How Giving Away Free Knowledge Built a Multimillion-Dollar Car Parts Business

17:20Felix Tarcomnicu:But when you know that this piece of content did 20x better than your usual stuff, there's something about it that resonated with the audience. And so we would turn that into ads that would deliver to landing pages or a blog post, and then we would get a disproportionate amount of email signups as well. All of those email signups then converted over the course of three, four, six months as sales in the store. And so So that pipeline has been one of our keys to success in a big way.

17:54Sean Reyes:Where does email fit in the funnel and how do you leverage it? I think email's kind of gone through this cycle of sort of love, hate, effective, ineffective. Do you find it to be productive for you?

18:06Felix Tarcomnicu:Yeah, it was one of those things where at the beginning we did a lot of heavy testing. And, you know, depending on the mood that I'm in, when I'm browsing around the internet, I'll, I won't even, someone could say you could have this entire website for free and I'll click the X and close the option box. Other times I will take, I will take up the offer on the 10 % off coupon. And so we all have these kind of these stereotypes about email signups, but, you know, the truth is they produce real money. You know, we are doing eight figures in business and we have a very, very tight attribution on Klaviyo.

18:44Felix Tarcomnicu:And even then we do about 18 to 20 % of our revenue through email. And so you can't, it's like, you can't ignore it. There's no replacement for it still, even with everyone's crowded inboxes. And so for us, it serves as bottom of funnel for people, you know, looking for discounts so that they can buy from us compared to competitors, but also middle of the funnel or even top of the funnel where they have no idea what we're talking about. They're just getting into this category of aftermarket or off-roading or performance driving, and they want to know more. And so that's where our kind of email program comes into place.

19:20Felix Tarcomnicu:We built out flows for all segments, all education. It delivers all of our content that we've been doing over the years on a specific vehicle, a specific brand line, type of driving, all edges of our audience. And so we're talking to a lot of different segments. And back to the content, when content and education is at the core of your business, it's easy to really start talking to all these different core customers of yours and really deliver information that literally no other store has. And so Alex Tramosi created an offer so good you can't ignore. I really took that to heart and deliver a lot of that stuff inside these email platforms or email flows, I guess you can say.

20:03Felix Tarcomnicu:Because once again, no one else has done the very, very hard work of discovering exactly what these products do. Because once again, all these products that we sell, they all look the same. They're just different colors. And none of the brands will tell you what's in the shock and how they behave. It's all marketing speak. And so for us, we have to do the work, discover exactly what these products do, and then deliver that information. And so that's our value. And so that gets distributed through email, you know, for the most part, and it comes back to us in lots and lots of revenue.

20:38Sean Reyes:As an operator that's so focused on the metrics, the profitability, the ins and outs of the business, the content piece of the business seems so robust on its own. So how are you focusing on the content side in addition to running this day to day?

20:58Felix Tarcomnicu:I'm lucky enough to have a couple people in-house that they're an encyclopedia of the knowledge, and they're also able to be very comfortable in front of the camera. And so I'm not the key man there anymore to get the knowledge out there. It was pretty important for me to not be that key man. I don't mind being on camera, and it kind of comes natural, and it's worked well. But education distribution can't only rely on Sean Reyes. being available, right? The business model is education distribution. And so we have numerous people on the media team that have that as their priority as well. And so, you know, having a team who's also has the same mission as I do is a tremendous help.

21:45Felix Tarcomnicu:And so I still play a part in some of the content, but I think, you know, 75 % of what's happening now happens without me. And I project manage and I give direction and I, you know, help out around the edges. But the core model is now, you know, being kind of administered by like our in-house media team.

22:05Sean Reyes:What is the core customer avatar profile look like? Are these automotive enthusiasts? Are they, you know, they own multiple vehicles and they're obsessed with parts? Are they refurbishing aftermarket vehicles? Like what is the core customer look like?

22:23Felix Tarcomnicu:It's a great question. The core customer is, I want to say an automotive enthusiast. I will say it's more of they are like, not necessarily an adventurer, but they do things. They are using their trucks to tow their RV or tow their motorcycles or tow their side-by-sides, or they're using their trucks for camping adventures, overlanding, a lot of people say, or just weekend adventures, you know, they're using their vehicles to go do a thing, right? And so you just kind of need a little bit extra from your vehicle, whether extra handling or comfort for drives or adjustability for all the loads. And so, you know, we're really talking to the customer that wants just a little bit extra from their vehicle, you know?

