Paul Rafelson was the most-cited resource in the Congressional Antitrust Investigation into Amazon’s mistreatment of sellers on the platform.
He is the Founding Lawyer at Rafelson Law, the #1 go-to law firm for online businesses facing legal challenges and digital sellers looking for the best deal when exiting their businesses. In 2021, they facilitated 60+ online business exits realizing over $238M for their clients.
Paul is also the Founder of SellerBasics.com, the first legal plan designed specifically for eCommerce sellers. With SellerBasics, eCommerce sellers can get access to unlimited consultations with qualified attorneys and free assistance with suspended eCommerce/Amazon accounts—all for only $99/month.
Paul is also the Founder of Online Merchants Guild (OMG), a non-profit trade association that enables thousands of online sellers to voice their concerns on various legal issues affecting them, where he volunteers as an Executive Director. OMG has played a major role in offsetting Amazon’s growing political influence.
Paul has 15+ years of experience as an attorney, and he paid for his law degree at Villanova Law School by selling video games on Amazon.
Before starting his private practice, Paul worked as in-house counsel at Microsoft, Wal-Mart, and General Electric, and has been featured by major media outlets, including Bloomberg, The New York Times, the WSJ, and CNN, because of his reputation as an advocate for the eCommerce community.
What you will learn
- How Paul began his journey into e-commerce
- The rise and impact of Fulfillment by Amazon (FBA)
- The controversies and legal challenges associated with the FBA network
- Uncover the legal challenges related to Amazon and the manipulation of virtual shelf space
- Discover the challenges associated with buying and selling FBA businesses
- Paul shares his perspective on joy, adversity, and his career journey
- The importance of personal fulfillment, learning from life’s challenges, and making choices that align with your values and goals
- Plus loads more!
00:00:07 - 00:02:08
Hi everyone and welcome to The Jeff Bullas Show. Today I have with me, Paul Rafelson. Now, Paul is the most-cited resource in the Congressional Antitrust Investigation to Amazon's mistreatment of sellers on the platform. I'm gonna have a big chat about Amazon, its workforce, its practices and what he's discovered over the years. He became an Amazon lawyer by mistake by writing a blog post. I'm gonna talk more about that later. He's a Founding Lawyer at Rafelson Law, the number one, go-to law firm for online businesses facing legal challenges and digital sellers looking for the best deal when exiting their businesses. So it not only protects sellers but also helps them sell their businesses. In 2021, he facilitated 60 plus online business exits, realizing over 238 million for their clients. Paul is the Founder of SellerBasics.com, the first legal plan designed specifically for eCommerce sellers. With SellerBasics, eCommerce sellers can get access to unlimited consultations with qualified attorneys and free assistance with suspended eCommerce/Amazon accounts. I'm gonna have sure we can have a chat about that. All for only $99 a month. Paul is also the Founder of Online Merchants Guild. That sounds something like out of England's trade history. A nonprofit trade association that enables thousands of online sellers to voice their concerns on various legal issues affecting them, where he volunteers as Executive Director. OMG, Online Merchants Guild, which also can be interpreted as oh my God, has played a major role in offsetting Amazon's growing political influence. Paul has had 15 plus experience as an attorney. He paid for his law degree by selling video games on Amazon. So he's also worked in-house counsel for Microsoft, Wal-Mart, and General Electric, just a couple of small firms in the USA. Welcome to the show, Paul. It's an absolute pleasure to have you here.
00:02:09 - 00:02:39
Thank you for that intro. I have to say it's quite the pump up, you know, I feel like I feel pretty good about myself, you know, I do have to qualify as a lawyer. So, you know, we don't guarantee results and, you know, I'm not saying, you know, you have to, you know, I think we do a great job. I have to be objective, subjective and I have to be, you know, I have to be proud of myself and say, yeah, I think we're the best but, you know, objectively all lawyers who are licensed are great blah, blah, blah disclosure.
00:02:39 - 00:02:50
And so that wasn't a non-disclosure agreement but it was something, it was an agreement and I did not add a disclosure. So I thank you, Paul and I would have expected that from you.
00:02:51 - 00:02:55
Of course, because we have to, because we, lawyers, ruin everything.
00:02:55 - 00:03:12
Yeah, exactly. So, but you guys are really, you do a good job of creating agreements. So you're ready for disagreements. I really like that line frankly. So you're actually not about agreements, you're really about disagreements.
00:03:13 - 00:04:56
Well, you know, that's an interesting construct in and of itself when you're a lawyer in a corporate environment, working for companies like the ones you mentioned, like GE and Wal-Mart and Microsoft and then you go into this world of small businesses and you realize, you know, it's agreements are an interesting construct when you live in a world, especially in the United States where I try to explain to our clients for the vast majority of us. Like, you don't really have access to our justice system, it's kind of really expensive, like really, really prohibitively expensive. So, unless your disagreement is, you know, probably in the, you know, high five to six figures, you're probably kind of looking at a situation where the juice ain't worth the squeeze. Does that make sense? So, you know, we coach our clients, advise our clients under that presumption that, you know, look, if you want us to review a document where you're gonna do a deal, do something and it's like 10 or 20 grand, maybe some supplier contract, you know, one, if it's in China, you're not gonna enforce it. Like it's a handshake, it's an understanding, but everyone knows the rules in China typically are if the manufacturer believes there's future business to be had, they tend to treat you right. Once they feel like the business is over, you tend to start to feel the, you know, the, you know, feel it falling apart. There's not much recurs to have but that also holds true in the United States. You know, if you're doing something, a $10,000 agency contract and they don't do what you want, I mean, It's just you call a negative value claim is the technical term. It just ain't worth it, you know, and you have to understand that the court, your remedy is good as a contract can be bulletproof on paper. But going to court national enforcing is a whole another can of worms.
00:04:57 - 00:05:09
Yeah. And that raises a very interesting area which I watch. We all watch some experience that is basically big corporate uses law as a commercial weapon.
00:05:09 - 00:05:19
100%. We see it every day. Bullying is alive and well, in our system, it's 100% how our system works. We have our clients bullying all the time.
00:05:20 - 00:05:50
So let's wind back to your college days where you started to pay your way through college by starting a video game store. So tell us how that happened. So let's keep it relevant. So how did you start selling video games on Amazon? And this is, we're talking early 2000s here. So, well, before fulfillment by Amazon, FBA stores even existed. Tell us about how you got into e-commerce on Amazon back then.
