WEBVTT 1 00:00:00.000 --> 00:00:03.200 There were a number of assumptions that had to be true for us to kind of hit what we wanted to do. 2 00:00:03.200 --> 00:00:05.760 And so it was like, we have to be more popular in the future than we are today. 3 00:00:05.760 --> 00:00:10.240 We have to invest in businesses where the marketplace is growing faster than the S&P 500. 4 00:00:10.240 --> 00:00:14.160 We have to believe that we can meaningfully drive value to those particular companies, 5 00:00:14.160 --> 00:00:17.280 and we have to do business with people that we think are exemplary. 6 00:00:18.640 --> 00:00:21.440 Welcome to the game where we talk about how to get more customers, how to make more 7 00:00:21.440 --> 00:00:24.720 customers, how to keep them longer, and the many failures and lessons we have learned 8 00:00:24.720 --> 00:00:26.640 along the way. I hope you enjoy and subscribe. 9 00:00:27.120 --> 00:00:30.800 What's going on, everybody? Welcome to another episode of the Ryan Pineda Show. 10 00:00:30.800 --> 00:00:37.440 Today, I actually have our most requested guest ever. Alex is pointing at Leila. 11 00:00:37.440 --> 00:00:40.640 I have none other than, I'll just say the Hormozis. What's up? 12 00:00:40.640 --> 00:00:42.640 What's up? Thanks for having us. 13 00:00:42.640 --> 00:00:47.520 Yeah, it's good to see you guys. So explain to everyone what acquisition.com is. 14 00:00:47.520 --> 00:00:51.840 Yeah. So we work with internet businesses. Typically, I would say the majority of our businesses 15 00:00:51.840 --> 00:00:56.320 are e-learning and training companies as a whole is probably 80%. Then 20% are just, 16 00:00:56.320 --> 00:01:00.320 I would say generic service space businesses. That's at least the split that hasn't been 17 00:01:00.320 --> 00:01:05.120 purposeful, but that's been what it's been up to this point. We know those spaces really well. 18 00:01:05.120 --> 00:01:10.560 Inside minimum size is 3 million. I think the biggest company we have does about 6 million a month. 19 00:01:10.560 --> 00:01:15.520 And so there's a big range there in terms of size. On the small side, it's 250 a month. On the 20 00:01:15.520 --> 00:01:21.040 high side, it's 200,000 a day. So it's a little bit different. But we've done that, 21 00:01:21.840 --> 00:01:27.280 3 million to 30 million jump six times now. And so we just really know what that looks like. 22 00:01:27.280 --> 00:01:32.160 And so we look for businesses that are right at that range, that have a good leadership team 23 00:01:32.160 --> 00:01:36.400 that have really deep expertise within some sort of thing that they're teaching. Because that's 24 00:01:36.400 --> 00:01:41.120 a big lever. Like how good you are at the thing matters a lot. Now we know the business around that 25 00:01:41.120 --> 00:01:45.920 to really optimize and scale it and drive profitability and ad acquisition channels, increase 26 00:01:45.920 --> 00:01:50.480 lifetime value decrease turn all that kind of stuff. But taking companies from three to 30 that are 27 00:01:50.560 --> 00:01:53.840 internet-based, founder-led businesses is kind of the bread and butter. And that's what we do at 28 00:01:53.840 --> 00:02:00.800 acquisition. So your target is to get a business currently doing 3 million, maybe minimum. 29 00:02:00.800 --> 00:02:06.000 Minimum, right. And obviously you get the biggest return taking them from 3 million to 30 million 30 00:02:06.000 --> 00:02:14.880 blocks. So selfishly, I have a couple of companies like that in the internet space. 31 00:02:15.200 --> 00:02:19.600 So what are the biggest bottlenecks you see to go from 3 to 30? 32 00:02:21.600 --> 00:02:26.560 Yeah, yeah. You know, if I were looking at it, I think to go from 3 to 30, 33 00:02:27.200 --> 00:02:31.200 first off is they're typically missing. They don't even have the completed first layer of 34 00:02:31.200 --> 00:02:36.160 leadership. And then in order to get, you need that in order to get to usually 10 to 15. 35 00:02:36.160 --> 00:02:39.440 And then you're going to need that second layer of leadership in order to get to 30. And so 36 00:02:39.440 --> 00:02:44.640 it's typically building out, you know, to get to 10, usually you need like one high level executive 37 00:02:44.640 --> 00:02:48.480 and then you need to fill out that like manager level leadership team. And then in order to get to 38 00:02:48.480 --> 00:02:52.720 30, you need to have really both of those levels. So that's the first thing in terms of people. 39 00:02:52.720 --> 00:02:58.960 In terms of like the other piece of the business, their product packaging and pricing is usually 40 00:02:58.960 --> 00:03:04.960 not optimized at all. So typically we have to redo the whole structure. So all their offer structure, 41 00:03:04.960 --> 00:03:09.520 all the product, all the pricing, all the packaging, it's just not optimized. They don't typically, 42 00:03:09.520 --> 00:03:13.360 they don't, they're undercharging or they're not charging for the right things. They don't know 43 00:03:13.360 --> 00:03:17.200 it's actually valuable to the customer. And so we help them figure out what's the thing that's 44 00:03:17.200 --> 00:03:21.200 actually valuable to the customer. And then who is your freaking customer, right? Because you can 45 00:03:21.200 --> 00:03:25.360 say who it is, but like who's actually buying, who's actually like in your Facebook group or in 46 00:03:25.360 --> 00:03:30.160 your CRM is a different story. And then I would say that the other two pieces to our data. So 47 00:03:30.240 --> 00:03:35.120 getting the data in place really, really tough to scale without that. And so getting them into a 48 00:03:35.120 --> 00:03:40.640 system that actually can, that their team one wants to use because it's one to get you on a system. 49 00:03:40.640 --> 00:03:43.760 It's the second thing is you have to get the one system that their team can actually use easily. 