Frank Kern - How To Turn Advertising Into Profit


Hey, how's it going? It's Ollie here. So this week, I want us to do something slightly different on the eCommerce Freedom podcast. I want to play you an interview that I did for my Marketing Bites podcast I ran about a year ago. This interview is with someone called Frank Kern, who's a really well-respected guy in the online marketing world.


Now, as you know, if you've been following my stuff in eCommerce, marketing is a huge part of the business. All right? In fact, you can have the best product in the world, right? You could have a thousand units of that product sitting in the Amazon warehouse if you don't understand how to market it properly.


In other words, get it visible and get it to sell. It doesn't matter how good that product is, you'll never make any money. So marketing is so key, and that's why I wanted to show you this interview.


So I've been following Frank’s stuff for a long time. I actually learned quite a lot of the techniques that I use in my business from him and from his techniques. And in this interview we talked about his life story, about his journey as an entrepreneur, and we just dove in some kind of bigger concepts about how to grow businesses online.


If you are interested in growing a business in the digital age with e-commerce, with selling online, selling physical or digital products, whatever it is, this interview is essential listening and I'm sure you're going to get so many Aha! moments and also it's a lot of fun. It's really entertaining as well.


So I'm going to play for you my interview with Frank Kern. Hope you enjoy it.



Hey, Frank. Very, very warm welcome to the Marketing Bites podcast.



Thanks for having me. I think it might sound like I'm in a wind tunnel. My air conditioning is super loud right now so, sorry about that. We can pretend like it’s coming from an airplane or something, if it sounds more interesting.



That would be cool. I'm jealous that you have air conditioning cause here in Stockholm it's absolutely boiling and I'm just sweating so..



Well, I'll stop complaining then.



Perfect. So I'd really liked to start from the beginning. I've heard a lot about your background. You started as an entrepreneur when you were relatively young, and I remember you saying that you learnt quite a lot from your grandfather.


So I was interested to sort of start off by asking you what was the most important lesson that your grandfather gave you in the early stages as you were getting moving?



Well, he never really talked, so it was all by demonstration and there were two. Number one was that expect nothing. So, he had the saying that if it's going to be, it's up to me - which is like on the seven times that he ever really spoke or held a conversation. He was one of those World War II era guys that just didn't really talk ever.


Really, really adamant about that, listen, you have to be responsible for everything. Or else nothing will come to you, you know, for you or handing over your responsibility to someone else and prepare to pay the price for that. So that was number one.


And number two was he was always really cool to everybody. And that's where the foundation of the whole results in advance approach and the intent-based branding approach came from, which was watching him because he would work very hard.


I don't even know if it was consciously, but he would work very hard to establish a really good relationship with everyone he came into contact with. And then when it came time for someone to do business with them, that relationship was so strong that there was very little salesmanship involved.


I mean, he was a very charismatic person when he wanted to be, but he never was like your typical sales person or anything like that. But people would be gravitated towards him due to the relationship he created with them. And then the reputation he built as a result of being so cool to everybody. So those were the two big takeaways.



That's fascinating. I can see how that's reflected in your career and the stuff that you teach. So he was an entrepreneur then?



He was. He jumped out of the school window in the eighth grade, I think.. well, he's passed away now so I don’t have any way to verify his story but I think that was the grade he was, eighth grade. He literally jumped out of the window.






Yeah. One of his earlier jobs at 13 years old was driving a log truck. You could imagine a 13-year-old driving a logging truck and he drove it from South Georgia to New York and he wrecked it. It's like, gosh, dude. I mean, when I was 13 I don't even remember what I was doing. Nothing of any importance, much less driving log truck, you know, cross country. It's crazy.



Wow. That's unbelievable. So he gave you your first start. So what would you say was the most pivotal moment like in the beginning when you were just getting moving as an entrepreneur, when you realized, you know, I could really actually make something happen if I had my own business.



It was when I realized that I was not cut out for civilian life, for lack of a better word. And I'll define civilian life by being, you know, having a nine-to-five or whatever. And there's absolutely nothing wrong with that at all. It just wasn't for me. I couldn't do it. I was terrible at it.


And I looked at him and realized, you know, once I started thinking about actually making money, thinking about doing something other than being a drunken rock and roll guitar player and everything - which is what most of my early life was spent doing - I realized that the only choice I had was to either become a civilian and just have a job or whatever, and I had no education of any kind and no qualifications, or to try to figure out how to start a business and basically be like my grandfather - you know, make my own way.



And one of the first things you tried to do was selling credit card machines. Is that right?



That was like the 20th thing that I tried to do. Some really large thing that I tried to do was buying and selling cars because my grandfather was a car dealer. He was retired when I started really getting to know him, but his business history was, you know, he jumped out the school window, joined the Marine Corps when I think he was 17, fought in the Solomon Islands in World War II.


He was wounded, I believe, he never spoke about it, but I think he stepped on a landmine and it gave him really bad eye injury, which was kind of awesome, where he had to wear sunglasses all the time, like even inside. So he always looked really cool. So that was good.