00:05:51 - 00:11:55
Okay. Well, I'm gonna be honest, I was fortunate enough to have my parents pay for my undergraduate college, University of Massachusetts. I, full disclosure, I was a very lucky person. It was not that expensive back then compared to what the tuitions you see today, however, what they didn't pay for was law school and that's the way we do it in there. So you do four years of regular and then you go into law school for three years. And I did my MBA also while I was in law school. So I was doing two degrees. So it cost even more. And actually it wasn't really, video games came later. It was actually DVDs that I started with, it was box set DVDs. So we're talking about the Simpsons, Seinfeld, Seinfeld may have been a little later. But those types of, the shield like these sets, right? Where normally those box sets you could buy for 50-60 bucks, right? They were very expensive because you get a whole season, right? This was before Netflix, right? This is the early 2000s, right? Family Guy was another one that was a big seller. So you buy these box sets, normally 50-60 bucks. But you know what I started with was on a Black Friday. So Black Friday is, you know, is the day after Thanksgiving, it's the biggest shopping day and back in the day, what people typically did on Black Friday was they line up like starting at like sometimes they'd line up literally the day before to try to get a good deal on a TV. And there'd be these famous, these videos of people fighting in malls and killing each, you know, they beat the crap out of each other to get the flat screen. And I was always saying like, how could I arbitrage? Like a bit, they didn't have that word wasn't being used then, but I was like, how could I flip? You know, like, okay, if I could stay up all night because I was just trying to figure out how I can make some money. I'm like, if I could stay up all night, you know, and get these, get a TV or two for, you know, 1000 or two bucks off. Could I sell it? Make a few bucks? And then I was just kind of reading through the circulars and I realized that the opportunity wasn't to stand in line and wait for the TVs, the opportunity was to stand in line and buy all the DVDs that they were putting on sale for like $12 or 15 because they were normally 50 or 60. So that's a lot of room and there was even some things that I did like you taking advantage of like price matching, differentials at other stores to get even more inventory. So I literally dropped like, I don't know, whatever my credit card was, and 30-40 grand. I mean, I don't know how as a student, you could get those kind of credit cards, but that's just that's our financial system here in the US and I literally maxed them out and I was just, you know, giving this a try and I thought, you know, this, this could go really well or this could be the most embarrassing return of my life, you know, and I'm sitting here and buying like, you know, insane amounts of these DVDs for like peanuts, hoarding them, going to all the different stores. I'm getting rain checks at Target because they would actually give me rain checks. They give me rain checks for like hundreds of units at once. So I mean, I could literally make a huge, huge killing just on the Black Friday weekend in terms of stocking up inventory. And then what I would do is I would list them, I listed on eBay, I would list it on half.com, which I don't know if you remember half.com, but that was a company that eBay acquired or, I don't know if they acquired it or they created it, but it was a company that eBay ran it used to be textbooks and then they went into DVDs and other things and the way it worked was like Amazon, right? It was a single unit like, you know, eBay, every listing, even if you're selling like 10 of the same things like it's always a different listing, at least it used to be, right? Whereas half.com was more like Amazon style where you had this one way for each UPC, right? So you had one listing for each UPC. So you just got on it and just offered lowest price. And then eventually I think it was the second or third year I did it that Amazon zShops opened up and literally it was just hoarding all this inventory, started out. Then I would literally go to the, you know, list it up. So by Cyber Monday, I was the cheapest on all the platforms make trying to make no more than, you know, five, six, seven bucks a DVD. It was a great return. I didn't, after all my expenses, I didn't mind because it was a volume play. And I would literally have days coming out where I do a hundred units, I'd have to ship a hundred units a day. Which was insane because back then a hundred units a day, there was no automation. There was no, you can print your postage at home. You had to go. And especially because DVDs were media. So there's a special shipping rate called media mail that you get in the United States, which is way cheaper if you ship like books and DVDs. But you had to go to the post office and it took like two minutes per DVD to process. It was such a slow process. So what I would do is I would go like to the Philadelphia post office. I used to work at a courthouse around the corner as a clerk, like an intern clerk. And I would go to the Philadelphia Post Office on my lunch break. I'd bring in like a hundred DVDs and I'd get through like quarter. I come back after work and I would create these massive lines because I would utilize, they'd only have like three or four people at rush hour during the holidays and I would utilize one person's time. So I would, I didn't realize how in danger I was when I was doing this, but I was probably pissing off a lot of people because they could see me sitting there with a giant pile of envelopes, not on the floor with my law books reading just, you know, flipping through it. And that was my business. And then I expanded into the Wal-Mart clearance rack and then I expanded into the video games because then I realized the video games that are normally selling for $60 on Xbox are selling for 24.99. So there was opportunity there and so on and so forth. So yeah, that's pretty much how it started and it was pretty neat, but it was never really scalable. Like you never had a consistent flow of inventory and you didn't have the tools like fulfillment by Amazon to really help you scale it and I hear that story a lot, you know, with a lot of my earlier clients who had started in 2007, eight, nine, or after the financial crisis, they said, you know, the business was doing okay. But it wasn't until they got, you know, they were doing like $100,000 a year in sales, maybe they were making an extra 20 or 30 grand as a side hustle, they would never quit their job over it. But then they said once we got introduced to fulfillment by Amazon, our sales velocity just went through the roof and all of a sudden now we're doing a million and two million. So, you know, FBA was a huge catalog catalyst for a lot of Amazon sellers in terms of how they got their volume and how they got to be bigger than where they are today.
00:11:55 - 00:12:32
Yeah. So after that experience, you obviously went and worked for a few corporates including Microsoft, then you worked for Wal-Mart and then you worked for GE and so give us a quick thumbnail sketch of that experience. I'm going to talk about how you actually by chance got into e-commerce, law and that area especially in the area of Amazon as a specialty as well. So give us a quick thumbnail sketch of your journey through corporate lawyer.
00:12:33 - 00:16:51
Yeah. So I worked as a lawyer in downtown Miami in an apartment about 45 minutes away on a if it was three in the morning, 45 minutes away in Boca Raton where we have one of our offices now. And then about two years into my role there, I was doing like corporate tax type stuff. So just kind of really boring corporate nerdy stuff, working on transactions, helping clients fight the government in some cases. Just different interesting stuff. And the thing about tax law people don't understand is like when you're a tax accountant, if you file a tax return and you're a tax lawyer, you're an interpreter. Your job is to understand everybody at law and then convert it into the tax code. So we have complex issues of intellectual property. You know, we have to convert it. What are the tax and ramifications? You have to explain it to the government. So for example, like something basic like, you know, dollar buy out leases, you know, so let's say I lease equipment to you and at the end of the lease, you can buy it for a dollar. Well, that's a lease legally, but according to the IRS, it's actually a loan because who wouldn't take the dollar buyout, right? So, stuff like that, nerdy, stuff like that, you really get into the weeds of stuff and you drive things, you drive M&A, right? All acquisitions or dispositions are always driven by the tax people because you're always trying to do it the most tax efficient way. So really getting exposure to a lot of things at once, but I was lucky two years, you know, billing 100 hours a week and living in just an awful unhealthy lifestyle. I got out of it within two years. I got lucky if a contact I met who was a big shot at Microsoft reached out to me and said, hey, we have this opening and it was a little bit of a stretch given my experience. But I, you know, I went out to Seattle, didn't think I would actually get the job. But I was like, you know, hey, this is pretty neat. Went to the bowling factory. So I was like, I'll probably never be in Seattle ever again, but I actually got the position and then I kind of just launched my in house life, which was pretty much nine to five, five days a week, not a lot of stress. And pretty kush, you know, they pay you well and you don't work that hard. And so people who completed on nine to five, not all of them are bad. I will say this, I know we love being entrepreneurs but say not all of them are bad. While I was in Microsoft, my wife actually worked for Amazon. She worked for their seller performance team, which is the team that sort of polices the marketplace and basically the team that we have to deal with on a day-to-day basis in our account, health business seller basics there. Our account health team is constantly going back and forth with that team. So I actually coincidentally would spend a lot of time with the Amazon's account health team because also the people on that team were sort of more our age. A lot of my Microsoft coworkers were, you know, a bit older and had kids that had different different goals. And so I spent a lot of time around the Amazon table and never really thought much of it. And then after a few years, Wal-Mart kind of started recruiting me and they made me really, really good offer to move to Arkansas, which was actually really lovely. At first, I was like, I will never go there. You guys are crazy. They just kind of said, you know, we just come out and take a look. We're really trying to build out this new team. Went to Wal-Mart, I actually really liked Bentonville and I still do and we moved there and then two years into that, like, literally the day I closed on my house to live there because we have this beautiful house that right in the middle of Fonville Square, for anyone who's ever been there, ever worked with Wal-Mart or been to Wal-Mart probably knows what I'm talking about. I get a phone call from General Electric and for those of you who don't know, GE is like when you're in corporate, especially as a lawyer and especially when the New York Times refers to you as the best corporate tax law firm in the country because GE was notorious for not being the best corporate citizen when it came to taxes. You may remember them paying zero tax to all those articles. But for what I did, that was like the New York Yankees, I was like being called up to the real major leagues like this is, it was like an honor, I couldn't say no. So I had to go back up to the northeast and spend a number of years at GE. While I was at GE, we just pretty much dismantled the company. There was a, it was a very different vibe. They sold, they used to own NBC and Universal Studios. We sold that to Comcast. We got hit with this bank regulation that required us to keep really large capital reserves, which for people who understand the GE business model that doesn't work, you can't keep a lot of cash on hand. We've always got to be earning return.
00:16:51 - 00:16:53
But that had been GE finance?
