Ep 1: Max scales his side hustle

[00:00:05] MAX: I’m Max. I'm the Chief Creator of Max'IS Creations. I first designed the mug with a hoop in second grade, we were in art class and our teacher told us to make a mug. I like basketball, hot chocolate. So, I decided to put a hoop on the back of the mug. My friend started to copy me and I, I got a little annoyed by that.

So, I asked my mom...

[00:00:26] JEN: He was a little kid and he came home and he was really upset. The kids, the other kids copied his mug. And, you know, I did say, you know, when you grow up, people will not only pay you for your art, but they'll pay you for your ideas. And he's like, what do you mean? And so I said, well, you could make 20 mugs and sell them for $10 or someone can make a thousand bucks and give you $2 a mug.

And this eight-year-old kid in the ride home from school did the math and he's like, I want to do that. And so I said, that's a great thing to do. And he said, well, how do you do that? And I said, well, I don't really know how you do that. But there were people out there that know how to do that. And a few minutes go by and we're driving home and he goes, mom?

And I said, yeah?

And he goes, I don't know any of those people.

[00:01:08] HOST: Hi,I'm Andrea Marquez -- and This is Small Business – a podcast by Amazon.  I assume, since you're listening right now, you're curious about what makes a small business tick. Maybe you're an entrepreneur yourself, and you're looking for tips on things like how to scale up, hire a great team, or promote your brand. Or maybe, like me -- you're dreaming of starting a small business one day, and wondering if you've got what it takes. On this show -- I'm making it my "business" to find out everything I can about what it takes to turn a great idea into a small business by asking small business owners themselves and focusing in on the pivotal moments, decisions, and challenges they are going through. I wanna know how to think scrappy and small -- and of course -- how to grow and succeed. By the end of this episode I will recap everything we learn today into [00:02:00] tangible, actionable takeaways for you to use in your small business journey. So keep listening. Things are about to get interesting.

[00:02:15] MAX: We started reaching out to different people and designers to first make 3d printed mugs. And then we found a manufacturer who we work closely with who makes the mugs now.

[00:02:27] JEN: And so that is how the business started.

[00:02:29] HOST: Ok --so now you've met MAX Ash and his mom, JEN. There's pictures of Max's original prototype mug on his website -- Max'is  (spelled M-A-X' IS Creations). It's this super-cute clay mug that has a hand-fashioned basketball hoop on it... you know... to make drinking your hot chocolate (or in my case, coffee) more fun. Since then -- the mugs have evolved to more sophisticated basketball, baseball, hockey, and soccer designs [00:03:00] (one of which I’m already a proud owner and have eaten ice cream in). Each with some kind of hoop or net -- perfect for dropping-in those tiny marshmallows. Such a great idea. I feel like only a kid could have thought of this!

[00:03:15] JEN: My husband was really smart. Max and I are doing a lot of the work. And then there's my husband behind the scenes is doing his piece and he had the brilliant idea to make sure we protect his intellectual property. And so we filed for a patent before he went to Fenway park and showed anybody this product.

And he has actually monetized his intellectual property. He has six patents.

[00:03:35] HOST: Six patents between the age of 8 and 17. I think this shows how important it is to protect your intellectual property to be able to then scale your business. Without protecting his intellectual property, Max wouldn’t have been able to keep growing to where he is today! His mom is super proud, for obvious reasons, but there's even more to the story.

[00:03:56] JEN: So,Max happens to have dyslexia. He has a language-based learning disability. [00:04:00]  He goes to a special school for kids who learn differently and they do a lot of multi-sensory learning, which is why he was making this mug in art class.

And at the time when he was eight years old, we were worried about his future. And we were worried we had this bright kid, but he had a learning disability, which we now call a learning difference, cause we think he's differently-abled. When he came up with this idea, we're like, oh my gosh, this kid's got one over on all of us.

But in the beginning it was really like, I wanted to teach him about his strength and that his ideas matter. And so for us, this business has become a labor of love.

Not only to help Max sell mugs because Max is definitely an entrepreneur and is interested in monetizing his ideas, but also to showcase to other parents the upside of seeing the world differently. And that instead of just looking at what our kids maybe struggle with to look at what their talents and strengths are.

