#48 – DON’T start an affiliate business before listening to THIS!

Summary

Erik Bergman has done lots of different kinds of affiliate and in all different sizes. Starting with a small affiliate business in the basement of his friend’s parents, ending with a 400 employee affiliate business on the Nasdaq Stock exchange.Three years ago Erik’s energy levels were like a roller coaster. When the food reserves crashed, so did his temper and some times he could barely speak unless he got a banana.

Transcript

[00:00:00] Today, we are exploring affiliation, a business model that we think is a great place to start, especially if you’re running one of your first businesses.

[00:00:15] We’re going to talk about why we think this is such an interesting business model. And we’re also going to explore some of the common mistakes and misconceptions you might have if you’re just starting out. And I am here with no one else than Mr. Erik Bergman. And he, to me, is probably one of the best people to talk about this with, because Erik has done a lot of different kinds of affiliate projects, starting super small in a friend’s basement with his best friend just for fun and ending up with the company Catena Media that now has 400 employees and is on the Nasdaq stock exchange.

[00:01:02] And why I think Erik is. A good person to pick his brain is that he is in this industry now. Greater Commerce and affiliation project and we are going to talk about the tips and tricks and how affiliation plays out in two thousand and twenty. Bam! That was a long intro. Bam! How are you today, buddy?

[00:01:25] I’m very good. Thank you. And I’m here with my good friend Emil, who is among the smartest people I know and the great host of this podcast. And he’s also the first person who joined me to this project. And he is genuinely curious about affiliation. And I’m genuinely curious to be teaching and being I’m stepping into my jodo energy here. I feel I’m gonna be a very smart guy today.

[00:01:49] You deserve it, buddy. And together we are doing the Becoming Great podcast, a podcast for people who wants to make the world a better place. Trying to pronounce ship. And we’re here because we want to help out. That’s what I feel. Yeah, I completely agree.

[00:02:05] We think if someone wants to start your own business and want to experience more responsibility in their life, more adventure, doing things like their guns, tourism, sales pitch, you want to experience more responsibility. Yeah, well, adventure and responsibility at the same time. I think that’s beautiful. Yeah, I agree.

[00:02:24] Because when you run something on your own, it’s all up to you, right? Yeah. And I love that. To me, responsibility is a very attractive word. Yeah.

[00:02:34] Yeah. I don’t think you want to be using that in marketing. It’s a good thing, but we’re being real here. Right. We’re being real. I think taking ownership of something and being responsible is also the only way to really be proud of something. If you’re not responsible for something, you kind of can’t really be proud of it because it’s not really yours.

[00:02:55] Totally. And when you are ultimately responsible for something, I think you’re also more inclined to give it your your all to think about it day and night. Be immersed in the process. And I personally love living like that.

[00:03:10] That’s why I like to run my own projects. Yeah, I agree.

[00:03:15] So from now on, responsibility is a sexy word. Let’s go. That is.

[00:03:21] It’s a blessing. It’s a blessing. So there was a sidetrack. We’re gonna talk about affiliation.

[00:03:28] So to begin, how would you. Explain what affiliation is for someone that isn’t quite aware.

[00:03:38] So affiliation, I think the best example of an affiliate out there is TripAdvisor. Dot com, this huge guy that has all the information you need to know about traveling to anywhere. And it’s all free for the users. So what they give you as a user is lots of information and how they then then make money is when you book a hotel somewhere. They take a cut of that hotel. They take commission usually about 30 percent, which makes them an affiliate, send an affiliate. Most of the time gives away information for free and then have a commission based advertising. For example, in TripAdvisor case for hotels and we are doing that with great for casino. So we are giving away information for free about which casino is good, which casino has the best customer support and so forth. All the information is free for a user and then we make money if that user starts playing because then the casino pesos.

[00:04:42] So the image I see in my mind when you explain it like that is a wise man sitting on a mountain with a lot of information and people can come there and get the information for a small fee. And at the same time, when I think of hotels dot com, I see almost like a hunter day going out and they’re finding customers or prey for the hotels. So to me, I get an image of something that is a bit more active than someone that just has the information.

