Lessons - How To Get Rich in Direct Sales | Ryan Blair - Impact-Driven Entrepreneur & Best-Selling Author

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All listeners can save 30% off their first order. Just head to cornbreadhemp.com slash success and use code success at checkout. That's cornbreadhemp.com slash success code success for 30% off your first order of these amazing gummies. In this lessons episode learn how a direct selling model drove Vesalis rapid growth and the challenges it faced. Discover innovative marketing strategies, the reward structure for sellers and key mistakes during scaling gain insights into managing public scrutiny, legal hurdles and sustaining long-term success in competitive markets. How do you understand the business model for Vesalis? When you say direct selling model, how does that differ from like a CPG company or a direct to consumer company now where they're going online or they're going to retail like what does that direct selling model look like and I guess I recognize a direct selling model from like an enterprise B2B space because you're going pure outbound but this is a consumer product at its core so how did that work? Well you're recruiting affiliates basically so the way to describe it would be an affiliate model and you're recruiting affiliates to basically sell that product you know and in our unique innovation was our marketing was a challenge and now you'll see on the internet everyone has challenges and we brought challenges to social media so we launched a thing called the Buy by Buy 90 Day Challenge. When you join the Buy by Buy 90 Day Challenge you are encouraged to bring three friends with you and when you brought those three friends with you we gave you your product as free we built into our economic model incentive structure for you know well in our cost model we built in the structure where we could bear that burden where the more people that brought in three people the more free product we were shipping and at one point we're shipping out you know tens of thousands of free kits free product kits per month as a result of that marketing initiative. On the other end of that we had an incentive structure a compensation plan that compensated our sellers based on them helping more people receive their product for free and the more that they did that the more we unlocked additional incentives we had a BMW program that we put 18,000 BMWs into our seller's hands through the BMW program we had a million dollar cash bonuses if they you know did enough of the activity that we just described and so we built a very complicated multifaceted multi-variable compensation plan and that was one of the big primary reasons for the fact that we were able to you know grow and scale you know to the size that we were we did. So it's a walking through numbers too so when you joined where was it at versus because you won awards I think for turning this company around no at some point. So it went through when I bought it it was doing about 20,000 a month in sales and then I scaled it to and I do have to say I had a fantastic team it wasn't just me I hate even the fact that I say I because it was a we you know I had great investors great business partners great founding team members and I was my primary role was handling the finance raising the funds providing the strategic direction and organizing you know the operation of the team but there were some great contributors along the way but you know for the sake of of explaining how it went about it 25,000 built and scaled it and this was in 2005 and then built and scaled it to the summer of 2008 where I sold it to a publicly traded company called Blythe which was on the NYC. I was doing about 25 million a year at the time a couple million a month in sales when I sold it immediately upon the signing of the deal the great recession hit I sold it on 8 for 2008 and by September of 2008 the great recession hits the company basically goes into severe debt I went from two and a half million a month roughly down to 600,000 a month I'd accumulated a ton of debt to try to stay afloat the business was burning cash to the tune of like $600,000 a month business was burning 600,000 we were down to about our last 600,000 the public company that bought us wrote us down to zero and so the the gains that I was able to take off the table as a result of their acquisition because it was a multi-year urn out it was structured as part of the acquisition I had to put back and salvage the deal which myself and my co-founders and one of my other investors did and we kept the deal alive we re-engineered the company came up with the challenge idea that I'd mentioned and then from there I scaled it in a you know in a new economic environment post-recession where excuse me we were able to take a lot of market share and and we were able to while our competitors were retracting we cut our losses re-engineered our you know our compensation plan re-engineered our product offering re-engineered everything and we were able to expand while everyone else was retracting and we took the number one share in shake during that time we got to a 23% market share and we were number one over Costco GNC and everyone during that time based on the innovation that I described I just want to take a second and thank cornbread ham for supporting today's episode now cornbread ham CBD gummies have been this really nice addition to my wellness toolkit I don't use them every day just when I want to win wine after those extra busy weeks but they're perfect for those moments when you want to take the edge off and just find your balance really just shut off from work or make some special is how cornbread ham crafts them they only use a flower of USDA organic ham plants that's the best part for the purest most potent experience no fillers no artificial fluff just clean full spectrum goodness and delicious watermelon berry and peach flavor I keep them in my nightstand for those moments when I just need a little extra help relaxing and I love how transparent they are too every batch is third party lab tests it's you know exactly what you're getting and they put together a special offer for all success story podcast listeners all listeners can save 30% off their first order just head to cornbread ham dot com slash success and use code success check out that's cornbread ham dot com slash success code success for 30% off your first order of these amazing dummies that's amazing