Turn Your YouTube Subscribers Into Customers

0:00By being able to create content that can then provide people value will feed a lot of traffic which will then help us feed traffic to the website. Hello and welcome to Shopify Masters, your companion for starting and building a business. I'm Adam Levinter. Today's generation loves to watch their favorite beauty influencers share their secret hacks or try out their latest go-to products. But in 2010, Alex and Mimi Icon's business Luxie Hair was one of the first companies to use their YouTube channel as a platform to organically grow their brand. Luxy Hair took off gaining over 250 ,000 customers and 3 million YouTube subscribers before being acquired by the Beauty Industry Group, a leader in the hair extension and lash enhancement industry.

0:46Alex and Mimi know how to strategize, market, and create community around their products, all while injecting meaningful stories into their messaging. Alex is here to share how Luxy Hair's dedicated community was built, his process for exiting, how his team built and is managing intelligent change and more. Alex, welcome to the show. Thank you for having me. A lot to talk about today. Let's start with the story of Luxie hair. Okay, so in December of 2018, the story of Luxie concludes with this acquisition by Beauty Insider Group. And I want to ask you about that acquisition later. But before I do that, let's rewind back to the beginning, the origins, which I think dates back to 2010.

1:29So two part question here. One, how did you get your first sale? And two, what was the impact of Tim Ferriss's book, The 4-Hour Workweek, on that business? Yeah, for sure. So I'm very grateful for Tim Ferriss with his book, The 4-Hour Workweek, that really, I think, inspired that business and so many other people. I think a generation of entrepreneurs around the world that would think about businesses in a different way. Prior to the four-hour work week I think most of us the rough idea of a business would be you know you know maybe building a team a business and then working there for life and then potentially one day retiring.

2:12And what the four-hour work we did beyond you know the actual say tactics in the book was really changing the mindset of hey I don't want to be a fat guy in a red BMW like having a middle midlife crisis type of situation I want to be able to enjoy my life when I'm young when I have energy and that's where really you know when we read that book I was probably early 20s and was just really inspired to like I want to live my 20s to the max and it was a little naive I think to a certain degree to like hey I can do this for our work week thing and only work four hours a week and then maybe surf in parts of the world and just hang out.

2:51But that was a dream. And that's where it led to that idea of wanting to build a business or find this muse that will allow me to live this lifestyle. And so that was kind of the four-hour workweek moment. And then obviously to make that a reality, you have to make your first sale. And as you said, the most important thing anybody can do if they want to become an entrepreneur without having, I think so many people have these ideas of, I want to build, you know, be the next Elon Musk or see jobs or whatever it is. But as you said, hey, just make your first sale. And that's what I often say to people these days as well, is that just make your first hundred bucks and see how that feels and also see how hard it may be to do that.

3:31So for our first sale, we kind of got our first shipment of Luxie Hair, which are, you know, clip and hair extensions. Probably four months before that I didn't even know what clip and hair extensions were so it was a fairly fast build up to going from idea to product which was inspired by my wife and I getting married and her looking for hair extensions and just being unsatisfied which goes to say if you you know look out for people having problems and complaining and I was just lucky enough to be in the room where my wife was complaining to her sister and just overheard her complaining like ah this sucks and I just bought this and it's not good and then I just started getting curious like why are you not happy what's wrong and then figuring out how can I find a solution to that and back then I was I was already aware and exposed to you know the world of Alibaba and be able to find manufacturers directly there so that's exactly what I did I went to Alibaba checked what manufacturers I can find and then was able to find the product source it put it together direct from a manufacturer order our first i think our first order was like twenty thousand dollars so it was like a lot of money for us i think it was probably around 450 units kind of split up into different categories and things like that and when we just got the shipment a friend of a friend of my wife's and her sister's heard that we have this product and she was a customer who has this need to buy this product and say hey i'd love to come check it out she came to our house checked it out and she's like oh this looks great here's the money and left and she just gave us the cash.

5:08And I was like, whoa, like somebody actually bought something from us. Amazing. So we're very grateful for that sale. And in our first website, we were one of the first stores in Shopify. But before Shopify, I had a PayPal button on a WordPress theme. And that was my way to make our first sales. And of course, I'm very grateful to Shopify then kind of coming around. I think we were store number 4000 on Shopify, which is pretty crazy. And then for a few years, we were top 10 Shopify stores in the world, which is crazy to think of how big now Shopify stores are. Yeah, I think that brings up a couple of important points, one being timing.