00:16:53 - 00:23:07
That it was all of the GE, the entire, I was GE corporate. So we were over all of it. So we were above it, you know, we worked, I actually worked in the GE capital buildings in Connecticut at the time. But we were just kind of telling in their space, but we were technically Albany employees working at the corporate level. So we, because of GE finance, GE capital was being told that they're a bank and they have to do these capital reserves. They basically dismantled it now. And for those of you who know Jack Welch and his GE capital. And GE finance was probably more profitable than the rest of GE, right? I mean, GE started as a company that sold spitty things, as I say, like engines and turbines, the windmills, the trains, AusTOMs, we own AusTOMs, we acquired AusTOMs while I was there. And yeah, we dismantled all of it. I mean, we dismantled appliances, we dismantled, we sold that off to, first we tried to sell to Electrolock that fell apart and we sold it to Haier, which is in China. We sold off all the financing divisions including the credit card division. We spun off, it's now known as Synchrony Bank. And by the end of it, the last thing we had to do was GE decided they wanted to try to move their headquarters. They did this whole protest against Connecticut and they wanted to move their headquarters kind of the way Amazon did. They actually, Amazon borrowed our playbook actually. And we went state to state and did this old dog and pony show and ended up moving their headquarters to Boston. And it was around that time that I just kind of saw that I just didn't wanna be a part of this anymore and just politely exited stage, I did not wanna go to Boston. I didn't wanna be a part of the remainder of GE, I didn't want to be a part of any of it and I didn't really have much of a plan, so I was kind of a wanderer at that point just enjoying a bit of a hiatus in life. You know, I'd worked for a number of years. I was ready to just take a break and see, you know, do I want to go to a law firm? Do I wanna find another company? Do I wanna do something completely different? And about a few months into that I get a contact from another Amazon consultant that used to, from a guy who's doing Amazon consulting that used to work with my wife. And he asked me to write a blog post about sales tax, which is not something I really had a lot of experience in because it's not really something you get involved in. But sales tax issues that affected Amazon sellers were very rooted in US constitutional law, which is very different than just filing a sales tax return about whether they can legally require Amazon sellers to do these things. And they were trying to hold, you know, basically what was happening was states like California were saying that these Amazon sellers who'd been selling on Amazon since like 2010, this is 2017, you know, owed seven years of back taxes, basically their life savings and their whole more than their historical profit in back taxes. And that's just one state then you had Massachusetts, then you had 40 other. So these people were basically being told that they owe and it was completely fraudulent. It was completely a scam and it was completely unconstitutional. And I do teach a constitutional law course in New York as an adjunct on taxation and constitutional law. So this was right up my alley of like holy buckets and I was an Amazon seller and my wife worked for it. So it was like all this like, you know, fate was just like telling me like, hello, do this. And so I wrote a blog post and that blog post kind of went, let's say viral. But it got a lot of people suddenly had hope. Like they finally, there was somebody, you know, because the only information people were getting were from the tax filing software companies that just wanted to sell you on, you need to register your business in 50 states. And that's an insanity. Some small businesses can't afford to do that. I mean, the burden is insane. You know, to think that a business making a million dollars a year, no sorry, in sales and maybe earning about 100k in profit at best would have the same tax obligations in terms of compliance and filing as Wal-Mart is insanity. And our constitution actually has clauses, you know, this thing called the commerce clause. It sort of says that that can't happen. And so I took this sort of, seemingly contrary position, but one that was rooted in our constitutional law and that drew a lot of attention. And that's when I realized holy buckets. There's this market, there's these people out here, these real ingenuitive, intuitive, smart entrepreneurs, this whole market. I've never seen anything like this before of private label, retail arbitrage wholesale. But they're all building these massive businesses on Amazon. And I said, you know, there's this, I said this is where I had the moment of like there's this thing called the global small business. And that's where I kind of came up with this concept of like these guys are global small businesses. Because if I said to you in 1989 that I run a global small business, you look at me with like I had two heads. What is a global small business in 1989? How could you be one? Without tools like FBA and e-commerce, right? Platforms. That would seem silly. But that's really what e-commerce did was it gave us access us regular people, us normies, access to the global economy in a way that was unprecedented and really liberated us from our jobs and gave us options outside of the nine to five grind. And, and for those of us who saw it early they, you guys jumped on it. It was really impressive. But what wasn't happening was the practice of law hadn't caught up to it, right? Lawyers, service, global businesses, like the lawyer that I was, you know, my typical clients, a fortune 50 company, a fortune 10 company, in some cases, right? I never thought in a million years doing what I do, I would have clients who do under a million dollars in gross sales. But I saw this opportunity to provide that service to the small business community to sort of take what I've learned over the years, scale it and use what I call sort of the economies of scale. The fact that I kind of know your business, 90% of, you know, if you're an e-commerce, I probably know 80-90% of your challenges better than you do. Not even knowing you. Because the other part of like, what do you specifically sell? That part is not that hard to figure out, but most of the challenges these businesses face were at a high level, very similar. And people would always be surprised when they talk to me how familiar and knowledgeable I was of their business, not because I'm smart just because I've seen it 100 times before, right? And so using that sort of a cognitive scale, we were able to sort of develop ways to advise small businesses at a price point that wasn't oppressive and that was really my goal. So if that makes sense, so yeah.
00:23:07 - 00:23:13
Well, you almost democratized law for the e-commerce fraternity.
00:23:13 - 00:24:45
Correct. That's exactly what I was going and nobody was, you know, the only other lawyers I saw were solely focused on getting your account reinstated in Account House, which I absolutely hate and despise and it was actually originally planning never to get into that business. I actually hated that business. But then I realized we're actually very good at it too because we provide a level of credibility that other consultants who are not lawyers can't. And we also as lawyers have access to people in these companies that most people don't have access to, right? I mean, as a lawyer, we can trigger, you know, sort of like, you know, fast track arbitration, we can get conversation with the general counsels, we can, you know, we can do things that other folks can't. So we ended up building that business anyway, but it wasn't my goal. I was kind of like let the suspension people handle the suspension. There's plenty of work just helping people figure out how to form an LLC and whether does an Australian business even need an LLC, if their only connection to America is an e-commerce, right? Those are questions that like, I love answering and how do you structure your business? How do you, when's a good time to file for, you know, what trademarks and copyrights and just some really basic stuff that like just seem to never really, nobody was really talking about. It was boring, right? I mean and my only competition wasn't lawyers, it was legal zoom. It was the services that just sell you, you know, forms as these sort of entity mills and really can't really provide legal advice. So, and they still do better than I do because they have a much better marketing reach than I do. But for those people that wanted real understanding of what's going on, we were there for them.
00:24:46 - 00:25:45
Cool. So this I suppose almost the matrix of e-commerce law and Amazon is, it's basically a maze, isn't it? Which you're trying to help people solve in the most cost effective way. So let's wind back to how the opportunities that arose out of fulfillment by Amazon, which is used the acronym FBA for people that don't know because I have a saying about an acronym. If you see an acronym, shoot it because it's industry speak, right? So Amazon on FBA. When did that arise? And what are the opportunities out of that? And then on top of that, I'm gonna talk about what are the challenges with dealing with Amazon next. So let's look at the rise of FBA and what and your observation of it and your role in helping people with fulfillment by Amazon type e-commerce businesses.
