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Make Your Ecommerce Business Sell-Ready: Tips from a Shark Tank Alumni
By Quiet Light
Innovation makes the eCommerce world go ‘round. But it sounds scary and intimidating to patent, manufacture, and sell a product that you’ve created. How do you protect your invention without burning cash? Unintentional entrepreneur and CEO of Beard King Nicholas Galekovic stumbled his way through the Amazon patent process and even survived the Shark Tank, coming out the other side a stronger, better business owner. Learn from his experience to better prepare your own eCommerce business for sale.
If you want to understand the strange machinations of an inventor’s mind, look no further than the bitter rivalry between Thomas Edison and Nikola Tesla in the 1880s. The two engaged in the Battle of the Currents, where they each tried to outdo the other in bizarre antics that resulted in the electrocution of an elephant named Topsy.
This feud also inspired the name of the band AC/DC, for you music fans out there.
So yeah, inventors do some crazy stuff to stand out from the pack. Fortunately, the “crazy inventor” stereotype is more chill these days, with many inventors transforming into entrepreneurs (instead of elephant murderers). The best place to sell your ingenious invention is via eCommerce platforms like Amazon, although that can be a minefield
It’s a risk that Nicholas Galekovic knows too well. In addition to sporting a rockin’ beard, he founded the men’s grooming empire Beard King, which he sold through Quiet Light. During this process, Nicholas learned how to file for Amazon patents, grow his business, and prepare it for sale.
After growing Beard King into a successful brand, Nicholas decided to sell his business. This was an interesting project for Quiet Light because only a handful of Quiet Light sales involve utility patents, which Nicholas had for his product. This caused some significant differences in how Nicholas grew and sold his business.
And no, his background wasn’t in business, but in design. Like most entrepreneurs, Nicholas had to get scrappy and figure things out the hard way.
If you’ve got a great product idea brewing in the back of your mind, it’s time to unleash it on the world. You don’t need to electrocute an elephant to do it, either. If you’re thinking about exiting from your business and you have a utility patent, pay attention to Nicholas’s story! Follow Nicholas’s recommendations to better protect your product and build a more valuable, transferable brand that you can sell for more money.
Nicholas didn’t want to be an entrepreneur when he grew up. He wanted to be a designer. He started off charging clients for small, one-off projects like custom fliers. Nicholas also designed custom MySpace pages, which you’ll only remember if you’re over age 30.
Nicholas founded the company Kovick to put his branding and graphic design experience to good use. The small agency did everything from brand strategy to web design.
Sure, Nicholas got to work on some cool projects, but there was a problem. He put a lot of sweat equity into branding other companies (companies which, by the way, usually fizzled out and disappeared). Nicholas had already started his own agency; why not shoot for the stars and build a kickass brand for himself? “I realized I’m building all this brand equity for other people,” he says.
Nicholas didn’t know what he wanted to do outside of graphic design. Like most things in entrepreneurship, he created Beard King as a happy accident.
As a beard aficionado, Nicholas had a problem: any time he wanted to trim his beard, he left a mess all over the bathroom. When his hair fell into the sink, he still had to clean everything up, but it inevitably left little bits of hair everywhere.
Kinda gross, huh?
Nicholas assumed that there was already a solution on the market for such a common problem. “Everything’s been invented and now you’re just creating a better mousetrap,” Nicholas says. But after a lot of Googling, he couldn’t find anything effective. That’s when he decided to pull an Edison and design a solution for his personal use.
A Used T-Shirt, Staples, And A Dream
Here’s the thing about inventing: it’s not a clean, fancy process. Nicholas made his first prototype with a used t-shirt. This worked all right, but he knew the design could be even better.
Nicholas knew what he wanted, but he had no idea how to put the product together. Undeterred, Nicholas bought an apron from the beauty supply store, cut it up, and stapled it back together because he didn’t know how to sew. “I didn’t know how to sew. What’s a man to do? We’re going to use staples,” he says. Held together by staples and a dream, Nicholas had his first Beard Bib prototype.
It was hideous, but it worked.
Even then, Nicholas didn’t think he had something special. The idea fizzled out and he let it sit for six months. It wasn’t until he bought clippers that claimed to solve the hair problem that Nicholas felt compelled to take his product to market. These fancy clippers claimed to gather hair with a vacuum seal, but in reality, they only captured 20% of the fallen hair.
Surely Nicholas’s less-fancy solution could top a pricey set of clippers that didn’t work. That’s when he decided to go all-in on the Beard Bib by creating the brand Beard King.
Nicholas didn’t know anything about Amazon patents when he started Beard King. “I didn’t know how to operate and scale a business,” he says. He had some experience in trademark as a graphic designer, but patents were a new rodeo.
If you’re feeling intimidated by the intellectual property and patenting process, don’t worry. Follow Nicholas’s 3 recommendations to master the Amazon patent process.
Patenting Best Practices
1. Accelerate The Process
Nicholas regrets taking too much time to get his utility patent. Instead of filing for a utility patent from the get-go, he filed for a provisional patent. At the time this seemed like a great idea because a provisional patent allowed him to work on his product. It essentially reserved his spot in line for a true utility patent.