5:50So Luxie has really become a truly global brand since then. You now have 250 ,000 plus customers in over 165 countries around the world. But you were also an early adopter of YouTube. in addition to Shopify. So do you credit YouTube as being a key factor in Luxie, Hair's Rise? Major. Prior to us starting the business, I was trying to be a social media consultant in 2008. So if you remember those days when Twitter, Facebook, a lot of these tools were just starting out. Instagram wasn't even around. And I think there was, you know, Gary Vaynerchuk was still there. You know, God bless them, the OG.

6:33And I think seeing Gary do his wine kind of videos. So for those who may not know, Gary Vaynerchuk kind of started with his dad's liquor store. And then the way he really got the word out for Wine Library was through creating YouTube videos and doing these reviews of wine on YouTube. And so for us, you know, my social media consulting career didn't take off. People thought I was a snake oil salesman. That social media doesn't work. and how are you going to do business through social media? But I really then saw, like, the future is here. I think similar to how we're now having with AI, when you do come across these kind of fundamental shifts in the way society works, I would say to a certain degree.

7:21And I just felt that the way we will consume information is through YouTube and all these other tools. and so when my wife was complaining to me it was like this is perfect my wife and her sister which were both unemployed and I was unemployed at that time these are two beautiful young girls with beautiful hair they can create this content all about hair giving people a value of how to create different hairstyles and things like that and then we'll have this product which is hair related that we can sell and that was really the strategy and so from 2010 when we started you know we quickly gained like a million followers most likely in the next two years which back then you know it's very different times than now so the engagement was was very high and that channel then to date I think has over like a half a billion views but the whole strategy was really creating evergreen content you know content that doesn't matter it's like you know the basics of how to braid your hair how to create this hairstyle and basically understanding that How do you leverage YouTube and what people, because YouTube is the second largest probably search engine in the world and obviously owned by Google.

8:35So Google anyways will feed the search traffic into YouTube as well. So we just understood that by being able to create content that can then provide people value will feed a lot of traffic, which will then help us feed traffic to the website. The thing that many entrepreneurs forget is that in order to make your business work, you need eyeballs on your website or your store or your business. You can have the greatest product in the world, but if nobody knows about it, then you're not going to kind of sell it. And then obviously connecting to Shopify and being there just made things all very easy.

9:11I don't know about how easy it is to monetize YouTube. So you guys have done an incredible job. You mentioned a billion plus views. That channel, Luxy's channel on YouTube now has north of 3 million subscribers, which is just astounding. But I'm just thinking about how mature the platform has become. And I'm wondering your opinion, Alex, on whether you think D2C brands looking to break in and monetize YouTube can still do so, so to speak. Or do you think they have to look to a new platform like a TikTok or some other social media platform to make it work? I think what has changed over the years, as you said, is that there's more diversity of platforms and where you can potentially get that reach.

9:56I still believe YouTube is the OG platform that still is relevant today. And the biggest difference is that, as I stated before, is that its ability to host and have evergreen content that can be searched. versus TikTok or Instagram. It's more based on your interest in feeds. So it's lottery in a lot of these platforms. However, with YouTube, if you're able to create relevant content based on the terms that people are searching for, and you can also see the trends in terms of traffic, whether it be on Google and things like that, you can then tailor to fit your business, what it does towards creating content around that.

10:40And that doesn't mean that it's easy or is going to be kind of overnight success, because I think cracking that content engagement piece can be tricky. And it is also very, I think, personality focused. So we're very lucky that, you know, my wife and her sister at the time had those engaging, charismatic personalities that people connected with and they wanted to watch and engage with their content. Let me ask you about some of these strategies that you're alluding to. So one being personality focused content as a derivative of the evergreen content piece, but also rewinding back to something you said earlier, which is pretty intriguing.

11:23This idea that Mimi initially was so unsatisfied with the products that were out there in the market and kind of created something for her versus something for others. Do you feel like that's a good startup strategy versus, say, doing analysis on the total addressable market and figuring out how to scale and whether there's sort of a mass market appeal beyond yourself? I think even though personally it wasn't my problem, you know, I don't need hair extensions in my life, so it's not like I was scratching my own itch, but it was a problem for somebody who was close to me, which is my fiance, soon to be wife.

