Stacking the Bricks Podcast
EP17 - Kids Incorporated
In this episode…
Amy has talked about starting Freckle. Alex has talked about starting Indy Hall. But NEITHER of these were our first brushes with business.
To get our true origin stories, you'd need to see what we were doing to earn money while we were still in grade school. And it wasn't from babysitting...
Jump into a time-traveling DeLorean with us to go back, back back in time and learn how our EARLIEST experiences with business, making sales, and understanding customers and their behaviors shaped the businesses we run today.
Alex Hillman: So today we wanted to talk a little bit about our humble beginnings.
Amy Hoy: Very humble!
Alex Hillman: The humblest of beginnings! Because they were, you know, it’s always fun to sort of find out where people’s first introductions to business and making money were because there’s so many different places that it could have come from.
Amy Hoy: I’ve talked about how we started Freckle a bunch of times, but I’ve never – almost never – talked about what came before Freckle, other than consulting for big clients.
Alex Hillman: So when we’re talking about how we make money, that includes the products and businesses that we run today. That includes the consulting that we’ve done prior to and includes jobs that we’ve had along the way but we’re going to the beginning, like big bang of our understanding of sort of money and things like that.
Amy Hoy: Yeah. I was thinking about this the other day when I wrote that blog post about risk and the money that I had saved up as a 13-year-old to invest in the stock market. That didn’t come from chores or washing cars.
Alex Hillman: I was gonna ask you where that came from. It was like a thousand bucks was the number you put out in that blog post.
Amy Hoy: Yeah, and in 1998 that was a lot more than a thousand dollars today, I think.
Alex Hillman: And at age 13.
Amy Hoy: It wasn’t from my parents. I think unlike a lot of people in our industry, I grew up without much money, I earned that myself.
Starting when I was, I think, 12, I wanted to write a book on HTML for kids –that didn’t go anywhere. But what I did end up doing was taking some things that I had read and things that I had tried myself and I wrote a little booklet on internet marketing.
Alex Hillman: For kids?
Amy Hoy: Nope, just true to my roots, for adults, and I actually sold two copies on Yahoo Classifieds!
Alex Hillman: Oh, okay. So that was that part of the directory thing that they bought? I don’t even remember what Yahoo Classifieds was?
Amy Hoy: Yeah. It was, it was not like Craigslist – it wasn’t local. It was internet-wide. I think I sold two copies for like $10 each. Oh, and the funny thing, I really wish I still had the file that was in it, but a lot of it was like, “Go befriend a community, become part of the community” type stuff, and I was like 12.
Alex Hillman: You were like itty-bitty Safari.
Amy Hoy: Yeah. I was the nerdiest kid you could possibly imagine. The problem with selling these little booklets on Yahoo Classifieds and the reason I only ever sold two was because it cost me more to have them printed and bound and mailed from Kinko’s than I made.
Alex Hillman: Wait, these were actual, not like PDF download? This was like an actual physical thing, like a doctor’s office pamphlet on internet marketing.
Amy Hoy: Yeah! I went and I got that binding that they used to do with the machines that had like a strip along the end and it had like claws?
Alex Hillman: I know exactly what you’re talking about!
Amy Hoy: It was like some sort of weird alien hands, Geiger binding method and then I had to mail it and it was like $15 per at least.
Alex Hillman: So this was a money losing effort?
Amy Hoy: Yeah, I lost money! I probably could have actually done it very affordably if I had a printer at home and didn’t go for the fancy binding and the nice cover, really, I over did it, I overproduced it.
Alex Hillman: So you were learning hard lessons very early. Can we talk about a time that didn’t fail?
Amy Hoy: Well, that means I can’t tell the Beanie Baby story.
Alex Hillman: I mean, now that we’re here, you have to tell the Beanie Baby story. Okay, so Beanie Babies, I remember when that was just everywhere. I mean, for as much hype as startups have today, I think Beanie Babies had as much or more, it was insane.
Amy Hoy: There’s way more money in startups than Beanie Babies. So, you guys remember the Pennysaver? I do. So this is a market research fail, and it’s very funny to look back on it, but I saw what Beanie Babies were selling for on eBay and then what they were listed for, for sale in the Pennysaver, which was a like little local classifieds magazine. It was local classifieds, so only in my area. I saw what the Beanie Babies were listed for, for sale. And I found some of them on eBay for far less, so I bought them and then paid to have them listed in the Pennysaver for less than the previous ads were for, I thought that that was going to be a shoe in but I learned that just because it’s listed for sale for a certain price doesn’t mean anyone is buying.
So I had a box of Beanie Babies that I only got rid of when I moved to Austria, which was about a decade later, more than a decade later. I carried those fucking Beanie Babies for like six moves because I just couldn’t let them go!
Alex Hillman: You know, it’s funny that you bring up the value, like list value versus what people actually pay for because I didn’t even think about it until you just said it. I collected comic books because I was my own kind of nerd, comic books and comic cards.
I had a pretty significant collection and actually, I got a lot of them – because they cost money and I didn’t have money – I earned a lot of comic books by bagging comic books for a local comic book shop. I’d go in for a couple of hours, I’d take the new books, put them in bags with backer boards and for every box that I filled – and the boxes were like 36 inches long. That’s like a few hours to do that. I would get $5 in credit to buy comic books at the shop. Smart move on the comic book owner to get this kid who’s hanging out all the time anyway, like, “Hey, make yourself useful and you can get more comic books instead of just thumbing through them while they’re on the shelves.”
I started collecting the books and finding the books that I liked and the cards that I liked and then I picked up a copy of Wizard World magazine, which apart from being sort of like their ink entrepreneur, but for that kind of nerd, so pricelists were a big part of Wizard World. I remember going through my collection and being like, “Holy shit, I’ve got cards that are worth like $30, $50, $100, and then I started building a spreadsheet – what kind of kid was I? – building a spreadsheet of how valuable my collection was, and I started collecting based on that and I think it lost some of its luster, but it was actually the same comic book shop owner that told me one day. He was like, “You know, just because it’s listed at that price doesn’t mean that somebody out there is actually going to buy it for that”. I feel very sort of fortunate that I didn’t have to learn that in sort of a harder way, but that lesson…
Amy Hoy: List prices are a lie…
Alex Hillman: That’s just it and I think when I when I look at it the hypothetical valuations and things like that today, the little trigger in my brain is - that’s basically Wizard World.
