00:00
Alright. What's going on? This is Sam. We've got an awesome episode today. We have Andrew Wilkinson on the pod. Andrew's one of our good buddies. Andrew owns this company called Tiny. Tiny basically started as, like, this agency that made a bunch of profit, and he took those profit, and he's bought, like, eighteen or twenty different companies. And he took tiny public. I think today, it's trading in the six hundred million dollar market cap. So he's got like a really good perspective on what's going on in life. During this episode, I think it's the the, like, twenty minutes left in the episode, he's actually said something that I'm I'm sitting here taking notes. It's gonna change my business. It's about the this thing called the profit first, mentality. And he goes in in-depth on how much money he leaves in each business and how the CEOs are able to operate them. It's really insightful stuff that I haven't really heard him talk about before. And then also
00:45
Andrew is interesting to me because Andrew is my close friend, but he's very wealthy. And I get to ask him all types of questions, kinda like behind this stuff on how he spends his money. He talks about how he's now a patient, a peer at TIA, who's this famous doctor, and how much he's spending on that and and and the outcome of that. I find it very interesting. Talks about shooting his shot with his hero. So he's done business with guys like Bill Ackman, who's, you know, worked ten or twenty billion dollars as a hedge fund guy, and he talks about how he met Charlie Munger, who's
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Warren Buffett's partner. And so there's really interesting insights on a, how he lives his life, but how he got indoors that he did when he was still up and coming, really fascinating.
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So this is the episode with Andrew Wilkinson. Let me know what you guys think. You can hit me up on Twitter, thus Sam Parr, and let me know if you enjoyed
01:35
Alright. What's up? We got the man here, Andrew Wilkinson,
01:39
fan favorite guest of the pod.
01:42
Welcome, Andrew. How's how's he how's it going? Hey, guys. I'm good. So you gave us, like, a list of, like, ideas and things that you're kinda messing with, but you have this thing on here about sexy versus non sexy things. And you're like, the things that everyone loves on the outside,
01:57
they're the hardest ways to make a living. And so you you said here, that I didn't know this. I I or maybe I did. I knew you owned a bakery. Is you said you owned a deli and a bakery. Is that two separate things or is that one thing? No. That's combined. That's one. And it's a pain in the butt.
02:12
Total pain. Yeah. So, yeah.
02:15
But thinking about this a lot lately, because I think When you talk to young entrepreneurs, they're they always wanna do something sexy.
02:22
And I was like that too. Like, I was a product CEO. Right? You think every CEO kinda has their thing
02:28
And for me, it was making great products. So when I was running software companies and stuff, I'd always be thinking, oh, when we released this new feature, that's when everything will take off or, you know, when we get this partnership or, you know, whatever big announcements, things flashy.
02:43
But one of the things I've realized after running a company for, like, twenty years is it's really not the sexy stuff that pays off.
02:50
You know, for example, like, we have a bunch of companies,
02:53
And, you know, one increased prices thirty percent after not increasing prices for five years. They massively grew profits. Right? That took ten minutes, a little bit of planning,
03:04
and that paid off big.
03:06
You know, one significantly re reduced shipping costs by sizing down packaging.
03:12
You know, another realized, hey, we've got insane SEO on certain keywords, and now we can drive affiliate revenue.
03:18
You know, one had a bunch of customer gift card deposits,
03:22
and they were like, oh, shit. We can invest these in T bills and make five percent. Makes five hundred grand a year of just pure profit. I just love these boring things like that. And I've realized that it's kind of sad. Like, you know, I grew up being like, oh, yeah. I wanna be the next Steve Jobs or James Dyson or something, but the things I'm actually good at are these really, really boring. I call them like lever pulls. You get in, you pull a lever and revenue or earnings just grows,
03:49
you know, by x percent.
03:52
This data is wrong every freaking time.
03:55
Have you heard of HubSpot?
03:57
HubSpot is a CRM platform where everything is fully integrated. Well, I can see the client's hold history, calls, four tickets, emails. And here's a test from three days ago, I totally missed.
04:09
HubSpot, grow better.
04:12
You know, the the good thing about that is that the older you get the more,
04:16
like, appealing those get. And so for example, like and and this also is just in life, like, You know, I've never seen a couch. I don't like, you know, the older I get. I'm just like, yeah, it'd be nice to sit right now. And I feel like the same thing happens at business where
04:29
I used to think I wanted to pull off some, like, awesome
04:32
feat of, like, creativity and hard work. And I actually very rarely wanna do that. There's times, but most of the time, I'm like, oh, what's the simplest thing I could do that will just make this work better? And you were the king of that. You were you were the king of that. You you owned a video streaming startup that or or you were, like, to the moon or nowhere.
04:52
And you spent, like, five years or four years doing it. I mean, you're you're in. Crazy
04:57
computer vision features and all this stuff even before AI became, like, you know, really big. And And the reality was like, we have this other business called birthday alarm.
05:06
The birthday alarm was like a reminder of It's your friend's birthday today, and it would send them a cheesy ecard, you know, if you pay nine dollars a year.
05:15
And that business had been printing cash, millions of dollars,
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every year for, like, fifteen plus years. I think it started in two thousand one, and I'm this was, like, I was working on it, like, in twenty, sixteen, twenty eighteen. So, like, you know, eighteen years later. And,
05:31
we we were like, you know, at one point, we finally got our senses. And we were like, why don't we make birthday learn like a little bit better. Like, it pays all the bills.
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We could just
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improve it. Right? And even then, the team was like, list of ideas,
05:46
rewrite the whole thing in the new, like, you know, make it re rewrite name JavaScript. Oh, it's written in this old, like, language because that's what was Hutton in two thousand one, we gotta rewrite the whole thing. And then when we do that, we'll be able to make it so much cooler. We'll add these new features. We'll redesign this. We redesigned it. Our designer spends mock up after mock up, unlike making it cleaner and more minimalist and more cool or whatever.
06:09
And I tell you what, after a year of doing all that shit, there was really only two things that made a difference.
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Number one, we raised prices.
06:18
So you know, raise prices by thirty percent exactly what you said, Andrew, because those prices haven't gone up in fifteen years. You just delete the zero and the twenty dollars a month and change that to a five because twenty five a month. Exactly.
06:27
And then the second thing was,
06:30
we implemented Stripe instead of the old payments platform because Stripe had a feature where If somebody's credit card expires
06:37
and they get a new one, like at all, they, you know, their credit card company gives them a new one, it would mess up your subscription. And they're the Stripe has a feature for twenty five cents, they would just update it with the new card automatically without the user having to go type anything in.
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And that one like, one feature is like a, you know, seven figure feature that took honestly, no work on it. We just just check a box on on stripe to be like, yeah, we want that. We'll pay the quarter for every time you do that. And,
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you know, we made, like, an extra million dollars a year of profit just off of that one thing, basically.
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And, it it was a big lesson learned of, like, you know, the the link between effort and result is so much more disconnected than you think. And,
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the more mature you get, the more you realize, like, you should just work backwards from what's actually gonna work, not like, what's the cool or or difficult thing to do. These these things too. They're so often they're one day of work. Right? Like, we have a similar thing. We have this,
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invoicing software about ten years ago called ballpark.
07:34
And, it was the first SaaS product that we built. And we realized we were doing, like, I think a hundred million dollars of payment volume through the credit card process So, you know, I send Sam an invoice for ten grand, and he has the option to pay on credit card. And we just marked it up too. And I think that was worth hundreds of thousands of dollars to us. And I remember it was, like, ten minutes for me. I was, like, going through Stripe and realized there's this setting, and I checked a box. And suddenly we make way more money. So I think, this stuff is super powerful. And I mean, like, just to tell to, like, give an example, so you know, Sam mentioned, so I own, like, a deli and a bakery.
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And when I was a kid, there was this, bakery down at the end of my street that I would always go to on the weekends, I'd go and get a croissant and have a coffee and sit and listen to a podcast or something. And I knew the owner my brother worked there.
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The owner would pay me, like, ten bucks hour to fix his computer.