12:06And so what I'm trying to communicate, whether it's you or your co-founders or maybe a family member's problem that you also feel passionate about, finding a solution for or creating a better experience for would then allow you to really dig into that problem a lot more. And of course, kind of going forward to that, to our current business now, which is intelligent change and we created the 5-Minute Journal and the Productivity Planner. Same thing, those products were created simply because I just wanted things like that and they didn't exist on the market. So I created them for myself. So I'm a big believer in scratching your own itch.

12:46And I believe because there's so many people in the world, I'm sure you can find enough people to be able to have that interest as you do in this type of product. I'm joined by Alex Icon. I hope you're enjoying our conversation. And if you haven't already, please subscribe or follow Shopify Masters wherever you get your podcasts. Leave us a review or feedback for the show. It certainly helps our audience find us. Okay, so in 2013, Intelligent Change is born. And oddly enough, there is another connection to Tim Ferriss. In this particular case, though, it's not a book that you read. He actually does a video and pumps the five-minute journal.

13:21So what was the impact of that piece of content on your sales? To wind back a bit, it's similar to your question before was, Tim Ferriss once again has inspired at that time who was going to become my business partner into intelligent change to also look for how do I create this muse business? How do I live this 4-Hour Workweek? And UJ, who became my business partner, started asking around, do you know anybody who's actually done this 4-Hour Workweek thing? Is this real or is this a myth and a legend? And a friend of a friend says, you should talk to Alex. And he's like, who's Alex? He's like, well, Alex, as we just covered in regards to Luxy Hair, YouTube, all that stuff.

14:04He's like, where's Alex? He's like, he's, I don't know, South of France probably. He's like, great, that's the guy I need to speak to. He's actually doing it. He's not just kind of talking about it, but he's actually living this life. We then connected and we both had mutual interests in regards to mindfulness and well-being. And right away, I told him that quickly learning of having that early success with our business, we did seven figures in our first year in sales. We figured out that, hey, this money thing and this lifestyle thing isn't what it's cracked out to be. And what I mean by that, I know it's hard for people to fathom.

14:39I knew if I would be listening right now, like, what is this guy saying? But I grew up poor. So I thought having money in the bank, driving my dream car, being exotic locations, having a beautiful partner, that would be like, that's all you need in life. And I quickly learned that it wasn't. And in a way, there's more towards our journey to actualize ourselves as humans. And so this is where really the new intelligent change business started. And it was very inspired by, like I said, my partner wanting to create a muse business. And then me telling him, dude, create a business that you're really passionate about.

15:19So this is where, you know, really the 500 Journal comes in and intelligent change. and us then be able to once again utilize the same format of I think the first person still to promote the journal was my wife and her having a fairly large following on her own social media channels and then she was able to push it to her audience too however we were also very lucky when our friend you know Jason Gaynard was putting on this event in Toronto in 2013 right when we're about to launch the five minute journal. And that's another thing kind of communicate to people listening is that our thing with that business was like, Hey, let's print a thousand units of these.

16:00It's going to cost us probably like 5 ,000 bucks. At the end of the day, I get to have a product that I want in my life for my partner was he gets to have the experience of what it takes to launching a product and a business from nothing to from idea to manufacturing, to importing, to exporting, to getting into fulfillment, to setting up Shopify, you know, that whole experience, Because a lot of times you can read about all the things you want, but once you actually put yourself out there and try to get a product to market, that's when you're actually learned. So we printed the first thousand units of these.

16:31And at our friend's event, we're like, hey, we're going to give it out as gifts for free to your audience. Hold on. For those listening, Jason's event was actually, I believe, the first iteration of Mastermind Talks, which has now become a sort of franchise in and of itself, let's say. yeah and and and there was you know incredible people that we met we met tim ferris yes tim ferris had the four-hour work week but he didn't have his podcast and you know he didn't have his other books like tools of titans which i think the five minute journal then got kind of featured in the future so we met him through that event and lucky for us my co-founder at the time you know had the balls to come up to tim ferris and say hey here's the you know we created this and we were inspired by your work and this is our muse business and here's the journal tim gets approached giving products probably all the time you could have just chunked it in the trash and the rest is history but lucky for us he was going through a hard time in his life he's like hey i'll give this thing a shot and it really helped him impact and change his life in a positive way and when he launched his podcast he would just naturally speak about it so the video that you speak about But it really came way later.

