The Pomp Podcast - #376: Ryan Begelman on Buying and Building Profitable Companies

Episode Date: September 3, 2020

Ryan Begelman and his partners bootstrapped Bisnow Media, an email newsletter and conference business, to over 7M in annual profit after only an initial $50,000 investment. They ultimately sold the business for over $50M. Most recently, Ryan is the cofounder of Summit, which has been called Davos for Gen Y by Forbes. He is also an early investor in startups like Uber, Warby Parker, and CoinBase. Today, he’s on the hunt for small companies to acquire. In this conversation, we discuss the tactics and techniques every operator should know, riches in niches, systemization, training programs, holistic entrepreneurship, and productivity hacks. ============================ Choice is a new self-directed IRA product that I'm really excited about. If you are listening to this, you are likely part of the 7.1 million bitcoin owners who have retirement accounts with dollars in them, but not bitcoin. I was in that situation too. Now you can actually buy real Bitcoin in your retirement account. I'm talking about owning your private keys and using tax-advantaged dollars to do it too. Absolute game changer. https://www.retirewithchoice.com/pomp ============================ ExpressVPN lets you access the internet as if you’re from a different country. There are hundreds of VPNs out there, but ExpressVPN is ridiculously fast. You can stream everything in HD quality with zero buffering! If you use my link right now at EXPRESSVPN dot com slash pomp, you can get an extra three months of ExpressVPN for free! That’s https://www.expressvpn.com/pomp ============================ Pomp writes a daily letter to over 50,000 investors about business, technology, and finance. He breaks down complex topics into easy to understand language, while sharing opinions on various aspects of each industry. You can subscribe at https://www.pompletter.com

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off. Ryan Begelman and his partners bootstrapped BizNow Media, an email newsletter and conference business, to over $7 million in annual profit after only an initial $50,000 investment. They ultimately sold the business for over $50 million. Most recently, Ryan is the co-founder Summit, which has been called Davos for Gen Y by Forbes. He's also an early investor in startups like Uber, Warby Parker, and Coinbase. Today, he's on the hunt for small businesses to acquire. In this conversation, we discuss the tactics and techniques every operator should know,

riches in niches, systemization, training programs, holistic entrepreneurship, and productivity hacks. I really enjoyed this conversation with Ryan, and I think you guys learn a ton from it. Before we get into the episode, though, I want to quickly talk about our sponsors. The first one is Choice. They're a new self-directed IRA product I'm really excited about. If you're listening to this, you're likely part of the 7.1 million Bitcoin owners who have retirement accounts with dollars in them, but not Bitcoin. That's a big no-no in my world. I used to be in that situation too, but not anymore thanks to Choice. Now you can actually buy real Bitcoin in your retirement account. I'm talking about owning your private keys and using

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I break down complex topics into easy to understand languages while sharing my personal opinion on various aspects of each industry. You can subscribe at pompletter.com. Again, pompletter.com. All right, let's get into this episode with Ryan. I hope you guys enjoyed this one. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational

purposes only. All right, guys. Bang, bang. I've got Ryan here. Thanks so much for doing this, man. Yeah, thanks, man. I'm really excited to be here. How you doing? I'm doing fantastic. For those that don't know you, let's just jump right into your background. You've done a bunch of awesome stuff, built some pretty large companies. Maybe just talk about where'd you grow up and how did you get into the business world? yeah so I'm from the DC metro I'm from Maryland and I went to school at Northwestern in the Midwest near Chicago and then I went through the whole like banking route did the JP Morgan Lehman Brothers worked at Deutsche Bank during school took a full-time job at Deutsche out of

school did the investment banking thing for a short while and then I went to the the the Carlyle Group, moved back to D.C., worked in Carlyle's U.S. real estate fund when it had about a $3 billion fund in 2006, and did a whole bunch of deals there. I was learning a tremendous amount. And then while I was there, I started doing real estate deals for my own account on the side. And I was reading this newsletter called BizNow, B-I-S-N-O-W, which is this father and son duo had co-founded Mark and Ali at BizNow in DC. And I essentially cold approached them and asked them if I could buy a big chunk of the company. And I ended up doing that and becoming CEO of that company. And I spent seven and a half years scaling that company from, which was, you know,

newsletters, an email newsletter for every metro market that we were in. So we had 28 metro markets eventually, with a reporter in each one, kind of like Imagine Business Insider for commercial real estate and we made a bunch of our our money was really made on conferences and advertising and we scaled that to about 300 conferences a year and about 7 million in profit a little over 20 million top line and sold it to a private equity firm in 2016. I replaced myself with kind of like my my protege if you will who became CEO of the company and he's still there and and And so at the same time, though, in 2008, Elliot Bisnau and I co-founded this company with a few other friends called Summit or Summit Series, which is basically like this

kind of community or gathering for all kinds of people, like founders of companies, nonprofit leaders, activists, academics, athletes, anybody who's a leader in some sort of space. And we would gather them for these really immersive events. that were made up of wellness and talks and art installations, kind of like Burning Man meets Ted. Some people kind of refer to it. And yeah, eventually that became thousands of people gathering at a time. You know, they'd buy a ticket that's like anywhere from, you know,

$4,000, $5,000 on average. And we'd have all kinds of, you know, amazing speakers and personalities there. We've had Bezos and Branson and Shonda Rhimes and Jessica Alba and Reed Hastings from Netflix, Ted Turner, Brene Brown, Al Gore. All kinds of, you know, really interesting people who would come and, you know, inspire the community and many of them were part of the community. And then in 2012, we bought a 10,000 acre ski resort. It's actually the largest ski resort by acreage in the U.S. in Utah, a ski resort called Powder Mountain, which is actually where I'm at right now. It's absolutely beautiful here right now.

And we, it's about a seven lift, you know, four restaurant, 10,000 acre ski resort. And we, we've been essentially become developers of the other resorts. So we're, we're building roads, we're building utilities, we're building lodges and hosting our events here and building this community here. Like it's a, it's still, you know, open to the public, but there's also an element to the community that's like a membership as well. And so we've sold about $150 million worth of real estate here since 2012. And it's been kind of an interesting way to think about extending a media brand or a community brand into a real estate project.

And we started a $30 million venture fund at one point called Summit Action, which invests in startups. And started a nonprofit called the Summit Institute, which is a 501c3. And yeah, I still do real estate investing. And my main focus these days, actually, is trying to buy small companies. And we're actually a friend of mine, helping him close on a company next week. So that's been kind of a crazy adventure. Sure. So you, not only one, have built multiple companies. You've also done everything from media to software to real estate to kind of community building. And you've just got a lot of what I'll call kind of practical experience and expertise. So throughout this conversation, I think we'll kind of talk through a lot of just like the lessons you've learned from the operator seat. But maybe talk a little bit, let's go back to biz now and talk a little bit about like

tactically. You know, once you bought the business, what was kind of the state of the business? And what did you do to actually grow it to a 20 plus million dollar top line $7 million in profit? What were those steps that you took? And why did you do that? Yeah, so, you know, the idea was to build like a mini conglomerate of sorts, like I was looking for a cash flow positive company, and then I would take the cash flow and invest it in real estate. That was my original thesis. I underestimated how busy I would become running biz now. And so I frankly ended up, you know, just becoming like kind of more of a passive real estate investor than doing as many deals as I thought I would on my own. But, but the way that,

you know, we scaled that was, was, was by market. So, you know, I'd go to New York and crash couches with friends and hire our first writer. And then I would make the first sales myself selling advertising and get it up to break even. And one thing that we would do is whenever I'd go to a new market, I would go to all of the top firms in the space and say, look, we're only going to have one law firm own all of our advertising for a year. And we're only going to have one accounting firm and one lender. And I'm talking to five of you and one of you is going to get it. And I'm going to give you a big discount and I'm going to give you all the ad inventory for a year in your exclusive category. And that really worked well. Like I could get, you know, the first

five, six key stakeholders, and then that would basically pay for the writer and pay for me to hire a salesperson. I would pay for some of our overhead for a year. And I just basically did that market by market. And the thing I thought was kind of cool about that is we never took any outside capital. So we ended up owning a lot more of the company than, you know, your typical kind a growth company or startup through this kind of like profitable sales method. And then, you know, once we got, you know, maybe, I don't know, five to 10,000 subscribers in the market, we would start producing our own conferences. And the conferences would bring in ticket sales through our website. And our sales team that was selling the ads would sell the sponsorships to it.

