00:00

Today, we are playing a drinking game on the podcast, and we're playing never will I ever.

Today, we are playing a drinking game on the podcast, and we're playing never will I ever.

00:07

And it's a game where we're talking about all the mistakes that we made when we were selling our company and saying never will we ever make this mistake again? And if you ever wanna sell a company or you've sold a company, if you sold a company, you're gonna be able to relate some of these mistakes. I'm sure. If you wanna someday sell your company, good to listen to so that you don't have to pay the same price that we did to make these mistakes. So go ahead, grab a drink. We're playing never will I have Today, we are

And it's a game where we're talking about all the mistakes that we made when we were selling our company and saying never will we ever make this mistake again? And if you ever wanna sell a company or you've sold a company, if you sold a company, you're gonna be able to relate some of these mistakes. I'm sure. If you wanna someday sell your company, good to listen to so that you don't have to pay the same price that we did to make these mistakes. So go ahead, grab a drink. We're playing never will I have Today, we are

00:38

talking about how to sell a company. And in fact, we're talking about how not

talking about how to sell a company. And in fact, we're talking about how not

00:43

to sell a company. These are mistakes that we made

to sell a company. These are mistakes that we made

00:47

selling our company. So Sam sold the hustle to HubSpot,

selling our company. So Sam sold the hustle to HubSpot,

00:51

and a big deal sold to a public company,

and a big deal sold to a public company,

00:54

I've had two exits now under my belt, and I've sold one to a big company, Amazon, and one to a small group of private buyers.

I've had two exits now under my belt, and I've sold one to a big company, Amazon, and one to a small group of private buyers.

01:02

And every time you sell your company, you learn a bunch of lessons, but we're gonna make this fun. So if you've ever played the drinking game, never have I ever, We have a new drinking game for you, MFM style. Right?

And every time you sell your company, you learn a bunch of lessons, but we're gonna make this fun. So if you've ever played the drinking game, never have I ever, We have a new drinking game for you, MFM style. Right?

01:13

This is never will I ever. And never will I ever is a game where we I never will. I ever

This is never will I ever. And never will I ever is a game where we I never will. I ever

01:19

do blank again,

do blank again,

01:21

because we made so many mistakes.

because we made so many mistakes.

01:24

We made these mistakes So you don't have to. We died. So you don't have to here. And, if you listen to this, you're gonna be a lot smarter when it comes to selling at your company. Sam, are you ready to play the game? What are you drinking?

We made these mistakes So you don't have to. We died. So you don't have to here. And, if you listen to this, you're gonna be a lot smarter when it comes to selling at your company. Sam, are you ready to play the game? What are you drinking?

01:34

What's your drink? I mean, I only have a little left here, but I got some greens in the morning.

What's your drink? I mean, I only have a little left here, but I got some greens in the morning.

01:38

I'm I'm looking a little athletic, and I got some greens. Not sponsored, but, you know, send me a free box.

I'm I'm looking a little athletic, and I got some greens. Not sponsored, but, you know, send me a free box.

01:45

Yeah. That'll save you eighty bucks a month.

Yeah. That'll save you eighty bucks a month.

01:48

Dude, I have a I have a ton of it. I drink it once in a while. It's really hard to stomach for me. Do you like you could just drink that plain? I love it plain, and I love that it doesn't taste that great because

Dude, I have a I have a ton of it. I drink it once in a while. It's really hard to stomach for me. Do you like you could just drink that plain? I love it plain, and I love that it doesn't taste that great because

01:57

to me,

to me,

01:59

I don't want my healthy shit tasting good. Right? I don't like my hot people to be funny too. I don't like when things are not supposed to go together, go together. Alright? Like a guy Matt Rife at comedian?

I don't want my healthy shit tasting good. Right? I don't like my hot people to be funny too. I don't like when things are not supposed to go together, go together. Alright? Like a guy Matt Rife at comedian?

02:09

No. Too good looking. I'm not watching that special. Number one on Netflix, no thank you.

No. Too good looking. I'm not watching that special. Number one on Netflix, no thank you.

02:14

Well, you're pretty funny. Does that make you? Pretty ugly

Well, you're pretty funny. Does that make you? Pretty ugly

02:19

as the world should be.

as the world should be.

02:23

Alright. What how do we wanna go about this? We have a bunch of points here. Which one you want? Let's start with the the most straightforward thing. Okay.

Alright. What how do we wanna go about this? We have a bunch of points here. Which one you want? Let's start with the the most straightforward thing. Okay.

02:31

So never will I ever. You both we both have this one. Ignore QSBS.

So never will I ever. You both we both have this one. Ignore QSBS.

02:36

I'll drink to that. Yes.

I'll drink to that. Yes.

02:40

Now explain when you say ignore QSBS. What happened here? QSBS,

Now explain when you say ignore QSBS. What happened here? QSBS,

02:45

for those who don't know, I didn't know about it until, like, a year before I sold.

for those who don't know, I didn't know about it until, like, a year before I sold.

02:50

My friend, Jack Smith, told me about it. QSBS, I'm gonna try and state the law here, but it says, So it stands for qualified small business stock, QSBS

My friend, Jack Smith, told me about it. QSBS, I'm gonna try and state the law here, but it says, So it stands for qualified small business stock, QSBS

02:58

protects up to ten x of your investment from long term capital gains, taxes of ten million dollars.

protects up to ten x of your investment from long term capital gains, taxes of ten million dollars.

03:05

Or

Or

03:06

ten x your, initial investment.

ten x your, initial investment.

03:09

What that means, and a lot of people only pay attention to the ten million dollar thing. So With QSBS, how long do you have to hold it? Your stock in five years?

What that means, and a lot of people only pay attention to the ten million dollar thing. So With QSBS, how long do you have to hold it? Your stock in five years?

03:17

Yes. So you hold a a small business stock So a privately held company, that's a, C Corp,

Yes. So you hold a a small business stock So a privately held company, that's a, C Corp,

03:25

and you have to hold it for ten, err five years, and it has to be valued originally or the sets of the company, which is the value, has to be fifty million or less. You hold it for five years, and you can save ten million dollars in capital gains tax. The first ten million when you sell. So, like, let's say you sell for ten,

and you have to hold it for ten, err five years, and it has to be valued originally or the sets of the company, which is the value, has to be fifty million or less. You hold it for five years, and you can save ten million dollars in capital gains tax. The first ten million when you sell. So, like, let's say you sell for ten,

03:43

all ten would be

all ten would be

03:45

tax free at a federal level.

tax free at a federal level.

03:47

And many states also honor Q SBS, not California, but many states also do. So you could walk away paying zero in taxes

And many states also honor Q SBS, not California, but many states also do. So you could walk away paying zero in taxes

03:55

if you sold for ten million dollars, which is remarkable.

if you sold for ten million dollars, which is remarkable.

03:58

Or and now here's the or part that a lot of people forget.

Or and now here's the or part that a lot of people forget.

04:02

Or you can save up to ten times your investment,

Or you can save up to ten times your investment,

04:06

whichever is greater, the ten times or the ten million. Now what that means, is let's say that theoretically

whichever is greater, the ten times or the ten million. Now what that means, is let's say that theoretically

04:12

you start as an LLC,

you start as an LLC,

04:14

or you don't have a your company isn't valued. But let's say you start as an LLC and you convert to a C corp, And when you convert, you value your company, and it usually has to be done by a third party, so it has to be reasonable. You value your company. Let's say you're doing

or you don't have a your company isn't valued. But let's say you start as an LLC and you convert to a C corp, And when you convert, you value your company, and it usually has to be done by a third party, so it has to be reasonable. You value your company. Let's say you're doing

04:28

fifteen million in revenue. Let's say you're doing twenty million in revenue, and you say, great. I think we're a forty million dollar company. You get a third party that does it.

fifteen million in revenue. Let's say you're doing twenty million in revenue, and you say, great. I think we're a forty million dollar company. You get a third party that does it.

04:35

So you can save

So you can save

04:37

ten times forty million dollars in taxes. Four hundred million dollars. That's a four hundred million dollar tax shield right there. Yes. And I know friends that are doing this. Now this this this this law, a lot of people don't know about it. It's maybe besides real some of the real estate laws, tax savings in real estate. It's probably the greatest thing there is. It's better. Better? You think it's better? It's better than real estate because in real estate, you have, let's say, depreciation or the ten thirty one exchange. These are great, but they're deferrals.

ten times forty million dollars in taxes. Four hundred million dollars. That's a four hundred million dollar tax shield right there. Yes. And I know friends that are doing this. Now this this this this law, a lot of people don't know about it. It's maybe besides real some of the real estate laws, tax savings in real estate. It's probably the greatest thing there is. It's better. Better? You think it's better? It's better than real estate because in real estate, you have, let's say, depreciation or the ten thirty one exchange. These are great, but they're deferrals.

05:06

Whereas, this is not a deferral. This is simply... You just have a, you know, you have a exclusion

Whereas, this is not a deferral. This is simply... You just have a, you know, you have a exclusion

05:12

on a hundred percent of your gains up to some number. So it is way better than a deferral, way better than real estate. I was talking to a real estate guy yesterday, and I said, I have the greatest tax thing that no real estate guy has. He said, what are you talking about? Real estate's the most tax advantage. I said, yes, don't have QBS because real estate is not eligible for QBS. There's only certain types of businesses can do it. But, like, like Sam's saying, you could stack it. So, for example, what some people do, They have QSBS for themselves, but it's per tax return. So you could do it for yourself. You can create

on a hundred percent of your gains up to some number. So it is way better than a deferral, way better than real estate. I was talking to a real estate guy yesterday, and I said, I have the greatest tax thing that no real estate guy has. He said, what are you talking about? Real estate's the most tax advantage. I said, yes, don't have QBS because real estate is not eligible for QBS. There's only certain types of businesses can do it. But, like, like Sam's saying, you could stack it. So, for example, what some people do, They have QSBS for themselves, but it's per tax return. So you could do it for yourself. You can create

05:41

trust for your kids and give each of them equity. And then each trust gets a ten million dollar exclusion

trust for your kids and give each of them equity. And then each trust gets a ten million dollar exclusion

05:46

in addition to your own. So you could have, you know, I was joking around with a a QSBS guy, and it's he's like, yeah. If you have three kids, I can get you I can get you forty million, fifty million in QSBS. And I was, like, I was, like, oh, this kid I have, you know, this next kid, you know, I'm gonna have this is This is just a walk in QSBS shield here. Like, this is awesome. And, it used to be that it wasn't... But does that mean that your kid, when they're

in addition to your own. So you could have, you know, I was joking around with a a QSBS guy, and it's he's like, yeah. If you have three kids, I can get you I can get you forty million, fifty million in QSBS. And I was, like, I was, like, oh, this kid I have, you know, this next kid, you know, I'm gonna have this is This is just a walk in QSBS shield here. Like, this is awesome. And, it used to be that it wasn't... But does that mean that your kid, when they're

06:10

But were your your kids at the age of eighteen have, say, in control of your business? But they're eighteen. I mean, you, you know, I think so. By them, by them. Right? Like, but they're gonna have then maybe not. But they're gonna have a just a small equity. You still have the majority. Right? Like, you're just giving them enough so that they have a shield. They have, like, you know, and they have less less, tax. And you, you know, while they're minors, you control the state. You can always, you know, Sure. I don't know. I don't think why a lot of people having is like little kids that eighteen years later are, like, succession hostile taking over, like, the company as they band together. I don't I don't think that's the that's the thing to worry about.

But were your your kids at the age of eighteen have, say, in control of your business? But they're eighteen. I mean, you, you know, I think so. By them, by them. Right? Like, but they're gonna have then maybe not. But they're gonna have a just a small equity. You still have the majority. Right? Like, you're just giving them enough so that they have a shield. They have, like, you know, and they have less less, tax. And you, you know, while they're minors, you control the state. You can always, you know, Sure. I don't know. I don't think why a lot of people having is like little kids that eighteen years later are, like, succession hostile taking over, like, the company as they band together. I don't I don't think that's the that's the thing to worry about.

