0:00
For all my friends, this is their only business.
Search this video
0:01
This is literally their lifeline.
0:03
And so, I find it very not cool is my official diagnosis.
0:10
Super uncool by the orange guy. All right, Shawn. Mahalo.
0:19
My first question is, what's it feel like to be an extra on the set of White Lotus?
0:29
As long as I'm not the guy who dies, I'm good. All right?
0:30
So, that's my that's my White Lotus game plan.
0:34
I I thought I'd be festive for you. I mean, it's Hawaii. you look good.
0:38
Dude, I was uh so, as you know, I don't leave my house and um took the family on vacation, so we're in Hawaii and I texted Ben.
0:45
I go, "Dude, I'm getting recognized left and right." And he goes, "Really? Uh that's awesome. Like, how many times? Like, 10? 11?" And I go, "No, dude. Two. Left and right."
0:56
Like, I didn't have to wait till now.
0:57
I had to text you right away. This is amazing.
0:59
Where did you get recognized at the airport?
1:02
Dude, someone voice recognized me.
1:02
I was uh like coming around the corner somewhere, I'm talking to my kids, and some guy just runs around the corner.
1:09
He goes, "Hey, are you Are you Shawn?"
1:11
I go, "Did you just recognize my voice?" He goes, "Yeah.
1:14
I listen to like I listen to the podcast a bunch."
1:16
Dude, there's been so many times where like I've met someone and I like, "We should hang out." And then they text me.
1:21
You want to get off this flight?
1:24
Do you have Do you have a ticket?
1:26
Well, like if I'm like flying home and like someone's sitting near me, I'm like, "Do you Do you want to like be friends and like get together sometimes?"
1:31
And then they'll message me a week later.
1:33
I'm like, "What was I doing?"
1:34
It's like going to the grocery store hungry.
1:36
Like, I'm just like making bad choices.
1:39
Um can we talk about tariffs really quick?
1:42
First of all, I want to let people know I don't know anything about this.
1:45
Like, I'm not like an economist, which everyone is all of a sudden.
1:47
But, I want to know, did you go to Hawaii because you were sweating and you're like, "I need to find peace." Or or what?
1:53
Dude, the last time I came to Hawaii, I don't know if you remember this, was in 2022.
1:58
Wasn't it like a some crypto thing like you crashed landed and the same day I landed crypto had the biggest crash like Luna basically went broke and it brought down Bitcoin with it.
2:11
And I basically landed and then lost a million dollars and it was just trying to hang out with my wife and just be like, "Okay, cool."
2:18
Uh I'm stuck going to mention this like how expensive this vacation just got and the worst part was because I was on vacation I didn't have like any of my normal like computer hardware or anything that I can sell. I can I can do anything.
2:31
Yeah, like you know, "Oh, this cold storage is working out great."
2:32
So, I was I was basically stuck and then to this time, same thing, went on vacation.
2:39
Oh, the S&P 500 has had the worst like three-day losses since like the bubonic plague and I was like, "Oh, great. Here we go again."
2:47
I'm not coming to Hawaii anymore.
2:49
When I've been going through this, as everyone knows, I'm I'm heavy on index and when I have been going through this, my I've just I just don't look.
2:57
I I just Yeah, I just don't look. I don't look.
2:59
I just I pretend it doesn't exist and I don't look.
3:03
Although, I did I I invested a little bit more than normally I do every month and I went a little bit heavier, but I just didn't look. I just I can't log in.
3:10
It it it makes me too anxious and it really ruins my day.
3:12
Yeah, I will I ask a simple question.
3:14
Am I going to do anything?
3:15
Is my plan to do Do I have some trade I'm trying to make right now?
3:19
Is there some some genius move?
3:19
Am I just trying to panic sell? No, okay.
3:21
If not, then there's really no point in even looking.
3:24
It's just going to ruin my vacation.
3:26
So, I don't I don't look um but when I landed, I there was something I had to look at, which is these tariffs.
3:31
So, not only did the stock market crash or maybe because of this, the stock market has been crashing which is that Donald Trump has created a new holiday, Sam. Liberation Day. Yeah. Uh someone Happy libs. Happy lib day.
3:43
Somebody was like, "Maybe he meant liberation day in the sense of liberation like the Buddhist think where we are being liberated of all of our possessions and we just aren't going to own anything anymore.
