Hamad Dar's Blog

My Friend Showed Me An Obvious Opportunity Hidden In Plain Sight

Zeeshan introduced me to Sajawal about an year ago. I think Sajawal has a bright chance that he’ll make it. Not because he’s the smartest guy I know. But because he’s a curious guy. In the past year, no one’s asked me as many questions as him.

Sajawal sent this chart to me yesterday and it’s unsurprising.

The sales for books have increased by up to 300% as everyone’s stuck at home. People have been selling face masks and sanitizers left and right but I won’t touch that. We started a store selling home fitness equipment as people continue to try to stay fit during the lockdown but I didn’t think of an obvious behavioral change and that is people are reading more books as they are stuck at homes.

Selling books right now is not only interesting because there’s demand for them but also because they can be shipped digitally.

Starting today, I will be exploring this area to find something worthy of selling.

Happy selling.

A Billionaire’s Advice [Part 2]

Yesterday I wrote about a meeting that I had with a billionaire in NYC and some of the advice that he gave me. When we met him, our situation was unique and it made us feel invincible. So I asked him some questions that a lot of other people probably wouldn’t. Because we had a unique relationship with him, he was very kind to us, and wanted to genuinely help us so he welcomed all questions.

The unique situation that we had was that we had successfully setup the US infrastructure including a company, payment gateway and access to other business tools that weren’t available to people in Pakistan. We were at the top of our game with regards to the revenue that was being generated and like other Pakistanis we had extra-ordinary tax benefits available for IT services and IT related services. So when he recommended that we move to US, a natural question came up that we’re able to use most American infra without paying any taxes, why would you ask us to move to US, bear higher costs of doing business and also pay insanely high taxes.

His answer was tax is what you pay for the privilege of doing business in the US. The privilege that you think you have is not nearly enough compared to the privilege that you will have once you’re here. He was vague like that. He didn’t give any specifics of what privilege other than what we already have.

He reminded us once more, “I was going to be a teller at a bank 5 years ago but I’m not. The US has something to do with that”.

I didn’t follow his advice. I’m still here in Pakistan. I know I missed a lot of things. As a digital nomad, that’s okay. But if you’re looking to build the next big thing and want to amass insane amount of wealth, you should give his advice a thought.

A Billionaire’s Advice

I and Saad met a young CEO in his 30s who is a billionaire. The meeting happened in New York City in October of 2013. He encouraged us to move to US and pursue a career there. He said if he hadn’t moved to US, which he had done only a few years before that, he would have been a teller at a bank in his home country.

I obviously didn’t take that advice as I have continued to live in Pakistan for over 7 years since that meeting. For a brief period, I had thought about taking his advice but I was only slightly motivated. And after I was turned down by an accelerator in US, I also lost the little motivation that I had.

As some of you may know, I’m a proponent of digital nomadism. There’s a freedom associated with the ability to be location independent. Moreover, $100K in US last a really short time compared to $100K in a developing country. As for the quality of life, sure quality of life is not great in Pakistan, but in theory you could have great quality of life at a small cost in many countries if you wanted.

Digital nomadism also instilled remote work habits in me. While many of my friends are going bananas now that they have to work from home, it has come naturally to me. In fact, every effort that I’ve made previously to move to an office has failed so far.

In summary, digital nomadism is great but it’s a freedom movement. It’s a hack to live well, spend less, be free and happy. However, in no way it’s the right strategy to be really wealthy. The right strategy to be really wealthy is the one outlined by the CEO we met; relocating to the land of opportunity.

I want to continue to believe that remote work is the future of work. Unfortunately the keyword here is “future”. The present of work is still in the bay area. People like Paul Graham believe US needs to have better immigration policies as 95% of the best programmers live outside of US.

But he doesn’t see hiring the same workforce remotely as a viable solution.

One reason the Bay Area is so expensive is that the way to make a successful startup is to make the right product, not to pay employees less. So cheaper locations have no advantage.
— Paul Graham (@paulg) December 9, 2019

The world has made a lot of progress to equalize the opportunities at a global scale but we’re just getting started and there’s a long way to go. Until then, bay area is your best bet.

