E-Commerce Pricing and Marketing Strategies With Chad Rubin

Intro (00:09):
Welcome to Innovations and Breakthroughs with your host Rich Goldstein, talking about the evolutionary, the revolutionary, the inspiration and the perspiration, and those aha moments that change everything. And now here’s your host, Rich Goldstein.

Rich (00:33):
Rich Goldstein here, host of the Innovations and Breakthroughs podcast, where I feature top leaders in the path they took to create change. Pascal guests include Joe Polish, Ryan Deiss, and Kevin King. This episode is brought to you by my company, Goldstein Patent Law, where we help you to protect your ideas and products. We’ve advised and obtained patents for thousands of companies over the past 28 years. So if you’re a company that has software or product or design you one protected, go to goldstein patent law.com where there are amazing free resources for learning about the patent process. And you could email my team welcome goldstein pc.com to explore if it’s a match to work together. You could also check out the book I wrote for the American Bar Association that explains in plain English how patents work. It’s called the ABA Consumer Guide to Obtaining a Patent I have with me here today, Chad Rubin. Chad founded Skubana and also co-founded Think Crucial and Prosper Show. Uh, Chad recently founded Prophecy, and now he leads its operations and overseas strategy. Uh, Chad often speaks about e-commerce, Amazon, and leveraging AI strategies on webinars and conferences worldwide. It’s my pleasure to welcome here my friend Chad Rubin. Welcome, Chad.

Chad (01:46):
Thanks, Rich. Thanks for having me.

Rich (01:48):
Absolutely. So, um, it, it’s interesting you’ve founded a lot of different companies and helped many other companies along the way. Uh, and, uh, and I’m wondering, where do you get your inspiration and where do you get started in creating a new company?

Chad (02:04):
Yeah, that’s a great question. For us, and for me specifically, it’s all about incubating ideas from pain points that I have. So stretching an itch. So, you know, I started this e-commerce site in 2007, and we were all competing for the buy box cause I was a reseller. And then suddenly, boom, we manufactured our own brand. We were one of the first private label brands on Amazon. Then you move into the Prosper Show. There is no community for people to really activate their potential and to connect. Now, there’s dozens of them, uh, and the community has definitely changed quite a bit, but at that time, there was nothing that was available. So it was like, boom, let’s let’s create it together. And so me along with three other people created the prosperous show. Uh, and then you move into Skubana. There is no all in one system to manage my business. Why doesn’t it create, why doesn’t it exist? Well, I need to create it myself. Uh, and the same thing with Prophecy, right? My, my e-comm business has been startling since 2007. You’re thinking about, it’s a, it’s a, it’s a over decade Amazon business that has been compressed and commoditized over time. So the question is, well, how do I turn it around? And for me, the quickest and simplest lever was pricing. So everything is for me is dog fooding and, uh, eating your own dog food and, and solving those problems.

Rich (03:19):
Yeah, very interesting. And so, um, you know, essentially as you’ve, you’ve grown your e-commerce business, you’ve discovered the different problems and, and recognized that other people probably have those problems as well. And, um, and so it’s, it sounds like it’s been a bit of the test lab for, um, for the, the type of solutions that you might create for the masses.

Chad (03:41):
Totally. Like my econ business has incubated four businesses now. It’s insane.

Rich (03:47):
Yep, absolutely. And

Chad (03:48):
So, and if you think about it, by the way, Amazon’s doing the same thing, right? They’re incubating businesses inside of businesses, and they’re productizing what they’ve created for other people. And so it’s not so different from that strategy.

Rich (04:00):
Yep. And, and, and what’s it like for you to see these different things that you’ve created become, uh, I guess, bigger than yourself, bigger than you had imagined? So, uh, I mean, uh, Skubana is an important tool used by, um, by e-commerce companies in managing multi-channel sales. And Prosper is, you know, the biggest show, uh, in the Amazon world. So, so what’s that like for you?

Chad (04:26):
Yeah, it’s, it’s amazing to see these things exist in the wild, independent of myself. I mean, I’m fully out of Skubana. I’m fully out of Prosper now. Uh, even like, I think the best thing is watching these brands flourish using the software that we created. So it would light up my day when I receive a product from a D two C brand and I see like the Skubana invoice on it, uh, that would really make my day. So it’s exciting.

