WEBVTT

1
00:00:00.000 --> 00:00:02.080
You've made and lost your money twice.

2
00:00:02.080 --> 00:00:04.160
You have to make big bets in order to win big.

3
00:00:04.160 --> 00:00:05.360
You have to be willing to go to zero.

4
00:00:05.360 --> 00:00:06.160
How'd you get here?

5
00:00:06.160 --> 00:00:08.480
It's this healthy appreciation for risk

6
00:00:08.480 --> 00:00:11.520
that's completely contrasted with the utter comfort

7
00:00:11.520 --> 00:00:12.560
with losing it all.

8
00:00:13.520 --> 00:00:15.280
Not all bets are going to be a good one.

9
00:00:15.280 --> 00:00:18.480
What you've done is incredibly rare and impressive.

10
00:00:18.480 --> 00:00:20.560
You've gone from a couple thousand dollars to now worth

11
00:00:20.560 --> 00:00:21.760
$150 million.

12
00:00:21.760 --> 00:00:23.840
Even more than a hundred X, what's the next step?

13
00:00:23.840 --> 00:00:25.280
Are you starting a fun?

14
00:00:25.280 --> 00:00:27.440
Alex from Aussie, welcome to the Tannex Capital Podcast.

15
00:00:27.440 --> 00:00:28.240
Thank you for having me.

16
00:00:28.240 --> 00:00:29.040
I'm honored to be here.

17
00:00:29.120 --> 00:00:30.000
It's great to have you.

18
00:00:30.000 --> 00:00:33.040
So you have one of these stories where you've made

19
00:00:33.040 --> 00:00:34.160
and lost your money twice.

20
00:00:34.160 --> 00:00:35.920
You went from hero to zero

21
00:00:35.920 --> 00:00:38.400
and now back to $150 million in that worth.

22
00:00:38.400 --> 00:00:39.360
How'd you get here?

23
00:00:39.360 --> 00:00:40.000
Geez.

24
00:00:40.000 --> 00:00:41.680
I'll give you the shortest version possible.

25
00:00:41.680 --> 00:00:43.920
So I was a management consultant right out of college.

26
00:00:44.960 --> 00:00:45.760
Did well in school.

27
00:00:46.560 --> 00:00:47.680
Did two years of that.

28
00:00:47.680 --> 00:00:52.160
I went to go apply to all the big IV leagues to get an MBA

29
00:00:52.160 --> 00:00:54.400
and one of the questions on the test was

30
00:00:55.280 --> 00:00:57.600
how will a Harvard MBA help you shorten one of the term goals.

31
00:00:57.600 --> 00:00:59.840
And I sat there for like four days trying to answer the question

32
00:00:59.840 --> 00:01:00.960
and then I just came to the conclusion

33
00:01:00.960 --> 00:01:03.120
that it wasn't going to help my short-term goals.

34
00:01:03.120 --> 00:01:05.520
Which is probably why they asked those questions on the application.

35
00:01:05.520 --> 00:01:06.720
So I was like, I guess I'm going to do fitness.

36
00:01:06.720 --> 00:01:09.440
Basically what I would do is I would sign a lease

37
00:01:09.440 --> 00:01:12.080
and then start running ads before I even had anything built out.

38
00:01:12.080 --> 00:01:13.760
And the model that I had was not very difficult

39
00:01:13.760 --> 00:01:14.640
to get the equipment for.

40
00:01:14.640 --> 00:01:16.400
I would generate enough pre-sales

41
00:01:16.400 --> 00:01:18.800
from the launch to cover the entire opening of the gym.

42
00:01:18.800 --> 00:01:20.720
From there, started doing gym turnarounds.

43
00:01:20.720 --> 00:01:23.200
It was during that process that I lost my money twice.

44
00:01:24.400 --> 00:01:26.080
Once was with a partner at the very beginning

45
00:01:26.240 --> 00:01:27.760
who was like, I filled his gym up and he said,

46
00:01:27.760 --> 00:01:30.240
hey, I'll come behind you and I'll just operate all the gyms.

47
00:01:30.240 --> 00:01:31.440
Then you don't have to give anything away.

48
00:01:31.440 --> 00:01:32.240
You'll just own them all.

49
00:01:32.240 --> 00:01:34.320
And then probably took the money out of the business

50
00:01:34.320 --> 00:01:37.440
that I saved up from selling the six gyms that I had.

51
00:01:38.400 --> 00:01:39.440
And so that sucked.

52
00:01:40.800 --> 00:01:43.120
But I learned a valuable lesson, which is in general,

53
00:01:43.120 --> 00:01:45.200
if you have the option between getting to business

54
00:01:45.200 --> 00:01:47.120
with someone who's already been indicted for fraud.

55
00:01:47.120 --> 00:01:48.160
All things being equal.

56
00:01:48.160 --> 00:01:49.120
Yeah, if you have no option,

57
00:01:49.120 --> 00:01:50.640
everybody that you know has been indicted for fraud,

58
00:01:50.640 --> 00:01:52.240
then you have to just choose the best one.

59
00:01:52.240 --> 00:01:54.240
But for me, that was big lesson number one.

60
00:01:54.320 --> 00:01:56.800
Honestly, it was like four or five six months later.

61
00:01:56.800 --> 00:01:57.520
It happened again.

62
00:01:57.520 --> 00:01:59.760
So I called the next gyms that were supposed to launch

63
00:01:59.760 --> 00:02:01.760
and told them, hey, we're getting out of the business.

64
00:02:01.760 --> 00:02:03.040
We're going to do something else.

65
00:02:03.040 --> 00:02:05.040
One of the guys says, hey, launch my buddy's gym.

66
00:02:05.040 --> 00:02:06.160
And so I picked the highest number.

67
00:02:06.160 --> 00:02:07.600
I could think of because I wanted to get him off the phone

68
00:02:07.600 --> 00:02:08.960
and he already said he was broke.

69
00:02:08.960 --> 00:02:11.200
And so I said $6,000.

70
00:02:11.200 --> 00:02:12.880
And he said, six grand, don't.

71
00:02:12.880 --> 00:02:14.240
And I remember just looking at the phone,

72
00:02:14.240 --> 00:02:15.920
being like, holy crap, what just happened.

73
00:02:15.920 --> 00:02:17.520
I had seven more calls that day.

74
00:02:17.520 --> 00:02:19.840
And next call, same thing, how much eight grand,

75
00:02:19.840 --> 00:02:21.680
next call, same thing, how much 10 grand,

76
00:02:21.680 --> 00:02:23.840
and I'm doing $60,000 in sales on a day.

77
00:02:24.000 --> 00:02:24.880
I could finally breathe again.

78
00:02:24.880 --> 00:02:27.040
I was officially just broke again, but no debt.

79
00:02:27.040 --> 00:02:28.200
And then from that, the next month,

80
00:02:28.200 --> 00:02:31.520
I think we did $2.20, then $3.80, then $4.80, then $7.80.

81
00:02:31.520 --> 00:02:33.200
Then a million, then $1.2, then $1.5.

82
00:02:33.200 --> 00:02:35.120
Then I think it's like $1.82, $2.2.

83
00:02:35.120 --> 00:02:37.440
And went all the way up to $4.4 million a month

84
00:02:37.440 --> 00:02:38.280
within 20 months.

85
00:02:38.280 --> 00:02:40.000
We ended up packaging those companies

86
00:02:40.000 --> 00:02:42.480
and selling them to American Pacific Group.

87
00:02:42.480 --> 00:02:45.360
I sold two thirds at a $46.2 million valuation

88
00:02:45.360 --> 00:02:46.280
in an all cash deal.

89
00:02:46.280 --> 00:02:47.440
That was your first big exit.

90
00:02:47.440 --> 00:02:48.480
That was the first big exit.

91
00:02:48.480 --> 00:02:49.320
And during the five years,

92
00:02:49.320 --> 00:02:50.840
we took out 42 million in distributions.

93
00:02:50.840 --> 00:02:53.800
So that was like still a very casual positive business.

94
00:02:53.920 --> 00:02:55.080
I didn't want to be, I'd been in gyms

95
00:02:55.080 --> 00:02:56.160
for like a decade at that point.

96
00:02:56.160 --> 00:02:58.920
So I was, I was ready to just not be the gym guy anymore.

97
00:02:58.920 --> 00:03:01.880
And on Christmas day, I officially started acquisition.com.

98
00:03:01.880 --> 00:03:03.400
The thesis I had was everybody wants

99
00:03:03.400 --> 00:03:05.480
proprietary deal flow and everybody wants people

100
00:03:05.480 --> 00:03:08.360
who trust them when they get into a deal process.

101
00:03:08.360 --> 00:03:10.360
I wonder if somebody has merged

102
00:03:10.360 --> 00:03:13.360
like a influencer social media brand

103
00:03:13.360 --> 00:03:15.800
with the traditional private equity model.

104
00:03:15.800 --> 00:03:18.280
Tell me about the social media ramp up year zero,

105
00:03:18.280 --> 00:03:19.200
year one, year two.

106
00:03:19.200 --> 00:03:21.480
How quick are that ramp up at the gym secrets podcast?

107
00:03:21.480 --> 00:03:22.640
Was that an interview style?

108
00:03:22.640 --> 00:03:24.040
No, just me, just talking ahead.

109
00:03:24.040 --> 00:03:26.320
So I lost all my money the second time,

110
00:03:26.320 --> 00:03:28.680
April of 2017.

111
00:03:28.680 --> 00:03:31.720
And my first podcast episode is July of 17.

112
00:03:31.720 --> 00:03:34.640
You can follow the whole thing from zero back again,

113
00:03:34.640 --> 00:03:36.000
90 days after I was at zero.

114
00:03:36.000 --> 00:03:38.680
We both know many people that make a lot of money

115
00:03:38.680 --> 00:03:41.720
then lose it and oftentimes make even more on the come up.

116
00:03:41.720 --> 00:03:44.160
Why is losing all your money a prerequisite for success?

117
00:03:44.160 --> 00:03:45.720
I hope it doesn't have to be.

118
00:03:46.960 --> 00:03:48.200
Third time's the charm for me.

119
00:03:48.200 --> 00:03:50.360
Probably 50% of the people I know

120
00:03:50.360 --> 00:03:52.360
worth hundreds of millions or billions of dollars

121
00:03:52.360 --> 00:03:53.200
have gone through this arc.

122
00:03:53.200 --> 00:03:54.040
There's something there.

123
00:03:54.040 --> 00:03:54.880
What is it?

124
00:03:54.880 --> 00:03:55.720
That makes me feel better.

125
00:03:55.720 --> 00:03:58.200
I think I would say there's two completely dichotomous

126
00:03:58.200 --> 00:03:59.120
things that come out of it.

127
00:03:59.120 --> 00:04:02.240
On one hand, you earn a very healthy respect for risk.

128
00:04:02.240 --> 00:04:03.680
Not everything is going to work out.

129
00:04:03.680 --> 00:04:06.160
On the other hand, you know that you've lost everything

130
00:04:06.160 --> 00:04:07.840
and yet you are still here.

131
00:04:07.840 --> 00:04:11.120
And so it's this healthy appreciation for risk

132
00:04:11.120 --> 00:04:15.160
that's completely contrasted with the utter comfort

133
00:04:15.160 --> 00:04:17.240
with losing it all anyways.

134
00:04:17.240 --> 00:04:19.720
Because you got there and I joke about this

135
00:04:19.760 --> 00:04:21.600
but Layla and I were happy when we were poor

136
00:04:21.600 --> 00:04:22.760
or just about as happy now.

137
00:04:22.760 --> 00:04:23.920
Makes you anti-fragile.

138
00:04:23.920 --> 00:04:24.920
Yeah, it's perfect.

139
00:04:24.920 --> 00:04:26.280
And how does that practically help?

140
00:04:26.280 --> 00:04:28.080
With the healthy appreciation for risk,

141
00:04:28.080 --> 00:04:31.880
we are willing to take fewer but more strategic big swings.

142
00:04:31.880 --> 00:04:32.920
You have to make big bets.

143
00:04:32.920 --> 00:04:34.560
So you have to be willing to go to zero.

144
00:04:34.560 --> 00:04:37.440
But at the same time, knowing that not all bets

145
00:04:37.440 --> 00:04:38.520
are going to be good ones,

146
00:04:38.520 --> 00:04:40.240
I feel like that is fundamentally the basis

147
00:04:40.240 --> 00:04:41.080
of good investing.

148
00:04:41.080 --> 00:04:42.960
There's some huge power laws

149
00:04:42.960 --> 00:04:43.960
when it comes to venture capital,

150
00:04:43.960 --> 00:04:44.960
one of the investments.

151
00:04:44.960 --> 00:04:45.800
And because of that,

152
00:04:45.800 --> 00:04:47.440
you don't have to make huge investments.

153
00:04:47.440 --> 00:04:48.440
You can make small checks.

154
00:04:48.440 --> 00:04:51.280
Jason Calicanas invested $25,000,

155
00:04:51.280 --> 00:04:53.000
made $100 million for Sequoia.

156
00:04:53.000 --> 00:04:54.880
Is that the same thing in your private equity business?

157
00:04:54.880 --> 00:04:57.480
Are you able to make small bets and make huge returns

158
00:04:57.480 --> 00:04:59.120
or do you really have to have more

159
00:04:59.120 --> 00:05:00.200
of a concentrated portfolio?

160
00:05:00.200 --> 00:05:01.720
The concentration for us right now

161
00:05:01.720 --> 00:05:04.160
is because we're super operationally involved.

162
00:05:04.160 --> 00:05:05.960
And so this is something that we're to be very candid,

163
00:05:05.960 --> 00:05:07.120
like we're actively looking at.

164
00:05:07.120 --> 00:05:09.680
Is there a way that we can maybe do less?

165
00:05:09.680 --> 00:05:10.680
And so on one hand,

166
00:05:10.680 --> 00:05:12.120
we've considered opening up a venture arm

167
00:05:12.120 --> 00:05:14.280
which is something that we're strongly considering right now.

168
00:05:14.280 --> 00:05:16.000
On the more traditional private equity route,

169
00:05:16.000 --> 00:05:18.760
we have made small bets relative to the amount

170
00:05:18.760 --> 00:05:19.600
of money that we've made.

171
00:05:19.600 --> 00:05:23.040
So we've had monster returns from a percentage basis,

172
00:05:23.040 --> 00:05:25.880
but the amount of work that has gone into those companies,

173
00:05:25.880 --> 00:05:27.600
the company that was at $2 million that went to $110,

174
00:05:27.600 --> 00:05:28.520
we've done a lot of work.

175
00:05:28.520 --> 00:05:30.200
To be fair, the founders have done an amazing job.

176
00:05:30.200 --> 00:05:31.040
There are awesome people.

177
00:05:31.040 --> 00:05:31.880
The credit should go to them,

178
00:05:31.880 --> 00:05:32.920
but we've done a lot of work too.

179
00:05:32.920 --> 00:05:34.600
And the same thing with the brick and mortar chains

180
00:05:34.600 --> 00:05:37.080
that we have, we have tended to go towards

181
00:05:37.080 --> 00:05:39.000
operationally complex businesses

182
00:05:39.000 --> 00:05:40.640
that just require lots of people.

183
00:05:41.640 --> 00:05:42.520
And I think it's just because

184
00:05:42.520 --> 00:05:43.840
Layla and I are very comfortable

185
00:05:43.840 --> 00:05:45.040
in those types of environments.

186
00:05:45.040 --> 00:05:46.720
We both came from a service-based background,

187
00:05:46.720 --> 00:05:48.120
but one of the big kind of like arbitrage

188
00:05:48.120 --> 00:05:49.840
as we were talking right before we started the show,

189
00:05:49.840 --> 00:05:51.480
40% of our portfolio is software.

190
00:05:51.480 --> 00:05:52.520
And we don't talk about it as much.

191
00:05:52.520 --> 00:05:53.680
So part of the reason I don't talk about it

192
00:05:53.680 --> 00:05:55.360
in my content as much is because

193
00:05:55.360 --> 00:05:58.080
I think 78% of all businesses are service businesses.

194
00:05:58.080 --> 00:06:00.440
It applies to such a small slice of the demographic

195
00:06:00.440 --> 00:06:01.720
that I'd rather just talk about the thing

196
00:06:01.720 --> 00:06:02.760
that applies to most people.

197
00:06:02.760 --> 00:06:04.840
But we take a lot of the best practices

198
00:06:04.840 --> 00:06:07.640
that we've learned from traditional service businesses

199
00:06:07.640 --> 00:06:11.000
and that apply them to software as a service businesses

200
00:06:11.000 --> 00:06:12.680
because a lot of the same things work

201
00:06:12.680 --> 00:06:13.800
is just a lot of it's automated.

202
00:06:13.800 --> 00:06:15.800
And that's where you get huge returns on it.

203
00:06:15.800 --> 00:06:17.280
I want to double click on something.

204
00:06:17.280 --> 00:06:20.200
So I read your book, 100 million offers, incredible book.

205
00:06:20.200 --> 00:06:22.200
Basically, it's a book on how to create value.

206
00:06:22.200 --> 00:06:25.000
You talk about how you would go to a company

207
00:06:25.000 --> 00:06:26.720
and they would give you 30% of the company

208
00:06:26.720 --> 00:06:27.720
with almost no investment

209
00:06:27.720 --> 00:06:30.240
and you've done this over and over dozens of times or so.

210
00:06:30.240 --> 00:06:31.640
You've never really explicitly talked about

211
00:06:31.640 --> 00:06:33.600
how you construct that value proposition

212
00:06:33.600 --> 00:06:34.480
for the business owner.

213
00:06:34.480 --> 00:06:35.880
So tell me how you get somebody

214
00:06:35.880 --> 00:06:38.600
to give you 30% of your business with no money down.

215
00:06:38.600 --> 00:06:40.040
We do a combination to be fair

216
00:06:40.040 --> 00:06:41.600
that the deal is evolved over time.

217
00:06:41.600 --> 00:06:45.440
And I wrote the book, I want to say three or four years ago,

218
00:06:45.440 --> 00:06:48.440
between 20 and 24 deals in similar structures.

219
00:06:48.440 --> 00:06:51.560
So we had an element of cash flow,

220
00:06:51.560 --> 00:06:53.560
which is either a profit share or a revenue share

221
00:06:53.560 --> 00:06:55.640
depending on how volatile the business was.

222
00:06:55.640 --> 00:06:58.600
And then we had a profit's interest

223
00:06:58.600 --> 00:07:00.480
based on some agreed upon basis that we had

224
00:07:00.480 --> 00:07:02.520
or above a basis that we mutually agreed on.

225
00:07:02.520 --> 00:07:04.520
And usually that number was very low

226
00:07:04.520 --> 00:07:05.720
because the companies didn't really have

227
00:07:05.720 --> 00:07:07.320
a ton of intrinsic value.

228
00:07:07.320 --> 00:07:10.280
And so that was more or less the combination of what it was.

229
00:07:10.360 --> 00:07:13.440
Like, okay, your business is worth two million bucks.

230
00:07:13.440 --> 00:07:15.640
We get 30% of everything above that.

231
00:07:15.640 --> 00:07:17.480
And for the work that we do in the meantime,

232
00:07:17.480 --> 00:07:18.920
we need cash flow because we have a huge team

233
00:07:18.920 --> 00:07:20.560
helping you put all these things together.

234
00:07:20.560 --> 00:07:23.040
And so that's pretty much how the deals work.

235
00:07:23.040 --> 00:07:26.040
Over time, I started writing checks into companies

236
00:07:26.040 --> 00:07:28.000
because I noticed it changed the dynamic a little bit

237
00:07:28.000 --> 00:07:29.200
favorably for us.

238
00:07:29.200 --> 00:07:31.840
And it was less like we're consultants for hire.

239
00:07:31.840 --> 00:07:33.600
Now we only do cash in deals.

240
00:07:33.600 --> 00:07:35.160
That's probably more traditional.

