Guillaume: Hello everyone. Guillaume Le Tual here, host of the Ecommerce Wizards Podcast where I feature top leaders in e-commerce and business. Today’s guest is Valentin Radu, a CEO of Omniconvert. Today we’ll be talking about the Mindset of Optimization for E-commerce, SEO and probably lots of other things. So Valentin has built a suite of software that he’ll tell us a little bit about in a moment. He has a very ambitious and realistic goal I believe, I mean to go with an IPO, an Initial Public Offering, so best of luck in that goal. It’s an ambitious goal, I guess it must be inspiring for your employees to go towards that, especially to build such a nice suite of software at this point.
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All right, Valentin, I’m happy to have you here today.
Valentin: Thank you Guillaume and hello everyone. I’m really excited to get this going.
Guillaume: Yeah. And to start, can you please tell us a little bit about your entrepreneurship journey and the software that you’ve built here?
Valentin: Yeah, sure. I started as an ex-poor kid from Bucharest, Romania. I was making something like 1000 US dollars per year back in 2000. I started by playing StarCraft to understand strategy and then I built a network to play StarCraft with my neighbors. Then it was Battle.net, and we wanted to compare our skills with the larger world. We got broadband connections and some neighbors stated that they needed to get in touch with their relatives from abroad and we quickly turned it into a business. In three years we rose from four to 4000 subscribers to our broadband connection, internet service provider. At that moment, I had understood the power of entrepreneurship and how cool it is to be a rock star because entrepreneurship if you do it well you’re like the next rock star. You attract a lot of attention, you have a lot of people that recognize your skills, abilities and the way you help them. Then I said, ‘Let’s do the next company’. I failed miserably and went back to my father’s apartment. I had to choose between keeping the office or going back to my father’s apartment to hear him say, ‘You wanted to build your own company, who wants to do that?’
So fortunately, I built an agency in 2005. Nobody wanted a website at that time, and it was really hard to run it. However, I identified an opportunity together with one of our customers who were selling online car insurance. We teamed up. I was very good at looking at data patterns, identifying trends. I saw this as a great opportunity because it was ‘a blue ocean’, and I built this together with him. We invested something like $700 back in 2014 after doing a lot of stuff there, handling websites, marketing campaigns, viral guerrilla marketing, and everything that you can imagine for that e-commerce company. We got up to 14 million in turnover. And I said it’s time to share this knowledge and to build a company that is doing software and in helping other e-commerce entrepreneurs that were struggling just like I did before to make the cut. Because we were investing something like 1 million US dollars in Google ads and Facebook ads and we were only breaking even and it was so frustrating. So at that moment I realized how important it is to do conversion rate optimization. I was using a software that we produced internally. We had a team of 12 people building software for our own needs and I decided that this was a great opportunity.
That’s when I started Omniconvert with the purpose of helping other e-commerce companies thrive without over-investing in acquisition and in demand generation. After that, we got a lot of attention. As we grew the company, we started to sustain a lot of brands from all over the world. At this moment, we decided to completely focus on customer value optimization. I’m a strong believer in lifecycle marketing. After two decades of acquisition marketing, I thought it was time to take care of customer retention and customer lifetime value. That was something that helped me to exit from my former e-commerce company. And at this moment we were doing tools like, a tool for doing A/ B testing, for doing surveys, to do customer segmentation, to empower other companies to become data driven and customer centric. We also do training for other agencies, we have an academy where we train other people to do customer value optimization. So we do a lot of stuff which has to do with the total lifecycle of the customers from e-commerce companies.
Guillaume: Yeah, thank you for that beautiful summary and journey of entrepreneurship. I can relate to some of those things that you said there for sure. Well, I am a big StarCraft fan myself, as well as playing. I used to play nations versus nations for Team Canada against other countries.
Guillaume: Yeah. So I love that game and spent way too many hours on it when I was a teenager.
Valentin: What was your favorite race?
Valentin: Yeah. Same here.
Guillaume: I played them all. I can also relate, you failed in your second business, I never had one go under. I never failed one. But I remember I used to be a professional visual artist, and then did the transition to entrepreneur and my father told me, ‘You’re a great visual artist, but you’re a terrible businessman’ when I was starting. And now it’s just like fun to laugh about it after more or less than 15 years later, and with the success that we’ve had. Well, I had to learn at first and there were some struggles and now it’s great. So that’s an interesting thing that almost everybody in the entrepreneurship journey will typically need to deliver at one point. There’s the learning curve and the people around you believe in what you’re doing, or how stuff works. But actually we made it, you know, and that’s great.
