By Marie Griffin, Director Content Strategy, KidBacker
At age 18, Max Fata is already running his third entrepreneurial venture. Max was barely a teenager when he started in business, purchasing a used vending machine that was placed in his father’s office. A couple of years later, he came up with the idea of developing a customizable phone case, which he patented. Max learned how to market the product by leveraging the popularity of some of the rising stars of social media—leading to substantial sales until the market became flooded with poor quality phone cases and unreliable vendors. By the time Max sold the business at the end of 2014 for a six-figure price, he had already started developing the idea for a new company. He is now the CEO of 99 Cent Razor in Bonita Springs, Fla., which launched earlier this year. He spoke to KidBacker about his love for business and his passion for learning, which he doesn’t believe happens only within the traditional school environment.
KidBacker: What was it about you, your family, or your background that made you want to become an entrepreneur at such a young age?
Max Fata: I’ve always had an interest in business. My father, my grandfather, and my great-grandfather were all entrepreneurs. I was surrounded by it, and I just understood it really well. It was like a hobby for me.
KB: How did you get the idea of buying a vending machine?
MF: I wanted to get a job, but I was only in middle school. I started looking for ways I could make money doing something that wouldn’t require a lot of my time. My dad and I found someone selling used vending machines at a discount, so I bought one for a few thousand dollars. My dad had a telemarketing company that employed 100 to 150 people. So, we put the vending machine in there and it did fairly well, making a couple of hundred dollars a week. All I would think about was how I could grow the business.
KB: What did you do with the money you were making?
MF: I just saved it.
KB: So, tell me about your first company, Erase Case?
MF: I was 15 years old. It was summer time. I had a lot of friends who were teenage girls and they had so many phone cases. There was nothing different about them besides the design. Then when I found out how expensive they were, so I knew there had to be pretty good [profit] margin.
The idea of creating an erasable case just came to me out of nowhere. I started researching manufacturers overseas over the Internet. I had to find a good plastic for the case, then I had to find permanent marketers that could be used to decorate the case so that the design wouldn’t smear or rub off. Finally, I had to invent a formula for something that would erase the design so that the users could create a new one.
After a few months, I had the prototype and manufacturers were lined up. That first purchase order was for a total of four or five thousand dollars. I had 90% of the money saved up, between the vending machine and money I got from Christmases and birthdays. But, it was a big risk. I had some friends and family that doubted me. They said the risk was too big, and if it didn’t work out, I be sitting on all those products. But I had already bought into the idea and I knew it was going to work, so I did take the risk and I’m glad I did.
KB: Was Erase Case an instant success?
MF: It was really slow in the beginning. I made sales to a distributer in the UK, but our e-commerce site didn’t take off until I started the social influencer program. I knew traditional marketing wasn’t going to work very well with this product. Then I came across these social media influencers who had huge followings on Instagram, YouTube, and Facebook.
I would search for beauty or makeup tutorials, for instance, and see who had the most followers. I would contact them and offer to pay “x” amount of dollars if they would promote the product. If it was on YouTube, they might show themselves decorating a case. If it was Instagram, they’d post a picture and let people know where they could get it.
So, with the viral marketing, Erase Case took off. We were selling about $10,000 or $12,000 worth of product every week off the website. After a year or so, the [phone case] market got really saturated. All these people came in with poor-quality products and bad e-commerce sites, and the market started going down.
For the majority of 2014, we were trying to get the product into major retailers. We had interest from a lot of great ones—Sam’s Club, Toys R Us, Bed Bath & Beyond, Meijer—but we never got in. With the big retailers, you strike out or it’s a home run, but there’s nothing in between.
Also in 2014, I started developing the idea for another company, 99 Cent Razor. I wasn’t burnt out on the Erase Case, but I was just amazed with the potential for 99 Cent Razor. I knew the Erase Case had a lot of potential and it still does. I found great people in Colorado who bought it, and I think they’re going to do really well. So, I sold Erase Case around the end of December/beginning of January .
KB: Tell me the concept behind 99 Cent Razor.