00:25:46 - 00:31:42
I have mixed opinions about FBA because of how, not because of what it is, but because of how it came to be. But let me start with what it is. FBA in my opinion is really was the final, I don't know the piece of resistance of e-commerce of taking, helping sellers take their businesses to instant scale. If you go back to the 1990s and if you wanted to have your product on the shelves of a massive store like Wal-Mart, and you wanted like the level of logistics. And remember Wal-Mart was the original logistics powerhouse, right? Everybody, you know, go watch the CNBC documentary about Wal-Mart from 2003 or four and you'll see nobody was better than Wal-Mart. Wal-Mart had done, I mean, the weather predictor people, you know, and everything going, they were on top of logistics like nobody else. But if you wanted to use those logistics, you had to get into Wal-Mart, which means you had to go through a very big gate, right? Which is the Wal-Mart pitch room. So like little mini shark tank room, There’s literally hundreds of these rooms. I passed by them all the time and you know, and you conduct like a mini shark tank interview with these Wal-Mart buyers and trying to get your product on the shelf. So FBA changed that because it liberated commerce because it gave us scale. And my first recollection of when it started, as far as I know is they were beta testing as far back as 2008 with certain sellers, right? So certain sellers were invited to the program and then they gradually expanded it 2010-2011, they were on a big tear to get people into it. And it was revolutionary because for our clients, like I was saying, like they would do, you know, they would say I was doing 70-100 grand in sales and I did this FBA, fulfillment by Amazon thing. And all of a sudden, I'm shipping my stuff to Amazon and now I'm doing a million dollars in sales or 2 million. And I can't get my inventory in this fast enough because it, they're just moving it out and Amazon prioritized FBA because the other thing that happened with FBA is you had Amazon Prime, this two day shipping addiction in America, you know, got hooked on. So Americans wanted two day shipping with their Prime memberships. And if you used FBA, your products were eligible for Prime. So that meant you would get the buy box more if you sold a competitive product, right? If you were selling, reselling products, it means more sellers would filter on prime products only, they would pick you. So it really was revolutionary to giving ordinary citizenry the access to again, part of that liberation of the economy was the ability to get logistics for like, what five bucks. I mean, that's how much it initially cost to send a box to X FBA at 2015-2016. I mean, it wasn't very, I mean, the amount of money that Amazon would charge up front, it looks like a very, very subsidized UPS rate. And next thing, you know, your products are, you know, so you would ship your products to say your local warehouse in, let's say Florida. And then Amazon based on their predictive technology would determine, okay, you're likely to sell some of this. We're gonna need some of this up here in the northeast. We're gonna need some in the northwest. We'll put some in Seattle, put some in California. We leave some in Florida. And what would happen is you'd send one box of stuff to your local warehouse in Florida. And by the end of the week you got inventory located in five or six states, maybe 10 states, depending on, you know, where we are in time, maybe 50 states, which is also what triggered this whole tax thing that caused people a lot of pain that I was telling you that launched their career because that's what the states were sort of honing in on this idea that, well, if your inventory is in our state that we can tax the crap out of you with these fake taxes that really were Amazon's responsibility. But so yeah, FBA to me is a really important part of the story. It's also, you know, we can go down a deeper rabbit hole as part of the corruption of Amazon is how they built that network in terms of were they making shady deals with states in order to because states were well, states are, state government people are really dumb. And like with what we did with GE like what we saw with Amazon headquarters, they were doing the same thing. I mean, they would fight each other tooth and nail to say that we have tech jobs in our state and that's what they would say about Amazon. Amazon is putting a warehouse in the state and they would call it our tech company and our tech jobs, even though they had nothing to do with tech, these were just pure warehouse jobs. States wanted that pinochet of, you know, look what we did. We brought Amazon here and they're bringing 500 good jobs or a thousand good jobs or 10,000 jobs and they're building a warehouse and that's what the states would fight over and they would compromise their morals and their tax rolls and their legality. I mean, they were making deals with Amazon that were straight up illegal in terms of the effect of what they were doing, for example, they would not require Amazon to collect sales tax on the marketplace even though from our perspective, that's Amazon's cash register. So they were basically Amazon was calling itself a marketplace to avoid sales tax. Now, why were they trying to avoid sales tax? Not because it lowers their tax bills. Sales tax is something the consumer pays, they just collect it. But what sales tax avoidance does for Amazon is it allows them to undercut competition. Because if I'm buying a $10,000 camera lens from a camera store, I'm gonna pay seven, eight, 9%, 10%, 12% on the state sales tax. But if I buy that same camera lens from Amazon, I saved that seven, eight, nine, 10%. So that could save me $1200. And how much is a Prime membership, by the way at that time was 79 bucks. So I was saying the first 10 years of Prime, most of these states were subsidizing our memberships because anyone with half a brain in the USA knew that they would get more than their money back by buying from Amazon in terms of sales tax saving more than enough to cover the cost of Prime membership. So there was some real shady stuff going on. I think I could do a whole crime story. We've had lawsuits about this. We've gone off on this a lot. Anyone who googles me and looks at my old YouTube from 2017, you'll learn all about this. But it's really fascinating how dirty this all was but this is what led to the FBA network being built and the ability to have that scale.
00:31:43 - 00:33:00
Yeah. What's interesting about the, when you talked about Amazon with FBA taking over or basically challenging, what was Wal-Mart’s monopoly on a fight for shelf space. In other words, these people trying to get on the shelf of Wal-Mart. So that's the old game, which was basically a producer, a product, sorry, a producer, a product having to fight for shelf price or even buy it. So, yeah, whereas now basically we've moved into Amazon providing virtual shelf space but also being able to. So in other words, you're going from real physical shelf space competition to virtual shelf space competition and then that raises another thing which I'm intrigued about and I'm sure you've experienced as well is essentially how do you get, amongst the millions of products, how do you get your product visible on the virtual shelf? And what shady deals maybe were done or how it's done today? I'd be intrigued by how that game is played to become visible on Amazon on a virtual shelf as opposed to Wal-Mart’s physical shelf. Tell us a bit about that.
00:33:01 - 00:37:30
Yeah. And the thing that I was saying about Amazon, the other innovation they did. And as we get into that is their model, right? So with the Wal-Mart, it's a traditional retail model. They buy your inventory. Typically, you may have to buy it back, but they buy your inventory. Amazon, they became the everything store by saying we have enough space in our warehouse to store your stuff. We'll charge you a little bit of rent for the time it sits here. But really, it's a consignment store, alright? The FBA concept is really a consignment store, right? So you're not, Amazon's not buying anything, right? You're giving them a sort of like an interest free loan to hold your inventory until it sells and they're charging you the rent for the space. They're charging the fees for the processing. So it really wasn't intuitive model because now they could, they didn't care. Yeah, you want us to stock, you know, a part for a 1991 sub 900 that 10 people will buy. Sure. That's what you want us to do. We don't care. It's consignment. You pay the rent, you put the state, put it in there. but today you're right, it is a fight for eyeballs and it is dirty. It is a dirty game. At times, you know, first you've got the PPC advertising which I say is sort of akin to buying the end cap, right? And our traditional retail store, right? So those of you who don't know if you sell it at Wal-Mart, if you have a, let's say the Avengers comes out on DVD and they want to put it at Best Buy and they want it prominently paced. Best Buy charges for that space, right? If you don't pay Best Buy to have your product directly or Wal-Mart or Target to have that, you know, product either placed right in front of the front door when they walk in or, you know, prominent display in the electronics department, you're just gonna get thrown in the back shelf like they're, you know, they, these retailers charge for prominent display and that's kind of what we sort of say, see about pay per click advertising with Amazon or PPC to give the analogy, is what that sort of become. It's another way to sort of get things in front of people's eyeballs. And that has become a, you know, but the, but, you know, people think, you know, Amazon is the biggest advertising company in the country and I'm like, it really is just margin erosion, right? If you look at it the way I look at it's just, they're just, it's just another way for Amazon to tack on fees and erode your margins by making it seem like it's advertising, but it's really just like, you know, Amazon could just as easily have the business model of saying, hey, we'll move 500 of your units if you're willing to give us this much of a cut. You know what I mean? Because they have the day to do that. But rather they kind of create this sort of bidding market where people are just fighting over themselves to get visibility and it's hard, you know, there's certain areas where it's really hard if you were to launch, let's say I've been told a pet supplement product, you may have to spend a million dollars in pay per click advertising before you get any traction on Amazon. You drowned out. The other issue is, you know, sellers overseas, especially in China where you're doing, basically, it's factory direct and you got a couple of things going on. You've got subsidization at the, you know, probably a legal subsidized, you know, question legal subsidization by the China government. Basically saying, you know, any dollars you bring in, we're not gonna tax. So just keep bringing those dollars in from the US. That allows sellers in China to truly undercut American sellers so they can sell at lower price points and then take higher and do and spend more money on advertising because they will take a much, much thinner margin. And they will do that to the point of domination to the where they, you know, if you were to look up like ink cartridges, that's sort of the classic one on Amazon. The first, I don't know, the first, like five or 10 pages are just all sellers in China. Like you're not going to see an American seller for a mile, right? It's all just different factories, with each other at this point. So it has become a bit of a, you know, I wanna say it's a scam. It is what it is. I mean, that's the way you have to get it the way you have to be visible. The way Amazon lets you guys fight it out over. But it wasn't the way, you know, go back to the early, earlier 2017, 28. There wasn't even PPC on Amazon at the time and it was just a different model. It was more driven by search and by rank and Amazon has been accused of also making their page results look organic, but they're really just paid ads like they don't do a really good job of distinguishing sponsored ads versus, and you find one of the things the FTC said in their recent lawsuit against Amazon is that the quality of the service is degrading due to Amazon's monopoly because they literally just can fill their front page up with ads before they ever have to, you know, show you an organic result. So it's kind of diluting things and diluting the experience. But people don't seem to mind because they keep shopping.