And we would do an event pretty much every month in every market, and eventually even as much as like three events per month per market and we became uh you know obsessed with data you know how can we have the most data on our audience so that we could deliver an event on hotel development in brooklyn and have 400 people show up when like you know the competitors at best could have maybe 200 people show up for a hotel development event for like the tri-state area of new york like we could get super niche and really deliver like a really specific audience for a specific event like like like that example and then you know the next week we might do an event on you know midtown office uh you know real estate in midtown manhattan so like really really super

niche uh was kind of uh you know like our belief is that there was riches and niches and we could deliver like this really specific audience um so that was like part of the methodology uh i'd say one other thing about it too is i think we learned pretty early on that if you're going to produce 300 events a year and published 28 newsletters every single day, five to six days a week. It's all about systems and making it replicable, which initially we were terrible at. Initially, you know, we would try to have like one smart person like me kind of just do everything. Like, you know, I'd get the speakers, I'd figure out the contract with the hotel, I'd show up in, you know, the morning and get all the chairs arranged. You know, I'd even write some of the

copy i'd edit some of the copy and um and initially that was the model i kept trying to find like replicas of like our founders and people like myself uh who could do kind of everything and what i learned is that you know most people are just like you know they're not going to necessarily be that dynamic and uh and maybe it's that they don't you know have enough equity i don't know but it was hard to get you know these people so i ended up studying this company um called ir that had hundreds of conferences and figured out, oh, wow, they break it down into an assembly line. And so we basically had a programming department

that gets all the speakers, a production department that handles all the coordinating and all the contracting and details and shows up and actually executes on the event. A marketing department that does all the constant email marketing. I mean, every day we're sending marketing about, you know, hey, check out this speaker.

You should sign up, you know, card abandonment, all the e-commerce stuff. And then the fourth department was sales. And then those four departments are supported by HR, technology, and accounting. And we invested really heavily, too, in our CRM. And so just making this whole thing like this assembly line was really critical. And talk a little bit about the systemization. So you just described kind of the buckets, but maybe walk through.

There's a lot of people who run a business, and human capital is the solution to every problem, right? They just throw bodies at something. And for many people, especially kind of small business owners, they throw themselves at the problem. You were able to kind of at different points in that business, build systems so that you didn't have to write every newsletter, do every sale, kind of all that stuff. But then also eventually on the transition, when you sold the business, you were able to step away from the business and not have to kind of continue running it.

So talk a little bit just about like, how did you design the systems? And then what were the steps it actually took to implementing them? Yeah, so I basically try to take everything that seemed hard to formulate and turn it into a formula. So like for the writing, we created this like manual for like these are all the do's and don'ts, kind of like a design guideline. You know, we speak in the first person. We write headlines that look like this. We write this many words typically. we our photos should never look like this but they should look like this and um it definitely

was far from perfect it's not like i just handed this manual and people just instantly could write it like this but um but over time we managed to train people and then you know put in place a certain amount of management and culture that people could replicate the writing and the same thing on the speaking like we're like you know we want we need a certain percentage of the speakers to look like this and a certain percentage like this and you know when we set up chairs in a ballroom we never want them just to all be forward we want them to be curved or we want to be theater of the round and so we basically break as many things down into formulas even the i was really obsessed with like the sales processes because man it was a huge difference between a good salesperson

and a mediocre one and like a lot of them don't schedule the next meeting in the meeting they just want to email the proposal instead of present the proposal because they're kind of you know scared to talk about price and all these kinds of things that make a huge difference in conversion and so we had to basically build training programs. And also I found that people forget like 80% of what they learn in the training program when they join. So you basically need to have like a continuing education where you're just constantly every week getting people back together and teaching them and going into the field. And then another thing I think we learned eventually was hiring multiples of people at a time and hiring full-time recruiters. If you have a lot of great

talent coming into the company you can put pressure on the people that are in the company that like that what you know that they're replaceable and that there's great talent coming up the pike and they have to keep improving and honing their skills um and also it was a cool thing is then they would teach the people who are coming in and people learn a lot through teaching and so we built this whole kind of like apprenticeship program where you know each department was constantly bringing in new talent and training them and we had two to three full-time recruiters we're just constantly hiring people. And the one other thing I learned was, whenever I do something new myself as a CEO, I should never be doing it alone, I need to have like, at least two to three

people learning it with me as apprentices. And you know, one of those people is going to end up being outstanding, one will be kind of so so and one will probably have to let go within a year. And so I used to like hire one person at a time, I started trying to hire at least three at a time for any role. Especially when when you're growing, you know, if all three of them are amazing, great, you'll find, you know, you'll find a place for them. So I think some of those things were key. And yeah, that investing in getting office spreadsheets and into a CRM was a huge thing. Like we, we took, we not only put our, our sales in the CRM, we put all of our speakers and a lot of the people we wrote about and all the information about them, we were constantly

adding to this, this like central database. And so it got, the job got easier and easier. Like if you were trying to get a great speaker for like a podcast, we could just click a button and say, okay, who do we know that's real estate, that's hotel, that's in Los Angeles for this event? And we could just click a couple of buttons and get an email out to them. And so that made it a lot easier as we got, as we got scaled. Yeah. And then these training programs, I think probably if you ask most entrepreneurs, what are they really bad at? It's like onboarding training and that continued education. You spent what seems almost like an inordinate amount of time, money, resources, mental energy on these kind of supporting actions of the system. So you got to

design the system, you got to implement the system. And then like, it's almost like garbage in garbage out type, you know, scenario. So talk a little bit about those training programs that you set up, what were you guys optimizing for? And kind of how did those operate? So every time we hired a new a new employee, we'd say, here's the existing manual, tear this thing up and make it better. Because you're good, because in your first 90 days, you're going to learn the most and you're going to see a lot of things that we don't even remember or see anymore. And so like every week you owe us a certain, you know, a certain amount of track changes and updates to this manual. And it's great because new people are, like I said,

they're like, they have fresh eyes. And so they're, so we were constantly refining. We had a manual for editorial. We had one for, you know, producing the event, one for contracting, you know, the hotels, whatever it was. And then, and then when people would join, we'd put them into like a four to six week program where we were, we'd have someone in that department and sometimes even myself for part of the time or my COO go in and actually train them. And then we'd bring them into the field. And actually we learned that just telling people things doesn't really work. They have to do it themselves. And so, you know, the first weeks we'd get them to actually do a lot of this stuff and, uh, and then, you know, help be corrective. And, and then eventually once they

got good, you know, it was all about getting out of their way and like removing, um, and just throwing, you know, resources at them. Here's more talent that we'll hire for you. Here's more money that we'll throw at your ideas. Cause that was, that was, and that was challenging. And I think also I learned that sometimes you have to allow like a department to do 70% as well as you might do yourself as the founder. Like there were definitely tons of times where I'm like, man, I think had I shown up at this event, I would have done the chairs this way. I would have gotten this speaker. Oh, I would have made this sale, you know, 7,000 instead of 5,000. And I kind of had to let go of that in order for us to grow. And, but that was challenging initially, because I

definitely was like, you know, always wanting to like fix and optimize everything. And other times people would way exceed my, you know, they'd make like mistakes initially, and then they would learn and then they would get way better than I could ever be. So I don't know, I don't know if that perfectly answers the question, but no, those are some of my observations. Yeah. And then both of the businesses that you built, um, you did so with no outside funding, um, talk a little bit, and I know you've got a whole bunch of thoughts on, uh, kind of venture capital versus bootstrapping and maybe some of the fallacies that people fall victim to there. Um, you kind of take us down that path, however you want to, but, but just really comparing the

venture route to, uh, to one that doesn't involve outside capital. yeah i mean i've been kind of like an evangelist recently of trying to persuade more and more people that they don't need to pursue venture i just you know having worked at summit like like you i think we've both seen so many entrepreneurs in the venture space and and i just see a lot of them suffer from a tremendous amount of anxiety because they've got to keep hitting these growth numbers because their only opportunity to make any real money besides their salary is to sell the company generally. And it usually takes like seven to 12 years to get to the place where they actually sell. When I first went into it, I thought it was like a five-year thing, but it's longer.