3:54
I don't have any material goods anymore. Thank you. Thank you.
3:59
So, he came out and he has this giant poster board slam to every country that's basically like a slam board where he's like, "China, you're getting tariffed. You're getting tariffed.
4:09
Everybody's getting tariffed."
4:11
And and then since then he So, he came out with like a 50% or whatever.
4:16
It was like a 35% plus a 20% tariff on China.
4:18
So, it's like, "Wow, 54%.
4:20
That's That's going to be crazy."
4:23
And then since then he added another 50% on top.
4:25
So, now we're at 104 and I suppose there's just no upper limit as to how hard how high this could go cuz this morning as of this morning China retaliated with its own uh escalating retaliate retaliation 80-something percent tariff.
4:39
So, we're in a trade war.
4:41
And does that mean for you as an e-comm owner when you buy $10,000 worth of goods from um China or if you do buy them from China that now you are be you're going to pay $20,000? Yes, exactly.
4:54
Okay, so it's as simple as that. Got it.
4:56
It's as It's as simple as that.
4:58
So, basically uh and and the reason to talk about this is not cuz I'm a tariff expert, which I'm not, but because I have an e-comm store and I have a lot of friends in e-commerce as well.
5:09
And for all of them I mean this is like D-Day basically.
5:11
So, most of us manufacture in China not because we're like, "Oh, I really want to have the lowest cost goods from China."
5:19
That wasn't really the impetus.
5:21
In fact, when I started our company we first looked at manufacturing in the US.
5:25
We were like, "Oh, that'd be great.
5:27
It'd be great to manufacture in the US.
5:30
It'd be a great story to tell to customers.
5:31
Also, maybe we'll be faster lead times cuz we're not having to put every item on a boat and sail it across the sea."
5:37
So, I called all the manufacturers I could find in the US and I was like, "Hey, like do you think you could do this?"
5:42
And most of them were just like, "No."
5:43
And one guy in LA was like, "Oh, yeah, we could do this.
5:46
Do you want it for double the price, half the speed, and half as good?"
5:53
Is that your sales pitch?
5:55
He's like, "Look, I'm just being honest with you."
5:57
He's like, "Cuz if you're comparing factories, you're going to find this."
5:58
He's like, I was like, "How could it be half the speed? You're There's no boat.
6:01
There's no sitting on a on a boat for a month."
6:03
And what he explained to me was like, "Number one, all of the inputs to anything you're going to make.
6:09
So, even if we make it, we're going to import all the parts.
6:11
So, we still have the parts on a boat for a long period of time.
6:15
Secondly, we don't have the labor that's skilled at doing this.
6:19
Uh third, we don't have the machines."
6:20
He was like, "Actually, it's the machines, not the labor, that's the problem."
6:23
He's like, "Basically, when we kind of de-industrialized, all of the best machinery to do this work went to China.
6:30
There's only like so many machines that do this right now.
6:32
To get a new machine takes like a year and blah blah blah.
6:35
It's going to cost a bunch of money.
6:36
And so, we don't even have the machines."
6:38
And I was like, "Okay, so then Dude, how does this guy answer the phone?
6:42
Is he like, "F you, this is Derek." You know what I mean?
6:46
Like, I don't want your business. How are you?
6:51
Is there anything I cannot get for you? Yeah.
6:53
Like, all right, have a good day. Bye-bye now. Go have yourself.
6:55
Like, is that just how That's just how they do They answer the phones. Obviously, a great day. As far as I'm concerned.
7:03
Like, maybe he's like a retired guy and he just wanted to keep that going.
7:07
Like, my dad would like to do that in retirement.
7:10
Turning people down all day.
7:13
And so, what are your friends thinking in the industry?
7:16
Cuz it seems Dude, you guys just get beat up constantly. You know what I mean?
7:19
You just get punched all the time.
7:21
Yeah, it's like, "Okay, make America great again.
7:25
Where's Where's the great part? What's happening?
7:28
Where All we're doing is putting like all these small businesses out of business and then raising the price on consumers, right?"
7:32
So, here's what's happening.
7:33
So, just to give you a scenario.
7:35
I have a friend who is doing really well with his business.
7:39
And the business has been growing.
7:41
And so, prior to Trump taking office, he's you know, he's growing the business.
7:45
Trump takes office, he says he's going to have a tariff.