Valentin: Yeah. The best thing is when you pass the ‘messy middle’. I think entrepreneurship is when you pass the initial spike of enthusiasm, you know, when you’re really excited, ‘I’m going to start this, I’m going to do this’. Seth Godin says, ‘Nobody talks about those struggles, nobody talks about the heavy job, which is struggling to make the cut and to pay his employees and find out what it’s all about’, And then when you get out of this ‘messy middle’, is when you start to actually realize what it’s all about. Then you start to systemize things and to put in place the processes and the right people at the right place. Then you can look back and you can say, ‘You know what, I made it’. But it’s so hard to do it sometimes. I think this journey has a lot to do with resilience, if it’s something that you need to build up as an entrepreneur, maybe we have entrepreneurs in the audience. I think resilience is something which is so underrated and everybody talks about creativity, about networking skills, and whatever, but at the end of the day it’s not a sprint, it’s not a marathon, it’s an ultra marathon, it’s like Ironman, and you need to prepare yourself for a long run.
Guillaume: I totally agree and had another guest Vinnie Fisher who also built an almost nine figure business and he says that the number one tip or rule for him for success is just don’t quit. Just keep going. There’s so much difficulty when you start to build a business and it’s very different when you start from nothing, like we’ve both done, than if you build something that is already a big foundation, and then you grow it to the next level. It’s a very different ballgame. So you can see it sometimes in generational intrapreneurship where the first generation takes everything from the father, maybe 5 million just like we hear Gary Vee say, I don’t remember exactly, and then the next generation takes over and it’s like, boom 60 million! Nobody starts from that 5 million baseline from the father. So yeah, it’s interesting.
Valentin: Trump said at some point, I got no help from anyone. My father only gave me $1 million.
Guillaume: Yeah, it’s funny, but it was more than that. His father owned so much real estate, or so many ‘doughs’ as they say. So his father was already a multi-millionaire. Of course you get the contacts, the credibility, maybe even an endorsement that nobody knows about.
Valentin: Yes, and the winner’s advantage because your mindset is not like you’re struggling to survive, I mean, you have the baseline. I was actually not running towards prosperity. I was running out of poverty. I wasn’t running towards a goal, I was running from the fears. And it’s kind of different when you’re running because of that, you’re not aspiring to do some fantastic stuff. You just want to get out of poverty. I couldn’t even afford to buy a pretzel when I was in high school, you know, I still remember those feelings. And fortunately, looking back right now, I think that was an immense motivation agent for me. So I’m really happy that it turns out to be this way.
Guillaume: Yeah, so for sure, you know, it needs great resilience and then a lot of mindset optimization because sometimes you’re creating that pain yourself, in a way, by putting too much resistance in the wrong direction. Maybe you need to pivot a little bit here and try to surf the waves a little bit more and not row the ocean. So sometimes you need to have that mindset adjustment. And what do you have here in mind, actually, in mindset optimization for your e-commerce SEO?
Valentin: Yeah, I think it’s an inner game. It’s so tricky Guillaume, because if you think about it, we live inside our minds the whole time. You know, we have this interaction with the outside world, we have these objectives to reach a certain figure or to reach a certain step. But at the end of the day, you’re with yourself all the time and you have this inner talk. I have optimized the way that I talk. I’ve been talking with myself for more than a decade. I’ve been talking very bad with myself, just to say it softly, when I failed on some particular things like doing that, achieving this, and through that result I’ve studied so hard. And I think mindset optimization should not only be prioritized a lot by entrepreneurs, but also by any high achiever, because if you’re here and you’re listening to this, it’s clear that you want to learn and you want to level up your game and your understanding about life. I think the first thing would be to fix the mindset that you have, are you a winner or are you a loser? Are you trying or are you doing it?
So those types of nuances are so important, because if you craft your inner character, let’s say if you write your own story you have to make sure that you’re not stopping yourself from evolving because you can be your worst enemy, but also you can be your biggest ally. And I think the idea here would be to continuously optimize the mindset, and there are certain tools for that. I’ve been doing journaling to have an objective way of seeing what’s important for me and how to interpret the reality, because your mind can be so tricky. When you’re an entrepreneur, you’re working on so many projects at the same time, you have to take care of that, you need to hire another person there, you have that client, you have that perspective, you have to do the P&L, the budget, you’re working on so many different levels at the same time. It’s like Starcraft, you need to take care of data, you have to have the resources, you have to work on so many different levels at the same time. And what I found throughout my entire journey, is that observing the way we interpret reality is the trick. So it’s like adding a distance between what I think is happening, and how I look at myself on how I think that this is happening.
