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Why You Should Focus More on AOV Instead of ROAS with Hayden Wadsworth - Honest Ecommerce Ep. 139

Hayden Wadsworth is the 29 year old CEO and Co-Founder of HydroJug, a rapidly growing, international Hydration company. 

He holds a master degree in business administration and has been featured in Forbes as well as other publications for his entrepreneurial prowess. 

He and his wife Brie have two children and fill his days striving to build an environment inside of HydroJug that is second to none to work for. 

In This Conversation We Discuss: 

  • [00:00] Intro
  • [00:50] Chase being honest
  • [01:35] How HydroJug was conceived
  • [03:19] Why Hayden wanted to create a brand
  • [04:34] The importance of filtering information
  • [05:35] Context matters
  • [06:02] Books that stand out to Hayden
  • [07:42] Traction by Gino Wickman
  • [08:27] The parallels among business books
  • [09:10] When Hayden figured out he’s onto something
  • [10:34] The KPIs that Hydrojug focuses on
  • [12:24] ROAS vs AOV
  • [12:56] Looking at the whole picture
  • [14:44] Sponsor: Electric Eye electriceye.io
  • [15:04] Sponsor: Mesa getmesa.com/honest
  • [15:58] Sponsor: Rewind rewind.io/honest
  • [16:33] Sponsor: Gorgias gorgias.grsm.io/honest
  • [18:02] Sponsor: Klaviyo klaviyo.com/honest
  • [19:11] Mistakes that Hayden wants you to avoid
  • [22:11] Where to find best practices and fundamentals
  • [24:02] From apps to custom solutions
  • [25:23] Shopify apps are great
  • [26:12] Hayden’s advice for starting businesses
  • [28:51] Accounting and knowing your financials
  • [29:48] Where to buy HydroJug

Resources:

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 Transcript:

Hayden Wadsworth  

Entrepreneurship is literally running around trying to put out fires. 

Chase Clymer  

Welcome to Honest Ecommerce, a podcast dedicated to cutting through the BS and finding actionable advice for online store owners. I'm your host, Chase Clymer. And I believe running a direct-to-consumer brand does not have to be complicated or a guessing game. 

On this podcast, we interview founders and experts who are putting in the work and creating real results. 

I also share my own insights from running our top Shopify consultancy, Electric Eye. We cut the fluff in favor of facts to help you grow your Ecommerce business.

Let's get on with the show.

Hey everybody, welcome back to another episode of honest ecommerce. I'm your host Chase Clymer. 

And today, we welcome to this show, the CEO and co-founder at HydroJug, Hayden Wadsworth

Hayden, welcome to the show. 

Hayden Wadsworth  

Yeah, thanks. Thanks a lot for having me. Happy to be here. 

Chase Clymer  

Oh, absolutely. I probably confused you because... I'll tell everybody, I screwed up the first intro and I'll admit it. 

And I went a lot shorter on this one and I caught Hayden off-guard probably (laughs).

Hayden Wadsworth  

(laughs) I was ready to listen a little bit longer, but no worries.

Chase Clymer  

Alright. So for those that are unaware, can you give us a quick backstory about the product that you guys are bringing to market over there at HydroJug?

Hayden Wadsworth  

Yeah, for sure. We sell a half-gallon, water bottle along with accessories. Our main focus... Our primary focus was to help people drink more water and live healthier lifestyles. 

It has evolved over time as the company and the culture has grown. But yeah, that's our core product right now. We do have a lot in development. But...

Chase Clymer  

Awesome. Yeah, we spoke a few weeks ago on a pre-call and you're telling me about all the exciting stuff. So maybe we'll get there on this call. Who knows? 

So take me back to the beginning of your entrepreneurial journey into Ecommerce. Where'd the idea come from? What was top of mind? How did you guys get into launching the brand?

Hayden Wadsworth  

So I think I was always engaged in wanting to start a business of some sort. It didn't really matter what it was. I wanted it to be a brand. 

I didn't want to just dropship something or sell a product on Amazon, I wanted to be an actual brand. I built a few different websites. 

And then I'd run into some issue and it just seemed like I always had these roadblocks of not doing them. One day, I was watching a YouTube video. It was a fitness influencer and they were at the grocery store getting ready for a fitness competition.

And they were complaining about all the jugs that were there on the shelf. And I just thought to myself, "Hey, nobody is really making a quality water jug on the market. So why don't I do this?" 

