Like most writers, I am wholly unqualified to hand out life or business advice — but I’m going to do it anyway. Unlike most writers, I don’t just piggyback on the experiences of others — my insight has been shaped by my own first-hand experiences in business. Between January 2014 and August 2018, I owned a company called OMGTEA that sold detox tea products exclusively through an online store. The company was perhaps best described as an “Instabrand” — a company that uses influencers and online growth marketing strategies to tap into captive consumer markets that only exist on social media platforms. In the space of four years, with no outside help, my company sold hundreds of thousands of detox tea products to tens of thousands of customers all over the world. Selling online and marketing through social media allowed the business to grow exponentially with minimal effort. For Instabrands, the normal rules of commerce don’t apply — they tend to operate in the shadows. While traditional retail brands may struggle to get sales and cover costs, many Instabrands are able to generate millions of dollars in revenue with few staff and no capital backing.
I didn’t set out to become a tea mogul. In fact, I don’t particularly like tea; I started OMGTEA on a whim. It was a social-media-based experiment that shouldn’t have lasted longer than a few months. Fast forward four years, against all odds, my throwaway initial investment of NZ$1500 turned into a business capable of generating twice my previous annual salary as a lawyer, from a single day of sales. There is something incredibly empowering about making money through unconventional means where education, work experience, and connections play little part in whether or not you succeed. Gone are the days where you need hundreds of thousands of dollars and industry experience to start a consumer product business. Now, all you need is a laptop, a mobile phone, and a basic understanding of influencer marketing. Barriers to entry no longer exist. The reality is that if you can access a market, you can sell anything. Almost every market in the world can be accessed through social media.
On the eve of my 30th birthday, I took pause to reflect on my time in business. I had spent an inordinate amount of time trying to make OMGTEA work — thousands of hours, years of my life. I reached a point of complete social media exhaustion. I simply couldn’t bring myself to spend any more time on Facebook or Instagram or Snapchat. It was clear that I needed a change. In the end, I had to ask myself, do you really want to spend any more of your life selling tea? Do you really want to spend any more of your life on social media trying to figure out how to crack an algorithm and make a post popular? Do you really want this to be the sum of your existence?
When you walk away from a business that is making money, the reaction is always the same. Why? Are you insane? Do you know how many people would have killed to have been in your position? Here’s my short answer: “Because I wanted to, yes, and I don’t care”. In many ways, I felt compelled to write. I have never read an honest account of what it is actually like to be a small business owner. I don’t know if it’s because people are unwilling to share their knowledge or they simply don’t know how to communicate their experiences in written form. Most business books are nothing more than erotic fiction for “entrepreneurs”. Do-nothing authors have become adept at selling a fantasy and tapping into the dreamer inside of all of us who wants to escape the boredom of a 9-to-5 existence. As a first-time business owner, I was always interested in how someone went from point A to point B. How did they go from nothing to something? I wanted details. What did an average day look like? How did they find their first supplier? How did they decide when it was time to release new products? In most cases, months of time get distilled into single sentences. I wanted to chronicle my time in business from start to finish in as much detail as possible.
When I started out in business, it was like the Wild West. The right social-media post could have generated hundreds of orders with very little effort. If I wanted to reach a sales target for a week, I knew what I needed to do. I could do a social media post or send out an email to my subscriber base or do a giveaway with another brand. For a time, it was predictable. Within a year of starting my business, Facebook and other social media platforms began throttling views and engagement. What affected the engagement of brands, naturally also affected the effectiveness of influencer posts on the same platforms. The things that made ecommerce so appealing, like low cost marketing and the ability to access a diverse pool of customers, quickly disappeared.
While it was still possible to generate strong revenue by utilising social media, it was clear by the start of 2017 that the control dynamic had shifted. Companies like Facebook, Google, and Snapchat were in complete control. This placed me and many other small business owners in a difficult position. While social media had given me everything, I was conscious of the fact that I could wake up one day and find that my marketing channels had disappeared overnight. Knowing this, I tempered my ambition and shelved my expansion plans. As much as I wanted to make money, I didn’t want to spend the rest of my life worrying and trying to keep up with pointless algorithmic changes designed squeeze more and more money out of creators and small business owners.
Flash-in-the-pan businesses tend to have predictable lifecycles: there is a boom, followed by a period of rapid decline, and the companies then just fizzle out over time. Owners then spend the rest of their lives trying, in vain, to recreate their previous successes without acknowledging the role that luck and timing played in helping them get to where they were. I knew that I had been lucky and the last thing I wanted was to spend the rest of my life trying to right the ship. Sometimes, thinking doesn’t help. Sometimes, you have to know when to take your chips off the table.