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And about eight years ago, he comes to me and he's like, hey, I'm gonna sell the business. I wanna make sure it goes in a good hands. Will you buy it? And I don't know anything about the bakery or anything, but I kinda wanna protect this, like, cool neighborhood institution. And so And you wanna be, like, a big shot. You wanna be, like,
08:46
Come come hang out at my place. You know, like, would you like some of my bread? Yeah. Totally. There's like there's always like a pride of ownership. Right? Like, if I tell someone low let's say, like, locally, I'm like, Hey, I own this huge social network for graphic designers dribble. They're like, you know, eyes glaze over. They don't care. But if I say oh, I own Otavio, like, the local bakery that everybody goes to with their kids. They're like, whoa, that's so cool. So there's a lot of pride of ownership But there's, like, thirty or forty employees.
09:13
You know, we have to have been sure, like, a baker wakes up at two in the morning to bake the croissants,
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a million different things have to go right to serve a customer and have them have a good experience. Right? And this business is, like, you know, it goes from making money one month to losing money for six months.
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You know, t huge swings if, like, one person quits, it messes up everything.
09:36
Super complicated to operate.
09:38
And if we're lucky at the end of all of that, we'll maybe make a hundred and fifty grand a year. Now on the flip side, we bought a business about almost ten years ago called wework remotely dot com, and it's very simple. It's a job board.
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People pay money to post, like, a blue link, kinda like, Craig's list. So you're hiring remote. You post on we work remotely
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it would be like, you know, I'm hiring a developer
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for, you know, automatic or whatever.
10:07
So we were when we bought that business, charging one ninety nine, and it was run by the guys from base camp, and they just didn't do any mar marketing or promotion.
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Didn't do any SEO. So we buy the business.
10:20
We pay three or four times earnings or something, which was, you know, a fair price given what he was doing.
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We immediately take the price from one ninety nine to two ninety nine because that's what all the other job boards were charging. And we hire an seo consultant. We start doing SEO. We start doing email marketing.
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That business went from doing about four hundred k of profit
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to, I think, a couple years ago, it did four million of EBITDA or something in that range. So these in that business, that had two employees and one or two part time contractors,
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Right? And literally, like, the entire team could go pens down for six months, and it would still keep printing cash. And so you look at it, and it's, like, business on harm hard mode versus business on easy mode, but the inexperienced entrepreneur would look at the bakery and go oh, sexy. Right? And it's, like, online, there's bakeries too. Right? E commerce businesses or bakeries in my opinion. How much of, what was, so to for those who don't know Andrew, he took his kind of his holding company took public. I think today, it's trading many hundreds of millions of dollars, five or six hundred million dollars.
11:27
What were your earnings that you reported for last quarter or what's like the public record for your annual earnings. I think it was between thirty and forty. That's like the public number. I think
11:38
But what's crazy is that we work remotely would have accounted for something like ten or fifteen percent of of, you know, this company worth hundreds of millions of dollars, of your guys' earnings. That's pretty wild. Well, and I think a lot of people forget that small things can get big. Right? We grew that we took that business
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from four hundred k, we basically ten x ed it. And we bought that business, I think, for about one point five million.
12:02
Right? So it's pretty it's pretty wild how powerful this stuff can be. When you see a business where they're just not they're myopic on something, they're not doing the best practices, and often it's because they have other priorities. I mean, the base camp guys had a hundred million dollar ARR SaaS business. The last thing they're gonna be thinking about is this little pimple on their ass, this, you know, remote job board.
12:23
So buying buying from someone like that is a great opportunity.
12:27
I was talking to one of your
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company,
12:30
CEOs last night. And,
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they mentioned this profit first book, which I think is interesting.
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Sam, do you know about this? Everyone is talking about that. Andrew or told me about it months ago. And since then, I've seen, like, eight or nine friends bring it up. I don't know what it's about, though. I'll give you my take, and then Andrew, you you fill in the gaps because I haven't read the book. But I was like, can you just explain it to me in five seconds? And then they explained it to me in five seconds. And I was like, oh, got it. And that makes a ton of sense. And so here's the the ultra have read the book version of of the book, which is
13:04
in a normal business,
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you get revenue top line. And then you start, you know, you get your gross profit. So, like, in a revenue minus what it took to sell it to sell those goods. And then you have, like, all these other expenses. And then what what's left is like the profit at the end. So profits at the end normally. And then you sort of take a distribution out of it. That's probably how you ran the hustle. Yeah. Or you take no distributions because you're just paranoid.
13:28
And that's how I run my e commerce business. And I think what the profit first mentality is you take the gross profit You put that in your bank account.
13:35
And then as you have bills to pay, you literally put it in your bank account or figuratively?
13:41
I think you literally move it. You move it into a profit bank. You sweep it. You don't you don't see. You sweep it out of the company. Got it. Okay. You sweep it out of the company. Then company gets a bill from some vendor or some software and then you have to go back and you have to now take money out of that pocket and pay it. And there's something psychological about When you just accept the waterfall of expenses and you're like, I guess I get what's left, you sort of leave the fat in the company versus
14:05
if I paid you out everything and then I said, hey, Sam, gonna be eight grand to use the software or whatever. Be like, eight grand for this. I don't wanna I have to take eight grand out of my pocket and pay for this. You start to question a bunch of these expenses and it sort of forces you to get lean even though nothing changed except for the order of operations. But does that ruin growth? Does that, like, does that ruin when you see an opportunity and you wanna pounce on it? Like, well, no. Because you would just you would just you'd take that money and you'd invest back into the company. And at first, Andrew, did I did I bastardize it or or was that was that an accurate description? I I think you nailed it. I mean,
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the way to think about it is, like, if you wanna lose weight, you know, there's that all these,
14:43
psychological
14:44
experiments where they give people on different sizes of plates, and the bigger the plate, the more they eat, because
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psychologically, you know, they gotta get through all that food. So the idea here is smaller plate. So, yeah, you if you make a hundred bucks, you immediately take away thirty, and people are just forced to eat off of a smaller plate, and so they eat less. And they're more thoughtful about expenses. But how do you do the math to figure out how much cash to leave in the bank?
15:09
Well, I think you would always say that,
15:12
let's say that Your business historically has run with a thirty percent net profit margin. You would always scrape out thirty percent. And over time, if there's excess cash,
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They're more profitable. You keep increasing that threshold.
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Right? Cause you wanna be running as as,
15:28
as optimal as possible. One of the weirdest things I've noticed in business is that everybody, all CEOs,
15:35
seem to go, you know what? Twenty five percent profit, that's good. Let's lee you know, that that's what we should manage too. Yeah. That's how I feel. I do that. What I've seen is that some of our businesses historically,
15:47
not at all times, can operate with eighty or ninety percent net profit margins. And if we got a dreamer in there, right, if we got a CEO like me from twenty years ago or or Sean from twenty years ago, we'd be going, oh, let's innovate. Let's do all these new things, and they'd burn through all that cash. So I think it's a way of creating discipline. Now we haven't actually implemented this. I've gone to all the CEOs and asked them to read it, and some of them have got excited and implemented it. But, I think it's a really interesting framework, especially for smaller companies.
16:16
Our buddy, Sully does this. So I was like, how much working? It was like, are you come bank balance getting bigger? I was like, how much should I leave in there versus,
16:23
you know, distribute out?
16:25
And he was like, I just distributed it all out. And I was like, all of it? Like, what about, like, three months of working capital? And he's like, okay. You can leave a month or two, but he's like, People act like you can't just put money back in the bank account. Like, you can always put money back in the bank account. There's no penalty for this. And he's like, I think you have way better discipline when there's not this huge bank balance sitting there. And,
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you know, and I was like, oh, okay. I guess you're right. There is no, like, penalty or, you know, for just sending the money back into the bank account when it's needed, but you will question. Is this really needed? And why is this needed? And what happened last month that is leading us to inject capital back it? I've I've, like, yelled at Sam over text a few times about this. Many times. But
17:04
I'm really conservative. I've changed though. So starting January one, we're making the change,
17:10
where I'm taking out a lot of the money, and we're actually just putting it into, like, t bills into a different account to figure out what do we wanna do with the money
17:18
maybe we'll pay ourselves a little bit. I haven't paid myself anything from Hampton at the moment, but maybe we'll pay ourselves money as well. But
17:24
yeah. I'm I'm you've convinced me that that's the right way. And I'm I have to read this book. What I'm still trying to figure out is how much capital keeping the business. I don't know if I wanna, like, do so Let's say your business is is spending five hundred thousand dollars a month in expenses.