And there were obviously steps in between that idea and actually creating it. But that's what stemmed everything and kicked everything off. 

And then from there, it was just like customer feedback like, "Does this bottle like have a problem with condensation?" "Does it have a straw?" Or things like that. 

And that's how we got into other accessories and products along with it. So that's what kicked off the original idea for the actual HydroJug. 

But as far as Ecommerce goes, I was always interested in and around Ecommerce, so...

Chase Clymer  

Now, you said that you didn't want to do Amazon or any dropshipping stuff? Did you dabble in that and realize it wasn't for you?

Hayden Wadsworth  

No, I think just from research. So one of my big things is being able to consume as much information as possible. So whether that's books, podcasts, audiobooks... 

No matter what I'm doing, I'm trying to consume information and learn on YouTube videos from people that have done it before. 

And I think that was one of the big things. I wanted to create a brand and big value behind it. Not just like, "Hey, this is as much revenue as I can drive." 

And if I ever did choose to sell, I get "That's how much it sells for." Whereas if you create a brand, you're gonna get exponential value on that brand, so...

Chase Clymer  

Absolutely. And I just think, I talk about this often here: Books and consuming content. Depending on where you get it from, but most of the time it's just a shortcut to get to where you need to be.

It cuts out a lot of the iteration and learning curve that there is to  whatever the thing is. What are some of the books --looking back on it when you're first getting started-- that were definitely worth it after you got through it?

Hayden Wadsworth  

Yeah, so... And just something to add to your point. And I really liked what you said as far as: There's so much information out there. And not all of it is good. 

And a lot of entrepreneurs have... They speak in such a matter-of-fact way and they have been successful… And I found myself doing this. 

It's like they say something and I'm like "Okay, that's how I have to do it." And that's not the case. There's not... With entrepreneurship and building brands and stuff, there's not one size fits all. 

There's a lot of different ways to achieve goals, some might be faster and more efficient than others, but there's not a one size fits all. 

And just because it was true in one scenario and worked for one person doesn't mean it'll always work in another. 

So you have to be very good at not only consuming the information, but filtering the information and understanding what applies to you in your scenario and the situation that you're in. So, I always like to preface the things I say with that disclaimer. 

Chase Clymer  

Absolutely. Context matters so much. 

I see some entrepreneurs just going down the wrong path of the type of content they're consuming versus the type of product they want to bring to market. 

Oftentimes, I'm like, "It doesn't matter how all these SaaS brands built their business, really, because SaaS is a completely different monster than trying to build a brand on Shopify." 

Those are 2 different styles of business. 

Hayden Wadsworth  

Absolutely. 

Chase Clymer  

So context does matter in that regard. But back to the first question, does any particular book stand out to you?

Hayden Wadsworth  

Yeah. I'm sorry to sidetrack. 

I think the most impactful book on my entrepreneurial journey has been Principles by Ray Dalio. That one... That was almost like a pivotal moment in my entrepreneurial path. Because I've never done this before. I don't have a huge network of people that have... 

I've made more of a constant effort to do that. But that book just gave me so much information and great value on the things that I needed to do to create a good foundation for my business and the principles that I should have instead of how to show it... 

Again, I pick and choose which ones are good for me. But Principles by Ray Dalio, for sure. 

And then Adam Grant just came out with a new book that I really liked. It's called Think Again, which... It's basically just almost no thoughts that you have or assumptions you have are safe. 

Don't ever, like close your mind off to new ideas and be very open minded. So those 2 books have been really big in my entrepreneurial journey.

Chase Clymer  

Yeah, I haven't read Principles. I've heard good things about it. But from what I've heard, it kind of reminds me of Traction by Gino Wickman, which is where our agency took a turn. 

It was like, "Oh wait, now we get what we need to be doing." 

Hayden Wadsworth  

Yeah. 

Chase Clymer  

And it was more about just the clarity of... Honestly, running a business, until you think about... 

There's a way to literally structure how your business runs outside of the individual channels like marketing or procurement or fulfillment. 

There should be a structure to the decision making within the organization. And we didn't have that for the longest time. We were just... 

It's definitely what separates young businesses --not even brands-- just young businesses to the more mature ones that have their act together. 

They have this process for identifying what's important and what they don't need to worry about.

Hayden Wadsworth  

Yeah, 100%. What you said was called Traction? 

Chase Clymer  

Yeah. Yeah, that one's a pretty good one.

Hayden Wadsworth  

 I'll have to look into that one. I haven't read that one. 

