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How To Use AI To Predict the Perfect Amazon Price for Every Product at Each Precise Moment
Chad Rubin is the CEO and Founder of Profasee, a dynamic pricing platform that enables Amazon brands to predict the perfect price for every product at each precise moment. He has worked in the e-commerce space since 2008 and is the author of Cheaper, Easier, Direct. Chad is the Founder of Deep and Saasy, Founder and Board Member of Think Crucial, and an Advisor for PickFu. He was the Co-founder and CEO of Skubana, which was acquired by 3PL Central, and was a Founding Board Member of the Prosper Show.
Here’s a glimpse of what you’ll learn:
- [04:12] Chad Rubin talks about his background in e-commerce and scaling one of the first private-label brands on Amazon
- [07:18] How networking and partnership can lead to a greater exit
- [12:30] Chad explains how he recognized the opportunity to move forward
- [18:27] The ways AI can generate pricing for maximum profit
- [22:08] Why aggregators buy growing businesses — and how AI can help grow yours
- [27:43] Chad shares how brands can set profit boundaries with Profasee
- [31:50] Chad discusses competing with copycat brands and how to optimize different channels
- [36:23] How AI can optimize the product price outcome
- [42:50] Ways the AI model learns based on your brand’s activity to produce greater outcomes
In this episode…
Pricing products for optimal profits can be confusing and frustrating. How can you program AI to charge prices to maximize profit for Amazon sellers? Chad Rubin used his own experience and knowledge of growing an Amazon brand to create an AI model that does just that.
Leveraging AI to price products can help keep your brand current in the market and work smarter, not harder. By using this method, your brand could have a 30% increase in profit and decrease the number of mistakes typical pricing makes. Chad used his knowledge and insight of SKU pricing to produce a technology that helps Amazon brands increase profits — and can lead to a great exit! Stop deploying and start harvesting with this episode.
In this episode of the Quiet Light Podcast, Joe Valley sits down with Chad Rubin, CEO and Founder of Profasee, to discuss how AI can predict the perfect price to win on Amazon by maximizing your profitability. Chad talks about the importance of networking, setting price boundaries for growth, and the competitive advantage of AI. Stay tuned!
Resources mentioned in this episode:
- Chad Rubin on LinkedIn
- Chad Rubin on Twitter
- Chad Rubin’s email: [email protected]
- Quiet Light
- Quiet Light on YouTube
- Joe Valley
- Mark Daoust
- Quiet Light Podcast email: [email protected]
- The EXITpreneur’s Playbook: How to Sell Your Online Business for Top Dollar by Reverse Engineering Your Pathway to Success by Joe Valley
- Brian Lee on LinkedIn
- “How High Level Amazon Sellers Automate and Delegate With Chad Rubin”
Sponsor for this episode
This episode is brought to you by Quiet Light, a brokerage firm that wants to help you successfully sell your online business.
There is no wrong reason for selling your business. However, there is a right time and a right way. The team of leading entrepreneurs at Quiet Light wants to help you discover the right time and strategy for selling your business. They provide trustworthy advice, effective strategies, and honest valuations. So, your Quiet Light advisors aren’t your everyday brokers — they’re your partner and friend through every phase of the exit planning process.
If you’re new to the prospect of buying and selling, Quiet Light is here to support you. Their plethora of top-notch resources will provide everything you need to know about when and how to buy or sell an online business. Quiet Light offers high-quality videos, articles, podcasts, and guides to help you make the best decision for your online business.
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What are you waiting for? Quiet Light offers the best experience, strategies, and advice to make your exit successful. To learn more, go to quietlight.com, email [email protected], or call 800.746.5034 today.
Hi folks. It’s the Quiet Light Podcast where we share relentlessly honest insights, actionable tips, and entrepreneurial stories that will help founders identify and reach their goals.
Joe Valley 0:32
Hey folks, Joe Valley here, welcome back to another episode of the Quiet Light Podcast. Today’s guest is Chad Rubin, founder of Skubana, founder of a brand on Amazon that’s 15 years old, one of the original partners in the Prosper Show, and has a new company called Profasee, Profasee.ai. Or I’m sorry .com. It’s an AI company that helps with pricing on Amazon. But in a much, much more detailed and effective way, then you might be thinking when you hear about companies like this, they essentially help you predict or actually Profasee and I’m gonna get this wrong Chad. If you’re listening, I’m doing the best I can. Because as I said, during the podcast, I’m not an Amazon seller. I just help Amazon sellers sell their business for maximum value, a prophecy. It’s really impressive first, Chad’s history and background is really impressive, but it’s going to help you, you know, discover and help you predict the perfect price to win the sale every time on Amazon. And you know, maximizing your profitability, looking at minimum prices, maximum prices, your landed cost of goods sold, and predicting pricing to make sure you’re you’re maximizing your pricing, whether you’ve got two SKUs or 2000 SKUs. And that’s the key thing here. It’s it’s AI based and it’s learning and Chad’s team is learning and they’re launching new cohorts. And it’s, it’s going to be I think, you know, very much the future of Amazon. So, jump in, take a listen. It’s Chad Rubin from Skubana. And now Profasee.com Here we go. Chad Rubin. Welcome back to the Quiet Light Podcast. How are you?
