The Tim Ferriss Show Transcripts: Allen Walton and SpyGuy, The Path to Seven Figures

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Please enjoy this transcript of a special episode uncovering a real-world case study of someone who built a seven-figure business after reading The 4-Hour Workweek (and other resources, of course).

Joining me are Allen Walton (@allenthird), founder of SpyGuy, an online security store based in the Dallas, Texas area that brings in seven-figure revenue with five employees, and Elaine Pofeldt (@elainepofeldt), an independent journalist and speaker who specializes in careers and entrepreneurship and the author of The Million-Dollar, One-Person Business: Make Great Money. Work the Way You Like. Have the Life You Want, in which she looks at how entrepreneurs are scaling to $1 million in revenue prior to hiring employees.

The episode was transcribed and therefore might contain a few typos. With some episodes lasting 2+ hours, it’s difficult to catch some minor errors. Enjoy!

Listen to the episode on Apple Podcasts, Spotify, Stitcher, Overcast, or on your favorite podcast platform. 

#351: Real 4-Hour Workweek Case Studies — Allen Walton and SpyGuy, The Path to Seven Figures
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Tim Ferriss: Hello, boys and girls. This is Tim Ferriss, and welcome to another episode of the Tim Ferriss show. This episode is a special episode. I have two people seated right around me. And we are going to delve into what thousands, maybe tens or hundreds of thousands of you ask for, which are case studies related to perhaps what some of you might recognize as muses or startup businesses, very often bootstrapped, not necessarily the venture-backed variety. And we have, like I mentioned, two people who will be joining me. We have first, Elaine Pofeldt – silent D. P-O-F-E-L-D-T – who is a journalist and the author of The Million-Dollar, One-Person Business. Thank you so much for being here.

Elaine Pofeldt: It’s my pleasure, Tim. Thank you.

Tim Ferriss: And Elaine and I have gotten to know each other over the last few years as she has profiled many people who have started businesses in many different contexts. And a fair number of them have been readers of or somehow inspired tactically or philosophically by The 4-Hour Workweek, which is how we – well, I suppose we first connected ages ago when the first book came out. So this goes back some distance.

Elaine Pofeldt: It goes back 10 years, in fact. I was telling you earlier that when I worked at Fortune Small Business Magazine, one of my duties was as the book editor. And I received a lot of submissions for books to excerpt. And your book was the only one I ever excerpted because a lot of the other business books were not up to snuff. And that was how we initially connected.

Tim Ferriss: And I so much appreciate that because back in the day, of course, with an initial print run of whatever it was, 10,000 copies, 12,000 copies, it didn’t even have national distribution. So the fledgling, hatchling days were really, really a sensitive time that could have been an inflection point, which it ended up being, or it could have been crickets. So I appreciate the early support. And then we also have with us today Allen Walton. Allen, welcome to the show.

Allen Walton: Thanks for having me.

Tim Ferriss: And we are going to be delving into your story. And Allen was introduced to me by Elaine. And Allen is the founder of SpyGuy. One word, capital S, capital G. SpyGuy, which is an online security store based in the Dallas, Texas area. Allen – 30? Currently 30? 31?

Allen Walton: Yes, 30 years old.

Tim Ferriss: — learned the spy camera business while working in a store that sold spy cameras for $11 an hour. And we will be getting into some of the backstory. And the next line is what I’m going to probably dig into first. After getting frustrated with the world of traditional jobs, he used what he learned in the store to create his own online shop and got to $1 million in run rate before he hired any employees or before turning 30. And along the way, you found yourself in all sorts of interesting situations from spouses who needed his help in catching a cheating mate to helping the police stop a child predator. And the business just keeps on growing. You now have five employees. So once again, Allen, thanks for taking the time.

Allen Walton: Yeah. Absolutely.

Tim Ferriss: So let’s talk about this getting frustrated with the world of traditional jobs. I think this is a common sentiment among lots of people listening probably. And could you tell us a little bit about that portion of your story?

Allen Walton: Yeah. So overworked and underappreciated I guess is the term you used. I was working in a retail store that sold surveillance equipment. I was the only employee at the location. So if the store was empty and it was around 2:00 p.m., I’d have to hustle outside the building to grab lunch real quick and come back because if customers were to come in and there’s nobody there to help them, they could just take everything in the store. So it was just me. And I was constantly having to monitor inventory levels, which they never gave me enough product to keep in stock. So I’d always have to drive for like, a half hour to where the headquarters was and pick up inventory and load it into my car and then bring it back to the store. So these were really long hours. I’d have to do that after my shift ended at 7:00 p.m. And so it’d be 10:00 p.m. by the time I’d get back. And it was just a big mess. A little nervous.

Elaine Pofeldt: How old were you back then?

Tim Ferriss: No, you’re good. And this is exactly what I would say – this is the biggest unscratched itch of people who listen to this podcast. So I’m really happy you’re here. And I can’t wait to learn more about your story because I’m coming in as fresh as possible. I have the bare minimum necessary for it all to pique my interest. And there you are, driving around, trying to steal a sandwich in between visitors so that disaster does not befall this establishment or get you fired. When did you start thinking about starting your own business and why? How did that come about?

Allen Walton: So this is where we get into that job I had in between starting SpyGuy and then working in the retail store. Basically I had this opportunity that came up through a customer of mine. They were a detective for a TV show called Cheaters. And it came at the perfect moment. I was very stressed out with my employer and just life, in general, I guess. And I remember this customer coming into my store and saying, “Hey, my boss wants to meet with you. And he’s the guy that created the TV show Cheaters.” Yeah, they took me out to lunch. And it turned out that a lot of people who watch the TV show were calling in because they suspected that they had a boyfriend, a girlfriend, or a spouse that was having an affair.

And so they’d want the TV show to come in and investigate it. And they don’t have the resources to handle that many calls, so they had the bright idea of opening up an online security store which is what I knew about. And they wanted to sell hidden cameras, GPS trackers, covert audio, phone monitoring software, all sorts of surveillance equipment. And so I created that store for them. And that lasted for about three years before I decided that I really wanted to work for myself. And I did all of the exercises in 4-Hour Workweek and ended up leaving in 2014 and starting SpyGuy.

Tim Ferriss: And don’t worry, people who are listening. I’m not going to turn this into an infomercial for The 4-Hour Workweek. But having come across so many different stories, there are many different ways that people would get to the book or have it get to them. How did that enter the picture?

Allen Walton: I remember it pretty vividly, actually. I was living with my parents at the time. And I guess this was in 2011 when The 4-Hour Body came out, right?

Tim Ferriss: Yeah, 2010-2011, 4-Hour Body comes out.

Allen Walton: Okay. So my dad had cancer. And he was trying to research things that would make him feel better, recover from that. And I remember coming down the stairs of my parents’ house. And I hear my dad on the phone. And he’s like, “Yeah, this guy, he races motorcycles and kickboxes and tango dances. And it’s crazy.” And it just perks my interest. I’m like, “Wait, there’s one guy that does all of these things?” I’m just playing video games in my spare time and this guy’s living an amazing life. This sounds really interesting. And so I wait for my dad to get off the phone, and I’m like, “What are you talking about?”

And he goes, “Oh, I just found out about this book called The 4-Hour Body. It was mentioned on a website called Instapundit. And I remember loading up Amazon and then clicking on your name, and then seeing The 4-Hour Workweek. And I’m like, “Hey. Now, that sounds interesting.” And so I remember getting a copy of the book. And I remember seeing page 90. I was on page 90, and I’m like, “Wow. This is unlike any other book I’ve read before. This is blowing my mind.” So that’s how I stumbled into the world, I guess.

Tim Ferriss: Yeah. It’s surreal for me because I feel – despite the fact that I’m now bald and once wasn’t 10 years ago, I feel like in some respects, it was just yesterday that I put that book out. So it’s always wild to come to the realization sometimes it’s been more than a decade now. So you’re reading this book. You’re on page 90. And you’ve decided you want to start your own business. What are some of the first steps that you end up taking, whether that’s research or actually giving it a go and building something? What were some of the very first initial steps that you took?

Allen Walton: Well, I’d already had –

Tim Ferriss: Or how did you prepare for it? Either/or?

Allen Walton: So I actually have my notes. I don’t know that you want me to get up and grab them right now, but I actually have the original notes that I took of each chapter. And then the fear-setting  exercises and everything like that.

Tim Ferriss: Okay. You know what? Yeah. Let’s grab it. Let’s do it.

Elaine Pofeldt: While, you grab them, I have to say that I noticed that in interviewing owners of million-dollar, one-person businesses, that is a habit. A number of them have saved their original notes from The 4-Hour Workweek and still refer back to them today.

Tim Ferriss: That’s so wild. Yeah. Cool. So we have a yellow legal pad. I used to use these as well because I grew up with my dad using legal yellow notepads.

Allen Walton: Yeah. I’m not sure what it is about the notepads, but yeah. Every book I read, I take notes like this. And so 4-Hour Workweek – I wrote down some of the quotes that you opened each chapter with and then other things that speak out to me. And so talking about DEAL.

Tim Ferriss: DEAL, for those people who haven’t read the book, is a framework which is: Define, Eliminate, Automate, and Liberate, which correspond to different activities and a process that you can go through for, among other things, building businesses that generate cash flow. And the fear-setting  exercise that you did, did you recall any of that?

Allen Walton: Oh, yeah. It looks like I just basically wrote this entire book on my legal pad. So yeah. “Define your nightmare. What’s the absolute worst that could happen if you did what you’re considering?” And I guess I was considering leaving my job, which was paying well and then taking substantially less income but being my own boss. And so I wrote down what the possible outcomes were, which were I lose, at most, $10,000 and the time it took to make the company. And that’s only if I fail. I have some other particularly far-fetched scenarios.

Tim Ferriss: Anything you can share?

Allen Walton: Yeah. I was worried that my employer was going to sue me and that I was going to have to spend a lot of money in court and probably lose a lot more money if I lost or something like that. I don’t know why I thought I would get sued. I wasn’t doing anything – I don’t know why I thought I would get sued. But it’s just –

Tim Ferriss: Yeah. Well, part of the point of the exercise is to put down these oftentimes non-specific or, in some cases, ultimately unjustified fears because we all have them. But if you don’t put them on paper, they’re very hard to see for what they are, very hard to examine. Anything else on the worst-case?

