The Game with Alex Hormozi - Why Brand is the Biggest Risk in Investing (on Don’t Be Sour) Pt. 1 - Feb. ‘23 | Ep 539

Episode Date: May 20, 2023

"Strategic buyers tend to buy businesses for more than financial buyers do." Today, join Alex (@AlexHormozi) as he guests on Don’t Be Sour to talk about his background in building and investing in businesses, the importance of understanding a company's value, the risks associated with investing in a brand, and the variables that go into valuing a business. He also emphasizes the need for multiple sources of acquisition and unique mechanisms to give competitive advantages. This is part 1 of the interview.Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned on his path from $100M to $1B in net worth.Check out the episode on Don't Be Sour's YouTube Channel!Timestamps:(6:07) - Acquisition.com and minority investments(17:36) - Raising money in business(24:10) - Acquisition and building a personal brand(30:24) - Content creation and online fame(39:13) - The issues with alternative education(45:03) - The value of accountability in businessFollow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

I like trying to solve the problem rather than saying, cool, that's the equation. I have a fundamental belief about the world that, like, if you ask the right questions, you can solve the problem. And I just believe that if we're creative enough, we can figure out a way to make it grow profitably. Welcome to the game where we talk about how to get more customers, how to make more per customer, and how to keep them longer and the many failures and lessons we have learned along the way. I hope you enjoy and subscribe. We're here with the man with the greatest beard on the internet who might enjoy talking about Chipole even more than I do.

Mr. Alex Hermosie. Thank you for having. me. How you doing, man? I'm amped to be here. I'm actually pretty, uh, I feel like you're just slightly disappointed. You, you thought I owned a bunch of companies. You're not the first person. Because in my bio, it just links them down below. So people are like, damn, you own movement and ghost. And then the other two companies I don't know about. Yeah. No, it's all good. I, uh, well, I'm glad that you worked with those guys because it's still very cool brands. Yeah, absolutely, man. Well, why don't, uh, for the people that don't know you, why don't you just, uh, I like to say,

like what's your Uber pitch of if someone's just like, who are you? What do you do? And you're like in a car somewhere. What's your like quick little identifier? Uh, started with the chain of gyms out of the cellar of California. I sold those, kept the IP, started licensing the model to just under 5,000 look. Actually, I think we're just over 5,000 locations now. Um, sold two thirds of that company last year, uh, and some ancillary companies that went with that at 46, 46, 4,6,000 um, um, to a private degree firm out of San Francisco. Um, and during that whole period of time, It was a very cash flow positive company. And so we started doing a lot of private investing.

And right now, we started Acquisition.com, not right now. I mean, two years ago, I started Acquisition.com and that portfolio of companies does about $200 million a year. I was going to be like, and I have. And I make a lot of content now just to help other people do it, too. And hopefully grow their business is big enough that we could, you know, invest in them someday. That's what you would tell an Uber driver? Yeah. That exact specific.

Well, I have a long ride. I got 10 minutes. he's going to just have to listen to it. He's like, God damn, I didn't need the whole life story. Well, so, like, generally, when I interview, like, any sort of guest, I like to do some sort of, you know, deep dive on them. So I don't come in fully looking like an idiot. But I like to also not, you know, know everything about them. So I'm kind of fresh.

And I'm very, you know, on the internet, you're the $100 million man. Everyone likes to refer to you as, do you like that name? I mean, it'll, it's a little under now. And it's, you know, in five years, I'll hate the name. It's kind of disrespectful to only call me the $100 million van. It's, I mean, it's, I'm honored. It's very nice. I'm flattered by it.

And a lot of it's because of the book. So $100 million offers was because I think at that point when I wrote the book, you know, we'd done $120 million-ish in cumulative sales. And so I was like, here's the stuff that we learned about making offers. And so I just put it in the book. And I think people just took that title and, you know, slapped it on me. Do you think people who like own businesses or whatever, when they get to $1 million, they like to refer themselves to as a millionaire?

Is that like when the moment you hit $100 million, like I'm a hundred millionaire? I actually made a video about this, but there's like seven different ways I've seen people talk about like they're not worth. Most of them false. But there's like how much total sales I've done over the lifetime of my business is like total revenue. And then it's, you know, one step underneath that would be like the value of the company based on equity. And then another one underneath that would be like what their current run rate is. And then another one is like what their profit is. And then another one would be like what their cash flow is.

And so I'll say one of the things that I have feel like I've learned is like the wealther you become, the more amorphous, what net worth even means is. Amorphous. Yeah, it's just it's muddy. It's murky. It's not like when you're poor, you know exactly what you have because you don't have much and you can count it on your fingers. Right. When you have a lot, then it's like, well, what's the value of the 28% stake I have in this business that we're not planning on selling and we're reinvesting profits into? Yeah.

I don't know. I mean, I could probably sell that to different people for different prices. Like, and then I would, so a lot of, a lot of assets aren't liquid. And so even, even when you, it's kind of funny because like going through the sale process, you get a big chunk of cash. And then after that, you then have to allocate the cash. So when people were like, oh, this guy's worth a billion dollars. It's not like he has a billion dollars in his bank account.

Right. He just owns something that is worth a billion dollars, which is very different. You know, the only time that it's, I feel like it's more accurate is once you go into a public market, the equities you have are tradable and you can take loans against them, you know, immediately. And so in that way, you really are, at least in my opinion, like the billion is more real than if you're in private equities, which, you know, things are illiquid. It takes six to 12 months to be able to sell or kind of transact in any way. And it's based on what the market looks like then and what buyers are available. Do you think a lot of people say different, you brought up a lot of good points about when I, when you talk to businesses of like, yeah, our business, you know, it's like, how much have you done to like $50 million?