Rich (04:54):
Yeah, no, absolutely. Um, and, um, so then I guess let’s talk about what you’re doing now. I mean, and so again, uh, having an e-commerce brand for a, a number of years, you start out where you’re doing something unique over time, other people jump in and, and, and do similar things. And so that just leads to commoditization where mm-hmm. <affirmative>, uh, where in the past you had an edge that gave you the ability to, to sell something at more of a profit, and you have other people coming in and competing on price. Uh, and, um, and so you’ve, you kind of moved to, to try to overcome that issue of commoditization. And so like, what did you do and how did that lead to prophecy?

Chad (05:41):
So these are some very, very big questions. <laugh>, uh, first of, by, by the way, patents in general certainly help to create a competitive mode around what you’ve built. Yes. Um, in my space, specifically in the vacuum filter, coffee filter, air filter space, a lot of of that stuff is off the shelf. And so, you know, when, if you look at some of my LinkedIn ramblings, I’ll talk about what is the set of criteria that you need for the next generation product? And it’s certainly not what I started in 2006, 2007. Um, and the reason why you’ll see a big shift from me, from Amazon product-based businesses to diversifying across other unit segments and taking my experience and combining with what I’m passionate about, is that you can really make magic, right? And so, if you look at Skubana, if you look at Prophecy, these companies actually can provide and help other people flourish, which really lights me up, but also afford myself and my family a much larger outcome than just running an Amazon business, because at least in my opinion, and I think broadly speaking, time is finite. And so you wanna maximize your potential here on this planet and maximize your outcome and create generational wealth. And that’s why you see there’s, there’s definitely a shift for me that happened.

Rich (06:58):
Hmm. Yep. Absolutely. Um, and so, um, in, in particular with Prophecy, so tell me about what the solution is like, um, that you created.

Chad (07:07):
Yeah, so Prophecy is a dynamic pricing platform that enables you to find the perfect price for every product at a precise moment. So it’s very similar to Uber search pricing. So Uber search pricing, the pricing changes if you order a cab at 9:00 AM or if you order a cab at 7:00 PM the price changes based on a lot of different factors. And we believe that there’s a lot of brands leaving money on the table, and that pricing shouldn’t be static shows be dynamic, and we maximize profit by changing pricing for brands throughout the week without hurting your bsr your competitive position on Amazon.

Rich (07:46):
Got it. And, um, and so, um, le let’s talk about the founding of it, of how you kind of got this all together. So you had the idea, uh, and then, um, did you, did you uh, prototype it? Did you, um, just go and gets on board? Like, what path did you take with

Chad (08:03):
This? So, I, I wanna share that, uh, in between of selling skubana and resigning from my own company in October of 21, I did a lot of self-work and self-improvement in that process. I would like be staring at Palm trees here in Miami. And, uh, I would have these ideas, these like epiphany moments, these aha moments. And I kept a running list of all these ideas. And one of these ideas was like, well, how do I solve my pain of my e-commerce business? In other words, everyone is right now changing their spend on Amazon, but why is no one changing price? And if price is the biggest lever to profitability, why is no one moving that lever? So I presented it to our, my old investor of Skubana, the list, the running list, the whole list. I was like, Hey, like, hear me out. Here’s some like, crazy ideas that I wanna think about into the future. And this one on Prophecy, he was like, dude, that’s a winner. I’ll put a million in it right now. And I was like, Hmm, hold up there, cowboy. I’m not ready to start my next thing yet. I’m not done with what I call the great reset, which is, but

Rich (09:10):
That is pretty good validation right there.

Chad (09:12):
It was a, that was the point,

Rich (09:14):
The call into that, that’s, it makes you look closer at it, right,

Chad (09:19):
<laugh>? Totally, totally. I was like, okay. Like, that made me feel really good and it like lit me up and I was getting impatient with getting back into the arena, uh, the entrepreneur arena, but I didn’t know what I wanted to do, and I know I needed a little bit more time to sit with myself. So I sat with myself for two more months, and then I ended up raising 2.3 million <laugh> in December, uh, on, on the idea of prophecy

Rich (09:43):
In Dec December. So just recently, so that we’re really at the early stages here?

Chad (09:47):
No, no, no. December 21.

Rich (09:49):
2021. Okay, got it. Got it. That makes,

Chad (09:51):
So we’re a full, a full year now. And by the way, now, and that was before ai mm-hmm. <affirmative> was, I’m sure you’ve been following a lot of the news around chat GPT.

