Escaping the Drift with John Gafford - Empowering Young Leaders in Business with David Guttman

Starting point is 00:00:00 Hey, it's John Gafford from the Escaping the Drift podcast. And big news, my new book, Escaping the Drift is coming out. November the 11th, you can pre-order it right now at thejongafford.com. There are tons of bonuses, tons of giveaways. Get the book. If you are somebody that feels like you might be drifting along, this is for you. If you know somebody that feels like they might be drifting along, this is for you. Available everywhere, all bookstores, everywhere, Amazon, Barnes & Noble's, the whole nine yards.

Starting point is 00:00:28 but pick your copy up right now at the john gaffer.com and get a bunch of the awesome bonuses I've thrown out because I promise you I put my heart and soul into this thing I want it to help you change your life pick it up everywhere there was an entrepreneur who I who I respected he owned a bunch of businesses and he would basically hire these territory managers to manage a group of businesses for him and part of what he would do in the interview process with every single person is he would play golf with them and see if they counted all their strokes if they were honest. The last thing he would do,

Starting point is 00:00:58 the very last part of the interview is he'd take him out to a real... And these were guys who only had high school degrees. He kind of had a chip on their shoulder about the fact that they didn't go to college. So he'd go to take him to a really fancy restaurant, have them dress up,

Starting point is 00:01:10 and he'd paid a waiter or waitress to dump water on them and see how they reacted. See how they treated them? Yeah. And now, escaping the drift, the show designed to get you from where you are to where you want to be.

Starting point is 00:01:25 I'm John Gafford, and I have a knack for getting extraordinary achievers to drop their secrets to help you on a path to greatness. So stop drifting along, escape the drift. And it's time to start right now. Back again, back again for another episode of the podcast. Like it says in the opening, man gets you from where you are to where you want to be. And today in the studio, this is, uh, this is pretty interesting, man. I got to tell you, this is going to be, uh, pretty out there, pretty cool stuff. So we have a couple of guests live in the studio. One of them is a dude that I just was informed toward his Wharton MBA degree up live on my buddy Dan's Fleischman's podcast not too long ago. He is the

Starting point is 00:02:06 president and CEO of Investify. And yeah, and with him today is an 18 year old protege. And I'll get to what we're talking about that. So anyway, guys, welcome to the program. This is David Gutman and Anna. Yes. Welcome, guys. Happy to be here. Welcome, glad to have you guys. No, so, okay, so, Anna, we're going to get to you, I promise, in just a second. All right. So, David, welcome.

Starting point is 00:02:34 So, actually, let's get to you right away because I think it's weird if you just sit there. We talk about anything else if we do that first. So, David, explain to me who Anna is what she's doing here and what we're doing. So, Anna Prichenko is the daughter of a very close friend of mine. I'm an advisor on his company, him and I've been friends for years now. And she was originally, she was looking for a summer internship. going to go to college full time in the fall was the original plan. And so I was like, yeah, you know, hey, I need some help on some social media grunt work

Starting point is 00:03:01 on some of the stuff I'm doing. We had a conversation. She was wicked smart. I was like, oh, this will be great. She'll make some money for the summer. I'll get some help, you know, be a nice thing to do for my friend. And so I was just finishing up the course called the anti-MBA. She actually came up with the name of the name, what the Wharton MBA never taught me,

Starting point is 00:03:22 the Wharton Business has never taught me. So anyway, I'm about three weeks in her internship, and she's just blowing me away with everything that she's doing. And so I said, Anna, you're going to think I'm crazy, but how would you feel if I made you CEO of a company? We have you start the business in the course, and we basically document your journey. And the idea is get the business launched in 30 days,

Starting point is 00:03:41 profitable within 90. What better way to demonstrate that so long as you have the right raw, write more on materials that anyone can be an entrepreneur with a little bit of information and a little bit of mentorship? Okay. So when did this process start for you, Otto? When did this start? When did you guys kick off this process? It started probably around a month and a half ago, I would say. I started working for David as an intern, as he said. And then I got the offer. I was like, you know, I have no experience, right? And he's like, yeah, that's exactly what I want. So I started working on the company immediately after that. And we're about to launch. So, yeah, it's going pretty well.

Starting point is 00:04:19 So what's the company about? it's called one of one posters and it's a and it's an idea that David had the initial thought of he wanted a poster of Michael Michael Jordan right and um with a with a quote but he couldn't find it anywhere on the internet for no amount of money like it's he just couldn't find it so he made it himself and then he was like wow that that was super difficult but also I feel like this would be a great present so he started giving these posters to his friends and family and all of them said this was the most thoughtful, meaningful gift they've ever received. And that's where the idea was born. That's what David pitched to me. I was like, okay, this is cool. Not the most exciting

Starting point is 00:05:01 for an 18-year-old though. And so I put on a spin on it and I was like, okay, how about we do an AI feature too? So when you scan the poster, there's going to be a little like concealed QR code or something of the sort. And it will forward you to an AI generated page where it's content that is suited to your goals. So the poster becomes the portal into your self-growth journey. Okay. So when you guys came up with this idea, David, you had this. What are the steps to getting from A to launch? That's the beauty of it, right? Which is I basically said, look, I could guide you step by step, but I've created all the content for the course. Just take the course. And then we would talk once on Friday, once on Monday, and answer whatever questions she had. And that was all the

Starting point is 00:05:48 guidance I gave her. She makes 100% of the operating decisions. She'll ask my advice when she wants to. But I wanted to be as hands off as I could be. In fact, part of what I wanted was I wanted her to make mistakes along the way because I think you learn, you know, you almost always learn more from the mistakes and from the things you do right. Sure. And, you know, when you make the right decision, you don't know if you were lucky or good. In fact, even the idea, I wanted her to be excited enough about the business idea that she could get behind it. But the other part of what I was trying to teach her was, I'll take a mediocre idea executed really well over an exceptional idea executed mediocre any day. And so I think that's part of what I was trying to teach her.

