Digital Products → How Ryan Sold a Million Stars

At the time he digitized it, marketed it to brilliantly and boosted the virality of an already highly giftable idea. I'm sharing the story to spark your creativity and show you the potential of integrating digital products with your physical product sales. As you listen to this interview, pay close attention to Ryan's unique way of thinking creativity. Like an artist while finding ways to automate processes.

As an e-commerce operator, you should always be thinking about how to increase your contribution margin. This is why you should be open to exploring complimentary digital offerings. This kind of fluidity folks is very key. Think about how Jeff Bezos pivots at Amazon in the early two thousands. He was inspired by Steve jobs, who at the time was revolutionizing music with an iPod.

And what Bezos did is he actually had a conversation with Steve jobs at the time, and he saw what was about to happen to music. And he then had to pivot and creates. The Kindle, which was the hardware you. You know, device that was going to serve be the distribution channel of an entirely. Huge digitized offering, which was e-books. So he obviously couldn't compete. Against apple on music. And thought, okay, we've been selling digital books for, for this longer time.

Now's the time to change consumer behavior and you know, the way people consumed and he just puts his head down and. They created the Kendall that you know, today. So. As operators, you just can't afford to think only physical products. You need to be innovative, you need to be adaptive and you always need to look on how to automate and scale. Your ideas. Right. So before we dive in, though, make sure to follow the 2X eCommerce on your preferred platform.

Your support always helps bring us amazing guests and stories. Listen to the end. There's something special after that. Ryan, welcome to the 2xEcommerce

we jump into how you sold, actually sold stars, do you want to give a bit of a backstory to

people. And I ended up, also getting my insurance license at the same time. So I jumped into selling health insurance, which isn't that exciting. but it was valuable sales background and marketing background. And I ended up paying my way through undergrad and I got an entrepreneurship degree. And then I went directly into and got an MBA. and so when I graduated. Like I did not want to be an insurance salesman for the rest of my life.

you know, there was people in like their 50s going to Hawaii four times a year, a bunch of employees, big house with a pool, you know, multi multi so it's a good career, but I was like, man, I want to go build software. I want to go do e commerce.

I want to go create things online and Try to unlock the power of what, seven billion people in the world and build something that I could take to market and provided I have the right go to market plan with the right product offering, I could just print money online and it was just very exciting. The concept to me was more of like an artist, you know, I can go create something and build and then go get the feedback loop of sales. And just without having to be involved and be on the phone.

I was making six figures with insurance at 23, 24 years old, but it was not the future for me.

the essential steps to getting started in the world of digital marketing and selling online?

after talking to him, I realized the potential of what I could do as far as call it a web app, or a e commerce site. The power of those platforms to be able to Build a little bit on top of and, be able to appear the right product, then go take it to market.

Just refer business to me. Here's my website. And gave them, basically the most I could kick back to them was like a 25 gift card. But every month I'd send them these gift cards really if whether they referred to one or not just to get them top of mind. And so I just built a really good referral network. I had my pitch down I could sell someone insurance in under five minutes asking 10 questions Qualifying them recommending a plan and my brother actually beat me one day.

It was a single guy So he was able to do it quicker. he got it down to four minutes and so it's just trying to Take, sales and marketing and a go to market strategy, which was built a referral network and then go sell policies.

that I didn't want to be the, it just seemed boring to me to wake up every day, sell insurance. Like there's not a lot new and there's not a lot to create. It's just building a stronger muscle in the business. and I'd actually lined up a deal with, so it was a family business at that time. So my parents founded it like 15 years earlier. I lined up a deal with KeyBank, I said, hey, I'll run radio ads saying, every KeyBank you can go buy health insurance from.

Personal or business and I'll train your people and I'll give them the bonus that I get from the insurance company to pay them and people will open up health savings accounts and you'll get foot traffic into key bank, which is what they really care about is driving foot traffic. They love the idea. So I went back to my parents and said, I just landed like the business biz dev deal ever to refer business into our organization.

I was expecting them to be excited, but they're like, yeah, we don't want to work any harder. We don't want a bigger business. So they said. Go create your own. We'll support you. Go create Reinhart Insurance. And that's when I really had to ask myself the question of, did I want to stay in insurance? And I said, I don't really want to do this. I want to go build software. You know, B2B, B2C, e commerce or SaaS, something in that realm. I had some criteria of I wanted, like, no cost of goods.

