Vanilla is the fastest way to increase your Google and Facebook reviews through text with a 98% open rate. Vanilla reviews is the simplest cheapest way to interact and engage with customers. Visit us at vanillagood.com for more information
Sam Taggart 00:21
Hey everybody, my name is Sam Taggart and today’s podcast, we are actually going to be discovering product innovation and entrepreneurship. And there’s so many people out there that have this idea, or they’re like, “I want to be an entrepreneur when I have a product and start selling this product”. And they don’t really know how to get it off the ground. They don’t know if it’s gonna work that they’re nervous. And so today I have a very special guest, Paul Taggart, who is a serial entrepreneur. He is built and scaled, many, many successful businesses, he’s gone through the entrepreneurial rollercoaster of losing money, making money, losing money, making money. And I know this from personal experience, because he happens to be my dad. And it’s it’s a, it’s an honor to first I’ve seen it firsthand, I’ve watched this go from living in mansions to living in condos. And I was the byproduct of this. So it’s a very, very honored to have Paul Taggart here as a guest on the show. And, you know, today we’re going to be really asking, what is that entrepreneurial journey? And what is it going to take to take a product from an idea to an actual revenue generating thing. So some of his big successes have been sounder one of the cofounders of ojio. It’s a bad company, a lot of us are familiar with, and PMD. It’s a microdermabrasion tool that everybody is, you know, it’s a it’s a tool that a lot of skincare customers and companies and people and consumers use features on shop NBC extra massive companies have if he’s built, and he’s done a lot in the land development and real estate market. So all sorts of different, you know, avenues of creating this scalable system of what we’re going to be talking about today. So excited to have you on the show.
Paul Taggart 02:03
Well, thanks. Good to be here. So most people ask, Where do you begin? Where do you start? And my advice to people would be, ask the right questions. And there’s a lot of questions you could ask, for example, number one question in my mind is, who’s going to buy this? And why? Why would they want it? I’ve got this great idea. It’s better than a smartphone. But who is going to buy it? What’s your target market? You know, you got to ask that question. And we’ve got a list of a lot of questions that will post on the screen that you might want to take a screenshot of or look at. But, you know, does it need to be demonstrated? Does anybody know about this, we’re going to talk to you today about three products that no one’s ever heard of, and you have no clue what it is. And they need to be demonstrated. Well, how do you do that? How do you demonstrate it? And who does it for you? You know, how much will the customer pay? You know, you think you think you think it’s worth x? You know, I could sell it for 180 bucks. But will they really buy it for 180 bucks? You know? That’s a great question.
Sam Taggart 03:07
Yeah I think a lot of them was like, you know, you have third party validation on there, it’s like, can you get third party validation, you can get, you know, how you’re going to test it? And when, you know, is a consumable? Is it a repeat, buy? Is it something like soap or a razor blade? Yeah, buying them? You know? So it’s like, a lot of people fail to ask and map out, they’ve got like this product, you know, can it be ripped off? Can it be patented? exact? Can it be something that, you know, we own the rights and then resell as a wholesale option? Or is it something we’re just gonna have to go straight? retail?
Paul Taggart 03:42
You know what I mean? One of the questions we always ask is, Can I get an unfair advantage? There are certain ways you can get an unfair advantage, one of them is a patent, can we get patent protected, and we have the money to protect it to protect the patent? Because if you get sued, it’s very expensive. Or if you have to sue somebody, it’s very expensive. You know, do I have better distribution? Have I got better management? Do I have more money? Can I be the first into the marketplace? You know, what is it that you have in the very, very competitive world? that’s gonna help you have a leg up? You know, ask those questions. You got to ask those questions. You know, how good is your management? Do you really know what you’re doing? Can you get help? Do you have a mastermind group that you can go to or a board of advisors or observatory board? That’s kind of they don’t even need to be within the company. They can be an advisory board. Yeah. People who will come and say help. With ojio. One of the mentors that we had was a guy named Joel Shapiro, he, he was at that time, just funny how this works. He was president of the National luggage Dealers Association
Sam Taggart 04:50
of all countries. There’s a national loggers dealers. Association for everything.