06:46

And we'll wrap this one up by what there's a big asterisk here, which is this I don't like calling it a loophole because that's not first of all, I hate that word loophole because loopholes are good. Loopholes are legal. Like, when someone says a loophole, I'm like, okay. But you're trying to spin this negative but, like, you're just following the law. Try tying a shoe without a loophole.

And we'll wrap this one up by what there's a big asterisk here, which is this I don't like calling it a loophole because that's not first of all, I hate that word loophole because loopholes are good. Loopholes are legal. Like, when someone says a loophole, I'm like, okay. But you're trying to spin this negative but, like, you're just following the law. Try tying a shoe without a loophole.

07:05

Yeah. Yeah. It's essential. Or when people say shortcuts, they're like, that's that's a shortcut. I'm like, Well, I love shortcuts. If I can arrive at the same destination just as safe and faster than a long cut, then I'm taking the shortcut.

Yeah. Yeah. It's essential. Or when people say shortcuts, they're like, that's that's a shortcut. I'm like, Well, I love shortcuts. If I can arrive at the same destination just as safe and faster than a long cut, then I'm taking the shortcut.

07:17

But so this loophole there's an asterisk here because I think two years ago, it was it was up to vote if they were gonna exit. And the idea was they might make it only fifty percent So they might reduce it by,

But so this loophole there's an asterisk here because I think two years ago, it was it was up to vote if they were gonna exit. And the idea was they might make it only fifty percent So they might reduce it by,

07:30

half.

half.

07:32

I don't know if this is gonna be in play for how much longer. This is not like real estate. We're gonna last forever. Right. Right. Yeah. It is but it's it's been out for a while, and it's it's amazing, especially in the in the tech industry.

I don't know if this is gonna be in play for how much longer. This is not like real estate. We're gonna last forever. Right. Right. Yeah. It is but it's it's been out for a while, and it's it's amazing, especially in the in the tech industry.

07:45

Can't find this client info. Have you heard of HubSpot?

Can't find this client info. Have you heard of HubSpot?

07:48

HubSpot is a CRM platform, so it shares its data across every application. Every team could stay aligned. No out of sync spreadsheets or dueling databases.

HubSpot is a CRM platform, so it shares its data across every application. Every team could stay aligned. No out of sync spreadsheets or dueling databases.

07:57

HubSpot, grow better.

HubSpot, grow better.

08:00

Alright. So my turn, never will I ever

Alright. So my turn, never will I ever

08:04

Just shut down a company without trying to sell.

Just shut down a company without trying to sell.

08:07

So well, drink.

So well, drink.

08:09

Yeah. Have a drink for that. I,

Yeah. Have a drink for that. I,

08:12

before I sold before my first exit, I had built many companies, many products before that, and they all had reached some version of, like, you know, an outcome, some really had no no momentum.

before I sold before my first exit, I had built many companies, many products before that, and they all had reached some version of, like, you know, an outcome, some really had no no momentum.

08:23

Some had, like, some momentum, but not breakout, and it was either wasn't worth a time or wasn't able to get funding or whatever.

Some had, like, some momentum, but not breakout, and it was either wasn't worth a time or wasn't able to get funding or whatever.

08:31

I specifically remember one app that we made. That was if you remember Bitmoji, we had basically made an app that was, like, way better than Bitmoji. It just, like

I specifically remember one app that we made. That was if you remember Bitmoji, we had basically made an app that was, like, way better than Bitmoji. It just, like

08:41

And Bitmoji was giving you an, like, a a personal avatar, a character for yourself that would be in these and then it it would give you, like, kinda, like, stickers that were in funny, like, positions or phrases. We had made an app that was even better. Making the world a better place, one emoji at a time. Exactly. Emojis

And Bitmoji was giving you an, like, a a personal avatar, a character for yourself that would be in these and then it it would give you, like, kinda, like, stickers that were in funny, like, positions or phrases. We had made an app that was even better. Making the world a better place, one emoji at a time. Exactly. Emojis

08:56

are one of the greatest products ever. Right? Self expression. There.

are one of the greatest products ever. Right? Self expression. There.

09:00

So you we had made an app that created a character of you.

So you we had made an app that created a character of you.

09:05

And then you could and then you could type any word. You can just type hashtag whatever, boogie down, and it would make your character boogie down. And we had every, like, whatever you could think of, like, you could put you could say #SingleLadies, and it would dress your character up like Beyonce right away doing the single ladies dance. Like, whatever you could think of we would be had, because

And then you could and then you could type any word. You can just type hashtag whatever, boogie down, and it would make your character boogie down. And we had every, like, whatever you could think of, like, you could put you could say #SingleLadies, and it would dress your character up like Beyonce right away doing the single ladies dance. Like, whatever you could think of we would be had, because

09:25

we would just, every day, we would rank the top

we would just, every day, we would rank the top

09:28

tagged terms.

tagged terms.

09:29

And our artists would create, like, hundreds of these per day. So very quickly, we had tens of thousands of combinations. It was really fun because you could just type something and just to see, does it do it or not. And people did this. We got half a billion people to download the app in the first month. They were just pounding, like, tons of these little stickers. It didn't have great longevity,

And our artists would create, like, hundreds of these per day. So very quickly, we had tens of thousands of combinations. It was really fun because you could just type something and just to see, does it do it or not. And people did this. We got half a billion people to download the app in the first month. They were just pounding, like, tons of these little stickers. It didn't have great longevity,

09:47

but it had this like amazing novelty factor. And we were trying to do it as its own messaging app, which was too hard. Like, people wanted WhatsApp. They wanted Facebook Messenger. They wanted all these things.

but it had this like amazing novelty factor. And we were trying to do it as its own messaging app, which was too hard. Like, people wanted WhatsApp. They wanted Facebook Messenger. They wanted all these things.

09:57

And I wrote this blog post called my hundred million dollar mistake because we took that and we said, well, this is not really sticky as a messenger. It's not big enough where you're gonna get all your friends to switch and and start texting you here. People love the character. They love these stickers. We don't wanna build a sticker company. So I guess we'll just crumple it all up. And just "Kobe!" and just throw it away.

And I wrote this blog post called my hundred million dollar mistake because we took that and we said, well, this is not really sticky as a messenger. It's not big enough where you're gonna get all your friends to switch and and start texting you here. People love the character. They love these stickers. We don't wanna build a sticker company. So I guess we'll just crumple it all up. And just "Kobe!" and just throw it away.

10:17

And,

And,

10:19

that was so dumb in retrospect. What we should have done is taking that little app to all of the existing messaging companies and be like, hey. This feature is unbelievable.

that was so dumb in retrospect. What we should have done is taking that little app to all of the existing messaging companies and be like, hey. This feature is unbelievable.

10:27

Building this is not easy. We've already built it. Proven that people really like to do this. Look how many, like, the average person is doing sixty of these.

Building this is not easy. We've already built it. Proven that people really like to do this. Look how many, like, the average person is doing sixty of these.

10:35

You know, just buy this and put this into your keyboard.

You know, just buy this and put this into your keyboard.

10:38

And shortly after Bitmoji sold for a hundred million dollars to Snapchat doing exactly that because they they couldn't make it as a standalone app either.

And shortly after Bitmoji sold for a hundred million dollars to Snapchat doing exactly that because they they couldn't make it as a standalone app either.

10:45

And,

And,

10:46

I have no idea why our instinct was just to, like, just pivot. Just turn it off and pivot versus, like,

I have no idea why our instinct was just to, like, just pivot. Just turn it off and pivot versus, like,

10:53

take thirty days and have, like, five conversations. Even if it doesn't go through, like, you owe it to yourself after, you know, nine months of hard work or a year of hard work, and creativity on something. So never will I ever just shut it down? You said we got a hundred oh, sorry. We got five hundred thousand downloads in sixty days and had a brief moment at number one on the charts before falling into mediocrity.

take thirty days and have, like, five conversations. Even if it doesn't go through, like, you owe it to yourself after, you know, nine months of hard work or a year of hard work, and creativity on something. So never will I ever just shut it down? You said we got a hundred oh, sorry. We got five hundred thousand downloads in sixty days and had a brief moment at number one on the charts before falling into mediocrity.

11:15

How much could you have sold this for? Easily tens of millions, easily. You think so? It either wasn't gonna sell at all, because there's only, like,

How much could you have sold this for? Easily tens of millions, easily. You think so? It either wasn't gonna sell at all, because there's only, like,

11:24

eight buyers for this. There was, like, eight mess messaging that there were major at the time. It was, like, Line and Kik and

eight buyers for this. There was, like, eight mess messaging that there were major at the time. It was, like, Line and Kik and

11:29

you know, WhatsApp and Facebook Messenger or Snapchat. Those all, you know, there's eight players that, like,

you know, WhatsApp and Facebook Messenger or Snapchat. Those all, you know, there's eight players that, like,

11:35

could benefit from something like this. And either it just wasn't gonna sell at all. But, like, that's actually unlikely. There's a price. There's a kind of like a price for every buyer.

could benefit from something like this. And either it just wasn't gonna sell at all. But, like, that's actually unlikely. There's a price. There's a kind of like a price for every buyer.

11:43

The hard part would have been that our team wouldn't have wanted to go with the acquisition.

The hard part would have been that our team wouldn't have wanted to go with the acquisition.

11:47

And so we would have had to, like,

And so we would have had to, like,

11:50

either try to just sell the tech, which is really hard, or

either try to just sell the tech, which is really hard, or

11:54

sell the whole company, including the team, and then disband for a year then come back together. And we,

sell the whole company, including the team, and then disband for a year then come back together. And we,

12:00

just you know, we didn't but with the thing is we didn't even really get to that point. Like, we should have gone and seen what our options were. Right? Like, in in poker, if you've already paid the blind, we'll just see the flop. Maybe maybe something good will come out of it, and we didn't do that. Did you by the way, your if you Google a hundred million dollar mistake, Sean Puri, there's, you have a Medium

just you know, we didn't but with the thing is we didn't even really get to that point. Like, we should have gone and seen what our options were. Right? Like, in in poker, if you've already paid the blind, we'll just see the flop. Maybe maybe something good will come out of it, and we didn't do that. Did you by the way, your if you Google a hundred million dollar mistake, Sean Puri, there's, you have a Medium

12:18

blog you've got a lot of good posts here. So if you're listening, go check it out. Did did you not and this might bring me to my my point. Did you not sell

blog you've got a lot of good posts here. So if you're listening, go check it out. Did did you not and this might bring me to my my point. Did you not sell

12:26

because your main investor

because your main investor

12:29

didn't give a shit. No. It it literally just didn't come up. It's not like we had a conversation in one One side said yes. One side said no, and we debated it. And then one side said no. I have the voting control. Hell, we didn't even think about it. We just moved on. We literally had lunch.

didn't give a shit. No. It it literally just didn't come up. It's not like we had a conversation in one One side said yes. One side said no, and we debated it. And then one side said no. I have the voting control. Hell, we didn't even think about it. We just moved on. We literally had lunch.

12:41

And then we just moved on. Like, it was just, like, it's the worst types of mistakes. The worst types of mistakes are the ones where you didn't even really explore the possibilities. You didn't even ask yourself what could I do here. You just sort of quickly glossed over it. Didn't, didn't even give it the thought to make a decision. It was a non decision decision.

And then we just moved on. Like, it was just, like, it's the worst types of mistakes. The worst types of mistakes are the ones where you didn't even really explore the possibilities. You didn't even ask yourself what could I do here. You just sort of quickly glossed over it. Didn't, didn't even give it the thought to make a decision. It was a non decision decision.

12:59

That's like your

That's like your

13:01

third or fourth or fifth multi, like, ten multi tens of millions of dollars mistake. The first one being not joining Stripe as employee thirty or fifty or something like that and not selling this app. And I think I think you might have a... Dude, I'm I'm Shooter McGavin in Happy Gilmore when he says, I piece shit like you for breakfast, and then happy hour goes, you eat pieces of shit for breakfast? That's me. I've I've made mistakes more expensive than your net worth. It's like, you've mistakes like this? It's like, yeah, multiple multiple.

third or fourth or fifth multi, like, ten multi tens of millions of dollars mistake. The first one being not joining Stripe as employee thirty or fifty or something like that and not selling this app. And I think I think you might have a... Dude, I'm I'm Shooter McGavin in Happy Gilmore when he says, I piece shit like you for breakfast, and then happy hour goes, you eat pieces of shit for breakfast? That's me. I've I've made mistakes more expensive than your net worth. It's like, you've mistakes like this? It's like, yeah, multiple multiple.

