Founders - #333 Red Bull's Billionaire Maniac Founder: Dietrich Mateschitz

Starting point is 00:00:00 Okay, so I want to jump right into this episode, but I have two very special announcements to make. I'll do so at the end, so make sure that you stick around to the end of this podcast. I'll give you a sneak peek now. One has to do with the first ever in-person Founders Conference that is happening in 60 days. I'll tell you why I'm doing it, what it is, and how you can attend after this incredible story of the Red Bull founder. I'll see you on the other side. Dietrich Matuschitz is one of the most successful entrepreneurs of our age, a man who single-handedly changed the landscape of the beverage industry by creating not just a new brand, but a whole new category, the energy drink. He is the visionary who brought the world Red Bull. In return for his innovation, the world

Starting point is 00:00:42 has made him very, very rich. Over the last few years, he was taking anywhere from $500 million to $800 million a year in annual dividends, and he had a net worth somewhere between $20 and $30 billion. Mateschitz also runs an efficient enterprise. In 2010, Red Bull employed just 7,758 people, which works out to more than $667,000 in revenue per person. This success is the realization of a business plan that eschews conventional advertising in favor of marketing through its own events, shows, sports teams, and publications. Red Bull has produced its own TV programs, films, magazines, websites, and a steady diet of videos online featuring snowboarders, rally cars, surfers, cliff divers, and concerts, and a guy jumping from space.

Starting point is 00:01:32 Mattress Hits calls the multimedia assault one of the most important line extensions so far. As a major content provider, it is our goal to communicate and distribute the world of Red Bull in all major media segments, from TV to print to new media. Red Bull also owns four soccer teams. They have a NASCAR team and two Formula One racing teams. He finances the annual $200 million cost of his F1 teams out of the company's healthy operating income. And this is what he said about that. In literal financial terms, our sports teams are not yet profitable, but in value terms,

Starting point is 00:02:08 they are. The total editorial media value plus the media assets created around the teams, that's such a good insight, plus the media assets created around the teams are superior to pure advertising expenditures. He then launches into a spiel that he's been delivering for the past 25 years. He explains that Red Bull is not just a drink. Instead, it's a philosophy, one seemingly derived from his own outlook on life and a functional product used to improve strength and performance and to revitalize the body and mind. Those are his words. He is also quite serious, prone to beginning sentences with the phrase, it is a must, as in it is a must to believe in one's product. If this was

Starting point is 00:02:51 just a marketing gimmick, it would never work. And it is something that he believed on because he worked on Red Bull for over the last 40 years of his life. He just recently passed away. That's why I wanted to do this episode now. This is a little bit about the beginnings of how he discovered this idea. He was on a chance trip to Thailand in 1982, which would prove to be a turning point in his life. He was curious to know what attracted the locals there to an uncarbonated tonic, which they called a word in Thai I'm not going to try to pronounce, which literally translates to Red Bull. He tried some of this himself and found that it instantly cured his jet lag. Not long after that, he was sitting at the bar at the Mandarin Oriental Hotel in Hong Kong,

Starting point is 00:03:33 and he was reading a magazine. In the magazine, it mentioned that the top corporate taxpayer in Japan that year was the maker of such tonics. Suddenly, the idea hit him. He would sell that stuff in the West. He then approached a Thai businessman who was selling the tonic in Southeast Asia and suggested that the two introduce the drink to the rest of the world with one crucial change. It would be carbonated. This is going to be his partners. His last name, I'm going to guess, is Yuvedaha. And he liked the idea. And so the two agreed to invest $500,000 apiece to establish a 49-49 partnership with the remaining 2% going to Yuvedaha's son. So when I said earlier that he was paying dividends somewhere between $500 and $800 million to himself a year, and his net worth was somewhere between $20 and $30 billion, that is from this 49% that he owned of Red Bull. In addition to adding carbonation, he also

Starting point is 00:04:23 positioned it differently. This would allow for his product positioning masterstroke. He would sell Red Bull as an ultra premium drink in a category all of its own. At $2 a can, it was far and away the most expensive carbonated drink on the shelves. This is what he said about that. If we only had a 15% price premium, we'd merely be a premium brand among soft drinks and not a different category altogether. At this point, most histories of Red Bull tend to depart from Matteschitz and focus on Red Bull itself, which is exactly how he wants it. A curious hybrid of a mogul, Matteschitz has a zest for life that rivals Richard Branson's, but his obsession with controlling information puts him closer to Steve Jobs.

Starting point is 00:05:06 Like the Apple founder, Mattishevits pulls the strings behind a consumer cult. And cults rely on message control. And cults rely on message control. Mattishevits is notoriously secretive. He is close to some of Austria's most prominent people. This part made me laugh. He is close to some of Austria's most prominent people. This part made me laugh. He is close to some of Austria's most prominent people, though Mattishev says he doesn't place a premium on collecting friends or socializing. I don't believe in 50 friends. I believe in a

Starting point is 00:05:34 smaller number, nor do I care about society events. It is the most useless use of time. When I go out, when I go out from time to time, it's just to convince myself that I'm not missing out on a lot. And so the little that he does speak, he says very interesting things. This is another thing that I thought was very interesting. The success of Red Bull defies logic in one important regard. It doesn't taste very good. Mattishev says he doesn't care about the taste issue then. He didn't care about the taste issue then, and he doesn't care about it now.

Starting point is 00:06:03 This is what he says. It's not just another flavored sugar water differentiated by color or taste or flavor. It is an efficiency product. I'm talking about improving endurance, concentration, reaction time, speed, vigilance, and emotional status. Taste is of no importance whatsoever. That part actually shocked me. And Red Bull, I mean, I wouldn't say it tastes great, but it certainly doesn't taste bad. I think maybe the author is exaggerating a little bit here. Masters has proved his marketing genius, especially in the era, this is another funny thing, especially in the era of crisis management, with his early decision to foster

Starting point is 00:06:40 rumors about Red Bull's content instead of trying to squash them. I'm going to go into a lot more detail later on about this, but I want to give you an overview. This is what I'm trying to do. I'm just going to give you an overview of who he was and his approach to company building, which I found fascinating, by the way. I've been texting friends nonstop. I was like, I cannot believe all this stuff. This is an example of that. So again, he wants to foster rumors. That is just free. We're going to go into Christian Dior's comment on this, which I just covered a few weeks ago. He's just like, oh, this is just free propaganda.

Starting point is 00:07:09 Don't try to squash them. Foster them. And so in the early days of Red Bull, you have all this, like, why is Red Bull so effective? Why is it giving me so much energy? Why is it letting me eat a party all night? Because that was really spreading clubs to begin with. And so he says his early decision to foster rumors about red bull's content instead of trying to squat to quash them tales begin to

Starting point is 00:07:29 circulate that taurine which is one of the main ingredients red bull was derived from bull testicles or even that it was bull semen oh the company let the gossip travel unchecked and even set up a page devoted to the rumors on its website. He has an incredible, incredible quote about this. He says the most dangerous thing for a branded product is low interest. That reminds me of Edwin Land, founder of Polaroid, Steve Jobs hero, and the patron saint of Founders Podcast. He said something that was fascinating. And he says the test of invention is the power of an inventor to push your invention through, not in the face of staunch opposition, which most people think, right? But staunch indifference. Edwin Land, like MasterSys, would tell you that indifference is your enemy. If

Starting point is 00:08:17 they're talking about your product, that is a good thing, even if they think that it's coming from the secret ingredient is bull testicles. Was this all by design? Did he really anticipate that a combination of rumors and public outcry would play such a big part in driving early sales? Even think about that. I'm going to pause real quick. Think about if he said, okay, well, I have a new drink, and there's some caffeine in it, some sugar, maybe some B12 or some other vitamins.