Paul Taggart 04:57
So he, he Yeah, these are a very rare very organized group. Now this was 1987/88, long time ago pre-internet. He loved this product that we have called the original locker bag, and we’ll talk to you about that in a minute. And so he champion that product with us. He got it on the cover of the national luggage Dealers Association catalog is huge,
Sam Taggart 05:20
It’s huge. And this is pre internet, right? This is pre you got to go knock doors to, you got to go knock doors, you get a knock on nordstroms door to say, Hey, we have this idea or this prototype. We want to, you know, show this to you. Yeah,
Paul Taggart 05:35
we got this great idea. Here it is. What do you think? Yeah, exactly. Like, well, it looks nice to me. Why don’t you and your wife come down? Are you in the rep happened to be my wife, we put on these ojio Golf shirts, we put our little logo on there, went down to Nordstrom and demoed it for a day. We sold 20 bags, and they were pumped. That’s awesome. That’s why store one day we sold a cake that all over the country. It’s kind of hard to do.
Sam Taggart 06:02
Yeah. So then. So I think a lot of people don’t realize like, that is how you sometimes you have to push a product is go knock a door and talk to the right people and find the right team and say, hey, I want to show you and demonstrate this thing. You know, whatever the unit is, right? And I think a lot of people aren’t aren’t willing to walk down to Nordstrom and say, What do you think, want to sell you this? That’s right, you know,
Paul Taggart 06:29
So let’s go through some of these questions really, really fast? Where’s the plus best place to make it? We make it here and we make it overseas? Can we get a patent? Can if somebody’s going to knock it off? Knock it off? How do we control quality? quality controls a huge issue that’ll kill your company? You know, how hard is it? Is it to make? How large is your market? Are you going to go international? Do you need all kinds of certificates for international? This plug? Right here? For PMD? You know, have you ever traveled to other countries in Europe? They don’t have the same electricity? Yeah. So you need certificates, these little, all the companies and all the countries? You know, do you know those things? So they’re questions? How much money do I have? And what’s the cost of money?
Sam Taggart 07:16
You find? Yeah, I guess one of the questions that I have is, so many people, money is always the biggest thing, right? I mean, young college kid, I don’t have money to go, right? Get a patent and to go get a manufacturer with a minimum quantity order of 10,000. And you’re like, right, but
Paul Taggart 07:33
If you figure out you have a tiger by the tail, you’ve got a really hot product. Money’s an issue. Yeah, it’s a good problem. But it’s a problem. And how much does that money cost you? You have to give away ownership for that? Do you get bank financing? Where do you get it? And how much does it cost you?
Sam Taggart 07:50
So I think a lot of the big questions is that equity ownership, you know, re the structure from the beginning. And I’m sure over the years, you’ve seen bad deal structures at the very beginning because of Hey, my buddy, you want to go into business together? And can can you trust the people that you are in business with? Yeah.
Paul Taggart 08:08
How good are your contracts? What’s the structure of your company? Is it an LLC, a C Corp, an S corp, you know, they have tax consequences and other consequences? These are all questions that you should want to be asking. Yeah. What What is the cost value ratio? That’s a huge question. Biggest, one of the biggest questions you can ask, and we’ll get into that a little later. And I’ll give you examples of how that killed one of the products that we have.
Sam Taggart 08:35
Because not every one of the products you’ve sent out to market one. And I think that that’s what I think a lot of people realize, like, let’s go to the, my high school days, I remember you, we moved to California, and it’s, hey, we’re gonna start this fat bottom line and sell these electronic products and go websites and XYZ, and you got a lot of money raised, you brought the money.
Paul Taggart 08:59
And I put in a lot of money. lost it all. It was a very, very important learning experience, very expensive education. But you know, as much as you can you want to avoid that. And a lot of that happened because we couldn’t trust our partners.
Sam Taggart 09:15
Yeah. So it’s getting the right if if you’re going to either bring the money, and a lot of these younger entrepreneurs are probably going to have to go get the money from somebody, even if you’re getting money from somebody that’s still a good advices trust the partners. You know, I’ve met with a lot of entrepreneurs, I’ve done 150 these podcasts, different entrepreneurs, and I watch people go get money from the wrong people. And they’re like, yeah, I have 500 grand, but they don’t do anything, right. I needed somebody that’s going to be a partner with 500 grand, that’s gonna help me run the business. So you have to ask all these questions upfront sale.
Paul Taggart 09:49
Yeah. And so now that you’ve asked all these questions, there’s a lot of them and you can pause this and you can look at these questions. We haven’t asked them all because we don’t have time for that. But now the question is Now what? Yeah, you’ve decided, Okay, got a product? It’s we’re gonna go ahead, we’re gonna start making it. Okay, so now you go through, what do you do? prove the concept? What do I mean by prove the concept? You got to get it out there and ask these three basic questions. What have I got? What will it do for you? And what do I want you to do next? Who’s going to give you third party validation? Not your opinions. But the opinions of the public, the general public or the influencers? in that market to say, does this work? How well does it work? Do I like it? And will I buy it? And how much will I pay?
