Invest Like the Best with Patrick O'Shaughnessy - Ric Elias - The Art of Living Well - [Invest Like the Best, EP.388]

Starting point is 00:00:02 Hello and welcome, everyone. I'm Patrick O'Shaughnessy, and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, stories, and strategies that will help you better invest both your time and your money. Invest Like the Best is part of the Colossus family of podcasts, and you can access all our podcasts, including edited transcripts, show notes, and other resources to keep learning at join colossus.com. Patrick O'Shaughnessy is the CEO of Positive Sum. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of positive sum. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.

Starting point is 00:00:45 Clients of positive sum may maintain positions in the securities discussed in this podcast. To learn more, visit psum.vc. My guest today is Rick Elias. Rick is the CEO and co-founder of Red Ventures, which has a portfolio of fast-growing digital businesses like Lonely Planet, the Points, bank rate and large investments in a variety of other businesses across industries. He began Red Ventures in the year 2000 and has grown it to a global company with thousands of employees. Rick walks us through the early struggles that have led to a now flourishing investment

Starting point is 00:01:19 platform, but mostly this episode is a masterclass on cultural values and philosophies that transcend mere financial gain. We discussed the difference between living good and well, the power of forgiveness, and compounding more than just your capital. Rick's story is one of resilience, humility and grace. His story about being in the front row of the plane that Captain Sully landed in the Hudson is singular and moving. Please enjoy this great conversation with Rick Elias. So just before we came in here, you and I did something together on stage, and then I was talking to Carlos on your team, and he asked me whether or not and how I prepare for these things. And I told them the truth, which is that in some literal sense I don't prepare, I don't sit down

Starting point is 00:02:02 and think about them right ahead of them. But in some other sense, I prepare all the time because I end up talking to people that I'm most interested by and curious about and have met before, usually like you and I have met before. And that the only thing I prepare is the first question. And I usually do that about five minutes ahead of time. But I hadn't done that. And so I actually asked Carlos to give me the first question that I'll ask. This first one comes from Carlos, but I love it. You cheat it. So I'm using it. And I cheat it. I like it. Carlos's question. in mind is what is the big dream? My big dream is to live in a state of well-being most of the time and to have a sense of lifelong satisfaction when the end comes. So it's really very internal

Starting point is 00:02:51 versus something that gets accomplished or left behind. We're going to pick that apart in detail, but go down one level. Sure. What is the Red Ventures big dream? We've been on this journey for 24 years. And in one sense, it feels like we're about to go on another 10-year journey of reinventing ourselves. Red Ventures over time hopefully becomes a place where a lot of this, whatever success we've had, gets put back into the system. So more of a full circle versus a full line to the right or to the left or down. But I still think that we're years or decades away from that. Can you tell us what it is?

Starting point is 00:03:36 I ask that in the stupidest, simplest way I can for a reason, because it's pretty hard to figure out what it is from the outside. On purpose. I know on purpose, but I have to ask. Maybe the best way to ask is, how did it begin? The easiest way to understand it at a high level. You can think of ourselves as a operating private equity platform with permanent capital, hyper-focused on the digital world with different business models. Under the belief that culture really matters,

Starting point is 00:04:07 and that if you use that as the connected tissue inside of the portfolio companies, you can get some level of alpha vis-a-vis these companies being separate. And today, we depends on how you want to count, have about 15 different companies inside of the portfolio all over the place, between Europe, Brazil, Puerto Rico, and then our core business is here, inclusive of a big joint venture with United Healthcare and so forth. So if we go back to the very beginning, something worked. You and your team were awesome investors or trans spotters or operators or some combination of those things, probably maybe some luck sprinkled in, which is true for all of us. How did it start?

Starting point is 00:04:50 What was the origin story? Luck. I think we're more lucky than sprinkled luck. I think we're more lucky than sprinkle luck. I've always believed that. And if I look back in our journey, Dan and I started this company in January 2000. Dan and I worked together before this at a company called Send in CUC. And we really started with two principles in mind. One was, let's build a company we would want to work for. And Dan and I are not typical. We're very different in hopefully good ways. But we both are of the same opinion that life is to be lived with enjoyment and that we would want to work at a place or build a place that we would want to go work every day so we never have to work. True definition of being an entrepreneur.

Starting point is 00:05:32 And then the second one, and I think we said it at the time without really understanding it, which was a company that would outlast us. And even though we would want to do this for a long time, then retired about a year ago, a company that would outlive us. What I have come to realize is it will outlive us. us through the people that get trained in our platform, not as a company itself. And then many of the businesses hopefully are here for decades to be. But that really were our basic principles.

Starting point is 00:06:01 So when you start with that, the business plan was completely flawed. We raised $2 million from our friends. This is the frenzy of January 2000. This is before the first internet bubble implosion, raise money on three PowerPoint charts on the dumbest of ideas, basically a paper-based search engine, where we were going to help online companies use offline media. And by November, we had $117,000 left, no revenue. And this crazy thought of like, I will never attend my reunions.

Starting point is 00:06:33 Because all the capital came out of my business school friends and I'm a proud guy. I'm like, I can't. So we literally just hunker down, hustle, sold marketing programs, sold anything, anybody to hire us to do consulting things. We knew a lot about direct marketing at the time. And for a couple years, just mousled our way through it. In 2004, we had enough money to pay our investors back. And we said, look, we made a commitment to you.

Starting point is 00:07:01 Here's your money back times 10%. But we're done. If you keep your money in here is at your own risk, and I hopefully hope you take the money back, because that burden of taking someone's money was a lot. And in No, 405 was when Google was becoming the de facto aggregator of intent. they had this rule where you could not double serve as a brand. And we started thinking, wow, brands are going to need somebody to kind of help them

Starting point is 00:07:26 defend themselves in this environment that's aggregating intent. And customer acquisition is the life being of all budgets and is actually a line that is not in the operating budget. It's in the revenue budget. So there's a lot more leverage. And we literally said, let's go try to figure that out. Over the first couple years, build a core tech where we can map a couple million toll-free numbers to an online experience and give you a phone experience that was quasi-personalized

Starting point is 00:07:52 by how you navigate it online. So we could go to any brand and say, we can out-convert whatever you're doing in this notion of take your agency, take your call center, take your internal operations, we can out-converting by 30%. If that's not true, don't pay us. But if it's true, give us a piece of the upside, don't pay us as an agency or a service provider. And that became kind of the first unlock and call it 2006 to 2010. And from there, there's a cemetery full of skeletons of bad ideas. And we went our way through it. And long behold, come from 2010 to now.

Starting point is 00:08:28 And this is where we are. What was the first thing you ever bought? What business was the first business you ever just bought outright? First meaningful thing we bought where we literally broke the bank. We had a pristine balance sheet was bank rate. Bank rate at the time was $1.4 billion. And it wasn't worth that. Before we bought Bankrate, we bought an asset in financial services, that it was a tiny asset

Starting point is 00:08:51 where we said, let's go and prove that we can actually use that asset in Google and paid search and SEO and really start doing what we did in telecommunications using someone else's brand, using our own brand in financial services. We did really well. And we're like, okay, let's put all our chips in the middle of the table. And Bankrate was our first big acquisition at the time. We don't credit cards.com, the points guy, bankrate. and a bunch of other miscellaneous assets.

Starting point is 00:09:18 And it was our first, okay, we're in the big leagues now and we have a lot of debt. There's quite a lot of glossing over going from $2 million paying back your investors to a billion and a half dollar acquisition. This is a decade. But I'd love to dig into some degree. What would you credit your early operating success with? Obviously, you got to that scale on an unusual way with not a lot of outside backing and control of your own destiny and permanent capital and all these things.

Starting point is 00:09:44 So if you think back on that specific chapter, what was going on? What were the things you were doing or the way you were doing those things that made it possible? It's a strange story. Survival, to some extent, when you spend the first four years, two little kids, both of us, not taking any money home, humility, understanding that this could change easily. Early on, we would meet with our 80 employees, call it 2007 and 8, and we were now making millions of dollars to profit. and I will say, oh, I enjoy this. These are the good all day.

Starting point is 00:10:17 Someday this will end. It was this constant belief that this was a moment in time, and if it didn't work as hard as we worked the last three years, this will end. So a lot of it was like we were relentless. And one of the things early on is, for whatever reason, we have never competed against anybody. I never thought that our competition was somebody else.

Starting point is 00:10:38 And we've really never competed. And maybe it's because of our near-death experience as a business so early, against the fear of something. We always thought, look, if we can compound our performance a little bit every month and our business model gave us the fruits of that, it was all performance-based deals, we got addicted to this notion of incremental performance just becomes really virtuous for us. And that was our thing. Your strengths become a bit of your vulnerability. I think to this day, our DNA, thousands of people strong, is incredible.

