This Lawyer Quit His Job, Moved To China, And Started A Wildly Successful Sex Toy Business
He and his collaborators at Very Intelligent E-Commerce, Inc. have skipped the usual distribution methods, focusing solely on internet sales. The company's most recent product, a sex toy for men, launched as an Indiegogo crowdfunding campaign. It turned heads and raised over $260,000 - far more than its $45,000 goal - in the process.
"We are sure that we'll at least double revenue within the first year ... and will try our hand at offline sales to resellers," Sloan told us.
He agreed to answer our questions about what it's like to steer the ship of an adult novelty company. Here are some key takeaways from our conversation and the full (lightly edited) transcript appears below that.
- Sloan started as a lawyer, but made a change early in his career that led him to where he is now. "I used to go to garage sales at 6 AM on the weekends and make as much or more money than I was making in the firm. At that point it really became clear that if what I wanted was more money and a fun lifestyle - working as a lawyer would offer a poor return on my time investment."
- The industry is largely filled with people who don't know how to use the internet. "The adult industry was particularly ripe to 'disrupt' because of the combination of unusually high profit margins combined with industry-wide poor e-commerce knowledge," Sloan told us. "Only one brand of male toys and a few adult mega-stores had a high level of internet marketing or online selling technology knowledge."
- Sloan moved to China after repeated visits to buy items to resell in the States. He was "buying and selling everything from human bones to alligator shoes to truckloads of furniture to used medical equipment to vintage mannequins."
- He cites the merits of doing whatever it takes to succeed. "The key factor in the success of that business was clear: willingness to do whatever it took to grow the business, and not caring what other people thought of it. Once, I even had my mother videotape me and a friend walking through a shopping mall in Skokie, Illinois, wearing giant inflatable rubber suits!"
BUSINESS INSIDER: Why the Indiegogo fundraising campaign for a new product when things are generally going so well?
BRIAN SLOAN: There are plenty of businesses with healthy sales who need additional money in times of expansion. It's normal. There are two ways to do that - investment or loans. There were several individuals and a few companies who wanted to invest, but I declined because I did not want to give up shares or control. Adult businesses ... also cannot get bank loans at any rate. We were eligible for cash advances on our merchant processing from third parties, but the rates were mafia-like. Crowdfunding allowed us to raise funds by pre-selling products at a discounted price. In fact we needed more than our $45,000 goal, but we were warned by people who had run successful crowdfunding campaigns that setting a high goal would have a negative influence on funding.
BI: What was the original motivation in entering law, and when did you realize you were going to quit to start this business?
BS: I did a double major in philosophy and political science in college. Philosophers haven't really been in demand these last 1,500 years, and political science doesn't prepare one for any particular type of work. I bought into the idea that being an attorney would lead to a comfortable and interesting life and it helped that I didn't have any better ideas.
During my second year of law school a classmate took me to an antique auction. I ended up buying a very old version of the Monopoly board game, and I thought it would be fun to see if I could sell it on eBay, and I did, making about $100. I guess you could say from that moment my life changed.
After that day, I became obsessed with buying and selling things. I started studying less and going to auctions more. That part of Pennsylvania had, at the time, at least 10-15-plus antique auctions a week. The local people bought the items to sell locally at antique malls, but there were few if any eBay sellers attending the auctions. It blew my mind that people only knew the value of some really nice antiques locally but had no idea of their global value. I probably shipped 25% of the items overseas.
The second summer of law school when I worked as a summer associate for the boutique firm, I used to go to garage sales at 6 AM on the weekends and make as much or more money than I was making in the firm. At that point it really became clear that if what I wanted was more money and a fun lifestyle - working as a lawyer would offer a poor return on my time investment.
After law school I expanded from antiques to goods from bankruptcy auctions, but I kept selling on eBay. I spent those two years before I moved to China buying and selling everything from human bones to alligator shoes to truckloads of furniture to used medical equipment to vintage mannequins.
BI: How exactly does one start a sex toy business?
BS: I think like most businesses, one starts it one step at a time.
