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Ryan Deluca on the founding of bodybuilding.com

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michael

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Jul 22, 2008
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This is a long 5 part story, he never got around to finishing it though but he might do that one day.

Ryan Deluca is the CEO and founder of bodybuilding.com a business which he sold for $100million and one that is based around giving the best customer service and lowest prices in teh industry.

Its sole revenue stream is sales of supplements and it supports one of the largest and busiest forums in the world aswell as bodybuilding shows in the USA, employs nearly 200 people and yet retains the vision its founder had when he started bb.com


Part 1

I've been writing some stuff about the beginning of Bodybuilding.com for our orientation program, so I guess I can share that here to get started:

----
How Bodybuilding.com Started: The Very Beginning

In 1995, I was fighting acne while the Internet was just starting to become popular. I was a big fan of computers and was lucky enough to be able to "get online" before a lot of my friends even knew what that meant. I was already dating my future wife, Bryna, and her mom worked at Micron. Micron provided her mom with a computer and an Internet connection through the Prodigy Internet service. From the very beginning, I was in awe of what you could do and find online. I spent a lot of time at Bryna's house surfing around, even while she was out working at TCBY.

I worked hard to become an expert on the Internet, and eventually made my first web page. I was so proud of it and showed it off to kids at school while we were in the library. I thought it was crazy that this HTML page that I made was magically viewable from any computer! This seems so basic now, but it really was amazing back then.

Soon I heard that people were making money from home on the Internet, and I wanted a piece of it. I read everything I could on business and entrepreneurship, while my friends were partying and hitting on girls. I started writing "special reports" that I could sell to others. I wrote about everything from getting in shape (I loved bodybuilding even more than computers), to how to use the Internet, how to start an Internet business, and getting your web page to come up at the top of the search engines. I couldn't accept credit cards, so people had to send cash in the mail. I charged $5 for each report, and it only took me a few seconds to e-mail the report to each customer.

I promoted the reports using my search engine promotion techniques and soon my mom started asking me why we were getting so many random letters in the mail. I started receiving three to four cash orders per day. That doesn't seem like a lot, but back in high school, getting $150 per week for doing almost nothing was pretty unbelievable to me. I never had money like that.

I was hooked.

Over the next few years, I would spend nearly every waking moment learning new ways to make money on the Internet. Looking back, I?m surprised that Bryna supported me so well, since that meant she spent a lot of time watching TV or reading while I was working on the computer.

Back then, not a lot of people knew how important getting to the top of the search engines was, and I focused most of my time on becoming the best I could at it. I was able to attract visitors from search engines and send them to other companies for a commission. I was making more than double what both of my parents combined were making. I had enough money to move to my own place. I was working from home, making great money, in my underwear, choosing my own hours, and I was my own boss. What else could I possibly want?

I got bored of it pretty quickly. I wanted to do more. I wanted a physical product to sell. I wanted to have a real company, with employees, customers, warehouses, offices, and more. I wanted to "go to work" and build something that would be important. I wanted something real and lasting.

This was the point when creatine started to get popular. EAS came out with their Phosphagen creatine product and it became the top selling muscle building product at places like GNC. It was safe and effective, and Bill Phillips from EAS promoted it to the world through his Body-For-Life program. The only problem was that it was extremely expensive. A 1000 gram bottle was around $120!

I joined up with a bodybuilding friend and started contacting creatine manufacturers. We realized we could buy it at wholesale and sell it for only $79, directly to the consumer. That's when our site, wholesale-creatine.com, first went online.

What happened next blew my mind and I made a life decision that most people called insane...

Part 2
In 1997, I had just started the wholesale-creatine.com web site, selling pure creatine directly to the consumer over the Internet at extremely low prices. I had created a small web site that featured a lot of information on what creatine is, how to use it, what to expect from it, and more. It had a very basic shopping cart that I created myself (it was really just a one page order form). I created a very basic affiliate program that manually tracked which web sites referred customers.

At first, customers had to send their orders to me by snail mail to my PO Box since I could not accept credit cards.

After launching the site, I spent most of my time creating pages that could get listed in the search engines. I used my search engine optimization techniques to try to get my sites listed at the top for keywords like "creatine" and "muscle building".

For the first month? nothing happened. Not one order. I would rush to the post office to check my PO Box each day. My heart would race right before I opened the box to see how many orders were stuffed in there. Each day only an empty hole greeted me. Not one single order? It didn?t even make sense. I was very frustrated. Luckily, I still had money coming in from my other businesses. I had them running on auto-pilot at that point (I love the Internet).

