0:00:08 All right, you’re about to hear a podcast with a guy who does over a billion dollars a year in sales and yet 99.9% of you have never heard of him.
0:00:12 It’s my friend Craig. He is the smartest marketing mind I know, period.
0:00:18 And in this podcast, he talks about the three greatest lines in marketing history and he breaks down why they work.
0:00:26 He breaks down the ads that he used in his business and how he took one business from zero to 127 million in sales in year one.
0:00:27 Enjoy this episode with Craig Clemens.
0:00:36 I feel like I can rule the world. I know I could be what I want to put my all in it like no days off on a road.
0:00:37 Let’s travel never looking back.
0:00:43 Craig, what’s going on, man? We were just having a conversation out there and you gave me this teaser that’s unbelievable.
0:00:50 You were like, well, you know, the three greatest lines in the history of marketing and I had to put the finger up to your lips.
0:00:55 Like, we got to record this. And so we came in here emergency podcast before you tell me the lines.
0:00:59 I’ll tell people who you are. So Craig Clemens, he created he’s done many things.
0:01:04 But one of the things he created is Golden Hippo. It’s a company you’ve never heard of, but it just crushes it.
0:01:09 It’s a e-commerce company. You guys have done over a billion dollars of sales online.
0:01:15 So whenever you’re in a year, a billion a year, billion a year, that’s an important correction.
0:01:19 Every time I talk to you, the marketing part of my brain just explodes.
0:01:22 I just get so much smarter and so you’re one of my favorite people to talk to.
0:01:26 And because every time I learn from you, I can go do something in my business right away that’s going to make more money.
0:01:31 So I always appreciate that. You gave me the teaser, the three greatest lines of marketing. What are they?
0:01:38 OK, so the greatest line in marketing history, if you Google or chat GPT it, is going to say
0:01:42 a line different than what I was going to tell you.
0:01:43 OK, what would they say?
0:01:47 I’m going to tell you what they’re going to say in a minute. Teaser, teaser.
0:01:51 Marketing is a lot about teasers because it is a very strong line
0:01:58 and it’s worthy of discussion, but I’m going to start with my favorite headline of all time.
0:02:01 And that was written by a copywriter named Gary Halbert.
0:02:08 And the way it came about, he was contracted by a woman named Tova Borgnein,
0:02:13 who was the wife of movie star Ernest Borgnein before our time.
0:02:18 But apparently if we went to our parents and grandparents and we said Ernest Borgnein,
0:02:22 they would be like, oh, yes, he was a Brad Pitt type of the time.
0:02:27 So his wife wanted to come out with a perfume and she asked Gary to figure it out for her.
0:02:32 So Gary doesn’t know the first thing about perfume, but he knows a ton about marketing.
0:02:35 At the time, he was a legendary copywriter, had many, many successes.
0:02:39 And so he’s brainstorming on what to do as he’s walking through the mall one day
0:02:43 and he sees a kiosk where there’s like these little oils and things like that.
0:02:44 Did you ever walk by that kiosk?
0:02:46 Of course, there’s always like a very smooth talker right there.
0:02:48 Yeah, make your own perfume, right?
0:02:53 And so he goes up and he’s like, hey, what are these creations of perfume?
0:02:54 Do you make them yourself or whatever?
0:03:00 And they say, oh, yes, the essential oils are put together to make your own perfume.
0:03:02 And he says, is there one of them that outsells all the rest?
0:03:04 And they’re like, oh, yes, China Musk.
0:03:06 China Musk is the best seller by far.
0:03:12 He says, why doesn’t someone take China Musk, put in a fancy bottle and call it XYZ perfume?
0:03:13 And they’re like, well, that’s a great idea.
0:03:14 No one’s ever done that.
0:03:16 He says, okay, give me some China Musk.
0:03:21 So he takes the China Musk and he walks over to the jeweler that he knows and he says,
0:03:26 Mr. Jeweler, I would like you to put this in a fancy glass and gold bottle that is shaped like a tea.
0:03:32 Put it in the bottle and then he sits on it for like three months.
0:03:41 Calls Tova Borg9 and he goes, Tova, I have spent the last three months traveling the world in search of the finest perfume.
0:03:47 And I think finally, after sampling literally thousands, I’ve discovered it.
0:03:50 I want to bring it over to your house right now and have you smell it.
0:03:51 He brings it over.
0:03:54 She’s just in awe of how great the China Musk smells.
0:03:56 And she decides she wants to launch it.
0:04:03 And she wants to do the launch party at her friend Candy Spelling’s boutique on Roteo Drive.
0:04:07 Candy is a wife of Aaron Spelling, the big producer.
0:04:11 And Gary says, that is far too small.
0:04:16 We are going to rent out the entire bottom floor of the Century Plaza Hotel.
0:04:18 And she’s hemming and hollering.
0:04:21 She’s like, how are we going to fill that with people and this and that?
0:04:22 And he says, you know, trust me.
0:04:29 So she actually strokes the check, rents out the entire bottom floor of the Century Plaza Hotel.
0:04:33 And Gary takes it a full page ad in the LA Times.
0:04:36 And the headline is this.
0:04:41 Wife of famous movie star swears under oath.
0:04:48 Her new perfume does not contain an illegal sexual stimulant.
0:04:51 That was the headline in big letters.
0:04:59 And then the subhead said, and she is so confident in this, she’s willing to prove it by giving away
0:05:05 10,000 sample bottles on this day at this time at the Century Plaza Hotel.
0:05:08 So they put it to ad and you’re, you know, will it work?
0:05:09 Who knows.
0:05:14 And the phones at the Century Plaza Hotel just start ringing and ringing by people
0:05:16 wanting to know about this event.
0:05:20 And this kept going and going and they realized it was going to be chaotic.
0:05:23 So the fire department comes the day of and they like shut down the street.
0:05:28 They figure out this way to get all the cars in and thousands and thousands and thousands
0:05:32 of people show up and crowd into the lobby of the Century Plaza Hotel with this big reveal.
0:05:38 He has two in shape gentlemen with tuxedos.
0:05:44 Get a briefcase hand cuff it to their wrist and walk it in through the crowd.
0:05:51 Bring it onto the stage opens it up and in there are the 12 sapphires representing all
0:05:57 12 ingredients in Tova perfume and Tova auctions off each sapphire for charity.
0:05:59 Brings in a few hundred thousand dollars.
0:06:03 The next day the phone rang with unsolicited offers from, you know, Macy’s,
0:06:07 Robinson’s May, all the department stores, The Time, Barney’s Sacks, et cetera, et cetera.
0:06:12 It was the best selling perfume in the world that year and went on for many, many years.
0:06:18 I think now you’ll find it like at CVS behind, you know, photo counter or something like that.
0:06:19 But it’s still I think exists.
0:06:20 Wow.
0:06:20 Yeah.
0:06:22 So look for the tea Tova perfume.
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0:06:56 That’s amazing.
0:06:59 So you love that headline if we break it down.
0:07:02 So it was wife of famous movie star.
0:07:03 Yes.
0:07:04 Social proof right there.
0:07:05 Social proof.
0:07:07 Not using her name.
0:07:07 Yes.
0:07:09 Swear some curiosity.
0:07:09 Yeah.
0:07:11 Which famous movie star is it?
0:07:11 Exactly.
0:07:13 So curiosity and social proof.
0:07:18 Then it was swears under oath, which is like stakes drama, right?
0:07:19 Or how would you describe it?
0:07:20 Is that what you would call it?
0:07:20 Yes.
0:07:26 And then new perfume does not contain sexual, sexual stimulants, which is like kind
0:07:27 of an inversion, right?
0:07:30 It’s like that implies this shit must be amazing.
0:07:31 Okay.
0:07:33 So I need to come up with a name for this because my favorite part of the headline
0:07:39 is the last part and it’s like the secret marketing embed or some shit like that.
0:07:43 You know, it’s like the hidden secret message that even the reader doesn’t know
0:07:47 they’re receiving, but when you read that, you’re like, wait, okay.
0:07:50 It doesn’t contain an illegal sexual stimulant.
0:07:51 Does it contain a legal one?
0:07:54 Like what is in this fucking thing?
0:07:58 You know, and I always wanted to rip that headline and do it for like a new taco
0:07:59 stand or something.
0:08:03 You know, I think it’s universal that you could be like, you know, new restaurant
0:08:07 owner swears under oath his tacos do not contain an illegal stimulant.
0:08:10 You know, as he’s willing to give away a thousand free tacos to prove that
0:08:12 there’s nothing weird in here and they’re just that good.
0:08:13 They’re just that good.
0:08:14 Actually, that’s it.
0:08:16 That’s a great ending to it too.
0:08:17 Yeah.
0:08:21 And then it had actually the sort of the offer or the call to action, which was
0:08:24 giving away so many samples at this time at this place.
0:08:24 Exactly.
0:08:27 It’s proof that this is going to work.
0:08:29 You know, a risk-free offer.
0:08:30 You’re going to get this for free.
0:08:31 Right.
0:08:33 And if you don’t like it, who cares?
0:08:34 You know, so it’s removing all the risk.
0:08:37 It’s making it really easy to go get it.
0:08:39 Have you ever done a remix of that headline?
0:08:39 Have you?
0:08:40 I haven’t.
0:08:42 I had a roommate who was going to open a taco stand.
0:08:43 She didn’t know I’m doing it.
0:08:45 I came up with a name too.
0:08:45 It was going to be in San Diego.
0:08:47 It’s going to be called burro brachos.
0:08:48 So like drunken donkeys.
0:08:49 Yeah, I think it would kill it.
0:08:52 Man, if anyone out there, if you’re watching this, you want to start a taco
0:08:55 stand together, you got to have a good recipe, but I’m in man.
0:08:59 I’ll do all the marketing for your taco stand and you have to name it burro
0:09:01 brach and I get free tacos for life.
0:09:02 That could be amazing.
0:09:04 Um, but no, I haven’t.
0:09:08 But you know, ever since I heard about this, which was very early in my
0:09:11 marketing career, I’ve been obsessed with like marketing in-beds at about
0:09:12 the same time.
0:09:14 This, this came out, I think in the nineties or something like that before
0:09:19 I was in marketing, but about the same time I learned about this, another
0:09:21 marketing in-bed hit the world.
0:09:28 And I think this is another of the greatest lines in marketing history.
0:09:32 And that is, Sean, I’m sure something you can personally relate to.
0:09:38 If you get any erection lasting longer than four hours, call a physician
0:09:39 immediately.
0:09:42 So we’ve all heard it.
0:09:42 Yeah.
0:09:42 We’ve all heard it.
0:09:44 It’s the end of every Viagra ad.
0:09:48 And if you’re a guy that’s having trouble getting it up.
0:09:51 You’re thinking about this and you’re like, fuck, this could actually
0:09:53 give me a four hour erection.
0:09:55 I’ll be happy with four minutes, man.
0:09:56 You know?
0:09:58 And it’s such a great line.
0:10:04 So you think that, so I always heard that as at the end of any info, uh,
0:10:06 you know, pharma commercial.
0:10:06 Yes.
0:10:10 Like you may, side effects may include nausea, vomiting, but I kind of
0:10:10 thought it was like that.
0:10:11 But actually you’re right.
0:10:16 I don’t think that was the mandated, the mandated side effects.
0:10:18 I think that was an in-bed.
0:10:18 Maybe.
0:10:21 I mean, it could have been true also, you know, it shows a way to
0:10:24 workshop things in a way that could be a positive.
0:10:27 Like the, the nausea thing for something else.
0:10:30 It could be like, you know, if you’re, oh, here’s something.
0:10:35 I literally got, um, uh, stem cell treatments last week and the doctor
0:10:41 after he shoots me up tells me, Hey, you’re going to have swelling
0:10:42 tonight and extreme pain.
0:10:43 And that’s great.
0:10:44 That means it’s working.
0:10:45 I was like, oh, interesting.
0:10:45 Right.
0:10:46 Changed the meaning.
0:10:47 You know, yeah.
0:10:50 And when it started swelling and I was fucking howling that it was
0:10:51 like the most pain I’ve ever been.
0:10:52 And actually I was literally howling.
0:10:54 I was like, well, these fucking work.
0:10:56 You know, my knees going to heal.
0:11:01 So, uh, yeah, there is, is a lot of value in being able to turn
0:11:02 positives and negatives.
0:11:04 Joe Sugarman was a master of this too.
0:11:05 He used to sell a lot of devices.
0:11:06 Do you know Joe Sugarman?
0:11:09 I’ve heard the name, but blue block or sunglasses.
0:11:11 So we could talk about Joe Sugarman for, for a hot minute.
0:11:13 Cause he is one of the real name, by the way, or is that kind of like
0:11:14 an admin name?
0:11:15 That’s his real name.
0:11:17 And he was one of the greatest legends in marketing history.
0:11:20 Everyone should read Sugarman and study what he did.
0:11:23 But before he did blue block or infomercial, which was one of
0:11:26 the biggest infomercials at the time, he would do these devices.
0:11:31 And he had one of the early air purifiers.
0:11:35 And back then the way the technology, you think of an air
0:11:35 purifier.
0:11:36 Now, what do you think of?
0:11:39 Thing I put in the corner, a slick box in the corner of the room.
0:11:40 Like, yeah.
0:11:40 Yeah.
0:11:44 This one was in the nineties or something like that.
0:11:48 And it had to have this crazy weird wire coil on top of it to
0:11:51 grab all the negative shit out of the air.
0:11:52 And it was very ugly.
0:11:57 And his ad attacked that head on.
0:12:00 He said, like, you know, the coil that removes the toxins.
0:12:04 And so instead of having this ugly ass thing in your house,
0:12:06 you’re like, oh, that’s that you see that coil and you’re like,
0:12:08 that’s the coil, pulling the toxins out of the air.
0:12:10 You know, I forget what his exact headline was on that, but
0:12:12 it was turning these negatives into deposit.
0:12:12 Okay.
0:12:14 So are we on number two?
0:12:15 Or that was number two.
0:12:16 No, that was number two.
0:12:16 Okay.
0:12:17 Oh, okay.
0:12:17 Okay.
0:12:19 So maybe there’s going to be five, four.
0:12:20 I don’t know how many we said there was going to be.
0:12:20 Okay.
0:12:21 Shout out to another one.
0:12:26 I just remembered that’s really big when infomercials first aired.
0:12:30 The call to action was please call now.
0:12:32 Operators are standing by.
0:12:33 Do you remember?
0:12:35 Yes, I’ve heard these infomercials times.
0:12:36 Yes.
0:12:37 There was a woman a man.
0:12:40 I wish I could remember her name, but it was a female copywriter
0:12:44 that created this and it changed the entire world of infomercials.
0:12:46 And I think the entire world of selling.
0:12:52 And she changed that line to please call now.
0:12:56 If you get a busy signal, please call again.
0:13:01 And if you think of the picture in your mind, you know, of operators
0:13:03 standing there waiting for the phone, right?
0:13:07 No one’s buying this fucking thing to call now.
0:13:08 You, you probably get a busy signal.
0:13:09 Please keep calling.
0:13:10 Please keep trying.
0:13:14 You know, the offer is going to stay around for this many minutes.
0:13:15 Please keep trying to call.
0:13:19 It just gives the image of the phones flying in the room and
0:13:21 everyone’s trying to place their orders and it’s like high demand.
0:13:23 And, you know, it gets you excited.
0:13:27 And you, when you get through and you hear that person answer,
0:13:28 you’re relieved.
0:13:30 You’re like, oh, I got through.
0:13:30 Right.
0:13:31 I’m going to get the special offer.
0:13:34 Is the special offer still available?
0:13:35 Yes.
0:13:35 Right.
0:13:37 It is still available.
0:13:37 Right.
0:13:38 It’s like that feeling of relief.
0:13:39 So that was a big line.
0:13:40 I’ll give a shout out to that.
0:13:46 We did a similar one where for my company, we, let’s say on a normal day,
0:13:50 let’s say when we launch a product, it would be awesome if let’s say 800
0:13:53 people bought the thing, like right when it launches, like the kind of the first
0:13:54 10 minutes or so.
0:13:58 And so I’m like trying to think about how to drum up excitement or whatever.
0:14:02 And so part of the team, you know, first instinct is like, do we discount?
0:14:03 No, no, we’re not going to discount that.
0:14:05 That that’s going to have the opposite effect.
0:14:09 Probably do we free gift with purchase or some kind of limited time?
0:14:11 Like bonus for like the first people through the door.
0:14:11 Okay.
0:14:15 I think we’re on the right track and we did a similar thing where we were like,
0:14:18 I did the founder sent a personal note.
0:14:21 It was like an unstyled email and it was basically apologies in advance.
0:14:25 We expect this to go off, you know, to sell so quickly.
0:14:27 I know that many of you are going to be upset.
0:14:32 And so as a, you know, as, as a, as a make good, you know, I give you my word
0:14:34 that for the next one, we’re going to have more, but for this one, it’s just
0:14:37 going to be, it’s, I know it’s going to be chaos and scarcity.
0:14:38 I’m already worried about it.
0:14:39 Yes.
0:14:42 And immediately we had our biggest day, which we had never had.
0:14:44 Like, you know, 800 would have been a great day.
0:14:48 And then all of a sudden it was like 2800 just by apologizing in advance
0:14:51 because we embedded the, instead of saying like, come get it.
0:14:52 Yes.
0:14:54 We were like, we’re so sorry.
0:14:55 It’s, you’re probably not going to get it.
0:14:56 Yes.
0:14:57 And that just, that reversal really worked.
0:14:58 Embedded marketing.
0:14:59 That’s a book there.
0:15:01 It’s a book waiting to be written.
0:15:05 We’ve like, we’ve like brainstormed three books now in the last 18 months
0:15:06 that like somebody should write.
0:15:06 We want to write these.
0:15:07 All right.
0:15:07 Yeah.
0:15:07 Yeah.
0:15:08 What’s happening?
0:15:08 Yeah.
0:15:12 And actually you and I have been casually talking about writing a book.
0:15:13 Yeah.
0:15:16 And maybe we need some people out there to pressure us.
0:15:21 To pressure us and motivate us because one day we should, yeah, we should do this.
0:15:23 So let us, let us know below if you want to see this book.
0:15:23 All right.
0:15:25 Number three, number three, four.
0:15:26 I can’t remember which one, which one.
0:15:29 They’re eating the dogs.
0:15:32 They’re eating the cats.
0:15:36 They’re eating the pets of the people who live there.
0:15:37 I have that song in my head now.
0:15:40 They’re talking about they’re eating the dogs.
0:15:42 People of Springfield, please don’t eat my dog.
0:15:43 Okay.
0:15:50 This line was said to have lost Trump the debate and possibly the election.
0:15:56 And what happened over the following week, in my opinion, won him the debate
0:16:02 and possibly the election because that line of the 20,000 immigrants that had
0:16:10 been legally migrated to Springfield, Illinois, town of Springfield, Ohio.
0:16:11 Yeah, yeah.
0:16:19 Springfield, Ohio, town of 58,000 was torn apart by the fact checkers, torn
0:16:22 apart by every news station in the world.
0:16:31 These 20,000 legal migrants in this town of 60,000 are not eating dogs.
0:16:32 They are not eating cats.
0:16:35 That is complete BS.
0:16:36 Let me say it again.
0:16:42 These 20,000 migrants that were moved into this little town of 60,000 people
0:16:46 that probably didn’t vote to have them moved in, probably didn’t know they
0:16:47 were coming in.
0:16:48 Maybe some of them wanted them.
0:16:49 Maybe some of them didn’t.
0:16:51 They’re not eating dogs.
0:16:52 They’re not eating cats.
0:16:55 But what does it say to the entire world?
0:17:03 Yes, large amounts of immigration, migration, whether it’s legal or illegal
0:17:08 is happening in small towns and places like Springfield, Ohio.
0:17:09 Right.
0:17:11 I had never known this was happening.
0:17:17 And, you know, some people want that and some people don’t.
0:17:22 And Trump’s base and a lot of moderates don’t want the small town that they
0:17:28 live in or their parents live in or, you know, they grew up in to have such
0:17:35 a huge change in population, in demographics, in, you know, the style
0:17:39 of how businesses are run, et cetera.
0:17:43 And it spread that message worldwide that, wow, there really is a lot
0:17:45 of immigration happening.
0:17:47 And yeah, some people thought it was great and some people didn’t.
0:17:54 But it got that message out because before that you hear about, you know,
0:17:57 oh, there’s, you know, the number was always different, right?
0:17:58 There’s 8 million people that came in under Biden.
0:18:01 There’s 20 million people that came in under Biden.
0:18:01 This is a big number.
0:18:03 Can you visualize 8 million people?
0:18:04 I can’t.
0:18:04 Yeah.
0:18:06 But I can visualize 20,000.
0:18:07 I’ve been to a football game.
0:18:09 It’s 20,000 in the stadium.
0:18:16 And I can visualize 58,000 and I can put the simple math together.
0:18:20 That’s one third, you know, of the population and that is a change.
0:18:22 And so it paints a picture.
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0:19:09 All right.
0:19:10 Back to the episode.
0:19:15 Did you read Scott Adams when he was running the first time?
0:19:18 Scott Adams, the creator of Dilbert, he was one of the first people
0:19:22 back in 2016 to when Trump first came out.
0:19:25 And if you remember, he did the first speech and he was like,
0:19:26 they’re bringing the rapists.
0:19:28 They’re bringing their, their killers across the border.
0:19:30 And it was like, whoa, whoa.
0:19:32 That was like, I mean, this first exposure to like, yes.
0:19:34 It’s like, I saw this tic-tac the other day of like an African tribe
0:19:37 drinking a Fanta for the first time and they’re like, you know,
0:19:38 they don’t even know how to get to it.
0:19:41 They’re like biting the lid off and then they drink a Fanta and they’re like,
0:19:42 oh my, like, what is this?
0:19:42 Yes.
0:19:44 That was Trump.
0:19:46 That was the reaction Trump the first time and Scott Adams came out
0:19:48 and he was like, oh, not only is this not a joke.
0:19:50 I think he’s going to win.
0:19:54 And he goes, I’ve been a trained basically like, and he’s like a hypnotist.
0:19:57 He’s like, I have looked at how you communicate with people.
0:20:01 Not sort of overtly, but like the sub, the, the subtext of what’s
0:20:03 being said and how effective that is at planting messages.
0:20:06 And he called them linguistic kill shots.
0:20:10 He goes, Trump has these linguistic kill shots where he just labels
0:20:13 something or he brings their attention to it in an extreme way.
0:20:15 So like with the eating the dogs or the cats, it’s like, instead
0:20:18 of arguing about the migration, you’re arguing now are the migrants
0:20:21 eating dogs and cats, which forced you to first accept the migrant point.
0:20:24 But if he never said that, you have to debate the migrant point.
0:20:27 And so, and he was talking about like when he, Jeb Bush was the favorite
0:20:30 at the time because it’s the Bush dynasty, the father, the brother.
0:20:31 Now it’s going to be Jeb.
0:20:36 And he just called him low energy Jeb and he labeled him that.
0:20:40 And then no matter what Jeb did, if, if Jeb was just being Jeb,
0:20:42 he is kind of low energy looking.
0:20:45 If he suddenly got vivacious, Trump would be like, good job, Jeb.
0:20:46 You’re, you’re like, you’re doing it.
0:20:48 And he, and so Jeb couldn’t win.
0:20:52 He tied him up and neither path was like viable.
0:20:54 And he, he just had to like remove this sticker off him.
0:20:57 And nobody in politics was doing that to each other, right?
0:20:58 Crooked Hillary.
0:21:01 He was just coming up with these linguistic kill shots where visual
0:21:04 words, every time you saw the person, that’s what you saw.
0:21:04 Yes.
0:21:06 And Scott called that out pretty early on.
0:21:10 And, and whether again, whether it’s natural, that’s just how
0:21:12 he is, or it’s like strategic, I have no idea.
0:21:15 But I think at this point, it’s pretty, it’s pretty clear that
0:21:17 that is an effective way of communicating that he does.
0:21:17 Yes.
0:21:17 Yes.
0:21:20 He’s a, he’s a showman, like with the McDonald’s thing.
0:21:21 Right.
0:21:26 When he went to work at McDonald’s, a lot of people didn’t know
0:21:28 why he was going to work at McDonald’s.
0:21:34 And then they found out, oh, Kamala has a questionable history.
0:21:36 It’s in debate whether or not she worked at McDonald’s.
0:21:37 You know?
0:21:42 And he did something else where he was interviewed at a conference
0:21:45 and he said, I think Kamala is black now.
0:21:46 I thought she was Indian.
0:21:49 Everyone’s like Trump’s a racist, blah, blah, blah.
0:21:53 And it’s interesting because not when he says these things,
0:21:56 it kind of does make him look bad in a way.
0:22:01 It does in a way make him look like a schoolyard bully.
0:22:02 Right.
0:22:03 But it’s effective.
0:22:05 It’s weird, right?
0:22:08 Yeah, he creates the frames that then you have to participate in.
0:22:08 Yeah.
0:22:11 And the garbage truck, he did the same thing when Joe Biden called
0:22:13 his supporters garbage.
0:22:14 He went and got in a garbage truck.
0:22:19 He’s like, I’m going to milk this moment and make sure that I dominate
0:22:20 the news cycle.
0:22:23 That was the really interesting thing I realized in this election
0:22:27 is you could feel in the news cycle who was winning and then you could
0:22:29 track it on polymarket.
0:22:32 So like the news cycle, whoever had something positive, their odds would go
0:22:36 up on polymarket and then Trump did the rally at MSG and he had Tony
0:22:40 Hinchcliffe did the diss and the Puerto Ricans and like the polymarket
0:22:43 starts going down and like Kamala is owning the news cycle and then
0:22:46 Biden says the garbage thing and it goes back to Trump favor in the
0:22:48 garbage truck and Trump’s odds go up.
0:22:50 It was wild to see these two things tracking.
0:22:53 So let’s do another one of the greatest lines.
0:22:53 Okay.
0:22:56 So now we can go to the chat GPT line.
0:22:56 Yeah.
0:22:56 What would they say?
0:23:02 And it really is and this is something that everyone knows about,
0:23:04 but not a lot of people know where it came from.
0:23:11 So you’ll know the line instantly when I say this, but you know, in the 1940s
0:23:16 only about 10% of brides got a diamond engagement ring.
0:23:20 De Beers diamonds had an interesting run.
0:23:26 They were quite popular in the early 1900s as like a flex, not as a
0:23:30 wedding ring, but you know, in other jewelry or on like a lapel or you
0:23:31 know, necklace earrings, things like that.
0:23:33 And then the depression happened.
0:23:37 Around the same time as diamond mining got really good.
0:23:42 So they had an oversupply of diamonds and then they had people losing
0:23:45 money and then we should talk about Joseph DeVine to the greatest art
0:23:49 dealer of all time because he invented the American art market.
0:23:51 So people were spending money on art and things like that, you know,
0:23:56 and so taking more away from that luxury sector to go into another one.
0:24:03 And it was a female copywriter Francis Gehrity who was at an agency
0:24:07 that De Beers hired and the story goes is like she was frustrated and she
0:24:12 was like, you know, I don’t know at her last last down her last penny
0:24:12 or something on one night.
0:24:15 She is working on this campaign and can’t think of anything and then
0:24:17 wakes up in the middle of the night with this line.
0:24:19 A diamond is forever.
0:24:27 And what is interesting is that was the tie in to engagement before that
0:24:32 the engagement ring would be like a plane band, a gold band, you know,
0:24:37 sometimes it would be like like an offering like a cow or like a land
0:24:38 or things like that.
0:24:39 An engagement is temporary.
0:24:42 Anyways, like by definition, an engagement is like a temporary period of time.
0:24:44 So diamonds are forever.
0:24:44 Yes.
0:24:46 Is like an exact contrast to that.
0:24:47 Yes.
0:24:53 And it’s an embed because it then shows that if someone doesn’t present
0:24:55 a diamond, maybe they’re not in it forever.
0:24:56 Right.
0:24:56 Right.
0:24:58 And what woman wants a half commitment.
0:24:59 Right.
0:25:01 Ladies out there, do you want a half commitment from your man?
0:25:02 Yeah.
0:25:07 So and from what I remember reading about this, they went to Hollywood
0:25:13 and they basically were giving directors diamonds saying in the key
0:25:17 moment in the climax moment where the man professes his love.
0:25:21 He’s got to give her a diamond ring and they embedded it in Hollywood
0:25:26 in movies by literally bribing the directors in order for them to show
0:25:26 that.
0:25:29 So then you’re watching the movie and that’s now become that now
0:25:31 influences culture that I guess that’s how you do it.
0:25:35 The big romantic gesture is to literally get down on one knee and
0:25:36 hand her a gold, you know, a diamond ring.
0:25:37 Yes.
0:25:41 That became used kind of top down influence also to do it.
0:25:41 Right.
0:25:42 And then scarcity, right?
0:25:43 Because they limit the supply.
0:25:46 So all the core marketing things, you know, influence, social, social
0:25:50 proof, that frame diamonds are forever scarcity.
0:25:51 They kind of used all of it.
0:25:52 Yes.
0:25:56 And now there’s this big debate going on between lab grown diamonds
0:25:57 and mine diamonds.
0:25:58 Have you heard of this?
0:25:58 It’s fascinating.
0:26:01 Because I think they’re 10%, 20% of the price or something like that.