[00:05:00] HOST: It strikes me that this is pretty good advice for any small business owner, actually. Don't limit yourself because of your differences – focus on the areas where you know your unique strengths and ideas can shine. You can always get help to do the things you need support with. It's an approach that's worked well for Max'is Creations.

[00:05:19] ANDREA: So seeing this from today, what was that moment when you said "we're going to invest more time than we thought on this quote, unquote "side hustle"now, and actually see what we can do."

[00:05:33] JEN: I was calling retailers and different people looking at like any, you know, is anybody interested in this? And we had interest from a company called UncommonGoods. And so they ordered a small amount and they put it up on their website and they got thousands of likes of the product and they ordered two containers full of mugs. And so Max was profitable before he got his first shipment. And I would say, that was the first kind of moment where like, oh my gosh, [00:06:00] we're in the mug business. And then there've been a series of other inflection points that have led to more time being spent on the business as the business has grown and gotten more complex. And Amazon was really the other major inflection point. The people who are our manufacturing team, our sourcing team, who is another family business who've been amazingly instrumental in our business. They put up the mugs on their Amazon storefront and they started to sell.

And so Max got offers from companies that want to buy his business. He didn't want to sell the business, but we met with these people to learn about how they value the business. And, you know, they kind of gave Max a number and, and Max has a different number. So, Max told them what his valuation, what he wants to sell the business at, if you were ever, ever to sell it.

And it's a big number. And so, people told us, well, you're not there now, but you could get there.

[00:06:53] ANDREA: I love so much that you were able to do this as a team together and use your strengths and that as parents, you were able to give wings [00:07:00] to this idea as well.

[00:07:02] JEN: But I don't think his goal in life is to grow up and continue to run just a mug business. I say, "just" because I expect Max will have multiple businesses, but we have a few years with him being the face of the brand and a lot of people resonate with his story. And we are engaged with Understood.org, which is an online resource for families, for parents of kids who learn differently. And Max actually donated $25,000 to them last year. And we're continuing to, to engage with them and they want kind of to tell Max's story as well to inspire other kids. But we feel like there's this window of opportunity. And if we went from what we were selling to a million dollars in a short period of time, we thought, well, now's the time. So, we've got a few years.Maybe we should just go all in and invest. And as Max put it, if, if we're selling all these mugs without us doing anything, just organically, imagine if more people knew about it.

[00:08:00] HOST: So as you can hear, Max and his family are at a turning point. The fun little idea that they initially supported to help Max learn a valuable lesson has turned into a full-fledged and quite successful small business. Now they have some big decisions to make.

[00:08:18] JEN: And so that led us to have this conversation of, do we want to invest? Do we want to spend the time and the energy and the money to invest and we can't do it ourselves. And so we're now bringing in some advisers, some people who've done this before to kind of help us a little bit, and you know, Max talked about some of the places we're thinking of investing. So product development, Max had an idea for a product, and some product extension. So we have a design team that's now working off of his idea.

[00:8:50] HOST: Max's mom says there are still some areas they could focus more on -- but a lot depends on what they decide their long-range goals are.

[00:8:58] JEN: We're like, [00:09:00] well, should we also invest in social media marketing, which we've done nothing. And all of this goes back to this family conversation of, well, what do we do? You know, either for us to have people who are helping us run it or eventually. You know, to sell it, whatever he wants to do with this amazing idea that he had, that the world would be better if we could play with our food.

[00:09:20] HOST: I think it's great how Max's success is rooted in who he is as a young person, but also in the rock-solid support he's received from his parents, and from the entrepreneurial community in general.

[00:09:32] JEN: We learned a lot, like we didn't know how to value the business and we were not business people. And so we're like, oh wow, this is actually like, people want to buy your business Max. Like, it's really good. And so that got us to talk to other people who then talked to us about the opportunity. And we haven't done a lot to build the brand, so to speak. Again, we just let Max's story tell itself.

But in addition to like the product line extensions and the Amazon advertising, we actually have some other things [00:10:00] in the works to grow the brand. So we licensed to a company in Australia and they made some mugs we don't sell in Australia. So they made some mugs for a couple of years.

And Max just got a royalty and we have another licensing agreement in place for an exciting new thing coming up this spring and kind of us partnering with other companies to leverage their expertise, to take his brand and his ideas to the next level. And so that also is a way for people who don't want to do it all themselves, like we like the thought of ordering more mugs and more inventory and managing all of that is a little scary.