Starting point is 00:06:24 Well, I'm just curious, in part of your process, because you're launching product, right? This is product launch. Did you do any market research to see if there was a market outside of just your friends and family liking what it was? I had Anna do some market research. What? Talk about the market research you did, Anna. So I used AI to do some of it. I did some research myself too. It seemed like there was a lot of generic posters out there. Like if you go to Target or any other like goals or anything like that, you will see an aisle filled with posters. And all of them say it's like, oh, I love coffee. Don't talk to me before I had coffee. You know, it's super generic and like cliche messages that don't really speak to the broader audience.

Starting point is 00:07:03 And so I was like, okay, so there is a gap in the market there. And then once I was looking at more customizable products, the only thing that you can really do is go on Canva and create the poster yourself and then find the manufacturer and print it. No other business really offers the same kind of like customizable, personalized journey from start to finish to creating your own poster. So there was a gap. And then adding the tech feature, there is nothing out there like that. So just to clarify, these are original posters generated by AI, not pictures of Michael Jordan. Could be both. It could be both. Or you're not doing licensing, right now. No, but what you can do, though, is you can basically create a licensing relationship

Starting point is 00:07:44 with like a Getty images. Sure. The way we're going to launch it to start with is we're going to stay away from like Nissen, you know, copyright-related stuff. But although, again, that was one of the steps of the process was, here are there AI tools that allow you to use the output with, you know, for commercial purposes. So that was one of the steps in the process is, hey, let's make sure there's no legal hurdles that we can't clear. Yeah. Okay. So that, you had to look, look and figure that stuff out. Now, what about capitalization? How did you capitalize a business? Well, we decided to go the print-on-demand route. We don't hold any inventory, which is a really big plus.

Starting point is 00:08:16 We found a manufacturer, and we basically connected our Shopify store to the manufacturer, and they're already integrated together, so we didn't really have to do much there. And also Shopify is integrated with Stripe, which is the payment processor. And so we just developed a custom website with our brilliant web developer, who I love very, very much, and connected everything up, and this is how we're going to do it. We have a custom site. We have a lot of marketing strategies in place. Let's talk about that.

Starting point is 00:08:44 What are the marketing strategies in place? So I'm documenting, because I'm 18 years old and I have no prior experience, I'm documenting my whole journey from start to finish of building a business because there's not a lot of information out there. There are gurus that say, oh, yeah, I have a formula for building your business. That's not exactly true. Right until it fails. Yeah, until it fails, exactly.

Starting point is 00:09:07 So I will go through and document all the fails that I have, all of the learnings, the mistakes, everything. And I started a social media account called One of One Official, where I document that. We're also going to have paid ads because paid ads are one of the best things to get data from so that we can gauge our audience and all that kind of stuff. And we're also going to do a lot of UGC

Starting point is 00:09:29 because the unpackaging videos do extremely well for business like posters. Okay. Cool. Yeah. In terms of the capitalization, too, like a lot of businesses, right? Oftentimes you're going to bootstrap it to start. I try to stay as lean as you can until you can get some kind of revenue and even profitability traction, ideally, and then raise capital.

Starting point is 00:09:51 So I'm basically funding it in the bootstrap portion of it. And then I'm actually going to, even though I don't think we'll need capital to get the profitability, to scale we will. So we're going to go through the process of actually raising capital once we're profitable. And so she's going to basically, you know, with some guidance. me actually raise, you know, we'll probably, we don't need that much capital because you don't really need any. Maybe we'll raise 100,000, something like that, but go through the process of what it's like to, how do you structure the equity? Are you an LLC? Why do you do it that way? All those

Starting point is 00:10:19 things, all the things you normally have to do when you're doing a startup. Got it. Well, let's back up now and talk about why you're qualified to do all of this stuff, right? So, so obviously I know that I read your bio and I saw a little bit about your history and you had a near-death experience that change you. Where did you live in St. Louis? Where? What part? So right by the arch in Seulard. Okay, I lived in Seulard for a while. Okay, yeah, yeah. Interesting.

Starting point is 00:10:43 And it's totally different, close around the same time. I guess I lived there in probably 95, maybe. Yeah, there should have been just a little bit before that. Yeah, greatest show on turf when the Rams were that is when I was there. Yeah, that's right. That's funny. Yeah, so keep going. Yeah, so basically, I look, I've been a serial entrepreneur since I finished business school.