And then if they're losing money, which they often are because they're so focused on growth, the only place they can exit to is a strategic or going public. They can't sell to a private equity firm typically because they want profitable companies. They're not going to do a management buyout. They can't, you know, they can't borrow debt against their company because it's not profitable typically. And so, and most of them aren't big enough to go public. And so, and strategics are kind of like, they're, they kind of come and go. There might only be three or four of them and they're, they're kind of temperamental. It depends on their mood and their goals of that year. So I'm a huge fan of like, I think, I think a lot of businesses could start off without

venture. And so like my example for, you know, one example is pre-sales. You can pre-sell some sort of product. So if you're like a subscription software product, go to your customers and say, look, I'm going to give the first, you know, 50 customers a lifetime membership where, you know, give us like, you know, three years of what this product costs and you'll get it for life. If you're like a membership, you can do something similar. You know, I just spoke to like a manufacturing company like an amazon fba sort of company and they had a really cool approach they went to um some companies that would want to buy their product in a b2b sale and said we'll give you exclusivity for your region so that your competition doesn't have our products it was like

a packaging product and um and you got to give us you're going to pay us an exclusivity fee and then they use that fee to pay for the tooling and the initial the initial prototyping of the product and got them off the ground without any outside capital. And, you know, one thing I love about this is if you sell a company for, you know, 50 million without venture, like that's like the equivalent of selling your company for like two, three, 400 million

with venture capital typically. And so you don't have to scale nearly as large. And so you don't have to focus on as much growth. And along the way, if you want, you can take distributions if you're profitable. And so, you know, there were many years where we were making really nice money, like living off of distributions and salary

and still reinvesting millions of dollars into the business and growing it. And so I just found that we had a lot less stress in like years four, five, and six than a lot of my friends who have 200 employees, they're losing 10 million a year, bringing in 30 million, and they're just hoping and praying

that like Salesforce acquires them or whatever, Shopify buys them or whatever it might be. So yeah, and one other thing I'll say about that is I think part of that comes down to the ideas that you choose, the business ideas, if you're going to get started. For every market that you're interested in, that you're excited about, maybe you're excited about crypto or excited about whatever it is, there's a continuum of capital-intensive businesses to capital-light businesses. And I would suggest for many people, they start capital-light and then over time,

invest the profits from that capital-light business. Maybe it's a consulting business or a service business initially. And as you're getting that cashflow, invest it into your product business and your more capital intensive business you know maybe you have to build a piece of software for two years before you can release it but you start with having an agency that serves the same clients your software is going to serve and so you basically you essentially are able to you know finance your business through this initial business model so yeah that's the kind of thinking that i'd love to spread more out and i think that as you do this like project selection or market selection uh it's a huge determinant of whether you're going to be successful or not

and your point about um based on what market you choose can determine a lot about do you need tons of capital or can you kind of bootstrap and drive some cash flow uh one of the things that you've done over and over again is uh you take these like um i'll call them highly ambitious kind of pie in the sky uh really dreams right or goals uh and you're always able to pull it back to uh very rational plans and very kind of execution driven plans how do you think about uh being able to kind of context switch right so hey i want to go after this big market here's kind of the end goal or where i see this going but then being able to kind of you know come back down to reality if you will and say okay here are the 10 things we need to do in the next three months in order

to kind of keep going down the road that we're going down in order to get to that goal yeah so like one thing is we i like the idea of of not worrying too much about a massive total addressable market instead thinking about a minimum viable market just initially at least so like you know maybe i want to build um you know take the real estate example of business now like maybe we want to build the largest commercial real estate you know news and media business uh but and maybe we even want to eventually get into software and do other things or buy a ski resort but initially i just focused on you know can i build a following and a profitable business in washington dc and get everybody who cares about real estate in that

one market to know who we are and buy our product and then launch it to new york and we did the same thing with summit we started with 19 founders and then eventually we got up you know then it was 85 and then 140 and you know our last event was over 3 000 people and we took the you know the cash flow from that and the know-how and the ip and the community that we built from that and then we formed another joint venture and a separate llc and this is one that i love to think about is how do you structure separate separate llc so that you can if you don't want to dilute your initial company you can still do ambitious new projects so like you know maybe you get like the pop brand going and you've got this you know profitable engine and you decide like you know you want to

build, I don't know, the Pomp Hotel chain that appeals to all the kinds of people who are into the Pomp brand. Well, you could start another joint venture with a private equity firm perhaps that funds it and maybe a hotel development company and license your brand to that other entity and control your brand through the license, get royalties for that, and maybe even raise money for the venture and take a significant piece if the venture does well and upside in the form of carried interest or promote. And so I think thinking about structure is super important. And at the same time, thinking about, you know, how do you initially get some cash flow going in and a brand coming in? And how do you hire those first five employees? And one other thing I'll say

is, I was talking to an entrepreneur last week, and he was going to start like a new, kind of like a community for techies. And he was going to raise a million bucks. And I asked him, like, well, you know, how do you know how to price this? He was going to charge like 300 bucks for this product and he was like oh you know it seems like uh the competition is like you know this much and so i'm going to charge you know 300 bucks to come in a little cheaper and i was helping him like i think everyone should build their budget first it doesn't really take a whole lot of time like if you just take a few bids on everything and you look at what like you know your first employees are going to cost what the product's going to cost and then price it with margin above

that budget and i think a lot of like early entrepreneurs they just kind of throw out a random price. I don't really like back. I like to back into my price so that I know instantly that if I sell one unit, it's a profitable unit. And if I'm going to sell it at a loss, then it's on purpose. It's not like, you know, by accident. So yeah, I don't know. Those are a few thoughts on that. And so one of the things that you've talked about in the past, and I think just really nails at home is like, what's the purpose of all of this, right? So the systems, the operational efficiency and excellence, the bootstrapping versus venture, like it's this idea that you've talked about where entrepreneurship gives you the freedom and it can alleviate a lot of the like

financial anxiety or financial issues. Talk just like from a high level, somebody who's saying, I may want to go do this, but like, what's the purpose, right? Or how should I think about it? Because I think you've got a very kind of sober view of, you know, this is what this allows people to do. And some people want to optimize for that. Some people don't, but maybe just describe that a little bit. Yeah. So for me, I was, you know, like a lot of people not super happy working in banking in private equity, was, you know, working these crazy hours and, and was, you know, found it just not not as rewarding as I was hoping, you know, like, I was on this track that it was super appealing, that everyone wanted to get into in college. And I finally arrived at Carlisle,

you know, it's one of the top firms. And I wasn't really, I really wasn't that satisfied. I didn't see my family a lot, I couldn't pursue my hobbies anymore. And, and so and I wasn't really working and something that I was super passionate about. And so I went down this entrepreneurial route and what I discovered is that being an entrepreneur can also be super stressful and cause a ton of anxiety. You know, you're trying to keep up with growth and you're multitasking

and you're managing all these people all of a sudden. And so I've, and now looking back, I've been, you know, I like this idea of like holistic entrepreneurship where, you know, you're really, you're trying to solve for your wellbeing and you're trying to solve for, you know, real wealth, which to me is not just about getting rich, you know, financially, it's also about gaining freedom, you know, the freedom to self-express, the freedom to set your hours, the freedom to pursue, you know, your interests and

have time for family and friends, as well as your business and your team, the freedom to work with people that you love working with. And so I think entrepreneurship is this amazing vehicle for uh being able to achieve that sort of freedom and i think you know but but the key is to avoid some of the traps of you know growth at all costs uh you know growth can be like a cancer and it can kind of like eat you so i think if you can um structure things the way some of the ways i was discussing you can have this like really fun and really enjoyable outcome as you go um and just like take it like in small little steps bit by bit uh and gain a tremendous amount of freedom and and also solve financial anxiety. I know I, I suffer and still do, but, you know, especially

early on, uh, from a lot of like, you know, insecure financial insecurity, like, am I going to have enough to pay the bills as I'm building this business? Can I take care of my, you know, my family that I hope to have in the future and, and, you know, retire and all these questions that, you know, plague all of us. Um, and so I was very focused on like trying to mitigate risk I grew the business and try to ensure that we would have enough cash to weather storms and things of that nature. And so you've obviously spent the last number of years building businesses and done it at a very kind of high degree of success. You've been able to build really interesting communities that are not only full of successful, powerful, interesting people,

but also can be quite profitable. But at kind of the heart, you started out wanting to do real estate investing. And so talk a little bit about how you think about investor versus operator today. And you kind of merged them, it seems like, or there's like now more of a gray area, because you literally own Powder Mountain, and you guys are selling real estate there. But just talk a little bit about kind of capital allocator versus operator. Yeah, I think there's a tremendous amount of power and being able to, if you really understand both. And I think a lot of startup people don't really understand private equity. A lot of private equity people don't really understand startups. And if you understand, if you consider the intersection of those two things,

then you can do some really powerful things. So, you know, like an example I give is, I'm really fascinated by Barry Stern. I'm like to create a Starwood Capital and Starwood Property Group and, you know, hotels like the St. Regis and Hyatt and the One Hotel. And, you know, like just as an example you know he'll buy um like he bought the baccarat crystal company have you heard of this company no what is that so like there's this company that's been around forever they make these like you know crystal chandeliers and i think they make like you know silverware that's beautiful and so he buys this company and underneath his private equity firm he takes the brand and he uh builds a hotel brand using the baccarat name so buying the crystal company in

