The Simplest $7M Business You've Never Heard Of Transcript, AI Summary & Key Points

00:00 You were making like 36,000 a month recurring within your first 4 months. >> Yeah, that's wild. >> And it was just [music] us, so that was great. We're sending about 120,000 letters a month now. I didn't expect this. In 2024, we broke the 5 million mark. Last year, we broke seven. The best way to describe it is something you've never heard of, but your mother's going to love.

00:19 Is Mother's Day huge for you? >> It's our Super Bowl. [music] Yeah, that's awesome. >> What other niches do you think could be really interesting with the snail mail business? Would you believe that you can make millions of dollars per year sending stories through the mail? Well, that's exactly what Michael and his wife Hanny do with the Flower Letters.

00:37 They charge 12 bucks a month and they are sending $120,000 letters per month. Last year, they made $7 million in revenue. But what's most impressive is that within 4 months of starting the business with almost no money, they were making $36,000 a month. And most of that was profit. They grow the business through Facebook ads and referrals. And I am just obsessed with the snail mail subscription business.

01:01 This is the second episode I've posted about it in the last two months. We'll link to the one I did with Hannah below. And at the end of this episode, Michael will give us advice for starting our own subscription business. What niches look interesting, how we can be successful, and most importantly, how to find customers. Let's dive in. You want to start by just telling us who you are and what you do?

01:19 >> Yeah. Michael Clark. I'm the co-founder and CEO of a company called The Flower Letters. The best way to describe it is something you've never heard of, but your mother's going to love. So, we tell stories through letters sent through the mail. You get two letters a month for a year and it tells a story. My wife is an artist and an author and uh just so creative.

01:42 She sings, she does everything. She's doing stained glass. >> I call her her creator. And it was a about February, March of 2020. Anyway, we were just talking. We were on a walk and uh she was trying to figure out how to kind of she she made these paintings. She incredible these 3D floral paintings and she put one up for sale and it sell within you know 20 minutes.

02:03 I remember one night we we were going on a date and she put one up and it was like 3 hours past. She's like, "Hey, this hasn't sold yet. Do you think it's not good?" I'm like, "Hey, I got to put this into context for you. You sell your paintings in 3 hours." Like, yeah, most people have paintings up for days, months, years. People are they want your stuff and then sure enough in 30 minutes someone buy it.

02:26 [laughter] >> And what was she selling these for and on what platform was she selling them? >> Oh it's just Instagram. She just >> okay >> make a panty put it on Instagram say hey if you want it let me know. >> Someone would say I want it. And uh you know depending she make anywhere from this size to to big. I mean the big ones could be upwards of $1,000 but there's mostly small ones.

02:48 So a couple hundred dollar each each way. >> Yeah. And so she was doing that just and you know really enjoying it. And then she was trying to figure out how to grow her business and kind of get more people involved in email list and and uh she had the idea. She's like what if I like sent them a letter if they sign up for my email list? I like that's kind of a expensive thing to sign up for email list.

03:11 You send them an email. She's like what if I send them a letter? She's like there's all these old letters you can find. To be honest with you, all at once the idea came to me and I saw people like I remember getting mail a letter in the mail. I saw people going to the mailbox getting a letter and it being a chapter in a story. And I said, "Man, what if you what if you wrote a story and sent it to them?"

03:34 And she's like, "That's a terrible idea." [laughter] Christiey's a writer. And so there's a lot of details we had to work out. But I was like I was like immediately I thought of World War II. I was like what if what if you write a letter then I write a letter and we kind of send that out and we've kind of figured that out and we just iterated went back and forth.

03:54 There was another subscription that we were doing called letters from afar. We actually did a podcast with them. They're they're awesome. We got their letters and there's a sort of a standalone letter each month which is like >> okay >> great model like do the standalone >> and you you were a customer of this you're saying at the time? >> We subscribed to it.

04:12 >> Okay. And so we had been getting these letters. I like what if that was a story like and so you know letters from afar is a big part of our origin. We talked to them and and they're they're a great great company. I highly recommend them. Uh they're I think they're more geared towards kids but they follow this a character around the world. It's really fun.

04:30 >> Their models it's it's much simpler than telling a story. Figuring out okay what does this look like? How many letters do we send every month? It was like, "It's going to be a year and it's going to be 24 letters and we're going to send two a month." To be honest, when we looked at I was like, "Hey, this will be kind of fun. This will be cool. This will be uh, you know, let's uh let's give it a shot."

04:50 I'm still working on my startup. I was doing some consulting and uh we originally started she wrote a letter. I actually in her first story I there's a letter that I wrote, but it became clear like I'm not a great writer. She is. She's a great writer. So like okay. She's like, "You know what? I'm going to take this. I'm going to write this." And so, she's like, "I'm going to write this."

05:12 I was like, "Oh, sounds good." We started doing Instagram posts and just figuring things out. >> Just through her own friends and family, not like from a big business page or anything. >> No, we just we started a flower letters Instagram, put it out. And one of my things as a entrepreneur is I when I tell people I said, "If you're launching a product or service, don't tell your family and friends.

05:33 They'll give you a false positive. your mom's not your mom's gonna buy 10 of them, but she's not your customer. >> You gotta find your customer. We just put it out there. >> 33 people signed up. I was like, "Okay." >> And what was your first pricing? >> $12 a month >> for two letters. You got two letters and one month for 12 bucks a month. >> 12 bucks a month.