50 00:03:43.760 --> 00:03:47.840 And that's usually a good interface. So that's the third one. And then I would say that the last 51 00:03:47.840 --> 00:03:54.000 piece of that is just scaling the talent at the top, which is the culture, which is the soft stuff 52 00:03:54.000 --> 00:04:00.160 that we go over with them. And honestly, I think helping that CEO and integrator, 53 00:04:00.160 --> 00:04:04.480 typically a duo that we work with just raise up in terms of their level of leadership and the 54 00:04:04.480 --> 00:04:08.800 kind of culture that they have. Because I don't think that in the beginning, they realize how important 55 00:04:08.800 --> 00:04:14.000 it is. And so we reinforce that on day one from working with them. And so we really hammer home 56 00:04:14.000 --> 00:04:17.360 like dialing in what the culture is. That as we scale, we don't lose that. 57 00:04:18.160 --> 00:04:23.200 Right. So it seems to me, and I mean, it seems obvious just like talking about it, but like 58 00:04:23.200 --> 00:04:29.760 people, like most people just they don't have enough manpower yet. And what do you see as like the 59 00:04:29.760 --> 00:04:35.360 biggest needs for hiring? Like is it on the marketing side? Is it on the sales side? 60 00:04:35.360 --> 00:04:39.360 Depends on the company. Yeah. Like if you have a product driven entrepreneur, 61 00:04:39.360 --> 00:04:42.960 they probably have, you know, really good product and innovation R&D, things like that. 62 00:04:43.680 --> 00:04:47.200 Maybe decent customer success, probably the trackings usually not in place. And they usually 63 00:04:47.200 --> 00:04:50.720 don't have a very clear customer journey. They're not, you know, measuring time to value. They're 64 00:04:50.720 --> 00:04:54.560 not, you know, actively measuring NPS or creating customer health scores, things like that that we 65 00:04:54.560 --> 00:04:58.320 can have predictive metrics around how we're going to drive, you know, lifestyle value. 66 00:04:59.280 --> 00:05:03.440 But they'll usually be better there than they are on like the sales and marketing front. And so 67 00:05:03.440 --> 00:05:06.800 it's really just like where do we feel like the strain of the system is and then just ruthlessly 68 00:05:06.800 --> 00:05:10.400 prioritizing and attacking that. And so on the flip side, if we have a very promotion driven 69 00:05:10.400 --> 00:05:14.080 entrepreneur, the need to usually the back of the house that needs to clean up. And so, you know, 70 00:05:14.080 --> 00:05:17.600 for us, because we deal with the whole of the company, we attack it end up. 71 00:05:18.160 --> 00:05:24.640 Right. Yeah, it's funny. I, before this podcast, I had this guy's name's Keala. And, you know, 72 00:05:24.640 --> 00:05:28.240 we're talking about internet marketers, right? And most internet marketers are great marketers, 73 00:05:28.240 --> 00:05:33.120 great promoters. They suck at ops and fulfillment. And then, you know, you get guys who are really 74 00:05:33.120 --> 00:05:37.600 passionate about what they do. And they just don't want to talk about it, right? We're talking about 75 00:05:37.600 --> 00:05:41.920 my, you know, my buddy Graham Stefan, who he's partnered with. You know, he's not the greatest 76 00:05:41.920 --> 00:05:47.040 promoter, you know, but great products, right? His product is his content and what he's doing. 77 00:05:47.680 --> 00:05:53.600 So I think it's cool to see that. So what would you say, at least on the marketing side, right? 78 00:05:53.600 --> 00:05:57.200 Because you got your book, $100 million offers, right? Which is all about marketing, which was 79 00:05:57.200 --> 00:06:03.120 a fantastic book for anyone who has not read it yet. Go get it. It's 99 cents on Amazon. Like, 80 00:06:03.120 --> 00:06:10.400 you can't be dumb not to buy it, right? So, you know, quick plug there. But, uh, you know, 81 00:06:10.400 --> 00:06:15.360 in that marketing book, something that really hit home was all these ways to market that I 82 00:06:15.360 --> 00:06:19.040 currently don't market, right? Like, you know, I learned to market on the house, 83 00:06:19.040 --> 00:06:23.680 flipping side by going direct to seller, right? We would run TV commercials, direct mail, 84 00:06:23.680 --> 00:06:28.480 call call, all that stuff. But when I went to the internet, based businesses, I was like, oh, 85 00:06:28.480 --> 00:06:34.240 social media, this will carry me. And it has to this point. And then I've pretty much abandoned, 86 00:06:34.320 --> 00:06:41.840 you know, affiliates, outbound, anything like that. Like, what do you see with all these companies, 87 00:06:41.840 --> 00:06:46.320 you guys evaluate and look at as like, I guess the bread and butter with internet 88 00:06:46.960 --> 00:06:51.520 companies like for their marketing strategies? Is there a consistency or a theme? 89 00:06:52.880 --> 00:06:59.120 I would say, I mean, predominantly, most of them run paid ads and have some sort of strong 90 00:06:59.120 --> 00:07:04.480 organic or both. That's, I would say like, that's the majority of the companies that come to us. 91 00:07:04.480 --> 00:07:08.880 Not to say that that's what we need them to do or what we end up building with them. But that's, 92 00:07:09.680 --> 00:07:11.520 that's where they're at usually when they they meet with us. 93 00:07:12.400 --> 00:07:16.880 Yeah, I mean, I would say that there's the companies we take on versus the companies that inquire. 94 00:07:16.880 --> 00:07:20.880 Yeah. Most of the companies that inquire have figured out paid ads. Their product is usually not 95 00:07:21.600 --> 00:07:26.480 honestly like to the point yet where they figured out a really strong organic stream. 