Starting point is 00:11:13 operators, really good optimizers, maybe not as great people doing high-end product or experimentation and other things. Now, we've run in a lot of people to help do that and all of that. That is probably our core DNA of Red Ventures. I'm going to zoom back and forth a lot here. I go all the way back to today. I show up today and I've not seen anything like this. We're on a massive campus. There's thousands of people here. It feels like a self-contained world. and it is physically, literally, it's a self-contained world, and it has a very specific, coherent vibe to it, which makes me wonder about culture. You said there's more than a dozen companies

Starting point is 00:11:57 in all sorts of places, but it feels like this is one company and one team just walking around. Maybe say a bit about how you've designed and what it is. What am I feeling? How did that come to be? Because I think those are hard to establish. I am wonderful at explaining. in the world looking backwards. We were talking earlier today. I can give you the greatest story, which I will in a second, but I'm not really sure that when we set out to do this, this was the original plan. This is just the ability to iterate and pivot and iterate and change and all of that. One of the real unique things, look, we didn't raise outside capital until 2010. A decade of bootstrap. When we raised capital, we didn't need capital. We didn't need it for anything. We did it because

Starting point is 00:12:43 our employees wanted a little liquidity and investors were wanting to buy in. So as a result, and in general, ultimately we ended up in a structure where we have permanent capital, meaning we have wonderful investors. General Atlantic was our first investor, still a great partner. Silver Lake came in five years later, also equally a great partner. But the notion that we don't have a clock, that we don't have a photo up moment where we're going to go public or we're going to try to sell the business, for good and for bad, as just giving us license to invest in things that others would. And back to the principle of a place we would want to work for, we decided that our culture was really going to become that string of DNA that were permeate around the whole

Starting point is 00:13:25 company. And when you walk into our building, you'll see a series of belief statements on a wall. And our belief was, look, we can't teach you values. We can't teach you things that you learned at home, but we can tell you what we believe. And if those things resonate with you, they then you may want to work here. And then when we do performance reviews, when we do evaluations of things, when we, anything we do, we come back to, okay, that is kind of our framework. The beliefs evolve and will evolve and will continue to evolve because the core belief is everything is written in pencil, which in itself is a bit disorienting at that time said it can be

Starting point is 00:14:02 other things. But look, this is all the game. At the end of the day, we've been really lucky to play 24 innings of an incredibly interesting game. Not every inning has been perfect. And that's part of what makes it beautiful. Which of those four beliefs not counting that core one is most on your mind these days? There's seven beliefs right now. We've added some.

Starting point is 00:14:22 Making every second count really matters because I think the world right now, those starting in a perch, which I think we are having advantage, but those are going to be incredibly nimble and willing to adjust and adapt at a whole new wave of innovation coming is what matters. And one of the things that happened during COVID is our operating rigor diminished. I'm not sure that is for us alone, but this notion of working less intensely in the office, less together, there's some very good positive things that come out of it in a lot of capacities. And I worry about, do we have that fight? Do we have that thirst? Do we have that fear of not being relevant in 10 years? I don't think the people that show up today and look at this beautiful.

Starting point is 00:15:09 campus feel the same hunger we felt when we didn't know if we were going to make it. It's a circle of life. But how do you instill a desire of people wanting to go do something for their growth, for their own good? It's a really interesting challenge in kind of our leadership standpoint. Have you found anything that does that effectively for the marginal person that shows up and has a much bigger foundation to build on top of than you did originally, whether it's an incentive structure or an attitude or way of operating? Is there anything that works? There's no magic bullet. I think you got to find people that want it, want it. And I think typically athletes or people that are musicians, people that have been coached heavily in their lives tend up doing well in environments

Starting point is 00:15:50 like this because coaching is not criticism. It's like you're making me better. People that are super curious. I think right now, to be successful in the next five years, you almost have to be willing to re-underwrite your skill set. You need people that really are in that mindset and mode. annoyingly reductive about the Red Venture stories. Would it come down to you were just earlier and better at understanding how marketing was changing in the internet era than others? That would not be accurate and that would overinflate really what we did. We did not know we were earlier. Actually, I would argue that we were a little late. We were late to mobile. We're trying not to be late in AI, but we're also afraid to be too early. I think we bet on ourselves. We work collectively

Starting point is 00:16:44 better than most, and we're hyper-competitive against ourselves. And in life, a lot has to do with picking the right competitors. And I always joke that if this building, this campus was in Silicon Valley, it will be irrelevant. This region is something. I love that saying that you can either be the tail of the lion or the head of the rat. So we get great talent because all all the schools around here, super talented kids that want to stay in this region and want to be in a place where they get trained, they get invested in, they are pushed on, they love coming here. We have insane talent coming here. My sense is, and I'd love to just like pick any example you want, that frequently you would

Starting point is 00:17:24 buy a new company and the performance of that company would go up a lot after you owned it. Correct. Can you pick one story and in some detail describe what it was when you'd be. got it and what you did and how it changed? You think about the core of what Red Ventures was, and it still is to some extent. It's a B2B platform on basically doing customer acquisition, performance marketing, growth. Like at the end of the day, when I sit down with a CEO, I said, look, I can help you grow and you only pay me if that's true. It's not the hardest sell. Every CEO needs growth, especially. And we bring tech, operators, data. We bring a bunch of

Starting point is 00:18:07 tools that are really hard for you to replicate. And it's easy to measure that we provide incremental growth versus what you would do yourself. And so it usually is the rejection of the organization that makes it hard. So the timing of this conversation has to be either a new CEO or a crisis or a situation, a business that is usually performing pretty well or feels like they're in a good spot will not want to engage with us in that sense. So by virtue of our value proposition, we have this ability to take anybody's customer flows and using all our capabilities make it better. So we haven't batted a thousand, but we have had more of a quarterback completion rate than a basketball player batting average at taking a company.

Starting point is 00:18:53 And if we bought it at 10 times, within two years, it was four times. And that gave us a lot of conviction to a point where probably we overplayed our hand on our last acquisition. Right? So it's just one of those. But we can take any funnel where there's heavy data, heavy experiences, and use our technology to basically yield a lot more out of the same flows. That has happened time and time again in every asset we bought. This was the supposed promise of private equity that you would buy stuff and make it better and then resell it. I think in many cases, if you're cynical about it, like that really doesn't

Starting point is 00:19:30 happen. Like there's more financial engineering that goes on than actual operational improvement. and obviously what you're describing is like unbelievably valuable if you can buy at 10 and pretty quickly you effectively paid four. So why aren't there 10 red ventures? Like why aren't there 10 firms that have this specific expertise that are just really good at this function that buy things and make them grow? It feels like I'm missing it because there aren't. I've looked. Tell me how someone gets paid and I'll tell you how they behave. And most people that are in this space, are here to grow something to sell it to somebody else. And what we've been able to prove is we've been able to do this

Starting point is 00:20:11 across seven or eight different industries. We've had lots of really good competitors show up in an industry or two. Some of them better than us at certain things. Some of them go the brand. Okay, I'm going to build my own consumer brand versus building a much better middleware. In others, I'm going to do it really deep here and then I'm going to sell it to somebody.

Starting point is 00:20:30 So I think a little bit of this is incentive structures. If you had to describe how you got so good at this function, is it just iterative learning? Is it stacking lessons on lessons? Is it a heavy data focus? What is it that makes someone good at the thing you do so well? Compounding of a lot of things. A lot of three percents on each other quickly are 20 percent. But here's what's really interesting, Patrick.