05:51 And then uh >> and your cost is I mean a dollar, stamp, envelope, paper, and then time. >> The paper everything just to get everything in at the volume we're doing. And it was more around $2 to $3 cuz we put a lot of things. We put a lot inside. >> Nice stationery and stickers and >> nice and Okay. >> And we've done that and that's sort of what sets us apart.

06:11 You can get a lot and I can show you some things if you want but but yeah costs were relatively low. It goes really well. We started dabbling in ads. So our our main sort of acquisition was through Facebook ads and that's what really started to kind of get us traction. >> Facebook ads on both Facebook and Instagram. >> Yep. Yeah. Facebook and and it was us just like giving it a try.

06:32 We knew nothing about Facebook ads. And then this guy that I was working with, this kid really, I was talking to him about what I do and he's like, "Hey, I want to try that." I was like, "Okay, >> try the flower letters business or ads?" >> He wants to try doing ads and marketing with us. I was like, "Okay, okay, >> that's fun." >> I was like, "Let's let's go for it."

06:52 And uh anyway, he like I remember by the end of the year anyway by the end of the year we had a few thousand people that decide that and then he pitched me on coming and working for me full-time. I was like, "Oh, >> okay." >> Okay. >> He started running your ads pretty early on. >> Yeah, probably around October. So, we launched in like August. We started we sent our first letters in at the end of August and then Yeah.

07:15 October, we started dabbling in ads, just spending a few bucks here and there and people started showing up. And and then one of the things that was really important that I'm surprised how many businesses don't invest in is email. We knew from the get-go that email is really important because Meta can break. You know what if it goes away? You know it goes down.

07:35 You got your email address. So early on we started trying to acquire email addresses and so we can connect with people that way. >> How did you do that? Was that with ads as well? >> Yeah, ads would kind of come people would come to our website. That's the first sort of on-site funnel is you ask for their email address for a discount. >> Pretty standard e-commerce acquisition.

07:56 That's actually turned out to be huge for us. >> Upwards of 38 and sometimes, you know, 40 even sometimes 50% of our revenue is email driven. >> Wow. >> Anyway, if you're an entrepreneur and you're not thinking email, think email. >> You have to. Yeah. Own your audience. >> You got to know it. Since then, we've we've we're at 3.5 million letters mailed.

08:16 We're sending about 120,000 letters a month now. We've got six stories >> concurrently. >> More coming. Yeah. So, six stories, but nine subscriptions you can sign up. One of them is a fantasy. And so, there's seven parts of it. There's three parts currently. So, eight. I should say eight. There's eight options that you have right now. Most of it historical fiction.

08:37 And we're called the flower letters. And so that was part of the formula is at the beginning it was all of our heroins have a flower name. Originally we're going to do historical fiction which is the predominant story line for us but then we have Norah Aan who's a fantasy and actually was super popular and it's been been tons of fun. It's it's one of my favorites.

08:59 But that Norah Aan's been part of our marriage. Like she's been writing that since she been building that world since we were first married. So, but yeah, it's been wild. Just wild ride. >> Believe it or not, just because you're watching this doesn't mean you're subscribed to my channel. YouTube's going to show you stuff even if you're not subscribed to it.

09:16 Over half of people that watch my videos are not subscribed. It would mean the world to me if you just hit subscribe. Thank you so much. >> So, first year you said you finished at 2 or 3,000 customers. Was that the end of 2020 or your first full 12 months? >> Just the end of 2020 within five month four months. Yeah. So, end of year we had about 3,000 customers.

09:39 >> You were making like 36,000 a month recurring within your first four months. >> Yeah. >> And it was just us. That was great. [laughter] >> Yeah. Yeah. >> It was simple. >> What was your cost per acquisition on your ads in those early days? Like how much were you spending to acquire a customer? >> Early days. If we could go back preio, >> it was like 20 bucks.

10:00 15 maybe 20 bucks. >> Okay. So even on a subscription, we could be profitable within three months, right? And that's one of the biggest challenges with a subscript subscription like this, which I think probably people that are getting into it are learning. The key to our growth has been the prepaid option >> like a year up front. >> Yeah. Paying up front.

10:21 It's been interesting in this what we do. It's kind of like, oh, this is they're sort of they are buying a full story and it is a subscription, but like it's really not traditional subscriptions like your typical. was like, "All right, I'm going to pay 12 bucks and you send me a supplement." Okay. >> Mhm. >> Or, you know, or some of these other letters, it's like, "I'm going to, you know, give you $8 and you're going to send me one letter and it stands alone."

10:46 With us, it's like >> for this to work, you have to get every letter and you have to get every letter in order. >> And so, thinking about that, I mean, that's what makes it complicated. And across now stories, we're like, "Oh, yeah. >> All right." You know, I think when I step back and look at it, that has been our key to our growth and success is adding more stories, being able to kind of service a customer as they are, any story they would like, get them their letter, you know, soon.

11:15 >> Now, I have to think with churn, with losing customers, you're I'm assuming on the story ones, your churn is low because they want to know what happens at the end, right? So, this is a business built. It's a business built for very low churn. Y >> but I imagine if you do get churn it's going to be after the first couple weeks or month because maybe the story just doesn't resonate and then after that if you keep them after that you probably keep them for all 12 months.

11:39 >> Yeah. >> Is that pretty accurate? >> One of the things that makes our turn so low as well is that we're a very giftable item. >> Oh yeah. >> They can't cancel for themselves, right? Like someone gives it to them >> sometimes. It's funny. We have the best customers. They're incredible. But like I never thought of this happening. It's like uh someone had to reach out.