MF: In May 2014, I was going to be the godfather for my father’s new baby. He gave me money to go the drug store to buy razor blades. There were all these different razor blades on the shelf, and I realized two things: There were 100 different packaging designs but the products all came from only two companies, Gillette and Schick. And the prices were outrageous! Just out of curiosity, I went on some websites to find manufacturers and I got samples.
KB: Did it help that you had already found manufacturers for Erase Case?
MF: I thought it would, but I didn’t know as much as I thought. I had all these contacts and resources to find manufacturers overseas. I found them, but they just did not sell quality products. When it comes to something like a razor blade that you use on your face, you can’t get away with [poor] quality. So, we ended up finding a manufacturer in the U.S., in Tennessee. We pay about three times as much for the blades and razors as we could have overseas, but we wanted to have the quality.
KB: Had you heard of Harry’s Shave Club and Dollar Shave Club?
MF: I had no idea until about a month after I started looking into the idea. We were planning to sell razor blades for an affordable cost. They would be one-time purchases, but we were going to do really strong remarketing to develop our repeat customer base.
After I started doing research on Harry’s and Dollar Shave Club, I liked the subscription business model. I give them credit for being innovative and for what they do with their brands, but they both have quite a few weaknesses. Here at 99 Cent Razor, we’re doing a great job taking their weaknesses and turning them into our strengths.
KB: What do you mean by that?
MF: Harry’s Shave Club and Dollar Shave Club don’t sell to women, and 60% of our customers are women. Also, I wouldn’t say I’m impressed of the quality of the shave with their products. Our razors are made in America and the quality is unbelievable. They’re obviously competitors, but I don’t see them hurting our business at all. The market is just so big.
KB: How does 99 Cent Razor’s business model work?
MF: We offer two different services. One is a subscription service. You go our site and for 99 cents, you can get a handle and two blades. We consider that a “free” trial because you don’t pay for the product, but you pay 99 cents for shipping and handling. That gives us a chance to charge the credit card and make sure it’s not fake. Once your subscription begins, you get a supply of five blades for $8.95 in every shipment, with free shipping. To cater to different needs, we offer shipments every one, two, or three months.
But if the customer isn’t into the whole subscription idea, she can go on the site and purchase a handle and a set of blades without recurrent billing. We offer both options and that’s one of our best features.
We just launched a new program called Shave4Shelters. For every order placed on our site, 99 cents will be donated to a non-profit animal rescue organization. Our first partner isSTART Rescue. We’re planning to associate Shave4Shelters with our brand, for it to be something we can build with our brand. I think it’s going to go over really well and we’ll be able to make an impact.
KB: Your company is still very new. How is the business doing?
MF: Our margins are extremely tight, but we are profitable. I’m not paying myself and I’m perfectly fine with that, and I can take some of the money from the Erase Case sale and put it into this business.
If something happens where 99 Cent Razor slows down and we have to find a new angle to go to market, I’m not going to stop until I make it. For me, personally, just going to college and working 9 to 5 would be giving up. Not everyone can put everything on the line, wake up at 4AM in the morning, leave at 8PM at night, and come to work seven days a week. I’d rather die broke as long as I know that I tried, but I’m really confident I’m going to get to the top.
My intention is to grow the company as large as I possibly can and to employ people. And to make a difference with programs like Shave4Shelters. Money is great and it’s nice to have some, but it makes me happy to come here and work and to see other people who are happy with their work. The money is just the cherry on top.
KB: What do you think about college?
MF: I am attending Florida SouthWestern State College part-time, taking three classes. It’s a good learning process and a great way of meeting people. I’m not sure I’ll ever get a degree. I find the best education is just reading books and keeping an open mind—listening to people and observing what’s going on in the world.
99 Cent Razor At-A-Glance
Location: Bonita Springs, FL
Age: 18, Part-time Florida Southwest College
Business: E-Commerce/Online Razor Subscription Service
Mission: Provide men and women with high-quality razors at a fraction of the price
Launched: Early 2015
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