Transcription Episode 021

M.C:This is Cashflow Ninja Episode 21 with Afif Ghannoum.

Man: Welcome to the Cashflow Ninja, the podcast empowering and inspiring people to discover how to generate their own income and manage, grow, and protect their own wealth in the new economy. Now, here is your host, M.C Laubscher.

M.C: Hello, everyone. M.C Laubscher here, and welcome to our show. I hope you are all doing fantastic. I am skipping and whistling, since it's summer here in the United States. I know we have listeners from all over the world, so wherever you are, I hope you're doing fantastic. In Episode 17, I had two of my fellow ruggers, Mike Harriet and Luke Theme [SP], on talking about the really cool stuff that they are doing taking a proactive approach to brain health and concussion recovery with a unique product that they have designed and are providing to contact sport athletes.

It was a pretty cool episode. They talked about their journey from going from an idea to selling a physical product, and some of our listeners have indicated interest in getting more information about creating and selling a physical product not only online but through physical stores. Our guest today is someone that has mastered the art of taking a product from idea and concept to reality, and selling it online and in physical stores. Here's Afif Ghannoum, the founder of napkintoshelf.com. He's a formerly frustrated lawyer that has launched over 10 products that have sold in over 27,000 stores that include retailers like Walmart, Target, and CVS.

Afif also has two patents and has licensed technology to a large pharma company for a product sold in tens of thousands of stores in multiple countries, and has raised over $9 million and counting in venture funding. Afif has an incredible story to share, how he came to the United States with his family. Our interview with Afif will be packed with powerful information that includes how to know that the product that you want to create will sell, strategies to create products in different niches, how to come up with a distribution approach, how to come up with a name for a product and promotional strategies, how to own and control a logistic system that includes manufacturing, warehouse, and fulfillment and more, and how to raise capital and so much more.

Before we are joined by Afif Ghannoum, just a reminder that you can download any free book when you try Audible for 30 days. You can grab your free trial, an audiobook download at cashflowninja.com/freebook download. And just a reminder that my friend Minesh Bhindi from Gold and Silver For Life is hosting a webinar, 3 Steps to Cash-Flow Gold & Silver. Minesh is showing people how to use their gold and silver holdings to create income streams.

You can register for the webinar at cashflowninja.com/goldsilverwebinar. You can find all of our post show and show notes at cashflowninja.com, and you can also join our community and mailing list by texting the word CASHFLOWNINJA, one word, all capitalized, to 44222. That's two 4's and three 2's. If you sign up to join our community, I will email you three of the top 10 books ever written on building wealth.

John Lee: Hey, this is John Lee Dumas from Entrepreneur on Fire and you're listening to the Cashflow Ninja Podcast with your host M.C Laubscher. You must be prepared to ignite.

M.C: Afif, welcome to the show.

Afif: Thanks for having me.

M.C: Now, you have quite an amazing story. You immigrated with your family from the Middle East to the United States. Can you please share a little bit about your background and how this led to where you are today?

Afif: Yes, we spent my entire childhood there in Kuwait until we were displaced by the first Gulf War in 1990. We were actually on vacation in England, where my mother's from, when we got the news that Saddam had actually invaded Kuwait, and literally overnight we lost everything. We had a couple suitcases full of clothes, and that was about it.

So my parents, we went from summer vacation fun where we'd go every year, to my parents literally losing everything they'd worked for. For the first few weeks, local news covered it. We relied on the kindness of other people giving us clothes and literally food. It got to the point where five of us – I have two siblings – a local college offered to give us a dorm room meant for two people that we had to live in until my parents figured out what was going on.

A few weeks after the invasion, my dad got on a plane and headed back to Iraq and hitched a ride from Baghdad into occupied Kuwait on a bus full of Iraqi soldiers, of all things, to try and get what remained of our lives: photos, important papers, just fragments of what we had. Because, you got to remember, back then, this is pre-digital anything. So, everything from birth certificates to college degrees, it seems…I've been asked this, “Well, why would you go back? It's just stuff.”

But that sounds all well and good, except a lot of the stuff truly is irreplaceable. And the other thing was that back then, especially in that area of the world, there was no stock market. So my parents' savings was all in cash and some gold that they'd, every month, buy a little bit of gold. So it really was not a choice on my parents' side. My dad had to go back.

He meant to stay for a few days, and ended up staying for weeks and helping a number of Kuwaitis and European friends try and get out. And eventually, he did get out, but in the meantime, my mom would get calls from strangers who had been in Kuwait with my dad, saying, “I'm in Brazil. I met your husband in Kuwait. He's trying to get out in a few weeks,” or, “I'm in England. Your husband asked me to call you. He's trying to get out.”

So, for me, as an adult, it's hard to imagine what that was like. But after weeks of getting the lay-of-the-land and getting everything together, he literally sewed valuables or savings under his clothes, put some money and trinkets aside for bribes. He and his cousin found an abandoned Pepsi truck, stuffed it all with their belongings and headed back out of Kuwait to safety.