Chad Rubin 2:20
I’m good. It’s been a journey.
Joe Valley 2:24
Before we hit record, you said it’s been a long day. And I say it’s been a long decade. I’m looking at your LinkedIn profile. It’s just crazy. What you have done over the last I don’t know decade or more. Not sure how you’re keeping it all up. Doing good.
Chad Rubin 2:37
Yeah, I think it’s a lot of Wim Hof. breathwork a lot of personal work and enjoying the highs and during the lows simultaneously,
Joe Valley 2:46
we should have Mark recording this for you. Then he loves Wim Hof and he’s gone in depth. He doesn’t have the ice bath, but he’s taking cold showers every day and all that stuff too.
Chad Rubin 2:58
Awesome. Yeah, I started doing that after the ads of Cubana, I hired a breathwork coach. And he got me into like this, this Holotropic breathing exercise. And so I do that I try to do that once a week, twice a week from feeling strange or my body or coming out the cold. I’ll whip it out. And it’s just an amazing tool to use. And you don’t really need anybody else. Right? You just go to the go to the app, hit the play button and you work on your breath.
Joe Valley 3:27
You know, we could make this all about that and get getting into it. I’m meditating for 30 minutes a day now trying to do more. In fact, I just did a little bit before we recorded but mine is mostly sleep oriented or lack of sleep oriented. And that’s why I’m doing it going through some CBT AI programs. But let’s not talk about that. Let’s talk about you and your background, your history. For those that don’t know you haven’t seen you speak or know about schemata or the other companies that you’ve partnered in or operated. Can you give the folks a little bit of background on yourself? Yeah,
Chad Rubin 3:56
quick, quick sentence or two. I’ve been in the e-commerce space now for 15 years. So probably one of the first private label sellers on Amazon in the vacuum filter category, scale that business. At its height we’re about 11 or $12 million in revenue. My Account Manager at Amazon became an investor of the software idea I had called Skubana and that was James Thompson, who started the Prosper show. And I started that with him as well along with two other gentlemen. So we got Skubana who to prosper show. We have e-commerce business and then I just launched Profasee, which is a Uber surge pricing software for Amazon brands.
Joe Valley 4:39
Yeah, again, I’m not sure how you do it. I didn’t know that you and James started the Prosper Show together. We’ve had James on the podcast many times and obviously you guys sold that and it’s still going well. Are either of you still owners in the Prosper Show.
Chad Rubin 4:55
Now James did a brief stint afterwards and I want to say briefly I think he was on on for another two years, but with the sale, I was completely out sampling, Skubana was completely done and I didn’t have an urn out or anything after the process was over.
Joe Valley 5:12
Let’s let’s talk about Skubana first. Because if I’m reading this right, that leading up to the exit and exiting and going through it was wonderful and painful all at the same time. You’re not doing the type of breath work and focus on yourself and CEO on yourself and talking to coaches and things of that nature. Unless you’re trying to get some stick, some shoot straight and your life or just sort of tame it down a little bit. Can you talk to us about Skubana and the process of exiting and what were some of the highs and lows of that
Chad Rubin 5:46
of the process of the exits? Yeah, well, so I think I mean, there’s a lot. So Skubana, we were around for seven years. And with COVID, there was an uptick of, obviously DTC sales. And we were a beneficiary of that because we supported FBA or FBM. Right, meaning FBA sellers that are prime eligible or people that are picking and packing out of a warehouse. So we were a beneficiary of that process. The business started to grow tremendously during the pandemic. And we weren’t, we were unsure what was going to happen, right, operationally, but we started to do extremely well. And an amazing offer came through that seemed like a great fit. And of course, the first question is like, Well, is it a real offer?
Joe Valley 6:32
Was it unsolicited?
Chad Rubin 6:35
It was unsolicited. So I had to bring that to the board. And I was ready to take it right away. And perhaps not everybody was so willing to do that. So just in that, in that conversation, right, there’s hair on the process already. Because we had Brian Lee from Honest Company on our board, I had my business partner on the board, and we had our lead investor on the board. And so everybody had to be in agreement. And we had to align mentally on where our heads were because not everybody was on the same page.
Joe Valley 7:05
Where your board members also shareholders. Yes. And what was the function of the board?
Chad Rubin 7:15
Well, it’s it was to keep us in check as founders. Also to get a lot of experience from Brian Lee like Brian Lee started. Honest Company shoedazzle Art of sport with Kobe Bryant, and, and LegalZoom How can I forget that. And so it was like he was supposed to guide us. He believed in us when nobody believed in us. So he was a seed investor, when we first when I first raised money, and I had no notches on the belt, so to speak, which was amazing support from him.
Joe Valley 7:45
Curious how often you met with a board.
Chad Rubin 7:49
Quarterly quarterly meetings, but like, if anything was, say, out of balance or out of something, there was an anomaly that came up or something that was a deviation from the norm. I would call on them and they were ready to hop on a call immediately, which is what you want and aboard.
