My First Million - 3 Things You Need To Outperform 99% Of Entrepreneurs

Episode Date: June 22, 2024

Episode 599: Sam Parr ( https://twitter.com/theSamParr ) and Shaan Puri ( https://twitter.com/ShaanVP ) talk about the best traits of a startup founder and lessons from how Dana White, Elon Musk, and Emmett Shear cut through the bullshit.  — Show Notes: (0:00) Top traits founders should take from Dana White (5:35) 1 - Brute force (10:21) 2 - Extreme bias for action (14:55) Quick audit of Dana White's gambling claims (18:00) 3 - Speed (19:00) Checklist for a perfect niche event business (22:56) IDEA: The Beer Mile (24:45) IDEA: Paddle Prison Break (25:47) IDEA: Skyline Scramble (30:17) Growth vs EBITDA vs cash flow (32:27) Shaan's Guide to Increase EBITDA (34:19) Step 1: create a EBITDA budget (37:08) Step 2: communicate the plan relentlessly (37:48) Step 3: Track and report (38:04) Step 4: Tie into incentives (38:30) Step 5: Repeat every 30 days (40:02) Next stage: Cash flow (41:28) The benefit of playing on Hard Mode (43:38) Is e-commerce dead? (44:54) Shaan's $30M dollar dream house (47:56) Shaan writes an essay (49:43) Sexier core principles (1:00:53) Culture: What people do when the boss isn't around — Links: • [Steal This] Get our proven writing frameworks that have made us millions https://clickhubspot.com/copy • Shaan Puri essays - ​​https://www.shaanpuri.com/essays • Brunello Cucinelli - https://shop.brunellocucinelli.com/ • Grab HubSpot's free AI-Powered Customer Platform and watch your business grow https://clickhubspot.com/fmf • Wander - https://www.wander.com/mfm (Enter to win a free trip and use code MFM300 at checkout for $300 off your booking) — Check Out Shaan's Stuff: Need to hire? You should use the same service Shaan uses to hire developers, designers, & Virtual Assistants → it’s called Shepherd (tell ‘em Shaan sent you): https://bit.ly/SupportShepherd — Check Out Sam's Stuff: • Hampton - https://www.joinhampton.com/ • Ideation Bootcamp - https://www.ideationbootcamp.co/ • Copy That - https://copythat.com • Hampton Wealth Survey - https://joinhampton.com/wealth • Sam’s List - http://samslist.co/ My First Million is a HubSpot Original Podcast // Brought to you by The HubSpot Podcast Network // Production by Arie Desormeaux // Editing by Ezra Bakker Trupiano

extreme force of will, extreme bias for action, and a questioning of the default speeds, it changes everything. Yeah, you know I'm on this business entertainment kick, where I'm looking for content that is about business, but is made to be entertaining. So it's not just like an informational video or blog post. And so there's a new show called Fighting

that I watched that I thought was really good. Did you see it? I saw the commercials for it. How do you get it? It's on Roku, but I don't have Roku. You just Google, like, watch Fight Inc.

And it's Roku just lets you just, it's on their website, but you don't have to sign up, you don't do anything. You just click and you just watch it. So it's very cool. I mean, they basically follow around Dana, you know, behind the scenes

and the UFC, like kind of the machine behind the show. And the UFC, just to put this in perspective, they basically, there is no off season. The UFC is 52 weeks a year. Every Saturday has to be an epic show. It's a live event with pay-per-view.

It's got fighters who get injured and pull out or get arrested and now they can't fight. And there's all kinds of things that can and will go wrong. But it's like the actual epitome of the show must go on. So I wanted to share with you a couple of my thoughts watching this from a founder's point of view. So the first thing is, as silly as this sounds, I do think that Dana White is on my Mount Rushmore of startup founders. And I know he didn't technically found the UFC, but he basically did.

He created the goddamn thing. He's a madman. He is a workhorse. He's a machine. And I really don't think the UFC happens if there's no Dana-white. And this got me thinking, there are some companies

that I will call inevitable. An inevitable company is one whose time has just come. So YouTube today is a giant company, but YouTube's time had come. Like, if it wasn't YouTube, if Chad and Steve had not created YouTube, somebody else would have created the equivalent of YouTube. Like the idea of hosting video online was going to happen.

It was happening. Somebody was going to win that space. That's an inevitable idea. The momentum of internet speeds going up and being fast enough where you can now upload and download videos was going to a point where video became, and it was an obvious thing. We had Flickr for photos. We were going to have a version of that for videos.

I would say that Google wasn't an. The more popular the internet got, people already needed search engines and portals. Google happened to be the winner of all the search engine and portals, but there was going to be a way to search the internet. That was going to happen. So there's inevitable companies. And then there's companies that I honestly don't think if it was not for the force of will of the founder, for the vision, the skill, and the determination of the founder that would

not have happened or would not have happened for like 50 more years. It would have missed a whole generation of people had that person not made. that thing happen. My examples that I would put here are Elon's company. So I think Tesla and SpaceX would not have happened and would not have happened at least for another 50 years had he not made those happen. I think it required a level of insanity, self-funding, technical brilliance, determination to keep going even against the odds of failure, all of that for him to be able to pull those off. I think the UFC is in that non-inavitable bucket. where if the UFC had just died,

it was about to go bankrupt before Dana bought it for $2 million, I don't think that something like the UFC necessarily would have happened. Yeah, I mean, I totally agree because it wasn't like a wanted thing. It was one of those products where we didn't know what we wanted.

And at first, it was a freak show. Like, I don't know if you remember, one of the more famous guys who first started fighting was this black guy who would use one boxing glove and one free hand. And he fought against like a 300-pound similar wrestler. It looks like a creative character in a video game.

All of the people look like creative characters. Yeah, there's one Hawaiian guy who is like a sumo wrestler looking guy, and he fought the dude with the one boxing arm. It's weird. And it was a freak show at first, but then it took like 10 years, and then athletes started doing it. And it became amazing. And it was condemned.

Like John McCain famously, I think in Congress or Senate or whatever, asked for every state to outlaw the UFC. He called it human cock fighting, and he was like, this is terrible. We need to end this. And John McCain, the American hero, the war here. hero was now saying, this is, this is disgusting, basically. And so Dana had to find venues that

would support him, which is why, by the way, Dana and Trump are so close now is because Trump would allow Dana to host fights at his Trump properties in Atlantic City. And so that's why, you know, Dana had to fight and scrap state by state, city by city, event by event, almost going out of business many times. They went $40 million in the hole before turning this thing around, turning it into a $10 billion company. David's got this great story. It was like during the cockfighting, when people started saying that stuff,

and he was like, well, what do you think these athletes think? And people were like, they're, maybe they're miserable. They've got to go through all this pain. And he goes, let me tell you what they think.

They're killers. And they want to go out and like do something that is active. They need to get this energy out. And they live their life like they're in heaven. And they look at your life. You just go to work at nine. You come home at five. You sit in a cubicle as hell.

These guys are free. This is what they were born. to do and what they feel like they need to do. So if you take this away from them, you're hurting them way more than when they get in the rig. And I thought that was actually a pretty good spin on it. So one of the cool things about this show is it showed a couple of things. I'll give you the big takeaway and then some of the small takeaway.