11:56 I was like, "Yeah, my mom said she hated it. I need to cancel." I was like, "Whoa, your mom that's [laughter] ow." And I was like, "Okay, that's that's fine." So she, you know, uh, so they'll start getting it like I don't like it. So that'll happen from time to time and that's great. To me, the mail is a miracle. I love the postal service because of like how well it is.

12:19 Sometimes I get a bad rap. It's like ah, the postal they lost my letter. It's like >> you talk to a kid this now. You tell them like, "Hey, you can put this piece of paper in this box. >> It'll show up in Russia in a few weeks." They're like, "Whoa." >> Yeah. >> Wow. Right. They can understand sometimes their mind works like I can send a text and get it to Russia right now.

12:36 >> How does that piece of paper get to Russia or to who even the next state over >> one of the things? So, what sort of prompted me to leave everything like I was a fintech guy, software, let's build a tech company, you know what I mean? But what [clears throat] sort of drove me into leaving all of that behind and focusing solely on this one was the opportunity.

12:58 I think the growth, it was the impact. We started getting letters like [clears throat] very early on year one from people saying that they, you know, how grateful they were for us because we're doing this because it's something to look forward to. I won't say her name, but I remember her name. Uh she would keep it on her bedstand because she had this just I think it was fibromyalgia.

13:19 She's just in pain all the time. He's like, I look at that letter and I know another one's coming and it just keeps me going. Like I'm reading these things. I'm like, I didn't expect this. I did not expect this. And we get these every week. We still get them of people having a very a very positive impact. And so >> I stepped back, looked at what we were doing and said, "Okay, if we can truly run a business together, my wife and I, we love each other and we really like working together."

13:46 Which I'm finding is unique. She does the art, I do the business. We step back and say, okay, how can we have the maximum impact in this business and grow it so that we can bring this light and joy to people's lives? And so I left every thing behind and we focused solely on this and uh we we configured and the best way to describe it because there's you know there's a lifestyle business then there's you set up and it's like this is you know I've got 10 different things going on or there's like the generational thing

14:17 and we decided this was going to be a generational thing for us that we want our grand to work here with us that caused us to configure a little differently >> and reinvest pretty much everything back in the growth back into the the learning the marketing, the customer acquisition early on. I mean, it's been fantastic. So much fun, but so hard. Oh, man.

14:36 You know. >> Yeah. [laughter] >> Yeah. I was going to say I had a shipping business and we shipped hundreds of thousands of packages. And anytime I hear someone say like X, Y, or Z got lost in the mail, I'm just like no, it didn't. Like statistically speaking, no, it did not. Cuz we almost nothing that we sent didn't arrive. Like it always arrived. >> Yeah.

14:57 So it is miraculous how that works. So your churn is excellent. What is your churn on a percentage basis? And how has that changed over time if at all or across different genres or stories? >> Last I looked globally, we're probably at like a 5% churn. >> Monthly or yearly? >> Yearly. So very very low. >> That's incredible. >> We predominantly do uh sell our prepaid option.

15:21 People are way much less likely to turn in the prepaid. We make it very attractive to come into the prepaid. What is the price for that compared to 12 a month? >> 12 a month. So, right now you can do prepaid for $100. >> It's like eight and a half bucks a month. >> Yeah. So, that was our entry point. So, and then you can add, you know, a 10 to it. The 10 has been just so wellreceived.

15:42 People love it. They're pretty. You can maybe see one right back here. >> Oh, yeah. Would you mind holding one of those up? They get that like with the first so they can store everything in it. >> Yeah, they store the letters in it. >> Brilliant. So looking across, we we're relatively inexpensive comparatively to other subscriptions, but that's because we want to make it accessible for people because of the impact.

16:04 We want to have as much impact as we possibly can. >> But we have other products that help, you know, from a profitability standpoint, like the 10 different things. Like why haven't we added a letter opener? It's like, man, that's like a no-brainer. >> It just takes time to figure that out. You could put it in the tin. No, >> put it in the tin when you ship it.

16:25 >> I mean, there's so much stuff we can put in the tin, like letter opener, post cards, stickers, like different things they can add to their order if they want. >> So, it's it's 10 bucks. Do they have to pay for additional shipping for the tin as well? >> So, the tin we sell the tin for 30. >> Oh, you said 10, not 10. Okay. >> Yeah. So, then it'll be, you know, $8 shipping, $8, $9 shipping.

16:42 Right now, we're doing free shipping. Spring promotion is going into Mother's Day. So, and then standard shipping. If you do the letters, uh, we started charging more shipping, okay? >> Because we start to track when we can at the volume that we, you know, when we get into kind of busy seasons, we'll do free shipping just to remove any any barriers to entry.

17:01 So, >> yeah. Is Mother's Day huge for you? >> It's our Super Bowl. Yeah. >> Okay. >> Yeah. It's It's bigger than Christmas. >> Wow. Is it more, you know, sons and daughters for their moms or husbands for their wives? >> It's daughters for the mothers. >> Interesting. More than anything. more than anything >> and friends for friends. >> Our demographic is uh is pro is female 35 plus and probably skewing a little bit older.