0:26:04 There’s probably price control among the company.
0:26:05 50 to 80% cheaper.
0:26:06 Okay.
0:26:07 It’s the exact same rock.
0:26:09 You could look at them under a microscope.
0:26:10 In fact, they could be argued it’s more perfect.
0:26:11 It’s nicer, right?
0:26:12 It’s a more perfect thing.
0:26:14 And so you can get a big rock for this.
0:26:19 But then the smartest, the thing that I guess DeBeers did was that
0:26:21 they, so there’s a big problem.
0:26:24 They’re like, okay, if there’s lab grown diamonds that don’t have
0:26:27 these social issues with mining blood diamond type of stuff.
0:26:28 Yes.
0:26:30 And it’s just as good if not better.
0:26:31 This is a problem.
0:26:34 And so what they did, the genius of their business strategy was
0:26:37 they got into the lab grown business and just flooded the market
0:26:39 with cheap lab grown diamonds.
0:26:43 So they lowered the price intentionally like crappy ones.
0:26:44 Good time.
0:26:45 Good library diamonds.
0:26:47 But they just lowered the price so much more that then the
0:26:50 consumer’s mind became a perception like, oh, wow.
0:26:54 Like, yeah, if it was just like 20% less, something like that,
0:26:55 it might actually be more competitive.
0:26:59 They made it so much cheaper that they like took away the value,
0:27:02 the perceived value, the prestige of the diamond doing that.
0:27:03 I didn’t know that.
0:27:05 They were like involved in that, that process pretty crazy.
0:27:10 You put me on to an incredible marketer, Gary Bencevenga,
0:27:11 who I had never heard of.
0:27:15 And he has this little example, little exercise that I love.
0:27:17 I want to share, which is like, I don’t know if you remember
0:27:20 this from, from learning his stuff, but he gives this example
0:27:22 of kids going fishing.
0:27:25 So it’s like a lemonade stand type of example.
0:27:26 So it’s like kids are going fishing.
0:27:30 There are, they go to the fishing area and they want to sell bait.
0:27:32 They want to sell worms.
0:27:37 So they go V1 is basically like, basically worms for sale, 99 cents
0:27:38 or whatever, right?
0:27:42 And so they go there, not much sales, come back home.
0:27:44 Luckily, the neighbor is a copywriter.
0:27:45 It’s like the story.
0:27:46 Neighbor’s a copywriter.
0:27:49 He says, Hey, you know, why don’t we level this up?
0:27:52 And he goes, you know, first lesson of marketing.
0:27:53 You don’t sell the product, you sell the benefit.
0:27:57 So buy these worms, catch more fish.
0:28:00 So they go back day two, sell a little bit more with buy, you
0:28:02 know, these worms will help you catch more fish.
0:28:03 Now they have a benefit.
0:28:05 It goes, okay, they come back to like, Hey, what else you got?
0:28:06 How can we make even more?
0:28:10 And then they go to the next level where they were like, he’s
0:28:13 like, well, why do they catch more fish?
0:28:17 And I think it’s Ogilvy who has this great quote that he was
0:28:21 all about like the reason why marketing and they go, Ogilvy,
0:28:24 you seem to be a big fan of this reason why marketing.
0:28:26 And he goes, is there any other?
0:28:30 Like, is there any other way to sell this besides that?
0:28:34 It’s all, you know, that’s crazy if you don’t use that.
0:28:37 So then the kids go out and they’re like, well, why would I,
0:28:39 why do our worms catch more fish?
0:28:42 Oh, because these are local worms from the local soil.
0:28:45 And what you don’t know is that fish prefer worms that are
0:28:48 from their local soil, it’s more attractive to them.
0:28:51 Not these imported things that you find on the shelves.
0:28:54 We have the local ones start selling more, right?
0:28:56 And then they go to the next level.
0:28:59 He just shows like layering on these like master marketing techniques.
0:29:00 I love that example.
0:29:05 It’s an end with like, like, you know, buy two cans of local worms,
0:29:08 get a free bobber.
0:29:08 Exactly.
0:29:09 It’s like, there’s like an offer.
0:29:11 So he’s like, you know, use it with an offer.
0:29:14 And I think maybe I’m mixing up two of the stories, but like he
0:29:18 did a kind of a sensational headline too, which was like local
0:29:22 fishermen accused of cheating because he catches the most
0:29:25 fish reveals, reveals his simple secret, right?
0:29:28 And it’s like, oh, well, we got to know because there’s a guy
0:29:30 who catches way more fish than everybody else.
0:29:33 So people accused him of like, you know, using nets and other other
0:29:34 methods. No, no, no.
0:29:37 He’s just fishing like the rest of us, but he uses the local worms.
0:29:37 Right.
0:29:40 So he gets to the best of it.
0:29:40 Yeah.
0:29:43 I love Gary’s persuasion formula.
0:29:44 He’s got this very, very simple thing.
0:29:47 And it sounds like when you first read it, you’re like, okay, I
0:29:48 didn’t I didn’t get anything revolutionary.
0:29:49 Then I go look at my ads.
0:29:51 I’m like, okay, I’m not doing any of these things.
0:29:52 And then you start doing that.
0:29:52 Yes.
0:29:54 Euro as starts going up.
0:29:56 So he’s got the five P’s.
0:29:57 And so the first one is problem.
0:30:00 So what’s the problem that the person has?
0:30:02 And he says, no problem, no sale.
0:30:05 Like you can’t sell someone something that they don’t have some
0:30:06 Advil.
0:30:06 I’m not hurting.
0:30:07 Why would I want your Advil?
0:30:07 Yes.
0:30:08 So problem.
0:30:10 Then the next one is promise.
0:30:13 So what’s the promise benefit that this product is going to give
0:30:15 you proof that it works.
0:30:17 Then there’s proposition, which is your offer.
0:30:21 And then I call I call the last P products because he talks
0:30:23 about the cracker jack secret.
0:30:27 And he talks about how in a box of cracker jacks, they always had
0:30:29 like a gift at the bottom and he’s like, you know, even if you give
0:30:32 someone the cracker jacks and then they’re not hungry right now
0:30:34 or whatever, he’s like, I’ve never seen somebody just throw it
0:30:37 away and not get the little gift out of the bottom.
0:30:40 And he’s like, so you want to have the cracker jack secret in
0:30:41 your in your ad.
0:30:42 Basically that was his thing.
0:30:43 And then you can juice them up.
0:30:44 Right.
0:30:47 So those are the P’s and then he’s got to use and if you if
0:30:50 you stack those together, he literally has a formula where it’s
0:30:51 like urgent problem.
0:30:54 And that’s 25 points unique promise.
0:30:55 That’s another 25 points.
0:30:57 Unquestionable proof.
0:30:59 Another 25 user friendly proposition.
0:31:00 That’s the last 25.
0:31:04 And then the cracker jack secret is the bonus 20 points.
0:31:06 If you stack that whole thing together, you get to 120.
0:31:06 Love it.
0:31:07 Amazing.
0:31:07 Amazing.
0:31:08 So good.
0:31:13 New York City founders.
0:31:14 If you’ve listened to my first million before, you know, I’ve got
0:31:18 this company called Hampton and Hampton is a community for founders
0:31:21 and CEOs, but a lot of the stories and ideas that I get for this podcast.
0:31:24 I actually got it from people who I met in Hampton.
0:31:27 We have this big community of a thousand plus people and it’s amazing,
0:31:30 but the main part is this eight person core group that becomes your
0:31:33 board of advisors for your life and for your business and it’s life
0:31:36 changing now to the folks in New York City.
0:31:40 I’m building a in real life core group in New York City.
0:31:43 And so if you meet one of the following criteria, your business
0:31:47 either does 3 million in revenue or you’ve raised 3 million in funding
0:31:50 or you’ve started and sold the company for at least $10 million.
0:31:52 Then you are eligible to apply.
0:31:55 So go to join Hampton.com and apply.
0:31:58 I’m going to be reviewing all of the applications myself.
0:32:00 So put that you heard about this on MFM.
0:32:02 So I know to give you a little extra love.
0:32:03 Now back to the show.
0:32:06 Who are the other admin that you liked?
0:32:07 Let’s do that first.
0:32:10 So you, uh, you were telling me about an admin that I don’t, I’ve
0:32:12 never heard of or marketing.
0:32:13 Yeah, yeah.
0:32:17 So I actually studied non admin now because I think I’ve gone
0:32:18 through all the admin.
0:32:21 So we talked about ever Bernays the last time I was on your show,
0:32:25 but the guy I’ve been really geeking out on is actually an art dealer.
0:32:26 Okay.
0:32:28 Edward Bernays was a PR guy.
0:32:32 Joseph Devine is known as the greatest art dealer of all time.
0:32:37 Devine’s run was around like 1880 or 90.
0:32:40 I think he died in 1935.
0:32:46 And he came from a family that had a shop that sold like porcelain
0:32:50 goods and tapestries in London, England.
0:32:52 And they were pretty well established.
0:32:54 They sold to the queen and things like that, you know, so they
0:32:58 were the go-to place, but these tapestries and ceramics would
0:33:04 sell for like three to $5,000, which I think in that day’s money is
0:33:08 maybe like six figures or you know, something around there.
0:33:15 And he noticed as a teenager that fine artwork at certain times
0:33:18 was selling for like $75,000.
0:33:22 And so his uncle and father who own the shop brought him when he
0:33:26 was 15 years old to New York with them to do some business and
0:33:32 he sneaks out from them, goes to Fifth Avenue and leases a little
0:33:35 warehouse with like an upstairs and a downstairs and he comes
0:33:38 back and he’s like, dad, uncle, I got us a shop.
0:33:41 And actually I should preface this by saying, I don’t think
0:33:44 15 years old then was like 15 years old now.
0:33:47 I think 15 years old then is when you’re going in the real
0:33:47 world.
0:33:49 Yeah, yeah, you’re going to get your your shister.
0:33:54 I think was it George Washington led his first caravan of
0:33:58 soldiers at like 18 or something and he’d been a surveyor and
0:34:01 a scout since like 15 years old.
0:34:05 DuVeen was a hustler from from an early age.
0:34:08 He books this thing in New York because he has this realization
0:34:12 when he’s there and that is that Americans for really the
0:34:14 first time have tons of money.
0:34:17 This is when Rockefeller was coming up and JP Morgan and
0:34:22 Industrial Revolution Europeans have tons of art.
0:34:24 Americans have tons of money.
0:34:26 Europeans have tons of art.
0:34:30 So in Europe, you’d go to the Duke’s house, right?
0:34:34 And the Duke would have his family portraits up.
0:34:37 There’s no photographers and so you’d have to have a painter
0:34:40 catalog grandma or grandma as a baby or whatever.
0:34:42 So it would be on the wall and it would be like Raphael painting
0:34:45 grandma because Raphael was the portrait guy at the time.
0:34:47 I don’t know if it was specifically Raphael, but people
0:34:50 like that are Gainsborough or you know, some of the people
0:34:54 that are now the biggest artists of human history were just
0:34:58 you know, flooding the walls of the Duke’s house and these
0:35:01 Dukes like anyone else would go bust those sometimes and
0:35:02 they’d be looking for money.
0:35:07 So DuVeen in his first big deal, he went to this Duke and
0:35:09 the Duke was kind of broke and he’s like, yeah, I’ll figure
0:35:12 out how to get three million dollars for your entire art
0:35:12 collection.
0:35:16 And that at the time was like, you know, 300 billion or something.
0:35:19 I don’t know huge, but he bought the Duke’s entire art
0:35:22 collection and it was some of these old masters Rembrandt’s
0:35:23 and things like that.
0:35:29 And he brings it to America and he starts shilling it and his
0:35:33 sales methods are just like unbelievable.
0:35:33 What was he doing?
0:35:34 How did he do it?
0:35:37 So I mean, so some of these had some prestige, but like the
0:35:40 first thing he does as he gets this painting, I think it was
0:35:43 Gainsborough’s little blue boy.
0:35:47 It’s been a year since I read the book, but he acquires this
0:35:51 and he makes this huge deal that this great institutional
0:35:54 landmark of London is coming to the United States.
0:35:57 And when it comes, he arranges to have all the reporters
0:35:58 waiting on the deck.
0:35:58 He has no airplanes.
0:36:02 So you take the cruise liner over all the reporters are
0:36:02 waiting there.
0:36:05 It comes in and now it’s on American soil and it’s going to
0:36:09 be presented at this amazing spa, you know, and builds the
0:36:15 gravitas around this, this artwork, and then he has a pool
0:36:18 that he decides is going to be the buyer pool.
0:36:20 They don’t know yet, but he’s talking to people like Henry
0:36:24 Frick and Andrew Mellon and John Rockefeller about this
0:36:24 thing coming.
0:36:28 And they’d be like, you know, oh, is this going to be for sale?
0:36:32 I’m like, the crown jewel of London for sale.
0:36:33 Are you, are you kidding me?
0:36:36 No, absolutely, absolutely not at any price.
0:36:39 But if you want to make an offer, I could bring it to
0:36:41 someone, but it’s not for sale.
0:36:45 So he’d bring this thing and then he sold it for like $225,000,
0:36:47 which was record shattering at the moment.
0:36:50 You know, it’s in every newspaper in the world that this
0:36:51 paying soul for this much money to this person.
0:36:55 And through a couple of these things, he creates the American
0:36:58 Art Market and he has all of these industrial revolution
0:36:59 Titans, right?
0:37:01 You know, all the names, right?
0:37:08 Literally, you know, Rockefeller, Mellon, Morgan, Vanderbilt.
0:37:13 All these people become his clients and his sales methods are
0:37:14 just like next level, man.
0:37:21 Like, so there’s a story of, I think it was a guy who made
0:37:25 a fortune in California in the oil business and he comes to
0:37:27 Devine’s in New York and he wants to buy art.
0:37:30 And this guy’s like a new money guy and he’s not really in
0:37:31 the New York click.
0:37:36 He brings him to the shop and he has the guy show up at the
0:37:38 time he says, and Devine takes 90 minutes to show.
0:37:40 These are waiting there for 90 minutes.
0:37:43 Finally gets the guy and he’s like, okay, come on upstairs
0:37:45 with me and he walks them into this corridor and there’s the
0:37:48 five paintings there that are stunning and he walks them past
0:37:50 and he’s like, I’m going to show you some of the things in
0:37:51 the in the back.
0:37:53 The guy’s like, wait, wait, wait, what about these things?
0:37:56 Like, sir, those paintings are reserved for Mr.
0:37:58 Mellon come this way.
0:38:02 We need to get you something that will be more suitable for
0:38:02 your collection.
0:38:04 Tell me again, what’s in your collection?
0:38:07 Oh, I have not heard of any of those artists.
0:38:09 That’s cute.
0:38:12 Let me show you a nice starter work.
0:38:14 He’s like, well, what about the what about the pieces?
0:38:16 You know, like how much is Mr.
0:38:17 Mellon paying you making him feel small.
0:38:18 Yeah.
0:38:22 How much is he paying you and you think that he would do
0:38:22 this as a rivet.
0:38:25 He really didn’t sell the guy the paintings for Mr.
0:38:25 Mellon.
0:38:28 He made him buy this starter piece and is like, I can work
0:38:30 on one of those and then he’d call him a few months later
0:38:34 and be like, look, you know, I think I might be able to wrangle
0:38:36 one of those paintings loose from from Mr.
0:38:40 Mellon, but the price is going to be outrageous.
0:38:46 And Duveen saying was when you overpay for the priceless,
0:38:47 you’re getting it cheap.
0:38:49 That was this quote that he propagated.
0:38:51 We’re just kind of like a diamonds are forever.
0:38:52 Yeah, exactly.
0:38:55 And so he’s got all these imbeds that he does in just his
0:38:58 everyday behavior, you know, like putting people in tears
0:39:01 and things like that and propagating the saying that
0:39:04 overpaying for the priceless is like the best financial move
0:39:05 you can make, you know.
0:39:08 And the things he does is just next level.
0:39:10 I mean, on the sell side, it’s fucking crazy.
0:39:12 He’s so relentless.
0:39:18 He would go on cruise liners and back then the boat from
0:39:21 London to New York was the big thing and it was different
0:39:21 levels or whatever.
0:39:24 And your deck chair is like your baller spot, right?
0:39:27 And so he’d go on there and the way he met Andrew Mellon
0:39:32 is he greased the staffer to seat him next to Mr.
0:39:34 Mellon and then he gets there and he finds out that Mr.
0:39:37 Mellon is a recluse and doesn’t like going outside and
0:39:41 only stays in his room and he’s so mad that he greased so
0:39:42 much to get the deck chair.
0:39:45 But what he does is he starts kind of stalking the elevator
0:39:49 and he times it to get in the elevator at the same time.
0:39:50 Andrew Mellon gets in the elevator.
0:39:53 He’s like, how do you do, sir?
0:39:54 Literally an elevator pitch.
0:39:57 What’s the intent of your travels to London and Mr.
0:39:58 Mellon’s like, oh, I’m here in this business.
0:39:59 You know, how about yourself?
0:40:03 And he’s like, no, you know, having a brunch in the Duke of
0:40:08 Carnegie’s home, not sure what else, you know, but just drop
0:40:09 something like that.
0:40:12 And then, you know, where else are you going to be on your
0:40:13 travels and things like that?
0:40:15 And he’s like, oh, you’re the, you’re the person who founded
0:40:19 this, I forget what Mellon did, steel or something, you
0:40:22 know, would you like to join me for brunch at the Duke’s
0:40:22 house?
0:40:24 He’s like, oh, sure.
0:40:26 I would love to meet because royalty was the thing, you
0:40:28 know, and Duven really did have these connections.
0:40:31 So he brings Mellon to a brunch at the Duke’s house.
0:40:35 When you go to a Duke’s house, the dukes have the art on all
0:40:38 the walls and it’s from all of these old masters.
0:40:43 And you’re like, oh, if I want to become a dynasty like these
0:40:46 royal families that are dynastic families, I need to do
0:40:47 what they do.
0:40:50 And that means having these old master paintings on my wall.
0:40:56 So he sells Mellon so well that he becomes a top client of
0:41:01 his. And when you became a top client of Duvenes, you’re no
0:41:04 longer allowed to use your own architect as a rule for him
0:41:05 getting you the great pictures.
0:41:09 You have to use his architect to design your house, to have
0:41:11 optimal viewing, to give these pictures justice.
0:41:12 Otherwise, I’m sorry, Mr.
0:41:15 Mellon, but this picture cannot be in your collection
0:41:18 because it does not to be showcased in a side room or
0:41:18 something like that.
0:41:20 And he would have his architects design their apartments
0:41:23 with like very little windows and huge wall space, but way
0:41:25 more wall space than they would ever need.
0:41:27 And then he ran into an issue.
0:41:32 The people just didn’t buy enough real estate to hold all
0:41:32 the paintings.
0:41:34 And this wasn’t like crypto art.
0:41:35 We can store it on a wall.
0:41:36 You know, you got to have walls to put it on.
0:41:41 And so he started convincing them to open museums.
0:41:45 The National Gallery in Washington is founded by Andrew
0:41:47 Mellon at the urging of Joseph Duvene.
0:41:51 And he said, the key to your immortality is building this
0:41:55 gallery and having your work live on beyond you in it.
0:41:58 And we’re going to build it 30,000 square feet.
0:42:00 And so he does this.
0:42:03 Mellon builds the National Gallery and then Duvene is able
0:42:06 to sell him way more art, you know, stuck up all those walls
0:42:08 plus all of his houses and shit like that.
0:42:08 Right.
0:42:12 Mellon passes on and then I think it was Henry Frick.
0:42:15 He’s his next big client.
0:42:17 He’s like, you know, Mr.
0:42:20 Frick, if you really want to achieve immortality, you could
0:42:25 add on to the National Gallery a bigger wing than Mr.
0:42:27 Mellon made and stack it with your art.
0:42:28 And he did.
0:42:31 He fucking did, you know, and bought all this art from Duvene.
0:42:32 I mean, the guy was so ruthless.
0:42:36 He another of my favorite Duvene tricks he would do is when
0:42:39 he’d be at Andrew Mellon’s house, there was a couple other
0:42:42 competing dealers, you know, you’d ride the horse and carriage
0:42:43 over there, right?
0:42:44 It’s not like a car.
0:42:50 He greased the staff to tell him if they find out that another
0:42:52 art dealer is going to their house.
0:42:55 So he’d find out when the the competitors go into Mr.
0:42:59 Mellon’s house and he would show up the same day and he’d
0:43:04 be like, just passing through the Hamptons, you know, happened
0:43:06 to, oh, you know, hello, Mr.
0:43:08 Peary, fancy seeing you here.
0:43:10 I was just visiting my client and he would go and just sit
0:43:13 there all day and you can’t like reschedule the meeting
0:43:15 because that person probably traveled several days to get
0:43:18 there, you know, who’s just relentless, man.
0:43:20 On that section, I know you have a lot of young kids in
0:43:22 your audience and I did an experiment recently.
0:43:25 I was at a mastermind where everyone paid 250 grand to
0:43:28 attend and I asked them, I said, you know, I’m just
0:43:29 curious about this room.
0:43:31 You guys are all established people.
0:43:35 How many of you in your youth had some sort of sales job
0:43:38 that required you to be relentless, like 200 phone
0:43:42 calls a day or knocking on doors and almost all the room
0:43:43 raised their hand.
0:43:45 I think it’s something that really shapes them.
0:43:47 Did you ever have a job like that?
0:43:50 I don’t think I had that kind of, I’ve noticed the same
0:43:53 thing, but like, you know, so we, we’ve talked to people
0:43:55 who are a lot of Mormons who go on missions.
0:43:56 Oh, that’s the best dude.
0:43:59 You have to spend two years in complete solitude,
0:44:03 isolation, not talking to your family, selling Jesus to,
0:44:04 you know, whoever, right?
0:44:07 You’re selling religion to people who didn’t ask for it
0:44:09 necessarily, you’re knocking on doors, you’re facing tons
0:44:12 of rejection and day after day you carried on.
0:44:14 Like that is such a formative experience.
0:44:17 My, my uncle had told me one thing about he used to sell
0:44:20 textbooks door-to-door, like textbooks, textbooks companies.
0:44:22 I guess there was a couple of them in America that were
0:44:23 really big that way.
0:44:25 And we recently just had another person on the, like we’ve
0:44:29 had several people on the podcast with this one same job
0:44:31 which is like door-to-door sales, whether it’s textbooks
0:44:33 or knives or whatever it was.
0:44:36 And yeah, the hit rate on those is really high.
0:44:38 Brian Johnson, who was going to be here at the event.
0:44:40 I was just watching his documentary.
0:44:40 Same thing.
0:44:44 His first job was door-to-door credit card processing sales.
0:44:44 Hmm.
0:44:46 I was tail marketer of credit card processing.
0:44:48 You were too amazing.
0:44:50 And so you, he, he rejection, reject, figured out, figured
0:44:53 out how to sell, figured out how to carry on in the face
0:44:55 of rejection, got numb to rejection, just started, started
0:44:55 to see it.
0:44:58 Like my uncle told me, he goes, you know how I, I go, how
0:44:59 many did you actually sell?
0:45:02 Your selling text was like in a day, knocking on a hundred
0:45:04 doors, how many do you actually sell?
0:45:07 You’re walking through the hot Atlanta like neighborhoods
0:45:07 sweating.
0:45:10 And he’s like, oh, you know, like one or two or three would
0:45:11 be like an amazing day.
0:45:12 Yeah.
0:45:13 And I was like, I wasn’t telemarketing too.
0:45:14 It’s about 200 calls.
0:45:18 Uh, shitty day as one, five sales is an amazing day.
0:45:19 Right.
0:45:21 Which is just like, even if you hear those numbers, go, go
0:45:24 actually do something hard where 97 times out of a hundred,
0:45:26 you just get slammed in the face.
0:45:28 And he goes, the way I did, it was very simple.
0:45:31 He goes, I just did the math and I realized actually, I know
0:45:33 I have to knock on a hundred doors to get the two sales.
0:45:37 So actually, I don’t just count the revenue from the two
0:45:37 yeses.
0:45:40 I just assigned a price to every no.
0:45:42 So he’s like, a no is worth 50, 50 bucks for me.
0:45:43 Every time I collect a no.
0:45:44 All right.
0:45:44 That was fit.
0:45:45 That was a 50.
0:45:47 I wasn’t just coming up with the zero.
0:45:48 I wasn’t coming up empty every time.
0:45:52 He was a psychological trick that allowed me to like see
0:45:55 the nose still as like progression because I’m just getting
0:45:55 closer to that.
0:45:56 Yes.
0:45:58 That was, you know, the one out of a hundred or two out of
0:45:59 a hundred that are going to happen.
0:46:02 And, uh, so I’ve actually used that in fundraising, for example,
0:46:04 where it’s like, all right, I’m raising funds for a company.
0:46:08 It’s when investors reject your company, it’s a very personal
0:46:08 thing.
0:46:10 And what ends up happening is people don’t raise money.
0:46:11 And then you ask them, well, how many calls did you make?
0:46:12 How many meetings have you had?
0:46:13 And they just have a funnel problem.
0:46:16 It’s like, you guys haven’t had enough conversations because
0:46:18 you’re afraid of rejection or you’re avoiding rejection or
0:46:20 you tasted some rejection and it scared you off.
0:46:20 Yeah.
0:46:22 Um, but it’s a numbers game.
0:46:25 And like the way to do it is put a dollar value even on nose.
0:46:26 Yes.
0:46:26 Yeah.
0:46:27 That method.
0:46:29 I was going to ask you one last thing, which is what’s the
0:46:31 best way to get great at writing ads?
0:46:33 If I wanted to go from, you know, okay, to good or good to
0:46:35 great, what do I do?
0:46:36 I do a lot of it.
0:46:38 I’m assuming practice is a big part of it, but is there a
0:46:39 better way to practice?
0:46:39 Okay.
0:46:40 This is funny, man.
0:46:41 You have to be studying ads.
0:46:46 So right now, uh, uh, we’re at a, we’re at an event.
0:46:46 Yeah.
0:46:46 An event.
0:46:47 We call it hoop group now.
0:46:49 Hoop group, high level group.
0:46:53 And I meet this guy who’s got a 13 million YouTube channel.
0:46:54 And I’m like, what’s your channel?
0:46:55 And I go to type it in.
0:46:57 There’s like five people behind me and they type it in and
0:47:01 they see the ad pop up and they’re like, come on, Craig,
0:47:02 you don’t subscribe to YouTube, right?
0:47:04 You can’t afford the 50 bucks or whatever.
0:47:09 You know, and I’m like, are you fucking kidding me?
0:47:13 And advertising guy is going to turn off the ads.
0:47:14 Right.
0:47:16 Fight with one arm behind my back.
0:47:20 YouTube topics to get the ads on purpose.
0:47:22 Like I would watch the ads all day long if I could, because
0:47:24 I need to know what the lay of the land looks like.
0:47:28 One of my best friends who’s a great marketer and is made
0:47:32 probably personally made, I don’t know, $200 million and his
0:47:33 businesses all are just Facebook ads.
0:47:36 But like that’s like his take home that he’s probably made.
0:47:40 And he switched his gender and age on Facebook.
0:47:42 So he’s a 45 year old woman.
0:47:45 And I was like, why do I have a 40?
0:47:46 Why does it say you’re a 45 year old woman?
0:47:49 And he was like, so I could see the ads dummy.
0:47:52 Why would I want to see the ads of a 28 year old dude or
0:47:52 whatever?
0:47:54 You know, like that was that would be terrible.
0:47:58 Yeah, I’m I know who I need to sell to the golden customer.
0:48:00 And like, I need to I need to have my faith.
0:48:02 I need Facebook to be showing me what they’re what they’re
0:48:02 seeing.
0:48:03 Absolutely.
0:48:04 I was like, wow, that’s genius.
0:48:05 Yeah.
0:48:08 And then I also hang out in a lot of biohacker circles.
0:48:10 So I find the things that people are doing at Burning Man
0:48:12 and on Venice Beach.
0:48:15 And when they catch fire in these little circles, right, you
0:48:17 can tell they’re like ready to go mainstream.
0:48:18 I like it.
0:48:21 You know, and sometimes I get on the trend and sometimes
0:48:23 I don’t like mushrooms was one of them.
0:48:26 And you know, that’s a massive category.
0:48:29 Now I think, you know, our mushroom supplement with
0:48:33 Gundry MDs right sells okay, but it’s not like a category
0:48:34 creator.
0:48:36 Like the mushroom coffee did really well, really well, right?
0:48:37 Like the mudwater type.
0:48:38 There’s a few that have done it.
0:48:40 A four-sigmatic is owned by a friend of mine.
0:48:41 It’s a great brand.
0:48:43 I take those products myself.
0:48:46 Yeah, there’s a few mushroom brands that are amazing.
0:48:52 Yeah, sometimes you catch it and you can, as I say, like create
0:48:53 the wave.
0:48:58 Sometimes you’re riding the existing wave and I think too
0:49:00 many people start businesses trying to like ride the white
0:49:01 water.
0:49:04 You know, there’s a supplement company.
0:49:09 I won’t say that say the name, but you know, they launched
0:49:13 with a epic celebrity and then the product looks like every
0:49:18 other product out there and it’s out of business now because
0:49:21 they had this great celebrity who was certainly a scroll
0:49:25 stopper as I like to say, but they’re offering a product that
0:49:29 everyone else has to they could just, you know, learn about
0:49:31 from the celebrity and they go on Amazon by a cheaper one.