So here's the big takeaway. I said the word force of will. And I use that word, that phrase very specifically because I think it describes a certain trait of a founder. And I try to have this. I think the best founders all have this. And by the way, this comes with some. tradeoffs. When you have force of will, it is as brute forcey as it sounds. It is uncomfortable

to be around sometimes. You are pushing people. Maybe you're holding a higher standard. Maybe you're demanding that things are done a certain way or done at a certain speed. That does not feel good to the other people that are in the organization that are maybe used to working in other environments where they don't have that. And so there's a little story. So basically, it's like one of the big fights of the year is coming up in 18 days. And they've done everything. They've prepped all to marketing. They've got the billboard. They show them painting the billboards at night. They show them making all the marketing videos. They show them doing all the different things they go into promoting a live show. They're selling tickets. All of this. Which fight? This was a, I remember which

one. There was either the one where John Jones had to pull out or there was the one where Charles Olivera pulled out. Okay. And so 18 days before he gets a call, fighter got hurt. In his last round of his last sparring session, he was sparring without head gear. I think it's Olivera. This is all over. This is recent. Yeah, he gets a cut on his on his eye and he can't fight. So now the main event that they've sold all the tickets for, that they've done all the promotion for, that's been building up for six months,

the main event falls through. And he's like, and it's basically him and his guy Hunter Campbell. And they're sitting in this room. And this is business as usual. Disasters are business as usual for him. And he talks about this. He goes, give me all the stress.

I eat that shit up. He goes, I can take it all. And you could just see he's built up this resilience, this tolerance. Like imagine the UFC, which is a live events fighting business, it's stadiums full of people. When COVID happened, that kills the business. There was no other business. And Dana not only was a sport that survived COVID where it got shut down and you couldn't do live events for over a year. You can't just turn off a business for a year and hope it's all going to be okay.

Instead, he was the first sport back. He created something called Fight Island. He created a bubble where he's like, cool, we'll test everybody. Then they get here. And now everybody here is testing. Nobody comes in or out. And he found an island in the Middle East that they could do this on. And he branded it as Fight Island.

They were the first sport back. It was incredible. So he was used to this. So he's talking and he's like, what if we did this fight? What if we did this fight? And the guys in the room are like, yeah, we could call them. I put out a call. He's going to call me back.

Whatever. And somebody walks by, they go, his manager is in the lunchroom right now. They're here. And Dana within 0.1 seconds just hops out of his chair. Nobody else does. Dana hops out of his chair leaves the meeting. You see him and the camera's following. He goes to the cafeteria.

He's not even at the table yet. And he starts saying, he's like, Usman versus whoever, Usman versus versus, I forgot who he's going to find at the time, but Usman versus Gaetia, versus Gaetius. This is pretend it was Gaetia. And the manager's like eating a salad.

He's like, what? And he's like, Ozman versus Gaichu, we got to do it. And he's like, no, man, I don't want to do this. He's like, what? Are you kidding me? This is a huge opportunity for him. If he fights this guy or his Kamsat, he's like, who's one versus Hamzaat? You got to do it.

And the guy's like, he's like, no, no, he's not ready, blah, blah, blah. Not ready. Who do you want to fight? He says this other guy. He goes, what does that do for you? And he immediately, he basically in like four seconds cuts the deal with him and Khabib was there. And Khab was like, no, I think Dana's right. I think this is what he should do.

It's going to be huge for his career. And so they cut the deal. And the agent, who's like a, he's like a. super agent. He's like the, you know, like, he's an agent for all these fighters. You would think an agent's like R. Emanuel. He says in the thing, he goes, this is why I don't talk to Dana anymore. He's too intimidating for me. Like, he's too, too, like, forceful for me about what he wants to do. And so I saw that and I noticed and I said, most people will watch that scene and they'll, they won't even pay attention to what just happened, which is that the greatest

founders in the world, the greatest Cs in the world. They cut through the bullshit. There's another video I saw recently of, uh, who's the guy? Walter Isaacson who did the bio of Elon Musk. With Elon. And he's on someone's podcast. I think he's on Steve's podcast. He's telling the story. And he says,

I'm talking about the Twitter servers. The Twitter servers. So he says, Elon is talking to the Twitter team and he's like, hey, cut costs. We need to shut down the Sacramento server farm. And his engineers are like, okay,

I'm going to be tricky because those servers are used for all of our infrastructure. But we can do it. We'll make a plan and we'll be able to do that in six months. Six months. What are you talking about? We need to do this fast. It's going to take six months, Elon. That infrastructure is critical.

It's so interwoven into everything that we do. We're going to experience big issues. We'll make a plan and we'll get it done. I promise you, we'll get it done in six months. I need this done in six weeks. Six weeks. We can't do this in six weeks. We would have to do A, B, C.

It can be done in six days. Let's do it in six days. Now these guys are reeling and they're like, Elon, it can't be done. Six weeks, six days, it can't be done that way. so Elon is like he leaves the meeting and I think he was going to

like Texas for for Christmas yeah it's Christmas Eve it's Christmas Eve he's flying to Texas to go see his family and his two cousins or thing are on the plane with him and they're brainstorming they're like God six months six weeks this is ridiculous and then someone on the plane has the idea

they're like why don't we just go to Sacramento right now we'll just rip the servers out ourselves Because one of the cousins, I think worked at Solar City or whatever and he was like, you know, we can use some servers. We definitely need some servers. And he's like, all right, sounds good. And what's he do?

And I think the idea was like, if we just take the servers offline, they're going to have to figure out how to fix it. And they'll fix it in faster than six weeks. I promise you that. I think that was underlying it. So Elon, on the plane, on Christmas Day, basically Christmas Eve, you know, the flying to Texas,

midway through the flight just tells the pilot, turn around, we're going to go land in Sacramento. Pilots like, okay. And then he says, hey, do you have a pocket knife? And the pilot's like, yeah, I do. His bodyguard. His bodyguard was like, here, I got one and like whips out this pocket knife. And so they go to Sacramento, they take the knife.

They basically, and the server, the company that the farm, basically, they were like, hey, we're closed, dude. It's Christmas Eve. And he's like, let me in. These are my servers. Open this door. And now I don't need you to do anything. Just open this door.

I'm going in. Opens the door, gets in, takes down the servers. I don't know the exact ending. the story, but same thing. Extreme force of will, extreme bias for action, and a questioning of the default speeds for everybody in the company. And when you know that your default speed or your default clarity of thinking is going to be questioned, it changes everything. And so I've been on the other side of this. When I was at Twitch, Emmett was somebody who I've always said, his oven burns a little hotter. He's smarter than the average bear. And I felt that if you were in a

with Emmett and you presented a plan that to nine out of ten people in the company, it would sound okay. They wouldn't challenge your assumptions. Emmett would always challenge the assumptions of why we're doing it, how much it's going to cost, why it has to take that long, et cetera. And if your logic was not bulletproof, if you were not already maxed out in your thinking of what was possible, you were going to eat shit in that meeting. You are going to get shredded in front of like 18 people and not in a mean way, but your logic

is going to get shredded. you are going to get verbally undressed. And that changes things. Once you know that that's what's on the line, you come in a little differently. You sit a little straighter. You walk a little faster. You, you know, dot your eyes and cross your teas

when you go into those meetings. And so he only had to do it once. And then for the next 18 months, I was ready every meeting with Emmett. And so I think that this is just a very valuable trait that they don't teach you. Was Emmett nice about it? Was he,

is Emmett a courteous person? Emmett sort of has that like autistic. forgiveness where you're like, he's not being mean about it. He's not being nice about it. He's being very direct, but you're like, he's, oh, that's just how he is. He's just being direct. He's just like, he's not trying to be, he's not trying to be mean. And I wouldn't even say mean is the right word. He's just trying to get to the truth and he needs you to get out of the way so that the truth can appear. He doesn't care about your feelings in the search for the truth. And in fact, the more you kind of try to get in the way of the truth, the more he's like,

what are you doing? Get out of the way. We're trying to find out of the way. We're trying to find the truth here. That's the way I would describe how it felt from my point of view. And really, like, I was rarely on the receiving end of it, but I saw it happen many a time. And I took note very quickly of like, okay, you got to come correct here. Well, because I don't like people who are like, and I used to behave this way and I regret how I used to behave, but of like being needlessly rude. And I think that the people who are needlessly rude, I think Dana would fall in that category because he loves to fight. He loves to battle. So he just told this story last week. He goes, let me tell you something. I'm going to war right now with Caesar's Palace.