17:46But throughout the last decade, it was really that go-to product that he used many times that was kind of by his side, be that mindfulness tool for him. And that's what we saw happen. I think with any good product, once you have that product market fit, where that's the key thing for a lot of people to know is that does your product actually serve people in a positive way, make a difference that they want to recommend it to other people? They want to speak about it because they gain so much value from the product. And what we found is with the 5-Minute Journal, a lot of our sales actually come organically through word of mouth, through people, especially gifting it to other people because they receive some sort of benefit themselves.

18:30Because marketing, especially now, it's expensive. So if you can have your product do the marketing for you, it can really go a long way. And of course, that combination of my wife Mimi and Tim kind of speaking about it helped us gain that 1 ,000 true fans or then 10 ,000 true fans very quickly. Yeah, and I mean, since then, you have sold over 1.7 million copies. So let's hit on these products for those that are not totally familiar with them. So for someone that just wants to get an understanding of how to use the 5-Minute Journal, how does it work? The five minute journal, and this is another thing, when creating a product, have a simple intention that you want to deliver with that product.

19:13So before we even created the product, we said, okay, we want to create the simplest, most effective thing that you can do every day to be happier. We already came up in a way with a tagline that we want our product to serve before we even had the product. Because the goal was, my co-founder at the time was like, he's this guy who would meditate for an hour and journal for an hour. And I was into mindfulness too, but I'm like, dude, like you're pretty much unemployed in your early 20s. You can spend two hours on your this morning routine, but I don't have that time. You know, I have a wife, I have a business.

19:47I didn't even have a kid then, but I can imagine once you have a kid, like you don't, like you don't have that much time. The average person is not meditating and journaling two to three hours a day. Exactly. So it was like, how do we create something that's catchy and that's really going to just take you that five minutes a day to get all the benefits you can from all this positive psychology research? I'm like a self-development junkie, especially back then, reading so many books, still to this day listening to so many podcasts like this one and many others. I'm always consuming content and information.

20:18However, what I realized is it's not about consuming information and you can be the most literate red person in the world. If you're not actually implementing information in your day-to-day life by having those habits in your day-to-day life, nothing's really going to change. It's great. It's gratitude practice. You lay it out so beautifully. one of the things I was intrigued by is something that you've actually talked about in other podcasts that you've done, which is this idea that at some point your business goes from being a lifestyle business to a real business. And you mentioned, you know, hitting six figures at Luxie.

20:58There's some other metrics that folks use to define this. But in your experience, when does business become a real business versus say something that just serves your lifestyle? I think these days you can take lifestyle businesses very far. There's even, I think, a trend of no employee businesses or one employee type of businesses. And it's definitely possible. I think the reality check that a lot of people need to understand is for you to net take, let's say,$100 ,000 from your business, most likely you have to generate over a million dollars in revenue. because for most businesses, if you have like 20 % EBITDA type of, you know, or kind of that profitability into your business after all the costs, it's a fairly good business, I'll say.

21:45You know, like 20 % is actually fairly good. And a lot of people have this kind of idea, you know, they'll be like, and that's why what I'm trying to communicate, don't leave your day job or think that you can easily replace, you know, six-figure salaries with kind of business. Of course you can, opportunities are there. But the threshold, you have to understand that you'll have to generate most likely seven figures to be able to replace a nice high-paying kind of six-figure low-paying job overall. The biggest misconception that I used to have and I think a lot of people have is like, hey, I'm an entrepreneur.

22:22I have my own business. Like, no, you're not really an entrepreneur. You're just self-employed. And it's like, what's the difference in that? The difference is an entrepreneur is somebody who can genuinely not work in the business. They can step away and their business will be able to function and work without them. That is an entrepreneur. If you can't walk away from your business and for the business to keep generating the money that you have, you're self-employed. And we were really, we got stuck at like 5 million with our first business kind of just like plateauing there and just staying there for years.

22:55And that's where Traction came in. We implemented it, started building out the team, then started looking how we can hire a general manager who then became CEO. And another thing to understand and learn is the truth that I found, private equity doesn't want to do anything. Private equity is basically these funds. They just have money and they just need to put money somewhere else that will help them grow it at a faster growth rate than what others can offer. They're like everybody else. They're lazy. So they want to make sure that the team has a proper organization and team and leadership in place, that the business, once again, because they're true entrepreneurs, so the business keep going without them being there.

