Yonah (00:07)
Hey, my name is Yonah Nimmer and welcome to the Amazon Playbook, where we dive deep into the strategies and stories behind the most successful brands on Amazon. In our upcoming episodes, we'll be sharing conversations with key partners who have been instrumental in the growth of brands like Anchor, RayBans, and Biogents. This episode today is brought to you by Amazon Growth Lab. At AGL, we help brands on Amazon. Ooh, forgot how to speak.

We help brands on Amazon achieve explosive growth with a focus on organic visibility. Now David, I'm sure you've spoken to a lot of Amazon agencies and one really big differentiating factor with AGL is it's not just a focus on PPC. We view that as one small piece of the puzzle. Now what that allows us to do is, you know, one client that signed up somewhat recently, in five months, we were able to 10x their business. They went from 100K to nearly a million dollars.

Now does that mean that'll happen with everyone that signs up with AGL? No, of course not. But it's an illustration of what's possible. If you're ready to take your Amazon presence to the next level, let's make it happen. Visit amazongrowthlab.com to learn more. Now, before introducing today's guest, I just want to give a quick shout out to Kevin from Frame My TV. With their amazing TV frames, you can transform your Samsung TV into a beautiful work of art.

making it blend seamlessly into your living room as if it were a painting. It's a game changer for anyone looking to elevate their home decor. Now to the exciting part. Today's guest is David Newell. And for over 10 years, he has experience in online mergers and acquisitions. He's helped sell more than 130 businesses and advised on deals totaling over $300 million. David is a senior advisor at Quiet Light.

helping e-commerce and SaaS businesses finding the right buyer and closing the deal. David, you mind telling us a little bit about Quiet Light and your experience there?

David Newell (02:12)
Yeah, sure. Thanks so much for the great intro. Great to be here. Yeah, I mean, so Quiet Light, probably many of your listeners already know it's kind of a bit of a scion in the brand of online business brokerage we've been going since 2007. So yeah, coming up on only 25 years now. We are specialists in helping clients sell.

online businesses, specifically e-commerce, SaaS and content, anywhere from $200,000 in value right up to $50 million in value. There's a team of 15 of us advisors and another sort of backroom staff of 20 or so. And the thing that's kind of very different about Quiet Light is every single advisor inside the company has bought, built and sold their own online business. And in fact, over half of us here were in situations where we owned our own e-commerce brands.

We're looking to sell, sold through Quiet Light as clients, and now have subsequently come on board as partners to help other clients sell. So it's a very entrepreneurially led organization that's essentially by entrepreneurs for entrepreneurs. And in that sense, we have a very unique culture because it's very empathetic, I would say, towards clients and helping people basically realize those goals of selling and then going on doing fun things.

Yonah (03:33)
Hmm.

So that's fascinating. Is it a criteria if you want to be an employee at Quiet Light, you have to have had experience of selling a business?

David Newell (03:45)
Yes. Yeah. Yeah. Yeah. Yeah. You have to have a board bill sold and online business to work here.

Yonah (03:51)
Cool. What was the line of business that you were in that you sold?

David Newell (03:57)
Yeah, so I've had two. was in, so my great passion, guess, outside of doing mergers and acquisitions and consulting is in self discovery and personal development. So I had a, I had a business in that space. that started a podcast like this, interviewing all sorts of famous psychologists and authors and writers from around the world about everything to do that in our lives. And then that expanded into an online e-learning course platform, with

Yonah (04:07)
Mmm.

David Newell (04:26)
various psychological courses for people to understand their inner lives more. So that was a big unfolding for me in the three years before I joined Quiet Light.

Yonah (04:38)
Wow, fascinating. So yeah, what was the process like of, you know, starting a business from nothing to actually, you know, I imagine before you actually worked at Quiet Light, you knew nothing about selling a business. So from the get-go, did you actually prepare ahead of time of like, hey, this is the roadmap of how I get the highest multiple or, you know, at that point in your career, it's kind of a guessing game. You don't have all the knowledge that you have now. So what did that look like?

David Newell (04:39)
Mm.