Starting point is 00:20:53 That you could argue is maybe 50 percent of our business. The business that we're super excited about in the UK, we own a true software business that powers 80% of all the real estate agents. We own a data business that nine out of ten banks used to do all their valuations. In the U.S., we're really excited about the mortgage space and what we may do as a mortgage lender. We have taken this operational chops now and are doing lots of different things that are not performance market. So we took this B2B business, ended up saying, wow, we can do this and buy assets to do this ourselves. And the value is now we get all that richness of data. to take to our B2B business so I can go to somebody and say, look, I have a ton of consumer

Starting point is 00:21:35 intent data. But then we're saying, look, this chops apply to anything. So using the private equity head, we're like, we think we can do this in other places. And with fairly good success, we've been able to prove that we're good operator. When you see a new company or a new team or something, what gets you excited? Like, what is your taste? To buy? Yeah. We really like the bets we're leaning into right now. So we're trying to figure out things that are kind of be augmentative to the bets we have that are going to unlock something and you're going to mode us in some ways, give us a capability, give us something that is unique and different. But when I sit down, a couple of the things that I think about without thinking about,

Starting point is 00:22:16 so I really try to understand what is this person's motivation. I've bought enough things and been around enough things that ultimately it's not what they're telling you, it's really what they want. If they're going to really sell you something and not really be committed to whatever the transition period is, multiple years on whatever else. That's really, really important. Understand the motivation of the seller. And what we've done really well is when we've engaged with somebody that we really understand the why. The second thing is, I like places where you can win in multiple ways. So when you make a single bet, it's like, okay, I'm betting this happens and we have to compound growth at 20%, but if we don't compound growth at 20%,

Starting point is 00:22:55 but we also are able to use the data for this and we can build a model for that, and we can connect that to everything, then you can say a bunch of point sevens added up end up being two and a half three times something. That's the value of the platform, is that you can look at these things, and sometimes these assets have a lot of insurance into the platform or other value that brings. And because of our cultural alignment, you can get that out. A lot of companies can do this if it runs like a traditional portfolio or a private equity portfolio because the companies are not connected at the tech layer like we are or at

Starting point is 00:23:26 the cultural layer like we are. In the first part of that equation, that's the motivation of the seller. What are some of the most common reasons that you would decide not to partner with someone? Let's say even if you loved the thing, the business, what would be something that would scare you away? If I don't really think the person is generally a good human being, doesn't have to be like me or whatever. I'm turned up because that will reflect on the things that I won't be able to see. So I'm trying to get a sense of, is this a good human being? if the person on the other side, if I sense that they're running away from something versus running

Starting point is 00:24:02 towards something, they know something I don't know. So I'm very aware of why is it? Why now? Why us? Why this price? I'd rather pay a little more on something that people want than steal something. And one of the things we do is once we lock in on something, Patrick, we've never retraded on anything. Our word really matters. And I think ultimately, I expect that to be the case on the other side. Once we lock in, we go for it. One of the most interesting set of things that you and I have talked about is the ways in which your attitudes towards certain things change between my age and your age. So it's 18 years between us. I'd love to kind of go category by category and have you reflect on how your views have changed from my age to your age on some topics everyone cares about.

Starting point is 00:24:48 So the first one is money. Money is a tricky thing because money corrupts. society and most people basically have set up that more is better, more is better. And we measure things in money and value and the value of your company and the value of your business. And in reality, if you focus exclusively on money, you miss the journey. You miss what this is all about. After a certain amount of money and everybody's a little different, but it's a lot less than people think it doesn't really affect your lifestyle. And at some point, it affects how people treat you, and it affects your kids. It affects what you're going to do with it,

Starting point is 00:25:27 your responsibility with it. It affects all of it. I think money is one of those things that it's a privilege to have, but if you're not careful, it can change you. Or more importantly, it can make you so addicted that you spend the rest of your life accumulating something that is worthless beyond a point. We trade all our time for money. That's what we're doing. We work our butts off for money. And at some point, if you keep doing that, you'll end up realizing that you completely missed the point. And that when you make enough money, you use that money to give you back your time.

Starting point is 00:26:01 One of the things back to this point of 39 and 57, I was big into time. And I have all these principles around time and how do I think about compounding time and all these things that are kind of weird. But in the last couple years, I realized that time is actually a subcomponent of something more interesting or more important, which is our energy. I only want to invest my energy in things that give me multiple currencies back. And I'm very aware of my energy. If I'm with somebody and I feel like I drains my energy, it's like, you know what? I'm not doing that again. Or, wow, I love my energy with this person in this situation. Then you lean into that energy, right? So I'm

Starting point is 00:26:38 very thoughtful of today. It's like I just want good energy in my life. As someone that just tweaked my lower back, likely due to my rising age, how have your views? How have your views? on your body changed? I think the body, it's like heart. Heart disease starts in your 20s. It doesn't show up into your 50s. And heart specifically, for example, there's nothing you can do to reverse it.

Starting point is 00:26:59 You can slow it down. We abuse our bodies because we can take it. But once you get into 45, 50, 55, the same thing that's happening to your thinning hair or to whatever it is on your body. It's happening to your organs. It's happening to everything. You and I are both friends with Peter or Atia, but I really want to live really well.

Starting point is 00:27:22 I want to age as well as I can, given the gene code I got. And for that, I need to take care of myself. So I'm probably 50 pounds lighter that I was when my kids were born. And it's been five pounds a year for the better part of 10 years. I want to enjoy my life at the end. But not for any other reason. I don't want to be the healthiest guy in the cemetery either. I think life is to be enjoyed in balance and all those things.

Starting point is 00:27:45 Can you draw the contrast between good and well? That's my favorite new thought. I think in life, things are good. Like people are, I'm good or business is good and all this things. And that's okay. That's a reflection of externalities or what's happening in the world. I've been through some pretty difficult personal things in the last couple years. And I have found the notion of people will ask me how are things.

Starting point is 00:28:10 They're good. And I'm like, I'm lying. They're not good. They're horrible. They're actually really, really not good in what I realized, but even though they were not good, I felt well. I felt well because I was dealing with all the circumstances in the best way I could, and I was finding a tremendous amount of insight and peacefulness in that growth that I was having on how

Starting point is 00:28:33 I was showing up. And I realized, wow, this is what the part of well-being comes from. If you think about well-being, it's really two different words because they're connected. it when we say them, we think about it as one thing. And if you look at the definition of well-being, it makes no sense. It's like double talk. But if you couple those two words, well, is actually that feeling that you get a peacefulness inside, that connection to your soul, that sense that you are showing up the way you want to show up, that you're in control, that you're your own best friend, that no matter what's happening in the world, nothing can change that feeling inside. And that, to me,

Starting point is 00:29:12 has been the biggest realization of the last two years. It's like, I am really well. And I am well because, you know what, I'm kind to myself. I like my life. I do the best I can. I screw up all the time. I laugh on myself. And then being is the one that I find so interesting. We were talking about goals and no goals and divide your goals. And think about another one. It's like, we spend all our time doing things. We have to do list. Everything is a do. Society rewards us. for accomplishing things, for 450 podcasts, for this and that that's doing. And what you realize when you get to my age is like being, it's like a much better state of mind. Being is a place where there's nothing to do, where you're actually doing things for no reason at all.

Starting point is 00:30:00 You're doing it because you feel connected to whatever it is. And it's really hard when you spend 110% of your time doing to find the muscle and find the space to start being. And well-being is a place where you feel really settle inside, and you spend the time you want, just feeling connected to whatever you want to be connected to. And you suspend all this societal bullshit that we give so much power to, that manipulates the way that we think the world wants us to show up. So to me, this is like a really interesting journey, and I think I'm early in this journey. My hope is in the next 10, 20 years, is die peacefully will be understanding that I became

Starting point is 00:30:41 super clear on how to live life the way that I think my soul was intended to live. How would you assess a peer group, let's say a group of financially successful people that appear on the covers of magazines or something? How many of them are well or are thinking about this? I don't know many people that are well. I think everybody's on a journey, but you and I know a lot of people that are in those magazines. And it's not that they don't have well moments and it's not like their good is a bad thing either. But it's just really hard for our egos. It's really hard for what others may say of us. It's really hard for society's value to put on us not to affect us.

Starting point is 00:31:20 And the fact that you're in the cover of a magazine tells you something. Vanity is life's greatest sin. A little bit of this, you've got to decide what it is, but it can't become you. You can't put that inside of you. And I think we're all in some struggle and some journey to find our connection to ourselves. And crisis usually reveals that. And that was, to me, the big transition for me is this crisis has given me a perspective of, like, true appreciation of the really nice things you and I get to do every day. The rest will come and go.

Starting point is 00:31:52 You were in a very high-profile crisis once in the plane that Sully landed on the Hudson River, I think, in the front row seat. Can you describe the last five minutes of that experience? The experience, I think, was three and a half minutes. So I think it was like little. The whole thing. Well, that was three and a half minutes. Look, it's the greatest gift one can get. It's the greatest gift to know that you're going to die.

Starting point is 00:32:15 Were you certain of that? A hundred percent certain. It was either, I'm going to blow up, and that will be a lot better than breaking into pieces in January 15th in the Hudson River in New York and freezing in 40 seconds. If we're given those two options, I think blowing up is better. And then you have 90 seconds to say goodbye to your life with no suffering, zero suffering. And then on the other side of this, no one dies. So you can talk about it and celebrate it and understand it at a time where our country was an incredible crisis. We were coming out of the financial crisis of, wait, this country was in a low place looking for a story.

Starting point is 00:32:54 So we were really lucky that we had the most incredible pilot on that seat that day that in many ways, and we can talk about him, he'd been preparing for that moment his whole life. He was a gliding instructor. Later on, I've gotten to known really well. And you said, you're only a pilot when you lose an engine. Otherwise, you're just managing the autopilot or whatever the input's in the computer. In that day, it was a New York whole day. I was coming home to Charlotte. My biggest concern was landing and coaching my son's basketball practice.

