On this podcast, we talk about the importance of inventory forecasting, how a good product takes you halfway to success, why you should keep your operating expenses in check, and so much more!
Mroue is a self-taught marketer that learned through trial and error. He learned the ins and outs of customer service, email marketing, product marketing, content creation, video editing, advertising, data analytics, web design, and shipping and logistics.
After a few failed business attempts, Mroue launched his first successful ecommerce business in September of 2020, generating $150,000+ in sales in a little over a year.
In April of 2022, Mroue started a new brand—Cloudsharks. In less than a year they've gone from zero to multi-seven figures in revenue and continue to grow month over month.
In This Conversation We Discuss:
Resources:
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Rayan Mroue
I'm a very, 'put all my eggs in one basket' [kind of a person] and not be 50-50 like 'It's kinda cool and but kinda not.' I fully believe in [the saying] if you want something to work, you have to put forth [a] full effort.
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 I'm welcoming the show, an amazing founder of an extremely unique product. I can't wait to dive into this one. Welcome to the show, Rayan.
Rayan Mroue
Hey! How are you doing, Chase?
Chase Clymer
Doing fantastic, dude. So cloudsharks. What types of products are you bringing to market for people that aren't familiar?
Rayan Mroue
So cloudsharks, they're --long story short-- shark slippers. Those are slippers, slides, that look like sharks. And the "cloud" is pretty much the comfort of them. Very squishy, very comfortable.
And yeah, this is our first product we launched shoes. It's our best seller today. And we have a wide range of products now. We also have winter ones and stuff. We have some for kids and whatnot.
But that's the idea behind cloudsharks.
Chase Clymer
Awesome. And where did this idea come from?
Rayan Mroue
So I was getting back into ecom. About a year and a half ago, I took a break to finish school and get my degree.
And I usually use websites like Alibaba to look at products and whatnot, just things that I've seen. And I saw those and you know, thought they were pretty cool.
Did my research across the whole ecommerce space, the market, everywhere, and had never been introduced. Nobody had sold a product and I ordered a sample.
Talked to my girlfriend, my family and they're like, "Meh, it's okay."
And I was like, "I don't know. Something was really special about them. "And yeah, I decided to take a shot.
And it just blew up from there.
Chase Clymer
Awesome. So you said that you were checking out websites like Alibaba and stuff to try to find a product that works. Can you talk a little bit more about that?
Rayan Mroue
Yeah. So I would say like 90% of the world, at least in the US, --I would think-- gets their products from China.
Alibaba is the biggest global retailer, I think, in the world or wholesale retailer in the world. And it's just got a wide range of like products from anything you can think of. Absolutely anything.
And yeah, [I was] just scrolling, seeing whatever caught my eye. And it was something that immediately I was like, "These are kind of cool."
And like I said, I got some opinions and slept on it. And woke up one day, gut feeling intuition was like, "I need to order a sample of these." And yeah,
Chase Clymer
Awesome. So you get to sample in. How do you go from "This is a cool product." to "I think we have a potential business here."
Rayan Mroue
I didn't. So whenever I've launched any businesses in the past... This is my first successful one. Anything I've ever launched, never had proof of concept.
I'm a blue ocean type of person. I like to trailblaze and be an innovator, whatever the case is.
And yeah, so there was no proof of concept and no validation, no Google Trends, nothing. Nothing to say that this was a good product.
It was just, I looked at it, I tried them on, I was like, "This is a good product."
I think over the years of being in Ecom and developing my skills and stuff. I just looked at it and had that hunch, and I'm a really strong believer, and got an intuition and I just went with it.
Chase Clymer
Awesome. Alright. So you are feeling this product. And I'm assuming there's a lot of listeners out there that they're feeling their own product.
How do you go from like, "I believe this is a winner" to selling it?
Rayan Mroue
Yeah, until it becomes a winner. I just said... Like I said, I was just getting back into Ecom. I took a hiatus. And I was just like, "Whatever happens, happens."
I'm a very, 'put all my eggs in one basket' [kind of a person] and not be 50-50 like 'It's kinda cool and but kinda not.' I fully believe in [the saying] if you want something to work, you have to put forth [a] full effort into actually trying stuff.