Starting point is 00:11:01 My dad started a software company in his late 20 years that eventually IPOed. I always knew I wanted to be an entrepreneur. you know, back then, you know, I'm 59 years old. So back then, you know, you went to school. That's how you learned, right? You went to a library and you checked out a book or you went to Barnes and Noble and you bought a book. By the way, there were no book reviews to even review. So accumulating knowledge was very difficult. And so a formal education made a little bit more sense then. But bottom line was, you know, everything I've learned, you know, I've had one eight and one nine figure exit. And you learn by doing in my experience. It's not, and that's really the,

Starting point is 00:11:36 It's not that, I mean, you know, tongue-in-cheek, it's not that the education was completely worthless. But in terms of actually actionable insights that have actually helped me in my career, it was almost without, it was almost without value. Well, it's funny when you said that you tore up your diploma from Wharton on Dan's show, I thought to myself, yeah, but I bet he wouldn't burn his Rolodex. Well, you know, it's funny. It's not, again, it's not that the Wharton network was useless. But it was less, less utility than I would have thought, if I'm being honest. You know, a couple investors and some early businesses of mine, you know, came from that network. But quite frankly, there's a lot more capital for people I didn't go to business school with.

Starting point is 00:12:13 The pedigree was of value for sure because, you know, people are, you know, you know, you know, you know, you know, investors are intellectually lazy. They're very smart, but, you know, it's like, oh, who else is in the deal? Oh, that guy. Okay, yeah, I'm into. Yeah. Yeah. Yeah, yeah, it gives you a lot of credibility in the marketplace, which I love. Yeah, I mean, you know, we were just talking before we went on, you know, my son is getting applying to the IVs.

Starting point is 00:12:35 And for us, it's like, dude, if you can go to Harvard, you need to go to Harvard because I genuinely just believe that that will open every door on earth for you. I just genuinely believe the network you make. I'm with you. I think the education is, you know, is what it is. And unless you want to just seem to specialize like he does, which is fine. But I think the, there's a lot of value that gets dismissed in the networks that you make in college.

Starting point is 00:12:58 There's a lot of stuff. Well, and not only that, though, like, but again, back when I was going to school, there was no LinkedIn, there was no social media. there was no internet you know what i'm saying so yeah that was a really smart way to try to create a network because otherwise it's really difficult to do not's not nearly as difficult now like you know you think about instead of spending money on you know 40 million dollars is what it cost me to send my daughter to college seven years ago i probably begged her not to go she did what i asked which is hey let's put the money in bitcoin she'd be seeing on eight million right now you know um

Starting point is 00:13:27 and and ultimately she gets a degree in psychology yeah she got a decent job had nothing to do with psychology. She didn't need the degree in order to do it. You know, back back then, like in the early in the early 90s, you couldn't get a job as a receptionist at a company like Oracle without a college degree. Yeah. I would say if I look at the engineers I've hired over the last 10 years, two thirds of them don't have a college degree. Yeah. Well, you're hiring for what you can do now. Not for what somebody says you can do. It's all about the effort you can put forth. So when you started building these companies, you said you've had a couple eight, nine figure exits. One of the things I read about you that I thought was really interesting was

Starting point is 00:14:01 that you interviewed every person you ever hired. Is that accurate? So any person who directly worked for me, obviously, and I wouldn't say every person that's worked every way, you know, all the way down the food chain. But what is true is whenever I would consult in a company, I would. So, like, as an example, there's this one client I had Mindblazer.

Starting point is 00:14:20 I was a guy who was my kind of a mentor of sorts to me. He sold a company to Oracle for $50 million. And basically he would sell these projects in industries I had no background in. he would, you know, he would bill me out of 400 an hour. He'd keep 200. I'd keep 200. I'd do all the work. He'd take half the credit. And so he would basically, you know, inject me into these companies that I'd know

Starting point is 00:14:40 anything about. And I would interview every single person in the company. So in a mindblazer's case, I think they were like, you know, maybe five or six months away from running out of cash. And I didn't know anything about the industry they were in, but I interviewed everyone from the receptionist up to the CEO, everyone in between. Two weeks later, I said, here's what you need to do. The company was profitable within a month.

Starting point is 00:14:59 And the reality was, he's like, how the hell do you know my business better than you? I'm like, I don't. I don't know your business. Your employees and you know your business, but you had 20% of the answer. She had five. He had nine. And all I did was synthesize everything they told me. And the answer was fairly clear.

Starting point is 00:15:15 What's the key to hire and get people? I'm going to tell you, my opinion about that has changed over the years for sure. My current thinking is the three things I value more than anything are humility, curiosity, and heart. I take those three over anything else. One of the bigger mistakes I've made in my career, like Elon talks about this sometimes too, is hiring purely based on talent, you know, or aptitude in a particular area. Now look, you know, if you're trying to pick a brain surgeon or you need to do some very, very nuanced thing in AI, maybe that's the right move. But for most things, you can teach people the things that they need. And especially if you have a long-term play

Starting point is 00:15:55 where you want to run this business and scale it over five, seven, ten years, you want people that are going to come along for the ride. Yeah. And so hiring for those, for those softer qualities, I think makes more sense. Well, I think for me anyway, I think the truth is in the abstract. And I always try to find, you know, I can teach a smart person how to do anything. You can't, you can't teach you an experience, dumb person, anything. It just is what it is.

Starting point is 00:16:19 But like one of my little tricks that I always do here is, whenever somebody's coming into work directly for me in a job right before they come in, I take a piece of paper and I crumbled up and I drop it right in front of the front door outside. And they walk in, if they step over that paper, I don't hire them. Huh. Interesting. How you do anything is how you do everything. And for me, it's like if you don't have a conscientious to stop and pick that up to try to improve the world a little bit, especially place you're walking into, you're going to walk over everything. There was an entrepreneur who I, who I respected he owned a bunch of businesses. And he would basically hire these territory managers to manage a group of businesses for him.