Journaling is a great instrument because dumping your thoughts over there allows you to gain clarity and to prioritize what’s important, because you can easily get trapped into thinking that you can outsource that, you can delegate that to other other people. Because once you can fire yourself from being the single employee you’ll have the first follower, and that first individual who is following your dream will be your first employee. You think that yeah, ‘I should do that’. I think that delegating is a tricky tool because you can’t delegate certain aspects. For instance, learning about your business model, learning about how to drive. If you’re the visionary, you have to always learn. You can’t delegate, you can’t outsource this to an agency or to a professional or to a freelancer. You need to continuously learn about how to over-deliver to your clients and that means doing research, that means to be at the forefront of innovation in your industry or in your particular business. And I’m not speaking only about outstanding companies, you can even sell donuts and you can innovate on that front, you can come up with different recipes, you can do a different customer experience, you can package those donuts differently. It’s all about being different and respecting this principle of underpromising and overdelivering by having the right mindset and continuously learning about what you’re doing.
Guillaume: You’ve touched on a lot of important topics. So one of those is, you’re living in an emotion, you’re living in a hard situation but instead of feeling it and being lost in it, you’re sort of conscious that this is happening and you can take a step back and sort of look at it in a more detached way. So that attitude of being detached, I believe, is a great skill set. I call it being responsible, but detached. So you do what is just, what is right and you’re responsible, you’re not sloppy, you’re not lacking on any of your responsibilities, but you’re more detached in the mindset. You’re almost like a computer which would handle the situation in a very rational way.
And talking about that, here in Canada and Quebec, the professional order of psychologists is that they recommend mindfulness meditation, totally separate from any kind of spiritual or religious practice, it is just mindfulness and it really helps with stuff. If somebody wants to go a bit further, then you have the people who will have a spiritual view on this who will add another layer on top of it, like Eckhart Tolle, or Michael Singer. This will really help with the mindset and improving yourself over time to handle difficult situations in a more and more serene way and as time goes by, your skill increases.
Valentin: Yeah. And there is this thin line between what’s happening on the outside and what’s happening on the inside. And in this game, I think there was a saying that the only way out is in. I think it’s so crucially important to always focus on the inside because if something goes wrong in your business, you have to open a door to go to the bathroom to look in the mirror, and you’re going to find who’s responsible for the fact that you’re experiencing something bad in your business. I think the trap is to come up and blame the external conditions, your employees and whatever. Who decided to do this business? Who decided to get those employees and not the others? It’s such a liberating thought when you realize that you’re actually responsible, because together with this realization also comes the power to play around and to turn around the situation. It’s so crazy how you are, let’s say, deforming the reality with just a single event that’s occurring, let’s say you have a client who is not there for you, they gave up on you or you have an employee who is letting you down before an important deadline.
So there are many things that are happening in the life of an entrepreneur. But the trick is not to fall into the trap of blaming the whole cookie, or the whole pancake, because you’re doing a lot of cool stuff and this is just a single aspect, it is not everything. So if you can detach yourself from this, if you can look at this objectively, if you can gain this distance, you will be in a better position to come up with inspired decisions and all that you are grafting at the end of the day is how you make inspired decisions, how you are improving your decision-making system. I think why entrepreneurs are having so much success in their professional life is that they have a sample size of many decisions for the same time unit. In a single year, you’re making like 1000s of decisions big and small and you’re making them fast. Eventually, you train on how to make decisions because you had so many bad decisions, and myself included you know, I’ve made very huge mistakes. But I’ve learned from that. The beauty of it is that you can take some conscious risks, which are not endangering the whole company, or the whole system and I think that’s what we’re after. That’s what I call mindset optimization, to look at yourself, to continuously journal if you like this, I think it’s a great instrument, because having that is giving you an objective perspective over how you are thinking.