17:40
Do you just leave in, like, one month's expense What's the equation for? Chris Chris and I, we used to leave two weeks expenses
17:46
in the business. No way, really. If it meant that if they don't collect their AR, their accounts receivable.
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They go off a cliff. Now what they don't know is they're not gonna go off a cliff because tiny, the bank, we'll just inject more capital. We're sitting on cash, and so we move it in. But it creates this sense of urgency to do collections
18:06
and run the business very efficiently. So that math is basically if you're doing,
18:11
twelve point five million in revenue, you have ten million in profit. You're only leaving something like
18:17
five hundred grand in the bank. Yeah. Yeah. So, like, basically payroll payroll plus expenses
18:22
for two to four weeks max.
18:25
That's wild. That's stressful, but I I agree that's the right way to do it. It's not well, it's not, though, and because, I mean, most of the time, especially in a recurring revenue business. Right? Like, We'll do this with, especially with SaaS businesses because it's very predictable.
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We will
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say, okay,
18:40
you know, you always do three hundred k MRR.
18:44
So, you know, we're gonna give you, you know, two weeks of cash because it's very predictable.
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Now once in a while, maybe once a year, say, hey, can you inject a hundred k to help us make payroll or something like that, or for r and d? But to go back to Sean's point, they have to validate the r and d. Whereas if the money is there, they'll just take it and do the r and d. Are you gonna do this, Sean? Yeah. I'm gonna change it because I am, like, very guilty of this. Like, when I heard this,
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It was like, oh, I've heard
19:11
a a truth. I can't unhear. And this is for bootstrap companies, specifically,
19:15
because
19:17
You know, otherwise,
19:18
I don't I don't wanna belabor the point, but yeah, like, the it's so easy to just accept all your expenses as expenses that are necessary or required. It's easy to oh, what's the difference between this much net profit per month or this much? I'm not taking it out anyway. So I don't really feel the difference. Whereas If my paycheck is less,
19:37
I'm like, where's the rest of it? And then I have to go answer that question. And so
19:42
I think this is such a I look for forcing functions, and I think this is an amazing forcing function
19:47
that, like, initially, I was ready to poo poo this book. I was like, what is this stupid idea?
19:52
And then as soon as I heard it, flip my flip my opinion.
19:56
There's there's a really good quote on that. I was talking to a friend about this who runs a SaaS company. I won't say who, but he has
20:03
sixty five percent net margins,
20:06
and he's been running this SaaS business for twenty plus years.
20:10
Growing, you know, twenty, thirty percent bootstrapped every year. Just amazing, amazing business and great entrepreneur.
20:17
And I was telling him about how we had not done this in certain businesses
20:22
and how the CEOs had misallocated
20:24
some of that cash And he looks at me and he just goes,
20:27
if you ask the dinner guests what's for dinner, they will always say steak. And I was like, oh my god. That's so true. Right? It's like, why wouldn't they? You know, it's not their money. They, you know, yes. Don't get me wrong. Like a CEO is incentivized for a bonus, but For a CEO's bonus, they can spend three hundred thousand dollars of your money, and that might only be worth ten or twenty thousand dollar bonus for them. They don't care as much.
20:52
You know, every dollar counts when it's you and you're the owner operator.
20:56
I did the same thing when I sold my house. I I was like, okay.
21:00
I forgot we were selling it for, like,
21:02
Let's say it was a two point one. And I was like, I think we could get two point two. And the agent was like, oh, I don't know. Maybe it's two point one. And I was like, Well, I I get it. You wanna make the sale and move on, but I was like, you know, he and I thought, oh, we're both aligned. If if it's two point two, he gets more and I get more. I realized, well, this guy gets three percent. He gets an extra three grand. I get an extra ninety seven grand if it's two point one. I was like, this guy doesn't give a shit about that three grand. You know, he's getting whatever,
21:28
you know, three percent of the two million anyways.
21:30
This three grand is, like, not worth the time and hassle and risk of pushing a negotiation.
21:36
And so I incentivized him. I was like, how about this?
21:39
Let's cut a new deal. He's ready for me to, like, cut him down. And I go, no. For every dollar you get me above two point one, you're gonna keep fifteen percent of it. And sure enough, and and I made a bath. I also had a penalty. I said,
21:52
And if you don't sell it for you, at least two point one, you gotta buy my wife this bag. And I was like, because I was like, I don't wanna take money out of this guest pocket, but I also want him to feel the pain. So I made it a goofy gift. I was like, yeah, are they these, like, expensive slippers that, like, clearly are a waste of fucking money. And he was like, and then literally, we got down to it. We got an offer. It was around two point one
22:11
two, let's say. And,
22:13
I was honestly ready to take it at that point, but he was, like, he he was, like, it's about two point one don't know, like, you know, let's see if we could push back. He's like, I really don't wanna buy that bag. So he's like, well, I'm gonna, for sure, get it over this. He's like, let me see how far I can get it. And, he said let me go push one more time and he pushed one more time. We got a better deal. And it was just such a simple, like, lesson around,
22:34
really understanding the incentives and not just, like, the, like, on paper incentives, but, like, is this enough to move the needle for this person to behave differently or not?
22:43
I I think it's so crazy. The more that I go through working with other people in business, I realize that everything comes down to incentives. And if you just Think about the incentive.
22:55
You'll see the, you know, the exact behavior that they're gonna have. I did the same thing when I was selling a house. Chris had an interesting point. He was making, stink bids on houses. So if you look at, like, a million dollar house, he would go and he did six fifty or seven hundred and he'd do that ten or twenty times.
23:12
And the realtor was pushing back over and over and over again. Oh, you know, they'll never accept that. There's no point because think about it. The realtor's gotta go. They gotta spend thirty to forty minutes writing out the offer. Right. Send it. And for them, they're going there's five percent chance.
23:27
Totally worth it for Chris, but not for the realtor, and they're only gonna get one commission. And so Chris started saying, hey, look. For every offer you send, I'm gonna pay you a thousand dollars. Immediately the guy is totally down to do the stink bids. But before that, he's going, oh, you're gonna get a bad reputation in the market. You're gonna offend everyone. Don't do it. So funny. I don't know if this is public. So Sean will have to verify because he's closer to this person, but we've got buddies that if you're, like, I've been with them in LA when we were there, doing, like, an event. Or if when they're visiting New York, you'll be like, hey, what are you doing today? I'm like, oh, I'm gonna go see these three apartment or these three houses that I that I'm looking at. And I was like, you're looking to move. He's like, no. I just tour these constantly, and I put lowball offers on all of them. And every once in a while, someone will will take the bait and I get a a screaming deal. Is that right, Sean? Is that what they do? No. That's right. That's right. And they just, like, are doing doing this constantly and they do the exact same thing. Has any of those stink bids ever worked? Yeah. I mean, dude, it's just like some people like bargain shopping Ross trying to find that hidden gem that's in the basket that they know is worth more. So people like to go to garage sales. And then if you're just a little bit richer, you do the same thing on the level of houses, essentially. You're, like, Oh, good. If I can load all these houses,
24:39
you know, touring house is also pretty fun. And,
24:42
yeah, they've they've picked up a couple of assets. We have a mutual friend, all of us, and he buys companies.
24:48
And he was telling me what his funnel was. He basically said, I think they own eighteen companies
24:53
He said that they looked at one thousand companies, and I think they met with hundreds, many, many hundreds. And then he said they they did LOIs for, like, two hundred of them and only fifteen or eighteen or something like that closed. And I didn't realize Andrew how much alright. When I think of like a holding company or whatever you're doing, I think of it this way mostly because you give off this vibe, which I think you mean to do it on purpose, but I don't think it's the reality, which is like, oh, I just sit back and everyone does the work. And maybe they're doing a lot of the work running the companies. But what I've learned about buying companies and I think Sean's learning this too, because I know he's meeting with a lot of people it is a sales job, and you are hitting the phones, and you are creating a funnel. And that funnel
25:35
still has, like, a three percent conversion rate. So in order to buy three companies, got talked to a hundred people. I didn't realize how sales oriented this whole thing was that you guys are doing.