Rich (09:59):
Mainstream, I guess is what you’d say.

Chad (10:01):
Yeah. Before it was mainstream, it was like underground, right? <laugh>,

Rich (10:05):
Right.

Chad (10:06):
Uh, and so yeah, prophecy was built outta my own for me. Then I started working on, okay, how do I change price on my e-commerce business and how is that can influence my profit? And if I do this on a scale of manually, can I use AI to take these signals to learn, observe and actually create a better outcome than doing it manually? And, uh, yeah. And boom, boom, boom, we started building with the data science team, uh, all the manual work that I was doing in a spreadsheet around pricing. I was looking at all these different signals and manually making small tweets throughout the day. I managed to drastically improve my profitability at my company, where we hadn’t been profitable for 18 months, and now suddenly in the 19th month, boom, in December of 22, we just hit profitability for the first time in a long time.

Rich (11:00):
Wow. Awesome. And, um, what, um, and let’s get a little granularly here. So when you, when you got, when you actually decided to get things rolling, uh, what was your first hire? Who, like, like what position was your first hire?

Chad (11:16):
Yeah, that’s an, that’s an awesome question. Uh, uh, it was a va

Rich (11:23):
Okay.

Chad (11:23):
And I know that’s a crazy, crazy answer, and like, most people want all this growth, but I knew that splitting focus would be the death of me, and I wanted to subtract versus ad. So I was like, I don’t wanna do all these new things, these new shiny objects. I just want you to take things off my plate so I can have a proper foundation, have clarity and vision to create my next thing.

Rich (11:49):
Got it. So, so you hired a VA to, to give you more bandwidth for yourself, um, as part of, let’s say, staying in the loop of you in the loop of the things that you’re doing, uh, rather than just kind of create another silo.

Chad (12:06):
Yep. And I actually hired two, two VAs and I chose the better. After a couple months, I figured out who is the better one out of the two and just narrowed it down to one.

Rich (12:17):
Okay, great. And then what was your first, let’s say, like fully accountable position that you, um, that you

Chad (12:24):
Hired? Well, that person’s fully accountable is very important role. But, um, actually the first, first, first position, uh, outside of, say a VA would’ve been a machine learning engineer. So somebody that’s going to take, uh, take the the model inputs that I want in a specific AI model that we’re building, and to start developing those inputs and putting it all together. Okay. And at the time, you know, he, he was winning these, there’s something called Kaggle competitions. Have you ever heard of that? No. It’s, uh, it’s essentially, it’s a global competition where you can, uh, compete and generate data science models and solutions for people. And he won some Kaggle competitions, which is extremely impressive. It’s very difficult. It’s, it’s like harder than getting into the, the Marine Corps. Uh, and yeah, so when he shared that with me, I was like, okay, this guy is smart. He was an unknown quantity, and then boom, he came in and has been thriving. He still at the company today. So that was like the first, the first person we brought in. And then I started searching for a data scientist, uh, and to sort of build like the vision of the model that we’d be putting together. So that was the second individual we brought in.

Rich (13:42):
Okay. Got it. Uh, and so, um, that was part of what was gonna be my next question was like, I imagine that you brought in the machine learning specialist and, um, and then that grew into a team of people working on that. Um, yep. And what, um, and like this, again, this is another entrepreneurial question. You’ve built many teams before. And, and really what I was wondering is like, did that person empanel the team? Um, because so often the people that are subject matter experts, like an expert in machine learning, isn’t necessarily an expert in, in growing a team. So, um, so did, did that person grow a team or did you, uh, did you, um, help to, to bring people in?

Chad (14:30):
It was a combination. I mean that, so we then set out to build an assessment test. I had some, I done some assessment tests for develop developer projects before to make sure that I’m bringing the right developer. Uh, but we hadn’t done any data science da, uh, assessment tests. So we built assessment tests around data science and machine learning so we can build a team around it and make sure it’s a, it’s like sort of like one milestone to get through, uh,

Chad (14:58):
To safeguard, to make sure we’re making the right hire, right? To make sure they had the right prowess, uh, to continue forward in the process. So we did, we built out the assessment test, and then we really started hiring against that. And then I’ve developed, I have like my own personal values that I’ve created core values for myself and my family, and I developed and embedded those into the business. And those are actually on the prophecy page right now on the about page lists, uh, the important core values that we hire, hire, and fire against.

