241. These Viral Strategies Build His $20M/Year E-Commerce Empire

0:00Oleg Lee:Picture this. A guy posts a photo of a pillow on the floor. The internet loses its mind. The pillow looked exactly like his dog. Not a picture printed on a square, but custom cut out in this exact shape of the animal. The dog's name was Izzy. She had just passed away. Oleg asked his dad to make it. Dad did. Oleg posted it and people immediately wanted to buy one. That was the entire origin of the business. Fast forward to today, 400 ,000 custom pillows a year, 20 million in revenue, half a million a month in ad spent, and he's the silent manufacturer behind Netflix Shop, Paramount, and Chewy. And he ran out of his dad's garage as a side hustle for 10 years while working construction full-time.

0:45Oleg Lee:I'm Ryan Atkinson, and you're listening to Help Flip Podcast, where we interview entrepreneurs to hear their advice, how you can start a business too. And today, I am so excited for this interview. This is such a unique topic and such a unique story. So I'm excited to welcome Oleg Lee to the podcast. Oleg, thank you so, so much for being here. Hey, Ryan, thanks for having me. Let's go back to your origin story, though. Your dad was in a print shop making generic pillows when your dog Izzy died. And you asked him to make something different. Talk to us about that pillow and like the origin story and what happened when you posted it.

1:14So yeah, I lost my childhood dog. And you know, I miss him so much. And to make it long story short, I asked my father because I saw him when I visited him at this factory, the printing shop, I see him making pillows and ask him can you make me a pillow so he made a pillow with a picture the square pillow but it was kind of cool but it was a little bit boring yeah I could hold in the dog but like it wasn't the same so I asked him can you actually cut out the whole shape of the dog and make it into a pillow so he's like yeah I think I can do it I mean shouldn't be a big deal so he made it I came back I looked at the pillow and like I almost cried I'm like oh my god this is like my dog is just sitting there I took a picture posted online and internet lost it as you said everybody's like oh my god this is so cool this is so lifelike this looks like a real dog can i get one so i'm like i guess i think we're on something there's so many requests but the problem was we're not able to offer a custom pillow because it was we didn't know how to take orders so we went and we purchased i'm jumping a little bit forward but we basically start selling we went and we found what are the top most popular breeds in the usa and we found them and we bought pictures of 10 most popular breeds and started making them to shape pillows and selling them.

2:21That's how it basically kind of started first.

2:24Oleg Lee:Oh, man, that is so cool. I want to talk about actually posting it on the internet. Where did you post it? Like, what was like that initial reaction? Again, was it people like, Oh, my gosh, I want one, I need one? Or like, where'd you post it? What was that initial reaction? Yeah, it was on my social media on my old Facebook. And then the feedback was basically, Oh, my God, this is so lifelike. It looks like a real dog. I want one. How can I get one? And it's just hundreds of comments. And we're like, what did you get? I'm like, well we made it we didn't get anywhere and actually started looking there's nobody was offering it wasn't it didn't exist and yeah that was how idea came out like we should probably make it you know and start selling it so you're printing off now the top 10 dog breeds instead of doing custom orders initially what happens then i mean you got popular dog breeds what happens then so we opened a little website we put the pillows there and then the biggest thing what happened we group on was training back then and i know if people familiar with group and it's kind of old now but we went to group on i knew someone to someone to someone and i said hey i have this cool product because i knew people want it right so i can offer you a limited quantity and the star breeds for this price they love the idea again it's a new product didn't exist they launched it we knew we're going to sell like few hundreds we sold 20 000 20 000 of this pillows I think like the fog was the top sell.

3:48I think it was 8 ,000 on F fog. And it was like French bottle, golden retriever and all the other bits. And I was like, okay, how do we make them?

