the guy doing $30M A MONTH (Andrew Payne) | EP 3

Added: 2026-04-29

[00:00:00]All right, guys. We're live. Episode three over here. Today, we got Andrew Payne, an insane DTOC operator. This guy went from bringing a brand up from zero to scaling all the way up to 30 million a month. It's a brand called Air Moto.

[00:00:16]Maybe a lot of you guys have seen the ads over there. Now, Andrew is running his own holding company. He's got a few different brands in there, different niches, different spaces, even some mobile apps. Andrew, if you want to start by just giving yourself a quick introduction to the viewers.

[00:00:33]>> Yeah, sure. Thanks for having me. Yeah, as you said, I'm Andrew Payne. Longtime background in the online marketing space for many years from affiliate marketing to agency to otherwise, but jumped into e-commerce in 2021. Took our first brand, Aramoto from 5 million the first year to our peak year of 86 million.

[00:00:55]Yep. Typically, we're very seasonal Q4 centric. So that's where we start to flirt with those 30 plus million dollar months. Since we've been operating that brand for five years and over the last couple years, we've also launched like you mentioned other brands and different categories to offset the seasonality.

[00:01:11]Also venturing into the mobile app space for the digital side of things and just taking things one day at a time and trying to build something interesting.

[00:01:21]>> Amazing stuff, man. And yeah, we've chatted a lot and I think what's super interesting is even your background before getting into e-commerce or your background even in the affiliate space, some of the stuff that you did over there. So, if you want to touch on even going further back of what kind of led you to starting the first your own brand in the first place, what got you to that place?

[00:01:39]>> Yeah, I jumped into affiliate marketing or first discovered it a long time back.

[00:01:44]Some would say I'm a bit of an OE back in 2005. So over the years, I've had my hands into most areas of digital marketing, like everything from SEO to AdWords to MySpace ads and some of those old school early days when they first launched. Over the course of that time, that's when Facebook ads originally came out. So there was a lot of just a lot of new things that I saw come up. And so yeah, at did that for many years across various verticals within the affiliate space. At some point I also ran an agency for about six years. Worked a lot with B2B clients, industrial manufacturers, distributors, design build firms. So just a lot of B2B type of areas and that also taught me a lot.

[00:02:28]So I basically took a lot of the skills that I had learned as an affiliate or through the affiliate marketing space, applied some tactics and strategies for these other companies and did that for several years. Wasn't really my passion.

[00:02:41]So I started to gravitate back into affiliate marketing, built a push notification software and marketed it really well. did solid numbers on through a certain kind of business model ID set up for a few years and then took a year off and was thinking about what's the next step I want to take something that I saw had maybe a longer term potential also higher ceiling of capabilities and the I just determined that e-commerce was the closest fit to my skill sets with the marketing and the online experience overall and so I would just have to learn a bit more about operations and team building So that's what I told myself I would commit to for a period of time and here I am five years later still doing it.

[00:03:25]>> Amazing stuff. And I think when I met you it was around five years ago when you first launched the brand. I think it was like your first full year of operating it. So I guess going back to the start of Moto like what led you to that category specifically? And for those of you guys that don't know the brand I mean he's selling a tire inflator and he's been able to scale that thing to virtually hund00 million a year. So how did you land on that product being the thing that you went into and what is your philosophy when you're thinking through because you've launched now new brand so what's the structure that you had back then and maybe what's changed now for how you look at actually entering a market or entering a product >> yeah sure it definitely has changed so I can give you some of my thought process at that time and maybe some areas that it's evolved to now coming from the affiliate space I was already running some e-commerce affiliate offers like through companies like DFO and such. So, I already had some expertise with how to market e-commerce offers, but it wasn't until January of 2021, so basically right after the close of Q4, that I decided to fully commit to building my own. And I did some basic research, gathered some ideas, evaluated is it a broad appeal product, is it a product that people would need multiples of, things of that nature. I found a handful of products that I had prioritized. This category of attire inflators was like the third idea on my list. So, I tested the first three products, this one being the third category, and I just got momentum right away. And I think a big part of it was one, it was just after close in Q4, so there was still a little bit of the slide down in January from the holiday sales. So I picked up some of that energy, but also there wasn't anyone that had really dominated that category for this product. So there was a lot of consumers not familiar with this particular product type. At least this is what I later determined was a big part of that. So of all the products that I had tested, this one just was getting momentum right away. We did about a million dollars in sales like the first 90 days or just under 90 days.

[00:05:30]I spent a lot of time there testing different versions, going to different manufacturers, found a model that worked really well for us. Started bringing bulk inventory into the US and optimizing our margins on the shipping side. That just continue to give us more margin to market and build things out.

[00:05:47]Still trying to operate those other two products as well, but they were much lower scale. I think they were doing like 4 to 8K a day, but this one was at this point we were closer to 15 20k a day for after the first few months. And so yeah, over the course of that year, I think it was also that year where iOS got hit pretty hard with meta or that might have been the next year, I forget now. But right in that frame, we've dealt the first two years, we've dealt with all these kinds of issues and challenges, but pushing through with this product. I wouldn't say that that we had great results after the first quarter of that first year. We really things started to drop off and I think it's also because still optimizing a lot of the business, a lot of the brand and also we lost completely the whole Q4 energy. So now we're back to like real world. I didn't quite fully understand how drastic performance can be for a product that works seasonal as like a gift. But then going into our first full Q4, we weren't in the best position. We were down some money, but then we got to see the energy of Q4 full force for the whole first Q4. And that really started to open my eyes of the power of Q4 and how we need to think about operating this brand better. So at the end of the first year we did about 5 million in revenue and globally we lost about 200k and then but from my point of view that was still a big win because first year 5 million still figuring out the teams operations and such still optimizing a lot of parts of the business and in my mind if we improved just a couple of percentage points we would be positive going into the next year. So we basically applied all those learnings, jumped on Amazon. We weren't even on Amazon the first year. So I did a small test in Q4 and realized I should have been. So we just started building out all these things that I had learned over the course of that first year. And then by the end of the second year, we had more than tripled our revenue. We did 16 million with a very strong margin. So that's just something we kept rolling that momentum every year. Same process.

[00:07:47]Every year we learn something new or test something. we just apply it and roll it out and then maximize the squeeze Q4 as much as we can over the future years until we can just continue growing it.