241
00:07:35.160 --> 00:07:37.080
We look for a lot of majority covenants

242
00:07:37.080 --> 00:07:38.960
even if we're not in a majority position

243
00:07:39.040 --> 00:07:40.480
just because we want to have a good amount

244
00:07:40.480 --> 00:07:42.080
of operating control on the business.

245
00:07:42.080 --> 00:07:43.760
Honestly, in some ways, it's just keeping the

246
00:07:43.760 --> 00:07:45.240
emotionality of it from the founder

247
00:07:45.240 --> 00:07:46.640
from making a really poor decision.

248
00:07:46.640 --> 00:07:47.920
Everyone of the covenants that we're going to ask for

249
00:07:47.920 --> 00:07:49.960
are not like when we explain them,

250
00:07:49.960 --> 00:07:50.880
they're like, okay, I get that.

251
00:07:50.880 --> 00:07:53.560
The biggest companies we have are four plus years

252
00:07:53.560 --> 00:07:55.240
that we've had with us.

253
00:07:55.240 --> 00:07:57.640
And some of those were looking for liquidity events

254
00:07:57.640 --> 00:07:58.480
right now.

255
00:07:58.480 --> 00:07:59.480
And I think we're kind of at a point of like,

256
00:07:59.480 --> 00:08:01.200
okay, we're two from here.

257
00:08:01.200 --> 00:08:02.400
That's kind of, I would say the position

258
00:08:02.400 --> 00:08:04.280
that Layla and I are in right now with our holdings.

259
00:08:04.280 --> 00:08:06.960
And kind of like, okay, what went well from this last round?

260
00:08:06.960 --> 00:08:08.360
What are we going to do differently next time?

261
00:08:08.360 --> 00:08:10.600
And I would say the big one is that we're just going to buy

262
00:08:10.600 --> 00:08:12.200
fewer bigger businesses at the onset

263
00:08:12.200 --> 00:08:14.000
because we've learned that a lot of times

264
00:08:14.000 --> 00:08:15.880
the bigger the business, the more we can help.

265
00:08:15.880 --> 00:08:17.120
Because when it's a smaller business,

266
00:08:17.120 --> 00:08:19.280
it's like we have to build so much infrastructure.

267
00:08:19.280 --> 00:08:20.840
A lot of times there's no CRM.

268
00:08:20.840 --> 00:08:23.280
So it's all Google sheets and things like that.

269
00:08:23.280 --> 00:08:24.640
So we have to implement a full CRM

270
00:08:24.640 --> 00:08:25.960
so we can get data pushed to us.

271
00:08:25.960 --> 00:08:27.480
We even know what's going on in the business.

272
00:08:27.480 --> 00:08:28.800
Finances are typically a mess.

273
00:08:28.800 --> 00:08:31.640
It's just his mom's bookkeeper that's been doing it

274
00:08:31.640 --> 00:08:33.400
across the kitchen table.

275
00:08:33.400 --> 00:08:35.160
That's been doing the finances.

276
00:08:35.160 --> 00:08:36.840
There's typically no leadership team in place.

277
00:08:36.840 --> 00:08:39.520
It's usually a founder and maybe a first follower.

278
00:08:39.520 --> 00:08:41.720
Somebody who's really loyal and kind of like an integrator for them.

279
00:08:41.720 --> 00:08:43.120
But oftentimes they don't even have that.

280
00:08:43.120 --> 00:08:46.120
And so when we've looked at the more and more mature businesses,

281
00:08:46.120 --> 00:08:47.760
it's like they have a lot of these pieces in place

282
00:08:47.760 --> 00:08:50.480
and so then we can get straight to value creation.

283
00:08:50.480 --> 00:08:51.760
There's no leaking bucket.

284
00:08:51.760 --> 00:08:53.160
Yeah, we're less.

285
00:08:53.160 --> 00:08:54.080
Just to double click,

286
00:08:54.080 --> 00:08:56.200
you're really good at deconstructing processes.

287
00:08:56.200 --> 00:08:58.320
So you go to a founder and you say,

288
00:08:58.320 --> 00:09:00.360
okay, your company's worth $5 million.

289
00:09:00.360 --> 00:09:03.520
I'm going to go invest and then I want 20% of the upside

290
00:09:03.520 --> 00:09:04.640
or 30% of the upside.

291
00:09:04.640 --> 00:09:05.840
How do you ensure to the founder

292
00:09:05.840 --> 00:09:08.480
that you're not just freeloading on the upside

293
00:09:08.480 --> 00:09:10.160
and do you create milestones?

294
00:09:10.160 --> 00:09:12.880
Do you, what construct do you use to align yourself?

295
00:09:12.880 --> 00:09:13.960
Not milestones.

296
00:09:13.960 --> 00:09:15.520
It's been pretty much straight up.

297
00:09:15.520 --> 00:09:16.880
We get 30% of the upside.

298
00:09:16.880 --> 00:09:17.720
Just trust.

299
00:09:17.720 --> 00:09:18.560
Yeah.

300
00:09:18.560 --> 00:09:20.440
And that's been the whole point of building the brand

301
00:09:20.440 --> 00:09:21.960
and building the presence that we have

302
00:09:21.960 --> 00:09:24.280
has been to have that trust.

303
00:09:24.280 --> 00:09:25.200
And I would say that it's definitely

304
00:09:25.200 --> 00:09:27.920
lubricated the deal process overall.

305
00:09:27.920 --> 00:09:30.040
We don't need to do nearly as much diligence

306
00:09:30.040 --> 00:09:31.600
as a traditional P.

307
00:09:31.600 --> 00:09:33.720
So we can move a lot faster on deals

308
00:09:33.720 --> 00:09:35.280
and we've generated a lot of cash anyways

309
00:09:35.280 --> 00:09:38.040
in the meantime so that now if we do want to write bigger checks,

310
00:09:38.040 --> 00:09:38.880
we can do that.

311
00:09:38.880 --> 00:09:41.080
I can't write the check sizes that I would like to write.

312
00:09:41.080 --> 00:09:41.840
But at this moment,

313
00:09:41.840 --> 00:09:44.000
we can stroke a tenor or a $15 or $20 million check

314
00:09:44.000 --> 00:09:45.000
if we really like something.

315
00:09:45.000 --> 00:09:47.560
I can't write multiple of those $100 million checks

316
00:09:47.560 --> 00:09:48.400
for a company.

317
00:09:48.400 --> 00:09:49.560
When we got introduced a month ago,

318
00:09:49.560 --> 00:09:52.080
we started talking about this crossroads that you're at.

319
00:09:52.080 --> 00:09:53.640
You've engineered the model that works

320
00:09:53.640 --> 00:09:56.400
where you're owning large percentage of smaller businesses.

321
00:09:56.400 --> 00:09:58.720
And you're thinking, should we continue building

322
00:09:58.720 --> 00:10:00.960
this kind of birkshire holding company or should we go

323
00:10:00.960 --> 00:10:02.160
to the private equity route?

324
00:10:02.160 --> 00:10:03.480
What are the pros and cons in your opinion?

325
00:10:03.480 --> 00:10:04.760
If anyone who's listening is like,

326
00:10:04.760 --> 00:10:06.520
he doesn't sound decided, I'm aware.

327
00:10:06.520 --> 00:10:07.520
Yeah.

328
00:10:07.520 --> 00:10:09.600
You know, on one hand, we could raise, you know,

329
00:10:09.600 --> 00:10:10.920
outside funds, transparently.

330
00:10:10.920 --> 00:10:12.720
I'm just so afraid of losing someone else's money.

331
00:10:12.720 --> 00:10:14.240
I've made mistakes in the past for me

332
00:10:14.240 --> 00:10:16.400
and it's like, okay, that's an Alex mistake.

333
00:10:16.400 --> 00:10:18.080
I'll own that and it was all my money.

334
00:10:18.080 --> 00:10:20.720
Losing someone else's money, it makes me feel sick

335
00:10:20.720 --> 00:10:21.560
to think about.

336
00:10:21.560 --> 00:10:22.920
Because I just know how hard it is to make money

337
00:10:22.920 --> 00:10:25.400
and to just lose it for somebody else just like it kills me.

338
00:10:25.400 --> 00:10:27.560
It's definitely in a rational fear of mine.

339
00:10:27.560 --> 00:10:28.520
But that's road one.

340
00:10:28.520 --> 00:10:30.920
Road two is that we continue to still write our own checks

341
00:10:30.920 --> 00:10:32.360
and we still to go after bigger companies,

342
00:10:32.360 --> 00:10:33.360
but we just take smaller chunks.

343
00:10:33.360 --> 00:10:34.920
So we actually go back to the minority thing

344
00:10:34.920 --> 00:10:37.520
that we started with, but just with much bigger companies.

345
00:10:37.520 --> 00:10:39.640
And I think we'd be able to get pretty good valuations

346
00:10:39.640 --> 00:10:40.760
on this company's if we're coming in

347
00:10:40.760 --> 00:10:43.280
at some more party position with value at.

348
00:10:43.280 --> 00:10:45.720
The third bucket is we just continue to do

349
00:10:45.720 --> 00:10:47.800
what we have been doing and just continue to level up

350
00:10:47.800 --> 00:10:49.920
slowly over time the size companies that we have

351
00:10:49.920 --> 00:10:51.800
with not necessarily the desire to sell them,

352
00:10:51.800 --> 00:10:54.840
but some of the companies are really, really cash flow positive

353
00:10:54.840 --> 00:10:56.480
and I don't need to sell them.

354
00:10:56.480 --> 00:10:57.360
I like some of the software ones

355
00:10:57.360 --> 00:10:59.280
we're absolutely looking to have liquidity event

356
00:10:59.280 --> 00:11:01.240
from an exit because we just plow all the money

357
00:11:01.240 --> 00:11:02.560
back into the business, which it should do.

358
00:11:02.560 --> 00:11:03.840
So there's going to like the three doors

359
00:11:03.840 --> 00:11:05.840
that we have in front of us for like where to from here.

360
00:11:05.840 --> 00:11:07.480
I've been honestly split because I'm also

361
00:11:07.480 --> 00:11:09.040
continuing to run what we're currently doing.

362
00:11:09.040 --> 00:11:11.160
I would say that the likelihood that Layla and I

363
00:11:11.160 --> 00:11:13.040
raise a fund is high.

364
00:11:13.040 --> 00:11:14.040
I just don't have a time one.

365
00:11:14.040 --> 00:11:17.080
You're rationally being very slow in your decision making

366
00:11:17.080 --> 00:11:20.120
because institutional capital and outside capital

367
00:11:20.120 --> 00:11:21.480
is in for penny and for pound.

368
00:11:21.480 --> 00:11:23.400
You take that dollar, you're basically

369
00:11:23.400 --> 00:11:25.440
beholden to those LPs for a decade.

370
00:11:25.440 --> 00:11:26.520
What's coming through your pipeline

371
00:11:26.520 --> 00:11:27.840
are you getting billion dollar deals

372
00:11:27.840 --> 00:11:29.320
because I think that should really factor in.

373
00:11:29.320 --> 00:11:30.440
Our geoflows absurd.

374
00:11:30.440 --> 00:11:31.480
How do you even process it?

375
00:11:31.480 --> 00:11:34.720
So we get about 3,000 companies in most

376
00:11:34.720 --> 00:11:37.320
about 100 a day that come inbound that are trying it,

377
00:11:37.320 --> 00:11:39.680
that specifically apply for like we want

378
00:11:39.680 --> 00:11:41.760
to be a portfolio company.

379
00:11:41.760 --> 00:11:44.840
We have many more than that that just like want help

380
00:11:44.840 --> 00:11:46.480
and one information and things like that.

381
00:11:46.480 --> 00:11:48.400
But 100 a day come in that fill out

382
00:11:48.400 --> 00:11:50.360
a full many question application.

383
00:11:50.360 --> 00:11:52.120
And then those go to my deal team.

384
00:11:52.120 --> 00:11:54.360
So we have automated sifting that kind of just

385
00:11:54.360 --> 00:11:55.920
in the background based on the application questions

386
00:11:55.920 --> 00:11:58.680
that automatically remove 95%.

387
00:11:58.680 --> 00:12:00.200
We don't do any deals outside of the US.

388
00:12:00.200 --> 00:12:02.520
So that takes off half because 55% of my audience

389
00:12:02.520 --> 00:12:03.360
is international.

390
00:12:03.360 --> 00:12:04.640
So we have 45% left.

391
00:12:04.640 --> 00:12:06.160
From there, it's like we don't want other investors

392
00:12:06.160 --> 00:12:06.960
on the cap table.

393
00:12:06.960 --> 00:12:08.240
That takes another half out.

394
00:12:08.240 --> 00:12:10.040
From there, we've got, we just kind of like

395
00:12:10.040 --> 00:12:12.160
whittle our way down to what are the kind of

396
00:12:12.160 --> 00:12:13.000
investible deals.

397
00:12:13.000 --> 00:12:15.560
We probably get two to three deals a day

398
00:12:15.560 --> 00:12:18.320
that are legitimate businesses that are of size,

399
00:12:18.320 --> 00:12:19.560
that are US based.

400
00:12:19.560 --> 00:12:21.840
They're all over the place because the content I have

401
00:12:21.840 --> 00:12:23.200
helps a lot of different businesses.

402
00:12:23.200 --> 00:12:28.120
So we'll get a florist with a commercial cleaning company

403
00:12:28.120 --> 00:12:30.200
with a, you know, SaaS company.

404
00:12:30.200 --> 00:12:32.920
And then tomorrow it'll be a logistics broker with,

405
00:12:32.920 --> 00:12:34.960
like it just, it's all over the place.

406
00:12:34.960 --> 00:12:36.720
What's the revenue split on that?

407
00:12:36.720 --> 00:12:39.240
So 50% are zero to a million.

408
00:12:39.240 --> 00:12:41.360
25% are one to five million in top line.

409
00:12:41.360 --> 00:12:43.760
And then 25% are five million plus.

410
00:12:43.760 --> 00:12:46.480
And obviously there's a lot above five million plus

411
00:12:46.480 --> 00:12:47.920
in terms of, I mean, it's 25%.

412
00:12:47.920 --> 00:12:49.560
But I want to say it's somewhere in the neighborhood

413
00:12:49.560 --> 00:12:51.520
of like five percent of deals are doing over 20.

414
00:12:51.520 --> 00:12:53.600
So that's where that taking 100 wouldling down

415
00:12:53.600 --> 00:12:55.720
to like two-ish two to three deals a day.

416
00:12:55.720 --> 00:12:58.000
Those are usually companies that are doing over 10 million.

417
00:12:58.040 --> 00:12:59.760
And have all these other kind of things

418
00:12:59.760 --> 00:13:00.800
that are interesting about them.

419
00:13:00.800 --> 00:13:02.480
But sometimes we just hop on the phone with the founder

420
00:13:02.480 --> 00:13:03.520
and then we're like, this guy's crazy.

421
00:13:03.520 --> 00:13:04.880
A lot of times on the first call,

422
00:13:04.880 --> 00:13:06.680
we disqualify like 90% of companies

423
00:13:06.680 --> 00:13:08.960
because we're like, this is hairy or this feels weird

424
00:13:08.960 --> 00:13:11.000
or I don't really like the business or whatever else.

425
00:13:11.000 --> 00:13:12.480
A lot of times this business is that don't have

426
00:13:12.480 --> 00:13:13.880
any like compounding vehicle.

427
00:13:13.880 --> 00:13:15.840
And so that's what we look a lot for is,

428
00:13:15.840 --> 00:13:17.960
I have this theory that a business can only compound

429
00:13:17.960 --> 00:13:19.920
if you have a product that people never stop buying

430
00:13:19.920 --> 00:13:22.240
or you have a network of people that never stop selling.

431
00:13:22.240 --> 00:13:24.360
And so it's like if you have a real estate brokerage, right?

432
00:13:24.360 --> 00:13:26.400
You have a network of people that never stop selling for you.

433
00:13:26.400 --> 00:13:29.000
You have some reoccurring that comes from somebody sells a house

434
00:13:29.000 --> 00:13:30.000
and four years later they come back to you.

435
00:13:30.000 --> 00:13:31.680
But for the most part, it's onesy twosies.

436
00:13:31.680 --> 00:13:33.240
On the customer side, you have a SaaS software

437
00:13:33.240 --> 00:13:35.080
that's super sticky or you sell IT services

438
00:13:35.080 --> 00:13:36.080
and people don't really turn out.

439
00:13:36.080 --> 00:13:36.920
Those are the types of services

440
00:13:36.920 --> 00:13:39.480
that we focus a lot more on now.

441
00:13:39.480 --> 00:13:41.400
In our first round of companies,

442
00:13:41.400 --> 00:13:42.720
we basically had to take companies

443
00:13:42.720 --> 00:13:44.680
that were really profitable or had like,

444
00:13:44.680 --> 00:13:46.280
they had something that we really liked about them

445
00:13:46.280 --> 00:13:49.320
but they almost none of them had really good revenue retention.

446
00:13:49.320 --> 00:13:52.360
And so we spend a lot of time building that in

447
00:13:52.360 --> 00:13:53.720
so that we can get that compounding.

448
00:13:53.720 --> 00:13:56.240
But we just want to see that people keep buying

449
00:13:56.240 --> 00:13:57.960
and that they are good gross margins

450
00:13:57.960 --> 00:13:59.360
as they continue to buy.

451
00:13:59.360 --> 00:14:00.840
And so then those are the businesses

452
00:14:00.840 --> 00:14:02.000
that we can just knock out of the park

453
00:14:02.000 --> 00:14:04.440
because we know how to build acquisition out really well.

454
00:14:04.440 --> 00:14:06.080
We know how to build delivery out really well.

455
00:14:06.080 --> 00:14:08.080
The things that Layla and I are probably not the best at

456
00:14:08.080 --> 00:14:10.960
is like we're not the best at like super techy stuff.

457
00:14:10.960 --> 00:14:14.200
Like even though we have 40% of our portfolio is software-based,

458
00:14:14.200 --> 00:14:16.920
we heavily rely on the recruiting side

459
00:14:16.920 --> 00:14:18.880
of who we bring in, who is good at that stuff

460
00:14:18.880 --> 00:14:21.280
so that we can then just do all the business fundamentals

461
00:14:21.280 --> 00:14:22.120
to that model.

462
00:14:22.120 --> 00:14:24.400
And you're a big believer in demand constrained business,

463
00:14:24.400 --> 00:14:25.560
not supply constrained business.

464
00:14:25.560 --> 00:14:27.320
If I want to put my brand behind something,

465
00:14:27.320 --> 00:14:28.840
I want something that's demand constrained.

466
00:14:28.840 --> 00:14:30.800
If we're going to work on something,

467
00:14:30.800 --> 00:14:32.400
then I prefer the opposite.

468
00:14:32.400 --> 00:14:34.120
Yes, is the answer to the questions

469
00:14:34.120 --> 00:14:36.280
on both those situations we like demand constraints?

470
00:14:36.280 --> 00:14:39.240
Either we can generate it or if it's something that

471
00:14:39.240 --> 00:14:40.440
I have a huge amount of my audience

472
00:14:40.440 --> 00:14:41.760
that I can push towards and that's something

473
00:14:41.760 --> 00:14:42.600
that'd be interesting.

474
00:14:42.600 --> 00:14:45.080
So you're a big student of compounding.

475
00:14:45.080 --> 00:14:45.600
Yeah.

476
00:14:45.600 --> 00:14:46.640
You talk a lot about it.

477
00:14:46.640 --> 00:14:49.400
What skills have you compounded over your career

478
00:14:49.400 --> 00:14:51.680
and talk to me about why compounding some important?

479
00:14:51.680 --> 00:14:53.360
So I came from the gym business

480
00:14:53.360 --> 00:14:54.840
and probably one of the simplest

481
00:14:54.840 --> 00:14:56.440
reoccurring models that people understand.

482
00:14:56.440 --> 00:14:57.880
A lot of people don't know about the gym business,

483
00:14:57.880 --> 00:14:59.240
especially in the service-based gym.