Starting point is 00:08:43 I've already forgot what he said. But if somebody whispers like, hey, there's this new energy drink and the energy comes from bull testicles, even if, one, I wouldn't drink it because of that, but I won't forget it, that's actually a really powerful insight that he had there. So was it all by design? Did he really anticipate that a combination of rumor and public outcry would play such a big part in driving early sales? They're talking about the fact that Red Bull was forbidden to be sold in several European countries that he initially tried to launch in. Matches is emphatic. Yes, we expected it. It was part of the strategy from the beginning. We would make the brand interesting enough that people wanted to get their hands on it.

Starting point is 00:09:20 Red Bull's marketing campaign has always been its claim that it can improve athletic performance. To prove it, the company took a page out of Gatorade's book and targeted athletes, except with a twist. Mattress has zeroed in on the extreme sports crowd. Okay, so that idea is not new. I've done multiple podcasts and read multiple biographies of the founders of companies like Adidas, Nike, and then Vans Shoe. If you realize, Adidas started getting a lot of traction by sponsoring, they're making athletic shoes, so they sponsor athletes. Nike sees the success they're doing, and so they do the same thing.

Starting point is 00:09:56 There's a lot of stories about them competing in the early days of Nike. But what was fascinating is Paul Van Duren, who I did a podcast on a long time ago, he's the founder of Vans. What he did, he's like, well, I'm not making athletic shoes, but I like the idea that Adidas and Nike used to gain traction, initial sales traction. And so he copied, he didn't copy the what, he copied the how. And so instead of going to, you know, Olympians or basketball players, whatever, he found an underserved, excuse me, underserved niche, which was skateboarders.

Starting point is 00:10:25 And so he went out and tried to sign in the early skateboarding industry. And that was a huge influence on the early success of Vans. And so you see Massachusetts using a very similar playbook from Gatorade and then other products that also were very successful targeting athletes. Today, Red Bull underwrites more than 500 athletes in 97 sports. This state is about, what I'm workingrites more than 500 athletes in 97 sports. This state is about what I'm working off of is like about 15 years old. So it's probably much higher than that. Like everything else at Red Bull, the negotiations that lead to these sponsorship deals are

Starting point is 00:10:54 unorthodox as well. Wind surfer Robbie Nash recalls the first time he met Mattis almost 20 years ago. We talked in the courtyard of his office and pretty soon we realized that we were both really into cars. That was the end of our business meeting because he wanted me to show, he wanted to show me his Ferrari GTO. So we went driving off into the mountains and after 15 minutes, he pulled over, got out and told me to drive back. I didn't want to. That's a million dollar car. But he said I was either going to drive the Ferrari back or walk back. I was so scared that I drove it like my grandmother. The lines between Red Bull, Red Bull athletes, and Red Bull events are blurry on purpose. Another great idea.

Starting point is 00:11:32 This is why I kept texting people about this guy. To Mattis, it's just one big image campaign with many manifestations. Let me read that again. The lines between Red Bull, Red Bull athletes, and Red Bull events are blurry on purpose. To Mattis, it's just one big image campaign with many manifestations. Potential customers might actually attend one of the dozens of global events that Red Bull puts on. It could be a Red Bull soapbox race in Los Angeles or a motocross spectacular in Brazil the week after. This is what they said about that. This is fun stuff and it's a lot more

Starting point is 00:12:03 interesting than writing a check to buy 30 seconds during the Super Bowl. Despite the fact that he's approaching 70, he maintains quite a clip. He still moves like an athlete. He rides horses, rides a motorcycle, pilots his planes, and last year competed in an off-road motorcycle race. He has long insisted that he has no plans to sell or take Red Bull public. It's not a question of money, he said. It's a question of fun. Can you imagine me at a shareholders meeting?

Starting point is 00:12:31 Mattis has certainly created some enviable havens for himself, like Richard Branson. He has his own private island in Fiji. He bought it off of Malcolm Forbes. When I asked him what motivated him to buy a vacation home so far away, he resorts to quoting Malcolm Forbes himself. He gave a nice answer, which was, doesn't everybody want their own South Pacific island? Well, in my case, he was right. I did.

Starting point is 00:12:54 Mattis just also says that he's always been attracted to the idea of having his own independent state, the country of Red Bull, which would have the shortest set of laws in the world. The rules would be simple. Nobody tells you what you have to do, only what you don't have to do. Okay, so that was an excerpt not from the book that I'm going to talk to you about today. That's an excerpt from this long form piece in Bloomberg called Red Bull's Billionaire Maniac. The book that I am going to talk to you about today, as far as I know, is the only biography ever written about the founder of Red Bull, and it is only available in German. My friend Cameron Priest, who's been a longtime listener of Founders, and he's probably over the years sent me, no exaggeration, at least 40 great

Starting point is 00:13:36 biography recommendations, actually helped me translate it into English. The translation's not the greatest. Spending several hours reading what is technically English, but in a way, the words were organized. It's almost like you're reading a different language. So what I did is I just pulled out a bunch of highlights and tried to rewrite them into explaining the main ideas that Mattis has used to build one of the most valuable private companies on earth. And I think the story is incredibly important because even though he's not American, he's Austrian, he lives something like the American dream from employee to billionaire and did that with just one brilliant idea. And as we go through this, you'll see a lot of his

Starting point is 00:14:14 ideas actually interact well together. So he has this really unique, but I would say cohesive company building philosophy that is completely unique to his personality and the way he wants to live his life. Like you said, he could have taken it public. He could have sold out. He's just like, I just want to have fun. I'm making plenty of money. Somehow I think I'll survive making $800 million a year and I never want to stop because I'm having fun. And so he was working on Red Bull up until he died. So before I jump into how he views Red Bull as he calls it a marketing conglomerate, I want to go over what they talked about, they hinted at in that article, just how private and secretive and how he was just obsessed with controlling the message. He's just a very private person. He was always, always promoting Red Bull

Starting point is 00:14:55 and never promoting himself. And so the author of this book, and I apologize, I'm butchering all these names. I've already mispronounced that. I don't know, like half a dozen things. His name is Wolfgang Verweger. I'm just going to call him Wolfgang. So he actually runs into, as he's writing the book, he actually has a chance encounter with Dietrich and he tells him that he's writing a biography on him. And Dietrich does not like that. And there's going to be some wild stuff here. He is neither interested in an authorized biography or in a case history about Red Bull. I was able to have a brief personal conversation with him. And when he found out that he wanted to write a book on him, he described the publication of a book that he had not authorized as, quote, a disaster. So you and I have talked about this maxim over and over again.

Starting point is 00:15:41 Very common in the history of entrepreneurship. Bad boys move in silence. They find an advantage. They don't like telling, they don't like broadcasting how successful they are. And they certainly don't want to tell you what their next move is. And so this entire book, right, it says it's, there's a strict prohibition of discussing internal matters. So if you are an employee of Red Bull, you can't say anything about what's going on. So most of the people interviewed in the book are actually former employees of Red Bull. But this is fascinating. They unanimously, these people have left the company, right?

Starting point is 00:16:12 But they unanimously express positive opinions about their former employer. He is universally described as a person with great charisma. So the way he is with employees and people he knows is very different than the way he is with journalists. With journalists, he's extremely shy and reserved. And the few times he's done interviews, he's done some with like these European publications. He did one with The Economist, with Bloomberg. This is what he says about that. My philosophy is very simple. Since it's not me on the shelf for sale, but Red Bull, it's perfectly logical that Red Bull is at the center of our marketing activities and not the person. Naturally, I also have a pronounced desire for privacy. And then we see he utilizes an idea that you and I talked about on episode 292. I did this episode on this guy named Daniel

Starting point is 00:16:55 Ludwig. The name of that book is called The Invisible Billionaire. When Daniel was alive in the 80s, he was the richest American and no one knew who he was. I think there was only like one picture of him. And Daniel actually, Ludwig actually paid his PR team to keep his name out of the press. Mattis does the same thing. The press office of the Red Bull headquarters is a press prevention office whose task is to say nothing and find a justification for why their boss is unavailable. And so even though Mattis was one of the greatest promoters that we've probably seen in the last half a century, public relations was not a part of the company's marketing strategy. And the interviews that they do do, they're only granted to select publications and select journalists.