Guillaume: Yeah, I don’t personally journal but I do believe that all your planning should be done in writing and not in your mind. It will give you another added level of clarity, even if you first thought it was already clear in your mind, that is for sure for me. You’re also talking about accountability. Basically, as a CEO you’re accountable for everything, of course, some things you haven’t even done them yourself. You need to put in place a proper system to prevent that from happening because you’re always accountable for everything. Sometimes you have a bunch of problems that explode, and you’ll say ‘crap’, I didn’t see that coming! And then you have to handle all this and say, ‘Well, I’m accountable for it’. But if you beat yourself over it, it’s just not going to be good for your mental health, or the success of the company, or the morals of the troop and so it comes back to your idea of being detached. And some things that could help with this concept in mind, there’s one that is shared by Michael Singer where he says about, ‘All that chatter in your mind’, like, ‘Oh, what will that person think? Is my image good, is it appropriate?’ How would that go and all that anxiety model, ‘chatter in your mind’, he just calls it ‘the crazy roommate’. So this is your crazy roommate. And you can detach yourself from the crazy roommate and just observe the situation and say, ‘No, none of that’. So that’s an interesting concept.
The other one is the concept of ego. I have a slightly wider definition of the human ego than most people. The first level is people say, ‘Oh, an ego!’, like someone who was very pretentious. Maybe he’s driving around the Ferrari thinking somebody else or whatever and they say that’s the ego. But to me, the ego is way more than that. It’s not necessarily that much about being pretentious, like, somebody says something and you’re feeling hurt, why are you hurt? I mean, you’re not bleeding, you’re not hurt, what’s hurt? It’s your mental conception of yourself. It’s your ego, that this feeling hurts. So that thing is bothering me that’s happening in my business, but what’s bothered? It’s my ego, things are not going as I wanted them to go, but I can detach myself again from this and it always comes back to that exorcising or getting out of your own way. I had heard that quote before many times. I said well, there’s a few bad habits to improve on.
There’s this ‘to do list’ that Tony Robbins says, but there’s also ‘the stop doing list’ like stop going to bed so late with until the entire next morning. Okay, eventually, that was all about you stopping playing StarCraft. So you have to stop doing this. So you have the ‘to-do list’ of things to improve on but then it goes further than that. It’s so much of a personal journey, the entrepreneurship. Like you’re saying you’re always learning and improving yourself. Because life is challenging you in so many ways, and you have to get out of your own way. And I believe that your own way is mostly your ego that is working against you in many ways. And if you can get your ego totally out of the way, things will improve in amazing ways.
Valentin: That’s right, I think Guillaume an underrated activity is to see how much progress you have made so far. And an important aspect is that you can identify yourself with the character that you’re playing. If you have this approach you have to put some distance between who you are and your external results. Because you are not your external results, you are not your plans, you’re not your future expectations, those are yours but you’re not theirs. So when you put this distance, you come up to a place where it’s so serene, it’s so silent and you can consciously decide to get into the characters wherever, crazy mental noise, or you can stay over here where you consciously decide to play this character. I got into so many difficult situations from this perspective. I mean, my character got into so many crazy situations, but having this mental game, you know, to put some distance and to always understand that today is a new day. It’s like I’m being teleported to today where I have a lot of things to tackle, for instance, yesterday I had a crazy day. We were doing some full management day, I got two workshops to do during the break up instead of eating and then afterwards I did another webinar live. Then I went to my friend’s anniversary, then I heard the news that my kid had a broken finger, she injured her finger from basketball, got radiography, I got home and realised that someone messed up a podcast and instead of being at 1pm, it was at 1am. So I slept for two hours and I woke up at 1am. Maybe the webinar got in the morning awake again. It’s so much of a roller coaster, you know, sometimes you have this roller coaster life. And the idea is not to fall into the trap of feeling overwhelmed but to try and avoid these types of things. But you can’t predict everything, you can’t predict that your kid is going to have an accident. So you need to adapt to what it is, as it is, not to stay fixed into your rigid mindset that the future should be like this. Because it’s like you’re a painter, but you’re not the only one who’s painting your reality. You have other other factors which are affecting your picture.
Guillaume: Yeah, totally. When you look at the scale of the universe, it’s almost like an ant trying to predict what the weather will be. We need to be a little bit more humble in some way. We may prefer it goes that way, but we have to live with a lot of acceptance here that it’s not always going to go the way you want. Look at the scale of the planet, the solar system, the universe, whatever, how do you want everything to go your way? Really, if everybody had a vote on if it’s going to rain, it’s always going to rain on somebody’s birthday. Some things you just got to accept and that’s that. So that’s one point I can see in what you’re saying. Yeah, a very interesting conversation about mindset there.
