The $20,000 Gamble: How a Broke College Kid’s Ad Launched a $100M/Year Direct Response Empire [Part 2]

Want to discover the 4-step “secret formula” one former pizza delivery guy used to grow a $100M/year Direct Response empire?

(And launch a massive retail presence as a result)

Read on because we’re going to reveal it in today’s newsletter…

But first, a quick flashback in case you missed part 1 of this series…

…we left a 23-year-old AJ Khubani who was just about to break through to Direct Response megastardom.

We heard how the child of immigrants went from selling pizzas to gambling his entire life savings on a dream - a dream to hit the big time and make his first million.

Hop over to Part One of the ‘Infomercial King’s’ story to see how AJ’s gamble went, in case you missed it…

(Spoiler: it could hardly have gone better!)

But the story isn’t over…

AJ turned his initial $20,000 revenue into a $100M/year Direct Response empire.

So how did he do it?

How did he scale his business so fast? How did he manage to go to retail against all odds?

How did he buy his first house at the age of 26 - in cash?

We promised to reveal AJ’s secret formula for Direct Response success. And that’s exactly what we’re going to do. So if you want to know how to:

1) 🧑‍🔬 Test the viability of a product via Direct Response ads

2) 🚀 Scale the product via Direct Response

3) 🛍️ And go to retail all across the USA

… stick around, because it’s all right here.

Branching out and scaling up 📈

As we covered in part 1, AJ’s successful first-ever foray into Direct Response advertising - selling cheap cassette players in The National Enquirer - made AJ realize he was onto something.

The walkmans were a hit, but AJ knew they wouldn’t get him to a million. So, he decided to replicate his process with other products - all the while honing his Direct Response ad-writing skills and decision-making process.

Pretty soon, he landed his first ‘big product’: a pair of massage slippers.

At just $10 a pair, they sold like crazy.

Within just two years of starting out, in 1985 AJ finally turned a profit, having turned over a total revenue of $1.5 million. His days of delivering pizzas suddenly seemed like a long, long time ago…

AJ’s formula for success 🔓

Of all the thousands of products AJ could have invested in, he instead chose to focus his time and money on just a few high-potential items. 

The question is: how did he choose which products to go for?

Well, during his time selling through newspaper Direct Response ads, AJ developed a kind of ‘formula’ that he’d use to predict whether or not a product would be successful. 

Before investing a dime, he’d ask himself a few important questions:

AJ Khubani’s 4-Step Direct Response Product Selection Formula

Rule #1: Does the product solve a common problem?

In an interview with Inventors’ Digest, AJ explained that he has ‘no interest . . . [in selling] 10, 20,000, or even half a million pieces . . . it’s got to be a mass appeal item.’

By ‘mass appeal,’ AJ means that it has to solve a common problem faced by millions of people. The ‘Smart Mop,’ for instance, made $150 million in sales. Something niche, like anti-fog skiing sunglasses, are unlikely to sell even close to that.

Rule #2: Is it easy to produce?

Take a look at this list of AJ’s most successful products. What do you notice?

That’s right, they’re all relatively simple gadgets. No heavy engineering, no expensive materials. Just quickly manufactured products that are made cheap and get the job done.

If the item fails, you haven’t lost much. If it succeeds, you can reproduce it at low cost. Win-win!

Rule #3: Do customers like it?

Repeat purchases are key to Direct Response success.

Take AJ’s top seller, for example: the Ped Egg (a simple callous remover). After a while, the blades start to go dull, so customers often buy a new one.

‘The key to building a product,’ says AJ, ‘is to have very high consumer satisfaction, because you won't get repeat purchases if consumers are not satisfied with the product.’

Rule #4: Can you ‘market the heck out of’ it?

After establishing whether or not customers like the product - and will buy it time and time again - all that’s left is to market like you’ve never marketed before.

Simple, compelling messaging with clear benefits in as many places as possible. That’s what it takes to get those orders rolling in.

Let’s see how AJ applied these rules for his next product launch…

A new way to advertise 📺

It’s 1987. Bon Jovi’s Livin’ On a Prayer is all over the radio…

…and the longform infomercial has arrived on TV. DRTV (‘Direct Response Television’) ads are taking over print ads.