That was sort of the first part of our journey into our new life, but before anything had happened in Kuwait, my dad had been invited to a conference in D.C. for microbiology. He's a microbiologist by background. He had a paper ticket, again, because this is back in the day – there's no Expedia or anything – and he knew that he'd have a chance to maybe make some connections and get a job in the U.S. So he and my mom rented a computer, he wrote his CV down, and when he got to D.C., had no money for anything. He was eating apples out of a lobby. A couple people said, “Listen, this is not the meeting to find a job. If you could get to LA the following week, that's the industry where you can meet people, the decision makers.”

But he literally had no money and was walking around D.C. despondent. He walked by this travel agency and my dad could see there was this African-American man working behind a counter. And my dad, who we always joke he's the foreign dad in America, he's like the dad in My Big Fat Greek Wedding. There's nothing he won't…just go for it. So he goes up to this guy and he says, “I need your help. I need you to change my ticket to LA, and I don't have money.”

So this guy tells my dad, “Look, I can't do that. I could lose my job,” and my dad just hits him with, “Listen, you're African-American. You know what struggle is. I'm really struggling. I need your help.” So this guy did not know what to make of my dad, but literally paid out of his own pocket to change the ticket. So my dad got to LA and he ended up getting a job offer at UCLA and in Detroit. And shockingly of the two, he chose to take us to LA. Then we eventually moved to Cleveland. So the rest is history. It's funny to me when people say the American Dream is dead, because that's just not true. I think it really is alive and well, you just have to literally never let anything get in your way.

M.C: No, that's quite an amazing story. I agree with you, it's very, very live and well in many, many areas. You just have to look for it. One of the things, though, too, I completely understand about going back for some of the irreplaceables, like the pictures. I mean, that's just memories. That's one of the first things I will grab. You just can't replace that. I look at pictures from my grandparents and just family, and it's just something that I can't imagine being without it. You look at it once in a while, maybe once a year or so, but just irreplaceable stuff.

Afif: And especially now when not only are there so many more pictures, but everything's digitized. I can get my pictures from any computer in the world. These, they're precious to me, pictures of my dad as a child or obviously me as a baby, that sort of thing. So, yeah, some things truly are irreplaceable.

M.C: Now, you've had an incredible entrepreneurial journey, beginning as a frustrated lawyer to launching over 10 products that have millions in dollars in sales in over 27,000 stores, and having one of your products winning the Best New Product of the Year, co-patenting two products, licensing technologies to large pharmaceutical companies and raising over $9 million in venture funding. Can you please share your experiences of this journey and what inspired you to become an entrepreneur?

Afif: For sure. So, as you said, I was a lawyer at two of the biggest law firms in the country, and I just couldn't get over the fact that I was helping others accomplish their dreams when what I really wanted to do was follow my own dreams. And frankly, it was a grind, and it taught me the lesson that I never wanted to sell my time because I would always be owned by someone else.

I wanted to create assets that would work for me. Whether I was on vacation at night, someone is out there buying my product. As I opposed to when I was a lawyer, if I'm not billing my time, I'm not getting paid. So, at the same time, my father has been a consultant for a number of mega pharma companies like Pfizer, Novartis. We looked at each other one day and said, “This is kind of dumb. We're helping others accomplish big things. Let's do this for our self.”

So we took a leap of faith and I left my job, which was not an easy decision. But I always think of that scene in Indiana Jones where he knows there's a bridge but he can't see it, and he just knows he has to take a step. And there's a bridge after all, it's just invisible. You really, as an entrepreneur, you just have to, at some point, commit, or you're never going to know. So that's what we did.

So I left my job, and with another co-founder, we started Oasis Consumer Healthcare. Our first product line was one we actually bought called Oasis Dry Mouth. But after that we used my background and understanding of FDA regulations in the legal and business side of things, and my father's understandings of how germs work, and we started looking for ideas to develop.

We literally started combing the shelves of retailers, and the first thing we noticed was that while there were all sorts of products for older adults, from vitamins, to obviously hair color, there were no oral care products for older adults, even though older adults have different oral care needs than younger people. So that's what I would say was our first double, was a product called Age Essential Mouthwash, which was the first oral care line for 50 plus adults.

We knew we had this great idea, but we also knew that in the world of consumer products, we were nobodies. So instead of going right to the Walgreens of the world and saying, “Hey, check out our new product,” we went to a local retail chain here in Ohio called Discount Drug Mart, 100-store chain. We said, “Let us do a pilot test with you guys,” and we did everything we could to make it. We did displays, radio ads, coupons, you name it, and we got really good sales data. And within a few months, we took it to Walgreens, and based off that data, they picked it up. And that was truly our first big win.

So after that, things really, really got rolling. Our biggest hit, so far, has been a product called Halo Oral Antiseptic, which is basically the way to think about it is Purell for your mouth. So that's the product we won Product of the Year, which meant a lot to us because it's voted on by the top 100 retailers in the country. And overnight we went from this couple of guys in a building, to getting distribution in over 20,000 stores. That really was when we knew we were on to something.