17:25 or so starts at 35 then kind of gets into like the 45 55 is kind of the peak and it's ah I love this market so much when I think they're underserved when you interacting with them they're they're the best customers I've ever worked with like across all >> they're reasonable they're forgiving they're >> you know and they they they they're like oh yeah you know that's okay and if they're upset you call them and they're like oh you know that's okay you know we'll figure it out and our mantra is, hey, we're always going to

17:56 do everything we can to make it right and to do right by you. Cuz what we promise something that is pretty it's a pretty tall order to fulfill, you know, something to look forward to. It's a story that continues and, you know, go comes in order. When that doesn't go well, it's kind of like we didn't we didn't get we didn't make it happen. So, we got to do whatever we can to make that right.

18:20 >> Especially when it's a gift. >> How long are the letters? How many words? And cumulatively, how many words is the whole series? And have you ever thought of making that just into a physical book? >> Physical book. Uh, we have, but at the same time, no. >> Cuz you want to keep it special to the letters, right? Or else they're just like, "Oh, I'm paying 100 bucks for a book."

18:39 >> I'll tell you one of the things that we didn't do early on is make each letter formulaic. You know, I think if you're >> I see what you mean. If you're a, you know, if you're thinking of starting this, you're like, "Okay, every letter is going to be two pages with a postcard and maybe one little insert and that happens every single time." That's great.

19:01 It's very predictable and that's a good model if it works. One of the things that I think has helped us that makes us people like us is it's different. Like one letter, you're gonna get eight things and you're gonna have a four-page letter. And then the next one, you're gonna have a two-page letter and a postcard and like a sticker to the point where there there was one where we had to do something because people kept reaching out.

19:24 I was like, did I get everything? [laughter] >> It's like, yeah, >> it's just the one we sent you before. There's tons of stuff >> and uh I can go in one for >> Yeah, I'd love to see it. How many words are each letter on average? >> I don't know. >> Okay. It's just not something you track. >> Well, that's another thing with Hy is um and we have we we try to work into it is writing a story in this way is an art form.

19:50 It's that that she's perfected because there's so much that you can do, you know, with different content. I know this is just a random letter from Lily Clara, but I'll kind of give you an idea of what comes in this one. So, this is the letter. And so when she's creating this, she's like curating the experience, if that makes sense. >> And she's like, "Okay, in this letter, this in this envelope, there's going to be a letter, and this is three pages."

20:20 So the front and back. >> Mhm. >> And then on this one, then there's this is like an advertisement card. It's from the era. >> Oh, cool. >> This isn't part of the story. It's just like, let's send them this so they can be drawn into >> Yeah. And that's a real ad from that era. >> Real ad. Yeah, >> that's cool. >> American Machine Co. Ice cream freezers.

20:42 Pretty cool. >> Yeah, >> there's one that we were sending that ended up being that we didn't really notice it, but it was offensive, so we pulled it. [laughter] >> Okay. Oops. >> And then there's this one she designed. This is a bookmark. >> Wow. And she's designing all of these? >> All of it? Yeah. This is a And there's like some silver like metallic stuff on it.

21:04 This is a character from the story, actually. Then there's um a telegram. So this is the telegram part of the story. So like >> and it's like you look at it's like a telegram can fill in a lot of gaps, right? >> And then there's postcards. So I read there's 12 postcards in every story that you get. >> Okay. >> And so we send these >> one per month. >> Yeah.

21:24 About one one a month >> ish. >> Yep. >> Okay. >> Yep. >> How long did it take you to quit your job? >> Oh >> your startup. >> Oh man, that was hard cuz that was like you I loved it so much. We were we started right during the pandemic. In fact, he's a business partner from then. He's killing it now with AI. >> Mhm. >> And it's still going. It was It took me about a month to kind of truly really decide.

21:46 And it was January of 2021 where I I went to him. I was like, I got to I got to go do this. I got to, you know, do this. And he was supportive and great. Haven't looked back. Haven't done anything else. This takes all my time. It's it's awesome. Today it's been six years going on six years. Yeah, almost six years. And what is your monthly revenue and profit today?

22:09 >> Monthly revenues varies monthtomonth across it. It's about in 2024 we broke the 5 million mark in in total revenue. >> Wow. Wow. >> And then last year we I was like, man, maybe we could go to 10. >> And it's like, well, hold on, Clark. That's double. [laughter] >> That's hard. That's hard. Last year we just we broke seven. >> That's still >> And so this year, hey, what what about 10?

22:36 And it's like, hold on, Clark, that's a lot. [laughter] >> Yeah. >> Still a lot. >> After Mother's Day, you'll be like 12 for sure. >> Oh, >> and then come October, you're like 10 would be nice. >> We'll see. We'll see. I you know I have this I have a goal the next I mean the next goal is a 10 million mark just because that's sort of a a benchmark but if we can match what we did last year I'd be thrilled because we were able to service you know so many c new customers and uh that's been been a lot of fun.

23:01 So our month that's one of the the biggest challenges of this business is the seasonality. So you have these big peaks in Mother's Day and you have to figure out okay >> Mhm. We've got to make sure we've got enough operations to go then to get to the next one and continue to invest. And so, real quick before we keep going, I just wanted to share this with you.

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24:12 So whether it's just you or a small team, your business sounds like it's been running for years. 90,000 businesses already use Quo today and you can try it free at quo.com/tko20 and get 20% off your first 3 months with my link link in the description as well. And now back to the video. That's been a lot of learning for us, especially because we're we didn't configure this to be lifestyle driven for us.

24:37 So, we haven't extracted cash from the business. We we tried to invest all of this. So, we try to keep our net profit as low as we possibly can from a tax perspective and keep the business growing, keep it fueled, and try to with the intention of expanding our our net. >> Yeah, we're hitting a critical mass, I think, where we're really poised to really start to expand into different categories like retail.

