E400: Val Katayev was a 19-year-old immigrant kid who quickly lost a month’s worth of pay in a single day trying to figure out Google Ads during its early days.
“I woke up to a $5,000 loss. Did I just lose a month's worth of income in my sleep? Yes, I did. I spent $6k on ads to generate $1k of revenue.”
He was the only employee… and he was living in a basement.
But he kept trying to figure it out. He believed there was something there.
And at 19 years old, he ended up building a Google Ads business that quickly made $30 million in profit.
This is his story.
Read it: https://x.com/ValKatayev/status/1820173964393742507
00:00 A Huge Loss and a Big Comeback 00:22 Val Katayev's Marketing Philosophy 01:09 Celebrating 400 Episodes 01:31 The Beginning of Val's Success 05:36 The Big Loss 06:15 Finding Success 08:38 The Google Era 11:14 New Opportunities 12:12 Reflections
#performancemarketing #digitalmarketing #googleads #entrepreneurship
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This guy woke up to a huge loss. He said, "Did I just lose a month's worth of income in my sleep?" Yes, I did, but he kept pushing and he figured it out. He became wildly wealthy, and now several decades later, he's so wealthy that he's building buildings in York City. Not just one, plural, buildings. This is the story of Valcatiev. I previously shared a thread from Valcatiev about his philosophy on increasing advertising spend during recessions, during economic downturns, because it lets him take the market. That's his philosophy. I shared that. But at the very least, he does not stop marketing during financial downturns. He does not stop market. The biggest takeaway from that thread, which I shared several episodes ago, was if times get tough, keep marketing. It's actually one of the best times to keep marketing, because it allows you to take the market because your competitors dip out. Your market share and gravitas goes way up. By the time they've come back, you've taken the market and you have so much top-of-mind awareness. That was episode, oh my gosh, this is episode 400. That was episode 397, and this is episode 400 of my daily digital marketing podcast, Holy Moly. 400 episodes in a row, 400 consecutive days doing this show. Here is the opening to this thread. I read this a couple days ago. I loved it, and I've been meaning to read it on this podcast. So here is the opening. At 19, this kid built a Google Ads business that quickly made over $30 million in profit. The kid is me. I was the only employee in a basement. At one point, I was Google's second-largest advertiser after eBay. Here's the story of how I made this happen and what the business did. 19 years old, had a Google Ads business that quickly made over $30 million in profit. Before he was successful, though, he lost a bunch of money. So here's the story. A few years ago, a stack of envelopes with checks, and he wrote this August 4th, 2024. Oh, wow, I didn't even realize that he wrote this so recently because I saw that he had reshared it. I thought that he wrote it years ago, but he wrote it only a couple of days ago. So he says, "A few years ago, a stack of envelopes with checks arrived on my birthday. They were class-action settlement checks. These were remnants of my first big hustle. The business was performance marketing. I used paid search to execute it. The combo just crushed it. The way it worked was, I'd get paid to drive customers to an advertiser. I figured out that search advertising was extremely targeted for any kind of customer. All I had to do was spend less per click than what I thought I was effectively generating in bounties to acquire a customer. For example, the New York Times paid me around $100 for every new subscriber I signed up. Say I pay 50 cents a click, and on average, I get a conversion for every 80 clicks. That means for every $40 I spend on ads, I get $100 from the New York Times. I started doing this in 2001. It was wildly profitable. I was 19. My family moved from the former Soviet Union when I was 11. I only got my first computer at 17. I loved finance, computers, and marketing. And because the web was so new, big companies didn't really know how to do online marketing. Neither did I, frankly, but I figured it out. I love this thread so much. I'm enjoying reading this for the second time. Paid search was new pre-Google. I saw that in 2001, brands would pay per customer. And you don't need to win a huge contract or go through a crazy process to be a vendor. All you do is apply to their affiliate program, get approved, and test their deals. I grabbed a deal and gave it a shot. By the way, if you've never done affiliate marketing, as you know, I'm an affiliate for lots of products, only products that I actually believe in and use. But if there's a product that I like, I will see if it has an affiliate program. And if you've never done affiliate marketing, even now, it's super easy to sign up. It's literally, usually just give your email address and then give the email address that you have for PayPal. That's usually all you need to do for affiliate marketing. For bigger companies, you say where you're gonna do advertising, but it's really simple. So if you've never done affiliate marketing, really easy, especially fun for software as a service companies that have monthly recurring revenue. And if you're making content about the products that you use, see if they have affiliate programs. Because it's very easy to sign up, still is very easy. So Val Cachiev, 19 years old, he's trying his hand at affiliate marketing. He says, "The first deal was driving customers "to a marketplace called half. "Later acquired by eBay, half has a crazy story. "I made a video about half story. "They gambled a huge amount on this, "a crazy marketing stunt. "And it was so successful that eBay acquired them." Basically, they convinced a town to name themselves half.com for a day. They got all this press, and it was so successful that eBay acquired them. So half sold, used DVDs, college textbooks, CDs, and video games. Val Cachiev said, "I opened a go-to account, "go-to later became Yahoo paid search, "and started to drive traffic to half." There were no budget caps back then. I set up the campaigns, turned them on, and went to sleep. All right, no budget caps and here's what happens. He goes, "I set up the campaigns, "I turned them on, and I went to sleep. "I woke up to a $5,000 loss. "Did I just lose a month's worth of income in my sleep? "Yes, you did, Val. "I spent $6,000 on ads to generate $1,000 of revenue. "Ouch, a loss, but my gut told me there is something there. "I researched each and every keyword. "I separated them by categories and landing pages "that they had. "I deep-linked what I could. "I optimized the bids, I boosted the winners, "I dropped the losers, and then it became profitable. "Pretty soon, it started to make $1,000 a day. "Once it worked for half, I tried more products." Specifically, 800 different advertisers. Yes, I