Amy Hoy: It’s Wizard World! Yes it is.
Alex Hillman: For companies that number is not worth anything until there’s someone to pay that much for it.
Amy Hoy: Absolutely, evaluations are exactly like that. That’s a very excellent metaphor and people are going to hate that so much when we write a blog post with that comparison!
Alex Hillman: Oh it’s going to be good. It’s going to be good. So these are more failed stories. We should probably get to one where we actually made money.
So, what is your earliest memory of putting something out there and making more money than it cost you to put that thing out there?
Amy Hoy: I was I guess maybe 11 when we got a CD burner and I would sell my little middle school classmates custom mixed CDs for like 10 bucks.
Alex Hillman: So piracy. Okay, good, go on.
Amy Hoy: I know that was before anyone was even talking about what it meant though, to download MP3s; MP3s were extremely still rare at that point.
Alex Hillman: And you were not showing up on Metallica’s radar, so not a big deal.
Amy Hoy: No, no, no. I was small potatoes, also I don’t think anyone I knew listened to Metallica other than me. So that was like 10 bucks a pop. I didn’t do that a ton because of the materials, actually that was when CDR’s were like $3 each and it was a lot of work and I was like, “Ehh”.
Alex Hillman: And slow.
Amy Hoy: Slow. It was a 2X CD-ROM so to write a 60-minute CD, it took 30 minutes and that totally tied up my computer the entire time.
Alex Hillman: Right. Because Windows was like, grrr.
Amy Hoy: I was on Mac.
Alex Hillman: I remember running Nero on Windows and it just being like you couldn’t do anything other than burn a CD.
Amy Hoy: It was really a time consuming and so I was like, I value my computer time more than this. Screw that. The second thing was…
Alex Hillman: Wait before you do that, how did you figure out that people would pay for those CDs? Did you just like try it and someone was like, “Hey, can you burn a CD for me?” and you’re like, “Sure. 10 bucks.”
Amy Hoy: No, it was definitely a hypothetical “Hey, if I did this for you with your songs on one CD. I mean, if you went to the store, it would be $16 for the CD for the entire album, but you don’t really want it.”
Alex Hillman: So you were already pitching on value.
Amy Hoy: I really was, yeah.
Alex Hillman: You know what I love about what you just said though, if you were a typical, how old were you at this time?
Amy Hoy: 11 or 12.
Alex Hillman: Okay. So the average 11 or 12 year old’s going to be like, “I’m gonna make you the most awesome burn CD Mixed CD that I know how to make, you want that that’s $10.” Right? And people are like, “Eh, you know what? I think I’ll spend my money on comic books” or whatever it was, but you could take that money to the CD store and have to spend it on an album where you don’t actually want all the songs. There are two ways to sell another 11-year old, a mix CD and know it or not you picked one that people were actually going to potentially respond to.
Amy Hoy: It was weird because we had a CD ROM, which was a CDR burner at that point, which was a luxury type item. My mother bought that, but I didn’t have money for other things. I would go to school with ratty clothes and stuff. So, I was always thinking about what things cost. If I wanted a CD then I had to get to Sam Goody somehow with $16 or $17 to get a CD, that was when they had those big cases and the locking and all that crap. It was like a big deal.
Alex Hillman: And the only way to buy the CD was to buy the whole CD and the music industry is not really well known for releasing albums that are full of hits.
Amy Hoy: No That’s kind of the whole point actually – bundling. Us tech startup info product people did not invent bundling.
Alex Hillman: No
Amy Hoy: Newspapers invented bundling.
Alex Hillman: Really?
Amy Hoy: I think so. If you think about a newspaper, it doesn’t make sense if you think about why are all these things together in one item, they have nothing to do with each other? Other than that they’re in the newspaper together.
Alex Hillman: Once you’re distributing at once, you can sort of offset costs of things that aren’t going to make money with things that are.
Amy Hoy: Yeah, but that’s another side.
Alex Hillman: That’s another conversation.
Amy Hoy: I did. I was like, “Well, you could buy the whole CD for $16, or I could give you only the songs you want on a CD on entire CD for $10.”
Alex Hillman: And for someone who does not have a $250/$300 CD burner or the know how to do it, that’s actually, that’s a pretty good deal.
Amy Hoy: It’s a pretty good deal. Yeah, so that worked, I made money on that, but I didn’t keep doing it. I think the next thing that I made regular money on other than a couple little freelance gigs here and there, which I did have as a kid, I started a Mac news, opinion and how-to website when I was 14 and worked up to between $600 to $1,200 a month in ads.
Alex Hillman: Okay.
Amy Hoy: Over the next few months.
Alex Hillman: So you had a taste of ad sales very early.
Amy Hoy: I did. And the thing is when I told people that I was going to start this Mac news website, everyone, including people who ran existing Mac sites told me that there was no room in the market for anything else, but I looked at what content was popular and what I liked and looked at what mostly sites produce and thought I can do something different that people want.
I made the how-to content really explaining the technical aspects of the way computers worked in the way that I explained things now, which is full of metaphor and very, very much clear to understand and fun, and not an “I’m an important news website”, which all the other ones wrote. I wanted to be more like David Pogue who wrote these really fun and friendly narrative, full of jokes and puns and metaphors.
Alex Hillman: It was more like a story.
Amy Hoy: Exactly more like a story or like really sad stand up. I still have a lot of the articles that I wrote saved.
Alex Hillman: I would love to read some of those.
Amy Hoy: I will post those. But I proved them wrong and got between like a hundred and 200,000 impressions a month at the peak.
Alex Hillman: So how were you finding ad customers?
Amy Hoy: I contacted the people who are advertising on other Mac websites.
Alex Hillman: And just reached out, email, phone call?
Amy Hoy: Yeah. My main advertiser was Small Dog.
Alex Hillman: I remember that, but I don’t remember what it was.
Amy Hoy: It was a Mac electronic store. Other ones where our various Ram producers and retailers, like deal Ram and so on. They did advertising.