24:58 Retail is a real opportunity, I think, for what we do. We figured out a really neat product where we worked I don't know if you've been ever been back to the Newport Mansions in Rhode Island. >> They approached us last year. One of their the person that runs their gift shop signed up, reached out like, "What if we what if you wrote a story about the Gilded Age and we could put it in our shops?"

25:20 We were like, "Yeah, that's totally cool." So, we're in their shops. That's that's pretty awesome. >> Yeah. >> You know, then we're like, "What if we could get this? What if you could walk into Costco and you see the flower letters on a on a stand and you know it's a gift a giftable thing. It's like a gift almost like a gift card that come in and >> Yeah.

25:40 You just bring it to the register. >> Yeah. >> Yeah. So we built out a whole redemption website and >> Wow. >> And you know where you can come in, you scan a QR code, >> pulls up, you enter your address and you're good to go. And so that's been built out and configured and uh we'd love to, you know, get into retail stores, but also expanding into different mediums, audio, we've always explored what if we could have the opportunity to turn this into like a TV series.

26:09 >> Yeah, why not? Why not a podcast where your wife just reads the letters? >> Oh, we we thought about that. We we have a podcast. We're sort of dabbling in it. It's called Stories Told Through You. People from our community come on and tell their stories. Like come to find out people have like people are fascinating. That's one thing I've learned about this community from them.

26:27 I had this experience where I was in the doctor's office and you know this lady had a little >> a post-it note right on her desk and I was you know paying for my doctor visit and her post-it note was like taped down you know. So one of those post-it notes like she's like I'm going to look at this every day. It says your story matters. And that like that hit me.

26:45 I was like, why would you think your story didn't matter? And so anyway, our we we invite people from our community to to come on our podcast. We've heard some fascinating stories. Just incredible. >> Yeah. And everyone has them. >> I don't care who you are, your story is fascinating because you're human. You felt fear. You felt love. You felt betrayal.

27:08 I mean, all of these things that make up a great story are part of your life. It's been fun to extract that and have people come and tell their stories. So, but yeah, that's a great idea. Like an audio version where she reads the stories. Man, there's so many different things. >> So, if you were like taking profits out of the business, what would you hope to do in net profit on 7 million in revenue?

27:31 >> If we didn't invest back into as much as we did in in Meta >> Mhm. >> You know, I would love at some point to be able to have a net profit of a million dollars. >> Yeah. Your growth would slow. >> Yeah. It would it would slow. we wouldn't be able to get, >> you know, as much as many customers. But there is a point, there is a tipping point where I think we we start to hit a more organic >> Yeah.

27:53 >> growth. A lot of people referred this to their friends. With more people coming into this medium and and doing telling stories through letters, there's a lot of people that have started to do it in the last last little while. It's becoming, I think, a viable, I think, um, way to experience a story. And I think with that, you know, we we we've never really invested in organic growth until it's all been paid.

28:17 But as soon as we're able to crack organic and not have to spend so much within meta, that's when net profits will will start to to really build and grow. >> How much are you spending on meta today? >> Oh, so last year we spent 2.6 million. >> And your cost per acquisition went from 15 to 20 in the early days to what today? >> Oh, yeah. Oh man, if we could do 15 to 20, we'd be swimming in it.

28:41 [laughter] >> Yeah. >> But it's I mean every every e-commerce brand has I mean you can't do it. You can't do that. That's impos it's virtually impossible. Some do. Yeah. I mean just you know because they're they're really good at it. But ours is 40 to 50 at this point. >> Did you hear my episode with Hannah the snail mail business? >> I heard part of it.

29:03 Yeah. >> Yeah. >> Yeah. She's been >> So she's all or organic. >> Yeah. You should go look at her Tik Tok page and like the style of video that she posts because there's a lot there's a lot to learn there. She's doing it really interestingly. >> Yeah, I'm learning that organic what you do is an art. >> I don't know >> cuz you go you're I don't imagine you spend a lot on ads for what you do but you have a huge audience.

29:25 >> Depends on the thing. >> You've been able to kind of get out and make it happen. But every time I see it's like uh figuring out the organic would become a full-time thing because when I look at it it's like well what what organic there there could be some organic approach because we're a product right we're not a lot of the organic success or or brands that are organic the people are the product in a lot of ways >> where people are buying them when they buy their product because they like their content they enjoy

29:54 their you know what they are and they they've they've attached themselves so closely to the brand that when you buy their product, you're you're essentially buying buying them. And so that would be essentially me and Hy really investing in that organic approach, which we thought a lot about like she's writing stories like that. That's what she does.

30:15 >> Yeah. >> I don't know. There's lots of things we could do to try to figure that out. But the more I I look into the organic and see the people who are successful in it, I'm like, "Wow, they've really kind of because it's not just, you know, I really appreciate when they do because it's not just a willy-nilly. It's like formulaic." >> Yeah. Yeah. >> You figure it out.

30:34 You know, exactly. You know your hook, you know everything. And it's it's what what I do. >> But it starts willy-nilly. >> Yeah. >> And you learn from there. >> You figure it out. You're like, "Hey, wow, they like that. Okay, I'll do that." Yeah, let's do more of that. Yeah. >> Yeah. >> So, roughly, I'm just estimating here, you're spending like a third of your revenue on like cost of goods sold, postage and paper and supplies.