Starting point is 00:17:41 And I really need to hammer home this point about how extreme he was in doing this there. He's in Australia. He's the richest man in Austria. Right. And there's a society magazine. So like, you know, I don't I guess we call it like kind of like a tabloid or like a gossip magazine in the States. But he actually buys it. He buys this magazine just so he will not appear in it. And he was actually asked about this and he actually confirmed it. He's like, well, the best way to prevent me from appearing in it is to own it. And so this is tied to his very strong desire. He wants to control the message. He wants to tell his own story. That's why he's so heavy in them being available in all forms of media. But he's also a perfectionist who has to control his projects, the product that he's making and the

Starting point is 00:18:22 environment 100%. And so extreme success usually comes from extreme characters extreme personality traits he actually threatened to have this is way before uh this book was actually written about him but there was another potential biographer this russian author uh that tried to start writing a biography an unauthorized biography on matashits and uh matashits threatened to have his kneecaps broken. He didn't like that the author was going to his hometown. I think he was knocking on the door of his elderly mother. And it says, this aroused the wrath of the otherwise charming Matashits. You've harassed my mother, and I will not tolerate this. As long as a perforated kneecap in Moscow costs $500, you will not be safe. And so let's go into what he was

Starting point is 00:19:06 doing before he started Red Bull. This is one of the most fascinating things because as far as I know, it's his first business that he started and he was 41 years old. He was an employee for Unilever. But way before that, and what's fascinating, he calls himself like a very lazy student. So he actually chose marketing as his major. And it was perfect because he's one of the greatest marketers I've ever seen. But he had to work his way through college. He was actually working at like a steelworks company. And he'd also take jobs as a ski instructor and a tour guide. But he didn't think he was that good at school. He called himself a lazy student because he took 20 semesters to graduate. And he says, normally, you finish the University of Economics at the age of 22 and not 28 years old like he did

Starting point is 00:19:45 which was interesting because uh that he was a bad student because both of his parents he didn't come for money both of his parents were school teachers so after college he takes he starts working for one of the largest uh consumer package good companies in the world unilever he works all the way up and becomes a marketing director for the international division of a Unilever subsidiary called Blendex. It's toothpaste. He's marketing toothpaste. And he did this for a very long time. He wound up traveling all the time for work. And this is how he's going to discover Red Bull, which I mentioned earlier. So he's on the road three to four months per year. Often they're sending him all the way out to the Far East. He's all over Asia. And it might've been fun as a

Starting point is 00:20:23 younger man, but as he ages, he did not want to live that life of this frequent flyer, never home. And he has this realization where he said in an interview one time, all I could see were the same gray planes, the same gray suits and the same gray faces. I wondered if I wanted to spend the next decade like this. And so he's around 38 years old when he's having this thought, like this can't, I don't want, I don't want to be 48 and still in the same position. And really what motivated him, this is something he was going to repeat over and over again. He desperately, desperately wanted independence. He wanted financial independence and he wanted independence and control over how he spent his time. And so it's at the same time that he's

Starting point is 00:21:02 having these thoughts that he finds that Thai version, the uncarbonated version of Red Bull, gives him a lot of energy and cures his jet lag, and then reads the article. It's like, wait a minute, the people that make drinks like this pay the most, they make the most money, they pay the most taxes in this entire country.

Starting point is 00:21:18 And so he immediately starts to study the existing products in this very nation energy drink market. And he would literally grab every single samples of every single kind of drink that's very similar. He would get together with other people that he works with and he called them, he organized them what he would call energy drink parties. And at the time they were calling them stimulating juices. So these stimulating juices were all essentially taste tested. And there was like this giant like self experiment to see not only how it tastes, but also the effects that it had on them. And so one relationship that

Starting point is 00:21:50 he's going to make right now actually changes his life because he realizes that there is a Thai franchise partner of a Unilever group, right? They're making toothpaste, but they also produce and bottle that tonic drink, the uncarbonated version of what will become Red Bull. And he pitches him on the idea of them giving him the license to distribute that drink and then add carbonation outside of Asia. And this is when they do that partnership where they both agree to put in $500,000 and then carbonate and then sell this drink in the West. And one main theme that runs through this entire story that's very obvious when you

Starting point is 00:22:23 read about him, whether you read articles, a book, anything you come across. He has profound, profound self-belief because when he's 41, he quits his job and starts his first company and puts all of the money that he has in it. He doesn't have this like large buffer. He doesn't have a lot of money. And even from the very beginning, and the reason I think I say you have to have a profound self-belief, because there's you can see brochures that he was like pitching people on about like the business. I don't I think I might have been using this to try to raise money. But he says there is no market for Red Bull. We will create one. this great line in the English translation of this German biography where it says, rarely in the world of business has such a bold announcement been implemented into reality like this one. And so creating your own market is also not only do you have to educate the potential customers, but then you have to deal with all the regulators. And so he tries to set up shop in Germany and they didn't even know what the hell an energy drink was. And so he applied for what was going to be the first ever Europe-wide approval of a new type of indulgence, which is the energy drink, right? As you might

Starting point is 00:23:29 imagine, European bureaucracy is not known for fast approval time. So he's waiting over a year to try to launch just in Germany. He gets extremely frustrated. So then he winds up packing his bags and going to Austria. And he's like, I'm just going to launch in Austria. There's a lot of benefits from that. But also one of the main benefits is he launched in a single small market. And for nearly five years, he was able to run experiments and really improve the product, but also figure out the marketing and the messaging because he's only in a single small market. So I think he launches in 1987 in Austria and doesn't launch to his second market till 1992. So they're launching in just one small market. They don't have a lot of money.

Starting point is 00:24:11 They just put up, you know, $500,000 each. It's not like Massachusetts has any other money. And so when sales didn't take off, he did something that was really smart. He invested some of that money instead of an advertising at the very beginning. He actually made more of his product and he would bring it and deliver it to places by pallet and let people try it and drink it free of charge. This is very similar to one of my favorite entrepreneurs of all time is Estee Lauder. And in the early days of her company, which she also started when she was 40, I just realized that now, she actually took money out of her advertising budget and instead made more of her product to give away and this is what she said about that you give people a product to try if they like it

Starting point is 00:24:49 it's quality then they buy it they haven't been lured in by an advertisement but but convinced by the product itself we took the money we had planned to use on advertising and invested instead in enough material to give away large quantities of our product it was so simple that our competitors sneered when they heard what they were doing. Today, they're all copying us. And so Mattishevitz knew he needed more money. He went to a bunch of banks. They all said no, only one. There was a small private bank. Oh my goodness, Spangler. I'm butchering these words, but this bank called, I'm going to call it Spangler, was the only one to actually believe in the product and the concept behind it.