But he came back from the war, married my grandmother, and they opened a gas station, and the gas station served gas and food. He would probably gas, my grandmother would cook the food and they started buying old cars.


Well, I mean it was old back that anyway, so they would buy used cars and then they would sell them from the gas station and he built that into, you know, just a little country car lot, and then into multiple franchises of cars - BMW, Volkswagen, Subaru, you know, your typical usual major brand franchises of cars - and sold that and started investing in real estate.


So when I was about 18 years old or 19, I think I was living in Athens, Georgia, I was a failed musician. I never did make it as a musician. And I watched a movie or something made me make the decision of, you know, I'm going to go and talk to my grandfather and try to learn about business. So I drove down to Macon, which is where he lived and where I was born, and went to visit him in the hospital.


He had just had back surgery and he was in recovery from back surgery. And I started talking to him and I used to, I remember just being amazed because he was doing math in his head like a human calculator while recovering from back surgery on opiate narcotics. He was a narcotic user by any means, but he was in the freaking hospital, he just had this horrible back surgery.


And he said, you know, if you want to learn business, I want to give you 10,000 bucks as seed money and I want you to hook up with your cousins and I want them to show you how to buy cars at auction and sell them. And so I was like, really? Okay, good Lord. You know, man, dude, I had never, I had no idea what I was doing, right?


So he said, go try this. And I said, okay. And to me, 10,000 bucks was like a billion. So I hooked up with these two cousins who are really, really cool. They were both also completely insane. And I would go to help them. I mean, like this stuff was like straight out of a movie.


So I would go to the Albany, Georgia dealers-only used car auction where you could buy like little beaters, you know, for 800 bucks and try to fix them up and sell them for, you know, $1,500 or something.


And I started doing that with a moderate amount of success. You know, sometimes I'd get a good one and I'd be able to sell it, make a couple hundred bucks and then I get a bad one and I would lose the money, ‘cause I had to fix it, you know, ‘cause I don't know anything about cars.


And that was the very first attempt. I ended up not losing all of the money thankfully, and made about enough to pay for beer and my little $200 a month apartment and things like that. And I'm forever grateful for the experience. You know, it was really something. I learned very quickly - that it's not easy out there no matter what the business is.



It's fascinating that you had your grandfather gave you so much confidence and then like a springboard to actually dive into this stuff. So how did it transition then into online selling?



Well, so I stopped doing the car thing because I just, I wasn't good at it, you know, and thankfully didn't lose all the money, that was very good, and ended up trying a bunch of other businesses. One of them.. interestingly enough though about the car thing, I actually sold a car to an honest-to-God serial killer.


I obviously didn't know at the time, I was just a kid. I can't remember the guy's name, I'm totally blanking out, but I sold him this car. He had an old Camaro and traded the Camaro in with a little bit of money for this... No, I'm sorry. He had a giant super truck, like a monster truck that was all, you know, redneck thing.


He traded that in for an old crappy Camaro. We did the trade and then like, I think it was eight months later that guy murdered two college students at this campsite and shot them with a deer rifle.


Really, really crazy story and it was like all over the news and CNN and stuff. His father, it turns out, was an FBI agent. Like really crazy. So that's just a weird side note, but I have multiple failures between then and the time that I got online sales.


And what drove me to online sales was I was doing door to door credit card machine sales and was really tired of the personal rejection because I'm an introvert, like really serious level-50 introvert, and was, you know, I was cold- calling and people would throw me out of their businesses. They didn't want to see me.


And I finally I got online, this was before Google, I can't remember what search engine I used, and typed in sell credit card machines over the internet and saw an ad for an info course by a guy named Corey Rudl. It was 297 bucks. And I looked at the sales letter 7,000 times, you know, and eventually bought it a week later. I actually split the cost with a friend of mine.


Now that was the beginning of the whole thing. I got hooked from that point forward to seeing what was possible.



Wow. So soon after that, I think a lot of people have heard the story. You had some success, you sold a few products in line, and then sooner or later you had some trouble with the FTC. Is that right?



It is indeed. Yeah, I actually got lucky with that whole thing, as strange as it sounds. So the brief version of that whole situation is I bought this course, it was excellent. It taught really good advice.



Is this of Corey? Is that the one?



Yeah. And on one of the pages in the course - remember this is 1999 - one of the pages in the course, it said something. So imagine like the course was 300-something pages. And so one paragraph, like one sentence of one paragraph of one page, said something along the lines of - it is physically, theoretically possible for you to make money if you sends spam, you know.


So instead of actually trying to do anything, I read that to be like, oh, I should probably send spam. So I went really deep in the rabbit hole of trying to figure out how to send spam. This is before it was illegal to spam. That kind of spam thing wasn't done at that point. It's just that everybody hated it.


So I started buying reprint rights to products about marketing and I got to reprint a bunch of really excellent products like these old direct mail seminars and stuff.


So I would send out spam and I’d say, hey, wanna know how to sell things? And then people would respond, and then I would send them.. I'd put them in an autoresponder, and would ultimately sell them this big box of direct mail seminar tapes, you know, then I'd sell it for 300 bucks or something like that.