484
00:14:59.240 --> 00:15:00.960
So like personal training, semi-private training,

485
00:15:00.960 --> 00:15:02.280
large group, which is where I came from.

486
00:15:02.280 --> 00:15:03.200
That was my bread and butter.

487
00:15:03.200 --> 00:15:05.560
Is that people cancel all the time,

488
00:15:05.560 --> 00:15:07.440
whereas like a $10 a month membership,

489
00:15:07.440 --> 00:15:09.160
it's lower and it tends to be more like

490
00:15:09.160 --> 00:15:10.680
a facility usage business

491
00:15:10.680 --> 00:15:12.320
than it is actually like a service business.

492
00:15:12.320 --> 00:15:14.000
I remember the first time I looked at churn

493
00:15:14.000 --> 00:15:16.080
and saw that I was like, okay, 10% churn,

494
00:15:16.080 --> 00:15:17.920
that's the industry average and then I just did it for a year.

495
00:15:17.920 --> 00:15:20.160
And I was like, oh, I lose 70% of my customers every year.

496
00:15:20.160 --> 00:15:21.480
That means that basically every month,

497
00:15:21.480 --> 00:15:23.640
I have to like go hunt and I never get credit

498
00:15:23.640 --> 00:15:24.760
for what I did three months ago.

499
00:15:24.760 --> 00:15:27.000
And so I wanted to have businesses where I could get credit

500
00:15:27.000 --> 00:15:28.360
for the work that I did five years ago

501
00:15:28.360 --> 00:15:30.280
to ladder up to the first question you asked,

502
00:15:30.280 --> 00:15:33.280
which was what has been compounding in my life.

503
00:15:33.280 --> 00:15:34.560
And skills has been the biggest investment

504
00:15:34.560 --> 00:15:35.600
I've made in my entire life.

505
00:15:35.600 --> 00:15:40.040
And so when I first started, I got pretty good at sales.

506
00:15:40.040 --> 00:15:41.240
I mean, I didn't know anything about it,

507
00:15:41.240 --> 00:15:42.640
but I got pretty good at it just from taking

508
00:15:42.640 --> 00:15:45.080
4,000 one-on-one consoles in person.

509
00:15:45.080 --> 00:15:46.760
I learned enough about the other stuff

510
00:15:46.760 --> 00:15:48.160
to have that just not be the limiter.

511
00:15:48.160 --> 00:15:50.320
So I learned how to run Facebook ads in 2013.

512
00:15:50.320 --> 00:15:52.080
I went to a workshop and somebody taught me how to do it

513
00:15:52.080 --> 00:15:54.040
and that ended up completely changing my life.

514
00:15:54.040 --> 00:15:55.880
And that's how I was able to fill all these gems up later.

515
00:15:55.880 --> 00:15:57.920
But then I didn't know how to do like more advanced stuff.

516
00:15:57.920 --> 00:16:00.280
So then I paid somebody else to teach me the more advanced stuff.

517
00:16:00.280 --> 00:16:02.640
And so what I have noticed is that

518
00:16:02.640 --> 00:16:06.920
with each kind of new set of skills that I acquire over time,

519
00:16:06.920 --> 00:16:11.240
it just makes the former skills that I learned way more valuable.

520
00:16:11.240 --> 00:16:13.640
I like telling the story of Jay-Z as a simple example.

521
00:16:13.640 --> 00:16:15.320
It's like, okay, so he had a natural proclivity

522
00:16:15.320 --> 00:16:17.000
towards like beats and rhythm, okay.

523
00:16:17.000 --> 00:16:18.880
Then he learns how to wrap, okay?

524
00:16:18.880 --> 00:16:20.040
Well, he's got some skill there.

525
00:16:20.080 --> 00:16:21.480
But then he learned how to promote.

526
00:16:21.480 --> 00:16:24.080
So now that made his wrapping skill more valuable.

527
00:16:24.080 --> 00:16:28.920
And then he learned how to sign other people on or create a label

528
00:16:28.920 --> 00:16:30.000
and then he learned how to sign other people

529
00:16:30.000 --> 00:16:30.840
and then promote them.

530
00:16:30.840 --> 00:16:32.520
And so all of a sudden he just gets more and more leverage

531
00:16:32.520 --> 00:16:33.920
on the original skill set.

532
00:16:33.920 --> 00:16:36.600
He still needs to be able to recognize good music

533
00:16:36.600 --> 00:16:37.520
from his original days.

534
00:16:37.520 --> 00:16:40.040
But learning how to promote on top of that

535
00:16:40.040 --> 00:16:41.200
just gave him huge leverage

536
00:16:41.200 --> 00:16:43.480
and then doing it with other people more so.

537
00:16:43.480 --> 00:16:46.360
So just to deconstruct that, let's use Jay-Z.

538
00:16:46.360 --> 00:16:47.680
So he's got that beats.

539
00:16:47.680 --> 00:16:49.720
Let's say you want to acquire the skill of wrapping.

540
00:16:49.720 --> 00:16:50.920
How do you go about that?

541
00:16:50.920 --> 00:16:52.880
How do you identify the skills needed

542
00:16:52.880 --> 00:16:54.320
and be acquired those skills?

543
00:16:54.320 --> 00:16:55.640
Well, I'll walk you through something

544
00:16:55.640 --> 00:16:56.880
that we like to think about.

545
00:16:56.880 --> 00:16:58.680
Everything we do is off the theory of constraints.

546
00:16:58.680 --> 00:17:00.880
We say, how do we do more what's working?

547
00:17:00.880 --> 00:17:02.600
And we continue to do more of what's working

548
00:17:02.600 --> 00:17:04.080
until something else gets in the way

549
00:17:04.080 --> 00:17:05.320
of us doing more of what's working.

550
00:17:05.320 --> 00:17:07.520
And then we ask the question, why can't we do it?

551
00:17:07.520 --> 00:17:09.880
And the answer to that question is typically the constraint.

552
00:17:09.880 --> 00:17:12.240
And then all of our resources will get deployed

553
00:17:12.240 --> 00:17:13.800
towards relieving that constraint.

554
00:17:13.800 --> 00:17:15.680
And then we go back to doing as much of that thing

555
00:17:15.680 --> 00:17:17.120
that made as money as possible.

556
00:17:17.120 --> 00:17:19.080
And if you don't know how to relieve that constraint,

557
00:17:19.120 --> 00:17:21.040
that's your lack of skill and then you gain that skill.

558
00:17:21.040 --> 00:17:22.640
Let's say you have to gain that skill.

559
00:17:22.640 --> 00:17:24.240
Let's say you have to become a promoter.

560
00:17:24.240 --> 00:17:25.040
How would you go about?

561
00:17:25.040 --> 00:17:26.160
I'll do a microcosm of this.

562
00:17:26.160 --> 00:17:27.720
So the ads thing I was saying earlier,

563
00:17:27.720 --> 00:17:29.920
I didn't know how to run national ad campaigns.

564
00:17:29.920 --> 00:17:31.040
So I knew how to run them locally,

565
00:17:31.040 --> 00:17:32.480
but then when we wanted to scale gym launch,

566
00:17:32.480 --> 00:17:33.800
I was like, I gotta learn how to do this nationally.

567
00:17:33.800 --> 00:17:35.360
I have no idea, how do you target gym owners?

568
00:17:35.360 --> 00:17:40.360
And so I got on the phone with agency owners

569
00:17:40.720 --> 00:17:42.840
and I didn't have a ton of money at the time.

570
00:17:42.840 --> 00:17:45.720
And so I just said, hey, can you run my ads

571
00:17:45.720 --> 00:17:47.080
but also show me what you're doing?

572
00:17:47.080 --> 00:17:48.480
And they all said, no.

573
00:17:48.520 --> 00:17:51.400
Until finally, I was like on the sixth call,

574
00:17:51.400 --> 00:17:52.800
the guy said, no.

575
00:17:52.800 --> 00:17:55.160
And I was like, dude, it's America.

576
00:17:55.160 --> 00:17:57.520
Like just name or pride, like what would it take?

577
00:17:57.520 --> 00:17:58.840
And this is one of my favorite questions.

578
00:17:58.840 --> 00:17:59.680
Yeah.

579
00:17:59.680 --> 00:18:00.680
I was like, what's a good line?

580
00:18:00.680 --> 00:18:01.520
Yeah, what would it take?

581
00:18:01.520 --> 00:18:02.920
I use that line all the time.

582
00:18:02.920 --> 00:18:04.080
Like what would it take to get a deal done?

583
00:18:04.080 --> 00:18:05.880
What would it take for us to do five YouTube videos

584
00:18:05.880 --> 00:18:07.480
a week better, 10 out of 10 quality?

585
00:18:07.480 --> 00:18:08.840
And then we can just decide the trade off

586
00:18:08.840 --> 00:18:09.680
if it's worth it.

587
00:18:09.680 --> 00:18:12.560
That particular agency owner said, I don't sell my time,

588
00:18:12.560 --> 00:18:14.280
but I would do it for 7, 15 hour.

589
00:18:14.280 --> 00:18:15.440
And I was like, okay.

590
00:18:15.480 --> 00:18:18.600
And so I bought eight hours from him for six grand.

591
00:18:18.600 --> 00:18:21.160
And I showed up to every call with like notes

592
00:18:21.160 --> 00:18:23.560
and recordings that I needed to learn how to do this.

593
00:18:23.560 --> 00:18:25.920
We go document, demonstrate, duplicate.

594
00:18:25.920 --> 00:18:27.240
So I have to figure out the checklist

595
00:18:27.240 --> 00:18:29.360
of all the things they do, what are the behaviors?

596
00:18:29.360 --> 00:18:31.520
And then you do it in front of me

597
00:18:31.520 --> 00:18:33.000
and then I do it in front of you.

598
00:18:33.000 --> 00:18:34.640
And then as long as I can duplicate,

599
00:18:34.640 --> 00:18:36.160
then I have the skill now.

600
00:18:36.160 --> 00:18:38.640
I learned this from Leila was when we want to learn

601
00:18:38.640 --> 00:18:42.040
a new skill, we also interview people for the skill

602
00:18:42.040 --> 00:18:44.040
because usually it's a company that has a void.

603
00:18:44.040 --> 00:18:46.800
But we'll get on the phone with 10 or 20 people

604
00:18:46.800 --> 00:18:49.600
with the intention obviously of hiring somebody

605
00:18:49.600 --> 00:18:50.440
who's really good.

606
00:18:50.440 --> 00:18:51.960
But if you talk to 10 or 20 people

607
00:18:51.960 --> 00:18:55.240
that are all like senior director of customer success,

608
00:18:55.240 --> 00:18:57.560
he say, hey, walk me through some of the metrics

609
00:18:57.560 --> 00:19:00.160
that you track for this.

610
00:19:00.160 --> 00:19:01.440
And then how do you move these metrics?

611
00:19:01.440 --> 00:19:03.080
So what activities do you do to change them?

612
00:19:03.080 --> 00:19:05.120
My belief is that you can tell someone's skill

613
00:19:05.120 --> 00:19:07.040
by the quantity and quality of metrics they track.

614
00:19:07.040 --> 00:19:08.400
Easier thing is sales because most people

615
00:19:08.400 --> 00:19:09.480
who are listening get what that is.

616
00:19:09.480 --> 00:19:11.080
If I talk to a sales director and I say,

617
00:19:11.120 --> 00:19:14.360
first off, how do you make this company more money?

618
00:19:14.360 --> 00:19:15.360
Now if they say something like, well,

619
00:19:15.360 --> 00:19:16.200
I'm going to increase sales.

620
00:19:16.200 --> 00:19:18.000
It's like, no, but you're not going to be on the phone.

621
00:19:18.000 --> 00:19:20.280
So how do you increase sales?

622
00:19:20.280 --> 00:19:22.200
And so then it's like you start to put a little bit of pressure

623
00:19:22.200 --> 00:19:24.360
and then because if they can't tie the activities

624
00:19:24.360 --> 00:19:26.600
that they do to revenue generation on the interview,

625
00:19:26.600 --> 00:19:29.560
then for sure they're not going to do what they work for you.

626
00:19:29.560 --> 00:19:31.800
And some guys like, oh, I'm just going to roll up the team

627
00:19:31.800 --> 00:19:32.880
and I'm going to get them excited.

628
00:19:32.880 --> 00:19:34.160
We're going to do some training.

629
00:19:34.160 --> 00:19:36.480
That's not going to be a good sales manager, right?

630
00:19:36.480 --> 00:19:39.040
If someone says, well, I'm going to look at the offer

631
00:19:39.040 --> 00:19:39.880
percentage that we have.

632
00:19:39.880 --> 00:19:40.840
And we'll get our scheduling rates.

633
00:19:40.840 --> 00:19:41.760
I'm going to get our show rates.

634
00:19:41.760 --> 00:19:43.240
If we show rates are low, I'm going to do this.

635
00:19:43.240 --> 00:19:44.880
If our rates are low, we're going to look at marketing

636
00:19:44.880 --> 00:19:46.120
and make sure the messaging's right.

637
00:19:46.120 --> 00:19:48.400
If we're struggling with whatever a specific obstacle

638
00:19:48.400 --> 00:19:49.760
than what I'm going to do is I'm just going to isolate

639
00:19:49.760 --> 00:19:50.760
that obstacle and then we're going to drill it.

640
00:19:50.760 --> 00:19:53.080
I'm going to look at that particular reps closing percentage

641
00:19:53.080 --> 00:19:54.240
and make sure that it gets up to KB.

642
00:19:54.240 --> 00:19:56.680
If he starts breaking down all of these pieces,

643
00:19:56.680 --> 00:19:58.800
then I'm like, okay, not only is he tracking the metrics,

644
00:19:58.800 --> 00:20:00.280
but he knows how to affect them.

645
00:20:00.280 --> 00:20:03.320
And so then also when I talk to four other guys,

646
00:20:03.320 --> 00:20:04.600
and I get onto the fourth call,

647
00:20:04.600 --> 00:20:06.600
that first guy might have said something that I didn't know

648
00:20:06.600 --> 00:20:07.960
about, but when I go on the fourth call,

649
00:20:07.960 --> 00:20:10.120
I'm like, so what do you think about this?

650
00:20:10.120 --> 00:20:11.440
And then how they respond to it.

651
00:20:11.440 --> 00:20:12.760
Right, I get better and better at it.

652
00:20:12.760 --> 00:20:14.840
And so then I start to know what to look for.

653
00:20:14.840 --> 00:20:16.240
And then if I still have no idea,

654
00:20:16.240 --> 00:20:17.560
then that's when I'll pay somebody.

655
00:20:17.560 --> 00:20:20.320
I mean, I'm still the biggest fan of one-on-one tutoring.

656
00:20:20.320 --> 00:20:21.440
It's like out of vogue now,

657
00:20:21.440 --> 00:20:23.160
but I'll pay anybody to learn something.

658
00:20:23.160 --> 00:20:25.080
I offered someone $350,000 for dinner.

659
00:20:25.080 --> 00:20:26.280
He said, no, I offered $250,

660
00:20:26.280 --> 00:20:27.800
and then we offered $350, he was like, fine.

661
00:20:27.800 --> 00:20:28.640
He didn't even take the money.

662
00:20:28.640 --> 00:20:30.600
He's like, I'll just meet you for dinner now.

663
00:20:30.600 --> 00:20:31.680
Because you're so desperate.

664
00:20:31.680 --> 00:20:33.400
But I wanted to understand branding.

665
00:20:33.400 --> 00:20:35.240
Because it was this thing that I realized

666
00:20:35.240 --> 00:20:36.160
that I didn't understand.

667
00:20:36.160 --> 00:20:38.400
So in gym launch, it was very much an arbitrage business,

668
00:20:38.400 --> 00:20:39.520
like a media arbitrage business.

669
00:20:39.520 --> 00:20:41.000
And so everything was quant-based.

670
00:20:41.000 --> 00:20:42.760
And that was kind of like how it was all I cared about.

671
00:20:42.760 --> 00:20:44.880
It was just like, what are CTRs, where are CPMs,

672
00:20:44.880 --> 00:20:47.400
what's our cost per lead, what schedule, what show,

673
00:20:47.400 --> 00:20:49.080
what's close rate, and that's all I cared about.

674
00:20:49.080 --> 00:20:50.160
It was just blowing as much money

675
00:20:50.160 --> 00:20:51.800
through that funnel as possible.

676
00:20:51.800 --> 00:20:53.120
The moment that changed my life around this,

677
00:20:53.120 --> 00:20:54.760
and this is ultimately the beginning of my path

678
00:20:54.760 --> 00:20:56.760
down to building a personal brand

679
00:20:56.760 --> 00:20:58.760
was this is going to sound embarrassing.

680
00:20:58.760 --> 00:20:59.480
It's very embarrassing.

681
00:20:59.480 --> 00:21:02.080
I saw Kylie Jenner on the cover of Forbes,

682
00:21:02.080 --> 00:21:03.760
and I think she was 19 or 20,

683
00:21:03.760 --> 00:21:05.160
and I think I was 27 at the time,

684
00:21:05.160 --> 00:21:06.400
and I thought I was hot shit,

685
00:21:06.400 --> 00:21:07.880
because I was like, I'm taking a million and a half a month,

686
00:21:07.880 --> 00:21:09.720
like personally, and it's that she was a billionaire.

687
00:21:09.720 --> 00:21:11.160
And I was like, she's a girl.

688
00:21:11.160 --> 00:21:12.080
She's seven years younger than me.

689
00:21:12.080 --> 00:21:13.480
And at the time, I was still young.

690
00:21:13.480 --> 00:21:14.520
Now I'm just a white dude.

691
00:21:14.520 --> 00:21:17.240
But like before this, I was at least a young white dude.

692
00:21:17.240 --> 00:21:20.080
And so when I saw that, I have this fundamental belief

693
00:21:20.080 --> 00:21:21.200
that if someone makes more money than you,

694
00:21:21.200 --> 00:21:22.880
then they know something about business that you don't know.

695
00:21:22.880 --> 00:21:24.440
And then they're better than you in some way.

696
00:21:24.440 --> 00:21:25.840
And so you have to figure out what it is.

697
00:21:25.840 --> 00:21:27.080
And so I looked at everything, I was like,

698
00:21:27.080 --> 00:21:28.520
I gotta figure out this brand stuff.

699
00:21:28.520 --> 00:21:30.560
Like it's the brand, I don't have a brand.

700
00:21:30.560 --> 00:21:32.000
And so then I went through this long path,

701
00:21:32.000 --> 00:21:33.800
like, do I want to be known publicly?

702
00:21:33.800 --> 00:21:35.640
Fame has pros and cons.

703
00:21:35.640 --> 00:21:36.720
And at this point in my life,

704
00:21:36.720 --> 00:21:38.560
it has more pros than cons.

705
00:21:38.560 --> 00:21:40.120
The thing is, is that the pros of fame,

706
00:21:40.120 --> 00:21:41.720
there are some pros that I didn't expect.

707
00:21:41.720 --> 00:21:43.600
The biggest one is recruiting.

708
00:21:43.600 --> 00:21:46.240
Our ability to attract talent now is unparalleled.

709
00:21:46.240 --> 00:21:48.360
And that has probably driven more alpha

710
00:21:48.360 --> 00:21:49.640
from the investment than anything.

711
00:21:49.640 --> 00:21:51.480
The companies we started investing in,

712
00:21:51.480 --> 00:21:53.520
there was no way that some of the top talent

713
00:21:53.520 --> 00:21:54.560
that we put in those companies

714
00:21:54.560 --> 00:21:56.560
would have even taken a call with those companies,

715
00:21:56.560 --> 00:21:57.760
but we recruit from HoltCo.

716
00:21:57.760 --> 00:22:00.320
They see a private equity firm slash family office,

717
00:22:00.400 --> 00:22:01.920
they can look at a whole bunch of our content,

718
00:22:01.920 --> 00:22:03.080
be like, these people seem okay.