Allen Walton: Sure. So I said, “Neither scenario is permanent, and I could definitely recover from either of them. The pain would be a three to a four on a scale of 1 to 10 if either of these happened. I don’t think the odds of them are very strong. If I were sued, I would presumably have enough money for a good lawyer to win the suit.” So this is just absolute worst-case scenario. And even then, it really didn’t even seem that bad.

Tim Ferriss: So you go through the fear-setting exercise, which is called fear-setting for those people who are wondering because it is somewhat akin to goal-setting in the sense that in either case – or I should say in the case of goals, if they’re not specific, they’re very hard to achieve. And in the case of fears, if you do not make them really specific and define them, they’re very hard to overcome or can be hard to overcome. So for those people interested, you can go to tim.blog/ted, as in T-E-D, since I gave a TED Talk on this and provide all the forms and so on for you to do this if you’d like to try it out yourself.

So you do this exercise. You figure out that the worst-case scenarios, the downside risk is a transient three to four from one to 10. And the potential upside is a lot higher. So what do you do, then, as any of your first steps that come to mind? You do this. You’re building up the confidence. Notice I’m not saying courage because courage implies that you’re jumping headlong into complete unknown for a lot of people, whereas confidence is based on actually doing some degree of analysis and determining that you can mitigate and tolerate the potential downside risk and then optimize for getting it right. So what do you then do?

Allen Walton: Well, I guess the next thing I did was just quit my job. I really wasn’t even thinking about it. Most people say they have a backup plan. Or excuse me, just something to fall back on and then start your business on the side. I decided to just jump right into it. I was so sick and tired of working that job that I was at that I gave my two-weeks’ notice. And then after two weeks were up, I was like, “Wow. Okay. I’m not getting checks anymore. I need to actually get to work.” And so I think that I had actually gone to some of the resources that are mentioned. I specifically remember seeing Shopify on there which is what I started my store on. And I’m still on that to this day. It’s an e-commerce platform that makes it really easy for you to – oh, this is not a pitch. Basically, Shopify just allows me to have a website where I can sell my stuff.

Tim Ferriss: Yeah. They do a really good job. And they’re also some of the nicest guys you would ever meet. A bunch of boys from Ottawa, Canada. And it’s now, I guess, the most dominant e-commerce platform in the US. So you saw Shopify. You’re no longer getting these checks. Let me back up for one second to ask you how did you feel – you give your notice. Did you do it in person, via email, via phone? How did you give your two-week notice?

Allen Walton: I did it by email. And that was only because my boss, he lived a distance away. So I was working remotely for him.

Tim Ferriss: Oh, yeah. No judgment at all. I’m just wondering how did it feel when you hit send on that and the email was sent?

Allen Walton: It was a huge relief. And it was really funny because about two minutes after I hit send, one of the guys that I work with, he got a phone call from my boss and then asked if he wanted to run the company since I was leaving. And then my boss didn’t actually respond to me for a week. But I was right next to the guy. So I know he read the email within two minutes.

Tim Ferriss: You had your mole in the organization for all the intel you needed. How appropriate. Okay. So you find some of these resources like Shopify. Then what? Because ostensibly, there are other people online trying to sell things like surveillance equipment. So how do you think about increasing the likelihood of success? What are some of the other things that you did?

Allen Walton: Well, by this time, I was really familiar with Google AdWords and Google Product Listings had just come out which made it really – it’s known as Google Shopping now. But it made it really easy for you to get in front of people instantly. So I knew that if I were going to start a website, then people don’t just magically show up. They make it seem like that’s going to happen. If you build it, they will come type of scenario. And that’s not true at all.

It actually takes a lot of work to build up traffic. And so with Google Ads, I could pay to have people who were highly targeted, they were actually searching for a GPS tracker in Google. And then my website would come up. And I’d have to pay if they click on that link. But I purchased several books, and I read a lot of blog posts on Google AdWords. And so that’s how I generated traffic to the website initially. And it’s still part of our traffic strategy to this day.

Tim Ferriss: What are some of the – are there any particular resources – if you were sitting down with someone in a non-competitive category, let’s just say they have similar experience. And I’ll come back to this because I think it’s a really important point. So they work somewhere, or they get an education on a certain product category on someone else’s dime –

Allen Walton: Other people’s money.

Tim Ferriss: Really helpful. And that can be engineered and planned for. Someone is doing that for who knows? Lady Gaga-like platform shoes. That’s their specialty. And if people are like, “That’s crazy. You could never make a business out of that,” go read 1,000 True Fans by Kevin Kelly and then come back to this podcast, and you will probably think differently.

But let’s just say that is their area of expertise. They worked in a shop. They know everything there is to know about these performer, rock star-type platform shoes. And they’re looking to approach it maybe in a similar way to how you’ve approached your category. Are there any resources, books, that you would recommend for getting more familiar – well, overall, any that you would recommend? And then specifically, to customer acquisition, maybe a paid marketing, pay-per-click, whatever comes to mind. Are there any others that you found or found helpful or would recommend?

Allen Walton: Sure. So 4-Hour Workweek is what got the ball rolling. And then there were a couple of other books that I found super helpful that I read around the same time. So Choose Yourself! by James Altucher I found really, super helpful. It was really fascinating to hear some of the case studies that were in there because that book came out I want to say maybe five or six years after 4-Hour Workweek did. And In Choose Yourself! he also gives a lot of case studies. And I remember one of them being – I think the guy’s name is Bryan from Braintree.

Tim Ferriss: Yeah. Johnson.

Allen Walton: Bryan Johnson from –

Tim Ferriss: Bryan Johnson whose from Braintree has also been on the podcast. Yeah. He did all right. Sold it for a few hundred million dollars to eBay I think it is.

Allen Walton: Right. But he had really humble beginnings as well. He just started as a really super small credit card processor.

Tim Ferriss: Oh, he was selling credit card processing door to door, walking into retailers.

Allen Walton: So I found that to be incredibly helpful and mostly just building on what 4-Hour Workweek had laid the foundation for, just believing that I have this in me to carve a path. So that was one of them. The other one was a book called The Millionaire Fastlane by M. J. DeMarco. And it’s really funny because all the best books have the worst names.

Tim Ferriss: Yeah. The 4-Hour Workweek, blessing and a curse. Yup.

Allen Walton: I Will Teach You to Be Rich is another resource that I’ve used a lot. Ramit Sethi’s – he has courses that I’ve found really helpful, specifically the one on copywriting. Learned how to write significantly better through that course. The 22 Immutable Laws of Marketing was fantastic for just learning about what sets brands apart and how to position yourself and why it’s important to try and create a category and how there’re different strategies that you can employ. He also wrote 22 Immutable Laws of Branding, which I thought was really good as well. But it doesn’t get as much attention for some reason.

Tim Ferriss: Yeah. There’s Branding, Marketing, and then Positioning I think is another co-authored book. All of them worth digesting. Some of the examples they use are outdated, much like a lot of business books because no one can predict the future. So you look at Good to Great. Well, a lot of those so-called great companies are long since gone. But there are regime changes, there are macroeconomic changes, and so on. Nonetheless, when you read, say, The 22 Immutable Laws of Marketing, the law of category, the one that you mentioned, is particularly important even if some of the examples are a bit outdated. These are all great, very complementary examples. Ramit is very, very good at copywriting. Just wanted underscore that.

And Sethi is S-E-T-H-I. And on Choose Yourself!, I want to highlight – James is a friend, but I knew of his work before I became friends with him. Choose Yourself! I think is particularly important. And the example you brought up is very appropriate because whether it’s Bryan’s story or – I would imagine, Elaine, a lot of the people you’ve interviewed, it’s not as though people have figured everything out and they have a flawless plan they’ll be able to execute reliably, and then they start their business. There is a lot of testing and having the confidence that you will be able to figure it out, which I think Bryan is a good example of as well. So you have these resources. You’ve done a bunch of homework. You have some practice with Google AdWords. Then what?

Allen Walton: So I built up the website. And to do that, I needed to take product photography. I didn’t have any unique images at all. So one of the things I’d recommend is if you’re using manufacturer images, that’s a terrible, terrible thing to do. You really need to be taking your own product images. You can do it much better, and it’s good for SEO and other things like that. So I bought a little – what do they call it? A white box –

Tim Ferriss: Yeah, a white box.

Allen Walton: — where you stick the product in. And then I took photos of it. And then I remember – I did all of this from a two-bedroom apartment in Richardson, Texas. It’s a suburb of Dallas. And I just remember staying up really late. My wife would come in, and I’d kiss her goodnight. And then I’d put on Spotify. I’d have music that I’d listen to, like the same stuff over and over again.

Tim Ferriss: Your playlist?

Allen Walton: Yeah, the playlist. It was just the same album over and over again.

Tim Ferriss: What did you listen to?

Allen Walton: Well, two albums. The first one was an album called The Masterplan by Oasis. And then what was the other one? It was Welcome Interstate Managers by Fountains of Wayne. I don’t know why. But I would just have those on repeat. It was good for working. And so I would be writing product descriptions. And I remember I bought a dollar Kindle book and learned how to write product descriptions. And it was difficult, but eventually –

Tim Ferriss: You bought a Kindle book on how to write product descriptions?

Allen Walton: Yes, specifically. How to Write Seductive Web Copy was what it was called. And yeah, so I would write product descriptions. I would be editing the photos. So taking photos, uploading them, making sure everything looked good. I did this all with – it was a $140 theme on Shopify, which is amazing because I remember at a previous company that I worked for, we spent like $30,000 on a website. And it was so difficult to edit and make the way you wanted. And for $140, you could get a theme that was really, really good. It was already optimized for conversions and easy to edit. And so I just remember being so stoked that I was able to get this thing up and running for only a few hundred dollars. And so writing web copy, taking photos, trying to optimize my Google Ad campaigns before they went live because I didn’t want to turn on the campaign and then go to bed, and then all of a sudden, I spent $7,000 overnight.

Tim Ferriss: Yeah. That’s not a happy morning.

Allen Walton: So yeah. I was just getting the website to be good enough that I could turn the ad campaign on and then people would come to my website and make a purchase. And as long as I was breaking even in the beginning, I would have been happy. So I could cover the cost of the product that I was selling, cover the cost of the ads that I was paying for. And I turned my ad campaign on. And I had started working on the business in March. For some reason, it took me an additional two months to make it go live. I think I was just really – I don’t know. I don’t know where I was going with that.