Starting point is 00:33:24 And as we take off, there's a large explosion in the plane. Bam! Half asleep as you're taking up, you realize I look at the flight attendant. And I'm in 1D so I can see the flight attendant. There's nothing in their face, just like annoyance. It's like this is going to be, whatever, because we turn the plane right away. And nothing is happening. Smoke is coming in.

Starting point is 00:33:45 You can hear the engine struggling, but you think we're just going to go back landing. We're not that high. Probably three, four thousand feet high. And then all of a sudden, Sully gets on the microphone and says, this is your captain. So he identifies himself. And he says, three words. The only three words he said. And this was the moment.

Starting point is 00:34:01 He says, praise for impact. The movie is actually very true to a lot of it, especially to this. But at that moment, I look back at the flight attendant, Patrick, and then all of a sudden is complete terror in her eyes. She's like, holy cow, in training, this is we are not landing at an airport. I don't know that, but I can see her eyes, and I know that that's what it means. And the great gift of that day was 90 seconds to literally say, it's over. I am sitting there going like, oh, my goodness, it's over.

Starting point is 00:34:31 not only is it over and then some people you may have a near-death experience of a second or two seconds this is a minute and a half to basically sign off from life and that's for me been super formative previous to this last year and a half it was a real moment of kind of resignation in life and lots of things happened from how have I dealt with spiritual beliefs from that time all the way to how it did impact my life and I did that. that TED Talk, not knowing that it would ever get published. But by the way, it was the greatest gift I gave myself because people talk about it. And it's a reminder of me of a promise I made to myself that day, which is I was not going to let that experience someday I wanted to be a part

Starting point is 00:35:16 of me, not something that happened to me. I've tried to live very hard, but very consciously of the gift I got that day. Can you remember sequentially what went through your head in those 90 seconds? Yeah, when I think about it, and I think about it now more evolved with time behind, is a lot of it had to do with the immediate emotion that I felt was just, oh, no, it's over. It's this sense of real regret that it's over, and there were so many things I had left undone. It all changed in an instant. Life changes in an instant. We all have had friends that things have happened to in an instant. And I think in our evolution, We're unable to process that because we would have never left the cave if we felt that, right?

Starting point is 00:36:02 So there's this concept called hedonic adaptation that we will adapt to whatever situation. And that's what life is about. We have adopted this thing. And that was for me this notion of, gosh, when the plain land, and I am going to live with intense purpose every day. I am going to ask for forgiveness the moment I do something wrong. I'm going to drink my best wines whenever the person is there. I'm going to say, I love you to anybody I love. I am going to try my very best every day to try to like not regret, not doing or saying something.

Starting point is 00:36:38 And that was wonderful. So I live out loud, so to speak, because I know it's going to change in an instant. Tomorrow may be that instant. And I'm not having that regret if it happens. The second thing that I thought about, it was like you're going to superhuman, right? your adrenaline is shooting, you're in survival mode, you're going to die. There was this sense of almost embarrassment of how much I had allowed my eagle to be who showed up in the world. How much I had spent energy being wronged by people or being more or less than better or worse than.

Starting point is 00:37:15 How much my ego played a role in how I showed up every day. And it was this notion that, you know what, I hated it. I hated what that meant and that I didn't realize that that was a mask that I was putting on and that I didn't need to have that mask on. That eagle started with, okay, where does that come from? And for me, Patrick, was a lot of learning. I have this moment when the plane is going to crash. We talked about religion a bit today and I don't share this a lot. I don't know how people take it, but I ask myself, okay, do I buy insurance?

Starting point is 00:37:47 I can ask for forgiveness. I was raised Catholic. I can ask for insurance right now. And for sure, if there is such a thing, and I was not, I'm not a practicing Catholic or wasn't at the time a practicing Catholic. And I said to myself, I am not because I'm not a hypocrite. I may be all flawed in many ways, but it's not that. And it just didn't feel natural to me. And what happened as a result to me after that, after just saying, hey, this is who I am, is I let go of all guilt. Not that I don't take it. responsibility, but the forgiveness happened to myself at the moment. It's like, I no longer had this notion, and I think guilt drives a lot of our ego, a lot of our comparisons said, a lot of this notion of having to be right versus choosing to be happy. And look, this is not a perfect journey. And at times your ego gets caught up in this and your ego gets in the way, trust me, compared to when this happened, I am incredibly, incredibly lighter. I don't want to, want to die and I don't want the ego to be the one that shows up every day. And as a result, the problem that what happens when you have tremendous forgiveness for yourself, one, your conversation

Starting point is 00:38:57 with yourself changes, you become incredibly kind, you become a lot more light, but you then find forgiveness in everything. I am super, super forgiving. And to me, true forgiveness, and there's many definitions is when you forgive when the other person doesn't apologize. Because the forgiveness comes from love and comes from a language of accepting the humanity of all of us. That was to me super liberating. At the time, it was come on as a regret. All of this were regrets. And maybe the last one, as this plane is about to crash and, you know, when you fly, you can count down when we're going to hit the water and you're like, okay, please blow up kind of thing. I really had this thought is, wow, I was not scared. And I thought it would be super scary. And I was certain. And the feeling was

Starting point is 00:39:45 actually sadness. The feeling was somehow I had missed my opportunity to leave my mark in this world. I had not focused on whatever my purpose was meant to be. I was so busy accumulating, doing the things that society asked me to do, that I have forgotten. I actually can leave this place, this world a little better than I found it for my existence. And to me, that's the only meaning of light. And that manifested itself unlike my kids. I really justify myself being a light. 5% of the parenting. My wife carried the load and she did an incredible job. But I felt like, oh, I'm doing this side of the equation and she does that side of the equation. And I was like, I've changed dramatically. My relationship with my kids right now is

Starting point is 00:40:35 fantastic because I realize that that to me is my purpose. But my purpose is also this business. I am here 24 years later and as engaged as I am because I believe that this place is a place of good. It's a place of good where you come here, you get invested in, you get trained, you graduate, you do go great things. And hopefully you do it in a way that is honorable and ethical and purposeful. I believe that all this random success I've had, because it's more random than not. It's an opportunity to actually put it back into the system in ways. I'm reconnecting with Puerto Rico in the most beautiful ways. What a privilege. It's my purpose to put it all back in. So for me, life has become really, really simple. That was kind of my last 10 years

Starting point is 00:41:23 until the last two. Until the next challenge comes. That's what life is about. The contrast of our challenges is what makes our growth feel meaningful. You've teed me up. please tell the entire story of turning this basketball team in Puerto Rico around. Oh, that's a nutty story. Really? We're going to go there. A little bit of context. Hurricane Maria was, I think it's seven years coming up now, six or seven years from it. After Hurricane Maria, if you're Puerto Rican, you really love your island. And I found this really interesting. A lot of people ask me, oh, you Puerto Rican and you're American. I'm like, I am both. I'm not a percentage. I'm 100% both. And I'm really happy to be both 100%. I get

Starting point is 00:42:05 two things out of this. But like many other Puerto Ricans that were in the mainland and had some resources, you felt compelled to help. We raised a bunch of money and flew a plane full of stuff. And I took a lot of my friends, we got in four by fours and we got into the mounts and we were delivering baby formula and medicines and all these things and feeling really good about ourselves. Our egos were super healthy that we were saving nothing. And I got back on the plane coming back and I'm like, I am such a hypocrite. I literally have been looking for an opportunity to reconnect with my island. I'm here today and I'm feeling really good because I deliver boxes. It's like, if you're really, really going to do something, this is the moment. So I came back and

Starting point is 00:42:47 organize our comms team and they always get scared because I have an idea as code for like, oh no, because a lot of them are bad ones. But I have an idea. And we made this massive pledge that we were going to move Puerto Ricans back, that we were going to create real employees. in Puerto Rico that we were going to pay U.S. salaries, that we were going to train people. And fast forward a journey. And we have five companies in Puerto Rico with hundreds of employees, disrupting banking, disrupting media, really phenomenal. And it's a movement. It's not even a company. All the CEOs, a little bit of a different org design there than we have here or in the UK. And it's been beautiful. I reconnected with my island and I left Puerto Rico or I didn't go

Starting point is 00:43:27 back after college because it was too small, that little. And I'm full. in love with the island because it's too small and you actually can do something, right? And we're involved in like rewriting laws that are good for the island or helping entrepreneurs and investing in things. And I'm finding insane purpose on this. I love Charlotte. I love Puerto Rico. I can be both so I can see myself just being a part of that and helping people that need either courage or capital or conviction to go do something bigger. And it's this beautiful movement called forward 787 that we just are all a part of and it's authorless and all of that. Well, as part of that, now that's preamble to this thing. I love all that. All my high school buddies and we were all, we still get together

Starting point is 00:44:11 and we're that age again. And we all love hoops. And the inside story is, I always love hoops more than it loved me. I was pungo. I'm super tall. I really almost never made any good team. I was always in the B team. I sometimes made the C team. I was really horrendous. But as I grew into my teenage, I got better, and I started working at it, and it became like one of those things where I recognized effort to growth and reward, and I got better and better and better. And I literally was the last cut of a semi-pro team my senior year in high school. And the assistant coach was my high school coach, so maybe that's why it was the last cut and not the first cut, but I was there and I belonged.

