3 Things You Need To Outperform 99% Of Entrepreneurs

0:00:08 extreme force of will, extreme bias for action, and a questioning of the default speeds. It changes
0:00:09 everything.
0:00:15 I feel like I can rule the world. I know I could be what I want to. I put my all in it like no days
0:00:16 off on the road.
0:00:22 Yeah, you know, I’m on this business entertainment tick where I’m looking for content that is
0:00:29 about business, but is made to be entertaining. So it’s not just like an informational video or
0:00:34 blog post. And so there’s a new show called Fighting that I watched that I thought was really
0:00:35 good. Did you see it?
0:00:37 I saw the commercials for it. How do you get it?
0:00:41 It’s on Roku, but I don’t have Roku. You just Google like watch Fighting and it’s Roku just
0:00:44 lets you just, it’s on their website, but you don’t have to sign up to do anything. You just
0:00:50 click and you just watch it. So it’s very cool. I mean, they basically follow around Dana behind
0:00:56 the scenes and the UFC like kind of the machine behind the show. And the UFC, just to put this
0:01:02 in perspective, they basically, there is no off season. The UFC is 52 weeks a year. Every
0:01:09 Saturday has to be an epic show. It’s a live event with pay-per-view. It’s got fighters who
0:01:14 get injured and pull out or get arrested and now they can’t fight. And there’s all kinds of things
0:01:19 that kind of will go wrong, but it’s like the actual epitome of the show must go on. So I wanted
0:01:22 to share with you a couple of my thoughts watching this from a founder’s point of view.
0:01:30 So the first thing is, as silly as this sounds, I do think that Dana White is on my Mount Rushmore
0:01:36 of startup founders. I know he didn’t technically found the UFC, but he basically did. He created
0:01:41 the goddamn thing. He’s a madman. He is a workhorse. He’s a machine. And I really don’t think the
0:01:46 UFC happens if there’s no Dana White. And this got me thinking, there are some companies that I
0:01:53 will call inevitable. And inevitable company is one whose time has just come. So YouTube today
0:02:00 is a giant company, but YouTube’s time had come. If it wasn’t YouTube, if Chad and Steve had not
0:02:06 created YouTube, somebody else would have created the equivalent of YouTube. The idea of posting
0:02:10 video online was going to happen. It was happening. Somebody was going to win that space. That’s an
0:02:17 inevitable idea. The momentum of internet speeds going up and being fast enough where you can now
0:02:22 upload and download videos was going to a point where video became, and it was an obvious thing.
0:02:27 We had Flickr for photos. We were going to have a version of that for videos. I would say that
0:02:32 Google was an inevitable idea. The more popular the internet got, people already needed search
0:02:35 engines and portals. Google happened to be the winner of all the search engines and portals,
0:02:40 but there was going to be a way to search the internet. That was going to happen. So there’s
0:02:45 inevitable companies. And then there’s companies that I honestly don’t think if it was not for the
0:02:50 force of will of the founder, for the vision, the skill, and the determination of the founder
0:02:55 that would not have happened or would not have happened for like 50 more years. It would have
0:02:59 missed a whole generation of people had that person not made that thing happen.
0:03:05 All right, let’s take a quick break because I want to talk to you about some new stuff that HubSpot
0:03:09 has. Now, they let me freestyle this ad here. So I’m going to actually tell you what I think
0:03:13 is interesting. So they have this thing called the false spotlight showing all the new features
0:03:17 that they released in the last few months. And the ones that stood out to me were breeze
0:03:21 intelligence. I don’t know if you’ve seen this, but if you’re in HubSpot and you have, let’s say,
0:03:25 a customer there, you can just basically add intelligence to that customer. They estimate
0:03:30 a revenue for that company, how many employees it has, maybe their email address or their location,
0:03:35 if they’ve ever visited your page or not. And so you can enrich all of your data automatically
0:03:39 with one click using this thing called breeze intelligence. They actually acquired a really
0:03:43 cool company called Clearbit and it’s become Breeze, which is great because now it’s built in. I
0:03:47 always hated using two different tools to try to do this. Now it’s all in one place. And so
0:03:52 all the data you had about your customers now just got smarter. So check it out. You can actually
0:03:56 see all the stuff they released. It’s a really cool website. Go to hubspot.com/spotlight to see
0:04:02 them all and get the demos yourself. Back to this episode. My examples that I would put here are
0:04:07 Elon’s company. So I think Tesla and SpaceX would not have happened and would not have happened at
0:04:14 least for another 50 years had he not made those happen. I think it required a level of insanity,
0:04:22 self-funding, technical brilliance, determination to keep going even against the odds of failure,
0:04:29 all of that for him to be able to pull those off. I think the UFC is in that non-inevitable bucket
0:04:33 where if the UFC had just died, it was about to go bankrupt before Dana bought it for $2 million.
0:04:38 I don’t think that something like the UFC necessarily would have happened.
0:04:42 Yeah. I mean, I totally agree because it wasn’t like a wanted thing. It was one of those products
0:04:47 where we didn’t know we wanted. And at first it was a freak show. I don’t know if you remember,
0:04:51 one of the more famous guys who first started fighting was this black guy who would use one
0:04:57 boxing glove and one freehand. And he fought against a 300-pound similar wrestler.
0:05:00 It looks like a creative character in a video game. All of the people look like creative characters.
0:05:06 Yeah. There’s one Hawaiian guy who is like a sumo wrestler looking guy and he fought the
0:05:11 dude with the one boxing arm. It’s weird. And it was a freak show at first, but then it took
0:05:14 like 10 years and then athletes started doing it and it became amazing.
0:05:19 And it was condemned like John McCain famously, I think in Congress or Senate or whatever,
0:05:24 asked for every state to outlaw the UFC. He called it human cock fighting and he was like,
0:05:29 “This is terrible. We need to end this.” And John McCain, the American hero, the war hero,
0:05:34 was now saying, “This is disgusting.” Basically. And so Dana had to find venues that would support
0:05:39 him, which is why, by the way, Dana and Trump are so close now is because Trump would allow
0:05:48 Dana to host fights at his Trump properties in Atlantic City. And so that’s why Dana had to fight
0:05:52 and scrap state by state, city by city, event by event, almost going out of business many times.
0:05:56 They went $40 million in the hole before turning this thing around, turning it into
0:06:01 a $10 billion company. Dana’s got this great story. It was like during the cock fighting,
0:06:04 like when people started saying that stuff and he was like, “Well, what do you think these athletes
0:06:08 think?” And people were like, “They’re, you know, maybe they’re miserable. They got to go through
0:06:12 all this pain.” And he goes, “Let me tell you what they think. They’re killers and they want to go
0:06:18 out and like do something that is active. They need to get this energy out.” And they live their
0:06:23 life like they’re in heaven. And they look at your life. You just go to work at nine. You come
0:06:28 home at five. You sit at a cubicle as hell. These guys are free. This is what they were born to do
0:06:31 and what they feel like they need to do. So if you take this away from them, you’re hurting them
0:06:35 way more than when they get in the rig. And I thought that was actually a pretty good spin on it.
0:06:39 So one of the cool things about this show is it showed a couple things. I’ll give you the big
0:06:44 takeaway and then some of the small takeaways. So here’s the big takeaway. I said the word
0:06:49 force of will. And I use that word, that phrase very specifically, because I think it describes
0:06:55 a certain trait of a founder. And I try to have this. I think the best founders all have this.
0:07:02 And by the way, this comes with some trade-offs. When you have force of will, it is as brute forcey
0:07:06 as it sounds. It is uncomfortable to be around sometimes. You are pushing people. Maybe you’re
0:07:09 holding a higher standard. Maybe you’re demanding that things are done a certain way or done at a
0:07:14 certain speed. That does not feel good to the other people that are in the organization. They’re
0:07:18 maybe used to working in other environments where they don’t have that. And so there’s a little
0:07:26 story. So basically, it’s like one of the big fights of the year is coming up in 18 days. And
0:07:29 they’ve done everything. They’ve prepped all the marketing. They’ve got the billboard. They show
0:07:33 them painting the billboards at night. They show them making all the marketing videos. They show
0:07:37 them doing all the different things that go into promoting a live show. They’re selling tickets,
0:07:41 all of this. Which fight? I remember which one. There was either the one where John Jones
0:07:47 had to pull out or there was the one where Charles Oliveira pulled out. And so 18 days before,
0:07:54 he gets a call. Fighter got hurt. In his last round of his last sparring session, he was sparring
0:08:00 without headgear. I think it’s Oliveira. This is recent. Yeah, he gets a cut on his eye and he
0:08:04 can’t fight. So now the main event that they’ve sold all the tickets for, that they’ve done all
0:08:08 the promotion for, that’s been building up for six months, the main event falls through.
0:08:14 And he’s like, and it’s basically him and his guy Hunter Campbell. And they’re sitting in this room
0:08:21 and this is business as usual. Disasters are business as usual for him. He talks about this.