However, a provisional patent doesn’t protect your product. If you want true protection, go for a utility patent from the start.
Nicholas’s decision to go provisional first lengthened the timeline, too. It took him 3 years to get the Amazon patent, which means he went 3 years with a virtually unprotected product.
2. Get A Bangin’ Lawyer
Nicholas credits his patent success to hiring a great lawyer. This is helpful not just during the patenting phase, but as you prepare your business for sale. This ensures your patents transfer over to a new owner without weird gray areas.
It took 3-4 iterations of the utility patent to get it approved by the patent office. That’s because patent examiners are tough and thorough. You should expect to revise and update your Amazon patent depending on their findings. A good lawyer can help simplify and speed up the sometimes frustrating process.
3. Have Cash To Enforce Patents
But guess what? Once you get that patent, you aren’t magically protected from infringement. You need to have cash reserves on hand to enforce your patented product.
In Nicholas’s case, the Beard Bib went viral. Knockoffs flooded Amazon soon after. He had a provisional patent at the time and nobody gave a damn. Nicholas created a new class of men’s grooming products but it didn’t matter. “We’re losing money left and right with the knockoffs,” he confirms.
If you’re going to dedicate time to patent a product, save enough money to go after people who steal your stuff. Otherwise, that patent is just a fancy piece of paper.
Oh, and remember how I mentioned the Beard Bib went viral? That’s due in part to Beard King’s feature on Shark Tank. If you have a product business, you might be tempted to apply for the show. Nicholas shared what it’s like to show off your brand-new, patented product on live TV. Use his experience to decide if such a bold move is right for promoting your product.
1. It’s Stressful
Nicholas admitted the Shark Tank process is stressful. “You’re always on your toes,” he says. The entire process takes over a year, which can put a strain on even the most hopeful entrepreneurs. The process included interviews, Skype chats, multiple flights to LA, and pitching the producers.
Shark Tank was the first time Nicholas ever pitched his business, too. To top it off, he was pitching in front of high-level investors like Mark Cuban and Lori Greiner.
To make the process even more stressful, you aren’t guaranteed a slot on the show at any time. You could invest a lot of time into auditioning and it could go nowhere.
2. The Scheduling Is Bananas
If you pass the Shark Tank gauntlet, you get a spot to film. Sounds cool, right? But actually, it’s not guaranteed that your filming will even air on TV.
There was a six month gap for Nicholas between auditioning and filming. During filming, Nicholas chatted with the investors for an hour. He admits it was more of a conversation and not the intense, 8-minute grilling Shark Tank makes it out to be. “You’re there for an hour and they condense it down to 8 minutes,” Nicholas says.
You only know 1-2 weeks ahead of time if your episode will air. That makes it a challenge to scale your inventory for demand. If you’ll have trouble fulfilling a rush of orders after Shark Tank, consider scaling production before so you’re prepared.
3. It’s Worth It
Despite the travel, audions, and anxiety, Nicholas says Shark Tank was a great experience. It had such a tremendous effect on Beard King that he nicknamed it “The Shark Tank Effect.”
Since fewer people watch live TV, you’ll see waves of traffic long after your Shark Tank episode airs. You’ll see a spike from live TV, then from Hulu, CNN, and other content syndication channels.
If you can swing a spot on Shark Tank, you’ll get a stream of traffic every time someone sees your episode. That alone is worth millions of dollars of advertising.
Now, he did get an offer from Lori Greiner, but he turned it down. She wanted 40% equity in the company for just $100,000, which didn’t make sense for Nicholas. But that didn’t matter. “If you film and get a deal, that’s huge. It adds a lot of value when a Shark wants to close a deal with you,” he says.
If you want to seriously overhaul your product sales, Shark Tank is a bold move that can make it happen. Just chug some coffee, work on your patience, and have the ability to scale production if needed.
Beard King became a viral sensation after Shark Tank. While that was great for sales, it led to some nasty side effects. Namely, counterfeiters came out of the woodwork and started knocking off the Beard Bib.
Although Nicholas sold products through his eCommerce website, he relied a lot on Amazon sales, too. He saw a spike in counterfeit products following his feature on Shark Tank. Sure, he was technically making more money, but these knockoffs were stealing his idea and his money.
Fortunately, Amazon gives sellers recourse to go after counterfeits with the Amazon Patent Neutral Evaluation Process. This is Amazon’s solution to stamp out counterfeit sales, although it’s still not a perfect solution. During the patent evaluation process, Amazon will bring in a third-party law firm to investigate. This helps you avoid the expense of litigation to get a quick resolution.
Amazon will reach out to the alleged counterfeit sellers and give them 2 weeks to reply to your complaint. If they don’t reply, they’re automatically removed from the platform. Knockoff sellers will still popup regularly, so this can be an ongoing headache. “It’s a game of Whack A Mole and, man, it’s frustrating,” Nicholas says.
Keep in mind that this process is only for sellers who have an Amazon patent for their products. Amazon will ask you to provide proof of patent before they take down a knockoff.