I took a trip to Puerto Vallarta, Mexico with my family, and it was a nice break that lasted a full week. For the first time in a long time, I didn?t work at all. I asked Bryna to marry me on this trip. We were on the beach on a warm evening, and luckily, she said yes.

When I got back, I decided I might as well check my PO Box for any creatine orders. It's funny how things happen when you least expect it. I inserted my small gold key into the PO Box door and swung it open. What greeted me was more exciting than finding a secret hole in the girl's locker room shower wall.

The PO Box was stuffed with so many orders that I had to get the rest from the front desk clerk. I had at least 50 orders, each for $79 from customers all over the country. That's $3950 in sales, and it seemed like a million to me. My cost was around $30 per bottle, so that meant a profit of $2450. That was great, but the idea that this could grow and continue for years meant I was really on to something.

At that point, I made a decision to stop working on any of my other businesses. I was making $20,000 per month from home at 20 years old with little effort and minimal hassles, and I gave it all up to start selling supplements online.

This was when the hassles really started. Now that we had orders, we had to ship them out. Now that we had customers, we had to answer the phone when they called. We had to deal with returns, inventory, order processing, purchasing, and more, all from my small garage in West Boise. I didn?t have any experience with any of this. We had to figure it out all from scratch. Now you know why my hair started turning gray when I was in my early twenties!

At this point, my brother Jeremy came over to my house each day to work with me. Each day we checked our web site for orders (we eventually were approved for accepting credit cards), entered the orders into Quickbooks, printed them out, put Higher Power labels on our generic creatine bottles, pack the orders, put them into my 1998 Chevy Blazer, and take them to the local post office.

My friends were in college, partying it up and wondering why I was so stupid to want to spend my time working and reading. But I loved every minute of it.

Selling creatine was great, but I still wanted something more. Next I would buy something more valuable than pure gold. It is a something that you can't touch, hear, smell, or taste, but people ask me at least once a week about how I got it. Stay tuned for part three...

Part 3
It was 1998 (two years before the end of the world), and business was going great. We were selling more and more creatine monohydrate through our small web site, shipping it right out of my garage. We piled the creatine bottles high in my garage, using my old jet-ski as a shelf, and Jeremy would come over each day to help me ship them out. It was a very manual process, but we handled it. Our goal from the beginning was to ship our products out extremely quickly in order to get repeat business.

Soon we added another product, androstenedione, which was quickly becoming a popular prohormone supplement after home run king Mark McGuire announced he was using it. It was a new and legal product which gave people quick muscle building and strength results. We bought the domain androstenedione.com and started ordering 60 capsule bottles from our manufacturer.

This definitely helped increase sales, but we still knew we couldn't grow as big as we wanted with only two products on a couple of simple web sites.

One day while dreaming big, I noticed that the Bodybuilding.com domain name was not being used. A guy in California owned it, but he was not using it. I contacted him and asked him about selling it. Immediately, he responded and said that he would not sell it because he had big plans for using it. I was disappointed, but went on with my day.

A few months later, I noticed the domain was still not being used. What a waste! I contacted the owner again and asked him to reconsider. This time he wrote back saying that he was busy with his current business and may never be able to get around to using the name. He might be interested in selling it at the right price. Great! Now we could see if we could get a deal done.

At this point, I couldn't think about anything else! I would go to Barnes And Noble and study business books, and each day I was thinking of more and more great ways to build a business that was not just about selling supplements, but being a place where people could learn, interact, and reach their fitness goals.

I had started bodybuilding in junior high, and ever since then it was a major part of my life. I would read every magazine, idolize the pros, buy supplements and drinks from GNC, and buy books about how to get big and ripped. I loved everything to do with bodybuilding. I first started working out at home after school was out at Fairmont, then I moved to Valley Gym where I worked out before AND after school nearly every day.

When I first heard of the Internet, I searched for sites and bulletin boards about bodybuilding. I found some small sites and communities, and I joined a few mailing lists. I couldn?t believe how awesome this was! I was used to just reading the muscle magazines and talking to one or two of my friends that cared about working out, but now I could learn from thousands of people from around the world. I would spend hours online just surfing bodybuilding sites. It was a like a dream come true, even though at that point there wasn't a lot out there compared to what was possible.

The idea of being able to use the Bodybuilding.com domain name to build the site that I personally would have wanted as a visitor was very exciting. I couldn?t stop thinking of all the things we could do.