Starting point is 00:44:53 And then I was getting paid like $100 a week. I was a professional. And I loved it. And, by the way, it was the best thing that happened to me because then I went and studied. You know, that's when I left for the U.S. But I've always loved the game, and I love it here, sit next to the Hornets bench. I've got good friends with, like, five coaches in the NBA that I talk to all the time. I know, oh, I know everybody.

Starting point is 00:45:11 It's a language for me. It's one of the most beautiful language language. College basketball, I know all these guys, and I love it. And there's no currency other than love. And so my buddies are like, man, the league in Puerto Rico is so good. We should buy a team. I'm like, I need one more thing like I need a root canal. Zero point zero chance.

Starting point is 00:45:28 And they're like, come on, man. And we can afford it. We can afford it. Come on, we'll do all the work. And we'll go drinking and we'll go drinking and look. All right, go look if there's a team we can buy it. And like Bad Bunny owns the team. Or Zuna owns a team.

Starting point is 00:45:41 And it's like, it's really bad. It's really good basketball. But super competitive. And I'm like teasing. And then all of a sudden, like we found a team. And then all of a sudden, the team is too far. I'm like, I'm not driving an hour and a half for a game. It has to be in San Juan.

Starting point is 00:45:55 I'm like sitting the most incredible boundaries. So they found a team that we can move to San Juan. And we could play at a little volleyball court for three years. Well, they build as a court, and it's the worst team, has never made the playoffs. This is enough guy, but he couldn't afford the team. So we ended up buying the team. We bought it a year ago. And I'm like, I have no time.

Starting point is 00:46:14 I'm not doing anything. It's been the greatest for you. Fast forward tomorrow. So that team has never made the playoffs. There were three polls at the beginning of the season. We were ranked 12, 11, and 12. There's 12 teams in the league. We were the easy game in everybody's schedule.

Starting point is 00:46:31 Fast forward, we are playing game seven of the finals tomorrow night. And it's been the craziest, most fun ride. And you know what I realized, Patrick? I had never owned a toy as an adult. A toy where you literally do it for the pleasure of it. And the connections, the ability to bring a philosophical approach to this, the relationships running it in a very different way, investing differently. The biggest compliment is our best players all came through in the middle of the season, not winning the finals, say,

Starting point is 00:47:06 this is my favorite team I've ever been a part of. And it's all culture. At the end of the day, Patrick, we all want to belong to places that we feel connected to. And the magic of organizations is understanding that. And in this world, we are so disconnected from so many things. People no longer belong to civic groups or churches or all of this. And the ability to create connections, look, this town is going crazy. Win or loss, it didn't lose. It doesn't matter. It's so good.

Starting point is 00:47:38 Look, if you go through the year, go back to your calendar and say, what are the things that I'm going to remember 10 years from now? You'll be shocked how few they are. If you're lucky, you have six, seven, usually experiences, usually things that are either surprising and it involves different things. And it's a really good exercise to do because you're like, okay, how do I do more of those? I need to design that into my calendar. I tell you, I have like three of them that are going to show up at the end of the year,

Starting point is 00:48:04 including two nights ago when we're down 10 with two and a half minutes, game six on the road, we send it to overtime. We're going to double overtime and we win. I can't sleep the whole night. I have a leadership meeting yesterday, which I am completely exhausted for, and it was the greatest thing ever. So tell me what you did. How did the culture change? what is the culture of the team?

Starting point is 00:48:25 Like, I wouldn't ask to everybody. And don't sure change yourself. Like, someone told me that you called and we're talking in the locker room to every player one-on-one. You are involved. This is not something that you're just phoning in. I've been in Puerto Rico nine times. And I literally go hold down for two games and run back. So I just get so much joy out of it.

Starting point is 00:48:45 It's just uncomfortable to talk about. But, okay, now I'll give you a little. The first practice we show up, all these players are looking at like, okay, a new owner. Players don't trust owners. They get treated like merchandise. They get lied to. They get all this stuff. They're very skeptical.

Starting point is 00:49:01 So you can't show up and say, hey, we're going to build a culture of this and that and the other. So I shut up and say, look, there's literally three rules here. We are going to invest in you so that you can make more money out of your career here or anywhere. And here's what that means. We put it in a full weight room. We put a bunch of staff. They're looking at us like a little bit like incredulous.

Starting point is 00:49:21 It's like we're going to do this. Number two is we're actually not going to care about a goal. Teams have goals. You know, this is someone saying franchises have systems. We're going to build a system. And we're going to play in a certain way and we're going to do certain things. And then there's nobody that is above the team. So this is a team first and all of that.

Starting point is 00:49:42 And we've extrapolate a lot of this. And we signed a big free agent. I think it was two or three days later. We fire him because he was a jerk. Culture is what you tolerate. It's not what you preach. Our best player, we suspended and never told anybody because he was not behaving in a way that was culture fast. He begged to come back.

Starting point is 00:50:00 He's the most amazing teammate. This guy says, I've never been part of a team. This kids get treated like whatever. So great teams, great teams and anything in life, it is team first because most places are player first. Exceptional teams that where they exceed their expectations where we are, we are like the eighth best team, not the second or first best team, is when there's. teammates first. This guys, the love that they feel for each other is beautiful. And the great thing about teams, back to community. It's like, once you are part of an experience like that, the team will end, you will be teammates for life. And that to me is the beautiful part of all of this.

Starting point is 00:50:40 Regardless how the story ends, and this may have been our lucky season, we may never make it again. It does not matter. No one, there's a saying in Spanish, no me puttie out of lair. Nobody me Gita Lo Wa Laocke, you can never take away the songs I've danced. We go to the games, all my friends are sitting in the friends' role. Like, it is literally a reunion of high school there. And it's just beautiful. It's just beautiful. Towns are so passionate.

Starting point is 00:51:04 It's crazy the love that they have for the game. There's a parade on Saturday to celebrate our championship. I hope we win. How could I watch this game? It's on YouTube, actually. Okay. It was like 50,000 people on YouTube in the U.S. watching the last one. Incredible.

Starting point is 00:51:20 Oh man, I hope you win. But it doesn't matter like he says. It doesn't matter. It's a game. There's no winning. We won already. It lets me jump back to our list, 39 to 57, on leadership. And I was thinking about this as you were talking about Sully and how to characterize him.

Starting point is 00:51:37 And he seems like an incredibly quiet, humble professional. I don't know if you would call himself a leader. I don't know what that means. Lots of good sounding definitions about it. But rather than ask you like to. define it or versions of it that you've seen. I'm actually more curious than how you think it's changed for you in that 18-year period. It changes a lot. I'm surprised at how many things I was convicted of that I've changed my mind on. Part of it may be chemical. Part of it may be experienced. Part of it

Starting point is 00:52:11 as you realize at the end of the day, what is it that matters and all that? I think leadership, First of all, title is not leadership. Role is not leadership. Other people decide if you're a leader or not. It's not something that you have, it's something you earn. And I think that's something that you've got to take really, really personal.

Starting point is 00:52:31 Now, that doesn't mean that good leaders are not liked. They're respected. And they're respected for being consistent, being clear, being fair, giving, being all the things that matter, kind, and all this different things. But leadership to me is, it's a way you show up every day.

Starting point is 00:52:46 And it starts with personal leadership. I don't think you can be a leader in the world if you don't have control of yourself. If you don't really understand yourself. And then it's an imperfect art. And you're constantly growing and learning. And we had a staff meeting yesterday in the morning, you know, I think it was fantastic. And in the afternoon, I didn't show up that great. And I was exhausted from that silly game.

Starting point is 00:53:07 And I was short, I was like, I got into count. Like, that wasn't my best performance. And then I laughed and then I'd alone it and move on. Leadership a lot of is how you show what it is to be human. A lot of leaders feel like they have to pretend to be perfect. And luck, we all have insecurities. We all have challenges. And to me, leaders is showing the way of humanity of how to do growth and how to care for others

Starting point is 00:53:34 and how to do things that matter. This is a very strange question to ask an extremely successful business person. Do you like business? I love the game of influencing. I'm very influential. I listen to your stuff and I'm influenced by it. Today we had a great conversation and I'm like, I am evidence. So the business of making money, fine.