96 00:07:26.480 --> 00:07:29.600 We have some companies that we take when we find those ones, those are usually some of the best 97 00:07:29.600 --> 00:07:32.560 because they're very product. But a lot of the ones that inquire and are at that level usually 98 00:07:32.560 --> 00:07:36.720 don't have the organic because the product just isn't quite good enough yet. And so there were 99 00:07:36.720 --> 00:07:41.120 any organic really works against them. And then most of them just don't have the operational 100 00:07:41.600 --> 00:07:46.480 fortitude to do outbound. And so they might say like outbound like, oh, I run ads and then they DM me 101 00:07:46.480 --> 00:07:52.560 and message are like, that's not outbound. And it takes, you know, eight months to get outbound 102 00:07:52.640 --> 00:07:57.280 working. So they tip it's typically just something paid and it's usually not on brand. It's not 103 00:07:57.280 --> 00:08:01.040 aligned with their culture. You know, there's a lot of things. It's not calling out the right person. 104 00:08:01.040 --> 00:08:08.240 So there's a lot of room for optimization. Yeah, 100%. We get a lot of gains just from just filling 105 00:08:08.240 --> 00:08:12.080 in holes. Like the first year, we mostly just fill in holes and almost like by accident, 106 00:08:12.080 --> 00:08:15.680 we'll trouble the profit of the company without even like really putting the big stuff in place yet. 107 00:08:16.640 --> 00:08:20.720 Yeah, because it's interesting. We like, you know, we say between three and 10 because the thing 108 00:08:20.720 --> 00:08:25.120 is is that when you take on a business and we have that are bigger, it's very different. It's 109 00:08:25.120 --> 00:08:29.920 fixing. And fixing is taking something, having, you're basically negative. So it's like when you 110 00:08:29.920 --> 00:08:32.720 take on someone between three and 10, they're at zero and you just have to take them to 10. 111 00:08:32.720 --> 00:08:36.720 And you take on someone that's at 20 or 30 and they're stuck. You are starting from like a negative 112 00:08:36.720 --> 00:08:41.520 eight. And you've got to take them to negative four, negative two, zero. And so it's just, it's a lot 113 00:08:42.240 --> 00:08:48.160 easier to start brush. To give more, more words around it, they have incurred debt, usually 114 00:08:48.160 --> 00:08:51.360 multiple types of debt. They've incurred cultural debt. They've incurred management debt. They've 115 00:08:51.360 --> 00:08:56.160 incurred technical debt in terms of their, their systems that they're operating on. And so we have 116 00:08:56.160 --> 00:09:00.560 to basically pay down that debt before we can can grow again. So like one of the companies we had, 117 00:09:01.280 --> 00:09:06.000 we pretty much almost like maintained for the first almost nine months and then it tripled in 118 00:09:06.000 --> 00:09:11.520 the next six months. And it was just like org structure, move people around, get these people out, 119 00:09:11.520 --> 00:09:15.280 restructure this team, fix the compensation over here. You know what I mean? Just like all the 120 00:09:15.280 --> 00:09:18.880 all the stuff that no one wants to talk about, but like that's what builds sellable businesses that 121 00:09:18.880 --> 00:09:23.120 have true enterprise value. So when you guys are looking at acquiring these companies, 122 00:09:23.680 --> 00:09:31.280 are you only looking for ones that people want to sell? No, go for it. No, we align ourselves with 123 00:09:31.280 --> 00:09:36.000 whatever the founder wants. And so like the way that we get, you know, make money off of, you know, 124 00:09:36.000 --> 00:09:39.600 our investments, we align to make sure that whether they sell or not, that's one of the things that 125 00:09:39.600 --> 00:09:44.720 we didn't why we're not like traditional PE is, traditional PE is usually incentivized to get 126 00:09:44.720 --> 00:09:49.520 to someone to sell to a specific buyer within a certain amount of time against whatever the founder 127 00:09:49.520 --> 00:09:52.800 wants. Usually they force them to and they usually have like a drag along right, which means that 128 00:09:52.800 --> 00:09:57.040 they can force them to sell. We just never wanted to do that because we're entrepreneur first. And so 129 00:09:57.040 --> 00:10:01.680 it's really aligning ourselves with whatever that that person wants, which we make sure that we 130 00:10:01.680 --> 00:10:07.280 figure out within the first two weeks of working together. Right, right. So what does a typical 131 00:10:07.280 --> 00:10:11.040 structure look like, right? You know, somebody comes in, they're like, hey, you know, take a look 132 00:10:11.040 --> 00:10:16.160 at my business and you guys do your due diligence on it. Yeah. Like, all right, this looks interesting. 133 00:10:16.160 --> 00:10:21.280 You know, you have a call like these deals being struck. I've heard you say in the past, you know, 134 00:10:21.280 --> 00:10:26.160 you only want minority stakes, right? Because you want them to, you know, lead the charge. Yeah. 135 00:10:26.160 --> 00:10:31.520 So is a lot of this just you guys buying into the company or are you just giving you equity for 136 00:10:31.520 --> 00:10:36.000 your expertise? Like how's all that playing out? It's a combination. You know, it's a case by case 137 00:10:36.000 --> 00:10:40.080 basis. We have some companies that we have put cash in. We have companies that we haven't put cash in. 138 00:10:40.080 --> 00:10:43.680 The big thing is like, what problem are we solving? And so I'd say the vast majority of the companies 139 00:10:43.680 --> 00:10:47.200 that we are working with are internet-based companies. They are growing. They're profitable. They 140 00:10:47.200 --> 00:10:52.240 have cash flow. And so usually the founders like, if we were to appropriately value the company, 141 00:10:52.240 --> 00:10:55.680 it's usually not actually valuable because no one would really buy it because the founder could 142 00:10:55.680 --> 00:11:00.240 never actually step away. So it's really just them with a thousand hands. You know what I mean? And so 143 00:11:00.240 --> 00:11:03.520 the valuation would be really low. And for most of them, they don't need the cash. They need the 144 00:11:03.520 --> 00:11:09.200 expertise. And so for the majority of the situations, it ends up just being cool. We'll take a meaningful 145 00:11:09.200 --> 00:11:13.920 enough stake