Podcast 8: How Michael Houtzager Sells Millions Of This Mystery Product
The eight podcast episode is now live on iTunes. In this podcast episode I speak with Michael Houtzager who has one of the most interesting online businesses selling millions of this mystery product. It’s such a cool and unusual business that you’ll just have to click the play button yourself to hear about how he sells this product all over the US.
Michael talks about how his emphasis on offline relationship building helped him to build a business selling millions of this mystery product to repeat buyers time and again. He teaches several very valuable lessons that apply to any online business and not just the ecommerce space that he operates in.
You’ll love listening to this podcast where Michael discusses how he’s built a great business in this unlikely niche.
Intro: Podcast 8! Welcome to the MakeMoneyOnTheInternet.com Podcast where you learn tips and strategies from the pros on how to build your own online business. Now, here is your host Chris Guthrie.
Chris: Hello every. Chris Guthrie here and I have Michael Houtzager on. He is making money online and has been doing so for over 10 years selling crickets and other bugs of all things on his website, PremiumCrickets.com. Welcome to the show, Michael.
Michael: Hey Chris. Good to be here.
Chris: Yeah. I’m really excited to talk to you because as I mentioned in earlier podcast it’s always fun to talk to people that are making money in unique ways and obviously selling crickets is pretty dang unique. So, to those who are listening and hear that you’ve been doing it for 10 years, that’s quite a long time in internet years. I want to know how did you get started in this type of business?
Michael: It was pretty much out of desperation and one thing I enjoyed about your earlier podcast Chris is, you’re very honest. And I think you yourself faced a couple of time where you were broke. And you got fired from your job or lost your job or whatever and that’s really kind of what happened to me. I was in a position in my life where I had tons of success and then all of a sudden it just went away for one reason or another. And I had to get a job that I absolutely hated. I was selling trade show exhibits to people who I did not think really wanted them and I did not enjoy the people that I was working with. It’s not that they were bad people; it just was the chemistry and the mix and their realization that the world was changing just did not match with mine. So I kept thinking about, in my head, already what would be the perfect type of business on the internet. And I kept thinking annuity based revenue stream. Something on the internet to where once you have a customer you’re going to keep coming back and buying something from you. And then the other thing I kept thinking about was how do you have a product that Walmart can’t sell or Target can’t sell, you know, that they don’t really want to sell that might be hard for them to sell. So that was key and then third thing was, how do you have something that can’t be made in China or Mexico or Canada or something like that. So I was thinking about all that stuff and then all of a sudden a cricket farmer calls into our building and says, you know, he doesn’t have much money but he wants one of these trade shows exhibits news cheap. And all the other reps didn’t want to help him because they won’t be able to make money off of him. So I said okay I’ll help him out. And I sold him something for like $2,500. But I remember loading that thing up in the back of his truck and I said, “David, tell me about what you do.” And he explained to me that he has a cricket farm, and it was in Georgia. He’s had it for 27 years and that he is raising crickets for the fishing industry. Then, I asked him I said, “David, about how many crickets have you sold.” And he says, “Well, I sold about 40 million last year.” I went, “you sold 40 million crickets”. “Yeah, Mike I did. I sold about 40 million.” And I remember going home thinking man that’s a lot of crickets. And then I went through those three things about annuity based revenue stream and hard for other retailers to sell and you can’t make it offshore. And I said, this would be the perfect internet business. So what I did was called about three days later I said, “I don’t know how I’m going to do it, Dave, but I’m going to sell your crickets”. And he thought I was crazy. But he said okay I’ll work with you. And I would go home at night after this job which I hated and I started doing research about the reptile industry and I found that the reptile industry is actually a lot bigger than most people realize. Now, I myself do not have an affinity for lizards or snakes and so it was a hard thing for me to put my hands around. Why would anybody want to have a lizard in their house? Especially why would anybody want to have a snake in their house? I didn’t get it. But the more research I did the more I found out that there is a group of people that are just passionate about these things. And, I believe now to say after 10 years you’re either born with it or you’re not. And those who are born with it are – they are willing to spend a lot of money and they’re just fascinated by these things. So, I started building a website. Now, 10 years ago the ecommerce websites sucked. I mean, they were – the software just didn’t work. And I went through one thing after another that failed and failed and failed and failed, that blew and I finally came across this software, pretty brand new was the BBcommerce that I explained to you earlier and I got it to work. And that was after five months of working on something. And then, I remember the first thing I think have is Fresh Crickets; I think that was the name of the company that I started out with and I wasn’t getting any sales. And as I talked to people I realized that what people really wanted was a premium product. They wanted the best for their lizard. So I changed it from Fresh Crickets to Premium Crickets and that day things changed for me. So it was about – I remember in August I had some sales going on in the website and then the president of the company that I was working for called me in to his office and basically fired me. He just said it wasn’t working out, that my sales weren’t where they needed to be and blah, blah, blah. And I was thinking, yeah thank god. I said this is what I need to put 100% into the Premium Crickets effort.
