The Transcript

How to Determine if Your Business Idea Sucks

Voiceover: Welcome to Hack the Entrepreneur, the show which reveals the fears, habits, and inner battles behind big-name entrepreneurs and those on their way to joining them. Now here is your host, Jon Nastor.

Jonny Nastor: Hey, hey, welcome to Hack the Entrepreneur. I’m so glad that you decided to join me today. I’m your host, Jon Nastor, but you can call me Jonny.

My guest today is the founder and CEO of multiple successful businesses, including StickerJunkie.com and Delinquent Distribution. Most recently, though, and alongside her partner, Dan Caldwell, who’s the founder of TapouT Clothing, she’s also created Lessons.biz, which offers a six-week course on how to run a successful t-shirt business.

My guest skipped college and started her first business, Rhythm Styx, which she is currently reviving, at age 23. She also appeared in season 5 of The Apprentice and won two tasks as project manager before being fired by the Donald Trump in week nine. Now, let’s hack Andrea Lake.

Today’s episode of the Hack the Entrepreneur is brought to you by The Showrunner Podcasting Course, your step-by-step guide for developing, launching, and running a remarkable show just like this one that builds an audience in the age of on-demand audio content. We are re-opening the course for one week only on June 25th. The only way to get in is to be on the list. Join today by going to Showrunner.FM. Drop your email into the sign-up box.

Welcome back to another episode of Hack the Entrepreneur. We have an extra, extra, extra-special guest today. Andrea, thank you so much for joining me.

Andrea Lake: Thanks so much Jon. I’m excited to be here.

Jonny Nastor: Oh, it’s going to be a lot of fun. Let’s jump straight into it, shall we?

Andrea Lake: Sounds like a plan.

How She Learned the Power of Delegation (and the $20 Rule)

Jonny Nastor: Awesome. Andrea, what is the one thing that you do that you feel has been the biggest contributor to your successes so far?

Andrea Lake: Wow. There are a couple of things that I do. On a personal note, I would say taking time for myself: yoga, meditation, and hiking. I get my best ideas there. In business, there is a couple of contributing factors, but when I really put a dollar value on my time, when I started to do that. At first, it was just $20 an hour and hiring out everything else that I could hire for less than $20 an hour. My business increased by 500 percent that year.

Jonny Nastor: Wow.

Andrea Lake: I very strongly recommend that every entrepreneur does that. Now it’s hundreds of dollars an hour. Anything that I can hire out, which is almost everything, I do. And learning the superpower of delegation — that s been one of my biggest wins.

Jonny Nastor: Wow. I love that. I love that as the benchmark. Twenty dollars an hour — if it’s less than that, then yes, it’s gone.

Andrea Lake: Mm-hmm.

Jonny Nastor: I guess because I’m going through that right now at the podcast, trying to push things off, and knowing that by spending that money, it’s going to grow it, obviously, because there’s only one of me.

Andrea Lake: Right. Actually, it was a mind shift that my mentor helped me get because I thought in my head — which I think most entrepreneurs do Oh, I’m saving money by doing all of this myself, which is obviously completely inaccurate. But I was literally packing orders and stuff –it was like 98, the early days of the Internet. He said, “Okay, this is exactly what I want you to do. I want you to hire someone to come and pack the orders, and every minute that she is there — it was a girl I ended up hiring — I want you to be making sales calls.” I was like, “Well, that’s brilliant.”

Then I very quickly realized that I was averaging $400 an hour in sales when I was doing sales calls for that company. It was my first clothing company. I was like, “Well, I think A) my dollar value should be higher than $20 an hour, and B) perhaps I should be doing nothing but making sales calls.”

Jonny Nastor: Nice.

Andrea Lake: Yeah.

Jonny Nastor: That’s a great mind-shift change, because it’s absolutely right. As long as you do something more valuable with that time, right?

Andrea Lake: Yes, exactly. That was why it was a comparative to me. Not only that, it was a really great company because it was a CPG, a consumer products good company. I had a really tangible amount that I could associate with that time. Not all companies work that way.

The Simple Process of Determining Whether or Not an Idea Is Good

Jonny Nastor: Exactly. Yeah. That’s a great way to start. When you said on the personal side, with the yoga, meditation, and hiking, your best ideas come from there.