Alex Hillman: Cool. Very, very cool.
Amy Hoy: Again, there’s Amy doing her research and looking for holes in the market.
Alex Hillman: Where did you go from there?
Amy Hoy: I acquired another Mac news website.
Alex Hillman: All right. Still in journalism. Keep going.
Amy Hoy: So the funny thing about Mac news websites in the late nineties is about 30% of them were run by teenagers. Brian Breslin ran one.
Alex Hillman: We’ve talked about that. Brian Breslin’s a mutual friend from down in Miami.
Amy Hoy: Yeah. He and I knew each other as teens. Teen Mac website producers!
Alex Hillman: Sort of like alter universe what was the Disney kids?
Amy Hoy: Kids and Company?
Alex Hillman: Kids and Company yeah. I’m glad we had that experience together.
Amy Hoy: I always thought they were really bad businesspeople!
Alex Hillman: Amy was a fun kid!
Amy Hoy: I had no friends, surprise!
Alex Hillman: All right is there a reason that you got out of doing journalism?
Amy Hoy: I just got tired of it and you had to keep publishing to get the ad sales, right?
Alex Hillman: You also have to keep chasing new advertisers?
Amy Hoy: I didn’t do a lot of that. No, no, I didn’t do a lot of that. I was still small fish at 100,000-200,000 impressions. That was still small potatoes. This was before Google AdWords and everything. This is way back when. This was like 98, 99, 2000 2001. I did it for four or five years. But I did at one point have contributors that I paid $100 to $200 an article and had a semi-custom content management system and all kinds of stuff.
Alex Hillman: Awesome. So you got tired of running that because journalism is a slog – no matter how you do it, even the people that are good at it.
Amy Hoy: Yeah, I just kind of lost interest.
Alex Hillman: Ad supported businesses just require constant maintenance, high level of constant maintenance.
Amy Hoy: Now I will say though, that running this site got me so many opportunities. That’s how I got into tech editing. I used to get paid upwards of $4 a page to do technical editing for Sam’s and Q and towards the end I was working with Addison-Wesley to put together a proposal for a new Apple HIG: Human Interface Guidelines. We got really far along in the project with Addison-Wesley. This was when I was 19, I guess, so 2003 maybe.
Alex Hillman: Sure.
Amy Hoy: But Apple would not approve the project, even though Apple had come to Addison-Wesley originally, and of course there’s never been another HIG, so it never happened for anyone. Apple just lost interest.
I wrote a book that never got published, the publishing company sold right on the eve of when they were wrapping it up. I got paid to write a book. I got some job offers and just a bunch of stuff happened because I was out there and publishing, which to anyone who follows the 30x500 model will understand I was dropping ebombs and not only did it make me money on the ebombs, but it actually brought me all kinds of opportunities as well, because I was establishing my credibility.
Alex Hillman: I don’t know if you saw in the 30x500 chat room today actually? One of our students just posted that a recruiter that was shopping him around to some companies specifically started using some of his ebombs as basically the part of pitching him as, “Hey. You should hire this guy because not only is he good, but he shows how good he is by putting it out, like you can go read his stuff.” And he was really impressed by that – I thought that was really cool. And he said, you know, even though I believe in what 30x500 can do to help me get the kind of product business that I want, in the meantime…
Amy Hoy: Reap the rewards!
Alex Hillman: I’m still stacking the bricks. Stacking the bricks doesn’t mean don’t get paid until you get the big payday. You can make money along the way.
Amy Hoy: Absolutely. I was tired of writing about Mac stuff anymore, so during that time, I had also been looking for other ways to make money that didn’t involve regular jobs. So I learnt new HTML from very young child. I learned to do web page design. I was pretty good at it. I kind of bridged into application design a little bit. I had friends who did consulting and I kind of honed in and they would outsource stuff to me because I knew how to use Photoshop and I had a decent visual sense and I was always reading about design books and stuff. Then I slowly got into programming because I had worked with programmers so long. I was like, well, why am I relying on other people to do this for me? I could earn a lot more if I knew how to do it myself. And also, I just don’t like not knowing things.
So I was doing freelancing and design and development at the time, fairly poorly in terms of the business sense though. I mean, I was still doing like $34 an hour for the most part, but I was doing a very bad job of being a consultant, but I did some other stuff. I started selling things on eBay, which I wrote about.
Alex Hillman: I know a little bit about what happened on eBay. Why don’t you say a little more?
Amy Hoy: I used to make about a thousand dollars a month selling Ikea lamps on eBay.
Alex Hillman: To who?
Amy Hoy: Most of America who didn’t have access to Ikea, this was before they had any kind of spread across the United States and you could get the catalog, but they wouldn’t ship.
Alex Hillman: So you were looking for what people were interested in, buying it and then reselling it on eBay?
Amy Hoy: I love eBay, I think above all else. I mean, I hate eBay, the company and the software experience.
Alex Hillman: I was going to say, I know you have a very special relationship with eBay.
Amy Hoy: Yes. It’s love/hate. I love what I can find on eBay and learn, but I hate eBay itself, but that’s neither here nor there.
I used to, to get the things that I wanted to have – computers and cameras and stuff that I couldn’t otherwise afford, I had to really find good deals. So, I got the point where I was buying lenses locally or off a Usenet or the classifieds, and then fixing them up and selling them on eBay where the prices could be better if you presented yourself.
So, for example, when I was 16 or 17, I bought a pair of Mamiya RB 67 medium format cameras with three lenses for $900. And I was able to clean one up and sell one of the bodies for almost $900. I almost got the medium format camera set up for free. It’s all about how you position and sell with the eBay listing.
Alex Hillman: Can you go into a little more detail on that though? Like what was it that made your listings sell so well?
Amy Hoy: I always would start with 99 cents or just a couple of dollars so the people would get invested by bidding early at a low price since they would get emotionally invested, I would never set a reserve price. People hate reserve prices. It really freezes the bidding, a reserve price is a secret number where the item won’t sell, unless bids go above it, but the people who are bidding have no idea what that is. So that’s really discouraging because people will bid, and they’ll bid and they won’t have the secret number and they’ll have no idea what it is.
Alex Hillman: Then after like the third or fourth bid, they’re like, “Screw it”.