Valentin: Yeah, we could talk for days and not even scratch the surface of what’s really going on.
Guillaume: I have another idea from what you said earlier that you are not the result. I’ve seen this in my earlier career as a visual artist and I’ve also seen this with some musicians as well, people who are totally passionate and driven into their craft and they associate themselves too much with their output. So if the painting and the music was crap, they will feel like crap and they’ll believe they are not worthy. So it’s very important to detach yourself during the process of learning, well, you made an artwork and so what if it’s not that great? Maybe your career would be better if it was great, but in the worst case scenario, it could be something else. So that detachment is important there too.
Valentin: Yeah. And many times there are a lot of blessings in disguise. I’ve had moments when I said, ‘I have to sell this business, I have to exit.’ I got some interesting offers and eventually the deals were off, and I felt so frustrated about it. And afterwards, I realized that deep down I wasn’t ready to sell, I wanted to actually build this. Because it’s like in life, you can decide about your business, it’s like, you want to do a masterpiece, or you want to have 20 startups which are making some one, two, three or even 12 millions. But at the end of the day, if you want to build something sustainable, if you want to admire the life that you’ve crafted for yourself, I think there are these moments when you need to look at the reality and understand that it’s actually better for your future not to do the exit, or make that new deal, or get that new employee or whatever the case. That also comes with age, I think, accepting what it is as it is, and quickly adapting. Not spending more than a few seconds to regret something that is not in your control anymore. And that has a lot to do with the fact that accepting what it is, as it is, is also qualifying you for a better future because you’re not spending your time in the past. You should spend your full energy in the present and in the future, you know, glimpsing the future and crafting it from the present.
And one aspect that I wanted to also touch here Guillaume is about the continuous learning thing. I learned so much, sometimes it was self-learning, you know sometimes you learn by doing and by suffering. I don’t think that you’re so happy when you’re encountering some barriers, but you’re actually learning ways not to do this anymore. You can also hack your learning by constantly looking at getting the shortcuts from other people. I think that as an entrepreneur you have to be a learner and you have to do this continuously.
Guillaume: You cannot reinvent the wheel, you have to stand on the shoulder of giants who came before you. This is so critical, you see it with many people. I’m not sure which scientist it was, maybe Faraday or another one, but definitely a top world scientist, but he was the apprentice of the previous top world scientist, so that’s often how it goes. You don’t want to reinvent and rediscover all the knowledge of humanity. It’s way faster to just get up to speed if you have a master teaching you, and then you can go to the next level and keep pushing the knowledge of humanity. So for sure, don’t do it alone and continuous learning is a must. I have had some phases of ups and downs. And it depends on what works best for you. For some people it may be audiobooks, because I can just travel, drive around and I know my audiobooks are getting done one after another. Each time I’m taking the car in 15 minutes, there’s an audiobook, or I’m just doing the dishes or whatever. It’s like with my audiobooks, I’m always learning and those ideas are so precious.
Valentin: Yeah, that’s right.
Guillaume: They stack up over time.
Valentin: And also another way to learn is to teach others. I’ve invented a few concepts, I’ve invented a few things in this new category of crafting customer value optimization. I first started by doing a workshop with one of our first clients, early adopters, or let’s say our guinea pigs, they agreed to test out on them and it went, okay. And then I started doing these workshops, and I started to train my own team. Then I said let’s build the course but I was lacking some knowledge and then I teamed up with other professionals in that space and that’s how we crafted the CVO Academy. I think if you’re an expert on some specific topic, you know, if you choose your niche and if you’re the best in that, you can team up with a lot of fantastic teachers who are going to support you. I think that’s another phase of learning. If you want to learn something you can be able to teach and to explain it to others because there are these steps of learning, but the best is to learn by applying it, by experimenting it and then teaching others how to do it.
Guillaume: That’s interesting. And any other sort of life experience or tips that comes top of mind on CEO mindset or entrepreneur’s journey mindset?
Valentin: Well, what can I say? I think another angle that is important is the concept of having the right people. To surround yourself with the right people on the right seat. I had been experiencing this at the beginning of this company because we were exploring something that was never done before. And we are inventing things, we are using some models, some ways to segment the audiences and so on. At the beginning when you have start ups, you have a lot of generalists. You have people who are the ‘jack of all trades’, which is doing this, that and the other. But it comes to a point where you need to understand when is that point where you have a strong bond with that person who was with you from the very beginning, maybe you made the leap and you’ve become a better CEO or a better founder, but maybe that individual has not made the leap and he’s not specialized in any particular thing. You need to have the heart to know it’s an act of love and not attachment, because that’s what I’ve struggled with. I had to let go of a few people after we did our fundraising and we were in a better position to hire more professional people, specialized people.