[00:07:58]>> Amazing stuff. And I think what's super interesting about your business model is that like you're saying like early on you figured out that okay Q4 is the time where you're making all of the revenue.

[00:08:09]And I think we've spoke on some private conversations on this where you said that most people if they tried to run this business model they would be completely [ __ ] because they would see during the whole year wouldn't have that kind of momentum and then Q4 is where everything was compounding. So you were very deliberate about engineering your whole business model to be relying on that Q4 time. So can you zoom a little bit into that part of the equation and how you figured that out and then what were the changes you made to your business model to accommodate instead of trying to change and just try to make everything positive all year round? How did realize that identify it and then engineer the business to be able to work with just being Q4 as that period where you had that major growth? Yeah, I think we the first year in particular, we just saw how drastic the energy of sales was once you got into the early part of Q4.

[00:09:05]We were struggling throughout most of the year to to do roughly 20K a day. But in that first Q4, we were doing like 80 $90,000 a day in sales. And that was not like we did something tremendously different. We still had optimized a lot of our shipping and negotiate with the manufacturer. So a big part of it was just just that consumers were buying.

[00:09:26]They were buying for gifts. So our AO obs went up a little bit more that gave us more margin. We could spend a little more etc. We took that first year of learnings and data. And I said, okay, it was pretty obvious majority of our sales this year came in Q4. So how do we run somewhat efficiently throughout the year, still test new things, still grow the team as much as we needed to? uh but to expect that we might not see great results until the last quarter of the year. And then we would strategically plan how heavy and how hard do we want to lean into this next quarter or sorry this next Q4. And so we would make some predictions and calculations etc. Take some bets that we felt were both achievable but also within the reason of risk tolerance that we wanted to take.

[00:10:13]And the second year went well. And so we every year we just slightly compound deeper and deeper into that model. I wouldn't necessarily say it's the best business model because you are putting a lot of eggs in the basket, one product one period of the year, but we were we've been able to make it work. And part of what you mentioned earlier, a lot of people might give up because also a big part of it is if you don't have enough capital [clears throat] and you're not understanding that you might not have the best of performance year round, you may not even have the capital to just work through that period of time to get to the Q time. Fortunately, we we had a fair amount of capital and I also had already committed to about a million dollars in inventory. So, I had to sell out one way or the other. So, it's forced me to figure it out. Otherwise, I might have also abandoned much earlier because of that. But since I dug my hole, I had to either dig out dig myself out of it or dig it deeper and just go to sleep.

[00:11:05]>> Great stuff. And then just to understand the breakdown of that, right? So Q4 essentially is where you were making all of your profit then. So meaning like the everything outside of Q4 you were losing money and then you would have all that profit recouped and then make actual profit on the year all through Q4.

[00:11:21]>> For the most part, yes. A big part of it also is if you're growing, especially if you're tripling every year those first few years, you obviously need to hire more people. Not so much that I need them today in Q2, but when we get to that the high sales seasons in Q4, you're going to need the extra hands.

[00:11:38]And you don't want those extra hands to be not have had enough time to be trained and up to speed dialed into your workflow. So, we would have to hire usually starting around mid Q2 to late Q2. So there's three to four months there often times where we have more operating expense from payroll and such that we didn't necessarily need but we would need. So you're typically taking on more expense while performance is weaker. So you there were many times where we have been bleeding or losing money throughout the year trying to anticipate high growth on that upcoming Q4 which again makes this model not necessarily the best model because there is additional risks that being one of them but yeah oftentimes we would lose money throughout the year and we'd make a sizable amount of revenue and all of our profit in Q4. Yeah. And I think part of it though of it not being the most optimal business model is also maybe why you guys were able to be so successful because most people would probably be scared off and never even have a chance to compete. It created that moat for you where it wasn't as easy like other products to to make.

[00:12:43]>> Yeah, I think it definitely kept the competition low because unknowingly to me, but I did need to have a fair amount of capital to operate. And also just to kick back on a point I was talking about earlier, how I found this, I did find some other brands selling a similar model that was part of my early inspiration on testing this category and they had been around about 18 months, but they hadn't done very much sales, a couple million dollars globally. But when I had found it, other than them proving that there was actual sales going on, I also just evaluated their marketing and I knew that I could best them on the marketing at least. And then as I got deeper, we just optimized the business. But yeah, what you're saying was right. It definitely that was one of the perks was that because of being not the easiest type of product, it being leaning into it more seasonal and some of the other pros and cons, that definitely helped by keeping fewer competitors around.

[00:13:36]>> Nice. And just to understand a little bit of the growth trajectory because you said you did five million the first year, 16 million the next year. How did that growth continue to look for the coming years up to doing you said 86 million at its peak?

[00:13:49]>> Yeah. So we've done the first year 5 million, second year was 16 million, the third year was 56 million, the fourth year was 86 million, and last year we did 77 million. We've had consistent growth up until last year being our first kind of down year, but there was also a lot of tariffs and other things that impacted margins. So we just naturally uh globally in the consumer space saw a bit of a pressure last year, but still did solid numbers. Overall, we did well with the brand. So, it's very fast growth, which is also another negative. If you're growing so fast on a seasonal business model, you're having to buy a large amount of inventory for just one time of year, which again means you have capital pressure, cash flow.

[00:14:32]You have to put down deposits, make payments on the inventory, handle the freight shipping, all these other factors like months before you even have a chance to actually start selling the inventory. So, there's things like that.

[00:14:45]just make it not the easiest model to and business and brands to operate, but we've been able to find ways to do that and it has helped us. And because of how early we got started and with the momentum we had once we really built out on Amazon, we became one of the dominant players on Amazon for this product, especially throughout Q4. Typically, we're either number one or number two in the automotive category for the entire of Q4 on Amazon, which is a very large category and that gives us extra perks and exposure as well.

[00:15:18]>> Absolutely. So, if we had to distill down what were the main components that you think allowed you to have that type of growth going from 5 million and then pretty much in a matter of four years bringing that to 86 million. What were the key components that you were working on? And I think what I want to also let the viewers know because we've chatted about a few different parts of this.