3:56Oleg Lee:Oh, man. How do we make and ship? We didn't have any infrastructure. We didn't have any office. We had nothing. So me, my father in his car garage, we started making them one by one by the prints from the factory that he worked, bring them into garage and we sold them and stopped them and closed them and shipped them. my entire family was involved all the relatives everybody's stuffing by hand it was a nightmare but that's how we knew the demand is there what were you feeling at this time because i'm trying to put myself in your shoes you're like okay let me just test this out boom all of a sudden you have 20 000 orders was this life-changing moment or did you know it come it was definitely life-changing moment because it's like first of all you don't see just sales you see the money the amount of money also i don't remember how much it was it was a few hundred thousand dollars i think i think it was maybe$300 ,000 or something.

4:43I don't remember the number. But like you look in the number, like you understand, first of all, you're going to get this money. That's a lot of money right now. But the problem was, until we get this money, we have to fulfill the orders and make them. That was kind of a tough moment. And that was insane experience. We definitely didn't expect we woke up to this. And it didn't go for a day, it went for three days. So first, it was like, 8 ,000. And then like 9 ,000, then 1000. And then just shit, they keep going and keep going. It ended up, I think 22 ,000 pillows or something.

5:09Oleg Lee:Oh, my gosh, that's insane. So you guys were doing this just out of your garage, you and your dad are like doing these custom paint that picture for us. I'm curious, what does that look like? Because that has to not be easy or scalable. I wish we recorded that, you know, how we were doing it in his car garage, the entire family, like maybe 10 people standing and stuffing pillows and packing them. It was a crazy experience. It was, you know, people say it's a good problem to have, it's still a problem. So they need to figure out how to make them and ship them. It wasn't an easy thing to execute.

5:37But we got it done. And And then we realized, okay, so we went and started offering the same pillows to everyone. So I basically flew to Walmart corporate offices and I said, hey, I have this product that sold X amount in Groupon and I can make unlimited quantities, buy from me. And I ended up getting a deal. We basically were in 2000 Walmart stores nationwide. And that's where we started expanding, buying equipment, because we basically got in, we became Walmart vendor. And then they, I think four or five months later, they placed the order. And the order was like the place in order in September and you have to deliver it in like an October, they only give you one month, which was also another nightmare to execute it.

6:15Oleg Lee:Oh yeah. Interesting. So I want to ask about the Groupon Walmart timeline here. How quickly did all of this happen? Was this in the span of six months? No, no, I think it was a year later when we executed the order. We rented the little place. We got a little bit of equipment cause we realized, okay, people want this product. We went to Groupon, we did another event later on and we sold another like a few thousand. I think it was five thousand the second time. And then we start offering it to like Amazon and Overstock and all these marketplaces. And then I started chasing Walmart. I watched the Ark thing.

6:50I'm like, okay, I got to get into the stores. It was great. Walmart experience was good. Walked away from that deal to get into nationwide because the expansion required a lot of investment and it's not guaranteed I'm going to continue buying it from you. So it was risky and I made a decision not to do it anymore.

7:08Oleg Lee:At this point, are you doing it full time? I know you're also working construction gigs. So talk to me, what was your personal life like around this time from a year into it? I was still doing construction because the problem with all these marketplaces and Walmart specifically, the OPA 60, 90 days. Walmart, I think it's 180 days. So you have the orders, you have the sales, you have the cash to fulfill the orders, to buy the materials, to ship them. So I had to have the money to go work and get cash so I can pay. Because we're sitting on tons of receivables all the time. That's why I had to keep working.

7:42I didn't do a lot of work, but it looked like I would paint a house at night on the weekend or do some floor. I was a carpenter, so I did a lot of woodwork.

7:50Oleg Lee:Okay, so then talk to us about walking away from Walmart. Because it looks here like you went from 200 stores to like 2 ,000 stores, which is incredible. But why did you ultimately decide to walk away from Walmart? To be honest, the Walmart order, we probably lost money on it because the margin is small. The timeline, they give you only one month to create the order from the pickup day. The pickup day all at once. So we had like maybe 40 pallets or something of pickup. They have to be ready at one day. We didn't have a space to stock it. So we're stuffing boxes to the roof. And then when the rocks start coming in for pickups, we have to palletize them.