30:57 You're spending another thirdish on meta ads straight to meta. And then the rest of it is going to pay your people >> operations over investing growth operation. Yeah. >> Yeah. It's a it's a reinvestment cycle, but just been fun, right? But it's kind of a cuz you can see opportunities, different ways you can >> Mhm. >> can grow and it's no nothing's ever different.

31:20 Like every year's, you know, exciting something else is happening. New stories are coming out. Like a lot of it goes into investing in new stories to be honest. Researching the stories, things like that. But yeah, that's kind of that's where we're at. >> So your yearly turn is 5%. You know, $100 per year per customer. How long I mean it's still early.

31:41 You're five and a half years in. How long are customers staying? What's your like year-over-year churn or like lifetime value, I guess? What's the lifetime value of a customer? >> 12 months. Lifetime value right now is about $180 >> from across 12 months. Really? >> 12 months? Yeah. >> Wow. Why not closer to 100 if they're paying >> two? 12 bucks a month.

31:59 Okay. >> They sign up for one story. >> So, you'll have a customer, and this is not uncommon. They see our ad like, "Oh, wow. I'm going to gift this to my mom and to my sister so that I too. And then, you know, later on they're like, you know what? I'd like to do this. And they buy it for themselves. >> So now that person has spent, you know, upwards of $300 depending on what >> how many they do a tin or whatever.

32:28 >> But we have a lot of repeat purchasers. I saw one some someone bought like 10 for their friends and I was like, man, we >> that's crazy. been incredible. >> How do we get more of those? [laughter] >> Yeah. >> Yeah. >> Because you still spent 40 or 50 bucks to find that customer, too, you know? >> Yeah. But it's also we have a really strong core of people that when we release a new story, they're excited to sign up for it >> because they they love what we do and they know they they kind of know what to expect from us.

32:57 Uh from a story perspective, we're not trying to be edgy. We're not trying to like scare you. We're not trying to like throw anything in this controversial. The stories are all designed to be just full of light, happy endings. You know, we're not apologetic about that. We're try not trying to throw any curve balls at you, but our our customers appreciate that and really like that.

33:19 >> And so, if they're spending 180 per year, do you know how many are coming back for a second year? >> It depends. A lot of it bleeds into the other because it'll be she'll they'll buy two and then six months later they'll buy another one and then, you know, a year later they'll buy another one. So we'll we'll we'll we'll have win back campaigns where people maybe haven't, you know, been paying attention, know we have another story, so we'll do email campaigns to try to win them back.

33:45 >> I think we've built a really good core of loyal customers now. It it's sort of hard because it just doesn't renew, right? It's not like a after your story is done, you don't just roll into another one and pay yes. We don't we >> you sign up individually for each story. That makes a little bit more challenging for us to really get subscription data.

34:04 I we also don't process our annual subscriptions through a subscription software. We kind of do that on our own and we use a software monthtomonth >> and so we don't get as much we kind of get the the software is good because it gives you more like a subscription. We treat them a little bit differently because they're sort of buying that story, that experience, >> right?

34:27 >> And we don't have to pay 1% to the subscription for their the prepaid. If Mother's Day is 10 out of 10 busy, what is Christmas, Thanksgiving? How does that compare on a scale of 1 to 10? >> Oh, they all they all feel 10 out of 10. [laughter] >> Christmas can actually be a little bit more hectic because just from a personnel standpoint, that's when people want to go be with their families, want to and so we have people staffed is a little bit more challenging.

34:51 But Mother's Day usually, you know, goes really well. Yeah. I think from a business standpoint, Mother's Day is 10 out of 10. say nine out of 10 for Christmas. >> And what does your team look like? How many people do you have? And logistically, are you in like a warehouse? Do you have automation equipment for stuffing all these or are people doing that by hand?

35:10 >> It's all by hand. So the way that um and we have a warehouse just over in Oram, Utah. >> Right now, our headcount's 16. >> We've had as many as 25, but we built in like our operations manager is incred. He's fantastic. To give you an example of how efficient he's gotten us, we used to have like 15 people stuffing 20,000 letters. Now we have five doing 120,000 a month.

35:41 >> Holy cow, that's incredible. >> But yeah, it's very high touch. So people are handling each and every piece that you get has come through the hands of our our team. >> It's funny. I talked to a lot of business owners and nine out of 10en times it's like, "How are you using AI? How is AI gonna transform your business? How are you gonna make more money with AI?

35:58 And with this business, I'm just thinking about it and it's like you don't need AI. >> No, I use it every day. >> But then that's a fe Well, I guess you don't want AI to write your letters. No. >> Right. No, >> you're not going to get AI to stuff your envelopes anytime soon. No, >> you could use it in your meta ads. But how are you using AI? >> So AI has been I'm fascinated, it would be an AI business.

36:23 There's tons of them you can start, but I use it every day to process thought. I'll, you know, do analysis on a string of emails I've received, pull in data from our Facebook ads and have it run an analysis on our efficiency, put in our financials, right? Plug in our financials, [clears throat] have it do an analysis, and give us some insight into, you know, how we're how we're operating.

36:47 But yeah, you're right. We wouldn't use it to write the letters. But I think there's some that are probably using AI to write letters, things that they're doing and generate images. And I think time will tell how wellreceived AI generated entertainment is. I do know that the entertainment industry is >> I mean they're already using it. They're already leveraging it.