25:44
Well, I for us, I wouldn't say this. I would say in the early days it was for sure. But,
25:50
we've realized that, like, cold outreach is not the way to go. Like, we would much rather go and have a public presence and our reputation and have people actually seek us out and say, hey, I wanna sell you my company. I've I've I wanna connect with you. I don't wanna be some random private equity firm. That's like, hey, you know, let me tell you about us and do the dog and pony show and stuff. I wanna pull it up. You're still doing marketing. So instead of doing instead of doing sales, you're doing marketing. The funnel still exists. Yeah. Totally. And I and I did not realize that. Have you noticed that, Sean, while you're trying to buy stuff? Yeah. I mean, we just started this process, let's say, a year ago. Very much inspired by you, Andrew, of, like,
26:27
hey, this is a a wonderful way to basically, like,
26:30
own businesses without having to create them from scratch. Gives a good win to the person who's selling them. We will buy minority, which I don't I don't know if you guys always do, but, like, we will also buy minority of them, minority stake in them.
26:42
But the thing that's yeah. Sam, you're absolutely right. It's obviously, like,
26:46
you have to sort through so many just to find something worth buying and then even when you find something worth buying doesn't mean the deal's gonna happen. Even when you think a deal's gonna happen, it doesn't mean a deal closes. And so you end up with this, like, tiny, tiny funnel, and you have to be Okay. With hey, we might do one deal this year or no deals this year. It's so different than like entrepreneurship. It's all about actions, all about features. It's all about you know, more customers more more more more more and actually less, less is all almost, you know, the the name of the game when it comes to being very selective, picking the right asset. The hard part I think is a lot of people over invest in building that funnel, and they have a lot of conversations.
27:20
And what I've done is when someone emails me and they say, hey, I wanna sell you my business. I'll say, okay, hey, I'm gonna make sure I don't waste any of your time, and so tell me these three things. So it'll be like, okay.
27:31
Who runs the business? Right? Is that you? Do you wanna stay or go? And, and then what are your earnings?
27:38
And then after that, once I have that info, I say, okay. We would probably pay about x.
27:43
Right? And if they say, you you know, let's talk, then I know I should spend the time and talk, but I think a lot of people will actually have three or four conversations in, like, slow roll. And I'm, like, I'm, like, via email. I wanna send the first offer. I want them to say, yes. That's interesting. And then I'll spend time on it. And what I used to do is I would spend all this time getting no people and unboxing the business only to realize that their expectations were insane. And we would waste a ton of time. And just like with,
28:11
bidding on real estate or anything else, we throw out LOIs constantly. Like, I have no qualms about that. They're not binding documents,
28:19
you know, we'll send someone an offer. And there's something about if I if I read an email and I say, hey. I'll offer you two million dollars for your business, don't think people take it as seriously as when there's, like, a formal
28:30
document laying at all. Hey, on April thirtieth, you will get two million dollars in this exact structure.
28:36
This is what we commit to. People take it seriously. So we we send them out all the time. So I've never told a story. I don't think publicly.
28:43
But Sean, about
28:45
four or six years ago, the hustle was two or three years old. I was down in the dumps. I was feeling really bad about myself. I was feeling bad about the business.
28:54
And I told this person that I was not feeling great and they said,
28:58
you know, have you thought about selling it? I would really be interested in buying it. And this guy,
29:03
I was like, oh, maybe he goes, look, let's just hang out and meet, come up to, where I am and and fly up here. And I was like, okay, maybe. And he goes, Yeah. Yeah. I'm gonna send a jet. I'm gonna I'm gonna send you a jet. And I was like, what do you mean? A jet? Like, I get, like, I'm gonna fly private. It's like, yeah, I'm sending the jet. So I take all the this is right when TikTok came out. I'm one of the first TikToks was me on this jet. It was like a like, I can't believe this. I go to the private executive airport. My first time ever doing that. I get on the plane. I'm in my own jet. I have got the Wall Street Journal sitting there, and they offer me like champagne and all this stuff. I'm like, this is the craziest thing. I can't believe this. I was in heaven. I meet with the guy and I'm wooed. I'm so floored by this. And I'm like, days away from being like, yeah, I'm willing to do something. Then, thankfully, I snap out of the the the mood. And I'm like, it's okay. I can keep going.
29:53
But that, my friends, is how I met Andrew Wilkinson in real life. He was the one who sent me the jet. He sent me a jet. And he he totally wired it dyed me. I was such a redneck He goes, I lived in San Francisco. He goes, oh, I'm in Vancouver. I was like, I gotta go to New York though, and I don't wanna have to, like, I guess I'll fly to New York, and then you could send a jet, and we'll just bolt right I was thinking Vancouver was Toronto. I didn't I thought Vancouver was next in New York. I didn't even know where it was. It goes, dude, Vancouver's right by San Francisco. It's only gonna be two or three hours.
30:19
But,
30:20
he flew me up there. I don't know if you owned a bakery at the time. You took me to a bakery, and you guys totally tried to, like, wine and dime me. That's how I met Andrew. I was like head over heels just because he sent this jet. It worked.
30:31
You know, that's actually the only time I've ever done that. I think that's because you're so full of shit. It's no. I'm seeing a hundred percent. I'm I'm I've picked up friends and we've done that kind of stuff before. Like, if we're having an event, we've flown people in. But, I've only ever done that for you. That's the one time. And I think it was because you said you're afraid of flying or there's It totally worked. It totally worked. Fly commercial
30:54
There was some other option.
30:56
At that time, I was thinking about, I was thinking a lot about newspapers. And I was like, oh, Sam, you've built, like, the modern version of the newspaper.
31:04
You've got something really incredible. I think your deal with HubSpot, that was better than what we would have paid. Well, and it was like we got to the numbers, and we would have been cheaper than HubSpot. Well, then it was, like, I think a two years difference. I I I remember we I went to I even I was supposed get married on a Friday or a Saturday. And you wanted to meet me on a Tuesday. And I was like, Sarah, you think I could swing this. This guy's gonna fly me private. I gotta do this. We, you know, I'm I'll be I'll I'll miss maybe one of the events I have to do this. And it was like, so that was in two thousand and twenty. And so we ended up selling a little bit later. So it worked out for everyone, but that's how I met you. I will say one of the things I've learned from you, Andrew, is,
31:38
you are a master networker.
31:41
And Normally, networking is like this is like this company you don't wanna get.
31:46
You know, but
31:47
but you're actually great at it. And obviously networking is valuable. People would love to have a great network.
31:52
And meet cool people and have excuses to do things together. And I've seen you kind of throw your weight around in that area.
32:00
And
32:00
This might be, like, asking Michael Jordan, like, you know, how do you shoot a jump shot or how do you jump so high? You know, like, it's, like, they can't really explain,
32:07
but it's not conscious or that They don't really not explain it, but I've seen you do this with, like,
32:13
you wanna meet somebody who's really interesting, and you'll find a
32:17
good excuse
32:19
to get connected with them or even how we met. Like, you know, you listened to the podcast and then you were like, hey, I'd love to, you know, meet you. Let's do a call and you really kinda like took the time to do something that you didn't otherwise have to do.
32:30
And that's how we met. We had a great conversation, then that led to kinda like us hanging out a little bit more. And so
32:36
I've seen to do this with, like, pretty influential people. I've seen to bring people up to Canada where you're at, like, you know, the sort of home court advantage type of thing. Like,
32:44
Do you have, if I was to say, like, you know, how do you do it? And and by the way, I asked the when I was having dinner with the CEO of one of your companies, the other day, they said the same thing. They go Nobody's better than Andrew when it comes to to building an awesome network. Who'd you meet, by the way?
32:59
Zach. He lives like Oh, yeah. Right on. A minute away.
33:02
So what's your what's your first date routine for meeting all these people and building a network?