That's crazy. Like, you know, 2020, they're like, well, no, like lifetime. Do you think there's a reason why some people will, like, there's different types of personalities of business of like when I say a revenue number, it's that year, not lifetime. And then even it was relatively recent to me. I never ran into someone until talking about like run rate of like that's not what they're actually going to do this year.

That's like what they would do if this best month continued for the next 12 months. That's what they would do. Like, why do you think people, I don't, I don't want to say they can. inflate it, but is, do you think that's kind of like what they're doing? Yeah. Making it sound better than it. Not that it's bad, but. Yeah.

I think it's status. Yeah. It's like, it's always a way of like bumping their status like up one level, like rounding up. It's something that I actually work on a lot is like try not to round up. I like I'm not perfect at it, but like I try not to round up. You're a round downer. Actually, I want to be accurate. So 46.2.

I noticed that he said that like, yeah. Not more or less. And then trying not to qualify it because to very rich. people that is nothing and to very poor people that is everything. And so I can't guess what someone's going to see by that. So it's just, that's what it is. Okay. And with Acquisition.com, if I was a golden doodle, how would you explain what Acquisition.com is? We are minority investors in companies that are between three and a hundred million a year. And so we take minority stakes typically between 20 and 33 percent of those businesses. And we, depending on the business, we're

either investing for cash flow for some sort of return or we're reinvesting cash into the business so that we can eventually sell it later. It really just depends on the business. Is it a long-term hold? Is it like a fix and flip? It just depends on the business. But typically we are minority investors in those companies and we bring a lot of hands-on help to grow the business. And so we get discounts for the valuations, et cetera, that we invest in those companies because we are hands-on, which is not typical for minority partners. Most times they write the check and they want to ride, you know, just ride along and usually just get the founder some sort of cash. No cash usually exchanges hands from us to the founder because we're either investing into the business so that it

can grow or we're doing something in kind because it's based on the amount of value that we're going to provide. I noticed when I went to Acquisition.com, there's not that golden doodle spiel on it. It's like as soon as you go in, you just like have to know what, is it like you have to know what it is before you even go to the website type of thing? I think it's just because the vast majority people that do go to the site do know what it is because they've consumed something or multiple things of my like in order for somebody to say oh I'm going to go to acquisition.com they would usually have consumed at least you know a few pieces of content of mind before they would go there I mean if they click you know investment thesis or any of the other

you know links on there but you know I come from a direct response background and so having something that's optimized for for conversion is always forefront of mind and so you know if I had a big paragraph of what we do on the on the homepage I guarantee you I would have fewer deals that would be coming to me. You think it had fewer deals? 100%. Hmm. I could prove it.

Yeah? 100%. And did you, were you able to snag acquisition.com or do you have to buy that? I bought it. How much did the website cost you? I think it was $370 something. $370? $1,000.

What the fuck? Yeah. Was it someone just, what they call it like domain squatting or domain shark? It wasn't like someone had a business and you're like, hey, no, I can do better. It's just the name. What the fuck, man? Yeah. Did you talk it down?

What was the original? price. No, I just came into asking. They were in talks for somebody else. They're not a negotiator? I am, but it's like, what's the goal? You know what I mean? For me, the cost of negotiating it, because you had another buyer that they had been haggling with. And so I figured that the seller was kind of tired of haggling with this other guy for like, I think the number that they were at was like $325 or something like that. And they were trying to create some sort of payment plan. And I was like, I'll pay $370 today, cash, just wire it's like, I can wire it tomorrow. And so, So they'd close in like two days.

And they had been in talks for like two months. And so for me, it's like, what's the, like, is there actually a difference in how much value I'm going to get out of something if I pay $50,000 less or the downside risk of me just not getting it for me is significantly higher? And I would say that one of the things that I have changed over time is that I used to haggle every single nickel and dime. And I value speed more now because the opportunity cost of the time that I wouldn't have it. I will, I'll make more money having it sooner and I'll make up the cost difference with speed. I guess in my brain, I mean, I know, you know, it's all relative to, I guess, your income that you have. But in my head, I'm like, don't you think like an email of like, would you take $350, save you $20,000? It just wasn't.

It is what it is at this point. I want to just get the deal done. How many of the businesses that Acquisition.com invest in would you say get acquired? Because that's the end goal, like to the businesses that would sell. Do you have like a success rate or anything? So for us, we're two years in. to the minority investment. So even in a normal deal cycle, you know, I probably wouldn't sell it. Like, unless we're just flipping a company, which is not really our model, like, I would prefer

to hold all of them forever. That's my preference. I am a minority in a minority position, though. And so if the founders, like, I really want to sell, then we'll say, okay, then let's get it ready to sell. And that might take 24 months to like, you know, do a couple of low hanging fruit, increase the cash flow, you know, add a couple of value ads that would be, you know, significantly increased the enterprise value of the multiple we'd be able to get on the company. and then we can, you know, go to market. And that going to market process takes 12 months just on its own. Like, once the company is ready, it's another year.

Do you think a lot of people invest? Obviously, they get it from you, but like, do they expect that Alex is going to promote my company now, or is that not really part of the, like, you're going from my expertise of myself and my team? It's not that you're going to be a spokesmodel for, look at this chapstick brand that I invested in. Correct. So I am not, I don't endorse any of the companies that we have.