37:08 Um >> yeah, >> from a writing standpoint. But yeah, for me it's more of a business intelligence >> running it, bouncing ideas. >> Sure. >> I generated a web page. It took five minutes and it was pretty good. Yeah. [laughter] Yeah. Yeah. So, I don't think I told you this, but my wife is in the middle of starting a snail mail business for cooking. >> Cool.

37:29 >> Yeah. It It's called uh snail mail supperclub.com. >> Nice. >> And got a couple selfish questions for you. Sure. >> And she's starting it cuz she read a book called Bread and Wine. And she was inspired to start like a cookbook club with her friends where they every month they meet, they all bring their own meal, you know, appetizers, entre, desserts around a central theme.

37:48 like this month was Greece or Mexico or St. Patrick's Day, you know, a country or or a day or a theme >> and they all kind of have a group chat and they just bond over it and they share their food and they dress up all nice and she has absolutely loved it. So, she heard my episode with Hannah and she's like, I could just turn that business into a snail mail business where I could write the recipes out and we could get some artwork done and it's great for referral marketing because like we're encouraging groups.

38:16 Like, so one person signs up, the chance that they send it to their seven friends is much higher. They don't have to. They could do it themselves, but then they'd each get a unique recipe. So, there's kind of some logistical challenges there. but she's launching for Mother's Day. And I'm curious like what what other niches do you think this is that could be really interesting with the snail mail business that you're really not interested in tackling but you see um opportunity in?

38:43 >> Oh, the recipe is interesting. I there's a friend of mine started a company called Peachy Recipe. You can essentially upload your own recipes and they'll print out a cookbook for like a family cookbook. Pretty pretty pretty neat. >> Oh, cool. >> Um but yeah, the recipes ones that's really that's unique and fun. I think when there's there's a lot of this any sort of like the pen pal one is interesting.

39:03 We have people that I think there's other pen pal businesses that that do it. I'm just trying to think anything that's like a standalone like once a month thing >> is way simpler than than getting into the story business. The story business it's a much different animal to tackle because >> when you have to write a story and that's difficult >> recipes and things like that be interesting.

39:25 Someone was like, "Hey, you should do Santa letters." And I was like, "Huh? That's in our brand." But some I know there's a couple people that do Santa letters around Christmas and they do well. >> Where hundreds of people are launching, starting, testing, experimenting with business ideas that they heard from this podcast. If you want to go fast, go alone.

39:42 If you want to go far, go together. Check out tkowners.com. We'd love to have you. What about true crime? Like there's a business called Hunt a Killer and they do like true crime boxes, right? Where you solve a That's like a $150 million a year business. That's huge, right? Yep. >> And so why not take that and put it in a like a letter form and just a true crime story or like a puzzle, something to decode, you know?

40:05 >> I think there's one that does it. I think I saw one that that is doing that >> good. They proved the model. Yeah, we can go copy them. >> What it comes down to, honestly, that that the reason those companies were so successful, one, they they knew they knew their market and they marketed the heck out of it. >> It's all meta ads. >> Yeah. [laughter] >> I think you can only go organic in your business so far.

40:25 >> Yeah. Yeah, especially when something's sort of niche where it's not a mass market appeal, you're going to need to advertise and market and brand >> and develop e-commerce skills. You know, CRO, like CRO, I didn't even know what that was. >> Conversion for the listener, conversion rate optimization. >> Conversion rate optimization like >> getting 3% of people to buy to 3.2% of people to buy.

40:51 That that could be a lot of money. >> 3.15. That's >> Yeah, there you go. >> And it's like it's the craziest stuff. Hey, let's make this button green. >> Yeah, let's move it from the left to the right side of the page. >> Who cares? Like, why would you care about that? It's like, well, when you have 100,000 people come to your website in in a 5day period, >> that [clears throat] could be significant.

41:11 >> Yeah. >> The fact that a button's green and people are more likely to click on it, it's wild. It's kind of crazy. or if you learn like Samsung users in Turkey for some reason like this the checkout button doesn't load correctly. So there's so many one-off things and in aggregate it can really make a big difference. >> It's huge. Yeah. If you're an entrepreneur, you're a business owner, you probably see people, you know, coming up in your feed telling you you're doing it wrong.

41:34 Uh let me show you how to do this, let me show you how to do that. >> You have to know your business. You have to know your like if you don't know your customer none or your business or your product none of it's going to work. You got to know who who your customer is. You got to know how to talk to them. That's why early on the more someone can really truly understand who it is they're selling to and who it is is their customer, the better off they're going to be.

42:00 Because people ask us, "Well, who's your customer?" It's like, "Well, anybody with a mom?" It's like, "Hm, no, that doesn't work." Well, it's a great Mother's Day gift. Well, everyone has a mom, so just market to everybody. It's like, well, no, there's a specific demographic. There's a specific type of person >> that this will resonate with. Marketing for us, marketing to men has been it hasn't worked.

42:26 >> It just doesn't work >> because we don't get it. Men see this and within in a 30 second. It's very difficult to get >> Yeah. >> I hope I don't sound sexist, but >> No, no, not at all. >> They don't think about it. >> You have to hook them in. You have to hook them. Ironically, like if a I mean most of the people that watch this will be men and by the time they get to the end of it, >> they're watching it for business reasons, but they're probably like, you know, I'm going to get that from my mom because they're

42:50 they're sold. But if they were to see a video, the same type of video, you would not hook them in the first 5 seconds. Oh, >> you know, >> it's been super fun to figure out all that stuff. >> But it can drive you nuts. It can drive you wild. >> There is an 8020 to all of it. You have to at some point you have to stop moving pixels, right? Yeah. [sighs] >> Well, my last question for you, I want to be respectful of your time, is if someone's watching this and they're entrepreneurial and they want to start some sort of a

43:16 snail mail subscription business, what is some advice that you could give them that could help them save themselves a world of pain or hurt or all that. >> Know your customer. Know and but also know what you're signing up for. Um, if you're doing a story, it's much harder than doing a standalone monthto month >> because [clears throat] a story is is uh, you know, you have to get it right.