And I remember I lived in this little 1200 square foot house in the mountains of North Carolina, and I would physically mail people these big boxes of stuff that I would pack up in my house and everything. And that was working okay. But it was.. selling things via spam was about 9 million times harder than selling it the right way.


And what would happen was I would sell this thing for 300 bucks. And then people, some people, would love it and some people would return it ‘cause they say, I really want to.. these are things about direct mail and I'm interested in selling things online.


So right around that same time, fast forward to maybe 2001 or something, the e-book craze got pretty big in the marketing world. Really classic offer that you would see all over the place was someone would create an eBook about marketing and they would sell the eBook for 20 bucks or whatever.


And if you bought it, you could also have the reprint rights to not only resell that eBook but you could also grant other people the license to resell that eBook – it’s called master reprint rights.


So I was thinking, man, this is a pretty good offer. The eBooks are good. If people want to learn how to sell stuff, they can just resell these eBooks. So I put together a package of them. I think it was like five or six individual eBooks I bought the reprint rights to, and I wrote the sales letter for it.


And interestingly enough, I wrote the sales letter by hand and I was in a class to get my real estate license and I don't know why I was doing that. Whatever. I wrote this long sales letter in that class. I go home, I type it up on the computer in Dreamweaver, I put the website up, and I send an email out to my list, which had been built by spam.


You know, these were people who had gotten the spam and then they'd said, yes, I'm interested. Then I put them on a real list. I sent the thing out to that list and it sold like crazy. I remember making like 2000 bucks or something. My first day I absolutely freaking out because it was, there was nothing for me to ship. It was a $47 product. And I thought I was like set for life, you know.



So was this your first information product sale online? This was the first experience.



It was the first digitally delivered deliverable yeah, so the first thing I sold online was this old direct mail tapes and stuff. ‘Cause remember that we're going all the way back to ‘99 through 2001. So really, everything was in its infancy. But yeah, the first thing that was actually downloadable was this product. And the product was good. People loved it, you know. And it was really cool.


And where I went wrong with that was two parts. The first part is I said in my headline, my little business made X amount of dollars and you can too. In those three words - you can too - are the kiss of death, which I did not know at the time. A lot of people still don't know this, which is why I'm really happy to tell this story.


If you say something like that, it's not illegal to say it, but you have to be able to substantiate it. And what substantiation means is you have to be able to show that the average person who buys whatever it is you're selling gets the result that you're implying.


So if my things I sold $100,000 worth of stuff because I had like my little spam business, I didn't really make much net but I did about a hundred grand in volume, I would have to be able to say that the average person who buys this little $47 thing is going to make a hundred thousand bucks. And I couldn't. And nor did I mean to imply that in any way.


You know, I was just saying, hey, theoretically you could, too. So that was mistake number one. It was the biggest one. Mistake number two was I gave people the right to resell that thing and to resell those rights as well and use my sales letter.


So what ended up happening over a very brief amount of time was the product became very popular and people would buy it and they would just copy the sales letter exactly. And they would use my name and then they would send out spam with my name on it.



So you started a chain reaction.



Yes. And then one of the companies who would do that would then call their customers on the phone from a boiler room, and I don't think it was an actual boiler room, but whatever, a phone room. And then they would sell them this expensive “coaching stuff” that the customers were unhappy with and they wouldn't give refunds.


So all of this is happening before I got sued by the federal trade commission. I found out about that company, I called them, I sent them a cease and desist letter. They stopped.


I eventually stopped selling that product because it was like, it was a little gimmicky. And I'm like, okay, you know, kind of getting the hang of all of this stuff, I have a little bit more to offer than just selling this dumb little reprint rights thing.


Long story short, in 2003, I get a lawsuit from the federal trade commission because of that product. And that was really embarrassing. What’s way more embarrassing having to be sued by the FTC was the fact that I did not know that they existed prior to getting sued. So I was like completely ignorant of any sort of advertising guidelines or regulations whatsoever. I'm like, dude, what in the hell, you know?


And at this point, I'd sold something like $600,000 of that one product. I had other offers going. Everything was cool. No idea who the FTC was, no idea about legal compliance. I had our family's tax attorney review my advertising because I thought all lawyers were the same. Of course he didn't know what the heck he was looking for. He was like, I don't know, it looks okay to me, go ahead.


So the FTC sues me. So I'm like, man, this really sucks. I'm very, very nervous and very afraid right now. I hired an attorney, actually two of them, and one of them used to work for the federal trade commission and you know, I'll paraphrase here, but he was basically like, fella, what’s the deal? And this is some guy in South Georgia, he's nobody, what's going on?


And they forwarded over all these consumer complaints and it turns out the consumer complaints were about that company that was using my name. And I thought at that moment, man, I was like, oh, thank God. You know, this isn't me. I can show them it's not me. I can show them I sent these guys a cease and desist letter over a year ago. I can help them get these guys.