And there's a couple reasons for that. one is if I'm going to really endorse something, I do want to have it for a very long time or forever. I usually want to have control. So I'd want to be majority likely or at least 50, 50 in the business most times. I mean, there are special circumstances if it's a massive company and like it would make sense. I'd be open to it. But it would definitely be an additional like an additional negotiating point. The biggest risk for me is brand. Yeah. And so like, you know, making an endorsement is is a big investment because I'm really betting that this. guy, gal company is not going to do anything really dumb. And that's tough because there's a lot of

people in businesses. You know, if you're head of marketing, you know, DM some girl who's underage and he doesn't, and it becomes this whole thing. And then my brand gets associated with that. There's just like, I can control me. And so if I'm going to do it, I want to have as much control as I can. And so that's why I don't normally do it that way. It's also a little bit of a risk to the business because if I'm a huge driver of value to the business in terms of percentage of sales, et cetera, then it does make it more difficult to sell because then the acquirer would have to make a deal with me and a deal with the company. Right.

So we do this ultimately to make the companies independently more valuable rather than make them dependent on us, which is kind of like the fast track Band-Aid, but I think long-term robs them of the value that they could make on their own. You're essentially, I mean, not like, do people just compare you to a shark tank, kind of sort of? All the time. You're like a better looking Kevin O'Leary. A more jacked Kevin O'Leary With significantly more hair

You know, speaking of Speaking of, I guess like, you know, bringing up Shark Tank and the acquisition and, you know, percentages, minority stakes. Yeah. A lot of people that, you know, and I'll refer to Shark Tank because I think a lot of people understand that show. You'll see a lot of people come in and maybe, you know,

people, hey, Alex, I want you to invest in this. We're doing, what I see a lot on episodes is is people undervalue, valuing or overvaluing their company. And a lot of times, even I'm a little bit confused when the sharks or you would be like, it's not worth that. If companies like, you know, we're doing $10 million in sales, our business is worth $10 million.

And they get, like, no, it's not. It's only worth how much cash you have in the bank. Like, what is the biggest misconception people have with valuations beyond like their own ego of like, no, it's worth a whole lot of money? Yeah. So fundamentally, when somebody's buying a company, they're buying a percentage. of future profits, right? And so the question is, how profitable will the company be if it's in the future? How long is that sustainable? And what is my risk associated with that? And so if there's,

if there's a business that's incredibly transactional has a single point of failure that's founder-led and they're the face and they're the one that drives all the business, that person gets hit by a bus, the company's dead, right? That person gets in a scandal, the company's dead. And so you want to have as few, like you want to have multiple, you know, multiple different sources of acquisition. You want to have customers that return for a very long time. You want to have some sort of unique mechanism, if possible. And it could not necessarily even be about the product. It could be a unique mechanism for acquisition. It could be unique, like just some element that makes it a little bit different that gives some sort of competitive advantage or cushion against the new entrant that's going to

try and just copy and rip off the same thing. Brand would be an example of that, which is why, like, Warren Buffett talks about buying big brands. Like, anybody can recreate the Apple iPhone. I mean, shoot, China does it all the time. Yeah. But they can't recreate Apple, right? And so, like, a brand in and of itself would be something that's valuable. And so when they're thinking about that, like, you know, values of businesses are so murky, right? I don't use amorphous, but they're so, they're so variable. I like the word. You can use it. Amorphous. I'm adding that into my vocabulary. They're a moving target. You know, it also depends on the capital environment. So if you can borrow money at a cheaper rate, values of companies go

up, same like real estate, because if you can get money cheaper, in general, the whole market starts trading higher. If it's money more expensive, then the, the companies trade lower. And so there's just, there's a ton of different variables that go into it. And then, also what the company is going to get from the acquirer. So like if a strategic buyer, so a company, so to define that, if a company buys another company and the company that bought it would directly benefit from adding that company to its kind of portfolio, like it can cross sell its existing customers into those services or products, then that company will make more from the acquisition than what a financial buyer would be. So like if a family office, a rich,

you know, a rich guy just wants to buy a piece of a business or the whole business, he doesn't have any strategic plays, he's just going to buy it for what it is. And so like financial buyers tend to buy businesses for less than strategic buyers do. So you want to find a strategic buyer if you can, but those deals take longer. There's more integration. There's typically, you know, a one or two year consult back period where the founder has to like make sure it fully, you know, transitions. There's probably some sort of earn out or kickers along with how how well it does with that transition because some of the value, the enterprise value that gets described is based on how much more money we're together going to be able to make. And so

there's a lot of factors that go into how you value business. But at the end of the day, it's just what someone is willing to pay. That's true. It's kind of like when someone goes to anything, it's like it's worth this much, like it's only worth as much as someone's willing to pay for it. It's like if you have a $50,000 watch or you think someone's going to buy it, but no one wants to pay $50,000, it's not worth $50,000. If you sell in 2009 versus 2021, same business, you get a different number. Yeah. You know, and I didn't really mean to go super balls deep on acquisitions and whatnot. But something, else is a lot of people get caught up in raising money, a lot of businesses. What is your,