Chris: Okay. So there’s actually quite a few things that you had touched on there that I want to go back and just highlight, how important it is to people that are listening. I think that everyone that I’ve talked to whether it is on the podcast or just through email or meeting at random conferences, they always have that aha moment, where they hear from someone that’s making money online in some method and they think I needed to do that too. I think for you that was hearing from the guy that you sold the trade show booth to, that he had sold 40 million crickets last year. So I think that in and of itself is pretty cool. And I think too for people who are listening as soon as you hear that from someone and you hear that those people having success that’s when you should do what Mike has done and go out, see what you can do, apply whether it is something you already know a lot about or just something where you can be unique in an industry and try and build up your business in that way. So I think that that was a pretty good point that you mentioned.
Michael: Yeah, that was the aha moment. And the other half of that aha moment was I looked at David and I knew he didn’t know anything about computers or the internet but he knew how to make a great cricket. Whereas on my part, I knew a lot about the internet back then and computers and I saw that is really the perfect marriage. The other part I did was I researched and noticed that most of these cricket farmers were just hiring someone to build the website and trying to get phone calls for people to come in and order crickets. And so they didn’t have a good customer experience. So I saw an opportunity. Now that same opportunity isn’t there today. But that was the aha moment. Both of those things together.
Chris: Yeah, I think too that the other important aspect is that you had your day job and most people listening to this podcast will have a day job and at the end of the day when you’re done with your job, you didn’t just go home and sit and watch TV. Maybe you did a little bit of that but then you also made sure that you spend time working on trying to build your internet business. Or at least get started. And so I think that those are two critical points that people needed to take away. I think it’s cool at least to how you got started.
Michael: And I will say back then I couldn’t even afford a TV. So I didn’t have a TV. I had a computer. And I spend all my time at night working on this idea that I just, at the bottom of my heart, I knew it would work. And I ate a lot of peanut butter and jelly sandwiches. Let me just really quickly fast-forward to – so you know where I am today, 10 years later.
Michael: Last year the revenue for this company of mine which is just two people, it’s me and my wife, was around $800,000 of just crickets that we sold online. If things go as they are progressing I should be able to do well over a million dollars this year. So now for me that million dollars didn’t happen right away. It took 10 years of very steady, slow growth. And I notice a lot of these people that you talk to, they make their million dollars real quick and god bless them. I wish I could. But what I’ve done is just slowly build to the base and I just have a business that would just keep going, that’s very stable at this point. But I have a good living and me and my wife, we run it all out of our house. And there is no reason that – I’m not anything special; I’m not anything different than anybody else. And I truly believe that if I can do it anybody can do it. You just have to have that mindset. Looking for the opportunities and when you hear it, go for it.
Chris: Definitely, I think that you hit the nail in the head there and I think too, I know I interrupted you earlier but I wanted to ask you and just highlight how important it was some of the things that you mentioned earlier on where we’re discussing. But you mentioned, when I first interrupted the last, you had gotten fired from your job. I was curious was that due to your employer finding out that you’re running this business on the side or it was just a matter unrelated to internet business, or, maybe your internet business because you’re focused so much on that hindered your other job?
Michael: I’ll never know if he found out that I was running this business off the side. I don’t know. He did make some sort of a comment that he knew I was doing other things.
Michael: So he may have known. While I was working there at the day I didn’t actually engage with the cricket thing. Everything was done by voice mails and email. And I would do that at night. Really in the beginning I was getting maybe $100 a day in orders. What I noticed about that employer was in the past he was great. He was extremely successful and but what happened is times have changed and the internet was coming about and I believe the rules of business changed as well. On how we sell the people and so forth. What I found in him and so many people is just to refuse to change with the changes that are going on in the world and believing that the old way is going to just keep working; all you have to do is hire more reps, have them sell the same way they’ve always been selling and expect better results. So just didn’t have an admiration for him and I couldn’t put my heart and soul into him.