Amy Hoy: Yeah. I feel like items with reserve prices often do not sell.
Alex Hillman: And at a certain point, the eBay buyer culture just knows it and so they see things with a reserve price and they don’t even bother with it.
Amy Hoy: Don’t even bother. It’s like learned hopelessness. I would be extremely detailed and personal in the listing of the items. So, if there were any flaws, I would describe them, and I would describe how it affects the usage of it. I photographed everything in great detail. I told why I had it, why I was selling it. What makes it great, what I did to it to fix it up or anything of that nature and I included tons of pictures. Also as I was spending some more time on eBay, I was just kind of clicking around and looking, because I was curious, what is selling? Just kind of like when I used to read the Pennysaver, I wasn’t a 12-year old looking in the PennySaver to buy furniture or anything. I was just curious. I’m like, what’s going on? I would look all over eBay and I discovered that people were selling Ikea products on eBay for way more than they went in the store, because I used to live near one of the first Ikea’s in the United States and I would go hang out there for fun.
Alex Hillman: You know, I think that was a suburban thing to do.
Amy Hoy: It was a suburban thing to do.
Alex Hillman: Did they have the meatballs then where you could like actually go there for a meal? So it wasn’t that weird.
Amy Hoy: Yeah and you could see it from a hill behind my house, so it was just sort of like a fixture in my life. So, it’d be like, hmm, this Ikea lamp is like $4 or $5 and they’re selling it for like $10. Then I thought, they’re making all these mistakes. They’re flooding the market. They’re listing a ton of the same item at once. They don’t have the details in it. I can do better and I did. I used all my techniques and started drop shipping Ikea stuff. I got ahead - a special app that I ran. I bought a cheap PC just to run this particular app that would manage all my listings so I would stagger the listings and I would keep track of what inventory I had to go buy, and then I learned to pick items that could be shipped in their own boxes because I had learned the lesson from that pamphlet I printed at Kinko’s – not to overspend.
Alex Hillman: That shipping costs can kill.
Amy Hoy: Yeah. So I had a stamps.com type thing – it was Pitney Bowes back then – I would print postage, I would slap it on the box, wrap it in tape and drop ship it. I would not keep stock in my house. I would go buy it just in time.
Alex Hillman: So Ikea was footing the bill on the warehouse because it was their warehouse – that’s amazing!
Amy Hoy: There were a couple issues though.
Alex Hillman: Like?
Amy Hoy: Well they’d made these limited edition – and they didn’t say that there were limited edition – they these limited edition bubble mirrors like 1960s Verner Panton, they were 14 or 16 by 16 inch squares of molded plastic that had bubbles and stuff like funhouse mirrors, and those things sold like fucking hotcakes. They made me so much money and then I had sold a bunch and there were none in stock.
Alex Hillman: Oh!
Amy Hoy: For a while there were none in stock. There was no estimate of when the stock would be, so I had to call the Ikea’s all up and down the East coast and we ended up taking a two and a half hour road trip to Jersey to stock up so I could fulfill the orders. Definitely lost big money on that. Also, my boyfriend hated me because I couldn’t drive yet. It was a, it was a crazy time.
Alex Hillman: So the theme through all of these things is really is Amy is insatiably curious. Amy is never satisfied to let somebody else do something without at least knowing how it works. So, there’s that, I think that that’s worth it. Even if you’re not the one doing it, you at least want to know how it works. Constantly doing research – I didn’t hear a single throw a dart at the door board attempt in that sequence, there are things that cropped up along the way sort of serendipitously, but they all were outgrowths of things that were very strategic. Whether you knew that that was what you were going to get, you had enough experience to know that if you do that thing, there’s a good thing on the other side of it.
Amy Hoy: Yep. I also would set financial goals with stuff that I wanted to buy and figure out how to get the money. When I was, 11 or 12 part of the time where I was saving up for money, I really wanted to buy a Power Mac and my mother was like, we don’t have the money. I can’t afford it. You know, yada, yada yada. And so among other things, I held yard sales and I sold all my, My Little Ponies for $80 and other stuff like that to ger the money and then I bought a Power Mac off Usenet. Then I later swapped that to my brother for his laptop, which I then fixed up and sold to get myself up to the property ladder of Macintosh.
Alex Hillman: So there’s also an element of investment in reinvestment where you’re stacking the bricks over and over and over. Were there any specific influences like books or were you just pulling this stuff out of thin air?
Amy Hoy: I wrote in and said before that I was a strange kid who would read everything in the library. I ended up reading tons of business books like SPIN Selling and How to Win Friends and Influence People and investment guides, everything. But I think that angle that you’re talking about, why do I always look for knowledge first? Why do I start with research first is because when I was younger than that, even I was obsessed with Desmond Morris; do you remember him?
Alex Hillman: I don’t actually, I know his name from you, but I don’t remember the context.
Amy Hoy: He did a series of books and TV shows and I think I found out about him from a TV show on like Discovery Channel or something, Peoplewatching and then he did Catwatching and Babywatching and all this stuff.
Alex Hillman: The natural progression. Let’s get cuter!
Amy Hoy: What if David Attenborough studied human behavior?
Alex Hillman: Okay.
Amy Hoy: That was him and he had a sort of dry sense of humor, which, I mean, David Attenborough’s very straight man.
Alex Hillman: Are these on DVD or YouTube or something. Have you looked for them recently? I feel like this would be a fun thing to sit down and watch them. Maybe we even do like a Mystery Science Theater 3000 of you and I watching and doing commentary.
Amy Hoy: That would be so awesome! Anyway, I loved him as a kid. He was just like, “Look, you can observe people and understand why they behave the way they do”. And also cats, it may have started with Catwatching really. I mean, I was a kid who made GeoCity web pages full of cat pictures. That was my first thing that I did online. I was just sucked in by the idea that you can observe something and understand it and I I’ve been thinking recently, like where did I end up with this? I mean, that was a very strange thing for a child to do all those things I did. So I think that it was Desmond Morris. I’m pretty sure Desmond Morris made me who I am.
Alex Hillman: Well we should send them a thank you note.
Amy Hoy: I really should. I hope he’s still alive.