itself was a good buy. He bought it at a decent valuation. And then if you could grow that brand over time, as more and more consumers in places like China are becoming middle and upper class, Baccarat's going to grow. But at the same time, he took that brand and did something new with it. So he launches a new vertical that's a hotel brand. And with his private equity fund, he funds the development of a new hotel in Midtown Manhattan with condo and hotel. And he joint ventures with the developers. He puts up the capital for it from the fund. He licenses the brand from his Baccarat Crystal company that the fund owns. He gets a developer who really is an expert in building skyscrapers to actually build the hotel. He's playing in all parts. He's making

money on royalties. He's making money at Baccarat through the brand and the license. He's making money for the private equity fund on both the Baccarat company and the new hotel development. he's got a partner who's handling the day-to-day of building that hotel so he's leveraging his human capital so to speak instead of having to build all that internally and um and so he's kind of playing in all the different components of this and so he's able to do that because he really understands like everything from from brand and design and operation to also understanding capital markets and structuring and i think that um more and more people should learn how to do this you know i think virgin's another great example of being able to do that and so i've

been trying to apply things i learned at carlisle and things i've learned as an operator and trying to sit at the intersection of these things so you know summit is a brand and has events and powder mountains a joint venture we can you know leverage that brand to be a developer and we can use our hospitality expertise to improve the management of the mountain and make that you know a better feel when you show up at a restaurant for example and um and then the brand of the mountain strengthens the brand of the summit community and the summit events because more people hear about the mountain, more people want to come to the events, more people hear about the events, more people want to buy a piece of real estate at the mountain, or just come out and ski.

And so you're, you're kind of starting to leverage all these different things. And so I think that's a really, there's interesting ways to approach like, you know, building businesses in this way. Yeah, it's really interesting, when you start to think about the importance of IP, and using IP as an asset or a resource just as much as capital, human labor or anything else, right? Yeah, I mean, I like what you said in another show about Barstool and how, you know, they should have bought Penn Gaming, you know, potentially.

I think it's smart, you know, like you were saying, you know, they could use their brand. They've got this huge following and, you know, they could launch a new app for sports betting, you know, the Barstool app with the infrastructure of a gambling organization and leverage that brand to make money in a whole new way. In addition to having all their multimedia platforms.

So I think a lot of people could do this. Like even on a small scale, I spoke to a guy recently who was manufacturing pickleball rackets and selling them on Amazon. And nice profitable company, doing a half a million of profit. But it's competitive on Amazon.

So he was, you know, he was growing, but it's hard to grow. There's more and more competition every day. But one thing he could do is launch, you know, a league, for example. And, you know, he's got a following. People love the brand of his racket. So he could, he's got an email list. So he could announce to them, hey, listen, we're now going to do this thing where it's, you know, 50 bucks a month. And we're going to, you know, we're going to meet once a week and we're going to have a tournament. And he could start to expand into like a totally different vertical. And, you know, I especially like that vertical because it's kind of capital light. So it wouldn't need a lot of money to launch it. you could experiment and shut it down in six months if it doesn't work. And so, yeah, again, like leveraging your brand and your operational expertise to play. And you could, you know, he could also do that in a separate LLC. He could join venture with another entrepreneur.

Like, let's say he doesn't have the time to build and manage a new company. Well, another way to go about it is he joined ventures with someone else and they launched that and they run and they've got skin in the game and, you know, they pay him a royalty or they give him 30% of the equity in the business.

So I think there's a lot of different ways to skim the cup. Absolutely. And so I guess as part of this, you now are looking at kind of going out and finding brands to acquire and scale and grow. Maybe before we get to the types of things you're looking for, I know you and I have talked about a couple of different types of businesses and what you could do with them. So we'll play a game of what I'll call hypothetical private equity to kind of go through. Let's start first with Tony Robbins and his business. What would you do and kind of how do you think that business could be improved? Yeah, so I love Tony Robbins' business. And I went to my first Tony Robbins event last year.

Super impressive, incredible business, huge following, you know, diehard fans. And, you know, it's largely monetized through conferences or seminars, you know, where thousands and thousands of people gather for five days and they learn a tremendous amount. and you know but one thing i noticed is they they just kind of go home and and they listen to free stuff that he puts out and you know he provides coaching and some other services and and uh and and by the way i you know he runs an amazing business uh but i think there's ways that you could take that and extend it right so one thing is that would be to build a monthly forum uh you know there's ypo and vistage and other companies there's a company called chief now in new york

that's super successful where you get people together in groups of 10 they meet once a month Summit is actually producing this now, something like this called Junto. And you meet once a month, and you're basically a support group for one another to help each other achieve your goals, both personally and professionally. In the case of Tony Robbins, maybe even spiritually. And I think that could be a super sticky product. And his audience would pay at least $5,000 a year for a product like that. YPO costs $10,000 to $20,000. I mean, these are like 30% EBITDA margin businesses.

uh for kind of you know vistage does over 100 million dollars in profits sold to private equity so i you know that's like one extension that he could sell as people are leaving the the seminar you know from there you know i i've just been one thing i've been really interested in is just if you learn like 20 different monetization tactics then you can kind of come up with infinite permutations of things you could do if you bought or started a company and so you know another thing you can do is build a lead gen business where he builds the best seo you know rated content on all things mental health he's already kind of famous for that he already has a lot of traffic to his website so he could build you know a huge amount of media on his site that

covers every topic about mental well-being and then people end up on those pages and he could be an affiliate marketer that where he's driving traffic to you know different products around that space and taking you know a cut through legion um he could build a premium subscription newsletter Like, like, like you've done, of course, uh, at an online community, kind of like trends by the hustle where, you know, people meet in a private Facebook forum, uh, as part of that premium subscription, um, and share tips and, you know, share notes on how are they getting, you know, in managing life. Um, I also think a cool way to extend his brand would be, you know, kind of like I was

saying, he could build a private equity firm and buy other companies in the wellness space and then leverage his huge following to promote those companies. he's also got just an amazing set of operators in his business that could drop into those companies and help improve operations, cut costs, whatever it need be. I thought one cool thing, I don't know if many people know this. Did you know Jimmy Buffett has a real estate division as well? I did not. But like Margaritaville, Buffett's company, not only does it have like a radio station on, I think XM Serious and of course, his concerts, but he started a senior living development brand, where if you want to live the margarita lifestyle as a retiree, like, you know,

I'm sure, you know, tons of people would love to live that lifestyle. You can move down to Florida and live in one of his senior developments and, and live in this like really cool culture. So I think, you know, Tony Robbins has this huge following, especially among baby boomers, who, you know, have a lot of disposable income, and they, they want to, you know, visit wellness resorts and retreats and maybe go to meditation centers around the world. And so I think you could build a kind of a hospitality brand as well. So yeah, I mean, I could go on and on with ideas for his company, but I think once you have a following like that and expertise, there's a lot you can do. And it feels like really what you're talking about here is that following has bought

into a way of thinking, a way of life, right? And they feel part of their identity is attached to that. When you reach that point, you can apply it in so many different ways from a business perspective, right? Yeah, I think someone smarter than me said, focus on psychographic instead of demographic. And we certainly seen that with Summit. Like, we have people who are kind of like gray hair millennials, if you will, who are, you know, 65 years old. But they, you know, when Summit started, it was all people under 30. And now there's, you know, all these incredible people who are you know in their 60s 70s even who are going to kind of share the ethos and they share the energy of wanting to create things and have an impact on the world and you know other

things that kind of appeal to the summit kind of uh psychology and so yeah i think if you can focus on the psychographic of your audience um there's a lot that you can do with that and you can kind of lean have more heavily into that psychographic um and get a lot more you know out of it out of your follower. For sure. Another business that you've talked about is VaynerMedia, which is different, but has some of the same elements as a Tony Robbins type business. What are the thoughts around something like a VaynerMedia or media agency? So agencies are traditionally kind of like, they're challenging businesses, they're lower multiple businesses. They only grow through adding employees typically, because every time they get a new customer, they need more

bodies to support the customer. And so, but it's a great business for bringing in cashflow. It's a great business for getting out your name and they can scale very quickly. And they only, you know, you don't have to like scale them ahead of your profitability. You can grow them as you get more clients. But if you want to transition an agency into a higher multiple business, one, you could come out with a product. And so like, you know, Vayner could develop like a piece of software for social media. Maybe they should have been the next, you know, they should have been Hootsuite, you know, so they could, I'm sure still come out with a great software product and just to leverage

their huge brand and following. But another thing they could do too is launch a venture fund. And, you know, I think Hawk Media did this in LA, Eric Huberman's company, where, you know, in addition to having this, this agency, you know, they have access to so much deal flow. They're seeing so many problems that need to be solved and they're helping so many startups. And so you can launch a venture fund with a group of, you know, frankly, with a lot of your customers could be your investors. And then you could use that to make bets on the

companies that you're servicing and use this kind of unique perspective that you have. And then that just makes your clients even more kind of sticky because, you know, you've also become their investor. I also think you can make a private equity fund. Like say you're an SEO agency and You help companies optimize how they show up on Google. Well, you have so much insight into certain verticals and how to get the best SEO for those sites. You might as well buy those sites and roll them up. And if you roll them up and take them public,

I mean, you could even take advantage of the public markets right now where multiples for public companies are higher than private typically and with SPACs and everything. So you could have an amazing outcome rolling up blog sites, let's say, if you're an SEO specialist.