Starting point is 00:16:54 And part of what he would do in the interview process with every single person is he would play golf with them and see if they counted all their strokes and if they were honest. The last thing he would do, the very last part of the interview is he'd take him out to a real – and these were guys who only had high school degrees. They kind of had a chip on their shoulder about the fact that they didn't go to college. So he'd go to take them to a really fancy restaurant, have them dress up, and they paid a waiter or waitress to dump water on them and see how they reacted. see how they treated them yeah oh man that's so funny it's so funny you talk about people that didn't graduate from college have a chip on their show i think that's going away because that used to be me because i was one of those guys and i mean i opened a college bar when i was 20 years old and i was in school for hospitality at florist state and i'm like i own a bar like i just felt

Starting point is 00:17:38 the institution had nothing further offered me so i remember calling my dad i thought he's going to be so mad at me and he just started laughing because he was like i've paid my last bill for my last child because back then it really mattered and the funny thing was you know i just went through so much of my life where because i you know i had i had a moniker of success and people just assumed it that i had that degree so i just didn't really correct anybody yeah and you don't you're it came out literally so this work came out i tell the story my book is i'm sitting there we walk in to the very first day on the apprentice three right for filming i mean i walk into the boardroom and in walks trump and he goes how are you doing everybody this year we're doing something a little different

Starting point is 00:18:16 We're dividing you between people that have college degrees and people that don't. And I was like, holy shit. I'm like, everybody's going to know. I'm like, I've been living, you know, not perpetuating it, but not toning it off either. They live in this kind of the truth. And dude, when it came out, you know, four months later, nobody cared. Like, nobody, I don't think anybody ever said a word to me about that. I don't think it matters.

Starting point is 00:18:40 I think it made the very, very beginning it can matter, you know. And again, that was 20 years ago. Nowadays, it really doesn't matter at all. Now, if especially you look at what, you know, you look at what Elon's paying some of these AI guys. It's like, do you think he's asking for your credentials or what can you do? Yeah. That's how it is. So what are, what are you think that are the fundamentals that make a successful company?

Starting point is 00:19:01 You know, I think that one of the things I think that a lot of businesses don't do. And a lot of entrepreneurs don't do is one of the first things I do if I come into a new company, I'm consulting to a company or if I'm starting one from scratch is I build a bottoms up budgeting and forecasting model because what I really want to do is I want to understand what are the key drivers of the business like so in you know in our business it's in a lot of businesses but but in ours this one in particular what's your customer acquisition cost what's your lifetime value how are you performing what's your marketing spend you know what's your cost to sale all those things most I mean it's stunning I mean I remember I came on as CEO for this uh work prop trading firm down in Miami

Starting point is 00:19:40 they're already doing eight figures in revenue and they don't have a budget I'm like that's crazy to me. I don't know how to make sure I'm going in the right direction if I don't, you know, know what I have to work with. So I think that's one of the big mistakes that companies make. Not that you can't get there without it, but you get there a lot cleaner with it. And if you're doing a pure startup, too, like one of the things I always say is, whatever your model tells you, you think you need to get the break even, you need to double it, at least, you know, two and a half. I use two and a half times, but minimum two X. Yeah, the capital runway is. So I think they say that there's something like 70% of small aircraft

Starting point is 00:20:13 accidents are running out of fuel, and it's probably 90% of businesses that fail, run out of cash. Because the burn rate, they just don't estimate it properly. They don't have runway to get somebody who was in here yesterday talking about they ran out of room because the runway they just ran out. The only total failure of business I ever had was we just didn't raise enough capital. We were too early, and we were using LIDAR technology in a very unique way. We were probably three to five years too early. We probably would have survived if we had raise more capital. And so ultimately, we just underestimated the runway. Yeah, I think the biggest mistake I've ever made was building businesses that I was in love with without finding out if

Starting point is 00:20:49 there was a market for him. Yeah. This is so cool. We're going to do this. What do you mean? Nobody wants that. That doesn't make any sense. So yeah, I always tell people that proof of concept is so important and find that, you know, that you have a market. And in this business, too, like I intentionally wanted a business where Anna could brute force it, right, from beginning to end. So as an example, while She identified, you know, basically we can print the posters for like $10, right, with the, with an API interface and a printable, but our cost is going to start at 50, right? And I'm fine. I'm like, I don't care if we make any money.

Starting point is 00:21:24 Once we prove out our customer acquisition costs and our lifetime value, we can bring our cogs down just by hiring a developer to build that out. Let's brute force it to start. Let's figure out where the bottlenecks are. And then we'll automate them in the order in which they impact the business. You know, something I found interesting on this is your president's C.O. Oh, so I'm not actually not at Investify. Not Investify. You were. No, no. Yeah, so I

Starting point is 00:21:44 left there about, probably about six, eight months ago now. So you get terrible data. Well, I'm still going to ask the question because the question is so relevant, which is why were you the president's CEO and not CEO? Is your superpower in operations? No, no, so that I came on. Is this just totally wrong? You know what? No, no. Now you're fine. So the CEO that brought me on was the guy I had been mentoring. He actually was, he

Starting point is 00:22:06 He'd had a recruiting firm. I hired a bunch of people through his firm. And so him and I became friends, and I was mentoring him. And I was at another crypto company. And when I left there, he said, you know, he's like, hey, like, are you interested? I really need an operations guy. And so I basically, I looked at the business model and the revenue forecast they had. And I'm like, you're going to run out of money.