I continued to email the Bodybuilding.com name owner back and forth for weeks, trying to reach a deal that was acceptable to both of us. He had told me that at the same time a business owner in Japan was trying to buy it as well. After many rounds of negotiations, I finally offered $20,000 cash for it.

A few days went by without a response. I would sit and check my e-mail every two minutes, praying for a positive response, dreading being turned down, and just wanting an answer so I could stop stressing out!

On one fateful Fall day, I clicked the "Check Email" button for the one hundredth time so far that morning. A new message was coming through! I was sitting in my small home office with my two dogs laying by my side, patiently waiting for me to get up and take them for a walk. Bryna was at the gym, so I was alone, sitting in my old Office Max chair, in my underwear like usual. The message appeared in my Juno e-mail program. My heart stopped beating and I held my breath, involuntarily, as a I read the first five words.

"DEAL. It's yours for $20,000."

I couldn't believe it! I started jumping up and down, running around my house in my underwear screaming. My dogs had no idea why I was acting like a Price Is Right contestant that just heard that it was their turn to "come on down"! They were barking and jumping around, following me around as I did my best not to kick them with each spastic jump. I felt like I had won the lottery and found a Willy Wonka Golden Ticket at the same time!

It was mine.

Now it was up to me to do something with it.

I hired my cousin-in-law Travis Smith to come help me start building the first version of the site since he knew how to write HTML. After many late nights brainstorming at Shari's diner, trying to find more products to sell than just our Higher Power line, and creating web pages, the site was ready to go live on April 13th, 1999.

On that day, we removed the "coming soon" page and put up the real site with a few clicks. I refreshed the http://www.bodybuilding.com site and there it was, Bodybuilding.com 1.0, looking back at my from my CRT computer screen.

I couldn?t sleep that first night. I woke up that morning in my 1980?s style water bed, struggled to get out of bed since my dogs were practically laying on top of my head, and stumbled to the computer to see if we had any orders.

We did! But it wasn't what I expected?


Part 4
Imagine being strapped into an old wooden roller coaster with a blind fold on.

At first the ride starts out deceptively slow, climbing the first huge hill... "click, clank, click clank, click clank"... moving up, up, up for what seems like forever. Eventually, you reach the top and the clicking sounds stop and the silence is deafening.

Then it's a freefall into the unknown. All you can do is hold on tight to the rickety handle in front of you and hope that you don't get thrown out like a crash test dummy in a 1979 Ford Pinto.

In my life, I had reached that exact point. I was strapped in and had no idea what was in store next, but I was ready to take it on, head first, with nostrils flaring.

April 14th, 1999 was a Wednesday, and Bodybuilding.com had been open for one night. It was the next step in my journey that would eventually teach me more about the world, business, and myself than anything else. It would either bankrupt me at the age of 21 or make me a multi-millionaire. I would not accept anything in the middle.

That first morning I groggily went to my computer to check if we had any orders. We knew that the Bodybuilding.com domain was already getting 500 visitors per day from people typing "bodybuilding.com" into their browsers to see what was there, so we knew we had a good chance to have some orders on the first day.

I typed in the URL to get into our shopping cart admin area. The first message that greeted me was "New Orders Available". Sweet! I clicked the message to see how many we had.

To my disappointment, we only had one. I don't know why, but I naively hoped we would have at least 100 the first day. I know now that with our limited product selection, bare bones site, and low traffic levels, that was extremely unrealistic, but back then I had no idea what to expect. I've always been an optimist.

I clicked to view our first order, and immediately recognized the signs of fraud. This wasn't a real order. It was some thief in Nigeria using a stolen credit card. So in reality, we didn't have any orders at all.

I hid my disappointment when I broke the news to my brother Jeremy and my cousin Travis. It was okay. It was only the first day and we have a lot of work to do to build it up, one day and one web page at a time.

Over the next few days, weeks, and months we added more and more content and products to the web site. Those days were spent furiously writing articles, adding new features like message boards and chat to our site, filling orders in my garage, ordering supplies, answering customer e-mails and phone calls, and marketing our site all over the Internet using free methods like link trading, search engine optimization and more.

Slowly but surely, we started to get some orders. At first, it was just one or two a day, but would slowly and consistently grow, like a snowball rolling downhill. We would celebrate our first "10 order" day, then 20, then 30 and on and on.

Every month brought a new milestone, along with the pressure to keep up. That pressure has not stopped to this day. As I write this on February 26th, 2008, I'm happy to report that we just had a record order day yesterday with 4356 orders. I know this is just the beginning of what is possible.