Yeah, no, it was extremely humbling like it is for everyone and I did most things wrong and I didn't really think I never really thought about the business as one that I was going to sell. So obviously I wasn't really following the best guidance that I would give clients now. No, I didn't have a massive roadmap for

my personal development platform, other than wanting to be incredibly focused around content and making it something that people wouldn't want to put down. And so that in turn made it very successful just being very product centric. from a, if I looked at it now, like my broker advisor stuff from the outside world, I'd be like, this has not been set up very well for a secondary market exit, which was absolutely fine because I guess

You know, and I speak with clients like this all the time. Sometimes people have different objectives and criteria around their business. We operate in a world where a lot of people are very focused on that secondary market exit, focused on growing revenue and profit and heading towards that. But, you know, I often speak with clients that are very, you know,

emotionally or romantically connected with their business offering and that can kind of blur the line sometimes in terms of like your commercial logic around it and I would say I was probably a bit more in that camp with my previous business before Quiet Life but

Yonah (06:31)
As in, as in on paper, a business comes to you and you're like, yeah, you can sell for a four X multiple. And everyone's just like, you don't know how special my business is. They should be a 12 X.

David Newell (06:41)
Yeah, yeah, yeah, yeah, yeah, there's a lot of that going on.

Yonah (06:43)
So, okay, obviously you've helped sell a lot of businesses for Amazon businesses specifically. And, you know, I'm sure that the answer changes every single year. But do you see a big difference in the multiple that an Amazon business is able to get if from the get go from like the inception of the business, they're basically

planning on an end day versus if suddenly, you know, five years into the business, they come to you and they say you want to sell. Does the end result look massively different and why?

David Newell (07:25)
Yeah, massively so massively massively. So I think there's two functions to that because a lot of people focus on valuation when we come to exit, which is perfectly appropriate to think about, but also what we think about in quite a lot called saleability. There's not only what value does your business sell for is how easy is it actually to sell in the market? Like what's the likelihood, the probable outcome of achieving that outcome? And so what we find is that if clients follow the kind of

the pillars of value or the pillars of exiting from the outset or at least two years before they go to exit, they will see significant, I mean, sometimes to the order of magnitude of like 50 % higher valuations. But most prominently, they'll find their businesses unbelievably easy to sell. They're kind of two things that go hand in hand really. If you make your business very tailored, set up to sell good

Yonah (08:15)
Hmm.

David Newell (08:24)
good prices in place everything's documented the owners kind of being pulled out of the business the numbers are all clean and set you know the greats in a good place and that's the prospect of deploying a great plan that's already well articulated that's not only going to make your business incredibly easy to sell it's going to draw in you know five or six or seven more buyers than you would have had if you don't have any these factors in place so that

increases the valuation but also increases the demand and the likelihood that it's actually going to happen.

Yonah (08:59)
So if I'm understanding correctly, just to kind of break it down into layman's terms, if the business is essentially set up on autopilot and the founder, the moment that you remove them from the business can still survive and everything is clearly outlined, you're much more likely to get buyers and the more buyers you have, the higher the multiple will be because it's a bidding war. Is that right?

David Newell (09:22)
100%. Yeah, exactly.

Yonah (09:25)
Cool. So yeah, what, what is the calculation roughly when it comes to selling an Amazon business? Is it a multiple based off of profit? Is it based off of revenue? I know like in peak COVID times, especially when aggregators were a big thing, multiples, I imagine were higher. and multiples have kind of gone down since then, but maybe you can kind of walk us through what realistic expectations are. And if it even makes a difference, if you have a D to C presence, if you have social media.

or if you're strictly in Amazon business.

David Newell (09:57)
Yeah, and that's a great question. mean, we sort of knew when the aggregates market kicked off, we were going to go through an 18 month hyperdrive, very inflated multiples that weren't really going to last because, you know, internally we were kind of saying, you know, it's a lot easier to acquire a hundred Amazon businesses. It's a lot harder to run them all at the same time. And that's sure enough, what that whole community of buyers has subsequently found. What we have now in the market is everything's kind of become quite bifurcated.