[00:05:15] Well, it could be active. I think the idea is not about whether or not they’re giving the information or chasing the ideas they earn the commish. They earn their profits on commission. So if we’re an affiliate doesn’t charge any advertising fees, usually they just get paid when they deliver results. And this could be you coming to TripAdvisor and then booking a hotel on your trip to the Canary Island. Then TripAdvisor gets paid for that. Or it could be you Googling for free business cards and you find a Web site called free business cards dot com. And that will give you a bunch of options of where you could get business cards for free.

[00:05:59] And then you go to a site with business cards and L&G.

[00:06:08] And when you when you buy the business cards, the printing card company will give you who have the Web site, a commission for that. So the affiliate doesn’t really it can be anything it can be very aggressive in terms of marketing and can be very common in terms of marketing. But what defines this is how they get paid and that it’s always on a commission.

[00:06:30] I’m curious to ask you questions for the listener about how you got started on your experience. But before I do. Why are we even talking about this? Why are you excited about this business model and why do you want to share it to people that are getting into business? What’s the benefit of it?

[00:06:49] What I love with affiliation is that you actually don’t need to have a product. You can’t really have customer complaints. So if you’re a trip advisor, for example, when someone books and hotel, you don’t have to care.

[00:07:01] After the hotel is booked, they will not come to you and complain. If their service was bad. They will go to the hotel and the receptionist. They don’t need to clean the hotel. They don’t need to do any of these things. And it’s enough to have a website. And that website will be working 24 hours a day, even if no one is working at TripAdvisor tomorrow. You can go there, you can read the information, you can book a hotel and they will make money. So the affiliate business model is basically you provide information and then that information works for you 24/7. And someone else gets to do all the dealing with all payments, dealing with annoyed clients, dealing with all different things.

[00:07:42] And you can start this.

[00:07:44] At a very, very small scale. As you mentioned before, we started this from a basement with no money whatsoever. And just our time and energy.

[00:07:53] So that is the benefit that you don’t need an investment in a building or something like that, you only need to invest your time.

[00:08:01] Yeah, that’s one of the big benefits you can start is this information. You can start this as a supersmart. We had no idea what we were doing. We started in two thousand eight maybe. And we had absolutely no idea what we were doing. We were just Googling how to do MCO, which is how to rank in Google and tried to learn from that. And we did.

[00:08:25] So what are the downsides then of definition business model?

[00:08:33] One of the downsides is that you don’t really have your own product. So the upside is that you don’t need to have a product. The downside is also that you don’t have a product, which means that you can’t get other people to sell your product, for example. So a company that I’m really inspired by at the moment is humble brush. They are doing toothbrushes and in bamboo, so they’re not in plastic. And they have been growing like crazy with their own product, but they’ve been growing by getting other people to sell their toothbrushes. So they they get lots of distributors. For example, here in Malta, it’s a Swedish company. They have one distributor. And that person then talks to all stores and sells their product for them.

[00:09:18] And they’re not doing anything. Then just ship the products and people get to know their products. They hold them and keep buying it. It becomes a real thing.

[00:09:27] And there’s an affiliate. You are just heir kind of, which is both the upside and the downside.

[00:09:33] So that is kind of the opposite of affiliation. So what if someone has a really good idea for a product? They know that, OK, I can sell toothbrushes. I have a persona or talent or information about toothbrushes. And I know the market so I can sell that. So wouldn’t it be frustrating for them to sell some else’s toothbrushes? You would have to give away your profits.

[00:09:58] Yeah. So that’s one of the down. So the upside is that it’s easy to start and that you don’t need to take responsibility in the same way. The downside is that it’s easy to start and you don’t get to take responsibility in the same way. So it also limits the upside. So you can you can scale a lot more in terms of that you don’t need that much staff and stuff like that and you don’t need to take that much responsibility and you can not scale in the same way of user loyalty or long term thing. And it’s harder.

[00:10:32] If you were 16 years old and we’re starting over, would you get into affiliation? And if you did, what would be your first steps?

[00:10:42] Yes, I would definitely do that. I still believe that affiliation is super good business model.