what is your take on the people who either are super prideful that they've never taken money and they're super cash flow positive and they're, I guess, a slower grower, right? Versus someone who's, I want to raise tons of money dilute myself or my company because of this big exit. I mean, I guess there's strategies to both. Totally. So I think there's a right way and a wrong way to use to raise money. The right way of raising money is that you have all the base business economics correct. So I'll give you an example. So let's say you have a product or a software that costs a hundred bucks a month, right? And somebody stays on average for 40 months. So it's a $4,000 LTV. But it costs you, let's say, $500 to get that customer. Well, that would mean that the business is going to

lose money for the first five months before they even break even on gross margin, like let alone run all the rest of the business, just on spending to acquire, it takes them five months to break even. And then they'll make their first, quote, dollar of gross profit that they can, you know, start paying payroll and other stuff in. In that instance, it makes sense for them to raise money to more rapidly acquire customers because the fundamental economics of the business makes sense. Where it doesn't make sense is where people will raise money to cover the fact that they're not making money so they can artificially lower prices. And, you know, this is kind of the issue that Uber ran into or is running into is that the model is different

because if the whole concept was we're going to lower the price, gain a lot of market share, and then we'll raise the price. But in a very real way, the price was a big part of why people wanted to use it. Yeah. If cabs are cheaper than Uber, then all of a sudden the entire fact that you had this market share, only it was price dependent. And so that's where it's the tricky balance of are we using this money to speed up an acquisition cycle where we have the LTV to tricks that this makes sense and we just need to do more of it faster to get a certain, you know, size. The other instance is when you're trying to gain market share, but doing it the right way rather than necessarily this Uber example I was giving. The third piece with

raising money is that you get insane valuations. And so, because like if I, let's say, I want to sell 0.1% of acquisition.com. If I said I was going to do that and I posted it on my Instagram and for some reason, the SEC said, yes, you can be a regulation A. And I went through all the hoops, right, to do a public offering, I could probably get a billion dollar valuation for Acquisition.com today because I sold so little and so many people wanted a piece and they're just betting on my brand that it's going to be worth that in the future, which is fundamentally what it is, because you just have to do the math. It's like if I sold 0.1% at $10 million, then I would have a billion dollar company. So I think I could get $10 million from my audience right now to invest in

acquisition.com if I'm at 0.1%, probably because also because most people aren't sophisticated, you know, whatever. It doesn't matter. The point is, is that if you do it that way, at some point someone gets host, unless the company really does grow to a business that would, based on its actual profit, be worth a billion dollars. So theoretically, I could have, I could make, I could raise that money and then I would grow into my valuation and have, let's say, $100 million in EBITA or, you know, for people to know that is just fancy word for profit, just leave it at that, you know, five years from now. But the problem is if my sales, my net profit goes up, people are going to bet that it's actually worth $10 billion because they think

it's going to keep going. And so that's the game. And normally those round, those fundraising rounds kind of results in when that, when there is the IPO for that company, the people who get hosed is the general public. It's the retail investor who basically does the catch up for all the investors. They basically take out of their wallet for for those people to be made whole. But now they have to grow into that valuation. And so those are kind of like some of the things thinking about with with the right in wrong ways of doing it, et cetera. I have always been a no outside money guy. And I do that because I think you approach business a little differently.

Because I think a lot of times people will raise money because it's an option. And so I believe constraint drives innovation. And so I would rather say, okay, let's say that $500 to $4,000 example. It's like, okay, we've got whatever that is, an 8 to 1 LTV to Kack ratio. Great. For those you don't know what that means, lifetime value of the customer compared to how much cost to acquire them. So I just,

you want a good KAC ratio in life. LTV to KAC, yeah. And so if we have that, if we have that eight to one ratio, right, I would think, okay, if it costs $500, is there a way that I can say,

can I add an onboarding fee? Or can I add a sign up fee? Or can I add some sort of front end value add product or service that can liquidate my acquisition cost so that I can be net zero on day one or day 30, where I can get a short term credit line to acquire the customer that's revolve. rather than dilute myself in equity.

And so I think it's like I, I like trying to solve the problem rather than saying, cool, that's the, that's the equation. Let's go. I have a fundamental belief about the world that like if you ask the right questions, you can solve the problem. And so that's why I don't, I don't raise. And I just believe that we can, if we're creative enough, we can figure out a way to make it grow profitably. Hey, Mosin, Asian, quick break just to let you know that we've been starting to post on LinkedIn

and want to connect with you. All right. So send me a connection request. And note letting me know that you listen to the show and I will accept it. There's anyone you think that we should be connected with, tag them in one of my or layless posts. And I will give you all the love in the world. All right.

So let's get back to the show. I guess is do people ever give you of like you don't you're not about raising money, but your company is about you want people to want to raise money? It's not really. Most of the times are not raising money. Like not in the formal sense. Because most of the times the, I mean, more than half of the deals we have, we put money in because we're like strategic yeah exactly so that's kind of what I'm saying

earlier with the strategic partner it's like well if I can 10x your business then what is that worth to you yeah is it is it worth you know giving up a third to have a 10 times bigger thing so you are now seven times wealthier than you were at the beginning everybody wins do I'm a big like expand the pie guy do you think a lot of people assume there's some sort of number that every business has to get to before like let's say people are building a business to get acquired is it do you think like hey I need to get to 10 million hey I need to need to get $50 million, hitting to get $100?

Or like, what is your perspective on how companies view, like I want to see this company have success. They need to get to this certain number. Or I want to, I see the trajectory that I could be on. I want to acquire it before it gets so big that their, that their value is significantly higher.