Joe Valley 8:03
So you are in what position at this point when you get this unsolicited offer that you wanted to accept? Are you CEO of Skubana?
Chad Rubin 8:11
Yep, EFC Bana, and really how it all happened. And this is so serendipitous, is when things are going well, right? You’re coming up with new ideas on how to grow businesses instead of constantly putting out fires. Skubana was just shy of 50 people. I reached out to a three PL Central and the CEO and we’ve had a nice conversation and I presented this idea of hey, your customers customer is our customer. So you support the three PLS, the three pls customer are the brands. It sounds like there’s a great partnership here. Like what if you can get a spiff and sell our software into the three pls for those brands, and like he can make those three PL smart three peels, which is kind of like shipbob or shipmonk. Have you seen that? seen those companies, but they have to be all centralized? Like a lot of customers are using their software as the operating system or through pls. So I thought was a great partnership, I thought was a great idea. And they had a different idea. And which eventually they acquired us in April of 21.
Joe Valley 9:16
So why did the members of the board initially say no to an offer that you wanted to accept?
Chad Rubin 9:24
It was actually they said no, there was just a very heavy conversation, right? You run a SaaS company for seven years. And you know, just before we started the conversation offline, we’re talking about like, it’s been a long decade. And in SaaS, it’s, I think in SaaS is probably one of the most challenging businesses you can run. And I was I was I was ready, I was ready to move on. Right? I was like, Okay, this is a deal of a lifetime. And I have a lot of friends and family that are invested that have been waiting a very long time to to have this outcome. And like let’s go
Joe Valley 10:00
Okay, so from the timeline you closed in April, right, April 2021. When did that initial offer come in?
Chad Rubin 10:09
I want to say like we started dialoguing around November. Okay. It’s fairly quick. It was a quick process. I mean, you know, there was a lot of other interested parties at the time. And so we had to make sure that at least I had a fiduciary, fiduciary responsibility to our investors to maximize the outcome. And that’s certainly what we did.
Joe Valley 10:32
Good. And after closing, did you stick around? Were you stuck in the CEO role for a while help them transition to a new CEO was situation?
Chad Rubin 10:43
Yeah, I think I had an interesting situation. So we, we found a company, the plane landed very safely. And April 21, rolls around, and the company did an amazing job at, I would say, filling in any gaps that I had. And I eventually resigned October of 21. So
Joe Valley 11:08
was that the plan originally, that you’d stick around for a while? Or were you going to be CEO and they were going to,
Chad Rubin 11:13
there was no plan, there really was no plan. It was literally it was, I was CFC Skubana, I knew I wasn’t going to be CEO forever. And essentially, a lot of my roles are getting divvied up, right? Like someone on the revenue, side got the revenue side on the customer support sides or customer stuff. And so I was transitioned fairly quickly, and got to the point where I was like, Hey, I’m ready to move on in my life. And close this chapter. And I was the first I was probably the first person to leave Skubana after the acquisition. So I left in October of 21, we had a great zoom celebration to move forward with. And then I actually started Profasee in December of 21.
Joe Valley 11:58
Yeah, see that? I want to talk about that. Tell me a little bit more, though, of the, the lack of a plan? Is this something you’d recommend to someone that’s in your shoes, a CEO that selling their company, to, you know, a fairly large investor, that there’s nothing outlined or detailed about you, the owner? And how long you’re going to stick around? Or do you? Would you in hindsight, want to have that a little bit more detailed out? So you’re not wondering what the hell you’re gonna be doing at this company? And how long you’re going to be there for?
Chad Rubin 12:27
Yeah, so I think if you go back, you think to yourself, Okay, if there is no outline, there is no plan. And even the way agreements are structured, when you’re processing a deal, you kind of have an understanding the intent of what the other company want, like where their heart is, in the matter, right. And you can say this about a lot of things acquisition, dating life, professional relationships, actions speak louder than words, or a lot of times words speak on the actions that are coming right into the future. And so the fact that perhaps there wasn’t a lot of clarity, and that I was an at will employee, right. I’m trying to speak gingerly about this can show sort of like, maybe they were able to run, run stuff without me. Right? And move on from the relationship. And so I knew going in, I kind of knew that that was there was some intent there going into this like, hey, it’s not very clear. And seems like there’s a good opportunity here to, to move on quickly. And that was a deal of a lifetime. And so why not just take in and move forward? I did try working at the company rolling up my sleeves. It’s just, I haven’t worked for a company in a really long time. And it it wasn’t what I was, what I would let meet me up wasn’t like a hell yes. And either hell yes. Or hell no. And I wasn’t at all. Yes. Yeah.
Joe Valley 13:56
It’s very difficult, I would imagine to step into a structured work environment when you’ve been self employed for 20 plus years. I can’t imagine doing it myself.
Chad Rubin 14:06
Who was who was crazy. I gave it a shot.
Joe Valley 14:10
Well, I’m glad it worked out. I’m glad it worked out. And I’m trying to understand, Chad, how the hell and maybe this is focusing on my lack of energy, how the hell you’ve got the energy to then, you know, seven months later jump into developing Profasee.