Starting point is 00:25:26 And so they actually lent him money. Now, this is another main theme that's repeated over and over again. MasterSits is excessively loyal. And so to this day, that is the only banking house that Red Bull used in that country. This is where they get the early start. Red Bull started to flourish when bartenders and nightclub operators were convinced that it was a suitable new component for mixed drinks. The energy drink was sometimes referred to as poor man's cocaine. So this spreading in nightclubs and bars actually gives them their initial traction. The first year they sell about several, it's a several hundred thousand cans were sold in the

Starting point is 00:26:01 first year. The next year, that number goes to 1. two million. And then the year after, so year three, they're at one point seven million. So they're growing, but they're not, you know, growing crazy fast. They're also spending a ton. This is when they really start putting a lot of their money. I think it's something like over 30 percent of their gross revenue they spend on advertising. At the beginning, it was even more than that. But the remarkable thing is they hit their breakakeven point in year three, and they've been profitable every single year since then. And so there's three ideas that he's going to go into here. One that he was all in, he had that burn the boats mentality. He wanted to go high end from the start, and he knew that there was no market for this. So he had to create one. And so he talked about the great personal

Starting point is 00:26:43 risk that he did in starting the company. He says, if things had gone wrong, I'd be sleeping under a bridge today. And so he talks about his decision to have a high-priced product, plus use a lot of that revenue from people spending more money on it to actually reinvest into advertising. Red Bull was to become very expensive, and it was a new product for which there was not even a market yet. So it was necessary to create demand first. Potential customers had to be explained why they now desperately needed Red Bull, which they had not even known existed before. And so one of the things that he does

Starting point is 00:27:14 that's very unique that I don't know if I've heard before is he hires an advertising firm from the very beginning. It calls him his former study buddy. So I'm assuming that this is his friend from college, this guy named Kastner. At this time, Kastner was already a founder of an advertising agency called Kastner and Partner. So Kastner is going to play a very important role because he's the guy that comes up with the slogan, Red Bull gives you wings. Now, here's, I think, a testament to how unique Masterships is.

Starting point is 00:27:40 He doesn't have any money, but he's also a perfectionist. And so he keeps turning down over and over and over again, all the different marketing and advertising campaigns that they're trying to come up with. And you're like, well, how could he be doing that, David? Like he has no money. All this time is going by. I think it's like a year and a half that they're working on this. So they finally figure out the positioning and the actual initial launch of the marketing

Starting point is 00:28:00 and advertising. And so he actually paid for this initial work with labor. He had no money. So he actually helps out in the agency as a freelance employee just to pay for that marketing advertising that the advertising agency that his friend started is doing on behalf of Red Bull. Another important point. Everybody's telling him it's a bad idea. His friend immediately recognized its potential. And he said, if this is pursued consistently, this idea will lead to success. So again, Mashes is very self-confident, has a ton of, as you can imagine, has a ton of self-confidence in himself and the idea that he's doing, but it is very helpful for other people, especially people

Starting point is 00:28:38 that you trust and admire. Because he said, he says that Kastner was a very clever fellow and he knew that he was a perfectionist like me. And so you have somebody like that, that, you know, is smart, that you admire, you trust their judgment. They're like, no, you know, everybody else might be telling you this bad idea. But if you pursue this consistently, you give it like it will lead to success. And so Kastner was talking about this time. He's like, listen, this the birth of this campaign was not easy because for a year and a half, he's just rejecting every single suggestion that I have. I think they went through 50 different, you know, ways to either slogans or

Starting point is 00:29:11 ways to market it. Mashes rejects every single one of them. But Kastner understood his friend. He says he wants the absolute best. He believed in his product to the end of his days. And so even after 50 failed attempts, they're having this conversation and where they're like, well, anyway, the drinks Red Bull becomes damn strong. So that's the conversation of his days. And so even after 50 failed attempts, they're having this conversation and they're like, well, any way that drinks Red Bull becomes damn strong. So that's the conversation they're having. That's how they were thinking about it. It's like, well, you drink it

Starting point is 00:29:32 and you become strong. Like, what's the right tagline or motto for that? And in the middle of the night, Kastner has the idea that Red Bull gives you wings. And so he calls Mastro's in the middle of the night

Starting point is 00:29:43 and immediately Mastro's like, yep, that's it. So it was a, the fact that that was a good idea was immediately obvious to both of them. The thing about how crazy that is, you're fighting for a year and a half going through 50 things. He calls you, you hear it. You're like, yep, that's it. Let's go. And so now they had the branding and the tagline. They wanted the advertising to be, this is the traits that they were looking for. They wanted to be self-ironic, non-conformist, smart, and rebellious. And their point was that that's how they viewed their own personality. And so they're like, we're going to put a lot of our own personality into this.

Starting point is 00:30:12 And so now they're up and running. Five years, they're still just in that small single market in Austria. Five years in, then they expand to Hungary. That's the second market that they open up. And then they start adding market after market after market in Europe. Now, this part was a bit confusing to me, but it seems that the formation of the European Union was one of the waves he surfed. If you listen to episode 329 on Port Charlie's Almanac, there's something fascinating that

Starting point is 00:30:38 Charlie Munger would talk about that because several times in the book, he will analyze like outside success. And he's trying to teach people like, well, what would account for the success of like a Les Schwab or Sam Walton? And he goes through and one of the ideas that he has, he says, surfing is a very important model to understand. And so it seems like this brand new formation of the European Union was one of the waves that Massachusetts surfed. Because if a product is approved to be sold in one European Union country, it is automatically approved in another one. So it says Berlin, remember he's trying to get into Germany, finally allowed Red Bull for the German market as well. This made Massachusetts one of the

Starting point is 00:31:15 first big EU beneficiaries. The approval was only possible through a detour. Red Bull managed to get approved in Great Britain. Great Britain was not in their sights at that time, but an EU law laid tracks for approval in Germany. And so practically the next day, Red Bull set out to conquer the market in which it actually wanted to settle down. So it's talking about Germany. Now, here's the crazy thing. Way before they launched in Germany, there was a black market. People were selling cans of Red Bull on the black market. So let's go back to this idea that I've seen a bunch of times, but the one that comes to mind most is most top of mind right now, because I just covered Christian Dior's autobiography. And he talks about this, is that rumors and innuendo, you have to think about them as great free propaganda. And so Christian Dior says, the relative secrecy in which I chose to

Starting point is 00:32:02 work sounds a lot like Massachusetts, right? The relative secrecy in which I chose to work, sounds a lot like Massachusetts, right? The relative secrecy in which I chose to work aroused a positive whispering campaign, which was excellent free propaganda. Gossip, malicious rumors are worth more than the most expensive publicity campaign in the world. That is the end of Christian Dior's quote. This is what this book says about it. And again, I have to like rewrite this because the translation is kind of funny, but there was a thriving black market for Red Bull in Germany long before it was approved. Remember it's banned and people are flocking to it. So they're actually, people are, there's a, people are making money by smuggling it in from Austria into Germany. And so all that does is increase the desire for it because now you're drinking something that's, oh my God, this is illegal. And it actually made it more charming because it's like more forbidden. So this is the foundation of like this cult-like following that

Starting point is 00:32:52 Red Bull had at the very beginning. And it is in Germany where they're spreading these rumors that the drink contains an extract from bull testicles. There was also a rumor that it was secretly enriched with amphetamines. Remember, this is spreading in like clubs and bars and stuff like that. And it says the company did not, did nothing to counter these bizarre rumors. And again, I want to repeat that excellent quote that he had. As Mastersitz once lectured, the most dangerous thing for a branded product is low interest. Then they get approved, right? In the first three months of a legal market presence. They sell 33 million cans in Germany alone.

Starting point is 00:33:32 This idea is not new to you and I, right? This idea is like if something's banned, all it is is free propaganda, it's free advertising, it's going to drastically increase the amount of demand. And if you remember on the Michael Jordan episodes and also on the Nike episodes, when the NBA banned the original Jordan shoe. At the very beginning, Nike's like, oh, hopefully we're going to sell like I think it was like four million dollars or no, I think it's three million dollars by the fourth year. And then the NBA bans the shoe and they make a smart decision like just keep wearing it, Michael, we'll pay the fine. And so instead of hitting, I think, three million by the fourth year, they did one hundred and twenty five

Starting point is 00:34:03 or one hundred and twenty six million dollars the first year. They did 125 or $126 million the first year. And so Masters does something that he does for his entire career. He really pushes the pace. They launch in Germany and his marketing budget, right? So right now, the entire revenue of the company at this time, where we are in the story, they're doing 70 million euros at that time. They're in a few different markets.