Starting point is 00:53:58 It's a score that is kind of silly. The business of bringing people together to a common goal or to a purpose, to compete, to try to figure something out, to struggle, to fall, to not be sure. that's really fun. So I think to me business is just a platform for those elements to happen. In my house, my older sister's super smart. So I was never going to be the smartest. My younger sisters are great athlete. So I wasn't going to be a great athlete. My brother's super handsome. I shut up literally in my house. I'm like, I am never going to win anything in my own house.

Starting point is 00:54:33 So I gave up really early this. Like I look at, there's a lot of incredible entrepreneurs that are doing incredible things and inventing incredible things. And I don't feel neither envy nor anything. I feel like that's their thing. This is my thing. It's a weird question. Never been asked. Do I love business? My default answer would have been, of course, because I sold avocados on streetlight when I was 11. But what I really liked was being independent. I'm not really sure that business was what I wanted. Yeah. What was the key to selling avocados? Getting them really cheap at the farm and then, you know, low-cost provider. 20 X.

Starting point is 00:55:08 You described really for fun going through our decades and trying to label the decades a little bit with like a word or two. You said for your 30s that courage was the word. Yeah. It was an interesting word. And that for your 20s it was confidence. Can you describe why courage? That's not so interesting. I actually want to answer confidence because confidence goes into courage.

Starting point is 00:55:27 I think you need that. So look, I'm 20. I'm a sophomore in college. I don't know much English. I'm an accounting major, so I don't have to speak. I'm in a really cold place in Boston. I feel weird. I dress different.

Starting point is 00:55:40 I speak different. I act different. I'm Puerto Rican. And actually, that was really good to feel that. I'm working all sorts of jobs. I drive a limo. I do the things that people do in college.

Starting point is 00:55:49 And like, and for me, I graduated, I'm like, okay, what am I going to do? My dad was an OBGYN so I couldn't go back to his practice.

Starting point is 00:55:57 I was like, okay, and I ended up in Japan. And I go to Japan, and I'm like, holy cow, there's no internet. There's no anything.

Starting point is 00:56:03 I struggle. I was lonely. I figured out a way to take a six-month assignment, stay two years. I was general electric at the time. And all of a sudden, I'm like, I should just apply to Harvard Business School. They're not going to take me, but you know what? Who knows? And that's the only place I apply.

Starting point is 00:56:18 And all of a sudden, I forgot. I got a letter. It's like, do you remember a class in 194? I'm like, holy cow, they let me in. So I'm like, whatever, 26. And I get to Harvard thinking, I'm definitely not going to make it. I'm going to be one of the 10% that fills the screen. I literally spent my first month, smarter, smarter, smarter, smarter.

Starting point is 00:56:33 smarter, smart or smart. I'm trying to figure out. And I realized, it's like, you know what, everybody's the same. So I got confidence. Like, I could compete in any level. I can compete in college. I can compete in Japan. I can be okay. I can figure it out. I have tools. And I got a lot of confidence. And I finished business school and everybody was going to McKenzie or investment banking. I'm like, you know what? I've always kind of listened to a different radio station than most. And I always knew I wanted to run a business, start a business. I wanted to be independent. I have a story of my grandpa someday. I'll tell you. But that was a little. my vision to be independent. I was like, I'm going to learn. A professor told me, if that's

Starting point is 00:57:08 what you want, go on learn on someone else's nickel. And that's what I did. And that's where I met Dan, that's where I met Brenda, my wife. And, you know, at 30, which is the change of decades, that's when, like, little, yeah, I got married and basically we started the business. So the 20s was the place where I was like, look, I belong anywhere. I'm not better than anybody, but I'm not worse than anybody. And to this day, I show up and I kill this meetings and I kind of laugh. I'm like, how in the world that I end up in this room? I'm sure sometimes that happens to you, right, that joke. I start singing my head, one of us. It's not like the others.

Starting point is 00:57:37 It's just everybody's the same. No one above, no one below. So the 30s, a little bit of this is we struggle. We struggle in there. Losing all these pregnancies was really, really hard on our marriage. And we were this close to quitting. And going down the path of building our family in a different way, took it a lot of courage. And not quitting the business took a lot of courage and borrowing money from my dad to live. for a couple years after we depleted the little we have, took a lot of courage and

Starting point is 00:58:08 hustling our way every day for a long time, convincing people. I was like, holy cow, ignorance is a bliss. And necessity is actually a really driving factor. So it wasn't until 40 that I would say, okay, we're going to be okay, even if it's at a level that is not good enough. I build a lot of courage. I'm like, you know what, I'll go for anything with a little luck. and the right people around you, anything can happen.

Starting point is 00:58:35 Can you tell me about your grandfather? I never met my grandpa. It's my dad's dad. By all accounts, he was much older than my grandma. His Lebanese came to Puerto Rico on a boat when he was a little kid. There was an epidemic. The boat was going somewhere else. Stopped in Puerto Rico, pushed everybody out of the boat.

Starting point is 00:58:50 He ended up growing up partly in Puerto Rico back in Lebanon, Christian Lebanese. And then he came back in his 20s to Puerto Rico and became one of the most successful. People, the stories of my grandpa was like 20 servants in the house. was one of the big mansions, and he was basically had cornered the market for all vegetables, imported everything, set the price, stories of predatory pricing, beautiful, like this crazy stories of all the things he was. And I never met him. There's a lot of this is our mythology, which I understand.

Starting point is 00:59:20 But what was really interesting, I think in his 50s, he got Alzheimer's, really early Alzheimer's, and all of a sudden the government realized he never paid his taxes or a lot of his taxes. I imagine he's like, look, that money belongs to me, not to the government. So they took everything away. So my dad and his teens went from like the wealthiest 10 families to nothing. And to this day, my dad pays for anything cash. That was so riveting. So we will have this family dinners and big Hispanic Lebanese families.

Starting point is 00:59:48 There's 30 people at the table, right? You're the little kid. And inevitably, the story will always go to my grandpa. And the stories were always like this incredible guy who was bigger than whatever. and then they always ended in a murmur. The shame of how the family ended. And I saw my grandma tell the stories and everybody. And I think I was a little kid.

Starting point is 01:00:08 And I didn't realize this until much later. And it's interesting to stories. And by the way, it may be a story I'm telling myself. That's okay. It helps me. It's amazing the things that we carry in our lives. So I show up and I realize that a lot of what I've been trying to do. I'm super close to my dad.

Starting point is 01:00:23 I'm super close to my mom. I just really wanted them to feel proud of our family. I wanted to do what my grandpa did, but do it in a way that was ethical and my family could be proud of my grandpa through the work that I was doing. And I only realized this when I was with my dad and he goes, you are just like your grandpa. I was like, holy shit. It picked me. I didn't pick this.

Starting point is 01:00:47 It's like, this is a random roulette. It's the gene pool of I got my grandpa's gene of being a merchant. Fast forward a number of years. And you and I were on a walk and you said something. to me, which was something to the effect of be careful about the relentless pursuit of more. Thinking of that, in contrast to the story you just told. Yeah. Maybe say a bit more about that idea.

Starting point is 01:01:12 It hit me kind of hard. Society sets us up on a trick. Although this is a mirage. Every time you get to a peak, you'll see higher peaks. There's nothing about a peak that matters. Sometimes it's oversaid about the journey and this and the other. is that inner peace. It's a sense of well-being that really matters. How many days of your life do you have a sense of calm and peacefulness and purpose and you're in a good place? You feel like

Starting point is 01:01:38 your energy is in a good place. To me, that's what really matters. And the pursuit of more robs you from that. You can't take it with you. It becomes the responsibility, the more you have. And I tell this to a lot of our employees when they're leaving. And I said, okay, great, you're ready graduate, I'm for you, but when they're replacing happy with happier, that's when they get in trouble. There's no such thing. I have a fun exchange. An employee came in and I saw, hey, you're back, great. We have a bunch of boomerangs. It's silly how many boomerings we have. And I'm like, you're back. I was like, and I jokingly said, hey, the grass wasn't greener. He goes, no, I like this brown. And it's true. Everything is a little brown. I've stopped pursuing more. That's why anything I do

Starting point is 01:02:21 from here and out with my capital, the return on the capital. I don't invest anymore on funds. I don't invest in anything. I don't want to compound capital. I know that sounds like opposite of what you would ever think. I want to use my capital to compound other things that matter to me. So I'm using my capital in Puerto Rico to do things that really matter to me. This all notion of purpose. My original purpose is through my kids, it's through my friends, it's through my community. but like then I am incredibly privileged to broaden that purpose to things that are good for society. That's all that matters. Capital for capital what?