Chad Rubin 14:27
Like, I’m asking myself that same
Joe Valley 14:31
day, you know, I always have conversations with founders like yourself, many that have helped with their exit. And we talked about what to do afterwards. And what they did right what they did wrong, and I’m talking about within the first six to 12 months and most of them look back and say, you know, I wish I just taken a year off just to figure out what I wanted to do. Ramon van Mears, one of the great guy, a lot of folks know who Ramon is, we sold SOPA He’s all over Instagram and Twitter right now for dammit, Ramon, I’m not gonna remember the name of the kitty kitty litter company. It’s the number two kitty litter company in the country now. And he just got into retail, through Costco nationwide. He burned himself out, right? Blood pressure, all sorts of all sorts of health issues come into play physically and mentally when you don’t take proper time off. Do you? Now looking back saying I wish I had a little bit more time off to just focus on me, or did you do a lot of that? You talked about doing some of that yourself anyway. Right?
Chad Rubin 15:36
Yeah. So the transition process from lows of April to October, it was technically my part, the great reset. Where I was like, Okay, how am I going to spend this time? Right? I can spend this time going on to something else. I can spend it maybe drinking pina coladas, which got old really soon here in Miami. And our I can spend this time deploying dollars towards self help and self improvement by becoming the CEO of me. And
Joe Valley 16:08
why did you feel you needed to do that? You’re obviously very successful doing very well. How do you feel you needed to do that?
Chad Rubin 16:15
First of all, I love self help. I like read self help books. I love learning. I love growing I have just like this. unquenchable thirst for improving. And I also had found that during the days of running Skubana, which was I think over like 2000 days that I was deploying, but I wasn’t harvesting. And so I needed to like harvest my own natural resources and to become just like a software, right, a version if I’m version 2.0 become version 2.1 of myself. And I wanted to get coaches to do that kind of like Michael Jordan. Right. Michael Jordan wouldn’t be Michael Jordan without Phil Jackson as the coach for those that are understand, like 90s basketball. So
Joe Valley 17:06
some of the audience I’m sure weren’t even born until the 2000s.
Chad Rubin 17:12
All right. Well, I just knew that I wanted to achieve excellence and I wanted to leverage coaches to do that and I want to use any there is no cap towards the dollar amount towards this improvement in myself. So hired spiritual coaches. I hired nutrition coach boxing coach, which I’m going to have later today still have that boxing coach on everything stuck, but a DJ coach. I think I DJ like like a DJ like DJ spinning on a chess coach. And just like going into like parts of myself that I wasn’t exploring during Cubana. And I did that for quite a long time. And then I came across I was like keeping a running list of all the mistakes I made it’s Cubana and I was also keeping a running list of all these ideas that I had. And I was just putting them in a notepad and somebody had told me when I had to do it just like keep a running list, right? Like things come across your brain. Just keep a running list, I had this list. And like I presented it to our old investor, I had a list of about seven ideas. And he was like, Dude, this one about dynamic pricing and Uber surge pricing for Amazon brands like this is not exist, I’m willing to put in money right now. And I was like, Dude, I’m not. I’m not ready yet. I’m not there. And then he planted that seed. And I processed it. And then I became impatient which in hindsight, by the way, I would probably have taken a little bit more time. But I felt that AI, there was something happening in the AI world. And this is before now chat GPT is really become prevalent and alive in the business community. And I was like there’s something about AI here, that’s just a once in a lifetime opportunity to build proprietary AI and I wanted in on it. And we started building an AI model in December. So we raise money, I raised 2.3 million, and started building up the team coming up with the brand. And really start working on programmatically changing pricing to maximize profit for Amazon sellers and the aggregators. without sacrificing your ranking position on Amazon.
Joe Valley 19:21
You get to know some shit and be able to do that. For sure. That’s impressive both in the fact that you’ve come up with a concept based on your experience, you’ve been able to pull it off, develop it and make it work. And then just another animal altogether, going out and raising capital. Out of all those things, which was the most exciting and most challenging thing for you.
Chad Rubin 19:42
I think we missed one piece is that one of the reasons why property came to be was because I have an e-commerce business which we’ve chatted about historically. And this business has been just decimated and I was looking at the palm trees out inside. And I was like, we are trying to figure out how do I turn this business around. And the one thing that nobody was no lever that not a lot of sellers pull, everyone pulls spend. But nobody pulls pricing. And pricing is the best lever, right? Small levers swing big doors that generate flow to the bottom line and nobody’s changing price, I started asking the question of why. So in terms of like, what was the best part for me, like, I enjoy all the product parts, right? Like I love coming up with a brand name, like if you think about the word Profasee means to, to predict that something’s going to happen with a level of certainty. And so there’s a lot of thought around the name of promising predicting price, what’s the optimal price to maximize profit, with a level of certainty, and just all flow together? I love building. I love creating, I think our website is best in class for a SaaS company. And I don’t love turning businesses around, that’s for sure. And I’ve been kind of stuck doing that, even while I’m building a new startup,
Joe Valley 21:01
spell Profasee for me, for the audience to P
Chad Rubin 21:04
profit, you could see Profasee.com.