launched 800 other brands and products on search. This guy goes so hard, I love this. Most of these deals could be found on affiliate networks such as Commission Junction, Azuglads, RIP, and others. Having just a few networks saved me a lot of time because they tracked everything, collected the earnings, and paid me. I didn't know it at the time, but at one point, I reached a negative cash conversion cycle. To win my business, networks started to pay me around net three, net seven terms. I only had to pay for the ads on net 30, so I get paid before the ads had to get paid for. My cash flow statement was beautiful. Plus, their account managers started to sling all the best deals to me because they knew I was one reliable beast. I'd make them look good to their new advertisers. And it worked across pretty much every category. Subscriptions, lead gen, e-commerce. It was a small world back then, but there were no limits. The best deals were the ones where the advertiser had a great lifetime value, and they're willing to front load it to me. One of my bigger advertisers was Rhapsody Music. I love the idea of streaming unlimited music legally. Believe it or not, it was unheard of back then. So I bid on millions of keywords, every song, every artist, the long tail was along. I worked in scene hours, going to sleep when I saw the sunrise and heard the birds singing. Automating processes and using bulk tools was key. I just kept testing hundreds of offers to find the best ones. Many didn't work at first, but had potential. So I'd email the advertiser directly and negotiate a better deal. One of the big secrets to this business and all of my other businesses, I don't waste time on perfecting something for a launch. Launch and see the data, then optimize for success. If it fails miserably, it's much easier to take the loss and move on. This worked for me. It's great advice, a lot of people will say, just launch, get it out there, and then work on it, then improve it once it's out. Just launch and then work feverishly once it's out. This is especially common in the software world, but it can be done with lots of other businesses. Valvecatcher continues, then came Google. Things only got bigger. At one point, a Google employee told me I was their second largest client after eBay. I could never verify it, but it was early and it made sense. It was so early at Google that my representatives email address was mike@google.com. The numbers were insane. Just on Google, I drove 107 million clicks to my advertisers. These are not random clicks. They are high in 10 clicks from people looking for things that I was advertising. The volume got so big, advertisers would find me and beg to give them a shot with massive incentives to boot. Those special rates allowed me to outbid anyone. In fact, I'd negotiate non-competes and non-circumvent terms where the brand couldn't compete with me on search. This while they paid me three times or four times base rate, paying me four times was still more effective than paying their big shot brand agency. The secret nobody knew is that I was a one man show. Very few knew about paid search back then, so I stayed under the radar. I never went to one trade show. I'd win industry awards, but wouldn't go to the events to collect them. They'd ship the trophies to me. Exposure scared me. My reps would tell me that I'm doing as much volume as a performance marketing agency that had maybe a hundred employees out of South Africa. My first year's profit was around 1.5 million. That was a lot of dough for a 19 year old immigrant in 2001. My parents couldn't even afford to buy me a PC until I was 17. Yeah, if you did the math, that's just two years before. I was making so much money that taxes were killing me in Queens, New York City. It was time to move out of my parents' basement. So I moved to the suburbs of Long Island. I bought a house, all cash, and the neighbors thought I had to be a drug dealer. You're thinking he bought a mansion? No, it was a relatively modest suburban home. In fact, the house cost me like a month's worth of profits at the time. I needed to focus on the business, not maintenance of a house, but the profit only kept going higher and higher. Every year, I thought there was no way I'd beat last year's number, but it would just grow. I didn't even track it, just kept pushing hard, not realizing how far the profit was into a year. It's like that inspiration seen from facing the giants. I had blinders on and kept crawling away. I had no finance department or employees. The money didn't matter. It was the game and I walked away with a $30 million prize. Why did I walk? Because I had a choice to make, commit or walk. Committing meant hiring employees, offices, all while margins were sliding as paid search was becoming the biggest category of digital advertising. Google would be my biggest supplier by far and they'd control my business. Plus, I tested a new formula that worked. So I put search on cruise control and went after a new opportunity. It would become my second company. This time, the first year's profit was over $10 million. And that's the story. Killed it with this first company, killed it with the second company. Then I saw that he had posted a question about a place in New York City that was next to me. And I commented on that. I said, I was born and raised in Carroll Gardens. I go to events at the place that you mentioned. But the most fun that I have in New York City is normally in Manhattan or Dumbo. Sometimes in Williamsburg and he goes, thanks for the breakdown. We just finished a building in Carroll Gardens last year and started one in Williamsburg this year in Williamsburg, crazy expensive. This guy, it's a killer. I love the story. I love stories of people who win, people who keep going, people who push, people who focus, this guy did all of that. He went hard and I know what it's like to go as hard as he was going. I was doing that literally today. I've been doing SEO all day today. It's 7.35 p.m. I'm recording my podcast only now. I'll make a video after this. Last night I finished my daily video at 1.30 a.m. I can't believe the people who are watching my daily TikToks and Instagram reels. They like them and I look at these names. I'm like, wow, I know these people, this is crazy. But it's just crazy focus going into monk mode. And I love this story so much. There's too many lessons in here. If you want to read this thread yourself, I'll have the link in the description for this podcast. But I really like this story and I'm grateful to be able to share with you. I hope you like it too. This is episode 400 of my daily digital marketing show. Do this thing. How many days a week do I do it seven days a week? Every day, every day for you. And I love to do it. I do it for myself too. Thank you so much for watching. Thank you so much for listening. Hope you learned some stuff from this episode. I certainly did. I learned a lot. I will talk to you again tomorrow.