0:49:34 You know, you got to get things that are unique and that’s
0:49:36 why the probiotics was so great in 2014.
0:49:39 I don’t have a probiotic now that’s, you know, doing big
0:49:41 numbers like that because probiotics have become commoditized.
0:49:42 Craig.
0:49:44 Amazing as always.
0:49:44 Thank you for doing it.
0:49:45 Impromptu.
0:49:46 Paula Craig on Twitter.
0:49:47 Craig Clemmie.
0:49:48 Yeah, this is the impromptu.
0:49:49 This is our conversation.
0:49:51 We just moved it over here with the microphone.
0:49:51 So thanks for doing that.
0:49:53 I always love chatting with you.
0:49:54 All right, let’s get back to it.
0:49:55 All right, see ya.
0:49:57 I feel like I can rule the world.
0:50:01 I know I could be what I want to put my all in it like the
0:50:03 days on the road.
0:50:05 Let’s travel never looking back.
0:50:10 Hey, Sean here.
0:50:12 Quick break to tell you an Ev Williams story.
0:50:15 He started Twitter and before that, he sold a company to
0:50:17 Google for a hundred million dollars and somebody asked him
0:50:18 this and have what’s the secret, man?
0:50:21 How do you create these huge businesses, billion-dollar
0:50:21 businesses?
0:50:23 And he says, well, I think the answer is that you take a
0:50:26 human desire, preferably one that’s been around for thousands
0:50:30 of years and then you just use modern technology to take out
0:50:31 steps.
0:50:33 Just remove the friction that exists between people getting
0:50:36 what they want and that is what my partner Mercury does.
0:50:39 They took one of the most basic needs any entrepreneur has
0:50:41 managing your money and being able to do your financial
0:50:43 operations and they’ve removed all the friction that has
0:50:44 existed for decades.
0:50:47 No more clunky interfaces, no more 10 tabs to get something
0:50:51 done, no more having to drive to a bank, get out of your car
0:50:52 just to send a wire transfer.
0:50:53 They made it fast.
0:50:54 They made it easy.
0:50:55 You can actually just get back to running your business.
0:50:57 You don’t have to worry about the rest of it.
0:50:59 I use it for not one, not two, but six of my companies right
0:51:03 now and it’s used by also 200,000 other ambitious founders.
0:51:06 So if you want to be like me, head to mercury.com, open
0:51:09 up an account in minutes and remember Mercury is a financial
0:51:10 technology company, not a bank.
0:51:13 Banking services provided by Choice Financial Group and
0:51:15 Evolve Bank and Trust members, FDIC.
0:51:16 All right, back to the episode.
0:51:19 (upbeat music)

0:00:01 All right, today we’re trying something new.
0:00:03 We have three high school students, ninth graders,
0:00:05 10th graders, 11th graders, that all are running
0:00:07 their own business while they’re in school.
0:00:09 And not just like, oh, here’s my idea.
0:00:10 These guys have real revenue,
0:00:12 tens of thousands of dollars in profit
0:00:15 that they’re making as, you know, 14 year olds.
0:00:16 It’s crazy.
0:00:17 And so we invited them in.
0:00:18 We’re doing office hours with them.
0:00:20 So they bring us their biggest problem
0:00:22 and we try to help them solve it in like 10 minutes.
0:00:24 And whether you’re a high school or college student
0:00:25 or you’re just running your own business,
0:00:26 I think there’s gonna be something in this for everybody
0:00:29 because there’s a beauty in these kids
0:00:31 who they’re like, ah, I just don’t know anything
0:00:32 but they’re crushing it.
0:00:32 – Yeah.
0:00:34 There’s a lot of people who listen to this podcast
0:00:37 that wanna start something and they overthink it.
0:00:39 And there’s a beauty to being ignorant
0:00:41 and these kids are ignorant.
0:00:43 And because of that, they create amazing stuff.
0:00:46 And I think that you should steal that attitude.
0:00:48 ♪ I feel like I can rule the world ♪
0:00:51 ♪ I know I could be what I want to ♪
0:00:53 ♪ I put my all in it like no days off ♪
0:00:56 ♪ On the road, let’s travel never looking back ♪
0:00:57 – All right, we’re doing something fun today.
0:01:01 We have high school students who have existing businesses.
0:01:01 They’re running businesses.
0:01:03 They’re making a lot of revenue.
0:01:06 They’re making money and they’re here for office hours.
0:01:10 And this is all part of our buddy Anand who’s here with us.
0:01:13 He’s running this new thing called the formidable fellows.
0:01:15 And I think Anand, this is like a precursor.
0:01:16 You wanna launch a school someday,
0:01:18 a new school for entrepreneurship.
0:01:20 And this is kinda your MVP, is that right?
0:01:21 You started giving out grants
0:01:23 to middle and high school students.
0:01:25 – Yeah, so we’re building a national network
0:01:26 of schools of entrepreneurship.
0:01:28 It takes a while to build physical schools.
0:01:31 So my friend Raj and I started something
0:01:33 called the formidable fellowship.
0:01:36 And yeah, we kinda, I think like Gen Z
0:01:39 is probably gonna be the most entrepreneurial generation.
0:01:42 And we saw a lot of them out there.
0:01:46 And so we started a nonprofit with 500K.
0:01:48 We’re giving $1,000 grants
0:01:50 to middle and high school entrepreneurs.
0:01:53 And so kind of I just had our first class.
0:01:55 I had 23 grantees.
0:01:58 You’ll meet three of the great ones today.
0:02:01 And yeah, kind of along the way,
0:02:03 other awesome entrepreneurs,
0:02:05 they’re Mesh from HubSpot,
0:02:07 Sean Griffey from IndustryDive.
0:02:09 A bunch of other folks have been contributors.
0:02:12 So now we’ve got even more capital
0:02:14 to give out to these young entrepreneurs.
0:02:16 – This is like your second mountain.
0:02:18 So basically you started a company called CB Insights
0:02:21 that is in the range of $100 million in revenue
0:02:22 or something like that.
0:02:24 Now, is this like your,
0:02:26 this is what you do after you’ve made a bunch of money
0:02:28 and you wanna impact the world positively
0:02:32 besides creating, you know, business intelligence tools?
0:02:34 – Yeah, it’s the second mountain.
0:02:36 I think that’s a good way of putting it, right?
0:02:38 I think like if you could build a system
0:02:40 that increases human potential,
0:02:43 like that’s a pretty tremendous thing to do.
0:02:46 And I think we can do it in a way that will make money
0:02:48 and eventually rival the public school system.
0:02:49 That’s our goal.
0:02:52 – All right, well, 500K,
0:02:53 and how did you find these kids?
0:02:55 So they reached out, you reached out to them.
0:02:57 How’d you find all these founders?
0:03:00 – Yeah, we reached out to
0:03:03 a lot of entrepreneurship teachers at schools.
0:03:05 And that was, I think primarily the way,
0:03:07 a little bit of social media,
0:03:09 some parents who found us on Twitter and LinkedIn.
0:03:11 But yeah, I think a lot of them just, you know,
0:03:12 word of mouth.
0:03:14 And so yeah, we got a few hundred applicants
0:03:15 to first go around, you know,
0:03:18 qualifications where you had to have revenue.
0:03:20 So that was kind of a hard filter we had.
0:03:22 There’s a lot of folks who have sort of a dream
0:03:23 where they’re starting something
0:03:25 to burnish a college application.
0:03:26 And we didn’t want that.
0:03:29 We wanted people who were actually building.
0:03:32 And so, yeah, we narrowed it down pretty quickly
0:03:32 and found some-
0:03:33 – Sam, did you have any revenue
0:03:34 in middle school or high school?
0:03:37 I barely had facial hair.
0:03:38 – Yeah, it’s pretty insane.
0:03:41 Like when I was a kid in grade school,
0:03:43 it was like make a business plan
0:03:46 and like fake present it to a board of directors.
0:03:47 And you think that like, like, you know what I mean?
0:03:49 Like dear board of directors.
0:03:50 And it was nonsense.
0:03:51 And I’m seeing their bios.
0:03:55 This is so much more interesting than what we were doing.
0:03:56 What were you, I mean, at 14,
0:03:58 I don’t even think I knew
0:04:00 what that word entrepreneur meant.
0:04:01 – Yeah, definitely didn’t.
0:04:03 My business plan was like mac and cheese,
0:04:04 but with double the cheese.
0:04:06 That was the whole thing.
0:04:12 – Do you guys remember when marketing was fun?
0:04:14 When you had time to be creative
0:04:16 and connect with your customers?
0:04:18 With HubSpot, marketing can be fun again.
0:04:22 Turn one piece of content into everything you need.
0:04:24 Know which prospects are ready to buy
0:04:26 and see all your campaign results in one place.
0:04:29 Plus it’s easy to use helping HubSpot customers
0:04:31 double their leads in just 12 months,
0:04:34 which means you have more time to, you know,
0:04:35 enjoy marketing again.
0:04:39 Visit HubSpot.com to get started for free.
0:04:42 – All right, so we’re gonna do this.
0:04:44 We’re gonna see what we got.
0:04:46 They’re calling in literally from school, by the way,
0:04:47 which is hilarious.
0:04:49 Someone came on and they’re lunch,
0:04:52 they’ll bell for like recess came on or something.
0:04:53 That was amazing.
0:04:54 All right, so let’s try this out.
0:04:56 Let’s go, Lincoln.
0:04:57 – All right, my name is Lincoln Snyder.
0:04:59 I’m a senior at Lake Dallas High School.
0:05:01 My business is Sunshine Exteriors.
0:05:04 So we clean windows, gutters, power wash,
0:05:06 fence staining and holiday lighting.
0:05:09 We’re located in Denton, Texas.
0:05:10 The main goal is to help the homeowners
0:05:11 protect their investment.
0:05:14 Obviously I have a clean home year round.
0:05:16 My business is two years old.
0:05:18 Last year we did $60,000 in revenue
0:05:21 at about just above 50% margin.
0:05:23 – Hold on, pause real quick.
0:05:24 Sam, you know why he’s good?
0:05:25 Did you hear what he did there?
0:05:27 That was some sophisticated,
0:05:30 high level stuff he just did, where he goes.
0:05:32 He’s talking about cleaning gutters.
0:05:35 And he goes, we help homeowners protect their investment.
0:05:38 He didn’t say we clean your gutters.
0:05:40 What’s the biggest investment in your life, your home?
0:05:41 Wouldn’t you want to protect it?
0:05:43 Wow, Lincoln, I’m already impressed.
0:05:44 Continue.
0:05:46 – Yeah, so last year we did $60,000
0:05:48 at just above 50% margins.
0:05:53 This year I plan to grow about 150% to $150,000.
0:05:56 – So you made $30,000 as a junior in high school.
0:05:57 Is that about right?
0:05:58 – I was a senior.
0:06:00 It was this year.
0:06:01 – This year, okay.
0:06:03 – Well, well, but yeah.
0:06:05 – School year, yeah, yeah, yeah, okay.
0:06:07 Wow, all right, that’s wild.
0:06:09 – Just to recap, you go to homeowners,
0:06:11 you’ll power wash, you’ll clean their gutters,
0:06:12 you’ll clean the windows,
0:06:13 you’ll put up Christmas lights,
0:06:15 whatever you got to do, home services,
0:06:18 and you did $60,000 last year as a high school senior,
0:06:20 and you think you’re going to do $150,000 this year.
0:06:21 That’s the summary. – Correct.
0:06:23 – Correct. – All right.
0:06:24 – Yes.
0:06:27 And then, so it’s me and I have two 1099 subcontractor
0:06:30 employees, so right now I’m completely off the field,
0:06:32 so that means that they’re doing all the jobs
0:06:34 and I’m the one in charge of booking, scheduling,
0:06:36 finding the clients.
0:06:37 – And how do you do that, Lincoln?
0:06:39 How do you get customers?
0:06:43 – So, primary acquisition source right now is Nextdoor.
0:06:46 It’s a neighbor platform with surrounding communities.
0:06:49 – Hey, look, we complain about stuff all the time
0:06:51 on Nextdoor, you don’t need to explain.
0:06:55 – Yeah, so yeah, I kind of go on there.
0:06:58 My angle is I’m a local high school student.
0:06:59 I own a window cleaning, brush washing.
0:07:01 We do those services.
0:07:03 If you’d like a free estimate, check out our website.
0:07:05 We’d be happy to give you a quote.
0:07:06 – And Lincoln, how do you do that?
0:07:08 ‘Cause my understanding is you can’t post on Nextdoor
0:07:10 unless you’ve been verified as having an address
0:07:13 or you got a postcard that shows you live in the neighborhood.
0:07:15 They don’t want people from outside the neighborhood
0:07:16 messaging, how do you do that?
0:07:17 Is that a new feature or am I just out of the loop?
0:07:20 – So, I post in just my neighborhood.
0:07:24 So I guess in that area, I am confined to my neighborhood
0:07:29 on that app, but it’s been enough homes to keep me busy.
0:07:32 I think we got maybe 90 customers last year
0:07:35 off of Nextdoor just between March and September.
0:07:37 – Dude, if you’re listening, how many people have we had
0:07:40 on this pod saying, I don’t have an idea.
0:07:42 I don’t have this, you know, this doesn’t scale.
0:07:44 All this bullshit.
0:07:45 He’s 18 years old.
0:07:47 He made 30 grand and it was from posting on Nextdoor
0:07:48 in his neighborhood-
0:07:50 – In his own personal neighborhood.
0:07:52 Yeah, that’s insane.
0:07:54 – That’s, by the way, how did you hear about, you know,
0:07:57 Anand is a tech guy in New York City.
0:08:00 How does someone in Texas who does power washing
0:08:02 hear about this internet shit?
0:08:04 Like what’s he doing? – I was very fortunate.
0:08:06 So there is a teacher who’s a part of a teacher blog
0:08:09 and I’m not well known, but some of the people
0:08:11 at my school know that I own my own business
0:08:13 and do a kind of power washing window cleaning
0:08:14 things like that.
0:08:15 And so she told me about it
0:08:17 and then I submitted my application and-
0:08:18 – Wow.
0:08:19 This is cool, dude.
0:08:21 Okay, so what’s your question?
0:08:23 Before I start brainstorming ’cause I’m fired up.
0:08:26 – All right, so it’s a pretty deep question.
0:08:29 I’m trying to figure out how to reliably acquire customers
0:08:30 through paid advertising.
0:08:34 My current struggle is advertising on a small budget
0:08:36 and not having the skills.
0:08:38 My question for you guys is,
0:08:40 should I pay to acquire those skills
0:08:41 through paid courses?
0:08:44 So far what I’ve been doing
0:08:46 is kind of trying to learn on YouTube.
0:08:49 I don’t think that it’s in depth enough to learn fully.
0:08:52 So I think that I might get more out of paid courses
0:08:56 and content, seminars, whatever that might be.
0:08:58 Or do you think that it would be smarter
0:09:03 to just allocate a semi-large budget to paid advertising
0:09:06 and learn the skill on my own
0:09:08 and kind of have to figure it out as I go?
0:09:10 – All right, I got a bunch of opinions.
0:09:11 Sam, you wanna go first?
0:09:12 Do you want me to go?
0:09:12 – I have a bunch of opinions.
0:09:15 I think yes to all, basically.
0:09:17 Yeah, do all.
0:09:19 I don’t know what your definition of a large budget is.
0:09:20 The best way to learn is to do it.
0:09:23 And a lot of people will shit on online courses.
0:09:24 I think that’s nonsense.
0:09:26 Most of what I’ve learned in this internet world
0:09:28 has been buying an online course.
0:09:30 I bought a copywriting course that changed my life.
0:09:32 I would suggest you do that.
0:09:34 I don’t know what the course offerings are,
0:09:39 but if there is a local services paid marketing course,
0:09:41 100% do it.
0:09:43 I don’t know what a lot of money for you is,
0:09:45 but if you have to spend up to $2,000,
0:09:48 as long as it has good reviews, do it.
0:09:49 – By the way, I think if you emailed anybody
0:09:52 who runs that course, you say, “Hey, I’m 18 years old.
0:09:53 I badly wanna learn this.
0:09:55 I don’t have the cash to be able to put that up.”
0:09:57 Or, “I’m willing to pay it kind of next year
0:09:58 using the profits of this,
0:10:01 and I’ll be your best testimonial for you.”
0:10:04 I think you can get those courses for free out of Goodwill.
0:10:06 So I wouldn’t even let cost be a barrier.
0:10:07 But like Sam said,
0:10:09 I think learning is an attack on all fronts.
0:10:10 So you’ve done the right thing.
0:10:12 You figured out what to learn.
0:10:14 And if you’re committed to being obsessed with it,
0:10:16 it’s do it yourself.
0:10:18 Then it’s watch free YouTube stuff.
0:10:22 Then it’s do a paid course of some kind, buy a book,
0:10:23 whatever.
0:10:25 And then the last one you didn’t mention that I would do
0:10:27 is what helped me when I went into e-commerce.
0:10:29 So five years ago,
0:10:32 I had never done an e-commerce physical brand before.
0:10:34 And I had never done paid ads before.
0:10:35 And fast forward to now,
0:10:39 I’ve probably run $40, $50 million of paid ads
0:10:40 and gotten pretty good at it.
0:10:42 And so what was the learning curve?
0:10:44 One thing that really helped me was
0:10:46 instead of just going straight to a course,
0:10:47 I started doing it myself.
0:10:50 So I had my bearings and I knew what I didn’t know
0:10:51 on a very low scale budget.
0:10:53 And then what I did was I found somebody
0:10:55 who already was winning with that method.
0:10:57 So I found either a friend or somebody nearby.
0:11:01 And I said, “Hey, I really think what you’re doing is great.
0:11:02 I’m young, I wanna learn.”
0:11:03 And I basically went and I said,
0:11:04 “Can I come by for the day?”
0:11:07 And I just wanna ask you a couple of questions about paid ads.
0:11:08 And they’re like, “Yeah, sure, come over.”
0:11:10 And then you come over and then you end up
0:11:12 opening up their Facebook ad account with them
0:11:13 and you start asking them questions.
0:11:14 And if you do it right
0:11:16 and if you’re an earnest, genuine person,
0:11:19 you’re likable, like it seems like you are,
0:11:20 you’ll find somebody who will also give you
0:11:24 that kind of like real-world, real-time type of mentorship.
0:11:26 And they’ll just tell you the ins and outs
0:11:27 and they’ll also tell you,
0:11:30 “Oh, your ad account got shut down.
0:11:32 Email this guy,” or, “Hey, that’s normal.
0:11:33 Here’s what happens.”
0:11:34 So they’ll tell you stuff that you can’t find
0:11:36 just generically on the internet.
0:11:37 So I would also do that.
0:11:39 But it’s a war on all fronts when it comes to learning.
0:11:40 You should be doing all of them.
0:11:42 And then the ones that are giving you
0:11:43 a more rapid rate of learning,
0:11:45 do more of those and less of the others as you go.
0:11:47 You’ll figure out what’s gonna work for you.
0:11:49 – I would also suggest, so I’m looking up Nextdoor.
0:11:51 Nextdoor is not a big company.
0:11:53 If I had to guess, they have 1,000 employees or less.
0:11:57 I would Google Nextdoor account manager
0:12:00 or I would go to the top, Google Nextdoor CMO
0:12:03 or Nextdoor Director of Marketing,
0:12:06 something VP or above.
0:12:08 And I would email them and I would explain,
0:12:09 this is what I did.
0:12:13 I just built a business that is doing six figures
0:12:15 as a senior in high school.
0:12:17 I’m gonna advertise on Nextdoor.
0:12:20 Do you have any type of first-time customer credits?
0:12:21 And I would bet a lot of money
0:12:24 that they will give you $1,000 to $2,000 in ad credits
0:12:27 on Nextdoor to learn their platform.
0:12:28 And then I would do the same thing for,
0:12:30 what’s the other one, Sean,
0:12:34 that the guy who started Athena started, Thumbtack.
0:12:35 I would do the same.
0:12:36 I would do Nextdoor, Thumbtack.
0:12:39 I would email as high a person as you can in marketing.
0:12:41 Probably start with CMO.
0:12:42 – Have you run Nextdoor ads?
0:12:46 – Yeah, so that was kind of part of my question.
0:12:48 What I did last year for Christmas light installation,
0:12:52 I ran ads. – Oh, you do that too?
0:12:53 – I do.
0:12:54 If you need Christmas lights, hey,
0:12:57 I can fly out if the price works out.
0:13:00 But yeah, so I ran the ads and they did it extremely well,
0:13:03 which kind of, it’s almost frustrating to see
0:13:06 that it worked and then now I can’t get it working again,
0:13:08 but I think that’s kind of with paid ads.
0:13:09 It doesn’t work for a while,
0:13:11 but when it does work, it explodes.
0:13:13 – Paid ads is a constant game of cat and mouse.
0:13:15 It’s constant iteration, constantly trying things,
0:13:17 constantly goes up and then goes down.
0:13:20 That is completely normal for paid ads,
0:13:22 but you just have to zoom out and say,
0:13:23 wow, this is a magic money machine.
0:13:26 I’m putting in a dollar and I’m getting three back out
0:13:27 every day, this is incredible.
0:13:28 How do I do more of that?
0:13:30 And so that’s totally normal.
0:13:32 Yeah, I think Sam’s idea of like,
0:13:34 reach out to their marketing team and find their account rep
0:13:36 and be like, hey, I’m a kid, I got this great story.
0:13:38 I want to learn this, who would I learn from?
0:13:39 Who’s the smartest at this?
0:13:40 How can you help me?
0:13:41 Do you guys have ad credits available?
0:13:43 I would love to be a testimonial for it,
0:13:44 the same sort of thing.
0:13:46 Again, use your assets to try to get it to make it happen.
0:13:47 If you need help, by the way,
0:13:48 I think I know people at Nextdoor
0:13:50 that I might be able to connect you with.
0:13:51 So, okay, so that’s-
0:13:54 By the way, hold on, before we move on from that,
0:13:56 don’t do what we’re saying first.
0:13:57 The first thing you should do
0:13:59 is you should type out a letter
0:14:03 and you print 1,000 copies on your printer at home
0:14:07 and you want to make this look not professional.
0:14:08 I don’t want this to be professional.
0:14:10 I want it to be a typed letter from you that’s signed.
0:14:13 – It should be like a paper clipped photo of you,
0:14:14 like on the thing.
0:14:15 Or like-
0:14:16 – Do not act like a big company.
0:14:18 Act like a senior in high school.
0:14:20 Act like a mature senior in high school
0:14:23 and print it out, fold it up, put it in an envelope
0:14:26 and go and put that in 1,000 homes.
0:14:30 – And I want you to Google the Gary Halpert dollar letter.
0:14:33 So it’s the, there’s a famous copywriter, Gary Halpert.
0:14:34 And he wrote this letter
0:14:37 and he stapled or paper clipped a dollar bill
0:14:38 to the top of it.
0:14:39 And that was very attention getting.
0:14:40 People had to pick, what is this?
0:14:42 Why is there a dollar on this thing?
0:14:43 One dollar, right?
0:14:44 One dollar took his like open rate
0:14:49 and his read rate from zero to 95% type of thing.
0:14:50 And then he wrote this letter.
0:14:52 You could do your version of the dollar letter.
0:14:54 I think that would be tremendously successful.
0:14:56 So I think Sam’s idea is great here.
0:14:58 But I think there’s even a thing you do before that,
0:15:00 which is you already have something working.
0:15:02 We’re giving you new ideas.
0:15:02 Why don’t you advertise?
0:15:05 Why don’t you go do Yelp ads, Craigslist, whatever.
0:15:06 You already figured out
0:15:09 that you could go into a community’s next door,
0:15:12 type something and what was this?
0:15:14 $60,000 came out the other side.
0:15:16 So how do you just do that again
0:15:17 in the neighborhood next to yours?
0:15:19 Can you find a friend or a kid in that neighborhood
0:15:22 and say, I will pay you $100
0:15:24 and you’re gonna type this message in your next door
0:15:27 on this sequence ’cause they can post
0:15:28 ’cause they live there, right?
0:15:32 And so go activate basically your brand reps,
0:15:34 your affiliates to just clone the script you did
0:15:37 in your neighborhood in the two neighborhoods next to you
0:15:40 and see if that gives you another 60K per neighborhood.
0:15:42 Yeah, so I’m doing something similar.
0:15:46 I’m not sure that I would say it exactly the way I’m doing it
0:15:48 because I’m not sure that’s really the right way to do it
0:15:49 ’cause I know that next door,
0:15:51 you’re really supposed to be a neighbor in the community,
0:15:56 but to your point, I am doing–
0:15:58 Hey, this hat is gray, my friend, this hat is gray.
0:16:00 I’m good with that.
0:16:01 I’m apt out of region.
0:16:02 I’m kind of going by radius
0:16:04 of different next door neighborhood communities
0:16:05 and going from there.
0:16:07 Yeah, you’re hacking the system, that’s good.
0:16:08 You’re hacking the system.
0:16:11 Can we just become your angel investor real quick
0:16:12 and like– Absolutely.
0:16:14 I kind of wanna see where the story goes
0:16:15 over the next two years.
0:16:16 This is gonna be kind of insane.
0:16:18 Lincoln, have you heard of,
0:16:20 do you know a guy named Brian Scudamore?
0:16:21 Have you ever heard that name?
0:16:22 Sounds familiar, but I don’t know.
0:16:24 You should Google this guy.
0:16:26 He started very similar to you.
0:16:29 It took him years and years to get traction,
0:16:31 10 years to get traction.
0:16:33 Now, his company is called 1-800-GOT-JUNK
0:16:38 and he wholly owns it and it does a billion in sales a year.
0:16:39 So he’s a billionaire.
0:16:43 You should write him, or I can introduce you.
0:16:45 He’s a friend of mine and he will absolutely talk to you,
0:16:49 but you just gotta shut up and do this for about 20 years
0:16:52 and the results are gonna be pretty great.
0:16:54 Yeah, that’s how this business works, right?
0:16:56 You just kinda put your head down and you just get after it.
0:16:58 Yeah, but the beauty is you don’t know
0:16:59 it’s 20 years at the beginning.
0:17:01 You just think it’s just right around the corner
0:17:02 and you just think it’s right around the corner
0:17:03 for the next 20 years.
0:17:06 Well, you’re gonna get rich as you go
0:17:07 if you own the whole thing.
0:17:10 Like these companies can be great if you do it right.
0:17:11 Are you going to college?
0:17:12 Sounds like you graduated now
0:17:14 or you’re about to graduate.
0:17:15 I’m about to graduate.
0:17:20 I’m going to college, yes.
0:17:24 Is that maybe Michigan is the goal?
0:17:27 I got introduced through Formidable Fellowship
0:17:29 to someone at Michigan
0:17:31 who’s kinda gonna introduce me to people on campus.
0:17:35 And so that’ll be, they have a good business school.
0:17:37 Like chicks or what are you talking about?
0:17:38 Who are you trying to meet on campus?
0:17:39 What are you talking about?
0:17:42 Like some professors, some deans, some people,
0:17:43 ’cause I haven’t gotten accepted yet.
0:17:44 It’s still in.
0:17:45 Do they need their gutters cleaned?
0:17:46 I don’t understand.
0:17:48 Why do you care about the professors and deans?
0:17:51 (laughing)
0:17:52 I have good grades and everything
0:17:55 but the kind of what it takes to get out of state
0:17:57 and to that good of a school.
0:17:58 What do your parents do?
0:18:00 Do you have like a teal fellowship part of this
0:18:02 where you just pay people to drop out once you realize
0:18:05 that they should just keep going as an entrepreneur?
0:18:06 Yeah, I mean, I could probably pay one person
0:18:09 but bank on that.
0:18:14 My parents, my dad is a VP at Spectrum.
0:18:16 So not, no entrepreneurship
0:18:19 but he does kinda in the business realm.
0:18:20 My mom’s a nurse.
0:18:23 Do they criticize, not criticize,
0:18:24 they probably don’t criticize you.
0:18:25 Do they say, you know.
0:18:26 Do they put respect on your name?
0:18:27 Yes.
0:18:29 (laughing)
0:18:30 Yeah, like.
0:18:31 Do you get to sit at the head of the table now at dinner?
0:18:35 No, do they, are they like, like, this is a fun hobby
0:18:37 but you know, maybe you should consider
0:18:39 something more serious or do they,
0:18:41 you don’t disrespect your parents publicly
0:18:44 but or are they like, hey, you got a gift,
0:18:46 this is working, keep going?
0:18:47 They’re very traditional in the way
0:18:49 that they want me to go to college
0:18:51 and they think that it’s a fun thing to do.
0:18:53 I’m in high school, but yeah.
0:18:55 Anon, do you have a service
0:18:57 where you talk to these kids’ parents?
0:18:58 No, we don’t.
0:19:01 You know, I think, so yeah,
0:19:04 I posted about Lincoln getting into you, Michigan
0:19:07 and I guess luckily some people have reached out, right?
0:19:08 ‘Cause that’s where he wants to go.
0:19:11 I mean, any of these guys probably could skip college
0:19:13 and just go pro in business,
0:19:17 but you know, I gotta respect what they wanna do, of course.