Remember, if you create an awesome, never-before-seen product and show it off on live TV, people will copy you. If you find copycats on Amazon, you can always use the Patent Neutral Evaluation Program to get rid of some knockoffs.
Once he grew Beard King into a men’s grooming superpower, Nicholas felt it was time to step away from the business. Hindsight being 20/20, Nicholas has 4 tips to help other inventors and eCommerce business owners prepare their business for sale when they have a utility patent.
1. Figure Out Your Manufacturing
After going viral on social media and Shark Tank, Nicholas had a good problem on his hands. After several months of “meh” sales, he suddenly had $80,000 of orders. How in the heck was he going to fulfill them?
At the time, Nicholas was shipping materials in from China and manufacturing everything locally in Florida. But because of Beard King’s sudden rise to fame, he felt like the brand was forced to grow. He had to stop paying high costs per unit and find a way to cheaply produce the Beard Bib en masse.
Bolstered with proof of concept, Nicholas knew he had to change his model. Luckily, his materials guy decided to go into the manufacturing business. He struck up a deal with Nicholas to manufacture Beard Bib at a lower cost.
Manufacturing was a learning process for Nicholas. He spent a lot of extra time and money creating his product, but that’s because he was learning. As an entrepreneur, you have to be willing to learn and adjust. You aren’t born knowing how to manufacture products overseas.
It’s okay if your manufacturing isn’t perfect right now. Put in the work to figure out your next steps and make it happen. Entrepreneurship is about learning and growing, not perfection. Have an open mind and you’ll see the results in your multiple once you decide to exit.
2. Have An Intent To Exit
Speaking of exits, Nicholas recommends that inventors start their business with the end in mind. That is, create your business with an intent to exit from the start. “Have an exit plan and reverse engineer the business,” Nicholas says.
Nicholas always knew Beard King was going to grow. Did he see himself riding the Beard King wave for decades? Nah. But he does wish he had designed his business more intentionally from the start. It’s important to know what you want out of an eventual exit and reverse engineer your business decisions to make that exit possible.
Don’t get too caught up in the product design side of your business. You might be an inventor, but you’re also a business person. Unless you want to make the same stuff until you’re in your sixties, make a plan to step away from your patents—and get good money for them.
3. Clean Up Your Books
Like many entrepreneurs who decide to sell their business, Nicholas was gung-ho to sell immediately. But after chatting with Joe at Quiet Light, he realized his books weren’t in great shape. He could still sell his business, but he wouldn’t get as good of a price for Beard King.
After consulting with Quiet Light, Nicholas decided to get his books in order and establish SOPs before selling. That way, he would have a turnkey business that was clean and ready for a new owner. “If you’re trying to sell an asset, people need to see your numbers,” Nicholas says.
Of course, if you reconcile your books every month, religiously track your inventory, and run clean P&Ls, you’re in good shape. You could go to a broker and have an easier time selling your business without the rework. If you want to sell your product business for more money, invest the time and money in tracking your financials.
Build Not Just A Product, But A Brand
Remember, Nicholas didn’t know business at first; he was a graphic designer by trade. He didn’t know how to do manufacturing or how to apply for an Amazon patent, but he did know how to build a brand.
Maybe you have a really impressive product that’s going to change the world. That’s great. You’ll make a lot of money. But will you build longevity or a scalable business with a product alone? Probably not.
That’s because entrepreneurs need to build a brand around a product. Most Amazon users buy one-off products and don’t give a flip about the brand. But Nicholas wanted a different experience for Beard King customers.
By taking a brand-first approach, Nicholas could expand beyond the Beard Bib. He started selling beard oils, washes, brushes, and more. The brand inherently expanded Nicholas’s product offering, diversifying his portfolio while giving customers products they already wanted.
Nicholas created a royal theme for Beard King, which immediately made it stand out. By addressing customers as “Queen Sarah” or “King Joe,” Nicholas designed a cheeky brand experience that immediately pulled customers in. He filmed a somewhat cheesy video promoting the Beard Bib, which went viral. Snoop Dogg even tweeted about it!
Always build a brand behind your product. That’s the key to longevity in a crowded market.
Edison and Tesla eventually abandoned their war when bigger, shinier projects came along. While there were some casualties to their spat (RIP, Topsy), it’s a pretty accurate depiction of how the inventor’s mind works.
Entrepreneurs aren’t going to ride into the sunset after selling their business; you’re going to look for the next adventure. “Most entrepreneurs would retire on a beach and wonder, ‘What am I going to do with all this sand?’ You get bored,” Nicholas says.
That’s what makes business ownership so exciting. You’re always learning something new and always searching for the next viral product. And guess what? Based on what you’ve learned from selling your first business, your next product is going to be 3-5 times more successful.
Nicholas recommends taking a few weeks off after selling your business. Invest in your personal development to figure out your next move. Learn from your mistakes to make a stronger foundation for your next venture, whatever that may be.
Nicholas’s story proves that you can stumble through the process and still build a successful business. Learn how to create an Amazon patent by protecting your intellectual property. Prepare to sell your product to a new owner with a manufacturing strategy, an exit plan, clean books, and killer branding.
Who knows? Maybe you’ll build a life-changing product with nothing but a stapler and a dream.