The E-commerce Leader

[00:00:00] Jason: Read your contracts and re-look at your deal structure. And sometimes that means going back and looking at prior literal contracts or the service level agreement of some, vendor or some deal that you signed off on, other times it’s going back and looking at your emails and, just take a set of fresh eyes approach to it re-look at it.
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[00:01:20] Intro: Hey folks, welcome back to the e-commerce leader. And today we are in the middle of discussing the activity trap, or are you putting your ladder of your business up against the wrong wall is another way of putting it all a sunk cost fallacy. All of those things really relate to the same kinds of things.
[00:01:36] And really we’re talking about today, continuing our discussion of how to avoid ladder traps. And if we discover that we’re in one, what can you do about it? Unfortunately there are. Both ways to avoid the pain, but also to, to come back from that even stronger if you do the right thing. So I think this is a really critical topic.
[00:01:54] I hope you’re as passionate about this as I am, because I think this is where the big pain points can be is where if you solve it or even partly solve it, then our big, big wins to be had as well. And that’s the way I would think about this going in. So let’s plunge in and thanks very much in advance and hope you enjoy this.
[00:02:10] Jason: Well, the other part of that conversation of course, is just the internal conversation with your team members.
[00:02:15] You know, one of the smartest things any leader can do is just be completely honest about the situation you find yourself in with your team and, and own it. You know, I mean, it. Chances are your team is more clear on the problems occurring in your business than you are. So, you know, to the extent that you can just say friends, we’re staying.
[00:02:37] We have a problem. This is a, this is a, you know, a big, you know, situation we’re in. And I need to be honest about the decision-making around it and get your opinion and just solicit the opinions of your team members. I mean, that can be massively valuable and it’s a step of humility and it includes them in creating a new future.
[00:02:56] So I think there’s, there’s huge wisdom in that. And so that whole piece of seeking counsel and advice, it doesn’t have to be expensive or, or. It can be your team and their wisdom and insight might really unlock new ideas for you. And there’s humility in there. And in terms of listening and understanding their points of view and, and being.
[00:03:16] Partner in the work, you know, with your team members. Yeah.
[00:03:19] Michael: Yeah. That’s very true. So another few ways that the Springs might avoid ladder traps. I think you need to look the big picture stuff. I think the big picture is underrated as a thing that determines outcomes. I think. Very naturally in the e-commerce space, particularly above all.
[00:03:36] And the Amazon focus space tends to be fed such a strong diet of it’s all about the platform. It’s all about the hacks. It’s all about the tactics that they really don’t take strategic decisions. Seriously enough until they’ve been in business for a few years, by which time as you said, you can be locked in.
[00:03:51] So. The business model you’re running. If you don’t even know what a business model is, or you’re not sure what it is, it is really worth taking the time to examine it from a 60,000 foot view and sort of do a diagram of it. You know, it’s just rough out some form of flowchart. You don’t have to be super scientific, you know, bash it around, talk it through with wise people that have been in this space for several decades.
[00:04:10] And then you’ve got a mentor that you talk to you, you mentor people. I help people that are new to e-commerce and just. How does this thing operate? And then if your comment says, says, but surely that means by year three, you’d have to involve, you know, $500,000 of working capital to reach. My target may be a true insight, which case you may not choose to do that business model.
[00:04:30] So. Looking at it as a whole system. It’s hard to do, but I think it’s really important. Second thing to avoid traps is think about physical versus digital products and whether that’s really, you know, the cashflow characteristics, for example, a physical something you, you really want to get into products versus services.
[00:04:46] Think about if you scale this up and we talked about scalability before really important, is this going to become a nightmare of this succeed? And then, you know, how sustainable is my marketing as well? I’ve talked about content versus. So, yeah, so those are ways to avoid lot of traps. What are your thoughts that if we feel or discover as many of us do myself, I’ve certainly been in that situation, my clients as well.
[00:05:08] If you feel that your ladder is leaning against the wrong tree, how do we sort of unpack that and get, get it leaning on the right tree?
[00:05:14] Jason: Yeah, I do think there are specific things that you can do if you feel you like you’re, you’re stuck into the wrong deal and wrong situation. I think the first one. Read your contracts and re-look at your deal structure.
[00:05:27] And sometimes that means going back and looking at prior literal contracts or the service level agreement of some, you know, you know, a vendor or something like that. Some deal that you signed off on, other times it’s going back and looking at your emails and be like, wait, what, what what’s, what was this original arrangement?