23:40We actually also had a lot of private equity companies and VCs kind of start coming to us of like, hey, what are you guys doing? We want to invest. And I'm like, I don't even know what this means. So I had to reverse engineer and learn a lot of these things on the way to then to get to that point where we're then able to sell the business and be kind of liquid and not even have an earn out. Earn out means a lot of times when they buy, they wouldn't want the founders to leave and they lock them in for another few years so that it makes sure everything kind of works. And because of the way we set everything up and the leadership we had in place, they're like, get out of here.

24:18We don't want you here. Right. Just to clarify that point for listeners. So earnouts are tranches of cash as certain milestones are met beyond an exit or a sale versus cash up front, let's say, when you sell a business. But I mean, you bring up a lot of good points here, Alex. I think scaling a business beyond yourself is so critical. And I once heard something by I can't remember who it was, but some thought leader mentioned that the measure of a good CEO was the ability to make yourself useless. with respect to your business. And if you've done that, you're a great CEO. So I found that really, really interesting.

24:57But to close the loop on all this, and I promised listeners we would come back to it, in December of 2018, Luxie is acquired by Beauty Industry Group, B-I-G. So how did this deal come together? So the funny thing is, like I said, as we're growing the business and we had this kind of exposure where obviously you can see the channel getting larger and there's the company also growing and getting that exposure naturally when you start taking market share in business, people will start noticing. And we've had even, let's say, meetings with Sequoia on Sand Hill Road because one of the partners of Sequoia, his wife would be our customer.

25:36And they'll be curious about what's the scale of business, what's our vision. They think, especially those VCs, they think maybe we're these next Mark Zuckerbergs who have this big vision for this, disrupting the beauty industry. But we're like, no, we're just like, you know, lifestyle entrepreneurs. They're like, oh yeah, wait, you're wasting our time, go away. Go away. But what I'm trying to say is, along the journey, we then started getting this interest in people wanting to acquire or invest our business. But in all these meetings, I'd always be curious and take these meetings, honestly, to learn.

26:15I never feel afraid to be stupid. And I think a lot of people, that's where they get caught up, is that they think they have to know. What I've understood over the years is, don't be afraid to be the dumbest person in the room and just ask questions and be like, what do you mean? What is earn out? What is equity? Just ask them. Don't be afraid to not sound like you don't know. I still to this day will be like, sure, please tell me more. One of the biggest pivotal moments was really understanding when a friend said, I would look at the business as simply just the cash flows coming in and the profit in the business.

26:56But he said, that's not the way to get the most out of potential value and the asset that you have and getting that kind of big outcome and liquidity into your business. I'm like, tell me more. And what he meant is, and after meeting a lot of these people, you start to understand what are valuations, how are businesses valued, also the importance of, as you said, timing. What's the growth in your business? What's that profitability or EBIT in your business? And how are you kind of putting things together? That's where some of that kind of also financial engineering can kind of come in. That's why a lot of businesses don't want to show profits because then they can just imagine evaluations and market sizes and things like that.

27:40But for us, it was more like, okay, we have a certain number in mind that we feel would be like winning the lottery. We had a number of like, hey, once we have this number, we'll be set. And so for us, we had a certain number in mind and we said, okay, what is it going to take for us to get there? and we actually had a term sheet I would say in 2016 and term sheet is like basically when somebody is going to buy your business and they put you like a second pretty much an offer a legal kind of offer to acquire your business it was the first time we got a term sheet I didn't know what it was at the time but looked into it talked to some friends but there was there was an earn out in it you know we have to would have to stay in the business for the next three years to get this sort of outcome and hit these certain numbers and things like that.

28:29So then we're like, how do we reverse engineer it so that when we do exit in the next two, three years, that we don't have to be part of the deal? And then boom, and then we started getting to work. We started building out the team. We started building kind of everything out. The funny thing is we then got an investment banker. An investment banker is kind of basically a real estate agent for your business. And in the end, the buyer ended up being a guy who was emailed from, so I think his name was Derek from Beauty Industry Group. Derek would email me every year on the dot for like the last five years.