Ep490: Neil Twa – Learn to Protect Yourself From Fraud

Andrew Stotz 00:01
Hello fellow risk takers and welcome to my worst investment ever stories of loss to keep you winning. In our community. We know that to win in investing, you must take risk but to win big, you've got to reduce it, ladies and gentlemen on a mission to help 1 million people reduce risk in their lives. Join this mission at my worst investment ever.com By taking the risk reduction quiz I created from the lessons I've learned from all my guests is time you start building wealth the easy way by reducing risk. Fellow risk takers this is your worst podcast hose Andrew Stotz, from a Stotz Academy, and I'm here with featured guest, Neil tois. Neil, are you ready to rock? Let's do it. Awesome. And are you ready to join our mission to help 1 million people reduce risk in their lives? Yeah, man, let's go. So let me introduce you to the audience. Ladies and gentlemen, Neil tois is the founder and CEO of voltage digital marketing, don't you love that name, I love voltage. He has been launching, operating and growing private label e commerce businesses for the past nine years. As of today, he and his clients have sold over $100 million in physical products primarily through the fulfillment by Amazon or FBA sales channel, Neil shares his blueprint for how to build an online business that can generate a passive six figure almost automated income in just 12 months, while setting up the business for potentially millions in sales within 18 months. My goodness, Neil, take a minute and filling further tidbits about your life. Yeah, well,

Neil Twa 01:47
I appreciate you having me here. Thanks for getting me on the mission. I'm excited. Let's go right. So just about me real simply on the personal side, I am married for coming up on 15 years. I have four wonderful daughters. They are all born in four and a half years. So we got real busy real fast. In life early on, right after we got married, we were literally blessed with our first child less than six months after we got married. And so that's been a wonderful ride. It's been a very crazy ride. We do homeschool all of our children. We moved the country here, nine years ago on 40 acres of hunting and the Ozark Mountains. Some of you might know the Ozark show, that's not us. We're not involved in that at all. We live a nice peaceful life out here with chickens and dogs and organic homesteading and the garden and just love to be around my kids and my family while doing this business and lifestyle. That by design that we generated and created for ourselves, using the power of e commerce, that gives us this opportunity to be out here on a rather expensive internet connection powered by squirrels as I like to joke. So if there's any latency, it's probably because we lost a squirrel and someone's going to get a new one. Because we literally our country.

Andrew Stotz 02:56
That's amazing. You know, one question, is it I've heard a lot of people talking more about homeschooling these days. Yeah. Is it difficult? How you got four daughters that are going to be all homeschooled? Yes, like a full time job for you and your mom, or you and your wife? Or what? What's this? Yeah,

Neil Twa 03:13
well, it is. And so one of the commitments we made early on as we got married, got going, due to some medical issues that my wife had had during the first pregnancy, which caused a lot of difficulty for her. She was an RN by training, BSN nursing, loved it love to go out into community and was a home health nurse. But as that struggle came with the child, and she went on bed rest and 26 weeks, life kind of got very different for her and dealing with medical issues. And then the child ultimately made the decision that was best for her to stay home, cuz she was gonna be able to work much anyways. And that kind of led us into the concept that, you know, maybe keeping the kids with us and doing the homeschool and learning how to do that. So is it hard? Yes, by some standards by others, no. Within the last, you know, couple of years, due to the changes of our world. For us, it hasn't been as difficult. Because we are here, we do homeschool every day, my wife is here now. And you know, she tutors, the children literally, in their own specific needs and the way that they're being developed. They're all you know, again, within four and a half years of each other. So they're all relatively tight. They're all girls, they do a lot of things together. I'm very much outnumbered here at home, being the king with a bunch of princesses. But it has its ups and downs. It has its challenges. But at the end of the day, it's more rewarding to know that we have a direct input into their learning their studies, their opportunities, and of course, the ability to nurture their special gifts in unique ways that only parents I think can do. Which gives us a really opportunity to lift them up and the things that they want to do the most and the things they're good at and really help them with the things they aren't so good at and more of a one on one relationship.

Andrew Stotz 04:47
That's inspiring. I think for a lot of people that are building their families, you know, they're looking at how to homeschool and do other things. So it's a real good, good lesson. I have a neighbor of mine who's homeschooling his Son since he was young. And basically he's just saying My job is to really instill the love of learning, and help him to figure out how to learn something new.