When I finally made the decision to move on, I knew that I had two options. Option one, sell the business and walk away with a reasonable sum of money, or option two, sell through the company’s product stock and write about my experiences in business. I chose option two. For whatever reason, having the freedom to write without constraint or oversight mattered more to me than the money I would have received as a result of selling the business as a going concern.
Perhaps the most rewarding part of owning a small business is having autonomy over the decision-making process. Every morning you wake up and get to decide how your day plays out. You have the freedom to think laterally and impact change by coming up with innovative solutions to common problems. When a business’ cash flow is strong, the decision-making process has no bounds. Need a new supplier? Jump on a plane to China. Need more staff? Find the right people and hire them. Need new packaging? Find a company to execute your vision. To facilitate autonomous decision-making, you first need to establish a predictable and reliable pattern of sales.
If you can predict how much money a business is going to make on any given day/week/month, you can start planning for the future and forecasting sales. Predictability allows businesses to access outside capital with ease; it is the one thing buyers look for when considering whether or not to purchase a business. To achieve predictability, businesses need reliable marketing channels. For a long time, the most reliable marketing channels for larger companies were print and television advertising. While nothing is a “sure thing” in business, marketing through these channels resulted in predictable sales patterns that businesses could rely on for growth. It was static and expensive, but it was predictable. Internet-based advertising and ecommerce changed everything. In the space of 15 years, it became possible to access almost every individual in the world through hyper-targeted marketing. The trade-off is that while marketing channels became easier for smaller businesses to access, the outcomes are now far less predictable. A daily television ad spend for a desirable time slot might cost $20,000 and generate $100,000 in sales, while a simple boosted Facebook post might cost $500 and generate $30,000 in sales one day, nothing the next day, and $200 the day after — it is impossible to predict. A good business doesn’t necessarily experience year-on-year growth, but it does have predictable sales.
The goal for any business, big or small, is to get to a point where sales are so predictable that they function almost like annuity-type payments. This is the primary reason subscription-based businesses are so popular. If you, as a business, can get customers to sign up to pay $20 per month for the rest of their lives, you know how much you are going to make and can start investing and planning for the future. Obviously, it’s not that simple and it is next to impossible to create life-long relationships with customers; but it is possible to hold customers for extended periods of time if a product offering is compelling enough.
If you imagine a sliding scale of predictability, you might find Netflix on one end where customers pay monthly and the platform currently experiences great customer retention and on the other end you might find a basic-consumer product that a customer only ever purchases once or twice in their lifetime. Every business can be placed somewhere along this scale. The more stable a business is, the less it will move down the scale over time. A business like Netflix may be a 9/10 in terms of stability in 2018, but could drop to a 6/10 in 2019 if its product offering doesn’t match up with customer expectations. There is a commonly-held belief that when businesses start sliding down the scale, they should simply adapt. Sometimes businesses can’t change because there is a fundamental flaw in the business model that cannot be corrected.
Everyone has a different relationship with business. My relationship is perhaps best explained with a clumsy analogy. In the beginning, it was an adventure — everything was new and exciting. I experienced things I had never before experienced and developed a new-found confidence and intellectual curiosity that completely changed my world view. I was making money faster than I could spend it and had all the free time in the world. My friends and family thought I was throwing my life away, but I didn’t care. I was in love. The highs of the relationship were intoxicating.
A few years into the relationship, things started to change. Our interactions became strained and, for the most part, we couldn’t stand to be in each other’s company. We would have a few great months together where everything would start to feel normal again; but as soon as I felt like we were making headway, something would happen that would throw off the balance in our relationship. I often thought about leaving, but our identities had become so intertwined that I had a hard time imagining life without OMGTEA. I didn’t have the confidence to start over. I was terrified of being alone. But, no matter how bad it got, we somehow always managed to find a way to resolve our differences and come out the other side.
I thought that I could change OMGTEA and make things go back to normal, but every person has a breaking point and I had mine. I started to think about how decisions made me feel. When I thought about going to Palm Springs for a getaway, I felt incredibly light. It was something I would have done in an instant, without a second thought. It was my benchmark for happiness. When I thought about staying in the relationship, I could feel my blood pressure rise and my heart start to race. There was an inexplicable heaviness I couldn’t seem to shake — a gut feeling that put a strain on every other part of my life. I finally resolved to move on — I had to, for my sanity. I couldn’t do it any longer. I looked in the mirror, tears streaming down my face, and said to myself, “If Salman Rushdie can have the confidence to pursue Padma Lakshmi, then you can have the confidence to leave OMGTEA.” So, I did. I sold all of my possessions, packed up my remaining belongings, and walked out the door.