And we made that response and I'll paraphrase again, but essentially, their position was, dude, we don't care, your dumb ass made the product and made the original ad that they spam so it’s your responsibility, which all ties back to my grandfather. It's like, it's all your responsibility. It's like, okay, I get it now.


So that was really awful. And it was also the best thing that ever happened. Because had that not happen, I would have never really become a student of direct response and I would have never really taken it seriously and I probably would have ended up being one of those get rich quick on the internet people. And I really don't care for those folks, you know?


So I hope anyone listening to this, if they haven't gone to sleep yet, gets the point of, you know, really understand the regulations when it comes to advertising and stuff because what you don't know can and will hurt you.



That's fascinating. Yeah. That’s really, really important. So I'm really curious to know. After you had this experience, and I assume.. did they actually come to your house? Like that must've been terrifying.



No, they didn't. It wasn't like in the movies because it was not a criminal thing. I mean, the FTC has sued everybody. Amazon.. I think Apple.. I mean, it's really easy to screw up these guys ‘cause there's a lot of regulations and you have to make a conscious effort to actually learn them. You know, it's not that easy to figure out.


So, just a guy came to the house and handed me a bunch of papers and said bye. That was it, there were no storm troopers, that would’ve been really bad. They were just like, hey, we're suing you because you did this wrong and you know, you're stupid. I mean, they worded it better obviously. They're actually pretty nice considering.


They probably could have really killed me and they didn't because I think they realized, oh, this is just a moron out in the backwoods of Georgia and has no idea what he's doing. And we're gonna sue him anyway cause he's an idiot. But we're not going to like, salt of the earth or anything with them, which I'm very grateful for.



Right. So it was more of a slap on the wrist.



No, it was civil. It wasn't like a, hey, you broke the law, we're sending you to jail. It was, all right, there is a regulation here. You have to give all the money back that you got from selling this thing because it doesn't count. You can't sell something if you don't follow these regulations. And you didn’t, so you have to give it back to the consumer.



Ah. So you literally had to pay everybody back.



Well I paid them and they paid everybody back.



Yeah. Wow. Okay. So after that then, were you kind of a bit freaked out and then thinking, oh, is this really the right path for me? Or were you just like, you know, now I'm going to do it properly.



I was beyond freaked out because I thought they hated me. When you get sued by the federal trade commission, it's not like a friendly, okay, hi, we're the federal trade commission and we're going to see you today.. they could come in guns blazing because for all they know you're a degenerate, you know, so they're like, hey, you are terrible and you've done all this stuff wrong and it's time to pay the Piper.


And even though they were, you know.. they ended up being pretty cool to me. They're like, yeah man, whatever, just pay it back and don't do it again, dummy. It still scared the hell out of me. So I was afraid to sell anything marketing related at all, ‘cause it's like, maybe it'll make them mad, you know?


So I went into a completely different direction and took everything I learned from all those things I had the reprint rights to. I actually listened to them and you know, followed the directions, and created a totally different business in the pet market. And it worked. And it was great.



So was this the parrot thing first or the dog thing?



It was the parrot thing first and that went okay. And then the dog thing exploded because it was such a bigger market and I had to really pitch it down, you know? So I created a product that was a one-size-fits-all obedience training product for dogs. And then I created ads for every breed of dog in the world of which there are over 600.


So that gave me a 600 X reach over just one specific niche, you know. So I had 600 sets of ads, over 600 sets of dog breed-related keywords and 600 different autoresponder follow-up messages and stuff. It was crazy. And it worked great.



And I understand, was that your first million dollar year business?



It was, yeah. Still counting it.



Yeah, absolutely. It sounds so unbelievably complex for $1 million business.



Uh, it was not. So I, for lack of a better word, invented this methodology that I called serialization, which was if you have a market this broad like dogs, for example, and that market is made up of a bunch of sub market like dog breeds, for example, and you have a one size fits all product, the way my information on basic obedience training, not like performance training or whatever, but basic obedience training for a chihuahua, it’s going to be exactly the same basic obedience training you would use for a Cavalier King Charles Spaniel or something. A dog's a dog in this particular context, you know.


So what I created was the system where I had some software built that I could feed a list of every breed of dog known to man into this machine basically. And it would find every keyword that was related to each of those breeds.


And then it would go to Google AdWords and it would create an ad group for every dog breed. And it would say, before you train your Schnauzer, read this free report, you know, three mistakes you make when you're trying to train your Schnauzer.


The landing page would dynamically update with the word schnauzer based on what the URL was. So it'd be like dog stuff - that's not really the site, I can't remember this. I mean it was like, or something. And so all of this was automated.


So if you just replaced like, Doberman instead of Schnauzer, the website would Doberman on it. And then when they opted in, all of the follow-ups would be dynamically created based on what the original URL was. You know?


So it seems like I had to build all of these 600 something funnels, but in reality I built one and I use that software and that approach that I created to splinter it out to all of those various submarkets.


So that's what gave me that reach there. And it was great. I ran it all in Google AdWords and I sold a $47 dog training offer and never sold anything else like an idiot. I mean it could have been a huge business



On the back end and stuff, yeah.