0:08:28 He goes, “Give me all the stress. I eat that shit up.” He goes, “I can take it all.” You can just
0:08:34 see, he’s built up this resilience, this tolerance. Imagine UFC, which is a live event’s fighting
0:08:40 business. It’s stadiums full of people. When COVID happened, that kills the business. There was no
0:08:46 other business. And Dana, not only was a sport that survived COVID where it got shut down and
0:08:50 you couldn’t do live events for over a year, you can’t just turn off a business for a year. I hope
0:08:56 it’s all going to be okay. Instead, he was the first sport back. He created something called Fight
0:09:00 Island. He created a bubble where he’s like, “Cool, we’ll test everybody then they get here.” And
0:09:04 now everybody here is testing, nobody comes in or out. And he found an island in the middle
0:09:07 east that they could do this on. And he branded it as Fight Island. They were the first sport
0:09:12 back. It was incredible. So he was used to this. So he’s talking and he’s like, “What if we did
0:09:16 this fight? What if we did this fight?” And the guys in the room are like, “Yeah, we could call them.
0:09:21 I put out a call. He’s going to call me back.” Whatever. And somebody walks by, they go,
0:09:27 “His manager’s in the lunchroom right now. They’re here.” And Dana, within 0.1 seconds,
0:09:30 just hops out of his chair. Nobody else does. Dana hops out of his chair, leaves the meeting.
0:09:36 You see him and the camera’s following him. He goes to the cafeteria. He’s not even at the table
0:09:42 yet. And he starts saying, he’s like, “Uzman versus whoever. I forgot who he’s going to fight
0:09:48 at the time.” But, “Uzman versus Gachi. This is Pretend it was Gachi.” And the manager’s like,
0:09:52 eating a salad. He’s like, “What?” And he’s like, “Uzman versus Gachi. We got to do it.” And he’s
0:09:56 like, “No, man. I don’t want to do this.” He’s like, “What? Are you kidding me? This is a huge
0:10:00 opportunity for him. If he fights this guy or comes up.” He’s like, “Uzman versus Hamzah.
0:10:06 You got to do it.” And the guy’s like, he’s like, “No, no. He’s not ready, blah, blah, blah.
0:10:10 Not ready. Who do you want to fight?” He says this other guy, “What does that do for you?”
0:10:14 And he immediately, he basically, in like four seconds, cuts the deal with him and Khabib was
0:10:18 there. And Khabib was like, “No, I think Dana’s right. I think this is what he should do. It’s
0:10:24 going to be huge for his career.” And so they cut the deal. And the agent, he’s like a super agent.
0:10:28 He’s like the, you know, like, he’s an agent for all these fighters. You would think an agent’s
0:10:31 like Ari Manuel. He says in the thing, he goes, “This is why I don’t talk to Dana anymore. He’s
0:10:36 too intimidating for me. Like, he’s too, too like forceful for me about what he wants to do.”
0:10:41 And so I saw that and I noticed and I said, most people will watch that scene and they’ll,
0:10:45 they won’t even pay attention to what just happened, which is that the greatest founders
0:10:51 in the world, the greatest CEOs in the world, they cut through the bullshit. There’s a, another
0:10:57 video I saw recently of, who’s the guy, Walter Isaacson, who did the bio of Elon Musk?
0:10:58 With Elon.
0:11:02 And he’s on someone’s podcast. I think, I think he’s on Steve’s podcast and he’s telling the story.
0:11:02 And he says,
0:11:04 Like talking about the Twitter servers?
0:11:08 The Twitter servers. So he says, Elon is talking to the Twitter team and he’s like,
0:11:14 “Hey, cut costs. We need to shut down the Sacramento server form.” And his engineer’s like,
0:11:18 “Okay, I’m going to be tricky because those servers are used for all of our infrastructure.
0:11:20 But we could do it. We’ll make a plan and we’ll be able to do that in six months.”
0:11:25 Six months. What are you talking about? We need to do this faster.
0:11:29 It’s going to take six months, Elon. That infrastructure is critical. It’s so
0:11:33 interwoven into everything that we do. We’re going to experience big issues.
0:11:36 We’ll make a plan and we’ll get it done. I promise you, we’ll get it done in six months.
0:11:43 I need this done in six weeks. Six weeks. We can’t do this in six weeks. We would have to do A,
0:11:49 B, C. It could be done in six days. Let’s do it in six days. Now these guys are reeling and
0:11:53 they’re like, “Elon, it can’t be done. Six weeks, six days. It can’t be done that way.”
0:12:03 So, Elon, he leaves the meeting and I think he was going to Texas for Christmas.
0:12:08 Yeah. It’s Christmas Eve. It’s Christmas Eve. He’s flying to Texas to go see his family and his
0:12:12 two cousins or everything are on the plane with him. They’re brainstorming. They’re like,
0:12:18 “God, six months, six weeks. This is ridiculous.” Then someone on the plane has the idea. They’re
0:12:21 like, “Why don’t we just go to Sacramento right now? We’ll just rip the servers out ourselves.”
0:12:28 Because one of the cousins, I think, worked at Solar City or whatever. He was like,
0:12:32 “We could use some servers. We definitely need some servers.” He’s like, “All right,
0:12:38 sounds good.” What’s he do? I think the idea was like, if we just take the servers offline,
0:12:41 they’re going to have to figure out how to fix it and they’ll fix it in faster than six weeks.
0:12:47 I promise you that. I think that was underlying it. So, Elon, on the plane, on Christmas Day,
0:12:51 basically Christmas Eve, they’re flying to Texas, midway through the flight just tells the pilot
0:12:56 turn around and we’re going to go land in Sacramento. The pilot’s like, “Okay.” Then he says,
0:13:00 “Hey, do you have a pocket knife?” The pilot’s like, “Yeah, I do.” His bodyguard was like,
0:13:05 “Here, I got one.” He whips out this pocket knife. They go to Sacramento. They take the knife.
0:13:09 They basically, and the server, the company, the farm, basically, they were like,
0:13:13 “Hey, we’re closed, dude. It’s Christmas Eve.” He’s like, “Let me in. These are my servers.
0:13:17 Open this door right now. I don’t need you to do anything. Just open this door. I’m going in.”
0:13:22 Open the door, gets in, takes down the servers. I don’t know the exact ending of the story, but
0:13:31 same thing. Extreme force of will, extreme bias for action, and a questioning of the default speeds
0:13:36 for everybody in the company. When you know that your default speed or your default clarity of
0:13:41 thinking is going to be questioned, it changes everything. I’ve been on the other side of this.
0:13:47 When I was at Twitch, Emmett was somebody who I’ve always said, “His oven burns a little hotter.”
0:13:52 He’s smarter than the average bear. I felt that if you were in a room with Emmett and you presented
0:13:58 a plan that to 9 out of 10 people in the company, it would sound okay. They wouldn’t challenge your
0:14:04 assumptions. Emmett would always challenge the assumptions of why we’re doing it, how much it’s
0:14:09 going to cost, why it has to take that long, et cetera. If your logic was not bulletproof,
0:14:13 if you were not already maxed out in your thinking of what was possible,
0:14:17 you were going to eat shit in that meeting. You were going to get shredded in front of like 18
0:14:22 people, and not in a mean way, but your logic is going to get shredded. You were going to get
0:14:27 verbally undressed, and that changes things. Once you know that that’s what’s on the line,
0:14:31 you come in a little differently. You sit a little straighter. You walk a little faster.
0:14:37 You dot your eyes and cross your T’s when you go into those meetings. He only had to do it once,
0:14:43 and then for the next 18 months, I was ready every meeting with Emmett. I think that this is
0:14:48 just a very valuable trait that they don’t teach you. Was Emmett nice about it? Is Emmett a courteous
0:14:54 person? Emmett has that autistic forgiveness where you’re like, he’s not being mean about it. He’s
0:14:58 not being nice about it. He’s being very direct, but you’re like, “Oh, that’s just how he is. He’s
0:15:07 just being direct.” He’s not trying to be mean. I wouldn’t even say mean is the right word. He’s
0:15:12 just trying to get to the truth, and he needs you to get out of the way so that the truth can
0:15:16 appear. He doesn’t care about your feelings in the search for the truth. In fact, the more you
0:15:20 kind of try to get in the way of the truth, the more he’s like, “What are you doing? Get out of the
0:15:24 way. We’re trying to find the truth here.” That’s the way I would describe how it felt from my point
0:15:30 of view. Really, I was rarely on the receiving end of it, but I saw it happen many a time, and I took
0:15:34 note very quickly of like, “Okay, you got to come correct here.” Well, because I don’t like people
0:15:39 who are like, and I used to behave this way, and I regret how I used to behave, but of being needlessly
0:15:44 rude. I think that the people who are needlessly rude, I think Dana would fall in that category
0:15:48 because he loves to fight. He loves to battle, so he just told the story last week. He goes,
0:15:53 “Let me tell you something. I’m going to war right now with Caesar’s Palace,” and they’re like,
0:16:00 “Why?” He goes, “For the last six months, I’ve been playing like Baccarat or some casino game
0:16:06 with them.” He goes, “I’m up $17 million on them right now.” He goes, “I wake up in the morning,
0:16:11 and I think, how am I going to win this war today?” He goes, “I’m going to lose eventually
0:16:16 because they’re going to win, but right now, I’m crushing them, and each morning I wake up,
0:16:20 I go to work, and instead of going home,” or he said it, he goes, “When my kids are asleep,
0:16:25 I go back to the casino, and I’m ready to go to war, and I thrive off that.” He goes,
0:16:27 “I want my back against the wall, and I want to go to war.”