Tim Ferriss: Were you nervous? Or were you –

Allen Walton: I think it took more time than I realized to get going. And I remember thinking, “Oh, my gosh. I’m going to have to find a job or something before this website launches.” I was probably just being a little too perfectionist. I probably just needed to push it live. And so I remember it was May 23rd. I turned the campaign on at 3:00 a.m. I’m like, “All right. It’s time to make this thing happen.” Then I go to bed. And then I wake up at 7:00 a.m., and I roll over and look at my phone. And I have a notification from Shopify saying that I made my first sale for $149. And I let out this huge, orgasmic noise of relief that – I was like, “Wow. Everything’s going to be okay.” So it was a huge validation that I had it in me to do the entrepreneur thing, I guess.

Tim Ferriss: Yeah. I remember some of my very first sales. With anything that you’ve started from scratch – because at least in my case and I think a lot of cases, there’s this niggling little doubt in the back that’s like, “I’m not sure if this is actually going to work or if it can work.” And then when you have that first sale, you’re like, “Okay. This actually might work.” And Elaine, feel free to jump in at any time. I know I’m on a roll here because I’ve had plenty of caffeine as well. But the wife. So how did you present to her before you quit, if you did – I don’t know. Not everyone does – the prospect of starting your own gig? Was that an easy conversation? Was that a hard conversation? How did you approach that?

Allen Walton: I don’t think it was a particularly difficult conversation. She had a job at the time. And it was okay money. It wasn’t amazing or anything like that, but we had money saved up from my job and then her income. So I figured we’d be able to get by if this didn’t pan out. And she knew I was really unhappy. And she was cool with it. I had to explain it to her parents though who were much more skeptical. I remember sitting down in their living room.

And I casually mentioned that I was quitting my job or whatever to start a business. And pretty much everyone, when you say that, they instantly – I don’t want to say they judge you, but a lot of them are like, “Are you sure you really want to do that? Because it’s a stable income.” And maybe they think you’ll fail or something like that. But I felt like I had a lot of people that weren’t entirely sure with my decision. And so I remember explaining to them, “Yeah. So this is how Google Ads works.” And I lost them as soon as I mentioned that.

Tim Ferriss: They’re like, “This Google you talk of…”

Elaine Pofeldt: And how long had you been married at that time?

Allen Walton: Oh, I think only a year.

Elaine Pofeldt: Only a year?

Allen Walton: Yeah. Just about a year.

Tim Ferriss: One of the benefits that I’m ashamed I’ve never talked about before – one of the benefits of an exercise like the fear-setting exercise is that you can then use that. You’ve done the thinking through of many of the things that will jump immediately to mind for someone who is maybe blindsided or hasn’t done all the thinking on the leap like you have. And then you have ready answers because you’ve already gone through all of the worst case scenarios that you’ve been able to come up with. So you have your first sale. What was it? $149, you said?

Allen Walton: Yeah, $149.99.

Tim Ferriss: $149.99.

Elaine Pofeldt: And what was the item? What did you sell?

Allen Walton: It was a voice recorder. It’s just a really small – so we sell concealed recorders, like hidden inside of a pen, for example. But this one is just a really small recorder with a long battery life. And for whatever reason, customers really like it. And that was the first item I sold.

Tim Ferriss: So now walk us through the next steps. What happens then? Because I’m sure there are people listening, and I’m wondering as well, do you have a bedroom/garage full of inventory you’re hoping to sell? Do you have people in China? Do you have what? So the order is placed. Then what happens at that point? And maybe it’s changed, but at that point, what happens?

Allen Walton: Yeah. I think as o the first day that we went live, we were probably getting 10 orders a day. And yeah, this is in my second bedroom. And I have $10,000 worth of inventory in this bedroom. And –

Tim Ferriss: Is that $10,000 you have spent on the inventory or $10,000 –

Allen Walton: Yes.

Tim Ferriss: Okay. Got it. So the retail value would be much higher?

Allen Walton: Exactly. Yeah. And so I was too cheap to buy shelving for it too, so it’s just scattered everywhere, all over the floor and up against the walls and stuff. My wife hated it. And yeah. So I also had packing supplies because you gotta get customers their stuff, right? So I’d have boxes and packing paper and envelopes and everything like that.

Tim Ferriss: You were smarter than I was. I did packing peanuts back in the day on my very first –

Allen Walton: Oh, they’re the worst.

Tim Ferriss: Disaster.

Allen Walton: Whenever I see people – whenever people ship me in peanuts, I’m like… You open the box –

[Crosstalk]

Tim Ferriss: Terrible customer experience.

Allen Walton: So yeah. People were placing orders. I remember we were probably spending about $100 to $200 on AdWords each day and getting no organic traffic at all.

Tim Ferriss: And the $200, that was a limit that you had set yourself? Or –

Allen Walton: Yeah, it was a limit I had set just to make sure I didn’t suddenly spend a couple thousand dollars because I made some really tiny mistake like I had a dash somewhere that shouldn’t be there. So we were spending about $100 to $200 a day. I had a cap on it, so we wouldn’t go over that until I could look at the numbers and then make sure that we were actually profitable. And it took off from there. We started spending a little bit more money. We started getting more data from Google like how people were finding us, exactly the keywords that they were typing in, doing some AB testing with the ad itself. So we would change the copy of the ad or the headline of the ad to see which performed better. Things really took off once I started –

Tim Ferriss: Yeah. What we could do – we could come back to some of the smartest earlier decisions that you made. Like, in retrospect, where you’re like, “Okay. These were really important decisions.” I want to talk about the bedroom and the inventory. So the $10,000 of inventory, I suppose –

Allen Walton: You want me to riff on that for a second?

Tim Ferriss: I’d love for you to riff on that because there are many different ways to try to approach this inventory question. So how did you make the decision to fill up the bedroom? Two parts, right? So the first is how did you make that decision? And then if you were to do it over again, would you do it the same or differently?

Allen Walton: All right. So when we went live, I had about $10,000 in inventory scattered across the bedroom, and I was fulfilling all the orders myself. So around 3:00 p.m. each day I would stand up, start looking for whatever it was that customers had ordered, and then pack it. And then I would have to throw it into the back of my car and drive to the post office. And I did that every day for about six months or so. And then it became a huge issue because my car couldn’t hold enough – the trunk wasn’t big enough to hold all the packages. And then I was also living in a third-floor apartment. And I’d have to drive to the post office. And then when I was purchasing inventory from overseas, they’d ship it to a private mailbox that I had. It’s not a UPS store. It’s a private mailbox.

And they would accept the shipment for me. And then I’d have to go pick it up, these huge boxes. I’d have to get them in my wife’s car because my car wasn’t big enough to carry all of it. And then I’d have to carry it up three flights of stairs into the bedroom and then unpack it. And there would be cardboard dust and all sorts of crap everywhere. It was a mess. And then I’d have to go back downstairs and throw away all the cardboard. And this was my life for six months. By the time that – let me think. By the end of the year – I started the business – I had my first sale in May. And I remember –

Tim Ferriss: This was which year?

Allen Walton: Oh, this was in 2014. And so November’s rolling around. And I’m like, “I can’t do this anymore. Just packing orders is taking up two to three hours of my day, and all while I’m also answering phone calls,” because I had my phone number bright and center at the top of the web page as soon as people land on it. Everyone can see the phone number, whereas most e-commerce stores, they actually try to hide it. I wanted people to call because I knew I could close them over the phone. And so they would call. And I’d be –

Tim Ferriss: Which you knew you could do because you had a lot of experience also at retail talking to customers.

Allen Walton: That was so beneficial because I’d be on the other side of a counter from the customer. And they’d come in, and they’d say, “I’ve got this problem. I think somebody is abusing my parent in an Alzheimer home,” or, “I think something’s going on with my kid. They’re autistic. I think the other kids are bullying them. What do you have for that?” And so I would be able to gauge how they felt about certain products and just pick them with the perfect item. So when they called, I already knew what most of their problems were. And it allowed me to just definitely say, “This is the thing that’s going to solve your issue.” And so I had – where were we going with –

Tim Ferriss: No. I can rewind.

Elaine Pofeldt: The decision.

Tim Ferriss: Yeah. So you were doing hours of picking and packing every day?

Allen Walton: Yeah. I was doing live chats.

Tim Ferriss: You were doing all of live chat and phone calls.

Allen Walton: Live chat, phone call, and then picking and packing orders all at the same time. And I remember – one of my favorite stories to tell was going out to lunch. I went to In-N-Out. And I was doing three live chats all at the same time. And then I had a customer place a $2,000 order while they were on a live chat with me. And I’m sitting at In-N-Out eating a burger. And I’m like, “Man, this is crazy. I never would have thought that something like this was possible.” And so I was doing all of those things at the same time. And I was just neglecting the AdWords campaign entirely because that was just very data-driven. And I didn’t have the bandwidth to go in and analyze all of the stuff. And so I would let that go on autopilot for a couple of months. And that doesn’t really work very well. So I decided to hire an employee. And I guess that was about six or seven months after I started the company, just to help with customer service.

Tim Ferriss: We’re going to come back to the employee, but I don’t want to let the inventory go just yet because people listening are like, “$10 grand? Oh, my God. That’s so much money.” Did you decide to do that because you knew which items or you had a high degree of confidence in which items would sell, and you just felt most comfortable buying the inventory? Is it because you didn’t know of other ways to approach it besides buying inventory? Could you explain having the confidence to spend $10,000? And maybe it was credit card financed instead of out of your bank account. I have no idea. But –

[Crosstalk]

Allen Walton: Yeah. It was out of the bank account.

Tim Ferriss: It was?

Allen Walton: Yes. And so there are a couple of reasons why I had the inventory there. Number one was it was coming from overseas. And I didn’t know how the whole ePacket thing really worked.

Tim Ferriss: I don’t even know what that is.

Allen Walton: Oh, really?

Tim Ferriss: So what’s that?

Allen Walton: So that’s when you order stuff – it’s really popular with Chinese factories. They’ll actually just start listing products that they sell on Amazon. And then it’s subsidized by the United States to send extremely cheap packages very quickly. So it actually costs only a couple of dollars to send something from Beijing or Shanghai or Shenzhen. They’ll send it over to the US for just $2 or $3 or something like that.