And so partnering with people who do some of that, but who will tell Max's story is, is another thing that like we have on the books, so to speak and we're working on some fun things to take his idea and do different things with it.

[00:10:54] HOST: So, I was curious how all this was sitting with Max -- who is now at the age where he's starting to think about college. It occurred to me that the goals of a 17-year-old [00:11:00] might be pretty different from those of an 8-year-old. I asked him what his interests are these days.

[00:11:11] MAX:  Space and astronomy. I wanna find extra-terrestrial life in the universe. I probably eventually want to go to Mars, but I don't know about the moon.

[00:11:28] ANDREA: The world is, is just not big enough anymore. Is it.

[00:11:32] JEN: I will say also, you know, Max has done a million dollars in sales in the past year, which means he's done several millions of dollars of sales over the years. We invest that money back into the business. We have a huge order of mugs on the water and in queue for holiday season this year already.

[00:11:55] ANDREA: Max, this one's for you. As a young entrepreneur, what would be your advice to other young entrepreneurs [00:12:00] who have an idea, but don't know where to start?

[00:12:04] MAX: The biggest thing is you got to keep it simple. You can't, can't go all out on the first run. My idea was luckily pretty simple. Some people's may not be, but I think you have to go to the, the first step in it and see how that works. And then if you have to learn like what's good, what's not, and then you can kind of level it up by there, um, and kind of see the success that it has step-by-step and like leveling it up.

[00:12:32] HOST: And like his mom, Jen, Max is quick to attribute some of the success of his small business to the support he's received along the way.

[00:12:41] MAX: Getting help from other people is a big thing. Finding great partners to work with, working with your family, working with your friends and just finding people who will help you in the long run is very important. And, you also have to like, just stick with your gut. If it feels good, then, then you should [00:13:00] stick with it and you should be confident in your idea.

And, try and not give up and just, persevere.

[00:13:08] HOST: I asked Max if he saw any connection between his entrepreneurial streak, and his passion for outer space. I mean... you never know. I was thinking... maybe he'd design a rocket shaped mug. But his answer was much bigger than that.

[00:13:26] MAX: So like I found my mug idea, kind of out of the blue and nobody else had, so I'm hoping that in the future, I can use my, my crazy ideas to find some aliens in the universe.

[00:13:42] HOST: MIDPOINT: You're listening to This is Small Business -- brought to you by Amazon. And I'm your host Andrea Marquez. On this show, I want to take you guys through my journey of figuring out what it takes to start a small business today by asking small business owners themselves and focusing on the pivotal moments, decisions, [00:14:00] and challenges they are going through.

Did you know that more than half of the products sold on Amazon come from small-and-medium sized businesses? Max and Jen, who you just heard are one of the many small businesses selling on Amazon who have tapped into some of the tools and resources offered to help them succeed and grow. You can learn more about them in our show notes on our website ThisisSmallBusinesspodcast.com.

I loved talking to Max and his mom about their hopes and dreams for the business. And what struck me is that before you even think about scaling your business, you need to protect your intellectual property, and then-- as you start to scale up a business -- you really have to ask yourself: Is this what I want to be doing? If it is –then it’s about focusing on what investments you need to make to really make it happen. For Max, getting help was a very important part, especially now as the business continues to grow, like Max. [00:15:00] Max enjoys being a business owner -- but he also has big dreams, like any 17-year-old. He told me he wants to head off to college -- maybe visit South America or Canada... and of course -- as you heard -- he wants to find alien life. At the same time, his business is doing really, really well -- and his parents feel they kind of owe it to Max to help him run with it and grow the business. At least for a while. So they're looking for help with that. The kind of help my next guest can offer.

Verne Harnish is founder of the world-renowned Entrepreneurs’ Organization, with over 16,000 members worldwide. He's also the author of a suite of books, and the Founder and CEO of Scaling Up, a global executive education and coaching company with over 200 partners on six continents. He teaches at MIT, and has spent the past four decades helping companies scale up. He's definitely one of the people [00:16:00] to call when you're looking for advice about how to help your business "grow up."

[00:16:05] ANDREA: Vern. Thank you so much for being with us today. I'm very excited to hear your thoughts on a couple of things.