13:30

Alright. Here, I've got one. Never will I ever

Alright. Here, I've got one. Never will I ever

13:33

act desperate.

act desperate.

13:35

You have on here, you will only have one option that is the way that not act desperate. That is one way. But when I was building my company, I wanted an exit so badly.

You have on here, you will only have one option that is the way that not act desperate. That is one way. But when I was building my company, I wanted an exit so badly.

13:47

Like Give me an analogy. On the spot analogy, you wanted to exit as bad as Like a twelve like, when I was twelve year twelve years old and, like, a cute girl, like, you know, like, complimented my braces. It's like, I wanna close this so badly. I'm emotionally invested. If you don't like me, no one will like me, and I'm a piece of shit. I was so desperate. I had all of my personal,

Like Give me an analogy. On the spot analogy, you wanted to exit as bad as Like a twelve like, when I was twelve year twelve years old and, like, a cute girl, like, you know, like, complimented my braces. It's like, I wanna close this so badly. I'm emotionally invested. If you don't like me, no one will like me, and I'm a piece of shit. I was so desperate. I had all of my personal,

14:11

net worth, my emotional net worth tied into this exit, and I acted like a little bitch.

net worth, my emotional net worth tied into this exit, and I acted like a little bitch.

14:16

And

And

14:17

One of the ways not to do this

One of the ways not to do this

14:20

is to have multiple options. That's the easiest most most tactical one is to have lots of options. The second one is you just don't you you basically have to act like a hot girl. You're like, look, I don't care. Right? Like, I'm gonna be fine regardless. And I remember there was one point. Do you track your, like, your finances somewhere? Mhmm. I have, like, a a spreadsheet. And I remember one day I just added, like, ten million, like, you have, like, an other You can link all your accounts, and I just had other. And I just manually typed in ten million dollars. And I would stare at that for, like, six months and actually helped me believe that I already had it. And so I was a little bit less desperate. But I remember being desperate when you are desperate, you have zero power. And when you have zero power, that is the worst part to be in when you negotiate in the The best part when you can negotiate is to walk away and the and or to be able to walk away. And to be able to walk away, you typically just don't give a shit. So you're just, like, passionate about whatever you're doing, and you don't need the money, or you have other options. And I remember being desperate in that just like to that twelve year old girl who was into me, Erin,

is to have multiple options. That's the easiest most most tactical one is to have lots of options. The second one is you just don't you you basically have to act like a hot girl. You're like, look, I don't care. Right? Like, I'm gonna be fine regardless. And I remember there was one point. Do you track your, like, your finances somewhere? Mhmm. I have, like, a a spreadsheet. And I remember one day I just added, like, ten million, like, you have, like, an other You can link all your accounts, and I just had other. And I just manually typed in ten million dollars. And I would stare at that for, like, six months and actually helped me believe that I already had it. And so I was a little bit less desperate. But I remember being desperate when you are desperate, you have zero power. And when you have zero power, that is the worst part to be in when you negotiate in the The best part when you can negotiate is to walk away and the and or to be able to walk away. And to be able to walk away, you typically just don't give a shit. So you're just, like, passionate about whatever you're doing, and you don't need the money, or you have other options. And I remember being desperate in that just like to that twelve year old girl who was into me, Erin,

15:24

you know, like, they could sense it. They could they they could smell the hormones on you. Like, anyone could any hot girl could tell what could be best for. They could tell what a confident man is like, and I was not a confident man.

you know, like, they could sense it. They could they they could smell the hormones on you. Like, anyone could any hot girl could tell what could be best for. They could tell what a confident man is like, and I was not a confident man.

15:38

Can you put your retainer back in? It's the same thing. Right? Yeah. The

Can you put your retainer back in? It's the same thing. Right? Yeah. The

15:42

you've nailed it in that last bit, which is

you've nailed it in that last bit, which is

15:45

The rules, the rules of negotiating when you are when you're trying to sell your company. Number one, the most important rule is

The rules, the rules of negotiating when you are when you're trying to sell your company. Number one, the most important rule is

15:53

you must

you must

15:54

Be okay if no deal happens. Meaning,

Be okay if no deal happens. Meaning,

15:58

not just, like, I'll I'll be alright. Like, you know, like a funeral has happened, but You might what the, you know, option one should always be we do no deal, and we're totally fine. I would love to keep going. And whether that's true or not, There should be no grieving. You no grieving. Convince yourself that that's true. That the you don't want your options to just be offer number one or offer number two because guess what? Offer number one's gonna have some hair offer number two is gonna be a little shaky, maybe fall through. You're gonna start to feel real desperate when offer two falls through, and now it's only offer one on the table.

not just, like, I'll I'll be alright. Like, you know, like a funeral has happened, but You might what the, you know, option one should always be we do no deal, and we're totally fine. I would love to keep going. And whether that's true or not, There should be no grieving. You no grieving. Convince yourself that that's true. That the you don't want your options to just be offer number one or offer number two because guess what? Offer number one's gonna have some hair offer number two is gonna be a little shaky, maybe fall through. You're gonna start to feel real desperate when offer two falls through, and now it's only offer one on the table.

16:27

You always need the one one option on the table that you can control, which is I will keep running my company. It will grow and just be bigger and better if I keep going. And you have to convince yourself of that if you wanna have a chance in these negotiations. The second rule is

You always need the one one option on the table that you can control, which is I will keep running my company. It will grow and just be bigger and better if I keep going. And you have to convince yourself of that if you wanna have a chance in these negotiations. The second rule is

16:42

in any negotiation,

in any negotiation,

16:44

the side that cares the least wins.

the side that cares the least wins.

16:46

And so you have to be the one who needs the deal less

And so you have to be the one who needs the deal less

16:51

than the other party. And so whether that's true or not. It's a mentality. You must mentally need it less than the other side. You must mentally care less than the other side that this deal goes through exactly as is. If you could do that, then you're in pretty good shape. And you know which deal is the best deal? The one that will actually close. That's another huge learning. Not all deals are the same, the one that will close. To close a deal, it's a really big deal. To get an offer and go through diligence, that's not nearly as big of a deal. You and I have both gone through stuff where

than the other party. And so whether that's true or not. It's a mentality. You must mentally need it less than the other side. You must mentally care less than the other side that this deal goes through exactly as is. If you could do that, then you're in pretty good shape. And you know which deal is the best deal? The one that will actually close. That's another huge learning. Not all deals are the same, the one that will close. To close a deal, it's a really big deal. To get an offer and go through diligence, that's not nearly as big of a deal. You and I have both gone through stuff where

17:22

the offer was great and

the offer was great and

17:25

the the people buying were either disorganized, there were shitheads, They change their opinion. Right. Something you wanna do the deal that will close. That is the best deal. That that is one of mine as well. I put, never will I ever go with the highest offer.

the the people buying were either disorganized, there were shitheads, They change their opinion. Right. Something you wanna do the deal that will close. That is the best deal. That that is one of mine as well. I put, never will I ever go with the highest offer.

17:40

Sounds

Sounds

17:41

confusing. It's like, what do you mean? Why would you not take the highest offer?

confusing. It's like, what do you mean? Why would you not take the highest offer?

17:45

You wanna take the best offer, not the highest offer. And the best offer and the highest offer have a lot of differences.

You wanna take the best offer, not the highest offer. And the best offer and the highest offer have a lot of differences.

17:52

The one of the differences is what you just said. Likelihood to actually close. Will they do what they say they do?

The one of the differences is what you just said. Likelihood to actually close. Will they do what they say they do?

17:57

They say they will do.

They say they will do.

17:59

I'll give you a story from the Milk Road sale. We had a high offer And then we had a fair offer. And at first, we were like, oh, hell, yeah. We got the high offer. This is great. The but they they did a bunch of weird stuff, though. There were some red flags, but, hey, dude, it's like, you know, like, anything else. You know, when when something's really attractive,

I'll give you a story from the Milk Road sale. We had a high offer And then we had a fair offer. And at first, we were like, oh, hell, yeah. We got the high offer. This is great. The but they they did a bunch of weird stuff, though. There were some red flags, but, hey, dude, it's like, you know, like, anything else. You know, when when something's really attractive,

18:16

I had a red flag that starts to look just like,

I had a red flag that starts to look just like,

18:19

It's like, is that maroon actually? Maybe that's maybe that's orange. You know, like, that's that's so red. You you start to overlook and talk yourself out of a bunch of things. Right? So, like, was one of those red flags? Can you say? They had a lawyer that would jump on the call that refused to ever turn his camera on had no LinkedIn.

It's like, is that maroon actually? Maybe that's maybe that's orange. You know, like, that's that's so red. You you start to overlook and talk yourself out of a bunch of things. Right? So, like, was one of those red flags? Can you say? They had a lawyer that would jump on the call that refused to ever turn his camera on had no LinkedIn.

18:36

Sent us a document that was, like, the term sheet that was, like, our lawyer was, like, there's no way a lawyer wrote this. And we were, like,

Sent us a document that was, like, the term sheet that was, like, our lawyer was, like, there's no way a lawyer wrote this. And we were, like,

18:43

okay. It's probably not good that their lawyer's not a lawyer But,

okay. It's probably not good that their lawyer's not a lawyer But,

18:47

we don't understand also why why they would not have a lawyer. It's like, it's this guy's friend.

we don't understand also why why they would not have a lawyer. It's like, it's this guy's friend.

18:52

They says he's a lawyer. It says it's, like, so strange. It's, like, know, they're not, like, scammers,

They says he's a lawyer. It says it's, like, so strange. It's, like, know, they're not, like, scammers,

18:57

but

but

18:59

he said, like, can you just turn your camera on? And, you know, like,

he said, like, can you just turn your camera on? And, you know, like,

19:03

It was weird. It was just, like, a little bit weird. That was, like, one But I think they sent you money, then they well, then you were sent money. Right? We we went down the we took the offer.

It was weird. It was just, like, a little bit weird. That was, like, one But I think they sent you money, then they well, then you were sent money. Right? We we went down the we took the offer.

19:12

And,

And,

19:14

there was a time to close, but the the again, one of the stupid things they did, they wrote the offer

there was a time to close, but the the again, one of the stupid things they did, they wrote the offer

19:20

as when we signed the the term sheet, which is not the deal is not closed when you signed the term sheet.

as when we signed the the term sheet, which is not the deal is not closed when you signed the term sheet.

19:26

They wired us all the money. They had to wire us all the money on day one, which again was, like,

They wired us all the money. They had to wire us all the money on day one, which again was, like,

19:30

Are these guys idiots? Why are they doing that? That's not how this is supposed to go.

Are these guys idiots? Why are they doing that? That's not how this is supposed to go.

19:35

But we were like, well, I guess we're getting money. So, like, what what do you know? And it was during that kinda closing period that we started to get a little sketched out and said, look, I don't think this is the right deal for us. Maybe we should just go back to options. One, we'll just keep running our company. We don't have to do this deal. So we wired back millions of dollars voluntarily.

But we were like, well, I guess we're getting money. So, like, what what do you know? And it was during that kinda closing period that we started to get a little sketched out and said, look, I don't think this is the right deal for us. Maybe we should just go back to options. One, we'll just keep running our company. We don't have to do this deal. So we wired back millions of dollars voluntarily.

19:53

Because we had made the mistake of going with the highest offer first.

Because we had made the mistake of going with the highest offer first.

19:57

And the best offer is a combination of it's likely to close.

And the best offer is a combination of it's likely to close.

20:02

I'll tell you a funny story about that.

I'll tell you a funny story about that.