[00:05:44] And, just take a set of fresh eyes approach to it and re-look at it. The, you know, the next thing would be to step back from that. And then blue, blue sky, you know, our blue ocean strategy, the situation given the situation you’re in, what are the options that exist? And I think there’s valuable work that can be done there.
[00:06:06] Frequently. That means maybe if you’re in a ladder trap, you can’t get off that ladder, but you can minimize it in your business. You can marginalize it in essence and, diminish its meaning or importance in your business. Strategically, you know, a third thing you can do is, again, as we’ve already talked about understanding the sunk cost fallacy, and really put on the table or on a piece of paper, the list of what things did I invest into this. And what does it look like to walk away from those things, but just be honest about it. The opposite side of sunk cost fallacy is opportunity costs. So the question, if you start from like day one is today, like Jeff Bezos, his mantra, and you say to yourself, starting today, this is day one for my new future business.
[00:06:49] Then what is like the zero based approach to it. And a zero-based budgeting is an old phrase from whenever nineties or whatever, where you would literally every year, you’d say your budget for anything in your business is zero. And then everybody would have to justify like, no, no, I really need, you know, the money for my Klayvio accounts.
[00:07:08] So we can do email marketing. Okay. You may have $250 a month, you know, you zero base your whole entire business. That’s day one thinking. And I think that’s really, really valuable. And, then I, you know, I also think you probably need to. I guess go meta, not in the Facebook use of Metta, but go meta for a moment and ask yourself
[00:07:32] why did my behavior lead me to be in these situations? What was it about my decision making process and my framework that allowed me to be in this mess? And do I have a system in place where I proactively avoid and then, manage problematic, BR bear traps or ladder traps. And I think that’s an important key is to think through.
[00:07:56] What is my system look like for examining what we’re doing, and maybe it’s an annual planning day. Maybe it’s a quarterly, examination of your profit and your expenses. Maybe it’s a, you know, some other kind of special event that you do where you really examine these things. So anyway, so those are some, some things to consider undo.
[00:08:15] If you’re stuck into a ladder traps, right. And what your thought on those are Michael. Yeah, I
[00:08:21] Michael: liked that one thing we talked about, before we went on air, it’s a very interesting single I’d like to pull your thoughts out about this. You were talking about how much you reflect on experience and whether you even.
[00:08:31] Recognize or, or admit to yourself, and we talked about the emotional difficulty, but sometimes it’s a cognitive thing. Like you don’t realize you’re in a trap. And so you were talking about the different types of head on it and something else, this sort of relationship we have to reflection. Yeah. Yeah.
[00:08:45] Interesting topic. Tell us more about that. Well, I should have,
[00:08:47] Jason: I should have. Google it up a little bit, but, let me just describe for you what I was talking about and then people can search around for it. So there’s a psychological test that you can do, and it basically puts you into a three part framework.
[00:09:00] And it’s really interesting. And every one of us has this approach. In terms of mental framework that we bring to things, and there’s three, the three buckets are, past oriented. So we’re in our mind, we’re constantly reliving the past, thinking about what happened previously, that that’s a mindset.
[00:09:18] The second one is HUD. They call hedonic, which is, you know, hedonism, which is. Specifically means being in the moment, thinking about this specific moment with all of your kind of mental energy. And that’s, so that’s a hedonic. And then the, the third one is future oriented where you’re a dreamer and you’re just constantly dreaming up new things.
[00:09:38] And that three set thing, it might come out of a, is it, oh gosh, mindset by. It was her name, Helen Dwek or something like that. I know, but anyway, it might be from that. It might be tied to that, but anyway, people can search for that, but just search for the, and we might put it in the show notes, I’ll find it.
[00:09:53] And, but the concept is important because what it does when you do this little test is it says, well, you’re 30%. Past oriented and 70% future oriented and 0% hedonic. And, so you need to practice being present in the moment, you know, or focus on that piece. So that’s the kind of intelligence that gives you.
[00:10:13] And you know, if you run your business where you’re constantly just in the moment or feature oriented, like shiny objects, the future is going to be great. I’m going to do new things and you never have. Past orientation of reflection, contemplation, a examination of prior results. If that’s just not how you’re wired in your DNA, then you’re probably going to have a harder time with, you know, this latter trap, situation.
[00:10:37] Michael: Read and by the way, thank you for explaining that because I had no idea what the official psychological terms are, but the concept is really, really clear. And I think it’s a very simple and very important, profound, psychological thing. And it requires self knowledge. If you’re just self-aware enough to know that you really don’t like something.