But I just sold the one thing for 47 bucks and that was it, and still made a profit. So I didn't make $1 million on that. I probably netted like three or 400,000 or something from that business.



Great. So soon after this, you decided, and I remember you describing it as being like a decision you wanted to teach the marketing stuff again, was that right? Did that happen shortly after the dog thing?



There were two things that happened in between that. Three actually. The first was, people began to get wise, like marketers began to get wise to the technology and the approach I was using. And as you know, internet marketing is a very incestuous world.


So I got very nervous that people were going to rip off the idea and someone would screw it up and they would create a software application or something that would model what I did and they would sell it for like $10 or something on the warrior forum or whatever, you know.


So I decided to preemptively strike against that by holding a seminar where I would give people the software, I would teach them everything I knew about this particular type of marketing and I would charge a lot of money for it and I would limit it to a hundred people learning it. And so I sold that.


I had a list of about 8,000 people left over from pre-FTC days that thankfully they liked me because the thing that I sold them I got in trouble for was I actually was pretty good. They liked it, so that was great.


I got lucky there that I still had a really good relationship with all those customers and I offered that seminar to them and that worked. So I did two events. One had 35 people, and the other had 65 people, and it was $10,000 a head.


And so that was the first time I ever really made 1 million bucks, you know? And it was mostly net. But that was, oh my gosh, this is great. That they were all really happy and everything was awesome. I'd never done a seminar in my life, much less charge 10 grand for once. I was very, very nervous, but it worked. So that was thing number one.


Thing number two is I had, just by random chance, my cousin Trey and I decided to reach out to an author named Neil Strauss, who we didn't know. He was a New York times bestselling author who had written a book of dating advice for men.


We reached out to him and said, hey, if you'll create a home study course for these guys, we'll help you market it and do everything for you if you'll split the money with us. And he miraculously said yes. So we did that and it worked. So that was thing number two.


We sold 375 copies of his dating course. I think it was 3,500 bucks per copy or something like that. So that was really good.



How much was that, total? That was a big launch, right?



It was pretty successful, yeah. It was a one point something-million bucks and there were costs involved in everything. So I can't remember what the net was. I think Trey and I might've shared around 400,000 in royalties from it, which was awesome ‘cause I'd never done anything like that before ever.


This is in 2006, I think. So just three years prior to that, I had been sued by the FTC. I found it very humiliating. I was really embarrassed by it and still kind of weirded out by it.


You never want to get the American government mad at you. You know what I mean? Like I said, ‘cause a lot of people have these theories like, oh the government's horrible. And they hate everybody. And I didn't find that to be true. But you still don't want them to be mad at you.


Like Mike Tyson's probably a pretty nice guy, but you don't want to pick a fight with them, you know, so I was all weirded out and I'm just, it worked anyway and they were super cool to me.


So that, combined with that event, started giving me a lot of confidence that maybe I should teach some of this stuff ‘cause I'm pretty good at it. And what I ended up going through my mind was, okay, here's a market that's growing, which is people wanting to learn how to sell things online.


A lot of people who are teaching are good. There is a caveat that most of them have only sold how to make money online stuff. And I started doing that. I got hammered by the feds - rightfully so, ‘cause I made stupid mistakes due to ignorance.


And then I did seven figures at the dog business and I did seven figures in this dating advice business. And the funny thing was, I know nothing about dating, you know? Neil was brilliant at it, but I wasn't gonna write the copy, my cousin and I, both of us were just completely pathetic in that department.


So I was like, gosh, you know, maybe I should teach this stuff and go out there and just not make the same mistake twice and not make unsubstantiated income claims now that I know the stupid regulations, now that I actually know what not to do, I'll simply not do it and maybe everything will be cool. So that's when I decided to get back in the ring, so to speak.



So this led to a string of successful launches, right? And you were known primarily as the guy that does huge launches. Is that a good summary at that time?



I think so, yeah. So I decided, if I was going to do it and be an internet marketing guy, I wanted to be the most famous and popular one ever. So I made that conscious decision that I built in marketing to support that.


So I was maybe the first. I don't remember because also during that entire era I drank constantly. I took a tremendous amount of drugs. So the whole experience is a little hazy, embarrassingly.


I deliberately turned myself into a celebrity in that industry. You know, I made videos that felt like documentaries, videos that felt like movies, and did a lot of emotional anchoring and stuff in there. And it really, really worked well. So I didn't really try to take the positioning of a guy that did really huge launches that I can recall, but I did do really huge launches.


It's embarrassing not to remember this but I really don’t remember it because hey, it was about, you know, 12 years ago or something. I was blasted out of my mind the entire time, which is embarrassing but true.



Fascinating. Yeah. I think a lot of people saw you as the lifestyle guy, the surfer dude who lays back and makes a ton of cash.



That's true. I really did live that lifestyle even more so I let on, so I lived at the beach, I surfed all the time, and it wasn't a great lifestyle. What I do remember is the net wasn't as high as it is today because so much stuff was affiliate-driven back then.