20:05

The people involved are high quality, and they're people you wanna be around because it's not a

The people involved are high quality, and they're people you wanna be around because it's not a

20:10

sort of hit it and quit it, you're never gonna see these people again. Like, business even if your deal is kinda, like, you walk away, clear, like, I don't know. The business world is actually kinda small. You run into people. They now own your company, your brand. Like, you don't want it in the wrong hands. You'd rather do business with great people who you might do more business with in the future,

sort of hit it and quit it, you're never gonna see these people again. Like, business even if your deal is kinda, like, you walk away, clear, like, I don't know. The business world is actually kinda small. You run into people. They now own your company, your brand. Like, you don't want it in the wrong hands. You'd rather do business with great people who you might do more business with in the future,

20:27

which is what we ended up doing.

which is what we ended up doing.

20:30

So

So

20:30

the best offer is different. Now let me tell you a story about,

the best offer is different. Now let me tell you a story about,

20:34

about,

about,

20:35

likelihood to close. So we get this high offer and we're comparing the high offer with the fair offer.

likelihood to close. So we get this high offer and we're comparing the high offer with the fair offer.

20:40

And I call,

And I call,

20:42

biology

biology

20:43

And people know biology. You know, it's one of the smartest people on earth. I call biology. I said, biology. What would you do if you were me?

And people know biology. You know, it's one of the smartest people on earth. I call biology. I said, biology. What would you do if you were me?

20:48

And he's like, well, that's a higher offer.

And he's like, well, that's a higher offer.

20:52

But Let me ask you a question. Have he of course, like, intelligent people can get to the heart of the issue

But Let me ask you a question. Have he of course, like, intelligent people can get to the heart of the issue

20:57

right away. Like, he just, like, a metal detector, just new.

right away. Like, he just, like, a metal detector, just new.

21:00

And he goes, Are you negotiating these on the same time scale? And I was like, I don't know what that means. He's like, who did you talk to first and how far how long have you been talking to them and how long have you even talked to the high offer? Said, well, I talked to the fair offer way earlier.

And he goes, Are you negotiating these on the same time scale? And I was like, I don't know what that means. He's like, who did you talk to first and how far how long have you been talking to them and how long have you even talked to the high offer? Said, well, I talked to the fair offer way earlier.

21:14

We've negotiated it renegotiated it. They've done diligence. And the high offer is new blah blah. He goes, Okay. So this is not the real offer.

We've negotiated it renegotiated it. They've done diligence. And the high offer is new blah blah. He goes, Okay. So this is not the real offer.

21:22

And he's like, you need to apply a discount.

And he's like, you need to apply a discount.

21:25

And I said, well, what do you mean? And he's like, well, You don't know if this deal's gonna close. You don't know if this number's gonna stand. You don't know if they're gonna change their mind. This is this is all fresh. And a fresh deal is not the real deal. And so he's like, You need to just mentally apply some discount factor for if this is even is gonna be the final offer that gets

And I said, well, what do you mean? And he's like, well, You don't know if this deal's gonna close. You don't know if this number's gonna stand. You don't know if they're gonna change their mind. This is this is all fresh. And a fresh deal is not the real deal. And so he's like, You need to just mentally apply some discount factor for if this is even is gonna be the final offer that gets

21:43

sent to your bank account. And so I was like, okay. So, like, ten percent. He's like, tell me what you know about this person. I told him everything I know. He's like, fifty percent.

sent to your bank account. And so I was like, okay. So, like, ten percent. He's like, tell me what you know about this person. I told him everything I know. He's like, fifty percent.

21:52

It's we had to cut the offer by fifty percent mentally to to to, you know, compare apples to apples. And that was some of the best advice we got was that one piece of advice. So now I always, in any deal, I have to ask myself, what's the discount factor here? Meaning how likely are they to close?

It's we had to cut the offer by fifty percent mentally to to to, you know, compare apples to apples. And that was some of the best advice we got was that one piece of advice. So now I always, in any deal, I have to ask myself, what's the discount factor here? Meaning how likely are they to close?

22:08

Have they done all their diligence yet? Have we already had the deal have we already negotiated this to a stalemate where kind of both sides feel like they've gone as far as they're willing to go, because that's when you can reduce the discount. When we were selling to HubSpot, I remember the just like I said, the the my contact, the one I was speaking with, she sensed weakness, and she sensed,

Have they done all their diligence yet? Have we already had the deal have we already negotiated this to a stalemate where kind of both sides feel like they've gone as far as they're willing to go, because that's when you can reduce the discount. When we were selling to HubSpot, I remember the just like I said, the the my contact, the one I was speaking with, she sensed weakness, and she sensed,

22:31

she sensed that I was in a tough place emotionally. And she and I because I was constantly asking. Because we were sobbing. Alright. What else do you mean? Where how do how do we move this forward? Yeah. She could, like, she can she's like, are you Are you laying down when you're talking to me? Like, she can just, like, sense that I was, like, laying on the floor. And

she sensed that I was in a tough place emotionally. And she and I because I was constantly asking. Because we were sobbing. Alright. What else do you mean? Where how do how do we move this forward? Yeah. She could, like, she can she's like, are you Are you laying down when you're talking to me? Like, she can just, like, sense that I was, like, laying on the floor. And

22:49

And the difference between what you did and what I did was two things. One, I sold to a a public company, which meant Basically, the decision maker was not the CEO or the owner of the company. It was the person who reported to the person who reported to the person, who reported to the person, who who reported to the person. It was, like, for, you know, ladders down, probably the decision maker. The CEO was probably, like, they just saw it on their, like, board meeting every once in a while, like, you know, quarterly. And they're like, okay. Cool, whatever. Now can we talk about port stuff? And this woman,

And the difference between what you did and what I did was two things. One, I sold to a a public company, which meant Basically, the decision maker was not the CEO or the owner of the company. It was the person who reported to the person who reported to the person, who reported to the person, who who reported to the person. It was, like, for, you know, ladders down, probably the decision maker. The CEO was probably, like, they just saw it on their, like, board meeting every once in a while, like, you know, quarterly. And they're like, okay. Cool, whatever. Now can we talk about port stuff? And this woman,

23:19

she was like, look,

she was like, look,

23:22

we don't care about you. You know, she's basically said she's like, our company is worth, like, twenty or thirty billion dollars, and this is a rounding error for us. Our reputation matters more.

we don't care about you. You know, she's basically said she's like, our company is worth, like, twenty or thirty billion dollars, and this is a rounding error for us. Our reputation matters more.

23:33

Than than this little deal. And

Than than this little deal. And

23:35

it would hurt it would hurt our reputation

it would hurt it would hurt our reputation

23:37

more than the than the cost of this deal in order to dick you around. If we say we're gonna do something, we're gonna do something. Now, shut up and relax. That's basically, like, what she was saying to me. And I remember feeling that I was like, I feel so much better. And, so I think there's a difference between selling to, like, like, selling a small business to a sole proprietor

more than the than the cost of this deal in order to dick you around. If we say we're gonna do something, we're gonna do something. Now, shut up and relax. That's basically, like, what she was saying to me. And I remember feeling that I was like, I feel so much better. And, so I think there's a difference between selling to, like, like, selling a small business to a sole proprietor

23:55

or to a PE company or to a really large strategic company, I think the way that you deal with those sellers is different. More buyers are is different. I'll tie that in. I haven't never will I ever.

or to a PE company or to a really large strategic company, I think the way that you deal with those sellers is different. More buyers are is different. I'll tie that in. I haven't never will I ever.

24:05

Never will I ever

Never will I ever

24:07

assume the person I'm talking to is the person who's buying my company.

assume the person I'm talking to is the person who's buying my company.

24:12

So this is

So this is

24:15

When we sold to Twitch,

When we sold to Twitch,

24:17

which is owned by Amazon,

which is owned by Amazon,

24:19

I'm talking to corp dev. It's very easy to think I think I'm assuming you're talking about somebody in corp dev. Yeah. In Corpdev. So this lady was wonderful. She was like my therapist for three months. Right. And Corpdev is very helpful.

I'm talking to corp dev. It's very easy to think I think I'm assuming you're talking about somebody in corp dev. Yeah. In Corpdev. So this lady was wonderful. She was like my therapist for three months. Right. And Corpdev is very helpful.

24:31

They're they're they're the they're the router, they're the project manager of any acquisition. But

They're they're they're the they're the router, they're the project manager of any acquisition. But

24:35

They are not the decision maker. And actually, the thing you described, I actually think is not that true. Meaning, I actually do think there is a decision maker. They are pretty high up. It's either CEO or it's the the VP or the SVP who runs, like, you know, or somebody in the c suite who, like, matters to sign off on a on a transaction

They are not the decision maker. And actually, the thing you described, I actually think is not that true. Meaning, I actually do think there is a decision maker. They are pretty high up. It's either CEO or it's the the VP or the SVP who runs, like, you know, or somebody in the c suite who, like, matters to sign off on a on a transaction

24:52

of of of, you know, a multi eight figure transaction. That's not it's actually not

of of of, you know, a multi eight figure transaction. That's not it's actually not

25:00

it actually the decision actually does But by design, these companies design it, so you're never actually gonna get to talk to that person because they need good cop, bad cop. They need the person whose job is it to move the transaction along or find out information.

it actually the decision actually does But by design, these companies design it, so you're never actually gonna get to talk to that person because they need good cop, bad cop. They need the person whose job is it to move the transaction along or find out information.

25:13

And then that person can't actually be the one who's negotiating with you. They're gonna be like, cool. I'll go back and find out. And that layer those layers of bureaucracy are actually a huge negotiating advantage that a startup typically doesn't have.

And then that person can't actually be the one who's negotiating with you. They're gonna be like, cool. I'll go back and find out. And that layer those layers of bureaucracy are actually a huge negotiating advantage that a startup typically doesn't have.

25:26

Unless you're working with bankers and whatnot, where you where you do have an intermediary that's able to do that for you. And so

Unless you're working with bankers and whatnot, where you where you do have an intermediary that's able to do that for you. And so

25:32

one of the most important things you gotta figure out is who's actually buying this company?

one of the most important things you gotta figure out is who's actually buying this company?

25:36

It's not a company that buys a company.

It's not a company that buys a company.

25:38

There is a person in a company

There is a person in a company

25:41

who needs something for their job.

who needs something for their job.

25:44

And you have to figure out who is that person and what is the fire under their ass?

And you have to figure out who is that person and what is the fire under their ass?

25:49

You know, what is the thing that, you know, are they in trouble their job and they need to do something because the competitor is getting ahead. Are they

You know, what is the thing that, you know, are they in trouble their job and they need to do something because the competitor is getting ahead. Are they

25:56

super strategic and they had a dinner with somebody, and they they had an epiphany, and now they're they Steve Jobs, they're a visionary and they're trying to make that vision come true. You need to fit that story.

super strategic and they had a dinner with somebody, and they they had an epiphany, and now they're they Steve Jobs, they're a visionary and they're trying to make that vision come true. You need to fit that story.

26:05

Like,

Like,

26:06

you know, you have to figure out who is that person in the company and what is the five under their ass, if you ever want if you wanna have a chance of being able to sell a company, because you're selling to that person, that champion alone,

you know, you have to figure out who is that person in the company and what is the five under their ass, if you ever want if you wanna have a chance of being able to sell a company, because you're selling to that person, that champion alone,

26:16

not to

not to

26:18

a multi billion dollar corporation.

a multi billion dollar corporation.

26:20

Right. And and so the buyer really matters and understanding what motivates them. A lot of times, the people in corp dev, they just wanna keep their jobs.

Right. And and so the buyer really matters and understanding what motivates them. A lot of times, the people in corp dev, they just wanna keep their jobs.

26:27

And they wanna look good. And so as the seller, you have to sell a company and you have to make them look great. You have to make it easy for them to look wonderful. You you have such different incentives. They are just trying to not fumble the bag. You are trying to get your first bag, and you are gonna behave totally differently, and you're gonna value different And if I ever said to me something like, oh, this is kind of a rounding error or, like, you know, this is we're huge. This is not this is not not a this, you know, this is a small small piece of it. I'd be like, cool.