I would say. So we're kind of in like a two tier market situation with Amazon businesses. What you have is like a very large number of Amazon businesses that are honestly quite struggling with the economic market conditions, both generally in the U S economy, but then also on Amazon in particular. mean, you must know this looking at people's PPC and growth. I would say in the last two years, most Amazon businesses have been struggling both to maintain

a level of revenue growth, but also fight off margin erosion. And so there's quite a large sort of cohort of Amazon brands that are in this kind of space of flat to maybe slightly down or slightly up on revenue, but with eroding profit margins. And then there's a much smaller cohort of businesses that are still doing pretty well, that are growing well and showing expanding profit margins. So what that's meant in terms of the market is that

That's happened at the same time as we've had a credit environment where interest rates have skyrocketed, SBA loans and the use of them has shrunk and cash buyers are basically looking to be a bit more reserved about how much cash they're using. So you're seeing a lot now two kinds of scenarios when businesses come to launch. If you've got a business that's sort of in that first camp where it's kind of got slightly middle in growth,

but slightly eroding profit margins than their businesses that are kind of trading in the kind of below or average multiple environment. But if you're in one of the lucky few that's kind of got those higher growth and still very profitable Amazon businesses, they're attracting more demand than ever. before when aggregators were in the space, it was a lot easier to kind of plot

essentially the valuation multiple on a kind of a straight linear line based against growth, product set, category and scale of the business. Now it's much different. There's like, there's almost like a flat drop off between group A and group B. And so group A is probably trading at, you know, somewhere between two and a half, maybe to 3.2 times profit. Group B is like very comfortably, you know,

3.9 to 5 to maybe 6 times depending on profitability and the scale of the business. So it's a strange like leap between the two that we suspect will kind of start to kind of collapse back more towards that linear relationship as credits as credit starts to come down and the economic environment improves. And it's also go ahead.

Yonah (13:11)
Hmm

Do you find that most of the Amazon brands that are selling, I guess one selling in general and secondly at that higher six multiple are either luxury items that are expensive and therefore can, you know, deal with CPCs, cost per clicks rising on a weekly, monthly, yearly basis or a CPG product where it's a consumable with repeat purchases?

David Newell (13:47)
I would say it's more towards luxury than CPG, but I would say the most dominant factor is the market position, foothold. that brand has a leading position or a patent or has like a completely dominant market share, which kind of feeds to your point of can they price in inflation? Can they price in market competition? Can they basically

Yonah (14:05)
Hmm.

David Newell (14:17)
maintain their profit margins against the multiple attacks that there are on that front at the moment, whether that's be on the Amazon platform or from competitors. So I wouldn't say it's completely luxury, but I think it's more a factor of what the level of dominant market share that brand has.

Yonah (14:40)
Hmm. So yeah, how did you even get from it's funny? Cause you talk about initially you had a business around self development. which is actually something that's really important to me, know, mindfulness, meditation, journaling are things that are part of my daily rituals. So one, I'm like, I definitely have to check out your content, whether or not you own the business anymore. I'm highly intrigued by it. but I always find this like. Duality, this juxtaposition between like, you know, self help.

David Newell (14:47)
Yeah.

Yonah (15:09)
And the world in which we're essentially talking about, is consumerism and capitalism. They're almost like polar opposites. but you managed to find a way to kind of bridge the gap between the two. I'm curious. Yeah. How has that been for. Yeah. What does that process like? And like, did it, did it at all feel like it, it was like difficult for, you know, your.

David Newell (15:15)
Mmm.

Yonah (15:37)
your mental health or your soul or your, your feeling of like the value that you're bringing to the world, or was it a pretty, pretty seamless transition?

David Newell (15:46)
That's an amazing question. Not one that I thought I'd get asked on this. No, no, I'd really appreciate it. The honest answer to that is yeah, I did feel in my mid to late 20s, you know, I started life in investment banking and then I span out of that and founded Effie with a few friends, which is a company similar to Quite Light. And yeah, I think in that early part of my journey, I felt like a splitting was taking place inside of me, where there was kind of like David who turned up to work to do like classic.

Yonah (15:49)
Just to put you on the spot real quick.

Hmm.

David Newell (16:16)
finance and entrepreneurship and chat with clients and everything was very money oriented and so forth. And then in private life there was David the meditator, exploring all of these kind of spiritual constructs and so forth. And I felt like I was living two different lives basically. And that phenomena continued for several years, I would say into my early thirties where I started to realize that

A lot of the stuff that I was learning from meditation and mindfulness and Zen is actually pretty helpful in that work construct. know, like it's pretty useful to have a sense of mindfulness and Zen when you're managing multiple seven or eight figure transactions at the same time. So there were light benefits, but what really collapsed everything into one was one spiritual teacher that I had. They basically said, you know, that spirit and matter, you know,

capitalism and spirituality, if you like, nothing is inseparable from anything else. So, you know, every you look at every single religion, every single spiritual theology, they all say the same thing, all is one. And so what that really taught me was that, you know, there's just as much value and spirituality and mindfulness in materialism and capitalism as there is vice versa.