Chase Clymer  

There's a bunch of them out there. And it's funny, the more you get down this business book rabbit hole, you see just so many parallels between whatever they're naming their framework, the way that they operate stuff. 

And all the principles are just reiterated over and over again. And then it starts to really drive the point home until you're like, "Alright, well, if these half a dozen people are saying the same thing, we should probably investigate how to put these things into our business." 

Hayden Wadsworth  

Yep. Absolutely. 

Chase Clymer  

So going back to getting things started, where did it just click? Was there like a moment in time when you're like, "Alright, we're onto something here. This is different from the last ideas that we had."

Hayden Wadsworth  

I think when we started investing heavily in Facebook ads. We started on Pinterest ads. We were getting better results. So we started on Pinterest. 

And then they changed some stuff. And we weren't getting as good results, which pushed us on to Facebook. But as soon as we saw that, we were really able to scale quickly. So the first year we only worked with influencers. That's all we did. 

And all of our deals were commission-based. So we were really able to grow the business and put everything back in because basically we had terms with  everyone we worked with. We'd get sales and then we just had to pay out a portion of sales. 

Nothing was up front or anything like that. And then in our second year, we started running more paid advertising. And I remember a big milestone for us was like $1600 a day. 

And I was like, "This could be a great side hustle and work for me with what I was going to do." Because I was on my career path and things were going well. 

And that's what it was at the time. And then yeah, just scaled from there. 

Since we started on that paid media route, we saw a great return, we saw traction. We could sign more deals like and it just grew from there.

Chase Clymer  

I want to talk about scaling a business with paid media. Now, there's a bunch of KPIs that people will throw at you. A bunch of metrics. What was your guys' "True North" with scaling through paid ads? What were you more focused on?

Hayden Wadsworth  

AOV. So the thing is we were selling a $20 water bottle. And when you're... And I guess... That's the average order value, just to clarify for anybody. But [when] you're selling a $20 water bottle, you can barely pay to acquire a customer. 

So we would come up with ways to bundle products and just upsell. So we use Bold Upsell on Shopify, for that time. And now we have everything that we just built in-house. But we use... And then we use their bundle builder too. 

So we would really push bundles and we would have them at like a discount. So if you were going to buy 2 jugs and a sleeve or a jug and 2 sleeves and a straw, you got 15% off. But now people are spending $40 and $45. And of course, that's where we put our free shipping. 

It's where we wanted our AOV to be. And then now we can pay a lot more to acquire a customer. And it works for us because our product is... In hard goods you have you obviously have that margin built in there. 

But being able to find our sweet spot like "Here's our cost to acquire a customer. What does our AOV need to be?" And then incentivizing the traffic that we're driving to meet that is what really enabled us to scale quickly.

Chase Clymer  

Alright, you just literally wrote... That's the playbook right there. And it's often... I think that people are chasing ROAS too much and they're... 

That's important but it's also... What you said is you can manipulate AOV probably a lot easier than if you can manipulate how cheaply Facebook is going to send you traffic.

Hayden Wadsworth  

Oh, we have zero control over Facebook's algorithm and Apple's iOS 14. We can't control that.

Chase Clymer  

Yeah. So I guess what I wanted to highlight here is when people are like, you got to look at the whole picture. 

And the KPIs that matter like your conversion rate, your average order value, those are a lot more crucial to the cost of the traffic. You can only optimize it so much. 

And then let Facebook do its thing. The algorithm is way smarter than any media buyers are ever going to hire. 

You're not going to stumble upon some guy or gal that just outperforms everyone else unless you change your offer. You know what I mean? A more appealing offer is going to get more people to convert.

Hayden Wadsworth  

Yeah. Yeah, for sure. And there are other things that we've discovered along the way. The more that we can... We sell a water bottle. That's not a consumable good. How do we get people to come back? We face that. 

And how do we build our product strategy to make sure that people come back? And then now you're talking about customer lifetime value. 

And once you establish that and understand what that is, now you can pay even more for a customer where you're like "We can make offers and breakeven on this initial offer, if they're going to come back." And what is our returning customer rate and what is our customer lifetime value? 

But I will say very early on, one of my friends from elementary school did all of our media buying. And he was early in his career. 

So he also learned a lot with us but [he's] super smart. And he helped build this. This strategy. 

So in no way [I can] take all the credit for this, but like these are things... It was... Early on, it was me, my brother, him, and 2 other guys like in the warehouse. So that was essentially... 