7:47
He says it's going to be a 20% tariff.
7:47
So, we're like, okay, cool.
7:49
Mentally prepared for 20% tariff. So, he places an order.
7:52
Now, just give you a sense, like orders have like a Forget about moving your manufacturing, which is a multi-year process that may not even work, by the way.
8:02
Just like changing your like sourcing from one place to another is, you know, 6 months to a year to get it up to scale.
8:10
This guy, you know, basically he's operating on a 4-month lead time, meaning from the day he knows he needs an he needs a an order, he has to place it 4 months in advance.
8:19
So, he placed it 4 months ago.
8:20
Now, 4 months ago is basically you know, before Trump even took office, right?
8:26
So, he placed that order.
8:28
And now, as that order is he's got five containers out at sea, about to land.
8:34
the ship, and they're like Yeah, it's a 100% tariff now.
8:37
So, he has to pay a million dollars in tariff.
8:39
He doesn't have a million dollars.
8:41
So, he's like he's like, dude, I literally don't know what I'm going to do.
8:44
I I don't have a million extra dollars lying around in my business that I could just pay this tariff.
8:50
I also have five containers, I have thousands of units just sitting there. They can't be rerouted.
8:55
I can't tell them to go back to China.
8:57
I can't I can't He's like, what do I do? I shut down my business?
9:01
Like he's basically like totally screwed.
9:02
And so, and this is common.
9:05
This is a lot of people are dealing with this.
9:08
Hey, let's take a quick break, but instead of an ad, I have a freebie for you.
9:11
It is my pitch deck template.
9:11
So, if you're founder and you're ever looking to raise money from investors, the reality is most founders are pretty bad at telling their own story, their decks are bad.
9:19
I've seen thousands of decks, I can tell you that most decks don't do the business justice.
9:23
And so, I actually made a template of what I use for my own companies.
9:28
I've given this out before in my newsletter.
9:29
Thousands of people have downloaded it, and I get emails all the time saying, "Hey, thanks for that template. I used it. I raised my round." So, it's a freebie.
9:35
If you want to ever raise money from investors, go grab it.
9:40
There's a link in the description below, and it just tells you like slide by slide like put this here, put this here, put this here with a little bit of commentary of why you're arranging the structure in that order.
9:48
I think it will raise your odds of successfully raising a funding round.
9:53
So, go ahead and grab it.
9:53
It's my free pitch deck template.
9:58
You and I have a mutual friend. He said the same thing.
9:59
He was like he's like my container, you know, the price of a container got screwed during a bunch of stuff in the last two or three years.
10:06
There was so many different things.
10:07
There was the Panama Canal or what Suez Canal I forget whatever there was the ship got stuck. Yeah, a ship got stuck.
10:13
Then there was this and then there was that and then now he's like this thing.
10:15
He's like I don't have enough money to buy the goods that I have coming in because I placed the order like a month ago.
10:20
Like all like it was like in transit it changed the price.
10:22
It's sort of the it's like when a parent's like you say another word 5 more minutes of time out. Up there's five. What What did you do? Oh, yeah. Five more. Five more.
10:31
You just got yourself five more. Totally.
10:35
In fact, I'm going to start start calling it tariffs with my kids.
10:38
I'm just going to start using that lingo.
10:40
Maybe maybe it'll be fun to be on the other side of the tariff for once.
10:45
And and there's a little bit of So, now people are trying to find, you know, whether it's workarounds or, you know, try to figure out, "Hey, does this apply?"
10:52
Cuz it's kind of unclear even how this applies.
10:53
You know, does it matter if I got my goods on the boat beforehand?
10:57
Either way, whether you whether this shipment gets tariffed a million dollars or not, point is it's very hard to survive as a business when you're you operate a let's say an e-commerce business that has 10 to 15% profit margin if you're doing things right.
11:12
You know, 20 if you're really kicking ass and you've been business and been in business for a long time and you have economies of scale and you have a large returning customer base.
11:18
But like 10 to 15% profit margins and then your cogs go up by a 100% is not going to work.
11:24
Like they're going to go broke.
11:26
And so the all the only alternative is you have to pass that to the customer.
11:30
So, now you have to tell the customer, "Hey, what this what this means to the customer, the math is if a normal, let's say, a unit of your thing cost a dollar, and now it's going to cost $2.
11:42
Well, before you sold that $1 thing for, let's say, $3 or $4.