43:41 It has to come in order. >> You have to tie it all together. >> Yeah. Well, first you have to write a story, right? >> Mhm. >> One of the reasons why it works so well with my wife and I is she's the creator, right? And I think most people, and I think it's saw with Hannah, my wife's name's Hannah as well, but with with the person you had on your podcast, works well with us, is she can really focus on the creative and I can really focus on the business.

44:07 >> Yeah. >> And when you have a creative venture, it's very difficult. So authors, that's why authors and writers and creators creatives often struggle is because they just want to create. They want to write. They want to do this. They want to do their art, right? which I should do, but you got to sell it. And so you got to figure out, okay, now how do we marry these things together and, you know, really get a customer base and make a viable business out of this thing that I'm creating?

44:35 Yeah, I think that would be know your customer, figure out the business side. And uh if you can have a partner whether it's a a spouse or a friend that can handle one side of the business and you and the creative cuz it's a it's a creative endeavor, right? Probably with your wife if you run maybe to help her run the business side and she does the creative side of hers.

44:58 It' be a match, >> great match because you can see, >> you know, you're you're tracking customer lifetime value, your acquisition cost, >> you know, all the different business and she can focus on ah >> because that honestly enabling the creative is cuz that's your that's your product. I mean, that's the magic, >> right? That's squaltched in any way, shape, or form.

45:21 It's not going to be as >> as good. But I'd say that I I I don't think that's just for Snowma. I think that's for any business. >> Yeah. >> Have creative minds and really business minds that can really help understand the ins and outs of business. But also I need you I mean the more you think about any business like the creative I think sometimes we undervalue creativity and the creative minds in business.

45:47 >> I think if people have a hard time finding or knowing their customer because I agree that's paramount advice. Know who your customer is. If you don't really know how to figure that out, just start with a customer of one. You, right? Yeah. >> My and my wife and I had a conversation about this snail mail business is she wanted to take videos of her making all the recipes and then put a QR code in there so people could watch how to make it.

46:08 And I was like, "Okay, great idea, but like that's a very big lift. That's a a lot more of a lift than what you're currently planning on." And I asked her, "Would you like do you watch videos of people cooking when you make meals for us?" And she's like, "No." I'm like, well, like, build it out for you. Like, if you're not likely to do that, then people aren't likely to do it either.

46:29 >> And so, if it's not a big lift, then try it, but if it is, then maybe just give it a month or two before you try it. No, >> that's really actually insightful because on our when Hannah was creating our first story, which is Audrey Rose, she wrote it for her and she wrote it. It's like, I I'm going to write this for me and I'm going to curate this so that it is something that I love.

46:47 Turns out, wow, there's lots of different people they like. >> Yeah. >> And now they feel loyal to her because they're like her. We like people that are like ourselves. Right. >> Right. >> So, it's good business. >> I think people need to remember the markets are huge. Like, I think sometimes it's hard to fathom. >> Like, just think about 100,000 people.

47:08 That's a lot of people. That's a lot of people. Times that by 10, that's a million. That's a lot of people. ties that by that's a lot of people with a lot of different preferences. And because you haven't sold anything doesn't mean the market's not there. You just have to keep trying. You have to keep >> finding it, iterating. And it could be you try weird things.

47:29 I don't know. But like there's there's markets for just about everything out there. I think a lot of people get discouraged because they're like, "All right, got to launching it and nobody buys." Like, "All right, didn't work." >> Yeah. Yeah. I also have a a a theory that I tried because a business is all transactional. It's to me it's whether it's a transaction of you know coming into a store.

47:51 I think that's a transaction. I came into the store for some reason. I transacted by walking through the threshold into the store. I transacted by picking something up and feeling it. And then ultimately the final transaction is a financial trans transaction where they purchase your goods or your services. number one leading indicators of a successful financial transaction is someone giving you their email address because like they want to get what you're sending.

48:20 There's a way the secret that and if I were to start another business I would do this. I would develop a product a concept idea and I would build a website. I would put up a a form coming soon. Here's my product. Here's what I'm doing. Here's my service. Give me your email address, stay up to date. If I can do just run some ads, just little things here and there, and I can find a pretty good mass of people that are willing to transact with me through their email address, >> I'll say, "Okay, I think I got something

48:50 going here. I think there's there could be something here." >> That's a really easy way to like >> test a market. Sounds easy, but oh, I got to build a website. It's like, well, >> that's easier now than whatever, you know? But anyway, something that's something that people could could try, you know, before they really invest anything. >> That's excellent advice, Michael.

49:09 Thank you for your time. This has been incredible. Obviously, we can find you at theflowerlets.com. Is there anywhere else that we can find you? >> Social media, the flowerflower. But yeah, our website's the best. You'll find links to all of our uh social media there. And um you know, obviously you can sign up for our email list as well. and and uh hear from us there.

49:34 >> Awesome. Thank you. >> Thank you, man. I really appreciate it. Great to meet you. >> Likewise. All right. What' you think? Please share it with a friend and we'll see you next time on the Kerner