Sam Taggart 10:46
Yeah, because there’s always the hope. On a spreadsheet, you can make a lot of money, right? If we sell, if we sell 10,000 of these at $150 will be muted. You know what I mean? And you’re like, well, nobody’s gonna pay $150. Well, let’s see.
Paul Taggart 11:01
There’s 7 billion people in the world. Yeah, man. If I could just get one at the market. I’ll be rich. I love that. Yeah. So you prove the concept. What kind of third party validation can you get? With ojio Mike Pratt came to me with a idea for the locker bag. Okay, he comes to me with this cardboard box. And it’s shaped like a miniature locker, it has a shelf in it. And you put your shoes underneath the shelf, you put your clothes nicely folded on top of the shelf. And here’s a picture of it. And there’s all these little pictures of magic marker drawings of little bottles, and a toothbrush holder and a comb and a mirror and a wet pocket in the door of the locker. Because it’s the original locker bag. Let’s make it. It’s a little more complicated than that. But he came to visit let’s do something simple. That people it’s not really hard to make. The people will like and he came up with that the idea. We filed for a patent. We got a patent. We ended up getting really good distribution. So unfair advantage. patents. Got a real good distribution channel through a guy named Mel Hetzer in aptos. California. Who was the master rep for Reebok, okay? He had 70 reps all over the
Sam Taggart 12:15
how’d you land that? How’d you say, dude, sell my bag.
Paul Taggart 12:19
We went to a show. We went to the NSTA show in Anaheim, California. Mike created a booth Mike Pratt, very innovative, amazing guy. And he made the booth, little locker room, we created a locker room with a band cinna lockers, and we put the bag in the lockers. Well, Mao came by and saw us at the show, because this is awesome. And we talked in many trips back and forth to California. And we started selling. You know, and you know, when you talk about distribution channels, what is your distribution? distribution channel? Do you have reps? Do you sell direct today, you can sell direct on the internet back then. Internet didn’t exist. So you had to go knock on nordstroms door, you had to knock on Macy’s door.
Sam Taggart 13:04
So to the conventions go to the convention shop to the show.
Paul Taggart 13:08
Back then the hot thing were women’s aerobic constructors. Reebok is launching their woman’s aerobic shoe 52% of the market women. No one had ever targeted that market. What’s your target market? Reebok figured it out with the help of this male howitzer. And so we we capitalized on that and just started moving in, we moved in the luggage people and the sporting goods, people. That’s cool. And that’s how it happened. And we got people to help us people recognize this product and how cool it was. And how work. One of the one of the issues. Okay, here’s the other thing. What’s your turn on your money? Problem with ojio. Here’s a huge problem. The product was made in Taiwan. We had 30 day lead time, we’ve 30 to 40 days to make one batch. Then they put it on a ship, which was 20 days. So here you’re looking 60 days, right? 20 and 40. And then three days to clear customs. So there’s another three days and another five, six days to get from the coast to Salt Lake City. So now you’re in this, what? 70 days, 70 days now you have to ship it to Nordstrom or Macy’s.
Sam Taggart 14:30
So you have to be almost like a forecasting wizard. Yeah, to say we’ve got to order our next batch now even though we haven’t even sold the last freaking batch.
Paul Taggart 14:39
Well, and then when do you get your money? Your money this was all on letter of credit. So you had to post a letter credit was like you spent your money we didn’t have much and then wait almost five months before Nordstrom on a net 30 and they normally don’t pay on time. net 45 you get your Money. So, your your your sales are skyrocketing. But you don’t have inventory because you don’t have enough money to keep ordering products.
Sam Taggart 15:11
Oh, we’re running out with Eleanor and co right now we have a baby romper that we get from Taiwan. And now we just moved to Mexico. And it’s like, kidneys, like, we’re going to organ to order more units. And I’m like we haven’t even sold the units you’ve just ordered. like cheese, let’s sell these. So as opposed to the internet as the opposed to the internet, now you’ve got
Paul Taggart 15:32
instant you ship it. And as soon as you ship it, you get paid. I had to wait five to six months to get my money back so I can make another order. Yeah, that’s a problem. So those are questions you need to ask. Okay, so that worked. And we figured it out. We had to get an investor and get more money. And that was expensive. Because he took control of the company.