Alex Hillman: Even if he’s not, maybe we can send him a thank you note.
Amy Hoy: I love you Desmond Morris!
Alex Hillman: I mean for folks that are listening in today in the chat room, I hope that this paints a picture. I don’t think it’s a crazy leap to think about how all of those things lead you to being a high paid consultant and then also being able to figure out that Freckle, not that Freckle is needed, but that there is a problem that needs to be solved and that solution to that problem would eventually be Freckle.
Amy Hoy: And to understand what the problems are, what the pains are because as I said recently, in that podcast with Jane Portman, UI breakfast podcast, if you say people don’t track their time, well, you need to understand why people don’t track their time in order to actually solve that problem for them; and they don’t tell you. You can’t expect them to sit down and tell you, you have to essentially watch what they do and not what they say. That right there is Sales Safari, the ethnography in the digital world.
Alex Hillman: I have my own stories as well. I think I was a little more, my scrappiness came from a different place, but I think my drive – I mean, I had a weird influence in my life in that my dad was an entrepreneur, but out of sort of a attitudinal necessity, more than anything else. My dad is a terrible employee in the same way that I am a terrible employee. My dad went to chiropractic school and he did the necessary requirements to work for somebody else’s practice before you can start your own, but only the bare necessities. My dad is independent to a fault and that is true to this very day.
I think about growing up around my dad and the business that he ran and not that my dad was like an extraordinarily successful entrepreneur; my dad was independent. My dad fought his own way and my dad is totally not afraid to look at something to be like, “I think that’s stupid” and I think there’s a better way to do that.
Amy Hoy: How come I’ve never met your dad?
Alex Hillman: I feel like you have?
Amy Hoy: I don’t think I have; I’ve met your sister. I’ve not met your mom or your dad. We were supposed to go to your last holiday, but I was too sick.
Alex Hillman: Oh, that’s right, yeah, yeah, yeah. Well, we will make that happen and also, we can go to the shore house with my dad and Judy. So, you know, I think I had this sort of subconscious influence from my dad’s just total and complete worldview of, “Everyone else is an idiot, just let me get my fucking work done”, which anybody who knows my dad would agree, “Yep. That’s Ken!”
I approached schoolwork that way. I was like, why are we going at this pace, I’m ready to move on? The infrastructure around me always felt like I was bumping up against it and so when it started, I sort of joke that some of the earliest things I did to make money, I actually sold doorstops outside of my dad’s chiropractic office. He had a home office, and by doorstops, I mean, rocks that I pulled out of the backyard, but I was a kid and it was like, “You need a doorstop, right?” and they’re like, “That door is closing”. And here’s the thing is like; you could buy a rock – sure. But I painted these other ones.
Amy Hoy: You painted the rocks?
Alex Hillman: Premium rocks! This is a true story. That’s not where I learned anything at all. I had a series of jobs where I think it was pretty fortunate to have bosses that recognized that as long as they stayed out of my way, I would get a lot of work done. Having that freedom and leeway let me discover a lot of similar things that you did and let me sort of – I think the other thing that we have in common is we’re just like intensely curious and want to learn how things work.
So, one of my first jobs that I would consider professional, like I worked in a movie theater way too early in age – and that’s a story for another day. I don’t even want to talk about it and the only influence that working in this movie theater had on my life – and maybe it’s more important than I give it credit for – is this crazy old woman ran a one screen movie theater in my hometown. 12-year-old me, I think my parents had a dinner party, I was driving them nuts by being under foot. They were like, why don’t you go get a job? I was like, okay and so I jumped on my roller blades and I rollerbladed down into town and I knocked on the movie theater and I was like, “I want a job!”
Amy Hoy: That’s an 80’s movie right there!
Alex Hillman: That was very much my life. This woman, I mean, everything about this movie theater was a disaster, literally everything, I’m sure it never made money. I think her father owned it and it had its hay day and it was well, 1950s old classic Marquee; it was a beautiful building, but she never put up the posters in the cardboard stand ups that the company sent us. So there was all this collectible movie shit on this place and she had terrible marketing.
Amy Hoy: That shit’s worth so much money now.
Alex Hillman: The only influence that this place actually had on my business life is whatever Ellie would do, do the opposite!
Amy Hoy: That’s really instructive. I’ve learned so much about being someone who runs a company from looking at it how my bosses screwed up.
Alex Hillman: Yeah. Yeah.
Amy Hoy: You also have told me that you’re scarred for life by the crap that you put on the popcorn to make it “buttery”.
Alex Hillman: It’s not so much that it’s, that it was more often stale than it was fresh. I have a weird addiction to movie theater popcorn. It’s a comfort food for me in a very, very particular kind of way, but not just any movie theater popcorn – stale movie theater popcorn.
Amy Hoy: I mis-remembered. Yes. That’s weird.
Alex Hillman: Because what would happen is, is I would go up into this sort of closet booth thing where we pop the popcorn for eight hours. So basically, locked in a popcorn dungeon for eight hours. Not eating the popcorn then, because it was fresh then, I would bag it and then we’d store the bags – which is gross – but a lot of movie theaters do this. So, movie theater popcorn is gross to begin with, and then we would reheat the popcorn in that sort of behind glass bin upfront. So, we’d dump in the bag of popcorn then maybe I made a week ago, sprinkle some salt on it and it’s just a little bit – or a lot – stale and chewy. I love that shit! I don’t know why; I know it’s gross. Everything about it is gross, but for some reason that’s comfort food for me. But we need to stop talking about this movie theater and talk about actual business experience!
Amy Hoy: That is a long side!
Alex Hillman: That’s the longest side. The first, for me, memory of what I would qualify as a profession, I would consider the work you did on eBay professional, right?
Amy Hoy: Sloppy, but professional.
Alex Hillman: I mean, you can do a lot that’s professional and still be sloppy. The bandwidth you have for that is remarkable.