719
00:22:03.080 --> 00:22:05.360
They don't want to work at a $10 million revenue business,

720
00:22:05.360 --> 00:22:06.880
but if it's part of a family office,

721
00:22:06.880 --> 00:22:08.720
where you could grow and grow your skillset, that's it.

722
00:22:08.720 --> 00:22:10.240
Yeah, and if you peer yourself, we can move you over.

723
00:22:10.240 --> 00:22:11.480
And if you want to be in a different industry,

724
00:22:11.480 --> 00:22:12.640
we've got different industries.

725
00:22:12.640 --> 00:22:15.880
And if you crush it, then you can come up to HoltCo

726
00:22:15.880 --> 00:22:17.360
and then basically act as an advisor

727
00:22:17.360 --> 00:22:19.320
for all of those roles across the portfolio.

728
00:22:19.320 --> 00:22:21.520
And so like, our director of CS,

729
00:22:21.520 --> 00:22:23.520
directs all the directors of CS

730
00:22:23.520 --> 00:22:24.640
in all the portfolio companies.

731
00:22:24.640 --> 00:22:26.800
Our director of sales, directs and recruits,

732
00:22:26.800 --> 00:22:28.600
the sales directors for all the portfolio companies.

733
00:22:28.600 --> 00:22:32.240
Now what this does is it gives us a huge amount of leverage

734
00:22:32.240 --> 00:22:35.080
and kind of like inside man for all the companies.

735
00:22:35.080 --> 00:22:38.040
And so because we recruit some of the leaders,

736
00:22:38.040 --> 00:22:39.280
they have a good relationship with us.

737
00:22:39.280 --> 00:22:41.080
So we're not like this, the board.

738
00:22:41.080 --> 00:22:41.920
You know what I mean?

739
00:22:41.920 --> 00:22:42.920
They're like, oh no, it's Alex and Layla,

740
00:22:42.920 --> 00:22:44.240
and they're the ones who brought me in.

741
00:22:44.240 --> 00:22:46.200
My first three interviews were at Acquisition.com

742
00:22:46.200 --> 00:22:48.240
and then they put me into this business

743
00:22:48.240 --> 00:22:49.600
as my last two interviews.

744
00:22:49.600 --> 00:22:50.920
And so that's more or less the process

745
00:22:50.920 --> 00:22:53.160
that we run in order to place talent.

746
00:22:53.160 --> 00:22:54.640
So that's been a huge, that's been probably

747
00:22:54.640 --> 00:22:58.160
the biggest unforeseen benefit from fame

748
00:22:58.200 --> 00:23:00.520
has been our ability to recruit talent.

749
00:23:00.520 --> 00:23:02.000
Obviously the deal flow stuff is,

750
00:23:02.000 --> 00:23:03.520
I mean that's the obvious benefit.

751
00:23:03.520 --> 00:23:04.760
Those are probably the two biggest ones.

752
00:23:04.760 --> 00:23:05.800
Access to people.

753
00:23:05.800 --> 00:23:08.040
To be candid with you, I don't reach out to many people.

754
00:23:08.040 --> 00:23:08.880
Why?

755
00:23:08.880 --> 00:23:10.360
Take this the way I mean it to everyone who's listening.

756
00:23:10.360 --> 00:23:11.800
I'm pretty sure I know what I need to do.

757
00:23:11.800 --> 00:23:13.480
What activities I need to do in order to hit the goals

758
00:23:13.480 --> 00:23:17.120
that we have in the next 12 to 24 months, it is straightforward.

759
00:23:17.120 --> 00:23:19.200
And so the only thing that separates me from that

760
00:23:19.200 --> 00:23:20.040
is doing it.

761
00:23:20.040 --> 00:23:22.960
And so I basically try to eliminate all meetings.

762
00:23:22.960 --> 00:23:25.760
There's a concept of efficiency versus effectiveness.

763
00:23:25.760 --> 00:23:26.600
Yeah.

764
00:23:26.600 --> 00:23:27.760
And you're clearly very efficient.

765
00:23:27.760 --> 00:23:29.040
How do you know that you're effective?

766
00:23:29.040 --> 00:23:30.400
How do you have such a certain tier on that?

767
00:23:30.400 --> 00:23:32.040
The outcomes that we've generated so far,

768
00:23:32.040 --> 00:23:34.240
you know, in December of 2016, I had a thousand bucks.

769
00:23:34.240 --> 00:23:35.680
I may have a lot more than a thousand bucks now.

770
00:23:35.680 --> 00:23:37.320
How much of your success is based on thousands

771
00:23:37.320 --> 00:23:39.680
of hours of hard work versus high IQ?

772
00:23:39.680 --> 00:23:41.680
You deconstruct everything on a skill set basis,

773
00:23:41.680 --> 00:23:43.160
but isn't there a minimum IQ

774
00:23:43.160 --> 00:23:44.560
that you need to be successful in business?

775
00:23:44.560 --> 00:23:45.880
I think it depends on the business

776
00:23:45.880 --> 00:23:47.040
and it depends on the timeline.

777
00:23:47.040 --> 00:23:49.520
I've seen all manners of business owners

778
00:23:49.520 --> 00:23:51.240
walk through our doors here at Acquisition.com.

779
00:23:51.240 --> 00:23:53.160
I've seen some guys with janitorial businesses

780
00:23:53.160 --> 00:23:54.760
doing 40, 50 million dollars a year

781
00:23:54.760 --> 00:23:57.000
and I wouldn't say that they were super high IQ.

782
00:23:57.040 --> 00:23:59.120
They just stuck with it for 20 years.

783
00:23:59.120 --> 00:24:01.560
I think the narrower the field of focus,

784
00:24:01.560 --> 00:24:03.320
the lower the IQ requirement,

785
00:24:03.320 --> 00:24:07.480
because fundamentally, if you have a sound original model

786
00:24:07.480 --> 00:24:09.840
and you continue to try on a long enough time rise

787
00:24:09.840 --> 00:24:12.080
and eventually you try something and it does work

788
00:24:12.080 --> 00:24:13.880
and then that gives you the next, you know,

789
00:24:13.880 --> 00:24:16.120
peg, you know, up on the ladder.

790
00:24:16.120 --> 00:24:17.160
And you just keep doing that.

791
00:24:17.160 --> 00:24:18.560
I think we're a lot of much better skin troubles

792
00:24:18.560 --> 00:24:19.400
that they try too many things.

793
00:24:19.400 --> 00:24:21.000
So you just don't get enough failures

794
00:24:21.000 --> 00:24:23.720
in a narrow enough scope so that you can move forward.

795
00:24:23.720 --> 00:24:25.120
I've been really thinking about this paradigm

796
00:24:25.120 --> 00:24:27.640
of transactional versus relational businesses.

797
00:24:27.640 --> 00:24:28.880
I'm very much a straight shooter

798
00:24:28.880 --> 00:24:30.600
and sometimes people are put off by that,

799
00:24:30.600 --> 00:24:32.640
by the transactional nature,

800
00:24:32.640 --> 00:24:34.200
but it's meant to be an honest trade

801
00:24:34.200 --> 00:24:36.600
and sometimes historically I would feel bad about that.

802
00:24:36.600 --> 00:24:39.160
And then I noticed an interesting thing that any time

803
00:24:39.160 --> 00:24:40.440
that somebody pushes back on that

804
00:24:40.440 --> 00:24:42.440
and says I'm like, I'm not transactional.

805
00:24:42.440 --> 00:24:43.520
They have never executed.

806
00:24:43.520 --> 00:24:46.720
Not a single time somebody that pushes back on this construct

807
00:24:46.720 --> 00:24:48.600
on this kind of like explicit exchange

808
00:24:48.600 --> 00:24:49.840
have they actually executed.

809
00:24:49.840 --> 00:24:52.320
So it makes me feel a little bit more confident in that.

810
00:24:52.320 --> 00:24:54.360
I think that great relationships are built

811
00:24:54.360 --> 00:24:55.520
on great transactions.

812
00:24:55.520 --> 00:24:56.640
So what do you think about this?

813
00:24:56.640 --> 00:24:58.480
So I'm glad that this is where we went

814
00:24:58.480 --> 00:25:00.200
because that's wholeheartedly agree.

815
00:25:00.200 --> 00:25:01.720
I mean, Laila and I have an explicit agreement

816
00:25:01.720 --> 00:25:02.560
of our exchange.

817
00:25:02.560 --> 00:25:03.800
We risked that agreement if we feel like

818
00:25:03.800 --> 00:25:05.160
one of us is out of exchange with the other

819
00:25:05.160 --> 00:25:06.520
or we're not meeting the other person's needs

820
00:25:06.520 --> 00:25:09.560
but I genuinely believe everything is transactional

821
00:25:09.560 --> 00:25:10.880
and there's just people who realize it

822
00:25:10.880 --> 00:25:12.200
or admit it and people who don't.

823
00:25:12.200 --> 00:25:13.400
Fundamentally, if you are not rewarded

824
00:25:13.400 --> 00:25:14.640
for a relationship on a long enough time

825
00:25:14.640 --> 00:25:15.480
or as in you will leave it.

826
00:25:15.480 --> 00:25:16.880
I think there's two aspects there.

827
00:25:16.880 --> 00:25:20.280
One is the transactional aspect is only highlighted

828
00:25:20.280 --> 00:25:21.360
when it's really out of sync.

829
00:25:21.360 --> 00:25:24.480
So for example, if we have a relationship,

830
00:25:24.480 --> 00:25:25.960
you know, I make you $100 million,

831
00:25:25.960 --> 00:25:27.240
you make me $200 million.

832
00:25:27.240 --> 00:25:28.320
I don't think that's a problem.

833
00:25:28.320 --> 00:25:30.640
Yeah, I think we're gonna be best friends.

834
00:25:30.640 --> 00:25:32.600
I think, but over enough of a time,

835
00:25:32.600 --> 00:25:34.200
if it's so lopsided,

836
00:25:34.200 --> 00:25:36.040
then people naturally kind of go to like,

837
00:25:36.040 --> 00:25:38.120
hey, there needs to be more transactionalizing

838
00:25:38.120 --> 00:25:39.920
for me or more benefit for me.

839
00:25:39.920 --> 00:25:41.200
That's where it really gets off of sync

840
00:25:41.200 --> 00:25:42.040
with these extremes.

841
00:25:42.040 --> 00:25:43.240
And you look on partnerships too.

842
00:25:43.240 --> 00:25:45.320
You look at co-founders or 50-50.

843
00:25:45.320 --> 00:25:47.680
I don't think if somebody's doing 55-45,

844
00:25:47.680 --> 00:25:49.280
I don't think there's, I've never seen a problem.

845
00:25:49.280 --> 00:25:50.760
It's when it becomes like 90-10.

846
00:25:50.760 --> 00:25:52.360
The other person tries to kind of guilt

847
00:25:52.360 --> 00:25:54.280
other person saying like, well, I thought we were co-founders.

848
00:25:54.280 --> 00:25:56.040
I thought we started this together.

849
00:25:56.040 --> 00:25:58.080
But I think you need a pretty wide disparity

850
00:25:58.080 --> 00:25:59.000
before it becomes an issue.

851
00:25:59.000 --> 00:26:01.080
Something I learned from Layla that helped me out a lot

852
00:26:01.080 --> 00:26:02.080
in the earlier years,

853
00:26:02.080 --> 00:26:03.680
as she said, never count anybody else's money.

854
00:26:03.680 --> 00:26:06.280
That's proven so profitable for me to just say,

855
00:26:06.280 --> 00:26:07.880
what do I have available to me?

856
00:26:07.880 --> 00:26:10.280
And does this deal make sense for me?

857
00:26:10.280 --> 00:26:13.240
If this guy makes 20 billion on this deal,

858
00:26:13.240 --> 00:26:17.680
but the economics based on my side work, fine.

859
00:26:17.680 --> 00:26:19.600
And comparing those economics

860
00:26:19.600 --> 00:26:21.520
to the similar amount of activities or effort

861
00:26:21.520 --> 00:26:23.040
that I have to put in all the other vehicles

862
00:26:23.040 --> 00:26:23.920
that I could consider,

863
00:26:23.920 --> 00:26:26.080
if I get the best return on this thing,

864
00:26:26.080 --> 00:26:27.560
then I'm good with it.

865
00:26:27.560 --> 00:26:30.800
And so I've had this construct for value creation,

866
00:26:30.800 --> 00:26:33.600
which has been, well, rather, value capturing,

867
00:26:33.600 --> 00:26:36.680
which is there's the value that you add,

868
00:26:36.680 --> 00:26:37.880
which is thing one,

869
00:26:37.880 --> 00:26:40.720
your ability to negotiate against that value,

870
00:26:40.720 --> 00:26:42.640
how much of that can you capture.

871
00:26:42.640 --> 00:26:45.440
Third vector is how many other people can do it,

872
00:26:45.440 --> 00:26:46.320
that thing.

873
00:26:46.320 --> 00:26:48.640
And then fourth is what's the risk you take on.

874
00:26:48.640 --> 00:26:50.880
And I think that with those four elements,

875
00:26:50.880 --> 00:26:53.560
you can usually look at most deals

876
00:26:53.560 --> 00:26:56.160
and kind of know the major levers that are at play.

877
00:26:56.160 --> 00:26:58.520
So walk me through one of your private equity deals

878
00:26:58.520 --> 00:26:59.480
using that framework.

879
00:26:59.480 --> 00:27:03.240
If I bring brand to a deal,

880
00:27:03.240 --> 00:27:05.240
then that's gonna be a huge amount of value.

881
00:27:05.240 --> 00:27:07.760
The ability that I to negotiate to capture

882
00:27:07.760 --> 00:27:08.800
as much of that value as possible

883
00:27:08.800 --> 00:27:11.080
is predicated on the idea that I have many other deals

884
00:27:11.080 --> 00:27:12.720
that I could do as well that are lined up

885
00:27:12.720 --> 00:27:13.920
behind this other person.

886
00:27:13.920 --> 00:27:15.120
And your negotiation skill set.

887
00:27:15.120 --> 00:27:16.560
I still believe that all negotiation

888
00:27:16.560 --> 00:27:19.000
helps before we sit down at the table.

889
00:27:19.000 --> 00:27:19.760
The big stuff.

890
00:27:19.760 --> 00:27:22.120
It's fundamentally supply demand.

891
00:27:22.120 --> 00:27:23.400
I just have always seen it that way.

892
00:27:23.400 --> 00:27:25.480
So it's like, if I wanna have crazy terms

893
00:27:25.480 --> 00:27:28.000
to get into a relationship with a girl, for example,

894
00:27:28.000 --> 00:27:29.640
if I have no demand for me,

895
00:27:29.640 --> 00:27:31.120
it's gonna be very hard for me to get my terms.

896
00:27:31.120 --> 00:27:33.000
If I have a line out the door,

897
00:27:33.000 --> 00:27:34.240
I can ask a hundred people and one of them

898
00:27:34.240 --> 00:27:35.640
will say yes to my terms, right?

899
00:27:35.640 --> 00:27:37.680
So one is what's the value that I bring?

900
00:27:37.680 --> 00:27:39.920
Two is what are my skills at negotiating capturing

901
00:27:39.920 --> 00:27:41.200
as much of that value as possible?

902
00:27:41.200 --> 00:27:43.640
Three, and this also hints at supply demand,

903
00:27:43.640 --> 00:27:45.160
which is how many other people are available

904
00:27:45.160 --> 00:27:46.160
who can do that same thing?

905
00:27:46.160 --> 00:27:48.000
This is like a common one with like a sales guy, right?

906
00:27:48.000 --> 00:27:49.920
So it's like, okay, well, I brought in three million

907
00:27:49.920 --> 00:27:51.000
this year for the business.

908
00:27:51.000 --> 00:27:53.280
It's like, okay, well, your ability to negotiate the value,

909
00:27:53.280 --> 00:27:54.520
fine, you might be good at sales

910
00:27:54.520 --> 00:27:56.680
and be able to go back and forth.

911
00:27:56.680 --> 00:27:58.600
But I've got 10 other guys who can do the exact same thing

912
00:27:58.600 --> 00:28:00.800
as you, you were just saying Candida, baby.

913
00:28:00.800 --> 00:28:02.720
You were selling something very, very attractive.

914
00:28:02.720 --> 00:28:03.560
Right.

915
00:28:03.560 --> 00:28:05.400
And then finally, it's what's the risk that's taken on?

916
00:28:05.400 --> 00:28:07.040
And that's actually the most recent one

917
00:28:07.040 --> 00:28:09.280
which sounds silly on an investor podcast to bring that up.

918
00:28:09.280 --> 00:28:11.560
But we were talking to a high level employee

919
00:28:11.560 --> 00:28:12.720
that we wanted to bring in and he was like,

920
00:28:12.800 --> 00:28:14.920
okay, I would like, shares the business kind of up front

921
00:28:14.920 --> 00:28:16.920
because I'm going to be, you know, forgoing this other stuff.

922
00:28:16.920 --> 00:28:19.840
Basically, the TLDR was you want to be compensated

923
00:28:19.840 --> 00:28:22.400
as a business owner without taking on the risk of a business owner.

924
00:28:22.400 --> 00:28:24.720
Unless you're willing to put the same amount of skin in the game

925
00:28:24.720 --> 00:28:26.760
as I am or a business owner would in your position.

926
00:28:26.760 --> 00:28:27.600
When you started.

927
00:28:27.600 --> 00:28:28.440
Yeah, exactly.

928
00:28:28.440 --> 00:28:29.280
Exactly.

929
00:28:29.280 --> 00:28:30.120
Right.

930
00:28:30.120 --> 00:28:31.440
Well, yeah, then that's, this is not appropriate.

931
00:28:31.440 --> 00:28:33.840
So from your perspective, it should be about their opportunity

932
00:28:33.840 --> 00:28:35.120
costs, one of your competitors,

933
00:28:35.120 --> 00:28:37.720
and you don't have to offer much more to stay there.

934
00:28:37.720 --> 00:28:39.440
I want people to be happy to be very clear.

935
00:28:39.440 --> 00:28:40.560
Like, what would it take?

936
00:28:40.560 --> 00:28:42.600
I still as always, one of my favorite questions

937
00:28:42.680 --> 00:28:43.920
if I have somebody who's one of one

938
00:28:43.920 --> 00:28:45.120
who can create a ton of value,

939
00:28:45.120 --> 00:28:46.800
then the supply to manage shifts in their favor.

940
00:28:46.800 --> 00:28:48.800
You've taught me, by the way, about A-Players,

941
00:28:48.800 --> 00:28:51.200
not like giving them what they want at the margins.

942
00:28:51.200 --> 00:28:52.600
Don't be cheap with A-Players, you know,

943
00:28:52.600 --> 00:28:53.440
then it goes shit hard.

944
00:28:53.440 --> 00:28:55.560
I've learned so much from Layla about business.

945
00:28:55.560 --> 00:28:57.400
She was really the one who pushed me to be like,

946
00:28:57.400 --> 00:28:58.880
let's pay above market.

947
00:28:58.880 --> 00:29:00.160
And I was like, why pay above market?

948
00:29:00.160 --> 00:29:01.160
Let's pay market.

949
00:29:01.160 --> 00:29:02.400
Yeah, why pay above market?

950
00:29:02.400 --> 00:29:03.720
Because you get so much more.

951
00:29:03.720 --> 00:29:06.200
So on one level, you'll be able to attract the A-Players

952
00:29:06.200 --> 00:29:07.360
if you're paying above market.

953
00:29:07.360 --> 00:29:09.960
But I think that once the person comes in the door,

954
00:29:09.960 --> 00:29:11.960
all of their behavior is going to be predicated

955
00:29:12.000 --> 00:29:14.120
on the reinforcement loops that you have within the business.

956
00:29:14.120 --> 00:29:17.240
And so I think that it's the ticket of entry,

957
00:29:17.240 --> 00:29:18.480
like the comp is the ticket of entry,

958
00:29:18.480 --> 00:29:20.160
but all their performance is going to be based on

959
00:29:20.160 --> 00:29:21.720
how well they are managed and led

960
00:29:21.720 --> 00:29:23.200
and their opportunities for growth.