So, I made the website and I was like "Whatever happens, happens" but I'm dedicating my time, passion, and energy towards this. I think it's really cool. And I believe it could be something.
And we launched, yeah, April 6, 2022. So we'll be hitting a year soon. And it was primarily TikTok ads and within a day it just took off. We hit over 100k in the first 30 days.
Chase Clymer
That's amazing. How did you guys kind of crack the code with TikTok?
You alluded a few times to your experience in Ecom. Can you bring that into the mix?
Do you think that someone could have found a winning product like this and mimic your success?
Rayan Mroue
Absolutely. I definitely think it could have been mimicked. I think... I talk a lot about luck. I've told a few people, some people I'm mentoring, just in general. The skill set is, I think 60% - 70%. But I just happened to stumble on the product at that exact time when...
And then when I researched the product, there was nobody selling it. So what I think is had I waited, let's say 2 - 3 - 4 months, this might not we might not be here today. So I think it was definitely a mix of luck.
And just after having that hunch, having that intuition of "This is cool" to just execution and speed and just going all in.
Chase Clymer
Gotcha. So what was that execution?
Rayan Mroue
So like I said, we started primarily with TikTok ads. And that took off immediately. And then I think what really was a big lever was at the end of April, when I was running TikTok ads, my account got suspended for a month because I was showing a Nike slide in my ad.
And they striked me as copyright. And so I wasn't very…
I didn't have a lot of experience with Facebook ads. So I started using TikTok organic, which I'm sure you have heard of. Everyone loves to talk about it now. And that's when things just really, really took off. May was our second month.
And I think we did almost $200k at about 40% - 45% margins. So all of a sudden, I have zero advertising costs, and I'm just starting to rack up cash flow and being able to reinvest that immediately back in the business.
I remember, I didn't pay myself for 3, 4, or 5 months, because every dollar was going back in. I had that momentum. And it started with TikTok ads, and then the TikTok organic.
And then all of a sudden now I'm pushing myself on Google. I hired an email guy, a Google guy, and just started going rapidly. Started going omnichannel and just really going at it.
Chase Clymer
So what's the difference between your product and someone else sourcing the same thing from China?
What work did you put in to really differentiate yourself?
Rayan Mroue
Branding. That's probably my strongest suit. It's going to be the creative side. So branding and creative strategy. And when I saw the momentum, I knew that I didn't have a strong barrier to entry because anybody could source the product and sell it.
And at the time, I was shipping them from China, typical dropshipping. And I knew I had no edge with the momentum I was building.
And with the eyes that I'm starting to attract, I know people are gonna see. People are gonna want to start selling it.
So 2 weeks in, when I saw that momentum, I had the guys I was working with to dropship the products. We had inventory in our China warehouse.
And I was like, "Look guys, this thing's taken off. We need to brand it right away. I need to start creating something. A community or whatever." And so within a couple of weeks, we added custom packaging, a thank you card...
Pretty much doing anything we could to just start creating this brand flywheel. And that's what really started the separation from anybody who's trying to sell it.
And then as soon as I hired an email guy that started helping with retention, lifetime value, repeat customers, we started doing product drops and just expanding product lines.
Customer service was making sure those were dialed in and just really creating that "brand feeling", if you will.
Chase Clymer
I just want to ask a question that I know that our listeners will be curious about. You don't have to give me exact numbers here. But launching and testing this product on TikTok, what kind of budgets were you spending a week or a month just to really set expectations there?
Rayan Mroue
I think... When I started the business, I had about $3,000 saved up. I was working a 9 to 5. I was working in cybersecurity. So I was good.
I was making 50k a year so it was like $1400 - 1500 every couple of weeks. And I remember I had about $250,00 - $300,000 in my bank account.
And I didn't really have a set budget of what I had. I just said like all my money that I make is going towards this. And I think I started $100 - $200 a day, $300. And the ROI was...
It came back immediately because, like I said, it'd been such a new concept. No proof of concept and people just liked it. My intuition of "This is a cool product." gave me the ROI immediately.