Starting point is 00:34:23 He sets the marketing budget for Germany at 10%, just that one market, more than 10% to 7.5 million euros for that year. And then I learned something that was actually surprising because you go look like Red Bull essentially just has Red Bull. They might have like different versions, right? But they essentially sell one thing. In the book, there's all kinds of examples. They have this coffee and this cola line. But in the early days, you could tell that he's learning from his mistakes and eventually goes and really puts all of his energy behind one arrow. Because, let's see, he's a couple years into the company. It's in 1989. He comes out with this drink. It's a lemonade drink called the Red Rooster, which is like maple and lemon syrup. It sounds disgusting, by the way. But they launch it and just complete flop. And I went and searched all the other drinks that are mentioned in the book that were still in operation, and none of them seem to be in operation today. So I think he obviously learned from his mistake. He's like,

Starting point is 00:35:20 well, Red Bull has this power law outcome. It's really silly for us to try to introduce anything else. We should just stick with that and put all our energy and money behind the one thing that we know is a smashing success. And so this is where they just start hitting new markets after new markets. By 1997, they're opening new markets, which are new countries, nearly on a monthly basis. And every time they hit a new market, sales just keeps like, now you just see this like huge spike in sales on the graph. And then he also launches in America was very fascinating.

Starting point is 00:35:53 So he actually launches in one state he served. He's like, well, I think it's working in Europe. It should work in America. And so he just launched in California as a way to test a single market before expanding nationwide. He'll mention multiple times the fact that he hates banks and is very afraid of debt. And so most of the growth is just fueled from actual the profits the company's making. And so he's able to do something that's very rare, which he's able to control costs and maintain financial discipline, even when they're making a lot of profits. And he preaches that to his employees over and over

Starting point is 00:36:24 again. His employees have to argue and justify the expenditure of the smallest amounts, even at the same time that the company's annual record profits were being produced. And so as I was reading how he interacts with his employees, there's something, if you listen to the Anna Wintour episode I did on episode 326, I said, if Anna had a tagline, it would be, I have to make sure things are being done right. I feel Mattress just was the same exact way. And sorry if I'm mispronouncing his name. When he died, there was a bunch of different reports. I went on YouTube to try to figure out how to pronounce his last name. And they're all like European press reports. So they all pronounce it differently. But anyways, this idea, it's like, well, the role he's making,

Starting point is 00:37:02 you know, he talks about the fact that he's a control freak. He's a perfectionist. He's going to make sure things are being done right. And so former employees are saying there's always a great deal of pressure to perform. One can make a mistake, but you can only make the same mistake once. So he expects a lot, but he also provides a lot. He pays salaries that are above industry average. And in addition, this is wild, every Red Bull employee from the secretary to the board has a company car. Past employees repeat the same thing, that he is extremely loyal. They describe him as a gentleman. They say if you've helped him once, he will never forget it. And there's also some bizarre things.

Starting point is 00:37:41 When I got to this part, this is the note I left myself when I read this part. I go, because he's talking about, you know, it has a cult-like following outside. And then you get the idea that there's a cult-like following inside. And I read, I wrote to myself, am I reading this right? They drink special water only available internally. And so at these internal company events, they drink this thing called Luna Aqua, which is mineral water that is allegedly only drawn at the full moon. And they say it's advertised that it supposedly awakens the spirits of life. And so they serve it to Red Bull employees and then a bunch of Red Bull athletes or anybody in the Red Bull family. And I think it might be served at Red Bull events as well.

Starting point is 00:38:21 And so there's this great quote in this section that I think applies to this. Cult brands have their own laws. Otherwise, they would not be cultish. And again, to you and I, when we describe something as cult, that's not a pejorative. This is a very positive thing. A lot of the greatest companies in the world, a lot of the greatest brands, you could describe them as a cult-like following. And Red Bull definitely has that. A lot of the culture and the ideas of Red Bull, it's just really the founder's personality writ large. The accepted code of conduct for Red Bull people is set by Massachusetts himself. He is a fine and elegant person who values a cultured tone of conversation and good manners. You're supposed to hold doors open for the ladies and you do not get drunk in public. Red Bull is Massachusetts and Massachusetts and mattress shits is Red Bull is a quote from a former employee. And so let's go into this idea that he views Red Bull as a marketing conglomerate. Again, marketing is our core competency. We're going to outsource everything else. Red Bull has

Starting point is 00:39:15 no production facilities or warehouses. Many large corporations outsource their marketing and advertising activity. Red Bull consistently took the opposite approach. It outsourced production and distribution and takes care of sales and advertising itself. Basically, Red Bull is just a large marketing machine. Production, bottling, and delivery, which require simple manual labor, are outsourced. Now, this also speaks to being a gentleman, more like an old school way of approaching things. The main relation. So when he's outsourcing all the bottling and the production, right? His main bottler relationship was sealed with a handshake. The bottler is this family business that has been around for over 100 years.

Starting point is 00:39:57 He meets with the head of that company, right? It's in German. I'm not even gonna try to pronounce it. They agreed to produce Red Bull on a handshake. That was in 1987. And they still have this collaboration. This is what, 40 years? How many?

Starting point is 00:40:13 Yeah, about 40 years. He says, we are hopelessly loyal to each other. Mastersitz once described his, that's how he described his relationship with his bottling partner. For Dietrich Mastersitz, a handshake among men is still worth something. So Charlie Munger said something that was excellent. There's actually two. He said this in Charlie Munger said this in this interview that he did with the

Starting point is 00:40:35 release of the republication of poor Charlie Zominak. It's on the invest like the best podcast feed. If you haven't listened to it, I keep talking about this. It's so important. It was released December 5th, 2023. It is Invest Like the Best episode 355. It is John Collison, co-founder of Stripe, interviewing Charlie Munger. In that podcast, which I've listened to, I think, four times already, Charlie Munger says something that's fascinating. He says, trust is one of the greatest economic forces on earth. He is constantly trying to maneuver his whole life. He maneuvered himself into a high, I think he calls it like a web of a seamless web of deserved trust, where it's like, you know, in some cases we have just have a handshake or an agreement. We don't even have a contract. And there's another great invest like the best episode

Starting point is 00:41:17 on Rolex. It's on the founding of Rolex and the founder of Rolex did this exact same thing. One of his important suppliers, I can't remember what part of the watch they produced for him, but they had a handshake deal, no paperwork at all, that lasted 70 years. So again, I think this all ties to the great way that Charlie described that, that trust is one of the greatest economic forces on earth. This is the trust that Mattishev had with his main bottler. And if you really stop and analyze everything else, the way he set up his business, it's like, well, why would he do that? Well, this asset light approach frees up funds for marketing. He was building a marketing conglomerate from the very beginning. He

Starting point is 00:42:01 understood that at the very beginning, he's going to outsource anything that's not his core competency. Something else you see that he thinks like a marketer. So if you remember, James Dyson had this great realization from trial and error in his career. And he says, you should, if you're making a physical product, make your product look different from the start. Talk about it at a huge advantage, right? He's distributing his vacuum cleaner in the same place everyone else buys vacuum cleaners. You go to a store, he said you'd see like a line of like, let's say five vacuum cleaners. You see four that look like very similar. And then a fifth one is like, what the heck is that? Doesn't mean you're going to buy it, but you're again, indifference is the enemy to the inventor,

Starting point is 00:42:37 right? He's like, you might not buy my vacuum cleaner, but you're sure as hell going to notice it. And matches to the same thing where he made the can. I think everybody's seen what a Red Bull can looks like. No other can looked like that back then. Now, some have copied this, but he made that tall, slim can with the intention of looking different and standing out from every single other thing that would be on the same shelf. And one hilarious little story is Red Bull has its own private aircraft fleet. It's called the Flying Bulls. They use them for a bunch of events. The can holders in those planes only hold cans the size of Red Bull.