23:10Felix Tarcomnicu:And so that kind of plays out across all, you know, whether it's a Subaru Outback or Ford F-150 or a heavy duty truck on the farm that needs to tow a bunch of stuff. It's people that need a solution that stock parts aren't delivering. One thing I will say for everyone chasing big numbers is do not, because it's just more problems. It's more money, more problems, because a lot of people lose track of the bottom line, which is really what creates quality of life. The bottom line does, right? To be clear, chasing revenue versus chasing profitability. That's right. Okay. Yeah. And it's easy in our space, especially when you get into dropshipping because of the timing of everything.

23:53Felix Tarcomnicu:People see numbers and then they get ambitious about it, but then they lose track of the bottom line, which is really what creates quality of life for you and your team.

24:03Sean Reyes:Where does this philosophy come from? Is it the fact that you're completely bootstrapped and self-funded to this point?

24:09Felix Tarcomnicu:It's that and I've made tons of mistakes. You know, and so realizing that these big numbers, they solve issues in the short term, but in the long term, you still have to make sure you've got a profitable business on the P &L, right? And so, you know, I've seen this in other businesses as well. You run extremely hot. And then when the COVID boom runs out, like, you just get crushed and you're not around any longer. So I'm sure you know businesses that didn't last beyond 22 or 23, but they were crushing it in 2020, 21 and 22. What is at the heart of that is because you don't have, you don't really have a profitable business, even though your top line numbers are growing 25 % month over month or whatnot.

24:56Sean Reyes:Well, also market timing and market favorability, right? I mean, in that period of 2020 through 2022, you had a massive e-commerce boom. So you've got a lot of liquidity flowing into the space and a lot of investment coming in and folks chasing the top line at the expense of the bottom line. But at some point, the gravy train stops. That's right. Yeah. For you, have you ever thought about outside capital or outside investment? And what would you do if you attracted venture?

25:23Felix Tarcomnicu:I mean, we've used Shopify Capital a number of times to help take advantage of numerous opportunities. At our size, it's gotten to the point or gets to the point where, you know, do I want to take that risk myself to go get capital? Do we want to partner with someone bigger to, you know, make moves? If we did do that, there's a number of opportunities, but at the core of what we're doing, it's all about product margin, right? And so a key partner would be unlocking that margin through whether it's a distributor or a distribution network. An amazing YouTube channel could even unlock a lot of growth for us because of a brand new audience and extremely inexpensive eyeballs.

26:06Felix Tarcomnicu:And so there's all sorts of different ways to make partnership happen.

26:12Sean Reyes:In your opinion, where do you think the obsession with vanity metrics comes from? Like when you look at founders who are chasing that top line at the expense of watching the bottom line of road, what do you think is driving that?

26:25Felix Tarcomnicu:Yeah, I don't know. I think it's our obsession in America with money. It's the obsession with money being a key to happiness, right? I think here, that's just not the case. And a billionaire won't tell you that they're any happier than whether they were just a millionaire. I don't really have the answer there, but I think there's plenty of research out there that more money does not make you happier beyond a certain income level, right? But it's one of those things that people will say, still, I want the money anyways, and then let me find out for myself, right? And so I think that there's always that pursuit of it, or I can do it better.

27:05Sean Reyes:The media driving a lot of this too, this sort of celebrating the amount of money raised versus the amount of money made. That's right. It's what you read on the front page of TechCrunch, for example. Oh, you know, XYZ startup raises, you know, 10 million in series A, whatever it is. I think a lot of people just simply don't understand what that means from a business standpoint. I mean, oftentimes, you know, it's money chasing an idea, not necessarily a business.

27:33Felix Tarcomnicu:You're also selling your business when you're raising that money. And you're giving away a lot of equity. You're giving away a lot of control. you know, sooner or later, you might have way less control than you expected. One thing that, you know, I kind of took to heart from Alex Fimozi was that you should always take profits. The mantra out there is like, well, we're just reinvesting our profits. And that's just like an excuse to not even track your profits. And so you're seeing this in the business, seeing this as in other businesses, and they're like, oh, we're just reinvesting all the profits.

28:03Felix Tarcomnicu:And we're like, wait a second, how profitable are you? Are you tracking that actual investment into your company to see if it's producing more business or more profit, or is it just like a blank check for any profit to just get rolled back into your cost of goods and there was no tracking of it, right? And so going through your P &L with a fine tooth comb to really truly understand your business, a lot of founders do not want to do that. I was one of them. And now when I talk to other founders or other businesses, it's like, how much do you truly understand the bottom line, especially on a fast growing business.

28:39Felix Tarcomnicu:And, you know, there's businesses out there, lots of businesses out there now that are growing, you know, 25 to 50 % in our space month over month or year over year. And their P &L and their accounting is still not up to snuff because revenue and growth of top revenue always mask problems, right? The delta of issues can be solved by just growing another 25 % month over month to take care of last month

29:06Sean Reyes:You can find more runway if top line is growing.