00:37:31 - 00:37:47
Yeah, it, once you start diving it becomes almost a cesspool, doesn't it really of anti competitive behavior basically where they just continue ad fees and disguising it however they want in the best way possible for them.
00:37:47 - 00:39:51
Yeah. I really have a hard time shopping. I mean, I'll be honest with you as an Amazon lawyer, I actually don't shop on Amazon as much as I used to. I got concerned and it's not a political thing. It's not, it's just, I know too much, you know, I've seen too many things. I know that there are, you know, our products out there that are being marketed to kids that have not gone through the appropriate testing. I know that there are people who are faking documents saying their product doesn't have dangerous chemicals in them trying to get away with something and they should be in the warehouse because they could kill people and they're there. You know, and we've seen just some awful stuff and, you know, I just, I don't stomach it. I can't stand, like I can't, I won't even buy branded products because I don't even know because I know all about the counterfeits and I know all about the diversions and I know all about the, you know, the fact that like when you go to a store, you know, when you go to Target in Australia because I think, believe you have a different version of Target than we do, right? And you buy a Gillette razor, I think you're pretty confident that Target is buying that from Gillette. Is that fair? Buy that at Wal-Mart here. We believe that Wal-Mart. But when Amazon don't believe that, like if you think you're buying a Gillette razor, even if it says sold by Amazon, if you think that that's necessarily coming, you may be surprised, it may not be right? I mean, Gillette maybe it is, but there are a lot of branded products, right? I know client, we have clients who do that, they sell on the vendor central platform and you think because it is sold by Amazon, well, at least that's real. They're just literally storing this stuff in the garage and shipping off to Amazon on their behalf. I mean it is just a platform. I just don't love to shop on it. It's a very few brands. Like there's a few brands where I know who the sellers are and I know that they're doing it. I know they're sophisticated. There's a few brands that I'm fully comfortable buying, but I rarely shop at Amazon these days. Just this job has basically taken the wind out of my Prime account. I'm more interested in having a Prime account now to watch, what's that guy? Jeremy.
00:39:52 - 00:40:20
Ryan Reynolds or something with the Wrexham or whatever. So, the other thing rumor had heard around the traps was that Amazon watch is what products sell well. In other words, the niche sellers they come in so they do boutique tease or whatever it is and they create a marketplace and Amazon sees what, because they've got all the metrics, they've got all the data and they're going, this is there some product and they go and do it themselves. Is that correct or not?
00:40:20 - 00:48:02
Yes and no. I mean, this one, I think, and this is a bit of a red herring. I've spoken to some antitrust experts about this is certainly the premise of our FTC chair, Lina Khan, one of her points is that this is certainly something Amazon was likely doing and 100% they, there were evidence that they were doing and 100% I have clients friends who've been a victim of this like they went in and they sold a product. It's really, well, they were an early adopter. They built this market. Next thing you know, there's a seller, basic product. Amazon is deprioritizing them, prioritizing their products instead over it on the search and just totally manipulating the ranks. I mean, Amazon definitely has that ability to do that. Do they do it now? I don't think they do. Did they do it to the extent that I think it gave them a huge advantage? Probably not like, I honestly, because if you look at the numbers that just the, you know, in terms of how much Amazon sales are, you know, 200 billion, just on the marketplace side alone, another 200 billion on the Amazon side give or take, that's probably like 2019 or 2020. I don't remember what the latest numbers are but somewhere in that ballpark, right? If you look at the number, the amount of money they make on private label, Amazon branded products, it's not that much, you know. So did they hurt people? 100%, there were some bad actors that hurt people. Is this the thing that got them their dominance? 100% no, it's a red herring and then I actually think they like this issue because they're so easy to disprove. They can say, look, if you take out batteries and clothing, like basic clothing, our private label business is literally nothing, right? And nobody's gonna argue about batteries. Now, the other thing that's interesting about what they did though is how they defended it. This was really fascinating to us legal nerds because remember up from when I started my Amazon practice up until about mid 2019 when you had the first Amazon before Congress congressional hearing on antitrust. Amazon always said that they're a marketplace. They're a flea market. They're not a store, right? When it comes to the marketplace. And we always challenge that because we always thought that was BS because we're like, it's the same cash register. Like if you were to walk into your local Target, right? And buy something. And they said, well, we're not collecting tax on that because we're not the seller. We're just facilitating the sale on behalf of the seller who's in China. Would you buy that? Would the Australian government buy that? Absolutely not. Would the American government buy it? Unfortunately, the States? Yes. But they did the same thing with injury, like if somebody buys a product, this is the Oberdorf case something they worked on a couple of years ago. And this is the first case to challenge the notion that Amazon is not a flea market and win. What happened was a woman lost her eye after a dog collar broke apart. She tried to sue this, you know, the sellers were in China somewhere and they’re unreachable. So she had no remedy. She has nobody to sue. They sued a, you know, they went to Amazon. Amazon says, obviously, it's not our fault. We're just a marketplace. Well, this was the first court case where we got the federal courts to kind of rule. No, actually this is your store. Stop the nonsense. You control everything. It's your, like we're always like the Amazon seller the third party doesn't even know who their customer is anymore. They don't even know the name of their customer. So how is it their store? What store do you go to where you don't know who your customer is? And how is that your store? Amazon sellers are suppliers. This is something that we've tried to explain. You're not really sellers in a store, in the sense of retail, you're suppliers to Amazon your consignment suppliers in Amazon's consignment store, right? And that's how it's supposed to work. So Amazon became accountable for these things. And, but it was always there, you know, to the nth degree they would argue to you to your blue in the face, to the blue and face that they are not the seller, that it's not their store. They're not responsible for the sales taxes or VAT taxes. They're not responsible for personal injury, they're not responsible for intellectual property theft because they're just a marketplace. And that's, you know, like any flea market, you go after the individual stalls, not the market, market itself and the courts kind of said that's nonsense. But what was interesting was during the antitrust investigation, Amazon flipped the script, they said we, they started referring themselves as the Amazon store and the sellers as their selling partners. And when you ask them the question, when they were addressing the question of, well, what about competing against sellers what you just described? Their response is really fascinating. They sort of said, you know, like any other retailer store, we, you know, reserve the right to make like store branded products. So we have Costco in the US. Costco is very famous. People love their store brand. It's called Kirkland, right? When you go to Costco and you look at Tide Laundry Detergent, the big red bottle right next to that is a very similar looking bottle, it says Kirkland laundry detergent, right? So that's the store brand and it's this fabric softener, there's a blue bottle, there's a for Snuggie Snuggle whatever. And then there's the blue bottle for Kirkland. And what Amazon is trying to say is that's old school sanctioned retail behavior to have a store brand that competes with others and to use the data that's available. However, Amazon also says we never use the data individually. They said we make our data available to the public, which is true. So there's software like Helium 10 out there where you can go online and get a lot of data about your competition because Amazon wants competition to pile and they don't want one person to dominate. They want competition, they want their data to be public because they want to send a bat signal to China saying, hey guys, this American guy or this Australian guy or this British guy is making a killing in this product. If you guys come in and undercut them, you can bring our prices down and that's good for the Prime member and that you have to understand. Amazon cares only about the Prime member. They care that the Prime member perceives that Amazon is where you go to get the best deals. That's why Amazon will not let you advertise. And this is something that the Antitrust Committee, this is the main essence of their case is that one of the things Amazon does is if you advertise a lower price for your product on a website than you do on Amazon, Amazon will shut you down. They will block you, they will make it so hard for people to find and buy your products because in their opinion, nobody should be lower priced than Amazon. And if you're pricing lower on other websites or on eBay, that’s violating policy. But the reason why people do that is because the costs are lower, it doesn't, the fees are less on eBay, the fees are less on Shopify, so they're arguing. So what the sort of, what the argument becomes in the sort of price fixing element of the FTC lawsuit is that because the, obviously the Amazon seller is not going to be in a position to lower their price at Amazon, it only leads to one thing raising their prices on eBay or Shopify to be in parity with Amazon. And that in effect is a sort of a turns into a price fixing thing. So, that's what we noticed is that, you know, Amazon saying things like this is our store and that was mind blowing because again, we have Amazon now under oath including Jeff Bezos about a year later, the same thing saying under oath that this is the Amazon store. We're not a marketplace, it is our store and we do what other stores do like Costco and we use data the same way Costco does. And it was really, really amazing because Amazon's entire tax fraud was based on the premise that they are absolutely not a store which they also said under oath in a case in South Carolina, right? And in many other instances and they, the same thing under oath when it came to people getting injured by Amazon's products that they sold in the marketplace or when it came to property theft. So this was a real 180 where Amazon sort of speaking out of both sides of their mouth saying, hey, we're a store for all these other legal purposes so we can avoid liability. But when it comes to antitrust and possibly being broken up, and of course, we're a store. We have our store, we're no different than Wal-Mart, we're no different than Target, we're not even really that big. If you look at us compared to Wal-Mart, we're actually not even that big a store. So that's what we are today. That's where we landed. But this sort of paradox of nonsense.