Chris: And I think too the important thing is if you do decide to, for people listening, to try and build your own online business. I would always suggest not talking about it with your employer. Especially employer or even your coworkers for that matter. Few of my coworkers knew, specifically the guy that I worked with hand in hand in my sales job and I think that ultimately he led to my getting fired. I mean, obviously fast-forward almost two years now that was the best thing that could have ever happened but at the time obviously it was stressful.
Michael: Yeah, it was stressful and I’ve never been fired from a job. So it’s tough to take but I think once you pick yourself up and you dust off your clothes and you know in your heart that you can do it, then that also gives you the motivation to work twice as hard and move forward. It was great for me but it was tough.
Chris: I know you said it’s 10 years and obviously you’ve been growing it steadily ever since you started. So I wanted to talk a little bit more about that transition from. You mentioned earlier that it was just $100 or so in orders a day and now you’re up to potentially clearing over a million in revenues. So what did you learn along the way in building up those sales? What were you doing to try and build your business?
Michael: This is a key thing I want to share with everybody is I don’t think you should just rely on the internet alone to do everything for you. What I noticed is in the beginning I told everybody I’m not a big snake person, I’m not a bit lizard but I needed to understand the people who were. And so, forget how I did, I looked on the internet and I found in Birmingham, Alabama they were having a reptile show. And I called the show promoter up and asked him if there is a way I could sell my crickets and worms at your show. Fortunately, he was so thankful that I called apparently the last guy that was doing it for one reason or another had to abandon the show and he didn’t have anybody selling crickets and worms. He says Mike you come here every month, you’ll have the exclusive on crickets and worms for my reptile people. So what I did was I went to a one-day show in Birmingham, Alabama with – I’ve seen some pictures I laugh when I look at myself back then, but I had a tablecloth and I had a bunch of crickets and a bunch of worms and I sold to people. But as I sold to people I was constantly asking them questions about what are you using these crickets, what kind of reptiles eat them, what worms are good for what reptiles and I really built up my understanding of what foods for what reptiles at what time in their life. And I think at this point in time given the fact that I’ve done hundreds and hundreds of these shows that’s really how I had figured out how to configure my business so that it sold the highest value to those people who are getting new reptiles. So I did those shows for many, many years. It was just one show once a month in Birmingham and then all of a sudden there was one of the biggest show promoters for reptiles, called Repticon’s Billy. His cricket vendor had a problem and actually went out of business and he contacted me after I’ve been chasing him for four years to try to get his show. And he said Mike it’s yours if you wanted. So now what I do is I probably go to 30 to 40 different shows all throughout the southeast, these are weekend shows. And I have instead of one table I got four tables. I do have the exclusives still on all these shows for selling bugs to people with lizards and stuff. And I am now exposed I would say probably every year to 50,000, 60,000, 70,000 potential customers. And there’s nothing like looking someone in the eye, shaking their hand and giving them a flyer that says, when you need to reorder go to PremiumCrickets. And so for those people who are really trying to figure out how do I grow this business. Don’t forget the human element as well. Being able to meet people and these trade shows were actually a great way of doing it.
Chris: Yeah. I think the fact that even when you’re just getting started you’re basically doing demographic research by talking to every potential customer. I mean lots of times people think about using online surveys and how was your order and all those types of things but obviously, if you’re able to have that one on one connection with a customer in person then you can learn a lot and it’s also a lot less – more personal rather. You probably get a lot more, better info than if you’re just trying to collect feedback over your website.
Michael: I think that the internet is a great tool. But you cannot forget the human element. And when you meet people and you look them in the eye and these people are willing to share information with you. Because they would love to tell you what their problems are. Why buying crickets from this other guy didn’t work out. Or, what’s wrong with the worms and I also learn that there is a big and growing market for roaches. Now if somebody filled that out on the internet and says, yeah I’d like to buy roaches, I would just delete it. But once I saw with my own eyes that people are buying roaches at sometimes $70 for 1,000 roaches I paid attention to that. Now I actually have a roach offering of tropical roaches and you’d be shocked how many people buy roaches for their animals. Yeah, they’re tropical roaches. There’s a reason why they buy them and it fits a niche. Now I’ve expanded out to roaches as well.
Chris: I want to actually talk to you about fulfillment and ecommerce type things as well. But I was curious too, these types of reptile shows is it just basically people that are reptile pet fans, they come here and they just get to meet other people that like the same of pets, is that what it’s about?