[00:16:10] VERNE: Well, I'm looking forward to it.

[00:16:13] ANDREA: First, can you just give me a little bit about your background?

[00:16:18] VERNE: It’s a riches to rags story. My dad had a very successful company in the rocket space, you know, era, and, and then he lost it all in the 73 recession and we sold off everything, had what we had left on a couple of wheat trucks, and I moved from Colorado to Kansas and he and I became janitors.

And the rest is history. I learned business at 16 and helped build a company while I was in college. And then look, I felt like had already been in business for a dozen years so in 84, I launched the Association of Collegiate Entrepreneurs. Then Y E O YoungEntrepreneurs Organization. [00:17:00]

Then we all got old. And so we got rid of the 'Y'... And today it's the Entrepreneurs Organization, 16,000 members. And then I've got a company globally that, that serves that market. So that's kind of the quick story.

[00:17:13] HOST: Ok...so at this point, as a newbie to the small business world -- I was curious...as I often am, to hear what he'd have to say about businesses facing a challenge like Max'is Creations. In other words: How and when should you scale your side hustle? I asked him what he thought was the single most important thing someone in a position like Max should consider.

[00:17:33] VERNE: So I want to, I want to share what Bill Gates actually ended up considering the best question he'd ever been asked.

Entrepreneurs like this, gentlemen, they're wicked smart, but sometimes we just end up working on the wrong question. And it was a question that Regis McKenna taught the late Steve Jobs and Intel and Genentech.

And when I was in college and I had this idea, I wanted to build the Association of Collegiate Entrepreneurs, I said, all right. [00:18:00] "If Regis was good enough to help Steve get to 2 billion in his twenties, maybe he's good enough for me." So I cold called him and that's one of the things you do.

You just have to be bold. And I said, look, Regis, I want to build the world's largest entrepreneurial organization. Would you help me? He said "yes." I was his only free client he ever had. It was like 80 grand back then in 82 just to engage him. And he said, all right, I'm going to teach two things.

He said, you need to set aside one hour a week for marketing. So the first lesson here is, and the research is clear. Our senior faculty member at MIT at Roberts found when he studied high growth companies, one of the keys is somebody was focused on marketing and you need marketing to attract attention, investors, talent, new customers.

And then he said, here's what I want to do in that one hour.

And he said, and this is the question: Take a piece of paper out. Who are the 25 [00:19:00] most important influencers that you need to be talking about and getting behind your idea? And he said the bigger, the names, the faster you will scale. Now I'm young, and broke, and so I'm like, all right, it's 1983. President Ronald Reagan, look I'm kid at Wichita state. I'm going to get the President of the United States to be the first to use the word entrepreneur, no president had ever done that. And Andrea, I did and got invited to the White House. And then I put down Steve Jobs and I put down Michael Dell.

And then there were two important magazines, Inc, which is still around today and, and Venture. And I put down 20 more names and all we did was spend an hour, every week, figuring out how I was going to get to one of those people, including the President of the United States to get behind my idea it's crazy: 36 months later, we were global.

[00:19:55] ANDREA: Wow.

[00:19:56] VERNE: And so that's what I would encourage them to do. Take a piece of paper out like Steve Jobs [00:20:00] did when he said, I want to launch what became iTunes.

He made a list of the top 25 players in the music industry. He didn't know one of them, not one of them would return his phone call. So then what do you do now? Who do I know that can get me to that person? And Steve knew Don Henley drummer of the Eagles invited Don over said, Hey, Don, you know anybody on the list?

He goes like, I know that guy. He said well connect me. And it was crazy, you know, 24 months later, he's like the king of music distribution. I was like the king of collegiate entrepreneurs globally. So make the list and work it.

[00:20:35] ANDREA: Okay. So basically the first thing is marketing, in a general sense. And then the other thing is very specific to maybe influencer marketing or, or investors or people with a, with a certain level of expertise, name, and brand that can stand behind and legitimize or, or give a certain reputation to your product.

[00:21:00] VERNE: Yes. Yes. And it's a combination of all of those on that list. And be bold, be absolutely bold.

[00:21:07] ANDREA: And when do you, as a small business owner, when is the right time to do this?

