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This week we breakdown our (and Harrison’s) 4 step strategy for turning boring unprofitable businesses into ones that make you $9 million dollars in cashflow.
Speaking of cashflow, it’s all we talk about in our premium crew Contrarian Cashflow (seems obvious). We teach how to build additional passive income
streams. A caveat, most income streams aren’t truly 100% passive, why? They take time to learn and operate. What then IS truly passive? Investing in funds that other people manage. We break down exactly how to find, analyze and choose funds for 100% passive income in our most recent Contrarian Cashflow playbook. Want it?
Oh and Happy St. Patrick's Day! I don't know about you, but I wear green just so strangers don't touch me... 🍀
Today in <10 min we’ll cover:
- Crochet - this young gun turned this ‘crafty’ biz into 7 figures, and now it runs itself
- Boring to Badass - 4 step framework for turning boring into sexy
- Ice Ice baby - a sneaky $4 billion industry
- New bundle of joy - is perhaps a new Contrarian Thinking media channel being born?
Listen to the Audio Version of This Week's Newsletter!
🔊Crochet, a 7 figures business.mp3
Needles & Yarn
I remember when I was 5, sitting in my grandparent's living room watching my grandma twiddle some oversized needles with yarn, that eventually turned into the scarf I’d receive from her for Christmas. That’s about the extent of my exposure to crochet. Who would’ve known that 28.8 million Americans participated in knitting and/or crochet in 2016? Or that the crafts market in itself was worth ~$647B in 2020? It has a loyal following felt only by some sports teams it seems, with sub-Reddits in the hundreds of k’s...
As well as Amazon search volumes up to 37k for some kits.
This 500-year-old textile craft that you associate with your grandma…perhaps the least cool thing on the planet, somehow, is now this stylish and …sexy thing?
This is thanks, in part, to Harrison Richards, the founder of Furls Crochet. This guy is far from your grandma. This young, handsome (mostly shirtless guy on IG) brings in upwards of $9 million per year making crochet needles cool again. Side note: he’s British too, so that seems unfair.
The real brilliance here though? Turning a boring outdated sector into a cash-flowing empire with products his people love and operations that mean Harrison is largely jet-setting around making cool swag instead of having to run the day-to-day of the crochet business.
Let’s get crafty and see the framework on how you can do the same.
Harrison and Furls Crochet
For Harrison, it all started, as almost everything does, with a high-school sweetheart. Harrison knew a little about crochet, had even crocheted in middle school (insert eyebrow raise). But, then he had a high-school girlfriend who crocheted a LOT; she kept complaining that her hands hurt. So, Harrison being kind and British and everything, made her a new furl in his parent’s garage. He jetted off to Andrew’s College in Scotland but quickly realized college was meh when he came across the 4-Hour Workweek, read it, and wondered how he could implement some of the principles. He kept coming back to those crochet needles. What if he could make a boring biz sexy and then teach other people to run it? He ended up in his parent’s garage making more and more of them, perfecting the shape, minimizing the strain on users’ hands, and crafting a kinda rad-looking crochet hook.
Harrison started selling the hand-held crochet hooks on Etsy at first, as a 19-year-old. Three months after start-up, Furls was selling a hook every other day and Harrison was concerned. Feeling stalled, a friend of a friend told him to go to the 2017 Craft Guild of America conference where Furls sold 20 hooks in a weekend and the Rolls Royce of crochet hooks was born.
The company transitioned into different, more affordable hooks, rolling out the CandyShop line [polyresin plastic hooks] in 2015 and the Odyssey [nickel-pewter] a year and a half later. At this point, Furls had 5 employees and was making $400,000 in monthly revenue.
Harrison hired additional employees, ultimately topping out at 23, but chasing this growth turned a cash flow positive business into a cash flow negative one. After having to let 18 people go, the company returned to profitability and Harrison returned mentally to how to live that 4-hour workweek.
So he did what many passive business owners do, he hired an operator. This operator started with executing the business tasks of Furls and ultimately made her way to CEO. At this point, Harrison realized something crucial for passive cashflow: he could try to stay in the business’s daily operations, but he might actually be part of the reason the business almost went under. He was good at making something sexy, but then he got too aggressive. This was just a nice little business that hummed, without him needing to constantly innovate. The question was, did Harrison think he was indispensable to the business’s success, or could he step away given the team he had put together?
He rejected a strategic narcissism approach instead, outsourcing himself and continuing to let others run the business.
You can decide if he was right or not: Furls is now sold in at least 70 countries and Harrison only works 3-5 hours a week but racks up $9 million a year in revenue with some nice margins.
Turning boring into badass: How Harrison did it, and what this means for you
With our stage set, 4 steps stand out to me. Let’s look at them one at a time:
1) Don't chase growth. Profitability is everything.