Or if you're an e-commerce agency, you could do this where you're rolling up, you know, e-com companies like Thras is doing and then actually provide them this service. You know, Vista Partners is a good example. Like they're this amazing private equity fund and one of their, they buy, you know, enterprise software companies, but at the holding company, they have a consultancy and they drop that consultancy into the companies they buy and improve all their operations with their own. They kind of have this formula that they know is going to work before they buy the company. So I think Vayner is super well-positioned to do that. And they have so much expertise internally. What company has 1,000 people internally like Vayner that's got all these experts that they could deploy and leverage?

So yeah, I also love events, obviously, in a post-COVID world. I think Vayner could create a huge social media agency. I love how Salesforce launched Dreamforce. I used to be so jealous of, I'd go to Dreamforce and be like, you're kidding me. This software company is a more successful events company than my company. And I'm a full-time events company. Like they've got, you know, I forgot what it is. You have 50,000 people buying tickets and, you know, huge companies buying booths.

And, you know, that it's crazy that a software company owns that. And so I think that's, you know, it's a huge business. The trade show business is a very high multiple business. And I think Vayner could crush it in building like a social media trade show. Yeah. And talk a little bit about how this changes for non-product companies, like creating products or buying product companies and then using them to kind of scale. So I think one of the disconnects is like, oh, if you're in the agency business, like

then most people think you just have to stay in software, right? They don't understand. No, actually, and Gary's kind of done this a little bit, I think, in terms of he's bought some companies right and then try to use the expertise they have online to scale it we see um guys like ty lopez i listen i recently listened to him sampar and sean purry uh talk through um basically he's just buying up pure one import stress barn whatever and he's like hey i'm better at the internet than most people and so i can market this stuff on the internet like how do you think about that um meshing or intersection of uh these software businesses and skill sets

with those physical products yeah i mean i'm really really excited to see if the ty lopez model how that ends up playing out but um i think like if you have if you have like a media brand you've got a big following i think like you said about barstool you know you can go buy or i think you also said about joe rogan like you know joe rogan could go buy a physical product that's sold on on amazon sold through shopify and e-commerce and leverage his his you know not only his following But it's like, you know, he's got this kind of like sticky diehard psychology around what he's built and he could leverage that to promote a brand. I think someone who does this really, really well is Golden Hippo, Craig Clemens company. They kind of fly under the radar, but they are this kind of like holding company that is behind a lot of direct to consumer brands.

And their methodology is they find a guru, kind of an expert who's known in a space, you know, usually like a doctor. and they find some famous doctor you know the the leading cardiologist who's like you know you know worked on you know bill clinton and you know everyone kind of knows this cardiologist and then they find a product then in like you know the heart health space you know maybe it's a vitamin and they go and get that doctor and they joint venture with the doctor and they build the infrastructure to sell the product and do the customer service and build the freight formula maybe they buy an existing cardiology product that's already out there and they use this this famous brand and then they you know spend a bunch of money on facebook and build that brand even

further uh and you know they've absolutely killed it with with this strategy and you know they don't all work i think they're they're almost like an incubator you know some of them fail but uh but the formula works and so i think a lot of people could i mean obviously you see the Kardashians do this like you know anybody who's got a brand I think could play in the you know the e-com space which of course is you're basically growing in the behind Amazon you know as Amazon helps you know just expand the e-commerce universe there's kind of this wind in your sails from from all the amazing work that they're doing and Shopify's doing so I think a lot of people could take advantage of that for sure whole foods is a pretty interesting one what

your thoughts there all right well this is my silliest one but i uh i've always wanted someone to create this like i love what walt disney did with um with his brand i mean it's just insane if you look back at what walt disney did it's just so inspiring uh to take a cartoon brand and think i'm gonna go buy thousands of acres you know near los angeles and then you know eventually in florida and build a theme park um and i think disney's a great example of all these things they bought companies they you know they spun up other brands they leveraged their brand it's all kinds of different things cruise lines you know etc so while whole foods you know everyone trusts whole foods is like this amazing culinary brand right i think they can build culinary world

where it's basically like a theme park again post-covid but you know a theme park where you know imagine the ad like you know come see how you know 50,000 different kinds of food products and how they're made and experience this place. And I think it could be a huge tourist destination. The company that owns Eataly created kind of a theme park in Italy that most Americans aren't as familiar with. And it's like this really cool experiential theme park where there's just tons of tour buses showing up every day with tourists

who want to go see, yeah, how is mozzarella made? And how is beer brewed? And so you can imagine a huge theme park like that. Maybe they put it in Orlando or outside of Vegas where there's already a lot of traffic and make this an awesome culinary experience. And I think Whole Foods has got the brand to do it. I think other food brands could do it, too. You know, I also, you know, I love the newsletter business. I think they could also put a premium newsletter about nutrition and just, you know, own that category.

And every time you're, you know, checking out, you know, they give you a free subscription and get you, you know, into the brand and then upsell you into paying them, you know, whatever it is. 50 10 to 50 bucks a month and uh if you want to get nutritional updates you know from there they could do nutritional software yeah it and it also feels like uh maybe amazon is playing this game of like vertical integration they just came out with a wearable uh in the last couple days that uh it's going to check your health and fitness and all this kind of stuff and like i mean it's not hard for them to immediately now start to hook that in with what food you should order and then through Amazon Prime that gets delivered. You just start to put all the pieces together. It almost feels like some of the larger companies are doing this. Does that take away the opportunity for

smaller companies? Or is that just a sign that there's so much opportunity that whether you're large or small, it's kind of a green field? I think there's just so much opportunity. But I think these are great companies to learn from. Their case studies are incredible. And especially we're lucky that they're public and we can see a fair bit of their numbers and see kind of dig behind the scenes and see what they're doing. But yeah, you're so right. There's this, you know, there's this ecosystem effect as you build out more products. You know, Apple is probably one of the greatest examples of this, where you get people kind of hooked on the services, they're hooked on the physical product. And so, you know, there's this huge moat that you're

building. You know, Buffett says, you know, buy moats, don't buy companies. Like, you know, Apple has got this amazing moat. Amazon is this incredible moat. You know, Salesforce is doing the same thing they're buying all the companies that they can kind of channel right through their software right through their sales team and on top of it they've got like i mentioned the trade show and so you know you turn to them for everything crm and next thing you know they launch customer service and you know you're immediately going to look to them for that and so you know i think oracle's done a great job of this too talk a little bit about starting a company versus buying one. I know you've got some thoughts on acquisition and how that can be a great jumping

point for kind of kickstarting something and then also increasing the odds of success later. Yeah, I think there's a space that, you know, it's so kind of unknown and splintered that it doesn't even have a name that anyone can agree on. I started just calling it micro private equity that I heard someone else say. And, you know, I think it's a really interesting space where I've been spending a lot of my time recently, you know, there's all these companies out there that are like 300,000, you know, or I'll even say 50,000 of profit to two or 3 million that for the most part of the big PE shops or even the mid-market PE shops, they really can't spend their time on these. They just don't move the needle for a fund. Um, but they do move the needle for an

individual entrepreneur who's trying to make, you know, a half a million, a million a year, 2 million a year. And, and, and some of them can grow and I've seen friends grow them to five to $10 million of profit a year. And the space is highly splintered. And if you can become good at sourcing deals, it's the easy part is raising the capital. It's actually, there's a lot of capital. And plus the small business administration lending makes it very easy to borrow money. If you're willing to personally guarantee it, you can leverage up to, I think, 90% and take out a loan. And right now, you don't even have to pay interest, I don't think, for the first six months and so you know one nice thing about buying companies instead of starting them is you get the

advantage of the leverage you know the power of leverage is is as i know you know like it's it's enormous um the returns that you can make under capital when you only have to put in you know 10 to 20 percent of the equity and i think one thing people a lot of people in the startup world don't really understand is joint venture waterfalls um you know what is that explain that explain Yeah. So instead of thinking of like pre-money, post-money, convertible notes, sort of startup methods of raising capital, the private equity world and the real estate world work in this concept of a waterfall. So I put in 10% of the equity needed. My investors put in 90%. After we each get our money back, I get 10% of every dollar out. They get 90% of every dollar