8:27It was a lot of work, a lot of hours. We have to hire so many people to execute it. Very small margin because it's, let's say, it costs us$5. We sell them for like$7.

8:37Oleg Lee:Oh, wow. The margin is very small. And also, we start pushing more custom to the website where the margin is insane, right? From$5 cost to$50 retail. So I'm like, I want to do more of this. I don't want to deal with Walmart or this. I don't want to deal with this anymore. So it was a transition going more B2C and moving away from all the wholesale idea. Are you ready to launch, grow and scale a business? Inside the Uplip Academy, you'll get a complete roadmap to shortcut your success with 25 plus step by step programs taught by active business owners, not gurus who share their step by step blueprints, plus ongoing live workshops, skills training, a business idea database and community to share resources and celebrate your wins.

9:21Oleg Lee:Click the link in the description below to join the Elphab Academy today and start surrounding yourself with the people and tools that can change everything for your business. Talk to me about that shift from DTC. What were some of those key characteristics early on for you? Was it going from$5 to$50? Why was DTC the no-brainer play for you? Well, DTC is much harder as far as you need to spend a lot of money on marketing. We didn't have the money to spend on marketing, but once we started getting into proper cash flow, and we could put some money into the marketing, into the ad spend, this is where we're actually able to allow the transition.

9:55Because now when you sell directly, you get paid the same day. Actually, it's next day from Shopify, right? So the money started coming in daily. The cash flow improved. Now like, okay, we don't need wholesale anymore. We don't want to sit on the receivables. It takes so many more people to execute, so much more work and so much more risk. We got screwed by some of these sellers. They didn't pay us. My Touch of Modern was one of them. We used to sell, then they went out of business and they didn't pay us I don't know how much money. It was another one. I don't remember the name. So more risk. And we basically at some point, I made a decision, transition fully to B2C and walk away from all the wholesale.

10:28Oleg Lee:So you guys are doing custom orders now. Talk to me about the equipment that your team needed for that. Was it a seamless transition to starting to do more custom work or what pivot was needed for your team? So to do the custom pillows, as far as making the product, it's the same process. Print, cut, sew, stuff, all this stuff. It doesn't change the process on the manufacturing. It's the front end. It's how to receive your photo, understand what you want, crop it, size it. So first, if you would go to our website in the beginning, you have to upload your photo place in order and trust us to do the work.

11:01And most people, they don't trust it. Like, I don't know what I'm getting. And when we realize the issue, we spend a year, probably over$100 ,000 on developing our own tool, which is the mock-up generator. For example, right now, if you go onto my website, you take a photo at the moment and you upload it it will instantly crop the person or the pad will turn into 3d spinnable pill you can see it all you know 360 that's cool so you see exactly what you're getting and our team is trained to sell the pill based on mock-ups if you compare the actual pill that you're going to receive and the mock-up you saw is going to be like 95 accurate so once we launch this tool that's changed the game completely because now the conversion increases crazy i feel like the conversion rates

11:43Oleg Lee:I don't know what they were, obviously, but would have to just absolutely skyrocket. Because I feel like it's one of those things where someone now, they get to visualize it. It's like more real than just a photo. I feel like that had to be so big for your guys' conversion rates there. That was a game changer. And we also made sure that it shows you the preview in like three seconds. Super fast. Because most custom websites, you go, you upload, it takes forever. A lot of steps. We made it simple. Drop a photo, see your pillow, place an order. That's it. Do you have like any conversion metrics off the top of your head?

12:12Oleg Lee:How it jumped? Honestly, it's not as much as... I don't remember the conversion, but business started growing. The revenue started growing crazy from that moment. So it's safe to say that$100 or$100K software probably paid off for it pretty quick. We probably went from being$5 million to$10 million in revenue within a little bit over a year. So when you guys were doing like 5 million revenue, kind of paint us the picture of like what your team looked like, like who was on the team, who was there? Because I think it's a super interesting source, a super niche market, which I just absolutely love.