Like, how do you think people from whose perspective? I guess both, like of a business owner, like how much money do I need to build it to? Or is it just like, just build a great company and worry less about, how fast you're going to get to 100 million, we'll call it. And from a business perspective,

like, how do you think that they analyze businesses to acquire? Yeah. So I'll start with a founder one. So founder-wise, you know, I would say that the big thing that we always try and find is missionaries, not mercenaries. And so it's people who are really passionate about the cause, because somebody who's passionate about the cause will always build a bigger company because they're doing it for the different reason. And so it's like the person who loves walking, walks further than the person who loves the destination. And so when people are trying to build a business in order to sell it, they tend to just have a different energy about going. It's everything. it just inherently is shorter.

Yeah. Right. But if you have an unlimited time rise and then there is no such thing as a rush and you can make the right calls for the long, right? And that's what we really want because you'll get the highest returns with somebody you can think five, 10 years out. But it just won't make sense for one year or two years. But like they can make a huge move that's going to make it worth a ton.

But if they're always obsessed about like, that's why public companies is like quarterly earnings calls. Like they have to think short term because CEOs are incentivized, blah, blah, blah. I won't even get into that. But from a founder perspective, we prefer long term thinkers in terms of them getting acquired I think the line is just at what point you get institutional money. So institutional money would be like private equity money and up. And normally that doesn't really happen below 10 million in sales most of the time.

I'm excluding tech for like seed and VC and all that. This is a different game than like what I would consider traditional business, which is what we're in. Which is there's like this, like this, you know, but there's a lot of caveats to this. Like with what I was saying earlier with fundraising, that tends to happen more in tech companies. You know what I mean? and sometimes like open AI raised a ton of money to build artificial intelligence. Did that make sense? Absolutely.

Did they have any way of making money until it started to work? No. Still made sense. You know what I mean? So it's like it's trying to keep it within context. Most businesses that are would consider normal businesses that don't have a million X possibility oftentimes can solve their problems if they just think about it a little bit harder. But back to the founder.

So founder with institutional, usually 10 million in top line sales is minimum that they're really be interested in, you know, a million in EBTA, maybe, but like if I'm going to go to market, I don't really want to take anything to market below five, like an EBTA in profit per year. That's because that's when you can get what I would consider real money. You know what I mean? You know, you can get a 50, you can get 100. Like that's, that's a meaningful enough size. And it's like if you got to 10 or if you're at 7 million and you've got one and a half million in profit, it's like, dude, we just let's just get to 20 and have five. And now, you're, this is a company that becomes very acquireable.

Okay. And a bigger multiple. With, you know, you're talking about all these different like acquisitions things and how you're saying, you know, you could raise money from your, your audience. Yeah. Speaking of your audience, how did you get so popular on the internet? And why aren't you verified on Instagram? Are you pissed about that?

Um, I mean, you know. You got to be a little pissed. Zuck, you know, help a brother out. Um, no, I actually feel bad about it because there's like a hundred zillion like fake Hormosey accounts that. They're like, hey, invest in my thing. And so all these people get like scam for honor. And then I'll get a message like, dude, you took my $100.

I get, I get caught my YouTube videos. They'll get like a, hey, congrats, WhatsApp. Send me 20 bucks and I'll send you a PlayStation 5. And people DM me like, is this you? I'm like, guys. Yeah. Like, what do you come on? Yeah, as if you have to ask, you already know.

So anyways, in terms of the rise, a lot of it was because of the team. So I mean, the team that's off to the side here that you can't see. You got Caleb, got Quinn, got the boys with the Z. who really, who really packaged me well and make me look cooler than I am. And so, that's my goal every day. Me too. And so it's really just, you know, applying the same things that we did with business just to kind of media.

And media is very new to us. I mean, we've really only been doing it hard for, I would say, a year. We started doing it in general. Like I started posting like two or three YouTube videos a week of just me like screen recording myself. Yeah. I think in September of 20. So it's been two-ish years.

right now. And so, but anyways, taking it more seriously and actually doing like shorts and stuff. We did about it a year and change ago is when we started doing that stuff. And that started growing. I think a lot of it is because there wasn't a lot of people doing it. We got into the right time. We've been, we've been very lucky in a lot of things like that. I got into Facebook advertising in 2013, you know, with with the gyms and the fitness businesses. So like, I was super early on that. I've just, I've had a lot of things that just like, it worked out that I got in early. And we got a disproportionate return. But I mean, honestly, I think if I were to give you a real answer, I don't know.

You know, I think, I think there's a little bit of a vacuum for what I would consider real business education, because most of the people that are teaching business don't have very big businesses, and the people with very big businesses don't make content. And I think that's, so I think it's just, it's a crisscross of those two things, which is a, a very understandable story of legitimacy. And then the, the quote, advice, you know, that we, that I, you know, put out there is stuff that people actually, I get DMs all the time. They're like, dude, I ran that.

promotion that you said. I just made 50 grand, like all the time. Like, dude, I changed your sales process and we tripled our sales. So people are actually using it, seeing the result, and then they become true believers because they're like, dude, this is better than all the stuff I've paid for. And that's the goal. You know, I just want to, again, like my selfish intent here is that there's a kid who's 20 right now consumes all my stuff and in four years is doing 10 million a year. And it's like, dude, you've been on my vision board. I want acquisition.com as a partner. Let's make it happen. Like that's why I do it, but it's a long game. Was it, uh, you know, although you have a similar beard,

slightly almost as jacked as liver king, you know, he had a strategy of like, I'm going to become popular on the internet. Like it came out, right? Well, I'm 50 pounds heavier than the liver king. Are you? Yeah. You look jacked, man.