11:46
Let's just say $4, a 4x markup, right?
11:49
So, your COGS was 25% of your revenue.
11:52
is is is I would imagine is very normal, yeah?
11:54
A standard markup, let's say.
11:54
And that that sounds like greedy.
11:56
Oh, you're already marking it up 4x.
11:58
Well, no, cuz you have to pay for marketing and advertising and your staff and the fulfillment and all all this other stuff.
12:03
You end up with a 10 to 10% 15% profit margin by the end of it, which is like restaurant territory.
12:08
And so, you know, it's not some We're not some fat cats over here in the e-commerce land.
12:14
Like, go look at e-commerce, you just see a bunch of tired, scraggly fools who like are just playing the wrong game.
12:20
And so, you you take that dollar item, now it's $2.
12:22
Well, that means you have to raise the price instead of being instead of being four originally, now you got to raise it to five to make up for that, right?
12:29
So, your all your goods are going to go up by 25 to 30%.
12:31
So, that's inflationary, right?
12:33
So, you if you thought, you know, inflation was bad before, the price of eggs and all this stuff, well, wait till Christmas season comes and nobody could buy a toy because all the toys are made in China, right?
12:43
Like, this is things All the shirts are made in China.
12:45
All the toys are made in China.
12:47
And if they're not made in China, they're made in Vietnam, which also got tariffed.
12:50
And so, it's like uh you know, there's a few countries that make all the stuff.
12:55
And this plan really doesn't make a lot of sense to me.
12:57
Now, maybe I'm just being sensitive cuz I have a business in this space that's very painful. yeah.
13:02
Yeah, so well less so for me cuz I have a lot of businesses, but for people for all my friends, this is their only business.
13:10
This is literally their lifeline.
13:10
And so, I find it um very not cool is my official diagnosis.
13:19
Super uncool by the orange guy.
13:19
I think you you need to create like a Sean's homie private chat lobby Uh and you guys can spend literally thousands of dollars to lobby the government to change their opinion.
13:35
Dude, I'm going to go to the lobby of this hotel and just see if I can get someone to change their mind.
13:37
Is that what lobby means?
13:41
That's the only lobbying I'm doing.
13:41
And you'll declare bankruptcy down there by yelling it declaria.
13:49
And so by the way, I don't know if you've read uh Molson who uh I don't know if you know Molson, Molson Hart.
13:53
He wrote a great post on X that I think is worth reading and this basically is called the America underestimates the difficulty of bringing manufacturing back.
14:02
And he gives 14 reasons about like why even if you took the generous side of this like policy and you're like, oh you know what?
14:10
Short-term pain for long-term gain, right?
14:11
Cuz I think we could all agree there's short-term pain, right?
14:15
The business owners have short-term pain, the consumers are going to have prices raised, short-term pain, the factories on the other side have short-term pain, the stock market is crashing, that's short-term pain, the 401 Ks are going down.
14:24
So, that part is pretty unambiguous, the short-term pain.
14:28
The question is is there even long-term gain?
14:30
And he wrote a post that basically outlines like you know, very you know, thoughtfully why there's some problems with this.
14:36
And he's basically like, you know, one one argument after another.
14:40
argument after another. It's sort of like um not only does moving a manufacturing plant back to America take a long time, like by the time somebody by the time a business owner who today is going to get hit by these tariffs, assuming they could somehow survive, spend millions of extra dollars opening
14:58
up manufacturing in the United States, which is not going to happen, and is a multi-year period before they get it all online, and then they magically find the labor to do this, cuz we don't really even train people in America to do this type of work anymore, um there's going to be a new president. And like you don't even know what the
15:14
And like you don't even know what the tariff situation is going to be by then.
15:16
It might be a totally a total fool's errand to do it by then.
15:18
So, nobody's really going to be be to make that move.
15:21
Most likely what's actually going to happen is like he's like, you know, we tried to do this in Trump's first term and all we did was make Vietnam great again.
15:27
Like basically this manufacturing just shifts to one of the other low-cost Asian countries that has lower tariffs is what's going to actually happen.
15:35
There's not going to like magically bring jobs back.
15:36
Oh, and by the way, you don't want to sit there and knit t-shirts either.
15:40
Like this is not a job you want.
15:42
These are jobs China doesn't even want. You think you want it?