And that's, in my opinion, a terrible business model because you pay more in affiliate commissions than you would if you actually did real advertising. So that was a huge lesson from all of that.



This is exactly what I wanted to segue to now. So you focused on affiliates, launches, with all the other guys who love doing launches, and then you transitioned from that to focus on paid advertising. So how did this take place? When did you decide that that was the right thing to do?



I didn't enjoy being an internet marketing guru, number one. I was like, this is cool, but it seems like a lot of extraneous work. Like you build a product, you do a big product launch, and the product launch methodology form was brilliant. I mean it really is. I don't think it should be the only thing in someone's arsenal, which was for me that time.


So I would do all of this work. I do a big launch and it would either be successful or not and it would look like it was amazing ‘cause it would be several million dollars or whatever.


But most of that would be paid, expense, overhead commissions, and all of that kind of stuff. So, you know, if you do a million-dollar launch, you might be left with a quarter-million bucks of actual revenue. And then the launch is over and you have to do it all again, you know.


So it's like, this doesn't really make very much sense. And I started to feel like I shouldn't be teaching because what was I going to show people? Like, okay, well here's how to do a big launch and to get other people to endorse you. But what if they won't?


Well, there was no real backup plan. You know, it had been so long since I've been doing ads ‘cause my dog business was all AdWords driven so it'd been so long since I did that I didn't feel like I was qualified to teach that advertising and I just didn't feel right about it.


So it was a two-pronged decision. Number one, it's just not smart business not to learn advertising. And number two, I didn't feel qualified to really give advice unless I had gotten good at turning complete strangers - not endorsed strangers from a joint venture arrangement - but complete total strangers and the customers. So that was the decision.



That makes a lot of sense. So what advice would you have for, say, someone new who wants to place their first ad? Like, what are the key skills that you need to learn in order to make paid advertising really work?



So this is an interesting topic, really. I would first of all tell them to think long term. The biggest mistake I made in running ads and the biggest mistake I see people making is they'll run a $500 test and if they don't get that $500 back - plus a profit - in like seven days or whatever, that is the end of the world to them.


So that's the number one, don't try to do that. I mean, if you do, it's great, but really think more long term in terms of lifetime customer value and overall return on your ad spend over, you know, a 90-day or six-month period or whatever.


Number two is embrace the risk. What's really interesting is, I don't work with many beginners anymore, but when I did, I would see people that would happily go out and spend thousands of dollars on training and like, okay, whatever, and then to get them to risk $100 or $50 or whatever on an ad was like pulling teeth.


And when it didn't work immediately, they would totally freak out and be like, oh my God, I lost $50. It's like, well dude, you lost thousands of dollars on these trainings you did nothing with it. So, which would you rather play with? You know, like, just keep buying this information and do nothing with it or actually get in the game?


So the definition of entrepreneur I think is someone who actually takes risk in business and that's what advertising is. It's risk. You try to mitigate against the risk by having good ad copy.


Of course, having a really good offer, having a good retargeting strategy, having a good email follow-up strategy, a good sales process and all of that, but it's still risk. So the number one thing I would tell new people is be okay with risk, don't be afraid to, you know, lose a little money - it's going to happen to everybody - and just get in the game.



That makes sense. And also another mindset shift that you mentioned that you had or you wanted people to have is to not think like an internet marketer, but think more like an investor. Can you expand a little bit on that?



Yeah, I would avoid thinking like an internet marketer in any circumstance.



They have a terrible reputation, to be fair.



Well, you know, look, we deserve it. It's our fault as a community - we've brought it on ourselves, you know, but that doesn't mean we have to keep doing it. So that's thing number one.


But yeah, I mean business.. I’d quote that show Eastbound & Down - the character Kenny Powers, he always says, I play real sports, I'm not trying to be the best of that exercise. And that's the way I think anyone should look at this.


It's a real business. And the way business works is, it's a long-term play. And if you think about what it really is, any business is this - you take money and you multiply it by leveraging assets. And in our case, those assets, our ads, their funnels, their sales processes, and they are the products that we sell.


So the formula is you put money into advertising and then you get more money than you put out as a result of deploying these assets that I mentioned. And so if you think about, well, I gotta make my money back today, I spent $1,000 on ads, I gotta get $2,000 back today. You're essentially trying to get 100% return on your investment in 24 hours.


If you look at the most successful investors of all time, like Warren Buffett, for example, he’s really, really famous. I think his average annual return is 21%. He spent it, took $1,000 and put it in, and he would get $210 back after a year.


So in our business and advertising, first of all, that would really not be that great of a return on advertising investment, but it's still better than Warren freaking Buffett.


You know? So it’s like, if we can start thinking, okay, I'm going to build everything so I can put $1,000 in or whatever, $100,000, and within 90 days I'm going to get, you know, a hundred - maybe I'll get $110,000 back. But now those customers are going to go on and over another 90-day period they're going to buy another a hundred thousand dollars worth of stuff. Well that's 110% return over six months.