961
00:29:23.200 --> 00:29:24.720
And honestly, just like how much they sink

962
00:29:24.720 --> 00:29:25.720
within the culture of the business

963
00:29:25.720 --> 00:29:27.080
based on how we do things.

964
00:29:27.080 --> 00:29:28.560
And if they're rewarded frequently for doing things

965
00:29:28.560 --> 00:29:29.440
the way we want them to be done

966
00:29:29.440 --> 00:29:30.280
that make us the most money,

967
00:29:30.280 --> 00:29:32.600
then they're gonna be, they're gonna really like working here.

968
00:29:32.600 --> 00:29:33.800
And then that will ultimately, like,

969
00:29:33.800 --> 00:29:36.360
the big, biggest headlights for a eight-plus talent

970
00:29:36.360 --> 00:29:38.240
is unlocking discretionary effort.

971
00:29:38.240 --> 00:29:39.560
I want someone's shower time.

972
00:29:39.560 --> 00:29:40.720
And I'm open about that.

973
00:29:40.720 --> 00:29:43.120
And someone works based on threat of punishment,

974
00:29:43.120 --> 00:29:44.640
which is that you lose your job, right?

975
00:29:44.640 --> 00:29:47.560
Then you will get as much effort as required

976
00:29:47.560 --> 00:29:48.480
to not lose your job.

977
00:29:48.480 --> 00:29:50.160
For the most skilled people,

978
00:29:50.160 --> 00:29:52.320
that requires the least effort for them to do

979
00:29:52.320 --> 00:29:53.760
as little as required to keep their job.

980
00:29:53.760 --> 00:29:56.000
And those are the people that you lose the most alpha on

981
00:29:56.000 --> 00:29:58.960
in terms of how much they could add if they really tried.

982
00:29:58.960 --> 00:30:00.440
I mean, if you wanted to zoom all the way out,

983
00:30:00.440 --> 00:30:03.160
like, layl and I's purpose of all of this stuff

984
00:30:03.160 --> 00:30:06.640
is to show that having a way of running a company

985
00:30:06.640 --> 00:30:08.320
that is off of praise, not punishment

986
00:30:08.320 --> 00:30:11.400
is a more profitable way to run a business.

987
00:30:11.400 --> 00:30:13.000
And people don't hate you.

988
00:30:13.000 --> 00:30:15.280
But no one's gonna believe us until we have multiple billions

989
00:30:15.280 --> 00:30:18.240
and then people then ask, but that is our entire thesis.

990
00:30:18.240 --> 00:30:20.000
Daniel's here, he'll vouch for it.

991
00:30:20.000 --> 00:30:22.560
And the unlocking discretionary effort

992
00:30:22.560 --> 00:30:24.960
is that only captured through equity?

993
00:30:24.960 --> 00:30:26.920
Could that be captured through salary and how do you-

994
00:30:26.920 --> 00:30:27.760
Oh, yeah, yeah.

995
00:30:27.760 --> 00:30:28.880
No, it doesn't have to be equity at all.

996
00:30:28.880 --> 00:30:30.200
I think it's just how you treat people.

997
00:30:30.200 --> 00:30:32.240
Whether they're rewarded for going above and down.

998
00:30:32.240 --> 00:30:34.280
And I think reward cycles are way too latent

999
00:30:34.280 --> 00:30:34.960
in most people's business.

1000
00:30:34.960 --> 00:30:35.800
An arbitrary.

1001
00:30:35.800 --> 00:30:37.760
Yeah, well, latent in terms of, like, delayed.

1002
00:30:37.760 --> 00:30:40.360
Someone does something we want to reward in minutes.

1003
00:30:40.360 --> 00:30:43.480
A paycheck is so hard to attribute a behavior that you did.

1004
00:30:43.480 --> 00:30:44.880
My closest friend, Dr. Cashy,

1005
00:30:44.880 --> 00:30:47.320
is like a behavioral scientist, you know, genius guy.

1006
00:30:47.320 --> 00:30:48.520
He showed me this chart and it like,

1007
00:30:48.520 --> 00:30:50.280
it changed the way I saw everything.

1008
00:30:50.280 --> 00:30:52.280
He said, this is a chart of how to train a dog, how to sit.

1009
00:30:52.280 --> 00:30:54.240
On one vector it had, yeah, a number of attempts to

1010
00:30:54.240 --> 00:30:58.480
until they learn the trick and how delayed the trainer was

1011
00:30:58.480 --> 00:31:01.000
before they gave them a treat when they sat.

1012
00:31:01.000 --> 00:31:04.120
And so if you gave the dog the treat immediately,

1013
00:31:04.120 --> 00:31:06.240
it took a couple of times and they learned how to sit

1014
00:31:06.240 --> 00:31:07.880
because we reward them immediately after they did.

1015
00:31:07.880 --> 00:31:10.040
So they could tie the two together.

1016
00:31:10.040 --> 00:31:12.680
If you waited five seconds, it would be like 20 tries.

1017
00:31:12.680 --> 00:31:16.200
If you waited 45 seconds, it was a gazillion tries.

1018
00:31:16.200 --> 00:31:19.400
After a minute, the dog was untrainable.

1019
00:31:19.400 --> 00:31:21.040
It would never learn how to sit.

1020
00:31:21.040 --> 00:31:23.840
Now, where it gets like the 201 version of this is,

1021
00:31:23.840 --> 00:31:25.360
but you still continue to give them a treat,

1022
00:31:25.360 --> 00:31:26.400
which means you were training them.

1023
00:31:26.400 --> 00:31:28.440
You were just training them to do something else.

1024
00:31:28.440 --> 00:31:30.360
And so I think about this a lot within the context

1025
00:31:30.360 --> 00:31:32.640
of compensation systems, but comp with, you know,

1026
00:31:32.640 --> 00:31:35.840
paychecks is such a delay that it's a very effective way

1027
00:31:35.840 --> 00:31:38.240
of getting someone to join your company in a very terrible way

1028
00:31:38.240 --> 00:31:39.880
of getting them to work as hard as they can without us

1029
00:31:39.880 --> 00:31:41.240
sounding like psychopaths.

1030
00:31:41.240 --> 00:31:43.280
Do you believe in operand conditioning?

1031
00:31:43.280 --> 00:31:44.880
Yes, somebody does something and you give them

1032
00:31:44.880 --> 00:31:45.880
a bonus on Friday?

1033
00:31:45.880 --> 00:31:46.640
100%

1034
00:31:46.640 --> 00:31:48.840
And do you think there's any exception stopper in condition?

1035
00:31:48.840 --> 00:31:49.920
I don't even believe in free will.

1036
00:31:49.920 --> 00:31:50.760
Tell me more.

1037
00:31:50.760 --> 00:31:53.080
Well, we behave in ways that we have been rewarded for

1038
00:31:53.080 --> 00:31:53.920
in the past.

1039
00:31:53.920 --> 00:31:55.160
If you can control all the variables,

1040
00:31:55.160 --> 00:31:56.480
you can control someone's behavior.

1041
00:31:56.480 --> 00:31:58.520
Now that sounds like psychopath stuff,

1042
00:31:58.520 --> 00:32:00.160
but I don't see it that way.

1043
00:32:00.160 --> 00:32:01.440
I just see it as more of a statement effect.

1044
00:32:01.440 --> 00:32:03.640
If I wanted everyone in here to take all of their clothes off,

1045
00:32:03.640 --> 00:32:05.080
I could guarantee that I could do it.

1046
00:32:05.120 --> 00:32:06.960
I would just raise the temperature in this room and to a point

1047
00:32:06.960 --> 00:32:08.680
and we'd just stay in here until I'd lock the doors

1048
00:32:08.680 --> 00:32:09.680
and I'd raise the temperature.

1049
00:32:09.680 --> 00:32:11.240
And then eventually, all of us would take our clothes off.

1050
00:32:11.240 --> 00:32:13.840
And so if I can change the conditions to get a behavior,

1051
00:32:13.840 --> 00:32:15.760
then did that person have free will?

1052
00:32:15.760 --> 00:32:17.480
And so B.F. Skinner is one of the, you know,

1053
00:32:17.480 --> 00:32:19.120
the forefathers of this behavioral.

1054
00:32:19.120 --> 00:32:20.920
He has this quote that I just love

1055
00:32:20.920 --> 00:32:22.720
and it'll be at the beginning of one of my books.

1056
00:32:22.720 --> 00:32:25.160
But everyone says that you can lead a horse to water,

1057
00:32:25.160 --> 00:32:26.320
but you can't make a drink.

1058
00:32:26.320 --> 00:32:27.560
He said, false.

1059
00:32:27.560 --> 00:32:29.480
He said, if I salted the horse's mouth

1060
00:32:29.480 --> 00:32:31.120
and I dehydrated the horse for weeks

1061
00:32:31.120 --> 00:32:33.280
and then I put its mouth right in front of water,

1062
00:32:33.280 --> 00:32:34.920
I can veridably guarantee that it will drink.

1063
00:32:34.920 --> 00:32:37.160
And I think about like sales processes for that reason

1064
00:32:37.160 --> 00:32:39.000
is that there is a perfect sales process.

1065
00:32:39.000 --> 00:32:40.360
There is a way that we can get it

1066
00:32:40.360 --> 00:32:42.400
so that we can control all of the variables

1067
00:32:42.400 --> 00:32:43.840
that every single person would buy.

1068
00:32:43.840 --> 00:32:46.400
Now, it may not be worth the return investment,

1069
00:32:46.400 --> 00:32:48.360
which is a separate question, to create that

1070
00:32:48.360 --> 00:32:49.200
and then you have the trade offs

1071
00:32:49.200 --> 00:32:50.400
they have within a business.

1072
00:32:50.400 --> 00:32:52.800
But the same things exist when you're hiring someone.

1073
00:32:52.800 --> 00:32:54.280
So like if I know we're getting into a little bit

1074
00:32:54.280 --> 00:32:57.000
of the upside of business, it's hard for me to stay away.

1075
00:32:57.000 --> 00:32:58.760
But there's this whole concept of, you know,

1076
00:32:58.760 --> 00:33:01.400
higher for attitude and train for aptitude

1077
00:33:01.400 --> 00:33:02.880
and you've heard plenty of these things, right?

1078
00:33:02.880 --> 00:33:06.320
You hire for the smallest skill deficiency, period.

1079
00:33:06.320 --> 00:33:09.320
It's just that attitude has bundled terms

1080
00:33:09.320 --> 00:33:10.160
in terms of language.

1081
00:33:10.160 --> 00:33:13.120
And so if I say I want someone who has charisma,

1082
00:33:13.120 --> 00:33:16.040
charisma, if I say be charismatic to a child,

1083
00:33:16.040 --> 00:33:18.320
even if they understand what the word means,

1084
00:33:18.320 --> 00:33:19.880
they can't be charismatic.

1085
00:33:19.880 --> 00:33:22.320
They have to then translate that into smile

1086
00:33:22.320 --> 00:33:23.800
when you walk into a room, nod your head

1087
00:33:23.800 --> 00:33:25.720
when someone's listening, speak louder.

1088
00:33:25.720 --> 00:33:28.480
When someone says something, say it back to that,

1089
00:33:28.480 --> 00:33:31.840
you know, it's a bundled term for 30 sets of behaviors.

1090
00:33:32.000 --> 00:33:34.240
And then those behaviors are trainable.

1091
00:33:34.240 --> 00:33:37.560
Now, I believe in the concept of higher for attitude,

1092
00:33:37.560 --> 00:33:41.120
not aptitude, because to teach someone to be kind

1093
00:33:41.120 --> 00:33:44.200
may be 50 different micro skill sets

1094
00:33:44.200 --> 00:33:45.040
that I would have to teach.

1095
00:33:45.040 --> 00:33:47.160
And that's probably not worth the return on investment.

1096
00:33:47.160 --> 00:33:48.800
Now, in a higher level role,

1097
00:33:48.800 --> 00:33:50.640
it might be easier to teach someone to be kind

1098
00:33:50.640 --> 00:33:52.200
than to teach them 20 years of finance

1099
00:33:52.200 --> 00:33:54.400
or just find someone else, right?

1100
00:33:54.400 --> 00:33:56.480
We believe that acquisition.com,

1101
00:33:56.480 --> 00:33:58.080
that everything is trainable,

1102
00:33:58.080 --> 00:33:59.640
but everything is not worth training.

1103
00:33:59.720 --> 00:34:02.040
What about coachability, deconstruct that?

1104
00:34:02.040 --> 00:34:03.400
What makes somebody more trainable?

1105
00:34:03.400 --> 00:34:04.640
Someone who is coachable,

1106
00:34:04.640 --> 00:34:07.000
I would use at least our internal definition around this

1107
00:34:07.000 --> 00:34:08.120
was just intelligence.

1108
00:34:08.120 --> 00:34:09.360
Intelligence is rate of learning.

1109
00:34:09.360 --> 00:34:12.200
If we define learning as same condition new behavior,

1110
00:34:12.200 --> 00:34:15.440
then if I say, hey, answer this phone and say the script

1111
00:34:15.440 --> 00:34:17.320
and the phone rings and then you don't say the script

1112
00:34:17.320 --> 00:34:19.320
and I say, now read this script, phone rings again,

1113
00:34:19.320 --> 00:34:20.880
same condition, and then they read the script

1114
00:34:20.880 --> 00:34:22.360
and new behavior, they have learned.

1115
00:34:22.360 --> 00:34:24.880
If I can do that in one repetition with somebody

1116
00:34:24.880 --> 00:34:26.560
and it takes somebody else five repetitions,

1117
00:34:26.560 --> 00:34:28.040
the first person is more intelligent,

1118
00:34:28.040 --> 00:34:29.320
some people say more coachable,

1119
00:34:29.320 --> 00:34:30.680
then the other person.

1120
00:34:30.680 --> 00:34:33.480
And so I think you aptly pointed out

1121
00:34:33.480 --> 00:34:37.320
that one of the number one things that we look for now

1122
00:34:37.320 --> 00:34:38.520
is just general intelligence.

1123
00:34:38.520 --> 00:34:40.800
Basically, our return on investment

1124
00:34:40.800 --> 00:34:43.320
for what we put in two trains someone,

1125
00:34:43.320 --> 00:34:46.040
we can get down one fifth

1126
00:34:46.040 --> 00:34:47.840
if the person has higher general intelligence.

1127
00:34:47.840 --> 00:34:50.920
And so this is where sometimes you have people

1128
00:34:50.920 --> 00:34:52.720
who come in with lots of experience

1129
00:34:52.720 --> 00:34:53.760
and so they have a lot of skills,

1130
00:34:53.760 --> 00:34:55.640
but they're actually not very intelligent.

1131
00:34:55.640 --> 00:34:58.520
And so what you see is pretty much all you're going to get

1132
00:34:58.520 --> 00:35:00.000
because the amount of effort it takes them

1133
00:35:00.000 --> 00:35:02.160
to teach one or two more skills,

1134
00:35:02.160 --> 00:35:04.360
you could probably teach a younger, junior,

1135
00:35:04.360 --> 00:35:09.120
a hungrier or intelligent person in the same period of time,

1136
00:35:09.120 --> 00:35:10.640
but then once I've matched that person

1137
00:35:10.640 --> 00:35:13.200
or once that candidate has matched the more experienced one,

1138
00:35:13.200 --> 00:35:14.120
they blow past them.

1139
00:35:14.120 --> 00:35:16.800
Then a subset of intelligence is ego and ability

1140
00:35:16.800 --> 00:35:17.960
to take feedback.

1141
00:35:17.960 --> 00:35:19.520
Sure, but you don't believe in trauma.

1142
00:35:19.520 --> 00:35:20.680
No, I do believe in trauma.

1143
00:35:20.680 --> 00:35:22.760
I believe in defining it, which is a permanent,

1144
00:35:22.760 --> 00:35:24.480
I'll say this way, I don't believe trauma is bad.

1145
00:35:24.480 --> 00:35:25.960
It's a permanent change of behavior

1146
00:35:25.960 --> 00:35:27.720
based on an aversive stimulus.

1147
00:35:27.720 --> 00:35:31.520
So if I was a kid and I touched the stove

1148
00:35:31.520 --> 00:35:34.560
and I burned my hand, that is something that taught me something.

1149
00:35:34.560 --> 00:35:37.120
Now, if I never touched a stove again from that,

1150
00:35:37.120 --> 00:35:38.400
then the stove traumatized me.

1151
00:35:38.400 --> 00:35:40.440
The thought of question is, was that bad?

1152
00:35:40.440 --> 00:35:41.920
Fundamentally, you can imagine me

1153
00:35:41.920 --> 00:35:43.280
with like a room of like holistic healers

1154
00:35:43.280 --> 00:35:44.840
who are like doing bell things

1155
00:35:44.840 --> 00:35:47.200
and like, I think you're storing your trauma in your back.

1156
00:35:47.200 --> 00:35:48.680
I'm like, how do you know that?

1157
00:35:48.680 --> 00:35:49.520
Where?

1158
00:35:49.520 --> 00:35:50.360
Point to the anatomy.

1159
00:35:50.360 --> 00:35:53.240
Please tell me where I'm storing trauma.

1160
00:35:53.240 --> 00:35:54.080
What does it even mean?

1161
00:35:54.080 --> 00:35:56.760
And so by seeing this world, the world this way at least,

1162
00:35:56.760 --> 00:35:58.360
as we do it, and I'm not saying everyone should,

1163
00:35:58.360 --> 00:36:00.880
this is just, it's helped me see the world more clearly.

1164
00:36:00.880 --> 00:36:03.520
I think it's taken a lot of the gobbledy book

1165
00:36:03.520 --> 00:36:06.120
out of the many things that are on social media

1166
00:36:06.120 --> 00:36:06.960
and the internet.

1167
00:36:06.960 --> 00:36:08.400
And it's also, I think helped a lot of our team

1168
00:36:08.400 --> 00:36:09.240
in some of these things.

1169
00:36:09.240 --> 00:36:14.440
I had an interview with a candidate that we ended up hiring.

1170
00:36:14.440 --> 00:36:16.920
And he's like, you know, I just have a lot of demons.

1171
00:36:16.920 --> 00:36:19.080
And I was like, what does that mean?

1172
00:36:19.080 --> 00:36:20.960
And he was like, I just, you know, sometimes like,

1173
00:36:20.960 --> 00:36:23.080
I can sabotage my success

1174
00:36:23.080 --> 00:36:24.400
because I'm like afraid of being successful.

1175
00:36:24.400 --> 00:36:26.880
I was like, you were under-skilled.

1176
00:36:26.880 --> 00:36:28.760
You don't know how to behave in conditions.

1177
00:36:28.760 --> 00:36:30.320
That's all this is.

1178
00:36:30.320 --> 00:36:32.000
So when this new condition occurs,

1179
00:36:32.000 --> 00:36:33.080
we're gonna do a different behavior

1180
00:36:33.080 --> 00:36:34.120
than you've done in the past.

1181
00:36:34.120 --> 00:36:35.680
If you can do that, we're fine.

1182
00:36:35.680 --> 00:36:37.120
And he was like, I can do that.

1183
00:36:37.120 --> 00:36:37.960
I was like, okay.

1184
00:36:37.960 --> 00:36:39.200
Both could actually be true.

1185
00:36:39.200 --> 00:36:40.560
They could have this fear,

1186
00:36:40.560 --> 00:36:43.240
but you desensitize the fear through repetition

1187
00:36:43.240 --> 00:36:44.240
in that condition.

1188
00:36:44.240 --> 00:36:45.080
Totally.

1189
00:36:45.080 --> 00:36:45.920
So the situation?

1190
00:36:45.920 --> 00:36:46.760
Absolutely.

1191
00:36:46.760 --> 00:36:47.960
So you talk about the one meta skill

1192
00:36:47.960 --> 00:36:50.280
that's overshadows all of the meta skills.