29:10Felix Tarcomnicu:That's a good way to put it. Even if you're pleading more money, you can just get a little bit more runway, but you're kicking the can down the road, so to speak. That's right. But then when you have a slow month because of a geopolitical issue or an economic issue and even just a one or two month slowdown, now you're stuck into finding another loan, another situation. You have to raise equity. You have to do some of these things that at the core of it, you don't have a business that's making money.

29:42Sean Reyes:This focus on profit helps increase the quality of life of not only you as a founder, but your employees. Your team is 25 at this point. Which, if you just do the math, if you've got tens of millions of top-line revenue, any way you slice it, that's a very productive company. Still operating quite lean, I would say. What's the culture been like at shock surplus as the business has grown? And what do you mean by quality of life vis-a-vis your employees?

30:15Felix Tarcomnicu:You know, we were built with remote in mind. So like our business can run with or without an office. But we got an office in LA before COVID. And we have the type of team that I shut down the office in March. And two months later, they were like not begging, but they really, really wanted to come back into the office and work together with the team. And so that, you know, I'm extremely grateful for having a kind of team that like has that as their just general mentality of coming to work. Lots of employees have expressed to me that they love coming to work, like what they do. You know, it overlaps a lot with their own passion.

30:52Felix Tarcomnicu:Culture is one of the most important things for me and the business, mainly because you want to go to work to work with other people that are, you know, into the same hobby you're into or also want to help out people as well. And so you're kind of all on the same wavelength. I always like to say, I'll, you know, I'll sacrifice the top salesman if the culture isn't right. You know, I'm very much like, that's the most important thing to me because the vibe in the office, like that'll, that'll make or break, you know, someone's day, you know, and every single day. Right. So I always take that, you know, very seriously.

31:25Felix Tarcomnicu:You know, it's important for me to like keep that in a positive place, transparent place, lots of communication, keeping the activities going. You know, some of our team, they go out for mountain bike rides together during the weekend or we're all going camping. So it's that kind of workspace that I, you know, I'm grateful that I've got a lot of team members that are into all that. But to the profitability aspect, you know, we spend a lot of money on snacks and food and drinks at the office. But there's also, you know, unlimited PTO kind of stuff. We're going to events. We're going off-roading.

32:02Felix Tarcomnicu:We go to the King of the Hammers and work remote off the Starlink. You know, we've been at off-road events and the work Starlink. And there's six guys sitting around the campfire in the morning doing sales calls and answering sales emails. And so it's that kind of, you know, culture that like, I'm super grateful that, you know, we have at the business. What have you learned about yourself over the years? Anything surprising? I can eat a lot more crap than I expected. Yeah. When we were growing this thing originally, I had no number on my radar whatsoever to do. I was, it was very much a lifestyle business.

32:38Felix Tarcomnicu:I'm very selfish with my time. and I just wanted to take credit card orders on a chairlift, you know, in Mammoth. You know, that's how this business started and that's kind of just what I expected to keep doing. But, you know, as it grew, serving more and more customers every year, one of my previous partners, you know, he basically said, he's like, if you can help out way more people and grow a way bigger business, why wouldn't you? And I was like, hmm, that's a good point. Right. And so, you know, we're at this stage just because it was kind of the pursuit of helping more and doing more.

33:14Sean Reyes:It's going back to what you were saying about being hyper-focused on delivering value. Yeah. And building that trust.

33:19Felix Tarcomnicu:Yeah. I found myself helping more and giving more of my time to help out and not only in the business and with employees, but also just like the industry in general. and talking to more people and helping out any way I can a lot more often, I guess. That goes against my selfish nature of I'd rather be spending my hour on the trails or doing A, B, or C. And so I've kind of come around to have value to help out others and improve their business or their little aspect of life that they might be struggling with. And, you know, I'm only here because I've made tons and tons of mistakes.

34:03Sean Reyes:And, you know, what's the biggest one, do you think? Like looking back, could you highlight one or two key mistakes?

34:09Felix Tarcomnicu:No one's going to watch your money as much as you will. When your business is growing, you know, 150 % year over year, all sorts of problems just balloon. You know, we were growing extremely fast during COVID. And also at the same time, the sales tax nexus laws came into place. And so you compound extreme growth with sometimes an unprofitable business, with sales tax nexus laws that are very ambiguous. It was a disaster for a couple years. Watching the money and watching the bottom line back to that point is, you know, I'm on the Shopify subreddit almost every day helping people out. And I see this problem pop up every single day of being like, I'm doing this, I'm doing this.