15:44
Dave Chappelle was like, I want to wear Jordans.
15:48
I don't want to make them tickets. Exactly. Perfectly said.
15:51
And like there's these memes going around of like, you know, it'll be like Chamath like at a like a sewing machine trying to make a shirt. It's so true.
15:59
It's like is this what you think is going to happen?
16:02
Is this America being great again? I'm not sure.
16:04
And so, you know, political stuff aside, I think that the the tariff situation is really crazy right now.
16:11
As a business owner, it is very, very tricky how to navigate this.
16:16
Amongst your friend group, is it going to put anyone out of business or is it just going to destroy their margins?
16:22
Like is this like complete huge risk or is it like you've just made my life more challenging?
16:30
It's going to for sure put some people out of business because you had to like it's like I said to my my friend with the stuff already at sea or who's trying to scale their business, they might not be able to sell their product for an extra let's say they were a $100 product before and now they're a $140 product in order to maintain, you know, a still some profit.
16:50
So, on one hand demand is going to go down. Right?
16:53
I'm going to have less customers because I had to raise my price. My cost went up.
16:58
My cash flow that I had in the business went down and maybe down to a point where I'm needing to borrow money in order to just pay the tariff bills that I have of stuff that were already in flight.
17:07
Um it's a very, very tricky situation.
17:10
You know, what we did in our business was I was like, okay, here's how you deal with situations like this.
17:15
You have to create like a immediate SWAT team.
17:19
And let's open up a Google Doc.
17:19
Let's make six bullet points.
17:20
Like, what are the six levers we can pull? Okay, so uh pricing.
17:24
We're going to have to create some sort of tariff surcharge.
17:26
Um and we think it could be in this range that'll offset some but not all of the amount cuz we can't pass 100% of it to the customer. It'll kill demand.
17:34
And so we're going to pass, you know, a few bucks to the customer this way.
17:38
Uh the next thing we can do, we're trying to source from another country.
17:42
Okay, looks like you know, maybe it's Mexico or it's India or it's one of these lower tariff countries.
17:48
Okay, you're you're working on that.
17:49
Um you over here, you're going to work on um you know, figuring out how we're going to lower our cost because you're going to have to go negotiate with the factory, ask them to share some of the burden with you.
18:00
You're going to have to look up the talk to the lawyers and see what's going on with the stuff that's already in flight.
18:04
Hey, we're going to have to bring down the purchase orders cuz we have to be way more conservative.
18:08
Hey, you're going to have to go secure more debt because we're going to need a line of credit to make sure we can withstand the the storm here.
18:12
And so we created this plan.
18:15
I was like, we're meeting every day.
18:16
These five people, like the five core people in the company, whatever other priorities you had, they're gone.
18:20
This is your priority now.
18:23
We're going to meet every day and we're going to work on this plan for the next, you know, end number of days until this plan is executed.
18:29
And I think it's going to take that level of of intensity.
18:32
I think a mistake I made in the past is when things like this happen, you sort of take a little bit of a wait and see approach.
18:38
I think that could be very Every day that you don't act can be very costly as a business owner.
18:43
And so I think one of the key things to do um and like in our business, we have a CEO, we have a full exec team.
18:52
But when I heard how they were planning to approach this, it was like, yeah, this is like really important, just like these other four really important things we have. And I go, no, no, no.
18:59
You need to like have a public, you know, PSA that this is the most important thing you could do.
19:06
We're going to meet every morning.
19:07
There was a there's a name for this team.
19:09
And this this is the most important thing we're doing and this is your top priority.
19:12
You need to cut off with some other Right?
19:14
Like, I think just raising the level of intensity is very key in a situation like this, or people will go out of business.
19:20
So, you got to go snorkeling?
19:26
I'm on the call talking about how we have to like go raise the intensity, and there's literally just like aloha.
19:32
There's like this is like calming like Hawaiian music behind me and like clearly like palm trees.
19:35
And I'm like, "Guys, guys, this is life or death."
19:42
And then and then I like I like I go down a water slide on the Google Meet.
19:49
I didn't plan it this way, all right?
19:51
You you you stop like mid-talk to like get your drink that has the umbrella on it, and you're like looking for the straw with your mouth. That's awesome. Um well, that sucks.
20:04
Uh is there a world where is there any type of You know how like What are they What are What are George Is there anything I could do?