You just have to learn to figure out how to see it. So I would say now things have got pretty harmonious. The funny thing is, I would say is that as I came to that realization myself, you know, a number of clients that I work with who are often building businesses to sell and then become spiritual or peaceful afterwards, tend to start to like listen to material that I've created years ago or like interact with.

Yonah (18:10)
Hmmmm

David Newell (18:11)
or ask me, I've had like past clients messaging me about like retreats they should go on and things like this. And so it's funny how the worlds collapse into each other because ultimately we're all the same human being, we're just with different stories for sure, but everybody's got the same basic underlying needs and desires. And one of those is to connect with the infinite as well as to make a life in the material. So.

Yonah (18:35)
Mmm.

David Newell (18:38)
It's been a bit of a process, but now I've kind of come to peace with it. And in fact, the fact you're, the fact you're asking me this question on this podcast is evidence that of worlds colliding again.

Yonah (18:42)
It's beautiful answer.

I was going to say the solution is really, you know, just like be able to run this business in Bali, bring both of the worlds together.

David Newell (18:55)
Yeah. Yeah. Well, there's pluses and minuses to that.

Yonah (19:00)
Totally. Well, I appreciate you letting us take the conversation in a different direction than I imagine you anticipated, but curiosity got the best of me and I think it's amazing that that's the line of business that you're in. I think that, you know, blending the two worlds for me is, it's a daily battle and really just kind of wanted to learn from you for a moment there. So for someone who's in the process of, you know,

David Newell (19:08)
Hmph.

Yonah (19:30)
Let's say they're three years into their business on Amazon and they want to sell it in two years from now. What's the one piece of advice that you think would be the most valuable for them to hear?

David Newell (19:49)
I would say increasingly now that the standard stuff that you'll always people say is, know, get your financials prepared in order. You'd be amazed how many amazing business owners and operators there are out there who are running, you know, crushing it with brands, but behind the scenes, their numbers are all over the shop. but that's

Yonah (20:07)
Wait, it's not good to have your books written on a napkin?

David Newell (20:13)
Yeah, exactly. But it's like, it's, it feels so standard to say now I get bored of saying it myself, but I think, what I'd actually say, you know, a decade into this is probably the best piece of advice I could give is actually run this business, until the day you're going to sell it as if you're not selling it. And I mean that from a growth standpoint and from a kind of

energy standpoint, from a product launching standpoint, because too often I see circumstances where you see,

clients taking their foot off the gas, you know, six, nine, 12 months before exit. And if they kept it on, they would create momentum enough in the business to make it really exciting at the point of sale. It'll come to sale, come to the market and it'll still be exciting and compelling, especially if it's had like strong fundamentals. But if you have a business that's like really performing well and the owner is still like pretty, you know,

injected into it, you see a very, very, very different performance in the market from buyers. Buyers can really sense a business where there's a lot of strong positive energy around it and that it's actually quite a steal to get in on this now, rather than something that someone's capitulated on. And that's actually, to be honest with you, quite rare. So I'm saying that now knowing that probably only 5 % of

Yonah (21:43)
That makes sense.

To you.

David Newell (21:55)
businesses that come to market have that quality.

Yonah (21:58)
Because most people, by the time they want to sell it, they want to sell it because they're bored. Right? I feel like most entrepreneurs, as I'm sure you've probably felt at one point in time yourself, you know, the reason we're entrepreneurs is because we don't want to do the same thing for 40 years. there's almost like, there's this fire. There's this spark of wanting to dive into something new, a new venture. And then eventually I think a lot of entrepreneurs.

David Newell (22:03)
100%, yeah.

100%.

Yonah (22:25)
They almost lose the joy, the spark, and they want to move on to the next cool, hot thing. But it makes so much sense that the advice is see it all the way through.

David Newell (22:31)
Yeah.