00:48:03 - 00:48:34
Okay. So let's talk about, in terms of, I was gonna say about Amazon's fulfillment. But you get involved in basically helping FBA or Amazon stores sell and get acquired. So they build up a business on Amazon. Tell us a little bit about the experience of building a store and then your role in helping sell it. And also the rise of the aggregators that went and bought a lot of Amazon stores. Let's talk about that.
00:48:34 - 00:56:11
Rise and fall. It was a fun ride. So, again, having a, the background I have and being through all sorts of transactions, complex tax stuff, complex business stuff, right? All of a sudden we noticed in our firm as we kind of pivot to different issues that there was this uptick in the need for assistance with acquisitions. Now, we are not brokers, we do not value companies. We do not get a commission for our clients when they sell their business. We charge our rates and hours which is usually vividly compared to the commission, some brokers charge and sometimes well deserved sometimes not, right. But, you know, we are aware but we do provide objective analysis. We don't, you know, so if people are getting puffery from buyers or from brokers, you know, we provide a sense of like calm and real data, right? Because I can go, you know, in the height of the aggregator bubble. And for those of you who don't know what an aggregator is during, starting in 2019, but really peaking in 2021 there was a massive bubble caused by a company called Thrasio. And Thrasio was one of the first, although not the first but one of the first consolidators of Amazon company. So their idea was we can buy, it doesn't matter what, doesn't need to be a synergy. It could be, you know, this, somebody selling this pen and somebody selling these earphones assuming they weren't not apples. It doesn't matter, we can take all these various listings on Amazon, we can acquire them and through economies of scale, basically run them at a much lower, at much better margins. We can juice them up by investing using money that we get from investors to invest in PPC. So we can scale them up. And that was the idea. So they were gonna buy brands for three four X multiples, meaning four times their profit or five times depending on where we are in the bubble, sometimes six or seven and scale it up and within a year to 14 X or 30 X and they had all these grand ideas that they could do this really no clue what they were doing. But they thought they could do it and money being particularly dumb, you know, just, it's amazing how much dumb money there are. They just got tons of companies to invest in this. And before you knew it, Thrasio was a unicorn AKA billion dollar valuation. And what happens when somebody becomes a unicorn? Copycats. So then you had copycats and all these other companies were coming in. Now, all of a sudden you couldn't acquire the company for three X, you had acquired for four X or five X because the competition was coming in by the end by the middle of 2021 we went from having like one or two of these known consolidators in 2019 to maybe about 10 or 15 in 2020 to over 100 and 2021. There were companies that would give you a Tesla Model X if you referred your friend to them. So if you had a friend who had a multimillion dollar Amazon business and you referred them to a buyer, there's one, it's called Acquco, google it, if you don't believe me, they were literally getting, it was in the news. They were literally giving you a model X as a finder's fate, right? Obviously, as a lawyers, we would never take something like we can't do stuff like that. And that's part of what we did, you know, we provide a little of objectivity because we have to, we can't take incentive from obviously anyone but we just get our rates and hours from our clients. But it was a nutty bubble. It was crazy. And we were telling our clients so sell sell sell, man. This is not gonna get any better than this and it really didn't. I mean, our clients got really great rich clients who wanted out, got out and they got great deals. A lot of them were promised these things called earn outs or they were promised, you know, stability payments, none of that ever happened. But we told our clients that that would never happen if you're never going to see any of that money. But if you're content with getting five X your multiple, five X multiple in terms of closing cash and you think that's a great deal, you should take it and just roll the dice on the rest and see if you get it or not. I mean, that's their call at the end of the day. But that was always our advice. Like there's nothing we can do contractually to guarantee because the contract doesn't make money grow on trees, right? You can't draw blood from a term, turn up. Yeah, am I saying that right? So yeah, we, as long as we gave our client, yeah, they were happy to do it. Anyway, they all pretty much failed and collapsed over the course of the last two years. So now our M&A market, we're still busy in the M&A space. But what I say is like volume has come down. We're not doing nearly as many deals as we're doing in 2021. In 2021, we did a quarter billion in one year. I doubt we've done a quarter billion. I certainly know we didn't do a quarter billion in the fall in 2022. But maybe collectively, we've done another quarter billion since then. I think that's where we're at about maybe that even over, but that's been, you know, two years, right? But what we've noticed is the volume of deals have come down, but also complexities come out, come up because what we saw in these deals was massive, just due diligence, failures, nobody wanted to do due diligence. Everyone wanted to just move, move, move, move, move. They were like we're gonna send you a letter of intent and we want to close within 30 days, which is sometimes very dangerous. Both from a buyer and seller perspective because the risk profile of the deals were really bad. And that's really my job in the deal is why I tell my clients is like, I'm your risk navigator. Because if you read these contracts, when you first get the purchase agreement, some brokers will tell you it's just like buying a house, just sign the dotted line. It's not a big deal. This is boilerplate. I love that. It's boilerplate. You know, what else is boilerplate? The cockpit of a Boeing 747. It's boilerplate. What good. What does that mean? You still have to know what the switches do. If you don't know what the switch is doing on a Boeing 747 you're still screwed. You know, you're gonna have a lot of problems. So, you know, to the extent you, you call that boilerplate. Sure. I guess it's boilerplate, but the switches were all set for kill mode in terms of these aggregated deal because they were set badly. So we're paid to basically undo the dials, dial things back and negotiate what we consider a market deal with a reasonable risk that's appropriate. And we had to fight with these guys. But if you were dumb enough not to lay up and just listen to your broker and sign them online, you were inheriting a ton of risk. And what risk am I talking about? The risk that they might actually sue you and try to get your money back, get their money back from you. And that risk is real because it wasn't like, you know, people say, well, why would they do that? If they sue me, then nobody would ever sell them ever again. Well, I'm saying they're not suing you when they're doing well, they're suing you when they fail and when they fail. It's probably not them suing you. It's probably their private equity investors. It's probably really angry people, it might be in bankruptcy but people are gonna go through those contracts and find claims against you if you sign something that awful. And so that's kind of what we did is we helped our clients really negotiate that risk process and sort of make sure that the deal was fair to them and that they weren't inheriting a massive ton of risk going forward. That's, but what we noticed in that process too is the aggregators were not doing their due diligence. They didn't care, they didn't have time, you know, time killed their deals, right? That's an expression. Time kills deals. It's true. It's why they hate lawyers, why people hate us because we slow it down. We raise questions, we tell our clients it's not safe, they hate us, right? The buyers hate that. As the brokers, right? We're not the favorite person at the party. We're kind of the buzzkill sometimes. And that's kind of what we saw was just a massive failure. And these aggregators like were buying really toxic stuff and they weren't doing due diligence. They were literally buying kids products and not even realizing that these products were subject to, you know, consumer product safety regulations that needed to be tested and have, what testing, they didn't care. You know, and where they buy products that need to be FDA, that are subject to FDA regulations and they weren't even FDA registered, right? When they should have been and they didn't even know nor care. They just wanted to buy the thing because according to Amazon this is what it was selling per month and this is how much money it was making and they thought they could 10 X it, you know, they were like all Grant Cardone, they could all 10 X everything. And I'm like, you know, it was nuts.
00:56:11 - 00:56:34
Yeah, the thing as an outsider looking in on these aggregators, I'm going. So they're all coming in and aggregating all these Amazon businesses, which at the end of the day, a lot of them are still specialty because you've got to know your market. You've got to know this. It's a black box, buying a black box and they're buying a hundred black boxes without any due diligence as you just mentioned and it's like no wonder it blew up.
