My Neighbor Made $100k/Month Unpacking Boxes
Running a 7-figure operation doesn’t always look how you’d expect. This CEO was 99% the Customer Emotions Observer.
You should never judge a book by its cover…but sometimes, when that book is your neighbor, and his hoard of packages starts piling up to the ceiling, spilling out onto the patio, and encroaching upon your shared living space, a little judgment may creep in. I know it did for me.
What could this guy possibly be ordering all day long? He didn’t seem like the flashy type. Whatever was in those hundreds of packages probably never saw the light of day. He sat around in the same tank top and boxers 80% of the time, made the occasional stroll to the gym, and enjoyed the odd evening “out”.
There still begged the question: What the heck was he doing with his life and why the endless barrage of packages?
It would be close to a year before I found out the truth, befriended him, and we even ended up working together briefly — all upon his exodus from that dark, dingy Los Angeles apartment.
The consequences of a lean team
To the untrained eye, my neighbor (let’s call him “T”) was kind of a bum. However, to those with deeper insight into his daily routine — or the reason behind it — he was more like an entrepreneurial genius.
T had successfully built an eCommerce brand around his very own invention. He’d gone from college to full-time job, and distracted by his inspiration to invent, he swiftly moved back home, into his parents’ basement. After some unexpected viral PR made his company somewhat of a household name (and his sales started blowing up to 5- and 6-figures per month), he moved into the unit next to me, and his daily schedule got a whole new makeover.
In the early days of his startup, T was responsible for everything from manufacturing to order fulfillment and shipping. His mom sewed the very first prototypes herself, followed by a seamstress hired off Craigslist.
Until their viral PR, that was T’s company: Himself (CEO, COO, CFO, and VP Marketing) and his Craigslist seamstress.
Eventually, his company grew to employ a couple family members in social media marketing, two outsourced manufacturing companies, and an outsourced partner for order fulfillment, shipping, and packaging.
That left T with just one thing to do: customer service. More specifically, dealing with returns from dissatisfied customers.
T could, of course, easily hire that out — but he hadn’t, and the return address on his website was his personal apartment (perhaps not the best move — and it also explains the non-stop bombardment of packages).
Are you a creator or a cog in your own wheel?
When you sign up to be an entrepreneur or inventor, you might be inspired by the fulfillment derived from bringing a new idea to life. You might long to see your product on store shelves or in customers’ hands. However, the hard part that most entrepreneurs fail to talk about is what happens when the “creating” phase is over.
You have two options:
- Delegate and outsource operational tasks, and shift your focus to iterating your current product or pursuing a new creation, invention, or service.
- Resign yourself to being the operational cog in your very own wheel.
T chose option 2. Initially, he chose this out of necessity: Someone had to take care of customer service and returns. However, once he had successfully outsourced and delegated away every other operational task that didn’t bring him joy or fulfillment, he still clung to this one for quite a while; years, in fact.
I’ve been guilty of this myself in my own businesses. As an entrepreneur, it’s easy to get caught up in the roller coaster ride propelling you and your company forward. Sales, customers, profits, and perceived success can make it all feel okay, disguising the fact that as your company grows, your contribution shrinks. This can rapidly result in the tail wagging the dog: You’re the dog, and your business is the tail.
In other words, you can accidentally and subconsciously lose control and relinquish your role as conductor of your company’s journey.
Making the most of the CEO title
I don’t think T was necessarily wasting his time or potential dealing with dissatisfied customer returns — but I also don’t think he was making the most of it. If you’re the CEO, and you choose to spend your days in the customer service department of your company, I’d hope you’re getting some valuable intel from those angry customers.
Like most jobs, the role of Customer Emotions Observer can be approached in one of two ways:
- Reactive: T could simply refund the dissatisfied customers, process their returns, and maybe respond to angry emails or disparaging comments to save face for his company and placate the disgruntled shoppers.
- Progressive: T could use this customer-facing experience — the worst and most uncomfortable part of customer service (dealing with angry people) — to his company’s future benefit. He could identify patterns among those returns and seek to limit or eliminate them. He could ask what those customers would have wanted from his company and their products and assess whether these are requests worth exploring.
And he had an excess of opportunity for progressive customer research here: To give you some context for scale, T’s company was generating $100k/month in sales and processing $30k/month in returns, and his average product price was $55. That’s a LOT of returns (like over 500/month). I’d bet those 500+ angry monthly customers represent a goldmine of useful data.
What if an investor comes knocking?
When you think of your day-to-day routine, you may feel blessed to be shielded from the outside judgment of a boss or colleagues. In fact, entrepreneurs can easily fall into the trap of thinking any use of their time is a valuable one — especially since most times, no one’s looking.
That’s fair — to a point. Yes, any productive, thoughtful, forward-looking use of your time that somehow contributes to the current and future success of your business venture can be justified as a worthwhile one. However, if you’re aiming for elevated growth or considering outside investment, you want to make sure you keep an eye towards the future — even when everything in the present is doing great. You don’t want to be a one-trick-pony.
When investors came knocking on T’s door, they wanted to make sure his company’s heydey wasn’t behind them. They also didn’t think putting hundreds of thousands of dollars into a glorified box-unpacker (who also happened to be the CEO) was going to yield the returns they sought. They wanted assurance that T had more to bring — that his best contributions to his startup were months or years ahead of them.
And T rose to the occasion. He delegated those customer service duties and put his invention cap back on. Within a few months, he had a deal with that strategic private equity investor, had come up with a new patent-pending invention and two other pipeline products, and had gotten his new invention into the hands of celebrities and on the front page of national magazines.
Despite T’s customer service detour, that investor wake-up call revived his inspiration for inventing and new product creation, and he’s gone from having one product to four — and tripling the value from his former customer list (the happy ones, not the angry ones). That grants him a potential $600k to $2M in former customer sales, without spending a dime on acquiring new leads.
Being a CEO is not all glitz and glam, but it shouldn’t be mundane either. Remember why you’re here.
While most entrepreneurs will spend a decent amount of time handling the bottom-of-the-barrel grunt work, that shouldn’t come at the expense of new product innovation. As a founder, inventor, creator, and startup CEO, your role should not be merely operational, and your potential daily tasks never end. There are always territories uncharted and opportunities untapped. If you, the CEO and captain of your company’s ship, won’t lead your team into those new and promising waters, who will?
If you spend years unpacking boxes and leave your inventor persona in the past, how do you expect to move beyond being known as a “one-hit-wonder”? Do you really think today’s momentum will fuel tomorrow’s growth forever? If not, what will you do when the slowdown occurs — or worse if your product becomes obsolete? The only safeguard is to look ahead, iterate, invent, and assume your startup is never “mature”. The “mature” phase is where high-growth startups go to die.