaling, you've got to find out where the demand is.

You need to go on these marketplaces like OfferUp, Facebook Marketplace, eBay, Craigslist, wherever it is, and find the type of furniture that is selling and the price points they're selling for and how fast they're selling, what they look like, what are the colors? You gotta put all this stuff in a spreadsheet.

Every single morning I would wake up and open Facebook Marketplace. I'd start searching up furniture. Now I'm to weed out 80, 90% of listings because they're going to be the crappy furniture from Ikea that you can't really flip. There's no good bones to it. I'm going to look for that. Heavy, ugly, dented. That rusty furniture, that worn down furniture, that furniture that your grandma got in the Great Depression.

Furniture that hasn't been flipped yet and furniture that clearly has been flipped. It's gonna look brand new but it's not gonna look like something that just came from the store.

Then you're going to know with reasonable accuracy what's really hot in your market.

Let's say there's three hot categories in your market: bed frames, dressers, and tables. Then that's how you scale. You've just answered the question. You can't answer the how to scale question before you answer the where is the demand question.

Another way you can scale is by standardizing your processes. Maybe you see that every dresser that's navy blue is moving like hotcakes. So in that case, you scale by buying a bunch of navy blue paint and standardizing your processes.

It's the same way In-N-Out scales by only selling a few different things. Can you scale as the Cheesecake Factory? Absolutely, but it's a lot harder. I don't want that life.

You scale a furniture flipping business by reverse engineering your competitors, doing a ton of market research, testing everything, posting your own stuff.

Go to Vancouver on the other side of the country. Look at their Facebook Marketplace. Find beautiful-looking furniture that's being sold over there. Copy their pictures. List in your local market. You're not actually going to sell them. You're just looking for where the demand is. That's another way you can do it as opposed to peppering your competitor with questions.

2. How to balance our fears of starting or lack of capital?

The number one fear that I see with entrepreneurs that prevents them from taking the first step is insecurity. It all comes down to insecurity. And that's okay. I'm insecure, you're insecure, we're all insecure.

People say they're afraid of failure, really they're afraid of what people say about them behind their back.

There's a whole world on the other side of cringe. There's a whole world on the other side of starting a new business, of going outside your comfort zone.

Fear is okay, we were given the ability to fear things for a reason. It would be over simplistic to say, don't have fear, just don't be afraid. That's impossible.

We need to look to the base of these fears. Do we think it's genuinely realistic that if we start this business, we will not be able to provide for our family? If so, then don't do it. Then you're doing something wrong. It's the wrong business, the wrong industry, it's the wrong go-to-market strategy.

If the genuine underlying first principle fear that we have is what people will think about us or what they will say about us, then that's a dumb reason. People don't think about you just like you don't think about other people outside of your immediate family and kids.

Take your fears, write them down, and really get to the heart of what those are.

It’s kind of like addiction. Alcohol is not the root problem. It’s what people reach to because they’re feeling depressed or unworthy or unloved. When a counselor is working with an addict, they don’t talk about how to quit alcohol. They talk about the triggers that cause you to drink. If you can fix the triggers, avoiding alcohol becomes so much easier. The same principle applies here. Get to the root fear—what is the real problem?

How do you manage where you have to start a business and where you want to start?

Let’s say I want to start a jerky business, a beef jerky business. My dream, my goal is to start a jerky business. That’s what I want to do. That’s my passion, or at least I think it is. But that might not pay the bills. Maybe I need to start a tree trimming business and go climb some trees and go door to door.

Be willing to eat crap for a while while you follow your not passion so you can follow your passion eventually.

If I had to choose one of two camps, I’m in the follow your passion camp because it’s the only thing that’s sustainable. What’s the point of having a whole ton of money if you’re not enjoying what you do or you don’t enjoy what you do to get that whole ton of money?

Follow your passion, but be patient until that passion arrives. Be willing to climb some trees and to cut down some trees and to throw logs in the back of a truck to save up enough money to buy your offset smoker so you can start selling beef jerky.

First principles thinking comes in here. Break your business idea down to the basic truths and reassemble it from the ground up. If you want to start a jerky business, what are the truths? People want good jerky. They don’t care about the specific process—only the quality, taste, and price. Start small. Skip the $50,000 smoker and use your grill in the backyard to test the concept.

Do we really need the capital that we think we need?

Everything always takes longer than you think it will take. Your startup to get to profitability, your house to be built, the brisket that you’re smoking. I don’t know why.

What’s also true is that anything slash everything can always be done in a smaller amount of time.

Patrick Collison, one of the founders of Stripe, has a blog article on his website called "Fast". The Eiffel Tower was built in two years and two months. Bank of America’s card, which later became Visa, was launched in 90 days. The Alaska Highway, 1,700 miles of highway in rugged Alaska, was built in 234 days.

Tasks expand or contract to fit the time or resources allotted to it. If you give yourself a budget of six months to finish something, it’s gonna take six months.

Back to the capital question: do we need as much capital as we think we need? No. But also at the same time, everything seemingly goes over budget.

Constraints equal creativity. If you have unlimited money, then you have no creativity. They do not coexist. Unlimited funds or resources and creativity cannot be in the room at the same time.

If you want to start a restaurant that’s $500,000, okay, how can I get creative? I can use a ghost kitchen. I can go find an abandoned space that used to be a restaurant that has all the equipment on site.

Give yourself a budget of significantly less than you think is realistic, and you’ll be surprised what you come up with if you actually truly force yourself to be creative.

3. Most low list and high reward business?

Service businesses are all upside.