I had to come to terms with myself on letting go of the first employees that were with me, because they weren’t fit anymore. I didn’t find any seat for them because they were good at a lot of things but they weren’t fantastically good at specific things. There’s a book here that I recommend to you and to whoever is listening, The On Purpose Business Person, I think it’s a fantastic book. I think the Everest for an entrepreneur is to constantly chase opportunities for his or her employees to thrive and to evolve, and to realize when they are not fit anymore. And to come up with a way to find new jobs for them, to scout for opportunities for them, where they should be going next from your company. I think that’s a fantastic step and I am looking forward to getting into that position to easily spot who’s not fit and to come up with a plan so that I can help them make progress in their careers, because maybe it’s not the right place here but maybe they are fantastic in some friend’s company or some other client’s company, maybe they’re better in larger companies where they could be working on some aspect with their pace.
Maybe our pace is too fast for them and they are not fit here. But it’s not about throwing them out of the train, it’s about helping them make progress as well. I think that’s an important aspect for whoever is running a company and on the other hand, you can’t continue to make these kinds of trade-offs. So if you’ve identified someone who is not the right person or if you don’t have top level people for your key positions you need to simply replace them because as a CEO or as a manager actually not only as a CEO you have three main tools, you can hire, you can fire, and or you can train or coach people. These are your tools and you need to know this about all the people that you have in your team that you should fire or you should train. Because you can just step out of their way or just help them thrive without being so much in their life. You can actually use this approach to help them make progress, because if they make progress your company is going to make progress as well.
Guillaume: Yeah, right. This is difficult. The right person might relax when a company grows over many years. The person has the responsibility to keep growing as well and to follow you in that growth. They need to do their part through continuous learning and working on themselves. I remember one employee who had been with us for seven years, it was difficult to say, ‘Hey, you need to keep growing, you cannot stay on the same level we were before’. And that was very annoying but it was required. So I understand what you mean there. It’s very important.
Valentin: That’s right.
Guillaume: It’s very interesting sharing leadership lessons here. It’s challenging to find those people and very often you need to invest time, especially when you go from the startup phase moving up. Like now that we have two people at the HR, so hiring is not as hard as it was before. It’s always difficult having to cut down, but at least I have two people doing the scouting, validating and now I can just do the final interview. But it takes time to get there. That was very challenging. I can remember during the early days of the company, and those concepts are still true today or even bigger. Like, what’s holding you back to go to the next level? I first hired a part time Administrative Assistant to do 20 hours a week. Instead of having me personally come in and do all the billing, the first thing in the morning is to make sure we have the cash flow. Well, then she was trained, but it took a while, maybe a year, or a year and a half and then I was totally out of that role. It actually saved me at first 20 hours a week and eventually even more than that. And then you can totally train yourself out of a role, each time it always brings amazing growth to the company. So sometimes the best growth strategy is not even the new pay per click campaign, the technique of the month or something like that, but it’s actually hiring one person who’s going to take away a lot of responsibilities from you.
So you can train yourself out of a job in that specific seat and put someone in charge who is accountable, and has the vision. Another thing is that people will work differently to achieve the results, we have to be careful about telling people how to do their job. Yes, we want to have standard operating procedures to scale up the company, but there are more people who will just execute a proven procedure. If we’re hiring like higher level managers, then it’s more about giving them objectives that are clear. What do we want to achieve? And how do we know that it is done? Like, the definition of ‘Done’? Exactly, how do we know that we’ve achieved the goal? And does it mean yes or no this way? And then it’s just supervision by metrics, like are you hitting the metrics? But just step out of the way like, ‘You do it however you want, I’m not going to tell you how to do it’. Even though we had a way of doing it before, you can change everything if you want to as long as you get the metrics, and you’re well in progress to go and hit that goal.
Valentin: And in terms of the metrics I think Guillaume I can plug here something which is really important for people who are in e-commerce. I think that what’s happening right now in the market is that e-commerce is transforming so much. Because we are not playing the same game that we used to in e-commerce. Up until this moment we’ve been doing acquisition and we were guiding ourselves by traffic, by revenue, by things like conversion rate. And I think that the e-commerce growth formula must be updated as well. So we have traffic multiplied by the conversion rate, multiplied by the AOV.