Tim Ferriss: Wow. To the end recipient?

Allen Walton: Yes. And that’s really popular with FBA sellers right now. FBA stands for fulfillment by Amazon. So that’s a really hot business model at the moment where a lot of companies, they list products that are currently being made in China. They’ll list those on Amazon. And then when the item sells, they’ll just email the factory and say, “Hey, I need you to send this package over to my customer in California or whatever. And they’ll get it within a few days. And it only costs a couple dollars, whereas for somebody to actually have inventory in Texas and then ship it to California, it actually costs more than that.

Tim Ferriss: So at the time that you got the inventory, you were not familiar with – maybe it didn’t even exist. I don’t know how long this has been in existence – but ePacket. So you did not want to have to wait a long period of time to get your product.

Allen Walton: It would have taken two weeks or something like that for the customer to get it. Also, some of the factories just straight up wouldn’t even do that for me. They weren’t willing to do – you can think of it as a dropshipping model where once the item is sold, then you purchase it from the manufacturer, whoever’s distributing it. And then they’ll ship it on your behalf. And so some of my suppliers didn’t want to do that. And so I would actually have to put in an order for 100 or 200 units or something like that in order to actually have that inventory to sell to the customer.

Tim Ferriss: Right. How did you choose which products you would buy for that initial $10,000 of inventory?

Allen Walton: I knew that most of my sales were going to come from just a handful of products. So that’s the whole 80/20 thing.

Tim Ferriss: And that was based on your previous experience?

Allen Walton: Just based on the previous experience.

Tim Ferriss: I want to pause for just one second to really highlight this because very often, I meet folks who want to start their first business right out of college. And sometimes that is a great approach. Sometimes it works out really well. But whenever possible, I like to recommend that people do their real-world MBA by learning on someone else’s dime and acquiring some of the skills and testing some of the things that you tested before than gambling with limited savings that you might have. So anyway, speech complete.

Elaine Pofeldt: I think I remember you telling me, Allen, that you also picked the inventory with an eye on which ones would not be returned a lot based on what you had learned in the store. Do you remember that?

Allen Walton: Yeah. And that’s something we still do. So a lot of my competitors, they’ll – a lot of people just want to sell anything and everything they possibly can. But I sell electronics. And electronics are really difficult to – it’s a difficult industry because you have to give tech support to customers, whereas with other things like soft goods like bags and clothing and stuff like that, those do have high return rates, but you don’t really have to talk to the customer at all, whereas, with tech support, that’s a huge customer service thing.

And so I only – when I started, and I still do, we only carry stuff that we really, really like and that’s high quality so that when our customers get it, they’re not really irritated that it’s a piece of crap electronic that’s barely working that was imported from China or something like that. If you were to go to Amazon and type in “spy camera” or something, most of the stuff that’s listed is only two and a half stars, three stars. It’s being sent directly by the factory in China. And they don’t offer tech support at all. And so we try to just carry products that we know our customers are going to love, that they’re not going to want to return, that are easy to provide tech support on. And that’s worked out really well for us.

Tim Ferriss: So what I’m hearing – and please correct me if I’m wrong, but it gives me an opportunity to also clarify my position on something, which is I am not against high-touch customer service. So some people who have read The 4-Hour Workweek will think that everything should be automated. But there are certain instances where, for instance, you were able to use not just product or SEO or something else as a competitive advantage but use customer support as a competitive advantage, which can be a huge competitive mote, so to speak. It insulates and protects your business in a lot of ways because it is a hurdle that many other people are not going to be willing to make.

You’re not going to have – it’s very unlikely you’re going to have some competitor in Armenia who’s going to decide to offer high-touch support in English or anywhere else. There’s a steeper learning curve. And you have experience that gives you an advantage in implementing that. So I’m glad that we’re talking about this because it ultimately – you started in 2014 you said, right? We’re now in, as we’re recording this, soon to be 2019. And you’re still going strong as far as I can tell, right?

Allen Walton: Yes.

Tim Ferriss: And that is not the case with a lot of folks who anticipate that their one connection to one manufacturer and their batch of 30 secret keywords is going to keep them alive forever, which is very, very rarely the case. So coming back to where we left off before I dragged us back into the world of inventory, which I think is important, the employee – now, did you decide to make them a full-time hire right off the bat? How did you find them? And walk us through the thought process for – was there a breaking point also? Was there a specific day where you were just like, “Enough. I need to get this fixed” – and walk us through the thought process.

Allen Walton: I don’t know that there was a specific day. I just remember the general feeling of dread I had whenever 2:00 or 3:00 p.m. would roll by, and I’m like, “Oh, my gosh. The phone hasn’t stopped ringing. I have to pack all of these orders. I gotta go to the post office,” which was just such a drag, going up and down the stairs in my apartment and then also just – I had to wait in line at the post office just to give them a trash bag full of stuff. They wouldn’t let me drop it off. So I might be there for 15 to 20 minutes until they’ll accept the packages. And yeah, I realized that it was taking up too much of my time. And I was still referring back to The 4-Hour Workweek. Every couple of months, I’d go back and be like, “Okay. What am I not doing right here?” And I realized that I wasn’t offloading the $10 an hour tasks so that I could focus on the $100 or $1,000 an hour tasks.

Tim Ferriss: The In-N-Out phone call tasks, right? Or live chat $2,000 order tasks.

Allen Walton: Yeah, exactly. And so I’m like, “I really want to quit it with this post office thing. I don’t really know what to do. The third-party fulfillment fees, if I were to have somebody else take this over from me, would just be far too high.”

Tim Ferriss: Third-party fulfillment meaning you find a center which will house your inventory and interface with you in some way for order processing and so on just to set up costs and all that.

Allen Walton: Yeah, exactly. And so there’s a pallet somewhere with my products on it. And they’ll pack it for me and ship it out. And it’s usually a flat rate. But it was going to really eat into the margins. And so I was just like, “I can’t be on the phone all day anymore. I really need help.” But phone orders make up 20% of our sales. So I can’t just turn off the phone really. So I decide to go back to one of the guys that actually trained me in the surveillance industry and –

Elaine Pofeldt: From that original store?

Allen Walton: Yeah, from the original store that I started working in.

Elaine Pofeldt: It all goes back to that store, right?

Allen Walton: Yeah. It was May 2009 I got hired at that store. And they had four locations at the time. And each location had its own sales manager. And so my first week at the job, each day was at a different store in North Texas. And I remember it being on a Friday, I went into the location that – he still works with me. His name’s Vince. And I remember going into Vince’s store. And he was teaching me about setting up the CCTV DVR so that it would record on motion. And then he had an eight-camera package system that he was closing the sale on. And so he was packing up all of the cameras and the cables and the power supplies.

And then he showed me how the GPS trackers worked and just all of – and then all of the crazy stories that you might expect to hear from a brick and mortar spy shop. I just remember it being so much fun. And so he was my favorite guy to work with at the store. And I didn’t know who else to turn to because this is kind of a weird industry. And it takes a lot of customer knowledge. And I just didn’t have it in me to teach anybody else what I knew. So I went to him. And it was an opportune time for him. And so we decided to make that happen in – I think it was February or March of 2015.

Tim Ferriss: And what was the first week like with him?

Allen Walton: It was great. He worked from home. So we don’t live in the same city at all. But through the wonders of the internet, I was able to make it so that if somebody were to call the 800 number on the website, then it would ring him on his computer. And that’s all he did at the time was just customer service.

Tim Ferriss: Customer support. Okay. So you were still handling the picking and packing?

Allen Walton: Yeah. I was still doing the picking and packing. But at least I wasn’t taking as many phone calls until we grew to the point where we were getting more phone calls. And then I’d have to get on the phone again. And it was just impossible for me to do things from the third floor of my apartment. And so Vince has a house with a garage. And I’m like, “Hey, he can take care of all the shipping and all of the phone support and do live chats and stuff for me. So I just really offloaded stuff to him, which was great because when he wasn’t on a call, then he could be placing the orders throughout the day. He didn’t just have to wait until 2:00 or 3:00 p.m. like I was because the inventory was just hanging out in his garage. And so he became my fulfillment guy in addition to the customer service. And so I finally got all the inventory stuff out of my hair.

Tim Ferriss: Were you a good manager from the outset? Did you have experience from working in previous jobs? Or was that something you had to learn how to do?

Allen Walton: No, I definitely had to learn how to do it. I had to learn that on my next employee because the first one was the guy that trained me. And so he was pretty much autonomous. He could just do his thing, and I didn’t really even have to think about it at all. But then when I hired my second employee, that’s when I’m like, “Oh, so this is why everyone complains about managing employees and having teams and just –” I know so many entrepreneurs that say that managing the team is the hardest part of their job and finding employees. And I totally get that now. That was the lesson that most people learn on the first employee. For me, that was my second one.

Tim Ferriss: You’re like, “I don’t know what everyone’s complaining about. This is easy.” So you get the second employee. How much later did you hire them? Did you bring them on immediately, fulltime, as a contractor? And then what helped you to learn how to manage them?

Allen Walton: Yeah. I think that was a full year after I hired the first one. It was a friend of mine. That was probably the first place I went wrong. It was a good friend of mine who was also unhappy with his job. And I don’t know. I think it’s because I really wanted to help him out. And I needed somebody to help out with my company too. I was still spending a lot on paid advertising. And I’m like, “Man, I haven’t had any time to focus on SEO related tasks and projects.”

Tim Ferriss: Search engine optimization for organic, getting people to come to the site without having to pay for each visit.

Allen Walton: Exactly. So I knew that was a priority. And my friend had no marketing experience whatsoever. But he’s a really nice guy. And he hated his job. And I needed somebody to commiserate with on the whole entrepreneurship front. And I’m like, “Maybe he can just be an apprentice type of person. I’ll teach him what I know. And then he’ll go on and do something else. And all the while, he’s helping me build the company.” And then that’s when I realized that I had no idea what I was doing with managing people. This guy knew nothing about my industry. He didn’t know anything about marketing. And I’m like, “Wait. I have to teach him all this stuff or get him courses and books and things like that? This is going to be a huge drag.” And so he worked for me for a couple of months. But he ended up going back into his industry which is HR just because it paid significantly better than I did. I don’t know.