You're like a lump. Let the record show. Um, and you don't have to eat testicles, man. Yeah. Would all free since I three. Well, there was that one time when, yeah. When I went to Omnia. Yeah.

Um, would, Would, like, was there a point when you were like, I want to become, I want to become a thing on the internet? Because you said it was like two years. 100%. Yeah? Yeah. So it was actually, it was like a series of, so I'll give you the long real answer, which was I really wanted to be rich and anonymous. And there's like one video that cable was found of me being like, fuck content.

Like all the stuff stupid. Like I just would be rich and have no one bother me. And I did that for a really long time. And then what happened was like the thing that was like the first. big crack. Like, anybody who's listening to this and things is ridiculous. But when Kylie Jenner hit the front of Forbes and she was like 20 and a billionaire, I honestly, I was like depressed for a day.

Like I really was like. I think the world was depressed. I was like, why do I suck? Yeah. Why am I insufficient? But I was like, you know what? Chris Jenner organized her whole life. Chris Jenner's the G.

She's the one who's really old. Like she's just a figurehead for like Chris's empire. She's also more attractive than you. Oh. Yeah. If I had her butt, I wouldn't even be here. Right. Anyways.

So that happened. But I like, you know, my ego is like, no, it was just Chris and they was organized. Okay, cool. And then Connor McGregor came out with proper 12. And it was like, boom, 600 million. I was like, shit. He did 600 million with that? Well, the company's worth 600.

Yeah. Oh. And then, and then Huda Beauty. She sold a portion of her company at 600 million, just a YouTuber and an Instagram. I know. I know. And then again, I was like, this is like, this is starting to become a theme. And then the rock had Taramana.

And then now they're worth like two to four billion. And so this just, again, it was like these chinks in my armor of like, you know, all this fame stuff stupid. Like, why would you want to be famous? You know, blah, blah. And so, um, finally I was at a buddy of mine's house. He's, he's very famous. Um, who is he? And I don't want to name drop him.

Um, he's very famous. Well, I just, yeah, I don't want to, yeah, I don't want to blow him up. That's right. And it's Barack Obama. Yeah. Yeah. Yeah. Yeah.

Yeah. And so, okay. Anyways, uh, so I was there and he's like, and I was like, don't you get tired of like the weird messages and letters at your door and people dropping off, like threatening your family and kids and stuff. Like, isn't that like, I was like, that sounds horrible. Yeah. And he said, if that's the price I have to pay for the impact I want to have, I'd make that trade every day of the week. And I just like, it just like stabbed me. And I was like, here I am saying that I like want to help people out and make products and services that, you know, serve communities and whatnot. And I was like,

and I'm just too much of a pussy to like get out there. You were doing a disservice by not producing content. Right. And that's exactly that that was like the. And so after that point, I was like, all right, we're doing it. And so, you know, I got a couple vendors to new different platforms. Because I just started with agencies. So I was like, I don't know what I'm doing. And they were like, just send us three videos a week. I was like, okay.

And then that was what started it. And then, you know, we started recruiting, bring people in-house. And now, you know, our in-house team's bigger than our vendor team. But yeah, so we just started pulling the thread and started getting a little bit better and just try to add new platforms, you know, every few months and learn how this whole game works. There's a strategy to become popular than internet? Yeah, more good content. I've been doing it wrong for like 10 years, man.

Fuck. Yeah. No, it's like actually, so for anybody who is trying to do this, it's quantity first. So you just have to put out a lot of stuff. And you do a lot of stuff, not because you're going to get a lot of reach from it, but because you don't know what you're doing. And so it gives you two things. One is it gives you feedback from the audience because there's going to be some stuff that does better than others.

And so it's like, cool, do more of that. And the flip side, you'll also start to kind of like learn your voice. Because if you listen to some of my older videos, I sound just different, just less articulate, you know, whatever. I just, I wasn't doing this as much. And so quantity first. And then you start to learn how to increase the quality. That's like doing the more of that good stuff.

So you start getting, you're like, oh, why did that video do well? Oh, is that a topic thing or did I have a good hook? Like whatever. You start studying the things that are outliers that do a little bit better. And then you really start focusing on quantity. So quality kind of drops a little bit. And then you start quantity kind of drops. And you just start focusing on like, if I put out one really good video, it does way better

than 10 shitty videos. And so you're like, I'm going to do more of that. And I think the third phase is quality quantity, where you can put out amazing videos and then more of them or whatever your version of content is, podcasts, et cetera. And so that's kind of how I see some of the phases playing out. And so right now we're right at the, I'd say, cusp into the condensing down into more quality because we've just been boom quantity to learn what the market wants. You know, I always want to talk about like LTV to KAC, you know, ratios and like churn

ratios and like just different ways of like onboarding customers to increase LTV and like no one cares. So I was like, huh. But if I'm like, hey, I care. Yeah. It depends on the audience. You know what I mean? And so we actually alternate content. I mean, we're going into it. So we'll alternate content where it's like there's top of funnel content, which is content that we think will just reach a lot of people. And so that will, like if I make something about Tripoli,

which is reference the beginning of the show. Delicious. Right. It got you. Right. And so you might be, you know, it'll attract everybody, which means the net will also include bigger business owners because it includes everyone.