[00:15:37]What I'm super impressed about with how you've operated is that you've had such relentless focus and not allowed yourself to fall into distractions for all that time because at the beginning I mentioned that you're doing a lot of these different companies, but for a long time you were just zoomed into this product figuring out what was the biggest bottleneck and how to optimize that. That at least is from my perspective from chatting with you over the years. So I would love to see from your perspective, what do you think actually allowed you guys to take the same product without really that many changes and get it from 5 million all the way to that 86 million a year?

[00:16:15]>> Yeah. No, it's a great point to talk about because the first year, like I said, I tested three products. I got all three of them to work, but this category was working best. I did try to continue operating all three that first year but none of them were doing like significantly well and then we still had a small team still figuring out our overall strategy and operations as well.

[00:16:36]So come a after that first full year the very beginning of the next year I decided since nothing was working extremely well we need to cut and focus on what is working best and really either give it our all or move or decide to move on to the next thing after a period of time. So, we cut those two smaller brands and focus only on Air Moto that full second year. And there's a lot of things that people naturally default to. They, okay, obviously you can optimize your shipping. You can negotiate with your manufacturers, but you're only going to be able to negotiate once or twice a year depending on your order volume and how fast you're growing. So, you're only going to have potential for savings a little bit throughout the year there, which gives you more margin. So the other ways you have to focus on optimizing is obviously improving your marketing, improving your AOVs, but you can even get further in the trenches. We added in VFO as second affiliate partnership, which brings in a little bit. It was more impacted the first couple years, but it still brings in good results for us every year. But there's a lot of these smaller details that are like half a percent or a percent. And so those are what we would optimize more and more over time. Even just like your email marketing, we would add in things like retention and add shoppers and different areas like that would just be small boost, but that gives you a little bit more margin throughout the year. So, I think it's a lot of times people don't really dive super deep into the granular things to optimize and you don't have to when you're like maybe 5 to 10 million range, but to get beyond that, you really need to dive much deeper. So focus being I think probably the largest lever in that equation and then just really getting to understand how the business works. How do we optimize everything to that granular detail? Even now every year we use softwares like Slack or ClickUp or Air.inc and stuff. And even when those contract renewals come up almost always they want to push the price like 20 30 40% higher. And I just had this happen recently with Air.inc. I basically told them, "No, I'm not spending 35% more than I did last year. Actually, I'm thinking if we really even need it." And then they come back and they basically give us the same price. So, that's just way you keep all your costs in check and it adds up over time, saving 510k here, 510k here. As you grow, that adds up to several hundred,000 over the course of the year. I just got very granular in all areas of the business and to keep things in check, not to let my expenses go haywire. And back to the point about what you said, you're right. The first after cutting those initial little brands up until the full four year mark, we had zero other distractions. All we focused on was air motto optimizing on Amazon, getting launched on Walmart, getting launched on eBay. Doesn't always mean it's all impactful, but they all make up a footprint. They all help there. We've been a we've been aired on Good Morning America and other TV shows like that very consistently. It brings in not only awareness and branding, but also some supplemental revenue and income. Those are all these small details that globally just help work together to make the brand grow and to be successful with the brand.

[00:19:44]>> Yeah. And I think that kind of discipline is almost impossible to do, especially as you're scaling and you're seeing that the model is working. But it seems like from what you're saying there was a bunch of those micro optimizations across the board that each one individually wouldn't have made or break like the ability to scale. But all of them together is what allowed you to have that compounded effect to to actually be able to push.

[00:20:06]>> Yeah, for sure. And every category and every product type have different types of options. In some categories, you may not even have to think that granular until you're doing much larger numbers.

[00:20:16]But in our case, it's not the sexiest of product. people are not naturally looking on their own to to buy a tire inflator just to solve a higher pain point. So we had to get a bit more tactical on some of that approach and the focus it was a big shift because our idea from the start was to build up a portfolio but I realized that if you're growing a brand fast and large it takes a lot of initial focus and energy and so you really just understand things and then and so you have people in place to do some of these areas that normally I would put my attention around. But believe me every year I debated should we launch something else? Do we need to stay focused? It was a consistent topic that got brought up, but for the first four years, I just decided to stay focused until I saw some slowdown or some challenges and we did start to know that at some point in time we can't grow so large and only be dependent on a seasonal business. It just does become too stressful over time.

[00:21:13]>> Yeah. I want to zoom a little bit into the marketing side of it, right? because the way that you've grown this pretty generic product into something that is again like virtually doing a hund00 million a year that came down to I think some of the best worldclass marketing which I think is one of your main specialties. So what were the key things from your side that you think allowed you from a marketing side to be able to scale to those numbers? What are the different pieces there that you think you did really well that allowed for that scale? Yeah, I think some of our biggest wins certainly came from the first two years when we were very aggressively testing the sales funnel, the sales page, the offer flow, like how do we find the right upsells? Because the inspiration competitor that we had found early on, they didn't really have a good job, hadn't done a good job of identifying strong upsells. We even modeled after some of their inspiration on their upsells and it was getting like three and 4% take rate far below the benchmarks that I would typically want to look at. So we had to start to come up with our own ideas and we came up with our kit idea where the item already comes with its own cable, but this power kit gave you a longer cable as well as a house charger and a car charger in addition. So just like an additional accessory pack, we would sell it for 37 bucks and it cost us about 350 for the cogs and shipping and all. So just a very high margin accessory and that would had a great take rate. We get somewhere around 25% take rate on that.

[00:22:46]So that really helped boosted not only our AOVs but also strong boost to our margins overall. Naturally, because of Q4, we lean very heavy into selling multiple units as gifts for family and such. Typically, you might see a lot of products and brands have buy one, buy two, buy three. And we've tested that kind of approach before, but we've also tested up to five. We've test up to 10.

[00:23:11]Now, we have it where we actually show one through seven quantity, and they can even click show more if they want to take it to 10. And this is just to make the flow so easy to buy multiples without having to click like a quantity box which has a very big impact to the take rate and conversion rate there. So how do you find that right balance between selling quantities to get the AOVs up and maximize? We've tested things like should we show it this is the price for each of them or should we just show the full price for this if they're buying three for example. We've done those kind of more granular tests and various different advertorial flows, listical flows, quiz flows. We've done just doz dozens upon dozens of variants of tests from all stages of the funnel and we still rotate in new ideas just not necessarily as frequently as before because we have so much data and such to to base it on and things like that. But I think it you have to be strategic.