And they're like, why? He goes, for the last six months, I've been playing like back or some like casino game with them. He goes, I'm up $17 million on them right now. He goes, I wake up in the morning and I think, how am I going to win this war today? And he goes, I'm going to lose eventually because they're going to win. But right now, I'm crushing them. And each morning I wake up, I go to work. And instead of going home, or he said, he goes, like, I.

When my kids are asleep, I go back to the casino and I'm ready to go to war. And I thrive off that. He goes, I want my back against the wall and I want to go to war. So I got to say this because anybody who's an actual gambling degenerate, you listen to Dana's gambling story. And this is only going to apply to 1% of the audience. So I apologize for the 99% who are like, who cares about this. I care a lot about this.

So his story has some holes on his gambling stuff. I would like to list some of the holes that I'd like some extra race. I'd love to come on and talk about it. He tells us one time that he got too drunk and he lost, he goes, I think I lost $60,000. And I wake up in the morning and they're like, hey, man, you owe us. He goes, yeah, I'll get you the 60. He goes, no, no, no, no, no. It's $6 million.

Yeah. I'm not saying he doesn't admit that he loses. I just in that interview, he said, I'm up 17 million on Caesars this year, year to date. He says, my rule is that if I make a million bucks, I walk. And if I lose, I'm willing to lose up to six million. Oh my God. Then he says, I've only lost twice this year. So it doesn't add up.

How do you, if you walk away when you win a million or you lose six million and you're up 17 million and you've only lost two days of the year and it's, we're halfway through the year. The math ain't mathin on that one. Fourth thing, he represents himself as a like skilled gambler who beats the house. He's playing Baccarat, which is like a 50-50 push game. And blackjack where you're down for 49. There is no skilled, like, the biggest loser in the world is a professional blackjack player.

I'm just going to say that again. The biggest loser in the world is a professional blackjack player because you're professional that's something that is stacked against you is a by definition losing game. Secondly, you're probably really smart and could have done so many things with your life. And you chose to play a game that is stacked against you as your professional career. And third, you're delusional because there's no such thing as a professional blackjack player. That is why that is the big game. loser job of the world.

Well, he's, but the fact that he like continues to do it. I'm not saying Dana is that, by the way. Dana's job is running the UFC. Well, just a side tangent to any professional blackjack player out there. That makes no sense. He could be a degenerate and also a great business. He could be a degenerate gambler and also a great business. What was and many others are?

What else did you learn in that documentary or that show? Force of will, bias to action, speed, cutting through the BS, I think is tremendous. And his other employees even said this, like the head of PR was like, She goes, yeah, work starts at 830. It's 630 right now. I'm doing my workout. But Dana just texted me saying, are you at the office yet? I told him, not yet, but I'll be there soon.

And she was like, you know, Dana's going to do this press conference. Dana's the type where once he decides he's going to do something, he's like a rhino going to do it. He's going to bulldoze through. And you're either with him on it and you're helping him do that or you should just get out of the way. And, you know, I just thought, man, another really hard job. Being the head of PR for the UFC is a very, very difficult job. And that woman is with him everywhere. I forget her name, but Landa or Linda or something, she's always with him.

And what you'll notice is they do the press conferences after the fight. In New York time, it's like at 2 a.m. And then you'll see them Monday in France for another press conference. Right. They work their asses off. Yeah, 100%. Let me tell you, all right. So we talked about a company on here a bunch of times, but I actually just met the founder.

So I'm going to do a little bit of a repeat. But remember how we? we talked about 29-029, the Eversing thing. It's the outdoor race where you kind of run up and down a hill as many times as it takes to run the equivalent of Mount Everest, an awesome thing, started by friend of the pod, Jesse Isler, and others. Yeah, so it's, I guess Everest is 29,000 feet. So hence 29,029 is the name of their brand.

We talked about them a bunch, but the guy coincidentally joined Hampton recently. So I was able to like, I called them this morning and I was just talking through them because I've been so fascinated. We talked about Hirox. And we talked about a bunch of these underground, not underground, but these niche sporting events. And I actually think they're better businesses than I previously thought. So let me tell you about this one. So if you go to 29029, I think it's called 29029 Everesting.com.

You can go to the website. But check this out. So they do seven events a year. Each event only has 300 people. This year, they sold out the entire year in four minutes for all of the events. And he's purposely keeping this small. So if you do that math, that's $13 million in ticket sales that he's done. And he told me that basically they want to own all the accommodation.

And so basically it's turnkey. You pay $6,500. You show up in some locations. You can stay at like a Fairmont Hotel, which is where they partner with. Or they do like glamping. And you go to like Whistler and all these like really beautiful places. And so you show up, you do this event. And the reason they keep it at 300 people is so you can meet everyone.

And so you can have this experience where you get to know all your people. And so you keep coming back year after year. But listen to this. They started in 2017. When they started in 2017, Jesse Idsler was Mark's partner on this, which is like the whole idea of like an influencer partnering with you. Jesse only had 5,000 followers on Instagram when they started. He wasn't that big of a deal.

And yet in their first year of business, they made $500,000 in revenue. In 2018, their second year of business, they did a million dollars in revenue. By 2020, he said they were doing really great. But COVID happened. The business got wiped out. And so in 21, 22, they had to start all over again. But he says it's a great business. He's like, it's negative working capital.

People pay up front, and I can use that money to go and pay for all the accommodations and pay for everything. And he says it's a great business. I was like, well, what's wrong about this business? Well, he said the first thing that sucks is it's a fad, meaning tough mutter, a bunch of other events. Like you look at some of these events like Spartan race, they get really popular, really fast, and the tough mutter was doing 100 million revenue.

now it filed for bankruptcy a couple years ago. You have to figure out how to keep people coming back over and over and over again. And I asked him, I said, how do you do that? Like, what are like the keys to make this work? Because this is kind of an interesting thing. I don't know if I would ever want to start one of these, but maybe one day. He said, the first thing, you need a story. So you have to tell your friends, what's something exciting that you're going to be doing?

And it can't be really like running a marathon because everyone kind of does that. But it has to be a little bit more exciting. You need a story. You need to be going somewhere beautiful. You need to be doing some ridiculous race. The second thing, it's got to be challenging. Do you know how many people who start a marathon finish? 70%.

99%. 99% of people who start a marathon end up finishing that particular race. Not so hard, then. It's not so hard. In his opinion, you need roughly a 70 or 75% chance. He said for his events, roughly 70% of people go through with it, 30% fail. The third thing, you have to learn. some type of skill, like a new skill, or acquire some type of new fitness in order to accomplish it.

And the last thing, it needs to be in a beautiful place or it looks cool in photos. So I was thinking about this. Let me give you three ideas for ridiculous fitness events that could work out. You ready? Hit me. All right. The first one. We're going to call it the burly beer mile.