Tim Ferriss: So in looking back at that, what should you have done instead, if you were giving advice to your younger self? And I understand we all learn valuable things from all experiences and so on. But what should you have done instead? Or what advice would you give to someone in that same situation where they’re like, “I need somebody else, but I don’t know what to do?”

Allen Walton: Yeah. I wouldn’t have hired a friend. And I know a lot of other business owners that feel the same way. It’s not for everybody. I’m sure some people can make it work. But it was very difficult for me because I ended up having to just have uncomfortable conversations and stuff. And it hurt the friendship a little bit. So I did that wrong. And then if I were going to go back and do it again, there are a couple of options that are available now that weren’t really available a couple of years ago that have worked out really well for me.

Tim Ferriss: Yeah, like what?

Allen Walton: There are a lot of job boards out there now for people who are looking for remote work, like a lot of job boards.

[Crosstalk]

Interviewer Are there any that you –

Allen Walton: Yeah, I have a favorite one.

Tim Ferriss: What is that?

Allen Walton: It’s called Dynamite Jobs. And the website’s dynamitejobs.co. There’s no M. The guy that wanted the .com wanted too much money probably. Yeah. So full disclaimer: this is run by some friends of mine. But it’s for people who are looking for apprenticeships or jobs where they’re given a meaningful role. They’re not just clocking in and doing the 9:00 to 5:00 type of thing. This is for people who, they want to work remotely, they want to learn things, and they’re able to – a lot of them choose to live in Southeast Asia because the cost of living is so low that they’re high quality, they’re affordable, and they also want to work for companies that are doing interesting things. And so I’ve gone through, and I’ve looked at a lot of the jobs that are on there. And I’m like, “Hey, this would have been amazing for me before I started this entrepreneurship thing. I totally would have done that.” There’s another one called remotive.io. And then We Work Remotely is another one.

Tim Ferriss: I have heard about that one.

Allen Walton: Yeah. There are all sorts of niche ones. So if you’re a programmer, or if you’re just a customer service person, or if you want to work in content marketing, that type of thing, then there are a lot of niche job boards for opportunities like that.

Tim Ferriss: Were there any resources, books or otherwise, that eventually helped you to learn to be more effective as a manager?

Allen Walton: Yeah, the one that comes to mind the instant you said that was the one that I only read a couple months ago. I wish I’d picked it up sooner because it’s really short. It’s called The One-Minute Manager. They have a new one. It’s called The New One-Minute Manager.

Tim Ferriss: Who wrote –

Elaine Pofeldt: What’s new about it?

Allen Walton: It’s updated for organizations that are not as – they don’t have as much hierarchy. It’s more for 2018 businesses where they’re more flat.

Tim Ferriss: Yeah. This book has come up a fair amount. And what’s nice about it is that it’s very short. It is very, very, very digestible as opposed to some of these other books on management that are like university textbooks. And I think that people just drown in the information. You mentioned hiring a friend as being probably a mistake or something that, in your particular circumstances, would have been a mistake. What are any other mistakes that come to mind that you made in the first year or two? Or like, “You know what? If I were advising someone, I would probably do that differently?”

Allen Walton: I didn’t outsource the whole paid traffic thing soon enough. That’s a very brain intensive task, dumping a bunch of data in Excel and analyzing it and finding out what keywords were performing, and which ones weren’t. I let that go on autopilot for far too long. And it probably cost me a lot of money just six or seven months after I started my business. But I was so inundated with all these menial tasks that I didn’t go back to the thing that was actually making me money, which was all of the paid traffic that was coming in. And so I would have outsourced that significantly sooner to somebody who really, really knew what they were doing.

Tim Ferriss: How would you have found that person or that company?

Allen Walton: Probably through referrals. Most of the stuff that I do now and companies that I hire I usually hear about from other business owners.

Tim Ferriss: How do you meet those business owners?

Allen Walton: You go to a lot of events.

Tim Ferriss: What types of events?

Allen Walton: So it’s not just events.

Tim Ferriss: And I’m asking because this is a very common question where I hear from people who say, “I would love to do X, but I can’t find like-minded people,” which I think maybe a cop-out because they’re certainly out there.

Allen Walton: It’s really easy to say that when you’re first starting out. But there are people out there, a lot of people out there that are doing interesting things that you want to be a part of, and they’re willing to let you in on that world. And so let’s talk about going to events first. So there are conferences that you can go to for pretty much any industry that you’re interested in. I mostly go to e-commerce related conferences where there are people who are selling stuff online. That’s the thing that we have in common. I don’t go to any industry events for spy gear or surveillance stuff. I used to, but I don’t really like it. The e-commerce events are really helpful because most people there are willing to share what they know.

And they’re excited about it. And they’re not concerned about people “stealing their idea” to – they’re not worried about that sort of thing. They’re in their business. They’re already running big teams. They’re looking to grow even further. And e-commerce is changing pretty constantly. There’re always new things to try. And everybody’s always concerned about what Amazon’s doing and how to counteract it. And so you go to these conferences where just other like-minded people are going to be. And you just strike up conversations. And I have tips for conferences if you want to get into something like –

Tim Ferriss: Yeah. Well, can you mention one or two conferences you’ve enjoyed for e-commerce and then tips for conferences?

Allen Walton: Sure.

Tim Ferriss: People might be thinking, “Well, hold on a second. I just want to set up a business. This doesn’t seem relevant.” It’s really relevant. Or it’s a way to fast track a lot of your learning. And this is also something that I’ve done at various points in my career whenever I’ve wanted to take a new path is to spend time at conferences. So yeah. Could you mention a few conferences that you’ve enjoyed and then what your playbook is?

Allen Walton: Sure. When I first started in 2014, the conference that really kicked things off for me was Internet Retailer. It’s an annual event in Chicago.

Tim Ferriss: It’s a big one.

Allen Walton: Yeah. It’s huge. I actually don’t go to it anymore because it feels like a corporate getaway. There’re huge companies there like Walmart.com and B&H Photo Video, these huge companies that I have nothing that I can relate to. And a lot of the sessions are more for enterprise type of clients. But they do have beginner related stuff. You do get to go to the exhibit hall where they have all sorts of software vendors who are providing services that you can use to run your e-commerce website or your customer service or your logistical needs like shipping. And you strike up conversations in the exhibitor booths and you get introduced to people. It’s really cool. So that was really helpful when I first started. The one that I went to and I was like, “I can never miss this event ever again,” was a conference called – well, it’s a private community of location independent store owners.

So people who are Tim Ferriss wannabes, basically. I mentioned the job board earlier. It’s called Dynamite Circle. And they have an annual event in Bangkok each year each October. And it’s really cool. They get about 300 entrepreneurs. And we rent out the Conrad Hotel in Bangkok. And it’s like summer camp for people who are doing business online and working from their computers and managing remote teams. And it’s just a five- or six-day event.

And it’s really cool. You meet so many people just hanging out in the lobby. That’s my number one tip for anybody who goes to a conference is actually stay at the conference hotel. It’s going to cost more money, but there’re all sorts of serendipitous events that happen when you’re just hanging out in the lobby or sitting at the bar, and you start talking to somebody and all of a sudden, you realize that you have a lot in common or there’s something that you guys can work on together. And business deals happen. It’s really cool.

Tim Ferriss: Any other tips for conferences?

Allen Walton: It’s really tempting to stay out and drink at night and stay out until 2:00 a.m. But then by the time you get back to your hotel at 3:00 a.m., you don’t want to go to the session that’s starting at 8:00 or 9:00 a.m. So I would probably just advise that you should probably call it a night at midnight and then actually attend the conference in the morning. That’s a lesson I am always learning.

Tim Ferriss: There’s a conference here. We’re sitting in Austin, Texas. It’s called South by Southwest every year, which is where 4-Hour Workweek actually had one of its very first tipping points in 2007. And I’ve come back pretty much every year since. And for those people who are interested in why I value conferences for certain things and how I approach it, you could just look for how to build a world-class network. I actually think I did – I put out audio on the podcast about how I approach it. But one quick tip would be – well, I’ll give two quick tips. The first is that if there are panels, pay attention to the moderators because very often, after a session, all of the panelists will get rushed. And the moderator will just be left there cold, by themselves. That represents an easier person to talk to. And by the way, if they’re moderating the panel, they know all of the panelists.

So be nice. Be curious. And connect with moderators, not just panelists. The second is if you are going to be one of those 100 people rushing the stage to try to get a word in edgewise with Person X, don’t try to get a word in edgewise. Well, maybe just a few words which are, “I wrote you this note. I know you’re super slammed right now. But if you could read it, I think you might find it interesting.” That’s it. Do your thinking and your pitching on paper and give it to them for later because nobody does that – even though I’ve recommended this, still probably one out of 100 people will do it. Next to no one does it. And more often than not, they will stick it in their pocket. And then when they’re having coffee or a meal later, they’ll be like, “What the hell is this in my pocket?

Oh, it’s a note. Let me read it.” So those would be two recommendations. I want to come back to the beginnings for a moment since we talked about fear-setting , but we didn’t talk about dreamlining or lifestyle goals. What were some of the goals that you had for your life and/or the business when you first got going? What did success potentially look like to you?

Allen Walton: I tried finding my dreamlines. I think I tore them out of here at some point. I know I have them. But I remember thinking that if I could make $30,000 that I’d be okay, and my wife wouldn’t leave me, and I could pay my bills because dual income. So together, we would have been fine. By myself, $30,000 probably wouldn’t have been all that great. But if I could make $30,000 a year, then all of this will have been worthwhile. I’ll have time to pursue stuff that interested me. I was still really interested in playing music. I just remember $30,000 being just the number that I needed to hit.

Tim Ferriss: And you arrived at that just by crunching your expenses and figuring out –

Allen Walton: Yeah. I think that’s pretty much it.

Tim Ferriss: — burn rate?

Allen Walton: Yeah, exactly. And so I did the whole targeted monthly income exercise. I wrote out what my short-term goals – I can’t remember the exact lengths but like, “What do I want six weeks from now?” and then three –

Tim Ferriss: Yeah, six months, 12 months type of thing.