0:19:20 But yeah, no, obviously if any of them wanted to,
0:19:21 I’m not sure they would, you know,
0:19:25 they could be formidable, you know, without college for sure.
0:19:27 Lincoln, just to put it in perspective real quick,
0:19:29 you said you did 60K last year,
0:19:32 you’ll do 150K this year of revenue.
0:19:34 You’re gonna make more money than your professors.
0:19:39 Yeah, exactly, roughly 50% profit margin, 40, 50%.
0:19:41 Yeah, so last year it was 30,000,
0:19:43 it’s a little over 30,000 profit.
0:19:45 Let’s say you can roughly hold that.
0:19:48 You’re getting close to having a million dollar business
0:19:50 already.
0:19:52 So let’s say you’re doing 100K,
0:19:53 you’re a profit right now,
0:19:55 growth and you basically 2X the business.
0:19:58 Arguably that could be, you know,
0:20:00 somewhere between a $400,000 business
0:20:01 to a million dollar business.
0:20:03 Yeah, it’s like one more year for that
0:20:04 and you’re a million there.
0:20:05 Exactly, exactly.
0:20:07 Just to put that perspective of like the opportunity
0:20:09 and I guess like want to make sure,
0:20:11 I wouldn’t have known that when I was your age.
0:20:13 Well, I wouldn’t have known how to do any of the shit you did,
0:20:15 but even if I was there,
0:20:16 I wouldn’t have really had that perspective
0:20:19 because you kind of, as a business owner,
0:20:20 as a small business owner,
0:20:21 you sort of value your business
0:20:23 just on what you eat at the end of the day.
0:20:25 So you’re like, oh, I made $30,000.
0:20:27 I did a whole bunch of work.
0:20:28 That’s great, but you know,
0:20:31 that doesn’t pay for one year of college.
0:20:33 Whereas you look at it like I’m one year away
0:20:34 from being a millionaire.
0:20:37 If I just literally get two more neighborhoods on board
0:20:40 or one more neighborhood to do the same thing
0:20:41 that I just did, right?
0:20:45 So you are very close to a very meaningful size business
0:20:48 and I hope you continue that as your new angel investor.
0:20:52 Yeah, like I don’t think people truly grasp this
0:20:54 that if you do, this is a huge generalization.
0:20:59 If you do roughly 300 grand of seller earnings,
0:21:02 or sorry, of business owner earnings,
0:21:07 ballpark in most cases, you are worth $1 million.
0:21:09 And I think that if people understood
0:21:12 that they would probably keep going a lot harder.
0:21:14 And I would bet that a lot of the people
0:21:17 teaching business at Michigan, some percentage of them,
0:21:19 you would be richer than them
0:21:21 before you graduate college.
0:21:23 Yeah, and I definitely understand what you guys are saying
0:21:25 ’cause the way I think about it as I compare,
0:21:27 okay, a $30,000 salary,
0:21:28 which is what I made last year
0:21:31 is like an entry level job anywhere,
0:21:34 but going to the point of doubling it every year.
0:21:36 Which you’re not going to do.
0:21:37 You’re not gonna double it every year,
0:21:40 but you’re gonna double it for a few more years maybe.
0:21:43 You honestly, based on what you just described to us,
0:21:46 you actually have a path where you could probably forex
0:21:47 this business in one year
0:21:51 because you’ve done all of this in a single neighborhood.
0:21:54 And guess what, a lot of businesses are like this
0:21:55 where they’re what I call pond businesses.
0:21:58 It works in one pond, it’ll work in all ponds.
0:22:01 Businesses like any app that takes over a high school
0:22:03 will actually be able to take over every high school.
0:22:06 So Snapchat, for example, when Snapchat got hot,
0:22:09 it got hot in two LA high schools.
0:22:12 And investors who are smart knew right away that,
0:22:15 sure on the surface that only looks like a few thousand users,
0:22:17 but if it works in one high school and two high schools,
0:22:19 it’s gonna work in 14,000 other high schools
0:22:21 because all high schools are the same.
0:22:24 In the same way that your neighborhood is probably similar
0:22:27 to a thousand other neighborhoods or more
0:22:28 across the country.
0:22:30 And you should be able to sell local services
0:22:33 using the same exact blueprint and model
0:22:35 that you’re doing in those neighborhoods.
0:22:38 And so I think that what you haven’t done yet
0:22:39 is just replicate it.
0:22:42 So like, you know, do it in another neighborhood yet.
0:22:45 But you said that your next door ads were working
0:22:48 and you said that you’re starting to be able to post
0:22:49 in new neighborhoods.
0:22:53 I would actually be surprised if you can’t triple this business
0:22:55 just doing that properly.
0:22:58 – Yeah, so, I mean, the next door ads from last year,
0:23:00 I’ll kind of run through the numbers.
0:23:03 There was a $9 cost per lead, $30 customer acquisition costs
0:23:07 and a $650 average transaction value.
0:23:09 So 21 to one row ads.
0:23:12 So I think that just based on 21 to one,
0:23:13 by the end of this year,
0:23:16 if I just pump as much as I can into those ads,
0:23:17 I think I’ll be.
0:23:18 – And look, it’ll go down.
0:23:20 It won’t stay 21 to one, but it doesn’t matter.
0:23:21 Three to one, you’re laughing.
0:23:24 So you make a huge margin of safety.
0:23:26 – I thought you said you didn’t know what you were doing.
0:23:27 – Yeah.
0:23:28 – Like you said.
0:23:29 – The Christmas lights, I guess,
0:23:31 but window cleaning, I don’t know, I guess.
0:23:33 – Well, the Christmas lights is because there’s a time,
0:23:34 there’s an urgency on that.
0:23:36 So that’s why it’s such an easy sale.
0:23:38 But your website’s great.
0:23:40 Have you seen his website, Sean?
0:23:40 – No.
0:23:46 – HHH, I think, HHHpressureCleanings.com.
0:23:47 You’re also funky.
0:23:48 – You need to work on the domain.
0:23:50 – Yeah, but the website’s great.
0:23:54 – Welcome to Sunshine Exteriors.
0:23:56 Okay, why not SunshineExteriors.com?
0:23:59 – I have a Sunshine Exteriors, Texas,
0:24:01 but it’s saying I need six months
0:24:02 before I can transfer the domain
0:24:05 ’cause I just bought it on a different hosting platform
0:24:08 ’cause I needed emails with a branded domain.
0:24:10 – You could definitely transfer a domain faster,
0:24:12 whatever, that part’s not right.
0:24:13 Doesn’t take six months, but okay, great.
0:24:14 Let me ask a different question.
0:24:15 Do people come back?
0:24:16 Do they do it again?
0:24:18 Have you been in business long enough
0:24:19 to know the repeat rate?
0:24:23 – Yeah, so didn’t do a great job of tracking it
0:24:25 and not quite enough to know the repeat rate.
0:24:27 I’ll start seeing the repeat rate this year
0:24:29 ’cause most of my customers were from last year.
0:24:31 But from first year to second year,
0:24:35 I would say it’s probably close, it’s low, probably 10%.
0:24:37 – Okay, wow, this is great.
0:24:42 – My friends, if you like MFM,
0:24:44 then you’re gonna like the following podcast.
0:24:46 It’s called Billion Dollar Moves.
0:24:47 And of course, it’s brought to you
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0:25:26 All right, back to the episode.
0:25:31 – Okay, congratulations.
0:25:33 Anything else, Lincoln, before we let you go?
0:25:35 ‘Cause this was kind of great.
0:25:36 – One question.
0:25:39 So if you guys were in my position, right,
0:25:42 and you were going to, against your parents’ judgment,
0:25:45 not go to college, what advice do you have
0:25:46 for someone in that position?
0:25:48 – All right, so the pitch is like this.
0:25:49 You’re gonna sit them down and you’re gonna say,
0:25:53 “Mom and Dad, let me show you the potential outcome.”
0:25:57 So what’s, you’re near A&M, maybe?
0:25:58 I don’t know where you, okay.
0:26:00 – That’s another college, yeah.
0:26:02 – I would say, look, the average salary
0:26:06 that a graduate in the business administration school is this.
0:26:09 I don’t know what it’s going to be, probably 80 grand.
0:26:11 I’m already going to make that.
0:26:16 And if you go to, what’s the broker that we like, Sean?
0:26:17 Quiet Light Brokerage.
0:26:19 You go to quietlightbrokerage.com
0:26:22 and you say, here’s how much these businesses sell for.
0:26:26 In one year, I’m going to already be well above the average
0:26:31 in terms of earnings for a first, second,
0:26:34 and third year post-graduate A&M business admin,
0:26:35 graduate or whatever.
0:26:37 I’m gonna be already out earning that.
0:26:40 All I’m asking for is one year.
0:26:42 You don’t need to support me financially.
0:26:43 All I need is your blessing.
0:26:45 I just want you to say, get after it.
0:26:46 Go and achieve your dreams.
0:26:49 Because look, if you look at all of the change in the world,
0:26:52 it all, a lot of it is due to someone who just went out
0:26:53 and got after it and made a lot of money.
0:26:55 And I’m trying to do that.
0:26:57 And if it doesn’t work after one year,
0:26:59 I’ll do what you asked me to, which is go to a great school,
0:27:01 but just give me 12 months to make this happen.
0:27:02 And I don’t want anything
0:27:04 except for your emotional support.
0:27:06 How’s that, pitch, Sean?
0:27:07 Is that good enough?
0:27:08 – It’s great.
0:27:09 That’s exactly right.
0:27:12 I’m gonna ask for the gap year, not the full four.
0:27:16 So you don’t have to make this like longterm,
0:27:18 life-altering decision.
0:27:20 Just say, hey, I’d like to basically,
0:27:23 I wanna take a gap year and really give this my all.
0:27:24 I think I’m gonna learn a lot.
0:27:25 I’m already learning a lot.
0:27:28 And I think this can really grow into something.
0:27:31 And after school, school is about learning
0:27:34 so that the way, hey, school’s great,
0:27:35 but in education it’s more important.
0:27:37 Like the thing I would go to school for
0:27:37 is to learn about business.
0:27:40 I’m already learning a ton about business this way.
0:27:41 And I’m gonna learn so much more
0:27:43 if I just take this year and focus on it.
0:27:45 And hey, at the end of this year,
0:27:47 you know what, maybe I will actually, you know,
0:27:49 decide, hey, college is the right move.
0:27:51 I wanna be around friends and I wanna do all that.
0:27:54 And in which case, no harm done, one gap year.
0:27:56 And if this really takes off and we reassess at the end,
0:27:57 you know, I can go the other way
0:27:59 and actually maybe continue on this path.
0:28:00 But I wanna take a year.
0:28:02 And I think I would start with that.
0:28:05 So I think the ask is a year, not to never go to college.
0:28:08 And then you let ’em know that like the reasons why
0:28:10 and how you’re thinking this through
0:28:12 and that you want their support that they believed in you,
0:28:13 you know, up until this point,
0:28:15 you just want them to keep believing in you.
0:28:16 And you see how that lands.
0:28:18 So you got your little emotional manipulation.
0:28:19 You have your puppy dog clothes.
0:28:21 You got it all under the hood.
0:28:22 We got a lot of stuff going on there,
0:28:24 but that’s what you wanna do.
0:28:25 And then you see how that goes.
0:28:27 But at the end of the day, like, look,
0:28:29 sometimes just, you know, it might come to this.
0:28:30 I hope it doesn’t, but it might come to this
0:28:31 where they say, no, you gotta do this.
0:28:33 This is, you don’t know what you’re talking about.
0:28:34 Blah, blah, blah.
0:28:36 You may have to decide for you what’s most important, right?
0:28:38 That’s the coming of age, that’s 18-year-old thing.
0:28:40 And there are plenty of stories of people who do it.
0:28:42 And then years later, their parents are like,
0:28:44 you know, holy crap, I didn’t know,
0:28:46 I didn’t understand at the time, you know,
0:28:48 they come around to it.
0:28:49 You at the end of the day, you gotta take control
0:28:51 of kind of like what you want for your life.
0:28:53 But I think that the one you’re asked should land.
0:28:56 I think you got like a 50 to 70% success rate with that.
0:28:57 All right, all right.
0:29:02 – The median salary of an accountant student at A&M
0:29:05 is $60,000.
0:29:05 – Yeah.
0:29:07 – You’re gonna beat that this year.
0:29:11 That’s gotta be the numbers that you present to them.
0:29:12 – All right, well, they might not,
0:29:14 it might not only be about that, you know, people,
0:29:16 parents ultimately, they just want your good, right?
0:29:18 So they’re like, we want you to have this education.
0:29:19 You have your degree.
0:29:22 That’s just like safety and that idea.
0:29:24 Plus we want you to have that experience or young,
0:29:25 blah, blah, blah.
0:29:26 So there’s like other factors too.
0:29:28 So I wouldn’t, I would try to understand.
0:29:30 So like, let’s say they say, no, you gotta do this.
0:29:31 Before you start arguing with them,
0:29:33 just ask them, get curious.
0:29:35 Be like, okay, so like, you know,
0:29:37 it seems like school’s got a couple different parts, right?
0:29:38 There’s like the learning part,
0:29:39 which I think I’m getting a lot of here.
0:29:41 There’s friends and social life.
0:29:42 And then there’s like, you know,
0:29:43 the safety net of having your degree.
0:29:44 Like which one is it for you?
0:29:46 Why do you feel like it’s so important?
0:29:48 What is the part that really, you know,
0:29:50 let me help you understand.
0:29:51 And they’ll let them articulate it.
0:29:53 And then, you know, exactly what you need to smack down
0:29:55 ’cause they’ve served it up to you
0:29:56 about what the reason is that they think
0:29:58 you gotta go to college.
0:29:59 – That’ll work.
0:30:00 That’ll work.
0:30:02 We’re gonna try, Ayan, let’s give you a shot.
0:30:04 Let’s see if your audio video’s working.
0:30:05 So Anand, you wanna do an intro for him?
0:30:08 You wanna be his Bruce Buffer, his Dana White here?
0:30:13 – Yeah, so Ayan is a ninth grader.
0:30:15 Fun fact, went to the same high school as me.
0:30:17 Has built an awesome baking business,
0:30:19 but I think he’ll fill you in.
0:30:21 He’s a phenomenal entrepreneur.
0:30:22 – Yeah, all right.
0:30:25 Hi, my name is Ayan, like Alon said.
0:30:27 I’m a freshman in Hunterton Central High School
0:30:29 in Ringo’s, New Jersey.
0:30:33 So I’m the founder and CEO of Teens to Table.
0:30:36 We sell homemade baked goods to local establishments
0:30:39 across New Jersey and school suppliers as well.
0:30:42 So my business is one year old,
0:30:44 and last year I did 4K in revenue.
0:30:47 This year I expect to grow over 600%
0:30:52 and aim to do at least $25,000, which is really exciting.
0:30:54 So in addition to my business,
0:30:57 I am also a competitive chess player.
0:30:59 And so right now I’m trying to figure out
0:31:02 how to hire people to help with my production
0:31:06 while also maintaining both efficiency and quality.
0:31:08 And so currently I bake everything myself
0:31:09 from cookies to brownies.
0:31:11 And that really ensures my consistency,
0:31:14 but I’m considering bringing a small team
0:31:18 to keep with the growing demand that I’m currently gaining.
0:31:20 – So Ayan, before we go into your question,
0:31:22 let’s just get a little more context on the business.
0:31:25 So it’s baked goods, you sell it to who?
0:31:28 You said classes, a teacher, or who are you selling to?
0:31:30 – Yeah, so I sell it to local establishments.
0:31:32 So bakeries, ice cream shops,
0:31:34 and I also sell it to schools.
0:31:37 So when schools serve food and lunch,
0:31:40 there’s usually my cookie on the shelf as well.
0:31:41 – Okay, gotcha.
0:31:43 You’re making all the cookies right now.
0:31:44 You’re going and you’re selling to them.
0:31:45 How are you getting that sale?
0:31:46 You’re going and you’re knocking on doors.
0:31:47 What’s the pitch?
0:31:51 – Yeah, so the pitch right now is I usually either
0:31:54 go to the bakeries and go to the ice cream shops
0:31:56 and just go in person or on the phone.
0:31:58 And I say, “Hey, I’m 14 years old.”
0:32:00 And this is actually something that astonishes
0:32:04 a lot of people and I really find that interesting.
0:32:05 So I say, “I’m 14 years old,
0:32:07 I’m the founder of teens to table.”
0:32:09 And I pretty much tell them what I do.
0:32:12 Usually when I go in, I bring samples of my cookies
0:32:15 just to make sure they like it and everything’s good.
0:32:16 That I start with the pitch either,
0:32:19 can I sell and put a table up
0:32:20 or can I put it on your shelves?
0:32:22 – Gotcha, okay.
0:32:24 And you said you’re going to grow the business 600%.
0:32:27 So how are you going to go from 4,000 to 25,000?
0:32:29 Is it just knock on more doors
0:32:31 or is there something more to it?
0:32:34 – Yeah, so now it’s more into the school suppliers.
0:32:37 So I’m supplying currently to Machos and Pomtonian,
0:32:40 which are two school suppliers in my local area.
0:32:44 So I’m hoping to get more districts and more schools.
0:32:46 So currently I just got an order for 700 cookies
0:32:48 between the two suppliers.
0:32:51 And I’m in contact with two other suppliers,
0:32:55 Aramark and another supplier in the local area for my school.
0:32:59 So both of these plus Machos and Pomtonian
0:33:02 should hopefully get me to $25,000, yeah.
0:33:05 – And why do you have a bunch of some type of like curry
0:33:07 and other pizza and stuff on your website?
0:33:11 Is that just a stock images that are placeholders for now
0:33:13 or are you actually going to bake more stuff?
0:33:15 – Oh, so that’s actually the future goal to bake more stuff.
0:33:18 So those are the things I’ve made so far.
0:33:20 Along from baking, I love to cook.
0:33:23 So I love to cook like Mediterranean food,
0:33:25 Indian food, Mexican food.
0:33:26 So apart from the baking,
0:33:28 that’s just another one of my passions.
0:33:31 And hopefully as I go later on to my business,
0:33:33 I can incorporate those as well.
0:33:36 – Have you thought about putting cookies on your website?
0:33:39 – I believe, are there not cookies on there?
0:33:41 – There’s a lot of Italian food.
0:33:46 – Tomatoes and avocados and a cookie would definitely be cool.
0:33:51 – All right, so sounds like you are,
0:33:53 you’re going full break and bad, dude.
0:33:54 You’re going up the supply chain,
0:33:56 you’re finding the distributors.
0:33:57 How good are these cookies, by the way?
0:34:00 I need to know, what are we dealing with here?
0:34:02 – So the cookies, they’re really big.
0:34:06 Have you ever guys tried Levain cookies from New York?
0:34:08 – Yes. – That’s how they are.
0:34:10 So that was my goal to design those recipes.
0:34:12 And I think I cracked the code there.
0:34:15 So that’s how the cookies taste.
0:34:17 – How much money do you have in the bank?
0:34:18 – You did 40k last year.
0:34:20 I imagine you’re just doing checking account.
0:34:21 – Not 40k, 4k.
0:34:23 – 4k, that’s what I said, 4k.
0:34:25 And you’re doing checking account accounting,
0:34:26 which is basically just like,
0:34:28 is my bank account going up?
0:34:31 How much do you have in your bank account?
0:34:36 – So in my bank account, I have around 2.1k, I’d say.
0:34:37 – All right, cool, understood.
0:34:40 That’s pretty good.
0:34:42 – Okay, and so now your question was something around
0:34:43 scaling up or hiring, right?
0:34:44 What was the question?
0:34:47 – Right, yeah, so right, I’m trying to hire people
0:34:50 because with the new school suppliers that I’m getting
0:34:52 and then Machios and Pomtonian,
0:34:55 it’s really hard to just do this myself now,
0:34:57 especially since it’s gonna be around,
0:35:01 hopefully projected 1,000 to 2,000 cookies per week.
0:35:03 So I’m considering bringing on a small team
0:35:05 to keep up with the growing demand.
0:35:07 And so my biggest concern for this
0:35:08 is I use a commercial kitchen
0:35:11 ’cause I can’t do this really in my house.
0:35:13 So they charge by hour.
0:35:16 So if I hire people to work,
0:35:19 am I gonna lose my profits and all of my money
0:35:22 because they’re not gonna be as efficient as me
0:35:23 when I bake the cookies?
0:35:24 And then at the same time,
0:35:27 I worry that the quality of the cookies could suffer
0:35:30 because the people I hire might not follow
0:35:31 the exact same process.
0:35:33 And if they add one more teaspoon,
0:35:35 let’s say a baking powder that might skew off
0:35:36 the whole recipe.
0:35:37 – Wait, so you said that you’re doing
0:35:41 50,000 cookies a week, so 52,000 a year.
0:35:42 And how much in revenue?
0:35:46 – So revenue, it’s gonna be around 25K.
0:35:47 So projected.
0:35:51 – Okay, so cheap, right?
0:35:53 – Yes, with the cookies, since they’re bulk ordering,
0:35:56 I don’t make a lot of profit off of them right now.
0:35:57 – Let’s walk through that.
0:35:58 You get an order.
0:36:00 Typical order will be how much?
0:36:01 How many cookies?
0:36:04 – So a typical order is around 600 cookies.
0:36:05 – Great, 600 cookies.
0:36:07 On that 600 cookies, what are you charging
0:36:10 that end customer or not the,
0:36:11 let’s assume it’s not going straight to the customer,
0:36:14 but it sounds like you’re selling to the school district
0:36:17 or the bakery or the wholesale relationship.
0:36:20 So how much are you charging wholesale for that?
0:36:23 – Right, so for wholesale, it’s 80 cents per cookie.
0:36:27 So between 700 and 800,
0:36:29 I make around $400 in revenue.
0:36:31 – Okay, and then what does it cost you
0:36:33 to make those cookies?
0:36:35 – Yep, so I make two cookies.
0:36:36 I make an oatmeal chocolate chip
0:36:38 and I make a chocolate chip both.
0:36:41 The oatmeal costs 27 cents to make
0:36:43 and the chocolate chip costs 28 cents to make.
0:36:45 – Okay, gotcha.
0:36:50 So you’re basically 66% gross margins on the cookie itself
0:36:54 and that includes the kitchen cost and everything
0:36:56 or that’s literally just the ingredients?
0:36:57 – Yeah, so that includes everything
0:36:59 from packaging to the commercial kitchen
0:37:00 and to the ingredients.
0:37:02 – And do you have like your Excel file
0:37:04 that basically kind of shows your unit cost
0:37:06 and your percentages and when you do that,
0:37:10 what do you see when you add in the labor?
0:37:11 Do you see that the profits go to zero
0:37:13 or ’cause that was your question.
0:37:14 You’re like, well, my profits go away.
0:37:16 That’s kind of an Excel question,
0:37:18 not a Sean and Sam question really, right?
0:37:20 So what does the Excel tell you?
0:37:24 – So it really depends just based on minimum wage,
0:37:26 say $15 or $16 per hour.
0:37:30 It depends on how many actual people are higher.
0:37:33 So right now I’ve been trying to experiment with two or three
0:37:35 and see if that works in the spreadsheet.
0:37:39 And right now my profits are going pretty much to zero.
0:37:43 So I’m making like $20 to $30 per order.
0:37:46 So I just wanted to see if there was a better
0:37:48 or more efficient way to do this
0:37:50 without like choking all my profits.
0:37:52 – Raise your prices, that’s the easiest way.
0:37:54 – So basically I think there’s like only two or three ways
0:37:55 to grow a business, right?
0:37:58 You sell more of what you already have.
0:38:01 You sell the same stuff to the current customers,
0:38:02 but you get them to buy more,
0:38:05 whether a larger quantity or more often,
0:38:07 or you raise prices.
0:38:09 So those are like, so, you know,
0:38:10 there’s a great book called
0:38:13 Getting Everything You Have on Everything You Got.
0:38:15 And it just walks through like,
0:38:16 those are the only three options.
0:38:18 Sounds like you’re selling a lot more stuff
0:38:20 if you’re gonna grow 600%,
0:38:24 but you probably should charge more, I would think.
0:38:25 I don’t know anything about the cookie business,
0:38:29 but I think that sounds really cheap, right?
0:38:30 How hard is the sale?
0:38:31 Is the sale really easy?
0:38:33 If the sale is really easy, you should charge more.
0:38:35 How often are you turned down
0:38:38 when you’re asking these people to buy your stuff?
0:38:39 – So it’s quite a bit.
0:38:41 So right now with Machios and Pomtony,
0:38:43 I signed a contract with them.
0:38:45 So that’s pretty much going till the end of the school year
0:38:47 for me, so till June.
0:38:51 So with them, Pomtony is actually only taking 40 cents
0:38:52 per cookie.
0:38:55 So to me, that’s like, that’s a really cheap thing
0:38:58 ’cause I’m really making 12 or 13 cents of profit per cookie.
0:39:01 So with them, I’m making like a total of
0:39:02 barely anything for profit.
0:39:06 With Machios, on the other hand, I make 80 cents,
0:39:07 so they charge it for a week.
0:39:09 – I hope they’re not listening to this.
0:39:11 Uh-oh, we’re giving out all the leverage.
0:39:15 – So I make around 80 cents from them
0:39:18 as they charge me for a dollar.
0:39:20 So I feel like in my question, like a follow-up
0:39:23 is if I raise the prices, do you think there’s,
0:39:26 they would say we don’t want for you
0:39:30 to put your products anymore, or is that a possibility?
0:39:31 – Well, it’s definitely a possibility,
0:39:32 but it’s one you gotta figure out.
0:39:34 So there’s two ways to figure this out.
0:39:35 You can go to your existing customers,
0:39:37 assume you have a good relationship with them,
0:39:39 assume they’re happy, and you could tell them.
0:39:42 You could be like, hey, how’s this going for you?
0:39:44 They’re like, oh, it’s great, like awesome.
0:39:46 I really love working with you.
0:39:49 You know, I’m 14 years old, I’m figuring this out as I go.
0:39:50 And one thing I’m learning is that
0:39:52 I’m providing you guys 500,000 cookies.
0:39:54 Right now I cook all of these by myself.
0:39:55 I need to bring somebody in.
0:39:57 If I do that, I’m not gonna make any profit.
0:40:01 And so I was wondering, would it be possible,
0:40:02 like for us to raise the price here
0:40:05 and go to a dollar cookie or 95 cents a cookie,
0:40:08 whatever it is, that way I’m not losing money
0:40:09 providing you business.
0:40:10 And see what they say.
0:40:12 They might look at you and your puppy dog guys
0:40:13 and they’ll just say yes.
0:40:15 They might say no, and you’ll find out, right?
0:40:17 And then when you go to that next bakery,
0:40:19 you’re gonna go cold test them,
0:40:20 and they’re never even gonna know about the 80 cents.
0:40:22 You just go to them straight away
0:40:23 and you say it’s a dollar, 10, a cookie.
0:40:25 And then you say these cookies are amazing.
0:40:28 This is an, have you ever been to the bakery in New York?
0:40:31 This is a New York City cookie that I’m bringing to you, right?
0:40:34 So you have to up the perceived value of the cookie
0:40:35 through your packaging, through your story,
0:40:38 through the benefits that they get working with you.
0:40:41 And you could say, hey, I am gonna be able to, you know,
0:40:42 tell everybody in our local community
0:40:44 that you guys support, you know,
0:40:45 this young entrepreneurs, blah, blah, blah.
0:40:48 So you gotta find a way to be able to charge a higher price.
0:40:49 And so that, I think that’s your easiest lever
0:40:52 because you’re not gonna be able to get labor
0:40:53 for that much cheaper,
0:40:55 but you can get more margin out of every cookie
0:40:57 that you sell.
0:40:58 And you don’t wanna grow broke.
0:41:00 So if you have the wrong model, right?
0:41:02 You have the wrong cost structure today,
0:41:04 and let’s say you do go get these bigger contracts
0:41:06 and you’re cooking 10 times more cookies,
0:41:08 well, you’re just literally gonna grow broke
0:41:09 if you do that, right?
0:41:12 ‘Cause you’re gonna have to hire to fulfill those orders,
0:41:13 but if you don’t have the margin to support it,
0:41:15 you will go out of business.
0:41:17 And so, and by the way, I think you could test these things.
0:41:19 So you first you test it in Excel,
0:41:21 then you bring on one other person,
0:41:23 and you can always cut bait with that person
0:41:27 if it turns out that you’re not able to optimize them fully
0:41:30 to get the costs out, to get the benefits out of it.
0:41:32 But you just go sort of one step at a time.
0:41:33 I wouldn’t go get two or three people.
0:41:35 I’d start with one and move to two, move to three
0:41:37 as you figure out that model.
0:41:41 Right, okay, yeah, that makes perfect sense, thank you.
0:41:44 Yeah, you might also wanna try to sell to a richer customer.
0:41:47 So who is gonna be less price sensitive, right?
0:41:48 If you go to local businesses,
0:41:51 you go to real estate, the guy who’s killing it
0:41:53 in real estate down there, you go to the dentists,
0:41:57 you go to people who are themselves local entrepreneurs
0:41:59 that are making enough money where they don’t care
0:42:01 if it’s 80 cents a cookie, a dollar a cookie,
0:42:03 or two dollars a cookie really.
0:42:04 They like the story, they like you,
0:42:06 and they wanna be supportive.