When Furls had only 5 employees, they were cashflow positive at $400k rev/month. So they decided to add 18 more people during signs of growth...which led them into the red. It was only when the company went back down to 5 that it regained profitability. Lesson: don’t chase growth at the expense of your profitability. Continue to build your product, focus on your margins, and allow growth to come naturally.
That’s why I’m a huge proponent of buying, instead of building, cash-flowing businesses. I prefer ‘boring’ businesses precisely because many of these businesses are owned by a generation uncomfortable with Ecommerce, Google Analytics, the gig economy, and gives you the ultimate leverage to scale. I call that the “fax machine test.” If the company has a fax machine, doesn’t have a website, still uses handwritten notes, and not a CRM, I get all hot and bothered.
2) Add some bling to the boring.
Crochet is an industry with a dedicated and passionate hobbyist population. Chances are though, it hadn’t seen any innovation in the products in years. Lots of furls that looked more like dental torture devices as opposed to fun collector's items.
By tapping into a space with many returning buyers, he gained market share by providing needles with beauty, comfort, and performance enhancements. Your play? How can you add upgrades to your business that differentiates it from the others?
3) Know, and play to, your strengths.
Harrison describes himself as a ‘maker’. He dropped out of college because it wasn’t a place that he believed would leverage his strengths. He took his artistic skill with wood, but he didn’t decide to make a traditional wooden project. Crochet hooks have, for decades, been made from metal and have been viewed almost solely as a tool; a means to an end. Harrison made them out of wood, built them beautifully, and treats them as an end in themselves.
Imagine you are on an island with other people, each of whom has the exact same skills as you. To succeed, maybe even to thrive, then find an island where the inhabitants can’t perform your skills or perform them less competently than you. Look to stack skills on top of each other to make your strengths and competitive advantages even stronger.
Are you good at marketing?
→ Buy a boring business that has no or terrible marketing and amplify its earnings.
Do you understand SEO?
→ Use that skillset to help a laundromat show up at the top of a google search.
Are you artistic?
→ Bring your art into the eCommerce space, or turn a ‘boring’ object that is considered every day into a luxury product.
4) Ditch strategic narcissism and delegate.
Harrison rejected strategic narcissism where others wouldn’t. Many entrepreneurs win for a couple of years in a row and think they’re the next Steve Jobs. Most entrepreneurs say, ‘I built this company. No one else could possibly know more about running it day to day than I do’. Instead of trying to do it all, Harrison gave his own strengths room to grow and effectively gave someone else the ability to run his company on a daily basis. He hired operators well and made himself dispensable. This allows Harrison to work 3-5 hours/week and focus on other ‘maker’ activities while it allows his operator to earn like a CEO.
In his own words: “Don’t try to be everything to your business. Know when you can’t do something. Use that positive cash flow, and a sense of your own humility, and hire an expert.”
I recently wrote about this topic here, for brevity, I’ll just include a pull-quote:
If you can’t sleep for the want of the world you hope to build.
If you would rather die than stop creating.
If your mind is consumed with that irrational compulsion to labor.
Then do it. It was always inside you.
It was always waiting for you.
And there is no one else to do it, just you
You don’t have to create the next Tesla. Keep looking for everyone else’s boring and make it cash flow,
Codie
GIVEAWAY: HARASS CODIE & ICE VENDING
Ice vending sells over 1.25 billion lbs. of ice annually with little labor and high margins that can make you up to tens of thousands a year. (Which we break down for you here.)
And we ALSO we did a YouTube video on it...
OH what’s that you say? YES Contrarian Media will be getting another arm as I share stories of the everyday humans who have built up weird, wild, or boring everyday businesses to millions so you can do the same.
The channel just launched YESTERDAY with our first video on exactly how to play it.
And a GIVEAWAY:
To celebrate, we’re doing something a lil special. To grow we need your help. So between now and next week’s newsletter, if you go subscribe to the channel, you’ll be entered in to grab a private consulting sesh with me. Bring your deals, your questions, etc. NBD. So hop on over to YT, smash the subscribe button and explore the world of Main Street!
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Disclaimer – This is the “Be an adult” section. Everything mentioned above isn’t advice, just a recount of what I did. That said: This article is presented for informational purposes only. The opinions stated here are not intended to recommend any investment or provide tax advice. Neither are they an offer to sell or the solicitation of an offer to purchase an interest in any current or future investment vehicle managed or sponsored by Codie Ventures, LLC or its affiliates. All material presented in this newsletter is not to be regarded as investment advice, but for general informational purposes only. Day trading and investing do involve risk, so caution must always be utilized. We cannot guarantee profits or freedom from loss. You assume the entire cost and risk. You are solely responsible for making your own investment decisions. We recommend consulting with a registered investment advisor, broker-dealer, and/or financial advisor. If you choose to invest with or without seeking advice from such an advisor or entity, then any consequences resulting from your investments are your sole responsibility. By reading/sharing this newsletter or consuming our content on our other channels, you are indicating your consent and agreement to our disclaimer.
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