33:06
Well, it totally depends. I mean, I am
33:09
so
33:10
Here's an example. So in twenty sixteen, I was reading,
33:15
a profile on Dan Gilbert, Sean, or Sam, I think, you know, or both of you guys know who he is. He's the Quicken Loans Rocket Mortgage guy. And it was really cool. It was all about how he'd taken his entire fortune and base was trying to rebuild the city of Detroit.
33:29
And I just I thought that was really cool. I thought, you know, you see all these guys who get super rich and then they put their money into, like, mutual funds. Right? I think that's incredibly boring. This guy's trying to rebuild the city. He's buying skyscrapers. He's starting all these businesses.
33:43
So I just emailed him. I cold emailed him at, like, one in the morning. And I said, hey, you know, here's three bullets about me. And I thought about what is he interested in. And so I mentioned that I own that bakery,
33:54
I mentioned I'm passionate about my city. I'd mentioned I bootstrap my business, you know, tried to find a few points of similarity and said, I would love to meet you
34:03
Anytime anywhere,
34:05
you know, if you're gonna be in a random city in del you know, somewhere in Delaware, I will fly to you. Just tell me when we could meet And I got an email response back, like, twenty minutes later, saying sure.
34:15
And we ended up meeting up in Detroit. And he was amazing. We spent an afternoon together, gave me a tour of the city,
34:21
got to know a whole bunch of people on this team, and it was awesome. So I will shoot shots like that when I see someone that I'm interested in, But there's certain people that are, like, inaccessible.
34:31
Like, I wanted to meet Bill Ackman. I've, you know, been reading about him for years, been falling you know, watching every YouTube video, listening to every interview.
34:39
And
34:40
first, I was like, okay.
34:42
He's an investor in Chipotle.
34:45
Maybe we could redesign. I own all these agencies. Maybe we could redesign the Chipotle website. Maybe we could do an app. And so I email him and I say, hey, I'm a shareholder in your public company.
34:55
You know, I've I've got this amazing design agency. I'd love to help in any way I can.
35:00
And he intros me to, like, one of the board members. So I was like, damn it. You know, like, I just got handed off. Past off. But he told me he he replied to the email, though. That was good. I mean,
35:09
I basically just forwarded it to somebody. But I was like, okay. I know his email. Like, there something will happen here, and I just have to wait for it. And then I saw this charity lunch go up.
35:19
And, basically, every year, he auctions off a lunch.
35:24
And this year, this was in, like, twenty seventeen.
35:27
He was having a terrible down year. He got divorced.
35:30
He had, like, the herbalife stuff.
35:32
He invested in Valiant pharmaceutical. Everyone was kind of, like, shitting on him, he was being very quiet.
35:38
And so there weren't as many bids as usual to do this. And so I ended up bidding
35:44
fifty seven thousand dollars to go have lunch with him. And my bet was I had no I had no expectation there'd be any business to
35:51
do. Because he's a hedge fund manager. I'm a tech investor,
35:55
but, but I knew he'd be, like, an interesting person to meet. And so I went, and we ended up connecting. And then at the end of the lunch, he kinda pulled me aside, and he's like, hey, I like you. If you ever wanna do a deal together, let me know. And so Years later, we ended up buying a business and invested with us. Just, like, sent you a piece of paper. It says, do you like me back? Yes or no. Like,
36:17
twice. Yeah. Well, see, that's what I'm talking about. That's amazing. You did the same thing. I think with Charlie Munger and Buffet. Right? You you did the charity lunch. You bought you bought the charity lunch. Is that No. No. So that was a friend. Just a
36:29
that was totally random. That was, my friend Andrew Marx, who,
36:33
He he knew Charlie personally, and he said, hey, I'm putting together a dinner. And then through that, you know, I started sending Charlie letters. I knew that Charlie is not someone you communicate verbally with. He likes he likes to talk a lot. And so and, you can't communicate it with him. That way, you gotta write him letters. So Chris and I started writing him letters.
36:50
But, but, yeah, I mean, I don't know. I like people. I'm very extroverted. What are you saying in these letters? I I would just say, like, hey, here before the dinner, I said, hey, here's who we are. This is the business. This is what we do.
37:02
And he, you know, throughout the dinner knew who we were as a result. And then we started asking for his opinions and talking about different ways we could help him with stuff.
37:10
I I think, like, the fundamental principle is be of value to other people. And then also,
37:17
say yes to interesting people. If someone can If someone appears to be interesting, I will have lunch with them. Did he reply to the letters? He would just call us. We would we then we'd call him. And he would verbally he's he, like,
37:30
verbally,
37:31
he'll communicate to you verbally, but you have to write to him if you want to remember him to remember anything.
37:37
That's amazing.
37:39
Sounds like a glove. Like, like, my pen pal Charlie, you know, you gotta, like, save all the letters in the back and forth.
37:44
Totally. I I think,
37:46
it's great to see. You know, like, I would say there's, like, two takeaways for me. One is, like, I feel like you check your ego really well. Like,
37:53
you are humble about wanting to meet these people and you're open about wanting to meet these people, and you're not, like,
37:59
you're not be you're not, like, above just shooting a shot and saying, hey, you know, I think you're great. Here's what we do that might be relevant for you and helpful for you. You know, we'd love to connect. I think the other thing is,
38:10
you're willing to spend money. You're willing to hop on the flight. You're willing to buy the charity thing. You're willing to to to be a part of their
38:17
their program that they're launching because, you know, they care about that right now. And, I think people are pretty
38:23
everybody sort of understands that, like, having a valuable network is valuable.
38:26
But very few people are willing to invest because it's not a clear, like, dollars in dollars out thing, and that's one thing I've picked up from you. You gotta be really careful about it, though, because so about twelve, thirteen years ago.
38:38
I remember
38:39
when I was first starting my company, I would watch Ted Talks back when they were, like, really early. And I would always go, oh my god. I wanna be in this room. Like, who are these people? It's like Jeff Bezos and Bill Gates, and, you know, all these amazing people.
38:53
And so,
38:55
Probably, like, thirteen, fourteen years ago, I started going to Ted Global, and I started at the kind of baby event, the junior one,
39:02
the only one I could get into, and then I slowly worked my way into going to the main event because I met Chris Anderson who ran Ted and I pitched him on doing a TED app. And so I designed the TED app. I used that to get into the main one, and then I ended up meeting all these interesting people. And so that was an example where
39:20
I belonged
39:21
But I was, like, the baby. I was, like, the kid who's, like, you know, people would ruffle my hair. Oh, isn't that cute? This twenty three year old with a, you know, cracking voice runs a company.
39:32
But I kinda belong. So I I think that's a great strategy sometimes. But
39:36
this year, I went to the Oscars, and I went to the Vanity Fair After Party, And that was an example of something where I'm like, I should not be here, and you do not want that experience. Right? Tell that story. Tell that story. So, yeah, so it was really random. So I was at a conference,
39:52
about a year ago, and I sat across from this guy, and I asked him about his startup. And usually when you're at these conferences, they're like, oh, I own
40:01
a b to b software company for doing HR or something. And this guy said something that really caught my attention. He goes,
40:08
I run a startup that helps people convert money into an interesting life.
40:13
And I was like, whoa, okay. What is this? And so he has this company called Miria,
40:19
m y r I a. And the idea is basically they deep dive with you
40:24
on
40:25
You know, what do you care about? What are you excited about? What do you want your life to look like? So they kind of, like, paint out a blueprint. Like, in two years, you know, do you wanna be What kind of people do you wanna be hanging out with? What do you aspire to get involved with? You know, what are your passions? What do you wanna do with your money? And then they help you figure that out. And so I did it. I signed up, and they interviewed me. And I said, I love movies. And they said, well, do you wanna go to the Oscars?
40:51
And I was like, I've never contemplated that, but I was like, you know what? That sounds like a fun experience. I think spending money on funny experiences like that is worth it. And so We go me and my girlfriend go down. They set up, like, a personal stylist.
41:04
We buy, like, ridiculously expensive clothes and tuxedos
41:07
and I get, like, a five hundred dollar haircut, like, just silly, silly stuff.