You dress up like Paul Bunyan. You go into mountains on a track near a track. You run one lap, chug a beer, run another lap. chug a beer. You do that four times, four beers, one mile. What do you think about the beerly, the burly beer mile? Look, if you can give people any excuse to drink, you'll already have 80% of a good business. There's a reason that like top golf is really popular. There's a reason that people go to baseball games still. It's not because they're wondering what's going to happen in the top

of the sixth. It's because they want to eat hot dogs and drink beer outside. Like giving people an excuse to drink is a great business model. If you just layer on On top of that, a contrast, a juxtaposition. Oh, it's fitness and beer. Love it. I'm already in. I don't know about the Paul Bunyan. I think that's not sure that's on trend with the aesthetics that we're going for here.

But I think if we workshopped this idea a little bit, you could have something. All right. How about the paddle prison break? A paddle boat race from Alcatraz to the coast of San Francisco. The prison break. Oh, I like this one. My mind was still on the beer one for a second, by the way. I feel like just the beer mile or the beer, the beer marathon, it's a half marathon and you drink 13 beers, I think has legs.

Or maybe it's like, maybe it's a quarter marathon. It's six beers and six miles or something like that. Dude, I did a, by the way, I did a beer mile in college. So you chug a beer to start, run a lap, whatever. You get for four beers, four laps, one mile. I threw up. And if you throw up, you have to run a fifth lap. It took me 15 minutes to do it.

It was horrible. Yeah, but we call that the victory. lap. It's like, oh, I had to do a victory lap because I threw up during it. Oh, man, you sound fun. All right, so let's do prison break. So prison break is, we drop you off the side of Alcatraz in a

small boat. A paddle boat. We're going to call it the paddle prison break. Is there like a lane set up, or we're just going to lose people into the ocean here? What's going on? We've got some liability concerns. We're not going to let details get in a way of a good idea here. I think there is definitely something to the prison break out of Alcatraz if you can do that.

there's a swim race that happens every year. But I'll give you my last horrible fitness idea. You're ready? For the prison break, you have to start in cuffs. Great for the Carto. Adds a story, adds a challenge. You're going to have to learn and have to help each other get out of the Cuffs. So everybody's in Cuffs.

You need somebody in this race who can just get out of cuffs. And then they'll get the little pick and they'll start picking other people out. And then that's how you get out of this thing. And you have to have a criminal record. In order to get invited, you must have to have at least. A class B misdemeanor. A little gold patch on the shoulder. If you actually have a felony or misdemeanor, we'll just call you out there.

And the last horrible idea, we're going to call it the skyline scramble. A race through NYC, but you can't touch the ground. You got to go from building to building. Like a parkour challenge? Yeah, baby. The only person who survives wins. No, these are all horrible ideas. But I did think it was incredibly interesting to hear this guy's business.

I didn't actually think that this company could be as good as it is, but I'll be eager to see if this thing works. I, I do, I think these types of experiential businesses, I remember when I ran a conference, it wasn't the same thing, but like having a thing that you work towards and then all the people come to, it was a very fulfilling thing to do versus just being on the internet all the time. It felt nice to meet your customers and things like that. It was pretty awesome.

So you didn't give me the heads up about this, but I'm down to workshop a few ideas live for you. hear if you'd like. All right. What you got? When you were thinking to these, how did you put yourself in the mindset to even come up with these ideas? What got you going?

Well, they're not very good ideas. So whatever mindset I was in, I would say avoid that. We're going to go with maybe nostalgia. So the Boston Rover, it's Red Rover. Remember that game? Red Rover? But with just all the people in the city of Boston. As many people get on one team and we're playing Red Rover.

Just a citywide hide and go seek. A citywide hide and go seek, exactly. It's not really fitness at this point. No. Children's games I've gone into. They're all horrible ideas. But I just thought that this segment is fascinating, dude. I think that one day I could see myself doing this.

Yeah. To make one of these? Yeah. Yeah. Yeah. They seem awesome. It's like the, you know how we talked about like viral food? It's like how do you make, how do you make,

how do you make your restaurant go viral? Well, you need like some type of food that's either oversized or extra small or is a different color or it's typically a side, for example, uh, cookie dough. You make it the main. Yeah, it's like cookie dough. You make that the main thing. Or you mash up two things that don't go together. Or you mash up two things that yeah. And I'm like, what could you do for fitness? And I thought it was interesting. Um, I think is that the same idea. By the way, speaking of beautiful settings and doing races in memorable places. Where should people be racing to right now? I think they should race to wander.com slash MFM.

Why should they do that? Well, it's actually a pretty good deal here. So if you go to Wander right now, Wander's a place where you can go rent beautiful luxury vacation experiences. I'm booking one right now. I have my assistant working on it this morning. So if you go to Wander, they're doing a special deal for MFM people, which is that if you go to Wander.com slash MFM, you download their app, sign up. You don't have to book a vacation or anything. You are automatically entered into a luxury vacation getaway on behalf of us.

And so they're going to be giving away a stay to one listener, which is amazing. Your odds are actually pretty good. This podcast's not that popular. It could be you. There's maybe one in a hundred chance. Who knows? So go ahead, download the app and enter to win. And if you download the app, you'll also get $300 off your next stay.

So you get a discount and you get a discount. and you get into the giveaway. But check out Wander. Dude, I was looking at some of these properties. The problem I have with Wander, I got a bone to pick with Wander, which is the pictures are so good that I started booking vacations to places

I don't even want to go. I just like normally you're like, I pick a city and then let me find a place to stay. Here I went and I was like, dude, this house is sick. I guess I'm going to Naples. Like,

where am I going? I don't know. Like, I'm going to Florida now. I wasn't even trying to go to Florida. And so, they're setting, they're setting expectations so high.

So, for example, have you ever seen, um, have you ever seen, like people who take pictures of the pyramids and then they zoom out and there's like hot dog vendors and there's like, you know what I mean?

Instagram versus reality type of thing. I'm like, these photos are so freaking good. If they zoom out, is there going to be like a trailer right next to the home? Like, how are these so awesome? No, dude,

I've had people who use these for like corporate off sites because like some of these places are pretty baller. So they, they use it to like, there's like one in Sonoma. I know my friends did for a corporate offsite. And they were like, no, it was sick. It was amazing. There has to be, I mean, these photos look so good that there has to be some version of like, shoot for the stars and you still land on the moon type of thing. But yeah, if it's anywhere near

as good as it looks, I'm very excited. You have on this document, the difference between running a business for growth versus EBITDA versus cash flow. I'm interested. You got my attention. Yeah, this is a CEO school. tactical session. When you were running the hustle, did you, obviously all of these things are good. You want growth. You want EBITA. You want cash flow. The problem is, when you want three things equally, you usually get none. So generally in any business at any point in time, tends to be some order of priority. When you were at the hustle, did you, which of these did

you focus on? And was there ever a shift in, oh, now we're focusing on this instead of this? I didn't run the business long enough. We sold like four and a half years in to make the shift. But it was for the longest time, it was revenue, was the number one priority, followed by cash flow, followed by profit. And so what I wanted to do was double revenue every year. So I think we went from like 500,000 in revenue to 2.2 to like 5 to 12 or something like that. And we didn't make a lot of profit along the way.

I think the year we sold, we did maybe a million. in profit, but our cash flow was high. So I was able to add like $2 million to our bank account. And explain to somebody who's like, wait, how do you have a million dollars of profit and $2 million of cash flow? How does that work in a business like the hustle? So I'll give you guys a really easy example. So we had this thing called trends. It was $300 a year. But for the sake of this conversation, let's just say it was $1,200 a year. And if a customer paid up front, let's say they paid me on June 1, $1,200 for an annual subscription, my cash flow. flow was $1,200. That's how much my business accepted into our bank account. But the way that

Gap accounting, generally accepted principles of accounting, the way that works is that $1,200 was really only $100 in June, $100 in July, and $100 each month. And so my revenue was only $100 per month that they stayed with me, even though I collected $1,200. Thus, my profit, let's just say that it cost me $75 to produce the content. My profit was $100 minus $75. So 25 bucks. Exactly. And so I'm in the situation right now. I have a business that, my e-com business where we've been running it for maybe four years now.