0:42:07 I think that might be helpful
0:42:09 versus going to somebody like Airmark.
0:42:11 Airmark I think literally provides food
0:42:13 to like prisons and school cafeterias, right?
0:42:16 It’s gonna be harder to get wiggle room with them
0:42:19 than it is to get the local dentist to say sure thing.
0:42:22 Yeah, or local car dealerships, things like that.
0:42:24 That story is so much better
0:42:27 when you have your face on it with the story
0:42:28 and then your stuff right there.
0:42:30 You should maybe, do you have like a sign
0:42:32 so that let’s say I am the car dealership
0:42:34 and I do carry your cookies.
0:42:36 Like they could just give away a free cookie
0:42:37 to every customer who walks in.
0:42:39 By the way, they’re selling cars.
0:42:41 I think a pretty known sales tactic is you know,
0:42:42 Sam used to do this, right?
0:42:43 You go negotiate with somebody off Craigslist.
0:42:45 What’s the first thing Sam brings?
0:42:47 Oh yeah, it’s called the rule of reciprocity.
0:42:50 So basically I do something nice to someone,
0:42:52 whether it’s something really small.
0:42:55 Like I go, hey, you know, I was gonna meet you
0:42:57 to look at this car.
0:42:58 I just bought a Coke.
0:42:59 I went and bought a Coke.
0:43:01 You want a Coke, a Coca-Cola as well.
0:43:03 And then the rule of reciprocity states
0:43:04 that when you do something nice to someone,
0:43:07 they will always or almost always do something nice back.
0:43:09 And it’s oftentimes not in proportion
0:43:11 to the gift that you gave them.
0:43:13 So you do one little small things nice.
0:43:16 They’ll do something a lot bigger in return
0:43:18 because you always wanna just be even.
0:43:20 Right, okay.
0:43:24 Yeah, so I would go to like a local car dealer
0:43:26 and just say, hey, I wanna provide you guys cookies every week
0:43:28 that you guys can just give out to customers
0:43:29 and they come in.
0:43:32 Trust me, have you ever heard of the rule of reciprocity?
0:43:34 People are much more likely to wanna buy
0:43:36 when they’re eating a delicious cookie
0:43:38 and they feel taken care of.
0:43:39 And this thing’s gonna cost you a dollar.
0:43:43 But if you close even one more sale this whole year,
0:43:45 this whole year, right?
0:43:48 You know, that’s a $35,000 sale for you.
0:43:50 You know, this pays itself back in spades.
0:43:52 And so you can make a pitch like that
0:43:54 and you can go get actually like contracts
0:43:55 with people who are willing to pay more, right?
0:43:57 So simple rule of business is,
0:43:58 sell to the people who have money.
0:44:01 Dude, I wanna see you give like a speech,
0:44:03 like a waffle wall street where it just like ends
0:44:07 with like sign on the dotted line for Christ.
0:44:07 You know what I mean?
0:44:10 Like I wanna see him like pitch these hard.
0:44:13 Yeah, actually that is one piece of advice I’d give you,
0:44:15 which is that, look, this probably won’t be
0:44:17 your last business.
0:44:18 This is the first business.
0:44:19 This is your starter business
0:44:21 and you’re gonna learn a whole bunch.
0:44:24 You’re gonna get more value out of the story you’re creating
0:44:26 than the cookies that you sell.
0:44:28 My first business was a sushi business.
0:44:32 We probably made, I don’t know, $14,000 of profit
0:44:33 in the one year of operations
0:44:35 that we were working on that thing.
0:44:38 But the story that I told about how we cold called
0:44:41 a food network chef and how I went door to door
0:44:44 selling sushi, how we, you know, reverse engineer
0:44:46 the POS systems to figure out all the sales
0:44:49 of all Chipotle stores in the Colorado area.
0:44:52 Those stories got me bigger and bigger opportunities
0:44:53 as I went.
0:44:54 They got me speaking opportunities.
0:44:56 They got me into accelerators.
0:44:57 They got me other doors open.
0:45:01 And so one tip for you is while you sell the cookies,
0:45:03 you should be building the story.
0:45:05 So the story of, yeah, I went into the car dealership
0:45:07 and I gave a talk called how you can increase sales
0:45:09 by 600% like me.
0:45:11 And I talked to the car salesman about the rule
0:45:15 of reciprocity and how they became customers of my cookies.
0:45:17 Even if it’s not a lot of cookies, it’s an awesome story.
0:45:19 And putting yourself in those positions will build
0:45:20 your skill and build your story,
0:45:22 which ultimately is going to be a lot more valuable
0:45:24 than the cookies that you sell, I believe.
0:45:29 – New York City founders, if you’ve listened
0:45:30 to my first million before, you know,
0:45:31 I’ve got this company called Hampton.
0:45:34 And Hampton is a community for founders and CEOs.
0:45:36 But a lot of the stories and ideas that I get
0:45:39 for this podcast, I actually got it from people
0:45:40 who I met in Hampton.
0:45:42 We have this big community of a thousand plus people
0:45:43 and it’s amazing.
0:45:46 But the main part is this eight person core group
0:45:47 that becomes your board of advisors for your life
0:45:50 and for your business and it’s life changing.
0:45:52 Now, to the folks in New York City,
0:45:56 I’m building a in real life core group in New York City.
0:45:59 And so if you meet one of the following criteria,
0:46:01 your business either does three million in revenue
0:46:03 or you’ve raised three million in funding
0:46:04 or you’ve started and sold the company
0:46:08 for at least $10 million, then you are eligible to apply.
0:46:11 So go to joinhampton.com and apply.
0:46:13 I’m gonna be reviewing all of the applications myself.
0:46:16 So put that you heard about this on MFM.
0:46:17 So I know to give you a little extra love.
0:46:19 Now, back to the show.
0:46:23 – Okay, yeah, that sounds really great.
0:46:25 And definitely for the car dealership,
0:46:27 that’s a great thing to put in mind for me.
0:46:29 Even though I have these suppliers,
0:46:31 I think it’s good to start advancing
0:46:32 and thinking about more places to sell.
0:46:35 So I think that’s really helpful advice, yeah.
0:46:38 – All right, thank you, man.
0:46:40 You’re killing it, keep going.
0:46:43 Just, it’s amazing how far you are at 14.
0:46:47 All right, next, Abigail, where you at, Abigail?
0:46:48 – Hi.
0:46:50 – Where are you from?
0:46:52 – I’m from Odessa, Missouri.
0:46:55 – Oh, nice, I’m from Missouri too.
0:46:59 Hey, Sean, I posted Abigail’s Instagram.
0:47:00 I want you to click it.
0:47:02 And I want you to look at what her hobby is.
0:47:04 So scroll down, you’re gonna see like,
0:47:05 it looks like some prom photos,
0:47:07 but keep on scrolling down.
0:47:10 And you’re gonna see that in her free time,
0:47:11 she’s a race car driver.
0:47:13 – What?
0:47:15 – Yes.
0:47:16 – Okay, triple threat.
0:47:17 – Yeah.
0:47:20 – Student, entrepreneur, Sprint car driver.
0:47:24 How did she get into that, Abigail?
0:47:26 – So actually I’m a third generation Sprint car driver.
0:47:30 So my grandpa drove race cars,
0:47:31 and my dad has driven race cars.
0:47:34 And then I kind of just passed it on down to me.
0:47:36 – That is awesome.
0:47:38 – Amazing.
0:47:39 – Okay, so Abigail,
0:47:42 how old are you and what’s your business?
0:47:45 – I am a senior at Odessa High School.
0:47:46 I’m 17 years old,
0:47:49 and my business is growing and selling chrysanthemums.
0:47:51 So like mums, which is like something you’d put
0:47:56 on your front porch during like the fall season in Halloween.
0:47:58 So that’s what I do right now.
0:47:59 My business is two years old.
0:48:02 Last year I made 15, or this past summer,
0:48:05 I guess I made 15,000 in revenue.
0:48:07 And this year I expect to grow by 100%
0:48:10 and aim to do at least 30,000 in revenue.
0:48:13 – God damn.
0:48:14 Okay, so explain us the business.
0:48:16 So where do the flowers come from?
0:48:17 Who do you sell them to?
0:48:21 – So how my business works is I actually order the mums,
0:48:24 which we call plugs, ’cause they’re like about this big.
0:48:27 And I order them from a company in North Carolina.
0:48:31 I also have to order fertilizer
0:48:35 so we can make sure the plants get nutrients
0:48:36 that they need.
0:48:39 I have to order the soil and then the pots for it.
0:48:41 So that all goes into the price for the mums.
0:48:43 And then we have about a two week long process
0:48:45 of putting it all together
0:48:46 ’cause we have to mix the soil.
0:48:48 And then we put them into color blocks
0:48:51 and then put the mums in the color block.
0:48:54 It’s a really, really long and tedious process.
0:48:58 And then we put them on our, what we call runs.
0:49:01 And they’re like big tarps with watering lines.
0:49:04 And for the next like three to four months,
0:49:06 I spend watering.
0:49:08 And then after it’s, they’re ready to go
0:49:10 and they’re fertilized and watered.
0:49:13 And they’re grown to about as big as they can get.
0:49:17 We market them to schools and fundraisers.
0:49:20 And I also do retail at my own house.
0:49:23 So I try to post that on social media
0:49:26 and try to hand out flyers to like local towns
0:49:28 and post them at local businesses.
0:49:31 – Wow, that is a lot of work.
0:49:35 I’m looking at this picture, which is just like a field
0:49:37 or like these like long, long rows
0:49:40 of these potted plants with the watering system.
0:49:41 Is this, where do you do this?
0:49:43 Is this your backyard or what is going on?
0:49:46 – So I live on 40 acres.
0:49:51 And about 30 acres is leased out for farmland.
0:49:55 And the rest of it is for my mums pretty much.
0:49:57 So anywhere we can put them on the yard,
0:49:59 we pretty much put them there.
0:50:02 And right now we’re in the process of building a greenhouse.
0:50:04 So from my profit with my mums,
0:50:06 I’ve been able to buy a greenhouse
0:50:09 so that I can have a place to start my mums.
0:50:11 And also a greenhouse is a good place to have
0:50:14 a steady revenue for the other six months out of the year
0:50:16 where I’m not growing mums.
0:50:17 – So you, sorry.
0:50:19 So I missed the part of you you’re selling.
0:50:22 So you’re selling to, you said school fundraisers,
0:50:25 businesses, and you’re handing out flyers, you said.
0:50:27 So who’s the core customer?
0:50:29 Who’s the main customer?
0:50:32 – So right now we’re trying to do wholesale
0:50:35 as our core customer so that it’s like,
0:50:37 what we do is I’m in FFA.
0:50:39 So FFA chapters will sell it for a fundraiser.
0:50:41 – Shawn doesn’t know what the FFA is.
0:50:43 You gotta spell this out.
0:50:48 – Okay, so FFA used to stand for Future Farmers of America
0:50:50 but we’ve kind of veered away from that
0:50:53 because we don’t want it to be the stereotypical
0:50:56 about cows and like farming.
0:50:58 What we really do right now is we promote youth
0:51:01 in agriculture and leadership in agriculture.
0:51:03 And we’re pretty much growing the next generation
0:51:04 of agriculture at least.
0:51:09 – So Shawn, if you grew up in a more rural environment,
0:51:12 if you’re in high school, like you kind of by default
0:51:14 joined the FFA, there’s millions and millions
0:51:15 and millions of members.
0:51:17 And it was kind of like a thing, like instead of boy scouts
0:51:19 or girl scouts, maybe not instead of,
0:51:21 but it’s similar to that in rural areas.
0:51:24 You join the FFA and you get like your FFA jacket
0:51:26 and they’re like pretty, they’re pretty famous.
0:51:27 – What do you do once you join?
0:51:29 You go out and-
0:51:33 – So for me, I currently serve as my local chapter president
0:51:34 in area six Sentinel
0:51:38 and I’m running for a Missouri FFA state office.
0:51:43 So what I really do is I do public speaking events
0:51:44 and stuff like that.
0:51:47 So it’s really shaped me into who I am
0:51:50 because right now talking to you like I’m not nervous
0:51:52 and I know that my freshman year,
0:51:53 I would have been completely nervous
0:51:55 ’cause I never did public speaking.
0:51:58 And it kind of just shapes you to get those like life skills
0:52:00 that you need in the long run.
0:52:03 – Okay, college acceptance letter.
0:52:06 All right, that was a great, great essay.
0:52:09 So you, okay, so sorry.
0:52:11 So you said your core customers wholesale.
0:52:11 What does that mean?
0:52:13 Who’s the buyer?
0:52:15 – So right now we’re trying to do contracts
0:52:19 with like hardware stores around us.
0:52:24 So we have a couple like hometown kind of hardware stores
0:52:27 and then some bigger ones that are all across Missouri.
0:52:30 And right now we’re just kind of focused on Missouri
0:52:33 because delivering my product
0:52:34 is kind of one of the hardest parts.
0:52:37 So we actually get to use my Sprint car trailer
0:52:38 to deliver all of the mums.
0:52:43 So that’s kind of funny how it clashes.
0:52:46 – And how much profit did you do?
0:52:49 – This last year we did 15,000.
0:52:52 – And you did 15,000 in revenue, I thought you said.
0:52:53 – Yeah.
0:52:54 – How much in profit?
0:52:59 – So our profit was about, I think seven to eight.
0:53:02 – Wow, all right, that’s good.
0:53:05 – Just because of like each year it fluctuates
0:53:06 like how much the soil is gonna cost
0:53:08 or how much the pots are gonna cost.
0:53:13 And really our big cost this year was making those runs.
0:53:14 And now we already have those.
0:53:16 So it’s something that we can pack away
0:53:18 for like the fall and the winter time.
0:53:19 And then we can put them out next year
0:53:22 and that’s another cost we don’t have to pay for.
0:53:24 – So Abigail, let me ask you a question.
0:53:28 If you wanted to sell 10 times more mums,
0:53:29 how would you do that?
0:53:32 Like not, you said you’re gonna double your sales.
0:53:35 What if you wanted to go 10 times bigger, what would you do?
0:53:38 – I think that right now that’s kind of what I’m like.
0:53:42 My question to you guys was gonna be just because
0:53:44 I like to do the wholesale part of it,
0:53:46 but I also know that I can’t grow
0:53:49 how much I wanna grow just doing wholesale.
0:53:51 But I think really right now my biggest thing
0:53:55 is going to be just getting my company out there
0:53:58 and like promoting it better to other companies
0:54:01 so that they would possibly sign a contract for us
0:54:02 so we can have that fixed amount
0:54:04 that we’re gonna sell to them.
0:54:06 – Like, you know, I went to Farmcon,
0:54:09 which was this conference that Santa told me about.
0:54:12 It was actually in Kansas City.
0:54:14 And, you know, there was like 5,000 people there.
0:54:15 They’re all farmers.
0:54:18 If they had heard your story on stage,
0:54:20 I think a lot of people would have handed you a card
0:54:21 and said, hey, let me know how I can help.
0:54:23 Love what you’re doing.
0:54:28 I’m so excited that somebody in this next generation
0:54:30 is excited about agriculture.
0:54:31 It’s great to see it.
0:54:32 I wanna support that.
0:54:33 I think there’s a lot of that goodwill.
0:54:37 And I wonder if maybe the faster way to 10x your sales
0:54:42 would be like who’s the CEO of whatever Home Depot
0:54:45 or whatever the whole sale story is
0:54:46 that’s gonna carry your stuff.
0:54:47 – Or Ace Hardware or something like that.
0:54:47 – Ace Hardware.
0:54:50 Like how do you go to them and be like,
0:54:53 hey, I wanna be in your store.
0:54:54 Like that is my goal.
0:54:56 That is my dream.
0:54:58 And I wanna get my moms on your shelves.
0:54:59 How do I make that happen?
0:55:03 And you just, I think if you hustled more to the top,
0:55:06 you could actually get more growth faster
0:55:07 than going bottoms up in this case
0:55:10 because your story is your asset, right?
0:55:12 Yeah, the flowers might be great,
0:55:13 but your story is the real differentiator.
0:55:16 How many other people are there with your story?
0:55:17 This is zero.
0:55:20 And so how are you using your story
0:55:21 to unlock the growth is what I would be doing.
0:55:24 Whether it’s telling your own story on TikTok,
0:55:27 it’s getting on stage at places like FarmCon
0:55:30 or the FFA annual, whatever event.
0:55:34 Or it’s getting that sending cold emails every single day
0:55:39 to the CEOs of all of the major distributors or retailers
0:55:40 until one of them takes your meeting
0:55:42 and puts you on their shelves.
0:55:44 If you listened, we did this episode with Nick Mowbray.
0:55:46 He was this guy in New Zealand,
0:55:49 literally like on the other side of the earth
0:55:51 making toys by himself.
0:55:54 And he was like, I emailed every retailer
0:55:57 in every country, every single day.
0:55:58 And he’s like, I just kept doing that
0:55:59 until they finally cracked.
0:56:01 And they would tell me, no, I’m not interested,
0:56:02 not interested.
0:56:02 And one day they would be like,
0:56:05 can I see a sample or hey, are you gonna be at that show?
0:56:06 I’m going to the show.
0:56:08 If you’re there, I’ll take 15 minutes to meet with you.
0:56:10 And he would fly there and make it happen.
0:56:12 And I think if you 10X your approach
0:56:15 towards getting the major distributor,
0:56:18 I think you might leapfrog into a much bigger space.
0:56:19 Because otherwise, the way you describe this,
0:56:22 like I’m tired just hearing how you grow these things.
0:56:26 Like it is so much work to just get the product made
0:56:30 that I feel like you, it’s only worth doing that
0:56:32 if you’re going to be able to have like,
0:56:35 land some like major sales versus then it’s also
0:56:37 double the work to go sell to every school
0:56:39 for a fundraiser and mom and pops.
0:56:41 I think that’s just like too much work.
0:56:43 – There’s also, for all you all,
0:56:45 there’s a small window that you have
0:56:47 where you’re like this prodigy.
0:56:49 – Young and lovable.
0:56:50 – Yeah, that’s gonna go away.
0:56:55 But you’ve got this like two to maybe six year window
0:57:00 where you being pestering, that’s just cute and awesome.
0:57:02 And then in a few years, it’s gonna be annoying and weird.
0:57:07 And so while that window is open, take it, you know,
0:57:09 take that opportunity.
0:57:12 – We have a friend who was 18 and they got written up
0:57:15 in Tech Crunch as like the young hotshot prodigy.
0:57:18 He’s 23 now and he’s like, he feels washed up.
0:57:20 He’s like, I can’t use my store.
0:57:22 Like my entire stick was that I was young.
0:57:25 He’s like, nobody wants to hear about a 23 year old prodigy.
0:57:28 There’s no such thing and you’re not a phenom anymore.
0:57:30 – Yeah, it’s like a blind painter, you know?
0:57:33 Like you got to use everything you can use that story.
0:57:36 Like, you know, you can get away with a lot right now.
0:57:38 And the same stuff that you’re gonna be able
0:57:41 to get away with now, you’re not going to be in the future.
0:57:44 And so I would definitely do exactly as Sean’s saying,
0:57:47 which is go hard on going to the top.
0:57:52 And you’re not really annoying when you’re 18 doing this.
0:57:54 – Yeah, Abigail, in the next 30 days,
0:57:56 do you think you could get a meeting with the CEO
0:57:59 of either Ace Hardware or Home Depot?
0:58:01 – I think, I don’t know.
0:58:04 I think that that is something that like,
0:58:05 just sounds crazy to me.
0:58:08 Like I feel like I probably could just because
0:58:12 I’d like to say I’m a very well-spoken person
0:58:14 and very like good with my words.
0:58:18 But right now I just have like a lot of other things going on.
0:58:21 So it’s hard to like focus all of my time on my business
0:58:23 ’cause I am a senior this year.
0:58:26 So that’s just like kind of hard.
0:58:29 – That’s the only time I think that this excuse is valid.
0:58:31 I would say, okay, that is the only time
0:58:33 that I will accept that excuse.
0:58:34 I want to give everyone listening
0:58:37 and you guys a little bit of feedback that I learned
0:58:38 when I was a little bit younger,
0:58:41 which is the most powerful people on earth
0:58:43 are one cold email away.
0:58:46 And because of email and because of Instagram,
0:58:47 which you guys have grown up on
0:58:50 and everything else on social media,
0:58:53 you would be shocked at how small the world is.
0:58:56 And it sounds insane to say,
0:58:59 email the CEO of this large billion dollar plus
0:59:01 multi tens of billions of dollar company.
0:59:02 That sounds insane.
0:59:04 But I think that you are literally,
0:59:05 I wouldn’t say one email.
0:59:09 I would say your one email and 20 follow-ups away
0:59:12 from just about everyone on earth.
0:59:14 And there’s been times where we,
0:59:16 I even emailed them, jeff@amazon.com.
0:59:18 And I think I followed up like 20 times
0:59:20 and I gotta know thank you.
0:59:24 But it’s just proof that you are much closer
0:59:26 than you think to just about every single person
0:59:30 you wanna reach, particularly some type of executive.
0:59:31 – All right, I’m gonna show you something
0:59:34 real quick Abigail before fifth period starts here.
0:59:36 So just check this out.
0:59:38 All right, there’s this guy on Twitter right now.
0:59:41 His name’s Sonith, he’s Twitter handle Sonith.
0:59:42 He’s building ZFellows,
0:59:44 which is another young student program.
0:59:45 I think it’s a Stanford.
0:59:47 But just check out this.
0:59:49 There’s a cold email that my friend Niko,
0:59:51 who’s now a famous venture capitalist.
0:59:53 He invests in Snapchat really early on.
0:59:55 Again, off a cold email.
0:59:56 Okay, you might not be able to read this.
0:59:56 I’ll read it to you.
0:59:59 It’s him emailing Elon Musk.
1:00:02 Okay, so I’m giving you the CEO of Home Depot
1:00:03 and Ace Hardware.
1:00:05 This guy emailed Elon Musk and he goes,
1:00:08 “Dear Mr. Musk, Ace says I’m a graduate student
1:00:10 “at Stanford and taking this class, blah, blah, blah.
1:00:12 “I’m writing a paper about Tesla strategy
1:00:14 “because I think you’re such an innovative company
1:00:17 “and we’re gonna put together our recommendations
1:00:19 “on the future of your corporate strategy.
1:00:21 “Since you’re the chairman of Tesla,
1:00:22 “I thought it’d be great if we could do a short interview
1:00:25 “with you in person over the next few weeks
1:00:26 “to talk about your strategy.
1:00:28 “I’m aware that you receive dozens of similar requests
1:00:29 “on a daily basis.
1:00:30 “That’s why I’ll do my best to make this
1:00:32 “not only useful but an entertaining experience
1:00:34 “for you and your company’s execs.
1:00:35 “Hopefully we’re able to contribute
1:00:36 “first-class recommendations.
1:00:38 “I’m happy to sign an NDA, blah, blah, blah.
1:00:39 “I look forward to hearing from you.
1:00:40 “I would be grateful if you would participate
1:00:41 “in our research.”
1:00:43 Niko, and then Elon writes back,
1:00:44 “Okay, if you can limit the meeting to 20 minutes
1:00:46 “or schedule for late in the evening.”
1:00:48 And this was Niko as a student.
1:00:50 There’s another email of him.
1:00:51 – By the way, that’s not even a good email.
1:00:52 That’s not even a good email.
1:00:54 – That was not, and let me show you another one.
1:00:55 I just saw it literally today.
1:00:56 So the cool thing about following this guy Twitter
1:01:00 is every day he’s tweeting out us cold emails somebody sent.
1:01:02 So this is Corey Levy who runs ZFellows now.
1:01:04 He’s, so this is him emailing Andy Roddick,
1:01:05 the tennis player’s mom.
1:01:07 So he’s not Andy Roddick, his mom.
1:01:08 So he finds his mom’s email address
1:01:10 and he goes, “Dear Mrs. Roddick.”
1:01:13 Because as you already know from my previous emails,
1:01:15 my name is Corey Levy from Houston, Texas.
1:01:19 I’m 12 turning 13 and I’m a big fan of your son Andy.
1:01:20 I know Andy’s playing this tournament in Houston.
1:01:22 I was wondering if I could meet him
1:01:23 or hit with him before.
1:01:25 I’ve been dying to hit with him for the last two years.
1:01:27 Please email me back, Corey.
1:01:29 And then she says, “Corey, thanks for the note.
1:01:30 Andy’s gonna be at Houston.
1:01:32 As the tournament gets closer, reach out again.
1:01:34 I’ll definitely make arrangements for you to meet him.
1:01:36 Can’t promise you’ll hit with him, but I’ll try.
1:01:37 Please keep a touch and keep playing tennis.
1:01:39 It’s a great sport.”
1:01:41 – Turns out Corey was like 34 when he wrote that email though.
1:01:43 So it was kind of weird when he showed up.
1:01:44 (laughing)
1:01:46 – He’s still got a baby face actually.
1:01:48 So Abigail, I say all that to say this,
1:01:50 which is one, you should follow this guy.
1:01:53 Cause if you see every day a cold email that works,
1:01:57 it’ll go from that sounds crazy to this is perfectly normal.
1:01:58 And that’s one of the reasons probably people
1:01:59 should listen to this podcast.
1:02:00 It’s one of the reasons why you should follow people
1:02:01 on Twitter who are inspiring.
1:02:04 Cause they will make the crazy seem normal.
1:02:05 And that’s all you need is to delude yourself
1:02:08 into believing it’s normal to actually make it happen.
1:02:10 The second thing I’ll say is you describe the process
1:02:15 of like a multi month potting and moving and arranging
1:02:18 and watering and kissing and touching the flowers
1:02:20 to make them all work.
1:02:21 And then I was like, hey, can you send a cold email?
1:02:24 And he’s like, I don’t know, I got a lot of class coming up.
1:02:26 So I challenge you, which is I think this email
1:02:28 is going to be the least of your worries.
1:02:30 I think sending a cold email every day will take you
1:02:32 literally no, no more than 10 minutes.
1:02:33 And I think you’ve got that 10 minutes.
1:02:36 I think so because you just showed me your 10 acre farm
1:02:37 you’re doing by yourself.
1:02:42 So, so what happens is that familiar work feels comfortable
1:02:46 and feels easy, unfamiliar work feels hard.
1:02:47 And you sort of talk yourself out of it.
1:02:49 You tell yourself a story about why it’s your senior year.
1:02:50 You don’t have time.
1:02:52 In reality, the thing I’m telling you is a lot easier
1:02:53 than the stuff you already do it.
1:02:55 So that’s my challenge to you,
1:02:56 whether you choose to accept it.
1:02:59 Pick 100 people who you want to reach, okay?
1:03:03 Spend only 30 minutes a day for the next month
1:03:06 and follow up with each of them 10 times
1:03:08 until they say no thank you or yes.
1:03:11 And your reply rate, if you’re any interesting
1:03:13 or any good is going to be about 10%.
1:03:15 So most everyone’s going to say no or not going to reply,
1:03:18 but I promise you 10% out of 100 is going to be awesome.
1:03:20 It’s going to change your life.
1:03:23 – One more thing, go Google Sampar cold email.
1:03:25 Go read Sam’s cold emails he sent
1:03:28 to recruit speakers to HustleCon.
1:03:30 This like, you know, random conference that he was starting
1:03:32 and the follow-ups is where the magic is.
1:03:33 So there’s the initial email,
1:03:36 which a few brave people are willing to do.
1:03:38 Then there’s the four follow-ups that Sam was sending
1:03:39 that nobody’s willing to do.
1:03:41 I would go read those.
1:03:44 The other thing is there’s a great story of Tim Ferriss.
1:03:46 Abigail, do you know Tim Ferriss?
1:03:47 – I don’t believe so.
1:03:49 – Wow, that’s amazing.
1:03:50 She knows us, she doesn’t know Tim Ferriss.
1:03:51 Holy shit.
1:03:54 – Dude, our heroes are their grandparents.
1:03:55 You know what I mean?
1:03:58 – All right, so Tim has this great source.
1:04:00 Tim wrote this book called “The Four Hour Workweek”
1:04:01 and he’s this great guy who’s going to read podcasts.
1:04:04 So he has a story where he went
1:04:05 to a Stanford Business School course
1:04:07 and he offered a challenge.
1:04:10 He said, “I will give a round the world ticket.”
1:04:12 So an all expense paid round the world plane ticket
1:04:16 to anybody here who can get in touch with the,
1:04:18 whoever could cold email and get in touch
1:04:21 with the highest kind of most hard to reach person.
1:04:24 So the whole class reach out to whoever you want,
1:04:25 whoever gets the person highest on the food shade
1:04:27 gets around the world ticket.
1:04:31 And he, by the end of the class,
1:04:32 I’ll butcher the exact story, you can go read it,
1:04:36 but by the end of the class, he’s like, okay,
1:04:38 so who got who?
1:04:41 And I think one person got like, I don’t know,
1:04:42 Bill Clinton or something like that.
1:04:43 And he’s like, oh, amazing.
1:04:44 Who else did other people get?
1:04:47 And most people, like, I think of the class,
1:04:49 only four or five people got anybody.
1:04:51 And he asked, he’s like, what was the difference?
1:04:52 Was it your cold email script?
1:04:54 And it was basically that like 85% of the class,
1:04:56 90% of the class didn’t even try.
1:04:58 They just perceived it to be too hard.