Yeah, I mean, and then there's two ways to look at that. One is you can come to market six months earlier than you would have done, right? that you don't, because like burnout's a real thing and I get it, know, it's shiny jewel syndrome. Everybody wants to jump on or yeah, try and maintain the far all the way through to the end. But those transactions are very special when we get those situations come through. We get phenomenal results.

Yonah (22:56)
Is it mostly the same buyers that you're working with or like, is it a revolving door of buyers that are coming through that want to buy numerous businesses or every single time you're in a different niche, whether you're selling, you know, you're working with a brand that sells chemicals like boric acid or they're selling jeans. It's obviously an entirely different buyer. Is it mostly repeat purchases? Is it a revolving door?

David Newell (23:18)
Hmm.

Yeah. Great question. We probably sell 200 or so brands a year at Quiet Light. And I would say probably 10, 15 % of those go to buyers that have already bought before. So I repeat buyers, but sometimes they've bought three, four, five businesses from us, specifically from us. Probably another 10, 15%. No, probably another 20, 25 % go to

buyers that have already bought businesses before but not from Quali and then the other remaining 50 % will be kind of first time buyer types or not. Yeah, yeah, yeah. First time buyers.

Yonah (23:56)
Mm.

So interesting. So as you kind of talked about earlier, just to circle back for a moment, CPCs, call spare clicks on Amazon have quadrupled over the past five years. Do you see this being a profitable venture to start an Amazon business? Would you recommend to a friend of yours to get into it? Or do you think, hey, this is a fad and you're 10 years too late?

David Newell (24:05)
Okay.

Yep. Yep.

Woof.

Well, that is a loaded question.

a structural

re-rating and a downgrade in the kind of profit that one should expect on Amazon versus five years ago, which has been partially led by the phenomena you just said, which is four times increase in PPC spend, but also all of the other Amazon fees. It used to be the case that if you launched an Amazon brand seven years ago and you had a decent, you know, foothold on a product, you could reliably expect profit margins of anywhere between 20 to 30 % per annum.

with relatively light work and launching a new product, let's say every 12 months. I now would revise that down to something like 15 to 22 % with a lot more work. Now there are outliers to that and I still regularly sell businesses and work with clients that are north above that.

But to the lay person starting an Amazon business, would say that profit window has dropped down and the workload to achieve it has gone up. I don't want to, I mean, I still think that launching a business on that platform is phenomenal access to, you know, quote unquote, passive income and the ability to build a business and create value and ultimately sell it. And I can say for sure that the secondary market is still massive. So

in terms of creating an asset that can actually be sold in two or three years time, absolutely. But I would say it's a lot more work for a smaller profit return than it used to be.

Yonah (26:20)
If you have so much knowledge on the ins and outs of what it takes to sell a business, what has stopped you from launching your own brand and selling a business on Amazon?

David Newell (26:25)
Hmm.

Hehehehehe

Well, we talk about this a lot internally. mean, it's the difference between like operating and consulting. The honest answer is operating is way harder than consulting, way harder. That's not the reason. I mean, I don't turn down a challenge because it's hard. The honest answer to your question, which is very personal to me, is that I've never really been like a product person, like a physical product person. I've always been much more of a content information person.

Yonah (26:38)
Mmm.

David Newell (27:01)
which I have like a much more sort of philosophical learning type disposition towards life. Whereas a lot of other people like, you know, love the process of creating a product and putting that out there. I've never had an interest in it. So for me, I've never been able to get like super excited about, ooh, like there's this product that I could put out in the world. And I don't like, I've never really been driven by money, you know.

I run it because I started life in investment banking, which is the most money oriented industry you could possibly be in. Probably that's what changed me quite fast. I've been actually far more motivated and have launched other businesses in the past and more in display advertising. So content sites basically monetize off display advertising because again, I find information more interesting than physical products.

Yonah (27:57)
Hmm.

So interesting. Yeah. It's like, you have the whole playbook now, but I totally hear you on when it comes to conceptually understanding a concept as opposed to, you know, you know what it takes, like, Hey, on paper, ideally these are the 20 attributes that your business has in order to be sellable. But to actually make that a reality, it's possible that, you know, esoterically you understand the concept, but it's a whole nother thing to do it.

David Newell (28:06)
Yeah.