1193
00:36:50.280 --> 00:36:51.120
What does that meta skill?

1194
00:36:51.120 --> 00:36:52.960
A many things the ability to learn is the meta skill.

1195
00:36:52.960 --> 00:36:54.720
And, you know, intelligence is like your rate of learning.

1196
00:36:54.720 --> 00:36:56.000
I think that's the big thing.

1197
00:36:56.000 --> 00:36:57.240
From a business perspective,

1198
00:36:57.240 --> 00:36:58.760
I think the big meta skill is being able

1199
00:36:58.760 --> 00:36:59.880
to get other people to do stuff.

1200
00:36:59.880 --> 00:37:01.760
Because fundamentally, if you only had that skill,

1201
00:37:01.760 --> 00:37:03.240
you'd get everyone else to do everything else you need.

1202
00:37:03.240 --> 00:37:04.400
At least in the small business world,

1203
00:37:04.400 --> 00:37:05.080
which is where I live.

1204
00:37:05.080 --> 00:37:07.760
So, you know, sub 200 employees, whatever.

1205
00:37:08.720 --> 00:37:10.920
The vast majority of business owners

1206
00:37:10.920 --> 00:37:13.600
conflate CEO and business owner.

1207
00:37:13.600 --> 00:37:14.760
They see them as one and the same.

1208
00:37:14.760 --> 00:37:18.000
And so fundamentally an owner, a good owner, rather,

1209
00:37:19.000 --> 00:37:20.880
can bring all of the people

1210
00:37:20.880 --> 00:37:21.720
who can run the business.

1211
00:37:21.720 --> 00:37:23.600
Like right now, if I own a share of Apple,

1212
00:37:23.600 --> 00:37:25.600
then that business function's without me.

1213
00:37:25.600 --> 00:37:27.680
If I can get other people to do ever,

1214
00:37:27.680 --> 00:37:29.000
basically a business doesn't require

1215
00:37:29.000 --> 00:37:30.720
some leverage, some form of leverage.

1216
00:37:30.720 --> 00:37:31.720
Exactly.

1217
00:37:31.720 --> 00:37:32.720
What are the different forms of leverage?

1218
00:37:32.720 --> 00:37:34.440
So I think I'd be stealing from Navale here.

1219
00:37:34.440 --> 00:37:36.480
But I mean, he has, I remember with C.

1220
00:37:36.480 --> 00:37:38.640
So it's like code, content, collaboration,

1221
00:37:38.640 --> 00:37:39.480
which is what I say.

1222
00:37:39.480 --> 00:37:41.400
So getting other people to do things in capital, right?

1223
00:37:41.400 --> 00:37:42.400
Those are the four that he brings up.

1224
00:37:42.400 --> 00:37:43.840
But I think there's, I mean, fundamentally leverage

1225
00:37:43.840 --> 00:37:45.400
is just getting more for what you put in.

1226
00:37:46.400 --> 00:37:48.400
And so in any situation when you get more for what you put in,

1227
00:37:48.400 --> 00:37:49.240
then you have leverage.

1228
00:37:49.240 --> 00:37:51.240
You have several dozen companies.

1229
00:37:51.240 --> 00:37:55.160
Does basically managing hard or micromanaging ever work?

1230
00:37:55.160 --> 00:37:56.520
Or is it about aligning incentives?

1231
00:37:56.520 --> 00:37:57.440
Really good question.

1232
00:37:57.440 --> 00:37:58.440
I want to say yes.

1233
00:37:58.440 --> 00:38:00.480
I think aligning incentives is,

1234
00:38:00.480 --> 00:38:02.360
people can't have incentives that are against

1235
00:38:02.360 --> 00:38:03.760
the benefit of everyone else.

1236
00:38:03.760 --> 00:38:04.920
So that feels like number one,

1237
00:38:04.920 --> 00:38:06.520
we don't want to have something that gets in our way.

1238
00:38:06.520 --> 00:38:08.560
But like, micromanagement and abdication

1239
00:38:08.560 --> 00:38:11.720
so don't equal opposite sides of,

1240
00:38:11.720 --> 00:38:13.360
and I think it's more of a dichotomy

1241
00:38:13.360 --> 00:38:15.320
to be managed rather than a problem to be solved.

1242
00:38:15.320 --> 00:38:16.960
If you tell someone to do every single thing,

1243
00:38:16.960 --> 00:38:18.880
like at some point, you've lost all of your leverage

1244
00:38:18.880 --> 00:38:19.840
and why bother.

1245
00:38:19.840 --> 00:38:21.800
On the other hand, if you delegate something

1246
00:38:21.800 --> 00:38:23.440
and stats go down, you abdicated it.

1247
00:38:23.440 --> 00:38:24.280
You did not delegate it.

1248
00:38:24.280 --> 00:38:26.440
If you delegate it and stats room in the same or go up,

1249
00:38:26.440 --> 00:38:27.440
then you have probably delegated.

1250
00:38:27.440 --> 00:38:29.040
And so that gives us a very easy litmus test

1251
00:38:29.040 --> 00:38:30.800
for when people move up in the business

1252
00:38:30.800 --> 00:38:32.320
and they replace themselves in a role

1253
00:38:32.320 --> 00:38:33.600
that helps us do that.

1254
00:38:33.600 --> 00:38:35.200
From the micromanagement perspective,

1255
00:38:35.200 --> 00:38:36.920
this is probably like, recency bias,

1256
00:38:36.920 --> 00:38:37.760
but I just read,

1257
00:38:37.760 --> 00:38:38.760
have you seen the whole...

1258
00:38:38.760 --> 00:38:39.600
Yeah.

1259
00:38:39.600 --> 00:38:41.080
I think there's some truth to it.

1260
00:38:41.080 --> 00:38:43.040
I think it's less about micromanaging

1261
00:38:43.040 --> 00:38:45.440
and more about what are the behaviors

1262
00:38:45.440 --> 00:38:49.640
that a founder is doing that are not duplicated when they leave.

1263
00:38:49.640 --> 00:38:51.440
I'll give you a really micro example of this.

1264
00:38:51.440 --> 00:38:53.280
Caleb, who's directs all our media,

1265
00:38:53.280 --> 00:38:54.840
he was the first person to be hired

1266
00:38:54.840 --> 00:38:56.360
when we wanted to get into this content game.

1267
00:38:56.360 --> 00:38:58.040
He was so good to film with.

1268
00:38:58.040 --> 00:38:59.840
He moved up and he replaced himself.

1269
00:38:59.840 --> 00:39:01.000
I was like, I hate filming.

1270
00:39:01.000 --> 00:39:01.920
This is not good.

1271
00:39:01.920 --> 00:39:03.320
I don't want to do this anymore.

1272
00:39:03.320 --> 00:39:05.840
And so then we're like, okay, what is it that?

1273
00:39:05.840 --> 00:39:07.480
Because we're like, he just has such a great vibe.

1274
00:39:07.480 --> 00:39:08.920
I was like, a vibe is not a thing.

1275
00:39:08.920 --> 00:39:12.360
So what are the behaviors that he does during a shoot

1276
00:39:12.360 --> 00:39:13.960
that other people are not replicating?

1277
00:39:13.960 --> 00:39:17.800
And so it turned out one is when we were talking,

1278
00:39:17.800 --> 00:39:19.920
he would be nodding his head behind the camera.

1279
00:39:19.920 --> 00:39:21.360
And when we'd make a good point,

1280
00:39:21.360 --> 00:39:23.200
he would be like, he would throw his thumb up like,

1281
00:39:23.200 --> 00:39:24.120
that was awesome.

1282
00:39:24.120 --> 00:39:27.480
And immediately after the podcast

1283
00:39:27.480 --> 00:39:29.560
or whatever the recording session was over,

1284
00:39:29.560 --> 00:39:30.880
he would give us a fist bump

1285
00:39:30.880 --> 00:39:32.800
and then he would have notes on his phone

1286
00:39:32.800 --> 00:39:34.600
that he'd be like, hey, follow up question.

1287
00:39:34.600 --> 00:39:36.600
Hey, follow up question, hey, follow up question.

1288
00:39:36.600 --> 00:39:38.760
And so I was like, this is so enjoyable.

1289
00:39:38.760 --> 00:39:41.440
So he had some basic business context

1290
00:39:41.440 --> 00:39:43.320
so that he could ask good questions.

1291
00:39:43.320 --> 00:39:46.360
He was being reinforcing very low latency

1292
00:39:46.360 --> 00:39:48.000
while I'm actually doing the recording

1293
00:39:48.000 --> 00:39:49.280
in multiple ways, both visually,

1294
00:39:49.280 --> 00:39:50.880
from how he's nodding and raising his thumb up.

1295
00:39:50.880 --> 00:39:53.000
And then at the end, I basically had another reward cycle

1296
00:39:53.000 --> 00:39:54.480
where he gave me a bump saying like awesome job.

1297
00:39:54.480 --> 00:39:55.320
You crushed it.

1298
00:39:55.320 --> 00:39:57.000
Once we took that checklist,

1299
00:39:57.000 --> 00:39:59.480
that became the videographer training checklist

1300
00:39:59.480 --> 00:40:00.680
as even Thets Bummington.

1301
00:40:00.680 --> 00:40:03.800
Oh, every time we then duplicated all of those activities

1302
00:40:03.800 --> 00:40:05.680
with other videographers that before this,

1303
00:40:05.680 --> 00:40:06.840
we did not enjoy filming with,

1304
00:40:06.840 --> 00:40:08.440
all of a sudden we enjoyed filming with them as well.

1305
00:40:08.440 --> 00:40:11.000
And all of a sudden, they all had great vibes.

1306
00:40:11.000 --> 00:40:13.080
And so I say that as a microcosm

1307
00:40:13.080 --> 00:40:15.440
of the founder mode question that we began with,

1308
00:40:15.440 --> 00:40:19.920
which is I think that soft skills are hard to quantify,

1309
00:40:19.920 --> 00:40:21.960
but they are still skills.

1310
00:40:21.960 --> 00:40:24.720
And so it just means that there are more sub-skills

1311
00:40:24.720 --> 00:40:27.200
underneath of them that we have to learn and observe

1312
00:40:27.200 --> 00:40:28.240
so that we can duplicate it.

1313
00:40:28.240 --> 00:40:29.680
You're deconstructing skill sets,

1314
00:40:29.680 --> 00:40:31.200
probably some people think you're crazy,

1315
00:40:31.200 --> 00:40:32.360
other people probably love it.

1316
00:40:32.360 --> 00:40:35.120
Like how did people adapt to the style of management?

1317
00:40:35.120 --> 00:40:35.920
I wish my team was here

1318
00:40:35.920 --> 00:40:37.880
because I think they would answer the question even better.

1319
00:40:37.880 --> 00:40:40.600
But I would say that this is our view of the world.

1320
00:40:40.600 --> 00:40:42.320
If this is a view that you don't agree with,

1321
00:40:42.320 --> 00:40:44.800
that's totally okay, you just won't do well here.

1322
00:40:44.800 --> 00:40:47.200
One of the benefits doing a call back to the fame thing

1323
00:40:47.200 --> 00:40:48.720
is that almost everybody who comes in the company

1324
00:40:48.720 --> 00:40:50.200
has consumed a lot of my stuff.

1325
00:40:50.200 --> 00:40:52.520
And so they kind of know how we operate.

1326
00:40:52.520 --> 00:40:55.480
And so we have such a speed up

1327
00:40:55.480 --> 00:40:58.400
on the cultural kind of assimilation and or rejection.

1328
00:40:58.400 --> 00:40:59.560
So if someone doesn't fit in,

1329
00:40:59.560 --> 00:41:02.080
like we had somebody who just started three days ago,

1330
00:41:02.080 --> 00:41:03.680
and those third days, I don't think this is for me,

1331
00:41:03.680 --> 00:41:04.520
and we're like, cool.

1332
00:41:04.520 --> 00:41:07.160
Do you push that Tony Zappos famously from Vegas,

1333
00:41:07.160 --> 00:41:08.680
how he would give people a bonus to quit

1334
00:41:08.680 --> 00:41:09.880
I think after that first month?

1335
00:41:09.880 --> 00:41:10.920
I think it's a brilliant idea.

1336
00:41:10.920 --> 00:41:12.160
I think that these skills,

1337
00:41:12.160 --> 00:41:14.520
that everything is a skilled efficiency perspective

1338
00:41:14.520 --> 00:41:17.480
is incredibly refreshing for the vast majority of the team

1339
00:41:17.480 --> 00:41:19.280
because that is how we manage.

1340
00:41:19.280 --> 00:41:21.200
And so instead of being like you suck

1341
00:41:21.200 --> 00:41:23.440
or you are this way insert label,

1342
00:41:23.440 --> 00:41:24.840
which then feels out of their control,

1343
00:41:24.840 --> 00:41:26.320
you say, hey, you're a dick.

1344
00:41:26.320 --> 00:41:28.760
Very hard to teach someone to not be a dick.

1345
00:41:28.760 --> 00:41:31.840
But if you say, hey, these are five things that you do

1346
00:41:31.840 --> 00:41:32.920
that people complain about.

1347
00:41:32.920 --> 00:41:34.240
And we under these conditions,

1348
00:41:34.240 --> 00:41:36.080
we need you to change your behavior.

1349
00:41:36.080 --> 00:41:36.920
And then all of a sudden they're like,

1350
00:41:36.920 --> 00:41:38.160
oh, thank you for the clarity.

1351
00:41:38.160 --> 00:41:40.560
And so the difficulty in managing this way

1352
00:41:40.560 --> 00:41:41.960
is that it takes more work.

1353
00:41:41.960 --> 00:41:44.320
We have to be more precise with our language.

1354
00:41:44.320 --> 00:41:46.800
And we be more precise with the deficiencies

1355
00:41:46.800 --> 00:41:47.880
that someone is exhibiting.

1356
00:41:47.880 --> 00:41:49.800
This whole everything focused on behavior

1357
00:41:49.800 --> 00:41:51.360
permeates through the entire business.

1358
00:41:51.360 --> 00:41:53.640
And so I'll give you an example of the team thing

1359
00:41:53.640 --> 00:41:55.080
and then I'll example the one on one thing.

1360
00:41:55.080 --> 00:41:56.680
From the team perspective,

1361
00:41:56.680 --> 00:41:58.240
most business owners or teams

1362
00:41:58.240 --> 00:42:00.320
are accustomed to reporting data on performance.

1363
00:42:00.320 --> 00:42:01.400
And then when they get into that loop,

1364
00:42:01.400 --> 00:42:03.440
they start to provide more and more and more and more data.

1365
00:42:03.440 --> 00:42:05.240
I had to do a breakdown for the team

1366
00:42:05.240 --> 00:42:07.800
and say, hey, if this goes up, what do we do?

1367
00:42:07.800 --> 00:42:09.280
If this goes down, what do we do?

1368
00:42:09.280 --> 00:42:11.880
If we don't do anything based on if this data moves,

1369
00:42:11.880 --> 00:42:12.720
we do not need it.

1370
00:42:12.720 --> 00:42:14.560
So all of a sudden it took these massive sheets

1371
00:42:14.560 --> 00:42:16.280
and then just simplified them to three or four pieces

1372
00:42:16.280 --> 00:42:17.120
of data that we look at.

1373
00:42:17.120 --> 00:42:19.400
It's like, great, because these affect our behavior.

1374
00:42:19.400 --> 00:42:21.000
Now we can have a productive meeting.

1375
00:42:21.000 --> 00:42:23.240
And so from a large perspective,

1376
00:42:23.240 --> 00:42:25.880
then we say, this is the data that's off,

1377
00:42:25.880 --> 00:42:27.680
these are the behaviors that we're gonna do to fix that.

1378
00:42:27.680 --> 00:42:28.960
And that's what we're gonna start doing tomorrow

1379
00:42:28.960 --> 00:42:30.120
with the team doing XYZ.

1380
00:42:30.120 --> 00:42:31.440
From a one-on-one perspective,

1381
00:42:31.440 --> 00:42:33.640
it's addressing the skillless efficiency they have.

1382
00:42:33.640 --> 00:42:35.360
They may have 10 things that are off

1383
00:42:35.360 --> 00:42:36.520
that they're working on.

1384
00:42:36.520 --> 00:42:38.320
Who determines that manager or the leader?

1385
00:42:38.320 --> 00:42:39.160
Whoever the leader is.

1386
00:42:39.160 --> 00:42:40.560
So it's not meant to be like here.

1387
00:42:40.560 --> 00:42:41.960
I think you should be more charismatic.

1388
00:42:42.000 --> 00:42:43.400
It's based on outputs.

1389
00:42:43.400 --> 00:42:45.240
On the metrics that you're responsible for.

1390
00:42:45.240 --> 00:42:46.840
And we would never say be more charismatic.

1391
00:42:46.840 --> 00:42:48.080
It's like, you need to smile more.

1392
00:42:48.080 --> 00:42:50.480
Is there a speed of feedback?

1393
00:42:50.480 --> 00:42:51.760
Is there like a natural speed?

1394
00:42:51.760 --> 00:42:53.920
Like I try to, it goes back to negotiation.

1395
00:42:53.920 --> 00:42:54.920
And there's a negotiator.

1396
00:42:54.920 --> 00:42:56.960
Chris Vossi says, if you need to let the air out

1397
00:42:56.960 --> 00:42:58.560
of a balloon do it slowly,

1398
00:42:58.560 --> 00:43:00.160
even within a hostage negotiation,

1399
00:43:00.160 --> 00:43:02.480
if you have three hours, do it like 10 minutes at a time.

1400
00:43:02.480 --> 00:43:03.320
Do you believe that?

1401
00:43:03.320 --> 00:43:04.880
I think giving one piece of feedback at a time

1402
00:43:04.880 --> 00:43:05.840
is incredibly important.

1403
00:43:05.840 --> 00:43:06.680
But I'll give you an example.

1404
00:43:06.680 --> 00:43:08.160
We started running workshops here in our headquarters.

1405
00:43:08.160 --> 00:43:10.680
And a lot of our team, although subject matter experts,

1406
00:43:10.680 --> 00:43:11.800
are not good at presenting.

1407
00:43:11.800 --> 00:43:13.000
That wasn't a skill set that they had.

1408
00:43:13.000 --> 00:43:15.360
We had to teach the whole team how to present

1409
00:43:15.360 --> 00:43:17.160
in a way that other people liked

1410
00:43:17.160 --> 00:43:18.840
and would continue to watch and learn from.

1411
00:43:18.840 --> 00:43:21.480
And so the way that we did that was,

1412
00:43:21.480 --> 00:43:22.640
you know, someone would get on stage

1413
00:43:22.640 --> 00:43:24.360
and they would, you know, begin their presentation

1414
00:43:24.360 --> 00:43:25.400
and they'd be 30 seconds in.

1415
00:43:25.400 --> 00:43:26.800
We'd based stop.

1416
00:43:26.800 --> 00:43:28.920
Say this way, change your tone, do it again.

1417
00:43:28.920 --> 00:43:30.960
Stop, go back to the beginning.

1418
00:43:30.960 --> 00:43:31.800
One more time like this.

1419
00:43:31.800 --> 00:43:32.640
Let's do it again.

1420
00:43:32.640 --> 00:43:33.480
I'm at the behavior.

1421
00:43:33.480 --> 00:43:34.480
Yes, at the point.

1422
00:43:34.480 --> 00:43:35.320
At the point.

1423
00:43:35.320 --> 00:43:36.160
30 minutes later.

1424
00:43:36.160 --> 00:43:37.000
It's useless.

1425
00:43:37.000 --> 00:43:40.320
I genuinely believe that 95% of businesses

1426
00:43:40.320 --> 00:43:41.520
have no idea how to train.

1427
00:43:41.520 --> 00:43:43.080
They mostly survive on luck.

1428
00:43:43.080 --> 00:43:45.000
They plow 20 people in.

1429
00:43:45.000 --> 00:43:46.240
They see that five people work

1430
00:43:46.240 --> 00:43:47.640
because those five people came in

1431
00:43:47.640 --> 00:43:50.440
with a small enough skill deficiency at baseline

1432
00:43:50.440 --> 00:43:52.160
that they could be successful in the role.