[00:24:09]start with high impact areas which oftentimes is the first page they land on and then other times it's going to be anything from the point that they've made the decision in their mind okay I want to buy this so then everything else in the page or part of the sales flow after that conscious decision generally those areas have very big impact so come up with smart tests in those areas and you'll get some bigger gains much easier and we just work through the process obviously creatives were always the big >> before Before we jump into the creatives, I just want to mention a few things on the funnel thing. You're saying like the first big lever came in the first two years of essentially optimizing for AOV, also CVR, making sure that the page was dialed in, the offer was structured correctly, but then adding more bundles. And if you don't mind sharing, like what is the base price of one product to how far you were able to extend the actual AOV of your funnel? Yeah, the first two years we were mostly selling the item for $79 as a single item. I don't recall what our earliest AOVs were, but they were pretty weak, like 105, 110 range, something around there. And so within the first 18 months we were able to get up to 165 and then it softened a little bit throughout the year but generally in Q4 between 165 up to 175 during the peaker times in Q4.

[00:25:32]We've adjusted our pricing model now. So we actually sell it for a little bit lower cost per unit these days. So our AOVs are a bit softer but conversion rates a bit stronger on the offset of that. But those bigger wins was things like like I mentioned the power kit attachment and like a more advanced tactic is okay if they're buying three items on the front end for three units then our first upsell being a power kit we already present them with buying three power kits. So it's just a yes or no. Again they don't have to select any quantities or anything of that nature.

[00:26:05]It's already aligned to the same quantity that they purchased initially and that's for all of our upsells. So those kind of small tactics allowed us to just quickly find big wins that oftent times you don't have the flexibility to do on Shopify and some of those other solutions.

[00:26:23]>> Yeah. And that's insane. You're talking about literally more than 2xing the actual price of the product where I think that's make or break any type of circumstance of if the product will work or not. Literally >> adding 2x the amount. So that that's pretty insane on that side. And it gets even interesting when you think about over time how our Amazon sales have grown because okay, we're marketing on all these other channels. Obviously, we're doing some Amazon ads as well, but we're driving a lot of the halo effect to Amazon. But when you start to measure how much how many sales are you getting now on Amazon for every one sale that you're getting through the store side because we're directly impacting it on Amazon. So you think of a $165 AOV, but in reality it's can be somewhere like$225 when you start to factor in the Amazon component. And so that is what certainly allowed us to get a lot of scale, especially in Q4 because we were just able to acquire at a much higher cost than anyone else selling that type of item.

[00:27:23]>> That's super interesting. And how did you factor in that halo effect of Amazon? Was it just you saw a certain percentage that whatever you were spending on Meta and making revenue-wise from a new customer perspective, you would make 30% or 40% on Amazon and then you would try to essentially calculate that into the AOV or how were you actually measuring that as you were scaling? Yeah, the first few years wasn't super clear about it because the first full year on Amazon I think we did about 18% 15 18% in total sales came through Amazon but that's grown like you went to 35% 45% now it's about 5050 so the way we look at it now is a little bit different than then but in general we would take okay here's all the sales here's the costs here's the Amazon fees and here's the Amazon ad spend here's the margin left over and then we would factor that into our break even CPA on the front end like metas and such. So if our break even was say 100 bucks, but we're making an extra $25 in margin for every one sale on meta, then we technically could spend 125 and still break even. So we would just factored in like that.

[00:28:35]>> That's a super interesting way to go about that. And yeah, I spoke about this actually I think on a chat I had with Chucky from Primal Queen. And it's interesting because everyone has different ways that they go about it.

[00:28:45]But I think the biggest mistake people can make is just looking at Amazon on its own rather than trying to incorporate that into how you actually go about acquisition because it is such a strong correlation to the ad spend you're already doing on Meta or other channels that drips over. So yeah, and I think the other thing you mentioned that you guys are number one in your category. So, we've recently become number one on our category as well. And I think I didn't realize how big of an impact it is to be number one versus even number two or below that because once you get that besteller badge, >> it's insane. We're seeing up to a one:1 match ratio. And usually like what we would say before is if we could do anywhere above 20% to even 40% of whatever sales we would do from like metat traffic, that was good. But if you can actually get to the number one bestseller and I'm curious for you, we are seeing literally whatever we're doing on Meadow, we're doing on Amazon ratio. So is that something similar you had on your side as well?

[00:29:43]>> Yeah, similar. And we don't always maintain number one throughout the year, but in Q4 in particular and most of Q1, we maintain it in our core category, but in Q4, we're usually able to achieve it in automotive category, which is like the large top level channel. When you own number one in that category, you definitely steal it. It's more than one to one, especially in Q4.

[00:30:05]>> Yeah. Insane. Insane, man. So, first part of what you said, it's optimizing the offer, optimizing the funnel, maximizing AOB, getting that Amazon halo effect, right? Like those pieces are the foundation of the scale. And then on the other side, I guess zooming back into creatives that you're going to go into.

[00:30:22]Where does creatives come into this whole ecosystem piece?

[00:30:25]>> Yeah, one point on the former. Yeah, obviously maximizing AOV and these factors increase your margin, right? So it's no different than also focusing on operations where you're negotiating with your manufacturers and shipping. Those also increase your margin in a different way. Typically, the bigger your margin, the more you're able to spend to acquire a customer, which means the more sales the scale you can get, the more competitive you are. Ultimately, your goal is to be able to spend more than anyone in your category to acquire a customer or at least be very comparable to what they're able to spend. if you want to achieve bigger scale. And then how creatives play into that is creatives also can have a very big factor in your cost of acquiring a customer. Being able to properly test what are the key angles that stand out the most. Maybe there's certain types of actors or structures to the video that work better. Those kind of things. You can often see a huge decrease in acquisition cost if you're properly testing and optimizing your creatives.

[00:31:26]And like for us with AROTO, it's even though it's quite seasonal, there's maybe six different core angles that we use throughout the year, a handful of being our most dominant ones. But as an example, even starting as early as August and September in northern states, the weather starts to get colder. When the weather first starts to get cold, everyone's tire light goes on because the pressure in their tires drop. So, we start actively sending out creatives to test that are with that in mind to get some of that early interest. They're like, "Oh, heck, I need air." But, we're running ads at the same time that the weather's changing for that northern half of the country's demographics. And we start to build that momentum going into the winter season. But you wouldn't have without testing and brainstorming and ideas. You wouldn't figure that out.