Mm.

Yonah (28:30)
And on Amazon, there's so much that's unpredictable, right? Like at this moment in time, it feels obvious to say in hindsight, Hey, conversion rates are going to go down because there's going to be way more competition. Cost per clicks are going to go up for the same reason. But I think it's easy for us to all get stuck in our own way. and I know as someone who went through the whole process of scaling my own business on Amazon, it's easy to think that the status quo will always last.

David Newell (28:30)
That's it.

Yonah (28:59)
but things are constantly evolving and changing.

David Newell (29:02)
for sure. I think like, you know, in your twenties, all you think about is learning, which is a great thing to do. You just want to go run hard and crash fast at everything and just learn as much as you possibly can. When you kind of go into your thirties and head more towards your forties, you start realizing that time is the only non-renewable asset there is. And so, yes, I have seen some of the most incredible Amazon econ brands.

Yonah (29:22)
Noooo

David Newell (29:31)
there are and the inner workings of them and spent hours talking to the founders of them and do have a pretty massive head start on how to do something like that, as well as having 14 other advisors inside a Quiet Light that have an insane amount of knowledge as well. So if we combine together, we could probably do something insane. do I actually want to spend the next three years of my life thinking about, you know,

the next best product on Amazon and then launching it and doing all the campaigns and doing all the marketing and then getting an exit for like $5 million or whatever if that's my portion of it. And the answer is no, I don't want to spend my time doing that for the next three years, not even for that money. I probably wouldn't do it for $10 million either. I'd much rather pursue other things. it really, like time is the ultimate clarifying decision maker.

Yonah (30:14)
Yeah, makes sense.

Hmm.

David Newell (30:30)
I've worked with plenty of clients that have had like materially successful outcomes with their businesses, but would probably look back and think, I wish I'd spent my time doing something different. yeah, there are different lenses to which you can evaluate your decisions.

Yonah (30:48)
love how you're talking about that you're not driven by money. I heard a saying once that you spend the first half of your life trying to accumulate money in the second half of your life, spending money trying to chase your health. every time I hear it, gets me thinking and remembering what truly matters in life. And I think for me, it's easier when you view it as a game as opposed to necessity, right? So you're running an Amazon business and the game is, can you make the number go up?

David Newell (31:01)
Yeah.

Yeah.

Yep. Yep.

Yonah (31:20)
So obviously you've gone through the process of selling hundreds of businesses. Is there one that sticks out as more of a roller coaster or an exciting journey or a founder that really inspired you? Any like case study or story that's worthwhile to share?

David Newell (31:38)
Yeah, I saw one last year that I really liked actually. It's called, I know if I can actually say it out loud. I probably can't say the brand name out loud actually because it's sold now. Sorry about that. But basically it was, it's like an Argentinian leather belt brand. Super luxury. Like everything, minimum products was like $200, which on a belt is not Trump change. And

Yonah (31:49)
I'm

David Newell (32:08)
The owner had gone to, it was actually set up by a kid in like a university down in like Tennessee or Texas. one of those kind of like Southern bell type universities where everybody's into that sort of posh cowboy fashion. And it had really taken off on campus. but the kid basically was graduating, wanted to go up to something else. He gone to his business professor and said, I don't know what to do with this brand. Is it worth something? And this business professor had gone to one of the alumni.

of the university who was my client and said, well, I've got this kid, he's got this great brand, would you want to buy this thing off him? So he bought it and then basically 30x the brand over the course of the next 18 months. But they had gone to immense lengths to get the highest quality leather from two different like local tanneries down in Argentina. Really kind of like hand chosen these textiles and designs based upon

the style of these particular regions of Argentina. And then he had successfully got two country music rock stars to pick them up and were basically wearing these things on stage. And so he had kind of free, if you like, influencer marketing with one of the biggest country stars rolling around the US. so, yeah, he expanded into these beautiful cardholder wallets.

Yonah (33:31)
Very casual.

David Newell (33:37)
iPhone cases and so forth and I absolutely loved it because it was just like immense care was put into the quality of the brand and like the actual design of it you know like he is a guy who's basically like I'm gonna make this product so good that people will will pay huge money for it you know 200 dollars for a belt is no small sum so like he was really up there with like some of the

probably most premium and brands you could get to. And that's quite rare to see someone in our light orbit go and create something like that. would say most people would probably satisfy themselves with making a bet that it would retail for like $30 or $40 on Amazon, you know. And that's fine and dandy and they would get like decent margins for it. But yeah, we did super well on that business and it got like a lot of attention because it was so different.

