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Ep. 47 - Turning Traumatic Experiences Into Best Events, Investing Tips and The True Meaning of Entrepreneurship with Alex Ikonn

Alex Ikonn is a dreamer and a creator. He co-founded Intelligent Change and Luxy Hair. He is also an angel investor in great companies like Calm and June.

In This Conversation We Discuss:

  • [1:09] How getting fired from his job at a bank changed Alex’s life
  • [3:40] The beginnings of Luxy Hair
  • [4:41] What is Luxy Hair?
  • [6:14] Sponsor: Simplr simplr.ai/honest
  • [7:05] Going from a lifestyle business to scaling and selling a business
  • [9:27] What was the experience of being acquired by big tech?
  • [13:43] The biggest lesson and the biggest win of Luxy Hair
  • [15:45] Sponsor: Gorgias gorgias.link/honest
  • [16:33] Alex’s approach to investing
  • [19:02] Alex’s business advice

Resources:

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Transcript:

 

Alex Ikonn

Don't go after the money. Go after the work that you enjoy doing. The field that you enjoy doing. And I think in the long run, it will enable you to go through the difficult times.

 

Chase Clymer

Welcome to Honest eCommerce where we're dedicated to cutting through the BS and finding actionable advice for online store owners.

 

I'm your host, Chase Clymer and I believe running an online business does not have to be complicated or a guessing game.

 

If you're struggling with scaling your sales electric is here to help to apply to work with us visit electriceye.io/connect to learn more. Now let's get on with the show.

 

Hey everybody, welcome back to another episode of Honest eCommerce. I am your host, Chase Clymer and today I am welcoming from across the pond, Alex Ikonn. Welcome to the show.

 

Alex Ikonn

Good to be here. Thank you for having me on.

 

Chase Clymer

I'll thank you for being here. So Alex is a co-founder of Intelligent Change and Luxy Hair. And nowadays, he's also an angel investor for brands like Calm and June. This is gonna be a fun one. I'm excited.

 

Alex Ikonn

Yeah. Me too.

 

Chase Clymer

Awesome. So I just asked you this in the pre-interview, but we're going to get back into it. So let's go all the way back to the beginning. How did getting fired from your job at the bank change your life?

 

Alex Ikonn

Yeah, I'll say it was a great experience how you can turn around a very traumatic event to be one of the best events in your life. Looking back, life makes sense a lot more. So at that time, I really thought I was going to be climbing the corporate ladder, be a banker... I really want to aspire and be that.

 

I got into a bank before I even went to university. And I thought, "Hey, I'm really going to be on my way to the top." How it really changed my life was that it really set me on that path to become an entrepreneur because what being fired taught me was that in big organizations, there's nothing wrong with them, but you are, in a sense, a number. And if you don't follow policy, no matter how great you are... Because at that time when I got fired, I was working full-time at the bank. I was full-time at university. And I still had a side business, like a side hustle -- It’s very popular now-- on the side.

 

And that side hustle is the thing that got me fired. And that was great. It was great that that thing got me fired because it was kind of like, it's against policy to be doing something else while you're doing your day job. And I understand. If anybody was working for me, and they're doing their side business during the time I pay them, I'll probably be pissed off as well.

 

But at the same time, you can be like, "Hey, how are you managing all this? You're performing at work, you have a side business, you're at school. Obviously, you have a lot of capabilities to say more. But a lot of times in big organizations, they just don't care about that and it's easier for them to just get rid of you so that you don't disrupt anything.

 

However, in being an entrepreneur, one of the most important qualities is to be able to think outside the box just to be able to disrupt processes and look for leverage where it exists.

 

Chase Clymer

Awesome. Now, what's that side hustle that you were talking about? Was that Luxy Hair?

 

Alex Ikonn

No, not at all. That was before Luxy Hair. So this was our shipping cars... Me and my friend from... He would get clients in Russia. And we kind of like broker it. We buy the car for them and ship it over. And it was just like, it didn't last too long. But... (laughs)

 

Chase Clymer

Hey, I gotta respect the hustle.

 

Alex Ikonn

Yeah, exactly. Do whatever that makes them dollars. Yeah.

 

Chase Clymer

Absolutely. So how long after you --exited the bank-- did the beginnings of Luxy Hair come around?

 

Alex Ikonn

I took almost two years. So I give on... I had about two years left of school and I said, "Hey, while I'm in school, I'm just gonna try to do entrepreneurial things and not go back to 9-to-5." And fairly quickly I would say... I guess not fairly quickly. It took about two years. And Luxy really took off right before, (we were) about to run out of money.