0:16:33 So, I got to say this, because anybody who’s an actual gambling degenerate, you listen to Dana’s
0:16:38 gambling story, and this is only going to apply to 1% of the audience. So, I apologize for the 99%
0:16:45 who cares about this. I care a lot about this. So, his story has some holes on his gambling stuff.
0:16:50 I would like to list some of the holes that I’d like to make for this. I’d love Dana to come on
0:16:56 and talk about this. He tells us one time that he got too drunk, and he goes, “I think I lost
0:16:59 $60,000, and I wake up in the morning, and they’re like, “Hey, man, you owe us.” He goes, “Yeah,
0:17:05 I’ll get you the 60.” He goes, “No, no, no, no. It’s $6,000,000.” Yeah. I’m not saying he doesn’t
0:17:13 admit that he loses. In that interview, he said, “I’m up $17,000,000 on Caesars this year, year to
0:17:18 date.” He says, “My rule is that if I make a million bucks, I walk, and if I lose, I’m willing
0:17:25 to lose up to $6,000,000.” Oh my God. Then he says, “I’ve only lost twice this year.” So, it doesn’t
0:17:31 add up. If you walk away when you win a million, or you lose $6,000,000,000, and you’re up $17,000,000,
0:17:36 and you’ve only lost two days of the year, and we’re halfway through the year, the math ain’t
0:17:42 mathin’ on that one. Fourth thing, he represents himself as a skilled gambler who beats the house.
0:17:49 He’s playing Bakarat, which is like a 50/50 push game, and Blackjack, where you’re down $49.51.
0:17:54 There is no skilled… The biggest loser in the world is a professional Blackjack player.
0:17:59 I’m just going to say that again. The biggest loser in the world is a professional Blackjack player,
0:18:04 because your professional at something that is stacked against you is a, by definition, losing
0:18:08 game. Secondly, you’re probably really smart and could have done so many things with your life,
0:18:13 and you chose to play a game that is stacked against you as your professional career. And third,
0:18:17 you’re delusional, because there’s no such thing as a professional Blackjack player. That is why
0:18:22 that is the biggest loser job in the world. Well, he’s… But the fact that he continues to do it…
0:18:27 I’m not saying Dana is that, by the way. Dana’s job is running the UFC, but just a side tangent to
0:18:32 any professional Blackjack player out there, that makes no sense. He could be a degenerate and also
0:18:35 a great business. He could be a degenerate gambler and also a great business. Probably is.
0:18:39 One of Jordan was, and many others are. What else did you learn in that documentary or that show?
0:18:45 The force of will, bias to action, speed, cutting through the BS, I think, is tremendous. And his
0:18:51 other employees even said this. The head of PR was like, she goes, “Yeah, work starts at 8.30.
0:18:55 It’s 6.30 right now. I’m doing my workout.” But Dana just texted me saying, “Are you at the office
0:19:00 yet?” I told him, “Not yet, but I’ll be there soon.” And she was like, “Dana’s going to do this press
0:19:05 conference. Dana’s the type where once he decides he’s going to do something, he’s like a rhino
0:19:10 going to do it. He’s going to bulldoze through, and you’re either with him on it and you’re helping
0:19:15 him do that, or you should just get out of the way.” And I just thought, man, another really hard
0:19:20 job, being the head of PR for the UFC is a very, very difficult job. And that woman is with him
0:19:26 everywhere. I forget her name, but Landa or Linda or something, she’s always with him. And what you’ll
0:19:32 notice is they do the press conferences after the fight. In New York time, it’s like at 2 a.m.,
0:19:37 and then you’ll see them Monday in France for another press conference. They work their asses off.
0:19:44 Yeah, 100%. Let me tell you, all right. So we talked about a company on here a bunch of times,
0:19:48 but I actually just met the founder. So I’m going to do a little bit of a repeat. But remember how
0:19:55 we talked about 29029, the Everesting thing? It’s the outdoor race where you kind of run up and down
0:19:59 a hill as many times as it takes to run the equivalent of Mount Everest. An awesome thing.
0:20:05 Started by a friend of the pod, Jesse Yitzler, and others. Yeah. So I guess Everest is 29,000 feet.
0:20:12 So hence, 29029 is the name of their brand. We’ve talked about them a bunch, but the guy coincidentally
0:20:15 joined Hampton recently. So I was able to like, I called them this morning and I was just talking
0:20:19 through them because I’ve been so fascinated. We talked about high rocks and we talked about a
0:20:25 bunch of these underground, not underground, but these like niche sporting events. And I actually
0:20:28 think they’re better businesses than I previously thought. So let me tell you about this one.
0:20:35 So if you go to 29029, I think it’s called 29029Everesting.com. You can go to the website,
0:20:42 but check this out. So they do seven events a year. Each event only has 300 people. This year,
0:20:48 they sold out the entire year in four minutes for all of the events and he’s purposely keeping this
0:20:54 small. So if you do that math, that’s $13 million in ticket sales that he’s done. And he told me
0:21:00 that basically they want to own all the accommodation and so basically it’s turnkey.
0:21:04 You pay $6,500, you show up in some locations, you can stay at like a Fairmont Hotel, which
0:21:08 is where they partner with, or they do like glamping and you go to like Whistler and all
0:21:12 these like really beautiful places. And so you show up, you do this event and the reason they
0:21:17 keep it at 300 people is so you can meet everyone. And so you can have this experience where you
0:21:22 get to know all your people. And so you keep coming back year after year. But listen to this,
0:21:27 they started in 2017. When they started in 2017, Jesse Itzler was Mark’s partner on this,
0:21:32 which is like the whole idea of like an influencer partnering with you. Jesse only had
0:21:38 5,000 followers on Instagram when they started. He wasn’t that big of a deal. And yet in their
0:21:43 first year of business, they made $500,000 in revenue. In 2018, their second year of business,
0:21:47 they did a million dollars in revenue. By 2020, he said they were doing really great, but COVID
0:21:51 happened, the business got wiped out. And so in 21, 22, they had to start all over again.
0:21:56 But he says it’s a great business. He’s like, it’s negative working capital, people pay up front,
0:22:00 and I can use that money to go and pay for all the accommodations and pay for everything.
0:22:04 And he says it’s a great business. I was like, well, what’s wrong about this business? Well,
0:22:12 he said the first thing that sucks is it’s a fad, meaning Tough Mudder, a bunch of other events,
0:22:16 like you look at some of these events like Spartan Race, they get really popular really
0:22:19 fast and the Tough Mudder was doing 100 million in revenue. Now, it filed for bankruptcy a couple
0:22:24 years ago. You have to figure out how to keep people coming back over and over and over again.
0:22:31 And I asked him, I said, how do you do that? What are the keys to make this work?
0:22:34 Because this is kind of an interesting thing. I don’t know if I would ever want to start one of
0:22:39 these, but maybe one day. He said the first thing, you need a story. So you have to tell your friends
0:22:43 what’s something exciting that you’re going to be doing. And it can’t be really like running a
0:22:46 marathon because everyone kind of does that, but it has to be a little bit more exciting.
0:22:49 You need a story. You need to be going somewhere beautiful. You need to be doing some ridiculous
0:22:54 race. The second thing, it’s got to be challenging. Do you know how many people who start a marathon
0:23:03 finish? 70%? 99%. 99% of people who start a marathon end up finishing that particular race.
0:23:09 Not so hard then. It’s not so hard. In his opinion, you need roughly a 70 or 75% chance.
0:23:16 He said for his events, roughly 70% of people go through with it. 30% fail. The third thing,
0:23:20 you have to learn some type of skill, like a new skill or acquire some type of new fitness
0:23:25 in order to accomplish it. And the last thing, it needs to be in a beautiful place or it looks cool
0:23:31 in photos. So I was thinking about this. Let me give you three ideas for ridiculous fitness
0:23:36 events that could work out. You ready? Hit me. All right. The first one, we’re going to call it
0:23:42 the burly beer mile. You dress up like Paul Bunyan. You go in the mountains on a track,
0:23:48 near a track. You run one lap, chug a beer, run another lap, chug a beer. You do that four times,
0:23:53 four beers, one mile. What do you think about the burly beer mile?
0:23:59 Look, if you can give people any excuse to drink, you already have 80% of a good business.
0:24:04 There’s a reason that Topgolf is really popular. There’s a reason
0:24:08 that people go to baseball games still. It’s not because they’re wondering what’s going to
0:24:12 happen in the top of the sixth. It’s because they want to eat hot dogs and drink beer outside.
0:24:17 Giving people an excuse to drink is a great business model. If you just layer on top of that,
0:24:22 a contrast, a juxtaposition. Oh, it’s fitness and beer. Love it. I’m already in. I don’t know
0:24:26 about the Paul Bunyan. I think that’s not sure that’s on trend with the aesthetics that we’re
0:24:31 going for here. But I think if we workshopped this idea a little bit, you could have something.
0:24:39 All right. How about the paddle prison break, a paddle boat race from Alcatraz to the coast of
0:24:45 San Francisco? The prison break. Oh, I like this one. My mind was still on the beer one for a second,
0:24:51 by the way. I feel like just the beer mile or the beer marathon, it’s a half marathon
0:24:59 and you drink 13 beers, I think has legs. Or maybe it’s a quarter marathon. It’s six beers
0:25:04 and six miles or something like that. By the way, I did a beer mile in college,
0:25:09 so you chug a beer to start, run a lap, whatever. You get for four beers, four laps, one mile.