And they wanna look good. And so as the seller, you have to sell a company and you have to make them look great. You have to make it easy for them to look wonderful. You you have such different incentives. They are just trying to not fumble the bag. You are trying to get your first bag, and you are gonna behave totally differently, and you're gonna value different And if I ever said to me something like, oh, this is kind of a rounding error or, like, you know, this is we're huge. This is not this is not not a this, you know, this is a small small piece of it. I'd be like, cool.

26:55

Round up. The price just went up ten million then. Right? Like, you know, if if this money don't matter to you, it matters a hell. Every dollar of this matters to me. And so maybe we have the price wrong, actually, then, let's get the price right before we we continue. Alright? Like, that is,

Round up. The price just went up ten million then. Right? Like, you know, if if this money don't matter to you, it matters a hell. Every dollar of this matters to me. And so maybe we have the price wrong, actually, then, let's get the price right before we we continue. Alright? Like, that is,

27:10

and by the way, you saw this, we just renegotiated

and by the way, you saw this, we just renegotiated

27:13

our deal with HubSpot. And, like, you know, without going into the, you know, the gut Everything mattered. Everything mattered. And You saw high. I appreciate it. We mean you have very different approaches to negotiation.

our deal with HubSpot. And, like, you know, without going into the, you know, the gut Everything mattered. Everything mattered. And You saw high. I appreciate it. We mean you have very different approaches to negotiation.

27:23

What did you see or describe? Let's grab that. So this is like a Midwestern value state, which is if if I order a steak and you send me out a pizza, I'm just gonna shut up and eat it, and I ain't gonna complain. The way that you did this steak tastes different.

What did you see or describe? Let's grab that. So this is like a Midwestern value state, which is if if I order a steak and you send me out a pizza, I'm just gonna shut up and eat it, and I ain't gonna complain. The way that you did this steak tastes different.

27:39

Yeah. Yeah. I love my steak with mozzarella and,

Yeah. Yeah. I love my steak with mozzarella and,

27:43

pasta sauce. This is exactly how I like it. You handled it differently. And I and, frankly, I I I that was,

pasta sauce. This is exactly how I like it. You handled it differently. And I and, frankly, I I I that was,

27:50

one of that was, an example when I learned from you. I think you said something great. You said,

one of that was, an example when I learned from you. I think you said something great. You said,

27:55

whoever can be most uncomfortable will win. And you need all these fucking guys for everything. And in my head, I was like, what? Why? Who gives a shit? And you're like, this word needs to be that? And I'm like, what are you doing? And and you're like, the it all matters. It all is really important. And, frankly,

whoever can be most uncomfortable will win. And you need all these fucking guys for everything. And in my head, I was like, what? Why? Who gives a shit? And you're like, this word needs to be that? And I'm like, what are you doing? And and you're like, the it all matters. It all is really important. And, frankly,

28:12

you got your way, at least for the big important stuff. And when you got your way, I got my way too. To get that negotiation done, both sides have to get their way, but you have to figure out what really matters to them and what really matters to us. And those two things are not gonna line up. And you need,

you got your way, at least for the big important stuff. And when you got your way, I got my way too. To get that negotiation done, both sides have to get their way, but you have to figure out what really matters to them and what really matters to us. And those two things are not gonna line up. And you need,

28:27

like, Sam Altman, you know, he's he's all in the news right now, and he said something great about negotiation.

like, Sam Altman, you know, he's he's all in the news right now, and he said something great about negotiation.

28:31

He goes, I am not interested in binary negotiations. There's nothing interesting there where it's just a number and you want it to be lower and I want it to be higher.

He goes, I am not interested in binary negotiations. There's nothing interesting there where it's just a number and you want it to be lower and I want it to be higher.

28:40

That's just a tug. That's just a tug of war. That's like, you know, that's not interesting. That's not a sport. It's like slap fighting versus MMA. Right? Like, The slap league is literally just one guy standing there with no defense and one guy's gonna sma slap him as hard as he can.

That's just a tug. That's just a tug of war. That's like, you know, that's not interesting. That's not a sport. It's like slap fighting versus MMA. Right? Like, The slap league is literally just one guy standing there with no defense and one guy's gonna sma slap him as hard as he can.

28:53

It's kinda interesting to see, but, like, it doesn't have the same,

It's kinda interesting to see, but, like, it doesn't have the same,

28:57

It's not as satisfying to to to the sophisticated

It's not as satisfying to to to the sophisticated

29:01

barbarian like us who likes, you know, UFC instead.

barbarian like us who likes, you know, UFC instead.

29:04

And so,

And so,

29:05

the sophisticated barbarian cares about a,

the sophisticated barbarian cares about a,

29:08

a non zero sum negotiation. And so it's like, how do I give them what what they want?

a non zero sum negotiation. And so it's like, how do I give them what what they want?

29:14

Genesee quoi? What is that? What is that, Ari? If I saying that right? There's an art there. And so you have to figure out what are the things they really care about that I only kinda care about. One of the things I really care about that they only kinda care about. How do we all get what we want in order for this to work?

Genesee quoi? What is that? What is that, Ari? If I saying that right? There's an art there. And so you have to figure out what are the things they really care about that I only kinda care about. One of the things I really care about that they only kinda care about. How do we all get what we want in order for this to work?

29:27

But you're right that I was willing to be more uncomfortable

But you're right that I was willing to be more uncomfortable

29:31

than you or maybe most people, just because, I don't know, this is our baby, and this is, like, one line item for them, but this is, like, our this is, like, the basis of what we do and has has potential to be, like, such an awesome part of our lives. Like, you know, I have to get this right. This is my kid. It's like, you know, my kid versus,

than you or maybe most people, just because, I don't know, this is our baby, and this is, like, one line item for them, but this is, like, our this is, like, the basis of what we do and has has potential to be, like, such an awesome part of our lives. Like, you know, I have to get this right. This is my kid. It's like, you know, my kid versus,

29:50

know, how my teach how when they go to school, how a teacher's gonna teach, treat my kid, like, they care, but not the same way I do about my baby. Right? It's different. There's levels to that. And so, yeah, you know, the the party that's willing to be more uncomfortable generally will win or the way my dad taught me was the more stubborn person wins in any negotiation. Alright. Can I tell you a a dad negotiation story? Yeah. So I worked with my dad for about,

know, how my teach how when they go to school, how a teacher's gonna teach, treat my kid, like, they care, but not the same way I do about my baby. Right? It's different. There's levels to that. And so, yeah, you know, the the party that's willing to be more uncomfortable generally will win or the way my dad taught me was the more stubborn person wins in any negotiation. Alright. Can I tell you a a dad negotiation story? Yeah. So I worked with my dad for about,

30:13

nine months, I think, in my life. And I I'm really happy. And your dad does everything. Right? He's like

nine months, I think, in my life. And I I'm really happy. And your dad does everything. Right? He's like

30:18

Like, he does projects. He started as an engineer, lowly engineer, and he was like, you know, he is, like, office space or, like, a dunder Mifflin or something. Like, he was sitting in his cubicle, and it he kept getting patents. So his wall had, like, twenty two patents on the wall. But his salary stayed the same. And he's like, how come, like, you know, this, like, the guy who dresses up nice. He works with me for six months. I get this patent. He gets promoted. I stay here. Like, Wait. Am I in the wrong job? So it took him ten years to figure that out. He's like, maybe I should move to the business side. He works at a he works at BP for, like, thirty, forty years. And he finally, like, leaves, and he does then he started doing more entrepreneurial things. One of which was,

Like, he does projects. He started as an engineer, lowly engineer, and he was like, you know, he is, like, office space or, like, a dunder Mifflin or something. Like, he was sitting in his cubicle, and it he kept getting patents. So his wall had, like, twenty two patents on the wall. But his salary stayed the same. And he's like, how come, like, you know, this, like, the guy who dresses up nice. He works with me for six months. I get this patent. He gets promoted. I stay here. Like, Wait. Am I in the wrong job? So it took him ten years to figure that out. He's like, maybe I should move to the business side. He works at a he works at BP for, like, thirty, forty years. And he finally, like, leaves, and he does then he started doing more entrepreneurial things. One of which was,

30:53

we both worked together in this company in Australia.

we both worked together in this company in Australia.

30:57

And,

And,

30:58

when we were working there, I got to see my dad in action. And, like, it's so funny. Like, you see your dad at home and dad's at home are just, like, these, like, totally different creatures when they're, like, done with work for the day. I had to see him, like, interacting with other people, especially for an immigrant dad that's, like, it's oh, you have this level of polish. Why at home do you turn into just like a caveman?

when we were working there, I got to see my dad in action. And, like, it's so funny. Like, you see your dad at home and dad's at home are just, like, these, like, totally different creatures when they're, like, done with work for the day. I had to see him, like, interacting with other people, especially for an immigrant dad that's, like, it's oh, you have this level of polish. Why at home do you turn into just like a caveman?

31:16

And so I forgot to see him just act really differently. And one of the things that happened was

And so I forgot to see him just act really differently. And one of the things that happened was

31:21

They,

They,

31:22

we were negotiating with, this other party.

we were negotiating with, this other party.

31:26

The other party was this slick talking Australian guy who literally looked like Leonardo Dicaprio.

The other party was this slick talking Australian guy who literally looked like Leonardo Dicaprio.

31:32

This guy's on, like, the Australian CNBC every week and he's super polished

This guy's on, like, the Australian CNBC every week and he's super polished

31:36

Just an amazing talker. And I just think, oh my god. My dad's I'm gonna have to get watch my dad get beat up in this negotiation. This guy's, like, mister mister charisma, mister smooth. Everybody already loves them. The decision maker loves them. And they want one thing. We want another.

Just an amazing talker. And I just think, oh my god. My dad's I'm gonna have to get watch my dad get beat up in this negotiation. This guy's, like, mister mister charisma, mister smooth. Everybody already loves them. The decision maker loves them. And they want one thing. We want another.

31:51

My dad's, you know, this told, you know, this Indian guy who can barely, you know, he forgets to add the connecting words and sentences. He's just gonna get walked all over this this thing. And then they walk in and this guy's got, like,

My dad's, you know, this told, you know, this Indian guy who can barely, you know, he forgets to add the connecting words and sentences. He's just gonna get walked all over this this thing. And then they walk in and this guy's got, like,

32:03

binders of, like, you know, spreadsheets,

binders of, like, you know, spreadsheets,

32:05

presentation. Like, he's got everything prepared. My dad has nothing. He doesn't even have, like, a pen on him. And the guy that guy makes his case first, he kinda passes it around. He's like, here's what I think we should do and I wanna run the project to give me the funding, and here's what we're gonna do with it. It's gonna be great. Everybody's like, this is super well put together. Thank you so much. Blah blah blah.

presentation. Like, he's got everything prepared. My dad has nothing. He doesn't even have, like, a pen on him. And the guy that guy makes his case first, he kinda passes it around. He's like, here's what I think we should do and I wanna run the project to give me the funding, and here's what we're gonna do with it. It's gonna be great. Everybody's like, this is super well put together. Thank you so much. Blah blah blah.

32:22

And,

And,

32:24

it's my dad's turn, and my dad basically

it's my dad's turn, and my dad basically

32:27

kinda, like, refuses to speak. And then he starts to speak, and I'm, like,

kinda, like, refuses to speak. And then he starts to speak, and I'm, like,

32:32

where's the logical argument? He's not, like, using any logic. He's just saying, no.

where's the logical argument? He's not, like, using any logic. He's just saying, no.

32:36

I'm not doing that. I wanna do this. And I'm not doing it if we're doing it that way. And then they're like, yep, Raj, we have, like, you know, this plan, it makes sense. Look, I know you're not getting the exact equity you want. You're not getting to run it, but, like, this guy will run it, but you'll this makes sense. Right?

I'm not doing that. I wanna do this. And I'm not doing it if we're doing it that way. And then they're like, yep, Raj, we have, like, you know, this plan, it makes sense. Look, I know you're not getting the exact equity you want. You're not getting to run it, but, like, this guy will run it, but you'll this makes sense. Right?

32:52

And my dad's just, like, foot on the table. He's like, I'm just telling you right now.

And my dad's just, like, foot on the table. He's like, I'm just telling you right now.

32:57

It's not happening.

It's not happening.

32:59

Never.

Never.