And it's doing really well. It's been, I was only growth focused. So I was like you, I wanted to double or more every year. And so we did. Which the reason being is typically, not always, typically it's harder to grow revenue, but it's easier to once revenue is grown to become profitable. Exactly. I think it's the right order.

of operations. Actually, there's one pre-step even before growth, which is just product market fit, meaning, have I made something that people want? Do I feel like if I produce this, that there's a market pull for this? So once we, you know, it's a verify product market fit, great. Now it was grow. I think in year one, we did six or seven million. I think in year two, we basically got to 12 something. Year three was bigger than that. Now your four is bigger than that. So we've basically been, you know, growing by somewhere between 50 and 100 percent every year for the four years. But I don't. I have pulled out exactly $0 from this business. I have put in my pocket $0 from this business

in four years. Wait, really? Yeah, I've taken nothing out of the business. I've reinvested everything, but it's not a, oh, I could have took a ton of money out of this business. It's like, well, like, for example, one year, we basically had no profit. We did, you know, eight figures of revenue, and we were break even, essentially. And I was like, what are we doing here? How did this happen? So like the bank, did the bank account ever go up? Like, was your, was your cash position? ever good? Well, in econ, you have one other variable, which is inventory. And so the cash has been pretty steady, but the inventory assets are going up, but they're also inventory that might take a while to move. It might be slow. It might be whatever. And so I don't want

my cash tied up in inventory. That is not actually the plan. That's a it's a byproduct. Unless you can pay your employees and bills in inventory, it sucks. Yeah, exactly. So I've been going to this process where I shifted from, where I first was in growth, and then I shifted to EBITA. And so, that required a certain set of skills. So I'll share with you some of the lessons learned shifting to EBTA first. And we've successfully shifted to EBTA. EBDA being earnings before interest, tax, amortation, amortization, and depreciation. Exactly.

Okay, so what did I do to make that shift? The first thing was, and the reason I'm saying this is because there's probably people out there who are running a business that's been high growth, low cash flow or high growth, low profit. And for some businesses, that's the right move. You want to stay in that mode for a very long time. Maybe it's a winner-take-all market. Maybe it's a land grab situation. Maybe you're venture-backed and it's a billion dollar a bust. This is not that.

This is a business I own that I, you know, if we sell this business, it might be, you know, $100 million or less is like where this will thing will land. But that's great. We own the business. We have no outside, you know, investors. And so it's no big deal. So anyways, the point of this, point of this rant is basically how do you make that shift? So I first went and talked to people who, so step one, figure out what the right EBITA target is.

I go talk to people who are in the same space to figure out what eBita margin is kind of the low end of what's possible to the high end of what's possible. And then I ended up shooting for somewhere like, you know, the 60% mark. Like 10 to 25%. Yeah. So for me, that's like 17% margin. So the best ones were like, yeah, we have 25% like the econ ones. But then you dig under the hood. It's like, oh, you don't do any marketing like somehow.

Well, I do. So that's just not going to happen. But getting to 17, 18% is like, wow, that would be really great. And then the low end is like 10%. So that's the first thing. Then envelope create like an EBIT of what I call it, EBIT of budget. So basically you take for every $100 of revenue that comes in, what percentage is going to go to each of the following categories, my overheads, my cost of goods sold, my

upex, my advertising and marketing, et cetera. And so you create an EBIT of budget and you basically say, where does the dollars flow today. So you do a last 12 months look back. So we're on average, every month we're spending 5% of revenue on overhead and, you know, 12% on in the e-com case, maybe it's shipping and fulfillment, whatever. So you create a current status budget. And then you say, well, in order to get my margin, I need to find, you know, eight points of extra profit margin somewhere. So where's it going to come from? And so you start to basically pull calories from from these different departments. All right, marketing,

you're going to have to give me two points here. and shipping, you're going to have to find a way to cut off one point, and you basically find the extra eight points of margin that you're going to need. And that stuff is, it's not hard to do it in a spreadsheet. It's really hard to track it on a weekly and monthly basis to make sure that it's really hard. So once I did that, now it's time to communicate. So step three, communicate the plan relentlessly. So I then go to the leaders of the company.

I say, hey, guys, forget everything I said before. Now this is what matters, right? We still want to grow. Sure. secondary priority. First priority is we're going to grow EBITA. What's EBIT? Where are we tracking this today? So I'll show them, hey, here's what it is. Here's what it needs to be. Here's how we get there. And here's the cadence of how we're going to track this. And now I put the onus on them. I said, you need to find me one or two points of margin in your department or you need to find me three

points over here. How are you going to do it? So come to be tomorrow or in two days with a plan of how you're going to get that extra margin. And also, I want you to create a report that tracks this you know, the sort of, you know, if you're a cost center or your profit center of the business, you need to create a little dashboard and you need to show me how you're going to basically update that every single week or every single month. So we do that. And every single month, I start hammering people on this. And then the fourth step is tie their incentives to.

So I go to my CMO and I say, great, last year your bonus was based on revenue. This year, your bonus is based on EBITDA. Do you want your, and by the way, I'll actually increase your bonus. You can, it will remove the cap. You can actually get a bigger bonus if you're, able to get even bigger EBITA. So now it's on you to figure out how that happens. But if we don't hit our EBIT targets, you get no bonus. Okay. So now incentives are aligned to achieve that thing. And so those are the kind of the first four steps. Last step,

which is basically actually go do the thing over and over and over again. Somebody gave me some great advice along the way. They go, oh, you're in EBITA mode. Yes, called spring cleaning. So here's what you're going to do. You're going to go and you're going to go and you're going to find a bunch of SaaS subscriptions that you should cut off. You're going to find this agency you're paying too much. You realize that we don't need that agency, whatever it is. And you're going to feel like, cool, we cut the cost. Schedule a calendar reminder. In 30 days, you're going to do the exact same thing again. And you're going to feel like, well, we already cleaned it out. But it's just like cleaning a house. You first clean out the surface level mess. Once that's gone, now you start

to realize, oh, wait, we never actually dusted this area or this closet and actually stuffed. Now let's start to unpack this closet. And so we've done, I would say, three or four of these spring cleanings now this year. And it's only six months into the year. So I've done it at least three times, maybe four. And each time we go and we unearth more stuff. And you can't do it every day. That's not the right way to focus on it. But like, you know, on a monthly or every two months basis to go back through and say,

all right, let's trim some more fat. Where's more fat? And inevitably, you will find more things. But why are you going after EBITDA? Because so I'll mention this a little bit, but if people rag on me, I'm not like incredibly well versed. but I've been looking into like, EBDA might be bullshit.

Like, so there's this thing called GAAP generally accepted principles, whatever, it's like what we all like abide by. There's a lot of bullshit in there. Why EBDA versus cash flow? Cash flow also works.

Cashel required me to do a second big project. So the second big project was, okay, where's that cash going? Why doesn't the cash go in my pocket? Oh, the cash goes into inventory. And so separately we did this like after I did the EBIT

cleanup first, first couple months, I said, okay, great. Now the EBIT is great every month. but my bank balance is not going up proportionate to the EBITA. And so first three months of the year, we killed it on EBITA. Awesome.