[00:10:52] My suggestion is again the who, not how thing that if you know that you’re not good. For example, as I am at looking at current specific. Realities in the financial sense, you have to hire a bookkeeper. I mean, that’s what I’ve done recently. And, and in fact, in the process of sort of thrashing around, maybe hiring a different one, because it’s been hard to work with, cause I’m a nightmare to work with because I’m really not good at that, but you have to work that through.
[00:11:12] And, and, and my suggestion is really simple. If there’s an error, you really, we con you have to get some help. Don’t ignore it because inability to reflect on that, Is going to condemn you to repeat it into the future, which if it’s not working is not a good plan. And so, yeah, again, an accountant and for books or a marketing expert, if your marketing’s terrible or a sourcing expert, if your sourcing is terrible, it’s say I
[00:11:35] Jason: found the reference.
[00:11:36] It’s a book called, the time paradox by Philip Zimbardo and there’s a test called the Z TPI test. And that’s where this all comes from. So that’s. And I encourage people to check it out. There’s an online little test that you can do. I think it’s free. I don’t remember, but it was very interesting to go through.
[00:11:53] Yeah. Very, very,
[00:11:54] Michael: very good stuff. I liked that a lot because a lot of, what strikes me is extremely simple and yet profound pattern, dicey people who want to start businesses never do that. Don’t take enough action. They think too much. I’m, I’m prone to over analysis. People who are. Taking action and actually get into creating six or maybe early seven figure business, a very, very action or an operations focused, but those guys tend to hit a wall at some point as well.
[00:12:16] They either have to sell the business or they’re going to get to the next step. They really have to stand back and reflect which I find the mastermind. You see people blinking and going, oh my goodness. I haven’t thought about this in this way before. And, and to try and persuade people, not to just focus on operations quite hard, but I think they generally hit a wall and that’s when they’re open to thinking about it.
[00:12:34] So, it is a real thing, the ability to reflect, but it is not a substitute for action. I think there’s a rhythm isn’t there you take action. You stand back and let your wounds, or you celebrate and then you go, right. How can we replicate that successful? How can we never do that again? Like with your contract that you thought, wow, I don’t want to do that again.
[00:12:50] You know? Couple of other thoughts about how to, pivot things around. I think, there’s, there’s a really useful rule of thumb, which Jeff Bezos, I think was very fond of decision type one versus type two. One is reversible or non-reversible decisions. I think you need to be much more mindful about irreversible decisions or not totally reversible, but not getting into a pickle in the first place.
[00:13:10] I guess this is more about prevention than cure, I suppose, but it’s all related. You will, should educate yourself. You should talk it through with your experts. He’s talking through is your team business partner, life partner. If there are different people, but also to give you enough Headspace to turn the ship around, if it’s needed, you should get out of the habit of over discussing reversible decisions because you can micromanage those quite easily.
[00:13:34] And get quite happy about the fact that you’ve spent ages perfecting one particular infographic and your business model as a whole is broken. It’s so easy to fall into that because it’s kind of satisfying and safe, but not,
[00:13:48] Jason: I’ve never thought of it that way before, but you’re totally right. I that’s. So I love that that’s Bezos reversible or not reversible.
[00:13:56] The similarity there to the Robert Ronstadt corridor principle is interesting. I guess it’s like the quarter principle says, if you walk down a corridor, there are doors you see appear to you that you have. Wouldn’t been a, have been able to see if you hadn’t walked down that path. I guess to extend his corridor principle, there are those doors you can walk through that are not reopened from the other side.
[00:14:19] And there are doors that are openable. Again, you just get back out of the deal and you’re like, no, nevermind. I’m not doing that. I’m going to somewhere else. But this is very interesting to tie these, all these ideas together. Yeah.
[00:14:30] Michael: Some, some doors. Are in corridors and some aren’t. I think if you spent all of your life savings on some private label product, then you know, it doesn’t mean you can never start a business, but it’s going to really slow that down.
[00:14:40] Whereas if you are mindful about just being humble about the fact that you’re probably going to get some decisions wrong and you, you never spend all your money on something or to your point, painful, but not fatal was a very good phrase. If any outcome of a decision that burst. It’s painful, but not fatal.
[00:14:56] That’s a good decision fatal for your business. Let’s not go too dark, but you know, that that’s a very good, basic principle is that whatever decision you make should not have the potential to kill your business off, if it doesn’t work out. And yeah, very simple. But I mean, again, that’s much more prevention than cure, I guess, in sense of prevention once you realize you’re, you know, there’s a very old phrase we have in Britain.