Guillaume: Average Order Value.
Valentin: Yeah, Average Order Value, but what’s happening is that we need to take into account the customer lifetime value as well and our initial investment. The few mistakes that e-commerce companies are making, at least the seven figure ones, is that they are not focusing on the future revenue coming from the initial customers. And they are not calculating the CAC payback and in how many months or days. They mind about going to break even or investing in acquiring the customer. Because if you know these figures, the customer lifetime value versus the customer acquisition cost, if you ever have the ratio between those two, then you can scale like crazy because the one who’s going to win in e-commerce, Jeff Bezos said that as well, who’s winning in the market is that player who can afford to pay the most to acquire a customer because that means speed. That company can acquire most of the customers and that’s going to quickly get them into a position where they can control the market and that’s why I’ve been so obsessed with customer lifetime value because nobody is actually teaching those things. Everybody is teaching about [naudible-00:42:49], cookies, whatever, CTR, CPC, because Facebook and Google ads have their vested interest in teaching people around those advertising methods, because that’s their way of doing customer value optimization. They want to make you as a company keep spending money to acquire new customers, but what about the existing customers? What about the customer experience? What about ways to improve the revenue, the value that you’re getting from your customers? And that has a lot to do with a structured way and a methodology towards that. And that’s why I’m so passionate about these things.
Guillaume: Yeah. Because you’re talking about conversion rate, optimisation, and stuff like that. Those are tactics in Google like Click Through Rate, CTR, and stuff like that. But they make you focus on tactics. And as a CEO you’ll be like, ‘No, bring back the thinking to the strategic level or higher level and what’s my global game plan to grow the e-commerce company here?’ I see a lot of those companies with seven or eight-figure businesses there, especially those with lower than eight-figure businesses say, ‘Hey, let’s just acquire all customers at cost. And then we’ll make money on the second or third purchase’, and that’s their growth strategy. Some are doing it more or less gut feeling rough numbers, some are very precise in the sophisticated method, they have exact costing with proper software and all that. And of course, proper numbering will allow you to grow faster, safer with less anxiety, and with much better performance than the gut feeling approach.
Valentin: That’s right. And for many business owners right now, there is such a crowded space in e-commerce, all the traditional retailers that do online, we’ve 41% of the of the total e-commerce companies being launched post pandemic. So there are four out of 10 players who haven’t been around for more than two years. That means the competition is higher, and you need to differentiate yourself. And I think the customer experience is the next arena to differentiate yourself because at the end of the day, the consumers are so powerful. I mean, if you want to change the place where you buy your clothes, groceries or whatever, you simply do an ‘alt tab’ on your desktop, or you simply open up another app or another tab in your mobile browser.
So that means you as a company need to do conscious efforts to realize if what you’re selling is satisfying your customers. Are your customers happy? That means tracking NPs, are you doing the right job? Are you making your customers activate what we call the second e-commerce growth flywheel? As a company you are making your customers so delighted that they are coming back to buy again, and they achieve the network effect. They talk to their relatives, and you have the word of mouth effect. So that’s the second e-commerce growth flywheel, when you are relying on customers that come back and talk about your business, and not only the first e-commerce growth flywheel, which means betting on SEO, playing the acquisition game, so that you acquire customers that never come back, because that’s not sustainable. A lot of verticals are highly dependent on future orders from their first time customer.
Guillaume: Yeah, especially if you’re not playing the more advanced, sophisticated game. You’re not competitive because your competitor knows that he can spend three times more than you to acquire one new customer because he knows his lifetime value. It’s nothing new, it’s been around since like 20 years ago, it was still there 15 years ago, whatever, that you have a back end funnel of additional orders, perhaps you have additional emails going out. And he knows that he can make more lifetime value out of one customer and he can think in lifetime value and not just like, ‘Okay, how much does it cost me to get one visitor to come to my website and to get one order out of that one PPC or pay per click ad campaign there?’ So there’s a bigger game.