Yonah (34:07)
Yeah, it's incredibly impressive.

It's amazing. Thanks for sharing. So what percentage of these brands that you're working with are doing everything in house versus working with an agency?

David Newell (34:37)
Bye-bye.

Ooh, you know what? I'd say it's 50-50 straight down the line. Yeah. But like, I think if, if they had the choice, almost everyone would prefer to put it outside and do it with a third party agency. But all we ever hear is like very classic stories of, know,

We tried an agency for three months. paid the retainer. They spent a ton of money trying to understand the brand and then we just didn't really get anywhere and so forth. so there's a lot of struggles with trying to find good agencies. when they...

Yonah (35:21)
Something that I experienced myself. think and you know, I say this to everyone I talk to I think that They're more bad agencies than good agencies And you know, this is this is true. There are bad apples in every single industry and to me that kind of reminds me of like the idea of like I got married we were married for a year and then we got a divorce and like I don't believe in marriage and you know, there are definitely people that are not the right fit and

David Newell (35:35)
Yeah.

Yonah (35:50)
It makes a lot of sense that if someone gets burned that suddenly they're like, I don't want to work with an agency. and it's funny, that's actually what inspired me to start Amazon growth lab where I essentially worked with three different agencies over time and time again, just got burned where I had a really negative experience where either, you know, I just basically got cheap labor where someone's just following an SOP and they don't know really what they're doing. Or, you know, it's like.

this really established agency that's worth $150 million, but they essentially just have a college graduate. You know, they teach them for a week. This is how you run Amazon ads. And then they're responsible for 70 accounts. And as a result, you don't really get any time of the day. so, you know, one thing that was really important for us from the get-go is like, it doesn't make sense to have more than five accounts on one account manager ever.

And, know, if a brand's big enough, it doesn't make sense to have more than one account on an account manager. But yeah, it makes me sad that I hear that and I hear it all the time.

David Newell (36:55)
Yeah.

Yeah, it's not obvious to me that I think like the feedback that I always hear is that agencies have like really, really good pitches, but a lot of the time they're basically, they don't have that much experience within the niche that they're about to onboard this client in. So you're essentially paying for them to experiment and learn and figure out your niche within a very short period of time. And if they don't get it within 60 to 90 days, then that's it. And they move on basically.

And I think it's not obvious to me that every single agency has a playbook that will work and bring them up to speed in that vertical within that period of time. So they're just kind of like hoping to hit, they're kind of just hoping to hit a home run. And if they don't hit it, then they'll move on to the next one. So I don't know whether it's the case that like the most successful agencies are ones that where you pick them and they've already got a ton of experience in your vertical, or they do have just a winning playbook.

that actually works. yeah, it's one of those things of being in this space, you just have to try a lot out.

Yonah (38:06)
I think, I think, you know, obviously when you're working with an agency, the seller has to be the expert in the product no matter what. Right? Like it's a partnership. It's not a matter of suddenly it's completely hands off. So there needs to be an education on the product. think that, you know, really where, and you know, forget AGL, this is just like holistically for agencies where you'll see success is where everything is data driven and tested.

So what does that look like? know, PPC once again is one small piece of the equation. I think it's what agencies hyper-focus on because it's what has the highest margin. But it doesn't matter if you're working with the best agency in the world. If you're not basically, you know, running split tests, for example, with like, you know, one of our partners, PickFu, in order to essentially ensure, hey, we're running our main image versus all of the competitors.

David Newell (38:36)
Hmm.

Yeah.

Yonah (39:04)
And the data illustrates time and time again, you know, nine out of 10 people are going to click on our product over a competitor. And you can heat map the page and see specifically why people are clicking on a competitor versus your product. And ideally, you know, test 10 main images. And then next get to a point where, okay, let's split test our infographics with brand experiments on Amazon. So now you can essentially see, hey, is there a way that we can raise our conversion rate?