 

And I just finished university and I've said, "Okay, it's time to get a job." Because I said, "I'll toy around with this entrepreneurial thing until I get my degree. And then if anything after, I'll just go back to corporate." and we're just running out of money. Me and my wife... It was just about that time that we did the Hail Mary: Luxy Hair, which was great.

 

Chase Clymer

Cool. So for those of the listeners that are kinda unfamiliar with the brand, do you want to give us a quick rundown of what Luxy Hair is and kind of like that journey?

 

Alex Ikonn

Yeah, sure. So Luxy Hair is the direct-to-consumer hair extension brand. The main product is hair extensions. And we're one of the firsts --before even direct-to-consumer was hot or interesting-- we built a direct-to-consumer business. And it was really... The idea was not to build this big business. It was really a lifestyle business.

 

It really took off because we reutilized --because we didn't have a lot of money for marketing-- we utilized social networks like YouTube and even like forums back in the day. Reddit is so popular. Reddit, Yahoo answers or whatever we can get on.

 

But the way the business really took off was because of YouTube and the YouTube content library that we built up. It became one of the largest YouTube channels all about hair. More than 3 million subscribers, (it) gets like almost like a half a billion views now, a lot of videos with like 10-20 million views from those early days. It was just... Sometimes, even though... Looking back, you will be like, "Oh, it's too late. There's already Michelle Phan out there that existed and other beauty bloggers."

 

But we still entered the space, we still found our niche and we're successful. But right away, we did it not to become influencers, in a way. But we came to do it because we knew right away this was just a great platform for marketing, for leads. We really believe in content marketing. That's where we really grew our business really quickly.

 

Chase Clymer

Yeah, that's amazing.

 

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Chase Clymer

And so when did... I like how you said at the beginning, it was a lifestyle business. Since I read up on you, I kinda know what happened at the end there. So when did it change from being a lifestyle business to like, "Hey, we might sell this thing?"

 

Alex Ikonn

I guess we never really thought about really scaling to sell a business. That's not the way we're thinking about. However, our goal initially was to make just like 1500 dollars a month, each. And we would have been happy because we're just students, living like my mom. So that's all we needed.

 

However, as the business started growing, we started... We had seven figures in our first year. We realized, "Wow, there's a lot of potential here and opportunity." And we still can have the "lifestyle-y" stuff for the next 3 years. 3-4 years. Not really taking it seriously. However then, what started happening is private equity companies started approaching us and be like, "Hey, we're from venture capital or private equity. You want to chat?" I'm like, "Sure. Whatever."

 

I remember even taking a meeting with --I think it was some big firm on Sand Hill Road --The big venture capital... Sequoia. Somebody from Sequoia. It's like Big Tech. For some reason, I don't know why they're getting in touch with a hair extension company. I think one of the partners, his wife was one of our customers.

 

And he's just like --I remember we're in San Francisco-- he's like, "Hey, come down." We met him on Sand Hill Road, they're just talking to us about the business. How big is it? What's the market opportunity? All that stuff. But we didn't care to pitch or raise money. I guess then we realized that "Wow. Okay. There's some potential."

 

And then a little later down the year, we also have some other private equity people in New York and they were actually really serious. They give us an offer, like term sheet, like the whole real deal. And but I think they saw that we weren't experienced. And he was kind of... It was still pretty good offer but it's still pretty low ball --considering through the valuation, we were able to get after when we sold the company.

 

But I'll say around that time, it kind of really... It got me moving around this idea of like, "Oh, you can actually build a business and sell it for multiples, for your profits for the future." Which was a really interesting concept. So that's really how it all started with that idea, I would say.

 

Chase Clymer

Yeah, so what's that whole process like of getting acquired once you guys definitely started taking it more seriously? What are some of the things that people wouldn't think about?

 

Alex Ikonn

What do you mean by that?

 

Chase Clymer

How much due diligence did you guys have to do with your accounting? What are some of the parts of that process of getting acquired that were either surprising or a bit tough?

 

Alex Ikonn

Oh, I don't think it was surprising at all because what happened was, as we got this idea from speaking to a lot of private equity people, I kind of reverse-engineered and ask them what they're looking for in terms of how to raise valuations, how to get better valuations.

 

It does take a lot of regards to how do you have a business that can run and sustain on its own without... Because I think you only become an entrepreneur when the business actually doesn't require you. And this is where a lot of people... Even nowadays they call themselves entrepreneurs, but they're not really entrepreneurs. Even if you have a large business, but business still relies on you, you're still self-employed.

 

And what a lot of these private equity/venture capital people maybe realize is that entrepreneurship is when you build a system, build processes, where you're able to get those repeatable customers and systems in place. And that's when we started really building a team. Because before that, we just had two customer service people and one social media person.

