#54 John Hagan – eCommerce Mental Models and The Road to $100M

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John Hagan, the Sugatan veteran, is back on the Sugatan podcast for the 3rd time. In this episode, with Deividas, they discuss Black Friday results, eCommerce management, mental models, and many other concepts required for growth.

First, they catch up about the pros and cons of working remotely compared to working in an office.

John tells the story of never meeting his co-founder in person until their agency was doing 6 figures in revenue per month. It’s kind of crazy how close you become with people you meet over the internet without meeting them in person, he explains.

And with that, they discuss the first topic of the podcast – the difficulties and complexity of managing employees in a remote capacity. Sometimes, the only thing you can judge them by is the impact of their work and how substantial it feels on the business.

When you do have a remote team though, things can get much more productive, says Deividas. Using apps like Marco Polo are useful for brainstorming and even for quick small talk.

The landscape of communication has changed, says John. In certain ways more than others.

Communication is important now more than ever.

There are 3 main problems in scaling businesses:

Communication.
Decision-making.
Common knowledge (how to educate people in the business what works, what you tried, etc.).

It’s common practice that as the business grows, the decisions you make along the way also become more substantial as a decision-maker.

Deividas says his decision-making process hasn’t changed dramatically. Now, he has a few mental models he uses to make decisions.

Let’s say you’re launching a product. If you choose the wrong product to launch, that means your team will have been working for 3 months for nothing. Along the way, you would have invested in the inventory, 3 months of labor cost, as well as opportunity cost.

Opportunity cost in particular is a very important concept.

Let’s say your goal is to sell your business for $1B. Then, you have to say what’s the opposite of that goal (in this case: going bankrupt). With that in mind, you make a list of ways you could go bankrupt (e.g. 3 product launches gone wrong, bad decision-making, etc.).

As marketers, we’re called to be surgeons, not doctors, says John. We’re in charge of the tools at our disposal, we’re not in control of them. Like a surgeon, you’re trying to make the most out of your impact.

The next thing they discuss is iOS 14.

People have made money on eCommerce before Facebook and they’re going to do so after Facebook too. Obviously, there will still be a lot of value in paid social.

There’s a lot of value in honest and objective.

You don’t always have to come from authority when you don’t know what’s going on.

Which is why Deividas says it’s hard to say what will happen as of yet, but he’s confident they’ll figure it out before anyone else does.

When presented with a challenge, there are 2 types of people:

People who shy away from the challenge.
People who sit in their house in Mexico with the windows open microdosing on mushrooms (Deividas), thinking, and then getting to work.

What brings you forward is leveraging the right peoole with the proper technology, explains John.

If you take an engineer-minded person and put them in front of Excel, Facebook, or some systems-related complex problem, they’ll be more likely to perform better there.

Engineers make the best media buyers, explains John.

But if you get them to create an Instagram post, they’ll be more likely to freak out.

Talking about Q4, Deividas says he was disappointed with himself as he made quite a few bad decisions. Which is why they’ve already started preparing for the next Black Friday.

John says his satisfaction rate with Q4 was around 50%. It was somewhat of a mixed bag with results. It’s getting more and more competitive as you continue to grow in it

Right now, preparing for November means 2 things for John:

Already testing offers and creatives that move the needle that can be applied to Black Friday. People who think they have the game figured out and their strategy will be the same as last Black Friday will have a disappointing Black Friday.
If you are relying on Facebook to build your brand in 2021, you’re not going to have an effective Black Friday either. You should also be putting effort outside of the ads manager and into building a fire of a brand so that when you dump the gasoline of paid social on top of it – you have the maximum results possible.

According to Deividas, there are 4 things that can take an eCommerce company to $100M:

Facebook.
Influencers.
White-listed accounts.
Product launches.

For a while, John thought the “growth-factor” was always something he was not doing (e.g. TikTok, new channel, etc.).

But he agrees with Deividas and says these factors grow in magnitude and should be amplified.

If you’re focusing on influencers with 2M followers, move onto ones with 4M followers, and so on.

Therein lies the 10x rule and as you scale, so should your marketing targets.

Here’s what we cover during episode #54:

John the Sugatan veteran is back!
Managing employees in a remote capacity
Deividas on working in an office vs. working remotely
Deividas tells the story of how a minor product change caused the message to get lost in the copywriting
John talks about scaling up as a startup and making sure everyone is on the same page communication-wise as the company grows
3 Main problems with scaling businesses and how to deal with them
Bad decision vs. no decision
How decision making becomes harder as you scale up
The ‘Inversion’ mental model to uncover new possibilities and the importance of “opposite” goals
Importance of opportunity cost and eCommerce product launches
Important mental models and framework models you need to keep in mind while scaling
How you should be working backwards with opportunity cost in mind to make sure you’re focusing on the right things
Why being a marketer is like being a surgeon and not a doctor
Deividas on iOS 14 release and his plans for figuring it out before anyone else does
Problem-solving like an engineer
Deividas on why he was meditating, microdosing on mushrooms in Mexico with the windows open to find solutions to his problems
Why engineers are the best media buyers and the worst copywriters according to John
The only source of knowledge is experience and the best way to learn
Deividas and John discuss Q4 Black Friday results
What the perfect execution looks like for Black Friday within Shopify
Why brands who thought they were experts had disappointing Black Friday results
2 Main things that are on John’s that might change his approach to Black Friday 2021
How this eCommerce brand generated almost $50M and why they only recently started email marketing
Ambitious growth goals that double companies over the course of a year
Asking the hard questions: What are we NOT doing that we SHOULD be doing?
The go-to formula that consists of 4 eCommerce marketing channels that can take companies to $100M
10xing your eCommerce marketing efforts
Getting smarter about what questions to ask your data analysts
Why you should be actively seeking people who disagree with you
Brainstorming tools and exercises in Mexico
One of the best advice John has received that’s still helping him since college
Learning from others’ mistakes