Neil Twa 05:13
self starters, self motivation. I mean, my children get up first thing in the morning, they start their studies, they do their chores, sometimes they're up before we are and they're already working on things. And while they get that opportunity, they're learning time management in balance. So while they get their work done, and complete their work, and it's checked to make sure it's obviously done accurately, or they're being challenged to do new things, if they're done before noon, or two o'clock, they have the rest of the day to do the other activities they want to do. So they very much are learning a balance of life and home, homesteading and opportunities for chores and management of animals and things around here while learning a balance of an entrepreneurial study. They are not, you know, working eight to five, they are learning how to balance time management money and themselves while making smart decisions and how we're giving them an opportunity to become self independent decision makers who think for themselves not what to think but how to think.

Andrew Stotz 06:01
Beautiful. One last question before we get into the big question. My audience to this podcast is about, you know, about 50%, let's say the US and then the rest is split between Thailand, Australia, India, Philippines, many other countries UK. And I just want you to describe kind of the ideal person that you work with to help build this business that you're talking about on FBA, just so that a listener could listen to that and think whether that fits them or not.

Neil Twa 06:33
Yeah, in simple terms, a lot of people might think that I'm too young, I'm too old, I don't have the right skill sets, technology or other aptitudes. But the honest truth is, I've taught 19 year old high school dropouts with phobias, social phobias how to do this, in fact, one of the guys I'm thinking of, you know, came to our first event with his mom because he was afraid to fly. But now at 25, he's got a girlfriend travels the world and works off his laptop, retired his dad to work in his business, as the operations manager as a manager is now a whole different kind of person. But I've also got 4050 and 70 year old people in here, too, who are in all walks, and all stages of life. Some of them are successful in finances, and one way in business, or they own multi real estate. They own Chick Fil A's, they own nine subways, or they have 27 rental properties, or their golf course management and theology degrees. But now they run high end betting affinity brands on Amazon, really, it gets down to people who understand that the E commerce is an opportunity that the real growth of our industry has come just recently, and a big adoption curve that we all kind of experienced, due to the changes in the world economy and mandates and lock downs and things that many people were forced to get in and buy things online where they never, you know, had to do that. But before my parents being one of them, you know, 67 and 79, they had never bought anything online and didn't really like that. And you know, they weren't really accustomed to buying but now they buy all the time for the phone. So they became adopters of that. And we see that is a real huge opportunity. So those who understand it, it really has to do with the process, it really has to under do with understanding that you as a consumer of products and goods. Once you flip that coin around and look at it from the seller perspective, you realize that you're somebody's kind of Avatar, you have a brand driven affinity. And that many of the products that are sold out there come from people like us small businesses, so why can't I and once people kind of recognize that opportunity, they start to look and search for a way to do it. When the saying goes when the student is ready, the mentor will appear. So typically, I will find here you are, then when people reach me, it's because they've made the choice to really consider this model. They just happen to cross paths with me at a specific time. And we resonate, let's

Andrew Stotz 08:46
just talk about, you know, before we were turned on the recorder as an example. Um, you know, we were talking about my business and my business is one of my businesses is coffee works a coffee factory. And you know, we're not selling coffee on Amazon. And we actually have the ability. I mean, one of the things about FBA that's interesting is you, you break the connection between having to manufacture something, if you look back to when I was young, and you had a brilliant idea, you had to manufacture it. Right, you had to go back to design it yet. But you know, but we have a factory and the first thing that you did said was, you know, are you selling on Amazon? And I said, No, we're not selling coffee on Amazon. And right there. You and I both could see, ah, maybe there's an opportunity. Now I do sell for four or five books on Amazon, and I sell this audio, the audio part of this podcast is on Audible. So I do and I have started using Amazon a little bit more and finding that wow, there's a huge, huge opportunity there. So

Neil Twa 09:48
there's a big marketplace, right? And some may say, Well, why Amazon? Why is that a big deal. And that's kind of arguing about which vehicle you drive. It's kind of a preference. You could drive another vehicle um, that's not really the point. The point is Not the mechanism. The point is the consumer. The point is meeting people where they want to buy things, right. And so we found that in as we got into Amazon and started to sell, we wanted to put products in front of people. And like you just suggested we didn't really want to go after the manufacturing, we didn't really want to continue down things we've done in the past with patents and stuff, we wanted to be able to get products in front of customers eyeballs on the offer, as we refer to, and so that that met intent, people are driving the Amazon vehicle. So we started giving them products because they were already in that vehicle. It's a mechanism for reaching the avatar.

Andrew Stotz 10:33
Well, that's very exciting. And I know for the listeners out there, there's plenty of people that are thinking, How do I make more money? How do I build a little business? And how do I do that with the least amount of hassle to like not having to set up a factory as an example. So great, great stuff. And now it's time to share your worst investment ever. And since no one goes into their worst investment, thinking it will be. Tell us a bit about the circumstances leading up to it, then tell us your story.