Rich (15:28):
Yep, absolutely. And so, um, if you, I guess in a sense, like you supplied the process, you supplied the, um, the recruiting process as you’ve built many teams before. Uh, and you, you leaned on the expert for maybe the substance of it, like the questions to ask the assessments that you needed to do, but, but you’ve used your, um, I guess, proven process to, uh, um, uh mm-hmm. <affirmative>, um, as a context for the overall recruiting.

Chad (16:01):
Yeah, completely. So, I mean, our process was, and this is what we use internally at this startup specifically, which is we have the assessment test, then we move into the subject matter expert where they interview with the data science team, and then I do the final interview, which is more of a soft interview around like emotional, like your, so, um, your EQ versus your iq, right? Just to see, asking them questions if they’re a good fit culturally.

Rich (16:27):
Yep, absolutely. And this wasn’t the direction that I, I figured we were gonna go down, but I, but you’re, you’re an expert on this. You’ve built teams well before and people struggle with how to recruit and build their teams. And, and, uh, so it’s fascinating to, to see how your process, um, integrated with this. Uh, if, if we shift over to maybe another area of how you built this company, uh, how you’ve been building this company, let’s talk about marketing and message. So like, where did you begin there with tr with, um, now that you’ve got the right people on board to build the product that needed to be built, um, how did you go about getting the message out there and getting customers?

Chad (17:10):
So I think one of the, well, to just back it up for a second, right? I’ve been in e-commerce now for, since 2007, right? It’s been over a decade, it’s been 15 years. And so for me, I wanted to stay in an industry and leave it better than how I found it. And the reason why I decided to stay in e-comm was I had all these relationships like yourself, Rich, like we met, I think we met, I wanna say we met at War Room, and then I invited you at a Prosper show. And like now, like you’re fully integrated into the Amazon community, which is like so beautiful to watch the evolution of your business. It’s really cool,

Rich (17:43):
Right? And I, and I think it’s more even full circle of that. Um, you know, after being away for a little bit, you, uh, asked me to introduce you to people within the industry,

Chad (17:53):
And that is, that’s really community, right? That’s like leaning on each other and like paying it forward and helping each other. Uhhuh. So I’m, I’m, I’m grateful for that.

Rich (18:00):
Um, my pleasure. You too.

Chad (18:02):
So we were talking about the, so essentially if I stayed in this industry for a long time, I have a lot of contacts, and it’s that much easier to get back into the jam, get, get that, get back into the grind and scale much quicker. So state and e-com with prophecy and, uh, leads is certainly, I think one of the, it’s, it, I think we’ve entered into this market at the intersection of something that’s insane. We’ve, we’re departing an era of like growth at all costs where people didn’t care about profitability. And now we’re moving into a much more sustainable model where people want profitable revenue. And the core message of prophecy, it’s a plan words, right? Prophecy, is to predict with some level of certainty what’s going to happen in the future, but it’s also spelled P R O F, which is profit you could see.

Chad (18:51):
So our focus is maximizing your profitability, giving you the right price at the right time of the day to the right customer. And, um, so essentially just like all serendipitously happened at the same time, and in terms of marketing specifically, the marketing message is very clear, right? We help you make more profits by changing pricing. Um, and the way my channels of distribution around that are right now, which is by the way different from Skubana and different from when I knew you in that previous life, have been significantly around podcasts and LinkedIn and Twitter. Like, we’re just getting leads from that. And it’s working amazing because I have a point of view and I’m sharing that point of view with the world.

Rich (19:35):
Awesome. I love it. Um, and, um, what other areas of the, I mean, like we, we looked at at recruiting, we also looked at, um, the, the marketing side or the messaging side. So like, I guess, what challenges did you face in growing this company that differed from the previous companies that you grew?

Chad (19:57):
So I did this on purpose by the, I wanted to be a solo founder this time around, last time, uh, with Skubana, I had a co-founder Prosper Show. There was other co-founders. Uh, this, I wanted to remain independent and challenge myself. It’s a big challenge, right? Because like, not only do I have to oversee all the front of the house marketing, sales partnerships, managing employees, but also managing the development team and managing the engineering team. So that’s a big, big challenge and a big lift. Uh, and I’ve made a ton of mistakes in the process, some of them around hiring, by the way. Um, I needed to get the right butts in the right seats, and I was very quick to hire, but also quick to let go when I know I made a mistake. So that’s, those are significant things. Um, I would say like another thing was building AI is so new and everyone talks about building ai and, uh, we really are building AI first systems and upgrading our systems and knowing when to launch, right? When to have our first cohort of beta customers and when to like, stop upgrade our systems and then move into the second cohort. So those are all learnings in the SaaS process, uh, that I’ve been learning along the way.