0:25:14 I threw up and if you throw up, you have to run a fifth lap. It took me 15 minutes to do it. It was
0:25:18 horrible. Yeah, but we call that the victory lap. It’s like, oh, I had to do a victory lap
0:25:25 because I threw up during it. Oh, man, you sound fun. All right. So let’s do prison break. So
0:25:30 prison break is, we drop you off the side of Alcatraz in a small boat. The paddle boat. We’re
0:25:36 going to call it the paddle prison break. Is there like a lane set up or we’re just going to lose
0:25:39 people into the ocean here? What’s going on? We got some liability concerns. We’re not going
0:25:43 to let details get in the way of a good idea here. I think there is definitely something to
0:25:48 the prison break out of Alcatraz if you can do that. There’s a swim race that happens every year,
0:25:52 but I’ll give you my last horrible fitness idea. You ready? For the prison break,
0:25:58 you have to start in cuffs. Great for the Tardo. Adds a story, adds a challenge. You’re going to
0:26:02 have to learn and have to help each other get out of the cuffs. So everybody’s in cuffs. Do you
0:26:07 need somebody in this race who like can just get out of cuffs and then they’ll get the little pick
0:26:10 and they’ll start picking other people out and then that’s how you get out of this thing.
0:26:16 And you have to have a criminal record. In order to get invited, you must have to have at least
0:26:23 a little gold patch on the shoulder. If you actually have a felony or misdemeanor,
0:26:28 we’ll just call you out there. And the last horrible idea, we’re going to call it the Skyline
0:26:34 Scramble, a race through NYC, but you can’t touch the ground. You got to go from building to building.
0:26:39 Like a parkour challenge? Yeah, baby. The only person who survives wins.
0:26:45 No, these are all horrible ideas, but I did think it was incredibly interesting to hear this guy’s
0:26:49 business. I didn’t actually think that this company could be as good as it is, but I’ll be
0:26:55 eager to see if this thing works. Dude, I think these types of experiential businesses, I remember
0:27:00 when I ran a conference, it wasn’t the same thing, but like having a thing that you work
0:27:04 towards and then all the people come to, it was like, it was a very fulfilling thing to do versus
0:27:08 just being on the internet all the time. It felt nice to meet your customers and things like that.
0:27:15 It was pretty awesome. So you didn’t give me the heads up about this, but I’m down to workshop a
0:27:19 few ideas live for you here if you’d like. All right, what do you got? When you were thinking
0:27:24 to these, how did you put yourself in the mindset to even come up with these ideas? What got you
0:27:32 going? Well, they’re not very good ideas. So whatever mindset I was in, I would say avoid that.
0:27:41 We’re going to go with maybe nostalgia. So the Boston Rover, it’s Red Rover, remember that game,
0:27:46 Red Rover? It’s but with just all the people in the city of Boston. As many people as we get on
0:27:51 one team and we’re playing Red Rover. Just a city-wide hide-and-go-seek. A city-wide hide-and-go-seek
0:27:55 exactly. It’s not really fitness at this point. No. Children’s games I’ve gone into. They’re
0:28:01 all horrible ideas, but I just thought that this segment is fascinating, dude. I think that one day
0:28:09 I could see myself doing this. To make one of these? Yeah, yeah, yeah. They seem awesome. It’s
0:28:16 like the, you know how we talked about viral food? It’s like, how do you make your restaurant go viral?
0:28:22 Well, you need some type of food that’s either oversized or extra small or is a different color,
0:28:27 or it’s typically a side, for example, cookie dough. You’re making it the main. Yeah, it’s like,
0:28:31 cookie dough, you make that the main thing. Or you mash up two things that don’t go together. Or you
0:28:36 mash up two things that, yeah. And I’m like, what could you do for fitness? And I thought it was
0:28:41 interesting. I think it’s that same idea. By the way, speaking of beautiful settings
0:28:48 and doing races in memorable places. Where should people be racing to right now?
0:28:54 I think they should race to wander.com/mfm. Why should they do that?
0:28:59 Well, it’s actually a pretty good deal here. So if you go to Wanda right now, Wanda is a place
0:29:06 where you can go rent beautiful luxury vacation experiences. I’m booking one right now. Actually,
0:29:10 I have my assistant working on it this morning. So if you go to Wanda, they’re doing a special
0:29:14 deal for MFM people, which is that if you go to wander.com/mfm, you download their app, sign up,
0:29:18 you don’t have to book a vacation or anything. You were automatically entered into a luxury
0:29:23 vacation getaway on behalf of us. And so they’re going to be giving away a stay to one listener,
0:29:27 which is amazing. Your odds are actually pretty good. This podcast, not that popular. It could
0:29:31 be you. There may be one in a hundred chance. Who knows? So go ahead, download the app and
0:29:36 enter to win. And if you download the app, you’ll also get $300 off your next day. So you get a
0:29:41 discount and you get into the giveaway. But check out Wanda. Dude, I was looking at some of these
0:29:45 properties. The problem I have with Wanda, I got a bone to pick with Wanda, which is
0:29:52 the pictures are so good that I started booking vacations to places I don’t even want to go.
0:29:58 I just like normally you’re like, I pick a city and then let me find a place to stay. Here,
0:30:03 I went and I was like, dude, this house is sick. I guess I’m going to Naples. Where am I going?
0:30:06 I don’t know. I’m going to Florida now. I wasn’t even trying to go to Florida.
0:30:13 They’re setting expectations so high. So for example, have you ever seen
0:30:18 like people who take pictures of the pyramids and then they zoom out and there’s like hotdog
0:30:26 vendors and there’s like, you know what I mean? Like these photos are so freaking good. If they
0:30:30 zoom out, is there going to be like a trailer right next to the home? Like how are these so
0:30:34 awesome? I’ve had people who use these for like corporate off-sites because like some of these
0:30:38 places are pretty baller. So they use it to like do a, there’s like one in Sonoma. I know my friends
0:30:44 did for a corporate off-site and they were like, no, it was sick. It was amazing. There has to
0:30:48 be, I mean, these photos look so good that there has to be some version of like shoot for the stars
0:30:53 and you still land on the moon type of thing. But yeah, if it’s anywhere near as good as it looks,
0:30:58 I’m very excited. You have on this document the difference between running a business for growth
0:31:05 versus EBITDA versus cash flow. I’m interested. You got my attention. Yeah, this is a CEO school
0:31:13 tactical session. When you were running the hustle, did you obviously all of these things are good.
0:31:17 You want growth, you want EBITDA, you want cash flow. The problem is when you want three things
0:31:24 equally, you usually get none. So generally in any business at any point in time tends to be some
0:31:30 order of priority. When you were at the hustle, did you, which of these did you focus on and was
0:31:35 there ever a shift in, oh, now we’re focusing on this instead of this? I didn’t run the business
0:31:40 long enough. We sold like four and a half years in to make the shift, but it was for the longest
0:31:47 time, it was revenue was the number one priority followed by cash flow followed by profit. And so
0:31:50 what I wanted to do was double revenue every year. So I think we went from like
0:32:01 500,000 revenue to 2.2 to like five to 12 or something like that. And we didn’t make a lot
0:32:04 of profit along the way. I think the year we sold, we did maybe a million in profit,
0:32:08 but our cash flow was high. So I was able to add like $2 million to our bank account.
0:32:12 And explain to somebody who’s like, wait, how do you have a million dollars of profit,
0:32:15 two million of cash flow? How does that work in a business like the hustle?
0:32:20 So I’ll give you guys a really easy example. So we had this thing called trends. It was $300 a year,
0:32:23 but for the sake of this conversation, let’s just say it was $1,200 a year.
0:32:32 And if a customer paid upfront, let’s say they paid me on June 1st, $1,200 for an annual subscription.
0:32:38 My cash flow was $1,200. That’s how much my business accepted into our bank account.
0:32:44 But the way that gap accounting generally accepted principles of accounting, the way that works is
0:32:50 that $1,200 was really only $100 in June, $100 in July, and $100 each month.
0:32:55 And so my revenue was only $100 per month that they stayed with me, even though I collected
0:33:01 $1,200. Thus, my profit, let’s just say that it cost me $75 to produce the content,
0:33:09 my profit was $100 minus $75, so $25. Exactly. And so I’m in this situation right now. I have a
0:33:16 business where we’ve been running it for maybe four years now. And it’s doing really well. I was
0:33:21 only growth focused. So I was like, “You, I wanted to double or more every year.” And so we did.
0:33:28 The reason being is typically, not always, typically, it’s harder to grow revenue,
0:33:32 but it’s easier to, once revenue is grown, to become profitable.
0:33:36 Exactly. I think it’s the right order of operations. Actually, there’s one pre-step
0:33:39 even before growth, which is just product-market fit. Meaning, have I made something that people
0:33:44 want? Do I feel like if I produce this, that there’s a market pull for this? So once we,
0:33:48 you know, it was a verified product-market fit, great. Now it was grow. I think in year one,
0:33:53 we did six or seven million. I think in year two, we basically got to 12 something.