Neil Twa 11:00
Yep. So my story really starts around that time, when I mentioned my wife was pregnant, I gotten involved in some local community guys there in Oklahoma when we lived there. And they had sold me kind of on a concept for a new device, a new design, a patentable product that was going to help the oil and gas field industry. And it's big in Oklahoma, right. So it was a technology product that was going to help save price points in on the power grid, while allowing residential homes and businesses the ability to become what's called demand elastic to the grid, they could move an ebb and flow due to pricing changes, your home could you know power down, your business could power down when the pricing of electricity went up. And as we launched into that, we knew that things were going to change by 2020, that the EPA was going to shut down, you know, coal, fire plants, nuclear was going to slow down, the cost of electricity was going to go up. And many of those things have been realized. But see, we saw that I bought into that vision. And I thought, Man, this is amazing, it's gonna be amazing changing technology, it's going to allow automated home movement of energy, it's gonna change the way people even communicate, because we had a part of the technology that led me into this and got me really bought into the concept of the business, both emotionally too much. And there's a gotcha there. And you know, physically, emotionally, mentally and financially was, you know, that it could plug into a house and make every power outlet in the house, a communication grid. So we had a deal with Sony coming to the table called one plug, where you could plug a Sony television into the wall and would immediately have full gigabit internet. So anywhere you plugged it in, you could get internet in the house and full gigabit speeds. And it would also again, manage and monitor the grid and the power and anything plugged into it, including the entire house. And for businesses it had a very good cost justification ROI for large warehouses and other things. It could more automatically manage power lights and, and costs for grid.

Andrew Stotz 13:02
This go wrong. It sounds amazing. I really like it.

Neil Twa 13:07
Yep. So what happened? That kind of eventually started to make me question where we were going with this is as money was being put in from investors as capital was being raised by the millions to get this business off the ground. Somehow, we could never make it to a prototype. Somehow there was always kind of an excuse. There was a working prototype. But then there wasn't multiple working prototypes. There wasn't iterations of the prototypes. There wasn't stuff happening. But there was money disappearing, there was money being bought in it wasn't coming to me. So where exactly was it going? So the blinders started to come off just a little bit. The Vision blindness as I would refer to it started to come away. As I was opportunity started to reveal more of reality as I started to peel back the layers of this onion and start to look at it a little bit more differently. It's what Jim Collins in Good to Great calls, pulling the rock up and looking at the ugly nasty squiggly things underneath it. And so as I started to do that, it started to reveal more and more questions. And as I find naturally gotten into this too far, as I had brought and unfortunately brought other people into the investment strategy with me. I had leveraged myself too far into this hole. Before I realized six feet down, the water was filling up faster in the hole than I could grab the sides and pull myself out. Before that was happening, I started to realize financially I was going underwater. And so as that went it basically like an all thing seems to happen in some sort of movie style avalanche of snow coming down the hill, you know, as you're running and trying to avoid it, but yet it still overtakes you. I was trying to outrun that reel not realizing that there was two sets of books. So one day I walked into the office now seeing things and questioning things that I hadn't done before. I noticed a piece of paper and the piece of paper was a different accounting than the one that I had recently. seen for money that was going to other people that was not going to product development. And at that point, I was like, Ah, crap. Then I realized too many things were done too far immediately called my lawyer. I'm not sure how much farther you want me to go because your story was about them. Okay, so I had a wife, I had small children, I had three small children at this point. My wife was pregnant with the other child. How do you deal with this, right? Like I felt failure, I felt betrayal, I have shame for getting people involved. People trusted me. And I thought this is going to be great. It really was. And I still believe a billion dollar idea that is never going to see the market on amazing patented technology that no one is ever going to get access to. Because it literally died in all of that.

Andrew Stotz 15:45
Can I ask about that? When you said, No. Did you When was the moment that you talked to your wife that this is falling apart?

Neil Twa 15:53
When I had to tell her that we weren't going to make next month's bills. And that was going to be difficult to figure out what to do income wise at this point, because I had to hire lawyers, I had to be indemnified. And that got costly very fast on what money was left that I didn't, you know, basically put into the business and waiting for payback, waiting for the launch waiting for these things to occur. My Risk meter was going off, and yet I still kept pushing forward. I just wouldn't listen. I was stubborn, maybe arrogant, prideful, probably. And that did not make for a very good combination of common sense. So as dad continued forward, the next real kicker was when my pregnant wife was standing in the doorway when the repo man came at nine o'clock and pulled the van out of the garage, and we had no car. That was probably the lowest point in that whole complicated mess. Because she didn't realize that was occurring. I had kind of hid it from her, but not really hid it from her because she was pregnant. And it was that she was dealing with children. And I was kind of trying to protect her. Sure, which is not really a great excuse. But there it is. At the same time, it was a balance between, you know, kids need food and formula at that age, or I pay for the car payment. I had to balance it out. It's just a bad situation all around if I took screenshots of that, and I hold it as a badge of honor now to not forget where I came from. When I have a screenshot that shows $267 in my bank account. Amen. Yep. So Bowden bottom bounce when you want to call a dead cat bounce. Right? So that was a tough time.