To get from 10 orders per day to where we are now had many ups and downs, sleepless nights, fights with family and friends, big celebrations and big letdowns, lost friendships, lawsuits, fear of losing it all, a failed attempt to sell part of our business, and much more which I'll detail in the coming chapters.

One moment in our history I will never forget.

I was working in one of our first real offices outside of my house a year after we started Bodybuilding.com, when I saw five police cars pull up out front. Our warehouse was in the "meth lab" part of the city (hey, the rent was cheap), so I figured they were busting somebody in the trailer park next door.

Imagine my surprise when federal agents wearing bullet-proof vests busted into our office with their police dogs, demanding that we stop working and stay off the phones. Ten minutes of shock and fear went by as they secured the entire building and brought all of our employees into one area. What was going on? Was there some type of misunderstanding or did we do something illegal without knowing it? Was I going to jail?


Part 5
Starting a business is risky.

You could lose all of your money (and more depending on how much debt you use to get started). You could lose your house. You could lose your reputation. You could lose your self-esteem. You could lose your family. Starting a business usually leads to financial strain, extreme stress, and spending more time working than being with your family.

You could even get into legal trouble and end up in jail. It might not even be due to something you personally did, but as the business owner, you are responsible for what your employees do while working for you.

I knew this was a possibility, but I didn't really think that hard about it until the police broke into our offices with shotguns, bulletproof vests, and killer attack wolverines (well, that's what those German Shepherds looked like at the time).

I had no idea what was going on. Did we do something wrong? Were they in the wrong building? As they secured the building and gathered all of our employees into one room, I could only hear the deafening roar of my heart beating inside my skull.

A man dressed in a business suit walked in once they felt that it was safe, and walked right out to our warehouse. They started looking at the products on our shelves. When they came across the Cytodyne Xenadrine, the stopped, and pulled a few bottles down and started inspecting them. They appeared to have found what they were looking for, and then proceeded to take the rest of the Xenadrine inventory off of the shelves and into the main office area.

It was counterfeit Xenadrine, and they thought we were the ones making it and distributing it. A company had knocked off their extremely popular product by putting similar ingredients in a bottle, and then putting a fake Xenadrine label on it.

It was immediately obvious to them after seeing our operation that we were not the ones responsible for creating the counterfeit product. We were a victim of it as well. Nobody was going to jail and nobody was going to be led away in handcuffs.

At the time, we had many product distributors contacting us each day, trying to get us to become a customer and buy products from them to sell to our customers. The company that was selling the fake Xenadrine had contacted us like any other. They called and said they had extra Xenadrine stock, and we could buy it at a discounted rate. We jumped at the chance, like any company would and we stocked up. The people at Cytodyne heard about this counterfeiter, and placed an order on our site to see if it was us. When they received one of the knock off products, they contacted the authorities and organized the raid.

After I learned what they were there for, I started to relax. "See, it wasn't us. We can prove it by telling you who we bought it from. We are just a small company, with great values, trying to do what is right and trying to grow our business."

They admitted that we were not at fault, but what happened next taught me a valuable lesson.

Cytodyne had obviously spent a lot of money on legal fees trying to stop the counterfeiting. They knew we were not responsible for it, but they had to recoup their costs. They still sued us. We were a small company, trying to make ends meet, with employees and families to take care of, but they didn't care. They said we had to pay them $10,000 or the lawsuit would continue. After months of fighting (without lawyers on our side, we were too small to afford them), we finally settled and paid them. It hurt. It hurt even worse since we believed we were a victim and not at fault.

We had no choice but to pay them. We were small, and they were big. We were weak, and they were powerful. At that moment, I felt what it was like to be small, vulnerable and weak. I vowed at that moment that if we ever became big and powerful as a company, we would never treat another company or person like they were not as important as we were.

I'm proud that we have consistently applied this value over the last nine years, even as we surpassed $100 million in sales. I feel we are still that small company. I know what it is like, and when I see other small companies that want to work together with us, I'm pleased when they tell me how important we made them feel. We give them a chance. We are open, honest, and we work to make the pie bigger for all of us, instead of just taking our share at the expense of others.

We also now have the option of suing others if we find them harming us in some way. Many times we have found people stealing content from our site, or illegally using our trademarks, and our lawyers will sometimes recommend that we sue them and get them shut down. That's not our style. Instead, I send them a nice e-mail asking them to discontinue their actions. To this day, we've never sued another company or individual.