Starting point is 00:43:12 I thought that was cool. I also thought it was cool when asked, he was asked why he did that. And Dietrich said, everything is marketing. Let's go back to this focus that he has. He puts all of his energy behind, you know, one arrow. I sell Red Bull. I sell energy drink called Red Bull in a can. Might have a couple of different variations, but I don't do anything else but that.

Starting point is 00:43:34 And so as the brand got more and more popular, he got assaulted with all these offers. Like, hey, let's license it. We can make Red Bull gummy bears and we can make Red Bull underwear and Red Bull perfume. And he said no to every single one. He does not want to use the Red Bull brand for anything else but to sell the actual energy drink, to sell cans of Red Bull. All marketing is just made to sell more energy drinks. And so I found this fact in a couple different places. It's insane to me.

Starting point is 00:44:04 Like, I can't believe this is true. So he talks about the fact, like, he hates banks. He does not like debt. He's aiming for fun and for durability over every single thing else. And so his motto, it says, absolutely no debts to a bank. And he has stuck to that since the founding of the company. Only in the second year of Red Bull did it accept minor bank financing, which we talked about earlier that he's still loyal to them. But the company says that they only spend what they've already earned. And so all the growth and expansion has been funded, self-funded. And this is the crazy part. To not go into debt, there were no dividend payouts of Red Bull until 1999.

Starting point is 00:44:48 So you're talking for the first, what, 15 years of the company, he essentially just lived off of his own salary as the managing director of the corporation and that all the profits had flowed back into expansion. And so how many people would have been able to do that? 15 years, you're just making, I'm sure the salary is great, but nothing like, I mean, why is it paying off? Because then in the 2000s and the next for like 20 years of his life, he's paying himself. I've seen all kinds of reports. He made a hundred million this year. He made 165 this year. He made 400 that year. He made 700 this year. His son inherited, after his dad died, his part of Red Bull. And his son's dividend

Starting point is 00:45:27 this year was $615 million. So that is a crazy, crazy dedication to no dividends for 15 years, living off your salary, and then plowing everything back into expansion. And then by that time, the company is so valuable that you essentially just are living on unlimited money. And when he talks about this, I think you get insights onto why, like why that was so important to him. If you really think about it, I think it was Warren Buffett said,

Starting point is 00:45:54 it was either Warren Buffett or Charles de Gaulle, but to win, you must first survive. And so the way he's operating his companies, what he's saying here without saying is like, we're never gonna do anything that could potentially compromise our survival. And here's a quote from him. I have been raised on the motto that one does not incur debt. We at Red Bull spend the money that we've earned, not that we might earn someday. We never want to endanger the existence of the company, not even for a second. And so this

Starting point is 00:46:18 constant expansion is something, another theme that just flows through this entire story. I love General George Patton's speech to the Third Army. I listened to it to hype myself up. I don't know. I probably listened to it hundreds of times. But there's something that he says, that Patton says to his soldiers in that speech when they're fighting. They're about to fight the Germans. That I think is very similar to how Massachusetts kept.

Starting point is 00:46:43 It says that he kept his empire constantly in motion, that he was constantly trying to grow and expand it. And so Patton tells his army, or his soldiers, that I don't want to get any messages saying that I'm holding my position. We're not holding a goddamn thing. We are advancing constantly. And when I'm getting to this section

Starting point is 00:47:01 about the fact that the Red Bull empire, through the founder, he's constantly keeping that empire constantly in motion. For some reason, that quote from Patton popped my mind, goes back to this idea that Red Bull, as viewed from the founder's lens, is a marketing conglomerate. His economic empire is a marketing conglomerate. And hence, the entire activity of Red Bull is to be seen against the background of marketing. All corporate projects like Formula One, football, air races, media serve the core business, which is the sale of the energy drink. And he was way, way ahead of his time on this. Economics, especially in the consumer goods industry, he said, is essentially a battle

Starting point is 00:47:40 for attention. Red Bull throws more material into this battle than all of its competitors, focusing primarily on sports and increasingly on culture and recent history. No other company spends nearly as much money on advertising and marketing, meaning other company in the same market. And something that he picked up too was the importance of differentiation. He says, you learn this in the first semester of marketing, that you have to differentiate yourself. Consumers want the original, not the copy. So he even applies that not only to his product, but also to the way he markets, like all these media events and these crazy things. So these outrageous and unique events,

Starting point is 00:48:11 like the guy jumping from space, if you think about like why that's so smart, an outrageous and unique event will get covered for free in other media. So essentially he, this is multiplying his advertising and marketing spend for free. And so some of the things that

Starting point is 00:48:25 they spend money on, it says about half of the marketing budget is spent on unusual, unusual sports as running in the Himalayas, skydiving over the English Channel, surfing on the Amazon, or mountain biking in a mine. That's crazy. These events may not attract too many spectators since they don't take place around the corner, meaning in person, but due to their extravagance, they attract interest from numerous media outlets and thus reach a larger audience. And so even his approach to like sports sponsorship, right? You would think, OK, there's you got any sports event you see, you know, this beer's advertising and this company's advertising. He buys. So he has bought his Formula One teams, his football teams. The crazy thing is

Starting point is 00:49:04 when he starts, he's essentially what The crazy thing is when he starts, he's essentially what he's saying is like, hey, I don't want to just sponsor. I want to own. And then I want to rename it to the company. So his soccer teams, they rename the teams, the Red Bulls. So that is their actual name. And then the logo on the jerseys is the Red Bull logo. And this is what he says about it. Our philosophy in sports sponsorship is not to run around with a suitcase full of money and buy advertising space. We don't want to be like Marlboro on the Ferrari, but we want to be integrated into the sport. That's why we own an F1 team. We want overall responsibility and to make our own difference. He calls F1 a very important marketing tool. And then he makes

Starting point is 00:49:41 sure that all of his marketing and all the events and all the stuff that he's investing in, he has a very symbiotic relationship with other media, like other larger distribution forms of media. So what they'll do is they control everything, right? They put up the money for the event. They make the event. Then they make sure that they never relinquish media rights to every event. So as a result, they've produced hundreds and hundreds of hours of material every year from like TV shows, radio stations, print. And then they'll go to other TV broadcasters, other radio stations, other newspapers and magazines, and they will give them their content for free. And so when they put on the Red Bull Air Race, the Red Bull Air Race World Series, that content that Red Bull made and owned, they gave it to over 70 different television stations all over the world and said, hey, we put all this money into this. Here's something that you can't get anywhere else, that your customers will find, your watchers or

Starting point is 00:50:42 listeners or whatever, your audience will find interesting. Here, we don't want anything for it. You just play it for free. And because the media outlets don't have to pay to produce that material, they jump all over it. So again, a very clever way to just multiply his advertising and marketing spend. And so I mentioned earlier that he has developed his own company building philosophy, one that is very unique to him. And so he talks about the fact that even though he went to school for business, he just doesn't really believe a lot of the stuff that he was taught. And so it says, Massachusetts has amassed his wealth despite, or perhaps precisely, because he's at odds with some basic business principles. If someone says to him that the primary goal of a company is to maximize profit, he simply declares that to be incorrect. He thinks

Starting point is 00:51:21 longer term and more broadly than his competitors. I just don't believe everything I learned at business school, he has repeatedly said. He never tires of emphasizing that money was never his main motivation for starting his own company. Rather, the driving forces were longing for freedom and independence as well as finding joy in the work. This is why you don't retire, right? If you love what you do, you're obviously making a bunch of money in it. You're free and you have complete independence to control what you work on, who's around you.