[00:10:49] And you could argue like Uber, the taxi companies and affiliation as well as what they do is they work on commission to arrange to the they get you to find a taxi, a car and someone else drives you around, someone else owns the car or someone else do all of these things. They just take a commission so you can be an affiliate in all kinds of way. That’s a lot more complex, obviously. But if I was 16 and I was starting out, I would start by going to WordPress dot com, which is this free web platform to build a Web site. And I would start my first Web site about just myself. So I would go with Erik Bergman, dot WordPress, dot com, and then I would go to YouTube and I would Google affiliate Tips for beginners. And I would start watching these videos and I would start writing about what I learned on my own Web site, and the purpose of this is not to start making money straight away, but to start gathering the information someplace, making it more fun to learn. Being something I can show to others and it will later on also help you ranking in Google and stuff like that.

[00:12:00] When you have a Web site already, could the same strategy produced on, for example, YouTube or a podcast if you’re a more verbal or visual person for sure?

[00:12:13] Yeah.

[00:12:13] The idea is to start learning and creating a process of learning. I think one of the challenges with starting a company is that it’s very easy to get stuck in. I need to make money now and if I’m not making money, I’m failing. And I’d like to see a starting a business as going to the university. And if you’re going to the university for three years, you’re there to learn. And when you get out, maybe you can start making money. And I believe if people have the same patients when starting a business like you had the first three years, it’s about learning. And then I will be making money.

[00:12:49] I think we will see so many more successful companies out there.

[00:12:53] But it’s me. I did the same thing. I was very eager to start making money when I didn’t make money in first two months. I completely lost interest.

[00:13:02] So, yeah, I think that starting with a focus on learning is so much more beneficial than starting with a with a way of trying to make money as soon as possible.

[00:13:14] I like that perspective. So what personality traits would you say a person it would be useful for a person to have to succeed in this business?

[00:13:27] I think that pretty much anyone can succeed in this business. I don’t think there is one personality trait that is. Necessarily more important than anything else.

[00:13:40] You can have different approaches to things, personality traits that have really helped me has been to be very social online. So I’ve been talking to a lot of people all the time. I’ve been leaving a lot of comments on YouTube or on Twitter, and I’m Facebook to find people to collaborate with and helping them out. And that has been very useful for me. But it’s at the other hand, it’s not a necessity. I see a lot of affiliates that never talk to anyone and instead build their own strategies with computer software and scaling it that way. So you could either be very social or you could be very asocial and be a good developer or you can. It’s always good to be like writing. I think that’s one key thing here. If you enjoy writing, you enjoy producing material for the Internet, that’s gonna be beneficial. Because if you do podcasts or if you do YouTube videos, for example, Google have a hard time finding them because it’s not text based and Google is a text based search engine.

[00:14:45] So if you like writing, I’d say that’s one of the most beneficial qualities you can have.

[00:14:52] Could you transcribe the podcast under YouTube?

[00:14:56] You could, but transcriptions aren’t that easy on the eye. And it’s not going to. It tends to end up with a wall of text. And it’s not really written to be read easily. Since it’s a different medium so you can do it. And Google will kind of understand it, but it will be hard to capture a reader with it. I’ve never read a transcription for a podcast, for example. I’ve only used it to quickly find information. Since the difference if you’re good at writing articles, for example, which can capture in a different way.

[00:15:36] So we have addressed listeners that want to get started with a business, get a little bit of income. Learn, develop skills. And I also suspect that we might have someone listening that is very ambitious, that is dreaming big in business, that is listening to this and maybe 20 other business podcasts to really, really accomplish something big. And we talked about, well, you have to give away some of your profits with this business model. And at the same time, your company scaled up to how much is it valid. Now, $300 million give or dear Eber Hotel calm, some of the best that biggest companies in the world. And so you can scale ridiculous with this business model. So how does that scaling happen? Why is your company so valuable? It’s my first question.

[00:16:32] Ok, so let’s start in a different direction and. And, sir. What else can you do that is easy to get started and that many people choose to do and that I used to do, and that’s starting a consultancy business so you can be so on social media manager, for example.