that we care, but not so much so that you stop caring. Yeah. Yeah. 146 00:11:13.920 --> 00:11:17.840 You know what I mean? So it's really trying to strike that balance. And then we have incentives 147 00:11:17.840 --> 00:11:21.920 for us to try and like triple the company within five years. And that's like our big goal that we 148 00:11:21.920 --> 00:11:26.800 drive towards. But because we're minority partners, it's basically like everything kicks in after we 149 00:11:26.800 --> 00:11:30.720 triple. And so that's kind of like what we drive towards with those companies. So we get a percentage 150 00:11:30.720 --> 00:11:33.680 of cash flow and we have, you know, some profits interests are like equity-like 151 00:11:33.680 --> 00:11:36.480 arrangements within the company so that if they, you know, if they choose to sell in that period of 152 00:11:36.480 --> 00:11:41.520 time, you know, we're incentivized there. But because of the combination of cash flow and 153 00:11:41.520 --> 00:11:46.080 profit interests, which is just a fancy word for equity-like stuff for anyone who's listening, 154 00:11:46.080 --> 00:11:50.080 we are balanced in our incentive between holding and selling. Whereas if we were like just equity, 155 00:11:50.080 --> 00:11:54.400 then we would be over-induced on just trying to sell basically as fast as we can and get a big 156 00:11:54.400 --> 00:11:58.480 multiple on it. But most of the founders that we're dealing with that are approaching us are like, 157 00:11:58.480 --> 00:12:03.120 I really want to take this thing to the next level. They're 100% motivated to do it. And they just 158 00:12:03.120 --> 00:12:08.080 want more help to get their faster and make firm stakes. Got it. So what do you guys think about 159 00:12:08.880 --> 00:12:14.560 just the different options for, you know, having this exit event, you know, it seems like, 160 00:12:14.560 --> 00:12:20.160 you know, you guys obviously sold why not go public or something like that for acquisition.com 161 00:12:20.160 --> 00:12:25.040 or for those companies? For say, gym launch. Like why why not take gym launch public when you guys 162 00:12:25.040 --> 00:12:29.120 were doing it? I think again, it's what problem you're solving for. Taking a public would have 163 00:12:29.120 --> 00:12:35.360 again, you would have been the one taking it right. And we just knew, you know, for a lot of people, 164 00:12:35.360 --> 00:12:38.800 they're building something and it's the right foundation to build more upon. Like I think you're 165 00:12:38.800 --> 00:12:42.880 doing that, right? It's like you built the one company that's now building other companies, right? 166 00:12:42.880 --> 00:12:48.240 When we looked at gym launch, we said could this build what we want to build with an acquisition.com? 167 00:12:48.240 --> 00:12:53.520 And the answer was not eloquently. Like it would actually be complicated because everything was 168 00:12:53.520 --> 00:12:58.640 geared towards fitness. And so we could build a fitness version of acquisition.com within gym launch. 169 00:12:58.640 --> 00:13:02.080 And we could, you know, take companies public and do all those things there. But we were like, do we 170 00:13:02.080 --> 00:13:06.880 want to be, you know, isolated to fitness? And the answer was no, we already weren't isolated to 171 00:13:06.880 --> 00:13:10.000 fitness in the companies that we were working with. We don't want to continue to go further into that 172 00:13:10.000 --> 00:13:14.080 niche because we have other businesses that we have expertise in. And so we don't want to isolate 173 00:13:14.080 --> 00:13:18.320 ourselves to that. And so ultimately it was like, we could take a public, we could do all these things. 174 00:13:18.880 --> 00:13:22.640 We just felt like you're going further down a path. That wasn't the path we wanted to go down. 175 00:13:22.800 --> 00:13:27.120 Right. That makes sense. So I mean, obviously while you guys were building gym launch, 176 00:13:27.120 --> 00:13:34.320 acquisition.com came up as this idea and vision. So like, what gave you guys the motivation to 177 00:13:34.320 --> 00:13:41.280 want to go about that route? Well, we had one guy who somehow like found his way on my calendar. 178 00:13:41.280 --> 00:13:45.680 It's kind of funny. And you know, in the first five seconds, he was like, okay, I'm really sorry. 179 00:13:45.680 --> 00:13:50.240 I lied to get on your calendar. And normally I'd be like, all right, that's not, you know, good. 180 00:13:50.320 --> 00:13:53.760 But it's like, I promise that we were through time. All right. And so you gave me his 181 00:13:53.760 --> 00:13:57.280 pitch and you'd taken, you know, a brick and mortar facility from, you know, a few hundred thousand 182 00:13:57.280 --> 00:14:00.720 dollars a year, like $1.6 million a year, just using like all the free content that we had put out 183 00:14:00.720 --> 00:14:04.960 just for the gym space. So he'd been like super following stuff for a long time. And he'd been doing 184 00:14:04.960 --> 00:14:08.880 that for a few years. And it's like, I really want to take this thing and do what you do with 185 00:14:08.880 --> 00:14:14.640 gym launch in my niche. And it just ended up working out so well with that particular founder and 186 00:14:14.640 --> 00:14:19.440 his wife that I was like, I loved doing it so much. And I really enjoyed being able to just like 187 00:14:19.440 --> 00:14:23.600 solve so many problems ahead of time that we had, you know, struggled to figure out. And so the line 188 00:14:23.600 --> 00:14:28.560 of growth on that company is faster, bigger, more profitable than gym launch was. You know what I mean? 189 00:14:28.560 --> 00:14:33.280 And so it's like, man, let's do it. Like, and that's where I think the fire kind of live within both 190 00:14:33.280 --> 00:14:37.440 of us were like, this is what I really want to do. And we, you know, we've been in fitness for 10 191 00:14:37.440 --> 00:14:41.920 years. We knew we could build a fitness conglomerate and just do M&A and start, you know, buying 192 00:14:41.920 --> 00:14:46.080 franchises and buying chains of gyms and buying marketing agencies and things like that within 193 00:14:46.080 --> 00:14:51.200 that space, buying fitness coaching companies, whatever. And that would have 100% been a great path 194 00:14:51.200 --> 00:14:55.280 to wealth or more wealth. It just wasn't the path that we felt like doing. And, you know, I think 195 00:14:55.280 --> 00:14:59.600 I talk about this from my world views a lot, but like, you know, the marginal utility money beyond 196 00:14:59.600 --> 00:15:02.960 a certain point, you know, decreases. And so we wanted to do different things. 