0:33:57 Year three was bigger than that. Now year four is bigger than that. So we’ve basically been,
0:34:02 you know, growing by somewhere between 50 and 100% every year for the four years.
0:34:09 But I have pulled out exactly $0 from this business. I have put in my pocket $0 from this
0:34:14 business in four years. Wait, really? Yeah, I’ve taken nothing out of the business. I’ve reinvested
0:34:19 everything, but it’s not a, oh, I could have took a ton of money out of this business. It’s like,
0:34:25 well, like for example, one year, we basically had no profit. We did, you know, eight figures of
0:34:29 revenue and we were break even essentially. And I was like, “What are we doing here? How did this
0:34:35 happen?” So like the bank, but did the bank account ever go up? Like was your cash position ever good?
0:34:40 Well, in the economy of one other variable, which is inventory. It sucks. The cash has been pretty
0:34:45 steady, but the inventory assets are going up. But they’re also inventory that might take a while
0:34:49 to move. It might be slow. It might be whatever. And so you don’t, I don’t want my cash tied up
0:34:53 in inventory. That is not actually the plan. That’s a byproduct. Unless you can pay your
0:34:58 employees and bills and inventory, it sucks. Yeah, exactly. So I’ve been going through this
0:35:03 process where I shifted from where I first was in growth, and then I shifted to EBITDA.
0:35:07 And so that required a certain set of skills. So I’ll share with you some of the lessons learned
0:35:12 shifting to EBITDA first. So we, and we’ve successfully shifted to EBITDA. And so EBITDA
0:35:18 being earnings before interest, tax, amortization and depreciation.
0:35:23 Exactly. Okay. So what did I do to make that shift? The first thing was,
0:35:27 and the reason I’m saying this is because there’s probably people out there who are running a
0:35:31 business that’s been high growth, low cash flow or high growth, low profit.
0:35:36 And for some businesses, that’s the right move. You want to stay in that mode for a very long
0:35:39 time. Maybe it’s a winner take all market. Maybe it’s a land grab situation. Maybe you’re venture
0:35:44 backed and it’s a billion dollar a bus. This is not that. This is a business I own that I,
0:35:50 you know, if we sell this business, it might be, you know, a hundred million dollars or less is
0:35:54 like where this will thing will land. But that’s great. We own the business. We have no outside,
0:35:59 you know, investors. And so it’s no big deal. So anyways, the point of this,
0:36:03 point of this rant is basically, how do you make that shift? So I first went and talked to people
0:36:09 so step one, figure out what the right EBITDA target is. I go talk to people who are in the
0:36:14 same space to figure out what EBITDA margin is kind of the low end of what’s possible to the
0:36:18 high end of what’s possible. And then I ended up shooting for somewhere like, you know, the 60%
0:36:24 mark, like 10 to 25%. Yeah. So for me, that’s like 17% margin. So the best ones were like, yeah,
0:36:29 we have 25% like the Econ ones. But then you dig under the hood is like, oh, you don’t do any marketing
0:36:36 like somehow. Well, I do. So that’s just not going to happen. But getting to 17, 18% is like, wow,
0:36:41 that would be really great. And then the low end is like 10%. So that’s the first thing. Then
0:36:46 envelope, create like a EBITDA, what I call it EBITDA budget. So basically, you take for every
0:36:51 $100 of revenue that comes in, what percentage is going to go to each of the following categories?
0:36:58 My overheads, my cost of goods sold, my upX, my advertising and marketing, etc. And so you create
0:37:02 an EBITDA budget and you basically say, where does the dollars flow today? So you do a last 12
0:37:07 months, look back, say, we’re on average, every month, we’re spending 5% of revenue on overhead
0:37:14 and 12% on in the Econ case, maybe it’s shipping fulfillment, whatever. So you create a current
0:37:20 status budget. And then you say, well, in order to get my margin, I need to find, you know,
0:37:25 eight points of extra profit margin somewhere. So where’s it going to come from? And so you
0:37:29 start to basically pull calories from these different departments. All right, marketing,
0:37:32 you’re going to have to give me two points here. And shipping, you’re going to have to find a way
0:37:36 to cut off one point. And you basically find the extra eight points of margin that you’re going
0:37:42 to need. And that stuff is, it’s not hard to do it in a spreadsheet. It’s really hard to track it
0:37:47 on a weekly and monthly basis to make sure that it’s really hard. So once I did that,
0:37:52 now it’s time to communicate. So step three, communicate the plan relentlessly. So I then
0:37:56 go to the leaders of the company, I say, Hey, guys, forget everything I said before. Now this
0:38:01 is what matters, right? We still want to grow. Sure. Secondary priority. First priority is we’re
0:38:06 going to grow EBITDA. What’s EBITDA? Where are we tracking this today? So I’ll show them. Hey,
0:38:11 here’s what it is. Here’s what it needs to be. Here’s how we get there. And here’s the cadence
0:38:16 of how we’re going to track this. And now I put the onus on them. I said, you need to find me
0:38:20 one or two points of margin in your department. Or you need to find me three points over here.
0:38:24 How are you going to do it? So come to me tomorrow or in two days with a plan of how you’re going to
0:38:29 get that extra margin. And also, I want you to create a report that tracks this, you know,
0:38:33 the sort of, you know, if you’re a cost center or your profit center of the business,
0:38:36 you need to create a little dashboard and you need to show me how you’re going to basically
0:38:41 update that every single week or every single month. So we do that. And every single month,
0:38:45 I start hammering people on this. And then the fourth step is tie their incentives to.
0:38:49 So I go to my CMO and I say, great, last year, your bonus was based on revenue.
0:38:54 This year, your bonus is based on EBITDA. And by the way, I’ll actually increase your bonus.
0:39:00 You can remove the cap. You can actually get a bigger bonus if you’re able to get even bigger
0:39:03 EBITDA. So now it’s on you to figure out how that happens. But if we don’t hit our EBITDA targets,
0:39:07 you get no bonus. Okay. So now incentives are aligned to achieve that thing.
0:39:11 And so those are the kind of the first four steps. The last step, which is basically
0:39:17 actually go do the thing over and over and over again. Somebody gave me some great advice
0:39:21 along the way. They go, oh, you’re in EBITDA mode. Yes. Called spring cleaning. So here’s what you’re
0:39:23 going to do. You’re going to go and you’re going to say, there’s got to be some low hanging fruit.
0:39:26 You’re going to go and you’re going to find a bunch of SaaS subscriptions that you should cut off.
0:39:30 You’re going to find this agency you’re paying too much and realize that we don’t need that agency,
0:39:35 whatever it is. And you’re going to feel like, cool, we cut the cost. Schedule calendar reminder.
0:39:39 In 30 days, you’re going to do the exact same thing again. And you’re going to feel like, well,
0:39:43 we already cleaned it out, but it’s just like cleaning a house. You first clean out the surface
0:39:49 level mess. Once that’s gone, now you start to realize, oh, we never actually dusted this area or
0:39:53 this closet and actually stuff. Now let’s start to unpack this closet. And so we’ve done, I would
0:39:58 say, three or four of these spring cleanings now this year. And it’s only six months into the year.
0:40:04 So I’ve done it at least three times, maybe four. And each time we go and we unearth more stuff.
0:40:09 And you can’t do it every day. That’s not the right way to focus on it. But on a monthly or every
0:40:14 two months basis to go back through and say, all right, let’s trim some more fat. Where’s more fat?
0:40:20 And inevitably, you will find more things. But why are you going after EBITDA? Because
0:40:27 so I’ll mention this a little bit, but if people rag on me, I’m not like incredibly well versed,
0:40:32 but I’ve been looking into like EBITDA might be bullshit. So there’s this thing called GAP,
0:40:37 Generally Accepted Principles, whatever. It’s like what we all abide by. There’s a lot of
0:40:42 bullshit in there. Why EBITDA versus cash flow? Cash flow also works. Cash flow required me to
0:40:47 do a second big project. So the second big project was, okay, where’s that cash going? Why
0:40:51 doesn’t the cash go in my pocket? Oh, the cash goes into inventory. And so separately, we did this
0:40:56 like after I did the EBITDA cleanup first, first couple months, I said, okay, great. Now the EBITDA
0:41:01 is great every month. But my bank balance is not going up proportionate to the EBITDA. And so
0:41:05 first three months of the year, we killed it on EBITDA. Awesome. Where’s the money going? Oh,
0:41:10 it’s going into inventory. How do we get our inventory levels to be right size so that this
0:41:14 cash flow flows to the owners of the business and not to the warehouse? Because today it’s going to
0:41:20 the warehouse. And which is a separate challenge and a separate discipline altogether. And it’s a
0:41:25 three-legged stool. You need all three legs to have an amazing business. You need a growth leg.
0:41:30 Because if you’re not growing, the business is not worth very much. You need a profit. If you
0:41:34 don’t have a profit, the business is not worth very much. And then you need that profit to result
0:41:39 in free cash flow. And if you get all three, you have a beautiful, amazing business. But in order,
0:41:43 I kind of wanted to go in those three, because again, there’s not going to really be much cash
0:41:48 flow if you’re operating at a net loss. So I needed to first be making sure there’s a surplus of
0:41:51 profit. Then I needed to make sure that surplus of profit is resulting in free cash flow.