Sam Taggart 15:54
Yeah. So if you could have gone back and done that over again, knowing that you needed the money. Is there another way you would have got the money? Or would you be just said, yeah, we had to get an investor. That’s just how it is. You’re pioneering you don’t know. Yeah, that’s what I’m saying. Now going back to going back,
Paul Taggart 16:12
I would have planned way better, and had money lined up from different sources before this happened.
Sam Taggart 16:19
So you wouldn’t have to go everywhere your company.
Paul Taggart 16:21
We wereliterally flying by the seat of our pants. And what I’m trying to tell you is don’t do that. Yeah, make plans ask these questions up front.
Sam Taggart 16:28
Because you could have found other sources. Like you could have had banks lined up you could have had distribution credit lines. You know what I mean?
Paul Taggart 16:37
We were panicked.
Sam Taggart 16:38
Yeah, you could have gone to Reebok. No, Reebok might have been like, hey, or Nordstrom See?
Paul Taggart 16:42
And then all of a sudden, here’s another factor. When there’s a demand and you can’t supply it, you can’t create or produce the supply. What’s going to happen? Somebody else is going to do it for you. Yeah. Luckily we had a patent but we did have some people come in to knock us off. And they went to a different different distribution channels. So for example, Sam, if Costco or Walmart’s gonna sell your product is Nordstrom and Macey? Are they going to sell it?
Sam Taggart 17:13
Now you got to pick one you got to get in bed with somebody. That’s right.
Paul Taggart 17:16
We had a decision to make do we go with what back then was price saver? It became Sam’s Club Sam’s Club bought it out. We had to decide Sam’s Club ordered 10,000 units from us and we said, What do we do? We’re selling to Nordstrom and Macy’s. If we sell the Sam’s Club, they go away. Yeah, we decided to stay with Macy’s and Nordstrom. But somebody else came with a knockoff and sold the Sam’s Club or the price saver. Interesting. And they sold way more units. And we did made a pot load of money off our product.
Sam Taggart 17:47
that’s frustrating. And that’s just part of life. So yeah, so then you get this other idea of the air lock, which is a bike pump, slash, like lock, you know, it’s the pump and lock all in one, right? And you’re like, dude, we got this idea. Let’s go make it. And patented, had a great product we
Paul Taggart 18:09
Did a lot of testing went out into the marketplace. But we learned very quickly, and we’ll just tell you the short the short. Cost evaluation didn’t work. It cost us $15 to make that. So if you make it for $15 What have you got to sell it for to make a profit. And let the end user the bike shop, sell it and make a profit. What do you think?
Sam Taggart 18:33
And yeah, I don’t know.
Paul Taggart 18:34
Well, probably we sell it for 30. They sell it for 60. Right? We got $49/59. So it was it was lean. well over a period of time, and we got this into Walmart, Shopko. How foods in England before 150 stores? great product, we had Greg Lamond, the three time Tour de France winner, number one bikers, cyclists in the world’s 1991 Sportsman of the Year Sports Illustrated endorsing the product, you know, helping us yeah, that’s third party validation at a high level. But it needed to be demonstrated. People didn’t know what it was.
Yeah, they didn’t realize it’s like, oh, it’s a two in one.
Paul Taggart 19:13
And what we didn’t know. And here’s the catch on this, ladies and gentlemen, is the biking industry is a very fickle industry. And they don’t have a lot of money. Most of them are hobbyists, and just people. They weren’t going to spend 50 bucks for a bike lock in an air and a pump. They wouldn’t. We found that we could sell it all day long for 1995 $24. That didn’t work kill this. Interesting. So fast to value ratio, what’s my margin? What’s the value of the product versus your cost to make it? What kind of margins do you have? That’s a critical element in your evaluation process.
Sam Taggart 19:53
So fast forward you did years of land development had big wins big losses, obviously the market crash in 2008 You did this fat bottom line, another crash. And then you’re What? 55 sitting in 252 5750? Yeah, that’s what I’m gonna say is the seven. Sitting there, we lost all your money. Most people are sitting there like, this is the entrepreneur. I remember he goes like this. He says, Sam, you’re an idiot. All you should do is go to GE Apple or Google, work your way up the ladder. And I remember this advice from Paul Taggart. But this isn’t an emotional this was this is a this is me in high school, right? When I’m 17 when he’s seven or whatever. I’m a 17 year old kids and I’m going to start a business. He’s like, Sam, no, I just lost all my money. And I have no retirement. And I’m 57 What do I do? You know. And, you know, a lot of people on this stage this is what’s so admirable about Paul Taggart is he gets back on the pony, you know, he worked years to get this patent to get PMD. It’s a microdermabrasion tool. And he has one right here. And This is a little tool, it’s a dremel tool. Like, it has a spinning disk here with suction that takes the dead skin off your body. So your face for fine lines, wrinkles, age spots, you know, acne, scarring, that kind of stuff. It’s a microdermabrasion tool for home use, and we were able to get this to the market. Get out there and demonstrate it because again, nobody knows what this is. But the thing that changed everything for us was the internet. Yeah. PMD I mean ojio and that bike walk no wonder that this had the internet so we did have the social media people And so when your first areas to market and I think that a lot of people under utilize this well, they do but they don’t right. You have this influencers and you want YouTube influencers right from the get go.