33:00

Not happening.

Not happening.

33:01

And I'm like, what are you doing? Like, you're not even backing up your words. You just say no.

And I'm like, what are you doing? Like, you're not even backing up your words. You just say no.

33:06

And you're just refusing. You look like such a stubborn idiot.

And you're just refusing. You look like such a stubborn idiot.

33:10

And he just acted the fool for like an hour.

And he just acted the fool for like an hour.

33:13

And,

And,

33:14

they were like, this is going nowhere, and they walked out. I was like, dude, you blew it? And he was like, no. That went perfectly.

they were like, this is going nowhere, and they walked out. I was like, dude, you blew it? And he was like, no. That went perfectly.

33:20

And I was like, what do you mean? And he's like,

And I was like, what do you mean? And he's like,

33:23

he's like, oh, I could never compete with guy. He's like, you know, super charismatic, and he he has all the facts on his side. I was like, so what's your your plan as what? He's like, oh, I'm just gonna the most powerful word in any negotiation. No. He's like, I'm just gonna say no. I'm not doing it. I'm not doing it that way. And I I'm not gonna I don't need to explain why I'm not doing it. And actually, I'm offended that it's going this way. I'm pissed off. And, actually, I might blow this whole thing up. And, he's like, you know, I only have one piece of leverage, which is that they need me to play along in whatever we're gonna do here. Like, it's gonna be hard for them to replace me in this thing. So

he's like, oh, I could never compete with guy. He's like, you know, super charismatic, and he he has all the facts on his side. I was like, so what's your your plan as what? He's like, oh, I'm just gonna the most powerful word in any negotiation. No. He's like, I'm just gonna say no. I'm not doing it. I'm not doing it that way. And I I'm not gonna I don't need to explain why I'm not doing it. And actually, I'm offended that it's going this way. I'm pissed off. And, actually, I might blow this whole thing up. And, he's like, you know, I only have one piece of leverage, which is that they need me to play along in whatever we're gonna do here. Like, it's gonna be hard for them to replace me in this thing. So

33:54

I'm just gonna say no.

I'm just gonna say no.

33:55

And I learned so much that day. He told me he goes, the more stubborn guy in the room. Did it come back? Did they come back. They came back. And in fact, the exact opposite happened. By the end of the whole thing, we negotiated this deal. And, like, you know, there's just kinda, like, okay, let's take a break. We'll go get the, Yeah. Yeah. We. What were you doing? I was there. I was Where's the we? Of more support. And,

And I learned so much that day. He told me he goes, the more stubborn guy in the room. Did it come back? Did they come back. They came back. And in fact, the exact opposite happened. By the end of the whole thing, we negotiated this deal. And, like, you know, there's just kinda, like, okay, let's take a break. We'll go get the, Yeah. Yeah. We. What were you doing? I was there. I was Where's the we? Of more support. And,

34:14

it leaves a room to take, like, a break or printing out the papers or whatever, and my dad turns to the middle man guy. He goes, so how what do you think? He goes.

it leaves a room to take, like, a break or printing out the papers or whatever, and my dad turns to the middle man guy. He goes, so how what do you think? He goes.

34:22

He goes, I think we're playing poker, but all the chips are on your side of the table now. And actually, my dad made a mistake, which was that he negotiated it way too hard

He goes, I think we're playing poker, but all the chips are on your side of the table now. And actually, my dad made a mistake, which was that he negotiated it way too hard

34:30

and

and

34:31

took all the value in the end. And then they can then they realized it and they were like, you know what?

took all the value in the end. And then they can then they realized it and they were like, you know what?

34:37

We let the stubborn idiot take the whole thing, the whole enchilada. Like, no. And they went back to no, and we actually ended up more like a fifty fifty deal. But if if he had just given a little bit back, you always wanna kinda give back at the end. Where they feel like they have something to lose. He took it so far. He won the negotiations so badly that they at the end had nothing to lose in the negotiate and closing the deal. They're, like, what do I have to gain by closing this deal? Nothing. It's just all all the values going to him at this point. And so he had taken a little too far, but I'll never forget that idea that, you know, the in in any negotiation, it is not the side that has the better argument or the more or more logic. It's whoever has more leverage, number one, And then within that, you're the that's like the the the the substance. And then you have the style. And the style is whoever's a little more stubborn and a little more crazy, a little more irrational,

We let the stubborn idiot take the whole thing, the whole enchilada. Like, no. And they went back to no, and we actually ended up more like a fifty fifty deal. But if if he had just given a little bit back, you always wanna kinda give back at the end. Where they feel like they have something to lose. He took it so far. He won the negotiations so badly that they at the end had nothing to lose in the negotiate and closing the deal. They're, like, what do I have to gain by closing this deal? Nothing. It's just all all the values going to him at this point. And so he had taken a little too far, but I'll never forget that idea that, you know, the in in any negotiation, it is not the side that has the better argument or the more or more logic. It's whoever has more leverage, number one, And then within that, you're the that's like the the the the substance. And then you have the style. And the style is whoever's a little more stubborn and a little more crazy, a little more irrational,

35:25

that is, to your advantage in a negotiation. We gotta have your mom and dad on the pod, I think. We've we've heard a lot of stories about them.

that is, to your advantage in a negotiation. We gotta have your mom and dad on the pod, I think. We've we've heard a lot of stories about them.

35:33

Alright. I'll do we'll we'll do one or two more here's a really easy and simple one.

Alright. I'll do we'll we'll do one or two more here's a really easy and simple one.

35:38

Never will I ever

Never will I ever

35:40

be disorganized, and I'll give you an example of

be disorganized, and I'll give you an example of

35:43

that.

that.

35:44

We changed payrolls, like, three different times. It was like Gusto and then ADP and then, like, Zenifits and then rippling

We changed payrolls, like, three different times. It was like Gusto and then ADP and then, like, Zenifits and then rippling

35:51

because rippling can track your computers

because rippling can track your computers

35:53

like, when you give out computers, or Gusto pays two days later so I can keep the cash for it. It was so stupid. And here's why it's so stupid. When you selling a company, for thirty million and three hundred million, it's the same thing, basically.

like, when you give out computers, or Gusto pays two days later so I can keep the cash for it. It was so stupid. And here's why it's so stupid. When you selling a company, for thirty million and three hundred million, it's the same thing, basically.

36:07

As in a lot of times when you sell business, Let's say, I don't know what that threshold is. It could be ten or fifteen million. But

As in a lot of times when you sell business, Let's say, I don't know what that threshold is. It could be ten or fifteen million. But

36:15

when you sell a company for three hundred million and fifteen million, They basically give you this Excel sheet, and it has

when you sell a company for three hundred million and fifteen million, They basically give you this Excel sheet, and it has

36:22

five pages, and each page has literally fifty bullet points. And each bullet point is a big deal. For example, one bullet point will be under the HR tab, and it will say show me

five pages, and each page has literally fifty bullet points. And each bullet point is a big deal. For example, one bullet point will be under the HR tab, and it will say show me

36:34

the payroll

the payroll

36:35

for the last five years

for the last five years

36:37

or show me,

or show me,

36:40

every contractor you've ever hired. Yeah. Add the contracting agreement. Have with every single contractor, including the confidentiality incident. We don't even have that yet. Like Yes. Yeah. And here's why it's a big deal. When you switch pay here's a very specific example. When you If you just use one payroll, that's easy. You just click export.

every contractor you've ever hired. Yeah. Add the contracting agreement. Have with every single contractor, including the confidentiality incident. We don't even have that yet. Like Yes. Yeah. And here's why it's a big deal. When you switch pay here's a very specific example. When you If you just use one payroll, that's easy. You just click export.

36:57

That's easy, but I didn't. And so I had to and then if, you know, if it's been three years, you have to call Zenefits I don't have access to my account anymore. Do you guys even have these records? And I thought this was stupid. And I was like, I remember telling Kip, the CMO of Hubspot. I was like, Kip, I used Fiverr one time.

That's easy, but I didn't. And so I had to and then if, you know, if it's been three years, you have to call Zenefits I don't have access to my account anymore. Do you guys even have these records? And I thought this was stupid. And I was like, I remember telling Kip, the CMO of Hubspot. I was like, Kip, I used Fiverr one time.

37:14

I paid a hundred and fifty dollars out of my PayPal account. I even paid it personally. And he's I was like, why does this matter? And he's like, well, you know, I can't hire

I paid a hundred and fifty dollars out of my PayPal account. I even paid it personally. And he's I was like, why does this matter? And he's like, well, you know, I can't hire

37:23

B Baller eighty four

B Baller eighty four

37:25

on Fiver because if that goes against Fiver's terms of service,

on Fiver because if that goes against Fiver's terms of service,

37:29

And that would be, like, I can't I have to make sure that everything was by the book because every little thing matters. And and that made a lot of sense to me, but I was a fool and I was disorganized. I would use Paypal for some stuff. Every once in a while, I would just venmo someone. I'd be like, here's five hundred bucks. Thanks for the freelancer. Or I wouldn't track,

And that would be, like, I can't I have to make sure that everything was by the book because every little thing matters. And and that made a lot of sense to me, but I was a fool and I was disorganized. I would use Paypal for some stuff. Every once in a while, I would just venmo someone. I'd be like, here's five hundred bucks. Thanks for the freelancer. Or I wouldn't track,

37:46

confidentiality agreements. It was fucking mess. I used Google Drive to store some stuff. Dropbox to store some it was a mess. And I'm telling you, when you're selling a company for what I sold it for, I only had forty employees and you can't tell anyone that you're selling the company. So it was basically me and Edie, this woman who worked with me, and we went through all of these documents to find all of this shit, and it literally took three months to find documents. That's and three months working every day for twelve hours today. It is so hard to get all the documents. It is so challenging, and you don't wanna give them anything that's messy. Otherwise, you'll look not buttoned up. And if you look not buttoned up, they'll say, What else are you missing? Or, like, are you lying about something? Right. And you need to present things in a really nice orderly fashion. And so

confidentiality agreements. It was fucking mess. I used Google Drive to store some stuff. Dropbox to store some it was a mess. And I'm telling you, when you're selling a company for what I sold it for, I only had forty employees and you can't tell anyone that you're selling the company. So it was basically me and Edie, this woman who worked with me, and we went through all of these documents to find all of this shit, and it literally took three months to find documents. That's and three months working every day for twelve hours today. It is so hard to get all the documents. It is so challenging, and you don't wanna give them anything that's messy. Otherwise, you'll look not buttoned up. And if you look not buttoned up, they'll say, What else are you missing? Or, like, are you lying about something? Right. And you need to present things in a really nice orderly fashion. And so

38:29

start being organized from day one is really, really important and not, like, being a Maverick and being, like, I'll just here, I got twenty bucks. I'll pay you for this. I'll use PayPal for this. Like, it's a mess. Well, I gotta drink to that because

start being organized from day one is really, really important and not, like, being a Maverick and being, like, I'll just here, I got twenty bucks. I'll pay you for this. I'll use PayPal for this. Like, it's a mess. Well, I gotta drink to that because

38:42

I made that same mistake. No surprise. I'm, like,

I made that same mistake. No surprise. I'm, like,

38:46

the most disorganized guy on earth.

the most disorganized guy on earth.

38:48

And, you know, I made mistakes, like,

And, you know, I made mistakes, like,

38:51

I thought,

I thought,

38:52

you know, hey. Start up. You guys gotta move fast. Don't waste time incorporating and getting trademarks and

you know, hey. Start up. You guys gotta move fast. Don't waste time incorporating and getting trademarks and

38:58

doing all that. And,

doing all that. And,

39:00

you know, that could be the difference between long term capital gains or short term gains or having to, you know, explain why, you know, the IP is over here, but it should be over here.

you know, that could be the difference between long term capital gains or short term gains or having to, you know, explain why, you know, the IP is over here, but it should be over here.