197 00:15:05.120 --> 00:15:09.760 Hey guys, real quick, if you're new to the podcast, I have a book on Amazon. It's called 100 198 00:15:09.760 --> 00:15:13.840 million dollar offers that over 8,000 five star reviews and it has almost a perfect score. You can 199 00:15:13.840 --> 00:15:17.920 get it for 99 cents on Kindle. The reason I bring it up is that I put over a thousand hours into 200 00:15:17.920 --> 00:15:22.640 writing that book. And it's my biggest gift to our community. So it's my very shameless way of 201 00:15:22.640 --> 00:15:27.600 trying to get to you to like me more and ultimately make more dollars to that later on in your business 202 00:15:27.600 --> 00:15:32.720 career. I can push the partner with you. So that's my gift. Go check it out. Amazon and back to the show. 203 00:15:34.320 --> 00:15:38.560 Yeah. No, that makes a hundred percent sense. So, you know, you guys plan to do 204 00:15:38.560 --> 00:15:44.080 acquisition.com for a long time. Is there any plans to sell it at one point or? 205 00:15:45.040 --> 00:15:49.040 No, you know, obviously any good business could be sold at any point in time is kind of the way 206 00:15:49.040 --> 00:15:53.760 we look at it. But we set it from day one. We don't want to sell acquisition.com. We want it to be 207 00:15:53.760 --> 00:15:58.480 the foundation that we can build other things upon. So what we're doing right now with it, you know, 208 00:15:58.480 --> 00:16:01.600 like we're talking about the types of businesses that we're taking on right now. That's for the 209 00:16:01.600 --> 00:16:07.040 first part of, you know, say, I don't know anywhere between 15 to 25 businesses and we'll cap it. 210 00:16:07.040 --> 00:16:10.880 And then we might say that we're going to open a pod that's for SaaS or e-commerce or 211 00:16:10.880 --> 00:16:14.560 you know what I'm saying. And so there's variety there. There's different routes that we can take in 212 00:16:14.560 --> 00:16:18.320 terms of maybe we decide to buy companies out right one day. I mean, there's a lot of different 213 00:16:18.320 --> 00:16:23.840 stuff we can do and it feels like it would be a shame to then get rid of the machine that builds the 214 00:16:23.840 --> 00:16:28.800 machine, right, which is really what we wanted to build. So I could see us spinning up other things 215 00:16:28.800 --> 00:16:32.320 under acquisition.com and selling those off for sure. I just don't think that we want to sell 216 00:16:32.320 --> 00:16:35.440 acquisition.com. Yeah. So we don't want to sell the goose, want to sell the eggs if we're 217 00:16:35.680 --> 00:16:40.080 going to do the exit path. But now for us, there were a number of assumptions that had to be true 218 00:16:40.080 --> 00:16:43.280 for us to kind of hit what we wanted to do. And so it was like we have to be more popular in the 219 00:16:43.280 --> 00:16:47.200 future than we are today. We have to invest in businesses where the marketplace is growing faster 220 00:16:47.200 --> 00:16:52.400 than the S&P 500. We have to believe that we can meaningfully drive value to those particular 221 00:16:52.400 --> 00:16:56.960 companies. And we have to do business with people that we think are exemplary. And that's both 222 00:16:56.960 --> 00:16:59.920 internal and external with the company. So if those four things are true, then we will be able to 223 00:16:59.920 --> 00:17:03.920 you know, realize this vision. And so that's more or less been kind of the assumptions that 224 00:17:04.080 --> 00:17:08.800 that everything in acquisition.com was built off of. Yeah. So the way I look at it is like you 225 00:17:08.800 --> 00:17:13.280 guys are creating kind of like a blackstone where you're going to have all these companies that 226 00:17:13.280 --> 00:17:19.600 you guys own. So do you plan to maybe take acquisition.com public to get the funding needed to buy 227 00:17:19.600 --> 00:17:24.000 all these companies like down the road as you scale or what's the plan for that? We've had plenty 228 00:17:24.000 --> 00:17:28.400 of discussions about it. I mean, I like there's things that I do like about the going public part 229 00:17:28.400 --> 00:17:32.640 which is just you know, all of a sudden your equity is liquid and you can you can issue shares and 230 00:17:32.640 --> 00:17:36.240 you can you know, have access to debt markets and things like that which I think are cool. But 231 00:17:36.240 --> 00:17:40.240 there's also a lot of headaches associated with being public. And so I think we more towards just 232 00:17:40.240 --> 00:17:45.760 keeping it private this whole time. And if we want to do something we can in the future. But like 233 00:17:45.760 --> 00:17:48.800 because of the audience size that we have, you know, if you look at like we were talking about 234 00:17:48.800 --> 00:17:54.720 Graham Stefan earlier, if we were to do something I'd rather just raise funds from the audience and 235 00:17:54.720 --> 00:17:58.400 allow them to participate in the in the stuff that we do because I feel like that would be like way 236 00:17:58.640 --> 00:18:03.520 cooler. Yeah, I think something more what we would like to do is like, you know, eventually with 237 00:18:03.520 --> 00:18:08.560 say not maybe not the companies we have right now, but a specified pod we say we're going to grow 238 00:18:08.560 --> 00:18:13.440 this pod with the