I worked in a Mom & Pop computer repair shop; I had broken my home computer and my dad being the fixer upper kind of guy was like, “We’ll learn how to fix it”. And then he opened up the computer and he’s like, “You learn how to fix it”. So, I went over to a friend’s house and I got on the internet and I started Googling – well not Googling – but Yahooing, or Lycosing around the internet, like “Why is my computer clicking?” And then it’s like, “Oh, it’s either a fan or a hard drive”. And I replaced the fan and it wasn’t the fan, and then I was like, all right, I have a busted hard drive, which sucked but that was my first diagnosis. At some point I ended up needing a new motherboard. I walked into the computer shop and I say, “I need a new Mini ATX motherboard”. These two guys from behind the counter, who may as well have been like a slightly older version of Dante and Randal from Clerks, but a computer shop version, were like to this 14 year old me, “What are you going to do with a Mini ATX motherboard?”
I proceeded to tell them exactly what I was going to do with a Mini ATX and they were like, “Do you want to come and hang out with us after school and we’ll teach you, you can learn?” That was a huge opportunity for me, and I think I knew it at the time. I was really, really pumped about it and they paid me. But the thing that that job did for me more than anything else was it gave me exposure to a lot of problems in people’s computers. We’re talking late 90’s, early 2000’s; home PCs are fairly new. A lot of people, literally, this is their first computer, Windows is prolific and virus protection - most people don’t have it. So, a lot of our customers were people who had computer viruses and I got a knack for being able to know, not just that somebody had a virus, but which virus they had and what I was going to have to do to solve it.
Amy Hoy: Alex the virus whisperer.
Alex Hillman: I could do that over the phone!
Amy Hoy: Dude, I believe that; you know why I believe that?
Alex Hillman: Why do you believe that?
Amy Hoy: Between middle school and high school, I wrote a local ISP and said, “I’m a student looking for something to do in the summer. I want to earn the money or earn a PC to run Linux on”. And that was ToadNet run by Dave Troy.
Alex Hillman: Whoa, that’s a name I haven’t heard in a while! That’s wild! Cool. So that’s the Dave Troy connection.
Amy Hoy: I worked at an ISP when I was 13, 14 that summer, same time did a lot of phone support. It’s like, you know, when they’re like, “I don’t know anything about computers, let me put my kid on” and you can hear the fucking kid picking his nose. And you’re like, “Okay, go to My Computer. Do you see My Computer?” and the kids like, “Huhhh?” Did you do that too?
Alex Hillman: I did, so I had a couple of things that I was able to do because I had a massive throughput of experience in a very short period of time, I’m fixing between like 10 and 25 computers a day. I’m just totally like crushing out whether it’s sometimes like a modem upgrade, but sometimes it is something that’s actually broken, and I have to figure out what’s broken and solve it. Once you’ve found the same problem, like a half a dozen times through different ways, you’re like, “Oh, I now know what this looks like from a mile away”.
Amy Hoy: Totally. You get gut instincts about it, but they’re informed.
Alex Hillman: Not only that, but I also noticed something in the people who were showing up to our shop with their virus problems. One of the most common things was that they were going to Best Buy or Staples or Circuit City to their tech support desk, or even just calling Compaq because you know, most people had a Compaq or Gateway 2000, and the techs default was “You have a virus, we have to erase your hard drive”. So they were coming to us saying, “I have this problem” and they would never say “Best Buy told me I have a virus. Can you get rid of it without erasing the hard drive?”, but that’s exactly what was going on in their head. They would call and say, “My computer’s acting funny”. “Well what’s going on with your computer?” And we would sort of go through this pantomime that would help me understand what was wrong and ultimately end up diagnosing the virus, almost always correctly before they even brought me the computer.
More importantly, how did I get them in the door to bring me the computer? I told them, I said, “Look, I’m pretty sure it’s this problem. We’ve seen a lot of it going around. You’re not alone. What we are able to do here is 95% of the time I’ll be able to get rid of the virus and protect you against a happening in the future, and we won’t have to replace your hard drive, we won’t have to erase you hard drive. You won’t lose any data.” That last part, you won’t lose any data. They’re like, “I’ll see you in 10 minutes”, every single time.
Amy Hoy: Absolutely. I so identify with their pain because we took a computer and against my protests – because I knew this wasn’t possible – my mother was like this Mac has a virus and took it to CompUSA. Motherfuckers formatted our hard, without permission.
Alex Hillman: It happened all the time.
Amy Hoy: It happened a lot. So being able to say, even though they didn’t come out and say, “Please don’t erase my hard drive”, you knew…
Alex Hillman: I knew.
Amy Hoy: Because you’d seen this problem, you’d read between the lines based on essentially ethnography/Sales Safari.
Alex Hillman: Even for the people who hadn’t been through that experience of Best Buy telling them, “We can fix the problem by erasing your hard drive”, if I can anticipate that most people are not going to be super excited about being told, “We’ve got to reformat your hard drive and reinstall your operating system. You’re gonna lose everything”, nobody likes that news.
Amy Hoy: No, nobody likes that news.
Alex Hillman: So if I can say, “Sometimes this has to happen, but I’m pretty sure that if you get this in today, I can jump on it. We can deal with the virus before it gets any worse and I’ll be able to do it. If it’s the virus I think it is, I’ll be able to do it in a non-destructive way.” Instant sale. And they’re so thankful. They’re so grateful and holy shit, did they tell everybody about me? “This whiz kid down, basically Doogie Howser for computer viruses down at the computer shop, if your computer is acting weird, just take it to him, he’ll figure it out.” My boss loved this, of course because they’re making money hand over fist and happily paying me 20 bucks an hour, for me in high school was awesome money. It was awesome money.
The other thing, and I sort of bounced back and forth between that – there was a retail component to that job as well – I wasn’t just like back in the computer fixing pit, but I did more forward facing retail at Staples; it was the same sort of thing, though. It was computer retail.
Amy Hoy: It was commissioned, you were saying, right?
Alex Hillman: Part of it was commissioned; we were commissioned on selling certain upgrades and all those warranties that everybody hates and things like that. The thing that was interesting; I wasn’t the only person who worked in my department selling business machines is what they called it, which is computers, printers, fax machines, cell phones, GPS’s and then also cables, accessories, software, all of those sorts of things.
Amy Hoy: So most of the store?
Alex Hillman: Well, there was also the furniture department, paper supplies. It was really only like a quarter of the store; I think we were a large percentage of the revenue.
Amy Hoy: That makes sense.