39:10

Or, you know, we made a mistake of,

Or, you know, we made a mistake of,

39:12

did you mail in your eighty three b? I one year I did. And for one company, I just didn't do it. And I was, like, I was, like, oh, I gotta, like, go to the post office and I just didn't do luckily, that company failed, and I didn't have to pay the price of that. But, like, you know, the a b three b election, basically, but for anybody who doesn't know is, like, a

did you mail in your eighty three b? I one year I did. And for one company, I just didn't do it. And I was, like, I was, like, oh, I gotta, like, go to the post office and I just didn't do luckily, that company failed, and I didn't have to pay the price of that. But, like, you know, the a b three b election, basically, but for anybody who doesn't know is, like, a

39:29

you can basically get Shares in a company, and you could tell the IRS, hey, tax me now this year on the gain of these shares?

you can basically get Shares in a company, and you could tell the IRS, hey, tax me now this year on the gain of these shares?

39:37

Because I'm gonna exercise them now. And it's like a hundred dollars. I'm gonna exercise these shares now.

Because I'm gonna exercise them now. And it's like a hundred dollars. I'm gonna exercise these shares now.

39:42

Tax me, you know, and so it's like the the original strike price was one cent, and then they're valued at one and a half cents. And so you're like, text me today on that gain so that I've exercised the shares at this price so that when I sell, I don't have to,

Tax me, you know, and so it's like the the original strike price was one cent, and then they're valued at one and a half cents. And so you're like, text me today on that gain so that I've exercised the shares at this price so that when I sell, I don't have to,

39:55

pay this huge markup on the on the exercise, of the And you only have, like, thirty or sixty days to mail it in and you basically literally have to write a letter

pay this huge markup on the on the exercise, of the And you only have, like, thirty or sixty days to mail it in and you basically literally have to write a letter

40:03

is it ninety days you have to write a letter and you wanna, like, post market, and then you wanna, like, you you write in the letter, like, send me a receipt of this. Right. It's like a really annual process. And you're like, dear IRS, please send me proof that you have received this, and you have to store that in your records in case you all ever get audited. And I think now there's, like, I think there's some automation around this. But, yeah, I I was messy about that. You know, I had this great meeting when I wanted to sell my company. I didn't know how, and I went and I met with five people who had sold multiple companies. And I was like, okay. Hey. I don't know what the fuck I'm doing here.

is it ninety days you have to write a letter and you wanna, like, post market, and then you wanna, like, you you write in the letter, like, send me a receipt of this. Right. It's like a really annual process. And you're like, dear IRS, please send me proof that you have received this, and you have to store that in your records in case you all ever get audited. And I think now there's, like, I think there's some automation around this. But, yeah, I I was messy about that. You know, I had this great meeting when I wanted to sell my company. I didn't know how, and I went and I met with five people who had sold multiple companies. And I was like, okay. Hey. I don't know what the fuck I'm doing here.

40:35

Can I explain to you what I'm currently doing? And then you tell me what I'm doing which which parts point out the dumb parts. Okay? Can you do that? Yeah. Because I was like, if I just ask you for your advice, who knows what you're saying? But if I draw you a picture of what I'm doing, And you could point to the ugly part,

Can I explain to you what I'm currently doing? And then you tell me what I'm doing which which parts point out the dumb parts. Okay? Can you do that? Yeah. Because I was like, if I just ask you for your advice, who knows what you're saying? But if I draw you a picture of what I'm doing, And you could point to the ugly part,

40:49

that'll help me. And so as I did, I had, lunch with this guy, Fwad, and,

that'll help me. And so as I did, I had, lunch with this guy, Fwad, and,

40:53

he's the CEO of this company called Array now.

he's the CEO of this company called Array now.

40:56

He had sold, I think he sold, like, five companies or some shit like that. And, he pointed out two mistakes that I was making. Number one, he goes,

He had sold, I think he sold, like, five companies or some shit like that. And, he pointed out two mistakes that I was making. Number one, he goes,

41:04

He's like, oh, wow. You got, like, okay. You have an actual offer on the table.

He's like, oh, wow. You got, like, okay. You have an actual offer on the table.

41:08

And I was like, yeah, dude. It's been so hard. It's such a long road, you know, even though it'd only been, like, forty days, but I was like, Dude, I yeah. It's just been ups and downs, but finally, we're here. And I was talking like I arrived at some destination.

And I was like, yeah, dude. It's been so hard. It's such a long road, you know, even though it'd only been, like, forty days, but I was like, Dude, I yeah. It's just been ups and downs, but finally, we're here. And I was talking like I arrived at some destination.

41:19

He goes,

He goes,

41:20

he's looked at me. He's like,

he's looked at me. He's like,

41:22

This is not over. Actually, you just reached the starting line. Now it's time to sprint.

This is not over. Actually, you just reached the starting line. Now it's time to sprint.

41:27

And I like to repeated that advice to so many people of now it's time to sprint because so many times this happened. Let's say you're fundraising for a company and you've spent, you know, three months trying to fundraise. You finally get money in the bank and you're so happy. Is that so satisfying?

And I like to repeated that advice to so many people of now it's time to sprint because so many times this happened. Let's say you're fundraising for a company and you've spent, you know, three months trying to fundraise. You finally get money in the bank and you're so happy. Is that so satisfying?

41:41

Your whole body just wants to relax.

Your whole body just wants to relax.

41:43

It's like, oh, you know, welcome to the start of the race now. Now it's time to run. You ready to run? Yeah. And, like The work starts especially true when it comes to closing,

It's like, oh, you know, welcome to the start of the race now. Now it's time to run. You ready to run? Yeah. And, like The work starts especially true when it comes to closing,

41:51

M and A. It's like, when you have the And what a lot of people don't realize is it it it takes from getting the offer to actually getting the money, that can take six months. That could take Exactly. For for me, it took they emailed me in they emailed me in September or October. I got paid in February.

M and A. It's like, when you have the And what a lot of people don't realize is it it it takes from getting the offer to actually getting the money, that can take six months. That could take Exactly. For for me, it took they emailed me in they emailed me in September or October. I got paid in February.

42:06

Yeah. Exactly. Three months, six months is a very common. And so

Yeah. Exactly. Three months, six months is a very common. And so

42:10

you,

you,

42:11

yeah, that's the premise for the hardest. The second thing he said was he goes, show me your data room.

yeah, that's the premise for the hardest. The second thing he said was he goes, show me your data room.

42:15

And I was like, oh,

And I was like, oh,

42:18

we have a Google drive, but, like, it's kinda messy right now. And he goes,

we have a Google drive, but, like, it's kinda messy right now. And he goes,

42:23

He goes, you're selling your company. Think of it like a product on Amazon. How does Amazon sell a product? I'm like, liftoff.

He goes, you're selling your company. Think of it like a product on Amazon. How does Amazon sell a product? I'm like, liftoff.

42:30

Page, you know, one, like, a one click buy. He goes, exactly.

Page, you know, one, like, a one click buy. He goes, exactly.

42:33

You need to turn your entire company into a giant buy button.

You need to turn your entire company into a giant buy button.

42:37

And I was like, what is that? He's like, you need to, like,

And I was like, what is that? He's like, you need to, like,

42:40

answer all the questions now. Get it all organized now. Put it all in place now

answer all the questions now. Get it all organized now. Put it all in place now

42:44

so that when they look at this stuff, they are ready to one click buy. If the the more questions they have to ask you, the more you have to go dig stuff up, the more half or incomplete information you have, to give them, the more reasons that this deal could fall apart. Turn your company into a giant buy button. That's the other advice I've given given, which is like

so that when they look at this stuff, they are ready to one click buy. If the the more questions they have to ask you, the more you have to go dig stuff up, the more half or incomplete information you have, to give them, the more reasons that this deal could fall apart. Turn your company into a giant buy button. That's the other advice I've given given, which is like

43:03

what are all the the ducks I can line up here so that this just becomes a you know, easy to understand, easy to consume,

what are all the the ducks I can line up here so that this just becomes a you know, easy to understand, easy to consume,

43:10

you know, process for them. And, like, it was the one, you know, thirty day period of my life where I became Marie condo. I organized the shit out of my company. I took everything. I was like, look, this thing needs to be bulletproof.

you know, process for them. And, like, it was the one, you know, thirty day period of my life where I became Marie condo. I organized the shit out of my company. I took everything. I was like, look, this thing needs to be bulletproof.

43:24

And, I'm so glad that I did because it was it was extremely necessary. Do you wanna do one last one? Yeah. Oh, by the way, I have one never will I ever

And, I'm so glad that I did because it was it was extremely necessary. Do you wanna do one last one? Yeah. Oh, by the way, I have one never will I ever

43:33

run my company like a personal piggy bank. So, I made this mistake before, and I have a story of a friend of ours who, made this mistake before.

run my company like a personal piggy bank. So, I made this mistake before, and I have a story of a friend of ours who, made this mistake before.

43:42

So what a lot of people do when they run their company is you start to make some money, and then you're like, oh, I have to pay taxes, and then they're like, fuck. Taxes suck. And you're like, what can I do to, like, reduce my I spend it all? And, like, I think smart people,

So what a lot of people do when they run their company is you start to make some money, and then you're like, oh, I have to pay taxes, and then they're like, fuck. Taxes suck. And you're like, what can I do to, like, reduce my I spend it all? And, like, I think smart people,

43:54

smart people have, like, tax stuff they do. So what I may do is let me start doing some tax stuff. I was like, okay. What's the tax stuff? And they're like, oh, let me,

smart people have, like, tax stuff they do. So what I may do is let me start doing some tax stuff. I was like, okay. What's the tax stuff? And they're like, oh, let me,

44:02

like, we talked to a guy recently that was like, oh, I created my own captive insurance program, and then I bought this property that we're using as, like, a a office. And I'm like,

like, we talked to a guy recently that was like, oh, I created my own captive insurance program, and then I bought this property that we're using as, like, a a office. And I'm like,

44:12

I

I

44:13

what are you doing? You're just trying to save, like, two hundred grand of tax is, and what you're doing is actually you're ruining your books. So, like, when I looked at his business,

what are you doing? You're just trying to save, like, two hundred grand of tax is, and what you're doing is actually you're ruining your books. So, like, when I looked at his business,

44:21

the business looked like he had no profit.

the business looked like he had no profit.

44:24

And he's like, you know, so happy that he's, you know, has this, like, shitty margin shouldn't shouldn't have profit margin because in that year, it saved him on taxes. But the reality is if you're building a company that you want to sell, You need to take some short term pain of having clean,

And he's like, you know, so happy that he's, you know, has this, like, shitty margin shouldn't shouldn't have profit margin because in that year, it saved him on taxes. But the reality is if you're building a company that you want to sell, You need to take some short term pain of having clean,

44:37

simple

simple

44:38

books that you pay, you know, legit taxes on in order for you to have a big exit at the end because they're gonna see a track record of multiple years of solid profits that that you're gonna sell on the end. Right? Like, that is just generally better. There's, of course, exceptions to both cases, but, like, generally, that is a better approach. We have And if you don't wanna sell, there's a there there is like a bullshit category on quickbooks that you can put stuff in too, but that is not ideal if you're trying to sell.

books that you pay, you know, legit taxes on in order for you to have a big exit at the end because they're gonna see a track record of multiple years of solid profits that that you're gonna sell on the end. Right? Like, that is just generally better. There's, of course, exceptions to both cases, but, like, generally, that is a better approach. We have And if you don't wanna sell, there's a there there is like a bullshit category on quickbooks that you can put stuff in too, but that is not ideal if you're trying to sell.