 

And then we realized we needed to build a bigger team that can go without us and that doesn't require Mimi for marketing or myself for the management or anything like that. That's when we start hiring. Lulu, who then became --she was first just an operations assistant-- She then became a general manager, and we started building out the team. And so I guess in that whole process, Lulu was really great to manage that kind of the whole building... Build up and process.

 

She's really good at processes. And so it's really about, having people on your team who can create a lot of those systems. So Lulu was really in charge of getting that back end, those finances in order all that stuff. And when it came to selling, we worked with an investment banker. Lots of lessons there.

 

I wouldn't go that route with working with the individual that we did. But it's all really about, I would say, getting your house in order, being organized and that's what the buyer wants. Because in a way, if you are looking to sell your business, somebody's looking for a ready package that is able to reproduce income for them.

 

I remember a big lesson, one of my friends who's sold businesses before said this, "You shouldn't really think of selling your business because if somebody wants to buy your business, most likely it's because it's going to create income for them." Because once you get acquired, you get liquid capital. "Okay, what are we going to do with it now?" You pay taxes on it. After you pay taxes on it, what is left over? How can you recreate the same cash flow that your business was generating before?

 

It's actually pretty tough. So it has to be a very compelling reason for you to sell your business. Otherwise, I think you're better off long-term sticking around the same business.

 

Chase Clymer

Yeah, I kind of... I believe that. Everyone's talking about scaling these businesses as big as possible and like, "How can we scale?" Especially with Shopify and just how direct-to-consumers going with performance marketing and stuff.

 

Almost like lifestyle businesses, in a sense, these days have gotten a bad rap. But I don't think that's necessarily a valid perspective to have. I think a lifestyle business... If you want to build up a successful income for yourself, business and kind of have it run itself. I think that's perfectly fine. No one says you have to be the biggest fish in the pond.

 

Alex Ikonn

No, I actually don't think I agree with you. I think most people should actually focus on building good long-term businesses, mostly for themselves. And the reason it's a bad rap, it's just a bad rap for private equity/venture capital people.

 

They don't like people like myself who are more comfortable, who are relaxed, who are not trying to grow and make as much money as possible. It's just not interesting for them. So then they portray lifestyle entrepreneurs as... It's not interesting for them.

 

Chase Clymer

Yeah. I don't like that at all. So I got a two-part question about the journey of Luxy Hair. So the first would be like, what was the biggest failure that you guys overcame? Or the biggest lesson learned? And then on the flip side, like what was the biggest win within building the business?

 

Alex Ikonn

I think the biggest like I said, learning has always been the importance of building a team. I think people... If you really like to want to scale a business and build a bigger business beyond yourself, how do you go beyond your capabilities? I think this is where most people get stuck because they're trying to do everything themselves. And I'm there myself. It's something that I still struggle (with) to this day.

 

So it's big learning how you can really just grow faster and better and build better systems and create a better experience for your customers when you have a better team put together with great people. And the second part, I guess... What was the second part? Can you remind me? (laughs)

 

Chase Clymer

(laughs) What was the biggest win?

 

Alex Ikonn

The biggest win is definitely creating freedom for yourself, right?

 

Chase Clymer

Yeah.

 

Alex Ikonn

I think now, even early in the business, I don't think that really much has changed, post-acquisition. I still... Now I just have more money in my bank account. But in reality, my lifestyle is the same as it was before that is now because I've always put lifestyle as a priority. So my choice... I think why a lot of people should or want to become entrepreneurs is freedom.

 

Freedom not just like to be on a beach all day. But I guess the idea of freedom for me is really to be able to choose what you want to work on, the projects you want to work on, when you go into work, how you work, all that stuff. So that's freedom for myself. That was the biggest one.

 

Chase Clymer

That's awesome. You know, what's really funny here is because I've got a list of questions in front of me that I haven't shared with Alex. And he's just like, naturally progressing into the next question somehow. He's got like a fifth sense here or something. (laughs)

 

Alex Ikonn

(laughs) I know you said you want to send me the questions. I'm like, "Dude, I don't do that. I just go with the flow."

 

Chase Clymer

Awesome.

 

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Chase Clymer

Yeah, so my next question was, --you kind of talked about a little bit-- what's life like for you these days? And kind of talk a bit more about angel investing and like, what are you looking for and brands now that you're kind of on the other side of it?

 

Alex Ikonn

No, I've always been in that same kind of just... As I said, nothing has really changed. The only thing I've changed is I have no employees. Which sucks. So I'm looking forward to actually having more employees. Yeah, I'll get into that. But with angel investing, I always have done it just kind of like on the side, just for fun. Mostly through AngelList.