Since then, we patented the technology that Halo is based on. We're actually taking a drug through FDA approval for the first time, which is a whole ‘nother ballgame but very exciting. Now we're closing in on $10 million, all from angel investors, and we continue to bring products to market. One of the things I like to always emphasize is that one of the keys to our success is we emphasize lean, lean, lean. We've never ever had more than four employees, including myself.

M.C: That's amazing.

Afif: Yeah, that's sort of a taste of how I got to where we are today.

M.C: Now, you have had amazing success in taking a physical product and launching it successfully, and then selling it through physical stores. Now, as you know, on this podcast, we talk about people creating income streams from their passions by creating assets. Can you use your areas of passion as an example to explain what steps people can take to know and predict if the product that they want to create will sell?

Afif: So, you really hit on something, because one of the hardest things as an entrepreneur is to be passionate about something, which I do think is critical, but not letting that passion override whether you've ultimately got something that actually is an asset, that will actually create an income stream. So that's a very fine line to balance, and it can be a real struggle.

So, a lot of times it's not until, and entrepreneurs I've come across, that they've spent a lot of money that they're eventually confronted with the reality that their product is one of a few things. One, it's not just something people are going to buy, and that happens. Two, it's an interesting product, but it's just too expensive to make compared to the price the market will accept. And I'll give you a good example in a minute.

Or three, it's just another “me too version” of a product, which is basically, you know what? There's 80 other guys with the exact same thing. And the reality is, unless you're a Procter & Gamble, you're just not going to be able to differentiate yourself. So, with myself, I'm kind of born…some people are passionate about cars or fishing or gardening, and they come up with ideas around those. Passions, for me, my passion has really turned into chasing that moment when I know we have an idea that will likely be a product people will buy.

So, how do I figure that out? Early on, we literally spent hundreds of thousands doing everything from price elasticity studies to consumer concept testing, advertising concept testing, you name it. What we figured out was that basically we were coming to the same conclusions by using some pretty simple and free techniques.

So, the first, and it's going to sound ridiculous, but it's truly a simple Google search. So why do I say that? What you want to look for is to see if other things that are coming up similar to the product, which is actually a good thing. Why? Because if your product's totally unique, you're going to have to educate a whole lot of people about your new product, and that gets expensive. So, I like to use Google to get a lay-of-the-land for what's already out there.

The other reason I like Google, and Amazon, too, obviously the same aspect, is to see the general price range of products that are in the same category of your product. Because it's amazing how, if you have even the most incredible product, if it costs you $50 to make it, and similar products sell for 20, you're going to have a really hard time convincing people to pay substantially more for your product. So just figuring that out alone can save you a lot of angst and time.

I'll give you a great example. These dudes came up with this idea of smart socks. There are smartphones, smart everything now. Basically it's a technology-infused sock that…who knows? It may actually be extremely useful, give you all sorts of data on how many steps you take, the pressure you put on your feet, your general activity level. Who knows? But my sense is, if those socks cost $49.99, most people are going to stick with the six pairs for eight bucks, no matter how smart the socks are, because they're socks. It really pays to take your time and balance this passion or thinking you have something innovative with the practical reality of, will people buy this?

So the next thing I like to use is Amazon reviews, which are really this overlooked tremendous source of data. Why? Because you'd be shocked at what you'll learn about what consumers want in their products just from reading reviews. So, just by looking, you might find that someone says, “Oh, I really like this product, but I wish it had X feature. Or I wish it was…I paid double the price if it would do this.” Well, you've just created a new product because you have a product that obviously sells but it's not optimized, so there's an opportunity there.

The other thing I like to do is, aside from looking to see if I have a neat idea, is to see if there's actually a problem people are looking to address, and I will use Twitter for that. It's not obviously shocking now people who use Twitter are vocal about everything. So, for example, when we came up with Halo, we suspected airborne germs were something that really bothered people. Nobody likes being coughed on. We really wanted to get consumer proof, so we went to Twitter. We found that people despised airborne germs. We literally took screenshots of what people were saying, and we showed it to retail buyers and said, “Listen, this is a big unmet need for consumers.”

So, just do a simple search for the problem you're trying to solve and see if anyone's talking about it. And if it looks like you're in an echo chamber, it may be the first lines that you're trying to solve a problem that really isn't a problem. So, those are just a few of the ways that I like to informally conduct market research. I have a post on my site, napkintoshelf.com, where I really go into dozens of free ways you can do market research yourself, that is definitely worth checking out for your listeners.

M.C: You've talked about a red ocean strategy and a blue ocean strategy. Can you please explain these two strategies?

Afif: Red ocean is the idea that there's a ton of competition in the area you're trying to compete in, whereas in a blue ocean, the concept is that you have the entire area or the ocean to yourself. So a lot of people will preach that you should try and shy away from red oceans and stick to blue waters. The problem I found is that if you're in a blue ocean with a totally unique idea, it can be incredibly hard, especially as a solo entrepreneur, to make people aware of what your product does and to figure out if people actually need it.