0:41:57 And you just so happen to be in an industry where those EBITDA and cash flow things,
0:42:02 they’re really hard. It’s really hard. Like to figure out the inventory and stuff like that,
0:42:06 that is a science. I’m not envious that people go through this.
0:42:10 My major takeaway is Ecom is a terrible business to be in.
0:42:13 When is it not a terrible business?
0:42:19 If you are winning the game and you still think it’s a bad category to be in,
0:42:22 that’s when you know it’s a bad category. Most people, they lose the game, they’re
0:42:28 failing at it, and then they blame the category. So for example, and the opposite is true too,
0:42:31 I was telling somebody about podcasts, oh man, podcast is great, blah, blah, blah. He goes,
0:42:36 well, yeah, you won the lottery. So of course you love lottery tickets. Your podcast is popular.
0:42:43 It works. Of course, podcasting is great for you. But for the million podcasts that are not
0:42:47 really getting listened to, would it feel the same way? Is it winning dependent?
0:42:52 And so this one’s interesting because our Ecom store is winning. And even in winning, I’m like,
0:42:55 note to self, this is not the category to be in next time.
0:43:02 Beyond that, I would say playing the game on hard mode has a bunch of disadvantages,
0:43:06 and I wouldn’t put myself in this position voluntarily. However, once you’re in a position
0:43:11 where you’re playing some game on hard mode, there is one big benefit, which is if you ever get to
0:43:17 play an easier game, you will dominate. It’s like, it’s like I was playing pickleball with a guy,
0:43:21 it was his first time playing pickleball. He’s amazing. I’m like, yeah, what are you doing?
0:43:25 He’s like, well, I’m playing college tennis. It’s like, I played a harder game. And I won
0:43:30 that game. So like, yeah, I’m pretty good at pickleball. It’s not so, it’s not that hard for
0:43:35 me. In the same way I was listening to Andrew and Chris from Tiny, they were doing like a Q&A.
0:43:40 And the guy was like, yeah, I’m in Ecommerce, DTC, which you guys say you don’t love that space.
0:43:44 Would you recommend I just quit? What should I go do? And he goes, well, one of the things that
0:43:49 worked for us was because we ran agencies, which can be low margin, grindy businesses with a bunch
0:43:55 of HR problems and hard to scale, because we did Ecommerce, once we went into easier businesses,
0:43:59 we just cleaned up. We could buy a software business that was running at 10% margins and
0:44:04 get it to 40% just because that guy wasn’t willing. Ruth was with pricing. He was not
0:44:10 negotiating with vendors. He was not taking care of all these little things that we had to do to
0:44:15 survive in these other categories that in a software category, you’re not as on the hook for.
0:44:20 Who do you think is winning in Ecommerce and what attributes do they have?
0:44:29 Shopify, Facebook. No, I mean, of course, of course, of course, retailers, DTC, whatever
0:44:37 you want to call it. I think right now, the retailers that are taking advantage of TikTok,
0:44:44 the TikTok flywheel are cleaning up. And what I mean by that is there is a very specific
0:44:50 moment of time right now where you can create content on TikTok, either yourself as a brand or
0:44:56 even better, you use an army of affiliates and you see creators. And whether it’s with TikTok shops
0:45:00 or people just hear about the brand so much on TikTok, they go Google search it and they find
0:45:05 your Amazon or they find your DTC shop. That flywheel, I’m invested in a couple of companies
0:45:10 that are doing this. That flywheel is pretty unreal right now. But only for certain categories,
0:45:14 I would imagine. Is it only for things where young people are using? Nope.
0:45:20 That’s amazing. That’s ridiculous. Right? Let’s move on. I’ve said too much.
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0:45:34 and it was a daily newsletter at scale to millions of subscribers and it was the greatest business
0:45:40 on earth. The problem with it was that I had close to 40 employees and only three of them were
0:45:44 actually doing any writing. The other employees were growing the newsletter, building out the tech
0:45:50 for the platform and selling ads. And honestly, it was a huge pain in the butt. Today’s episode is
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0:46:14 All right. I want to talk about one thing that you actually had on here that I have no idea.
0:46:20 It’s way out of character for you. Your dream house or do you want to do painted chickens?
0:46:24 Well, I don’t have much to say about the dream house except for, “Dude, look at this sick house.”
0:46:31 That’s the entire topic. But let’s go there. It’s an amazing house. This is a house that
0:46:39 this guy on my team sent me. And I can’t believe it. It’s the most beautiful house I’ve ever seen
0:46:46 in San Francisco. It’s 11,000 square feet, estimated market value, $23 million. And it’s on the ocean
0:46:50 in San Francisco. I mean, there’s just a few photos. So this house is first to get an 11,000
0:46:55 square foot home in San Francisco is very, very hard to do. Every view is like the Golden Gate
0:46:59 Bridge. You’re right on the water. You’re right on the ocean. But even if you didn’t want to go in
0:47:03 the ocean, well, guess what? You have an infinity pool in the back that’s just spilling over into
0:47:08 the Pacific Ocean. On top of that, there’s one photo in here that I just have to show you.
0:47:13 I see a beautiful porch that’s overlooking the San Francisco Golden Gate Bridge.
0:47:20 Next photo, 24. Like a wine cellar that is big enough that it was bigger than my childhood bedroom.
0:47:29 25. A huge home theater that looks like they’re just watching some type of nature documentary.
0:47:34 So awesome. And here it is. The reason I want this home to begin with, 26.
0:47:39 A half-court basketball court with all windows where you can see the Golden Gate Bridge.
0:47:45 This is awesome. Is this… Floor to ceiling, like 25-foot ceiling, all glass window. You’re
0:47:49 seeing… You’re looking at the ocean, the breeze. There’s a glass door that’s open. You see the Golden
0:47:58 Gate Bridge. And you have a beautiful basketball court inside your home with all this light wood
0:48:04 that I just love. Oh my God. This is crazy, dude. This house is unreal. I must buy this house.
0:48:11 It’s not for sale. So that’s the first problem. But besides that, I now have a target. I now
0:48:16 have a desire. You know, I thought I had enough money. Now I have a desire. I need to be able
0:48:21 to drop 30 million bucks on this house. Dude, in order to buy a 30 million dollar home. Oh,
0:48:25 check this out. Okay. So it was owned by Sharon Stone before that or after that. Do you know who
0:48:32 owned it? A dentist. A dentist owned this house. What the hell? Yeah. It says this guy was a dentist.
0:48:37 In order to buy a 30 million dollar house… I’ll tell you how much money I need. 28 million.
0:48:42 And then I’m gonna borrow two. And I’m gonna buy this house with every dollar I own. And that’s it.
0:48:47 No, I think you need $100 million to buy a 30 million dollar house. Would you say that’s accurate?
0:48:52 Probably at minimum, yeah. At minimum. Because the maintenance, the taxes on a house like this is
0:48:56 going to be pretty insane too. Like your carrying costs are going to be what? Half a million to
0:49:00 a million bucks a year? Yeah, it could be… No, it doesn’t. Well, it could be that. It would be that
0:49:05 high probably because you’re on the coast and you have to see… Taxes alone in San Francisco on
0:49:09 this house is going to be like a quarter million to $300,000 a year. That’s just the property taxes.
0:49:15 So all the maintenance, all the insurance, all the cleaning, all that stuff on top of this thing
0:49:18 has got to be at least another quarter million. So at least half a million bucks.
0:49:25 Yeah, that’s insane. That’s insane. It’s a sick house. The last thing I wanted to ask you about,
0:49:30 you said you wrote some essay. Yeah, your boy’s getting his Paul Graham on. I started writing essays.
0:49:36 Why? I told you, I’m just in a creative season and I wanted to do different things. I like writing
0:49:39 and I was like, “Well, what do I want to write about?” And I realized I want to write about the
0:49:47 stuff that I’m curious about or whatever I feel like I have a golden insight. So anything that
0:49:52 feels insightful to me, I want to be able to write it down. And why do I care about that?
0:49:55 You want to spread your seed, baby? You got to spread that seed.
0:49:59 Well, that’s part of it. But actually, the bigger part is I’ve known there’s this feedback loop that
0:50:04 happens, which is once you have to deliver something, you start to look for it. Meaning,
0:50:07 when we start this podcast, let’s say every week, we got to do this podcast. And when you show up
0:50:12 to this podcast, you got to have three interesting business things to say. You need to have three
0:50:19 interesting business topics. And in order to do that, your brain starts to now go find interesting
0:50:22 business topics, starts to ask a few more questions, start to write a few more notes,
0:50:26 start to pay a little more attention. And this wonderful feedback loop gets built where you
0:50:31 start getting smarter about business more because you have this outlet where you got to go put it.
0:50:35 And you’re on the hook to go put it somewhere every so often. So in the same way, one of my
0:50:39 favorite things is to learn something new, right? I’m just kind of like a learning junkie, right?
0:50:45 By having a place to go right, I now am hunting for more insightful things. I’m reading more.
0:50:50 I’m talking to people more. I’m having more connections between two different ideas that
0:50:53 are disconnected. And so that’s the real reason. Because the thing I shared with you,
0:50:55 I haven’t even published yet. I’m going to publish all these on my website, just
0:51:00 SeanPurri.com. But right now, this one’s on a Google Doc. I’ll throw it up after this so
0:51:05 that it’s at least online. So the essay is called “Painted Chickens” and our “Painted Chicken.”