1:05:00 Anybody that tried reached somebody.
1:05:02 And then within that group of people,
1:05:04 some people literally reached like a former sitting president.
1:05:07 And so I think that there’s a lesson in there,
1:05:09 which is that like most people just won’t even try.
1:05:11 And this is something that sounds hard,
1:05:12 but it’s actually not that hard,
1:05:15 especially when you have your type of story.
1:05:17 I think it will actually be trivially easy for you.
1:05:18 You’ll be surprised.
1:05:21 The CEO of Ace Hardware, if you emailed him,
1:05:23 you will be the most interesting email he got that day.
1:05:24 ‘Cause guess what?
1:05:27 There’s not a lot of other 18 year old Spritcar drivers,
1:05:29 young entrepreneurs who are selling,
1:05:31 or who are interested in agriculture,
1:05:32 who are actually out there doing it
1:05:34 and not even just talking about it.
1:05:36 There’s only a couple and nobody’s emailing him.
1:05:39 So I think it’s gonna be a lot easier than you think.
1:05:40 – It’s something I’ll definitely give it,
1:05:42 have to give it a try.
1:05:44 – All right.
1:05:45 I’ll take that.
1:05:46 – Hey, thank you.
1:05:47 – Thank you.
1:05:49 – You’re fantastic.
1:05:51 – I’m gonna keep cold email you every day
1:05:53 until you cold email them, all right?
1:05:54 I think that’s so far enough.
1:05:56 – That’s okay, it’d be a good reminder.
1:05:58 – And you’ll have to invite us to Odessa.
1:05:59 I wanna watch one of your races.
1:06:00 I wanna drive the damn thing.
1:06:01 – No, definitely.
1:06:02 Definitely.
1:06:04 Did you say you’re from Missouri?
1:06:05 – I’m from St. Louis.
1:06:06 Yeah, I’m from St. Louis.
1:06:07 – You’re from St. Louis.
1:06:08 Yeah, I’m from Odessa,
1:06:12 which is just a little bit east of Kansas City.
1:06:14 – Yeah, where a lot of people,
1:06:16 like if you told Sean that he wouldn’t know anything,
1:06:19 but the difference between KC and St. Louis
1:06:20 is like LA and SF, Sean.
1:06:21 So not that similar.
1:06:23 – Yeah, pretty much.
1:06:25 – But all right, who we got next?
1:06:28 – By the way, Recap, Abigail, shoot your shot,
1:06:31 cold email, use your story to go to the top
1:06:32 and think about how you could 10X your business
1:06:33 instead of twoX your business.
1:06:35 – And follow up until you die.
1:06:36 – Yeah.
1:06:38 Sam cold emailed his way out of Missouri and you can too.
1:06:39 All right.
1:06:41 (laughing)
1:06:43 – Anand, thank you for bringing these folks to us.
1:06:45 – Yeah, absolutely.
1:06:47 Let me just plug real quick.
1:06:48 March 14th is our next deadline.
1:06:51 So for mittablefellowship.org.
1:06:53 And I think for just generally,
1:06:56 this has given me like an amazing amount of hope
1:06:57 in like the next generation.
1:06:59 ‘Cause I think the stories you hear,
1:07:01 like, you know, everybody’s just scrolling away on TikTok,
1:07:03 ruining, wasting away their life.
1:07:05 And like we see honestly hundreds
1:07:06 of like amazing young people.
1:07:07 You met just three of them today.
1:07:11 So yeah, so, you know, if you’d like what these guys do,
1:07:15 please support them by cookies, by mums.
1:07:17 – Are you just doing good in the world now?
1:07:18 Is that what’s happened?
1:07:19 You’re just doing good?
1:07:22 – No, I mean, no, this is, I mean, this is fun.
1:07:23 This is a lot of fun.
1:07:26 – Well, he puts a lot of wind in my sails.
1:07:28 – He put up about 500 grand or something
1:07:29 of you and your partner’s money.
1:07:30 – That’s what I’m saying.
1:07:31 He’s just doing good.
1:07:32 This is amazing.
1:07:32 – Yeah, we did.
1:07:33 – It’s called the second mountain.
1:07:34 This is what you do.
1:07:35 When you–
1:07:38 – We got 700 grand with donations now.
1:07:39 So I mean, we got lots of money for grants.
1:07:41 So if there’s young entrepreneurs,
1:07:43 if parents are hearing this, you know,
1:07:45 we’ve had a lot of parents who’ve reached out saying,
1:07:47 this inspired their kids to start a business.
1:07:50 So hopefully we’ll see them in six or 12 months.
1:07:52 So yeah, and I mean, it’s pretty dope,
1:07:54 like what has started to happen.
1:07:55 And we’re only four and a half months in.
1:07:57 So we’re still super loving.
1:07:58 – Sean, why aren’t you doing this?
1:07:59 That’s a great question.
1:08:00 That’s what I’m asking myself.
1:08:02 This is amazing.
1:08:04 – All right, Sean, there’s a few of these.
1:08:06 – We can just join us, Sean.
1:08:06 It’s all right.
1:08:07 All the infrastructure is set up.
1:08:08 That took the longest.
1:08:09 So just–
1:08:10 – Do you need like a hype man?
1:08:11 ‘Cause that’s kind of my skill.
1:08:12 – Yeah, here we go.
1:08:13 – I don’t really have much else, but.
1:08:15 – Yeah, yeah, we need a hype man for sure.
1:08:16 (laughing)
1:08:18 So no, but these guys, you know, these guys are great.
1:08:21 You know, if you need to buy mom’s cookies,
1:08:24 you need your, you know, you want your home beautified
1:08:25 and to protect that asset.
1:08:28 As Lincoln said, you know where to go.
1:08:30 – Dude, it’s also awesome not to hear about AI.
1:08:31 Do you know what I mean?
1:08:33 Like, which is great, which is great.
1:08:36 But like, it’s like, you know,
1:08:37 these guys are actually doing the damn thing,
1:08:40 like in real life and it sounds awesome
1:08:42 to hear different stuff.
1:08:43 – Yeah, I think the other thing,
1:08:46 we have like a podcast with these guys called Future Titans
1:08:48 and like Ion goes through a story of like emailing
1:08:51 and going door to door like a hundred times
1:08:53 and getting rejected, right?
1:08:56 And so I think like the things that they learn
1:08:58 out of building their businesses are phenomenal.
1:09:02 You know, Abigail walks through this like horticulture issue
1:09:04 which is like way above my pay grade
1:09:06 where like the moms were getting over watered in one area
1:09:09 and like just the problem solving they’re doing
1:09:12 is unreal compared to like anything they might do
1:09:13 like in an academic setting.
1:09:16 So yeah, no, it’s super.
1:09:18 – I’m gonna send you guys a copy of our boy Nick,
1:09:20 the Huber’s book, the sweaty startup.
1:09:22 How to get rich doing boring things
1:09:23 ’cause you guys are all doing sweaty startups.
1:09:24 This is great.
1:09:26 I’ll send you guys, get us your addresses.
1:09:27 I’ll send you guys a copy.
1:09:30 – And thanks for coming to guys.
1:09:34 You’re way ahead of the curve and you know, we’ll joke
1:09:36 and we’ll tease you guys and give you hard time
1:09:38 but you’re doing amazing stuff
1:09:40 and I hope you’re proud of yourselves
1:09:41 and thanks for coming on the pod.
1:09:42 All right, that’s it.
1:09:44 ♪ I feel like I can rule the world ♪
1:09:47 ♪ I know I could be what I want to ♪
1:09:49 ♪ I put my all in it like no days off ♪
1:09:52 ♪ On a road let’s travel never looking back ♪
1:10:02 [BLANK_AUDIO]

0:00:05 So that was the first Golden Goose, and then you said you started stacking geese like a rapper, you know, at the club.
0:00:06 So what’s the second geese?
0:00:08 I hope that becomes a term that we can use stacking geese.
0:00:09 Yeah, stacking geese.
0:00:10 We got to get some shirts, baby.
0:00:11 Goose over merch, baby.
0:00:12 Hey, merch guy.
0:00:25 So Brent runs Permanent Equity.
0:00:27 You started off as a founder.
0:00:29 You started buying companies.
0:00:32 And you then started raising money to buy companies.
0:00:35 So you raised like something like 50 million bucks for your first fund.
0:00:37 You started buying companies with that.
0:00:41 Then a couple of years later, you raised about $250 million to buy more companies.
0:00:49 And now you own, I don’t know, something like 16 companies that do over $350 million a year of revenue.
0:00:56 And I believe what you said was $50 million of free cash flow out of the portfolio now, which is pretty incredible.
0:00:57 So that’s who you are.
0:00:58 That’s what you’re bringing to the table.
0:01:00 And I think, Sam, what do we want to go with this?
0:01:02 Because we could ask you about buying businesses.
0:01:06 I have some questions around that, but I kind of want to start with something light before we go into like,
0:01:09 “Hey, can you teach me how to be private equity, please?”
0:01:11 Yeah, we can do the light stuff.
0:01:17 You also, you’ve got the, we call it the all shucks, Warren Buffett attitude, where you’ve got a list of one-liners.
0:01:19 You write amazing annual reports.
0:01:20 You’re a great writer.
0:01:23 So we have a bunch of one-liners that we want to ask you about as well.
0:01:24 Sounds good.
0:01:27 What, can you tell me what’s the, what do you buy and what are the biggest companies?
0:01:29 Do you buy like pool companies and HVAC companies?
0:01:34 Yeah, I mean, we typically, we’ve got everything from a children’s clothing brand to a military recruitment firm,
0:01:37 to manufacturing, construction, business services.
0:01:38 I mean, it’s really the 16 companies.
0:01:42 It’s a, you know, it looks like the island of misfit toys.
0:01:46 For us, they’re, they’re companies that we love the people who we get to work with.
0:01:48 They’re in industries that we feel like are not going to be changing.
0:01:51 And we can talk about how some of them maybe look like high change,
0:01:55 especially like the children’s clothing would seem high change on the surface,
0:01:57 but it’s actually not.
0:02:00 And yeah, we try to partner with them for a long time.
0:02:02 What’s the biggest one in terms of revenue and profit?
0:02:04 Let’s see, our, in terms of revenue and profits,
0:02:08 probably our fencing business out of Dallas, Texas is probably the largest.
0:02:12 So we, we have a big market share in the, in the Dallas market.
0:02:16 And yeah, it’s a, it’s a, it’s a pretty sizable business.
0:02:21 Do you guys remember when marketing was fun?
0:02:26 When you had the time to be creative and connect with your customers with HubSpot,
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0:02:41 Plus it’s easy to use helping HubSpot customers double their leads in just 12 months,
0:02:45 which means you have more time to, you know, enjoy marketing again.
0:02:48 Visit HubSpot.com to get started for free.
0:02:51 I was going to ask you a similar question.
0:02:55 Like, you know, people are always like, you can’t pick a favorite kid.
0:03:00 And as an investor, you can, you have this portfolio and like some are better than others.
0:03:01 And that’s okay.
0:03:05 It would be weird if all of your companies were equally successful investments.
0:03:06 I wouldn’t believe you.
0:03:09 And so what’s like the golden goose for you?
0:03:12 So which one is like, like, I know in my portfolio, right?
0:03:15 I have like, I have like a mini version of what you do where we have like four or five companies
0:03:18 that we kind of have either bought or own a big stake in.
0:03:24 And I could tell you, I’d be like, oh, this is like for us, like the somewhere.com business was like my golden goose.
0:03:29 Partly because I got in on a great price, but also the business tripled since we bought it.
0:03:32 And it’s just this business that just spits out cash flow.
0:03:36 And it’s like the market keeps growing for this people need this.
0:03:38 And so for us, that’s been the golden goose.
0:03:41 It just keeps laying a golden egg every single month for us.
0:03:43 What’s the golden goose in your portfolio?
0:03:48 Oh, we’ve been fortunate to actually like we’ve kind of stacked golden geese on one another.
0:03:49 That is how I would describe it.
0:03:56 So the very first business I bought is called Media Cross is a military recruitment firm bought that in very early 2010.
0:03:57 Explain in layman’s terms.
0:03:59 What does that even mean military recruitment firm?
0:04:00 What’s happening?
0:04:00 Yeah.
0:04:04 So we at the time worked with two branches of the military.
0:04:06 Now we work primarily with one.
0:04:07 We had two contracts.
0:04:15 One was to recruit civilian mariners into a division of the Navy called military seal of command that resupplies the ships that never came into port.
0:04:20 So it’s about 1400 to 1800 civilian mariners a year or recruited into that division.
0:04:21 That’s our responsibility.
0:04:27 So we do all of the marketing and recruitment efforts and then the processing to bring them into that branch of the military.
0:04:30 Does that mean like you’re out you’re out on the street with people?
0:04:33 Or does that mean you’re running ads and you own like a lead gen website?
0:04:34 All of that stuff.
0:04:36 Yeah, but we’re doing we’re doing lead gen.
0:04:38 We have a whole processing center.
0:04:40 We’re actually doing qualifications for these people.
0:04:43 So it’s a complete soup to nuts operation.
0:04:48 And the government just pays you per recruit or how does that work?
0:04:54 Yeah, we’re on a fixed contract that escalates every year based on the staffing and needs of the business.
0:05:01 So we it’s basically a staffed contract and then we have sort of a built-in profit margin that’s on top of that.
0:05:04 What do you get per recruit or per referral for one of these things?
0:05:07 Oh, gosh, I don’t even know because we’re not we’re not based on that, right?
0:05:13 So we’ve done this for the contract is we’ve had it as a business for 30 years now.
0:05:14 It’s been forever.
0:05:18 And I mean, we’re so deeply embedded into what they do.
0:05:19 We know exactly what it takes.
0:05:23 We I mean, we are the outsourced function of that piece of the military.
0:05:25 And why is that business great?
0:05:27 Is it because you got this cash flow, but you have this contract.
0:05:31 You have the certainty and defensibility with that.
0:05:32 Is that what’s great about that?
0:05:33 Yeah, yeah.
0:05:38 I mean, so like for the most part, we know what our profitability is going to be in three years from now, right?
0:05:41 And so once you get that business optimized and you get great people in place
0:05:46 and the leader of that business we’ve had, I mean, she’s been with the business since the very beginning.
0:05:48 So we’re 15 years into the relationship.
0:05:50 She’s doing a great job and it just it clicks.
0:05:55 So that was that was I would call the original Golden Goose that allowed me to pay back the SBA.
0:05:58 I’ve heard you say you accidentally bought your first business.
0:06:00 Is that what you meant when you say you actually what does that even mean?
0:06:01 How do you accidentally buy a business?
0:06:05 Yeah, I got a call from a guy and he was like, hey, I want to introduce you to this guy.
0:06:07 He’s it’s your he’s in your industry.
0:06:14 You know, he said marketing marketing because I’d launched a call it an ad agency for all intents and purposes before then.
0:06:15 And he was like, hey, he’s in your industry.
0:06:17 She gets to know him and I said, OK, great.
0:06:22 And he’s like, oh, by the way, the guys he’s got left at the altar for the second time trying to sell his business recently.
0:06:25 And I was like, oh, OK, I guess I could take a run at it.
0:06:26 I had no idea what I was doing.
0:06:30 I was 24 at the time.
0:06:31 No idea what I was doing.
0:06:36 And I sat in front of this guy and and you know, we talked about it and we negotiated and he said,
0:06:38 I would never sell it to you for the price you asked for.
0:06:39 And I was like, that’s fine. No problem.
0:06:41 And I didn’t talk to him for seven months.
0:06:45 And then seven months later, he called me up out of the blue and said, just renewed our largest account.
0:06:47 Business is in great shape.
0:06:48 I’m exhausted.
0:06:49 I’ll give it to you for the price you asked for.
0:06:52 But you got to close all cash 60 days from now.
0:06:57 And it was one of those where you kind of like you make the sale on the go down the elevator and you say, oh, shit.
0:06:58 It was it was like that, right?
0:07:01 And I remember getting off the phone and I was like, oh, crap.
0:07:03 Like I just obligated myself to go buy like buy a business.
0:07:05 I have no idea what I’m doing.
0:07:07 Did you know anything about digital marketing?
0:07:07 Oh, yeah.
0:07:10 I mean, we had we had we did digital marketing work back then.
0:07:11 You have a marketing agency.
0:07:14 You stumble into this business.
0:07:17 You’re like, maybe somebody tells you there’s a chance to buy it.
0:07:18 You’re like, all right, I could try.
0:07:20 He says no to the first price.
0:07:21 He comes back.
0:07:22 You’re not even following up.
0:07:25 He comes back and says, hey, still interested, but you don’t have a lot of money.
0:07:26 You’re 24 years old.
0:07:29 So you go to the SBA and you get an SBA loan for this thing.
0:07:30 Yeah, correct.
0:07:33 Yeah, I asked my newly married wife to sign a personal guarantee and she was like, what’s that?
0:07:34 And I was like, God, don’t worry about it.
0:07:35 A big deal.
0:07:36 You’re like, good news and bad news.
0:07:39 Good news, no prenup, but you do have to sign this other thing.
0:07:40 Yeah, exactly.
0:07:42 She was like, what happens if this doesn’t go well?
0:07:43 I was like, it’s probably not going to be great.
0:07:45 Um, so yeah.
0:07:47 So somebody’s never done an SBA loan.
0:07:48 What can you explain?
0:07:50 Just like you put down X, you get Y.
0:07:52 What’s how it all works.
0:07:52 Yeah.
0:07:55 Back then, um, so the requirements have changed a little bit.
0:07:57 I think it’s like five or 10 percent you have to put down now.
0:08:00 And I think you can actually qualify with seller financing.
0:08:01 I’m not an expert anymore on the SBA.
0:08:06 I’ve only done the SBA one time and that was literally 15 years ago back then.
0:08:09 What I did was I count, uh, leveraged the accounts receivable from the existing
0:08:13 business as the down payment and then got the rest of the debt through the SBA.
0:08:16 And so, I mean, I put very little cash into the deal.
0:08:18 So you put basically zero down.
0:08:24 I mean, it was a, it was a lot of my, my money, but it was just tied up in other assets.
0:08:28 But yes, I mean, in terms of actual cash that was coming out of my pocket was not a lot.
0:08:29 I didn’t have a lot of cash.
0:08:34 Um, and so, um, yeah, I ended up asking my buddy at the SBA.
0:08:35 It was, it was part of an SBA lender.
0:08:38 I said, Hey, do you guys do like expedited SBA loans?
0:08:40 And he was like, not really, uh, we don’t do that.
0:08:42 And I was like, well, I need it in 60 days.
0:08:43 And he was like, that’s really not possible.
0:08:45 And I was like, can we make it possible?
0:08:46 Like let’s try.
0:08:49 How much, how much are you talking that you had to borrow?
0:08:50 It was a million bucks.
0:08:51 Yeah.
0:08:51 It was a million dollars.
0:08:57 And was this like your C’s candy, like Buffett bought C’s candy and it’s returned like
0:09:01 a billion dollars in free cash flow or more than that to the, to the headquarters over
0:09:03 the last whatever 50 years or whatever it’s been.
0:09:05 It’s, it’s, it’s like a 20 Xer.
0:09:06 Yeah.
0:09:07 So that’s amazing.
0:09:09 So that was the first golden goose.
0:09:13 And then you said you started stacking geese like a rapper, you know, at the club.
0:09:14 So what’s the second geese?
0:09:16 I hope that becomes a term that we can use.
0:09:16 Yeah.
0:09:17 Stack and geese.
0:09:19 We got to get some shirts.
0:09:24 Hey, merch guy, you know, like Rogan has like Jamie.
0:09:27 I kind of have this like fictional studio in the room.
0:09:28 I’m like, pull that up.
0:09:30 Hey, much guy, get on that.
0:09:30 Like there’s nobody here.
0:09:31 Merge guy, yeah, yeah.
0:09:32 Merge guy.
0:09:35 Um, yeah, I mean, I knew, I knew so little back then.
0:09:38 I remember my lawyer said, okay, we got to start due diligence.
0:09:40 And I literally typed into Google D O diligence.
0:09:42 Like due to like, I had no idea what it was.
0:09:45 Um, and I was, I was like reading about it as he was talking to me.
0:09:46 I was like, Oh yeah, we just asked questions.
0:09:47 Like how hard can that be?
0:09:51 Um, so anyway, uh, it was quite the adventure.
0:09:53 That’s amazing.
0:09:57 Yeah, another, another anecdote on that deal was a week before closing.
0:10:02 I said, okay, so I take all of my money and I give it to you.
0:10:03 You take all the money out of the business.
0:10:04 Like how do I make payroll?
0:10:08 And the guy was like, well, you obviously got a line of credit on the
0:10:08 business, right?
0:10:11 And I was like, no, I didn’t, I didn’t do that.
0:10:14 And he was like, well, the business is going to go under immediately.
0:10:16 And I was like, yeah, that’s not good.
0:10:17 What do we do?
0:10:20 And he was like, well, you got to figure this out because you’re getting
0:10:21 ready to close on the business.
0:10:23 And I was like, can I get a loan from you?
0:10:28 So he actually lent me money to, as a line of credit to keep the business operating.
0:10:30 Cause I didn’t even, I didn’t even think about it.
0:10:32 I didn’t think about like, Oh, well, he’s going to take all the money and
0:10:34 there’s not going to be any cash to operate the business.
0:10:38 I was, um, I was with this guy this weekend and he was like, Hey, should
0:10:39 I start my own business?
0:10:40 You know, I’m 28.
0:10:42 I don’t think I have enough experience though.
0:10:45 And I was like, yeah, I’m pretty sure like a lack of experience isn’t like,
0:10:47 hasn’t stopped a lot of people.
0:10:50 Uh, you can kind of be like a kind of a dummy and get into it.
0:10:53 And you’ll probably learn in like six months and you are a good example of
0:10:53 that.
0:10:55 You don’t really need to know much.
0:10:56 Huge dummy.
0:10:57 Exactly what I think about myself.
0:11:02 And like the lean manufacturing part, uh, like kind of philosophy, they
0:11:04 have this idea of like just in time, right?
0:11:07 You, you, you do things just in time versus doing everything ahead of time.
0:11:10 And so just in time learning is basically what you did.
0:11:12 It’s like, Oh, when I need to close, then I figure out what due diligence is.
0:11:16 Then when I need to take over the business, I learned what working capital is.
0:11:19 And you just, you learned each of the core concepts as you needed them,
0:11:22 which is actually the real way that people learn rather than I’m going to
0:11:23 learn everything up front.
0:11:26 Then I’m, then I’m fully prepared to now to go do this.
0:11:29 And like in reality, that’s not how, how life works.
0:11:29 Yeah.
0:11:31 And sometimes it doesn’t work out.
0:11:34 And I, you know, I joke that I’m a force come private equity for a reason.
0:11:34 So.
0:11:35 What else do you own?
0:11:36 That’s awesome.
0:11:37 Yeah.
0:11:40 So the next business we bought, uh, was a, as a pool business out in Arizona.
0:11:44 Um, and that was, uh, just with, uh, again, started occurring cash and, um,
0:11:46 started building that up and, and bought that business.
0:11:49 And again, that one turned out to be, uh, uh, great investment as well.
0:11:53 You say, you say that nonchalantly like, Oh, a pool business, but it’s also like,
0:11:54 dude, that would be really random.
0:11:55 I don’t think about pool businesses.
0:11:57 Nobody shows me a pool business.
0:11:57 So what were you doing?
0:11:59 You’re talking to brokers.
0:12:00 Where does that deal come from?
0:12:02 Like for you at that time.
0:12:03 Yeah.
0:12:04 So it was about, so let’s see.
0:12:08 So I had no idea I was doing after I bought the business, the meaty cross in 2010.
0:12:09 I was like, Oh, that worked.
0:12:12 Uh, I should do more of what works and less of what doesn’t at the time.
0:12:15 There wasn’t a lot of writing on the internet about this.
0:12:18 Um, so I mean, there was a little bit of, uh, stuff out of the Harvard,
0:12:21 a little bit out of Stanford around search funds, but there was very little
0:12:22 activity online.
0:12:24 And so, uh, I was like, well, I just need to ask ground was like,
0:12:26 are there other people doing this?
0:12:29 I didn’t even literally know that there was a thing called private equity.
0:12:30 That’s how little I knew.
0:12:33 I mean, I started, somebody was like, Oh, you did a private equity deal.
0:12:34 And I literally Googled private equity.
0:12:37 And I was like, turns out there’s a whole industry of people to do this.
0:12:38 Like, why would they not do it?
0:12:40 Like in smaller companies.
0:12:42 And, uh, that was my foray into it.
0:12:46 And so at that point we said, okay, well, if we’re going to go find other
0:12:47 businesses, I mean, how hard can it be?
0:12:48 This one just came to us.
0:12:51 There must be just tons of businesses out there just floating around ready
0:12:53 to be, uh, ready to be bought.
0:12:56 And so we started reaching out to people and developed deal pipeline.
0:12:59 And one of the deals that took us so that, that pool deal we first
0:13:02 saw in 2012, I want to say.
0:13:05 Um, and it took us about three years to get the deal done.
0:13:09 And, um, it was just hanging around the hoop and they actually went
0:13:13 with two other buyers before us and ultimately had a good relationship with
0:13:17 them and so the time between deal one and deal two was three years.
0:13:19 It was, uh, five years.
0:13:22 Sean, isn’t it crazy how long things take?
0:13:24 Like Brent’s like a Brent’s a big shot right now.
0:13:26 Like, you know, people know you and you like, you’re talking
0:13:28 about hundreds of millions in revenue.
0:13:31 But you started this in like 16 years ago.
0:13:35 Like that’s a, I mean, it’s a huge success and everything, but it like
0:13:39 really goes to show you that like you have to grind for, or at least
0:13:41 be consistent for a decade plus.
0:13:42 Oh, absolutely.
0:13:45 No, I mean, I, I say to people all the time, like if I had been given
0:13:49 $50 million to invest in like 2010, I like, I would have lost all the money.
0:13:53 Like it just took so long to build up, like to make a bunch of mistakes,
0:13:56 make a bunch of mistakes that were low stakes, felt like high stakes
0:13:59 at the time that were low stakes, uh, in order to be able to, to, to warrant
0:14:00 having more resources.
0:14:02 And so yeah.
0:14:05 So at some point, somebody did give you $50 million.
0:14:07 How’d you get somebody to give you $50 million to go by companies?
0:14:08 Cause I’d like that.
0:14:09 Yeah.
0:14:11 Uh, well, so, uh, funny story.
0:14:16 I met this guy named Patrick on the internet and, uh, literally he put out a
0:14:17 tweet, Patrick or Shaughnessy put out a tweet.
0:14:20 And this is when he was like an analyst at, at his dad’s firm.
0:14:22 And he put out a tweet about capital allocation.
0:14:23 I responded.
0:14:25 I was like, yeah, I can hop on the phone and talk about capital allocation.
0:14:27 I didn’t really understand when he was even asking.
0:14:30 He was asking about public markets, like capital allocators
0:14:32 and public markets, but I, I didn’t know much.
0:14:34 And so I just reached out and said, yeah, sure.
0:14:34 Let’s talk.
0:14:36 We get on the phone and he’s like, so what do you do?
0:14:38 And I was like, Oh, I buy these, these small businesses.
0:14:39 He’s like, well, how much do you pay?
0:14:42 And I was like, I don’t know, like between three and five times.
0:14:43 And he was like, what?
0:14:46 Like, are these businesses going out of business?
0:14:49 Like, are these, are these going under or these distressed?
0:14:50 I was like, no, these are healthy businesses.
0:14:51 And he’s like, I’ve never heard of this.
0:14:52 What is this?
0:14:54 And so we talked like two or three more times.
0:14:57 And then he said, well, can I come visit you in Columbia?
0:14:58 And I said, sure.
0:15:00 So he flew to Missouri and we spent a day together at the end of it.
0:15:03 He said, like, I want my family to invest in what you’re doing.
0:15:04 Like, I believe in what you’re doing.
0:15:07 And I said, sorry, like, we don’t take outside capital.
0:15:10 Like, I’m not going to do a two and 20, 10 year fun life.
0:15:14 Looked at that, don’t want to do a holdco and value the current assets and,
0:15:17 you know, get saddled with a bunch of partners that don’t know who they are.
0:15:18 Like life’s good.
0:15:22 Like we’re making a bunch of money and compounding and like everything’s fine.
0:15:24 And he asked me the question.
0:15:28 No one else had asked me because we flirted with some family offices to that point.
0:15:32 And and he said, well, what would it take for you to take our capital?
0:15:35 And I said, well, I don’t know.
0:15:37 And he said, well, why don’t you figure that out and get back to me?
0:15:38 And I’ll tell you if we can do it or not.
0:15:42 And so I whiteboarded out our current structure, which is like kind of
0:15:43 the opposite of traditional private equity.
0:15:46 So we take no fees of any kind, no reimbursements of any kind.
0:15:51 There’s no cash that comes from the portfolio companies or from the LPs to the GP.
0:15:55 Outside of we take a percentage of free cash flow above a hurdle as we return cash back.
0:15:58 You got to redo that last 20 seconds.
0:15:59 Can you dumb that down a little bit?
0:16:01 I got you, Sam.
0:16:05 He’s the guy working in Cinnabon that doesn’t touch any of the Cinnabons.
0:16:08 So he’s in an industry where everybody’s like feeing up everywhere.