out for the first dollars out until we each get 100% of our money that we put in back into our pocket. Then we each get maybe an 8% return on that money. And after we've gotten our 8% return and our money back, then I, as the entrepreneur who did all the work, found the deal, put it together, worked in the company day to day, I then get a kicker. I get a sweetener. Maybe it's 20%, somewhere between probably 20 to 50% extra percentage of every remaining dollar of that business. And so if you buy a company and you hold it for 10 years, you know, and you buy it for the, you know, four times multiple in the first, you know, three to five years, depending on how much you grow the company might even only be two years, you'll get everyone's capital back. And then for

the next, you know, five, 10 years, you might own 50% of that business, even though you only put in 10% of the equity. And so you're, you're clipping 50% of the profit, plus you're paying yourself a salary. And if you're clever or ambitious about this, you can do this a few times a year. You could buy a handful of companies and build a portfolio, spread the risk of you and your investors across multiple companies. And you could even put all that into a holding company, which then has enterprise value across all of these things. You could take the holding company public. So anyway, there's a lot of things you can do with structuring that. And I'll say one thing about this is there's this concept that there are the largest generation in American

history are the baby boomers. And they're retiring right now, right? Like my parents are 73 years old. Now I'm 37. And I'm the first year of the millennials. I was born in 82. I think maybe I'm a second year. So over the next, you know, 10 years, tens of thousands of business owners who are baby boomers are retiring. And if they're running a small business, many of them can't sell their business to like a strategic or a PE shop because their business is too small. And they really, they need an operator to take over the business. And private equity firms, they don't want to be operators. So they're not going to buy a business and step in and run it. So in order for these people to retire, they need an entrepreneur like us to come and buy it from

them. And so there's a ton of opportunities now to buy these baby boomer businesses. And the other benefit is a lot of these boomers, they didn't really understand online marketing. So maybe they're running an HVAC business in Ohio, and they've had kind of a reputation with their customers for years, but they've got almost no presence on Facebook. And so you can buy this company, which has a great reputation, great employees, maybe even has a bunch of good surveys on Yelp, but they're not spending any money on Google AdWords. They're not investing in Facebook, and you can totally transform the marketing. So there's a lot of opportunity there, and I think it's an exciting space. Talk a little bit about, as you go out and you start looking at businesses to potentially acquire, what areas or industries do you think are interesting? Well, I just mentioned one that's kind of interesting, the home services industry.

You know, Buffett and Munger, they love these kind of boring businesses that, you know, aren't going to be disrupted overnight by new technology and are enduring. So, yeah, home services, you know, companies that install pools and fencing and roofing or do HVAC servicing are interesting businesses. Now, the downside of these businesses is that they, you know, the challenge is the personnel. You've got to take over and maintain personnel. But the upside is you don't have platform risk. You know, if you buy like an e-commerce company on Amazon, you know, there's always a risk that Amazon will just come out with their own competing product or, you know, a competitor from abroad will undercut you on pricing because they have cheaper labor. And so part of me kind of likes these boring offline businesses. But then I also really like, you know, there's a lot of great online businesses.

There's a number of companies right now rolling up kind of the FBA, the Fulfillment by Amazon space or the Shopify e-commerce space. Of course, software has always been a space that, you know, PE shops love, but don't have the energy to buy the really small companies. So if you can buy small software companies, there's a couple of interesting companies that are kind of rolling that space up there. There's this publicly traded company called Constellation, which is this amazing software company. It's kind of like the Berkshire Hathaway of software. And I think you could build a mini version of that, where you buy there's so many, you know, small kind of micros, they call them micro SaaS businesses out there. And you can buy them. And if you can buy them when they're small, when they trade for, you know, three to five times earnings, and scale them up to where they're a little bit bigger, they trade for more like eight to 15 times. Or if you can aggregate a handful of them together, and then your collective EBITDA is, you know, as you approach 5, 10 million of EBITDA, suddenly private equity firms want to buy you. And if you can get above 10, you can potentially even go public. And so there's a multiple arbitrage opportunity there where you're buying low multiple and scaling it into a higher multiple category. So, yeah, those are some ones I've been kind of tinkering around looking at. How do you think about talent in these businesses? So businesses that maybe are a little bit more antiquated, they haven't gotten kind of updated with technology, use of the Internet.

Traditionally, a lot of that's, in my experience, been the skill sets are different, right? So people kind of do what they know. And if you bring a bunch of young people in who are super savvy with the Internet and technology, like they start trying to put technology everywhere, right, and do things differently. If you don't have people who are kind of up the curve on certain types of technologies, they just don't know what they don't know. And so therefore, they kind of do it the way that they were taught or that they've done for their career. So how do you think about talent and kind of managing existing talent when you go into a business versus kind of bringing in folks who have different skill sets? yeah my experience you have to enter with a lot of humility and if you're going to buy a business you got to come in and spend the first six months just earning trust and and leaving a lot of the

things in the way that they're doing it the same and making only a few strategic changes so like if you bought an hvac business you can update the marketing right away because the the people you have out in the field a lot of times in hvac they get paid up in part on commission for how many installations they make or how much they service and so they definitely want more business so if you could start by helping the people that you're employing win more business and earn more money as opposed to immediately starting changing with like how they implement the business and how much data they need to enter day to day the things that are going to annoy them about your new management style so i would start with like you know how can you actually help them earn more

and gain gain some of their trust and then once they're kind of bought into the new this this a little bit this new method you say hey by the way we're also now going to put in this new system where you have to enter some more data about you know what happened on the visit and how many hours did it take you to install the thing so that we can get better at you know optimizing you know how we put you know labor out into the field in this example so i think it's like kind of like a step-by-step you know kind of gradual approach but and i think you know one challenge is if you're going to buy a portfolio is like how do you scale yourself you're not going to be able to be intimately involved in every detail. And I think that's one of the amazing

things when I watch like Buffett, like it's incredible how much, you know, they don't meddle in the businesses. And so, you know, one method is to be more hands-off and be more of a capital allocator and buy things and, you know, leave management in place or hire a GM while you're under LOI to come in and manage that business for you and just provide them the right incentives and culture, which is a lot easier said than done. I'm like amazed when I when I see how some of these companies like Constellation have done that. But yeah, I think it's a challenge

and an opportunity around the human element of this. Got it. And what do you think is the counter argument, right? So obviously there's a ton of opportunity, there's a ton of positives to taking the approaches that we've talked about, whether it's bootstrapping or acquiring businesses in Scunam.

What's kind of the counter argument that people should be aware of or the downsides and obstacles? Well, look, for society, venture is amazing, what it's done for the human race, if you will. You're not going to put rockets into outer space and solve major challenges globally without building billion-dollar unicorn companies. And so I think, you know, just for societal reasons alone, we need people that are, you know, building massive companies like, you know, like a Whole Foods, like an Amazon, you know, like a SpaceX or a Tesla that can deliver these new solutions and make huge innovative breakthroughs. You know, especially think about just like what's happened in developing drugs. You know, you're not going to develop a breakthrough for COVID without spending, you know, hundreds of millions or billions of dollars. So there's definitely a need for it societally. And then also some entrepreneurs, they, you know, they want the adventure, they want the challenge, they want the moonshot of going and taking on a huge world challenge and solving it.

I think that's inspiring. You know, I definitely, you know, I watch, you know, some of the people who have done this, and just blown away by the things that they're doing. And, you know, for me, I think I'm like too timid and too worried about, you know, failing and having that financial anxiety that we mentioned earlier. And so that's one reason that I kind of avoid this personally. But yeah, I think that's one thing is just certain concepts are going to take a lot of capital. For sure. And I guess as you kind of go through this, how do you suggest people getting in touch with, you mentioned earlier, like joint ventures and ways to get access to capital through private equity firms and stuff like that. What's, in your opinion, some of the things that people should think through and should

be aware of as they approach those conversations in order to make it a win-win and really align incentives? Well, I think that there's tons of capital out there chasing deals. And the thing that's in short supply are operators and deals, you know, fairly valued deals. And so if you can bring yourself as a good operator, and if you can bring a deal, then you've really solved like a major challenge for investors who are trying to diversify and put out capital. So you're going to be in a really nice position, like you'll be able to get pretty good terms today, at least, you know, it's kind of like a, it's an operators and kind of like a market, you know, there's an opportunity to structure deals that are pretty favorable to the

operator, but yeah, I think, you know, you really want to make it a win-win. You want to earn a good reputation so you can keep doing deals with your investors. And, and so, yeah, I mentioned that joint venture waterfall concept. I think that's a really nice way of raising capital because I mean, think about the proposition, like instead of me saying, look, I'm going to value this new concept at 10 million, this random number, you know, 10 million bucks.

and you guys are going to put in a million and we're going to give you 10%. Instead, you can say, look, put in a million and every dollar out initially, you sweep and you're going to get the first million. And after you get your million, I'm also going to give you this nice return. So at a minimum, you're protected to make this 8% return. And then if things go well and I'm really doing what I said I could do, then I get the extra 20%, 30%, 40% of this deal, only there of other of the remaining capital thereafter and so i i personally just love that structure i learned it from the real estate private equity world it's that this is super common this is how like developers build you know office buildings and apartment building and hotels

as they raise capital in this kind of joint venture waterfall um you know nothing wrong with the venture sort of methodology pre-money post-money i just it's i find like the argument is like a little bit harder to follow because you kind of have to believe in this kind of valuation that's kind of hard to pencil. Absolutely. And I guess as part of this, when you think of kind of where the world is going, the pandemic, the economic shock, the recession, the stimulus, the quantitative easing, like there's so much complexity in the world and so many moving parts. Do you see that as a opportunity or do you see that as something to kind of be very cautious of and could potentially be a negative? Well, I've certainly been cautious and not, you know, taking too many steps.