Starting point is 01:02:56 You're never going to be Bezos or whoever else. Like that's a silly game. You flipped something around on me earlier today that was really interesting around this idea of like 90, 10 in a conversation where I think maybe you and I are both tend to really be curious about other people and ask a million questions and very often finish a conversation having only. spoken 10% of the time or something like that, which I guess I've always thought is like a nice thing to do for somebody else, like be genuinely curious about them, like to think I'm that way. But you had a different perspective on this. Can you explain that? Look, somebody that is looking for love. The best thing that you can do is ask a lot of questions because people love people that listen to them. You can ingratiate yourself shortly to somebody who says, oh, how good. It was

Starting point is 01:03:41 wonderful is because you talk a lot about yourself. That said, one of the beauties of true friendships is allowing the other party to feel that they can love you back. And I told you the story of a dear friend of mine, one of my best, best friends, like my first best friend in the U.S. His name was John Woods. He passed a number of years ago. John was a little older, but still kind of in college with me because someone who worked and he'll study. And one day, many years later, I have dinner with him in Boston and his wife is also a great friend of mine. And she goes back and asks him a bunch of questions about me and he had no answer. He literally called me the next day, dead serious. This is one of the guys that was like most fun, jovial guys. He calls me to fire me as his friend. I was

Starting point is 01:04:27 in his wedding party. He was in my wedding party. We're like brothers. And he wasn't kidding. At first, I thought, oh, yeah, yeah, this is really, I just saw you last night. We drank two bottles of wine. We like literally told each other and we love each other. And you're firing me the next day. And he said, you are the most selfish friend I have. I was like, you just talk for 90% of time. I just, I bought dinner. I like, what else can I do? Right.

Starting point is 01:04:50 And he goes, you don't ever let anybody else love you back. And you'd suck all the love out of every interaction because that's how you feel good about yourself. And I don't want to be friends with somebody who is not able to be a receiver. And it was holy cow. At the time, I'm like, well, this guy went loony, and then the more I thought about it, the more true it is. I used to be in the place I always picked up every tab. That's selfish.

Starting point is 01:05:19 Letting people in your true friends, I now share my struggles the last two years. I literally, because in part, what I was doing was letting them love me by me loving them, right? It's like, it's this language of trust. It's a language. I'm like, I'm very open with people that I trust because it's what friendships are about. that's how we get helped. And I think a lot of people are out there feeling lonely, feeling like I can't share. Well, if there's somebody out there that you think loves you, give them a chance to love you back. How do you recruit people here? Like just shaking hands and talking to some people

Starting point is 01:05:52 a couple hours ago, you get this incredible sense of excitement to be here, front footedness. So what are you looking for in the people that you bring to Red Ventures? I think part of that is who you bring here. So I think you're making sure that people are comfortable with the way we operate. If you need certainty, if you need predictability, if you need to be the star of the team, if you have all this stuff, it's not going to work. But we recruit so many young people, which that's really usually not the case. I compare it more to Charlotte. One of the things I love about Charlotte is it's probably one of the greatest places to live, not just because of the weather or the airport or whatever, it's because people are super nice. People here drive nice and whatever

Starting point is 01:06:40 else. You take a New Yorker and you move into Charlotte and within a month, they're saying good morning to you. So the culture of Charlotte is what people come in and because you feel rude, you go to the third coffee shop in a week and you walk in and they say good morning and you're like, what do you want? And what you realize is that that's culture. So in here, ultimately people behave in a way. So when you walk in, you're like, oh, this is a good morning. This is. are the norms on how you behave here. And all of a sudden becomes like, ah, this is how I fit in. And it becomes the way that we operate with each other. We take our work really seriously, not ourselves. There's a ton of humor. We do a lot of things. We have tons of sports. We have tons

Starting point is 01:07:20 of stuff just because it's all interconnected. If you think about the investing side of your brain or world, I kind of have the same stupid question I have about investing that I did about business. In some sense, you seem like someone that's just intuitively good at this. Like, yeah, you're the avocados for a 20th of the price you sell them. Like, you make money. But do you have like an investing philosophy? Because part of what you've done is like allocate a lot of capital in some very basic way like you're an investor. I'm curious what do you think makes you good at it and what you like about it? I love to bet. I hate to gamble. And I think life is about understanding odds and edges and risks and this whole notion of can you win multiple ways? Also applies

Starting point is 01:08:05 on the other side. When I look at a business model, if the business has three variables for it to work, I will never invest in it. There's some great businesses that need three barriers. They're going to need a ton of capital, a ton of luck. They're going to have to figure some style. If the business has two variables, then you're compounding the risk. So you better be fairly certain that one of those variables you have high confidence on and the other one you have some visibility. And if the business This has one variable and you have an inkling lean right in. So a lot of this is just decomposed risk of what you're investing in. And it applies to everything.

Starting point is 01:08:40 So it's both the multiplier and then the discount that you would apply to an intuitive decision. And when we see something, we're like, okay, that's worth the bet. But understanding that when you're betting, you're going to lose some. And if you're, I think if anything, you need to have bad bets to be able to be a good better. Otherwise, you're just taking fastballs 85 miles an hour down the plate. What episode of Red Ventra's history do you look back on with the most pride? We all have revisionist history.

Starting point is 01:09:13 It's funny because we're getting a lot of momentum back and a lot of things are happening that are on the positive side. But still, there's this sense of, man, this are not the same days that are used to be. And of course they're not. Everything, Danny Meyer, a good friend of both of ours, says the cultures are like sharks. They have to keep swimming to survive. And to compare it to something first, I don't think the past is always as good as we remember it being. But the reality is that there was a moment in our journey where I remember leaving a big company event here on campus.

Starting point is 01:09:45 And it was like a magical night. And we had this like incredible energy. And I got in the car and I'm like, it just cannot get any better than this. to see a couple thousand people just completely pulling in the same direction, trying to do something. And it just felt like unity you couldn't. It was like lightning in a bottle at a moment in time. And it was a moment in time. You felt that today this is a magical place.

Starting point is 01:10:09 There's a magical culture here. But comparatively, so probably when we're compounding at 30% for like five years in a row and we're just success after success, it was like, wow, we're really good. reality is we were really lucky with it. We were really good. It was a matter of when that we needed to do it. I'm kind of very excited for the next five years. I spend a lot of time listening to your digestion of AI, but I think AI is really going to change a lot of our businesses, some of the traditional ones, but even our partner business, our client business is going to really change and some of our assets. So I think the next five years may be the most exciting ones. And we're either going to get runover

Starting point is 01:10:46 or we are going to play in it and we'll see. You described this evolution from the early the days of performance marketing focus into businesses all over the world that do lots of different things. I know healthcare is one space that you're really interested in. We don't have to get to the specifics of the business, but Ken, if you want, talk about what in that world seems like an opportunity and interesting to you. It does seem like such an important space, and that's a very different world than the world you started in. We owned a bunch of really interesting assets. We owned a bunch of assets that created a lot of both data and consumers' path, but you realize that Those are kind of narrow businesses that exist for a period of time.

Starting point is 01:11:25 We did this JV with United Healthcare, who their CEO, Andrew Whitties, a fantastic CEO. It's a fantastic human being. And his view is that the healthcare company of someday, of the future, five, ten years from now, will be very much consumer-driven, consumer-led. And they need to be making that investment today because they are really good in the health plan side. they're really good in the provider side. They got to get really good in the consumer side. And he is like, there's no way a company this big will ever figure that out.

Starting point is 01:11:56 So I got to find a clean environment where I can make sure that we're both investing. But I need the tech. I need the people. I need the alignment of incentives. So we did a long-term partnership to go build this. And it's been great. First year was typical put two organisms together. And our joke was like, look, we don't want our size and your speed.

Starting point is 01:12:17 that will be at this time. We're doing this so that we get our speed, your size. And that team is doing incredible work. And we have some big bets that we're making and the next couple of years you'll play out. But we're preparing for a future world. Healthcare is counterintuitive. The money in healthcare and very specific pockets,

Starting point is 01:12:34 if you really think about it, there's not a lot of value that has been sustained because where the money is, given the governments, putting the thumb on their scale with Medicare and all this different stuff is just really tricky. And I think doing it as part of the best and biggest healthcare provider and platform out there in United Healthcare was the best way to do it. And so what is the North Star for the product in that business?

Starting point is 01:12:57 What is the thing you're trying to deliver? Ultimately, you want a place where the consumer gets all the answers, all the connectivity, access to do I qualify for this thing? Is it cover? Is it not? It is preventives. And you can see how AI will play a role in a very personalized way. So it's almost like an agent for you personally around your health, that because of hip eye and all this kind of stuff, it has to exist inside an ecosystem. This is not going to be able to live outside.