Allen Walton: Exactly, yeah. And so some of it was like, “What am I doing? What am I owning?” that sort of thing. And so I can remember some of the things on there were like, “I want 8% body fat. I want to be able to have conversational Spanish skills so that I could talk to my grandma in Spanish.” I wanted a really cool leather jacket that I could pass down to my kid one day because I never had a really cool jacket. And I used to wear my dad’s in high school. Just stuff like that.

Tim Ferriss: Those are all great. For people wondering, also, you don’t have to buy The 4-Hour Workweek to see this type of sheet. If you just search, “Tim Ferriss dreamlining,” there are – all of this stuff is available for free on the blog as well. So you set out these things. Did you check off some of those items on the – like, “to be, to have, to do?”

Allen Walton: I’m certain I did. I don’t remember all of them off hand. But I do remember doing the exercise pretty regularly. I’d want to say like once a year.

Tim Ferriss: Do you have a leather jacket yet? You certainly have the money for it now.

Allen Walton: So here’s the deal. I know I didn’t hit the 8% body fat. And I was just going through this weird time where I’m like, “Wait. I gotta really bulk up first. And then I gotta buy a leather jacket. Otherwise, I’m going to get stuck with two leather jackets.” I don’t know. I reasoned myself out of the whole leather jacket thing. But maybe I should go grab one while I’m down here.

Tim Ferriss: This is a great town for leather goods, actually. Elaine, you suggested a couple of questions that I think are really worth exploring. Do you want to perhaps bring this one up? Because I am very curious to hear the answer.

Elaine Pofeldt: Sure. Yeah. A lot of the internet stores that I interview are on Amazon. You’re not, right?

Allen Walton: Right.

Elaine Pofeldt: Tell us about your thinking on that.

Allen Walton: Well, there are a couple ways that I’ve approached this. And the first reason was because I was afraid of the really high return rates getting me in trouble with Amazon. So it’s my understanding – and this could be outdated – but I’m pretty sure that once you get over a 10% return rate, then Amazon just penalizes you. They can remove the listing entirely. And so I remember from previous experience that a lot of times, my products were just too technical for some users. Or the bigger one was that I was afraid that somebody was going to use my products for whatever they needed, like, “I need this captured on video.”

Tim Ferriss: One use. Right, on an event basis.

Allen Walton: Exactly. And Amazon is a 30-day return policy or whatever. And I was like, “Oh, my gosh. That’s enough time for somebody to use this product, get all of the value they needed out of it, and then send it back. And then I’m totally burned by it.” And so I was able to mitigate that by having my own store where I could set my own return policy and not have to worry about it. Amazon also eats into the margins a little bit. And I also was worried about – it was mostly a fear-based thing, for sure, for not selling on Amazon. I knew I could make it work on my own. And then Amazon just seemed like a little bit of an issue that I wasn’t ready to take on. At least, that’s when I first started the business. Now, like many things, I start seeing things in different ways.

And so I do see Amazon as a sales channel that I could be taking advantage of. And so I’m trying to figure out how best to approach that. I’d really like to start manufacturing my own products. And that way, I’m not having to compete with other people for the same exact item. So that’s one of the other reasons I was worried that – I’d list the item on Amazon, and then all of a sudden, you have six or seven other people attaching themselves to the listing also saying that they’re selling this item, which I’m not entirely sure that they are. It could be a counterfeit or a copycat or something like that. And then you’re all fighting for the buy box. It just seemed like something I didn’t want on my plate. And I knew I could make it work without it.

Elaine Pofeldt: Have you started doing any manufacturing? I think you had mentioned you were exploring that.

Allen Walton: Yeah. So production line hasn’t started yet. But I did find an industrial designer who lives here in Austin and we’ve been working on some products together. And I’ve also found an engineer that is making the PCBs design for me. So that’s printed circuit board. And it’s been a hard road. There’s a reason why people don’t – if you’re trying to get into fulfilled by Amazon businesses, rule one is don’t sell electronics. It’s hard. And so I’m not technical. It’s been a really hard road figuring out how electronics worked, what are the costs. Oh, some of this stuff comes out defective, and I gotta deal with that.

And then, you gotta communicate with factories in China because that’s the hub for everything electronics these days. And it’s just been really difficult to figure out. I think I’m getting there. But we do have products designed. I want to sell them under the SpyGuy brand and then be in control of the actual product that we’re making. It’s been a pain being at the mercy of the manufacturer because sometimes orders take too long, or they jack up your prices. And it just feels like they have you over a barrel. So I’m looking to actually start manufacturing my own items. Yes.

Tim Ferriss: What are some of the tools that you’ve found helpful for running your business or automating certain things? You mentioned live chat, for instance, which was starting way back in the day. Way back in the day meaning not all that long ago, I guess, in terms of humans on the planet. But in entrepreneurship years, a long time. What are some of the technologies or tools that you currently use that you find very helpful?

Allen Walton: Sure. So Shopify is just the hub of everything that we do. And that’s what talks to everything else, pretty much. It’s fantastic. It makes life so much easier than when I was on – I used to work at a company. And we were using Yahoo! Store. Do you remember that?

Tim Ferriss: Oh, yeah.

Allen Walton: Oh, my God. It hasn’t changed. It hasn’t changed since you used it. So Shopify is the hub of everything that we do. It collects all of the data. And we base all of our decisions off of it. We have another tool that’s really helpful called Help Scout. It is a ticket software so that you’re not just in Gmail all day. It makes it really easy for customers to contact you and for you to give them the exact experience that your customer needs. So if they email you asking for a refund or a return, then you have canned responses that you can key in. And you can assign tickets. So if a customer’s like, “Hey. I talked to Dale the other day. I’d really like it if you could help me with this issue,” then you can move that ticket into his inbox.

And then he can manage it. And you can see the entire history of the customer’s profile. You can see everything that they’ve done in Shopify also appears in Help Scout. So you can see the orders that they’ve placed. You can see if they’ve been refunded. So you can do all of your customer service stuff just within Help Scout and not having to open a new window and go to Shopify. So that’s really good for streamlining things. One of my biggest wins was using a shipping software called ShippingEasy. There’s another one that’s out there called ShipStation that is also popular.

Tim Ferriss: I think ShipStation – I might be getting this wrong. I feel like they might be based here in Austin also.

Allen Walton: They are. So is ShippingEasy.

Tim Ferriss: Really? I wonder why that is.

Allen Walton: Yeah. And they’re owned by the same company.

Tim Ferriss: Oh, all right. There we go.

Allen Walton: Yeah. They’re all owned by –

Tim Ferriss: Is one like the Gucci, and then the other one’s the more affordable –

Allen Walton: I think that’s kind of it. So they started as two separate ones. And then they were both bought by Stamps.com, which also owns Endicia. I don’t know. They have a monopoly on the post office. And I’m not sure how that works. That’s really weird. But the shipping software is incredible because an order will come through on our Shopify website. And then it gets synced to ShippingEasy so that a label is automatically generated.

So what we’ve done is we have a set of automation rules. So ShippingEasy knows how much each item weighs, what envelope or box the item will be shipped out in based on the total order weight and the shipping method that the customer selected. So if they did free ground shipping, then it’s probably going to go out first class mail. But if they selected two-day shipping, then it’s probably going to go out FedEx One Rate. We have a million different combinations that are in there. And it’s really easy to set up so that within a minute of a customer placing an order on the website, a shipping label is generated. And we know exactly what envelope it’s going to go into and what products.

Tim Ferriss: And does that then – presumably, the orders get shipped out of a fulfillment center at this point and not out of –

Allen Walton: We have an office now.

Tim Ferriss: Oh, you have an office?

Allen Walton: Yeah. And we have all of our inventory at the office. I had tried doing the 3PL thing. It was a total disaster. I know other people who it works great for them. They typically only have a handful of SKUs. And I think that makes it easier. We have closer to 100. And we had a lot of issues with the 3PL with wrong orders getting sent out. That was actually one of the most stressful periods ever because I thought my business was going to implode. Customers getting wrong orders, wanting to cancel them, filing chargebacks all the time. It was very frustrating. So we have an office now. And I have a full-time fulfillment guy who comes in in the morning. And he’s really the only employee I have that has to go to an office. And he’ll pack the orders. And then we don’t have to drive to the post office. We’re important enough now that the post office and FedEx will come by the office and pick up from us twice a day.

Tim Ferriss: You were mentioning the 3PL and the fulfillment houses. I got a call – I don’t know if I’ve ever talked about this before. Actually, it wasn’t a call. It was an email. One of the less pleasant emails I’ve ever received which was – I was running my sports nutrition business way back in the day, 1,000 years ago, it feels like. And I was in Bratislava traveling with two friends. And I was off email for a period of time, as one might expect if they read the first book. And I went into my inbox just to check in for a few minutes.

And there was an email from one of the managers at the fulfillment center who said the president or the owner – who had become a friend of mine; it’s very sad – had died of a heart attack. His family has never wanted to be in this business. And the entire facility is being closed down. You need to have all your inventory out in the next seven days. But I had received it probably five days after the email had been sent. That was a very exciting 48 to 72 hours, to put it mildly. So, yup. There are pros and cons to all of these different approaches.

Allen Walton: I knew it wasn’t going to work out with my 3PL when probably a week after we started with them, I was getting text messages from the fulfillment center owner. He was fulfilling the orders himself. And he was texting me photos of products saying, “Is this this item?” It was a disaster.

Tim Ferriss: Now, you mentioned the manufacturing, for instance. How do you think about blocking out time for big-picture decisions and product development and things like that? Do you have an approach to blocking that out in your calendar? Is it a certain amount of time you block out each week? How do you think about any of that? Because there are the incremental improvements that can be made, right? We can improve, or we can work with consultants or people we’ve hired to improve let’s say paid advertising or organic or supply chain or whatever it might be. So there are these things that you could try to incrementally improve. And then there is, “What does the future of this business look like three years from now?” How have you approached that?

Allen Walton: So have you heard of Traction, by any chance?

Tim Ferriss: I know the word traction. It’s probably not –

Allen Walton: There’s a book. There’s also another one called Scaling Up by Verne, who, Elaine, you know.

Tim Ferriss: Yeah. Verne Harnish, right? Am I getting it right?