Joe Valley 21:09
So you applied Profasee to your own business that’s been struggling? And what’s the what’s the outcome?
Chad Rubin 21:15
I mean, we’ve turned it around. I mean, all of our prices were off, we have 550 SKUs. And 1000 listings on Amazon. And so it’s not just one thing, right, pricing is dramatically off. And I do believe in changing pricing based on not only signals that happen in your own listing, but signals that are your competitors have as well, and how AI can learn that quicker and more efficiently than a human can. So it’s a combination of pricing products that were completely off the mark, along with SKU rationalization, along with making sure everything’s prime eligible, figuring out metrics and criteria, what to liquidate based on turns based on velocity. So I mean, it’s it’s a whole lot of things to turn around this company. And that’s why aggregators don’t really turn around businesses. They try to buy businesses that are growing. But it’s a real market. Excellent. When you can turn something around and catch that falling short, which I’ve been doing, which is I’m surprised about,
Joe Valley 22:16
like you mentioned, you’re working with aggregators, and they’re using some of them are using one of them using at least Profasee. So yeah, is that because some of the businesses that bought are not growing, that are shrinking and prophecies helping them turn that around?
Chad Rubin 22:31
So I think it’s a lot of things that are happening with this transformation into AI, in general to me, is going to change Amazon in a very big way. And I want to be at the forefront of it. And so if you look at even, like THRASS you, right? A lot of these aggregators, by the way, are distressed and making layoffs. But the one thing that they’re not making layoffs around is AI. And these companies need to use data and turn them into decisions, to take them to new heights. So leveraging AI, whether it’s pricing, whether it’s forecasting and demand planning, whether it’s spending, right, all of these things they’re gonna need to leverage, they can actually be better than whatever exists today, which to me is the Rise Rise of the algorithmic brand on Amazon. And so we’re working with those companies to be smarter. Now, if you look at brass to say, for example, they’re hiring, like they didn’t lay anybody off on the AI side of their business or the data science side. And they’re working on this simultaneously, right? So they understand that AI is going to be their edge, they can get to sniff out any penny of profit that they can.
Joe Valley 23:40
I gotta tell you it with the aggregators that I’ve worked with, and I’ve worked with just about all of them over the last five years, originally started with one on one commerce and through SEO was, I think, when they got their first $780 million dollar valuation, we’d sold them 40% of their transactions. The one big mistake that most of them made was, you know, not not understanding that you Chad Rubin is a founder of a company 15 years ago, have everything invested in it, and you’re going to give it everything that you’ve got that you the founder of the company, they’re buying your company, but they lose you. And they hire somebody to, you know, do that job who’s on payroll that might have some sort of incentive, and there’s no comparison in terms of the passion and the focus and the energy. I’ve seen them run out of inventory, when they’ve got so much money available to buy the inventory yet somebody doesn’t pull that lever to order inventory on a timely basis. And that impacts, you know, the stability payment of the earnout that they’re, you know, guaranteeing or almost guaranteeing if they hit certain numbers to the sellers. How is Profasee going to change that for them when they’re able to minimize or get rid of or act more intelligently in this low to middle level management Of the companies.
Chad Rubin 25:00
Yeah, so the sheer size of aggregators, right? They can’t. Nobody knows what the app even brands, even founders, like made don’t know what the optimal prices. So like Amazon shoppers leave behind tons of cues, behaviors, preferences, searches. And it’s very manual, arduous to process that manual. And by the time you actually process with the optimal prices, the market shifted everything on Amazon spires within days, sometimes weeks. And so we will do that automatically for you using machine learning. And that learning compounds and gets better over time. So the more data that you feed it, the more you can learn, the more it gets better. And so right now, a lot of aggregators are leaving money. And so there’s two parts of it. One is they’re operating businesses, they’re leaving money on the table. How do they make how do they drive more dollars? So the bottom line, that’s where we help them. The the other part of it is before they’re making an acquisition, we can back test. If we put the plug in their Seller Central model, we can back test how much money is being left on the table? Before the acquisition? Yeah, exactly. To justify the multiple,
Joe Valley 26:12
exactly. I saw something on I think it might have been Twitter recently. or Facebook, I’m not sure. But somebody had posted it was an Amazon seller that posted and you might have seen it that they their competitor, you know, just repriced right below them and kept going down and down and down. And they reached out to that competitor. And the competitor said I can do this all day long. And I’m going to and that that individual that founder, waited until about three o’clock in the morning, found out where the competitor was made sure they were asleep and repriced. And then they automatically it was an automatic thing. They reprice right below them. So literally, they took their main SKU from you know, let’s say $25, down to $5. And then the competitors algorithm, repriced it to $4.99 and then that seller bought them all.