00:56:35 - 00:58:36
Oh, well, there was more. So, there are a few aggregators floating around today that are doing better some than others because they got a late start. So they get the benefit of hindsight because there was another thing, there was hubris. These aggregators literally thought that they could run these black boxes better than these actual sellers. They literally thought that these sellers brought nothing to the table. This was all an autopilot. All they needed to do was just amp it up. More ad budget, more inventory, scale it up. That's all they needed to do. And they quickly learned that they were in and over the heads and they couldn't do that. And so what they would often do is they'd, we'd have these sort of, you know, ongoing consulting agreements, right? Transition services agreements type stuff. And they would be so basic, it'd be like you promised to give us four weeks of your time up to 20 hours a week after that, we'll need about 50 hours over the course of a year. I mean, 50 hours over the course of a year. But really what they would often do is they would just be like, send you off on the beach. They'd be like, no, just, you know what? Here, they'd even give our clients, sometimes they would send our clients like a suitcase and a pair of headphones and some cool stuff and then buy them a trip to Tahiti and just like, literally send them off because they didn't think they needed them. So it was real hubris too about their ability to run these black boxes without the actual owners not appreciating the hustle that went into creating it and getting it to that point, they didn't have no appreciation that they thought they could do it better. They were dead wrong. So that's what some of the newer aggregators that we see today, they actually want the sellers to stay on for two years. It's not really an exit anymore. It's more of a, just an advanced buy out. You know what I mean? Like, you still hang it all on. You're part of a master. They'll make you part of a mastermind with other sellers like they do that. This is a very different. So they said that we do deal with aggregators. Not many, not that we do that much anymore. A lot of the buyers who work with their private equity family office. And then I quite a lot of just random people, small business people or people who want us to want to buy instead of, you know, buy then build as they say, as opposed to starting from zero. people getting government business loans just, there's a very different market today than it was very trouble.
00:58:36 - 00:59:12
Yeah, like you said, there was a lot of dumb money chasing, you know, chasing. And a lot of hubris involved in terms of we think we can do better than the guy that actually built it. And also the people giving the aggregators the money just going, oh, we can make 20-30%. That's where danger happens and that's where disaster happens is that it's basically, and I just heard a great quote the other day and it was from Buffet. He's saying that people with patience, take money from people that are impatient.
00:59:13 - 00:59:17
Yeah, I believe that. I feel like, I hope my patience pays off then.
00:59:18 - 01:00:00
Yeah, cool. I hope I don't want that. So let's just wrap things up. I'm going to ask you a question shortly. A couple of questions. Number one, what brings you joy either in business in life and number two question, I'm gonna ask you to wrap it up is what pain and suffering have you had in life that's taught you some big lessons or a lesson. So they're the two questions I'm gonna wrap with before I do that. So I'll let you consider that in the back channel of your mind. And what I wanna know is where do you see the Amazon FBA businesses heading? Where's FBA heading in the future? Where do you see it heading?
01:00:01 - 01:02:47
Okay. It's a tough question. Okay. The first one was what brings me joy. Honestly I get a buzz off of helping our clients. I get off, I get a buzz off of winning. I did not, you know, I didn't grow up super like it wasn't like a family, had private jets or anything like that, but I certainly grew up, okay, like I like my dad was a doctor like we never really, you know, there was like a moment. I remember when I was 13 where he's like one of his partners, like rated their pension fund and it was a whole thing. His whole practice came to a halt and there was maybe a few months where he had to start his own business and was a little scary, but that was like very short and I was helping them build their tech and I was a tech nerd, but that was about the most amount of, like, adversity I experienced in terms of like economic adversity. I mean, I've had other issues, you know, of a parent who had dementia and probably was, had some other issues growing up I didn't realize. But, to be fair, I've had a pretty good upbringing and I value things different. I had this conversation a lot with my clients when they close and they get these, you know, especially like, you know, I've got a Romanian guy who's, you know, from Romania and has, you know, went from being like, you know, the average Romanian income to, he's a 10 millionaire like the Prince of Romania. And we have these conversations about like wealth and accomplishment and I just have a different tact on what brings me joy and I think I just crave stability, I crave consistency, I crave a family. I crave, I don't, I just like the status quo. I don't like beyond that. I don't have like, I've never wanted a Lambo, I never wanted a private jets. I've never wanted anything. I don't want those things. I just wanna have like that and I really get a buzz off of helping people and people see that for me. Like, I like the win more than I care about the money. I just like the wind. Like I just crave that. That brings me joy just being right. I guess I'm just somebody who has a real, I'm a real pain in the ass. I like to be right a lot. And as a lawyer I did that, I guess I seek that validation more than I seek financial because like I said, once you get to a point in life where you've achieved, like where you don't have to really worry about money that you don't need to have a ton of it. It's just like, once you don't have to worry about it anymore, I feel like that's rich to me. Like that's really good, you know, and people who crave, you know, the dumb TikTok lifestyle, I mean, good for you if that brings you joy. But I just think in the long run it probably won't. You're missing the bigger piece of the puzzle and if you appreciate how lucky you have to be to even be in a position where you don't have to worry about money in your life anymore. You realize that is rich, that's all you need. You know, and so that's where I get joy. I don't know that that's some personal stuff, but I guess that that's what I think. Next question.
01:02:48 - 01:03:26
So the next question was along the way, they maybe had some, you know, some challenges in life that might have been minor. But what have you because a lot of people see, especially in the western world, see that suffering’s abnormal. It's a negative of happiness. In fact, it's not, it's actually, I think sometimes we're gonna welcome. It does have to be big suffering, but you gotta see the normal ebb and flow of life as being an opportunity to learn. So, is there any challenges you've had along the way in corporate life or business life that you've learnt a lot from?
01:03:27 - 01:07:50
Yeah, I mean, I've learned a lot from a lot. I mean, there's so many different elements of adversity in terms of my life. Like my first job at a college was completely just a health disaster. I mean, I was working a hundred hour a week. I wasn't seeing my, I was, it was in a state of dark depression like that billable hour lifestyle killed me and I didn't know a way out. There was no way out and it didn't pay very well and it was just, it was brutal and it wasn't until I, and this is where I learned to love the nine to five. I mean, especially when you're nine to five is a company like Microsoft where like it's just bloody utopia in terms of all the benefits that everybody gets just for being there. I just learned to appreciate, again, just time more than the money and just having that is a freedom. Again, having a parent with issues growing up is, you know, sort of coming looking back. I definitely struggled with dyslexia when I was a kid and I never got diagnosed because when I was a kid, if you, if that was how you got diagnosed, you were dead, you weren't gonna, they were gonna just put you in a different class and throw away the key. And so my parents were afraid to actually come forward and say anything to the schools because they just, we weren't built for that. There was no getting extra time on the test. None of that stuff exists the way they accommodate people now and I'm so glad that they do. I've been screwed over by partners. I've been screwed over by business people. I've been screwed over, you know, I learned that lesson over and over again because I'm a nice person. Like I'm genuinely trying to be a nice guy. I try to, I trust people more than I should. And it's funny as a lawyer, it's always like, do, as I say, not as I do because I'm, half the stuff I tell my clients to do is like, do I have time to do it? No. But I mean the adversity it happens in all ways. You know, there's adversity of fighting the biggest tax fraud in the history and trying to just get, you know, I've been in the news a lot but we've never really told the story of the biggest tax fraud in the world and I've talked to see, I've had dinner with reporters and they've told me it's not your fault. It's a good story. It's just that we live in a world where the attention span is two seconds or not even a split second. We can't, it's in your story is complicated and we just can't go with it. And so that bothered me, you know, having this real story that a lot of people were experiencing a lot of pain, right? I could, you know, Google some of the cases we worked on and the people who've been hurt it, it's unreal. And having to sort of shoot bear that burden of people calling me up and saying I'm gonna lose everything and but, you know, adversity happens everywhere, but it all happens, you know, the displacement of GE, like I said, I could have stuck with GE but I was really just over, but I didn't have a plan for what I was going to do next. I left with uncertainty, you know, and that was the craziest idea in the world. People thought I was nuts. How dare you leave a job without another job because that's gonna create a gap on your resume. And, like, I believe that stuff, right? Like, I'm like, this is risky, but I'm like, I just didn't want to do it anymore. I just wanted to take a break. And I'm like, if I haven't established my own credibility in my field at this point where I can't take a break and just go check other stuff out. Then this is a stupid world. And that was kind of how I just like, I just went for it. But it was scary at the time for me because I'm going from fairly high income jobs or to, I don't know what's next. Well, will there be another high income job for me? Will I be forgotten? But I just, you know, so, but, you know, the adversity is there. It's just not as obvious, it's not as a parent. It's not, you know, a lot of people I meet the adversity is like, I was excommunicated from my, you know, I work with a lot of folks who used to be orthodox Jewish and they got excommunicated because they didn't go along with it or that they lost a ton of my clients I met were lost to the financial crisis. They lost a ton of money, they lost their jobs during the 2008-20009. And they built back from that kind of huge adverse. I didn't have that. I don't have that direct moment of like, pure pain that motivated me. Like I said, this was kind of an accident but, you know, there's been adverse. But I think, you know, there were elements of adversity along the way and I think also I'll be frank even though I was well paid and my job, these corporate jobs are good. I was bored. There were times I had ideas, you know, I'm thinking, could I just start this company? You know, I was a little bored, you know, at times, but it was, it was cushy and sometimes being cushy is dangerous, right? It can restrict you. And I'm thankful I was able to break out of it because, you know, as much as this job kills me and I work nonstop and it's a different lifestyle. I'm proud of what we do and it's a lot of fun.