There's been a bunch of companies I looked at buying since around February. And I've been kind of following like the buffets of the world and kind of trying not to do too many things and being disciplined and kind of waiting for the right opportunity. because it was kind of hard to see where this was all going to shake out. And it's still hard to see from where I sit. Maybe we'll enter a recession next year and the business I buy will be down 30%, 40%, 50%. So one thing would be to use less leverage in an environment like this. Don't put too much debt on the business and burden it.

Raise a little extra capital at the outset, even if that means you dilute yourself a little more, whether that's starting a company or buying a company so you've got some working capital sitting around. And then if you have the extra capital and a little bit of extra and less leverage, now you're in a great position. You've got a company, you've got some extra capital

and you can be aggressive because this is a great time to be hiring people in the coming year. Talent is gonna be less expensive, really top talent that maybe you would have hired, they would have left you in six months for another great job. You're gonna be able to maintain for longer.

We built our businesses out of the recession in 08 and these were some of the advantages that we that were really helpful to us the other thing was competition was kind of distracted so you know like biz now we kind of came out under the radar when there were these big companies that were doing commercial real estate publishing and events and in like 0809 they were so busy just cutting costs and dealing with challenges and raising capital to survive that they really weren't paying attention to us coming in and eating their lunch And by the time I kind of woke up to what we were doing, you know, we had a few hundred thousand subscribers and a team and a great product.

And so it was harder and harder to compete with us. And we ended up going from like kind of like the underdogs to being kind of like the giant in the space. So I think if you've got, this is a great time to take advantage of those kinds of things. Absolutely. And so I guess, how do you find the opportunities, right? I think that's another piece too. Say, okay, great. You convinced me this is an awesome way to build a business. I want to go do this. Where do I find them? How do you normally think through finding either acquisition targets or markets to go look at? All right. So I stole this from this venture capitalist, Paige Craig, who said something pretty brilliant. So he talks about hunting, trapping, farming, and trading. And I think I was kind of doing this naturally, but once I started, once he got this framework into my mind, I've like tripled down on it. So hunting. So hunting is cold outreach. So, you know, you can network, you can, and you can also just do cold email campaigns.

I mean, if you really want to get super sophisticated about it, you can build a team in like the Philippines that does outreach and you can scrape LinkedIn. And there's a lot of clever ways to use technology now and software and outsourcing to build a huge lead gen pipeline for whatever niche it is that you're trying to buy companies in. Or if you're trying to buy real estate or any other asset for that matter. Okay, and then second is trapping. So trapping is becoming known in a niche and becoming kind of like you are, like you're this known entity in a number of different business verticals. And so, you know, one of the ways to speak on podcasts like this, you know, one way I love is host an event, you know, again, with COVID, you can do this over Zoom. But, you know, you'd be amazed how many people will just come together, even if you're a nobody initially. If you say, hey, I'm getting the founders together of a bunch of newsletter companies, we're gonna have a Zoom call, or we all share notes. And so I do this all the time whenever I enter a new vertical. And I find tons of people will show up. I used to do it like in the back of a bar and serve drinks in Manhattan. and what the way I would do it is I would I would have calls one-on-one with five or six people that I might have called outreach or gotten a couple of warm introductions to and once I had those five

or six people and I earned some trust with them I'd go back to them and say hey here's a list I created I just emailed it to you can you pull this up here's 50 names I think you know I saw you actually friends with them on LinkedIn would you mind introducing them to me so I can invite them to this like event that I'm going to host on Zoom or you know at this bar and you'd be amazed how of people come together. And then you become kind of like the mayor of this space. You get up and give the toast, you make all the introductions. And so that puts you kind of in the center of the universe of DealFly. And then you let all those people know, hey, I'm looking to buy companies and this is what I'm up to. This is my pieces. So that's true. Number three is farming. Farming

is basically just spreading love, just helping lots of people. I especially love helping lots of 20-something up-and-comers who are doing all kinds of cool ambitious things and who are in a particular industry you're interested in. Maybe it's newsletters, for example, again. Just get to know all that. Just go and help them and give them free help and advice. Eventually, that starts to plant seeds with a lot of people that grow into trees and start to bring you deals. Then finally, trading. Going to other people that are doing deals and saying, look, you're looking for software deals. I'm looking for information product deals. Every time I see a software deal, I'm going to send it your way. And every time you see this kind of deal, would you, you know,

would you mind sending it my way? And I, you know, yeah, people, people love this. And so like, you know, just yesterday I sent like a software company to a guy who's rolling up software companies and, you know, maybe he'll never, maybe he'll never send me something or maybe a year from now he will. So if you do that with, you know, 50 people, it kind of adds up. Absolutely. Co-founders versus no co-founders. You talked a little bit about kind of capital partners. But how do you think about this in terms of, is this a solo route to take? Or is this something that's done more in partnership? So I think that depends on the individual. Like there's definitely, you know, getting a business partner, I think I underestimated

initially is like getting a spouse. It's a major, it's a major commitment. And it's really hard to know upfront if your business partners are going to be the three things like, you know, you want them to be, right? You want them to be high energy, high intelligence. And I'm speaking about intelligence broadly. Maybe they have amazingly high EQ, and so they're awesome in sales. Maybe they're really good IQ, and so they're really good with systems. And then third, you want them to be high integrity. And the challenge is, it's really hard to know that until you work with somebody. You interview a bunch of people, you get to know them. Even friends, you start working with them, and you learn, oh, they're actually a little lazier than

i thought or you know or they're just not a good match you know for my personality for whatever reason um i mean one good thing is you'll grow a lot and trying to be a better partner to your business partners and so you'll have to develop empathy and patience and things like that but so i don't know it kind of depends i i know there are days where i'm jealous of the ted turners of the world who just owned you know all their business and had no partners and there are other days i was like thank god i've got these partners like i would have never made that you know that sale or thought of that you know great idea so um but yeah i think the extent i i would say you know naval ravikant talks about look at the signals like look at the actions of your partners

more than what they say especially when you're choosing a partner and you know it's really in the hard times you're going to find out if your partners are really who you thought they were when you're running out of money when you're making capital calls when you've got a fire someone who's really hard to fire like are they going to show up and treat you the way and are you going to treat them like the way that you you know kind of imagine that might go down um so you can kind of look at the signals from their past like look at their actions as best you can and kind of determine that but um yeah and it can be amazingly fun having partners too like you know they just bring a lot of it's fun to have someone at midnight to call and you know gripe about your

day with or you know it's just it can be cathartic so uh i don't know it's it's a tough call on partners. Absolutely. You, you're hyper productive in terms of done a lot. And before we go to wrap up with some rapid fire questions, talk a little bit about some of the hacks that you have on the productivity side that you've learned over the years in terms of really helping you focus on the highest priority things. Yeah, so I think people spend way too much time in their inbox. And so I'm constantly telling my team, don't worry about being inbox zero, like ignore your emails, if you're going to read them, you know, like Tim Ferriss is for our work, we, you know, said like bunch them up and read them at certain times a day and scan them. I think people would

be amazed how many emails they don't reply to just get resolved, especially when you have a team, like someone else resolves it. Or if you look back at your inbox, well, one trick is look at your inbox three weeks ago, like go back three weeks and look at the things that were in there and see like, you know, did they really have to be answered or solved? A lot of times they're not urgent. So one trick for this is whenever I'm done with a phone call, I'm on a lot of calls all day. My first thing is not to check my email. My first thing is to check my to-do list because the to-do list really can move major action items forward that really move the needle. Whereas responding to an email, like most emails don't really move the needle a ton. Whereas like, you