Starting point is 00:22:30 You're not going to come even close. I said, but I said, if you started a crypto trade desk, we could get you profitable within six weeks. So basically we brought on, and I know just the guy to run it, the guy who'd started my trade desk in another company, I brought him on.

Starting point is 00:22:45 And we did, I think last year we did 18 million in revenue in like nine in profit. Wow. It's amazing. Do you prefer to be in operations rather than like the visionary seat? You know, I, like when I was at the telemedicine

Starting point is 00:23:01 company, which is the nine figure exit I had, I had actually never overseen sales before. And I'd never done. sales directly. I feel like life is a sales call, so it's not like I don't know how to sell, but you want to get a date. You want to raise capital. It's a sales call, right? But that's what the company needed. So honestly, like, I mean, Elon talks about this all the time. You know, when you're running a business, you know, you have to do the toughest problem that no one knows how to solve that no one else wants to do. And that's kind of what I do. Like, wherever I go,

Starting point is 00:23:28 I'm just, I'm solving whatever the problem is. That's what gets me excited. I'm fortunate enough to be, you know, kind of a Swiss Army knife. I don't, I don't actually love operations. I prefer the visionary aspect of it, but I can do the operational part when I need to. Do you find when you hand the operational stuff off, it's difficult because you just nobody can ever do it as good as you? Earlier in my career was hard. Now I actually love getting rid of it. Yeah, well, you do. So, okay, what was the shift then? How do you let go of the ego and just say, okay, just getting it done is good enough, maybe not as good as me? I think that's one of the hardest things. In fact, when I, when I'm mentoring people that are leaders and organizations

Starting point is 00:24:04 that I've run, that's a big part of the part that I am trying to teach them on. It's like, it's okay that someone's only going to do it 70 or 80 percent as well as you. That you're not leverageable. So if you're doing that work, and again, at every company I've ever been at, I will do, I'll sweep the floors. It doesn't matter. There's no job beneath me. But that's also, I also know that's not my best leverage point. So for me, I'll roll my sleeves up and I'll do what needs to get done, especially early stage. But the reality is once I get to a certain place, I'm not, I'm not operating as an effective leader if I don't backfill myself. In fact, when I was running the prop trading company with with forethought and malice,

Starting point is 00:24:44 I hired a COO with the express purpose of mentoring him so that in a year I wouldn't be necessary anymore. When you're running a big company like these that you have, what's the key to maintaining great culture in those companies, in your opinion? So I'll tell you how I do it. And I used to think this is kind of hokey earlier in my career. But I would say at the last five or six companies that have been out, I've made sure we've done this. We had a set of internal core values and external core values. The external core values are the things we figure out like, hey, if we're going to make changes in product and service and things like that, those are who we're going to partner with, you know, channel partners things of that nature. I make sure that they pass whatever the filter is for those external core values. But the internal core values, that's, how we hire and promote, right? And what I do is I make sure that everyone in the

Starting point is 00:25:31 organization is involved in choosing those core values. Now, I guide them, right? I make the final selection, but ultimately I want everyone involved in that. And then what I would do to really cement that is I would create, I would usually have four core values is what I would usually shoot for. I'd create an award for each of the four core values. Let's say it was grit, you know, integrity, whatever they might be. I would create an award for each one. I would award them in the first quarter. And then whoever won the award, it would be their job to award it the next quarter. And so it just reinforced. And everyone in the company would know what those four core values were because of that. The other thing that I did was, I think if you want to

Starting point is 00:26:11 make people behave like owners, you have to make them owners. So whenever it has been my decision, every employee has equity, every last employee. The other thing I make sure is that every employee is financially literate knows how to read an income statement. So what I would do is when I would have a board meeting every quarter. I would present the results of the board. And then the next week I would present to the entire company, basically the same presentation. Now, if they're not shareholders, all I'm doing is showing them how much more money I'm making and the investors are making. That's true. Yeah. But when they're shareholders, now they're interested, now they're interested. And they get excited about it. So that's what I've done to create,

Starting point is 00:26:45 because if you do it right, everybody acts like an owner. And that's what I shoot for. So now, dude, you've had some massive exits on the stuff that you've done. Are you at a place in your life where you're looking to build something else yourself? Are you in that season of your life where you're just enjoying pouring into others? So I, one of the pieces of advice I give, because I'm, you know, my wife gives me a hard time sometimes because I'm, I'm at there anyone who'll ask, right? And so what I decided was one of the first things I tell people is tell me what you want the end result to be and let's work backwards. Yeah. It doesn't matter what it is. And so that's kind of what I decided. So when I, when I left Investify, I basically said, okay, how do I want to spend the next 15 to 20 years

Starting point is 00:27:25 my professional career. So what I want to do is I want to basically be on the board of 10 to 12 different companies that are being run by people I really enjoy as people that are doing things I find interesting. And so I said, okay, how could I do that? So I worked backwards. That's how I actually came up with the idea for the course. The course, I don't give a shit about making money from the course. It's a filter. I'm trying to do like a reverse kind of home office. So what I'm doing is I'm basically using the course as lead gen. I then interview every, I'm calling it a coaching call, but I'm interviewing every person who finishes the four and a half hour course and I'm evaluating them in their idea. If I like them. It's an incubator. And I like the idea that I basically, it's

Starting point is 00:28:05 invitation only. I'm only going to have 10 people in a mastermind. I'm going to, they have to commit the six months of mentorship at the end of that six months. I'm going to invest a quarter of a million to 500,000 in no less than one and no more than three of those businesses. So let's just call it two every six months. For a year, in three years, it'll be 12, you know, 12 businesses. That's what I want. And so I'm, because now I've got six months to evaluate these people. You know, can they lead and, you know, attract talent and motivate? Do they take, you know, coaching and guidance and make adjustments in the business model and pricing model and things like that, you know, so that's basically that that's the, that's the end goal. Wow. What's the filter on the front end to get into that?