Andrew Stotz 17:27
And how did it wrap up? As far as Did you get any money back? Or did you just have to walk away from it all and or lose and

Neil Twa 17:34
walk away? Go you're said, Yep, legal fees. indemnify yourself you'll be lucky if after the digging, you don't get investigated by the FCC. Sec. If you don't get this thing done correctly. Your best bet is to personally and professionally go bankrupt. Which again, not really a great badge of honor. There are of course worse things in life. And then that but that felt pretty bad. At that point, it felt pretty low. In a sad moment for me, for sure. Because it really set me back confidence wise. As you know, how can I ever let this go so far? Uh, why didn't I pay attention? Why didn't somebody tell me something? And if somebody did tell me something, why the hell did I listen to it? What really what was I thinking a lot of self deprecation analytical and other things went through that process. Right?

Andrew Stotz 18:19
So how would you summarize the lessons that you learned from this experience?

Neil Twa 18:23
Well, in simple simply, if I had a mentor, if I had another person in business, you may have experienced this if I had somebody different to lean on, where I could come to them and say, okay, crap, like, here's my whole bad wheelbarrow full of crap. Like, how do I sort this out? If I had a mentor like that, or someone who's willing to listen to who was really in my face? It would have changed things. I want to stop from walking off the cliff.

Andrew Stotz 18:48
Yep. Yep. That's a very valuable lesson. Maybe I'll share a few things that I took away. I've been writing notes as you've been talking. And one of the things, the last thing I wrote is I wrote down the word confidence. And I think that for the listeners out there, you know, the worst thing about losing money and about making big mistakes in our lives is that we start to lose confidence in ourselves. Correct. And that, that feeling of losing confidence in ourselves, I felt it when I've made mistakes. And I think everybody has felt it in the point of this podcast is to discuss that and bring it out into the open and understand that that's just gonna happen. You are going to lose confidence at that time, and people may lose confidence in you.

Neil Twa 19:32
Oh, absolutely. You will not question who your friends and family are. You'll know when you crash your ship. Many of them have no problem telling you exactly what they think. And believe it or not, some of them will simply walk away from you.

Andrew Stotz 19:44
Yeah. So confidence is such an important one. We don't want to be overconfident in what we do, but we also have to realize it yet when we lose and it goes down. We are going to lose confidence but the best thing you know is to be honest about what's happening and then figure out a way out of it. The second thing I wrote down was monthly financial statements. And one of the part another part of my business is what's called outsourced CFO. And basically, what we do is, we only really deal with companies that are a mess. Like, they just can't, the CEO can't get the proper financial statements, we come in, and we cut the Gordian knot. And we basically, rip through the company until we come up with monthly financial statements that are on time, and accurate, and accurate to the highest degree. And then, every month, we meet with our management team, actually, every week, or every two weeks, depending on the client. And we review the financial statements, and we create a forecast for the next five months or six months with the management team of the company. And then we review that, and revise that on a weekly basis. And then for those that want to understand what's the value of their business, then we also then move into, we've gotten the forecast of the business now how do we value this business? What's it worth? So but the key point to this to the listeners out there is monthly financial statements, make sure they're accurate and on time, always in every startup. And whatever bullshit excuse comes along, reject it and say, I want monthly find all we don't have time to close the books on a monthly basis and blah, blah, blah, blah, blah. And so that's the other thing I wrote down. And then another thing I wrote down is just product development. It's just hard. It's hard. Yes, it is to develop the product created. And if I bring it to the market, you know, me just sold any? Oh, yeah, there's this. Yeah, there's so many moving parts. And that's where I like to book I have here the Lean Startup, which is a great one talking about minimum viable product. And that's where I was thinking as you as you were talking, you were talking about raising cash, you know that they were raising capital, and I wrote down, don't raise cash, create cash. Yep, that's the point of the MVP is taking a product that people will pay for. That's right. It's not about a free product. It's about a minimum viable product that people pay one buck for $1, whatever that is, but start to create cash rather than raise it. And then the last thing I would just say is that, you know, really, this is partially the story of fraud, not only just, you know, and fraud can happen all the time. That's why we need those financial statements to start questioning what's going on. But I have a model for investing in startups. It starts with trust. Number one, so t trust is, do I trust these people? If I trust them go forward if I don't trust them, get out. Number two, because everything will fall apart eventually, if you don't trust, right, number two is the idea. Good. Now it sounds like preliminarily, you had trust whether that was earned or not. That's probably another manner. But it sounds like the idea was great. interesting, fascinating. So you got, let's just say you start off with trust, and the idea was good. The next one is execution. Can this team execute? There's so many people that cannot execute to get that cash flowing into the company. And then the final thing, the fourth thing is money. Does the company have enough money? And am I the only sole provider of cash or are there others? So it's trust, its idea, its execution, and its money. Those are all the things that I took away from your story, anything you would add to that?