01:07:51 - 01:08:11
Well, I think so what you said about, that you, what brings you joy is helping other people succeed and getting success for them, which really comes down to the fact that you get satisfaction and joy and happiness out of helping other people effectively.
01:08:11 - 01:09:07
When you save a business, you know, when you save a business from utter destruction, which happens on Amazon all the time when you deal with account health,right? I mean, these people call you up in moments of desperation. We're often times we don't advertise a lot. So a lot of account health services advertise time. We don't, people come to us as like a last resort. Like they heard about us through a friend of a friend. Like, what can you do? And they're surprised we can do quite a lot because we have different tools or disposal. It's a good feeling, you know, I had a guy come to me two weeks ago and his account was just hacked by folks. They cloned his number, they pulled his stuff. He hired a forensic, you know, internet investigation team to try to and this guy doesn't have that much money. So it was like, I don't know how he's affording this and, like all these things, like, within two hours I had him back into his account at Amazon. It's just that night you buzz off that. It's so much fun to be able to help people get that kind of result because it's nice to do those things. It's nice to be known for helping people in life, you know.
01:09:08 - 01:09:36
Yeah. So by chance you ended up discovering your life purpose to help people with the skills and expertise that you have, which I can see you're passionate about it and you're damn good at it, which is just it's great to see. So Paul just anything that you'd like to say to potential FBA sellers or e-commerce stores before we wrap this up.
01:09:37 - 01:13:14
Yeah, this isn't a plug, but I'm gonna tell you about my service called SellerBasics because there's one thing I love about people actually don't value this. So SellerBasics does two things. It gives you access to account house. So if something happens to your Amazon account, we cover, it's almost like insurance. We kind of use an insurance model because what we noticed was people get their account shut down, usually get hit up for like $1000 bills. Like these accounts suspension consultants was like, you always find, you know, because they're one trick ponies, they have nothing else to offer in life, but they're supposed account health services. We're a law firm. I mean, I invest in my clients. I want the exit, right? I have clients who spent a lot of money with us doing their exit, who I'm for $10 million exits that I knew when they were doing less than a million dollars in sales five years ago. We invest in our clients, we believe in their future. But there's another benefit to seller basics. It's called the Free Attorneys Counsel because SellerBasics is not a law firm. But it partners with law firms like mine and with that you get a free consultation with lawyers. And the purpose of that is basically something that I believe in is that most of our clients make really stupid mistakes that are very preventable. So when our clients in trouble I look back and say, God, I wish I knew you before you did the thing you did. If only you could have called me and we chatted for 10 minutes before you did the thing you did, you wouldn't be in this really bad situation. So that's why it was important to me to figure out how can we offer the cheapest consultations possible like $100 a month and you can call us up anytime there's an emergency or you have a question, it's $100 a month. It's two bucks a day after you deducted for taxes. If you are going to start an Amazon business, you need something like this in your life. You need to have a lawyer by your side and I'll tell you why because a lot of people are getting scammed out there. There's this whole thing right now called Amazon Automation. Our phones are ringing off the hook. People are being told that they can do passive income and Google this, read, watch these videos. You get passive income that they only have to invest $40,000 to buy their Amazon $40,000 to buy the Amazon store. You can open up your own Amazon account for free. It's free. Just put the Amazon Seller central account. They're charging you 40 grand for the Amazon store, another 10 grand to ungate and then you're selling these products. They all so far, the old ones I've worked with have seen the clients coming to me. They're all bullshit. They're all partner. They're all scams. This is an example of something. If you're gonna get into this business now, it is so riddled with fraud at every corner, you need a navigator and for $100 a month, I don't know how to make it any cheaper. I will tell you this. I don't make a dime off $100 a month. We don't make any money from it. In fact, we don't even receive the money. It's something we do as a courtesy. It's sort of like lead gen that, you know, we'll work with some of these clients in the future and that'll be a great relationship. But don't do it because we make, because a company that I own, you know, receives funds to pay people so that they can do the things that they can do, do it because you need help. But if it's not our service find somebody to help, find a lawyer, get help because it is scary out there and I don't want another person to be subject to $40,000-50,000 losses because they fell for something or they bought inventory off of some supplier who's actually now under investigation for selling stolen goods. And as a result, that person can't get their money back from Amazon or their inventory, it's all frozen. These are real stories that's happening. There's a lot of fraud out there so get help. I'm offering you a very cheap way to do it. And it's not because I, this is not an advertising because I don't think again, we don't really make money on this program, but we just, I just help people get, you know, run it by us. So before you do something, you know, if you're gonna spend 40 grand, spend a hundred right? You know, box and make sure that's what you really want to do.
01:13:15 - 01:13:27
I think that's great advice and quite often just yeah, preventing it before it happens rather than in hindsight is much wiser.
01:13:27 - 01:13:30
Prevention is better than a pound of cure, right?
01:13:30 - 01:14:03
Exactly. Prevention is better than cure. Paul, thank you very much for sharing your wisdom and experience. It's been an absolute pleasure. I've learned so much and we're gonna share this with our YouTube channel. We put it on all the, you know, Instagram Reels, YouTube Shorts as well as, and we're using AI to do that as well. So, and even TikTok, we're using AI to carve up the video into little snippets of wisdom. So hopefully people because as we know attention spans are very short these days of like really like a goldfish.
01:14:04 - 01:14:11
Oh Yeah. Sorry. Yeah, you were saying something about the attention span, sorry. Yeah. Sorry.
01:14:11 - 01:14:27
Yeah. So we create videos that we can serve up to people to have the attention of a goldfish which is seven seconds and a little bit longer. But so thank you very much for your ideas, insights and wisdom's been fantastic. Thank you very much.
01:14:27 - 01:14:57
Absolutely. Thank you so much. And, and let's check in some time because the next thing on the horizon is I call it t-commerce or TikTok commerce. That's the biggest thing now that people are trying to figure out is TikTok gonna do something is gonna take because this idea of going from influencer to consumer and bypassing Amazon, TikTok is building their own FBA, fulfillment by TikTok. It's all happening very, very interested. This is where I'm, where my mind is heading right now in terms of what does this mean. So sure, next time around, hopefully we'll have some more insight on that. We can chat about that. So it will be interesting to see.
01:14:57 - 01:15:04
So maybe our next chat we have is about FBT, fulfillment by TikTok.
01:15:04 - 01:15:07
They just launched a marketplace like a month ago.
01:15:08 - 01:15:17
I've heard of it, but I think we'll take a deep dive. Thank you for the tip and I think we may have another conversation a year about that and have some fun.
01:15:17 - 01:15:27
That'd be awesome. Thanks so much and thanks for this moment of reflection. It's been kind soul soothing actually as well. So appreciate it. Nice talking with you.
01:15:27 - 01:15:30
Thank you. Alright.
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