[00:15:17] When you were in a hole, stop digging. Certainly if you realize that something isn’t working, we talked about this before, but being prepared to quit, I mean, the sunk cost fallacy is the fallacy. The, the medicine is quitting strategically, not quitting when it’s getting hard, but that’s just a natural dip as a south coding.
[00:15:32] Cause it, so market adoption is, is a painfully long slow process. Sometimes if you’re doing your own marketing, you know, getting responses to your social media marketing might take you a year and at month three, you might want to quit, but then. More rational, quitting points. And using those means you quit doing the part of your business, the product line, the partnership, the sourcing strategy, whatever it is that isn’t working with, feeds up time, money, and energy to do the other things that could work.
[00:15:59] Yeah. That’s the most important thing.
[00:16:03] Jason: There are so many economic ideas or principles. This ties into, you know, we’ve talked in prior episodes about asymmetrical risk reward. And so I encourage people to go back and to listen to that episode. And the idea there is that there are some decisions that have small investment and massive, potential in, you know, result, positive result, and that whole idea of small decision.
[00:16:28] Future outcome can apply to ladder traps. There are some, you know, some seemingly small decisions that you make that can be ladder traps as well that have, then these big long-term implications. And you say to yourself, man, I am so bummed. We made that choice so long ago. So that, that applies to this as well, where there’s literally like orders of magnitude size impact in your business that has, has consequence, as it relates to the ladders as well.
[00:16:54] Michael: It’s true. But the last thing I would say is related to that, a lot of this stuff is really hard to predict. You don’t know what you don’t know when you start something. And also the ability to just run the, the operational basics of learning a course, you know, it’s a video course or a YouTube course, or, you know, you’ve got a ton of Udemy courses and they’re very good as far as they go, but you have to start with the tactical.
[00:17:15] Day-to-day basics cause you can’t get your head around other things, but it’s the ability to see a business model in the abstract is much harder, which I think is therefore it’s, it’s rare. It’s harder to explain. It’s harder to kind of put across it’s harder to monetize, but I’m really pleased that we do focus on that because I think at a certain point you see it more as a whole.
[00:17:32] And that’s the only use only when you see a business model as a whole or a business as a whole. You know, the one years worth of financials, for example, that you can start to evaluate it. And so really you you’re going to have to allow for being wrong. And I think the solution, as we’ve talked about, we’ve got a whole section of the podcast about pivoting, which haven’t talked about for a while, but it a really important concept because what it means is you can go in the wrong direction for a while, but still save your business.
[00:17:57] By flipping aspects of it, keeping some aspects the same in some turning through 90 degrees or even more so you can stay in the same industry, but, but source completely differently. So for example, you might stay in the industry of dolls clothes, but instead of selling physical products on eBay, you sell digital patterns as you and cinnamon D.
[00:18:14] You could, keep the same exact product line on Amazon, for example, or, or a Shopify store. And he’d been sourcing it from China and you’ve had an utter nightmare. Maybe you start sourcing from the UK, your profit margins change, but it’s a sourcing nightmare. You could stay on the same platform and Amazon, but flip between.
[00:18:30] Retail arbitrage. Maybe that’s getting really hard to source you move to wholesale for more consistency, or you moved from pure RA to whatever that is to Replens. You know, there’s lots of ways you can move. I mean, in my case, I can stand in the same industry, but, but change partnership model. So instead of me being.
[00:18:45] They know, responsible for everything. I’m these days partnering right now, I’ve got a couple of joint ventures in, in process there, with people who obsessive and expert product developers, which is my great, great, I don’t have a great interest in that, but I love the marketing piece. And so that is a partnership that’s that’s, those are the partnerships that are coming together.
[00:19:03] So it’s, it’s not really a violent change. It’s leveraging my abilities, but it’s getting rid of the stuff off my plate and bringing other people into account for my weaknesses, which is also.
[00:19:15] Jason: Love it. Well, what a great conversation, man. This is such an interesting set of leadership questions and decisions all the way from Stephen Covey to, all the other books we’ve referenced a D do we mention the Steve Derek Steve’s book as well?
[00:19:31] Michael: It’s one. We didn’t reference actually. And forgive me saying the H word, but that is part of the title I say. Ah, yeah, that’s a really interesting book. I’ve got it right here on myself and it’s basically, it’s not a, if you, you’re not really totally enthusiastic about an idea, you should probably say no, which having done a lot of the ones where I’m kind of lukewarm about it.