Starting point is 01:13:26 And this is the largest platform to do inside of. You mentioned speed. One of the very popular ideas in the West Coast and startup land is you could beat anybody if you're fast enough. what do you think is the role of speed in business? We used to call speed and then we ended up tripping ourselves because we were like speeds trumps perfection. Well, there's some stuff you need perfection. Or there are times.

Starting point is 01:13:55 Or if you're all speed, you burn a team. So we talk about two concepts that's an iteration of that. One is pace. Because pace is sustained speed. You see this marathon runners who go out and win the first mile and never finish a race. So you got to understand pace and how do you bring an organization. And the other one is not sprints. It's you're almost running intervals inside of a race. So when you can buy pace and intervals, we got a big push for the next 60 days. We got different things. I think that's the

Starting point is 01:14:24 sustainable peace speed part of this. I'm not sure that's right, but that's how we think about it. Because otherwise you end up either in a body shop where people get burned out or to what end. And then again, it has to be managed and purposeful. I do think that reps really matter. And the ability to do this faster is how you can build better models, is how you can build better product, is how you can get to differentiation. And when we go to big companies and our business model, the core is a B2B business. What we say to them, look, we have a platform that allows you to grow faster than you're

Starting point is 01:14:57 growing and we're willing to get paid, only if that is true. And part of that is because we can iterate in one. ways that you could never iterate. And if you give us the right APIs and the right controls, we are industrial grade security, industrial grade, everything, we may be able to help you. I think that's the key to this is we're servicing big companies that have to deal with a lot more than we do. Are there other, any other philosophies that we haven't talked about that you feel like govern a lot of your own behavior? There's a lot. I'm a cheap philosopher. Lots, lots and lots. There's lots around.

Starting point is 01:15:33 We haven't talked about our commitment to real social impact as an organization. And the work that we do in Charlotte is probably the most outstanding work we do. We just don't publish it. By the way, we also don't believe that like Simone Perez used to say, press and awards are like perfume, nice to smell and dangerous to swallow. Right. And those things get you caught in the wrong things. But we're so imperfect.

Starting point is 01:16:00 And so in many ways, naive. I joked with you, I'm like Forrest Gump running abyssus. I'm not sure what it is and who cares? And I worked really hard and I care really deeply. But just put weight on things that don't matter. If a high integrity builder were to come study this place for a year, really have access with the intent of I'm going to go spend a year studying RV, and I'm going to leave, and I'm going to start a platform,

Starting point is 01:16:29 what do you most wish that hypothetical person would take with them? At the core of what I hope we leave as our legacy is thousands of people that were better at what they're doing and did more meaningful work wherever they went because they were here. And I can't tell you the amount of emails I get from people saying, holy cow, I did not know I was this good because now I'm not competing against. everybody that is this good, and I would have never been this good if I had not been there. I think that's really cool. That opportunity, one of the great things about our country is the apprenticeship layer that exists between 20 and 30s when you leave college, which I think it's at risk right now with all this not coming to the office and everything else. And I think in the world of new tech and technology and digital, we're one of those great apprenticeship places.

Starting point is 01:17:24 That's great. Businesses understood the greater good. It's not we're going to be bigger or more profitable because that ability to train people is what allows for innovation to happen and changes to happen. How do you do that? Like, teach me how to do that. Like, if someone has the desire, you've mentioned the investment you make in the team, the investment in the literal team in Puerto Rico, clearly you're really intentional about what that means to do things or set standards. And I'm curious, what it is? Is it systems of accountability? Is it ways of thinking about the customers? What is it that you're investing and doing to imbue that in people here? like in a brass tax way.

Starting point is 01:18:01 It is 50 factors that have to play in. This is like an orchestra. It doesn't matter what it plays. It just has to be in harmony. So there is no song that says this does that is. Like all the instruments, recruiting, performance reviews, career tracking, training, management, experiences, rotations, accountability, access, talks like today, where you had all this constant investment in people in their personal growth.

Starting point is 01:18:33 And we don't have it right. And we don't have it right at times. We don't have it right for everybody. But it's this endless pursuit of holding our mirrors to ourselves and saying, are we doing the right things? And this is a little bit of my struggle. Employees here are loving coming to campus, but they love coming to campus three days a week.

Starting point is 01:18:49 And if you're 30 and you're balancing three things in life and you are really good at why you do that, you're perfectly fine doing that. You can do your job that way. if you're 24 and you don't know too much, I feel like we're robbing you from the experience of what it really means to get trained in this decade. So when you're 30 and you have 50 other demands, aging parents, a bunch of other responsibilities, kids and whatever else, you can actually allocate your time differently. So I'm really curious as to 10 years from now what this is all going to look like because we can see it. And you take that at scale. And I think it's happening

Starting point is 01:19:24 everywhere. Our apprenticeship layer in the U.S. is not just companies, it's hospitals. Take anything, any practice. Super interesting. Do you feel like the architect of all those things, those 50 things? Like, is that something you wake up on a Saturday? No, we have incredible people. No. If anything, I realize I tend to ruin the soup when I put my spoon in it. Because you get too much credit when you're the founder and power is really dangerous. And for a long time, I didn't understand it. Honestly, I don't feel like I'm anybody's boss. I just feel like I showed up here first.

Starting point is 01:20:01 But you can ruin someone's day if you don't say hello the right way or whatever because they're invisible. The same way you can make someone's day if you show up in the same way you can completely, a lot of time now I'm disclosed. Look, I don't believe this. I'm going to say it out loud just to see what you guys think because if I say it without a disclosure, it's like, Rick said we have to do this. And then we wake up six months later. What are we doing this? Like, oh, you said it. I'm like, that's a horrible idea.

Starting point is 01:20:24 I can't tell you the amount of times that an extravert like me that thinks out loud, it's like, holy cow, it's like you have now like everything is disclaimed. Just like you disclaimed, this is not personal advice for investment. It's like, and we have tremendous talent. I got to look. The woman that runs comes here is just world class. A lot of the team that sits in our people capital operations are fantastic. They're the ones that are constantly doing this.

Starting point is 01:20:48 We talked a lot about how you have changed your view on things in the last 18 years. What are you anticipating will change in the next tent? And what has you excited about the next 10? Look, my role is going to change. I don't intend to be committing this much energy to this one thing. That may not happen for the next three to four years. Hopefully, the Purcho Red Ventures existing, Yishan. I may not.

Starting point is 01:21:10 Go to Facebook or Meta and drive out of their campus and you see the sun microsystems on the back of the sign. It's a great reminder that someone is going to paint our building blue someday. And that's okay. It was meant to be for a period of time. So, yeah, I really don't know. And I think the next 10 years, I think AI is going to disrupt every workflow, every interface, every platform, everything in ways that no one can predict. You've got to be both aggressive and thoughtful.

Starting point is 01:21:45 Remember early in AI, people are like, oh, this is just like the internet, but it is four years, you know, for maybe. not. Maybe it's going to take that long for real models to mature, for consumer behaviors to change, for platforms to really adapt. All the money that got made, and you know this better than anybody, all the money got that made in the internet wasn't in the first wave. Maybe some of the infrastructure. Rick, it has been so much fun to get this excuse to talk to you about what you've built, maybe more importantly, your philosophy for building it. I think you know my traditional closing question. What is the kindest thing that anyone's ever done for you? In fairness, I knew this question was coming. There's been so much, but instead of finding the one person, I'll tell you

Starting point is 01:22:27 the thing in his forgiveness. I have been forgiven by many people, ultimately for being human. I've been forgiven by my wife for not being as committed in terms of being at home in that first decade of our kids. I've been forgiven by my kids for not being that present in the first decade. there's no manual to run a company. There's no manual to do acquisition. I made a million mistakes. And the grace that you give somebody when you forgive them is the most beautiful things we do as humans. So I am super grateful for the grace of forgiveness. And it's a great reminder that that's a power we have to give others. That is probably what I take with me. Coming here has been a total highlight of an otherwise fairly chaotic summer for me.

Starting point is 01:23:12 You've created something really enviable and inspiring here. Thank you so much for having me and thanks so much for your time. I'm an incredible honor to be on your show. If you enjoy this episode, check out join colossus.com. There you'll find every episode of this podcast complete with transcripts, show notes, and resources to keep learning. You can also sign up for our newsletter, Colossus Weekly, where we condense episodes to the big ideas, quotations, and more,

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Invest Like the Best with Patrick O'Shaughnessy - Ric Elias - The Art of Living Well - [Invest Like the Best, EP.388]

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