41:13
And, you know, it's it's kinda cool. We're in,
41:16
the actual Oscar event, and we keep seeing famous people and it's great people watching and stuff.
41:22
But after that, we go to the vanity fair after party. And I don't know if you guys know, but vanity fair after party is this, like,
41:30
super exclusive
41:32
event where literally everybody is famous. If there's five people there, four of them are b or a list celebrities,
41:39
And the one that you don't recognize is probably, like, a super famous director or producer or something. So
41:45
I'm standing at the bar And, like, to my right is John Ham chatting it up with Jeff Bezos.
41:52
You know, I see this guy checking out my girlfriend, and I realized it's Andrew Garfield,
41:56
Like, very weird. I can hear, like, Seth rogan laughing behind me.
41:59
Rhianna struts in. Like, it's just pinch me, like, the weirdest thing in the world.
42:05
And then there's me and my girlfriend.
42:07
And over and over again, every person that walks by us looks us up and down, looks a bit excited, looks us up and down, realizes we're not famous and then immediately turns on their heel. And we're just like, you know, this is kinda weird. We don't belong here. And I start making conversation with people. I'm, you know, I'm very social. I start trying to chitchat with people.
42:28
And as soon as I said, oh, I'm not in the film industry. I'm in tech, people would just immediately glaze over and start looking over my shoulder. Like, did not care. Could not care last. Right?
42:40
And, you know, it was I kinda gave up at a certain point. I just kinda was like, alright. Let's just people watch or whatever. But I realized that I'm really used to being in rooms where Like, obviously, I'm not famous, but I have, like, respect.
42:54
Like, you know, if even if I'm at a dental conference, I can probably chat with someone and be like, oh, you're the, like, you know, you're the business guy at the dent at the dentist, you know, clinic or whatever, we can talk business. But I realized I had no shared language for these people.
43:09
And it's just not fun. Like, you wanna be in a room where you actually have value. And so
43:13
imagine, like, I was a web designer and I'm, like, wanna be an investor. I wanna meet Bill Ackman.
43:19
If I have no value to him or I'm not interested in him, I should not meet him. You have to wait until you're interesting.
43:25
And ironically,
43:27
since I went to the Oscars, we ended up buying letterboxed, which is a social network. It's like the largest social network for film buffs. You're revenge by. If I go back to that same party, I'm sure people would be like, oh, cool. Right? But but it's interesting.
43:42
You you had a great phrase. You said you said I realized that you wanna earn the room that you're in.
43:48
And, I thought that was, like, I didn't know at first, like, what would the what's the takeaway of the story? Is it just like, you know, I don't know. Sometimes you go to these parties, you feel uncomfortable, but you're you're actually right about that. You do wanna
43:58
you don't wanna buy your way into a room. You wanna earn your way into a room. And, I do think that that's, that's a great takeaway.
44:06
Totally. Listen to the, the copy on the Miria. So it's miria dot US. It says, Parker Wayne Kent Stark.
44:13
Why should they have all the fun? Miria memberships gives you and your team special powers to make your life more enjoyable in the world a better place. And they say, say open sesame to the world's top private clubs and make sold out disappear from your vocabulary.
44:26
Well done.
44:27
This is a very well done site. Is this is this company gonna be something legit and big? I know they went through Y Combinator. It has done a couple of episodes ago too. I think, I think it's a really, really cool idea. And I think the idea like, do you ever go to a city and you're, like, shit. You know, we didn't plan. Like, I remember me and my girlfriend went to Tokyo,
44:48
and we kinda went last minute. And we ended up eating bad food. We didn't really, like, see the best of the city. We just hadn't planned it, and so it was just so wasted. And it's one of those instances where I wish I had something like this. It's, like, the key to the city where you're like, hey, I'm in Tokyo. I wanna go to all the coolest stuff. You know all my tastes,
45:05
curate something for me, or, like, Chris wanted to go to f one, and he doesn't know anyone at f one. He doesn't know how it works. He wanted to go last minute. These guys got him, like, I think he met Lewis Hamilton. He went in the hit, you know, stuff like that is, like, pretty cool.
45:21
But I yeah. It would be interesting to see because they raised venture we actually invested in their, their angel round immediately because I was like, this is such a funny idea. But, I don't know if it'll be venture scale. We'll see. They have a competitor that I,
45:35
looked at, and I was poking around the website. They say you have to spend eighty thousand dollars a month in order to make it be worth So on average a million dollars a year, to make these Twenty five. I think it's twenty five grand. And then they take a cut of everything you do. So if you spend a hundred thousand dollars. I think they would take a fifteen percent fee or something on that. There's another service I just got invited to and my friend. So he tells me about it, and it's basically,
46:01
last minute super high end reservations at any restaurant you wanna eat at in, like, New York, London, and Miami. And I'm like, oh, cool. You should invite me. And he's like, no, you don't get it. If you don't use this invite, I lose access and the guy who invited me loses access, which I think is, like, genius. So it's, like, forget what it's called, but basically,
46:22
You in if I invite Sean,
46:25
you have to use it within thirty days. Otherwise, I lose my access.
46:29
And, say, if Sam invited me, he loses it too.
46:32
There's some,
46:34
little trend I've noticed, which is people as they get more successful or notable or whatever the number of times they hear no in their life goes way down. And I've actually noticed that, like, there's some whole business in just the business of no for people that no longer hear no. And what this means is twofold. One is
46:51
they still run into some things that they don't know how to they they can't, like, their their powers are are useless here. Like, it's sold out. What do you want me to do? And so these guys with Miria have created a business around. We eliminate the last few nos of your life. And I've noticed other people like this kind of, hey, if you don't use this, I get kicked out. It's like, I don't get kicked out of anything nowadays. Right? Like, I'm paying the fees. What why would they kick me out? But There's a whole business around give people something to lose who'd never hear or know anymore. They never get rejected anymore. And it's like give them some rejection. Give them some way that they have some some risk, because it makes them sort of, like,
47:26
feel like something matters when everything is an easy mode for them at that time. So I,
47:31
I I've been on the wait list to go to Peter. Do you guys know who Peter Atilla is? Super famous doctor.
47:37
I I, I've been on the wait list there for, like, three years. His private practice, you mean? Private private practice, which is like, you know, I think he only has fifty patients. It's like getting it's like getting Huberman or someone to be your doctor. Yeah.
47:50
It's super expensive,
47:51
and so I pay I pay, like, this absurd amount of money upfront,
47:55
and they do this thing where they psychologically test you before they allow you to become a patient. And so I go through this test,
48:02
and Peter calls me and he goes, Andrew,
48:05
there was something concerning
48:07
in your,
48:08
your personality test,
48:10
I'm worried that you won't have good follow through.
48:13
Will you do what I say? Will you execute on the plan? And I'm like, Peter No. Like, you got it all wrong. Like, I I'm I pay attention to my diet. Like, I track everything. I wear a glucose monitor. Like, you don't have to worry about me. And he goes, okay. Cool. And so, you know, I've been working with them. And last month, I pull him aside, and I'm like, Peter, look, be honest with me. Did I actually
48:35
have, like, something in my psychological test. And he goes, you would you did. I was like, it's not even a real test. And he's like, yeah. That is. Right? So I actually did flag something. But I was thinking, what a great strategy because I'm, like, the dream patient now. I'm, like, terrified of getting booted out because of this thing he said, and I think doing something like that, you're right. Pushing someone away creates this desire to be a good customer.
48:59
Has it been worth it? His his him being your doctor?
49:03
Well, I think I think it's so it's a lot of money. Obviously, it's hundreds of thousands of dollars.
49:08
But If think about it this way. If you're gaining five years of life or ten years of life, what is that worth? And there's been quite a few things. I have I have an amazing doctor a primary doctor that I go to,
49:20
who I love,
49:22
and he's amazing. But atiyah, they have, like, a neurologist, a cardiologist,
49:27
exercise physiologist who works with you. So it's this team of people, and they caught,
49:32
a bunch of issues with cholesterol and other stuff that I may not have caught otherwise.