Where's the money going? Oh, it's going into inventory. How do we get our inventory levels to be right size so that this cash flow flows to the owners of the business and not to the warehouse? Because today it's going to the warehouse, which is a separate challenge and a separate discipline altogether. And it's a three-legged stool. You need all three legs to have an amazing business.

You need a growth leg. If you're not growing, the business is not worth very much. You need profit. If you don't have profit, the business is not worth very much. And then you need that profit to result in free cash flow. And if you can get all three, you have a beautiful, amazing business. But in order, I kind of wanted to go in those three, because, again, there's not going to really be much cash flow if you're operating at a net loss.

So I needed to first be making sure there's a surplus of profit. Then I need to make sure that surplus of profit is resulting in free cash flow. And you just so happened to be in an industry where, those EBDA and cash flow things, they're really hard. It's really hard. To figure out the inventory and stuff like that, that is a science.

I am not envious. I agree. My major takeaway is ecom is a terrible business to be in. When is it not a terrible business? If you are winning the game and you still think it's a bad category to be in, that's when you know it's a bad category rate. Most people, they lose the game.

They're failing at it. And then they blame the category. right. So for example, and the opposite is true too. I was telling somebody about podcast. Oh, man, podcast is great. He goes, well, yeah, you won the lottery. So of course you love lottery tickets. Like, you know, your podcast is popular. It works. Like, of course podcasting is great for you, but for the million podcasts that are not really getting listened to, is it, would you, would it feel the same way, right? Is it winning dependent? And so this one is interesting because our e-com store is winning. And even in winning, I'm like, note to sell. This is not the category

to be in next time. Beyond that, I would say playing the game on hard mode has a bunch of disadvantages and I wouldn't put myself in this position voluntarily. However, once you're in a position where you're playing some game on hard mode,

there is one big benefit, which is if you ever get to play an easier game, you will dominate. It's like a, it's like I was playing pickleball with a guy and it was his first time playing pickleball. He's amazing. I'm like, yeah, why are you doing that?

He's like, well, I play college tennis. It's like, I played a harder game and I won that game. So like, yeah, I'm pretty good at pickleball. It's not so, it's not that hard for me. In the same way, I was listening to Andrew and Chris from Tiny, they were doing like a Q&A. And the guy was like, yeah, I'm in e-commerce, D-C, which you guys say you don't love that space.

Would you recommend I just quit? What should I go do? And he goes, well, one of the things that worked for us was because we ran agencies, which can be low margin, grindy businesses with a bunch of HR problems and hard to scale, because we did, you know, e-commerce. once we went into easier businesses, we just cleaned up. We could buy a software business

that was running at 10% margins and get it to 40% just because that guy wasn't really, he wasn't willing, ruthless with pricing, he was not negotiating with vendors, he was not taking care of all these little things

that we had to do to survive in these other categories that in a softer category, you're not as on the hook for. Who do you think is winning in e-commerce and what attributes do they have? Shopify?

Facebook. No, I mean, of course, of course, of course. Retailers, DDC, whatever you want to call it. I think right now, the retailers that are taking advantage of TikTok, the TikTok flywheel, are cleaning up. And what I mean by that is there is a very specific moment of time right now where you can create content on TikTok, either yourself as a brand or even better. you use an army of affiliates and you see creators. And whether it's with TikTok shops or people just hear about the brand so much on TikTok, they go Google search it and they find your Amazon or they find your DDC shop,

that flywheel, I'm invested in a couple of companies that are doing this. That flywheel is pretty unreal right now. But only for certain categories, I would imagine. Is it only for things where young people are using? Nope. That's amazing. That's ridiculous. Right?

Let's move on. I've said too much. All right, I want to talk about one thing that you actually had on here that I have no idea. Like, it's way out of character for you. Your dream house? Or do you want to do painted chickens? Well, I don't have much to say about the dream house except for, dude, look at this sick house. That's the entire topic.

But let's go there. It's an amazing house. This is a house that this guy on my team sent me. And I can't believe it. It's the most beautiful house I've ever seen in San Francisco. It's 11,000 square feet, estimated market value $23 million. And it's on the ocean in San Francisco. I mean, there's just a few photos.

So this house is first to get 11,000 square foot home in San Francisco is very, very hard to do. Every view is like the Golden Gate Bridge. You're right on the water. You're right on the ocean. But even if you didn't want to go in the ocean, well, guess what? You have an infinity pool in the back. That's just just spilling over into the Pacific Ocean. On top of that, there's one photo in here that I just have to show you.

I see a beautiful porch that's overlooking the San Francisco Golden Gate Bridge. Next photo. 24. Like a wine cellar that is big enough that it was bigger than my childhood bedroom. 25? A huge home theater that looks like they're just watching like some type of nature documentary. So awesome. And here it is.

The reason I want this home to begin with, 26. A half court basketball court with all windows. where you can see the Golden Gate Bridge. This is awesome. Is this floor to ceiling, like 25 foot ceiling, all glass window. You're looking at the ocean, the breeze. There's a glass door that's open. You see the Golden Gate Bridge.

And you have a beautiful basketball court inside your home with all this light wood that I just love. Oh, my God. This is crazy, dude. This house is unreal. I must buy this house. It's not for sale. So that's the first problem. But besides that, I am, I now have a target.

I now have a desire. You know, I thought I had enough money. Now I have a desire. I need to be able to drop 30 million bucks on this house. Dude, in order to buy a $30 million home, oh, check this out. Okay, so it was owned by Sharon Stone. Before that or after that, do you know who owned it? A dentist owned this house.

What the hell? Yeah, it says this guy was a dentist. In order to buy a $30 million house, you tell me how much money I need. $28 million and then I'm going to borrow two and I'm going to buy this house with every dollar I own and that's it. No, I think you need $100 million to buy a $30 million house. Would you say that's accurate? Probably at minimum, yeah. At minimum. Because the maintenance, the taxes on a house like this is going to be pretty insane too. Like your carrying costs are going to be what half a million to a million bucks a year?

Yeah, it could be no, it doesn't. Well, it could be that it would be that high probably because you're on the coast and you have to see what. Taxes alone in San Francisco of this on this house is going to be like quarter. million to $300,000 a year. That's just the property taxes. So all the maintenance, all the insurance, all the, all the cleaning, all that stuff on top of this thing is got to be at least another quarter million. So at least half a million bucks. Yeah, that's insane. That's insane. This is a, it's a sick house. The, uh, the last thing I wanted to ask you about, you said you wrote some essay. Yeah, your boy's getting his Paul Graham on. I started writing essays. Why? I told you, I've just in a creative season and I wanted to do different things. I like writing.

And I was like, well, what do I want to write about? And I realized I want to write about the stuff that I'm curious about or whatever I feel like I have a golden insight. So something that, anything that feels insightful to me, I want to be able to write it down. And why do I care about that? You want to spread your seed, baby? You got to spread that seed. Well, that's part of it. But actually the bigger part is I've known there's this feedback loop that happens, which is once you have to deliver something, you start to look for it.

Meaning when we start this podcast, and let's say every week we got to do this podcast. And when you show up to this podcast, you've got to have three interesting business things to say, right? You need to have three interesting business topics. And in order to do that, your brain starts to now go see, go find interesting business topics. Start to ask a few more questions. Start to write a few more notes. Just to pay a little more attention. And this wonderful feedback loop gets built where you start getting smarter about business more because you have this outlet where you've got to go put it.