Starting point is 00:51:51 There's nothing better than that. Our motto, going back to a quote from him, our motto is the journey is the destination. I don't want to go to the summit to stand at the top, but to do the climb up. One of the great, one of this maximum I have saved on my phone, this great line that I think about all the time and I try to apply it to my work. I love the climb. I don't care where the summit is. You don't last 40 years into the same business

Starting point is 00:52:16 if that's not true for you. It is true for master's. It's like, I don't care. I'm having fun. I'm free. I'm independent and I get joy from the work. And I think in addition to all that, I think one thing that helped the longevity is the fact that he decided to move. Originally, the company was headquarters in a bigger city called Salzburg. And he winds up moving the headquarters to this tiny village that I can't even pronounce. And it only has 1,500 inhabitants. It's almost all Red Bull. The local like governing, like the local politicians said that if it wasn't for Red Bull, the place would be impoverished. And I think it's like one of the richest communities in Austria. And so he actually moves the company headquarters to

Starting point is 00:52:56 this little tiny village. This is very similar to the idea. Like if you listen to the podcast I did on the founder of Bugatti, he did this exact same thing. That's episode 316. Brunello Cuccinelli. It was a huge, again, Bugatti did his business for, till he died. Brunello Cuccinelli is still alive, but he's been doing his business for like 45 years. That's episode 289. This idea is like, okay, you're controlling the product that you work on. You're controlling who works in the company, but you should also put a lot of time and emphasis like where you're actually doing your work. And I'm fascinated by these people that actually build physical manifestations,

Starting point is 00:53:29 almost like they're building their own miniature world inside of the world. I guess George Lucas did the same thing with Skywalker Ranch. But we see this idea again with Matt Schitt's. This little community is on this picturesque lake in some word I can't pronounce. And he said they asked like why

Starting point is 00:53:45 he why he moved it there. And his simple his answer was simple. The aim was to create a more pleasant working atmosphere. Now, there was one funny thing I have to add, though, because people are having these rumors about why he did this. And it goes back to the fact that he's secretive and likes to control his environment. It also said that he wanted to build a network of underground tunnels so he could move from building to building without being seen. And then more about the fact that his business is kind of like his personality writ large. He stays incredibly fit. He loves extreme sports, aviation, riding his motorcycle.

Starting point is 00:54:22 And he constantly talks about he refuses to ever get married. I'll tell you this funny sentence on that. They call him the top bull, which is hilarious. I don't know if that's just it's the German translation in English. I hope not. I hope they actually call him the top bull because I thought it was funny. The top bull takes care of his body, keeps fit, and is amazingly good shape for someone almost 70 years old. He says, everything that gives me pleasure in life is connected with a certain physical fitness and a physical wellbeing. And so it is pure selfishness that I do something for my fitness. I like going to the mountain. I like skiing. I like sailing. I like riding my motorbike. Everything I do is connected with physical agility, motor skills, dexterity,

Starting point is 00:55:01 strength, and stamina. In order to enjoy it outdoors, I need the indoor program. So he's saying his dedication to physical fitness to be able to perform well in the outdoors, he has to be dedicated to his gym routine, his workout routine. And it says he is a declared opponent to the marital state. He was never married his entire life, just has his one son. And what I love most about him is that he was true to his authentic self to the very, very end. One thing he's categorically ruled out again and again, exiting the company in the form of selling his shares. I hardly even allow this question, he said. We could have done it a dozen times already. Our view on this has not changed. We neither have the desire to do so, nor is there a need. And it's the one exception.

Starting point is 00:55:45 Of course, one can never say never for a strategic minority stakes. Sometimes they can be helpful and indeed make sense. Mattis has also consistently and categorically ruled out a stock market listing. A sale or an IPO is not even remotely tempting. And when asked if he's going to retire, he answered, I'm having more fun than ever. And that is where I'll leave it. I will leave a link below to the German version in case you happen to speak German. I'll also leave some links to some long form,

Starting point is 00:56:20 like longer form profiles written about Dietrich in The Economist and in Bloomberg, in case you want to do any further reading. That is 333 books down, 1,000 to go. And I'll talk to you again soon. Okay, so I hope you enjoyed that. I had a lot of fun researching and reading and learning about Matashitz. And I think there's a bunch of ideas and his approach to company building, and really just the way he lived his life that are going to stick with me. So I want to tell you about two things and they're really related. So one, I want to give you an update on Founders Notes. Founders Notes, I really feel is the world's most valuable notebook for founders.

Starting point is 00:56:57 And I can say that because I've been compiling and adding to it and editing it nearly every single day for the last five years. And if you think about the story about how Founders Notes came to be, one, it's the best possible way you can support the podcast and yourself. So if you haven't subscribed and haven't invested in a subscription yet, highly recommend you do. You can click on the link in the show notes, or you can just go to foundersnotes.com. Everything I ever do, because I'm about to tell you about a conference

Starting point is 00:57:24 called Founders Only, always has the S, just like the podcast Founders Podcast, Founders Notes, and now we have the Founders Only conference. But I think these two things are related to why I'm doing an in-person conference that is targeted on, the mission is to build real relationships between founders. I've seen the difference in my own life of creating these relationships with founders. In fact, I'll just, basically, I'll just tell you about both of these at one time. I was, I've had this idea for a long time,

Starting point is 00:57:55 and I'll tell you how it relates to founders notes too. But I wind up having a conversation, it was very fascinating, with a guy who was, his job, he was hired by with a guy who was his job. He was hired by a bunch. He was hired by a family office. So, you know, a very wealthy family office in Texas. And his job was to introduce and do these in-person events for other people in other family offices.

Starting point is 00:58:21 And the reason they put so much time and energy and resources behind that was he had a great line. He said, because relationship between these two people, like these two investor or founder types, they produce nonlinear returns. You and I have talked about this idea over and over again, because they're in all the books. And I've put a maxim to it, that relationships run the world. This is something that I had the pleasure of speaking to both Sam Zell and Charlie Munger in person. And this is something they said in different ways, but the same idea was behind it that invest heavily in the relationships, build a seamless web of trust, find the most talented people you possibly can and work with them because relationships run the world. And so if you think

Starting point is 00:59:01 about how Founders Notes came to be, is I didn't, like I started building a relationship with one of the co-founders of ReadWise. His name is Tristan, and it's because Tristan sent me a DM. He was listening to the podcast all the way back in 2019, realized that I was kind of psychopathically reading. And he's like, hey, I built an app that makes it really easy for you to store your notes and highlights. So then you can search them and you can recall them and they have all these interesting features. You might want to check it out. And I didn't even know what it was. And then I immediately start using it. I became not only a super, a super user, uh, but they told me that I was their best sales, uh, salesman unintentionally, because I would go on,

Starting point is 00:59:44 I would go on all these other podcasts and I'd be like, this is the best app I pay for. I use it every day. I've become friends with Morgan Housel, who's obviously, you know, one of the best selling authors of the last decade. He wrote psychology of money.

Starting point is 01:00:00 And then he just released a new book and I should do a podcast as a new book too. It's called Same As Ever. And a main theme is that human nature just repeats. But anyways, Morgan had heard me on a podcast describe Readwise as a smart Twitter feed. And so he winds up signing up using it and he's like, oh, that's exactly what it is. And so anyways, over the years, I've been adding to this.