49:37
So I I mean, I think it's worth it, but for a normal person, is that a good use of money? No. I would say that's a crazy use of money. You went to your primary doctor, you're like, doc, I love you. It's been a great twenty years. Yeah. We have to talk. I met Angelita Jolie now, and,
49:51
we have a thing going too.
49:54
We're now in an open doctor relationship.
49:57
It's really yeah. It's one of those things. I used to think you could only have one lawyer like, I had one one lawyer and then I'd feel like I was cheating on my lawyer if I used other lawyers, then I realized, like, no, you have lawyers for different things or whatever. But, yeah, I have, Now I've got a polyamorous,
50:13
doctor relationship.
50:14
Let's do, you have this this idea of be the particle on the whale. What does that mean?
50:21
Yeah. So,
50:23
if you think about one of the biggest costs in most businesses, it's marketing.
50:28
So,
50:28
you know, if you think about it, it's like fifteen to thirty percent of most businesses is just getting people to know you exist and getting sales.
50:37
So if you can own a business that doesn't have to market itself,
50:41
then you're golden. You can run a super, super profitable business. So let's say that With marketing, you run at fifteen percent. Cut marketing, you could run at forty five, fifty, sixty percent.
50:52
So, for example,
50:54
Let's say that you're a fitness influencer. So, like, you think about, like, Derek from more plates, more dates. So he sells,
51:02
supplements and energy drinks, and he's got this shampoo for hair loss. He's got a great business because he is free marketing. He just talks about the product on his podcast, his YouTube,
51:13
his Instagram, and he gets free sales. Right? So it would be an as an e commerce business, if he was paying to acquire those customers, it'd be a crappy business, but he's got free marketing. Right? Now the problem is most of us don't have us to that. Most of us are not influencers,
51:28
but anyone can do that in a different way by being a barnacle on a whale. So here's a story of how we I kinda stumbled into this.
51:36
So I was at a conference about twelve years ago.
51:39
At the time, I met,
51:41
Harley and Toby from Shopify.
51:44
Shopify was this tiny little startup. They were bootstrapped. They were like fifteen people.
51:48
And they said, hey, we really like your design work.
51:51
Would you design some themes for us, but there's a catch. This won't be client where we're not gonna pay you.
51:58
We want you to list them in our marketplace.
52:00
So the idea is, like, when people sign up for Shopify,
52:03
they wanted people to be able to select a theme and pay, like, forty nine to two hundred and fifty dollars to do that. I started making
52:09
five thousand dollars a month, ten thousand dollars a month as these themes sold.
52:14
And I was like, hey, this is really cool. Like, I'm not having to promote it. I don't have to think about marketing or SEO or anything.
52:21
You know, people they they send all the traffic to their marketplace. And so We started building more and more themes, and we ended up spinning out that business. But what what I didn't realize was that
52:31
in the theme marketplace,
52:33
There was only so many squares,
52:35
and it took time to build the themes, and it took time for them to get approved.
52:40
And so I started owning more and more squares. So let's say that in the early days, if you were to choose a theme, there's a fifty percent chance that it was one of ours. So we had, like, saturation early in this marketplace that was very small when we joined it. But then as Shopify grew, I mean, you guys know what happened, They go public.
53:00
They start pouring hundreds of millions of dollars into marketing.
53:03
I get free marketing. I get to be the little barnacle on the whale. And keep growing. And it got to the point where that business was big enough,
53:11
that we ended up taking that public at a two hundred and sixty million dollar valuation.
53:15
A couple years ago. So,
53:17
it's an incredible strategy. Now I think Shopify
53:20
is hard because
53:22
you're late. You know, the the marketplace already exists. It takes a lot of time to get approved.
53:27
You know, that might not be the place to go. Where you might wanna look is,
53:31
like Discord
53:33
or Addapar or any kind of software ecosystem
53:36
that's not super saturated,
53:38
if you can go be a barnacle on a whale, you can make a ton of money.
53:41
I totally agree. I have a a
53:44
business that's cooking up. That's like this. I'll I'll I'll tell you later,
53:47
offline because I can't can't announce it yet, but totally agree with this strategy. I think it's amazing. You invested. So you said it went public at two hundred sixty million.
53:56
How much did you invest get there. Sounds like it was kind of some free labor to get the themes going, but, like, how much capital did it take for you to get going because you were early?
54:04
Twenty thousand dollars, maybe. So that's incredible. And didn't you set you sold that business for fifteen million, or did you sell for ten and bought it back for fifteen? There was, like, a story where you sold it and then bought it back. Right? So, basically, started it for twenty k, sold it for about seven million.
54:21
To and then I ended up buying it back from the guys who bought it. For twenty five million. And then about a year later, we took it public for two hundred and sixty million. So talk about that. Like, did you sell it? Like, did you regret selling it or what why sell it in the first place? Was that a mistake? And then,
54:38
psychologically, how'd you get yourself to buy it back for so three times as much? Yeah. Like Sam, I was, like, in this kind of, like, existential crisis. I was super burnt out. I've been running. So I'd I had that business. I had Metallab. I had two SaaS companies. I had an e commerce business.
54:53
I was running all of them, kind of running around, like, a chicken with my head cut off. And finally, I hit a wall and I was feeling really depressed. Talk to a friend. He said, hey. Why don't you sell one? And,
55:04
Were you were you liquid at that point? Like, were you financially secure?
55:08
No. No. I I was liquid in that we had a lot of cash flow, but the problem was I'd be,
55:14
borrowing from Peter to Paypal. Right? So I have, at any given time, I'd have highly profitable business, and then I have a start up. And this start up would burn all the profits. So I didn't have a nice house. Like, you know, I I I was okay but I always felt like I was gonna go broke. And so getting that cash influx was amazing. So I sell the business,
55:34
suddenly, I'm sitting on millions of dollars and feeling very secure. And the first thing I do is I go, okay. Now that I've got all this money, I gotta learn how to invest And so I pick up a book about Warren Buffett, and I start reading about this idea of competitive advantage in motes and what a good business looks like. And as I'm reading, I'm going Oh my god. I just sold the business that has all these qualities. What the hell was I thinking?
55:57
And I was still on the board. So the nice thing was I helped them choose the CEO, this amazing guy named Ben Moore, and I just kept watching. And eventually,
56:06
the guys who we sold it to, They were fatigued. They wanted to they had they had,
56:11
they had kind of transitioned to doing something different, so they wanted to sell the business. And so I just stepped on their foot. I said, hey, if you guys wanna sell, we'll do a deal. And so we did, and then we did a bunch of M and A and, you know, packaged it up and took it public. That's insane. Well, the twenty k you invested was the initial amount, but then
56:30
you bought it back for twenty five. And then you guys bought a bunch of other Shopify plugins and apps. Right? I think our total amount if you look at it from that perspective, our total amount of investment was about thirty six million. So we we took it, you know, start started it for twenty k, sold it for seven, bought it back for twenty
56:48
five did ten million dollars or so of M and A and then took a public. And we optimized the business and grew it quite a bit over that year. Yeah. That's awesome.
56:58
That's a that's a that's a good insight. I mean, I remember seeing, like, the press release for Pixel Union And I remember you talking about it, but I didn't know that you actually had to buy it back for more than you sold it for.
57:09
Yeah. It was five acts, basically.
57:12
It's insane. Sean, where do you wanna go from here? Let's do the the life philosophy. So you said,
57:18
people always suffer in silence. What does this mean?
57:22
Yeah. It's something Chris and I've noticed. So we have this real culture of, autonomy, autonomy. So we always say that When we hire a CEO,
57:31
we leave them alone.
57:33
And there's certain people who really love that. So, for example, often founders who sell their company to us, when a founder sells their company to us,
57:42
and keeps running it, often they sold because they wanted to buy out a co founder, or they wanted to buy with their VCs, and they wanted to operate the business profitably.
57:50
So they're kinda saying, look, I've got this great business. I know what I'm doing. I wanna investor who's gonna leave me alone. I just wanna buy out these guys. I wanna buy out a cofounder or something. And so,
58:02
Usually, those guys, they just wanna be left alone. And we say, great.
58:06
Talk to us if you need anything and, you know, sail off into the sunset and run your business. That works fine.