[00:32:18]As with anything, most people are going to learn about your brand and product when you're new from ads. So, you want to be able to build effective ads to get in front of them and to be remembered or shown something that's that's going to stand out and be a bit lasting.

[00:32:32]>> Yeah. You guys built a creative machine though. if you're comfortable to talk about how you've actually looked at structuring that because in Q4 you guys are pumping out I don't want to quote the wrong number but a lot of pieces of content going into the ecosystem. So yeah, >> how have you neared that structure to be able to just pump out such high quantities of content while still maintaining a pretty decent level of quality across the board? Yeah, the creative area of the team has been one of the harder ones to build out over the years because not only you're developing the team and strategies, but you're also having to consistently adjust to changes on meta or other platforms. I would say that these last six months we were also going through some adjustments and change mostly because of the Andromeda update where we're having to produce not just a lot of ads that are same core ad with five different hooks but now also making sure we're more intentional about diversity of the creative styles, diversity of the messaging, diversity of the ratios and really leaning into all the diversity aspects of the creative.

[00:33:37]So that just means more volume basically but in a slightly different layer.

[00:33:41]Ultimately we built out a really good report in the past that would feed all of our data into our report from Meta and other places. We have a very strict naming convention which helps us pull different data insights similar to what you can do with the motion app if for those who are familiar with that. We have a similar thing in house. It's evolving a little bit more now these days, but we use the original version for quite some time because the main thing is at least in my case, if I'm sitting down feeding ideas to the team, helping the team interpret what's working, what's not working, we would always stay on track and we would always be testing a good mix of good ideas that were working versus good ideas that potentially could work. But if I would get out of the equation too much for say two or three or four weeks, we would oftent times see our performance veer off one way or the other and then I have to get them back on track. And the key thing is there is that we needed to have a good process where okay ideas come in but how do you evaluate what's a good idea with a high probability and what's a good idea with a low probability because it might be a good idea but not every idea is the same. Same with with products. Not every product is going to have the same response as the consumers.

[00:34:55]So I built this a simple framework for the team to evaluate ideas. Our creative director follows that for the most part in addition to seeing the data. But then by having our own clear data report and a really strong naming convention. Every week the team can just review the port report together on a meeting and they can see what concepts, what personas, what ad styles, what hook numbers, what's standing out and so they knew where to explore more and then where to explore less and then make sure that we're just being smart about what new ideas we're introducing overall. But specifically going into Q4, we would to get volume. In the past, we would have to start prepping basically around early August, we would start mapping out tons of ideas, like a lot more volume of ideas than usual. We would start getting the UGC content or shooting the content ourselves in house like we have set up.

[00:35:51]So we would start really stacking up all this content and then the team would start to work on some of these ideas and we would start to lightly test and then every week or every two weeks we would startly start to increase from about September 1 onward we would start to increase the volume of testing. We would typically bleed more money during this period of time because we're trying to validate as many ideas as possible. So, we have enough time to go back and get more content and more ideas shot around what we see standing out the best. And then going into October, we're really ramping up a lot of tests. Now it's less of these broad ideas and it's more of volume of content and ideas around what we've already started to see get momentum and some small new ideas. But then by the end of a October we pretty much stopped all new ideas. So we're only focusing on what we found to work which is usually several dozen concepts and the team is now just cranking out many versions of it. many different styles but the same structure, same cadence, same angles or or up until last year a lot of hooks. Now hooks are becoming less and less impactful when you're scaling it super horizontal but so we still do it just much less volume.

[00:37:06]So one concept in the past we might have 40 different hooks for it and it works.

[00:37:12]Now it's more eight maybe eight to 10 hooks on the same concept are working.

[00:37:16]So you have to find new concepts, new styles etc. So that process is changing a little bit now, but that's generally how it is. And the way we would do it is we would just have the team keep pumping out creatives every week. We would just stockpile them. Whether we could test them or not, we don't know because we obviously every time we would launch a new batch ads, sales goes up and then launch again, sales go up. At some point, you're going to start to get things dialed in where you have more sales and inventory. But we never wanted to run out of potential ads to to run.

[00:37:48]And the last two years, I think we finished the quarter, finished Q4 with five or six hundred ads that we had built that we never got around to even launching.

[00:37:56]>> Wow. How many pieces of ads were you launching a week?

[00:37:59]>> Generally, we're launching between three and 500. It depends. Three to 500 at a time. Once we have our momentum built up, it starts smaller. Starts usually 50 to 100 usually in August, late August.

[00:38:12]September is like a 100 to to 200 up to 200 a week. And then in October it's 250 to up to five on the h high end. It depends if we're not finding a lot of things getting momentum and traction. We cut more aggressively and we launch another round. So that's where the higherend option would come into play.

[00:38:30]But then once we get into November, not much launching at all. Maybe 50 up to 100 a week max. What we're mostly doing there is optimizing for margin. So we would say, okay, we launch 100 new ads this week. Say we have a thousand ads already running. By the end of the first week, okay, out of these hundred new ads, we found like 15 that are doing like $100 CPA. So, we would go to the ones that have been running. Anything over $100 CPA, we just cut it. So, we would do this small cycle from the worst performer, add in better performers, and that would allow us to just optimize our CPA throughout the rest of the quarter to maximize our inventory profit.

[00:39:09]>> Wow, that's super interesting. So pretty much most of that high volume testing isn't even in Q4. It's before Q4 so that you find what works and then once you have that you pretty much are just scaling off of the concepts that are already working that you've already tested and then just adding some more to maintain that momentum.

[00:39:27]>> Yeah, August is usually a big prep month. September and October is the big test months. We do test a little bit. I would say a little bit not new ideas. If we're launching things in October, in November, it's ideas that we've already validated, but we're just trying to expand upon them. So, if we have a certain concept that's bringing $75 TPA, then we want to try to 10x that if we can. And so, it's those kind of things that we would launch out in November, but we're not launching like completely unproven ideas.

[00:39:56]>> Nice. And during that peak time, how what does the team look like to be able to maintain that 300 to 500 ads that you guys are launching a week? We have right now we have eight or nine editors I forget exactly. Three copywriters. We have a video team lead. Those are the main core and we have a few other assistants and stuff that help out for various stuff that we're starting to be able to trim some of that back because we're also leaning into using AI tools a lot more as well. But the last couple years that's about the size of the creative team that we've had. Yeah.