And you're on the hook to go put it somewhere every so often. So in the same way, one of my favorite things is to learn something new, right? I'm just kind of like a learning junkie, right? Well, by having a place to go right, I now am hunting for more insightful things. I'm reading more. I'm talking to people more. I'm having more connections between two different ideas that are disconnected. And so that's the real reason.

Because the thing I shared with you, I haven't even published yet. I'm going to publish all these on my website, just, shanprue.com. But right now this one's on a Google doc. I'll throw it up after this so that it's at least online. So the essay is called Painted Chickens. and are painted chicken. And the reason it's called painted chicken is because have you ever been inside of a subway?

Do you eat Subway? When I was a kid, yeah. And so I like Subway, I admit it. But Subway, the quality has gone like way down since I was a kid. I can't tell has the quality gone down or have our taste gone up? No, the quality's gone down. You know I know this? Do you know all the controversy with Chipotle right now?

No. No. Dude, like Gen Z hates Chipotle? Why? So basically the things started training on TikTok. There's like Chipotle jipping you on quantity. Okay. Or just like,

basically like the way that this like Chipotle used to be bombed. Now it sucks. Here's why. And different people have different reasons why the taste. But one of the big ones is like they're just skimping on the on the thing. And then the CEO came out and did this hilarious thing. You didn't see this. No.

It's so funny. The CEO came out and he goes, oh man, look, if you go into Chipole and you want a little bit more, our guys are great about this. You just give them to look. And it does this like stupid look. You do that. Our guys are and girls and girls. Our guys and girls are great at hooking you up with this.

And so there's all these memes now of people being like, yeah, when I go into a Chapolet and I make this face, like their reaction, it's like, they're not like, I got you, bro. Let me hook it up. And they're like also impersonating him where they're like, when you go into a Tripoli and you give the look, our guy. and girls and trans and black people too

they're all great at doing this and people are making fun of this CEO for like you know flubbing this this speech that he gave so anyway, Seypoly's under the microscope right now now they all like Kava which I just went to.

It's awesome. Yeah, they like Kava. Well, one of the reasons, so then the founders I think came out or somebody who was like the ex-CEO came out

and he said two things. He goes, it's insane that people think we would tell our staff to like skimp on portions. That's terrible for business. Like we've tested at this. The thing you do for business, if you want to grow revenue and grow profits in a store,

is you give people bigger portions, which makes them love the place to come back. Sales go through the roof and waste also goes down because you're giving them the food versus throwing it away. If you actually want to save on food waste, it's not by doing less portions. It's by having more customers first so that you sell through all your food. That's the way you reduce food waste. It's not by skimping to customers and then they don't come back because they're angry. Right. That would be counterproductive. The second thing that came out was the guy said, basically when Chipola had all those E. coli scares, they had to change their whole supply chain. I don't know if you remember this. Like there's a couple years ago where like two, three times like, whoops, whoops again. Oh,

E. coli again. Sorry about that. So they changed all of their operating procedures. So what they used to do was in the store, in the back, that's where they would, you know, chop the veggies right there. They would do whatever. Now it all comes pre-bagged, sealed from like a central headquarters where they can have really tight food safety, vacuum, seal it or whatever, ship it to the store. Storage just has to open it. They're not doing the food prep on site. Well, the result of that is the food tastes less fresh. And the result of that is that they go and say they cut down the number of suppliers

they were working with because it was too much risk. So instead of local farms for the meat, they now started going to a few vendors that are now shipping out much farther distances and maybe are more mass production, less taste. So the taste actually has gone down, not just the taste, but because of the supply change. changes. So they need to, I mean, bring back E. coli or whatever was like, yeah, dude, let's roll the dice. It's a little, little, right? Like, the food's got to taste good. Who cares if you get sick once a year? Which is insane. If they serve millions of customers when it's like four people, you know, that is, that's like statistically insignificant, I would imagine.

Which is always the worst argument. Like, whenever one of these social networks, they're like, dude, do you realize like they're getting hammered by Congress? And all they want to say is, there's two billion monthly active users. How many people are in your state? How many murders are there in your state per day. Do I blame you? No. I run a state a hundred times bigger than yours. Like, they can't say that, but that's the reality is the law of large numbers. If you're Facebook, literally, anything that can happen is going to happen on your platform every single day. That's just the rule of statistics. Even the most like oddest, strangest, most screwed up behaviors are going to happen because it's so many people. It's insane. Yeah. And so now they've had to change this whole thing.

But what was your essay about them? So my essay is about pay, I call it painted chicken because If you go to Subway, Subway's motto was eat fresh. And if you go into Subway, it's just hilarious to hear eat fresh. And then literally he's opening up a bag of chicken. And you see the chicken and the chicken has grill marks on it. But you're like, hmm, how come all the grill marks are so uniform? What kind of grill do they use? If you go look it up, the grill marks are painted on.

They don't grill the chicken. That's not what those grill marks are. The grill marks are literally painted on the chicken. And so I love this analogy because in every business, there are, there's always lip service. You know, every business has these stupid things that they say, go, go read the website of like BP. And BP will be like, we care about communities in the environment. And they're like spilling oil into the ocean, right?

Like everybody has their version of eat fresh, which is you say eat fresh and then you just, you're painting on chicken. And so what I wanted to talk about was what are the few examples where there's not painted chicken? Meaning what are the examples where a company has values that they actually live and they actually mean something. Because I think anybody would agree that a value system is very, very important. I remember in my first business, I was trying to make a decision.

And we asked our mentor, we're like, oh, we were doing a sushi restaurant thing. I was like, should we use the eco-friendly packaging? But it's more expensive and it's kind of like the paper straw. It disintegrates. But it's good for the environment. Or should you use this one that's cheaper, bad for the environment. And it's super durable. It's actually good packaging.

And she was like, well, you're asking the wrong question. You're asking the question of which packaging should be used. But the question is, what do we value more, the environment or the convenience and affordability? There is no right answer. It's just a question of what you value more. And you should just, all your decisions need to come upstream, move your decision-making upstream. Once you know your value system, everything becomes obvious after that. And this is just a good bit of life wisdom.

If you're in a situation where you don't know what to do with somebody, oh, should I, they treated me this way, but should I respond kindly? Should I be mean back? Should I ignore them? What should I do? Well, if your value system is, I'm a kind person, that's what I do. I don't change my behavior based on other people. Well, then the answer is obvious.

Just be kind and move on, right? Like, that's it. So what I started to look at was, what are the company values that I actually remember that meant something to not only me, but the people who worked in that company? And the first one that comes to mind is Facebook's move fast and break things. Yeah, I loved it. You, like, I think you've heard that. Everybody's heard that phrase by now, right?

So I said, hmm, move fast and break things. Like, okay, that's great. Is that popular because Facebook is popular? Like maybe it's just a popular value because Facebook was so popular. All right. That's theory one. Well, Sam, what's Microsoft's core value? What's Microsoft's Move Fast and Break Things?

No idea. I have no idea. Twitter, Lyft, Uber. Pick any of these companies, right? Do you know any of them? Like, no, we don't know any from any of them. In fact, the only other one that I could remember, like Move Fast and Break Things was Google's.

Do you know what Googles is? Do you know evil? Yeah, don't be evil. Exactly. Don't be evil. But then it got, it got silly because, they maybe did a little evil. Well, exactly.

So then I was thinking, well, what is it to learn from this? The first thing I learned is maybe these are memorable because they're catchy, right? Maybe that's the first thing, which is that instead of just saying integrity, you should say, don't be evil. Don't be evil is more provocative. It's more catchy. It's more interesting than integrity or honesty or be good. If they just said be good versus don't be evil, none of us would remember that Google's values

be good. but a lot of us paid attention when they said our value is don't be evil. So I think there's something to, lesson one is if you make it provocative, you make it memorable, people might actually use it. So that's the first little takeaway.