um now I know that there's been like as you built this up um obviously the the business model was successful but there was a lot of the you got a lot of pushback like there's a lot of shit about this business model that that didn't vibe with people obviously it's come up again and again so what went right what didn't go right why was there so much press around uh like how you grew the company like why was this something that I guess it seems like you know there's a lot of companies that do direct selling models um various companies do like affiliate multi-level uh setups but in particular you were covered by tons of news outlets uh there was like some legal issues that came up from this as well so I'm curious as to why this all came came to be one you know I could tell you I made a lot of mistakes by all means um you know I uh I was hyper competitive and I got into a lot of competitive oriented situations and lawsuits that you know and retrospect I uh should not have the other thing is I sold to a publicly traded company and we became the most meaningful portion of their revenue and so all the sudden we started getting a ton of press around that every time the public company released earnings their stock would blow up basically because you know they're publicly traded company which was basically a sleeper endormant was zero growth and in fact was going downward and retracting all the sudden now add hundreds of millions of dollars in revenue you know on a quarterly basis and significant sums of profit and so all the sudden all eyes run us both from the media and from Wall Street and you know we were um we were not a fortified business model by any memes the other thing that occurred that was a big mistake was the publicly traded company couldn't afford to pass the urn out so they persuaded us to go public and as a result of that now the sudden my company as opposed to you know accelerating our growth and building fortification and building a strong infrastructure my entire management team and everybody was focused on ringing the bell myself included you know there's such a gratifying idea that I would you know take this company from near bankruptcy to ringing the bell so we we lost our focus and lost our our you know our our discipline to building a a company and fortifying at that time we should have had done nothing but you know fortify for growth and and continue to invest in growth related initiatives not try to ring the bell and go public we weren't ready for that so there were a lot of things that we did wrong there are a lot of mistakes that we made you know um and you know some of the the negative activity that we had was a short seller enticed in that there was a we were the number one most shorted stock in all of Wall Street for my whole we're a year and so you know there was so many people that were trying to stimulate negative activity against us and then there was plenty of things that we did that were um you know just you know just the perfect storm a perfect storm of everything it was rookie mistakes it was public too soon it was short seller activity it's all this shit coming together that probably caused you a few gray hairs too yeah the second thing is is when you know all of a sudden you're putting up uh a hundred million in profit like every attorney in the world is looking to figure out a way that they can squeeze you so the bigger you are the bigger the target that you are so I had short sellers going after me I had ambulance chasers going after me I had competition going after me and then I was you know also uh I was not ready for got onslaught by any means we had class action lawsuits that all eventually got settled but a ton of them like there was class action lawsuit after class action lawsuit after class class action lawsuit over a billion dollars of class action lawsuits against us at one given time one was for texting incorrectly I had no idea that you weren't allowed to text people another one was for product efficacy that we ended up winning and another one was for the way the IPO was handled which I didn't know that I couldn't cite you know like you see Elon Musk trouble that he's going through like every time I tweet I would have an SEC filing and another you know citing in a lawsuit so I had no idea how to conduct myself as a publicly traded uh company and as a public figure by any means yeah that's not that's not easy to say the and and do you still stand by the like the core business model like the direct selling multi-level affiliate because that also has gotten just a lot of negative so how do you do that model right yeah you you can so I will tell you you you you can very much do that model right and there is a lot of um good that comes from that model but you have to be very careful because compensation drives behavior and as you know human behavior is very hard to calculate and so you might very well be creating you know great ideas and great incentives and so forth they create behaviors that aren't an alignment with your personal values and brand and when you have a million people out there marketing your company on your behalf which we did you're going to have a lot of of of chaos and you're going to have a lot of people that are doing it in ways that are not in alignment with your values and in alignment with the brands values and so you have to have a strong compliance you have to have strong policing of this you have to be very rigid and tight and and and it's a very difficult environment to do correctly it's highly competitive and you know it's it's kind of like the wild wild west of sales so I learned a ton from it I'm no longer within the industry at all so I can speak very objectively about it and you know and I could tell you that there's some there's some great things that come as a result of the industry but then there's also some you know some um some chaos that it's a result as well if you're not correct if you're not disciplined and you're not forward thinking enough to understand the various things that could come your way some of these companies do create uh you know vehicles marketing campaigns messages sales systems and compensation systems that are not great for the consumer thanks for tuning in if you found this valuable don't forget to hit that subscribe button so you never miss an episode and if you want to dive deeper into this conversation check out the links in the description to watch the full episode see you in the next one