Andrea Lake: Absolutely.

Jonny Nastor: How do you document those ideas while in the middle of an activity?

Andrea Lake: Oh, do you know what? Well, there were two things. First of all, I do use voice recordings, or I’ll text myself something.

Jonny Nastor: Ah, nice.

Andrea Lake: But in general, I know some people might not agree with me here, but if an idea doesn’t rise to the top and excite me to the point where I remember it, I don’t consider it all that valuable.

Jonny Nastor: Nice. If an idea doesn’t rise to the top. Yeah. That’s a great way to think of it, actually. You don’t need every idea, right? You just need ideas flowing more so than to remember every single idea.

Andrea Lake: Right. Yeah. People say like, “Oh, I had this great idea, and it was so great, and I forgot it.” I’m like, “No, you didn’t. It was fine. You’ll remember it. If it was really that great, you’re not going to forget.” Just the other day, I found out that I could apply one of my companies to vocational rehabilitation for military guys, which means the government actually will pay for them to take my course. I’m like, “There’s no way I’m forgetting that. I don’t even need to write that down.”

Jonny Nastor: So true.

Andrea Lake: That’s amazing. That’s going to mean like a million dollars over the course of the next two years, so I don’t have to write that down.

Jonny Nastor: Yeah, it doesn’t matter what notebook it was.

Andrea Lake: That’s right.

Jonny Nastor: That’s brilliant. That’s a great way to think about it, because I’ve actually been struggling with that myself. I got a notebook so I can write down things down, but wow. It’s true, you remember those good ones.

Andrea Lake: Yeah.

Jonny Nastor: All right. There s this time in every entrepreneur’s life, Andrea, where they realize one of two things: that either they have this calling to make something big in the world, or what seems to mostly be the case, they find they simply cannot work for somebody else.

Andrea Lake: Mm-hmm.

Jonny Nastor: Can you tell me which side of the fence you fall on and when you discovered this about yourself?

Andrea Lake: Well, actually, I’ve fallen on both sides of those fences, but the very first, which I think is the natural first one. It’s a slightly more immature thought, not in a bad way. But when I was really young, I knew that I couldn’t work for anybody else. That was the first thought.

Then for the first 15 years of being an entrepreneur, I just started companies, because I knew I wanted the freedom of owning my own business, even though there is a correlated risk with it. Then as I got older and I saw and I knew how to run businesses, and I cut my teeth on a couple of smaller companies, that’s when I saw the opportunity to do something that would have a massive worldwide effect.

Jonny Nastor: Nice.

Andrea Lake: Mm-hmm.

Jonny Nastor: That’s very cool.

Andrea Lake: Yeah, so most of my earlier companies were clothing, and I own the sales rights on Minecraft and World of Warcraft and all these video games, which is awesome. I love that, but that’s not really changing the world, you know? I’ve started 14 companies since I was 18, so I scaled into larger and larger companies. Then I created something that could have a massive effect on entrepreneurship, which is my passion anyway, so I was very excited about that.

Jonny Nastor: Wow, 14 companies since you were 18.

Andrea Lake: Mm-hmm.

Jonny Nastor: You started off early in clothing. Why did you pick clothing early on?

Andrea Lake: Well, I actually had a toy company. That was my first company when I was 18. Rhythm Styx, those sticks where you hold one in each hand and use the two you’re holding to throw a third stick around.

Jonny Nastor: Yeah.

Andrea Lake: Those are so fun. I made the best ones. Now I actually still have a little Etsy store that’s up. It really is a passion project because I literally do make the best, prettiest ones if you go on Rhythm Styx at Etsy. Well, we barely sell any of it because we won’t push it. We sell like a few hundred sets a year. But they are the best, most aerodynamic ones that have actual thought behind the physics of the whole thing while simultaneously looking really pretty. I’m super into design, but I never was making any money at it.