Why We Paid $10,000 For Our Hosting

A few weeks ago, I wrote about three types of founders. To summarize, they were big spenders, extra savers, and the ones that cut expenses in some areas bit were big spenders in others. We all should aspire to be the third type.

I can’t stress enough how important it is to be frugal with your operating expenses. If you’re not frugal with them, especially once you’re bootstrapped, you’ll always see yourself struggling with money or progress regardless of the revenue.

Not all costs are meant to be avoided though. Some costs, if you avoid them, will hinder growth of your business. Some costs of as little as $1000, could get in the way of your next $100,000 in revenue. So it’s quite important to be generous in some of the areas of your expenses. No I’m not talking about spending extravagantly on a shiny office space. I am talking about spending extravagantly on top talent, expensive tools, and education or training.

Never stop investing in yourself. Never cut corners on hiring talent. You need more talented people than yourself to build great companies. Always buy expensive tools that would put your productivity and growth on steroids.

I remember using PressLabs, a managed WordPress hosting company, for our content websites. Our monthly bill with them, at one point, was 10s of thousands of dollars. Yes, we paid 10s of thousands of dollars every month just to keep our websites online and safe. May be we could have rented a mega dedicated server for much cheaper, right? Yes, we could. However, we would still need top talent to continue to maintain that dedicated server to keep it online and safe at all times.

A few hours of outage, a malware, DDoS or ineffective caching would have been more damaging to our business and the revenue than the price we were willing to incur to keep everything online and safe at all times.

So we incurred that cost, and continued to work from our homes, because our priorities have always been clear about what to spend on and where to cut corners.

On a side note, our stats are still featured on PressLab’s front page 🙂

Product As A Currency

I have often seen many entrepreneurs offer their product or service as a mode of payment. I read an interesting story in this blog by Waqas, CEO of Markhor and Atoms. He traded 15 pair of shoes to get hold of a Twitter handle for his company.

I think that he certainly stood a better chance of acquiring that twitter handle with an interesting offer of 15 shoes instead of cash. Moreover, by paying with his product, he delivered more value and incurred lesser cost.

In e-commerce, most business owners pay influencers with their products. The influencers in turn review the products and get to keep them for free. The business owners get UGC (user-generated content) that they may use on social media and in their ads. In addition business owners receive content-distribution as the influencers review the products for the followers. The large influencers also receive store credit as a form of payment in addition to free products. The influencers receive higher value (e.g $99 goods if they had to buy), while the businesses incur lesser costs (e.g $30 cost of goods).

Product as a currency works and is a preferred mode of payment for modern businesses.

Building Lookalike Stacks, And Why They Work

I have been following some fellow marketers run this strategy for a while and I had tested it out myself too a few weeks ago. I’ve seen decent results with it. Unfortunately, I didn’t have a lot of data to work with so I couldn’t test it at full scale but I believe in the concept for sure.

The strategy is called lookalike stacks and it’s dead simple to implement. You create 1% lookalikes of various options like 1% of view content, add to cart, initiate checkout and purchase and stack them together in 1 ad-set. You can do the same for 2%, 3% and so on.

At nearly $100 spent, purchase conversion value is $255 yielding ROAS of over 2.5

There are two reasons why I think this strategy works better than most other lookalike configurations.

Firstly, Facebook prefers broader audiences over narrow audience. When you let Facebook work with broader audiences, it has more room to play with, find buyers, and generate cheaper sales in turn. When you stack 1% of everything together, the audience size is much larger than 1% of individual lookalikes. It is often 2-3 times larger. Sure you could individually use 3% of purchase or 3 % of view content to achieve same audience size. However 3% is never going to be as good as 1%.

Secondly, best lookalikes are created when you not only use more qualified events but also have a large amount of data in them. For example, if you have 1000 ATCs and 100 purchases, your ATC lookalike is likely to be better than your purchase lookalike because Facebook had 1000 people to create lookalike from. Although purchase is a more qualified event than ATC, it will create a more qualified lookalike once there are large number of purchases in the data-set. When you create a stack, you’re able to leverage from the best of VC, ATC, IC, Purchase together in 1 ad-set. This kind of ad-set is the best of both worlds as it has both: lookalikes of most qualified events (IC, PUR etc), and lookalikes of events with most data in it (VC, ATC etc).