Chad Rubin 27:08
Right, are you are you referring to by the way, is this on a reseller page? Or is this a two separate listings, because they were focused on Profasee is focused on Amazon native brands, these are two by box, two separate
Joe Valley 27:25
two separate brands, I believe, that were just competing against each other. And the one that had the repricer automated was the one that was, let’s say, the seller felt like he was playing dirty. And he quote unquote, taught them a lesson by repricing right below super, super low. And then via Android.
Chad Rubin 27:43
Yeah, I’d love to see that post. But I’ll tell you what Profasee you put in your boundaries. So you put in your min, your floor price and your ceiling price. So there’s boundaries that we’re operating within of how comfortable you’re willing to go and how low or high you’re willing to go.
Joe Valley 27:58
So take into account ad spend and cost per acquisition. And all you have to
Chad Rubin 28:02
do for sure. And I think ad spend is another big part of this, that I think we can go down this rabbit hole. But we take into account all the fees on Amazon along with adspend. So if you think about like, the equation of a costs, which is what you spend to what you make, most sellers are only focusing on what you spend side of the equation, right there kind of everyone’s managing to in a prosper, nobody’s ever changing price. And if they are, it’s very rare, sometimes maybe once a month. And so we’re flipping the equation around where we believe pricing dictates what ad spend is. And over time, you’re gonna see a lot more functionality features from us around ad spend. But to me, it’s like having peanut butter without the jelly, the two are much better together. And right now everyone’s managing to these, I call them gospel metrics, where it’s just they’re managing to an irrelevant vanity metric, which is row as Ray costs. And at the end of the day, it doesn’t, it doesn’t matter should and so I’m encouraging people to shift towards which is my mentality is what is your profit on adspend.
Joe Valley 29:08
And it’s where it’s why we’re in business, you can break even doing nothing. So you do need to focus on profit, and most people brag about their revenue numbers, but not the profit numbers or percentages. So I agree with
Chad Rubin 29:20
that. 100%. And I think a lot of sellers though, don’t like when you’re working with an agency or you’re working any of these add software’s there is no contribution margin, there’s no cost of goods sold. So and this is a is a massive fallacy. And so I grow as to me and to prophesy and our thesis is that row as is only an efficiency metric.
Joe Valley 29:44
You don’t want landed cost of goods sold when you’re working with folks. Oh, yeah. Good. Other folks. Skip that landed part. Sounds good. So you know, you mentioned something you know, on your own company, we’ve got 500 skews aggregators. they historically have never wanted to buy a company with 500, SKUs. They just want to look at 345 SKUs, because it’s manageable. You know, and you know, we sold a billion dollars in transactions over the last 15 years. And we’re finding that to be a consistent message, that the more SKUs there are, the more complicated there are, it is, it’s hard to have an inventory aging report, it’s hard to make all the adjustments so you can be as profitable as possible is Profasee going to take care of this and change the number of SKUs people are going to be willing to carry?
Chad Rubin 30:29
Now I really think less is more. I’m going through my own SKU rationalization process with my e-commerce business. And so like we can help people manage pricing at scale, whether you have 10, to use, whether you have 100 SKUs, whether you have 1000 SKUs. We’re not going to tell people whether they need to see rationalize or not. But I do think that narrowing in on the 8020. If 80% of your profits come from 20% of the skews. That’s where I’m focusing my energy. And that’s certainly where property like to focus is its energy, because we are we’re not in the business of trying to revive us, you right, we’re in the business of how do we harvest more money from that stew without affecting the discoverability? on Amazon?
Joe Valley 31:11
So you post something recently on LinkedIn about? It seemed like you were offloading SKUs? Was it? Because you’re understanding now that there are a certain number of skews that you’re not profitable on or not profitable enough, and you’re trying to narrow your focus on those that are more profitable? Yeah, totally. I
Chad Rubin 31:30
mean, there’s carrying costs. And you just my next call coming up is my fulfillment center, who I’ve been with for 12 years was acquired about, I think, about seven months ago. And they are to acting their fees on me. So there’s no free lunch. And so I need to focus on like, what is what is going to maximize this business and the opportunity for us. And so the other challenge in my business, which we didn’t talk about is the fact that we are we have been copied throughout the years, right. And so we’ve got Chinese sellers coming in factories, they’re going factory direct from China direct onto Amazon, and we can’t compete, it’s uncertain prices. And we haven’t innovated enough in the past seven years to move into new product categories and new new products that haven’t been commoditized over time. So it’s a lot of factors that allowed that have allowed me and by the way, it turns out that LinkedIn post that you’re referencing, I have found so many liquidators, it was like, LinkedIn is a better selling channel than eBay is.
Joe Valley 32:33
Where you’re finding the right people, for sure. The fulfillment center to x in your fees after seven years, it’s just been purchased, as you said, Do you think they’re doing that to everyone or they’re just doing it to Chad Rubin, because you’ve got 500 SKUs. And a lot of it just takes up space in the warehouse.