Michael: No, not really. I’ll give you an example. I’m going to Orlando, Florida next weekend and they’ve actually rented out the Doubletree hotel in Orlando and have the whole conference center there. So it’s a lot of money. There will be probably 150 different vendors from all over the country that will come in and they will rent a table and they will have a particular type of snake or lizard that they sell. And the people that are attending and there will be about 6,000 people attending are interested in maybe one thing. Maybe they are interested in a bearded dragon and all the different morphs that go along with that. They may be interested in a type of snake and all the different morphs. What is seems like this reptile thing is appealing too is to that collector who wants that one type of breed or morph that nobody else has. They want a red bearded dragon instead of a – they want the first red one. And they are willing to pay hundreds and hundreds if not thousands of dollars more to have that first one. So it’s a bizarre collector mentality that I think you find in all these other industries – people who collect coins or cars or comic books. It’s the same mentality with these reptiles. So it’s a big show. There will be a lot of people there. The last time I looked a reptiles magazine try to put an idea as to how big this is, they came up with a figure about $6 billion of how big the reptile industry is.
Chris: And that’s actually quite a bit different than what I thought it was the way that the expose [are handled, I guess]. But it makes sense. People like to collect everything and obviously there are pet lovers too. So that’s eye opening.
Michael: Yeah, what did you think it would be?
Chris: I thought it would be more like hey like this type of pet, I’m coming here because I just – I’m a huge fan of these type of pets. I like to meet other people that are pet lovers and this type of reptile niche and then there’re vendors that are selling stuff to these pet lovers basically.
Michael: Yeah, see that’s a good thing. I’m glad most people think like you do because if they all knew the truth there’ll be more people in this industry. It might be risky me telling everybody what’s really going on but hopefully I can help some folks out in other industries, use the same methodology that I use.
Chris: Yeah, I think most people listening will understand that you have a 10-year head start than anyone that was trying to do the same thing. And obviously you mentioned before that it took you four years to get an exclusive at one of the other shows. So it’s certainly because you’re so heavily involved in the trade show aspect that type of business is built based on probably your personal relationships with those type of vendors. Or, with those organizers, rather. And but yeah, I think the stuff you’re sharing can certainly apply to other industries. The fact that you mentioned that no one seemed to be focusing on Premium crickets as opposed to just crickets. I mean that in and of itself is a point that I would take away as a listener and apply towards some other types of niche or industry where you can do one little twist that can make it a lot better selling point.
Michael: I’m glad you mention that. That was the key to the success I think was renaming everything to premium crickets after listening to what people said, as they said, I got a pet I love this pet I want the best product possible. Were the crickets any different after I changed the name of it, no. But I think what that did was it showed up on the search engines to be more relevant and I came up pretty quickly when people put in like high quality or premium crickets, I came up quick. So that was the big change for me and that’s what I believe made this company successful.
Chris: Yes, I know you’re doing, it’s obviously ecommerce and I know you mentioned before that you’re doing drop shipping or is it I’m not sure how it would classified as but I was curious too, how do you manage the ecommerce aspect? I mentioned before when we’re first talking I’m not an ecommerce guy. I’ve never done – I’ve never actually sold products other than just as an affiliate relationship. And never really before through a drop shipper.
Michael: I think that’s unique what I’ve done is I went to a cricket farm only today but we worked out a deal and basically the deal was: I’m going to put a computer into your cricket farm and I’m going to have orders come from the internet to this computer, you’re going to hit one button and then as he hits that one button all the orders are downloaded and these are just called the pick sheets. And then he goes and he fills all the orders and there was a standard barcode reader attached to that, so he would fill it and run that pick sheet under the barcode reader and it would print out a label. And then he would just slap that on the box and stack them all up and then I worked out a deal with UPS and they would come pick everything up. So I had to make the system as simple as possible so that a cricket farmer who knew nothing about computers could simply operate it. And then also I have reports so that every week he charges me for what he ships and I paid it directly to his bank account. So that was the drop shipping aspect that I developed. Now, that the weird thing is that David went out of business and I think what happened is that the Forest Service was spraying for bugs in the area and all of his crickets died. And it was a tough, traumatic situation. But I was like okay, what are we going to do now? Everything is dead. So what I did was I called another cricket farmer whose name was Clay, Clay Ghann. And I said Clay can we work out this deal, here’s what I got and he said sure. And so what I did was I bought another computer, I put it into Ghann’s cricket farm and we worked out a deal and I didn’t miss the beat. I was now shipping crickets from a different facility, out of Ghann’s Cricket Farm. Now that was going along really good for about half a year and then all of a sudden all of his crickets started dying. And what happen in our industry is there was this virus called [___] virus that was specific to this type of cricket which is Acheta domesticus crickets. It was just specific to that. And it turned out that in the course of the last couple of year about 10% – 20% of all cricket farmers were catching this disease and they were going out of business. So he called me up. He said all my crickets are dying. I then hung up the phone and called another cricket farmer up in Mississippi and I worked out a deal with him and I said, okay, I think it was on a Friday and he said yup, I’ll take the deal and I told him where to go out to Walwart and buy. I’ve actually never been to his cricket farm. That’s the weird thing. And so he bought it wall, he loaded the software and I use one of those remote programs where I can configure everything and that Monday he was shipping out crickets for me. So that was the third farm that I actually went to but my customers never knew anything had changed.