 

I think they're... Like I said, it's... I wouldn't recommend anybody to do it. It's an expensive hobby. And sometimes, you know, you get a hit. So hopefully, my Calm and... Even though Calm... It was one of my earliest invest. Hopefully will return my overall portfolio of investments. But it's really just looking for... Yeah. I think the best investment that I have done are the ones who, which I understood.

 

Going back to the Calm one, it was through Jason Calacanis Syndicate, an angel list. and when I looked at it, I'm like, "I don't think this is really a venture-backed business that's going to scale, but I'll just throw them like a small amount of money just because I believe in the concept of like mindfulness, meditation, and all that stuff." And that did really well.

 

So I think my... Whenever I tried to invest in like, data/tech companies that I know nothing about, I'm like "Sure. Cool. It sounds cool." those actually didn't do so well. So it really goes back to that rule of Warren Buffett, invest in what you understand. And then yeah, so that's pretty much it. That's kind of my strategy for investing.

 

Chase Clymer

I mean, I couldn't agree more if you don't understand it. How do you know if it's a good idea? It's just other people telling you.

 

Alex Ikonn

Exactly. But like lifestyle... But on your second part of the question, like the rest of (my) lifestyle. Yeah, nothing has really changed. I think the only thing that changed is that it's so much harder without employees. When you have a team to support, what you do and when you grow, it's just so much easier. It sucks to do things on your own.

 

Chase Clymer

I'm going through that pain point right now. If anyone listening is a developer and you want a job, hit me up by the way.

 

Alex Ikonn

Yeah. Definitely. (laughs)

 

Chase Clymer

Cool. So before I let you go here, is there any other advice that you'd like to share with like young entrepreneurs? A lot of our listeners are in the eCommerce space, starting in SMB, something like that. So anything else that you'd like to share?

 

Alex Ikonn

I think going to what I was saying about investments is the same thing with the businesses. The reason we sold Luxy hair is not because it wasn't a great business or something like that, or because it gave us a big return. As I said earlier, selling businesses actually, it's not a smart move, I think. Unless you're getting a totally outsized return. The reason we sold is because we weren't fully still passionate about the business long-term.

 

And I think, this is where I'm at now with Intelligent Change. I just brought out my business partner, and I'll be focusing on that full-time/long-term. It's because I sold the previous business. I just wasn't interested in that business. So I think that the opportunity and the main lesson is don't do business for money.

 

You can skip that step, and go right into working on a business that you actually passionate about, or at least your... A lot of people say, "Oh, don't follow your passion." Possibly, you have to have some sort of interest in that industry that you're doing. So, for me doing hair extensions, it was great. I'm very grateful. It has allowed me to have a platform. I have to invest to do other businesses to all that stuff.

 

But in reality, I started Intelligent Change in 2013, and that's the same time Calm started. So if I actually focus on that business, build more digital apps, focus on the Five Minute Journal app, focus on other applications, focus on other products in that business, maybe that business could be like 10 times bigger than Luxy Hair. We knew because I was more interested in that category and that business.

 

So I'll say to anybody, "Don't go after the money. Go after the work that you enjoy doing, the field that you enjoy doing. And I think in the long run, it will enable you to go through the difficult times." Because for sure guaranteed, having a business is very difficult. And why is that difficult? Because it truly relies on you. It's all about...

 

You take responsibility for everything. There's nobody else's fault. It's your fault as a leader. So that's kind of the thing. Go after and do what actually you're interested in and not just because it's going to make you the most of our money.

 

Because (in the) long term, even if you... I've met lots of people who make lots of money, but if they're not passionate about what they're doing, or they're (not) interested in what they're doing, they're just miserable. They go miserable to work, they are miserable in their day to day life even if they have a lot of money.

 

Chase Clymer

That's amazing advice. Thank you so much for that. Before we go here, if people want to learn more about you and what you've got going on, where should they go? What should they do?

 

Alex Ikonn

Oh, yeah, definitely check out intelligentchange.com. That's where a lot of the focus is going to go into right now. And you can also follow me on Instagram @alexikonn and on YouTube as well. I haven't posted videos in a while but hey, who knows, maybe I'll start again. But I have a lot of content from back in the day that's educational or inspiring and motivating, so you should definitely check it out.

 

Chase Clymer

Awesome. Thanks a lot for your time.

 

I cannot thank our guests enough for coming on the show and sharing their journey and knowledge with us today.

 

We've got a lot to think about and potentially add to our businesses. Links and more information will be available in the show notes, as well.

 

If anything in this podcast resonated with you and your business, feel free to reach out and learn more at electriceye.io/connect. Also, make sure you subscribe and leave an amazing review. Thank you.