And again, I'll give you a very specific example with Halo. We were the first people to ever come out with a simple oral spray that addressed airborne germs. Got patents, and as we mentioned, we won the Best New Product of the Year. We literally had no competition, but what we found out was that it was incredibly expensive to explain exactly what Halo was to consumers and how people should use it. We literally spent millions on television and print ads, as well as public relations.

So it was a brutal process. Now, we did get out there, and it was expensive, and we are the only guys out there. I'm not saying it's impossible or the wrong path, I'm just saying it's a very expensive path to go down. So, what I'd like to actually implement now is what I call a pink ocean strategy, which is basically I like to go into product categories that are proven, but I'd look for a unique angle to bring to the shelf.

So, again, take Age Essential Mouthwash that we talked about. I don't have to explain to people what mouthwash is. People get it. They've been using it for almost 100 years, right? So, the concept of swishing something in your mouth will help your oral care, people have bought into that concept. But what they haven't been using is a specific mouthwash for people over a certain age. So that makes it way easier for me to stand out while still going into an area or product that I know are proven to sell.

So what I've always suggested is just walk into a retailer and you'll walk out with 50 different ideas. Just look at lip balm, which to me, is the stupidest category I've ever seen. They're all the same. The world doesn't need another lip balm. But there's at least a dozen lip balm brands that all are enormously successfully, and all they do, they have a different angle.

So, take EOS. Their unique angle is that they come in an egg-shaped container, vibrantly colored. Burt's Bees goes with the folksy vibe, which is kind of ironic now that they're owned by Clorox. Lip Smackers, their whole angle is they come in a thousand flavors. So, you get it. It's the same product, but they all have their little unique angle, and they all know lip balms sell. People buy them. So that's my advice, is look for a category of products that are proven sellers and just find a unique angle and swim into the pink waters.

M.C: That's great advice. From personal experience, too, when you launch something, as you explained, in a blue ocean strategy, where it's a unique product, the amount of time and capital just involved of educating the consumer on why they need this, it's a lot. So, that definitely makes sense. Now, marketing is obviously cardinal to a product's success, and a fundamental part of the marketing positioning is the name of your product. What advice can you provide on how people can develop a name for a product that will grab the consumer's attention within the space or niche?

Afif: I have a very simple rule that works for basically any product, and it comes down to what I call the SAAD rule for a happy product, which is cheesy, but I'll go with it. SAAD stands for S-A-A-D. The name symbolizes what your product does. Like, for us, Oasis symbolizes relief from a dry mouth. The name gives your product a level of authority, like Dr. Scholl's. The name evokes a specific aura, like Tommy Bahamas, gives you this island chic feel. Or the name succinctly describes what the product does, like spin brush. So, again, that symbolizes, creates authority, creates an aura, or describes what your product does. I'll give you a very simple example. Ever heard of a product called Five-Hour ENERGY?

M.C: Oh yeah.

Afif: So, Manoj Bhargava, the founder of, I think it's Essential Living that makes Five-Hour ENERGY, he took that to a billion dollars in sales. One of his geniuses was in the naming. He just kept it simple, and he literally told you what you're supposed to get out of the product, which is five hours of energy. I always use the example. If a tired alien came down and saw a lineup of Mountain Dew, Rockstar, Red Bull, and Five-Hour ENERGY, which one would he instantly know was an energy drink?

So, just keep it really simple. It's very tempting to name…I'd love to have a product called Afif Relief, but nobody knows what or who an Afif is. It's very tempting to come up with these beautiful abstract names, but you're losing a huge opportunity to make your name work for you. So, just stick to the SAAD rules, Symbolic, Authoritative, creates an aura or descriptive. And again, on my site, napkintoshelf.com, I lay that all out in a very simple to follow infographic that your listeners can check out.

M.C: Fantastic. Now, big difference also between an info product, which was talked about on this podcast, and a physical consumer product, is the packaging. This is obviously a very big area for differentiation within physical stores. Can you share some strategies and tactics on how to create amazing packaging that increases sales of the physical products?

Afif: Yeah, absolutely. One of the things you really have to figure out first before you figure out your packaging is where you're going to be selling your product. And I say that because if you're selling over the Internet, through home parties or something like QVC, packaging is actually really not that important because a consumer is already committed to buy by the time the product shows up at their doorstep. So, at that point, packaging is almost a waste. So, on the other hand, obviously if you're on the shelves of Walmart, packaging is incredibly important.

So, first things first, don't even worry about packaging until you've really taken the time to figure out where you're going to sell your product. But for our discussion, let's assume you are selling at retail and you need killer packaging. Unlike naming a product, there really is no single formula to nailing it with packaging, but what I do is, by constantly looking at other brands that are really hitting it out of the park, I'm always coming away with ideas on how to make product packaging stand out.

So, a couple of things I'd suggest to you. Go into retail and just look at products on shelf and see what products are really sticking out to you. But don't just go into the products that you're trying to sell. What I always do is, I purposely go into other product categories and see if they're using interesting containers or packaging that my type of product just hasn't caught on to and maybe there's something I can steal and bring over to our aisle.