intention that one day we can say all right, we have now five years of returns 239 00:18:13.440 --> 00:18:17.760 that we can say this is our return for the last five years and they're fantastic. Now I feel like 240 00:18:17.760 --> 00:18:21.920 ethically I could take someone else's money and say hey, what if we bought the other X percent 241 00:18:21.920 --> 00:18:25.520 of all these companies in this pod which we've already grown from day one. So like what's the 242 00:18:25.520 --> 00:18:29.040 likelihood that we're going to continue to succeed with these companies? So it's like stacking in 243 00:18:29.040 --> 00:18:32.400 the deck, you know, the stack in the deck in our favor. So, you know, from a diligence perspective, 244 00:18:32.400 --> 00:18:35.840 it's not like, okay, we've got this company. It looks really interesting. We already know. Right, 245 00:18:35.840 --> 00:18:39.040 it's like we've been doing this for five years. We've already, you know, five X the profit of this 246 00:18:39.040 --> 00:18:44.160 business and we know what the next, you know, five X looks like. And so yeah, so we might take this 247 00:18:44.160 --> 00:18:48.240 piece and then the fund takes this piece and then we still have majority now in the company so we 248 00:18:48.240 --> 00:18:52.800 can, you know, drive the direction even more. Yeah, no, I freaking I love that idea. That's super smart. 249 00:18:53.440 --> 00:18:58.880 So let's talk about how you even get these businesses to come to you. So, you know, social media 250 00:18:58.880 --> 00:19:03.440 has been something that's drastically changed, you know, the world period and business owners as a 251 00:19:03.440 --> 00:19:08.160 whole, right? Like it's like, dude, if you're not on social media, you know, it's like does anyone 252 00:19:08.160 --> 00:19:14.240 know about your business, right? Like that's just what it seems like. And you both recently came on 253 00:19:14.240 --> 00:19:19.680 the scene, like, you know, going full force. What was the catalyst behind that? 254 00:19:22.000 --> 00:19:26.960 Yeah, we can. Yeah. So I figured with this company, you know, in contrast to some of the other 255 00:19:26.960 --> 00:19:31.360 companies we've had in the past, it had to be something that was inbound. And so like true inbound, 256 00:19:31.360 --> 00:19:35.200 like I wouldn't, like I would say paid ads is like in between, you know, inbound and outbound. 257 00:19:35.200 --> 00:19:39.200 But like I didn't want to build a company where we're soliciting people saying, hey, we're going 258 00:19:39.200 --> 00:19:43.360 to help you grow your business. You don't know who we are. And by the way, you know, we're going to 259 00:19:43.360 --> 00:19:46.400 buy in for a minute or it just like, you know, there wouldn't be trust. There's just a lot of 260 00:19:46.400 --> 00:19:49.600 things that'd be missing. So I figured that this company would make the most sense to build off of 261 00:19:50.080 --> 00:19:54.160 an organic inbound, you know, following and I didn't have one. And so I was like, okay, well, 262 00:19:54.160 --> 00:19:58.560 you know, real estate's not my game. But you know, I feel pretty confident that, you know, high cash flow 263 00:19:58.560 --> 00:20:04.160 of digital businesses are our game. And so if that's what we're going to do in 10 years, then 264 00:20:05.040 --> 00:20:08.080 start today. You know, that was kind of the the thought process a year and a half ago. 265 00:20:08.720 --> 00:20:13.680 Yeah. And honestly, looking at like, because we both, you know, we're ideeing about this business, 266 00:20:14.640 --> 00:20:18.720 how you bring in customers, effects the entire business. And so even like looking at the 267 00:20:18.720 --> 00:20:23.600 kind of talent that you can acquire when you have like a very volatile acquisition strategy, 268 00:20:23.600 --> 00:20:26.720 you're not going to acquire the same kind of talent you can if you have a very stable, 269 00:20:27.360 --> 00:20:31.200 reliable acquisition strategy. And so we know that if we can build this vote, which maybe it 270 00:20:31.200 --> 00:20:36.240 takes a lot longer to build, that's okay. It's still worth building because of the kind of 271 00:20:36.240 --> 00:20:42.080 business that we can build underneath of that. Yeah. And I agree. Like most of my customers have 272 00:20:42.080 --> 00:20:47.840 been all organic and bound. And so like even when things aren't necessarily going well, like if, 273 00:20:47.840 --> 00:20:51.680 you know, they don't get the service that they were hoping for or something happens, they're not 274 00:20:51.680 --> 00:20:56.800 immediately like, Oh, you know, bad review scam. They're like, Hey, like I get it, you know, 275 00:20:56.800 --> 00:21:02.320 they're much just more easy going than somebody that you had to do a hard sell on to buy your product. 276 00:21:02.880 --> 00:21:07.040 Yeah. And I think by the nature of what we do, you know, it's investing and 277 00:21:07.040 --> 00:21:10.880 be partnering with people. It's not even like, I mean, we talked to founders of the company 278 00:21:10.880 --> 00:21:15.200 every day pretty much all of them. And so I think it's just a very different. It sets the 279 00:21:15.200 --> 00:21:19.600 relationship up for success this way, rather than if it were paid or outbound, I just don't think 280 00:21:19.600 --> 00:21:23.600 that we'd be set up for success. And I don't think we'd be able to have as much influence in those 281 00:21:23.600 --> 00:21:28.720 companies as we do now. And so I think it would be disadvantageous for them and us. And because 282 00:21:28.800 --> 00:21:33.120 our relationship is a minority's sake, it's much more based on trust and influence because like, 283 00:21:33.120 --> 00:21:36.880 we don't have majority. So we can't force someone to do something. And so we have to have people 284 00:21:36.880 --> 00:21:40.080 who share our values and like trust us. And if we're like, Hey, we really think you should make 285 00:21:40.080 --> 00:21:44.000 this move. And it might seem scary. They're like, All right, I trust these people I'm going to do it. 286 00:21:44.000 --> 00:21:49.760 And that happens honestly all the time. Yeah. Because of just all of the content and value put out 287 00:21:49.760 --> 00:21:52.560 there. It's like, Yeah, if you tell me to do this, I already believe you. You don't need to sell 288 00:21:52.640 --> 00:21:59.680 me on doing it. Yeah. Yeah. Trust is a lubricant for doing business is happen a lot faster. Yeah. 289 00:22:00.560 --> 00:22:05.520 There you go. So I mean, obviously you guys are putting out amazing content. Like, 290 00:22:06.080 --> 00:22:11.120 how much of your time do you think you spend on the content side versus like the meat or the 291 00:22:11.120 --> 00:22:15.520 business side? It's different between both of us. So you can answer yourself first. 