20:14
No, there's nothing you can do.
20:15
Dude, I have I met with the guy the other day, and I thought I was like, "Why do you want to I never take phone calls with people, but he wanted to talk."
20:21
And I thought he was going to end the conversation with like, "Look, like, you know, I've loved watching you get big and be on the pod, and you know, is there anything I can do?"
20:28
And I thought he was going to say could do to help.
20:31
And he said, "Is there anything I could do to be a guest on the podcast?"
20:35
Uh and I was like, "Wait, what?"
20:35
Uh I thought you were going to ask me how you could help me.
20:38
And then he just ended it with, "Is there anything I could do to be on your podcast and to have you promote me?"
20:48
I was like, "No, there's nothing that you can do." Wow, hell of an ask. Yeah, it was a bold ask.
20:55
Um Do you want to talk about something more fun? Please.
21:00
All right, let's talk about something more fun.
21:02
Yeah, I think this is actually going to be really fun.
21:05
I'm going to try and take your mind away from um the fact that the company that you've spent decades trying to build with your I'm going to try and uh take you uh take your mind off of that.
21:17
It just you know, four decades you spent building this company not going to vanish.
21:22
Never send Sam to like the cancel ward. the bedside manner.
21:27
We don't have time much We don't have a lot of time left. Uh so, let's get to it. Sorry.
21:35
Uh I meant you don't have a lot of time left.
21:36
So, let's hurry up and get to it.
21:38
Um or but I did I did I read something interesting that I when I read it, I was shocked by it.
21:43
And the reason I read this thing was because my company Hampton is basically like an events company.
21:49
We host hundreds of events a year.
21:50
And so, I'm trying to learn how other like event-based businesses operate.
21:53
And I found one that I totally didn't realize how amazing it was.
21:59
Uh and I just forgot about it.
21:59
Have you ever heard of the uh Medieval Times? It's generally, yeah. Yeah, sure.
22:06
No, the restaurant series like the restaurant franchise. No.
22:08
You've never heard Oh my god.
22:10
You are going to love this.
22:12
Okay, Google Is it like Rainforest Cafe but for like More.
22:18
Oh, there's like basically it looks like a small castle like the Excalibur Hotel in Vegas.
22:22
And then inside there's like people on horses jousting. People in the crowd.
22:27
always thought this was just like a joke.
22:28
I thought this was a joke in like '90s movies like for where people were going uh for dinner.
22:33
I didn't realize it was a real thing.
22:35
So, let me tell you this story.
22:36
So, Medieval Times is basically dinner theater.
22:39
And so, they do a 2-hour show where you go with you, your wife, and your two kids.
22:43
And you spend something like $80 ahead.
22:45
And you see people host a medieval show. There's like 200 actors.
22:50
And they like do jousting.
22:51
They do um like some type of theater stuff.
22:55
It's It's It's almost like Cirque du Soleil, but it's medieval stuff.
22:58
And it's like It's like WWF or something like wrestling.
23:03
Like it's all like acting.
23:03
I did not realize how big this was.
23:05
So, let me tell you the story.
23:07
So, the guy who started it, his name was Jose. He was a Spanish guy.
23:11
He had a small restaurant in Spain where he would like have like medieval like circus performers like doing juggling and just really small stuff and inside of a barbecue joint in Spain.
23:22
In the '80s, for some reason he decides to move to America and he's like, I want to create what I did in Spain, which was a really small thing.
23:30
I'm going to do it in America.
23:31
And he convinces a couple bankers to invest $8 million into his first restaurant.
23:37
And that first restaurant was in Florida.
23:38
And he creates what is now Medieval Times.
23:40
And he creates this thing where the idea is we're going to host something like 20 to 40 shows per month.
23:47
I'm going to hire 200 actors.
23:49
He spent a year training these guys how to sword fight, how to joust, how to like be like legit actors.
23:54
And he's like, we're going to serve you turkey legs and other medieval food.
24:01
Like whatever like the stereotype like stereotypical medieval food is.
24:02
And we're going to create this dinner experience.
24:06
And that's what he launches in 1983.
24:07
Well, fast forward almost 40 years now or 40 plus years, his son has taken it over.
24:14
And they were recently sued because a bunch of their performers tried to unionize.
24:18
And apparently they were preventing them from unionizing.
24:22
And so, there was a ton of articles written about this company.