If you look at our pet cremation business... We’re like, geez, we gotta raise some money because these burners are $350,000. Then we started thinking. What if we just use someone else's burner? Surely they're only used 10, 20% of the time. What if we just leased it from them or outsourced our cremations to them? Next thing you know, that's exactly what we did.

We bought a $15,000 refrigerated van that was used on a farm. The check engine light was on when we bought it. Turns out there aren't a lot of refrigerated vans for sale in DFW for a halfway decent price. And that was our only cost. That’s it. We’re in business. Downside, $2,000. Upside, unlimited. Constraints equal creativity.

It’s a service business. On paper, all of our competitors, it's an asset-heavy service business. I don't know of anyone that's doing the model like we're doing it.

I think of our tree trimming business. That should have cost about 15 grand as well, because we really needed a truck. I already had a truck, so we didn’t have to buy it.

Is a home service business the highest reward opportunity in the sense that it could be a $10 million business? No, yes. Any home service business could be a $10 million business, but it's not easy. Ironically, service businesses are easier to start, easier to get to profitability, but harder to scale because it's people-heavy and people are hard.

If you’re looking for an asymmetric bet, forget products, forget retail, go after service businesses. Digital marketing agency, email marketing agency, anything home service, anything outside, anything that makes you sweat, and you'll win.

4. Photo room rental business?

(This question was referring to this Reel I made.)

The reason this is a cool business is because it's asymmetric, because it's a service business.

It's so visual. Most people that own a visual business don’t take advantage of how visual it is. They don’t take advantage of Instagram. If I owned a pressure washing business, you better believe I’d be all over Instagram.

You can build one for not too much money, and you can just invite your friends and family over to take pictures and videos of it, post it to your own personal social media following. Since these videos organically go viral, you’ll get customers from that.

If you build this business in any other way off social media, you're going to be swimming upstream.

I would take it to farmers markets, rent a booth, put the photo booth in the farmers market. Have you ever seen that? I’ve never seen that, but it would work. It’d be a thing. You’ve got hundreds of people walking by. Charge them five or 10 bucks to take their picture in there with a QR code.

You could even do an on-your-honor system. You could drop it off and literally go home. Worst case scenario, you come back and pick it up and a half dozen people took pictures but didn’t pay you. It didn’t cost you anything.

Always be testing. Test everything except drugs.

I don’t like reinventing the wheel. I don’t like being the pioneer. Pioneers are the ones that get shot with arrows. I want to do something that someone’s already doing. I want to copy them, but at the same time, I want to test all kinds of new marketing concepts.

I hope you learned something today. If you did, please share this newsletter with a friend with the link at the bottom of this. Have a great Saturday!

5. Creative ways to sell health insurance?

There’s three routes when it comes to health insurance. You’ve got the Aetna’s, the United, Blue Cross Blue Shield. What are we gonna learn from them? I have no idea.

Then you’ve got the Oscars of the world. Oscar was a highly touted VC-funded startup, hundreds of millions of dollars raised after Obamacare was enacted so people could navigate the healthcare marketplace.

Then you’ve got the third category, which I think you can learn from. You’ve got the healthcare sharing plans. Christian Healthcare Ministries, Samaritan—there’s a half dozen of them.

You’ve got to see what they’re doing to grow. Is it radio ads? Is it Dave Ramsey?

One thing you have on your side is this is a polarizing topic on social media, especially Twitter. Dozens of times I’ve seen people post about their medical bill that was tens of thousands of dollars. And then the hospital was like, yeah, you don’t need to pay this. As soon as they got a little pushback, tens of millions of views on these tweets.

Ask yourself, how can you piggyback on the aspect of your business that’s very polarizing? What can you do? Can you go find people that post about these polarizing healthcare topics and say, hey, next time you post, and you have something that’s going viral, can you link to my business in the top comment? If so, I’ll give you a referral fee.

Healthcare isn’t cheap. So that referral fee could be pretty hefty for them.

If you’re already selling to consumers, then bypass the companies. I don’t know if anyone’s selling me health insurance. I don’t think you’d be that crowded going directly to consumers.

6. What Amazon app to build?

The bigger a market, the bigger a TAM—total addressable market—the more shameless you can be about shamelessly copying what other people are doing.

There’s a half dozen pieces of software out there that enable you to see what other apps are popping off in the app store. Tons of downloads, tons of reviews, tons of revenue. The one that I’ve used in the past is App Figures.

Find out what apps are coming out on different app stores and/or Amazon, and just have him rip them off. Period. End of story. Copy paste.

A dumb game comes out on the Android app store, copy it. You can’t copy it directly—you don’t want to get sued—but take the same concept. Try to find the first principle of what makes that app great.

Let’s look at Angry Birds. Why was it fun? It wasn’t because of the colors or the noises. It was fun because it was the first app on the iPhone that really showed us how accurately the physical world could be reflected in the virtual world.

Temple Run—why was it popular? It wasn’t because it reminded us of Indiana Jones. It was the gamification element of it. That’s the first principle. It’s not the app itself. It’s what makes the app great.

Find some new app, even if it’s kitschy, even if it’s cringe, even if it’s for 16-year-olds. Don’t look at it on a surface level, but boil it down. Why do people love this? And go copy that in the Amazon app store.

Please let me know what you think of this format of either email/podcast after voting on today’s issue below.

If you want more thorough answers to the questions above you can watch/listen here: Youtube - Apple Podcasts - Spotify - Everywhere else.

Your favorite toxic optimist,

Chris Koerner
chrisjkoerner