The other place I like to checkout are sites like the dieline.com, which is basically packaging from around the world. And especially out of Europe, there are just some really neat innovative takes on how to package products. So I always check that out for ideas. One of my favorite products I've come across lately that I loved it when I saw it because I thought, “This is just smart,” is this product called Still House Whiskey, which literally…I have no idea if it's even a good whiskey, but it literally puts their whiskey in a red gas can. So it makes it pop right off shelf compared to every other plain see-through whiskey bottle.

So there's no magic formula. There are a few things that everybody seems to do that really nails it. They err on the side of being overly simple. They have a few key points of what the product is, but they really don't overdo it. Then they take steps to make sure they look different than their competitors, even if that's just using an unusual color or container. So, really with a little bit of effort, it's actually not that hard or expensive to make packaging that really stands out from the pack and is effective.

M.C: This ties into one of another questions. So, how do you determine the distribution of products that will give your product the best chance at success and where to go with it?

Afif: So, for us, at this point, our bread and butter has really turned into a major retail. Now, with that being said, it really all depends. And more and more, we're working on what I say is owning more of the distribution process by going direct to consumers through digital and social selling. So, as an example, in 2010, when we were founded, basically 0% of our sales were online.

Now it's over a third, and growing. The reason more and more I am looking at alternate distribution other than major retailers is that major retail, it seems exciting to get a product on shelf, but it's actually not that difficult in the scheme of things to get a product on shelf. What's very difficult is getting that product off shelf. It's going to happen one of two ways. People are going to buy your product, or the retailer is going to take it off their shelf. And you don't want that.

So, it's incredibly expensive, if you're going to do it right, to get into retail. So, more and more, you just don't need to rely on it. When we started, that was really your only way, if you were going to have a product sell millions of units. And that's just no longer the case. So, our bread and butter is major retail, but Amazon, for us, is enormous. We sell our products direct through Amazon, as well as Instagram, and we're even doing some interesting stuff using some of these viral, social selling tools to really get products in front of people, that just didn't even exist a year ago.

M.C: My next question, too, is so you've talked about the viral and social media and a lot of promotional strategies. Can you share some of those promotional strategies for my listeners?

Afif: For sure. We've literally done everything, from national TV ads to infomercials to courting the mommy bloggers of the world, which is a whole art in and of itself. And there are just a ton of ways that we've gone about it, but more and more, we're heavily shifting our focus away from traditional media to almost completely digital and social promotion, for a few reasons. One, again, as I mentioned, even two years ago, it was impossible to do the sort of social and digital promotion that you can do today because of the targeting and Facebook and Instagram. In fact, I'm going to meet with one of our major retail customers in a couple of weeks, and they love the fact that I'm coming to them with an Instagram and social promotional program for our products as opposed to a television campaign.

So the landscape is absolutely changing. I'll give you an example right now of one of the things we're working on is a contest to give away a year's supply of Oasis products. We're using this really cool software called Contest Domination that makes online contests go viral by giving consumers more entries every time they share the contest. So that goes live in about a week or so and we'll see how it goes.

But that's the type of thing that costs about 100 bucks to try, but we could literally end up with tens of thousands of consumer leads that are interested specifically in dry mouth products. So, very targeted, great list building that now we can give them promotional sales and reach out to them about new products. When I started in this game, it was next to impossible to promote a product nationally without, I would say, a minimum of a million-dollar budget, but you can literally do it for free.

So I'll give you a quick example that will drive you bananas. So I interviewed this guy named Corey Cole who's a stay-at-home dad. Every time I think about it, it drives me crazy. So he started a men's personal care line about 16 months ago, and his startup budget was 200 bucks. All he does is market through Instagram, and he's built his brand, The Rugged Company, into a million dollar business. He sells about 5,000 bars of soap a month. He sells beard oils. He sells lotions. All through Instagram, and he has spent zero dollars on promotion. So, just insane.

There really are no excuses for not being able to promote and grow products on almost no budget. Now, there are some strategies. It's not easy, and it takes some effort, but I look at it as you have two resources: your time or your money. If you have the money, great, but if you have the time, you're going to have to spend one of those two.

M.C: That's some really good information that you shared here. One of the words that you kept bringing up was targeted, and it's amazing that targeted advertising that you can perform on social media platforms. And then list building, of course, the key is to keep building that list. You had mentioned using the example of being on Instagram and this guy literally starting with a budget of $200 and growing his business, and he focused on Instagram. So that's another thing, too. I feel that sometimes people spread themselves a little bit too thin. It's good to key in and dominate one or two platforms and just keep focusing on that.

Afif: One thousand percent. You could not have said it better. And actually, again, not a shameless plug, I did a big case study on how he did this and the specific strategies he used in…he did really, really innovative things like bundling giveaways with other similar types of products that would be of interest to his audience, or he could do a $5,000 Instagram giveaway. So I walked through exactly how he did this, to the point that I turned around to our social people and said, “I want you to read this and we're going to start doing these things,” because it was incredible and very simple.