[00:40:29]>> Yeah. Super interesting. They and honestly that's a pretty lean team still to be able to maintain that kind of volume. So that means you you must have the team super efficient there. So I guess going back to what you said from a marketing side, right? So it's like the first parts which we spoke about which is the offer and funnel optimization maximizing that AOV having an Amazon for that halo effect and then creatives to try to keep CPA at a decent level. So all that comes together, right, where you're now scaling peak time to 30 million a month, right? What does that actually look like when you're scaling to 30 million a month from either return on ad spend standpoint, a CAC standpoint? Like how are you maintaining that? Is your goal to make profit there?

[00:41:10]Are you relying on some LTV component after the fact or you're trying to make all your profit right there if I'm not mistaken? Right.

[00:41:17]>> Yeah. for Aeramodto is very much first perfect first purchase profitable focus.

[00:41:23]We're the whole volume of testing ads and getting that momentum. That's for us to be able to get scale. We don't have to do that to be profitable, but if we want to really get big scale and big profitability, you need volume of creatives and we need them in a short period of time because we're not operating at high volume all year. So we have a short window to ramp things up and then we have a window of time to squeeze as much as we can out of that period of time. So oftentimes our September and October months are pretty goodized months, but it's November and December that we are floating with 30 million plus type of months and that's because we have a couple thousand creatives running and we're doing that cycle like I said where we're launching more concepts of existing winners in the effort to find lower CPA and we just trim back every week the worst CPA in our mix and that just slowly increments our CPA down week by week for the whole last two months and that just gives us stronger and stronger profit margins during the best time. People oftentimes think that Black Friday week is the best time. It is a great time but every from after Black Friday or from starting Cyber Monday all the way up until the cut off for Christmas that's the real money time is that that window.

[00:42:39]>> Yeah, December is is the peak for sure.

[00:42:42]>> Yeah.

[00:42:42]>> Q4. So that's super interesting on that.

[00:42:44]I want to touch on the AI stuff as well because I I think at least from my perspective of I'm curious how you're also looking at that side of it. I feel like in the next probably one to maximum two years most of the creative process will be automated. If you're looking at the video generation softwares right now even AI editing is possible. We've allocated a lot of resources right now internally just to try to figure that piece out of how to make full endto-end creative automations from the research process all the way to the final edits all the way to uploading it directly to Facebook. And we've actually made some pretty decent strides there. It's definitely not ready for production level scale. But as soon as that's figured out, pretty much quantity never becomes an issue because you're paying 1/100th of what you'd be paying to produce a traditional ad. So it's as long as you have cash flow there and assuming it has a decent level of quality, scale is pretty much infinite at that point. So how are you guys looking at that part of the equation?

[00:43:45]And what are you guys doing to invest into the AI resources over there?

[00:43:50]>> Yeah, by the way, you and everyone else is building trying to build a full end there. That's what I've heard.

[00:43:55]>> Which ultimately means everyone's still on the same page.

[00:43:58]>> Yeah.

[00:43:59]>> Our team's been using a lot of AI tools externally like various platforms, Hitchfill, different things like that, different models for different purposes.

[00:44:08]We've already began to centralize most of that into our own platform as well.

[00:44:12]similar to what you're saying where we have an automated flow and then we also have a manual flow where we can do everything from good context and research from the brand level to ideas to ranking ideas to developing a lot of concepts fairly automated auto deploying them and other cool aspects and then the more manual flow is where okay maybe the team wants to yeah convert one of our actors into an a AI avatar or create specific types of hooks or create a one-off off video or image type for certain XYZ or a batch of them. So, we're leveraging a lot of that mostly because we can customize the workflow better and the team can we can produce more with less people. But I still think like the way you differentiate yourself is how you build it, but also the ideas of what you're doing. There still intellectual piece and experience piece because everyone's able to create ads.

[00:45:06]You can ask any model out there, hey, create me an ad for XYZ. It'll do a better job than most manual people have been able to do the last few years just right off the bat. So AI alone basically puts you middle of the pack basically.

[00:45:21]You're not bad, you're not great, you're right in the middle. We're looking at how do we make sure that we maintain slightly above average. That gives you the edge there. And the way I see you do that is you still keep the right people involved, make smarter decisions, don't rely 100% on AI. One of my guys sent me a video of Neil Patel not long ago on YouTube where they did a strategic control study. They also a group of the clients they work with. They spent just over $7 million in two rounds of testing and each round they had more manually created human created creatives and then you had your AI created creatives. That first round the human created creative bested the AI but then they used the data and learnings from this applied it back to the AI and that second round the AI edged out the human created creatives. So that's what I mean you still need the human thoughts that the AI can learn from because AI it has broad knowledge but it doesn't have like specific knowledge. If you're a dentist office and you ask Chad GPT to create me an ad which will get clients or whatever, but there might be a thousand dentists that ask the same thing, it's going to give you all something very similar. So, it needs to give you some stronger context to give it a stronger output. And that's a piece that is a little harder to do, but we're using it a lot so far, too.

[00:46:47]>> Yeah. No, 100%. I think context is what will feed the output of what you're going to get from the AI. So the way we're trying to do it is everything is agentic workflows where it's programmed with as much context as possible where we're trying to literally emulate the human flow as as close as possible. So each step that we're taking we're separating it out into individual agents. So a research agent, a writing agent, a asset generation agent, which can be the AI avatar, the voice over, the captions, even the music, right? and putting all those into its own flow and then taking all that and actually editing it together to then launch it.

[00:47:25]Each of those we're just working super close with like our leads on the team getting that pretty much mapped out giving that context to the AI so that it understands the exact flow in which a human would do it and then work to synchronize all those different points together. So that's how we're trying to look at it. That's the level of detail we're trying to get into that piece of it. And like you said, the way we're looking at it is the same piece where there's going to be the manual flows and then the gold standard where that's where we're trying to get to is the fully autonomous flow. But even if it doesn't get to fully autonomous yet in the next probably like three to six months, it probably will be. I think each of those individual parts you can still for sure automate like 80% of the function. And 80% of the function still allows you to get a two, three, four, fivex output.