0:16:11 They’re just getting high on the sugar and he’s like, I’m good.
0:16:12 I don’t need that.
0:16:18 Can we only do Cinnabon references or analogies because that was much easier.
0:16:20 They’re talking about hurdles and sprinting and whatever.
0:16:25 Yeah.
0:16:26 Well, so okay.
0:16:33 So traditional private equity, you raise a fund and you get 2% of the amount every year and 20.
0:16:35 Every year, by the way, you get 2%.
0:16:38 So which is actually like getting 20% of the total.
0:16:39 Correct.
0:16:40 Every year for 10 years.
0:16:41 Which is kind of insane, right?
0:16:42 It’s insane.
0:16:47 I mean, people in private equity get paid well because it’s hard to do and not many people can do it.
0:16:48 And it’s a rare skill set.
0:16:53 And yeah, I mean, it seemed high to me when I first looked at it, but I was like, okay.
0:16:54 Well, that’s the market for it.
0:16:55 So whatever.
0:16:59 And I said, I don’t need the fees because I’m already paying for the team and the overhead and everything.
0:17:01 And so I don’t need the cash flow from the fees.
0:17:03 Just I want it to be entrepreneurial.
0:17:06 If we make money, like we want to share in that making it together.
0:17:11 And so that’s our model and we don’t use debt and we hold it for a very long time.
0:17:13 So we have a 30 year initial term on our capital.
0:17:22 Typically a private equity firm will have 10 years and most private equity firms, you know, use a lot of leverage, put a lot of debt on the businesses at closing.
0:17:23 We typically use no debt.
0:17:27 And so we’re kind of in some ways the opposite of traditional private equity.
0:17:29 And yeah.
0:17:32 So I went back to him and I said, Hey, this is the structure that I think would work that we would take capital.
0:17:35 And he and Jim, his father said, okay.
0:17:36 Wait.
0:17:36 So I think I missed it.
0:17:38 What, what did you do as the carry then?
0:17:43 So you said, okay, no, no, no on the 2% fees, but what did you do for the profit share?
0:17:44 Yeah.
0:17:50 So we get 40% of the, of the free cash flow of businesses as we return it back to the investors.
0:17:53 So you don’t, you don’t have to return all the money upfront first.
0:17:55 You just start participating from day one with 40%.
0:17:56 Correct.
0:17:57 Correct.
0:17:58 But it’s only on what we returned back.
0:17:59 Only on what you returned back.
0:18:00 Okay.
0:18:00 Great.
0:18:02 And then you said you use no debt.
0:18:04 Correct.
0:18:04 Yep.
0:18:05 So these are completely unlevered.
0:18:09 They’re buying all cash, all cash deals using equity from day one.
0:18:10 Why don’t you use like a little bit of debt?
0:18:13 Probably like a little bit of debt.
0:18:13 Yeah.
0:18:16 Just, just, just a little bit of debt.
0:18:16 It’s not a big budge.
0:18:19 Just, just a little icing on top of the Cinnabon.
0:18:19 Yeah, exactly.
0:18:20 Just this one time.
0:18:24 You don’t even do seller notes like nothing.
0:18:26 We will occasionally do some seller notes.
0:18:31 Although we found that having the people that you work with be your creditors is not an
0:18:33 ideal situation often.
0:18:35 So we’ve really shied away from that as well.
0:18:36 Yeah.
0:18:40 No, we typically just close all equity and try to keep things just super simple.
0:18:44 I mean, we think that, that, that transitioning small businesses is a difficult and it’s
0:18:45 pretty stressful on everyone.
0:18:49 We can always lever them up after, you know, after we close, although we haven’t really
0:18:49 done that.
0:18:52 And it’s that strictly like a lifestyle choice.
0:18:55 You’re just saying that just helps you sleep better at night.
0:18:55 Yeah.
0:18:59 Is it a financial decision or a peace of mind decision to not use debt?
0:19:00 I think it’s both.
0:19:05 What I would argue is that the optionality that we have in doing some pretty interesting
0:19:09 things with these businesses to grow them is much better when you don’t have debt,
0:19:12 when you’re not paying all the cash to, to a bank.
0:19:13 I’ll give you an example.
0:19:17 So we bought an aerospace business in 2019 called Pac Air.
0:19:20 And I don’t know if you guys know this, but the aerospace business never goes down.
0:19:23 It always just goes up in the history of the industry.
0:19:24 Never really has a problem.
0:19:29 And I remember when we were closing that deal, one of the advisors to the seller
0:19:30 said, are you guys idiots?
0:19:33 Like this business does never go down.
0:19:34 Why wouldn’t you guys lever the thing up with debt?
0:19:36 And we said, Hey, here’s our philosophy and all the stuff.
0:19:40 Well, it’s not like we actually knew what was coming down the pipe, but 2020 hits and
0:19:44 we were literally the only business out there without debt on it, like literally.
0:19:47 And so we were able to take all the cash flow that we were generating because we were
0:19:51 still generating cash flow, even though the business was down a lot, and we were able
0:19:53 to go out and basically make 10 years of progress in two years.
0:19:58 And that business now is seven-ish times the size is when we bought it.
0:20:02 And everyone else that had debt is, you know, maybe grown a tiny bit out of
0:20:04 from 2019, but not much.
0:20:06 And so it’s really been a transformative experience.
0:20:08 We’ve had that happen over and over again in these businesses.
0:20:11 Like we never know what the future is going to hold, but we know that there’s going
0:20:14 to be options to invest in really interesting things.
0:20:16 If the cash flow is all going to the bank, you don’t have that option.
0:20:18 Right, right.
0:20:20 I’m going to still use a little bit of debt, but I think that’s good.
0:20:22 Can I ask one question?
0:20:22 Never hurt anybody.
0:20:27 We’ve had a bunch of people come on this podcast and I’m always like wowed by
0:20:28 their insights, their personality.
0:20:32 I feel this way about you and so many people that have come on this podcast where
0:20:34 I walk away being like, that guy’s the man.
0:20:36 Like that person’s a master of what they do.
0:20:37 They’re kind of a master of the universe.
0:20:38 This is great.
0:20:40 And it’s so easy.
0:20:44 And it’s so easy, but I and forget the easy part for a second.
0:20:46 I’m just like, wow, that really works.
0:20:47 And it makes sense what they said.
0:20:52 They’re, they’re kick-ass my friends.
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0:21:36 All right.
0:21:37 Back to the episode.
0:21:41 And then if you look at people over like a 20 year period or
0:21:43 you know, like a longer period, 10 to 20 years.
0:21:47 There’s this base question which is like, if you just put money
0:21:49 in the S&P, you get some rate of return, right?
0:21:53 So like Sam loves to put money into the index and he’s like,
0:21:54 cool.
0:21:57 I like that because I do no work and I’m going to get, Sam,
0:21:57 what do you want to get?
0:21:58 Eight, nine percent, something like that.
0:22:00 I would be very happy with eight percent per year.
0:22:01 Okay.
0:22:02 So eight percent a year.
0:22:04 And so to be smart and do a bunch of work, you got to beat
0:22:05 that.
0:22:08 And so we’ve had people come on this podcast that when they
0:22:10 talk, they sound absolutely brilliant.
0:22:13 And then later you look at their returns and it’s like,
0:22:16 oh, they kind of don’t beat the index actually.
0:22:19 And I don’t even think that’s really like a knock on them
0:22:21 or I don’t even view that as like, they’re not like a
0:22:22 Charleston.
0:22:24 I just think it’s really hard to beat the index actually.
0:22:27 So what do you try to do in terms of like your rate of
0:22:30 return and what, what’s your score?
0:22:33 So if the S&P is doing nine percent of your compounding,
0:22:35 what are you doing out of, out of permanent equity?
0:22:36 Yeah.
0:22:39 Well, so I’m under all kinds of SEC regulations.
0:22:42 So I can’t actually talk a ton and I would love to talk
0:22:44 about that, but I can tell you what’s been put in the
0:22:45 letters or annual letters.
0:22:47 What are you not, what are you not allowed to say?
0:22:49 I can’t say anything that would be future looking.
0:22:51 I can’t say anything that would be inducing investment.
0:22:53 I can’t say anything that, that would be considered
0:22:57 marketing because we’re like top level registered SEC,
0:22:59 FINRA, all the stuff.
0:23:00 And what if we bleep it out?
0:23:01 What if you tell us and then we bleep it out?
0:23:02 So it’s not, it’s not on air.
0:23:03 Just tell me what to stop.
0:23:05 Yeah, yeah, yeah.
0:23:08 So, so what I can, yeah, here’s what I would say.
0:23:12 So we, we target the minimum underwriting that we have is
0:23:16 we target a minimum of a 30% IRR is, is minimum we
0:23:18 underwrite to, and we’ve historically been pretty
0:23:19 significantly above that.
0:23:20 Okay.
0:23:23 Um, but, um, you know, we really think about term things
0:23:24 in terms of cash, right?
0:23:27 So I think it was last year that we talked about, uh, you
0:23:31 know, our total cash out IRR is in the low twenties and
0:23:32 that’s without any marks.
0:23:33 That’s without anything.
0:23:35 So you, you know, you stack marks in the growing, obviously
0:23:37 cash flows on top of that and the numbers get pretty
0:23:40 ridiculous marks being, uh, the valuation, the valuations
0:23:41 of the business.
0:23:41 Yeah, that’s correct.
0:23:43 And so, I mean, if you, if you underwrite, I mean, if you
0:23:46 think about it, like kind of the bottom line, if you’re
0:23:47 buying a business with no debt, right?
0:23:49 So take the debt side off of it.
0:23:51 You just buying the business for all cash and you know,
0:23:55 let’s say on average, we’re paying between five and seven
0:23:57 times for a business kind of in that range.
0:24:01 And let’s say that the business is organically growing 7,
0:24:05 10% per year and we’re increasing that to, uh, start
0:24:08 to call it mid teens a year, maybe low twenties.
0:24:12 Um, the math gets pretty amazing pretty fast and that’s
0:24:13 without using any debt.
0:24:15 And so I think that’s where it’s obvious from the outside
0:24:16 looking in.
0:24:17 There’s gold in the hills, right?
0:24:20 If you look at small businesses acquisitions, I mean,
0:24:21 this is not a secret anymore.
0:24:24 I think when I first started talking about it in 15, 16,
0:24:25 right?
0:24:27 I remember going on Patrick’s podcast when it was brand
0:24:28 new, I remember Patrick being like, oh, hey, I’m thinking
0:24:29 about starting a podcast.
0:24:30 I was like, yeah, sure.
0:24:31 I’ll help a friend out.
0:24:33 Had no idea was going to turn into what it is, right?
0:24:35 Uh, but I remember going on there and people were like,
0:24:37 shocked, you know, at like what you could buy these
0:24:38 businesses for.
0:24:39 And people say, oh, well, that’s not fair.
0:24:42 It’s an inefficient market is, is inefficient, but it’s
0:24:45 inefficient for different reasons why people think it’s
0:24:47 inefficient, not because people are getting taken advantage
0:24:47 of.
0:24:50 It’s inefficient because it’s absolutely freaking brutally
0:24:52 difficult and it’s so easy to lose a bunch of money.
0:24:56 Like I had a guy reach out last week and say, Hey, I want
0:24:56 to be honest.
0:24:57 I’m looking for a job.
0:24:58 My wife and I went all in.
0:25:01 He was working at a big private equity firm based out of LA
0:25:02 as an operating partner.
0:25:05 He and his wife went all in on a business and it failed.
0:25:07 And now they’re bankrupt.
0:25:11 What attributes make you and others like you successful
0:25:13 versus this other guy, not successful?
0:25:17 Yeah, I mean, I think the, the, in the beginning, if the
0:25:21 first deal I had done gone south, um, and there’s plenty
0:25:22 of opportunities for it to go south.
0:25:25 And so I would say a lot of our success is, is attributable
0:25:26 to luck in the beginning.
0:25:28 And I mean, look, if you listen to any investor, if they
0:25:31 tell you that the early stuff they did wasn’t lucky, they’re
0:25:32 lying to you.
0:25:35 Um, I mean, I remember, uh, getting a chat with a Buffett
0:25:38 about this and I said, Hey, tell me about sand board maps
0:25:39 and Dempster Mill.
0:25:40 And he was like, Oh my gosh.
0:25:43 Like he’s like, if either of those investments go wrong,
0:25:44 there is no Warren Buffett.
0:25:46 No one knows about Berkshire Hathaway.
0:25:47 None of that stuff happens.
0:25:47 Right.
0:25:48 And they were that close.
0:25:51 Like that’s how he met when he met Munger.
0:25:53 He asked Munger, Hey, do you know anybody who could help
0:25:56 help basically turn around Dempster Mill because it’s, it’s
0:25:57 flailing.
0:25:59 And if that goes under, like my future’s done.
0:26:01 Wait, can you, can you, I don’t know the story.
0:26:03 Can you tell the story in more detail?
0:26:06 So Warren Buffett almost failed at the beginning of his
0:26:07 career.
0:26:07 What, what was it?
0:26:08 Can you tell the story?
0:26:08 Oh yeah.
0:26:12 So he had 70% of his assets into these two investments.
0:26:14 One was called sand board maps and the other was called
0:26:15 Dempster Mill.
0:26:17 Um, and this is early days of the Buffett partnership.
0:26:19 So this is pre Berkshire Hathaway.
0:26:20 What do those two companies do?
0:26:23 So sand board maps was a, was a mapping company.
0:26:27 Um, they basically had, uh, at the time, the thing about
0:26:30 this intellectual property for, for maps, right?
0:26:32 If you needed to go build something or if you needed to
0:26:35 navigate something, they had all the best mapping technology.
0:26:40 Um, and so, um, that business was a publicly traded business
0:26:43 and, uh, I think he was a minority shareholder in it,
0:26:44 but he was basically the controlling shareholder.
0:26:48 That one, um, I think turned around independent of him
0:26:51 installing new leadership, but Dempster Mill was a completely
0:26:51 different story.
0:26:53 He, he bought into that to control of it.
0:26:56 Um, and the business was just flailing.
0:26:58 So Dempster Mill, I can’t remember exactly.
0:27:02 I think they were building constructing, um, mills, uh, of
0:27:04 some sort, uh, hence the name Dempster Mill.
0:27:07 And, um, it was basically the biggest headache and he was
0:27:09 staring down the barrel like I did.
0:27:11 And I mean, I can talk about the early days, like we almost
0:27:12 failed like five different times.
0:27:13 So, sorry.
0:27:17 So he, he had 70% of his assets in these two companies, but
0:27:19 those were public companies where he’s just a passive investor
0:27:22 or he was like owned to the majority of those companies where
0:27:23 he could make a change in them.
0:27:24 Yeah.
0:27:26 So I think that he had, he may not have had a controlling
0:27:30 stake in, in, in Sanborn, but I know he had enough shares
0:27:32 where he could basically throw his weight around in that one.
0:27:34 Um, I think Dempster Mill, I think he actually did buy a
0:27:36 majority of it and have control of it.
0:27:38 And so those companies, they’re not doing well.
0:27:40 And you said he goes to Munger and asks him something.
0:27:41 Yes.
0:27:43 We just met this guy, Charlie Munger, uh, who had been back
0:27:46 into town in Omaha and he had kind of gotten a matchmaking
0:27:48 by a mutual friend who said, Hey, you guys are the two
0:27:49 nerdy dudes.
0:27:50 We know you should know each other.
0:27:53 It was like bromance, like love at first sight.
0:27:55 Uh, they get to know one another.
0:27:56 And I think it was actually Charlie who said, Hey, well,
0:27:58 like Warren, what’s your biggest problem you’re facing?
0:28:01 And he said, well, I’ve got these two, you know, problem
0:28:03 children, especially Dempster, you know, Dempster Mill.
0:28:06 And, uh, do you know anybody?
0:28:08 And, uh, Munger said, actually, I do know this guy.
0:28:12 His name’s Harry Bottle and he’s an accountant out here in LA.
0:28:13 We should go talk to him.
0:28:16 And so they took Harry Bottle lunch and pitched him on moving
0:28:20 his family to the middle of nowhere Midwest and, uh, running
0:28:24 Dempster Mill, Harry Bottle, uh, reluctantly agreed, turns it
0:28:27 around, makes Dempster Mill, uh, uh, uh, you know, a fortunate
0:28:29 surprise on the upside.
0:28:32 And, um, you know, again, he starts stacking geese.
0:28:37 As we talked about, so, um, everyone in the beginning.
0:28:41 I mean, look, you, you don’t, you don’t get to be successful
0:28:42 by not taking risks.
0:28:43 Like all investing is taking risk.
0:28:46 And so the question is just how much risk are you willing to
0:28:47 take?
0:28:49 And when you’re younger and you don’t have much, I mean, the
0:28:51 only way to get ahead is by taking more risk.
0:28:54 When you are doing all this research, are you an expert in
0:28:57 the pool business or are you just an expert in looking at
0:28:57 financial statements?
0:29:01 Are you an expert in understanding how leadership thinks and
0:29:02 how to find winners?
0:29:04 What are you great at?
0:29:07 I think I’m pretty good at seeing the big picture.
0:29:09 So taking all those pieces, like I’m not the best financial
0:29:10 analyst.
0:29:12 Uh, the joke is I can barely open up Excel.
0:29:13 Like I’m not an Excel guy.
0:29:15 I’ve never had the skill set and never learned.
0:29:16 I never worked at another, uh, firm.
0:29:19 Like I never took a finance class in my life.
0:29:21 So I don’t have a lot of the, what I would call like hard
0:29:24 skills that you learn as being an associate or an analyst at
0:29:24 a firm.
0:29:28 Um, you know, I think that I’m pretty decent at putting the
0:29:30 puzzle pieces together and then negotiation.
0:29:33 I, you know, I think, you know, and going back to Buffett,
0:29:35 he talks about, I’m a better investor because of an operator.
0:29:36 I’m a better operator because I’m an investor.
0:29:37 That’s true.
0:29:40 And I think operating and investing are two sides of it,
0:29:42 but I think there’s a third leg that’s not talked about a
0:29:44 lot, which is the dealmaking side.
0:29:48 Um, and I think that dealmaking side, especially as you get
0:29:51 into more inefficient markets becomes really the dominant
0:29:51 skill set.
0:29:54 So understanding how to put the puzzle pieces together and
0:29:58 like in that pool business, um, I saw a business that had a
0:29:59 clear track record of growth.
0:30:01 Uh, they were in a durable business.
0:30:03 I mean, you know, we, we kind of joke that, you know, until
0:30:06 people stop dipping their bodies in water for pleasure will
0:30:06 be fine.
0:30:08 It’s been happening for a couple of thousand years.
0:30:09 I think it’ll keep going.
0:30:12 Like we try to have these like very simple feces for everything.
0:30:15 And so if you look at somebody already has a dominant market
0:30:17 share in a market, they’ve had it for a long time.
0:30:17 The business is growing.
0:30:18 The market’s growing.
0:30:21 Um, you know, you look at the business model of it and you
0:30:24 say, okay, look, we’re an asset light business.
0:30:26 Um, they’re not investing in a ton of equipment.
0:30:29 It’s a very simple business model.
0:30:32 It’s fine customers that want pools, uh, do it better than
0:30:35 they could do it themselves and, and, and, and take a rip on
0:30:36 that on the upside.
0:30:39 You know, you start looking at, okay, who is the leadership
0:30:40 and how do you structure a deal and how do you make sure
0:30:42 everyone’s interests are aligned?
0:30:44 Um, how do you continue to find talent to build the business?
0:30:47 I mean, those are all, I, I say this, this is how to make
0:30:47 it sound simple.
0:30:48 It’s not simple.
0:30:49 It’s very difficult.
0:30:51 It’s just not complicated.
0:30:54 You gave one answer to the question.
0:30:57 I think the real answer just was based off of your, how
0:30:58 you’re answering it.
0:31:01 You are a, uh, really good storyteller.
0:31:05 You are very persuasive and you have, um, you’re, I could
0:31:08 just tell you’re a good leader because of how you dumb things
0:31:11 down to be relatively simple and easy to understand.
0:31:11 Right, Sean?
0:31:14 I mean, just him explaining that you’re like, oh, okay,
0:31:15 that’s you’re actually.
0:31:16 Yeah.
0:31:19 Like, uh, you don’t get stuck on the midwit mountain, right?
0:31:22 Like the middle, the middle part where it’s an over, over
0:31:25 analysis, over overthinking, over thesis out.
0:31:28 You know, you’re like, do I think the people are going to
0:31:30 stop dipping their bodies in water for pleasure?
0:31:30 Nope.
0:31:31 Exactly.
0:31:31 All right.
0:31:32 Cool.
0:31:34 Uh, you know, that’s great.
0:31:37 Do I think we’re going to get like, do I think tech, you
0:31:39 know, is AI going to take us out of the pool business?
0:31:39 Nope.
0:31:39 Okay.
0:31:40 Cool.
0:31:41 So this is an enduring business.
0:31:41 Great.
0:31:41 We got that.
0:31:44 Seems like this guy’s been paying himself a lot of money
0:31:46 every single year as the operator.
0:31:46 Great.
0:31:47 We’ll probably be able to do the same.
0:31:50 Also seems like this guy doesn’t do any marketing.
0:31:51 He says that and he doesn’t have any ads anywhere.
0:31:53 If we did a little bit, probably would help.
0:31:53 Right.
0:31:54 All right.
0:31:54 Cool.
0:31:55 Thesis done.
0:31:56 Check, check, check.
0:31:56 Right.
0:32:00 So like not, um, not over complicating things is a skill.
0:32:04 Um, I would also say like, it seems like you have a good
0:32:07 amount of level two luck, which is the action luck.
0:32:10 Like you were talking about that Patrick O’Shaughnessy example.
0:32:12 I thought that was a great luck example because you were like,
0:32:14 you didn’t have any investors.
0:32:15 You’re just doing this with your own money.
0:32:18 This guy tweets out, Hey, I’m looking for somebody, whatever
0:32:21 to talk to me about equities and capital allocation.
0:32:22 So you reach out, right?
0:32:23 And you reach out.
0:32:26 You don’t have some like imposter syndrome or insecurity
0:32:27 that prevents you from reaching out.
0:32:30 You take some action and you’ve probably taken a thousand
0:32:33 actions like that, you know, cheap lottery tickets where
0:32:35 the downside is very low.
0:32:37 The upside, if you made a valuable connection like you did
0:32:39 was pretty high actually.
0:32:41 And so you filled out a thousand of those scratch off tickets
0:32:44 and then he had luck on the other side, which was perception
0:32:46 luck because he’s like, Oh, you’re buying this company for
0:32:48 four times profit.
0:32:50 That means like if you put in a hundred dollars, you’re going
0:32:53 to get 25% yield every year, even without growing the business.
0:32:56 And wait, I’m in the stock market buying things at 25
0:32:59 times earnings and you’re buying them at four.
0:33:00 So like something is good.
0:33:01 That makes a lot of sense.
0:33:04 So he had that’s that third level of luck, which is like
0:33:05 you, you could spot it.
0:33:07 You could spot good luck when it shows up at your door.
0:33:10 And that’s why, you know, that was good on his part.
0:33:13 So I think that’s impressive to me and a good reminder of like
0:33:16 you got to take action to get that action luck.
0:33:18 And then when you know something and you spot something,
0:33:21 what he did a great job was he flew out to Missouri.
0:33:23 He got to know you.
0:33:23 He pitched you.
0:33:24 You said no.
0:33:25 And he’s like, he asked the magic question.
0:33:26 What would it take?
0:33:29 Whereas like, you know, 10 other people could have done most
0:33:31 of that and not gotten the result that he got.
0:33:33 You want to spend more time talking about why you’re successful?
0:33:38 Let me ask you a different question.
0:33:40 So I have, I have this goal.
0:33:42 I want to retire my sister.
0:33:43 So my sister has worked hard.
0:33:45 She’s got her own business, blah, blah, blah.
0:33:47 And she wants to just have an easier life.
0:33:49 So she wants to spend time with her kids.
0:33:51 She wants to travel like her business is brick and mortar.
0:33:54 So she stuck in the certain location where those businesses are.
0:33:56 She can’t really take her eye off the ball in that way.
0:34:00 So I want to buy her a business and I’m like buying businesses
0:34:01 sounds great.
0:34:03 You buy a business that’s already working.
0:34:04 It’s cash flowing.
0:34:07 You hire a CEO or you promote somebody internally in the company
0:34:08 to be the CEO.
0:34:11 But I know there’s obviously a lot of ways that can go wrong.
0:34:14 And so if you’re me and you want to retire my sister,
0:34:15 where do you start?
0:34:19 Like what is your thought process around buying that first business
0:34:24 that’s going to get you to 300 to $500,000 a year free cash flow?
0:34:27 What would you, where would you orient somebody who’s trying to do that?
0:34:29 Yeah.
0:34:30 I mean, I think it’s all about constraints.
0:34:34 Actually, I wrote a piece called how to buy your first smaller company
0:34:37 like literally because this is a question I get a lot from people.
0:34:41 And I can remember I had no idea when I first got going
0:34:45 and I mean, the thing is I, everyone’s got different constraints.
0:34:46 Where do you want to live?
0:34:47 How much do you want to travel?
0:34:49 What do you actually know about?
0:34:51 What are your, what are you good at?
0:34:51 Right.
0:34:53 So somebody with a very different personality type than me should
0:34:55 be buying things that are very different than what I bought.
0:34:59 Somebody who wants to live in LA should be buying things that are
0:35:01 very different than living in Missouri.
0:35:05 People who don’t want to travel a lot or who want to drive to the place.
0:35:07 Like that’s a very different constraint.
0:35:10 Capital constraints, how much cash do you have available to be able to
0:35:11 invest?
0:35:14 I mean, look, like, you know, if you have, uh, you can buy really,
0:35:18 really high quality business assets that are smaller for like seven,
0:35:19 eight, 10 times.
0:35:22 So if you want something that’s going to be more hands off, that’s
0:35:24 an incredibly durable business model, you can get something that’s
0:35:26 either software, software adjacent.
0:35:27 You can get something that has recurring revenue.
0:35:31 Like the, the more you pay up into the value chain, I mean, you’re
0:35:33 going to have decreased, I think total returns.
0:35:37 Um, but ultimately, like there are easier businesses to run.
0:35:40 So like there are like level 10 difficulty businesses.
0:35:43 Like I would not recommend buying into your local restaurant.
0:35:45 Like that would not be something that I would recommend doing, especially
0:35:47 if you want to quote unquote have an easier life.
0:35:51 Like it depends on if you want the role of a hybrid investor operator,
0:35:54 which really is you’re going through a short season of investment.
0:35:56 And then really you, what you’re doing is you’re buying a job.
0:36:00 Like that’s one very specific type of way to leverage your time
0:36:01 against your money.
0:36:05 Um, if you really just want to be in the investor seat, it’s very
0:36:08 difficult to only occupy the investor seat in the, in the world of
0:36:09 small businesses.
0:36:10 It can be done.
0:36:11 It’s very, very difficult.
0:36:15 The first three to $500,000 of cash flow coming from small businesses
0:36:18 are very likely going to require a lot of sweat equity in, in, in
0:36:19 exchange for that money.
0:36:20 Yeah.
0:36:21 You should go to that blog post.
0:36:25 He has a good Q and a, he goes, uh, the question is how hard will I have
0:36:27 to work harder than you’ve ever worked before?
0:36:31 The opportunity in small business, in the small business market is dressed
0:36:34 in overalls and likes to, and likes hard work.
0:36:38 Dude, you’re poetic when you’re right.
0:36:40 Uh, I love that way.
0:36:40 You’re right.
0:36:41 That’s my main skill set.
0:36:43 So yeah, yeah, that’s great.
0:36:45 Uh, you have some one liners that are pretty cool.
0:36:49 Can we just get you, can I read you a one liner that you’ve said and you
0:36:50 just kind of rant on it?
0:36:53 So just basically kind of like make your case for this thing.
0:36:56 Why, why you think this is true or why you believe it, why you think people
0:36:57 should pay attention to this idea.
0:36:58 This is the lightning round, right?
0:36:59 It’s a lightning round.
0:36:59 Yeah.
0:36:59 Here we go.
0:37:02 All businesses are loosely functioning disasters.
0:37:04 Some just happen to make money.
0:37:05 Yeah.
0:37:08 Uh, anybody who’s ever operated a business knows this is true.
0:37:10 The only people who have issues with this are consultants.
0:37:14 So if anytime I’ve said this publicly, the only people who come at me are
0:37:16 people who either got lucky the first time or have never done it.
0:37:20 And, uh, I mean, look, every business I’ve ever been involved in,
0:37:23 it doesn’t matter how profitable the business, how big the business.
0:37:26 Um, I’ve gotten a pretty good view into some very large businesses.
0:37:28 They’re all highly dysfunctional.
0:37:29 Why are they dysfunctional?
0:37:30 Because they’re full of people.
0:37:32 People are messy.
0:37:34 When you get a bunch of people together, that messing is compounds.
0:37:36 Like it is not a complicated concept.
0:37:39 Uh, and so I just think that people should lower their expectations
0:37:42 and, and understand what to expect when they get into a business.
0:37:43 It’s going to be hard.
0:37:45 It’s going to be hard in different ways.