292 00:22:16.240 --> 00:22:20.640 I would say, I mean, the vast majority of our time is on the business and the businesses that 293 00:22:20.640 --> 00:22:24.640 we have in the portfolio. We've been pretty good. And Caleb's here behind the camera. We've 294 00:22:24.640 --> 00:22:28.160 been pretty good about capturing way more of the stuff we've been doing. And so I think that's 295 00:22:28.160 --> 00:22:32.400 dramatically cut down. We were talking about this earlier on the actual amount of like direct 296 00:22:32.400 --> 00:22:36.320 to camera type stuff. But like for me, the YouTube channel, I make, you know, two to three videos 297 00:22:36.320 --> 00:22:41.360 a week, which ends up being me usually like one day every two weeks. I'll just knock out, you know, 298 00:22:41.360 --> 00:22:48.480 four to six videos. And beyond that, I use Twitter a lot. And that's kind of like where I test my 299 00:22:48.480 --> 00:22:52.960 short. It's really just like stream of consciousness. And then that's based on what people, 300 00:22:52.960 --> 00:22:58.160 you know, find interesting there. That's usually what what seeds the short form video content. 301 00:22:58.720 --> 00:23:03.120 And we can, you know, we knock those out pretty quickly, because those are easy for me to do, 302 00:23:03.120 --> 00:23:08.080 because I've made ads for so long. They have similar like pace, you know, to like an advertisement. 303 00:23:08.080 --> 00:23:11.920 And so we enjoy doing that. Besides that, it's really just we've the long form videos, 304 00:23:11.920 --> 00:23:16.560 the short form videos, and we've got tweets. And that's that's the majority of what we do. And, 305 00:23:16.560 --> 00:23:21.680 you know, tweets get repurposed as as Instagram posts as well. And that's I mean, that's the that's 306 00:23:21.680 --> 00:23:27.520 that's it. You know, that's that's everything. Sounds so simple. What about you? Yeah. I mean, same 307 00:23:27.520 --> 00:23:33.120 stuff, but I think I know what, you know, with Acquisition.com being new, it's not it would be 308 00:23:33.120 --> 00:23:37.440 irresponsible for me to prioritize making content over getting the infrastructure in place like we're 309 00:23:37.440 --> 00:23:42.480 heavily investing in talent and hiring and getting the, you know, structure in place to scale. 310 00:23:42.560 --> 00:23:46.000 And so that because that's my role in the company, like I, I actually realized today I was like, 311 00:23:46.000 --> 00:23:49.920 oh, shit, like I haven't made a YouTube video in like three weeks. And so I told our YouTube 312 00:23:49.920 --> 00:23:52.480 backs, then being like, you're going to do it, Alex says he does three times a week. And I was like, 313 00:23:52.480 --> 00:23:55.920 I'm doing three times. I was like, I'll do like maybe one week. And then he'll be like, 314 00:23:55.920 --> 00:23:59.200 dude, we don't have one this week. I'm like, I don't care. It's like because it's irresponsible. 315 00:23:59.200 --> 00:24:03.360 You know what I mean? Because I'm just always going to be more internal facing. And so actually, 316 00:24:03.360 --> 00:24:06.640 that's when, you know, when I said, I really do want to make the content. Because I think it'll 317 00:24:06.640 --> 00:24:11.680 help the companies and help them be more well rounded. They both of our perspectives. But I was 318 00:24:11.680 --> 00:24:16.880 like, I cannot do direct to camera. It's not scalable. So I was listening to Gary Vee and he had 319 00:24:16.880 --> 00:24:20.000 this one line where he just said, dude, I'm an operator. He's like, you don't get it. I spend 320 00:24:20.000 --> 00:24:24.080 nine nights on my time on my businesses. And I was like, I'm an operator. And I was like, I need 321 00:24:24.080 --> 00:24:28.240 someone to capture rather than me creating. And that was when we really had the conversations of like, 322 00:24:28.240 --> 00:24:31.200 because I kind of came to, I was like, dude, I can't, how are you doing this? He was like, I don't 323 00:24:31.200 --> 00:24:36.800 think I can either anymore. And so we're like, I come to that conclusion too. Yeah. For the last 324 00:24:36.800 --> 00:24:42.560 two years, I've been like, all right, I'm focused on building this media business. And you know, 325 00:24:42.560 --> 00:24:47.040 it is a business, right? So like making this content and everything. And now I've come to 326 00:24:47.040 --> 00:24:50.880 the conclusion, I'm like, yep, you know what? I'm just filming like me doing business. And that's 327 00:24:50.880 --> 00:24:55.440 the content now. That's just way easier. Like you don't have to like dedicate time to go film. 328 00:24:55.440 --> 00:24:59.120 It's real live videos. Yeah, it's really, you know, I mean, people are like, I really wish I knew 329 00:24:59.120 --> 00:25:02.560 what like your day looks like. It's like, well, this is what it looks like now. Yeah. So we're putting 330 00:25:02.560 --> 00:25:05.360 more and more of that kind of stuff out there, which is cool. It's like either you're telling them what 331 00:25:05.360 --> 00:25:09.680 you just did or you're just doing it in front of the camera. So. So what's your