1433
00:43:52.160 --> 00:43:53.120
The other 15 fall off.

1434
00:43:53.120 --> 00:43:54.040
And that's how they run their business.

1435
00:43:54.040 --> 00:43:55.400
A lot of people are on Zoom calls

1436
00:43:55.400 --> 00:43:57.040
and they want to give feedback to somebody.

1437
00:43:57.040 --> 00:43:59.080
Do you just record that and then go over it?

1438
00:43:59.080 --> 00:44:00.120
We slack them in real time.

1439
00:44:00.120 --> 00:44:01.160
It's way faster that way.

1440
00:44:01.160 --> 00:44:02.400
So we'd be like, hey, bring this up.

1441
00:44:02.400 --> 00:44:03.240
Hey, your tone's off.

1442
00:44:03.240 --> 00:44:04.080
Try this.

1443
00:44:04.080 --> 00:44:05.480
Do you sell select for employees

1444
00:44:05.480 --> 00:44:06.560
that want to develop themselves?

1445
00:44:06.560 --> 00:44:07.720
It's actually the number one thing

1446
00:44:07.720 --> 00:44:08.560
that people come back with.

1447
00:44:08.560 --> 00:44:10.080
It's not common for the number one thing

1448
00:44:10.080 --> 00:44:11.800
that people say they're coming here for its growth.

1449
00:44:11.800 --> 00:44:12.640
People follow my stuff.

1450
00:44:12.640 --> 00:44:14.640
They know that I'm a big skills guy.

1451
00:44:14.640 --> 00:44:15.480
Yeah.

1452
00:44:15.480 --> 00:44:17.120
And so they usually want more of them.

1453
00:44:17.120 --> 00:44:19.040
And we do our very best to provide them.

1454
00:44:19.040 --> 00:44:20.560
You're obviously highly skilled.

1455
00:44:20.560 --> 00:44:22.760
I mentioned you're worth hundreds of millions of dollars.

1456
00:44:22.760 --> 00:44:24.120
What skills are you work on right now?

1457
00:44:24.120 --> 00:44:25.360
Let's break this into two buckets.

1458
00:44:25.360 --> 00:44:27.240
Knowing about and knowing how to

1459
00:44:27.240 --> 00:44:29.040
is basically the two big buckets.

1460
00:44:29.040 --> 00:44:31.080
And we're the biggest blind spots

1461
00:44:31.080 --> 00:44:33.360
that have had my career are me not knowing about.

1462
00:44:33.360 --> 00:44:34.960
I didn't know private equity existed.

1463
00:44:34.960 --> 00:44:36.960
I didn't know that was a thing, right?

1464
00:44:36.960 --> 00:44:38.680
So that was like, I couldn't get good at private equity

1465
00:44:38.680 --> 00:44:40.480
until I learned about private equity.

1466
00:44:40.480 --> 00:44:42.400
Knowing about private equity and how it works

1467
00:44:42.400 --> 00:44:45.240
is very different from knowing how to run

1468
00:44:45.240 --> 00:44:47.920
a private equity fund, raise funds, deal with LPs,

1469
00:44:47.920 --> 00:44:49.960
negotiate deals, do deals, source deals,

1470
00:44:49.960 --> 00:44:52.000
all of the micro things that occur underneath of that.

1471
00:44:52.000 --> 00:44:53.760
I'd say that for me right now,

1472
00:44:53.760 --> 00:44:55.320
from the learning about side,

1473
00:44:55.320 --> 00:44:58.280
I'm still learning more on the fund stuff.

1474
00:44:58.280 --> 00:45:00.160
I'm still very, very green there.

1475
00:45:00.160 --> 00:45:02.760
And then the how-to is really going to come from

1476
00:45:02.760 --> 00:45:04.600
that will be like my second kind of order

1477
00:45:04.600 --> 00:45:06.160
of skills that I'll have to break down.

1478
00:45:06.160 --> 00:45:08.560
The thing that we have right now is we have tons of deal flow.

1479
00:45:08.600 --> 00:45:09.680
And we know how to create value.

1480
00:45:09.680 --> 00:45:10.880
So there's the two things we have,

1481
00:45:10.880 --> 00:45:12.120
the things that we've been lacking

1482
00:45:12.120 --> 00:45:13.680
have been the funds to execute,

1483
00:45:13.680 --> 00:45:15.040
honestly, the amount of deals that we could do

1484
00:45:15.040 --> 00:45:16.120
at the size that we want.

1485
00:45:16.120 --> 00:45:18.120
So what's the largest deals that you get

1486
00:45:18.120 --> 00:45:19.080
from a deal from standpoint?

1487
00:45:19.080 --> 00:45:19.920
We have, I mean, we've got companies

1488
00:45:19.920 --> 00:45:21.400
doing 300 million a year coming to us.

1489
00:45:21.400 --> 00:45:22.520
And what are they looking for?

1490
00:45:22.520 --> 00:45:25.040
Honestly, most people come to us for expertise.

1491
00:45:25.040 --> 00:45:27.360
They watch some more deep stuff on,

1492
00:45:27.360 --> 00:45:30.200
scaling a sales team from zero to 40 guys in 90 days.

1493
00:45:30.200 --> 00:45:31.440
And they're like, how did you do that?

1494
00:45:31.440 --> 00:45:32.440
Can you do that for me?

1495
00:45:32.440 --> 00:45:35.080
And we're like, yeah, but not for 5%.

1496
00:45:35.080 --> 00:45:38.400
And so then that's really where the negotiation,

1497
00:45:38.400 --> 00:45:39.240
kind of gets in.

1498
00:45:39.240 --> 00:45:40.800
It's like, okay, well, if we do do this,

1499
00:45:40.800 --> 00:45:42.920
then we're going to 5X the value of the company.

1500
00:45:42.920 --> 00:45:45.480
People come to us because they have some constraint

1501
00:45:45.480 --> 00:45:46.800
that either have identifier or haven't.

1502
00:45:46.800 --> 00:45:49.160
Yeah, the investing schedule where you grow at five times,

1503
00:45:49.160 --> 00:45:50.480
and you're like, okay, my job is done.

1504
00:45:50.480 --> 00:45:52.040
Do you continue to stay with the business?

1505
00:45:52.040 --> 00:45:53.880
So my CFO gave me this.

1506
00:45:53.880 --> 00:45:56.760
And I've been trying to stick with it,

1507
00:45:56.760 --> 00:46:00.760
which is one of his friends was a very successful VC.

1508
00:46:00.760 --> 00:46:03.400
And what they figured out was that when they double down

1509
00:46:03.400 --> 00:46:04.960
on the ones that they did really well on,

1510
00:46:04.960 --> 00:46:06.480
they did even better.

1511
00:46:06.480 --> 00:46:10.440
And so, I would say if you'd asked me five years ago,

1512
00:46:10.440 --> 00:46:12.200
feed the winner, starve, starve.

1513
00:46:12.200 --> 00:46:13.040
Yeah, exactly.

1514
00:46:13.040 --> 00:46:15.320
But I mean, it's harsh, but it's the venture.

1515
00:46:15.320 --> 00:46:16.640
Yes, it's kind of the same thing.

1516
00:46:16.640 --> 00:46:18.600
I mean, we absolutely pay more attention to the companies

1517
00:46:18.600 --> 00:46:19.920
that are the biggest ones in the portfolio.

1518
00:46:19.920 --> 00:46:23.560
And in terms of us kind of like letting off the gas pedal

1519
00:46:23.560 --> 00:46:25.680
once we have a 5X, it's like kind of the opposite of that.

1520
00:46:25.680 --> 00:46:27.120
The better they do, the more we push.

1521
00:46:27.120 --> 00:46:29.560
So I don't often do this, but what questions do you have for me?

1522
00:46:29.560 --> 00:46:32.360
If you were in my position, what would you do?

1523
00:46:32.360 --> 00:46:34.360
So I think there's a general situation

1524
00:46:34.360 --> 00:46:36.680
where it's the ultimate grasses greener.

1525
00:46:36.680 --> 00:46:38.920
Every private equity person that you talk to,

1526
00:46:38.920 --> 00:46:40.520
we'll say, do your own thing.

1527
00:46:40.520 --> 00:46:42.040
And every person that says do your own thing,

1528
00:46:42.040 --> 00:46:43.040
we'll say private equity.

1529
00:46:43.040 --> 00:46:44.280
I think there's a couple of ways.

1530
00:46:44.280 --> 00:46:47.280
First of all, a meta common I would say is,

1531
00:46:47.280 --> 00:46:49.840
I think you're very right to take your time on this decision.

1532
00:46:49.840 --> 00:46:51.520
I had a friend, he went around,

1533
00:46:51.520 --> 00:46:54.440
he's actually my co-host, Eric Tornberg, and he spent 18 months,

1534
00:46:54.440 --> 00:46:56.080
I would see him ask the same questions to people.

1535
00:46:56.080 --> 00:46:57.960
I'm like, this guy, he's just not execute.

1536
00:46:57.960 --> 00:46:58.800
Like, what is he doing?

1537
00:46:58.800 --> 00:47:00.480
Just do something and like figure it out.

1538
00:47:00.480 --> 00:47:02.320
And then he built this incredible business

1539
00:47:02.320 --> 00:47:03.600
and you had this huge launch

1540
00:47:03.840 --> 00:47:04.840
and it was very successful.

1541
00:47:04.840 --> 00:47:06.240
I just blown away by like,

1542
00:47:06.240 --> 00:47:09.080
how somebody could consciously gather information.

1543
00:47:09.080 --> 00:47:11.280
So I commend the thoughtfulness

1544
00:47:11.280 --> 00:47:13.520
because it's a very big decision and it's irreversible.

1545
00:47:13.520 --> 00:47:14.360
Yeah.

1546
00:47:14.360 --> 00:47:15.520
It's one of those things to quote Jeff Bezos,

1547
00:47:15.520 --> 00:47:17.480
it's a non revolving door.

1548
00:47:17.480 --> 00:47:18.320
Yeah.

1549
00:47:18.320 --> 00:47:20.640
So first of all, it is a very big decision.

1550
00:47:20.640 --> 00:47:24.160
Second of all, I would think about one of my mentors,

1551
00:47:24.160 --> 00:47:26.000
Eric Anderson, who's on the podcast,

1552
00:47:26.000 --> 00:47:28.520
he's developed more drugs than anybody else in history.

1553
00:47:28.520 --> 00:47:29.640
He started his last company,

1554
00:47:29.640 --> 00:47:30.920
I'll go with therapeutics.

1555
00:47:30.920 --> 00:47:32.720
What is the last business that I want to start?

1556
00:47:32.720 --> 00:47:36.000
What company do I want to work with in the next 20, 30 years?

1557
00:47:36.000 --> 00:47:38.080
So I think there's a founder product fit question,

1558
00:47:38.080 --> 00:47:39.560
which is, what does Alex Hermose

1559
00:47:39.560 --> 00:47:41.160
want to do over the next 30 years?

1560
00:47:41.160 --> 00:47:43.480
Because you're so good at operationalizing,

1561
00:47:43.480 --> 00:47:45.480
you look at everything from a number standpoint,

1562
00:47:45.480 --> 00:47:46.680
but you're also a human being.

1563
00:47:46.680 --> 00:47:48.400
And I think the question is,

1564
00:47:48.400 --> 00:47:50.640
especially after you gain a certain amount of wealth

1565
00:47:50.640 --> 00:47:52.080
is your lifestyle.

1566
00:47:52.080 --> 00:47:53.680
What do you want to be doing day to day?

1567
00:47:53.680 --> 00:47:55.760
And you can make those decisions

1568
00:47:55.760 --> 00:47:58.200
not only from the perspective of private equity

1569
00:47:58.200 --> 00:47:59.120
or non-private equity,

1570
00:47:59.120 --> 00:48:00.520
but also which LPs do you want?

1571
00:48:00.520 --> 00:48:02.400
One of the other things, which I didn't mention

1572
00:48:02.400 --> 00:48:03.920
is belly door four,

1573
00:48:03.920 --> 00:48:05.320
which has been a strong consideration,

1574
00:48:05.320 --> 00:48:06.600
I don't know why I didn't mention it,

1575
00:48:06.600 --> 00:48:09.920
has just been raising around at our hold co-level

1576
00:48:09.920 --> 00:48:11.920
and just doing a minority round there

1577
00:48:11.920 --> 00:48:13.280
that would allow us to get the funding

1578
00:48:13.280 --> 00:48:15.360
to then just do all the stuff that we're currently doing,

1579
00:48:15.360 --> 00:48:16.360
the way we do it,

1580
00:48:16.360 --> 00:48:17.560
the way we already know works

1581
00:48:17.560 --> 00:48:18.880
and just do it on bigger deals.

1582
00:48:18.880 --> 00:48:21.680
That would then capture all of the brand growth that I have,

1583
00:48:21.680 --> 00:48:23.480
so those LPs would be like, oh wow,

1584
00:48:23.480 --> 00:48:24.760
I guess it wouldn't be an LPs structure,

1585
00:48:24.760 --> 00:48:28.160
I guess they would just be owners of my hold co.

1586
00:48:28.240 --> 00:48:32.360
And that's something that's actually been very interesting to me

1587
00:48:32.360 --> 00:48:34.280
because it's the due original point,

1588
00:48:34.280 --> 00:48:36.200
like I've structured my day for the most part

1589
00:48:36.200 --> 00:48:37.720
to do exactly what I want to do

1590
00:48:37.720 --> 00:48:38.800
and what I think I'm good at.

1591
00:48:38.800 --> 00:48:40.240
And what does that look like?

1592
00:48:40.240 --> 00:48:41.680
I have a pretty MD schedule,

1593
00:48:41.680 --> 00:48:43.840
I work all the time, but I have no commitments.

1594
00:48:43.840 --> 00:48:44.760
In my way of saying it is,

1595
00:48:44.760 --> 00:48:47.160
I end up working on that which matters most every day.

1596
00:48:47.160 --> 00:48:48.520
And so sometimes that which matters most

1597
00:48:48.520 --> 00:48:50.360
is something that's gonna come to refreshing in a year.

1598
00:48:50.360 --> 00:48:52.040
But I have one day a week on Mondays

1599
00:48:52.040 --> 00:48:53.120
that I have all my meetings

1600
00:48:53.120 --> 00:48:57.120
and then I have basically media stuff,

1601
00:48:57.120 --> 00:48:59.680
so content, me writing books, things like that.

1602
00:48:59.680 --> 00:49:01.960
Basically the rest of my week is predominantly deep work

1603
00:49:01.960 --> 00:49:04.040
and that has worked really well for Layla and I

1604
00:49:04.040 --> 00:49:06.520
and the only way that I can live that lifestyle

1605
00:49:06.520 --> 00:49:07.480
is because of Layla.

1606
00:49:07.480 --> 00:49:09.640
Layla's schedule is the inverse of mine.

1607
00:49:09.640 --> 00:49:11.120
She has one day a week of deep work

1608
00:49:11.120 --> 00:49:12.400
and then four days a week

1609
00:49:12.400 --> 00:49:14.360
where she has 20 plus meetings a day.

1610
00:49:14.360 --> 00:49:16.560
So she has many indirect reports

1611
00:49:16.560 --> 00:49:18.000
that she's soft touching, you know,

1612
00:49:18.000 --> 00:49:19.560
two levels down, three levels down

1613
00:49:19.560 --> 00:49:21.520
to continue to develop good talent,

1614
00:49:21.520 --> 00:49:23.080
bring up rising stars,

1615
00:49:23.080 --> 00:49:24.560
get good feedback on their leaders

1616
00:49:24.560 --> 00:49:26.280
so that she can give them feedback directly.

1617
00:49:26.280 --> 00:49:28.080
Like she will never get the credit that she deserves

1618
00:49:28.080 --> 00:49:29.160
because she's a woman

1619
00:49:29.160 --> 00:49:31.040
and because I'm so vocal in public,

1620
00:49:31.040 --> 00:49:33.480
but she's absolutely the reason that we have what we have.

1621
00:49:33.480 --> 00:49:35.120
Like I had only made up to $3 million

1622
00:49:35.120 --> 00:49:35.960
year before I met Layla.

1623
00:49:35.960 --> 00:49:37.920
It was a constraint blocking tackling.

1624
00:49:37.920 --> 00:49:39.600
I ruled through fear to be honest.

1625
00:49:39.600 --> 00:49:40.440
That's what it was.

1626
00:49:40.440 --> 00:49:42.280
I know a lot better now, but when I met Layla,

1627
00:49:42.280 --> 00:49:44.400
she told me on one of our first date,

1628
00:49:44.400 --> 00:49:45.760
she said, I just want to build a place

1629
00:49:45.760 --> 00:49:46.680
that people love to work.

1630
00:49:46.680 --> 00:49:48.640
And I was like, well, I just want to make a lot of money.

1631
00:49:48.640 --> 00:49:49.920
And she said she wanted to do that,

1632
00:49:49.920 --> 00:49:52.200
but she was very like anti money when we met.

1633
00:49:52.200 --> 00:49:53.240
She was like bleeding heart.

1634
00:49:53.240 --> 00:49:54.680
I just want to help everybody.

1635
00:49:54.680 --> 00:49:56.440
And I was like, well, you won't be able to help anyone

1636
00:49:56.440 --> 00:49:57.280
if you're poor.

1637
00:49:57.280 --> 00:50:00.280
And so what if we can merge kind of these two thought processes?

1638
00:50:00.280 --> 00:50:01.640
And that's been kind of like the journey

1639
00:50:01.640 --> 00:50:04.680
of our working relationship is that she has been.

1640
00:50:04.680 --> 00:50:05.760
And I don't want to say this offside

1641
00:50:05.760 --> 00:50:07.720
because I think that does it disservice to the fact

1642
00:50:07.720 --> 00:50:08.600
that she's made of iron.

1643
00:50:08.600 --> 00:50:09.800
It's really impressive.

1644
00:50:09.800 --> 00:50:12.720
No one has ever left any company that we've had

1645
00:50:12.720 --> 00:50:14.000
and been like Layla is unfair.

1646
00:50:14.000 --> 00:50:17.080
She's a matriarch in terms of how everything is run

1647
00:50:17.080 --> 00:50:18.280
within all of our portfolio companies.

1648
00:50:18.280 --> 00:50:20.400
I would say all the founders have tremendous respect

1649
00:50:20.400 --> 00:50:22.400
for Layla and they know that she's the one you go to

1650
00:50:22.400 --> 00:50:23.960
when you have to have the hard conversation

1651
00:50:23.960 --> 00:50:25.920
with someone and she would be like, this is how you do.

1652
00:50:25.920 --> 00:50:28.080
You have such a high performing culture

1653
00:50:28.080 --> 00:50:30.040
and not everybody fits within they leave.

1654
00:50:30.040 --> 00:50:31.360
What do they say when they leave?

1655
00:50:31.360 --> 00:50:33.400
We have very low turnover.

1656
00:50:33.400 --> 00:50:35.440
Is that because of a good screen processor?

1657
00:50:35.440 --> 00:50:38.720
Our ability to create culture and operationalize culture

1658
00:50:38.720 --> 00:50:40.800
has just improved so much between businesses

1659
00:50:40.800 --> 00:50:42.680
because it's still on such a short timeline

1660
00:50:42.680 --> 00:50:43.600
if you think about it from a business.

1661
00:50:43.600 --> 00:50:48.600
I mean, I started my first business when I was 22

1662
00:50:48.640 --> 00:50:50.640
and that was 13 years ago.

1663
00:50:50.640 --> 00:50:51.960
In the investor timeline, it's like,

1664
00:50:51.960 --> 00:50:54.280
I've had one funds worth of time, right?

1665
00:50:54.280 --> 00:50:55.720
10 plus, plus one plus one.

1666
00:50:55.720 --> 00:50:57.200
Yeah, right, exactly.