We started with really good Ecommerce fundamentals and paid media.

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Chase Clymer  

Now we're talking about some big wins that you had historically, you know, is there anything that stands out to you that's on the other side of the coin that you want to help people avoid?

Hayden Wadsworth  

Yeah, It's tough because it's like where do I even start. Entrepreneurship is literally running around trying to put out fires. And some are bigger than others. 

I'm trying to think early on some of the bigger mistakes. Quality... Product quality issues were huge. I think it took us like a year to get like most of the issues hammered out with our suppliers. 

So I think early on, knowing who those people are that can solve the problems... Because not everyone is going to experience issues like hard goods which are more complicated than soft goods or if you're selling like a service or anything like that. 

But finding an expert in that field, and growing your network, and understanding who can solve that problem... Because I didn't even know who to go to. I didn't know that you could go to an industrial engineer. 

And they would  mess with the tooling and how the ports worked and all these different things to solve the quality issues that I had. 

But if I would have networked a little bit more and understood, found someone who had done it and been able to reach out to a freelancer or something, that would have saved me a lot of time and a lot of headache. 

But there was a shipment... Our first issue was the seals on the bottles weren't working. So like everyone's bottles were leaking. 

So we got a bigger seal in our next bottles, but it was airtight. And in this shipment, it pressurized because of the changes in elevation. 

And we opened up... We ordered a container of product and we started opening up, and every bottle, the lid was literally blown off from the pressurization. So there would be like 3 bottles in a box that were. 

And you'd open it and it sounded like you were opening like a soda, because they were pressurized. So literally, it was our second order. 

And we got a whole container of bottles that don't have functional lids on them. So  one of the big issues, and I guess losses in the beginning. But yeah, you just hit the ground running and figure out how to solve them.

Chase Clymer  

Yeah. That's... You answered the question, honestly, from the get go. You're just like, "Where do I begin? It's entrepreneurship." It's 2 steps forward, 1 step back. That's just the career path or that's the trajectory of any business out there. 

So let's fast forward more to now. What's different now versus when you started the business? How are you acquiring the customers? How are you running things?  I guess for a simpler question, what's working now?

Hayden Wadsworth  

Just from a paid media perspective?

Chase Clymer  

Oh yeah. Most of the comments I get are "Chase, you're doing great at this. But we want to know more specific tactics." 

Obviously, context matters. But anything that you can share there?

Hayden Wadsworth  

Yeah. So it's the same principle. We're running and the exact same principles as far as  paid media goes. I think what another big principle that I've learned is like, there really aren't like a ton of secrets out there. 

Nobody is doing these special things that 's magic, right? There are good fundamentals, Ecommerce practices, if you want to know how to do them, get on Amazon's app. They are the gold standard of Ecommerce. 

And you can learn a lot from benchmarking. But yeah, we practice those same things. We have tools on our website. 

We've created a tool called the “hydro viewer”, where people can go in and they can customize or they can see [something] like, "Here's your bottle. Here's your sleeve. This is what it will look like." 

And they get that experience of switching them out. And then it's like an add to cart, Getting Started Bundle. People spend time on that. It helps our SEO ranking. It helps our conversion rate. We can send up a bunch of email flows after that. 

So there's certain tools and certain things that you can do to get smart with it. But the same good, sound principles like fundamentals still apply to it. 

You want a good AOV. You want people spending time on your website. You want a good returning customer rate, good conversion rate. 

How would you set up your UI and UX to create that experience and a good conversion rate? I don't really have any secrets outside of that. 

But if you have a specific question, I'm happy to go into it. If you had a comment that someone was like, "Hey, I want to know this." I'm sure I could go more into it. I just don't... I need a little more direction.

Chase Clymer  

Absolutely. You touched on something earlier and I guess I'll ask it more directly now. You said you were using Bold Upsell and the Bold Bundle builder back in the day, what prompted you to switch to a more custom solution?

Hayden Wadsworth  

I think first being able to... Having the means to be able to switch and then just it's the customer experience. 

So we want everything to be on-brand. We want everything to just be focused around that customer and how they interact with things. There were limitations with the Bold app. It worked great but there were limitations. 

And just as we've scaled, we've run into those. Like "Hey, we need bundles to work and be discounted but if we have a site-wide sale going, we don't want that site-wide sale being stacked with the discount people get with bundles." 

So we've had to... We've been forced into custom building a lot of the experiences on our website. But yeah, I think that's the biggest push for... That was the biggest push for us to switch.