But then to earn trust with that person, that's where the track, you know, the track record, et cetera helps like having the, you know, the companies that we have and the eggs. and whatnot. But then we have deep content that doesn't get the same amount of reach as kind of like the more general content. But then those people get to have, in my opinion, just like a deeper relationship. That's my running theory. I could be completely wrong. So that's how we see. What I got from that is Chipotle is the reason for your success. Yes. The common thing among the people. Yes. And you. It's chorizo. It is delicious. You made a comment about like, I don't call them like

fake gurus or fake business people. But I'm, I'm sure that was probably frustrating of seeing, seeing popular people on the internet who you're like, well, something's not right there. Do you ever get people that think you're a fake guru? Yeah. It doesn't, I don't, I honestly don't think much about it. But yeah, I'm sure there are people who are. I was doing a little deep dive. And first of all, I learned to never go into Reddit forums just in your life, right? Because it's the dark side of the internet. And some comments that I was seeing, which, which again is that, because I was doing research about you, right? is that people were like, there's no way that this man is just giving out information for free. There's some ulterior motive, right? And I think someone said, some of your books are super cheap.

99 cents. And they were like, it's a strategy, which it might be. But like, what do you say to people who are being like, there's no way he would just give all this information? He's trying to suck us for money. I'm super transparent about my intention. I'm here to absolutely make money. But I just don't need most people's money. So if I have one Facebook investment, I make more than I would sell than I would if I sold coaching and programs and courses and all that kind of stuff. You know what I mean? I don't need to. Because like I said, if I make one, you know, like we have 16 companies in the portfolio right now. Like most of them I could probably, like my equity stake is probably worth, I don't know, five, 10-ish million just as a conservative medium. How many, you know, how many thousand dollar

courses do I have to sell to do that a lot? Yeah. And in terms of a brand that I want to build, I don't want to do what everyone else does. So I want to, you know, I don't want to live their life. And to be fair, like most of the, like there's a cap to how much money you can make if that's the game. Like you can't get, in my opinion, you're not going to get like ultra wealthy. So for me to get to a billion, I'm not going to get there selling courses. Yeah.

So I have to, I have to own something or stuff that's worth a billion. And so I have to play the game differently. So we were like, you know, he's trying to suck us for money. I'm probably not trying to suck that person for money because the type person that I'm going after. Understands exactly what I'm doing. So they have nothing to fear. But no, I mean, we have, I have books.

And the reason I had the book, it's 99 cents. And, you know, it's crazy. It's like so many people from like Bangladesh and like Pakistan. Like people who really like, they can buy the book and they're like it, all these thank you messages, which is cool. But I also think it's like part of the reason I'm doing this way is because like I kind of want to prove a point, which is that you don't have like you don't have to play the game the same way. Like if and I just have this big belief that if you give the most away in the marketplace, you get the most over a long enough time horizon, you get the most back.

And so everyone gets a little bit of goodwill and they try monetize, a little bit of good way, they monetize, right? But if you can just deposit and deposit and deposit and people are like, I don't know, when is the other, when is the other shoe going to drop? And then you just keep proving it wrong. Then that doubter, that person,

actually ends up becoming your biggest fan. Like, they become your biggest supporter. I think people just want to assume that everyone has some evil intent or... I'm here to make money. Yeah. Like, I'm very... A lot of people, that'd be like saying,

Like, God, Apple only comes out with new iPhones to make more money. It's like, no shit. It's like, of course. Yeah. And like, what do you, what do you think about, we'll call them fake gurus, like, or people that are trying to sell the people who sell, sell courses about how to build a business, but their only business experience is making a course. About how to build business.

Yeah. So I think, so this is a really, it's an, I have, I have a lot of, thoughts about this. Because I have really strong reviews about the formal education system. I believe that there's the supply and demand of like the demand for income generating skills will not go away. That's only going to get more. Right. And the supply of people who could provide those skills in the formal education system is basically nothing. And so they, their poor job, the fact that they never adapted, they skyrocketed at the price, which is subsidized by the government so that no one could bankrupt themselves out of it, which created these

insane tuitions and no longer provided because they never changed. So it's the same education you got 50 years ago, but the market's changed dramatically. And so they just sell a really outdated product for an egregious price. And so the market continues to shift. So every year for the last three years, college enrollment has dropped and it's dropping faster every year. Because Gen Z is like, I don't think this is R. I'm just going to dance on TikTok now. Or whatever. You know, I'll start a business because now because like when I went to school, like YouTube wasn't a thing. You know what I mean?

Instagram wasn't a thing. And so like the content that exists now wasn't there. And how old are you, by the way? 33. Sam'sies. There you go. Same age. Same physique.

It's great. Done. And so this marketplace of alternative education sprouted from demand. People want to have these skills. And so a market will always appear where there's demand. And so people started providing that. I do think that we're in kind of still early days, big picture on alternative education because there will be illegitimate players and there will

be legitimate players. Because if someone wants to learn a skill and someone says, I want to learn how to sell and there's a sales school, what's wrong with that? The problem for the alternative education scene is that is the expectations that people set and the track record that they lie about. So I'll dive into both those real quick. So the expectations that are set is the primary issue that people don't have a problem with formal education and do have a problem with alternative So people spend $200,000 in four years and go into debt that they can't get out of because college promises nothing. They promise nothing. Yeah.

They don't say you're guaranteed to get a job. They just say you'll have four years here. You might. Good luck. What we do guarantee is that if you get grades, we'll give you a diploma. That's the guarantee. And they fulfill that promise, which there's a whole other conversation by expectation setting. On the other hand, a guy sells a $1,000 course and promises that you're going to make $10,000 within 30 days.