So ideally, it was a digital product. I wanted to have, unlimited inventory. so I could literally sell infinite amounts, provided there was a market there and I could reach them. And then I wanted to build a really good team of, part time contractors that could, we could all collaborate and fill these specific roles. I really didn't want any full time employees and I just wanted to hire specialists for niche specific work and then set the business on autopilot.

Eventually, I heard a radio ad I was driving around and they said hey name a star By the way, no one can name a star and so They said, name a star and we'll mail you something. You got to plan ahead and it costs money to ship and produce. And it took me a while. I took that away and about a week later, I was thinking. I could do this in a digital way, right? No cost of goods. I can deliver it digitally,

text and email and mobile responsive link and a free color certificate if they want to print it out. but the one thing that bothered me was like, nobody can name a star. They trick people. They say, it's put in a book and trademarked and put in the library of Congress. And those are all fancy words for fluff. They're trying to create credibility. So I was determined to have truth in advertising. So I only ever marketed the business as dedicate a star because that's all you can do.

You can say I want to dedicate that star to you. So the origin of the concept came from. and then it was a question of how do you build it?

And I realized somebody created Google Sky, google. com slash sky. It's still live.

And then lastly, I found a, it was open street maps was the, open source software that I wanted to use for the interface. And I called Scott up, Scott Dahl was a full stack developer. And we met at a Anthem coffee shop and said, Scott, I want to do a proof of concept. Can you take open street map?

Plug in the URL of the SkyTiles, the background on the site, and plug in the database to query, you know, up to like 20 stars that fit within this, you know, wherever the map was oriented and just plot them with a pin on the map. And if we can reach that level, we know we will have inventory and we can build a web app around it and an e commerce platform and go to market. And so it took us like we met up two days in a row and we ended up hitting that milestone.

I realized if I can just find a way to sell this product, I can deliver on it. I can build this, everything that I wanted and to end from a. e commerce product standpoint.

go to market. I could do SEO. I could do pay per click. I could do email marketing, you know, all sorts of things. I could partner with, like, build a bear and have a star sold with every bear. Like, I could put a star voucher with every telescope that was sold by that telescope companies. I could put it in gift cards and I could put, you know, all these different things and I had to decide on what was I going to bet on. And so what I was imagining was, is that I would go to Groupon.

I would just submit a form, call them, whatever, have a product ready and have them say, yeah, Ryan, we'll sell millions of them for you. And so that was what I was betting on for my go to market, which is just basically channel sales. Groupon sells a voucher code. People come to your site, they see the retail price, but they put their voucher code in. Maybe it's good for one, two or three times before it is no longer good. And then it discounts it to zero and they check out.

that's the model of working with Groupon and typically whatever you sell for, they give you 50 percent of the revenue. so I thought that's it. I'm going to build my business around that being my initial go to market sales channel. Build something really, really small to then go test. Because what I had to do is I had to have a logo, went to logo tournament and spent 275 to get a logo needed a landing page homepage to communicate the product offering.

So I went to 99 designs and spent like 300 to get a, Fully mobile responsive designed web page that fit my brand and implemented it. and then I had to build the checkout process. so I adopted Shopify before Shopify was cool and was one of their first customers, and then built a coupon generation code, system. So I could actually go, Hey, here's some codes for Groupon. They expire at this date and they're good for this many times. So it fit my product offering with them.

And it cost them about 20, 000. To build all of this and it took, about three months. So I owned the business and had all of the upside and then it was, all right, let's go talk to Groupon.

And I'm like, I made a big bet here and I'm not sure, what do I do next?

And so he said, look, let's get you on these small sites and then these medium sites, and then these big sites, and then eventually we'll get you into living social and Groupon. But what we need to prove is that you have a good conversion rate on the landing page. So X percent, basically for every person who sees the offer, you generate X amount of revenue. And so we just went through that process and it took about a year. to eventually, get the credibility to where Groupon could not ignore us.

if I ever had any ideas to grow the business, I could just invest in those, but it didn't cost anything from my time or energy to run the business.