0:37:48 Like, you know, the first time you had to put somebody through rehab,
0:37:50 your, your guide doesn’t show up at the, to me in the warehouse
0:37:53 because there’s been a domestic violence dispute and he’s in jail.
0:37:56 I mean, literally like these are things that we’re having to deal with.
0:37:58 Um, these are things that everyone’s having to deal with.
0:38:01 Now they may come in different flavors, depending on how professional
0:38:04 the business is, but the reality is that these are things that happen.
0:38:06 Sean, have you watched the land man?
0:38:08 I have.
0:38:09 It’s really good.
0:38:14 Um, it’s a, for those listening, it’s a show with Billy Bob Thornton on,
0:38:15 it’s about like the oil industry.
0:38:16 And they, there’s this great quote.
0:38:20 It says, our business is one of constant crisis interrupted by brief
0:38:22 periods of intense success.
0:38:23 Yeah.
0:38:25 How good is that?
0:38:25 Yes.
0:38:26 Yes.
0:38:27 Uh, yeah.
0:38:30 So I have a, I have a quote on my wall and it says, success is
0:38:33 founded on a constant state of discontent interrupted by brief periods
0:38:37 of satisfaction upon the completion of a job, particularly well done.
0:38:38 Um, all right.
0:38:38 How about this one?
0:38:42 The more humility a leader has, the more their business can grow.
0:38:43 What’s an example?
0:38:44 Yeah.
0:38:46 So, uh, look, what is humility?
0:38:49 Humility is acknowledging reality for what it is.
0:38:53 Um, and if you don’t acknowledge reality, you can’t get better.
0:38:58 And so lack of humility is basically a defense mechanism, right?
0:39:02 This usually is one of two forms is either self-protection or self-promotion.
0:39:05 And people are usually doing a combination of both when they’re in, uh,
0:39:07 some form of pride or arrogance.
0:39:09 Uh, they’re usually terrified, fearful.
0:39:12 I mean, I can say this from experience when I get prideful, uh,
0:39:15 is because I feel like I’m not enough and I’m not going to be enough.
0:39:17 And I’m worried that I might not have enough.
0:39:22 And so, uh, what is humility is, is laying that down and saying, Hey,
0:39:26 I, I want to see reality for what it is so I can learn and grow and become better.
0:39:29 And that’s the only way to do that is to get feedback from the world around you.
0:39:36 New York city founders, if you’ve listened to my first million before, you know,
0:39:39 I’ve got this company called Hampton and Hampton is a community for founders
0:39:43 and CEOs, but a lot of the stories and ideas that I get for this podcast.
0:39:46 I actually got it from people who I met in Hampton.
0:39:48 We have this big community of a thousand plus people and it’s amazing.
0:39:52 But the main part is this eight person core group that becomes your board of
0:39:54 advisors for your life and for your business.
0:39:58 And it’s life changing now to the folks in New York city.
0:40:02 I’m building a in real life core group in New York city.
0:40:05 And so if you meet one of the following criteria, your business either
0:40:09 does three million in revenue or you’ve raised three million in funding or
0:40:12 you’ve started and sold the company for at least $10 million, then
0:40:13 you are eligible to apply.
0:40:16 So go to joinhampton.com and apply.
0:40:19 I’m going to be reviewing all of the applications myself.
0:40:21 So put that you heard about this on MFM.
0:40:24 So I know to give you a little extra love now back to the show.
0:40:31 I like that lack of humility, self-protection or self-promotion though strong.
0:40:33 Charlie Munger says this thing.
0:40:35 He says, every time you see the word EBITDA, you should substitute it
0:40:37 with bullshit earnings.
0:40:38 Do you agree or disagree?
0:40:39 Yeah, for sure.
0:40:40 I agree.
0:40:44 I mean, like look, EBITDA can be a useful tool in some very limited
0:40:50 circumstances, but for the most part, it is dressing up something that is
0:40:54 more than often obfuscating reality.
0:40:57 So when you see EBITDA, especially in the small business world, there
0:41:00 usually comes a ton of capex, a lot of reinvestment needs that are on
0:41:01 the back end of that.
0:41:04 And what you have to really do is you have to figure out, okay, just in
0:41:07 a steady state, what is the business actually producing a free cash flow?
0:41:10 Like we look at businesses all the time that are making quote-unquote making
0:41:14 seven, eight, nine million dollars a year that you ask the owner how
0:41:16 much money they’ve taken out of the business and they’re taking out
0:41:18 maybe a million bucks a year, maybe two million bucks a year.
0:41:19 I got news for you.
0:41:22 For the most part, you don’t have a business that’s quote-unquote making
0:41:23 seven million dollars a year.
0:41:25 You have business making one to two million dollars a year.
0:41:26 That’s the reality.
0:41:30 Have you guys, Sean, have you ever learned the history of the idea of EBITDA?
0:41:32 Do you know that’s like a new-ish thing?
0:41:33 No.
0:41:36 So basically, John Malone, I believe, is that right, Brent?
0:41:36 He invented it.
0:41:38 Yeah, John Malone invented it.
0:41:40 So John Malone, his nickname is like the greatest nickname.
0:41:42 He’s one of the Cable Cowboys.
0:41:46 So John Malone, you would know him now as like the guy who owns or founded
0:41:49 Liberty Media, which owns F1 and all this other amazing stuff.
0:41:52 But basically, he owned a cable company.
0:41:53 It was like a small cable company.
0:41:57 I think when he took it over, it was like five or 10 million in revenue,
0:42:01 something like that, like relatively small, and he needed to get loans because
0:42:04 he found that if he could just acquire way more cable companies, cable
0:42:07 companies were incredibly sticky and it was recurring revenue.
0:42:11 I should go out and buy a ton in order to go and get more cable companies.
0:42:13 I need to borrow lots of money.
0:42:16 And for some reason, he came up with this idea that EBITDA was an amazing
0:42:19 metric to convince banks to loan him money.
0:42:23 And so he coined the term EBITDA because for his business, he had
0:42:25 lots of depreciation, lots of things like this.
0:42:28 So he was like, no, no, no, just give me like the earnings before all of this.
0:42:31 And I’m going to convince banks to loan me against that.
0:42:35 And that, I think it was the 80s, the mid 80s became like the term.
0:42:37 And I’ve hated EBITDA.
0:42:39 I think EBITDA is really stupid.
0:42:42 But what I think that like is kind of insane is that we’ve all
0:42:44 collectively agreed that this is like the metric.
0:42:48 And I always thought it was like weird, but I never had the courage to say
0:42:49 like, this is stupid.
0:42:52 And then I would like read about Buffett and all these guys and I was like,
0:42:53 God, I think it’s stupid.
0:42:54 Dude, I take the opposite.
0:42:55 I’m like, this is genius.
0:42:57 I need this in my personal life.
0:42:58 I need this.
0:42:59 I did the husband version of EBITDA.
0:43:05 It’s like, you know, my, my behavior before, you know, before football,
0:43:09 before taking out the trash, if you ignore all those things, I’m great.
0:43:11 I’m amazing actually.
0:43:14 Well, it’s crazy that like you don’t pay your personal taxes on EBITDA.
0:43:17 You pay your personal taxes on a cash flow, or you know, on a cash base.
0:43:20 It’s just there’s so many reasons why this is insane.
0:43:24 But, and also, you know, it’s the most insane thing, adjusted EBITDA.
0:43:25 What the hell does that mean?
0:43:27 It means whatever you want to be.
0:43:28 It’s, that’s insane.
0:43:32 You have another one, another quote you said, you either operate with high
0:43:35 authority, top down or delegated authority.
0:43:37 Hell is in the middle.
0:43:37 Yeah.
0:43:41 So this is hard earned because I would say is I think everyone’s
0:43:45 temptation is to be high authority when you think there’s something wrong and
0:43:47 then low authority when you want to be lazy.
0:43:51 And that, that combination just makes a mess of everything.
0:43:54 And so there’s really two ways to be involved with the company.
0:43:58 You either say, Hey, this is what we’re doing.
0:43:59 This is how we’re doing it.
0:44:00 You need to get in line.
0:44:02 I need people to go and execute this vision.
0:44:05 Or you say, Hey, I want to be supportive and helpful.
0:44:06 It needs to be your vision.
0:44:09 And I’m not going to intervene even when I think that something’s wrong.
0:44:13 I’m just going to go along for the ride and be helpful.
0:44:16 And very, very, very lightly interviewing.
0:44:17 And so you just have to choose.
0:44:19 And I think there’s both can work.
0:44:23 I think both come with certain upsides and downsides, um, but you can’t
0:44:26 do the middle because if you do in the middle, what you end up doing is you
0:44:29 end up saying to the leadership team, Hey, you’re responsible, but I’m
0:44:31 basically telling you what you have to do.
0:44:33 And so it removes all agency from them.
0:44:37 And ultimately everything that goes right is going to be their fault and
0:44:38 everything that goes wrong is going to be your fault.
0:44:43 But to make the lazy, when you say the lazy approach, I’m like, Yeah,
0:44:44 that sounds great.
0:44:44 Sign me up.
0:44:45 Yeah.
0:44:47 But that’s hard.
0:44:49 How do you make that work?
0:44:52 You have to find, uh, the right person and what attributes does that person
0:44:56 have and you know, Buffett and Munger always said that like incentivizing
0:45:01 manager was the number one goal of, uh, of was their number one job.
0:45:02 Is that true for you?
0:45:03 Yeah, absolutely.
0:45:04 A hundred percent.
0:45:07 If you’re going to, uh, try to truly be an investor and not an operator in the
0:45:11 business, uh, it all comes down to somebody has to do the work and somebody
0:45:12 has to exert judgment.
0:45:15 And if you’re not going to be the person to do the work and exert judgment,
0:45:16 somebody else does and you got to be interested.
0:45:18 Got to be aligned with that person.
0:45:22 And so yeah, when I say the quote unquote lazy approach, I mean, ultimately
0:45:24 this is the only way you scale, right?
0:45:26 I mean, if you look, if you look at, again, we keep coming back to Berkshire.
0:45:29 It’s a good thing to think about because when people say, Hey, let’s talk about
0:45:32 how, you know, Berkshire like buys businesses and leaves them alone.
0:45:37 That was not how they operated for a vast majority of the time that they’ve done
0:45:37 it.
0:45:40 Like they had to do that eventually because they got to a such a scale.
0:45:42 They literally couldn’t intervene anymore.
0:45:46 If you go back and look at Buffalo news, like Buffett and Munger were literally
0:45:47 living in Buffalo.
0:45:49 Dude, they’re writing headlines.
0:45:51 They’re, they’re writing like, have you ever read of that Sean?
0:45:57 They bought a newspaper and they would literally, uh, like they, they were news
0:46:00 guys, like they liked the news and they were like, here’s, I want this many ads
0:46:01 on the page.
0:46:03 I think the headline should be like this.
0:46:06 Like they, they, yeah, I did not know this.
0:46:06 This is amazing.
0:46:07 Yeah.
0:46:11 I mean, I was just saying is like Buffalo news is a good example of, of like
0:46:17 basically their, their mode of operation until the call it early 80s, mid 80s, when
0:46:19 they got to have so much money, they literally couldn’t be involved in the
0:46:22 stuff that they were doing was to be highly interventionist.
0:46:25 I mean, they would be involved in the smallest of details.
0:46:26 They would set the tone.
0:46:27 They would help on marketing strategy.
0:46:28 They would replace leadership.
0:46:31 They, I mean, they were doing all the stuff that I’m doing.
0:46:34 They would do all the stuff that anybody has to do because when you’re small,
0:46:35 you can do it.
0:46:39 When you’ve got less capital and more time, you can do stuff like that.
0:46:42 And by the way, the returns are higher when you could leverage your
0:46:43 time against your money.
0:46:44 It’s an advantage, right?
0:46:48 It’s not a disadvantage, it’s an advantage, but eventually you, you have
0:46:51 a limited amount of time and attention and as the money grows and your
0:46:55 attention stays the same, that ratio gets thrown all off and you have no
0:46:59 choice but to say, okay, I’m going to spread a much more thinly layered
0:47:03 amount of judgment over a much wider thing of grouping of things, which
0:47:06 means you have to step out of the day to day operations and then you have to
0:47:07 hire people who can exert great judgment.
0:47:11 And so Buffalo News, I mean, there’s a great quote from Munger saying,
0:47:15 hey, like I’m down to my last like million bucks that I can put into
0:47:15 Buffalo News.
0:47:18 Like after that, I’m calling uncle, like I’m out.
0:47:22 I mean, it was, there’s been various times in Berkshire’s history.
0:47:23 They’ve gotten, it’s gotten very hairy.
0:47:26 It was not a guaranteed success.
0:47:30 And even when they had a lot of success, it still gets hairy in various
0:47:32 points and I think every business has that though.
0:47:33 That’s what should be expected.
0:47:34 Like it should be an adventure.
0:47:38 There’s a great letter that you can read.
0:47:43 It’s from, it’s in 1972 and it’s the Buffett letter to the C’s Candy CEO.
0:47:47 If you Google that Buffett letter to C’s Candy CEO and he says, and because
0:47:50 I went into this, I haven’t like studied Buffett in depth the way that
0:47:53 you would if you’re going to do private equity.
0:47:57 And he, I just thought the, oh, he’s this, aw shucks.
0:47:59 He sits at the table.
0:48:00 He drinks his Diet Coke.
0:48:03 He, he just allocates the capital and he hires great people and they
0:48:03 just do magic.
0:48:07 And this letter, I was like, oh, Buffett had the mind of an operator,
0:48:08 right?
0:48:11 Because he goes, dear Chuck, I was out of Brandy’s a couple of days ago and
0:48:13 I have a few strong impressions to pass along.
0:48:17 Number one, and he basically, he starts talking like details about the
0:48:18 store.
0:48:20 So he goes, people are, people are going to be affected not only by our,
0:48:23 how our candy tastes, obviously, but what they hear about it from others
0:48:26 as well, the retailing environment and which it appears, this class of
0:48:29 the store, the packaging, the condition, like this is like Steve Jobs
0:48:31 talking about the Apple store, right?
0:48:32 Like a product oriented person.
0:48:37 And he just goes through like step by step kind of like things that he
0:48:41 thinks could be improved on, you know, in the store experience.
0:48:45 And I thought, wow, this is different than what I kind of the impression
0:48:48 you get when you hear about Buffett, just sitting in his room reading
0:48:52 all day, you know, making investment decisions off of, you know, financial,
0:48:53 you know, financial sheets.
0:48:54 This is a great letter.
0:48:58 By the way, how awesome is this that this was like a typewriter letter?
0:49:01 Does that make it, doesn’t that make it so much more substantial?
0:49:02 Totally.
0:49:04 He licked, he licked an envelope for this one.
0:49:07 I mean, he licked an envelope.
0:49:10 I kind of want to like start sending letters like this.
0:49:12 It just makes it feel like more authoritative.
0:49:13 Let me ask you something, Brent.
0:49:17 I have, like I said, we kind of, my business is a little bit different
0:49:20 than yours, which is I create content on the front end.
0:49:21 It’s the mullets.
0:49:24 I have content on the front end, which is what I love to do, what I’m
0:49:28 great at, but media and content is not a great business model.
0:49:32 So my back end is basically start or buy businesses that I know I can like
0:49:37 turbocharge and we’ve done this maybe four or five, six times now and it’s
0:49:37 going really well.
0:49:43 But one thing I’ve noticed is like, if I draw a pie chart of what makes it work,
0:49:48 it’s basically like 60% of the battle was just the initial market selection.
0:49:52 When we picked a project that was like the winds were blowing against us.
0:49:56 It didn’t matter how much effort we put in or how great the operator was.
0:49:58 It was always just an uphill battle.
0:50:01 And sometimes we pick these markets that are just like, it’s a pull market.
0:50:02 You’re being pulled in.
0:50:03 It’s just a sweet spot.
0:50:05 The people just need this.
0:50:07 It’s shooting fish in a barrel type of thing.
0:50:09 That creates a big part of it.
0:50:15 The second part of it, the next, I’ll say like 30% is the quality of the CEO
0:50:17 that we picked who’s going to run the business.
0:50:20 And when we pick a sort of limited CEO, we get limited success.
0:50:23 When we pick an unstoppable CEO, we get like massive success.
0:50:24 And the last 10% was just luck.
0:50:28 Like the ball bouncing our way on one or two things that could have easily
0:50:32 not happened, but that they happened or, you know, when the winds that didn’t,
0:50:34 maybe we missed out on something that we didn’t see.
0:50:39 I got a question about that second piece, which is hiring the CEO or evaluating
0:50:41 the CEO, evaluating the operator.
0:50:43 I want to get better at that.
0:50:45 If you sit down with somebody, you’re recruiting an exec.
0:50:49 Maybe it’s a, you’re interviewing somebody who’s maybe in the business
0:50:53 that’s going to become a CEO or you’re taking somebody external to come run this company.
0:50:56 What are you doing to, what are you doing?
0:50:58 That’s like not obvious to get that assessment.
0:51:01 Is there any little tips and tricks, anything that you’ve picked up
0:51:03 that, that helps you find the right operators?
0:51:04 Yeah.
0:51:09 Well, so actually, I think this is a, probably a pretty underappreciated aspect
0:51:14 of being involved in small companies is all about the people, right?
0:51:17 And so the better you can be at the people, the better it’s going to be
0:51:18 for the business.
0:51:24 And, you know, we’ve really deep dived into, I would say all personality
0:51:25 testing is wrong, right?
0:51:29 It just depends on what you’re trying to get out of it.
0:51:33 And so we have actually a huge battery of personality testing that we do
0:51:37 for people to try to get as close to a 360 view of who they are.
0:51:38 What do you use?
0:51:38 Yeah.
0:51:45 So we’re doing a combination of disk, Myers-Briggs and something
0:51:49 called habit story, which kind of has them see like, what are the habits
0:51:51 that they’ve built in their life and how are they kind of supporting
0:51:54 who they are with the structure and apparatus around them?
0:51:59 And I personally also do a lot of study of Enneagram.
0:52:03 And so I think actually, personally for me, when I meet somebody, I’m
0:52:06 instantly categorizing them as what I think their Enneagram number is.
0:52:10 And I’m automatically categorizing them across the four main Myers-Briggs.
0:52:12 Dude, this is crazy to me.
0:52:15 I thought that’s just horoscopes for dudes.
0:52:19 Like, do you really use this as like your core thing?
0:52:19 That’s amazing.
0:52:20 Yeah.
0:52:23 Well, so all of it tells you something about the person, right?
0:52:26 So if you think about, so Enneagram, most people don’t understand this.
0:52:29 So Enneagram basically tells you who you are at your worst.
0:52:35 And there’s nine numbers and basically everyone falls into a number
0:52:38 and then you have what’s called wings, which is kind of where do you tip
0:52:39 from that number?
0:52:42 So for me, I’m a three and I tip two.
0:52:45 So a three is they call the achiever.
0:52:49 My biggest insecurities is that I’m not enough and I want people to like me.
0:52:52 And so again, if you, if anybody’s proud of their Enneagram, it
0:52:53 means they don’t understand Enneagram.
0:52:56 Like, like it’s not a good thing, right?
0:52:59 This basically tells you what are your deepest fears and what, what is
0:53:01 the, your areas of greatest weakness.
0:53:04 But if you can know that about somebody, you can see them.
0:53:06 How is that playing out in their life, right?
0:53:09 So like I, when I’m in my least healthy, I’m a people pleaser.
0:53:11 I say yes to way too much stuff.
0:53:13 Um, I don’t tell people the truth.
0:53:15 Um, it’s really unhealthy.
0:53:17 It’s, it’s highly destructive behavior, right?
0:53:19 I’m very focused on hierarchy.
0:53:23 And, and, and my guess is that you guys have different Enneagrams, right?
0:53:26 I won’t, I won’t guess your Enneagrams, but can you do it?
0:53:26 That’s great.
0:53:27 Yeah.
0:53:29 Do it.
0:53:30 I can’t wait.
0:53:30 Yeah.
0:53:33 My guess is Sean, you’re a three and my guess is Sam’s an eight.
0:53:35 Uh, but what’s three and what’s eight?
0:53:37 Uh, the three is the achievable.
0:53:41 So threes and eights, uh, both achieved, but for very different reasons.
0:53:44 So, so, uh, threes achieved because they want people to love them.
0:53:46 It’s like less about the thing itself.
0:53:48 And then eights really want the thing itself.
0:53:52 So like as a three, like I don’t want money to just like want the, want the money.
0:53:54 Like I want the money because I want people to love me.
0:53:57 Uh, eights really want the money because they want the security and
0:53:59 they want the power that comes with the money.
0:54:04 Uh, so, so I want to learn the, I want to roll over so that I get Pat and
0:54:05 my tail can wag.
0:54:06 Sam just wants a dog treat.
0:54:07 Yep.
0:54:08 That’s exactly right.
0:54:09 Um, that’s right.
0:54:10 What do you think?
0:54:11 Yeah.
0:54:14 Well, like he’s, he’s describing everything in like the most positive way.
0:54:16 So like, yeah, sounds great.
0:54:18 Uh, I’m, uh, I like that.
0:54:21 And then I looked up who other eights were and it’s like Winston Churchill,
0:54:23 Martin Luther King.
0:54:24 I’m like, yeah, okay, cool.
0:54:26 Um, yeah, yeah, for sure.
0:54:29 What you do, but you, what this is like crazy fascinating.
0:54:31 You said like five different things.
0:54:32 So can you give us the exact?
0:54:35 So you said Myers-Briggs, uh, and then you said this, this other test.
0:54:37 What’s like the exact stuff that you’re using.
0:54:38 Yeah.
0:54:40 So, so I, well, there’s two things.
0:54:43 One is when I first meet somebody, I can, I can walk you through what I do.
0:54:47 And then I would say is separately from that in a hiring process.
0:54:50 We, we use that once we get serious about a candidate, then we put them through
0:54:52 a huge battery of testing to make sure we try to understand them.
0:54:53 Right.
0:54:57 For me personally, when I first meet somebody, it helps me so much to be able
0:55:00 to categorize them into what I expect based on just kind of how they’re showing
0:55:02 up in the world, uh, in Myers-Briggs, right?
0:55:04 So you have, you have I and E.
0:55:06 So are they introverted or they extroverted?
0:55:07 Right.
0:55:11 Are they S or they, uh, N, which is, are they, are they in the present?
0:55:13 Are they sensing or are they in the future?
0:55:14 Right.
0:55:17 Um, uh, then are they a thinker or are they a feeler?
0:55:18 Right.
0:55:21 So they, are they primarily excited about ideas or they primarily excited
0:55:24 about, uh, sort of the, the, the people themselves, right?
0:55:29 Um, and then the last one is T and P, which is, um, uh,
0:55:34 are they, uh, it’s kind of, excuse me, J and P, which is, are they, uh,
0:55:39 very focused on rigid schedules and on creating order or do they like to go
0:55:40 and test and try a whole bunch of things?
0:55:41 Right.
0:55:44 And how all these like sort of stack up and combine really gives you
0:55:48 a much more holistic view of who somebody is than when you then pair with
0:55:51 Enneagram, I think gives you probably those two together.
0:55:56 I think creates the most, the quickest and the most holistic view of
0:55:59 who somebody is, where if you can get like a, a pretty good idea quickly
0:56:03 of who they are, like how I would talk to somebody who’s present oriented
0:56:05 is very different than how I talk to somebody who’s future oriented.
0:56:09 And oftentimes, you know, we assume the whole world operates like the way
0:56:13 we do, like my wife and I are literally the opposites in every single one
0:56:13 of these areas.
0:56:17 So you can imagine in our marriage, like how she shows up and how
0:56:21 I show up is so different and it creates all kinds of miscommunications.
0:56:24 We’ve been married now for 16 years and it really, we went through
0:56:28 personality testing together about, oh, three and a half, four years ago.
0:56:30 It was game changing in our marriage.
0:56:34 It was, it completely explained a ton of behavior for her and for
0:56:38 me that had been bothering us for a long time and it was just largely
0:56:39 how we’re wired.
0:56:41 So that’s how we do it.
0:56:44 That’s how I think about doing it in the moment that helps me relate to
0:56:45 people a lot more.
0:56:46 It’s crazy.
0:56:51 By the way, Sean, 16personalities.com is like these websites are huge
0:56:52 that are doing these tests.
0:56:54 Yeah, yeah, yeah, they’re really big.
0:56:55 I mean, this isn’t, it’s an important piece.
0:56:58 I would say five voices is a really interesting one.
0:57:01 They, they, so it’s just the number five voices.com.
0:57:02 I think.
0:57:07 Yeah, those guys have created Steve Cochrum and Jeremy Kubitschek are
0:57:09 the two founders of that business.
0:57:12 They’ve created an overlay for Myers-Briggs that simplifies it.
0:57:15 I think a lot of their stuff is incredible.
0:57:19 And yeah, we definitely use a lot of their work as well.
0:57:22 Then we finish off with a quick tarot reading just to see how the future
0:57:23 is going to go.
0:57:24 And then we’re, we’re all set.
0:57:25 This is amazing.
0:57:28 This is so good.
0:57:31 You, you also have one thing I read that I really loved.
0:57:33 You go, you have this like asshole test.
0:57:35 It’s like, we don’t, nobody wants to work with assholes.
0:57:36 How do we sort of filter for that?
0:57:38 Nobody’s trying to present as an asshole in a job interview.
0:57:42 And you said like, you can eat with them, see how they treat the staff.
0:57:45 You could see them interact with their significant other.
0:57:47 That’ll tell you a lot in their home environment.
0:57:50 And then you said, the most telling environment is to travel with somebody.
0:57:53 It is impossible to fake it when you’re at the airport.
0:57:54 You’re grinding through security.
0:57:57 And if there’s a delay, your, their true colors will come out.
0:57:58 That was great.
0:57:59 Yeah.
0:57:59 Yeah.
0:58:00 It’s fun.
0:58:03 I mean, just want to, I mean, honestly, the business we’re in is predicting
0:58:04 people’s behavior.
0:58:05 Like that’s what we’re trying to do.
0:58:09 And because of all these businesses are predicated on the people who run them.
0:58:12 They’re, they’re all going to have the risks, the primary risks of all these
0:58:13 businesses are going to be the people.
0:58:15 And so what we’re trying to do is get to know people.
0:58:18 Have you guys ever been out with someone and they’ve actually been
0:58:20 an asshole to the wait staff though?
0:58:22 Whenever people say about this, this asshole test, I’m like,
0:58:25 I’ve never been around anyone that’s like rude.
0:58:28 Dude, you don’t remember the dinner we were at where this happened?
0:58:29 Yeah.
0:58:31 But that was like one out of a thousand.
0:58:31 Yeah.
0:58:32 Yeah, it’s true.
0:58:35 The, this guy, we, Sean and I went out with someone and he was like
0:58:39 shooing the waiter when he was like, it was, it was like, it was, it was, it
0:58:41 was, I was, I was ashamed.
0:58:42 I left that dinner.
0:58:46 I’d be like, I felt like, uh, like I had just like participated
0:58:47 in like a porno.
0:58:50 Like I felt like I was like, I’m so ashamed.
0:58:53 Like if people find out about this, like I’m going to be so embarrassed.
0:58:54 That’s rough.
0:58:57 Wow.
0:58:58 Dude, what a fun episode.
0:58:58 This is great.
0:58:59 Oh yeah.
0:59:01 I really enjoyed hanging out with you guys.
0:59:02 That’s the one we guys built.
0:59:03 Brent, thanks for coming on, man.
0:59:06 If you haven’t, go check out his blog and his annual letters.
0:59:07 They’re pretty great.
0:59:08 Follow him on Twitter.
0:59:09 What’s your Twitter handle?
0:59:10 Brent, be sure.
0:59:11 Just Brent, be sure.
0:59:12 Yep.
0:59:12 All right.
0:59:13 Good seeing you, dude.
0:59:14 Thank you.
0:59:14 That’s it.
0:59:15 That’s the pod.
0:59:18 I feel like I can rule the world.
0:59:24 I know I could be what I want to put my all in it like the days on for the road.
0:59:25 Let’s travel never looking back.
0:59:30 Hey, Sean here.
0:59:33 I want to take a minute to tell you a David Ogilvy story.
0:59:34 One of the great ad men.
0:59:36 He said, remember, the consumer is not a moron.
0:59:37 She’s your wife.
0:59:39 You wouldn’t lie to your own wife.
0:59:41 So don’t lie to mine.
0:59:43 And I love that you guys, you’re my family.
0:59:45 You’re like my wife and I won’t lie to you either.
0:59:48 So I’ll tell you the truth for every company I own right now.
0:59:51 Six companies, I use Mercury for all of them.
0:59:54 So I’m proud to partner with Mercury because I use it for all of my banking
0:59:57 needs across my personal account, my business accounts.
1:00:00 And anytime I start a new company, this is my first move.
1:00:01 I go open up a Mercury account.
1:00:03 I’m very confident in recommending it because I actually use it.
1:00:04 I’ve used it for years.
1:00:06 It is the best product on the market.
1:00:11 So if you want to be like me and 200,000 other ambitious founders, go to mercury.com
1:00:12 and apply in minutes.
1:00:16 And remember, Mercury is a financial technology company, not a bank.
1:00:19 Banking services provided by Choice Financial Group and Evolve Bank & Trust
1:00:20 members, FDIC.
1:00:21 All right.
1:00:21 Back to the episode.
1:00:24 (upbeat music)