Chase Clymer  

Yeah, I couldn't agree more. The solutions exist and they do work. But you hit a certain tipping point where your customer experience becomes more valuable than the investment it will take to build it out, I guess.

Hayden Wadsworth  

Yeah. And Shopify apps are great in general. The people that are building them, they're very smart and their Ecommerce-driven mind. So everything, the email marketing software is great, their automations are great. 

The SMS software is great. Everyone should be using those. Affiliate program apps and... What was the next one I was going to say? Loyalty and Reviews, all of these things are just plugins. Some of them are more expensive than others. 

But those are the fundamentals I was referring to. If you're going to be spending a lot of money on that top funnel on Facebook, you need to have these good fundamentals in place and make sure that you're using those apps to capitalize on it.

Chase Clymer  

Absolutely. I have one more question for you before we go today. 

And it's like, if you had to go back to the beginning or if you had advice for someone that's listening now that's about to get started, what would that be?

Hayden Wadsworth  

One of the things that probably helped us is we put everything and it feels like we still do. I worked my full-time job for, I think, the first 2 and a half years of the business so I had income. My brother had a job. He wasn't all in on this. 

We hired my buddy that did the paid media as a contractor in the beginning. And he was working on the side. So we weren't a burden to the business. The business could grow. We could put all of the money back in and reinvest it. And I think it's tempting. There are times... 

The first time you see [something] like a big sum of money or your company all of a sudden has traction, you're doing X amount of money, you're like "Man, a sports car looks good." Or whatever it is. 

But your focus needs to be like your business. And it needs it, especially in the first 5 years, maybe even longer. The business needs... Cash is the lifeblood. It needs it. And if you take it out and you're gonna go in and have a salary --even if your salary is a modest salary-- that's a burden on the business. 

So I think that's a piece that really helped us in the beginning. And helped us be able to get to where we could have a salary from the business. And it's still, in my opinion, a very modest salary. 

We want to make sure the business comes first, the health of the business comes first. 

And whether that's working your full-time job, or your part time job, or working on the weekends, whatever it is, make sure that business comes first and that you're putting the money back in to make sure that it's sustainable and that it will grow.

Chase Clymer  

Yeah. That's amazing advice. And once you get further into the Ecommerce business lifecycle... In my opinion, zero to $1 million is that startup phase, you're still figuring stuff out. $1 million to $10 million is your scaling. 

But once you get more to that 8 figures, it's definitely more about managing your cash flow, honestly. It just becomes... It becomes a... Not a shell game. That's illegal. But definitely you have to just know your numbers. And that's what it comes down to.

Hayden Wadsworth  

Yeah. And just a little background on me. I did accounting in my undergrad. So I had... And by no means am I an accountant, but  I can understand financials. 

And Shopify has a really basic course on understanding financials and how to invest and stuff like that. The basics. 

Like, I feel like that's a super important piece in that stage of making sure that you last or you get to that $1 million and you can make it to that $10 million. 

Because if you're in a product based business, just imagine the investment you need for inventory to get from $1 million to $10 million. That's a ton of money. And if it's not there, you can't grow. That's a huge constraint. 

So, but yeah, formalizing everything, building out the models and that becomes a big piece of the business once you... Like you said, once you get into that 8-figure stuff.

Chase Clymer  

Awesome. Now, for people that are interested in picking up the product and checking it out, where should they head to do that?

Hayden Wadsworth  

Yeah, so thehydrojug.com. We're available on a few different channels but the best deals [and the] bulk of the product is just available directly on our website.

Chase Clymer  

Awesome. Anything you want to leave the listeners with today?

Hayden Wadsworth  

Thanks a lot for having me on the show. I really enjoy this stuff. I really like helping and sharing the things that I've learned to help... 

Hopefully help others avoid the pitfalls that I had. So yeah. Thanks a lot.

Chase Clymer  

Oh, no. It was a pleasure having you and I'm sure I'll have you back in a couple months. We'll drill down into something else. 

Hayden Wadsworth  

Awesome. 

Chase Clymer  

Alright. I can't thank our guests enough for coming on the show and sharing their knowledge and journey with us. 

We've got a lot to think about and potentially add into our own business. You can find all the links in the show notes. 

Make sure you head over to honestecommerce.co to check out all the other amazing content that we have. Make sure you subscribe, leave a review. 

And obviously if you're thinking about growing your business, check out our agency at electriceye.io. Until next time.