[00:48:13]>> Yeah. Well, what I mean is that if you're the way I don't currently see AI being like only 100%. I see it yes getting to 85 90%. All these Tik Tok trend videos for example, AI is never going to come up with a new idea for the next trend. All they're going to be able to do is replicate a trend.

[00:48:32]>> True.

[00:48:33]>> So who's coming up with the trend idea?

[00:48:35]>> Yeah.

[00:48:36]>> It's the brain above the AI brain which is generally human.

[00:48:40]>> Yeah. the top 1% of actual like human creators are going to be probably the most soughtafter because that example is a great way because what AI does very well is it replicates what is working and it can learn off of that and then take your context >> to replicate that >> it doesn't drive inspiration.

[00:48:59]>> Yeah. So it's not going to be the one that's usually creating those unique trends or those unique ideas. So yeah, if you're a really good creator and you understand like that piece and even the human element because that's a good question. What happens when everyone has this tool and my thoughts on it is there's going to be an arbitrage window of probably >> maybe six to 12 months at most before everyone has access to those tools. And that's why my thoughts on it is develop developing that inhouse will give you that advantage where you can just accelerate scale but once that's leveled out what what happens there? What happens when everyone has the ability to say, "Make me 10,000 ads." And all those 10,000 ads are all super [ __ ] good.

[00:49:41]What happens? I think what happens is probably the consumer sentiment on those ads will level out and then the way you differentiate yourself might be back to the human related ads. But I'm curious your thoughts on how you look at that.

[00:49:54]>> I do think there's a window of arbitrage and it's mostly just like first movers advantage basically and that's with anything. I mean, there's tons of platforms already available that it creates ads, launches them, and all that kind of stuff already. There's several of them publicly available. I've we've never used them, but we've toyed around with them. I have some thoughts, but some of it's my secret thoughts, so I'm not going to share all the details. But in general, you got to start now so you can consistently stay ahead. Because if you start if you build something like this yourself now at least or you're only leaning on to existing tools and you start to decide to build something later, you're playing catch-up way too much right now. You need something that at least works internally to support and then you find these small ways to consistently improve it. The models are going to consistently get better. the options of what you can do with them will consistently get better. Something that we're doing in ours or it's not quite launch effort that we're doing is that we can take an ad in the marketplace, drop it in to our platform and it analyzes and breaks everything down and we can quickly replicate an ad based on just dropping in a full reference ad. So that way our system is very flexible. We have maybe pre-standard templates and stuff that we use and we can create custom ones or whatever. But maybe there's some new concept out there that we want to see how do we turn this into a template test or model after it, things like that. So then you can go out there and continually explore new ideas that are popping up, identifying trends. There's always going to be someone creating a new trend. So those are small ways to consistently stay ahead because most of the public platforms aren't doing that.

[00:51:34]you either create an ad. You might be able to reference an ad, but it's not like consistently looking at storing and coming up with this kind of process. And I think also the bigger time opportunity is not even just volume of ads. It's getting more structure with who you're speaking to in the ads.

[00:51:50]>> Yeah, that's true. That's a great point because you can do with that volume instead of just volume, you can be way more specific and way more custom.

[00:51:58]That's a good point on that. Yeah. Yeah, I mean I guess even on that point of what you said like I I think the thing with context and that's where I think there's a problem with a lot of these third-party tools is that it always will lack context if you compare that to building it in-house where you can feed the exact flow and information of what you want the AI to understand about your business, your brand. And that's where the bigger question is also what happens with SAS outside of just e-commerce.

[00:52:26]It's like I I feel like SAS as a general thing will start to change just because AI is democratizing everything from like a software standpoint in general of what you can build, how you can build it and it just makes it easier to make things custom. And if you can make things custom and give it that extra layer of context, it usually better than like third party things that you can just buy. Yeah. You also doing some apps.

[00:52:50]What's your thoughts with just SAS in general and where that direction is heading with the way AI has been? Yeah, I also think there's, for lack of better word, an arbitrage opportunity in the SAS app space and other things like that. I think SAS has like a huge opportunity because now if you do enough research, you will see that there's a ton of ideas out there that a bigger platform has been built for or built to handle, but that platform is built to handle basically as broad of an audience as you can. But now you can take a segment of that audience, build the plat similar kind of platform but directly specific for this one segment of the audience which means they don't have to build their own custom tool because you built something so ideal for that audience of say maybe four or five million potential customers that fit in that pool versus that that group of people would typically have to work with a larger platform say like Figma that would appeal has have so many features so much complexity for so wide range uses. But maybe as an simple example, a dentist office may not need a Figma, but they need some specific things, brochures, letters, invites, blah blah blah blah blah, whatever. You can build a very vertical focused platform that solves these kind of nuances. And so it's it's a SAS, but it's more like a micro or semicro SAS, but it's strictly tailored to a certain audience. So now what happens is someone like you and I can build that and it takes market share away from the big guys and it shows clear value to their target audience and it makes no sense for a dentist to hire someone to build this and they likely wouldn't do it anyways. There's always going to be some people that will never build their own tools. It's just not their area. We're on the tech marketing side so it's a bit different for us. So there's ways you can basically undercut the big boys in software so freshs and all these various ones out there.

[00:54:42]there's opportunity to break it down much more granular and build something directly for your use case or my use case and still sell it as a SAS. I think there's value in that. I do think tools like, you know, Figma, they probably are going to have a big change over time, but it'll be it'll still be a couple of years. People don't shift too quickly, but there is an opportunity for those types of approaches. Yeah, >> super interesting on that. And I guess to come back to to the e-commerce side, right, of where everything was at. So tying all these pieces together, AI is obviously super interesting with the creative flow and where that will go.

[00:55:17]You have the creatives, the funnel, the Amazon piece of it. That's what's got you essentially to the 86 million. So what has happened now where the way you're looking at it has been the way that got you there also just from what we started with was the focus, right? So what has now got given you the signal to say I'm gonna take some focus off of this and now more recently you've launched a few [clears throat] different brands. you've expanded into some of these apps. What gave you the change in perspective to then look back up and then move into these other opportunities?