Chad Rubin 32:51
I do think that they are optimizing. So I think if you look at what’s happening across e-commerce in general, why everyone’s in such a struggle is that there’s inflation across the board, raw materials, services, in PPC, inflation, warehouse inflation. And I do think that there’s probably adjustments of pricing, it’s happening to other people simultaneously. And I think that they’re looking at my SKU count, and the long tail of the series that I have and saying, Hey, this guy hasn’t received a proper increase in a very long time, I’ve had a sweetheart deal, because I’ve sent this company a lot of business. And with the acquisition, there’s no more personal relationship. It’s just a transactional approach. And so they want to calibrate the pricing.
Joe Valley 33:37
Okay, I can’t fault them for that. I’m looking at your site now. Profasee.com. Good looking site. As you said, Thank you. You’ve got sort of like a ticker tape going across the bottom. Very cool. Tell us about that. What it shows
Chad Rubin 33:51
about the brands?
Joe Valley 33:53
Yeah, I’m seeing ASINs. And I’m seeing competitor number two, and
Chad Rubin 33:56
oh, I think you’re on how it works. Maybe you’re on how it works page. I am exactly. Okay, so, so, the deal, the reason why pricing is so hard is that most of the software’s that exist today aren’t for private label, or if they are trying to do private label, they’re based on velocity. And they don’t account for all the other things that are happening in the marketplace, right. So when you make a decision on Amazon, it’s not just a decision that affects you, but it affects your competitors, and it affects Amazon as well. So this makes it very challenging. And instead we actually pull in signals from Amazon. So not just your own your BSR your price, your reviews, the quantity of reviews, the recency of reviews, inventory position, but we also pull in your competitors signals and all this flows into a model. And in our model, we process this information and the model creates its own if then statements and and nodes of if then statements to maximize the outcome that we’re trying to achieve, which in this case is maximizing profit without hurting your position on Amazon, your organic rank. So the reason why there’s a ticker tape across is showing like, Hey, we’re accounting for other ASINs and your competitors price and making adjustments in real time to maximize your profit. What if
Joe Valley 35:19
I use Profasee for my brand, and my biggest competitor uses as well.
Chad Rubin 35:25
So that would be a champagne problem. Now, I can’t tell you how the AI would react. But there’s something to be said around to people having us having information as a third party fiduciary responsibility to help raise profit of the two businesses that were working for. You fight you follow where I’m going with that?
Joe Valley 35:47
I do I do. So we’re probably gonna see your muted Joe. Sorry, I leaned on to my keyboard, folks. And I muted myself, I just said the most intelligent thing I’ve ever said, I’ll just say something else. For now, though. We’re gonna see profits go up, and prices are gonna go up the profits gonna skyrocket on both, instead of fighting each other. They’re positioning themselves to be more profitable, both more profitable, I would imagine. Yeah. Totally. So that price fixing
Chad Rubin 36:17
high? Well, essentially, it’s a AI is making decisions to optimize the outcome. Now, I’m going to refrain from using that terminology. But, but essentially, you know, the other thing is that when you come on to privacy, you put in your minion your max price, or it could be the two of you sellers have different min and max prices. And what we’ve seen time and time, again, is that it’s not always at the lowest price wins on Amazon. And it’s not always at the highest price wins either. There is a magic and there is a secret sauce, right? There’s conversion rate, there’s sessions. There’s a lot that’s happening on your listing, that’ll dictate what the apple price should be.
Joe Valley 36:56
And it’s all above my head, because I’m not an Amazon seller, I’ve just helped hundreds of Amazon sellers exit over the years. So what, what is going to be the first step for an Amazon seller that, you know, goes to Profasee and wants to sort of get started, it says request to access here on the site. But what’s the process? What’s the onboarding process? Like? How much work and time is involved? And how quickly do you generally see people get some positive results?
Chad Rubin 37:23
Sure. So I like that there’s a lot of learnings that have happened because we went live with our first clients in July. And then we learned from them, and then improved our tech. And now we’re actually into our second cohort right now. So this isn’t like an off the shelf model that we’re using. Right? This is a real model that we’ve built that’s proprietary. And so the first thing that we’ve noticed from Cohort One, Cohort Two, is that a lot of brands don’t change pricing. So what does that mean? It’s kind of like going on Facebook. And Facebook doesn’t know what ad to give you. Because there’s no lights, there’s no Pope’s there’s no dwell time, you have no connections to the algorithm has nothing to bite on. So power algorithm, similar to that doesn’t have anything to bite on. If there’s no price changes, right? It doesn’t know how the market reacts, how your competition reacts, how Amazon reacts. So now, our AI for the first month, we call it the hyper learning phase. We’ve trademarked that. And the first month is just hyper learning where we oscillate and change pricing for you dynamically on a net neutral profit impact basis, where it’s learning, and that learning is then injected into the model in the following months. So that’s like, that’s a big, that’s a big improvement that we’ve made. Another improvement is that our AI isn’t isn’t hands off the wheel, meaning we are supervising our AI. So our data science team every day is looking at every single SKU that you have to make sure that there’s nothing funny going on, there’s no Allamani anomalies that exist, to make sure that we’re ensuring that we’re going to be delivering the profits that we expect. And so on average, you’re looking at 10 to 12% increase in profits. But like if you look at a case study that’s on our page, right now, we have a 30% increase in profit. So the beautiful thing about AI, right? It’s faster than us. It’s cheaper than us. It works harder than we do, and it makes fewer mistakes. And over time, that’s become a mode and a sustained competitive advantage that compounds for the salaries that come on processor.