Alex Hillman: So what was it interesting was, so I had a couple of coworkers and I had a great team and I really liked my manager and it was a job where I had a lot of fun. I really did enjoy it. I watched some of my teammates sell computers and accessories and things like that in a very particular way where they’re basically going for the highest sale, whether that was based on commission or we got rewards based off on sales volume. So it wasn’t really a commission per se, but I was like top sales person for the week because I sold, the $3,200 Compaq Presario and I sold six of them.
I took a different approach because I watched most of the people come into Staples buying their very first computer. They were timid, they were afraid, they were confused. They saw these little placards in front of the computer that lists out a bunch of numbers and they didn’t know what any of it meant. Like, is that number better than that number? That’s where their heads were. Meanwhile, none of the other salespeople are asking them, “So what are you going to use this computer for? Are you going to play games? Are you doing word processing? Are you going to get on the internet? Do you want to make music CDs? Do you want to burn CDs?” Nobody asked those questions, and I started asking those questions. That was out of the gate. “Hey, what’s up? My name is Alex. I see you checking out whatever computer and know nothing about the computer. What do you want to be able to do with this thing?”
Then from what I would deduce, I would say, “All right. Sounds like these are your top two options. Let me tell you why this one is better than this one, what are the pros and cons between the two?” They’re instantly at ease. I’ve spent a bunch of your time listening to them to find out what they actually showed up for. In some cases, they don’t even know. They don’t even know what a computer can do. If they don’t know, it’s like, “Alright, well, here’s some of the things that you might use it for.” “Oh right. We’re processing. I do want to do that. Is it is a hard to get on the internet? Is that expensive?”
“Well, you know, we actually have deals with a couple of local providers, and I can make some introductions and it costs this much a month and extra phone line.” I basically helped them out with the math. Everything I’m doing to make them feel smarter.
Amy Hoy: Oh yeah.
Alex Hillman: They’re feeling more confident and I’ve got them whittled down to two really good options and at that point, whether they’re within 100, 200 bucks of each of each other, it doesn’t matter. They’re going to buy. There’s no way they’re not buying it. If they don’t buy it today, it’s only because they’re gonna go home…
Amy Hoy: It’s because you helped them.
Alex Hillman: …talk it over and they will come back and not only come back to buy the computer, they’ll come back and ask for me, which drove my coworkers nuts because nobody asked for them by name. I always got asked for by name, because I’d go out of my way to teach them a little bit about computers, to help them feel really comfortable in making what was this significant purchase.
Again, we’re talking $2,000 was a cheap PC. When stuff dropped below a grand, that was a big deal and that took a really, really long time and they weren’t very good. That was the eMachines and they were crap. My coworkers sell them to people who were clearly cheaping out, but not help people understand why even $200 more was worth spending.
Amy Hoy: Remember they had those crazy swoopy purple cases though? Oh, that was so crazy! Them and the Acers.
Alex Hillman: The industrial design. Yes. And the Sony’s. So there was that, so it was making them feel at ease, basically I’m earning the sale.
Amy Hoy: Yeah. Their pain wasn’t that they didn’t have a computer, their pain was so they were like fucking intimidated.
Alex Hillman: Because computers are intimidating. First purchase, like buying your first car or first, any major appliance or whatever.
Amy Hoy: That’s the leap that most people don’t make until they’ve been beaten down and reeducated, the software or the product is not the salt solution for the pain necessarily. It is a deeper level. We talk about this in 30x500, because we’ve had extremely similar situations and done our research and learned that this is pretty much universal. The real pain that Freckle solves for people is that they don’t have good compliance for their time tracking for their employees or their freelancers or themselves. The issue isn’t, “I don’t have time tracking software. I need to buy a time tracking software. Look, here’s a panoply of times softwares. I pick this one.” No, the problem is that they don’t have time tracking that they do because compliance is the issue because of pain and discomfort and stress and annoyance.
Alex Hillman: So the other thing that I learned…
Amy Hoy: Okay, sorry, back to you!
Alex Hillman: That’s okay. The other thing that I learned was – and I didn’t know this word at the time, but I realized when people would come back asking for me by name that I could do something and that was sell more stuff.
So my coworkers were approaching things from a perspective of, I’ve got to get every dollar out of this person’s wallet, right now.
Amy Hoy: Oh, premature optimization.
Alex Hillman: Premature something. And I took the approach of helping them feel so confident in their first purchase – and maybe even making them feel comfortable spending a little bit more, and also maybe not selling the bundled printer today. Because I’m like, “If you don’t have something to print today, you don’t need to print it today. When you’re ready for a printer, come ask for me and I will help you get the best printer for what you actually…Do you want to be printing holiday and greeting cards. Do you just want me to be doing like schoolwork for your kid’s printing out papers? Different kinds of printers. Are you going to be printing out manuscripts? Is this for a business? You should probably get a laser printer – it’s a little more up front, but you’ll save on ink.” All of these kinds of things. I was basically playing the customer lifetime value game, even though I wasn’t tracking my customer lifetime value. That was not what I was – my employer probably was. I was going at it from a perspective of, I want to earn the sale. I want to earn your trust and when you come back, everything you ever need for this computer, I want you to think of me.
Amy Hoy: Just call your name and you’ll be there.
Alex Hillman: Just say my name three times, and I’ll be right there in your computer room.
Amy Hoy: I was going for more Jackson 5, you went Bloody Mary/Beetle Juice.
Alex Hillman: Interesting how thin the line can be!
So, I think my skills in these sort of two components culminated at – do you remember when some of the States started doing PC tax-free week?
Amy Hoy: Yes! I did Apple demo days at Best Buy and CompUSA during those times, but I didn’t earn any money. I was just a little fan girl wearing a special Apple shirt that iMacs all over it!
Alex Hillman: Right. So I made a shitload of money and here’s how.
Amy Hoy: You did a better job.
Alex Hillman: So Staples had massive campaigns when the State did this and it was sometime in August, I want to say, which was cool because it was right before my birthday. This was like a super, super birthday party for me.
Amy Hoy: Alex only ever earned money to throw parties for the first like two and a half decades of his life.
Alex Hillman: What’s changed?!