[00:55:47]>> Yeah, sure. One one big thing is that we have a need to diversify. We need to be at minimum not as seasonal, right? That was one of the main factors like we're too much of our revenue and income comes in the last part of the year and that has worked. It'll continue to work but it may not always continue to work at the same level of strength. So, we've known for some time that we would have to eventually diversify. So, like a lot of our newer brands, pretty much all of our newer brands are non-seasonal. They might have some small seasonality, but in general, they're very nonseasonal.

[00:56:19]And we also focus on increased lifetime values with subscriptions, higher repeat purchasability, type of brands, etc. And so, what kind of led it other than just already knowing that we would have to go that path if we want to continue growing larger, we have a pretty good grip of a strategy now. We have we understand how things work, the marketplace and all this kind of such, but also we have good team infrastructure and our capital's compounded over the years. We have the resources to do more aggressively, hire the right people. So, if we're going to launch a new brand or a project, we we have enough resources to put someone dedicated in charge of that project who's giving direct resource or sorry, direct feedback and such on a regular basis. That's not requiring me to spend all my time in that particular area. So those will be the main ones really.

[00:57:08]Yeah.

[00:57:08]>> Got you. And plus also the playbooks that have made everything work up to that point that you can take and repeat on top of all that. Also something I want to just point out is how impressive it is to scale to 30 million a month and not have subscriptions really be a big part of that equation whatsoever. And I think that's what you know is probably the most impressive part where you've been able to do that on first order profitability. So, is that something that you're now thinking through with these next products that you're launching where thinking through, okay, how do I incorporate some form of a subscription model into this or other pieces and a business that lends itself more to that? And if so, I'd love to hear your thought process there.

[00:57:48]>> Yeah, for sure. To be honest, it's a big lesson we learned with Airto. First purchase profitable is nice when you can do it, but the problem is there's fewer and fewer chances that you can do it. At least doing it at scale these days is much much harder. No business thrives and survives long term off of just a a one-off purchase or first purchase profitability, especially when you're in the gadget space. And we've known that for several years, too. But we just still have plenty of room with their moto. But yes, all of our new brands generally it's one or both. Subscription is a main component somewhere in the strategy of the brand. Secondarily, it's a naturally a brand that would need to have that that people wouldn't want to buy multi or buy repeatedly over time.

[00:58:30]So whether it be a consumable or something to that effect, we want one of those both. So even if they don't subscribe, for example, it's still something that they likely would come back and buy a couple times more in the future, whether they subscribe now or not, I think. So we want as many options as that. Also with Arooto, we learned that the cost is very expensive for a gadget with a lithium battery and such.

[00:58:54]And so we had other product lines that we considered launching, but they were either either the same level of difficulty with cash flow on the cogs or greater. And that's something that we didn't want to continue with, which is when we decided, okay, we just need to launch a new brand now. and having multiple clear product lines that we can branch into over time that that also are lower on the cogs aspect. So we just can just have less capital risk to put into those and even if they start scaling very quickly we have the capital more easily to handle it.

[00:59:27]>> Gotcha. And then I guess to tie back to the first question of all this is how do you tie all those pieces into now what do you look at as your criteria now for a category to go into? So what are the big things that you're looking at if you're going to launch a new brand today? What would be some key bullet points that you would look through?

[00:59:44]>> Yeah, low seasonality. So that way it's or it could be medium to low seasonality, but you don't want strong seasonality becomes too difficult over time. It's fine if you're only planning to be 10 or 15 million, but if you want to really grow, it becomes too difficult. Yes, subscription needs to have a very clear path to subscription offer. It needs to support that as a default. these days there's he who can pay the most to acquire a customer wins across any industry and subscription gives you the best chance of that and it also gives you a bit more tolerance in case you make mistakes in the short term you still are going to feel it a lot less just might take a little bit of time to recoup some of that so it's a great safety net in some ways typically I want to see that the market is growing over the last five years there's growth in that market and the future growth is projected to the 8 to 10 plus kagger. So at least future market is great. So for example, products that are in the space that deal with like older and heavier set people would be a great example because our population is turning is much older now than they are even younger and naturally in the US as you get older the group of heavy set people are getting larger. So that's a growing category which means your marketplace and potential customers are going to expand over time. So even if new competition stabs in, there's also more consumers which means the competition element is a little bit softer of a hit.

[01:01:12]What else? Those are would probably be the main ones, but nationally there's some other smaller caveats. Okay, we'll dive into a category that we've done research for. Evaluate all the competitors. Maybe there's no main dominant player or maybe there's no second dominant player. So, you know, that just is something on the scale that we will consider. But it's not necessarily a true determinant of our choice.

[01:01:37]>> Nice. I want to be respectful of your time because I know we're a bit over. So I guess just to leave off on one last question for you. What's next for for Andrew Payne? You brought Airto to this level 86 million at its peak and now you're into more brands. Like how do you see the next few years progressing for you? Is it some big exit? Is it to just launch more brands? What's the next stage for you?

[01:01:59]>> I would I'd like to say I have it fully figured out but I don't. We can, it's pretty easy to see the two-year mark, like where we're going to be, at least as a company in two years. Beyond that, I think things are changing too rapidly these last couple years, both in our business, but also just in the marketplace in general to truly define where we'll be. Like a few years ago, we didn't think much about building our own SAS products to for as a product and as a brand, you know, we are now. So, it's a bit different. Ultimately, yes, we're looking to exit some of the brands o over time. It's not like our primary goal. Our primary goal at the moment is just to build a strong, stable, diversified, cash flowing business. And then as we see specific opportunities that we know we can take them much larger, we will take those particular opportunities larger and those are likely the ones that we will sell.

[01:02:49]Otherwise, I'm just learning and navigating and growing along the way.

[01:02:53]>> Amazing stuff, Andrew. Thank you so much for the time. This has been an awesome conversation. I think the viewers will get a ton of value from what you broke down over here. I'll link your socials down below and any plug I can do for you, Andrew. Anything we can say for Andrew, any good hires, anything like that you want to give a shout out for over here?

[01:03:11]>> I think for now we're great, but I appreciate it. Yeah. So, yeah, feel free to to follow me. I'm not super active on socials, but we'll drop down my X profile. That's I'm the most engaged there, I would imagine.

[01:03:22]>> And if you guys don't have good air pressure in your tires, you know where to go. air moto to fill up the tire pressure. Thanks so much, Andrew. Great chatting and we'll be in touch, man.

[01:03:31]>> All right. Thank you,