Paul Taggart 21:57
We This was 2009/10.
Sam Taggart 21:59
This is pre likepre big. I mean, this was like innovation of the influencer market,
Paul Taggart 22:05
Social media was just starting to happen. And we capitalize that we really pioneered that that world there. But we went out to the influences. We went out to these beauty bloggers, and mommy bloggers,
Sam Taggart 22:19
This is Paul Taggart, 57 year old cat, saying, “hey girl”
Paul Taggart 22:23
Try this, try this, try this. Try this product and tell us what you think. And if you And hey, we thought it was great. And we had some doctors that thought it was great. And some estheticians we went out to the to the professionals and said, give it a go. And they liked it. In fact, in some cases that work too well.
Sam Taggart 22:47
It’s pretty bright, their faces are starting to torture facing say, and we’re like you’re overusing this What are we doing?
Paul Taggart 22:52
This is like you got to follow this the directions you got to follow the instructions. But these are these are questions, Sam, that people need to ask, what’s the dangers to the consumer? Yeah, what can happen to these people if they mess it up?
Sam Taggart 23:06
I mean, look at like Samsung when this phone combusted. Right? Hit them start billions or dollar, you know, I mean, like, everybody’s like, Oh, we don’t want to get one of those. And I mean, look at the car manufacturers that have to recall. Yeah, recall product. So
Paul Taggart 23:18
You got to think through those things. You know, people are, you got to make this idiot proof. So that they they know exactly how to use it, because no one had ever seen it before. Yeah, so that’s where we started. We started with the internet, we got influencers. And then some people got ahold of it. We went on to Good Morning America. And they had a Deal of the Day deal thing in in that day, which had 1.5 million in sales one day, because Good morning, America said, here’s a product that’s amazing. In that’s third party validation. The magazine started to publish articles about microderm. You know, and that’s what happened. And so, you know, and then we had to manage, again, money, growth, quality control. This is made in Vietnam, it’s an international product. Europe, we sell in Europe, we sell in Japan, we sell in China. You know, now what’s happening with China with the Coronavirus. All of these factors are things that you think about as you run a business.
Sam Taggart 24:22
Yeah. Now that’s I mean, it’s it’s crazy. And I think a lot of people don’t realize it. Business is duplicatable. And I think it’s like you found you could go from a locker bag, to an airlock to a, you know, real estate properties to a microdermabrasion tool. And it’s you answer the same questions. I mean, the principles, the principles are the same. I mean, it doesn’t, it doesn’t change. So let’s kind of wrap up with prepared.
Paul Taggart 24:51
Yeah, be prepared. So you know, once you’ve got a tiger by the tail, then you have a whole new series of other questions. What’s your risk tolerance? What How many how do we manage inventory? Yeah, you know, what, what? What kind of office warehouse? Do we need? You know, how good is our manager? What’s our team going to look like? Who do we need in place to do you’re in a situation right now where your company is blowing like mad, and you got to hire a CEO and find more people. It’s like, if you do that quick, and you don’t watch yourself really carefully, you could make big mistakes. That could be extremely expensive, and very, very hard to deal with. So sometimes it’s best to step back, take some time and say, I’m not going to hurry this. I know I need it. But let’s make the right decision, not the quick decision. And so that that leaves you and I’ll leave this we’ll put this. These questions slide up on the board, you know, how do we manage our fixed costs? Most people operate from a ready fire aim mentality. Don’t do that. You want to do Ready, aim, fire. Be ready. And think as if you want to answer all the questions. But think is of many questions you can possibly think of that will affect your business. Before you pull the trigger. Yeah, know the target that you’re shooting at. Have that aimed right at a good target where you know where you’re going and know where you’re headed, because you’ve asked all the questions before you pull the trigger. So I appreciate you know, being on the show. This is awesome. I hope you enjoy this. Yeah. Thank you.