Allen Walton: Yeah. They’re both ways of running your company. I guess the way that Traction explains it is your phone has an operating system. Your computer does too. And so should your business. And we’ve started working on that a little bit. And they have this concept of rocks, sand, pebbles. And so sand is just the incremental stuff. Pebbles is a little more important than that. And then the rocks are what are the things that are really going to make your business awesome. If you can implement this stuff, what are the things that are just going to make it really take off?

Tim Ferriss: And I haven’t read the book, but just so people get the visual, the idea being if you have, say, a mason jar, if you put in the sand first, you can fit in a few pebbles. You can definitely not fit the rocks. But if you put the rocks in first, then the pebbles, then the sand fits around it.

Allen Walton: Exactly. And so this is something that I’ve been looking at for the last month or so really not that long. But I also read a book called The ONE Thing that has been really, really helpful for me. I find that I tend to be pretty scatterbrained. There’s always small stuff that I – small stuff pops up on my radar. And I’m like, “Oh, I can knock this out really quickly.” And then before you know it, 40 minutes have gone by. And then my wife wants me to get lunch with her. And then I’m like, “I’ve barely even done anything today. I can’t stop and get lunch right now.” And you’re putting out fires all day and stuff. And then before you know it, the day’s over, and you haven’t done anything at all.

So with The ONE Thing, it’s like what’s the one thing that you can do that makes everything else easier or just entirely obsolete? And so I’ve been thinking about that a lot lately like, “I should really be manufacturing my own products right now. Why? Because my margins are going to go up. Because I’m not as fragile with my manufacturers.” We had a bug detector that was mentioned on The Today Show last November. And we sold out of all our bug detectors instantly. And we couldn’t even keep them in stock for another three months. And I’m like, “This is terrible. I could have predicted this. I should be manufacturing my own items, so I’ve got 1,000-2,000 in the warehouse so if something like this happens, I can account for it, and I’m not at the mercy of other people.

Elaine Pofeldt: And Allen, out of the hundred products, how do you know which ones to manufacture first? Are they the ones that sell the most? Or is there some other criteria?

Allen Walton: The ones that sell the most are the ones where – I have a vendor that’s really unpleasant to deal with, but I have to sell some of the stuff that they have. And so now I’m like, “All right. How can I cut them out?” So that’s the first product that I started developing. And then I also have a couple products that customers have asked for, but none of my suppliers are providing it. And so I’m like, “All right. This could be a real opportunity here.” And so that’s actually going to be one of the first items that I manufacture.

Elaine Pofeldt: And do you aim for the ones that would be bought by the enterprise clients? I know you work with some government clients.

Allen Walton: We do. But most of our customers are just regular people that have something going on. They own a business, and something’s getting stolen, and they need to find out who. Or they’re getting political signs stolen from their yard and they want to find out who’s doing that. So all sorts of crazy reasons. It’s really hard to find our customers on Facebook ads because there’s no demographic for people who need surveillance equipment. But yeah, they’re just regular people. But we do have private investigators and law enforcement. So it’s always fun to see an order come in on the website, and it’s from Department of Justice or something like that. That’s always fun. But to get those big orders from them, you have to do government contractors.

Tim Ferriss: Yeah, request for proposals. And it’s more involved.

Allen Walton: Yeah, RFQs and – let me think. We get emails all the time from people who are set up as government suppliers I guess is the term. They’re like, “Yeah, we need 2,000 bug detectors. And we need them at your lowest possible price.” And then we get those emails all at the same time.

Elaine Pofeldt: When you made the news the time that you helped catch the child molester, did that help your sales? What effect does that have?

Allen Walton: So do you want me to tell the story?

Tim Ferriss: Yeah. And tie that into also The Today Show because I’m curious how both of these things happened. But let’s talk about the child predator first. And tell us the story of how that happened. And then, to Elaine’s point, if it had an impact on sales.

Allen Walton: Sure. So I remember getting a message. We use Slack to communicate within the team. I guess that’s also a big – I remember getting a message from my employee, Vince. And he’s like, “Hey. We had something weird happen just now. And I want to alert you to it.” I’m like, “Okay. What’s up?” And he goes, “We had a live chat come in. And it’s from somebody asking about a particular customer. And I told them that we can’t give them any information on this customer.” We don’t just tell random people on live chat about our customers and what they’re ordering. And so that –

Tim Ferriss: I think that’s a good policy.

Allen Walton: So that’s exactly what my employee told the live chat visitor. And then the live chat guy goes, “Oh, okay. I am with the district attorney’s office in –” I guess it’s Sherwood, Portland area in Oregon. “And we think that this guy bought a hidden camera from you. And we found this hidden camera in the boy’s bathroom of the Catholic Church where he is a priest. And my employee’s like, “Okay. Send us a subpoena or a warrant or whatever it is that they ask for, and we have to give you that information.” And so my employee tells me this. And I’m like, “Oh, my gosh. This is not what I needed today.” And my employee goes, “I looked him up. And he did buy the hidden camera from us.” And I’m like, “Okay. We can’t just sit on this. We have to hand this information over.” And so at the time, I was reading Trust Me, I’m Lying by Ryan Holiday.

Tim Ferriss: Ryan. There’s a lot of Austin tie-in here. Austin Board of Tourism, you know where to send the roses!

Allen Walton: So that is his first book. And it blew my mind when I read it. It’s all about the media and how they work and how you can use it to your advantage and then also to your detriment if you don’t play by the rules. And I was reading it at the time. And I’m like, “Oh, my gosh. I could totally see this headline ending up on Gawker,” which isn’t around anymore. But “Catholic Priest Installs Hidden Camera in Boy’s Bathroom,” just screams Gawker. And then they’d probably mention my store or something like that. And then everything I worked for was going to be ruined.

Tim Ferriss: Or you’d have a giant influx of priests as new customers. There’s your Facebook advertising. I’m kidding. Go ahead.

Allen Walton: Oh, it’s so bad. And so I’m like, “Okay. We gotta get the police department this information.” They had a detective that was working the case. And they gave me their contact info. And I’m like, “Okay. What can I do? What can I do?” And so I actually do a Google search for the guy. And I stumble across articles that had been written about him already in a local newspaper up there in The Oregonian was the name of the paper. And so they already had a reporter that was on this story. And she had come out with two to three different blog posts because it turned out that the kid found the camera and then reported it to his parents who then reported it to the priest who actually set up the camera. And then he’s like, “Oh, okay. I’ll get this taken care of.” And then he never went to the police. And so the kid’s parents are like, “What is going on here?”

And so then the police suspected that the priest was doing something. Anyways, the reporter that was working the article, I decided to reach out to her. And I decided to reach out to the detective that was working the case at the same time. And we worked hand in hand to get the story out in a way that looked favorable for me. So the reporter for the paper was greatly appreciative that I contacted her with the scoop and allowed me to share my side of the story. And instead of making it seem like I was an accomplice to some guy that did a terrible – we had never even spoken to this guy. He just placed the order on the website. He never called us on the phone, never did a live chat or sent in an email. Was just somebody that placed an order on the website and did something terrible.

And so I was really worried that that would just destroy my business. And we worked hand in hand with the police department. They ended up issuing a warrant for his arrest. But he had already fled the country a week prior. He went back to the Philippines where he was from. And when the story finally hit, it gave us a lot of publicity. So all of a sudden, other newspapers were wanting to talk to me. And then TV stations were asking for Skype interviews and stuff. And it actually came out on the same day that Jared from Subway was arrested. And that took up the news for the entire day. Also, I think Anthony Scalia died, the Supreme Court Justice. So the news was just flooded. And the story just got buried. But that’s what happens.

Tim Ferriss: It happens. Yeah. The media cycles and events are never predictable. I’ve had the great misfortune of, in the case of a few book launches, to just get completely drowned out which is always one of those things that can happen. But The Today Show, how did that come about?

Allen Walton: So we weren’t mentioned, specifically.

Tim Ferriss: Did you know anything – oh, it was not mentioned, specifically. But you had the net to catch the fish on Google?

Allen Walton: Right. Every week or so there’s a story that comes out about somebody finding a hidden camera, like in the Airbnb or vacation rental. And they did a segment on that and how to find a hidden camera. And so they just generally mentioned a bug detector. And it turns out that Amazon sold out completely. And a lot of customers found our website after hitting Amazon and not being able to find anything in stock. They came to our website and purchased all of our inventory. And we were out for months. It was horrible. And we had to cancel orders left and right. And it was a difficult time.

Tim Ferriss: Was it more of a problem than a blessing? Because some people listening might think, “Wow. You sold out of all your inventory. So that can’t be a bad thing.” Do you wish it hadn’t happened? Would it have been better for you if it had not happened?

Allen Walton: It was our biggest sales day of all time. It still is. So that was really cool at the moment. But then for the three months after, I’m like, “Oh, my gosh. What’s taking so long?” Factory’s not being very responsive to me at all. We have customers calling left and right. And a lot of them – we forgot to mark it “unorderable” on the website. So customers were requesting orders for it even though it wasn’t in stock. And so they were getting frustrated with us. And yeah, it was a difficult time. I’m glad it happened. I just wish we had been prepared better.

Tim Ferriss: Hindsight’s 20/20. Well, the mention by The Today Show is also one of those be careful what you wish for, not that you were expecting it, but one of those be careful what you wish for scenarios. And certainly, back in the day, maybe even still, Oprah gave people the hug of death where she would mention a bakery or a company. And they thought it was winning the winning lottery ticket. But in fact, it just ended up destroying the business because they would ramp up to try to do tons of manufacturing or hire extra people. And then a week later, they didn’t know how to reconcile what had just happened.

What are some of the – well, we have I think just a little bit of time left – some of the highlights when you look back? So you were in this job. You were underpaid, overworked, really hating the 9:00 to 5:00 or 7:00 to 7:00 – whatever the hours might have been – experience. You start this company. What have been some of the peak experiences? Or what were things that you couldn’t have imagined would have come true that you couldn’t have imagined at the time, when you were like, “Man, if I can just make $30 grand, this will work out?”

Allen Walton: So the first thing that comes to mind as I look out at this amazing view of Austin is that I’m sitting here chatting with you right now. Book was hugely influential to me and then a lot of my friends. So this has been an awesome experience. Meeting people who are like me has been the biggest impact on my life. I went through high school just as a loner. And I didn’t really have a lot of friends. And I was wandering around aimlessly. But starting this business up has exposed me to people who are just really cool and really interesting. And if we went to high school together, then we probably would have gotten along really well. It would have been awesome. And so seeking those people out and finding them – and on Twitter, it’s easier than ever.