The best part is he's a stay-at-home dad. He's with his daughter until 3, until his wife gets home. I think she teaches. Then he goes and he makes products, and all day he's on his phone just Instagramming away, #beardoil. I didn't even know what a beard oil was when I talked to the guy. He's in the middle of rural Indiana. It's not like he's in some hot metropolis for social media. They guy has no background in it. So, definitely check out that case study. It's really interesting.

M.C: I'll definitely put a link to it in our show notes today. It's funny that you said beard oils, too. I was on some platform and it said something about trending beard oils, and I had the same response. I'm like, “I didn't know that existed.”

Afif: I literally didn't know what he meant when he said beard oil. So, yeah, it's very [inaudible 00:34:19].

M.C: Now, let's talk about the fun part of business: logistics. The first people think of when they hear physical product is like, “Oh, I'm going to have to manufacture it. I'm going to have to have this warehouse of my own and fulfillment and all this other headache.” And that usually steers people towards informational products. Can you talk about the benefits of just outsourcing manufacturing and using a third party logistic source and provide some advice of how to overcome manufacturing headaches to change people's mindset?

Afif: Right, 100%. So, first of all, not only is it totally possible to outsource, it's all we've ever done. We've sold millions of units, and to this day – I think I mentioned this earlier – the most people I've ever had on staff are four, and that includes myself. So, my personal philosophy is that, from unit one, I outsource not only manufacturing, I outsource everything. And so, let's start with manufacturing. So why do I do that? Few reasons. First, by outsourcing early on, I don't have to invest in any of the things you talked about: labor, equipment, the space involved. Instead, I just have to put the order in, and the facility, the workers, the equipment, that's their problem. It's not mine.

So, second, while at first I'll be making a small number of units before really scaling up, at this stage, it's where the manufacturer can work out the production kinks early on before you really ramp up. And trust me, something always comes up. So, for example, in our first batch of mouthwash, the safety seals wouldn't stay tight. We figured it out, and it wasn't a big deal when we were making 500 units. Now, if I waited to try and do that when shipping to Walgreens, we'd have a big problem on our hands. So, you really got a chance to figure out early on what kinks are in the process if you outsource from the getgo.

So, the next reason is that a manufacturer is almost certainly going to get better pricing and access to components than you are. Since they're just buying more, it just makes logical sense. They're buying more and doing it for many people, then you're likely going to be able to do it. You kind of hit the nail on the head, is that a lot of people think that…they have this whimsical idea of whatever it is. Take candles. “Oh, we're going to make these candles.” Which all sounds great until you are trying to make tens of thousands of these things in your house, and it becomes a nightmare. You really hit the nail on the head with the idea that, really, what you're going to end up doing is burning yourself out.

So, the other key reason I like to outsource from day one is that – and we touched on this very early on – if at the concept stage I engage a manufacturer, I'm able to understand what our true manufacturing cost is going to be as we scale up. Because it's not very difficult to make something pretty cheaply when you're doing it in your kitchen. Maybe a whole different ballgame when you're trying to scale up. You could waste years of your time when you get to the point where you're trying to make 10,000 and you realize the margin is just not in there.

So, we know upfront what it's likely going to cost as we scale, which is critical to the process. The other reason, too, especially if you want to go to retail, is it gives you a lot of credibility with retailers being able to say, “We deal with this manufacturer. We deal with this accounting firm or this law firm.” They see you're surrounding yourself…it gives you a halo of credibility. I've seen many a phenomenal product just not get picked up by retailers because they just don't think the company is going to be able to pull it off.

So, a couple of tips I use to find good outsourcing vendors is I literally ask for referrals from the people I'm already dealing with. For example, your manufacturer is going to know 50 different trucking and warehousing companies that would be worth using. And then the other, frankly, is a good old Google search. But the critical, critical, critical part of this is vetting who you're using. So nobody who's reputable should be willing to send you samples, give you references, give you specific examples of their experience in what you're asking them to do. And it can take an effort to get all this in place, but then it's almost autopilot.

I'm not exaggerating. We literally ship almost 100,000 units a month. I don't see a single bottle of anything. It's funny. Some of my investors will stop by the office and say, “Can I get a box?” “Sorry, I don't have any here.” It all goes from my manufacturer, who knows how many to make, ships it to the warehouse. Our sales group takes the order, the warehouse fulfills it, our sales group gets paid. So it's a great process, but it's just a little bit of elbow grease early on. Again, we have four people, and our offices are about 1,200 square foot looking over Progressive Field here in Cleveland. So, it really is a myth that creating physical products has to be this laborious process. It really doesn't.

M.C: You just want to own and control a system, not the individual parts of the process. Now, you've raised over $9 million in venture funding. Can you share some strategies on how you can raise some capital?

Afif: Obviously, fundraising itself can be a whole podcast by itself, so I'll hit you with some of the highlights. So there's four things I figured it comes down to. You really have to tell investors a compelling story about not only your product but about you, because, really you is what they're investing. There's this cheesy cliche saying that they invest in the jockey not the horse. So you really have to show them not only that the product is great but that you are great.