AJ, never one to fall behind the times, leapt on board. He kicked off his DRTV venture with a pair of ultraviolet ray-blocking sunglasses called ‘AmberVision’. 

Selling 15 million pieces, AmberVision was the definition of a smash hit, and remains to this day an iconic flagship product (head over to eBay and take a look: a pair of AmberVision sunglasses in their original packaging can go for over $70!)

DRTV brought AJ’s company, Telebrands, to a new level. The pizza boy-done-good was about to become ‘The Infomercial King’...

The Direct Response to Brand Jackpot 🎲

By 1988, those who’d doubted AJ could see for themselves just how wrong they’d been; he’d bought his first house outright and was enjoying his business success.

But AJ had an itch. He knew there must be a way to expand beyond print and TV, but just couldn’t put his finger on how.

Then, one day, he found himself sitting at a $5 blackjack table in Atlantic City, NJ. The dealer asked what he did for work, and AJ told him he sold this product called ‘AmberVision sunglasses’ on TV.

The dealer’s eyes lit up. 

‘I see that commercial all the time,’ he said. ‘You’re the AmberVision guy!’

What AJ realized in that moment was something that would revolutionize his career: he was creating brand recognition without even realizing it. And if people knew what a product was by the name alone, he should be able to sell that product in retail stores all across the U.S.A.

In other words: brand recognition would be AJ’s ticket to scalability.

The AmberVision Guy goes retail 😎

AJ’s vision was clear: if he could leverage brand recognition, he’d be able to sell in retail stores across the country while advertising on TV.

With that in mind, AJ set out on a series of high-profile meetings with executives from America’s biggest retail chains; Caldor, Jamesway, Woolworth’s, Bradley’s - all with the aim of persuading them to sell AmberVision in their stores.

His hopes were dashed, however, when the same answers came back again and again and again: 

• ‘You’re a competitor, we can’t work with you’ 

• ‘You can’t sell sunglasses in a box’ 

• ‘Customers want a choice of styles, but you only have one!’

So there he was in a meeting with Herman’s Sporting Goods, about to give in, when the boss happened to walk by. ‘What’s this guy selling?’ he asked.

AJ showed him the box and the boss recognized it immediately.

‘I see these on TV all the time! That’s a great product. Let’s give him a test order.’

It wasn’t much yet, but brand recognition had given the Infomercial King his first big retail break (and it would soon turn out that you can, in fact, sell sunglasses in a box!)

‘As Seen on TV’ ✅

AJ knew that reminding consumers that they’d seen AmberVision sunglasses on TV would be key to their retail success. With that in mind, he came up with the now-legendary ‘As Seen on TV’ red label. With this, he hoped to jog shoppers’ memories.

Clearly, it worked:

Herman’s 200-piece test order sold out on day one. They immediately ordered 20,000 more.

And they weren’t alone, either: other vendors who’d previously turned AJ down were now willing to look past the product’s ‘flaws’ and put in test orders of their own.

Ambervision trailblazed the ‘As Seen on TV’ revolution and today has made over $150 million. The success seen here highlights the importance of brand recognition as a fundamental step toward Direct Response advertising success.

Rinse and repeat 🔁

AJ isn’t sentimental about products and never stands by items that aren’t selling.

He’s prepared to fail 95% of the time and swiftly move on when he does.

His process looks something like this:

🚀 Launch hard at low cost

❌ Find the 5% that works and cut the rest

📢 Double down on the 5% and market like crazy

🔁 Repeat

Want to see the products he’s been able to scale?

We’ll cover that in part 3, coming soon…

In the meantime…

🏁 The Takeaway: AJ's Million-Dollar Formula 🏁

So there you have it, folks - the secret sauce that turned a broke college kid with a $20,000 gamble into the $100M/year "Infomercial King." 

Let's break it down one last time:

AJ's journey from pizza slinger to Direct Response mogul shows us that with the right formula, a dash of courage, and a whole lot of hustle, anyone can hit the jackpot. So what are you waiting for? Time to take that $20,000 gamble of your own!

Stay tuned for Part 3, where we'll dive into the products that made AJ's empire soar after this initial big win. 

Trust us, you won't want to miss it! 🚀💰

Have a great week!

The VidTao Team

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