1667
00:50:57.200 --> 00:50:58.680
And so it's been a very short timeline.

1668
00:50:58.680 --> 00:51:01.600
And so how I built my gyms was very different

1669
00:51:01.600 --> 00:51:02.720
than how we built gym launch,

1670
00:51:02.720 --> 00:51:05.560
which is very different from how we've built acquisition.com.

1671
00:51:05.560 --> 00:51:10.440
And this has been my favorite business to run.

1672
00:51:10.440 --> 00:51:13.080
And I feel like it's Layla and I are both in our stride.

1673
00:51:13.080 --> 00:51:15.200
We are doing what we are both very good at.

1674
00:51:15.200 --> 00:51:18.160
We've given each other the protection or space

1675
00:51:18.160 --> 00:51:19.480
to just do what we do best.

1676
00:51:19.480 --> 00:51:22.240
So Layla basically runs everything.

1677
00:51:22.240 --> 00:51:24.360
And I'm in charge of rain making.

1678
00:51:24.360 --> 00:51:26.280
That's been always the best division of labor.

1679
00:51:26.280 --> 00:51:28.360
You tell Layla, I just want to make more money.

1680
00:51:28.360 --> 00:51:29.800
Is that really what drives yours?

1681
00:51:29.800 --> 00:51:30.960
That kind of more mark.

1682
00:51:30.960 --> 00:51:33.000
I always like saying that because I never want to be

1683
00:51:33.000 --> 00:51:35.120
one of those people who like says they're trying to do,

1684
00:51:35.120 --> 00:51:36.800
yeah, that's my reputation insurance.

1685
00:51:36.800 --> 00:51:37.800
Like, yep, I'm here to make money.

1686
00:51:37.800 --> 00:51:38.800
And I say that in all my content,

1687
00:51:38.800 --> 00:51:40.560
like not here to be a good guy, here to make money.

1688
00:51:40.560 --> 00:51:42.200
So I'll give you a longer answer than you probably asked for.

1689
00:51:42.200 --> 00:51:44.200
When we sold gym launch,

1690
00:51:44.200 --> 00:51:46.480
we'd taken 42 million distributions

1691
00:51:46.480 --> 00:51:49.000
and then we got a 31 million dollar check

1692
00:51:49.000 --> 00:51:50.960
for the two thirds at 46, right?

1693
00:51:50.960 --> 00:51:53.800
And I invested a little bit and so the 42 had grown or whatever.

1694
00:51:53.800 --> 00:51:56.160
At that point though, we had zero responsibilities.

1695
00:51:56.160 --> 00:51:57.960
And the year during the sale,

1696
00:51:57.960 --> 00:52:00.720
I wasn't, you know, typically you don't like change anything

1697
00:52:00.720 --> 00:52:02.600
while you're in the middle of a deal process.

1698
00:52:02.600 --> 00:52:04.360
And so the whole company pretty much just ran

1699
00:52:04.360 --> 00:52:06.200
and we just got checks every month, basically,

1700
00:52:06.200 --> 00:52:07.040
and that was it.

1701
00:52:07.040 --> 00:52:08.640
And it was the saddest year of my life

1702
00:52:08.640 --> 00:52:10.280
because I couldn't start something new

1703
00:52:10.280 --> 00:52:12.080
because I didn't know if the deal was going to happen,

1704
00:52:12.080 --> 00:52:13.880
you know, like things can fall through whatever.

1705
00:52:13.880 --> 00:52:15.520
But I also couldn't work on the business.

1706
00:52:15.560 --> 00:52:17.920
I basically just had to sit idly for a year

1707
00:52:17.920 --> 00:52:20.120
and I had a lot of time to just think.

1708
00:52:20.120 --> 00:52:23.200
And the conclusion that I came for me was that hard work

1709
00:52:23.200 --> 00:52:24.040
is the goal.

1710
00:52:24.040 --> 00:52:27.200
For a very long time, it was hard work so that I can

1711
00:52:27.200 --> 00:52:29.560
and then it was just insert whatever thing.

1712
00:52:29.560 --> 00:52:32.760
But when I looked back on my favorite days of my life,

1713
00:52:32.760 --> 00:52:34.200
it was when I left nothing on the field

1714
00:52:34.200 --> 00:52:36.200
when I was completely used up at the end of the day.

1715
00:52:36.200 --> 00:52:38.120
And the first boss that I had,

1716
00:52:38.120 --> 00:52:40.320
the management consulting firm that I had right out of college,

1717
00:52:40.320 --> 00:52:41.160
she said this thing to me,

1718
00:52:41.160 --> 00:52:42.040
that had like a good weekend

1719
00:52:42.040 --> 00:52:44.000
and I came in on Monday like in a good mood or something.

1720
00:52:44.000 --> 00:52:45.840
She asked me why and I said, I just, you know,

1721
00:52:45.840 --> 00:52:47.000
I had a great weekend.

1722
00:52:47.000 --> 00:52:49.480
And she said, I'm pretty sure the secret to life

1723
00:52:49.480 --> 00:52:52.040
is living as many days in a row like that as you can.

1724
00:52:52.040 --> 00:52:53.080
I always remembered that.

1725
00:52:53.080 --> 00:52:55.760
And so in trying to structure my life,

1726
00:52:55.760 --> 00:52:57.080
I actually use the same process

1727
00:52:57.080 --> 00:52:59.760
that we use to improve everything in everything we do.

1728
00:52:59.760 --> 00:53:01.040
So whether it's media, whether it's ads,

1729
00:53:01.040 --> 00:53:03.760
which it's sales teams, it's CS, whatever.

1730
00:53:03.760 --> 00:53:06.360
We just look at what did we do in the past?

1731
00:53:06.360 --> 00:53:08.600
What were the top 10% days or outcomes?

1732
00:53:08.600 --> 00:53:09.440
What did those look like?

1733
00:53:09.440 --> 00:53:10.680
And what were the bottom 10%?

1734
00:53:10.680 --> 00:53:12.840
And then the bottom 10% tells us what not to do.

1735
00:53:12.840 --> 00:53:14.320
On the top 10% we do more of that.

1736
00:53:14.320 --> 00:53:16.000
And so when I look at my life,

1737
00:53:16.000 --> 00:53:19.040
my top 10% days had the same two or three things

1738
00:53:19.040 --> 00:53:20.200
that were involved.

1739
00:53:20.200 --> 00:53:23.040
I ate food with people I liked.

1740
00:53:23.040 --> 00:53:26.720
I worked out hard and I worked and accomplished

1741
00:53:26.720 --> 00:53:28.760
something meaningful for the day.

1742
00:53:28.760 --> 00:53:32.080
And I usually have nothing left at the end.

1743
00:53:32.080 --> 00:53:35.840
And so I pretty much just try and do that every single day.

1744
00:53:35.840 --> 00:53:37.320
That's my, that's my goal.

1745
00:53:37.320 --> 00:53:40.640
And the things that I enjoy working hard on is business.

1746
00:53:40.640 --> 00:53:41.480
I love business.

1747
00:53:41.480 --> 00:53:43.080
It's almost like a romantic love fund.

1748
00:53:43.080 --> 00:53:44.080
I love it.

1749
00:53:44.080 --> 00:53:45.080
I draw pictures about it.

1750
00:53:45.080 --> 00:53:46.080
I write books about it.

1751
00:53:46.080 --> 00:53:47.080
I make videos about it.

1752
00:53:47.080 --> 00:53:48.080
I do business every day.

1753
00:53:48.080 --> 00:53:49.080
It's the thing that I love.

1754
00:53:49.080 --> 00:53:50.080
I could talk to you for 10 more hours

1755
00:53:50.080 --> 00:53:51.080
about business stuff.

1756
00:53:51.080 --> 00:53:52.280
I interviewed Steve McLaughlin.

1757
00:53:52.280 --> 00:53:54.560
He's considered the world's richest banker.

1758
00:53:54.560 --> 00:53:57.800
And he spends 80% of his time dealing with clients.

1759
00:53:57.800 --> 00:54:01.800
And how do people like you and Steve say no to other things

1760
00:54:01.800 --> 00:54:03.640
that you may not want to do?

1761
00:54:03.640 --> 00:54:05.480
But that quote unquote need to be done.

1762
00:54:05.480 --> 00:54:08.600
I get emails like, how do you operationalize

1763
00:54:08.600 --> 00:54:10.760
four days of deep work?

1764
00:54:10.760 --> 00:54:12.040
I have no direct reports.

1765
00:54:12.040 --> 00:54:12.880
Zero.

1766
00:54:12.880 --> 00:54:13.880
Like if you look at the work chart,

1767
00:54:13.880 --> 00:54:15.640
it's me and then dotted line to Layla.

1768
00:54:15.640 --> 00:54:16.880
And then Layla has the whole company.

1769
00:54:16.880 --> 00:54:18.560
What about bills?

1770
00:54:18.560 --> 00:54:20.920
There's a long tail of things that just hit your email.

1771
00:54:20.920 --> 00:54:22.600
R.E.A.'s, check my email.

1772
00:54:22.600 --> 00:54:25.160
And they route things and make decisions

1773
00:54:25.160 --> 00:54:27.440
based on just like decision process.

1774
00:54:27.440 --> 00:54:28.280
Yeah, exactly.

1775
00:54:28.280 --> 00:54:29.920
How long did it take for you to create that system?

1776
00:54:29.920 --> 00:54:30.920
We have three A's.

1777
00:54:30.920 --> 00:54:32.800
Senior A just became director of ops.

1778
00:54:32.800 --> 00:54:34.760
But it's been seven, eight years

1779
00:54:34.760 --> 00:54:35.680
that we've had that team.

1780
00:54:35.680 --> 00:54:38.160
And so what were the biggest fails in that system?

1781
00:54:38.160 --> 00:54:40.600
I have had 10 EAs personally.

1782
00:54:40.600 --> 00:54:42.400
And have failed all of them.

1783
00:54:42.400 --> 00:54:44.840
And so then we realized after the 10th trial,

1784
00:54:44.840 --> 00:54:45.920
it's me, not them.

1785
00:54:45.920 --> 00:54:48.680
Layla paired us for a quarterly to give feedback

1786
00:54:48.680 --> 00:54:49.560
to one another.

1787
00:54:49.560 --> 00:54:54.480
And she said, I feel like when I message you, I'm bothering you.

1788
00:54:54.480 --> 00:54:57.600
I'm assuming with the hope that I would say, oh no,

1789
00:54:57.600 --> 00:54:59.520
it's fine, message me.

1790
00:54:59.520 --> 00:55:01.160
And instead I said, you are.

1791
00:55:01.160 --> 00:55:01.840
I'm working.

1792
00:55:01.840 --> 00:55:03.920
And then when you take away from that work,

1793
00:55:03.920 --> 00:55:05.440
you make us less money.

1794
00:55:05.440 --> 00:55:07.720
And so I do see it pretty much always

1795
00:55:07.720 --> 00:55:09.800
as a punishing event for me to basically

1796
00:55:09.800 --> 00:55:11.040
have to stop doing something that I'm

1797
00:55:11.040 --> 00:55:13.480
doing, to do something that I enjoy less doing.

1798
00:55:13.480 --> 00:55:17.240
And so over time, the EAs now, they'll come in when I eat lunch

1799
00:55:17.240 --> 00:55:18.920
because it's the same 15 minutes every day.

1800
00:55:18.920 --> 00:55:21.240
And they'll just like, they'll be like, I have six things for you.

1801
00:55:21.240 --> 00:55:22.080
This thing, this thing.

1802
00:55:22.080 --> 00:55:23.560
And it's while I'm not working anyway.

1803
00:55:23.560 --> 00:55:24.240
Self-managed.

1804
00:55:24.240 --> 00:55:26.520
But honestly, my lifestyle is only,

1805
00:55:26.520 --> 00:55:29.040
I'm only able to do this because Layla's lifestyle

1806
00:55:29.040 --> 00:55:30.240
is the inverse of mine.

1807
00:55:30.240 --> 00:55:32.160
Together, we are one good CEO.

1808
00:55:32.160 --> 00:55:34.240
She is a work funnel.

1809
00:55:34.240 --> 00:55:36.400
Like she just swallows work.

1810
00:55:36.400 --> 00:55:38.120
And then she brings people in and trains them.

1811
00:55:39.000 --> 00:55:42.200
And her rate of operating is just unbelievable.

1812
00:55:42.200 --> 00:55:44.040
And so she allows me to think really big

1813
00:55:44.040 --> 00:55:45.040
and have the space to do it.

1814
00:55:45.040 --> 00:55:45.880
And it's all because of her.

1815
00:55:45.880 --> 00:55:46.880
What are your special skills?

1816
00:55:46.880 --> 00:55:48.040
I think it's actually just education.

1817
00:55:48.040 --> 00:55:50.240
Like I love teaching, which sounds terrible.

1818
00:55:50.240 --> 00:55:52.360
Like saying that you love teaching is kind of lame.

1819
00:55:52.360 --> 00:55:55.080
But I see sales as an education process.

1820
00:55:55.080 --> 00:55:56.960
You educate a prospect and if they educate enough,

1821
00:55:56.960 --> 00:55:58.840
and if you have a product that really is good,

1822
00:55:58.840 --> 00:56:00.480
if they believe what you believe, then they will buy.

1823
00:56:00.480 --> 00:56:02.400
I see marketing and sales as the same continuum.

1824
00:56:02.400 --> 00:56:04.200
Like you just need a certain amount of information

1825
00:56:04.200 --> 00:56:05.800
for someone to make a purchasing decision.

1826
00:56:05.800 --> 00:56:07.720
And so I see them as one thing.

1827
00:56:07.720 --> 00:56:09.560
That's what I spend a lot of time doing.

1828
00:56:09.560 --> 00:56:12.960
And so if we define education as changing someone's behavior,

1829
00:56:12.960 --> 00:56:16.200
then that is what has been the passion of my life.

1830
00:56:16.200 --> 00:56:18.680
Hopefully everybody who's listening to this, who's an LP,

1831
00:56:18.680 --> 00:56:21.000
I hope I didn't bore you to absolute death,

1832
00:56:21.000 --> 00:56:22.600
not talking about too much investing

1833
00:56:22.600 --> 00:56:24.120
and just talking way more about business.

1834
00:56:24.120 --> 00:56:25.400
If you were to do a fund,

1835
00:56:25.400 --> 00:56:27.760
like tell me about what you would want in LP partners.

1836
00:56:27.760 --> 00:56:28.920
I probably won't want one of two types.

1837
00:56:28.920 --> 00:56:30.600
I'd either want a completely passive LP

1838
00:56:30.600 --> 00:56:32.920
who just let me do what I think we're good at.

1839
00:56:32.920 --> 00:56:35.280
Or somebody who had some strategic benefit

1840
00:56:35.280 --> 00:56:36.360
that they could bring to the table,

1841
00:56:36.360 --> 00:56:37.280
probably wouldn't be deal flow,

1842
00:56:37.280 --> 00:56:39.120
but there probably would be relationships around

1843
00:56:39.120 --> 00:56:41.960
whatever the investment thesis that we were going to build it off.

1844
00:56:41.960 --> 00:56:43.840
As you've evolved your private equity business,

1845
00:56:43.840 --> 00:56:44.920
have you narrowed down?

1846
00:56:44.920 --> 00:56:46.920
Do you have a very specific kind of hit lane

1847
00:56:46.920 --> 00:56:48.720
on these other types of deals I want to do

1848
00:56:48.720 --> 00:56:50.040
or are you more opportunistic?

1849
00:56:50.040 --> 00:56:52.240
I would say Laylin, I both like a service

1850
00:56:52.240 --> 00:56:53.800
and software businesses.

1851
00:56:53.800 --> 00:56:54.800
Those are the two.

1852
00:56:54.800 --> 00:56:55.800
We've looked at all the deals that we've done.

1853
00:56:55.800 --> 00:56:57.160
Those are the ones that we do the best with.

1854
00:56:57.160 --> 00:56:59.320
And especially ones that are demand constraint.

1855
00:56:59.320 --> 00:57:01.720
Those are the ones that we just can absolutely murder it for.

1856
00:57:01.720 --> 00:57:04.000
Someone has really good user retention

1857
00:57:04.000 --> 00:57:06.480
and they have good ascension processes.

1858
00:57:06.480 --> 00:57:08.520
The best guys are the ones who are just obsessed with product.

1859
00:57:08.520 --> 00:57:10.080
Like the reason that I did this school deal

1860
00:57:10.080 --> 00:57:11.840
was when I saw the metrics of the business,

1861
00:57:11.840 --> 00:57:13.280
I was like, this thing's a monster.

1862
00:57:13.280 --> 00:57:14.360
Like it's just early.

1863
00:57:14.360 --> 00:57:15.440
They just need demand.

1864
00:57:15.440 --> 00:57:18.520
And I think all product sees just distribution

1865
00:57:18.520 --> 00:57:20.240
and all distribution seeks good product.

1866
00:57:20.240 --> 00:57:22.120
And so I see myself as distribution.

1867
00:57:22.120 --> 00:57:24.000
And so that was just like such a no-brainer

1868
00:57:24.000 --> 00:57:26.080
because it's perfect, it's school, it's education.

1869
00:57:26.080 --> 00:57:27.920
It worked with the 70% of my audience

1870
00:57:27.920 --> 00:57:29.000
that want to start a business.

1871
00:57:29.000 --> 00:57:30.640
So only 30% of my audience have a business.

1872
00:57:30.640 --> 00:57:31.800
Now, if I talk about business,

1873
00:57:31.800 --> 00:57:33.040
then everybody wants to start a business

1874
00:57:33.040 --> 00:57:33.880
so I'm going to listen, right?

1875
00:57:33.880 --> 00:57:37.800
And so I can't, I don't try and kick them out or anything.

1876
00:57:37.800 --> 00:57:39.640
But it took me three or four years

1877
00:57:39.640 --> 00:57:41.520
of looking at a zillion different businesses.

1878
00:57:41.520 --> 00:57:42.920
I was like, okay, what's the easiest thing

1879
00:57:42.920 --> 00:57:45.040
someone can start who's just going to go zero to one?

1880
00:57:45.040 --> 00:57:46.080
Build their confidence.

1881
00:57:46.080 --> 00:57:46.920
Yeah, exactly.

1882
00:57:46.920 --> 00:57:48.880
Yeah, just about basic skills of business.

1883
00:57:48.880 --> 00:57:51.760
And so that was a perfect vehicle for me to help.

1884
00:57:51.760 --> 00:57:53.120
And so that type of business

1885
00:57:53.120 --> 00:57:54.320
is those are the ones that I love.

1886
00:57:54.320 --> 00:57:55.760
People that want to learn more about you.

1887
00:57:55.760 --> 00:57:58.880
What's the best on ramp to learning more about Alex from Hussey?

1888
00:57:58.880 --> 00:57:59.720
That's probably YouTube.

1889
00:57:59.720 --> 00:58:01.040
Or if you're actually if you're a podcaster,

1890
00:58:01.040 --> 00:58:02.040
then I have a podcast.

1891
00:58:02.040 --> 00:58:02.880
What is it called?

1892
00:58:02.880 --> 00:58:04.200
You can just search my name and it'll come up.

1893
00:58:04.200 --> 00:58:05.040
Excellent.

1894
00:58:05.040 --> 00:58:06.440
Well, Alex, this has been a masterclass.

1895
00:58:06.440 --> 00:58:08.360
I've been following your work for a year.

1896
00:58:08.360 --> 00:58:09.200
I learned a lot.

1897
00:58:09.200 --> 00:58:11.440
You have an incredible way to deconstruct concepts

1898
00:58:11.440 --> 00:58:12.800
and teach millions of people.

1899
00:58:12.800 --> 00:58:14.720
It's making a big difference in the world.

1900
00:58:14.720 --> 00:58:16.040
Appreciate you jumping on podcasts.

1901
00:58:16.040 --> 00:58:16.880
Thank you for having me.

1902
00:58:16.880 --> 00:58:17.720
I appreciate it.