That you have a plan for making the product a success, which, i.e, means they're going to make a lot of money. You can literally have…I've come across some people with phenomenal ideas that we invest ourselves, and we look and say, “This is not going to work. They don't have the system set up. They don't know what they're doing.” So you really have to sell people on why you are the person that's going to do this.

The second thing is you really have to have the right attitude, and by that, I mean you must be willing to reach out to people and ultimately you have to ask them to invest. That can be very difficult and intimidating, especially when you first start. Look, I was a lawyer; I had never done this. And the first time I picked up a phone to ask someone for money, it's hard. But you know what? Especially when people say no, but it's the only way it's going to happen. You just have to realize that the more I…here's what I say. “I'm fine with no. I love yes. I hate maybe.” So, I will just keep asking until someone gives me a yes or a no. And it's business. You have to get over this idea of that it's a personal thing.

Now, I have some internal rules for myself, which is my own preference – some people don't – is while I do have some friends and family that have invested, I personally don't go to those people first. Why? Because for me, it's a comfort level. I've had some friends I approach and I say, “The only way I'm letting you invest is you have to understand black and white, that this is very risky. Any investment is. If you're comfortable with that and you're investing as much as you feel comfortable if you lost it all, then fine. You can invest.” But I, for myself, usually try and deal with people that this is not their first rodeo.

But it does get easier over time. The quicker you realize that some people are just never going to invest, the easier it gets. Which brings me to probably the hardest part, which is persevere. So, even when someone says “yes,” you're likely going to have to follow up several times to get their paperwork signed and actually receive their money. And it can sometimes take months, even after someone said yes, to actually get them on board. And it's not because they're being difficult, but people have to move money around, they have to get paperwork, they're busy.

Especially the kind of people that have money to invest, they're doing a thousand things. I am just not shy about following up, following up. Not to the point that I'm annoying, but eventually I will send an email that starts with, “Sorry to keep bothering you, but…” Usually that brings them back to life. I really don't want to bother them, and I think they're interested. And if they're not, great. I just want an answer either way.

Actually, one other thing on perseverance is I always, always, after someone commits to invest, I ask them if they know of anybody else that may be interesting, and over half the money I've raised has come through referrals from other investors. So, again, that, I think, is critical. So, the last part is being organized. And I cannot emphasize enough how important it is to stay organized because the critical thing you must remember is when you take other people's money, it is now your obligation to make sure you're on top of all the details of their investment.

So, obviously, as I said earlier, no investment is guaranteed, but what must be guaranteed is that paperwork's done well, you're using accountants, you're using proper lawyers to draft the paperwork, and you are just very well-organized, because that really is your fiduciary obligation. I personally take that very seriously. So, those are my four pieces of advice: Tell a compelling story, have the right attitude, you must persevere, and God help you if you're not organized.

M.C: What is the best advice you've ever received and the most important lesson that you've learned on your journey?

Afif: I'd say the best advice I've ever received was from a book I read on Stoic philosophy called “A Guide to the Good Life,” which I think is on Amazon. It really taught me that life falls into three buckets: things you can control, things you can't, and things that are a mix of both. So, very early on, I'm just wired to work. I think it's part of the reason I've been successful, is I always think of every detail. But what I found was actually a negative when it came to worrying about things I really had no control over. So, really, for things you can control, I do my best, and then I forget about it. For things I can't control, I don't even worry about it because there's nothing I can do, and that's really helped me build an awesome perspective, not just on business but on life.

Look at my parents. Who the hell would have thought you'd go on vacation and lose your entire life? Now, they could have wallowed in it, but my dad, he wasn't thinking of Stoic philosophy; it's just the way he's wired. He didn't worry about the things he couldn't control, like the war, but he did worry about the things he could, like getting our stuff back, figuring out how to get a job.

So, if I can't control it, I don't worry about it. And lesson-wise, pardon my language, but I've learned to keep my asshole quotient at exactly zero. If you're a jerk, I will not deal with you. I don't care who you are. It's just life's too short, and no one is that important, especially with business. There are ups and there are downs. It would be great to think that business is great, and it just takes a good attitude and it works. There are going to be down times, there are going to be peaks, and you just need to be surrounded by good people that are going to be there to celebrate the high times and the low times.

M.C: Afif, one of the questions I ask all of my guests is, if you cannot pass on any money to your children and grandchildren and you are only allowed to pass on five principles to them to build wealth and achieve success and happiness, what would they be?

Afif: I like this. Let me think about this. I would say the first would be work harder than anyone else because most people will quit before you will. Second would be don't get discouraged because something bad will happen in your life; you just have to keep moving. The third, and this is probably the principle I believe in most, is I always invest in myself first, because if I don't, nobody else will. In business specifically, I always maintain the voting control of my business no matter what. And lastly, don't sell your time, or someone else will always own you. So those are the five things I would pass along.