12:45Oleg Lee:What did like that team look like when it was at like 5 million? Honestly, the team was pretty small. We had one guy who in our entire marketing, paid ads, email, Google, everything marketing related. We had one graphic designer in-house. we had me i mean doing a lot of marketing as well and helping with content and stuff and that's it pretty much that was very very small thing like three people but even now we're like we're only like five people team so crazy we're very small because it's like you know to scale it doesn't really require more effort we just basically spend more money on marketing and that's it so basically where we do need more hands and people it's in the manufacturing side this is where we're going.

13:27We went from 10 people to 50 people now on the warehouse.

13:31Oleg Lee:Well, let's talk about the marketing side. And if someone is listening, if they want to do a similar business, how they can grow as well. So you just said, spend more money, you make more money. That's a common business notion there. What are you guys spending money on? And what is your monthly spend on marketing tasks? Well, we spend mostly on Meta, which is Facebook and Instagram ads. We spend a little bit on TikTok. On average, we spend about half a million a month like obviously november december we spend over a million a month but i would say from half a million and 80 goes to meta spend we on any given date you go to our meta account or go to it as library we run over thousand ads every day we launch hundreds of ads every week so it that's kind of like i wouldn't say it's a secret but that's how you're supposed to do it you have to launch a lot of it so you can't just spend more money like i wish i could spend a million every eight months or two million like there's no limit to the budget as long as the return is right you know talk to us about obviously i don't think of this the total secret sauce of everything you're doing but give us some of the secret sauce of like successful like meta campaigns because i'm personally like starting to learn like meta campaigns for like a very high ticket item like oh should i do meta should i do linkedin give me some like meta tips here like what goes into a successful campaign and like how do you know something is successful in that obviously pretty simplistic.

14:51Well, it's a lot of testing. So let's say we throw 150 ads in only like 10 over. So we're going to remove the 140 in place and with another 150 ads. So like you have to really do big batches of ads to understand what's working. Then you have to analyze what's working and why it's working. But with meta, I mean, probably anyone will tell you always the random stuff does the best. Like I personally used to edit and create ads. And one point I was creating batches for Christmas. And I like I take a long minute video and I chop it into five clips. But then I had some videos that I couldn't do more than one clip out of this video.

15:27So I saved them as a solo. I was just like, Okay, I don't care about this. I just saved them in this folder, I called them solo. And one of them being our highest would probably spend 2 million on this ad.

15:37Oleg Lee:No way. Eight second ad. There's a college girl in the college room, in the door room, very bad quality. she opens the package and she cries immediately and she hugs it. We have tons of similar videos, but this one, I don't know why. It just stuck with people and it made us a lot of money. So with ads, you never know. There's some you think, okay, it's going to be great ad. Nah. You really have to be just throwing and testing, throwing and testing. But what makes successful ad is shareable ad. You know how we all send each other reels and stuff? You don't think about it. Like if you know I'm a passionate runner and like you see something about running, you immediately think, oh, Oleg, I'm going to send him this.

16:20You don't even think, it's just instant. This is how the ad's supposed to be as well. When somebody sees it, you don't want them to think of someone. You want them to exactly know who they're going to send it to. And if you can achieve it through the ad, you have a winning ad, basically.

16:34Oleg Lee:Everyone should rewind that and hear that 500K a month strategy right there. That's a great breakdown. Is there a formula though that like works for you? Like, because in my experience, when I've like sold like B2B marketers, I always have, I'm like, oh, like B2B marketer to get like super specific. And I get into like an offer, like right away. And like, we saw all right results. We should have honestly tested more, but like formula that works consistently for you. Is there one? Well, we have a lot of you juicy reactions. So like we basically encourage people. Most of our product purchase as a gift to someone.