34:56Felix Tarcomnicu:But for some reason, we're still cashflow negative. We're like, okay, well, you're pricing your product completely wrong. And so there's these things where we all get into business because we want more freedom. Or people want to get rich, one or the other. But a lot of the times, it's the freedom. And they want to be in control over their own destiny. Made tons of finance mistakes. On the other side of it, and the more optimistic side of it, is what's really worked well for me is giving a lot of trust up front for employees to do their best work and let them run. And so I think that's worked out well for us incentivizing partners.

35:38Felix Tarcomnicu:Maybe I haven't done so well on that front, but that's all hard because we've never done this before. We've never built a$100 million e-commerce business before, right? So it's gonna be a learning experience, especially when you're bootstrapped and you don't have hired guns to come in and do the job, right? No, well, you're that person. Yeah.

35:59Sean Reyes:Shock surplus is on track to hit$40 million in top-line revenue this year. Could you point to a couple of things that you feel like have helped drive that growth?

36:08Felix Tarcomnicu:A lot of it comes down to building audience over the years and better understanding how to convert that audience because we've gotten a tremendous amount of organic traffic, you know, through, from our YouTube channel, through our blog posts, our, our social media stuff is all gaining a little bit more traction, but you know, right now our conversion rate, not the best because we're, we're constantly, you know, we deliver a lot of customers, a lot of knowledge, but then do they forget about us after they are get educated and then forget that they actually got educated on our website and now go shopping on Google at some other point.

36:47Felix Tarcomnicu:And now we're not bidding for the correct keywords or we're not bidding enough for that customer. And so what's really, you know, being able to close the loop on understanding the customer lifecycle is what's really allowing us to like continue the growth, you know, getting much better return on, you know, return on ad spend or MER, what people kind of are more familiar with. But it's understanding that all the metrics don't lie inside of a 30-day attribution window. And so how do you track your audience in a 60-day, 90-day, or even 150-day timeline when they're researching a$2 ,000 set of shocks?

37:30Felix Tarcomnicu:That is extremely hard. And it's been the marketing problem for decades. What's attribution? Is it the ad they saw on YouTube? Is it their organic piece they saw on Instagram? is that the email they saw 45 days ago, right? And so with all these new tools, like we use Pression AI now to better understand our mixed media kind of spend. And so a lot of these tools coming online, a lot of the tools out of Meta now, Google, all of these things are getting better to better understand attribution and then also better understand audience signals. And so we're just getting better at converting all of our organic traffic that really stems from education.

38:14Sean Reyes:So to sum up, content, attribution, return, ROI. Pretty much, yep. Look, it's been phenomenal to watch the success of this thing. Congrats on Shock Surplus and all that you guys are building. Anything that you're really particularly excited about this year?

38:29Felix Tarcomnicu:I woke up this morning at 3 a.m. thinking about Claude AI and how it can duplicate my entire site in 22 seconds. And so that is both incredible and also scary. And so the whole AI thing happening right now is just such a massive, massive opportunity. Infinite intelligence in our pocket. It'll enable anyone to just become a superhuman if they want to use it for business. I'm not saying that everyone should be using it, but if you want to help more people or if you want to make way more money or if you want to impact the industry, you know, we're trying to impact the industry. Like these are incredible tools that you can take advantage of now.

39:15Felix Tarcomnicu:And so I think I've been thinking about that a lot and, you know, how we're going to be using that. We're already using some kind of, some of those tools in-house. What was once a week-long wire framing project that you go back and forth with a design team on, 14 seconds in Replit will get that whole thing done and you can live iterate. And so for a scaled up e-commerce business or even just a fledgling e-commerce business that you don't even know what you want, just go talk to the AI and be like, give me three options on the design and it's done. This would be thousands and thousands of dollars and dozens of hours or hundreds of hours of time with back and forth between you and your team.

39:58Felix Tarcomnicu:Now that's all eliminated. So speed has been a huge factor, I think, in our success because I'm not nitpicking what we're putting out there. We'll run the camera, whatever happens on video, that's just going to social or that's just going to YouTube. Like we're not trying to script a bunch of stuff. And so speed in this industry, I think it'll get you a long way because you can't be the judge of your own quality. The audience is gonna be the judge of that, in my opinion. Oh, the market decides. The market decides, right? Yeah. Whatever you think is good is -

40:32Sean Reyes:Exactly. Not really relevant.

40:34Felix Tarcomnicu:That's right. Yeah. And so that's, you know, for us, we're just putting out, you know, we're just trying to be natural and put out what we think is going to help and let the market decide, you know.

40:44Sean Reyes:Great place to wrap. Sean, great to chat with you today. Thank you. Congrats. Thank you. Thank you. And thank you for tuning in. Hit that subscribe button so you never miss out on a new episode. Leave us a comment below on what you liked today and I will catch you next time.

41:03Thank you.