Starting point is 00:28:42 Because I'm sure people listen to like, like, how do we get in? How do we get in? What's the filter? Well, they've got to take the course, right? Right. And then it's all going to come down. Like, you know, you've interviewed a lot of people in your life, so have I. Right. So I can tell an awful lot in 30 to 60 minutes. So, you know, and then they're going to have to commit to that mastermind for six months and pay for it. Right. So, you know, how serious are they? It was funny when I was originally pricing the course, you know, because I didn't care about making money. I was just going to charge a thousand bucks. And, you know, some guys who know more about, you know, courses. They're like, if you charge $1,000, 80% of the people won't even take the, even go through it. So charge a higher price and almost all of them will go through it. Yeah. Well, they get, yeah, they have skin in the game. Exactly. And, and, you know, people are funny, man. They value what you give them. If you put that course out right now for free, right? You just said it's free. Nobody would take it. I agree. It's the, it's the weirdest how people just place this arbitrary value by how much, you know, it's like, it's weird. The information is

Starting point is 00:29:42 because I paid for it because you know what it is. People don't want to, they don't want to be embarrassed. I don't want to say I made the wrong choice. Right. So if they make a head, heavy investment in something, you better believe they're finding value it. It's like a personal trainer. I know how to work out. But if I'm paying $200 an hour, I'm showing up. Yeah. Yeah. Or worse. Yeah. I've given away some personal trading sessions of my life where I was like, man, I just yeah, didn't make it. Look, you know, you got a QDU who's going to an Ivy League school, right? Think about how much you're paying per semester, right? And imagine, you know, the tiny fraction of that to pay to go to a mastermind, to pay to go to, you know, for a really high quality course,

Starting point is 00:30:16 it's a tiny fraction of what you would pay at any expensive school. I know, but I find it so funny how unwilling so many people are to invest in themselves. Shocking. It's, I have to say, like, I don't have a lot of regrets in my life, but it's funny. One of my goals for the year was to do a TED Talk, right? And so I was researching it, figure how to do it on my own. And I actually had a guy in my podcast who told me in the last, I think he said, in the last nine years, he spent a million dollars in coaching and mentorship.

Starting point is 00:30:46 And he goes, he goes, it's roughly returned 25X. Yeah. And it was funny. I just had that conversation. And then I just got pitched. There was like 30 grand for this TEDx thing where they guaranteed to get me on a stage, whatever it might be. I'm like, pull the trigger.

Starting point is 00:31:00 Let's go. It's like, yeah, it's like, but again, same thing. Like, I'm always showing up. You know, if I'm paying 30 grand for it, I'm always showing up. You're not missing a session for that. You're doing the work. Exactly. Because you're like, I have, yeah, I've got to get a return on this for sure.

Starting point is 00:31:11 I find it so interesting that, you know, The incubator is genius. Like what you're doing is so smart and how you're doing that and allowing you to evaluate people as we do this. How many people have approached you in life before doing this that wanted you to mentor them that you were like, maybe not? And then tell me why. So if I had a guess, because I've mentored people to just work for me, right?

Starting point is 00:31:38 So because I've run larger journeys, I've probably directly mentored close to 100 people probably throughout my career. But I would say people that have approached me that didn't work directly for me, maybe 15. And I would say of those, I mentored five. And the 10 that I didn't was because

Starting point is 00:31:55 their idea and their approach to it was stupid. I mean, I'm just being honest, right? I remember this one guy. He had an idea for, you know, we had kind of a tree hugger, save the world kind of thing, which is fine. I don't have an issue with that per se,

Starting point is 00:32:09 but, you know, he wanted to basically have metal straws instead of having plastic straws, Right? And I was like, so I just did some quick research. Now, mind you, he'd been working on this idea for six months when he came before he came to me. This is someone I'd worked with before, but he didn't work directly for me. And he's like, you know, you never run businesses. You know, what do you think? Did that would you mentor me? So I did some back of the envelope of math. And I'm like, the only people who would pay for this, you know, and I don't even think they would pay for it would be super high-end restaurants, right? I said, you're going to eliminate like 0.0001% of the straws. You got to be at Subway and McDonald's and places like that if you're going to make a dent. And the economics just don't work. So I was able to figure that out in 90 seconds.

Starting point is 00:32:47 Okay, he spent six months on it. That's not someone I want to work with. Yeah. So you're looking more at the idea than the person. Well, you know, it's a little bit, again, I wouldn't get involved, say, in a liquor business or a tobacco business or a business that I just felt like, you know, so I wouldn't get into business that I felt like harmed people, you know, if you will. But I don't care about the idea so much so long as a person is, you know, because it's

Starting point is 00:33:09 funny what you said about being in love with the business. I agree with you. I don't want someone to be in love with the business, but I don't want someone to be in love with the business, but I want them to really like it. Yeah. I want to be like it to be excited about it, but not be so in love with it that it, that they stop taking the information.