Rich (21:19):
Okay, got it. So, uh, uh, I kind of want to, uh, finish up with, um, so maybe, I mean, you’re, you’ve been an e-commerce so long, I mean, compared to like a lot of people who have just been in, you know, some of the OGs in this field have been in the field for maybe four years. Mm. And you’ve been in since 2007. And like, I’m just wondering advice that you, you may have for people that are starting out with, um, with new brands, launching, launching a brand on Amazon, like what, um, what direction might you give them in terms of getting started? I know it’s a general wide open question, but you can go with it any, any direction that you like.

Chad (22:00):
So I think what it took to, to win on Amazon in 2006 versus 2015 versus 2023 are very different things. And I’m gonna probably give you a pretty big layup here, but I think that the brand needs to have a certain criteria in the next product. Meaning they can’t just create a physical product that’s just a garlic press anymore. Like that problem has been solved. You need to go a, a layer or two deeper. You need a garlic press that, uh, perhaps is smart, right? And I don’t know, I’m just talking off, off the top right top of my head right now, but you need something that’s in innovative, right? Because like going direct consumer and cutting out the middle man has been done countless times on Amazon, billions of times now. In fact, we have China, China coming direct from factory to consumer now.

Chad (22:48):
So developing a really strong viewpoint on the space of what your net proc want needs to be. So I love ai, right? AI for me is very special because the learnings that I get from data compound over time, meaning the model gets better the longer you use it. And if you think about that in a product business on Amazon, what are some products that get better over time? So for example, a Nest, the Nest thermostat, it actually knows when I’m in my house and when I’m not here, and it knows the exactly perfect temperature to deliver to me, which to me is a competitive moat and differentiation that others don’t have, right? So you can’t be amazoned by Nest, you’ll be acquired by Amazon, but you won’t be Amazon, you won’t be copied. Another example is, I just got a temperature gauge for meat. So I am a meat eater and uh, I like a perfect steak. And so this temperature gauge actually knows my perfect temperature and I put it in and it’ll go off when the steak is at the perfect temperature. Like that is truly amazing. So I guess to, to share, I think developing a set of criteria kind of similar to what I’m sharing, not just, um, things that get better over time, but there’s other criteria that you can add to it that give you a differentiation where you can’t just be copied and duplicated by anybody on the marketplace.

Rich (24:12):
Got it. So differentiated product, um, it seems to be more important now than it was back when you started. And so like, you sounds like you strongly advocate for making, having a differentiated product with some strong

Chad (24:27):
Criteria, but I’m not talking about like differentiation when it comes to like, oh, we have better infographics, right? Mm-hmm. <affirmative>, oh, like our bullets are stronger and have emojis in them. Like, that’s not what I’m talking about <laugh>. I’m being, I’m being, uh, cheeky, but like, that’s not what I’m talking about, right? Mm-hmm. <affirmative>, um, I’m talking about like really innovative products and really thinking about the calories that you’re putting into your products to make them much stronger than whatever’s on the market today.

Rich (24:50):
Got it. So people wanna learn more about you again, in touch with you, Chad, how they go about doing. So,

Chad (24:57):
Uh, my personal email, Chad prophecy.com is a great place to start. And

Rich (25:02):
By the way, prophecy is spelled P R O F A S E E.

Chad (25:07):
Yes. Uh, you can find me on LinkedIn with a lot of my thoughts that I’m sharing and distributing there. Uh, so Chad Rubin on LinkedIn and also Chad Rubin on Twitter, and I’m here to support the community in any way I can to help them grow.

Rich (25:21):
Awesome. Well, um, Chad, I really appreciate you taking time to, to do this podcast and for, uh, all the great insight that you have, uh, for people on the path to growing their business, growing a concept from, uh, you know, from initial stages to being, uh, a, a reality out in the world. Um, so again, I appreciate your time. Thanks for being here.

Chad (25:43):
Thanks for having me.

Outro (25:49):
Thanks for listening to Innovations and Breakthroughs with your host Rich Goldstein. Be sure to click subscribe, check us out on the web at innovationsandbreakthroughs.com and we’ll see you next time.