0:51:09 And the reason it’s called “Painted Chicken” is because have you ever been inside of a subway?
0:51:16 Do you eat subway? When I was a kid, yeah. And so I like subway, I admit it. But subway,
0:51:19 the quality has gone like way down since I was a kid. And the irony is-
0:51:24 I can’t tell, has the quality gone down or have our tastes gone up?
0:51:28 No, the quality’s gone down. You know, I know this. You know all the controversy with Chipotle
0:51:33 right now? No. No. Dude, Gen Z hates Chipotle. Why?
0:51:38 So basically, things started trending on TikTok. There’s like Chipotle
0:51:42 gipping you on quantity. Okay. Or just like, you know, basically like
0:51:47 the way that this like Chipotle used to be bombed, now it sucks. Here’s why. And different people
0:51:50 have different reasons why, the taste. But one of the big ones is like they’re just
0:51:56 skimping on the thing. And then the CEO came out and did this hilarious thing. You didn’t see this?
0:51:59 No. It’s so funny. The CEO came out and he goes,
0:52:03 “Oh, man, look, if you go into Chipotle and you want a little bit more,
0:52:06 our guys are great about this. Just, you just give them a look.”
0:52:13 And he does this like stupid look. He’s like, “You do that. Our guys are, and girls, and girls,
0:52:17 our guys and girls are great at hooking you up with this.” And so there’s all these memes now
0:52:23 of people being like, “Yeah, when I go into Chipotle and I make this face,” like their reaction,
0:52:25 which is like, they’re not like, “I got you, bro. Let me hook it up.”
0:52:32 And they’re like also impersonating him, where they’re like, “When you go into Chipotle and you
0:52:38 give the look, our guys, and girls, and trans, and black people too, they’re all great at doing
0:52:43 this and people are making fun of this CEO for like, you know, flubbing this speech that he gave.”
0:52:45 So anyway, Chipotle is under the microscope right now.
0:52:49 Well, now they all like Kava, which I just went to. It’s awesome.
0:52:52 Yeah, they like Kava. Well, one of the reasons, so then the founder of Chipotle I think came out,
0:52:56 or somebody who was like, the ex-CEO came out, and he said two things. He goes,
0:53:01 “It’s insane that people think we would tell our staff to like, skip on portions.
0:53:05 That’s terrible for business. Like, we’ve tested this. The thing you do for business,
0:53:10 if you want to grow revenue and grow profits in a store, is you give people bigger portions,
0:53:15 which makes them love the place and come back. Sales go through the roof, and waste also goes
0:53:19 down because you’re giving them the food versus throwing it away. If you actually want to save
0:53:24 on food waste, it’s not by doing less portions. It’s by having more customers first so that you
0:53:28 sell through all your food. That’s the way you reduce food waste. It’s not by skimping to customers,
0:53:31 and then they don’t come back because they’re angry. Right? That would be counterproductive.
0:53:37 The second thing that came out was the guy said, “Basically, when Chipotle had all those E.coli
0:53:41 scares, they had to change their whole supply chain.” I don’t know if you remember this,
0:53:46 like there’s a couple years ago where, like two, three times, like, whoops, whoops, again,
0:53:50 oh, E.coli, again, sorry about that. They changed all of their operating procedures. What they used
0:53:55 to do was, in the store, in the back, that’s where they would chop the veggies right there,
0:54:00 they would do whatever. Now, it all comes pre-bagged, sealed from a central headquarters
0:54:05 where they can have really tight food safety, vacuum seal it or whatever, ship it to the store,
0:54:08 store just has to open it. They’re not doing the food prep on site. The result of that is the food
0:54:13 tastes less fresh. The result of that is that they cut down the number of suppliers they were
0:54:19 working with because it was too much risk. Instead of local farms for the meat, they now started
0:54:24 to go into a few vendors that are now shipping out much farther distances and maybe are more
0:54:30 mass production, less taste. The taste actually has gone down, not just the taste, but because
0:54:35 of the supply chain changes. They need to bring back E.coli or whatever, was like,
0:54:40 “Yeah, dude, let’s roll the dice. Let’s live a little.” The food’s got to taste good. Who cares
0:54:44 if you get sick once a year? Which is insane if they serve millions of customers when it’s like
0:54:50 four people. That’s like statistically insignificant, I would imagine. Which is always the worst
0:54:54 argument. Whenever one of these social networks, they’re like, “Dude, do you realize they’re getting
0:54:58 hammered by Congress?” All they want to say is, “There’s 2 billion monthly active users. How
0:55:02 many people are in your state? How many murders are there in your state per day? Do I blame you?
0:55:08 No. I run a state 100 times bigger than yours.” They can’t say that, but the reality is the
0:55:14 law of large numbers, if your Facebook, literally anything that can happen, is going to happen on
0:55:19 your platform every single day. That’s just the rule of statistics, even the most oddest,
0:55:23 strangest, most screwed up behaviors are going to happen because it’s so many people.
0:55:28 It’s insane. Yeah. Now they’ve had to change this whole thing, but what was your essay about
0:55:32 then? My essay is about, I call it “Painted Chicken” because if you go to Subway, Subway’s motto was
0:55:37 “Eat Fresh.” If you go into Subway, it’s just hilarious to hear, “Eat Fresh.” Then literally,
0:55:41 he’s opening up a bag of chicken and you see the chicken and the chicken has grill marks on it,
0:55:46 but you’re like, “Hmm. How come all the grill marks are so uniform? What kind of grill do they
0:55:51 use if you go look it up?” The grill marks are painted on. They don’t grill the chicken. That’s
0:55:55 not what those grill marks are. The grill marks are literally painted on the chicken.
0:56:02 I love this analogy because in every business, there’s always lip service.
0:56:07 Every business has these stupid things that they say. Go read the website of BP,
0:56:11 and BP will be like, “We care about communities and the environment.” They’re spilling oil into
0:56:18 the ocean. Everybody has their version of “Eat Fresh,” which is you say, “Eat Fresh,” and then you’re
0:56:23 painting on chicken. What I wanted to talk about was, what are the few examples where there’s not
0:56:29 painted chicken? Meaning, what are the examples where a company has values that they actually
0:56:35 live by and they actually mean something? Because I think anybody would agree that a value system
0:56:39 is very, very important. I remember in my first business, I was trying to make a decision. We
0:56:42 asked our mentor, we’re like, “Oh, we’re doing a sushi restaurant thing.” I was like, “Should we use
0:56:47 the eco-friendly packaging, but it’s more expensive and it’s kind of like the paper straw. It disintegrates,
0:56:51 but it’s good for the environment. Or should we use this one that’s cheaper, bad for the environment,
0:56:57 and it’s super durable. It’s actually good packaging.” She was like, “Well, you’re asking
0:57:00 the wrong question. You’re asking the question of which packaging should we use, but the question is,
0:57:05 what do we value more, the environment or the convenience and affordability?” There is no
0:57:10 right answer. It’s just a question of what you value more. All your decisions need to come upstream,
0:57:14 move your decision-making upstream. Once you know your value system, everything becomes obvious
0:57:20 after that. This is just a good bit of life wisdom. If you’re in a situation where you don’t know what
0:57:26 to do with somebody, “Oh, they treated me this way, but should I respond kindly? Should I be mean
0:57:30 back? Should I ignore them? What should I do?” Well, if your value system is, “I’m a kind person,
0:57:34 that’s what I do. I don’t change my behavior based on other people,” well, then the answer is obvious.
0:57:40 Just be kind and move on. That’s it. What I started to look at was, what are the company values
0:57:45 that I actually remember that meant something to not only me, but the people who worked in that
0:57:50 company? The first one that comes to mind is, “Facebooks, move fast and break things.”
0:57:51 Yeah, I loved it.
0:57:56 I think we’ve heard that. Everybody’s heard that phrase by now. I said, “Move fast and break
0:58:01 things.” Okay, that’s great. Is that popular because Facebook is popular? Maybe it’s just a
0:58:06 popular value because Facebook was so popular. All right, that’s theory one. Well, Sam, what’s
0:58:10 Microsoft’s core value? What’s Microsoft’s move fast and break things? I have no idea.
0:58:17 Twitter, Lyft, Uber, pick any of these companies. Do you know any of them? We don’t know any from
0:58:21 any of them. In fact, the only other one that I could remember, like move fast and break things,
0:58:23 was Google’s. Do you know what Google’s is?
0:58:24 Do you know Evil?
0:58:25 Yeah, don’t be Evil, exactly.
0:58:26 Don’t be Evil.
0:58:30 But then it got silly because they maybe did a little Evil.
0:58:36 Exactly. Then I was thinking, “What is it to learn from this?” The first thing I learned is,
0:58:40 maybe these are memorable because they’re catchy. Maybe that’s the first thing, which is that,
0:58:46 instead of just saying integrity, you should say, “Don’t be Evil. Don’t be Evil is more provocative.
0:58:52 It’s more catchy. It’s more interesting than integrity or honesty or be good.” If they just
0:58:56 said be good versus don’t be Evil, none of us would remember that Google’s value is be good,
0:59:00 but a lot of us paid attention when they said our value is don’t be Evil. I think there’s something
0:59:04 to lesson one is, if you make it provocative, you make it memorable. If you make it memorable,
0:59:09 people might actually use it. That’s the first little takeaway. The second is, well, there are
0:59:14 other catchy rhyming things. You could just try to be catchy, like the quicker picker upper.