Joe Valley 39:25
It sounds pretty positive, right? I don’t know any other way to slice it, except that it seems like people should be looking at it and paying attention to it. And you know, then looking at AI and the metaverse and all this stuff as well. And I do believe it is the future in terms of day to day management of somebody that let’s say they’ve got somebody that manages the brands for them somebody in house. How’s this going to change that role? And how active will they be in Profasee? After the first 30 to 60 days.
Chad Rubin 40:01
So 30 in the 31st 30 days, we are the model is learning, right? It’s observing, experimenting. And it’s learning independently of us. Right?
Joe Valley 40:13
So then but but the human at the brand, let’s call it thrush to the human death rasio, that is managing the brands, are they doing something different than they normally do once they’ve subscribed,
Chad Rubin 40:25
the only thing that they’re doing is they give us their min and max, they give us their landed cost. We are giving them monthly business performance calls, to share our learnings and to share insights and to share how much money we’ve made them. If there’s a prime deal, or some sort of Lightning Deal that they want to run, right, we need to know that in advance. So there is a tight conversation that’s happening with us in the brand to make sure that we know what our deals that are being run in advance or promotions that they want to run. But outside of that our focus is helping them maximize profits and get insights that they never had before. What are they going to do?
Joe Valley 41:00
If Profasee doing all of this? What are they going to do as a brand owner?
Chad Rubin 41:04
Well, we’re doing price, they might change listings, they might be doing listing research. But like over time, right? I mean, you can see it with Chad GBT AI is going to be a massive supplement, and in some cases, replacement of specific functions of jobs. But you can say that about SaaS in general, right, like Steve, Ivana, we did inventory management order management. Now imagine if somebody was like counting how many you had in the warehouse, and then counting how many was in the bin, and then putting that into Amazon Seller Central, and then having to put that then into other channels as well. So that all the inventory levels are synchronized. Like that probably was somebody’s role, which it was when we first started Skubana, which made it much more efficient. So I just, I think that this has been happening in SaaS, but I think AI is taking it to a whole nother level, because AI is now thinking for you. It’s not just doing the efficiency work, it’s actually doing the thinking and the decisioning, based on insights. And I think that’s the big difference in this new world.
Joe Valley 42:09
Will it take into account, you know, the new ad copy, the split testing things of that nature, when things change outside of pricing? Will it take into account these changes as well.
Chad Rubin 42:23
So, yes, and it’ll come with my next capital raise, but I can assure you that I believe that the future is going to be pricing and PPC together. So longer the days of just managing to spend, and software’s taking a percentage of ad spend, and managing to a target a cos, or a goal a cost, which is irrelevant, because if your a cost goes up, 5% and you’re making more profit dollars, let’s just say, your price goes up 20% And your a cost goes up 20% And you double your EBITDA by 50% or increase your up to about 30%. Like it doesn’t matter what your classes. So I think you’re gonna start seeing more of that for me if, if we deliver if and when we deliver on our cohort to results, which I’m very optimistic about, and we raise capital. This is this is really where we’re focusing our time and energy.
Joe Valley 43:18
What’s the benefit to somebody jumping in with Profasee now as a client, versus waiting 369 12 months, any?
Chad Rubin 43:31
First of all, like the knowledge and information that the model learns, is learning now versus a month from now. Two is we’re ready showing results from our first cohort. Three is you’re getting legacy pricing. And I think there also is something to be said about Amazon when you’re a first adopter, right? Like when you are too late to the party, then you have no edge. So like when when the market when the market Zeds and we’re zagging you’re missing out on the zagging piece?
Joe Valley 44:10
I agree with all of them. I think the basic fact that you’re going to be more profitable along the way is more worth it as well. It’s all good. Chad, I know that you have a call coming up with your with your fulfillment center and trying to get them not to to extra fee. So wrapping it up, how do folks learn about Profasee? How do they get in touch with you and so on and so forth.
Chad Rubin 44:34
So yeah, my email, my personal email is [email protected] Feel free to follow me on LinkedIn. I’m trying to post insightful thoughts there, Twitter, as well. And just really happy to support the community. I really want to leave the Amazon ecosystem and the e-commerce ecosystem better than how I found it. And I think I’m doing just that. So thank you for for having me on.
Joe Valley 44:57
My pleasure, folks. It’s p r o F is in Frank a s e e.com profasee.com. We’ll put that in the show links as well. Chad, appreciate your time. Thanks for coming back on the Quiet Light Podcast. I look forward to having you on again someday in the future. Thank you Joe.
Today’s podcast was produced by Rise25 And the Quiet Light content team. If you have a suggestion for a future podcast, subject or guest, email us at podcast at quietlightbrokerage.com Be sure to follow us on YouTube, Facebook, LinkedIn, Twitter and Instagram and subscribe to the show wherever you get your podcasts. Thanks for listening. We’ll see you next week.