So it didn't require a lot of initial budget. I got the money back instantly. And then we're profitable from the get-go. And it was pretty much a rinse and repeat and just building off of that.
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Chase Clymer
You mentioned that one of the points of the business was obviously branding and then starting to hold stock here in America.
If you were to go back and do it all over again, would you do it exactly the same way? Or is there anything you'd change?
Rayan Mroue
So I think someone's asked it before. It's really interesting. I think if I were to go back in time, I would have transitioned to the US earlier or I would have waited. So we started moving inventory to the US starting mid-August - September.
That was when the whole ball started rolling. We didn't start selling in the US until November. But the time that I...
The way it worked out...
And we started selling in the US in November, one of the busiest months of the year. I think it's the busiest. Q4, Black Friday, Cyber Monday...
I had no idea how to project inventory, how to forecast, I just ordered what I thought made sense. We had our best month. We did 400,000, close to it, and sold out of our inventory within a month. So now I sat here with no stock.
And I had ordered more but we had a 2-month lead time. So I sat there for 2 months with very little cash flow and the business pretty much almost went down.
And if I think I could go back, I would have made that transition earlier before that busy season or after Q4 into Q1 2023.
But all in all, like I said, I'm starting to hit the year mark. I'm starting to think about what I did and just the process and everything and I don't think I would have changed anything else other than that.
Chase Clymer
Gotcha, I know that one of the limitations that people run into with scaling a business as rapidly as you have is the financial aspect of it. So can you shed any light on how you pulled that off?
Rayan Mroue
Yeah, so... The hardest part was that whole transition to the US because all of a sudden, I have to drop $100,000+ on inventory.
And it's got a 2-month, I think, cash conversion cycle is what it's called. I'm not going to see those returns until we start selling.
I think one of the biggest things that I did is... What I see... At least, what I think I see in the Twitter space is that people love the instant gratification of, "I make an X amount, I need to pay myself X amount and I need to buy such and such."
With me, it was like, "I need more money so I can put more dollars back in the business." Like I told you, I didn't pay myself for ever. I was so scared because I just wanted to keep building the business.
I just moved out of my mom's house like 4 or 5 months ago. But previously, I was working in my garage. I cleaned out the whole garage, I set up a whole workspace for myself, and pretty much lived on...
I had no bills, kept everything to a minimum, and like I said, every dollar that was coming into the business was going straight back whether it's to product expansion, brand expansion, exploring new channels, hiring VAs working on backend infrastructure stuff...
And that's where, I think, really built me to where I am now where I've just set up solid structures and foundations.
But back to the whole financial part, I think it's just, I was just really responsible and saw a vision once I got the momentum that I was able to have that money available.
And just as of, I think 4 months ago, I started paying myself and it's only about $2600 a month. So not much at all. But I don't... I'm not somebody who needs a lot
Chase Clymer
Gotcha. So what's on the next horizon for cloud sharks? What are you going to do? How are you going to grow this? What's next?
Rayan Mroue
So we just launched on Amazon. That's starting to take off because there are some people who do sell ours on Amazon. We did add a layer of branding to our slide, which is the logo to add some type of proprietary stuff.
Like I said, we launched on Amazon, which is, you know, taken off pretty well. We're diving into the wholesale space now. We hopefully...
I potentially just landed a really large client. And yeah, wholesale is going to be a big space for us. Because the margins are great and it's just the reach that we can get.
So have 2 potential clients that we're working with through wholesale. And then as far as continuing to grow, my only limitation has been inventory. Inventory requires capital.
And really just building up the funds that I have to keep ordering more and more inventory. Because yeah, we're. We do on average, about $250k to $300k a month.
And that's only kept because of... You can only scale as fast as your cash flow allows your inventory.
But we have the systems in place to get to those $500,00 - $600,000 - $700,000 months. And just really just continue to reinvest, continue to grow and to do at a sustainable pace so that things don't break.
Chase Clymer
Awesome. Awesome. Now, looking back on it in the last, almost a year now does anything stand out as a mistake that you made along the way that you want to say, "Hey everyone else, don't do this."
Rayan Mroue
Yeah, actually. It's one of the reasons why cash flow has hindered me from scaling further. So it's not a bad...