58:12
But often when we hire a CEO,
58:15
they're used to having, somebody who oversees them.
58:19
So, like, a really active board or before they were in, like, some big corporation, and there's constantly someone checking in. And so they associate
58:27
check ins with everything is okay. And we don't do that. We literally throw people in the pool and we say, okay. Go and swim, do whatever you need to do. And,
58:37
and so often and because there's so many companies, there's forty companies now in tiny There's always someone we forgot about that we're not checking in on. We're not texting. They've just fallen off our radar, or we think they're okay. And so we look at their numbers, and they seem to be good. We assume everything is fine and so we just say, you know, they're not contacting us. Let's leave them alone. Well, so often we found that people will fester in silence. They will actually assume that
59:01
Here I am. I'm doing this great job for them, and they won't even do me the honor of picking up the phone or checking in or
59:09
you know, whatever it is. And and it's this
59:12
I always I remember about ten years ago, I was complaining. I was
59:16
I was hurt. Somebody I'd sent someone,
59:19
an emotional email, and they didn't respond.
59:22
And my friend says, do you know what Hanlon's Razor is?
59:25
And, basically, the idea is it's,
59:28
never attribute to malice
59:30
what can otherwise be explained by ignorance or stupidity.
59:34
Right? So never assume negative intent, but everybody assumes negative intent. You know, we all know what it's like to send an email that's really important to us. And the person doesn't respond for three or four days. You assume that they're going, you know, fuck this person or I'm gonna ice them out. In reality, they're busy. They've got kids, They're doing their email, they're they're behind, whatever it is. And so I've just observed this fact. I don't know what to do about it, but people will always assume silence equals malice.
01:00:00
And then you have this other one that says people don't change. So you first said people always suffer.
01:00:07
Or p people suffer in silence and people don't change. Is you're you're getting a little pessimistic on worldview.
01:00:14
But I agree with you. I there's this author called, Robert Green. He's got, you know, forty eight laws of power, and he has this other book book called Human Nature. And he's like, why should you study in nature
01:00:25
because very rarely do people change. It's the same stuff over and over and over again. And then when you look at their individual habits, whatever they've done in the past, they're gonna just just assume it's gonna happen again and again and again in the future. That's one of the best that's one of the best books I've ever read, the laws of human nature by Robert Green I just got the audiobook and I just keep listening to it every year. It's amazing.
01:00:46
I I've just seen this over and over again. I find that you rarely
01:00:50
hire someone.
01:00:52
And let's say, like, you know, I love to hire people based on scrappiness.
01:00:56
Will they figure things out? Will they learn? Do they have high pace? I've never hired someone who doesn't have high pace and then coached them into having high pace. Right? People either do or they don't, and the The only thing I've seen where people change is what it's kind of like addiction.
01:01:11
You kinda have to hit rock bottom. Right? So if
01:01:15
you're kind of an asshole and you talk, you you interrupt people all the time and you always talk about yourself.
01:01:21
Maybe you stop having any friends, or you have an intervention. Your friends have an intervention with you. Maybe at that point you hit rock bottom and you go, I need to change. I have a problem,
01:01:31
but most people generally continue on their track that they're on.
01:01:36
And I I don't know. I I see this all the time with with people I work with, and especially people will not change their ideas.
01:01:44
So if you
01:01:46
let's say a CEO comes to me and they say, I've got I think the best way for us to grow is SEO.
01:01:51
And I say, oh, well, Let's think about that. What about x y z opportunity? I think we should focus on PPC marketing or Have you thought about changing the product in this way? They will actually double down. When I challenge their idea, they will double down and they will keep they will now defend the idea. And as soon as they defend the idea, they will commit and con they will be consist what is it called? Commitment and consistency bias. Right? Now they will double down on that. So I've just realized, like, trying to change people's impossible. And at the end of the day, we're all, like,
01:02:25
People are like elephants, and you're just the rider, you know, you just kinda go where the elephants gonna go and hope for the best. You see a big, a poor guy on the side of the street bacon from begging for change. You just say change comes from within my brother. Change comes from comes from within.
01:02:44
I,
01:02:45
I completely agree with the people don't change. I I had a thing in my life where at twenty two or twenty four if I get it was like, oh, this is rock bottom. And I had, like, there was, like, a distinct moment where I'm, like, I'm just gonna change that trajectory just a few degrees. And if I just keep going. It's gonna make a massive impact. I had but there's really only, like, I remember, I think two times in my life where I'm like,
01:03:07
that's gonna change. And it's happened. But then, like, everything else,
01:03:10
it rarely changes. It's very hard to break any type of habit or human nature,
01:03:15
characteristic.
01:03:15
I think I would disagree with that.
01:03:17
The only thing I would disagree with is I would just say, I would instead of the phrase being people don't change, I would say, assume people don't change as a reminder to myself because the the the the problem is you're like
01:03:29
if you assume that people are gonna change because you're being hopeful,
01:03:32
and you're you're gonna make a bunch of bad decisions because you're gonna be baking and change when change is quite rare. It says not that they don't change, it's that you should not be assuming that they will change is the the trap that you wanna avoid.
01:03:44
It's like when you get married, there's that classic saying, like, you know, don't try and change the person that you're with.
01:03:50
And I think it's, like, it'd be pleasantly surprised. Like, it has happened for sure, but it's it's really a fool's errand to try and go and change a person.
01:04:00
And also, it's sort of like ads. People are like, oh, ads ads don't work on me. It's like, okay, everybody thinks ads don't work on them. Everybody thinks they're not average. I think, you know, the same way it's like I think we think that other people don't change, but if I if I separately had asked you, you know, like, Have you are you the same guy you were with, you know, the last twenty years? Like, no, I've learned so much. I've evolved. I've just matured. I've I've changed so much.
01:04:24
And,
01:04:25
but we think other people don't change. And I think this
01:04:27
I I guess I'm a I'm a little more optimistic about the change.
01:04:31
Although my sister has a funny phrase about this, she goes, peep peep people say that people don't change They do. They get worse.
01:04:37
And, like, and I think that that's, like, you know, more of the how to protect your downside mentality is assume that people are not gonna change or it's just gonna they're gonna dig in even further into their current set of patterns.
01:04:48
But of course, there's so many outliers that I think you can only make it an assumption, not a rule.
01:04:53
Andrew, it was awesome being able to catch up with you. I'm happy, things are going well. And you, you said a few things here. Like, I I I hope the listener does this, but I actually have a notepad here that I take down notes for, like, everything that we're writing. This profit first thing
01:05:08
and how much money leaving the bank. I'm like, I have a note here. I'm like, shit. Alright. I actually have to go and actually do that.
01:05:15
Moiz said something a few times ago or, and sort of Patrick Campbell. We had Patrick Campbell on from profit well on, and I still have his notes here, and I had a meeting with my company right afterwards. It was, like, here's a Patrick Campbell set. I just hit a pod with them. We gotta do this, this, this, and this is another one of those episodes where you've actually given me things that I'm actually I gotta go and run and, like, tell my company right now. Everybody loves this. CEO who comes in with the whole with a whole new life life approach every every three days because they listen to a podcast. Like, if I was at a company, I'd be like, hey, Dude, you're not allowed to listen to podcasts anymore or go to these dinners because every time you come back, everything's changing.
01:05:50
That is an annoying person. There's a good way to to deliver it, though. It's it's amazing how just a lack of awareness
01:05:57
can change the results of the business. Right? Like, as soon as I stopped I remember I used to obsessively look at my credit card statement. As soon as I stopped looking, because I got too busy,
01:06:06
I started spending so much on stupid SaaS crap or whatever, and I think just building those processes
01:06:11
into your company can make such a big difference. Like, it literally is those Sam, you described that thing of, you know, if you were plane taking off from New York, you changed three degrees, and that was the difference between ending up in Seattle versus Tijuana.
01:06:25
Think that same thing is true in a company.
01:06:27
Yeah. And I think that's this thing might change the trajectory of of a bunch of things that I'm doing.
01:06:34
Thanks for doing this, and we appreciate it. Thanks for coming on, man. Yeah. That was awesome, guys. Alright. That's the pod.
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