[00:16:51] Which basically means you’re selling your hours to help someone grow their social media. Or in our case, we started a small web agency, meaning we sold our hours to build websites for other companies. And these are the most common ways to start the first business, I would say. So starting a business where you sell your time to help someone else and that does not scale because you have a limited number of hours. And even if you add more people, there’s always a limited number of hours that you can do to take on a lot of risk with a lot of people and with each person you only get one hundred and sixty hours per month, give or take. So you’re stuck in that and it becomes harder to scale. Affiliation and software and. E-books can be different because it doesn’t to take on more clients doesn’t necessarily require more people. If you have a Web site, it’s not gonna be more work to take care of 10000 visitors than 1000 visitors. But if you’re gonna build 10000 Web sites for customers, you’re gonna need 10 times more people than if you you’re building a thousand.

[00:18:01] So this scales very well because it’s just a Web site. It’s just information. It doesn’t need more more information for more people to read it. And you get a. You can get a very steep, upwards growing trend. Thanks to that, you can just do marketing without meaning to change the product much.

[00:18:22] How realistic is it for something I’ve got to happened to, cause I guess in most industry you have giants like your previous company, A media, you have hotas dot com, you have transportation. Where could you how could you compete with this, guys?

[00:18:38] So. We started with MCO. So search engine optimization, how to rank higher up in Google. And a good approach here is to pick a small niche. So one example that I like is New Year’s Eve dresses. So let’s start. So you start a website about New Year’s Eve dresses. And this is a good keyword to rank for because you can compile a list of, well, beautiful black glittery dresses or whatever from different websites. And could you clarify keyword to rank for. So when someone searches on New Year’s Eve, dresses on Google, that’s the keyword. So it’s something that people look for. And obviously people only look for this once a year. But that’s also one of the upsides for this, because it means that the big players like ESOS or Amazon or whatever it is, are not gonna really be focusing on this. So you have an opening here where you can create a website that actually adds value where you collected beautiful dresses and could you be even more specific like Swedish red?

[00:19:45] New Year’s Eve dresses, theoretically, but you don’t want to go too small. So if you’re trying to rank on dresses, you’re never gonna beat Amazon. Amazon is gonna be there. But if you go, the more narrow you go, the smaller keyword you go, the bigger your chances of competing and actually being better. Because, sure, Amazon might have a category for New Year’s Eve dresses, but they’re not gonna put much love into that because they don’t really care about it because they want to rank on dresses or white dresses or wedding dresses, bigger categories. So the smaller category issues, the easier it is to start competing. And once you’ve started competing, you can start growing from there. So, for example, when we our first website that we made money from was called Proof of being good at Essien, which means try bingo dot com basically. But in Swedish. And our first keywords that we tried to rank for was not bingo or online bingo, which might be the obvious choices. The first keyword we ranked for was bingo on the internet, which is a smaller phrase, but you can still make money from. It was easier for us to show up there because we didn’t compete with the guys who tried to rank for just bingo.

[00:21:06] Got it.

[00:21:10] And how do you even rank? What is the process to start rank?

[00:21:15] And so Google is a text based search engine, meaning that Google reads all texts. So it doesn’t really understand what happens in a video. It doesn’t really understand what goes on in a podcast, but it reads text. So that’s the first thing you need to have a lot of text about what it is that you’re doing. And that part is called on page as SEO Basic SEO you do on your own page. The other part is to a large extent links pointing towards your Web site, meaning that if another Web site writes about you, Google will think of that as a vote on you saying that you are important because if you wouldn’t be important, why would someone else write about you?

[00:21:57] So. Easily explained.

[00:22:00] The ones who have the most links from the most powerful Web sites will rank the highest. And this is when it goes back to being very social. For examples, if you’re commenting a lot on blogs and you’re commenting on Twitter, you can find a lot of people who can help you out by linking from their websites or their social media’s.

[00:22:19] And you can kind of create your own importance. And that’s a big part about it. So we we talked a lot with other people, had blogs, and they helped us by linking to us and we help them by linking to them.

[00:22:31] I have a feeling this is a topic. We want to dive deep into in another episode to really nerd out about Ezio, how would think that would be interesting. And for now to not make this episode too long. How would you say affiliation is different now in 2020 compared to when you started maybe 2012? Something either.

[00:22:56] I started in two thousand eight, I think.