[00:19:50] I can say it’s the crash test dummy for that. Yes. It’s a great plan to follow that.
[00:19:54] Jason: Well, let me wrap it up here for us and summarize and, and thank you everybody for listening. So if you’re in a business decision that feels intractable, then, you’ve stepped on a ladder trap, and hopefully this episode has been helpful to give you strategies and ideas for, getting yourself
[00:20:10] untangled from that ladder and repositioning it against the right wall. So you can start climbing properly in the direction you want to go. So appreciate everybody listening today. Michael, as always as great conversation to have with you. And, it’s an honor to be able to do the podcast with any final call to actions or comments.
[00:20:28] Yeah.
[00:20:29] Michael: You could just summarize quickly what we’ve covered. Cause we’ve covered quite a few topics. It’d be nice to pull it together for people in that space.
[00:20:36] Jason: Sure. If you are stuck in a ladder trap, maybe it’s related to your founding team choice, your niche, your industry, your product line, your financing strategies, or any long-term contracts that.
[00:20:48] Participated in, then, and maybe even business model, product type or physical product, product versus service, and on and on. Then you’ve got some hard choices to make. And so we encourage you to consider reading the contracts or agreements you’ve made stepping back and seeking wise counsel and understanding sunk cost fallacy, and how it’s playing with your mind.
[00:21:10] And if you’re stuck on a ladder trap right now, Then we’d really encourage you to figure out how to go forward and avoid them, avoiding them can best be done by testing small and committing small, never getting involved in a landlord in Asia, which is a joke of course, for princess bride fans. But you get the idea, never commit to a big, crazy idea.
[00:21:32] And when big money is on the line, always seek counsel and advice. And finally. Do not succumb to marketers time, pressure or scarcity tactics that are designed to get you to make hasty decisions. And so with that, hopefully it’s a good summary of the topic of ladder traps and,
[00:21:51] Michael: Absolutely by the way, the reason that the scarcity and fear and whatever for marketers works is an internal problem for us in the end.
[00:21:59] It’s fear or greed, isn’t it. And we need to manage those emotions in ourselves as well. I would say so that I’m talking of wise counsel. Obviously we have you think I’m wise, we’re sending, I think you’re always tasting so people, when they come to you and said, you’ve got to experience, I think wisdom, wisdom is gradually coming with.
[00:22:15] So winning on Shopify and take care collective the two places. Tell us a little bit about what you offer for entrepreneurs in terms of wise counsel at the winning on Shopify sort of stable of, of services. Sure.
[00:22:26] Jason: Yeah. Kyle and I do a couple of different, things in our business. We do one-on-one coaching and consulting, with, veteran e-commerce operators.
[00:22:32] We don’t work with folks who are startups or brand new to it, but if you’ve got a. Effective, product strategy and, or, you know, growing your sales. Then we, have a one-on-one consulting that could be of interest. We have an application page on winning on shopify.com and, Kyle focuses on Amazon and.
[00:22:51] Channels. I focus on Shopify and branding and marketing strategies. And then we also have small group opportunity as well. So that’s, that’s how you can find it winning on shopify.com we’re rebranding. And so soon that’ll redirect to our new brand, but until then, that’s the place to find the details in the application for one-on-one coaching.
[00:23:10] Michael: So, if you want to, come in and find out more about me, I do also want to one stuff. I think the best thing we offer these days is the masterminds. We’ve got the 10 K collected masterminds, which really ranged from businesses anywhere from, mid six figures to high seven figures, I suppose, in dollar terms, Virgil and eight figures in the biggest cases.
[00:23:25] And I’m also starting a new group that I’m quite excited about as sort of in early days. For six-figure operators to get them from the sort of, you know, 10, $20,000 a month range up towards the, the next level. So if you’re interested in that, I had somebody emailed me literally yesterday about it.
[00:23:39] So just email me, Michael, at amazing fba.com. Otherwise you can find the [email protected] amazingly, still up. Blatantly infringing on IP. And I didn’t say that publicly, but if not, you can find [email protected]. You’ll find this stuff there, but for the moment the Amazon mastermind is still up.
[00:24:00] So do you come and find us there? It’s been a great discussion. I really think this is a topic where I see a lot of pain and not much discussion about how to solve it. So it’s really good. Thank you for bringing that topic up. Really like it.
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