And so you would put in the recipient's email and or phone number and the scheduled date and time you wanted to have that sent off at. And it would actually deliver it digitally. to the recipient. So like your wife could get a text at dinner and be like, Oh yeah, click on that. Honey. Hey, dedicate a star to you. And here's our favorite music video of used to dance too. And here's a poem I wrote for you. And here's the first date photo.

so my mission was to meaningfully affirm significant relationships and make a lot of money. That was the mission.

of, product feedback from my customers. About what they thought about the product offering. And so there was frequent questions. so there's two pieces to this. I wrote 21 canned responses to like, how do I see my star in the sky, et cetera, and outsource that, customer support to where it was just send the standard replies and you're done And secondly, I learned a lot from all of these questions. And so they'd be like, Okay, how do I see my star in the sky?

So I eventually developed an iPhone app that you put your six digit or six or seven digit star number in and it would tell you where to point your star. And then other people would say, oh, but my star is below my feet, like I'm in Northern Hemisphere. And I chose, I scrolled so far that I chose one of the Southern Hemisphere. So then I said, okay, put in a search bar, address bar, and we'll center the sky above your house.

Okay. And you sort of stay around there to make sure you can, see it at that, like a 45 degree angle of wherever you are.

planisphere that you could actually take your coordinates. And if you ordered it from us, we put a little red dot sticker where your star was and we ship it to you. So slowly I got into some physical products, but it was acceptable to me because I'd partnered with the drop shipper. In order fulfillment. So I just still didn't have to touch anything.

and then the last item was people would say, thank you for a free color pdf certificate, but I don't have a printer or I have a black and white laser printer. Can you print this and ship it to me? that ended up being a very profitable thing to enter into. I use the same drop shipper and I marked everything up 10 profit. So whether they ordered just the certificate, they got it in like a diploma cover where they got it framed.

I sort of just made the same, profit there and, you know, incorporate Shopify once again into the site and, created it as an upsell motion, I sent an email to all of my existing customers and said, now we offer this and it ended up being, really profitable.

business recently. What was the timestamp? Because you said you're one of Shopify's first customers. So I'm thinking this is 2017 or 14.

Shopify is like, you'd have to pay me a lot of money to go to market on a platform other than Shopify. when I sold the business in 2017,

And then secondly, I believe I would have been more successful if I had a more diligent plan to just every single day do something on the business. Instead of, taking a week off at a time out of discouragement, I think I would have cracked the code much sooner this is back when deal of the day. Websites were hot. Everybody was getting the emails. They were opening them. They're clicking them.

They were buying things and, I, I think I could have sold 2 million stars if I had really just been diligent and stuck with it and doubled down faster than earlier.

in mind I have like 160 a month in expenses to do this business. that included like my home internet. the most I did during that time was about just over 300, 000 in revenue per year. I had a full time day job during this time. this was a, hobby side business that was just, cranking out cash flow in an automated way. I actually didn't even tell any of my coworkers what I was doing on the side.

I just kept it really like hush hush and, you know, just showed up to work and I was the guy selling stars that no one knew about.

I moved into product and I worked for a background screening company. So I built an entire web app platform that, integrated with over 200, 000. HR softwares and, since then, it's done over like 200 million in transactional revenue. And so my day job is product management. I build web apps for B2B organizations and got to work with a bunch of really cool overseas, teams that have now since relocated to Serbia.

I got to run product and engineering and, Do what I love to do, which is build and create and built a web app from scratch.

golden eggs.

And I wanted to have, that feather in my cap and say I exited. And I had a successful story of building, creating, marketing, tightening the expenses and then selling the business to sort of button up the experience. but really what made me What kept me awake at night was, my, call it channel risk. The smaller deal sites were sort of going out of business or getting gobbled up. They'd sell their customer lists and their domain and get acquired.

And Groupon finally bought Living Social that Amazon had invested in, and my sales were down 10 percent year over year. the appetite to buy deals and voucher codes was waning. And I asked myself the question, would I invest in Groupon? And I was like, not a chance. I mean, go look at Yahoo Stocks for Groupon and go look back at like, 2015 to now or even 2013 to now. it just, I foresaw it just going down and down and down. Their sales process was so efficient.

Every like 90 days I'd have to work with another salesperson, sign a docu sign. They'd have to type it all into, Salesforce and their costs to administrate these deals were just like way too high. And if you really think about it, all Groupon is doing is they're not really helping. These local businesses Groupon is saying, Hey, Kunli, how valuable is it to you to get a future customer? You're going to make zero money or maybe even lose money on the first time you serve this customer.