Starting point is 00:33:20 You can't see the truth. You can't see the truth. Yeah, exactly. You'll just write it to the end. But the idea, you know, it doesn't have to be something that necessarily, you know, sings to me per se. Yeah.

Starting point is 00:33:30 If, um, if somebody wanted to take your course and they wanted to, you know, first of all, how they find it, because I want to make sure everybody figures out, I think, yeah, so they just go to my social media. If you just go to my Instagram, you know, Dave, Dave R. Gutman, my Instagram handle, you know it's launching next week so by time this podcast releases yeah yeah so um by time this podcast

Starting point is 00:33:46 releases you know it'll be out there uh and there'll be links to it'll be it'll be really off or you can go to gutmanmedia.com and there's a page there where they can see the the anti-MBA course cool so it'll be there well let's talk about let's talk about the mastermind group because what is that going to entail what do you envision that being so basically so it's you know I would say the closest thing to this model and I wasn't even aware of it when I came up at the idea was what Alex Romozy is doing because you brought him up earlier too with his book launch, which I think what generated over a hundred million in revenue or something insane. So, I mean, literally, thanks, Alex.

Starting point is 00:34:15 I went from a seven-month plan to having to compress it in three weeks. Thanks. Appreciate you. But so, but what he does is probably the closest to what I'm doing. But what he does, he does it in a seminar format where they're talking, where people are in the room together and they're doing it in a more generic way. I don't want to do that. I want to take 10 people that I pour myself into.

Starting point is 00:34:34 So, yeah, there'll be some group stuff we do every week, but I'm going to be spending one-on-one time, probably two to three hours a week with each one of those 10 people on their idea. Yeah, I think, you know, the word, the mastermind, that word has gotten really diluted for to mean a lot of different things. I mean, I'm in a couple of them that I love that are high level mastermind groups where we go and share our business and get shredded. I love it. It's the only time that anybody ever criticizes my business is in those rooms, which I love those things. But I think, you know, some people hear that word and they're like, oh, what is this really? Is it like a sales pitch? So I love that.

Starting point is 00:35:08 you're doing that but yeah i agree having that community and creating that where they can lean on each other i think is going to help them whether you end up investing in them or not how much equity when you invest in these businesses how much equity are you looking to so it'll depend that that's part of what i what i try to help people understand too is how do you value a business how do you value a business pre-revenue how do you value a business post revenue how do you value a business on exit because one of the big things and you know if you've sold businesses you know that the the main goal of due diligence is to reduce the purchase price. Sure, of course.

Starting point is 00:35:39 So how do you, how do you, you know, fight against that? Recast financials. Yeah, exactly. So, you know, so part of what I'm going to do is we're going to work on it together. And the thing about it is, don't get me wrong. I'm not allergic to money. Yes, I want to have it work out for me. But I want it to work out for them because it works out for them, for sure it's working

Starting point is 00:35:58 out for me. Whether I end up with 3% or 5% or 10% of the company won't really matter that much to me. What I'm going to do is I'm going to teach them how to value their business fairly. and then I'm going to take the amount of equity, that's fair. Because the other piece of it is we're going to have to figure out how much capital they need. Yeah. You know, and so that'll be part of the process too. So my rough estimate is most businesses are going to need between a quarter of a million and a half a million,

Starting point is 00:36:20 but there'll probably be some exceptions. Yeah. Let me ask you this, because it's something I struggle with for years and I probably screwed this up a lot, which was, man, I just, I turned into the free business advice guy, right, a lot. And I put a lot of help into places. where I was never compensated. So I made a promise to my wife two years ago. And I said, if it gets past a certain point, it's going to be, hey, I'm happy to consult for equity. I'm happy to consult for equity. I'm happy to consult for equity. And since I've started doing that,

Starting point is 00:36:50 I found that nobody has a problem saying, yeah, dude, sure, you know, you bring value. We'll do this. We'll put a stop on it and see where, you know, we'll have a runway, figure out what we're going. But yeah, I haven't had an issue with that. At what point do you go from just like, okay, I'm going to give you some free advice to, okay. This is literally the point that I'm at right now literally because it got to that exact place you're doing the same thing that's how we got here okay you're the same thing okay it's fair I feel look I'm 53 you're 59 all right I got it six years faster you did I'll take it because man it's just like you love to help people and you want to be a go giver man you want to help but at a certain time you're like when you see somebody

Starting point is 00:37:30 take something that you gave them and all of a sudden you're like did they just make like eight million dollars you're like i will say i have been fortunate where there've been a number of situations where i've helped and someone's just given me equity yeah without me even asking yeah that's happened a few times and that's nice and hasn't happened to me which is what which is why you know it's uh we have a conversation about that hey i'm happy to consult for equity happy to do it all right water so you got the business coming man you're excited it's going to be moving so you're you're officially going live when Tuesday next week Tuesday next week and you got 90 days get profitable, right? Yes. Okay. Let's make it 60. All right. So how many units do you need to move to

Starting point is 00:38:10 become profitable based on the current cost of sales on current? Around 45. So 45 units, you're in the black and making money per month. Per month. Okay. So how far are you, so the initial investment you made, are you imagizing that over space? Yeah. So the people asked me, I was on a podcast the other day and they were saying, well, how much you, I said, I think, because the other thing I'm doing is, you know, part of my deal, you know, her father is a close friend of mine. Her mom was let's just say not the biggest fan of this approach. She's a little more conservative. Okay.