If you did that on Wall Street and real estate, whatever, you'd be on the cover of every magazine. And that is not uncommon in a real business and an advertising environment when done correctly. It's hard to do.


I don't want to make it, I don't want to minimize it and make it sound easy to get that type of return. But even, you know, put $1,000 in and over 90 days or six months, you double your money.. It's not really that unusual.


50% that's really common, you know, that's nothing. So it's all in the way you look at it. And if we look at it as internet marketers, which is, hopefully I’m going to get rich right now, I got to have a $20,000 every day or whatever, it's short term thinking and it causes stress and overwhelm. It sucks. But the long term approach works great.



Yeah, that's fascinating. Every time I've tried to do sort of a short time gain promotion, it's almost always backfired. So yeah, it just makes so much sense.


So, a few years ago I noticed you had a shift. You kind of shifted from doing like a new promotion sort of every month and doing a new launch or a new email series selling different products and you transitioned to just focusing all of your energy on one product. And that's when you started the Inner Circle, I believe it was August in 2016 I think, I joined on day one.


And it's an awesome program. And so this must have transformed your whole entire business and I've got a sneaking suspicion that through this transformation is when you started to develop the stabilize, optimize, expand methodology. Is that right? Did those two things sort of happen together?



I didn't start thinking about stabilize, optimize, expand until maybe it was six months to a year ago.



Ah, right.



Yeah. The Inner Circle was born out of a.. to tell the story mercifully quickly, I've had gotten out of the launch space and started running ads. Everything was going okay, but I kept on having to make new offers to my list and everything all the time. And it seemed like every month was the start of a new month. So if we think of my last month, and we're starting at zero this month, and it's stressful.


So I went back and I looked at all of the analytics of everything I'd done since 2008 and I learned that one promotion that I thought was a loser, actually over time for about a three year period, ended up making 3 million bucks. And that was a monthly program. And I had the revelation of, oh my God, what if I just been doing this the entire time?


So I immediately relaunched it and focused all of our efforts on that from, I think it was May of 2016 until January of 2018, we sort of did diversify a little bit and that created the Inner Circle, which grew up to about a half a million dollars in revenue. And it was awesome. And it was working with those clients over time that I realized there was this pattern and the people were trying to jump ahead.


So, the stabilize, optimize, expand comes from this idea that what happens is an entrepreneur will hustle and they'll be successful and they'll start making money and then they go try to do something else credible with another offer or whatever and they go straight into trying to expand the business when in reality the business isn’t even stable yet.


They don't even really have a consistent stable process to put a dollar in and get a dollar or $2 back out or a certain amount of time with any consistency.


So our problems entrepreneurially come from when we try to jump that process. You know, we don't actually build a stable system for acquiring customers at a profit.


And then once we have it and we don't take the time to try to tweak it and make it really, really good, that we go straight to let's come up with another offer. I wouldn't start trying to run that and that becomes very stressful and everything sucks.


So that was born out of just working with a large membership base every other week on these video conferences and trying to coach them through it.



Yeah. And you helped me with that. I mean before you introduced this methodology and that was, I mean, you pretty much just described exactly what I was doing. I'd have something that would work.


It would be great. You know, you get a massive dopamine rush and then you instantly throw all the funnels away and just restart from scratch. Like you're building a new business almost every single month.


And having this realization was a, yeah, it gave me a lot of clarity. So this kind of coincides with how to build like a stable business and how to actually just focus on one thing and get it really solid.


So what would you say is like the main mindset differences between people who have, say, six figure businesses who are doing well? But what differentiates them from say, a seven or eight figure business owner who's like really taking things to the next level, you know, building like what you might describe as a gazelle company and has a really, really stable, profitable business?



Is it all right if I'm like slightly inappropriate in this answer?



I'd welcome it. Yeah.



Because I don't want you to have explicit in your podcast. All right. So there's this movie called Colors, about the gangs of LA. It came out in the 80s. And I can't even remember what happened in the movie. I just remember the end.


So at the end, these two cops, after having successfully defeated the evil scorch of the street gangs, et cetera, they're talking to each other and there's an old cop and a young cop, and the young colleague wants to go do something exciting or drastic or whatever. And the old cop looks at him and he tells him this story slash joke and I'll try to clean up the joke a little bit.


He goes, it reminds me of this story about these two bulls. There are two bulls and they're sitting on top of this hill and the young bull looks over to the old bull and he goes, hey, why don't we run down that hill and have our way with all of those calves that are down by that tree at the bottom of the hill? And the old cop looks at it, he goes, I have a better idea. Why don't we walk down that hill and have our way with all of those calves down there?


And the point of the joke is if you just walk and you take it easy, you can have everything. But if you sprint, you might get one, and a six-figure to seven - early seven-figure business. They're in sprint mode. Like that's when you're hustling, you know? So when you see all these folks and they're saying, hey, you gotta hustle, you gotta grind and everything, they're right.


That's what gets you to the seven-figure mark. You never want to lose that hunger, but eventually you have to stop sprinting and you have to shift the motor from first gear into like fifth gear. I started to think about doing just a few things really, really well instead of doing everything so that that difference is really the biggest one.