17:03We know that we collected this data. We know it. Now, every time somebody purchase was telling, hey, we know you're gifting. make sure to record your gifting moment send it to us we'll give you 250 store credit if it's good and we have 2500 videos like that we get like five to ten videos every single day people submitting because we give a lot of credit but then one of them will win and it's amazing so for us the basically the reactions the true reaction when i'm giving you a package it's closed it's sealed you open it in front of the camera like you don't even know i'm filming you i'm just gifted i gifted you you open it pull the pillow first reaction they always hug it most people cry because it's very emotional like it's either they somebody they love or miss you know and those are the best ads you know the true ugc reactions so you have like the true ugc videos but

17:55Oleg Lee:like you have done some really cool stuff with celebrities i'm looking at your instagram here tell us about the david dobrik one that i'm seeing here on your instagram as well tell me about that We did a lot of collaboration with celebrities. It's mostly for product and brand awareness. I can't say it drove a lot of revenue, but definitely people are like, oh, I've seen this on David Dobrik. So here and there. With David Dobrik, he's local. He actually went to high school where effective is, Vernon Hills, Illinois. So that's basically where we did the world record was in front of his high school.

18:24And he lived there in the area. So we're looking to partner up with somebody big to do the world record. And we figure out, okay, David Dobrik is a great candidate because he's local. You know, he has a lot of local community. And we knew someone who knew him and we reached out. He agreed to do it. We did this together.

18:40Oleg Lee:It was fun. Good experience. It's really interesting, though, that you say like celebrities, like it's great for brand awareness, but it might not be for revenue. I'd be curious, like, what are some like thoughts on that? Because like, I would think like if you did something with David Dobrik, you'd be like, oh, my gosh, like, this is so cool. Like, I'm going to go on the landing page and like buy one. Like, what's kind of the theory behind that? Most of the celebrities pillage, you can sell them, first of all. Right? So like if I'm making pillows for Pater's Hilton, which she's a good friend and I always make pillows for her, I just send her a bunch of pillows for her Coachella party.

19:11I can't really sell her pillows. So me giving her pillows and making for her own sheets, posting and tagging, just bring awareness to the product. Because at the end of the day, I am the only manufacturer in the USA who makes this product. So if you see this product anywhere in the USA, in any party, in any place, you always come back to me. Who makes it? You started searching, you started Google and you're going to find me or my brand. So that's why I'm putting my product into places and houses and hands of every celebrity. So we made for Kim Kardashian, birthday party, her own birthday, you name it, for DGKL, like we work with a lot of celebrities, but it's never like you get a lot of attention, not real orders, but maybe the order is coming in later.

19:50It's basically the trust factor that we legit.

19:53Oleg Lee:Oh, for sure. It's a new brand. You're trying to grow it and like, can I trust these people? And then when you see, you know, all our celebrities, like, yeah, I can probably trust these people. Yeah. Well, I feel like it's just straight social proof at that point. Because when I'm thinking about like evaluating, you know, buying something that I've never bought before, if I see, you know, Paris Hilton on there, David Dobrik, someone famous, I feel like it just adds that social proof. And that probably makes your ad better, essentially. Well, we don't use any of this creative in ads, but on our website, yes, it is a social proof.

20:23It is credibility. We still kind of small brand that trying to grow. So like at some point, maybe we won't need it. Our name will be big enough and known enough. But for now, it's very, very important. And it's actually good how people should be doing it. You know, I took the strategy from Damon Jones from Shark Tank. That's how he did Fubo brand. He put his shorts and hats on all the celebrities. That's how I build credibility. You know, you can say all day your product is great. But at the end of the day, I want to see somebody I know, you know, using that product.

20:49Oleg Lee:Speaking of somebody we all know, that is Netflix, Chewy, Paramount, etc. And you are the back-end manufacturer for all of them. How did those deals come together and how those partnerships start? So this is my biggest secret sauce is my Instagram. I utilize it to the full. And that's something I learned from Gary V, by the way, Gary Vaynerchuk. He said, just DM people, DM people. And I really started doing it. So the Netflix and Paramount, it's all to DM. No way. Yes. All the celebrities, all my relationship, it's all to DMs. I worked with some of the largest brands. I just DM them, email like, I don't want to say names, but the Netflix, we don't work directly with Netflix in Paramount.