I hope I was able to explain myself just fine. If I didn’t, please feel free to ask me questions.

Scaling In Non Mainstream Geos

The past few days I have been working on a highly competitive product that I know hundreds of sellers are working on. There’s demand for it, but the product has lower sale price of $20 and is competitive to sell with paid media.

After analyzing competition and discussing strategy with Saad, I decided to sell the product in non-mainstream geolocations primarily targeting middle-east. This allowed us to generate sales at cheaper CPA than US/UK/CA/AU/NZ/EU and we were able to scale freely in untapped markets.

The CPA for “other geolocations” can be seen $2 lower than US and $6 lower than UK/CA/AU/NZ /EU

Sales from Middle-East, Asia, Africa & South America costed us 25% less and also accounted for 48% of total sale volume with US only accounting 17%.

Our average order value was 40% higher in Qatar and UAE in comparison with average of all other geolocations. 8% of our sales came from Mexico. We also received substantial volume from Chile, Hong Kong, Taiwan, Brazil, Oman, Bahrain and Caribbean states.

Our seed data was built using Singapore and Hong Kong which I think have high conversion rates and purchasing power. The seed data was then used to create custom audiences and lookalikes to scale in all other locations.

Over-all I’m really excited by the new avenues this unlocks because a few years ago, I couldn’t have imagined this. Selling in these geo-locations is one thing, but scaling there is a different ball game.

Platform Strikes Again As Amazon Cuts Commissions

I wrote this blog titled “the incentive to be on a platform” a few weeks ago. Today when Amazon announced rate cuts for their affiliates, I was reminded of my thoughts regarding the platforms.

The rate cuts were announced despite the fact that Amazon is one of the few businesses right now surging through unprecedented growth. They had to hire over 100,000 employees in last few weeks to fulfil the demand of essential shopping and I can’t help but wonder how could Amazon be driven by COVID-19 to take this action. Honestly, I can’t seem to understand it. If this is a COVID-19 related event, please help me understand how.

A rate cut of as much as 70% is devastating for many content websites which generated a substantial amount of revenue from affiliate links as the ad revenues declined due to a large user base behind ad blockers.

It also means a loss of up to 70% valuation for what are known as “affiliate blogs” which are blogs designed to generate 100% of the revenue through Amazon affiliate program.

The sellers were also halted from selling anything but essential items for a few weeks. Sellers were also forced to move out any items from their warehouses that could “melt” such as edibles and make up. While the decision to remove these items was taken by Amazon in order to prioritize essentials, Amazon still charged per unit warehouse removal fee.

When you build businesses on a platform, this is the kind of counter-party risk that is involved. As I wrote in my other blog post, these platforms are the power houses and fuel growth, but no business should ever be built solely with a platform in mind.

Gratitude

I was complaining to my friend Usama today about the paid growth and the disappointments that I have with Facebook right now. First the competition has gotten so fierce that ad rates take up the lion’s share of the revenue. Secondly, with pandemic looming over us, they are doing lesser manual reviews and relying more on AI. The AI isn’t working so well in my favor right now.

My ad account has been deactivated 3 times in the past 48 hours. It takes 24 hours for them to reinstate and it goes away again much sooner than that. It’s disappointing. Furthermore, I told my friend that the margins are as little as 15% and I miss the good old times of the organic growth where we took home majority of the gross revenue.

The good thing about my conversation with him isn’t that I was able to vent out. It is that that he reminded me of how privileged am I. Most people’s lives have gone to complete stand-still. There are 10s of millions of people unemployed. There are probably going to be 100s of millions when the pandemic runs its course.

So I’m thankful to be able to work. I’m thankful to be in quarantine with my family and I want to take this opportunity to extend my support to anyone who needs it. If I can be of help to you, please feel free to get in touch.