Even if it's by a quarter of a percent or 1%, if you do that time and time again, every single month on every single product, you know, your profit margin is going immensely up over time. and similar to what you're saying, you know, sometimes you can hit success in the first month with your experiment. Other times it may take three to four months. but it makes a lot of sense to me that some people see success with agencies and other people,

Maybe it's just not a good fit or they're not partnering with the right person, but it's, it's interesting to hear that it's like down the middle 50 50. Has that always been the case or has that changed with time?

David Newell (40:14)
Good question. Yeah, I'd it's changed actually. I think it was probably more in-house going back like seven or eight years and now it's slowly being the penetration of outside agencies has probably increased. But that's just probably because they're just a growing maturity in the e-commerce landscape anyway. And know, far more people running Amazon brands scaling up. So yeah, it's probably gone 50-50 now.

Yonah (40:40)
Hmm. Well, as we're getting to our last few minutes, just one final question. who, do you have any mentors? And if so, who are they and what's the best piece of advice they ever gave you?

David Newell (40:55)
my mentor is a really strange one, I would say, because he wouldn't know he was a mentor. he's just probably the most impressive person I think that I've worked with and then subsequently seen. You might not be super familiar to people in the e-comm Amazon landscape, but he is in the software space. there's a guy called Rob Walling and he runs a software conference, and a kind of a SaaS community called Microcom.

And he's famous for selling the email app Drip, which was sold to Leadpages, which I sold for him back in 2015. Rob is an insanely humble and amazing guy who basically started with nothing, created a little tool, sold that, used the money to buy a little keyword research tool, and then scaled that.

two or three times and then sold that and then used the money from that to start Drip and then scale that and sold that for a very decent sum. And then he took the money from that, put some of it in crypto, put some of it in investments elsewhere and then did very well with that. And now he runs a company called Tiny Seed, which basically gives out 50 to $100,000 chunks to bootstrap SaaS applications all around the world basically.

So now he's got kind of got like a, essentially like a venture capital Y Combinator style incubator. And Rob is insanely impressive because most software people are insanely software oriented. They're very product oriented. And so they hate doing marketing. They hate dealing with teams. They hate dealing with people that hate scaling that kind of thing. They just want to focus on product. And Rob is someone that kind of like very brilliantly attended to all the different skillsets needed.

to ultimately become successful and scale any business. I would say like the best advice that I kind of like tacitly absorbed from him would be to do that, to embody that skill set of like, you want to get, if you want to become really, really successful, it's to pinpoint your weaknesses early on and cultivate development in them.

So he knew he didn't really like massively love managing people and working with people. So he learned that skill set and learned a way to love it early on rather than leave it over here and hope that if you just build a really successful piece of software, he was going to magically be able to scale that having solved that problem. He just kind of like slowly bulldozed into the, into the uncomfortable areas. And the thing I love about that is it's kind of like a very personal development approach.

to scaling business that actually paid off super well for him because he allowed him to grow businesses up much, much, much faster as well as grow himself. The two were in a lockstep basically. And so yeah, he's a really impressive guy and super humble. And yeah, if anyone has an interest in scaling SaaS businesses, he's about 100 % the other person to speak to. Yeah, for sure.

Yonah (44:05)
He's, he's, he's the guy to talk to. It's funny. That story reminds me of, I watched the documentary about Warren Buffett and you know, he basically has, he went to like a, you know, I think it was like a week long workshop on public speaking because he was petrified of it. And like, that's what's hanging in his office. It's like this certificate, you know, not from the school that he went to, not from awards that he's won. it's just like, you know,

David Newell (44:12)
Mm.

Grrr.

Yonah (44:31)
this small school that he went to to learn how to public speak because that was the most valuable thing that he ever did. Well, I really, really, really appreciate the time, David. For anyone that's interested in selling an Amazon business, definitely go to www.quietlight.com. Is there anywhere that people can look out for you, David, and get in touch with you in case they're interested in selling a business?

David Newell (44:54)
Yeah, just easiest way is to hit me up on email. So david@quietlight.com. We have tons of content on site and a podcast like this is very popular as well. But yeah, if you want to get in touch about maybe doing direct valuation, for example, for the business, then just go to david@quietlight.com.

Yonah (45:12)
Well, I really appreciate the time and thanks for coming on board today.

David Newell (45:15)
Thanks again, I appreciate it.