Starting point is 00:38:40 In her approach, I want her to just spend, you know, go all in on college. So I basically committed to his look, I'll basically pay her salary until the business can afford to pay her, which I think it will be within 60,

Starting point is 00:38:51 90 days on the outside. Is that a loan? No, I'm actually, because again, I have 49% of the equity. Okay, so you're paying her. Yeah,

Starting point is 00:38:58 yeah. So I'm going to pay her. Basically, I'm like, I've hired her for basically $50,000 a year. And so basically, when the business can afford to pay her 25, I'll pay the other 25. When the business can pay $40, I'll pay $10 until the business is paying all of it,

Starting point is 00:39:11 again, which I think will be in 60 to 90 days. And then, you know, the, but I think it probably all in when the dust settles, I'll have invested somewhere between, again, not a lot of money, maybe somewhere between $25 and $50,000. Okay, perfect. And you guys think you'll be in the black in 90 days from that. I think in 60 days, yeah, 60 days I think will be, I think 90 days on the outside. We should be able to do it within 60 because, again, once we've figured out the customer acquisition costs and at least a rough LTV.

Starting point is 00:39:36 Then we'll build the interface into printables, and that's going to reduce our cogs by 80%. Yeah, anytime you can do that. So let me ask you this, Anna, because this is your business. We're back to now. So what are the boltons you're looking for? We're starting with posters.

Starting point is 00:39:51 Are you thinking about any, what else are you thinking about? You can bolt on and remark it to these customers. Well, there's, I don't know if you heard about a brand called accessories. They do a lot of products for corporate offices. They do, like, mugs. They do, like, posters, all that kind of stuff. Swag is what you're looking for.

Starting point is 00:40:08 Swag. Exactly. Swag. So, then we can go into that. We can also go into, David has an idea to go into NFTs so that you can print your own line of posters and then you can get royalty fee for it. Spoken like a true crypto guy. NFTs are coming back, baby.

Starting point is 00:40:25 Well, the bigger issue there is there's a network effect opportunity here. So let's say that you're a huge, you know, Lakers fan, right? you could create a whole bunch of posters, you know, Kobe, Shaq, with all cool quotes from Kobe and Shaq, you create a whole little store within our ecosystem and now every time someone buys one, you're getting paid. And so you could have people create

Starting point is 00:40:45 all these different things. Yeah, that's the move. I mean, a buddy of mine right now just has a, they started a brilliant company, which is amazing, effectively what it is, is he is a singer-songwriter, pretty famous guy in Nashville, and has a lot of other famous friends in Nashville

Starting point is 00:41:00 that are there. And essentially what they did they built AI producers that are them and how they would mix and write a song like how we would do it if we were sitting here with you working with you how we'd set the board how we'd set everything up and now they have this network of people can sign up for it and they can write and mix and make songs with these very famous Nashville producers in this ecosystem and then every time those songs get spun within that ecosystem they get a royalty or if they get licensed out to tv or production or whatever this are creating this bank of not AI created like not that stuff that's

Starting point is 00:41:38 a little weird but this is actual musician created but just mixed and produced by these famous guys and now they're getting royalty on it as it goes out is really cool yeah having you know anytime i think you can have a creator network or a place where people can think they're doing their own thing i think that's smart that's smart look at you go that's smart that's good stuff there's the reason i picked her no i get it i get it all right well if they want to find you more how exactly can they find you look the best place to go is on you know to my youtube channel uh official david gutman um and my instagram is you know davar gutman and instagram those are the two best places to find me okay what about you on or where they

Starting point is 00:42:15 find you one of one official it's an instagram handle and we're also going to launch our website so one of one of one oh any oh any oh me oh me one one of one so your poster has to be unique as well i'll look at you go all right i like it like the slogan well guys listen hey man If Auda can do it and you're sitting at home with an idea trying to figure it out, I mean, this is a pretty good pathway to making those things of reality. Because, dude, if you're waiting around for somebody to come to save you, like they said, in the best Christmas movie ever die hard, no one's coming to save you. So do it yourself.

Starting point is 00:42:48 See you next week. Hey, it's John Gafford from the Escaping the Drift podcast. And big news, my new book, Escaping the Drift is coming out. November the 11th, you can pre-order it right now at thejohngafford.com. There are tons of bonuses, tons of giveaways. Get the book. If you are somebody that feels like you might be drifting along, this is for you. If you know somebody that feels like they might be drifting along, this is for you.

Starting point is 00:43:14 Available everywhere, all bookstores, everywhere, Amazon, Barnes & Noble's, the whole nine yards. But pick your copy up right now at thejohngaffer.com and get a bunch of the awesome bonuses I've thrown out because I promise you. I put my heart and soul into this thing. I want it to help you change your life. Pick it up everywhere. what's up everybody thanks for joining us for another episode of escaping the drift hope you got a bunch out of it or at least as much as i did out of it anyway if you want to learn more about the show you can always go over to escaping the drift.com you can join our mailing list but do me a favor if you

Starting point is 00:43:49 wouldn't mind throw up that five-star review give us a share do something man we're here for you hopefully you'll be here for us but anyway in the meantime we will see you at the next episode

Escaping the Drift with John Gafford - Empowering Young Leaders in Business with David Guttman

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