Starting a business is risky, but the potential rewards outweigh the risks. Do the right thing, focus on people and values, and good things will happen.

(By the way, Cytodyne is a completely different company now with different people running it, and we love working together with them. No hard feelings.)
And thats where it ends

If you want to read the story on the forums keep in mind it is in the miscellaneous section of the site so a lot of the questions asked are not on the topic of business or are crass in-jokes but he does answer a few good questions people ask in the thread

Ask a guy that started Bodybuilding.com anything... - Bodybuilding.com Forums


There is also an interview by members over a video site here:

Justin.tv - BB.com owners Ryan DeLuca and Jeremy DeLuca answer your questions! - Bodybuilding.com
 

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michael

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Jul 22, 2008
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A couple cool things in the JTV video interview:


  • He mentioned any articles and the purpose of the forums on bb.com are soely to help you get in shape, the company hopes the result will be you buying supps

  • His first job was at blockbuster and he knew from a young age he was making someone else rich in his job

  • Tips to new entrepreneurs - get out there and do it before you get old and have regret for not doing it. Don't wait for someday, do it

  • He mentioned he never started bb.com to be a $100000000 company but instead to help people get in shape and connect with other fitness enthusiasts - "Our beginning attitude was get started and learn as we go"

  • Never get complacent or too happy, read and learn from others mistakes...

  • He's never thought about selling 100% because he enjoys building the company too much, works 5 days per week couldn't retire lest regret not helping more people

  • Pulled out of early college courses but has learned so much on marketing, psychology, e commerce, teamwork, leadership, success stories through books

  • He seems to not care about the money he makes but genuinely about helping his customers and members

  • Only 10% of their orders come from international orders and they have never even marketed overseas. He wants to grow this to a larger figure

  • Wants to build a recommendation system similar to amazon to recommend programs, supps, nutrition programs etc

  • Considers the rep system of v-bulletin to be essential to encouraging participation and positive posts aswell as to differentiate good posters from trolls

  • Paid to defend a number of members against a slander/libel suit from a company which recieved widespread bad reviews on the forums rather than letting them fend for themselves


I didn't finish watching it but I might later
 

MJ DeMarco

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Surprised not many commented on this ... what a treasure trove of goodness.

Speed +++ Thanks +++

Again, another story where hard work yields Fastlane dividends...

Also take note, "Starting a Business is Risky!"
 

LightHouse

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I remember we had a discussion on this a while back on the forum portion of him building a community around the sales process. you had linked these and i read them then. I really like the way he has built the stores out. Thank you for putting this up again Michael.
 

Spazmatic

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Very inspirational and I can kind of relate because the internet was the first place I started earning money on my own. I've only made about $5,000 but i am constantly thinking up ways and ideas to earn money and make a living with the internet.
 

TomD

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I love this story. I had no idea Bodybuilding.com did the volume they actual do. I also never really considered how important their forum was to them.

My business has been considering opening a forum that relates to the industry we serve. We are a VERY small niche industry where a forum with 60k members is considered huge. Having read this story I now see how much we would benefit from a thriving forum. Our idea was to make it on a completely separate domain with no obvious ties to our company, but I now see that as a mistake....huge mistake. The branding and credibility would be huge by directly tying it into our existing website.

My main question for all you guys is where can I hire an offsite tech savvy forum manager? Where would I find someone like this? We have no time or staff to setup and manage a forum in house, so I would like to hire someone to setup/run on a part time paid basis. Any ideas where I could post a job like this and find qualified applicants?

Thanks,
Tom
 

Gymjunkie

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How cool! I needed this type of article! Will read soon and hopefully it will help my idea :)

Didn't know they sold for 100 mil!!! Wow...

Speed+
 

Lathan

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Wow, I was hooked from beginning to end of that story. Awesome! Really enjoyed it!
 

Determined2012

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From Wikipedia: In May 2012, Bodybuilding.com and its CEO Jeremy Deluca were formally charged with introducing misbranded drugs. Bodybuilding.com was fined US $7 million and the CEO personally fined $600,000.

Does this mean that they knowingly or purposely had misbranded supplements and sold them? Or did they get charged because the supplements were misbranded (regardless of if they knew that they were or not)?

Very inspiring story.
 

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SerpKing

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It's all about the process! Great story. Thanks for the share
 

RHL

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BB.com is like 4Chan and Reddit in some ways; as it evolved, it became its own nexus of internet culture, where people could rabbit trail and talk about a variety of things. It was that level of community depth and engagement, I would guess, that lead to the staggering valuation.
 

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