Making money online can be incredibly easy if you know which metrics are important and how to focus on the right things.

Making money online can be incredibly easy if you know which metrics are important and how to focus on the right things.

I’m sitting in my investing office, looking over the river behind the property, figuring out what I’m going to do for the day. I’ve got a cup of coffee in my Seattle’s Best mug from Border’s and am listening to Roosterspur Bridge by Tori Amos. The ideal would be to plow into a giant pile of stock reports but that isn’t going to be possible for a few days because the operating businesses need my attention. We have so many opportunities over the next twelve months to explode in revenues and profits by taking business from weakened competitors that I’m driving everyone pretty hard. Aaron, as always, has been patient, long-suffering, and wonderful.

One of the questions I often get asked is how, exactly, we make money. Moreover, most people want to know why we’ve succeeded when others have failed. To explain how easy it really is to create a large amount of wealth, I wanted to go through and work the problem backward (as Charlie Munger would say, follow the mathematician Jacobi to solve all of life’s problems: “Invert! Always invert!”). By seeing how we think about these things at our company, you can gain insight into whatever it is you are involved in yourself.

Let’s begin with a simple premise: You want to make $10,000,000 after taxes by selling your business and walking away when the deal closes. You own an online retail site. How do you do it? (more…)

The New Team Supply Business Launches This Week

There’s some exciting news coming out of headquarters in the next few days regarding the expansion of our flagship custom apparel company.  We’re going to aggressively go after a new market that has seen its primary players devastated by the credit crisis and, like any good American, we are going to use the situation to our advantage.

MOA Team Supply Screenshot

MOA Team Supply Screenshot

We are working until about 4 in the morning to launch the new team supply business, which will be a division of Mount Olympus Awards ™, the successful custom letterman jacket business we launched several years ago. Due to our low-cost expense structure, we can get brutal on pricing, provide great customer service, and still generate higher profit margins than our competitors despite charging as much as 70% off their traditional prices. It’s a great system that lets us leverage our existing client relationships and, I hope, add a few million dollars in revenue to the company’s tax returns each year.  The product lineup that we hope to have in place by the fourth quarter will include team uniforms including baseball, softball, basketball, hockey, lacrosse, cheerleading, soccer, football, and track, just to name a few.

What will be interesting is that we are building this business on a scalable platform that has a far more flexible coding properties than the Yahoo merchant solutions site we use at some of our other stores.  This means that we can enter hundreds of products per day by working in CSV-formatted excel sheets, uploaded en masse in a few seconds. This should let us eventually reach a productivity metric of several million dollars in sales per employee, a figure that most people can’t even dream about, let alone believe is possible.

The specific nature of the team market makes me optimistic on our prospects.  We are going to be absolutely ruthless.  In less than one year, we are going to build one of the largest online team sporting goods dealers in the country.  If there is one thing our business model has mastered, it’s the ability to serve customers better, deliver goods in a fraction of the time, and generate profit margins in excess of Microsoft’s despite selling at huge discounts off our rivals.  There’s no way the competitors can keep up because this is what we think about every day when we wake up, at night when we are lying in bed, during the holidays as we wrap gifts, in the summer as we spend an afternoon in the pool … this market is one that is entered by those who simply wanted to find a way to make money and enjoy a decent life with their family.  How can they possibly compete with an investor who reverse-engineered the business and built it from the ground up for one purpose, and one purpose only: To generate ever-increasing torrents of free cash flow to be redeployed into other opportunities? They cannot win.

Murano Glass Beads for Chamilia Charm Bracelets

Murano Glass Beads for Chamilia Charm Bracelets

Our Kennon Home Accessories business, which is the online site launched in fiscal 2009 that sells thousands of luxury gifts, just expanded into murano glass beads and charms.  These stunning works of art are worn on charm bracelets and are made using a technique mastered in Italy centuries ago by artisans.

The truth is, until the folks at the Kennon & Company retail store introduced them to me, I had no idea how big of a deal they were.  As a man, my exposure to jewelry is mostly limited to fine pens, watches, and cufflinks.  Make no mistake, though, the women who suggested the product knew their stuff.  These charm bracelets are tremendously popular with some customers routinely dropping between $300 and $700 per visit simply to augment their murano glass bead jewelry charm collection.  We are weighing the brands to bring in now to accent our Chamilia product line.

We have hundreds of murano glass beads available for sale at Kennon Home Accessories.

We have hundreds of murano glass beads available for sale at Kennon Home Accessories.

To date, we have added several hundred sterling silver charms and murano glass beads to our online inventory and hope to have the rest of the merchandise up and available for sale by Christmas of this year.  It’s an ambitious goal, especially with the expansion of our other sites and the launching of the new team business, but I have faith.  By focusing on serving the customer and keeping costs low, we win.  It is a formula that has worked for time eternal and will continue to work in the future.


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