I began importing latex fetishwear from China during my time as an eBay seller. The reason was simple: going to auctions took a lot of time and effort and was not scalable. I needed high profit margin items I could buy from China, in quantity, to properly grow the business. I used Alibaba.com and connected with a latex factory in south China. I grew the business significantly by making custom sized rubber suits for larger people, and figuring out sub-niches of the latex fetish culture.
The key factor in the success of that business was clear: willingness to do whatever it took to grow the business, and not caring what other people thought of it. Once, I even had my mother videotape me and a friend walking through a shopping mall in Skokie, IL, wearing giant inflatable rubber suits!
At a certain point, the latex business also wasn't scalable enough for me so I moved onto toys. I thought about a few other businesses and got close to launching brands of a few products, including anti-snoring devices and a teeth whitening system. I decided to stay in the adult industry as I had gained so much knowledge about it during my time selling latex.
Ninety percent of adult toy brands only focused on high-volume manufacturing/sales solely to distributors. The breakdown of retail price allotted to manufactures in the adult industry is not pretty. I figured with what I learned about internet marketing from the latex business, and my location near factories in China, I could create internet-only brands and sell them for very competitive prices by cutting out the middlemen - distributors and retailers.
Executing well on the technology aspect was a huge part of the success of the business at that point, and has been something that sets us apart from competitors even now. I built a team of people all over the world, with a strong concentration in Eastern Europe and began creating niche web presences to compete with the more well-established brands.
Over the years I built relationships with maybe 20 factories in China to make items that our customers want.
BI: Were you concerned about any stigma surrounding the nature of what you were doing?
BS: Actually, no. My parents are super-supportive, although I found out my mother told her friends I was in the "import-export" business for a few years. Now that the business is more successful, she seems to not be embarrassed anymore and even suggests ideas for me to make late-night infomercials.
Regarding a stigma - why should I care that some people don't like what I do? The kind of person who would dislike me or not want to know me because of what I do is also coincidentally not the kind of person I would want to know. So it works out perfectly.
Doing this kind of work, strangers sometimes feel its appropriate to open up to me on sexual topics that they would otherwise keep private. Once I was on a flight from Chicago to Qatar and met an oil executive who was working in the Middle East. The first part of our conversation centered around his role in his church in Oklahoma and some stories about his children who were Christian missionaries in Asia. To my surprise, when I told him what I did for a living, he told me that after his kids all left home and him and his wife had a lot of time on their hands - they bought their first sex toys! So… you never know.
From a friends perspective - the story of what I do does well at parties and bars.
BI: Why the move to China?
BS: I was going back and forth to China buying small antiques, after law school. A friend told me about an antique market there so I took a trip to check it out. Long story short, over the next 1.5 years, I made a bunch more trips to buy things, which I would sell back in the U.S. on eBay.
Secondarily, China is the factory to the world so it also made sense from that perspective to base myself there. Sex toy factories in China tend to be in the south - around Ningbo and Wenzhou, and then further south in Shenzhen/Dongguan/Guangzhou.
BI: How difficult is the design and manufacturing process?
BS: I worked with a company in Taiwan whose normal business was manufacturing Wi-Fi whiteboards and commercial-grade air conditioning controllers. I thought that because they understood how to manufacture complex electronic devices, they could also manufacture my Autoblow 2. I was wrong. Their team lacked knowledge of ergonomics, had no experience working with TPE, the material that now comprises the interchangeable sleeves.
After working with them for 1.5 years, they managed to create a product that essentially collapsed upon itself when one tried to use it. It was a huge disappointment.
Basically you need a designer or two, a sourcing team to source the different components, and a few factories to work closely with to produce the main parts. Picking the right factory partners, and making sure that your main factory picks the right sub-factory partners is probably the most important aspect of the entire process. If one supplier factory is producing a sub-par component and your main factory doesn't catch it, the whole project can fail.
It's frankly not a very sexy process and involves talking with engineers, sometimes via a translator when things get technical, about things that make everyone in the room blush.