A bigger business will think I'm in this for the longer term, I'm not going to try to get, you know, a huge.. like, I'm not going to think in terms of how much money am I making today or this month or whatever. I'm starting to think annually, five-year pictures and instead of doing 7 million things a day, I'm going to start building a team and focus on the areas that I'm really, really good.



That's a brilliant answer. So when it comes to thinking annually and thinking more long term, what are sort of the key things that people should start to focus on? You mentioned team. Would you say being financially literate and being able to read or your sort of scorecards is another important part of it?



Yeah, absolutely. But it's personal preference, right? So one thing that we have to be really conscious of is how easily influenced we are. So yeah, I follow a lot of people on podcasts and social media. And if I'm not careful, I'll let their personal preferences become mine.


So thing number one is to really understand what it is you want. And I like to think in terms of 20-year chunks. Like, where do you want to be 20 years from now? And then you take that and you break it down into five years, and then you take those five years and you break it down into annual, you take the annual, you break it down into quarterly, and then you take quarterly and break it down into weekly.


And here's what's interesting. If you have a five-year plan, and you start thinking in terms of weekly activities that you want to do to get to that goal - so again, there's a lot of reverse engineering involved here - and if you make one percept progress per week towards your five year goal, if you keep at that pace, you will actually double the goal if everything remains constant because there are over 200-something weeks in a five-year period.


So 1% gain every week is actually 200-something percent progress, not 100%. So that's really the difference. You know, as a number one, you really understand where you want to be. For you.


Like what really matters for you, the entrepreneur, is it lifestyle, is it legacy, is it giant company, is it monthly? Whatever it is, it's okay as long as it's what you want and then you think of where you want to be in 20 years.


And the reason why you wanna do that is ‘cause it makes you think a lot bigger. And then you chunk that down into, okay, where do I want to be in five years? With that 20-year goal in mind.


And then with that five-year goal in mind, where do I want to be over the next 12 months? And with that 12 month goal in mind, what do I wanna do with this quarter? This next 12-week period? And then with that in mind, what do I want to do this week? What are the big things to accomplish?


And man, if you follow that framework, as silly and basic as it sounds, and just stick with the freaking plan, you can end up doing way better than you thought because of the math that I just went through, which is pretty cool.



You know, it's funny ‘cause I think you may have talks on this stuff a little bit in one of the Inner Circle letters and I started thinking about my 20-year plan and I started breaking it down and part of it was actually to start this podcast and then that led to actually getting you on the podcast. So this is quite funny how things have actually come so full circle.


So, well, I wanted to ask you then, just to kind of close this, what's your 20-year goal?



Well I'll put it in the professional context. I want to be David Ogilvy when I grow up. So I'm 46 now and my hero, you know, like of all of the mentors I've ever had, with the exception of my grandfather, I mean, no one could ever take his place.


But in terms of our business, which is the business of advertising and marketing, that to me, David Ogilvy is my all-time personal hero for a myriad of reasons.


Number one being he made advertising very respectable. He and Leo Burnett and, I'm blanking on the guy's name, William Bernbach. You know, guys like that made that whole industry into something that was really, in my opinion, a very noble and respectful industry.


And so I would like to be the David Ogilvy of online advertising because everybody hates us right now. And I don't think it's necessary. I think we can do a lot better. And just as this changing the way we do things and changing some habits and practices.


And so with that in mind, in 20 years, my plan is to have an agency that does the creative work and builds campaigns for successful businesses, not beginners or anything like that. Not there's anything wrong with them. I'm just not very good in that environment. So that's the plan, it’s to have that and I haven't been very successful.



That's fascinating. That's a very big, ambitious goal. I love it.



Also, you know, I saw this interview with a guy named Rob Dyrdek, who's awesome by the way, he’s a TV star, an athlete, and a really, really smart guy. It was on Lewis Howes School of Greatness, a YouTube channel.


Rob talks about, it doesn't matter how big the goal is, if you can reverse engineer it to a believable plan - not believable to other people, but a conceivably believable plan in your own mind - then it becomes a doable and a realistic thing.


And I've always really agreed with it. I've never heard it articulated that way until I saw his interview, but I don't think any goal is overly.. not that you were saying mine was overly ambitious, but I don't think anything is insurmountable as long as you can break it down to a believable limit, an achievable plan.



Fantastic. That’s inspiring stuff. Well, Frank. It's been absolutely fascinating hearing your story and everything else. And a big thank you for joining me on the podcast.



Thanks for having me, man. I appreciate it.



Oliver Denyer About Ollie

Ollie is an ecommerce and lifestyle business enthusiast.
He's sold tens of thousands of products he's never had to touch, pack or ship himself.
A persistent disdain towards feeling like he's in a "job" has inspired him to create businesses that are FUN to run.
This means leveraging big companies to ship products, outsourcing laborious tasks to a team of VA's and running everything from a laptop.
He's passionate about sharing his knowledge with the world and helping people find more freedom through business.

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