know, hiring the next person, building that next big system, like those things could really make a huge kind of like, they leverage your time. I think if you have a team, every minute you can spend investing in your team, instead of getting your own to do's done, creates leverage. If I can get like, you know, a person like three people on my team to understand the way I think about negotiating a contract, instead of me doing the next contract, I struggle a lot with my team and getting them to do this. You know, as people become managers on my team, they want to keep doing the things that they were doing because it's it's going to be phil tell me it's oh it's faster you know the person i'm managing isn't very good at doing this so i'll just be a lot quicker if i

get it done for them and like they have to like go and invest in that person so that you know six months from now they're never doing another one of those uh items again and they're now innovating and doing the next item um so i know that that's really been hard for me to you know kind of get out of my own way and do that sort of thing. But yeah, I would say, in general, sticking to your to do list, let's see what other things Oh, another thing that I've found is, if you don't spend like one late night a week, or maybe for some people, I'm a late person, but maybe it's early riser, you got to get like an extra like three, four or five hours in sometime in the week at a minimum, whether it's on the weekend, early in the morning or late at night to kind of like

get into the proactive stuff because it can you can very quickly just be in reaction mode all week and be super busy and i find it i make so much more progress if i put in like one extra chunk of time where i'm like okay that project i've been holding off on i'm gonna do you know during this period and then one last thing i'll say is do the hardest thing on your to-do list first like when you wake up you know do the thing you most hate doing that you know get that out of the way at least for me maybe not for everyone i find that that's huge because i'll just avoid it all day um and uh one other thing i do too is i'll set an alarm for two around two or three p.m in the afternoon and i'll the night before i make my top five list of the things i really were going

to move the needle the next day and when that alarm goes off i check that list to see if i actually done this and if i have it i'll cancel everything else that's happening the next like two three hours and just get those things done um and that way every day i don't miss you know Because a lot of times, otherwise, it's like, oh, I'll snooze it to the next day, the next day, the next day, and the next, you know, three weeks go by and you still haven't gotten done. Yeah, it's so funny how humans all do the same thing, right? Like everything you're describing, people are going to be listening to either. Yep, I do that. If I'm really intellectually honest with myself, I absolutely do that.

And it's being, one, aware of it, but also too intentional about, you know, putting yourself in a position to be better about it, right? and you don't have to be perfect 100% of the time, but just being in a position to be better and improve something can have a significant impact. Yeah, totally. Oh, one last one. I really like, I think this is from Getting Things Done, this kind of famous book.

Anything you can do in under like two or three minutes, just do it right away. Sometimes it annoys people on my team because I'll like, you know, they'll bring up something and I'll just like pause and be like, can you give me a minute and get it done? And so it's not always great if you're like in a team call or something,

you know, but otherwise, if someone sends you an email and you think, or you think it's something that's quick, I would just get it out of the way. And if you can't, you know, if it's longer than that, put it on a to-do list and have it, you know, have it organized into some sort of bucket. But yeah, we're all, you know, we all have like, a lot of us have the same bad habits. And so I'm always trying to kind of, you know, fix those. Before we get into the rapid fire to finish up, where can we send people to connect with you, find out more information um or uh or send you deals that i think potentially would be interesting to you yeah if you just go to ryanbeigelman.com my name uh you know it's b-e-g-e-l-m-a-n

ryanbeigelman.com and you could subscribe there and uh i'll occasionally send out some insights or share some info and uh and also if you have a deal that's 300 000 a profit or more uh that you think i could acquire would love to know about that you can send me you can find my email on my website and you can also follow me on twitter and uh i get two questions i'd ask everybody and then you could ask me one to finish up uh what is the most important book that you've ever read oh easily untethered soul by michael singer um you know the most useful thing i've invested my energy into the last 20 years have been trying to become more mentally fit and uh you know, I think a lot of people think it's just like woo-woo Buddhism and my mindfulness, but

man, there's like really hardcore, very real gains that you can make from, you know, the same way that Federer and Nadal are just better than every other tennis player. It's largely the mental game is the same, the same as it can be applied to business or your relationships is becoming more patient, more focused, being able to, I really like this. if you get frustrated with something how quickly can you can you switch from frustrated to being back at peace and like serenity and clear-headedness and even like as a manager i i have to have a lot of endurance for decision making i'll sometimes go you know six calls in a row where i've got to make a decision um and i get tired and so like you can build up mental endurance and so anyway

Michael Singer's book is a great place to start. It teaches you about how to develop awareness. And awareness is this muscle memory that you can use to see patterns and make huge gains. So I love that book. Yeah, that's my number one right there. Untethered soul. I haven't heard of that one. I'll have to go read that one for sure. Aliens, believer or non-believer? well there i i definitely believe that there is uh advanced you know being somewhere out there in the vastness of our universe i mean so 100 believe that there's alien um you know life forms maybe it's simply bacteria but you know my guess is there's also advanced life forms

i think it would be um kind of uh sophomoric not to not to imagine that there's going to be You know, there's like something like, you know, a million times the number of grains of sand on Earth in the Milky Way alone. You know, there's probably another rock that's pretty close to a sun that's got life forms. Now, whether or not they've visited our planet, if that's what you're asking, as a whole another matter, you know, I don't know. It's fun to think that they're out there and that they're hanging out. You know, one crazy thought is maybe they're among us right now and we just can't understand them. like, you know, to walk through the Amazon and pass an ant, and you imagine trying to explain to that ant, hey, we built the skyscraper over here in Manhattan, you wouldn't even be able to

communicate with them, they might not even, you know, be able to fully understand anything about your presence. And so I think, when you think about artificial intelligence, super AI, like, you know, there could be, you know, we think of the advanced forms that are just like living on a different frequency than us or in a different multiverse that are so what does it mean to actually visit earth quote unquote is like i think in itself kind of complex but yeah if you're talking about like you know the ufo landing and like a movie i i don't know i'm gonna guess that hasn't happened i i've never thought of it as like what if we're the aliens to the ants right like that like that's uh i've had a lot of people answer that question i've never had

anyone present it that way that's pretty good way uh way to think about it yeah well there's this concept of fermi's paradox which is like why haven't we seen other advanced life forms and you know it could be for any number of reasons maybe they always get wiped out because they kill each other um you know maybe they're just too far away they can't reach us um but yeah one plausible concept is that they're um over you know they uploaded their information into the into like the server and you know as they became advanced and they you know they're traveling through a frequency that's you know that we can't imagine in the same way that we can't see radio signals and you know they're among us in that way or we're living in a virtual reality that they created

and you know they're just outside of the video game that we're in that is awesome you could ask me one question to uh to finish up what one question do you have for me yeah well well one thing is what are one of the more interesting uh alien responses that you've gotten yours is definitely one of them um no i think most people fall into two categories either yes i believe the universe is so vast like you know that type of stuff uh another is i don't believe because i've never seen them and so show them to me and then i'll believe it uh are kind of like the two most common but it's like heavily slanted like 90 believe 10 don't um i had an alien researcher come on one time and uh i'm sorry an ancient alien researcher and uh he had

a whole uh theory as to uh the extinction of the dinosaurs was actually driven by uh meteors that impacted the earth and it caused you know a change in the climate all that kind of stuff but everyone thinks it was a meteor that collided into the earth instead actually it was uh alien spacecraft and you know you can imagine the uh the conversation from there uh a guy named bruce fenton uh and uh that one was pretty wild you know i i uh jokingly told a friend later i should have been drunk for that one so that i could like really let my mind uh you know go and explore all the possibilities yeah that's an interesting one i mean there's you know there's a there's a handful people who believe that uh the younger dryas period that you know wiped out a bunch of

civilization uh like 11 000 years ago was caused by um like a solar flare-up that led to the magnetic field changing on earth and which the magnetic fields protects us i guess from solar winds and so that led to like huge lightning storms and um and so that could have like wiped out you know that could have clouded the earth for a long period and you know led to drought and all these all these interesting things maybe an alien caused the sun to flare up 11 000 years ago in some form they they set off a nuclear bomb and on the side trust me bruce has probably thought about it awesome ryan listen uh anyone who wants to get in contact with you ryan b-e-g-l-e-l-m-a-n right b-e-g-e-l-m-a-n.com uh or they can find you on twitter um any last parting words there my friend

dude i just uh i love watching i love listening to your show and uh and reading your newsletter So I really appreciate it. I think everyone should pay more and more attention to it. And also, I've been watching you on YouTube now while you eat lunch. I love how you're multi-platform. It's awesome. All right. Thank you so much. We'll have to do this again in the future. All right. Thanks. Talk to you soon.