I was, because I was 18 when I started it. I was a baller for an 18-year-old, because I was probably making like 40 grand a year, which was all of the money in the world. Then, when I was 21, I heard that this guy was making $10,000 a month selling t-shirts, which was like all the money in the world. Profit! Ten thousand dollars a month profit! I’m like, “Holy moly, I am going to go do that immediately.” When I was 22, I started my first clothing company, Anti-Establishment Clothing. I saw a gap in the market in really offensive t-shirts.

My premise was that I could sell all these to head shops and tattoo shops and online and whatever. Most of the people that have most of these companies are probably really angry people that are not having excellent customer service and really good branding and all that stuff. That turned out to be accurate. I thought, I could go totally, totally dominate this market. I had an angsty, misspent youth. That came out in the t-shirts. It went really well, that company. That’s how I got into clothing.

Then it didn’t sell, though, that well in the chains. I was doing really well. I was doing almost maybe a million dollars a year in sales. Then I finally got into Hot, which is not that much profit, as any entrepreneur knows. It’s maybe 15 percent profit, which you’re reinvesting back into the company anyway.

Jonny Nastor: Yeah.

Andrea Lake: Then my big goal was to get into Hot Topic, and Blink-182 started wearing my stuff when they were a tiny band. Hot Topic kept saying, We’ll buy from you, we’ll buy from you, we’ll buy from you, and finally they went to a Blink-182 show and saw my merchandise on the band. They were like, “All right, we’ll buy it.”

Jonny Nastor: We’ll totally buy it all from you.

Andrea Lake: The next day, they actually placed their first order with me. True story. It’s actually even funnier than that, because they weren’t allowed to wear anything but Hurley on stage because they were under contract. They actually had like 1,000 of my stickers. They were throwing them out into the audience, and my Hot Topic buyer was in the audience and picked up one of the stickers and was like, “Whoa, if Blink-182 is throwing this girl’s stuff out, we ve got to buy it.”

Jonny Nastor: Why were they throwing out your stickers?

Andrea Lake: Because I randomly had sent over they broke so fast. They were a San Diego band. I grew up in San Diego. I used to always give them clothes. We were really good friends with the lead singer’s cousin. He came over before the show. We were supposed to go backstage to the show. I had the flu, so I sent over this huge grocery bag full of merchandise. We had 90s slogans — all offensive — like I sell crack for the CIA and stuff like that and other ones that I probably can’t say on the air.

Jonny Nastor: Yeah.

Andrea Lake: I grabbed like 10 of each slogan, which is like 900 stickers, which is a ridiculous amount of stickers to send to anyone. What else are they going to do with them? I had put no thought into it. I was delirious with the flu and packing merchandise for them to take with them on their tour. They ended up throwing out hundreds of stickers into the audience. Really cool stickers. We were advertising on the back cover of High Times back then and Alternative Press magazine and Revolver and all these magazines that were big back then. It was a cooler brand.

Jonny Nastor: Wow.

Andrea Lake: Yeah, but it didn’t sell when I got to Hot Topic. They called me up, and they were like, “We can’t buy from you anymore.” They had already bought way more than they were supposed to buy. They kept testing designs that weren’t selling, and more designs that weren’t selling, because I just was a good salesperson.

Jonny Nastor: That’s awesome.

Andrea Lake: The buyer made his assistant buyer call me to tell me that they weren’t going to buy from me anymore because the guy had no power to say yes, and he knew he’d be talked into stuff.

Jonny Nastor: He knew he’d be talked into it.

Andrea Lake: I totally started crying. It was super-professional. I was like 24. I didn’t know what I was going to do with my life if Hot Topic didn’t sell my stuff.

Jonny Nastor: Wow.

Andrea Lake: The kid was so nice. I didn’t pick up the equation back then, but like I was a smoking hot 24-year-old girl, and I’m crying on the phone with a 21-year-old guy. I didn’t understand the dynamic of any of that. He’s like, “Oh my God, Andrea. Andrea, don’t worry. We really like you. We really, really like you. You’ve crossed the biggest hurdle, and you just have to sell us stuff that’s going to sell. Just not Anti-Establishment. I will take your call.” I immediately, while I am still crying say, “Well, I came up with this new company. It’s called Delinquent Distribution, and I’m going to have 80 designs to you in six weeks.”

I had done no such thing. No such thing. I didn’t even put the receiver down onto the