0:59:19 That’s cool. But why does move fast and break things have a little bit more weight to it?
0:59:25 I think it’s because you have to pay the price. You’ve got to pay the cost to be the boss.
0:59:30 What I thought was interesting was, if I went to 100 CEOs of Fortune 500 companies and I said,
0:59:38 “Hey, we think that the company should move fast. That speed is an important value. Speed is
0:59:42 important. Moving fast, would you say that’s a value for your team?” Of course.
0:59:47 100 out of 100 would nod their head and say, “Yep, of course. Definitely. We value speed.” Awesome.
0:59:54 If you said, “Well, when you move fast, naturally, sometimes things might go wrong. You might bump
0:59:59 into some things. You might break some things when you’re moving so fast.” Let’s agree that it’s
1:00:06 actually going to be move fast and break things. How many out of the 100 would now agree? The
1:00:10 reality is that 99 would be chicken shit and they would be like, “Well, no, we’re not trying to break
1:00:15 things around here. It depends. Speed without breaking things.” Once you go to speed without
1:00:20 breaking things, you’re now Subway Eat Fresh painted chicken. You’re bullshit. It’s now an
1:00:25 unusable, non-useful value. It might be something you put on your website, but it’s never going to
1:00:28 have any weight. You’re never going to be one of these generational type of companies that operates
1:00:33 differently and is known for how they operate. I went and read this quote from Zuck. I want to
1:00:39 read this to you. He says, “The value is actually move fast, but my theory on values is that most
1:00:43 organizations have a lot of values that don’t mean very much. They’re just table stakes. If you
1:00:47 say just be honest, of course you’re going to be honest. You should be honest. Everybody agrees
1:00:52 with that. Everybody knows that. It means nothing. It’s not an option to not be honest. That’s
1:00:57 automatic.” He goes, “I think the defining principle for a company,” meaning your company is going to
1:01:02 have one thing that you guys really do is your A+ strength. It should be something more interesting
1:01:08 that has a trade-off. Move fast is interesting for us because we had to give something up to get it.
1:01:15 The question is actually, what are you willing to give up? “Values are not free. Nothing is.”
1:01:21 Dude, that’s insane. What an insightful person. He’s just like an eloquent guy for how young
1:01:30 he was. That’s a really good quote. If I think about other great values that have had resonance
1:01:34 and stuck with people and meant something to people, for example, Nike’s, this is more of a
1:01:41 slogan, but just do it. If you think about the phrasing of just do it, is Nike’s just do it as
1:01:48 powerful if it just said do it or do things? It’s very different. The word just changes it
1:01:57 because just implies there’s a cost. Just implies that don’t hit the snooze button. Don’t shy away
1:02:01 from it. It’s going to hurt. It’s going to be painful. It’s going to be uncomfortable, but just
1:02:06 do it. I thought there’s something to learn in that. That’s inspiring for me. My essay was basically,
1:02:12 if you want your culture, your values to mean something, and my friend Siki has this great
1:02:16 phrase. He said, “Culture is there’s many ways to define it, but the best way is,
1:02:20 what do people do when the boss isn’t around?” I love that. I thought that was pretty powerful.
1:02:25 It’s your default behavior. If you want your default behavior to mean something, to be different,
1:02:28 to be a defining characteristic of your company that is different than the way other companies in
1:02:33 your space operate. Here’s the three-step formula, which is you choose one thing, not 10 things.
1:02:38 So for Facebook, it was moving fast. For Apple, it’s thinking differently. For Nike, it’s action.
1:02:43 Then you make it real by acknowledging the cost through the trade-off. And lastly,
1:02:47 you make it catchy. You make it provocative. You phrase it in a way that’s going to turn heads.
1:02:50 So that’s my essay called Paint the Chicken. First, that’s awesome. Second,
1:02:54 while you’re running this little value-driven, mission-driven company
1:03:00 Quest, have you heard of this company called Brunello Cuccelli? You probably haven’t,
1:03:03 because it’s not your shtick. Is that an opera singer? Who is that?
1:03:10 It’s this Italian company that makes really expensive cashmere clothing. Their most famous
1:03:16 thing is sweaters. I’m wearing a free t-shirt made at 100% polyester from a YouTuber, bro.
1:03:22 Yeah. That’s why I knew it wasn’t your shtick, but it’s not my shtick either, but it kind of is
1:03:28 becoming it because I like it so much. But Brunello Cuccelli, the founder started it because he was
1:03:33 like an expert at, I guess, cashmere. I don’t know what the term is, but he knew how to put
1:03:38 together clothing. And he basically was like, you know, my dad worked his ass off. He was working
1:03:44 seven days a week and I wanted to create a humane workplace. And so we’re going to do that by creating
1:03:49 these amazing sweaters where we hand stitch and it’s done perfectly. What do you say? It’s done
1:03:54 beautifully. And he makes these really high-end sweaters. And the clothing is great, whatever.
1:03:58 But what’s more interesting is this guy, the founder, and I just saw that someone shared this
1:04:04 photo of his schedule at 6 a.m. Wakes up at his countryside home, slowly gets dressed,
1:04:10 goes to the office at 8.30. And then he says, at 1, I walk home for lunch. Then I take a 30-minute
1:04:15 siesta at 3 o’clock. I go back to work at 5.30. The whole company stops working and takes the
1:04:21 late afternoon walk because we believe that rest is super important to being soulful and personal
1:04:26 studies important as well. He has light supper at 8 p.m. and then from 9 p.m. he heads out to the
1:04:30 cafe to meet friends where they discuss politics, philosophy, religion, and other subjects late
1:04:36 into the night. And I was like, is this guy legit? Is he the real deal? He is. So this company,
1:04:40 this sweater business, it’s a publicly traded company. I didn’t realize that. It’s a publicly
1:04:45 traded company with a market cap of like $4 billion. He’s building his company to build a
1:04:50 great workplace and to create great products, not to make money first. And just because of that,
1:04:53 I want to give him more money and he’s going to make more profit.
1:05:00 Yeah, I’m on the website right now. And it’s just from a swipe file. There’s so many little things
1:05:06 that they do in their brand and marketing that is congruent, completely congruent with everything
1:05:11 you just said. One of the great marketing lessons I learned a long time ago was somebody said,
1:05:16 yeah, it’s got to be Epoch. Epoch, what’s Epoch? E-P-O-C. They said, every point of contact.
1:05:22 So they said, once you decide what you’re all about, every point of contact. Meaning,
1:05:27 when somebody hits you on your, if you’re all about luxury, but then your customer service
1:05:33 hotline is like some janky old web form, it’s not every point of contact. Like, I’m looking at,
1:05:38 for example, one of the little gifts on the site for, you know, he’s just like, go click on the
1:05:43 sweater section or whatever. It’s this guy and it’s a model. But the model, he’s peeling an orange
1:05:47 and he pops like an orange slice into his mouth. He’s just kind of wandering. He’s like walking
1:05:51 a little side of the aimlessly. He’s just sort of like, he’s chilling. He’s not trying too hard.
1:05:56 He’s enjoying himself. He’s right by the water. And I’m like, man, the creative direction to say,
1:05:59 because, you know, normally what you said is you have the founder who’s got their beliefs,
1:06:04 then you have the revenue team that’s trying to jack up revenue and they’re adding pop-ups on
1:06:08 the website, try to make it like, you know, improve conversion. They have the creative director who’s
1:06:11 not even invited to the meetings and they’re trying to do one thing over here and it is not
1:06:17 congruent at all. And people, whether they can see it or not, they feel it and you could feel
1:06:23 when something is congruent. It’s the same reason that the Apple store looks the way it does and
1:06:26 the iPhone looks the way it does and the packaging looks the way it does and the commercials look
1:06:30 the way they do. It is congruent when it’s done well as a brand. But it’s very rare to see that,
1:06:36 to be honest. Yeah, these guys are on top of it. Now, I like them. I don’t know if I want to spend,
1:06:42 like, I’m looking at $1,500 for a Polo. I don’t know if I’m there yet, but I’m definitely thinking
1:06:49 about it. Maybe I’d buy it. Maybe I’d buy a $2,000 sweater, but like, everything they have is high
1:06:52 end. Like, it’s one of those places. Well, I think he wants to attract a good customer and I think
1:06:57 he’s repelled me successfully. I would not be a good customer of this. But you know what’s cool?
1:07:05 You’ve said his schedule. Light supper. Light supper. I don’t think I’ve ever had a light
1:07:11 supper. I’m eating heavy dinners over here and I just realized just changing the words. If I said,
1:07:15 if I just changed my words, I said, okay, what am I going to have for my light supper tonight?
1:07:19 I bet that would fix my diet. Just that one, you change your words, you change your life.
1:07:23 I bet you if I just changed that one word, light supper, it wasn’t even in my goddamn vocabulary
1:07:31 until just now. Thank you. I’ll be taking that. Is that it? Is that the pot? That’s it. All right,
1:07:38 that’s the pot. I feel like I can rule the world. I know I could be what I want to. I put my all in
1:07:43 it like no days off on a road. Let’s travel never looking back.