I can’t remember who said it. I want to say it was Naval Ravikant. I think he had a tweet. And he’s like, “Facebook is where you meet the people of your past. And Twitter’s where you meet the people of your future.” And I’m like, “Holy crap. That is exactly what’s happened to me.” I’ve met so many amazing people on Twitter. And you can have these great conversations without having to physically be near them at all. So meeting people through Twitter, meeting people at these events, other business owners who are just doing really cool stuff in our interpersonal development and fitness and entrepreneurship and just cool people, even without that stuff, I enjoy being around them. So I’ve been able to find my tribe type of thing.

Tim Ferriss: I would imagine you also have quite a few people who come to you now, having seen what you’ve done, friends and maybe just people in these communities who want to get your advice. What do you say to those people who are maybe where you were some time ago in the sense that they have a job. It’s paying decently well. But they just dread Monday morning when it rolls around, going back in? What do you say to those people? Or what advice have you given them, or would you give them?

Allen Walton: So I actually don’t get a whole lot of people asking for advice. I lay low I think. But the people who do reach out, I give them a handful of books to read that were hugely – we talked about some of them earlier. I can name more later if you want. But I tell them to read these books. If they have any questions, they can get back to me. I give them a list of podcasts that I listen to.

Tim Ferriss: What are some of those podcasts?

Allen Walton: So been a listener of Tim Ferriss show for a long time. TimTim TalkTalk.

Tim Ferriss: Formerly known as. Appreciate that. Thanks, Kevin Rose, for making that stick forever. Gotcha. Appreciate that. I’m sliding a $20 across a table. We had a deal ahead of time for this. What other podcasts?

Allen Walton: eCommerceFuel.

Tim Ferriss: eCommerceFuel.

Allen Walton: Yes. And then EcomCrew. EcomCrew is my favorite e-commerce podcast. It’s written by a friend of mine named Mike. And he’s been almost completely transparent with his e-commerce business. It’s a seven-figure e-commerce business. They do adult coloring books.

Tim Ferriss: Amazing. Wait. Adult? Meaning adult-themed content plus coloring? Or coloring books for adults?

Allen Walton: Coloring books for adults. I never thought about that though.

Tim Ferriss: Another growth opportunity.

Allen Walton: When I started my business –

Tim Ferriss: Very limited number of colors that you’d be using for the former, probably. So maybe not a great idea. Go ahead.

Allen Walton: So EcomCrew I would totally suggest to anybody who wants to start an online business that’s selling physical products because they talk about factories, finding them, working with them, raising money, running an e-commerce store, and how to do Facebook ads correctly and make money from that. It’s really cool stuff. About two months after I started my business I learned about The Tropical MBA podcast. Again, terrible names usually mean that the product’s pretty good. But these are guys that do entrepreneurship Tim Ferriss style.

And so they have a lot of really great episodes with people like me who are doing – maybe they’ll do fulfilled by Amazon businesses. So they’ll find products, sell them only on Amazon, and then Amazon will actually ship it for them as well. So they never have to physically handle the inventory, which sounds amazing to me. FBA sellers, they interview people who are running digital agencies. So paid ad campaigns on Google or Facebook, Instagram. They’ll interview people who have a small team. And they’ll be based in the Philippines or in Thailand or something like that running their business remotely for US clients. And it keeps costs low. And they’ll share with you everything that they know, like how they stumbled into that niche. So you hear about people who are doing really interesting things and niches you’ve never known about, like the guys that run that podcast sell valet podiums.

Tim Ferriss: I love it.

Allen Walton: They’re the number one distributor of valet podiums in the US. And so I remember being in Dallas getting a haircut a couple months ago, and they had valet parking. And I looked down at the thing, and I see their logo on it. And I just crack up because these are guys that I found out about through the podcast who lived in Thailand at the time. And people are doing cool stuff everywhere.

Tim Ferriss: And plus, there are just invisible stories around you constantly. It’s like if you walk into – I just recently learned this. The cardboard sleeves that hold coffee that you would get at a coffee shop, those are zarfs. And there’s a guy responsible for the most dominant zarfs in the United States. Or not too long ago, I think I was in Idaho. And I ended up driving by this gigantic estate, this enormous ranch with multiple buildings and ponds and this.

And I’m like, “Whose ranch is that?” They go, “Oh, you know those little winglets that you see on the edges of airplane wings that point upwards?” They’re like, “Yeah. He’s the guy who made those.” And you never quite piece it together. Or you wouldn’t think of it unless someone points it out. Well, we’re going to wrap up in just a few minutes here, but what are you hoping, say, next year, in the next 12 months? Is there anything you most want to change or tackle for yourself? Could be related to the business. Could just be overall. But you have what a lot of people would see as a dream. You have your own business. You are the maker of your own destiny in a lot of senses. You far surpass $30,000 per year. So what are some things you’re working on? You mentioned personal development. It could be with the business, or it could be outside of the business. But what are you focused on these days?

Allen Walton: So the thing on my mind right now is I have a kid coming next month.

Tim Ferriss: Congratulations.

Elaine Pofeldt: Oh, congrats.

Allen Walton: Thank you. Yeah. So I’m kind of interested to see how this will go with the free time and being able to work on the business. And so I’ve really taken upon the task of building out my team and letting them carry more of the burden. Well, not a burden, but carry more of the weight because I can’t do everything on my own anymore. It’s impossible. And by building a team, I can have people that I depend on to actually not just maintain the business, but I want them to help grow it. And figuring that out has been a lot of fun. It was cool doing stuff on my own for a long time. That’s how people typically see it when they do entrepreneurship. It starts out with just them. But building out a team has been really life-changing for me because they can handle all the shipping and stuff, so I don’t have to. I don’t have to take a single customer call anymore if I don’t want to.

Sometimes I’ll hear it ringing, and I’ll snatch it before somebody else does. But I could go months without taking a phone call if I really wanted to. And that’s great. Yeah. So building out my team, figuring out how to factor in having a newborn baby into my life. I think that’s going to be really interesting. I love meeting other entrepreneurs and finding opportunities to have great conversations or start a business together or help other people with their businesses. I get a lot of joy out of that. And so, yeah. I’ve done the dreamlining thing, and I’m like, “All right. Where do I want to be a year from now? Five years from now?” And I just really want to be helping people who are maybe where I was when they were 18 or 22 or whatever. If I can share some of my knowledge and point people in the right direction, then I think I get a lot of personal satisfaction out of that.

Tim Ferriss: Well, I think you’ve done a lot of that today. So first and foremost, thank you for taking the time. It’s been really fun.

Allen Walton: Of course. Yeah.

Tim Ferriss: And Allen Walton, where can people find out more about you? Websites, if they want to ask a question or wave hello on Twitter or elsewhere? Anything that you’d like to share. I would suggest against giving your personal email address.

Allen Walton: Okay. So my business website is spyguy.com, S-P-Y-G-U-Y.com. I’m on Twitter. Give me a shout. It’s @AllenThird, so A-L-L-E-N-T-H-I-R-D. And I have a personal site as well. There’s not a whole lot on it at the moment, but maybe in the future. Allenwalton.com.

Tim Ferriss: Amazing. And Elaine, thank you for being here. I know I was charging pretty hard for most of this interview. But I wanted to introduce you guys to Elaine because I am hoping to do quite a bit more with you in the future. So this is going to be an experiment as we collaborate via audio and, hopefully, in other ways. But I think this was a really fun outing. And Elaine did help with getting me up to speed on a lot of the basics so that I could ask questions that were informed. So thank you for that as well.

Elaine Pofeldt: Oh, thanks, Tim. It was great to be here. And it was really great to see how you looked at Allen’s business. That was really fascinating for me.

Tim Ferriss: Well, I’m hoping that – and I’m sure you will, and I know you already are behind the scenes. So we have secrets coming for you guys. But you’ll be shedding light for me on quite a few people and businesses as well. So thank you, Allen. Thank you, Elaine. And to everybody listening, thank you for listening. And you can find show notes, links to everything that we discussed in the show notes, as per usual. Tim.blog/podcast. And until next time, maybe you should do some fear-setting  and dreamlining and certainly think about what experiments you want to run in the next year. Until next time, bye.

Posted on: December 13, 2018.

Please check out Tribe of Mentors, my newest book, which shares short, tactical life advice from 100+ world-class performers. Many of the world's most famous entrepreneurs, athletes, investors, poker players, and artists are part of the book. The tips and strategies in Tribe of Mentors have already changed my life, and I hope the same for you. Click here for a sample chapter and full details. Roughly 90% of the guests have never appeared on my podcast.

Who was interviewed? Here's a very partial list: tech icons (founders of Facebook, Twitter, LinkedIn, Craigslist, Pinterest, Spotify, Salesforce, Dropbox, and more), Jimmy Fallon, Arianna Huffington, Brandon Stanton (Humans of New York), Lord Rabbi Jonathan Sacks, Ayaan Hirsi Ali, Ben Stiller, Maurice Ashley (first African-American Grandmaster of chess), Brené Brown (researcher and bestselling author), Rick Rubin (legendary music producer), Temple Grandin (animal behavior expert and autism activist), Franklin Leonard (The Black List), Dara Torres (12-time Olympic medalist in swimming), David Lynch (director), Kelly Slater (surfing legend), Bozoma Saint John (Beats/Apple/Uber), Lewis Cantley (famed cancer researcher), Maria Sharapova, Chris Anderson (curator of TED), Terry Crews, Greg Norman (golf icon), Vitalik Buterin (creator of Ethereum), and nearly 100 more. Check it all out by clicking here.

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2 comments on “The Tim Ferriss Show Transcripts: Allen Walton and SpyGuy, The Path to Seven Figures

  1. Tim, thank you for emphasizing the strategy of getting your real world MBA on someone else’s dime! This really stuck with me, and I believe was a key component to the successful startup of spyguy. The largest hurdle for me is identifying what business or product to create, and then how choose that first product to put out there. so far, I have plenty of ideas but struggle to narrow down and fail to get to the next step. It would be so helpful to hear more detail about that beginning process and how to narrow down and decide on THE ONE idea and get the ball rolling forward instead of in circles.

    -Ross product designer and fan

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