Starting point is 01:00:22 I have over 20,000 highlights in Readwise that I can search, I can constantly reference. And been adding to this. I have over 20,000 highlights in ReadWise that I can search. I can constantly reference. And what happened was I kept having people ask me over and over again, how do I get access to your notes and all your highlights and everything else that you have? And so I wind up, because I had a relationship with Tristan, this is going to relate to the conference. This all makes sense in a minute.

Starting point is 01:00:39 And so because I had a relationship with Tristan, I contacted him. I was like, hey, I think we have an opportunity to work on a project together. And the result of that project is Founders Notes was like, hey, I think we have an opportunity to work on a project together. And the result of that project is Founders Notes, which again, I think is the world's most valuable notebook for founders because what you see when you sign up for Founders Notes, you see exactly what I see. You have an exact replica of my Readwise.

Starting point is 01:00:59 And so what that allows you to do is you can search every single one of my highlights by book, by keyword. I just did this yesterday because I was like, man, I'm becoming even more obsessed with making founders podcasts and like finding other ways to teach and like share these lessons. And, you know, I was like, am I going crazy? And I obviously know I'm not because obsession. I mean, this is every single person in the podcast that we cover was obsessed with what they were doing.

Starting point is 01:01:25 And I just decided, I was like, let me just go through. And I started reading highlights just by searching the term obsession. I was like, oh, Anna Wintour was obsessed. Christian Dior talks about their obsession. Bill Gates talks about his obsession. The founder of Ikea, Ingvar Kamprad, talks about becoming obsessed with his work. Napoleon, Christopher Nolan, James Dyson, Leonardo da Vinci, Arnold Schwarzenegger, Estee Lauder, Steve Jobs, Jeff Bezos, Mike Ovitz. And so it just reinforces this idea that if you want to get to the top of your profession, which I definitely

Starting point is 01:01:55 do, obsession is a prerequisite. So that's one of the main ways when you get access, you'll see the first thing you do is search for highlights you can also do this thing called the highlight feed that is what morgan housel called uh the smart twitter feed with the highlight feed is it's going to show you a random think about like any kind of really social network it just shows you like a piece of contact after another instead of you know the ramblings of these crazy people on the internet, it's highlights and notes from all the different books and founders that we covered. So I just clicked on it.

Starting point is 01:02:29 I see something here from Jeff Bezos, from David Ogilvie, some of Yvonne Chouinard. It's like history's greatest founders talking directly to you every single day. And so that's why I say it's like if you have access to this, whether you already have access or you want to subscribe now, keep it up in your browser. I never X out of it unless I do it by accident. So you can do the highlights feed. You can then go by books and search and, you know, and then actually read. Let's say you just want all the highlights from an individual book. That's what you want to read that day. And then the other feature is favorites, which what that means is when I go, I, so I reread my highlights every day. And as I do this, I'm constantly favoriting the ones I

Starting point is 01:03:06 like. So I have, you know, 700, 800, something like that, favorites right now. That number will constantly go up and it's updated because I'm doing this constantly. And so you can see what I'm reading and you can see what I feel is like even highlight is special in one way, right? And then now I'm saying, oh, I reread these highlights and this is something even more special, something I want to remember. So anyways, that is a general overview. What I wanted to update you on is there's two features that I haven't discussed. One is, and we're going to make this, I just talked to the team at ReadWise yesterday.

Starting point is 01:03:35 We're going to make this more obvious. When you subscribe and if you go under billing, you can actually invite and give access to one other person for free. So let's say you want to give it access to a co-founder, a very important person on your team. You can do that for free. This is available by default. If you already have a Founders Note subscription, you can do this as well. So every single subscription comes with an additional one for free. The second thing, and then I want to get onto the conference because I think it's really important and we only have 60 days. So I got to move on that. I didn't want to talk about features before they're released, but I've had so many people, there's a lot of like AI founders

Starting point is 01:04:12 that have reached out that have already subscribed and want to help on this, but this is already in development. There's going to be a founders GPT version. I should begin testing it myself in the next week or two, and you'll be able to actually communicate, ask questions and use that chat format, which is becoming extremely, extremely popular. And so the important point is if you sign up now, as I keep adding features and obviously keep adding more and more data to it, the price will go up. The point is, if you sign up now, you're locked in at that price. So all the additional improvements that I do and all the additional features that I do, you don't ever have to pay any additional money. If you're already running a successful company and you already understand the importance of constantly being in touch with the knowledge of history's greatest entrepreneurs, and you want an easy way to

Starting point is 01:04:57 reference their ideas, to search through them, to find ideas that you can apply to your own company, then I would encourage you to test it out for a year. You'll have access to the world's most valuable notebook for founders. And I really do believe the value that you'll get will be incredible because I use the product every day and I get incredible value from it myself. So relationships. This is another thing that people have requested a lot over the years. They want to meet other founders that listen to founders. One of my favorite quotes from Paul Graham, and he's got a lot of great quotes, but he talks about the importance of being around other ambitious people. And so he says, ambitious people are rare.

Starting point is 01:05:34 So if everyone is mixed together randomly, as they tend to be early in people's lives, then the ambitious ones won't have many ambitious peers. When you take people like this, the very ambitious, and put them together with other ambitious people, they bloom like dying plants given water. Probably most ambitious people are starved for the sort of encouragement they'd get from ambitious peers, whatever their age. So for the last several months, I've been kicking around this idea, like what would a Founders Conference look like? First of all, it's called Founders Only. You can go to foundersonly.com to apply. You can see the dates.

Starting point is 01:06:06 It is happening in Austin, Texas, March 12th to the 14th. It is going to be limited to 150 people. I rented out an entire venue. It is a private venue, not available to the public. I spent a few days there before. I absolutely loved it. Once you get past the guard-gated gate, you never have to leave again. So all you have to do is get yourself to Austin, Texas, and then

Starting point is 01:06:29 every single thing else is taken care of accommodations, food, the entire event. You never literally, you literally never have to leave the compound. So that's Austin, Texas, March 12th through the 14th. So a little over 60 days from now, it is going to be limited to 150 people. You have to be limited to 150 people. You have to be a founder of a company. CEOs with founder mentality are welcome to. It should be unlike any other conference that you've ever been to because my stated goal, the mission statement, the North Star is to help other founders build relationships with

Starting point is 01:06:59 other founders to that end. That's why I've limited it to just 150 people. That's why I chose the it to just 150 people. That's why I chose the venue where it's at. It is also why before the conference, I'm going to talk to every single attendee, every single person one-on-one. I want to gain an understanding of who you are, what your business is about, and what is important to you. And then I'm literally building a founder map. And that way I can literally match founders together who I think should know each other. I think this is incredibly important. That's why I can literally match founders together who I think should know each other.

Starting point is 01:07:29 I think this is incredibly important. That's why I'm going to dedicate so much of my time to doing this. I am the only one doing this. I have a world-class events team behind me that are taking care of all logistics, but I'm the one matching all the founders individually myself. And obviously, I will be there the entire time. I will get there before anybody else does, and I will be the last person to leave. I think this is going to be incredibly important because I've seen it in my own life that before I had these relationships and the network I have to after, it's not even remotely the same. Relationships really do run the world, and I want to help other founders build relationships with other great founders. If you are interested, if you're willing to travel to Austin, Texas, and be there from March 12th through the 14th, go to foundersonly.com. I will

Starting point is 01:08:06 obviously leave a link in the show notes as well, foundersonly.com. And do so as soon as you can, because this is limited to just 150 people. Okay, so that's it. Go to foundersonly.com, founders with an S, go to foundersonly.com if you want to attend the conference and build relationships with other founders, and then go to foundersnotes.com to get access to the world's most valuable notebook for founders. As always, thank you for listening and I'll talk to you again soon.

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