advice to these 332 00:25:09.680 --> 00:25:13.520 founders like who want to get better at organic, right? You're talking about how most of them 333 00:25:13.520 --> 00:25:17.200 already got paid media figured out. And they're like, oh, we want to get organic. And they're like, 334 00:25:17.200 --> 00:25:20.880 that's why they're coming to you. Because they're like, you know, you guys, you know, came out 335 00:25:20.880 --> 00:25:27.520 of nowhere. And now your organic is so strong. What do you give them as advice? Yeah, I would say 336 00:25:27.520 --> 00:25:31.840 first nobody comes to us and says we want to do organic like you guys. And they actually all know 337 00:25:31.920 --> 00:25:36.160 that's not typically a priority for where they're at in business. It's really not for most of them. 338 00:25:36.160 --> 00:25:39.680 So that's the first thing I'll say. And the second thing that I will say or that she will say 339 00:25:39.680 --> 00:25:44.160 that I will say after her is that a lot of things is sequence in the business. And so usually zero 340 00:25:44.160 --> 00:25:48.960 to three million ish, you know, is product market fit. So the whole objective of that phase in the 341 00:25:48.960 --> 00:25:54.080 business is just do people want to buy what you are selling, right? And so it's like, okay, you 342 00:25:54.080 --> 00:25:57.760 have made some sales. And the mistake that most people make is they think, okay, while marketing 343 00:25:57.760 --> 00:26:02.320 got me here, I should market more. And that's usually not the case. Usually now it's like, okay, 344 00:26:02.320 --> 00:26:05.600 we have proven product market fit, but we are not getting any referrals. We're not getting a lot 345 00:26:05.600 --> 00:26:10.080 of word of mouth. And unless we clean up all the backend and increase customer lifetime value, 346 00:26:10.640 --> 00:26:14.320 put all the infrastructure in place so that we can get more ascensions, build it back, you know, 347 00:26:14.320 --> 00:26:17.840 all the other things that are required to really create an exceptional customer experience. 348 00:26:18.320 --> 00:26:23.040 You become a only marketing company. And then it becomes very difficult to scale past maybe 10 349 00:26:23.040 --> 00:26:27.280 million because you have so many people falling out the back that you just like every month, 350 00:26:27.280 --> 00:26:32.000 you have to sell twice as many as you did the month before just to stay the same. And so, you know, 351 00:26:32.000 --> 00:26:36.160 for us, it's like, okay, zero to three, you got your product market fit, you know, three to 10, 352 00:26:36.160 --> 00:26:39.520 we have to clean up the backend. And usually just by cleaning up the backend without even 353 00:26:39.520 --> 00:26:45.040 increasing the sales velocity or number of units sold per month, we can still triple the business 354 00:26:45.040 --> 00:26:49.040 just by massively increasing how much each customer has worked to us and how many customers 355 00:26:49.040 --> 00:26:53.280 those customers bring to us. And then at that point, now that we've expanded LTV, expanded 356 00:26:53.280 --> 00:26:57.600 growth profit margins, et cetera, and the infrastructure to scale, then we have these new metrics we 357 00:26:57.600 --> 00:27:02.240 can go and attack new acquisition channels and be inefficient at scale because we have so much 358 00:27:02.240 --> 00:27:09.200 margin that we can work with. Right. So talking about churn, you know, in a lot of e-learning, 359 00:27:09.200 --> 00:27:14.560 many people buy say a mastermind right or something and they go into it knowing that like, oh, 360 00:27:14.560 --> 00:27:18.640 you know what, I'll do it for a year and then I'll try a different mastermind after that, 361 00:27:18.640 --> 00:27:24.640 right? Like typical somebody's attitude. They want to go learn something. How do you keep that 362 00:27:24.640 --> 00:27:29.920 from happening? I mean, leave, start stopping from leaving. So it depends on because there's, 363 00:27:29.920 --> 00:27:32.880 you know, levels, there's, you know, courses, there's coaching programs, there's masterminds, 364 00:27:32.880 --> 00:27:38.000 things like that. We have to separate out the consumables from the one-time purchase. So like 365 00:27:38.000 --> 00:27:42.480 education, for example, is a one-time purchase and information decreases in value precipitously 366 00:27:42.560 --> 00:27:46.480 over time. The day before you learn something, it's much more valuable than day after you learn it, 367 00:27:46.480 --> 00:27:51.200 right? And so that's where having information only becomes very difficult from a continuity 368 00:27:51.200 --> 00:27:55.760 perspective. The things that are consumable that people can use month in month out are accountability. 369 00:27:55.760 --> 00:28:00.560 They can use tech support. They can use a community. So those are all things that people can consume 370 00:28:00.560 --> 00:28:05.440 on a consistent basis, increasing the stick, you know, if we increase the quality of the community 371 00:28:05.440 --> 00:28:10.400 overall and if we can appropriately adjust the price to match the value or be less than the value 372 00:28:11.120 --> 00:28:16.000 receiving over time. So it's not uncommon to see a year one price be higher than a year two price 373 00:28:16.000 --> 00:28:20.800 because the value diminishes once you have access to the network. And then the new value that's 374 00:28:20.800 --> 00:28:26.240 being consistently delivered is the new people who enter the network and the new information that 375 00:28:26.240 --> 00:28:30.000 comes, you know, that gets put into the programs and the trainings and things like that. And so, 376 00:28:30.000 --> 00:28:34.320 but that might be less than the learning of the initial scale. And so it's really finding that 377 00:28:34.320 --> 00:28:39.200 sweet spot where we can keep the customers and make sure that we're pricing based on the consumable 378 00:28:39.200 --> 00:28:48.800 not on the one type thing.