The course may be exceptional. It may teach a lot of skills. but if someone doesn't make $10,000 and 30 days, they hate the guy. Yeah. And so even though there may be in a very real way more value in that course than they do get in the in the four year education. And my wife's father is actually a former dean of engineering school, a professor. And he said, and he's like bought some of the courses and he's like making money online now. And he's like, I would never tell someone to go to school anymore.

He's like, I've learned so much more from these courses than I did from anything that we teach at school. And so like the the game is shifted. And now also because YouTube has just. blown up, a lot of really good stuff is available online for free. Yes. And so all that to say, fake guru, in my opinion, just comes down to deception. So deception in terms of what you did to validate yourself, to say that you are an authority. So it's kind of like the example of like, I own a hundred million dollar business.

And what it really means is like all of the customers that I've ever serviced over my entire life make $100 million. Yeah. And you're actually an agency that has 10 clients and one of them happens to be like if someone, it's like if my, if a vendor from in this, this shit happens is a vendor of mine makes like one TikTok a month for me. And he's and then he would say I, you know, my clients make half a billion. See then he's even still putting clients in. But some guys will go, you just drop the clients and be like, our, you know, our company is $500 million a year. Like that's a lie. Right. And so it's really

about the premise and the expectation that's being set. If someone says, I was a sales guy at a company and I was a top 10% sales guy for five years, I can teach you how to sell. That's a pretty straightforward. And he teaches somebody how to sell. And the way that he delivers that is a course and some sort of like, you know, call feedback and you refuse calls, because, you know, maybe helps you get a job. Like, that's a business. And it's a demand. And the person wanted to get a sales job, which there is no good college career, you know, path for sales. So the demand existed in the market created itself. I think a lot of the issues with it is that it's like the further it goes down the rabbit hole of it starts with good intent and then

people teach people how they're going to like how to sell and then now they're like oh I've learned everything from this course now I'm going to get some people to teach them what I learn from this person and it just gets like I don't want to say dumber and dumber but it's like less. Yeah, less from the authenticity of like the top of the funnel. It's interesting stuff. It's and that's so it's either it's the deceit around expectations and it's the deceit around legitimacy. And I think those are the two core issues for why. Like if those two problems were solved and like let's just play out a perfect scenario. If someone, you know, if Bob Iger from Disney, now Bob Iger from Disney doesn't need to sell a course because he, because he's rich enough

on its own, on his own. But if Bob Iger wanted to sell a course on how to be CEO and said, I'm Bob Iger and I've been CEO of Disney and I promise you that all I'm going to teach you is the lessons that I've learned, I don't think people would have an issue with it. Right. They would the course, they wouldn't buy the course, whatever. But like, he's not going to say, if you do this, you'll be CEO of a company. That's where he'd get in trouble. Right. So it's, what's my legitimacy and what are the expectations that I'm setting for the customers? What promises am I, am I making and can I deliver on them? And so it's like, if we have these two things that are legit, here's why you should trust me and you're not lying or exaggerating. And then here's

the expectation you should have and you're not lying or exaggerating. I think you're completely in the clear. But most people can't do that because it's so easy to just push it a little bit, just a little bit. and get way more people to buy and raise your price by a lot more and blah, blah, blah, blah. Yeah. And no, I completely agree with you. Do you, well, do you sell any courses on how to? No. No.

It's all free on the site. You don't have to opt in. You know, some things I look at is, and I guess some people want to have maybe, uh, uh, they want to pay someone to have this specific like I paid. So I'm going to feel like I need to follow through with something. Because in my head, and maybe there's just how my brain works. I'm like, why would you pay someone if people who are building? building businesses like you, like maybe even a Gary V or something, they're literally putting

out hours and hours and hours a week of content of what they're doing, how they do it, tips. And I'm like, why wouldn't you just listen to these people? So people should do that. But most people aren't that way. And so there's a couple of things that like, I'm, you know, a tweet that went really viral mine was give away the secrets, sell the implementation. Right. And so, you know, you could make the same argument like, use all my stuff and get to $100 million,

which you can. Right. but you also want personalization, which is like, does this apply to my company right now? Ah, okay, well, that requires nuance. And I can't make personalized nuance in a video, right? And so a lot of people think, and this is the crazy thing, people think that if they give away their secrets, they're not going to make money, but you're going to make more money if you give away your shit because you're just afraid of it, right?

And so you sell the implementation. And so to your point, like, fundamentally, the entire fitness industry is based on selling accountability. Like, stop eating and move more. Like, it's not complicated, right? But the heart is in the execution. And so that's, so to your point, should people just execute? Sure.

Do they? No. Demand, market. And so they're like, I need help. I need someone to hold me accountable. I need someone to personalize it if I get, if I have a plateau, someone who's done this with 100 other people before me so that I can avoid the common pitfalls. And so that, that promise exists in every industry.

You want to implement a CRM? Sure, you can watch the CRM videos, but they're probably not perfect for you or your business right now. so you pay for implementation. You know, if you have, you know, a gardening thing, like you can teach people out of garden, but then some people are like, can you just do it for me? Sure. Like, you know what I mean?

Like all of these things, there's always an opportunity like you can provide all the value up front and people will still want help. And I think that that's a totally noble and fine business. You help people out who want it. You help everyone else for free. It's a win-win.