Amy Hoy: Well, now it’s a house party as in you get a house for it.
Alex Hillman: The week – and I wish I could remember what year it was – I’m going to ballpark, it was probably somewhere in 2000, 2001, when they did this; the first tax-free PC week that we participated in, my sales incentives, commissions, bonuses, and things like that – that is excluding my hourly pay. So, this is just bonuses, was more than the general manager of the entire store made in his salary in the entire month.
Amy Hoy: So you told me this earlier and I was really impressed and you’re saying it again, and like, how did you know what your general managers salary was?
Alex Hillman: Because he said so.
Amy Hoy: Oh, he said so.
Alex Hillman: They could not believe that I had moved so many damn computers.
Amy Hoy: Well done.
Alex Hillman: Yeah.
Amy Hoy: That was your commission?
Alex Hillman: That was commissioned. That was bonus. Sales volume was – I wish I could remember what the numbers were, but it was fun. I was lining them up, just lining them up and it was a beautiful thing that, and again, I had built in word of mouth because people that have been considering buying a computer were maybe waiting off for a few weeks as they knew this event was coming. Not only were they coming in, but they told all their friends to come in and ask for Alex. So again, all my coworkers are super pissed because all these people are coming in and they’re like, “Oh, you know, it’s okay. I get, it’s really busy and I really just want to wait for Alex” and they won’t get their incentives unless their code gets keyed in with the sale. It was awesome!
Amy Hoy: That is lovely. You essentially grew your audience with ebombs by educating people. You couldn’t have done a hard sell; you can’t force someone to buy stuff so you educated them. They could have easily walked out and gone to the other store and used the knowledge, but because you helped them and made them feel so at ease and attacked their actual pains and made them feel understood and listened to, they wanted you to earn money. People look at commerce and selling things as it’s some sort of horrible, contentious, abusive relationship, and it can be, but it is not innate to the way of selling things. It is not required.
Alex Hillman: Whatever I’m selling – this is true of all the things I did the entire time I spent consulting, the agencies that I worked for, Indy Hall itself, the business that we run together. I can be good at a hard sell, but I don’t like it. There are people who like it, I’m just not one of them. There are people that really get off on that boiler room game. I love being on the same team as someone who I know I can help.
Amy Hoy: Absolutely. That is a great feeling.
Alex Hillman: And I love them feeling we’re on the same team. When somebody dropped three grand on a computer setup and were leaving high- fiving me and being like, “I’m so excited.” I’m like “When you get it home and set up, if you have any questions, come talk to me.” They’re at ease, they’re excited, they just basically paid the same amount of money would pay for a used car.
Amy Hoy: It is so possible to make people feel good about giving you money and then the money to you feels like a thank you and then they get what they want and they’re happy. It’s a very awesome feeling. That’s why business is magical if you ask me.
Alex Hillman: I agree.
Amy Hoy: And it’s wonderful.
Alex Hillman: Remember your first computer, how cool did that feel? That was life changing. Even if it was kind of intimidating. The first time you get on the internet. To be a part of so many people’s first experience with something that life changing in the same way that we get to be a part of so many people’s first product sale. It’s the coolest.
Amy Hoy: It’s awesome. It’s so great. Every time you say ‘internet’ I hear drunk Jeff Goldblum.
Alex Hillman: “Internet…”
Amy Hoy: “You are the creator of…you’re the purveyor of great stuff!” Sorry guys!
Latest Stacking The Bricks Episodes
- EP44 - What's Coming Next
- EP43 - Jonathan Stark has Questions About Self Publishing
- EP42 - What is Sales Safari? with Eteinne Garbugli
- EP41 - Questioning Our Assumptions with David Dylan Thomas
- EP40 - Worst Boss, Best Boss with Lauren Williams
- EP39 - Grow your Audience with Kevin Chemidlin
- EP38 - Don't Pee in the Pool with Nilofer Merchant
- EP37 - The stuff they don't teach you in school, with Mayur and Shahzada
- EP36 - Building Trust at Scale with Will Toms and REC Philly
- EP35 - Debugging Humans with Michele Hansen and Colleen Schnettler
- EP34 - "Is this really gonna help people?" with Tony Lopes
- EP33 - Agency Talk on The Iowa Idea
- EP32 - An (Overly) Honest Review of The Tiny MBA with Brendan Hufford
- EP31 - The Zen Koans of Business with Chariot Solutions
- EP30 - Sales for Founders & The Tiny MBA
- EP29 - What are you optimizing for?
- EP28 - Double your Conversion Rate with Brennan Dunn
- EP27 - You can ship. But will anybody buy?
- EP26 - Don't wait 18 months
- EP25 - Features, or marketing? (Part 3 of a series)
- EP24 - Teamwork is harder than you think (Part 2 of a series)
- EP23 - "Everything will get easier if..." (Part 1 of a series)
- EP22 - How to make an offer they can't refuse (Outreach Masterclass with Kai Davis)
- EP21 - The most dangerous room in the house
- EP20 - Swift Kick in the Ass (Accountability)
- EP19 - A Swift Kick in the Ass (The Game of Business)
- EP18 - Our Profitable Mess (and how we're cleaning it up)
- EP17 - Kids Incorporated
- EP16 - How do you design products people love?
- EP15 - Why "Lambo Goals" never keep you motivated
- EP14 - What are your New Years Pants?
- EP13 - Justin Weiss's shift from side projects to successful product launches
- EP12 - "I'm shipping ebombs, now what?" - From Pain to Product with Nick Piegari
- EP11 - "I just need someone to hold me accountable."
- EP10 - Why do people worship the struggle of entrepreneurship? And how to avoid it.
- EP9 - How to clear a path for product success
- EP8 - From pain to product Masterclass with Amanda Thomas
- EP7 - Part two of "The Life-changing Magic of Shipping"
- EP6 - "The Life-changing Magic of Shipping"
- EP5 - The evil voicemail effect
- EP4 - Shipping is a skill
- EP3 - We didn't hit our 2014 goals. But...
- EP2 - Scott Hurff's first product launch was "wrong", but $50k later he knows it didn't matter.
- EP1 - How Pat Maddox went from 0 subscribers to over $3k MRR in 10 days