[00:21:15] VERNE: So it just depends on what your ambitions are. This, this young guy has huge ambitions from what we can tell. At the same time, the thing he's going to have to watch out for you do not want market share. You want profit share. And so in essence, he has got to cross this chasm where he is actually saying no more than yes.

And that's how he preserves his values is getting crystal clear, and who you have on that list is going to reflect the values that you want to maintain as you continue to scale. So the list can be local, or it can be global depending on your ambitions.

[00:21:50] ANDREA: Okay. So thinking about someone like, for example, the young entrepreneur we're talking about, who's also growing up and going to college by the way, [00:22:00] he's been with this company, this idea for about 10 years now and he started when he was very young. So now he's at a stage in his life where he's, he has to balance this and the priorities of this business very differently now. So what advice would you offer to him or someone like him? Who's balancing a lot of different priorities while at the same time trying to grow a business.

[00:22:28] VERNE: In a phrase, "routine sets you free." And it sounds like a contradiction. But for instance, the importance of a daily huddle with whoever it is that you're working with to try to get something done that seven minutes, same time, same bat channel, will save you over an hour and a half of trying to track people down, email, slack, all these other kinds of communications.

And that's actually what my book's about. [00:23:00] You know, it opens with a guy, Alan Rudy. He was working 80-hour weeks. And when we got it, when he got finished, he was working, he was getting it done in eight hours.

[00:23:10] HOST: By the way – in case you're curious -- you can find all of Verne’s books on "Scaling Up" on Amazon.

[00:23:15] ANDREA: I completely understand on routine sets you free. And even though I'm not a small business owner myself, when I do become one, I think the hardest part that I see from my family, who most of them are small business owners is, you have to be your own boss and set that routine and making sure that yes, you're going to have many different competing priorities, but you do have to stick to some sort of schedule, because no one's telling you what to do anymore.

[00:23:48] VERNE: And then that brings up what is the other key? And, and again, I've, I've been lucky to curate from a lot of people, much smarter than me. And so that's where I turned to Marshall Goldsmith who wrote the book What Got You Here, Won't Get You There, [00:24:00] and every CEO, he coaches, he coached Hubert Jolie, you turned around Best Buy, I named his book, the best business book last year on Amazon. And, and that is to have a peer coach. It's different than a mentor. It's different than advisor. It's a peer. And so you want to choose somebody else. Who's somewhat doing what you're doing, roughly same age. And what we do is we figure out what are the five things we have to do every day to be, you know, my case, better father, better partner, better leader of my company. We're really there just to support each other, as, as friends and accountability partners. It is the single most powerful thing I've ever done to hold my own feet to the fire and why I founded the Young Entrepreneurs Organization.

There's 16,000 entrepreneurs now around the world who are not alone. And that was my favorite quote: "It's okay to be independent, but no reason to be alone."

[00:25:00] ANDREA: And so my next question is kind of two-fold. What would you say are the most common mistakes people make when they're trying to scale up their small business? And, what advice would you give to overcome that mistake?

[00:25:15] VERNE: You know what? It's trying to go too big too soon. Ironically. You have to start local. And I'm talking about in your neighborhood, like you think you have a product that can sell, you know, globally or whatever, make it local first. So another way to say that the riches are in the niches. And so Southwest airlines started just surveying salespeople. You know, other people could fly with them, but they focused on traveling salespeople. So really go as narrow as you can. Initially, Amazon started just selling books.

[00:25:53] ANDREA: Is there any other big, common mistake you see for people who are trying to scale up?

[00:26:00] VERNE: We see it in four areas, people strategy, execution, and cash. And so the first around "people" is sorting out who you're going to partner with. And man, you partner with the wrong folks and it becomes bad. Around "strategy," it's the idea between riches in the niches is you got to figure out what word or two you can own in the mind to the market.

That's the essence of brand job to be done. And we're always trying to do too broad of a job, and that's why you want to get more specific. You know, I want to own two words, scaling up. "Execution" is doing too many things and then "Cash," it really is important to not raise money. Friend, you know, we tend to go out to friends, families, and fools, and it just creates a lot of pressure.

You're much better off to bootstrap as much as you can and get the customer to fund you.

[00:27:00] ANDREA: Curious to know what's the most important piece of advice you would give small owners who want to make the jump from small to medium.