Another thing that’s important to keep in mind is that there are cycles in the market. Like you just said, I didn’t know those stats but I’m not surprised at all with COVID, that something like four out of 10 business e-commerce we’re not there to use two years ago. It totally makes sense. We had a lot of clients coming to us or potential clients saying, ‘Either I go e-commerce, or I die right now with COVID because the store is closed by federal order.’ For sure there’s a lot of competition happening and there’s a lot of things that you just cannot foresee. Sometimes it can be the next big Google algorithm to change that, it can drop some big competence there. Horror stories like this have been seen in the past, they bought a lot of inventory and they are able to turn over like a million dollars a month or something like that. And then they lose their Google ranking, a bad update for them, and then they’re stuck with like $2 million of inventory they cannot sell. They lost the ranking. So for sure this is a question of diversification and risk management. But there’s more than that, there are cycles. So even though you may have a competitor that’s dominating the market, what’s the next battleground I can go to, to start preparing to think more in cycles of a few years? Not just like, ‘This year we’re doing averagely in the market’, or whatever. But, ‘Look at what I’m preparing for the next battleground where I can take them ahead of the curve’.
Valentin: Yeah, that’s right. You have this free pre-horizon of your projects, you have the immediate pre-months horizon, you have one to three years horizon and the best companies out there can have three to 10 years horizons where you invest right now into the future. The idea is that few companies are having the luxury to invest in the future. For instance, we’ve been lucky to identify a new trend, and to identify what our customers are going to need. I’ve been drying my mouth talking about customer value optimization, and now we have 500 students who are certified with the systems. And mainly, I think this is going to be the next wave in e-commerce for agencies as well, to come up with ways to actually make their customers to not only survive, but also thrive. And the data driven agencies, I think, are the ones that are going to win the game and e-commerce companies as well, that are using data and patterns and anomalies, and they’re easily spotting trends so that they can make decisions based on data not on assumptions.
Guillaume: Exactly. This is an amazing conversation, Valentin. We’re coming on top of the hour, do you have anything else top of mind that you’d like to share before we finish this episode?
Valentin: I think what I want to share with our audience is that we have these free courses in our CBO Academy, customer behavior is one of them. There is a mini course around customer lifetime value optimization. I invite anyone that wants to level up their e-commerce game to get it, it’s completely free. And as the last part, I think it’s crucially important to believe in your North Star Metric. So if you’re an entrepreneur, if you’re an employee, determine what’s your North Star and envision your best future, your brightest future, and I can guarantee that if you make efforts towards that bright future, and if you believe in it, if you make efforts towards it, if you learn how to tackle it, I think you’re going to get there. But I think a few people are so determined to keep their eyes on the prize. Where do you want to go? So if you don’t have that, maybe it’s time to realize where you want to go. If you have a company, where do you want to go with that company? This stuff works.
I mean, I can tell you, I’m a former poor kid from Bucharest, I had no money to buy a pretzel and I’ve been building four companies now. We have a lot of contracts with big companies coming to us. and we help them with those advanced things around data driven growth. I’ve seen this on my own scheme that this stuff works. So having said that, that is it from me Guillaume.
Guillaume: Yeah. And just to go a bit through what you just said here about having that North Star vision and all that. It’s becoming more important than ever, people have been talking about this in business like forever, but now people are demanding it in the employment market, the new generation coming in, but with COVID there was that great resignation of a lot of people questioning their life choices, reorganizing their lives and working from home and there’s a big shuffle happening in the workspace and people want to have a meaningful cause to work for and to have clear declaration of values from companies like, what do you stand for? Tell me clearly, it better not be some dusty thing printed on a wall. I want to see that the company’s living those values, hiring, firing, rewarding and reviewing based on the values and where are we going? What’s the company’s mission?
Not everything has to be a big mission like, ‘Let’s bring mankind on Mars and be a multiplanetary species’. Okay, that’s the craziest of all visions and the worst of it is that you might actually pull it off. But you need to declare a clear vision and mission statement for the company. It makes a difference in the alignment and performance of the whole team. And anyway it’s going to be more and more just a table stake of the game because a lot of employers are clarifying this right now. It’s not just like greenwashing or anything like this. It has to become authentic values with a clear North Star. What’s your company’s mission?
Valentin: That’s right.
Guillaume: Well? Valentin, this has been a very enjoyable discussion on CEO mindset. Thank you for being here. If somebody wants to get in touch with you, what’s the best way?
Valentin: I’m a LinkedIn person, so you can reach out to me on LinkedIn. I’m there almost daily. And if you think I can help you out, just shoot me a message.
Guillaume: Awesome. Thank you, Valentin.
Valentin: Thank you, Guillaume. And thanks everyone for watching or listening to us today.