[00:23:00] Not sure if it is that different, to be honest, the competition is definitely different. But also the access to information. So back then there weren’t really competition in this. Obviously it’s been twelve more years. So it was easier to get started back then. And today it’s easier to get information and it’s easier to get a. Partners to collaborate with. Back then, most companies didn’t work with affiliates because they didn’t know what it was. And today you can partner up with almost everyone, anyone if you just Google affiliate programs. You can find endless opportunities. So I don’t think. The big picture of it. It hasn’t really changed much. It’s about providing information and then getting commission. And it’s different than competition. But all in all, the game is pretty similar.

[00:23:54] Same kind of game. Got it. So final question, what kind of affiliate is great and how is great different from your previous business?

[00:24:05] So great is gonna be one big website and it’s going to be about casino and in future, maybe a lot of other things as well, but we’re starting with casino and it’s different in the sense that we’re building one big project that takes a lot of time to get started and we’ll stay one big project. While in my previous businesses we’ve been aiming to create lots of small projects and lots of niche projects, kind of ranking for bingo on the Internet, ranking for a free casino offers and ranking for best sports betting on Manchester United kind of going lots of different directions. So in my previous business, we had maybe 40 projects running at the same time. And great is just gonna be one big one. And it’s very common in this industry that you have a lot of projects and focus on ranking on very specific keywords in Google. While we want to build one very big one, very trustworthy one over a long period of time instead.

[00:25:10] And why would you want to do that?

[00:25:14] I believe that it’s so I believe in the long game. If you want to build something small and niche like the New Year’s Eve dresses thing, that’s a great way to start something. But you’re never gonna be a multibillion dollar company aiming to rank on New Year’s Eve dresses. Then you need to go bigger. And it takes a lot more time to go bigger. But we want to do this. I want to do this because I want this be my project for the next 50 years, and I don’t want to do 40 different projects. I want to do one that I really care about, that I really enjoy, that I really want to work with.

[00:25:50] And I want to do that really, really big.

[00:25:53] So I think that’s my my belief is that if you’re going long term enough, then it’s better to build one really big thing than trying to build a lot of small things.

[00:26:05] Great see giving away all of its profits. How is that benefiting a affiliation business model?

[00:26:14] So once again, it’s a big part of what the business will be about links and people looking for what we are doing. And by giving away our profits, it makes it easier to get links because people would rather link to someone who wants to give away the money as they hate. Look at these guys. They’re giving away the money, which is obviously a very good thing. And that will help us to rank higher up in Google, which will help us to make more money and help us give away more money that will hopefully get even more people say, hey, look at them, they give away a lot of money and that becomes a positive upward spiral.

[00:26:51] And can that be useful for other people with business interests that might want to try the same business model?

[00:27:00] Yeah, I definitely believe it does, and you can do and you don’t need to give away all of your profits if you’re doing small campaigns and you turn that into your your marketing or even reach out to charities and offer to donate money to them if they write about you.

[00:27:18] It’s a way of. Making something good with your marketing money. So you basically sponsor charities.

[00:27:32] I could ask. A couple of more questions like what are your favorite tricks that you have done so far? But I feel like that’s a topic for another day. We are approaching 30 minutes. Do you have something to add before we wrap up?

[00:27:48] I really think that this is a good place to start. If you are one thing to start your first business, and I really believe that patience is key and focus on learning, which is an advice that no one wants to hear. Everyone wants to hear how can I make money quickly? And this is a kind of quick way to earn money. But it’s more a long term, stable way that can change your life dramatically if you focus on learning it instead of trying to make money tomorrow.

[00:28:22] Yeah, I’ll sum it up like that. Mm hmm. Well summarized, would you like to do an outro for today? I’ll do an owl, too. Sure.

[00:28:32] So this is the Becoming Raid’s podcast. And we’re doing this podcast because we believe that entrepreneurship is the way to make the world a better place, at least a really good way.

[00:28:43] And we want to build a community of people who shares his dream with us. And if you have, like this podcast, then please go to i-Tunes, find us and rank us with five stars because we really want to get this more. We’ll get more listeners into this and we need your help to get there. So please help us out. And thank you for listening.

[00:29:06] Thank you, Erik, for sharing your knowledge. This. I feel like I’m learning. I didn’t know anything about most. Thanks for speaking about today. Before I got to know you and I’m excited to share this to more people. So let’s keep going.

[00:29:23] Yes. See you next week shares.