It's not sustainable and what Groupon did is they basically took all of this marketing ad campaign dollars that they generated because they keep half of the voucher code that's already discounted and that money just went to Chicago. It doesn't benefit the local economy. So they're basically like raping and plundering these local businesses and promising them future sales with the customer lifetime value. And I just didn't believe in that model. It was too expensive for Groupon to do business.

They took too much of the deal and it really did not help these local businesses in the long run. So I thought I would sell Groupon stock and just like, I was no way I would hold it. And so then that told me like, Maybe I need to sell my business because Groupon was almost all of my sales. how do you sell a business? Well, you tighten up the expenses as much as you can. You try to generate as much revenue in a 12 month period. You bring in a business broker.

I, went through that process and, committed to sell it.

I worked with, three different people there, and it was the third buyer interview that eventually decided, they wanted to purchase the business. I got a full price offer You know, probably 90 days to close and transition everything and they wired the money to me and signed over the, domain and website. And that was it.

life changed from then to now? And why are you telling this story now?

So I just launched a book called how I sold a million stars It's a 21 page comic book and you can read it in under five minutes I let my buddy at the gym read it and he read it between bench press sets the other day. He's like, wow, quick, quick read. and so it's a number one top new release on amazon and product management and so it's been out about three weeks.

digital products again? And if yes, how would you approach, how do you approach it? Or has the time for digital product selling sort of, passed and.

Which I think there's like six competitors online now that have copied me, could compete, and digital products could get dropped or a group on success could wane. And so, thankfully I sort of, managed those risks well, and so offloaded the business before that happened. I do have one. Digital, product online today, but used for a lead gen source. if you've ever heard of g2. com, they rank the best software businesses in each category. I created a site called rank one on g2.

com and I have a free e course where it's 20 minutes of sped up videos to basically give you my strategies on how to rank number one. And then a lot of people just. Can't execute it on their own. So that's where I come in. People could hire me as a managed service to run really good review campaigns for them on G two. And I've got a lot of great success stories of people who now basically own their category.

what most people don't know is that There's a, subscription service that BCs and private equity groups subscribe to a G2 where they're able to see all of the trending software companies and get an idea of what companies are, on the rise. So then they can form early relationships with those software companies and try to pre vet and, be at the seat to help them to then be the investor that funds their next software round.

The last company I was at I ran marketing and deployed my strategies there for their g2 campaigns We had 30 investors call in and our ceo was fantastic at fielding all this interest And he was sort of the bell at the ball and he was great at

After I attended the event, I got a G2 invite, for like some Starbucks coffee or something. And then I kind of filled it out. I was already a user of it and, you know, it was a great way to acquire, you know, lots of reviews at scale. Cause the attendance at that event was in the thousands. So you can imagine, what the uptake could have been. Ryan, it's been fascinating. Just understanding how you literally sold stars.

but at the same time, it might take away from this is people buy emotions. people remember you the way you make them feel and you really were able to Deliver. Very emotive, digital experience, which they were able to pass on, to people to make them feel good. The other takeaway I've had from this conversation, essentially, it was a low price point, the barrier to entry. Was, you know, 20 bucks, but that's four coffees, right? And four or five coffees.

So it was to make my mom or my partner just change their day to give a smile, you know, and them, so you're, you're selling smiles. You're not sending stars in my opinion. How can our physical products actually make people smile, you know, give them positive emotions, right? Which will be a clincher for CLTV for, for lifetime value, particularly if there's a retention or element to your brand. So I learned a lot. want to thank you.

So for people who want to find out more about you, I know you said the original website isn't going down the direction you want. I'm going to link to your book. the name of your book is how I sold a million stars. Are you active on any social media channels or do you have a newsletter or, a website people, can connect with you on.

And from a commerce perspective, modern commerce is what I do. I'm an old preacher. With octillion and what we're hold core e-commerce business, you know? Columbus is very dear to me. It's my very first job was related to commerce and retail. So commerce is really important. And then leadership, I'm going through a leadership journey right now as we speak. There are many trials and tribulations. There are many learnings. In this journey.

So lending from the grades, which is to help shape that direction. Now, if of interest to you, I have a link in the show notes. You just click that link in the show notes and sign up. The first will be dropping on my birthday which is Monday the 22nd of July. We're really like for you to, to be part of that journey. So hits the subscribe button.

It's in the show notes, wherever you're listening to this on, or just go to the 2X eCommerce What you want to do is look at the show notes of this and you sign up. I will to the newsletter. Signup page