[00:27:09] VERNE: Just be bold.

So I'll tell you maybe a final story. So I truly am poor, when I go off to college. And I'd read how Andrew Carnegie was poor and how important it is though, to live in the right neighborhood. So you meet the right people. It is the sum total of the relationships that you're able to make.

So, I get this job with this company called Superior Supply Company as a freshman. I mean, I need to make some money. And I heard, that the CEO, lived in the best neighborhood and he lived in this mansion. So, about the third day on the job, I made sure I bumped into him in the hallway. And I said, I'm your new engineer doing drawings. "I said, "I hear you live in a beautiful place."

He goes, "yeah." He goes, I said, is there any chance I could live with you?" And he's like, like "what?" I tell him the Andrew Carnegie story, which I think, you know, got his attention. And he goes, [00:28:00] "well, let me go ask my wife." So he does that night and he comes back and said, "she thinks it's a good idea." And, because I didn't know, I started in the summer... they were snowbirds. They would leave to Naples, Florida for the winter. So she, she thought it'd be a good idea that there was somebody in their place over the winter time.

But she felt she should charge me something. So, my rent was $50 a month to take care of this mansion while I was in college. And I ultimately, he became my mentor. I became number two and we were about a $12 million company. But more importantly, he introduced me to everybody in town that were very significant business people that many of them are still acquaintances and friends today. That supported me early on in my ventures.

[00:28:50] HOST: Isn't that the wildest story? I mean, imagine having the guts to ask your boss's boss's boss for a place to crash. And then turning it into a huge business opportunity for yourself. [00:29:00] This is wild. I could barely believe what he was telling me.

[00:29:08] ANDREA: So to conclude with this Verne, I will ask you.

What is a lesson you have learned that someone like our small business owner who is young would benefit to learn from now that you're in this part of your life?

[00:29:21] VERNE: Sell sooner than later, you know, when you are most excited about it is when you should sell it because selling a business is convincing whoever's going to buy it, that this thing has got a huge future and they can sense it in your being.

[00:29:42] HOST: That was Verne Harnish -- author of Scaling Up, and founder of the Entrepreneur's Organization.

There are too many important lessons learned in this episode. So some of the key takeaways for scaling your side hustle that I’m adding to my small business playbook after speaking to Max, Jen, and Verne are: [00:30:00]

• First you need to protect your intellectual property! You need to get your trademarks, patents, and protect your brand so that your idea is protected from being copied and you're able to scale through other businesses.
• Then, think about what you need help with to get your business idea off the ground. Figure that out and look for the help you need. You will be able to move faster and smarter from the start.
• Set aside at least on hour a week for marketing, this should always be somewhere on top of your list. This makes a lot of sense to me: figuring out what story you want to tell and then how you market is key, so that you make sure you reach the right audience.  
• Write down a list of the most important influencers or partners that you need to get talking about your business. The bigger the names, the faster you scale. And I think that this is kind of what we see when small businesses get mentioned or promoted by influencers with large followings, [00:31:00] they suddenly take off.
• To repeat some of Verne’s quotable points: 1. routine sets you free and the 2. riches are in the niches. Routine allows you to free up your mind for what’s important because you have the daily planned out, and you can’t be everything to everyone.
• Verne suggests that if your small business does takeoff, and there are interested buyers, you should sell sooner rather than later. When you’re most excited about the business, is when you’ll be able to transmit that the best and when people will be more interested in investing.
• And lastly, what has got to be one of my favorite lessons learned… be bold. I mean… Verne’s story about asking his CEO to live with him… crazy! But that sure was bold.

I hope you enjoyed these conversations as much as I did.

[00:32:00] On the next episode I will be talking to a 2X Emmy Award Winning Makeup Artist who turned her passion into a small business. Meanwhile, if you like what you heard, don’t forget to subscribe to our podcast so you can stay up to date with new episodes, let us know what you think by leaving a review on Apple Podcasts or email us at (thisissmallbusiness@amazon.com) with episode ideas, and tell your friends about us too!

[00:32:25] Until next time – This is Small Business, I'm your host Andrea Marquez -- Hasta luego -- and thanks for listening!

CREDITS: This is Small Business is brought to you by Amazon, with technical and story production by JAR Audio. [00:32:50]