The second is, well, there are other catchy rhyming thing. You could just try to be catchy, like the quicker picker upper. That's cool. But why does move fast and break things have a little bit more weight to it?

I think it's because you have to pay the price. So you've got to pay the cost to be the bus. And what I thought was interesting was if I went to 100 CEOs of Fortune 500 companies and I said, hey, we think that the company should move fast. That speed is an important value. Speed's important, right? Moving fast, would you say that's a value for your team? Of course.

100 out of 100 would nod their head and say, yep, of course, definitely. We value speed. Awesome. And if you said, well, when you move fast, like naturally, sometimes things might go wrong. You might bump into some things. You might break some things when you're moving so fast. So let's agree that it's actually, it's going to be move fast and break things.

How many of the out of the hundred would now agree? And the reality is that 99 would be chicken shit. And they would be like, well, well, no, no, no. And we're not trying to break things around here. It depends. It's speed without breaking things. And once you go to speed without breaking things, you're now subway, eat fresh, painted chicken.

You're bullshit, right? It's now a unusable, non-useful value. It might be something you put, on your website, but it's never going to have any weight. You're never going to be one of these generational type of companies that operates differently and is known for how they operate. And so I went and read this quote from Zuck, and I want to read this to you. So he says, the value is actually move fast, but my theory on values is that most organizations have a lot of values that don't mean very much. They're just table stakes. Like if you say, just be honest.

Of course you're going to be honest. You should be honest. Everybody agrees with that. Everybody knows that. It means nothing. It's not an option to not be honest. That's automatic. So he goes, I think the defining principle for a company, meaning your company is going to have one thing that you guys really do is your A plus strength. It should be something more interesting that has a tradeoff. So move fast is interesting for us because we had to give something up to get it. So the question is actually, what are you willing to give up? Values are not free.

Nothing is. Dude, that's insane. I mean, what an insightful person to, I mean, he's just like an eloquent guy for how young he was. I mean, that's a really good quote. And so if I think about other great values that have like had resonance and stuck with people and meant something to people, you know, for example, Nike's, this is more of a slogan, but just do it. If you think about the phrasing of just do it, is is Nike's just do it as powerful if it just said do it or do things? It's very different.

The word just changes it because just implies there's a cost. just implies that it's, don't hit the snooze button. Don't shy away from it. It's going to hurt. It's going to be painful. It's going to be uncomfortable, but just do it.

And so I thought there's something to learn in that. That's kind of inspiring for me. So my essay was basically, if you want your culture, your values to mean something, and my friend Siki has this great phrase. He said, culture is there's many ways to define it,

but the best way is, what do people do when the boss isn't around? I love that. I thought that was pretty powerful. It's your default. behavior. And if you want your default behavior to mean something, to be different, to be a defining characteristic of your company that is different than the way other companies in your space operate, here's the three-step formula, which is you choose one thing, not 10 things. So for Facebook,

it was moving fast. For Apple, it's thinking differently for Nike, it's action. Then you make it real by acknowledging the cost or the trade-off. And lastly, you make it catchy. You make it provocative. You phrase it in a way, that's going to turn heads. So that's my essay called Painted Chicken. First, that's awesome. Second, while you're on this little like value-driven, mission-driven company quest, have you heard of this company called Brunello Coochelli? You probably haven't because it's not your schick. Is that an opera singer?

Who is that? No, it's this Italian company that makes really expensive cashmere clothing. And their most famous thing is like sweaters. I'm wearing a free t-shirt made out 100% polyester from a YouTuber, bro. Yeah, that's why I knew it wasn't your st. But it's not my shit either, but it kind of is becoming it because I like it so much. But Brunel Cuchelli, the founder started it because he was like an expert at, I guess, Kashmir.

Like he was, I don't know what the term is, but he knew how to put together clothing. And he basically was like, you know, my dad worked his ass off. He was working seven days a week. And I wanted to create a humane workplace. And so we're going to do that by creating these amazing sweaters where we hand stitch and it's done perfectly. What do you say? It's done beautifully. And he makes these really high-end sweaters. And the clothing is great, whatever. But what's more interesting is this guy, the founder. And I just saw someone shared this photo of his schedule. 6 a.m. wakes up at his countryside home,

slowly gets stressed, goes to the office at 8.30. And then he says, at 1, I walk home for lunch. Then I take a 30-minute siesta. At 3 o'clock, I go back to work. At 5.30, the whole company stops working and takes the late afternoon walk because we believe. that rest is super important to being soulful and personal studies important as well. He has light supper at 8 p.m. And from 9 p.m., he heads out to the cafe to meet friends where they discuss politics, philosophy, religion, and other subjects late into the night. And I was like, is this guy legit? Is he the real deal? He is. So this company, this sweater business, it's a publicly traded company. I didn't realize that. It's a publicly traded company with a market

cap of like $4 billion. He's building his company to build a great workplace and a great create great products, not to make money first. And it just because of that, I want to give him more money and he's going to make more profit. Yeah, I'm on the website right now. And it's, you know, just from a swipe file, like, you know, there's so many little things that they do in their brand and marketing that is congruent, completely congruent with everything you just said. One of the great marketing lessons I learned long time ago was somebody said, yeah,

it's got to be epoch. Epok. Epoc, what's epoch? EPOC, they said every point of contact. So they said, once you decide what you, what you're all about, every point of contact, meaning when somebody hits you on your, if you're all about luxury, but then your customer service hotline is like some janky old web form, it's not every point of contact. Like I'm looking at, for example, one of the little gifts on the site for, you know, he's just

like, go click on the sweater section or whatever. It's this guy and it's a model, but the model, he's peeling an orange and he pops like an orange slice into his mouth. He's just kind of wandering. He's like walking a little, suddenly aimlessly. He's just sort of like, he's chilling. He's not trying to hard. He's enjoying himself. He's right by the water. And I'm like, man, the creative direction to say, because, you know, normally what you said is you have the founder who's got their beliefs. Then you have the revenue team that's trying to jack up revenue. And they're adding pop-ups on the website, try to make it like, you know, improve conversion. They have the creative

director who's not even invited to the meetings. And they're trying to do one thing over here. And it is not congruent at all. And people, whether they, they can see it or not, they feel it. And you could feel when something is congruent. It's the same reason that the Apple store looks the way it does and the iPhone looks the way it does. And the packaging looks the way it does. And the commercials look the way they do. It is congruent when it's done well as a brand.

But it's very rare to see that, to be honest. Yeah, these guys are on top of it. Now, I like them. I don't know if I want to spend, like, I'm looking at $1,500 for a polo. I don't know if I'm there yet. But I'm definitely thinking about it. Maybe I'd buy a $2,000 sweater, but like everything they have is high end. I think he must attract a good customer, and I think he has repelled me successfully.

I would not be a good customer of this. But you know what's cool? You've said his schedule, light supper. Light supper. I don't think I've ever had a light supper. I'm eating heavy dinners over here. And I just realized just changing the words. If I said, if I just changed my words, I said, okay, what am I going to have for my light supper tonight?

I bet that would fix my diet. Just that one, you change your words, you change your life. I bet you if I just change that one word, light supper, it wasn't even in my goddamn vocabulary until just now. Thank you. I'll be taking that. Is that it? Is that the pod? All right, that's the pod.

I feel like I can rule the world. I know I could be what I want to. I put my all in it like no days off. On a road, let's travel. never looking back.