M.C: Very powerful. Thank you for sharing. Are there any resources that you can recommend that have contributed to the success of your business?

Afif: There's a number of tools I really like and I use on a daily basis. I would say the number one would be – and I know a lot of people are using Gmail, so this will be irrelevant – is an app called Boomerang, which literally I use a dozen times a day. What it does is, it puts email back in my inbox if someone doesn't follow up, like an investor. I love Upwork for finding outstanding freelancers. I use TaskRabbit for tasks that need to be done. Real quick story on that one. I did get some documents from FDA's library, and the only way they're available was if you physically went into their library in D.C. My D.C. law firm wanted to charge me $2,000 to have a paralegal walk over. I found someone at TaskRabbit for 40 bucks. The guy went over, scanned them, sent them to a disk. So, great service.

M.C: That's funny.

Afif: Design-wise, I like the dimeline.com for looking up packaging. 99designs.com is awesome for great design work. I really like fiverr.com, and that's fiverr with two R's at the end, which is phenomenal if we were trying to figure out some concepts. We'll literally pay five bucks and get eight different logos whipped out just conceptually.

And then I'll do a shameless plug. One of the things I did was I created an Ultimate Guide to Launching a Product, that has 391 guides and tools for launching a product. That's on my blog, napkintoshelf.com. It literally has 391 different guides, tools, videos that I found really useful that I've just collected along the way, that I just turned into an ultimate guide. There's 24 different sections of content.

M.C: Wow. Yeah, that's great. It's all in one place.

Afif: Yeah, and that's something…I don't know if, for your show notes, that might be something worth looking to.

M.C: Yeah, I'll put a link to that in the show notes. Now, are there any books that you would recommend?

Afif: Yes. I'm a big “how did they do it?” fan. There's about seven books I love that are specifically about products. The first is “The Pampered Chef,” the story of one of America's most beloved companies by Doris Christopher. “Pampered Chef” was bought by a little known investor called Warren Buffet. So I think the company did just fine. The other is “Delivering Happiness” by Tony Hsieh, the founder of Zappos, which is a really neat insight on how to treat your customers.

One is “The Making of an American Icon,” which is about L.L. Bean. The one that I really find intriguing, just because I love the guy, is called “Longaberger: An American Success Story.” It's about those Longeberger picnic baskets that you'll see at your aunt's house. It's really a neat story how this guy created doing something on the weekend to a billion-dollar business, selling decorative picnic baskets.

The other I like is “Raising the Bar,” which is the story of Clif Bar. I like entrepreneurs who not only want financial reward but ethical and emotional reward, and he's one of these guys that founded Clif Bar. Another guy like that is Yvon Chouinard, the founder of Patagonia, and he wrote a book called “Let My People Go Surfing.” The other is “The Everything Store” about Jeff Bezos, because Amazon, if you ignore Amazon, you do so at your own peril. So it's a nice insight as to how everything works.

I love a book called “Against the Odds,” which is James Dyson of the Dyson Vacuum fame, how he came about the idea. And really, if you talk about perseverance, he came up with thousands of prototypes before he figured out how to do it. And probably the last one is “Made in America,” a Sam Walton story, just because it's very intriguing and a real look into how retail truly works. So those would be the books I'd recommend.

M.C: Fantastic. There's a lot of good ones there for people to consume. Now, Afif, how can my audience learn more about you and your company and all the projects that you're involved in?

Afif: The best place to check out is my site, napkintoshelf.com and my blog. I've got tons of awesome resources for turning ideas into consumer products. And then once you have a consumer product, actually growing it. And I religiously post pretty in-depth case studies and articles. As an example, I just interviewed and posted a story about a guy who raised 1.7 million through Indigogo, through crowdfunding. I told you about the Instagram case study. So I really like to really get into the nitty-gritty and deconstruct how people have had success. So that's napkintoshelf.com. And on Twitter, they can find me @afifghannoum, which is A-F-I-F, G-H-A-N-N-O-U-M, and they can always email me @afif, A-F-I-F, @napkintoshelf.com.

M.C: Perfect. Well, Afif, thank you so much for coming on and sharing your inspiring story and providing so much value, sharing your knowledge and your journey. Really appreciate it. Thank you so much.

Afif: No, thanks for having me. I really appreciate it.

M.C: Thank you for joining me and my guest Afif Ghannoum, the founder of napkintoshelf.com. Remember to grab your free book download from Audible. You can download any book for free when you try Audible for 30 days. You can grab a free trial and audiobook download at cashflowninja.com/freebookdownload. And just a reminder, my friend Minesh Bhindi from Gold and Silver for Life is hosting a webinar, “Three Steps to Cash-Flow Gold & Silver.”

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Man: You have been listening to the Cashflow Ninja, with your host M.C Laubscher, the podcast empowering and inspiring people to discover how to generate their own income and manage, grow, and protect their own wealth in the new economy. Today's show notes and resources are available on our website, cashflowninja.com. This presentation is for educational and informational purposes only. The information being presented and considered does not consider your particular financial objectives or situation, and it does not make personalized recommendations.

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