Chris: And during that time you didn’t actually have to contact them to say orders might be delayed or anything like that? It was just because you had those relationships with those people that I assume you probably met, obviously the first person you met when you sold the trade show booth but then the other people you met probably through the conferences.
Michael: The cricket farmer in Mississippi I met through a conference in Mobile, Alabama. And he and I got along pretty good. We were competitors there but friendly competitors and I liked him. I like what he was doing. The other guy, Clay, I had never actually ever met him but I knew of him. And I always believe in building relationships. Because I always believe that the market is big enough. You don’t have to go out and try to kill and stop somebody out. Just see how you could work together eventually. But it’s through the trade shows and just knowing who he was.
Chris: We’re getting close to the time where I’d like to wrap this up but I am curious too, ecommerce is not my specialty in the sense of actually shipping out a product. I’m always an affiliate type guy. What would be your best advice to someone that heard your story and they’re like ecommerce sounds like it’s something I might be interested in doing. I know you mentioned earlier about not selling something that Walmart can sell. Is that the main key point you’d like to share or is it something different?
Michael: I think if you’re going to focus on ecommerce you need to find a niche. And, remember, this annuity based revenue stream. That was the one idea that I always got in my mind. I don’t want to go out and have to find a brand new customer for every sale that I make. And that’s why I wasn’t interested in shoes or something like that. I wanted a customer that once you sold something to them and they were happy with it that they kept coming back over and over and over to buy it from you. And then the second thing is I need a product that was not easy to replicate by Walmart or Target so again shoes or [shrubs] or whatever like that I couldn’t a value add in that. And then the third thing is you don’t want to have it to where somebody in China or Mexico can make that same product at 1/10 the cost of what you can do it. The good thing about crickets is, is that they have to be made domestically. They can’t be imported from other countries. So this cricket thing just met that model. Now I will say there’s a million other things out there that can fit into that model. And what your challenge is is to find those things and reinvent the economy and that will provide the type of jobs and the living that all of you need and want going forward. Because the world is changing.
Chris: That’s great advice for ecommerce and I want to thank you again for coming on and sharing your story. I think the best place for people to see what you’re doing is just PremiumCrickets.com, right?
Michael: PremiumCrickets, but I’ve moved it forward to also GeorgiaCrickets and FloridaCrickets. I now have three different locations and GeorgiaCrickets is a warehouse that is just my laboratory because what I hope to do and I got some of this inspiration from you is to franchise this out. So, one day I want to see pensilvaniacrickets, massachusets crickets, say, California crickets and through the things that I’m developing in this warehouse I’ll make it easy to franchise so that many other people can participate and succeed in it.
Chris: Very cool. Well, thank you again for coming on and sharing your story and telling us how you got started and built up this great business.
Michael: yeah, and thank you for doing what you’re doing and I think the way we’re all going to succeed is just be honest, open and we all talk to each other. So if there are people who think that they can help me in this business and have some ideas my email is firstname.lastname@example.org, just shoot me an email and I’m interested in building partnerships.
Chris: Alright thanks again.
Michael: Yeah, thank you.
Chris: And that was the podcast. If you’d like to subscribe to the podcast you can do so by going to MakeMoneyOnTheInternet.com/itunes. You should also check out upfuel.com and you can see the various blog posts that I’m covering as well. Thanks again for listening and I’ll see you on the next podcast.