45:03

Yeah. Exactly. Is if you're trying to sell, you wanna you wanna be able to show a track record of of success and,

Yeah. Exactly. Is if you're trying to sell, you wanna you wanna be able to show a track record of of success and,

45:09

versus, like, you know, I had a friend who

versus, like, you know, I had a friend who

45:11

would go to the bank on December thirtieth and take out a bunch of cashier's checks that they were gonna use to pay vendors. And it's like, prepaid vendors for the next And then the next year, they're like, oh, I wanna quit this vendor, but I've already prepaid them. Or they'll, like, take two of the checks and never even paid and then put it back in the bank a month later. Hope nobody notices. It's like, Dude, just don't do this shit. Like, don't treat your company like a personal piggy bank

would go to the bank on December thirtieth and take out a bunch of cashier's checks that they were gonna use to pay vendors. And it's like, prepaid vendors for the next And then the next year, they're like, oh, I wanna quit this vendor, but I've already prepaid them. Or they'll, like, take two of the checks and never even paid and then put it back in the bank a month later. Hope nobody notices. It's like, Dude, just don't do this shit. Like, don't treat your company like a personal piggy bank

45:34

if you wanna sell this someday because nobody wants to buy your hot

if you wanna sell this someday because nobody wants to buy your hot

45:38

mess. And, I think it's very and you can't undo that. You you can't really unwind that. These are, like, it's in the it's in the history books. Every year that you're doing that, you are kind of, like, making your You're adding a bunch of asterisk to your own books that, like, you need a buyer who's willing to go and do a bunch of add backs and try to figure this out. In order to feel confident that they should buy this business. When Dave Portnoy is sold, the you know, he's sold Barcelona Sports a couple of times, but the first time he sold it, he was like,

mess. And, I think it's very and you can't undo that. You you can't really unwind that. These are, like, it's in the it's in the history books. Every year that you're doing that, you are kind of, like, making your You're adding a bunch of asterisk to your own books that, like, you need a buyer who's willing to go and do a bunch of add backs and try to figure this out. In order to feel confident that they should buy this business. When Dave Portnoy is sold, the you know, he's sold Barcelona Sports a couple of times, but the first time he sold it, he was like,

46:06

I was an idiot. He's like, I owned a racehorse

I was an idiot. He's like, I owned a racehorse

46:10

that I bought

that I bought

46:11

through Barge tools sports.

through Barge tools sports.

46:13

And so bar stool sports owed, like, two race horses,

And so bar stool sports owed, like, two race horses,

46:17

a trailer for the race horse,

a trailer for the race horse,

46:20

they owned, like, the house I was in. Like, he said all this stuff that the business owned. And he's like, we got docked so hard. Three thousand all the leaders that did that we acquired. Like Yeah.

they owned, like, the house I was in. Like, he said all this stuff that the business owned. And he's like, we got docked so hard. Three thousand all the leaders that did that we acquired. Like Yeah.

46:30

And that's what he said. He's like, he was like, and didn't wanna buy, like, skippy the race horse.

And that's what he said. He's like, he was like, and didn't wanna buy, like, skippy the race horse.

46:36

But the business owned it. And we it was really hard. You know, when he first sold that business, He sold the first portion of it. And at the time, Barcelona was a big deal. He only sold it at a fifteen million dollar valuation Crazy. When it was worth way more than that. And it's probably because it would he was just sloppy.

But the business owned it. And we it was really hard. You know, when he first sold that business, He sold the first portion of it. And at the time, Barcelona was a big deal. He only sold it at a fifteen million dollar valuation Crazy. When it was worth way more than that. And it's probably because it would he was just sloppy.

46:55

A lot of it was sloppy. And he was like, I also, like, made so much profit. And I didn't put any of the profit back into the company. I just would buy horses and shit like that and gamble. He's, like, and gambled like crazy because it was content.

A lot of it was sloppy. And he was like, I also, like, made so much profit. And I didn't put any of the profit back into the company. I just would buy horses and shit like that and gamble. He's, like, and gambled like crazy because it was content.

47:07

Is that it? I got one more. Never will I ever

Is that it? I got one more. Never will I ever

47:10

just sit just stay at home when there's a deal to be closed.

just sit just stay at home when there's a deal to be closed.

47:14

So this is the rule of just get on a plane.

So this is the rule of just get on a plane.

47:17

Go meet go meet people in person. Don't do Zoom calls. Or if you're doing Zoom calls, add in the in person afterwards,

Go meet go meet people in person. Don't do Zoom calls. Or if you're doing Zoom calls, add in the in person afterwards,

47:25

The in person meetings are so important.

The in person meetings are so important.

47:28

You know, I'll I'll tell one story which was

You know, I'll I'll tell one story which was

47:32

just a deal we closed recently.

just a deal we closed recently.

47:35

The oh, yeah. One deal that we didn't close that I got on a plane for. And, like, you know, for me, I I my running joke on the spot is I I don't leave my house. And that's true. I really don't leave my house. I don't like to do that. I got little kids and, I don't know, it's for our family life. It's a very disruptive to travel. If I go if I leave the house for, like, five days or whatever. But I did for this one deal. It didn't the deal didn't go through, but I could sleep easy at night because I'm like, I did everything. Like, I

The oh, yeah. One deal that we didn't close that I got on a plane for. And, like, you know, for me, I I my running joke on the spot is I I don't leave my house. And that's true. I really don't leave my house. I don't like to do that. I got little kids and, I don't know, it's for our family life. It's a very disruptive to travel. If I go if I leave the house for, like, five days or whatever. But I did for this one deal. It didn't the deal didn't go through, but I could sleep easy at night because I'm like, I did everything. Like, I

47:58

made multiple offers on this deal. I got on the plane. I met them in person. Like, you know, we did everything that we could we could do. We did what was in our control.

made multiple offers on this deal. I got on the plane. I met them in person. Like, you know, we did everything that we could we could do. We did what was in our control.

48:08

With a deal that we just recently did, the other party was, like, cool. Like, after the initial conversation of interest, they were, like, cool.

With a deal that we just recently did, the other party was, like, cool. Like, after the initial conversation of interest, they were, like, cool.

48:16

We'll love to just next chat. We'd love to do it in person. I'm happy to fly out to you wherever you are. Let me know which day works. I'll fly in same day. Fly out same day, and it'll be easy.

We'll love to just next chat. We'd love to do it in person. I'm happy to fly out to you wherever you are. Let me know which day works. I'll fly in same day. Fly out same day, and it'll be easy.

48:25

And I was like, I respect this person, and I trust doing business with this person because they understand this principle of, like, you just gotta get on a plane and you gotta go meet somebody. And you should be willing to do that. When we sold the milk road, I had a similar situation where

And I was like, I respect this person, and I trust doing business with this person because they understand this principle of, like, you just gotta get on a plane and you gotta go meet somebody. And you should be willing to do that. When we sold the milk road, I had a similar situation where

48:39

we

we

48:40

I told you about the high offer, the fair offer, we had said no to the fair offer, took the high offer, then you credit it. So we went back to the fair offer months later.

I told you about the high offer, the fair offer, we had said no to the fair offer, took the high offer, then you credit it. So we went back to the fair offer months later.

48:48

And we were like, I was like, you know what, I wanna see what those guys are up to and see if there's a deal to be done here.

And we were like, I was like, you know what, I wanna see what those guys are up to and see if there's a deal to be done here.

48:54

And,

And,

48:55

I kind of called or emailed. It was sort of, like, we just had, like, a quick I texted, I think. And it was, like, really, really wasn't an opening.

I kind of called or emailed. It was sort of, like, we just had, like, a quick I texted, I think. And it was, like, really, really wasn't an opening.

49:02

But I was, like, Hey. I'm gonna be in the city tomorrow,

But I was, like, Hey. I'm gonna be in the city tomorrow,

49:05

you know, for my niece's soccer game.

you know, for my niece's soccer game.

49:08

So I was like, I'll go see my niece's soccer game, but I'm gonna really doing this to me too, but I mean, it sound to him, like, I was going to the soccer game. And I was like,

So I was like, I'll go see my niece's soccer game, but I'm gonna really doing this to me too, but I mean, it sound to him, like, I was going to the soccer game. And I was like,

49:16

you know, we'd love to catch up. He said, yeah, great. Let's do it. And so we drive into the city.

you know, we'd love to catch up. He said, yeah, great. Let's do it. And so we drive into the city.

49:21

Car breaks down on Van Ness.

Car breaks down on Van Ness.

49:24

And my car literally just shuts off in the middle of the road. Your car breaks down. Carlos shuts off. I don't know what happens. The car stop stop driving. And I, like,

And my car literally just shuts off in the middle of the road. Your car breaks down. Carlos shuts off. I don't know what happens. The car stop stop driving. And I, like,

49:33

and the momentum to let me just get it to the side of the road. But I'm there with my Don't you have, like, a brand new Escalade? This is the BMW before that. So,

and the momentum to let me just get it to the side of the road. But I'm there with my Don't you have, like, a brand new Escalade? This is the BMW before that. So,

49:41

this is, you know, I'm with my wife. My two kids are in the back and the car seats. Cars broke it down. I got this meeting in, you know, ten minutes.

this is, you know, I'm with my wife. My two kids are in the back and the car seats. Cars broke it down. I got this meeting in, you know, ten minutes.

49:48

And,

And,

49:50

I'm like, shit. I guess I gotta cancel this meeting, you know, whatever. Like, knows? Well, if this meeting anything would have even come of it anyways, but, like, whatever. We'll wait for AAA.

I'm like, shit. I guess I gotta cancel this meeting, you know, whatever. Like, knows? Well, if this meeting anything would have even come of it anyways, but, like, whatever. We'll wait for AAA.

49:58

And my wife's like, no. You gotta go. You told you've been telling me all morning how this is an important meeting. Like, you think that you have a feeling that you could be able to to get this deal back on, like, you know,

And my wife's like, no. You gotta go. You told you've been telling me all morning how this is an important meeting. Like, you think that you have a feeling that you could be able to to get this deal back on, like, you know,

50:09

go.

go.

50:10

And,

And,

50:11

I was like, I'm just not gonna leave my wife and kids on Van Ness in San from the middle of San Francisco in a broke down car.

I was like, I'm just not gonna leave my wife and kids on Van Ness in San from the middle of San Francisco in a broke down car.

50:18

And she's like, Just go. We'll be fine. I was like, okay. You don't have to tell me twice. And so I hop out and,

And she's like, Just go. We'll be fine. I was like, okay. You don't have to tell me twice. And so I hop out and,

50:24

I literally run.

I literally run.

50:26

I I run down Van Ness, like, you know, a mile, basically,

I I run down Van Ness, like, you know, a mile, basically,

50:30

get to the coffee shop, meet the guy, deal comes back to life, by the end of that coffee meeting, and we ended up selling to them. You know, and I'm like, I I think I'm I'm actually, like, hundred percent sure. If I hadn't gone to that coffee meeting,

get to the coffee shop, meet the guy, deal comes back to life, by the end of that coffee meeting, and we ended up selling to them. You know, and I'm like, I I think I'm I'm actually, like, hundred percent sure. If I hadn't gone to that coffee meeting,

50:42

That deal doesn't happen. And, because in that meeting, we were able to clear up some things that, like, were not as exact

That deal doesn't happen. And, because in that meeting, we were able to clear up some things that, like, were not as exact

50:49

transactional, but, like, you know, kind of what his fears were and what our hesitations were and really kinda suss it out and get get comfortable with each other in person. So Yeah. Insane. Insane that that happened and,

transactional, but, like, you know, kind of what his fears were and what our hesitations were and really kinda suss it out and get get comfortable with each other in person. So Yeah. Insane. Insane that that happened and,

51:00

This is like a this is like an anti ad for BMW.

This is like a this is like an anti ad for BMW.

51:04

Yeah. Don't trust them. Yeah. Don't trust them. They'll ruin your deals.

Yeah. Don't trust them. Yeah. Don't trust them. They'll ruin your deals.

51:09

Well, that's sick.

Well, that's sick.

51:11

Hopefully, people dig this. We did a little q and a for this episode,

Hopefully, people dig this. We did a little q and a for this episode,

51:15

except on one topic. I think we're gonna keep doing these every other Tuesday. Right? Yeah. We're for now. Trying to come up with great topics that we can kinda shoot the shit on it and share maybe, you know, either our answers or or,

except on one topic. I think we're gonna keep doing these every other Tuesday. Right? Yeah. We're for now. Trying to come up with great topics that we can kinda shoot the shit on it and share maybe, you know, either our answers or or,

51:26

stories that that we've been through. So I think that was good. I think people will like this one. But let us know. Let us know the YouTube comments what you Alright. Well, we'll end there, and

stories that that we've been through. So I think that was good. I think people will like this one. But let us know. Let us know the YouTube comments what you Alright. Well, we'll end there, and

51:35

that's the pod.

that's the pod.

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