Neil Twa 23:21
Well, in this instance, you know, as I as I reevaluate it, because it's always easier to look at it on the outside, a lot of new protocols and best practices were put into my personal life and professional life after that, including outsourced accounting, bookkeeping, for personal finances, indemnifying, myself through my own LLC, that allowed that as well as my own business finances, and my partner structuring separate companies, holding companies, again, accountants and lawyers upfront to ensure that all of those things are held in total transparency. So that was a very different way of doing it, of course, and learning those hard knocks lessons. But of course, fraud as a tough one, and people want to manipulate those some of those things are hard to get around. In this case, these gentlemen, literally as I got down to it, the gentleman who was helping us with the prototyping and MVP knew exactly what he wanted to create, but was underfunded. The other two gentlemen literally had an ego pride and read issue, and felt that they would be irrelevant if they have literally let this go to market. So they had a confidence and agreed issue. And so they held back on literally getting it to go because they were afraid that they wouldn't have a place in the business when it grew up. So that's a tough one. But that was some of the lessons that I learned later on is to deal with the people and deal with the competence of those people as well as questioning and understanding a little bit more about who they are. And definitely crawling before you run, which is a big one.

Andrew Stotz 24:47
So based on this story, and what you continue to learn what one action would you recommend our listeners take to avoid suffering the same fate they're just about to put their money into this fantastic idea. It's a great idea, you know, All of that one action,

Neil Twa 25:04
stop and sleep on it. And if you still feel confident about it in the morning, then you might go for it. Right it literally slow yourself down whatever it takes to do that. If it takes an eight hour period of sleep, or 10 hour period or timeout from anything you're doing, then do that just stop. Time and reflection can come on you. You'll maybe even be willing to ask somebody questions when you weren't before. My base experiences don't make a quick decision.

Andrew Stotz 25:33
Got it. So let me ask you what's one free or paid resource you've created or you've used that could benefit our listeners,

Neil Twa 25:45
you can go to my website and check out a free video that everybody is able to see it myself and Kevin Harrington, who is a partner in my portfolios division, is on that video talking about the business model in E commerce and what that opportunity looks like that's a free resource, you can go check out that training, which will give you some more insights into the model become and give you some insights into the ideas and learning lessons that we've had, that now have been literally given us the opportunity to build great businesses. So you can go check that out and learn a bit more about what that means. Perfect. If you're interested in learning about e commerce.

Andrew Stotz 26:16
I'll be there. And I know the listeners will be there, too. I'll put the links to the show in the show notes to your website, which I believe is voltage ta gdm.com. DM not got it voltage DM. Fantastic. Well, now last question. What is your number one goal for the next 12 months?

Neil Twa 26:37
Number one goal, continue to build an exit brands. So we've got one on deck right now. That's excellent. We got three coming up with our builders. So in the next 12 months, I hope those do reach the maturity numbers as anticipated with their current forecast models for growth. And if they aren't, then those fine folks will be exiting their businesses in the next 12 to 14 months.

Andrew Stotz 26:58
Fantastic. Well, listeners, there you have it another story of loss to keep you winning. Join our mission, and start building wealth the easy way, by reducing risk. Start by going to my worst investment ever.com And take the risk reduction quiz. As we conclude, Neil, I want to thank you again for coming on the show. And on behalf of a Stotz Academy, I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the audience?

Neil Twa 27:32
Well, parting words that's a good one. Um, feel the fear and do it anyways. There it is, be smart about it.

Andrew Stotz 27:41
Feel the fear and do it anyways, but be smart about it. That's a wrap on another great story to help us create, grow and protect our wealth. Remember, ladies and gentlemen, this podcast is about one guest. One story. One mission to help 1 million people reduce risk in their lives fellow risk takers. This is your worst podcast hose Andrew Stotz saying. I'll see you on the upside.