It wasn't a bad thing. But pretty much when the business started blowing up, a month and a half later, I quit my job.
And I was like, "That's it. I'm going all in on this." The momentum kept growing. I was like, "Oh my god. I need to hire, I need to hire, hire, hire. Outsource everything."
So I hired a Facebook guy, I hired an email guy, I hired a TikTok guy, I hired a CRO agency....
I think I said email already. I hired a Pinterest ads agency...
I outsourced absolutely everything. And we grew. We scaled. Like I said we started, I think... In August, we were doing $250k - $270k consistently. And then things were just going...
I was so focused on the day-to-day that I didn't have my finances in check. I was just like "Sales are booming, like things are going, I'm working hard, like, I'm good.
And I started having a hunch one day that the money wasn't growing in my bank account or things...
We were doing...
We were growing in revenue, but I was like, "Something's not right." It was like three in the morning before I went to bed.
And I was like, I pretty much had this thought of like, "I don't think I'm getting paid as much as I think I am."
And so that led me to really dive into my financials, looking at my P&L, looking at what's at the service level, what's going in and what's going out. And long story short, more money was going out than it was coming in.
And I pretty much had way too many operating expenses, almost paying for too many people. I was on a lot of performance-based agreements. So as we scaled, even those fees grew.
And I think it was like a 2 or 3 month period between like August, September, October, where we did close to I don't know, I think like 700,000. And my, I think actual take home after everything was $10k $15k. It's like 1% -2% margins.
And that led me down a rabbit hole of cost cutting and getting my...
We're basically becoming as lean as possible in the business. And that was probably...
That mistake happened. And I felt that mistake, when we ran out of stock. And I had already ordered more inventory.
But my bank account wasn't as high as it should have been had I been more lean. And yeah, so like I said earlier, the business pretty much almost went down. I had, I think, $7,000 in my bank account. And I didn't think I was going to make it.
I didn't think I was going to be able to pay for my credit card bills. And yeah, I went through like a 2 - 3 week period of just shutting down. Didn't think I was gonna make it. And one day I talked to my dad about it, because...
My family knows I own a business and I run the business, but they don't really ask too much about it. My dad asked me, "What's going on? How's everything?" I said, "Not good."
And he pretty much gave me a pep talk. "Get your butt up. That's not who you are. You're either gonna make it or you're gonna die trying." Those were the words.
And then I went home and woke up the next day, and I was like, "Alright, let's get out of this." So operating expenses. Yeah, making sure you have your finances dialed in.
Chase Clymer
Gotcha. This has been a fantastic episode. It's just... It's so surprising how fast you can scale a winning product. And it just really comes down to "Product is almost everything."
Rayan Mroue
No, I completely agree.
I think once you have the right product as long as you're marketing it the way you should, you have the creative side dialed in, --which like I said, is my strong suit-- man, you can really take things far.
So yeah.
Chase Clymer
Is there anything I haven't asked you about that you think would really resonate with our audience?
Rayan Mroue
Nothing else that I can think of? This is a little off topic. I wanted to give a shout out to Sam Mendelsohn. He's the owner of Workspace6.
It's a big community of I think minimum 7-figure brand owners. It goes all the way to 9. And he actually introduced me to your podcast and stuff. And yeah.
One big thing, I think, that I haven't talked about is the whole networking aspect of things. Being in a community like that...
I'm multi 7-figure right now, there's people that are nine-figures. So, if you think I'm smart, there's people that are way above me and stuff.
And it's been like an amazing community. I just want to shout out to him. And networking, in general, has been really big, especially within that community and stuff. But yeah, I think you covered everything.
Chase Clymer
Absolutely. And we'll make sure to link down to his community in the show notes of this episode as well so people can check it out if they think that's something that they might want to join.
Rayan Mroue
Cool.
Chase Clymer
Awesome. Well, thank you so much for coming on the show.
Rayan Mroue
Thanks so much.
Chase Clymer
We 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.
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Lastly, if you're a store owner looking for an amazing partner to help get your Shopify store to the next level, reach out to Electric Eye at electriceye.io/connect.
Until next time!