24:27
And a lot of people were talking about their financials. They're enormous.
24:28
So, this company does So, basically they have it's estimated around 2 to 2.
24:32
5 million people a year coming to the restaurants.
24:37
And they make something like $150 to $200 a year in 10 locations hosting these dinner theater shows. It's amazing.
24:45
I had no idea this was this big.
24:47
And since 1983, they've hosted close to 80 million people at these events.
24:52
Have you ever been to one of these? No.
24:55
So, there's 10 locations.
24:55
And I haven't lived in any of the places.
24:59
Dallas, Myrtle Beach, Scottsdale, like places that I've, you know, haven't really lived in.
25:05
So, I've never been to one. Have you?
25:08
No, I've never been to one. Say the numbers again. So, how big is this?
25:10
So, just on 10 10 locations?
25:12
On 10 locations, during the union lawsuit and things like that, reporters were doing back of the envelope math and they were like, we think the company does between 150 and 200 million dollars a year in revenue.
25:27
And there's 10 locations.
25:27
And each location host something like, depending on the how popular it is, but the lowest one does something like 20 mil 20 performances a month all the way up to 60 performances a month.
25:40
So, two a day for 30 days.
25:42
It's insane how much demand there is.
25:45
And it was estimated that it was around 2 million people a year attending.
25:49
And on their official website, they say something like 80 I think they say 76 million people have ever attended a Medieval Times restaurant for one of their performances. Is that insane?
26:01
So, you know, 10 to 20 million dollars per location.
26:05
And they might be making, you know, one to two million dollars of profit per location, something like that. So, that's my guess. Or more.
26:10
So, the way it works is it's not a normal restaurant.
26:14
And so, you don't order the food. It's all pre-selected.
26:17
And so, it's like it's like an assembly line.
26:20
At the same time, all 1,000 guests get the exact same food.
26:24
So, like there's a lot of like maybe potentially significantly more efficiencies than a normal restaurant because there's not like, you know, a whole menu of stuff to do.
26:32
And get this, their performances, they only change the performances every five to seven years.
26:38
So, they spend a lot of time like making the performance and then everyone else just goes and learns it and they perfect it over the course of five to seven years.
26:45
So, they don't even change it that often.
26:46
And it takes like 200 performers for every show.
26:50
Yeah, it's pretty rough for you know, night performers, right?
26:53
Because you have like the step down between Game of Thrones and the Medieval Times restaurant. So vast.
26:59
Like the second place is pretty rough out there.
27:04
A knight's got to do what a knight's got to do.
27:07
So this is hilarious cuz you were like you were like looking this up as an analog for Hampton.
27:10
Are you thinking about getting in the turkey leg business? What's going on?
27:13
Well, the way that we are going to grow is through launching cities and I'm like, you know, trying to study like how launches work, how do have like general managers of each city, of each region.
27:24
Do you I'm just trying to understand like the logistics of it and I'm looking at a variety of unrelated but still in the event space just to figure out how do they do it? How do people do it?
27:33
And so I'm just looking at a ton of different ways and I was just curious about for some reason I came across these guys and I started thinking about them like, oh they have 10 locations and are they franchises? How do they work?
27:43
And it just caught my eye and I was shocked at how big they were.
27:49
Dude, can I tell you a goofy story that's kind of similar to to what you just described?
27:53
So I've been writing this book like on the side.
27:55
I'm not sure if I'm going to I'm going to actually publish it or not like but I kind of got I went down a rabbit hole and I got interested in it.
28:01
And it was um it was around how creativity works.
28:04
So how people how to be more how to be a more creative person and ultimately like make hits.
28:10
So like where do the hits come from? What's the title? Uh bad art. Bad art, okay.
28:17
Yeah, so it's like cuz there's one of the key like obvious sounds obvious in in hindsight but like when you go look at the creative process of the world's most successful creative people, you would think, oh wow, the ones who make the hits, the things that we all love, the high quality stuff, they just nail quality.
28:33
And if you listen any of their interviews, you watch their process, they don't give two shits about quality directly.
28:40
What they do is they focus on quantity and their belief is basically that quantity is the only way to get to quality.
28:46
So they're they play a volume game and they're like, "We produce a lot of bad art and that's where the one or two things that are real gold come from."
28:53
If you just sit down and try to make gold, it doesn't work.
28:54
You know, you actually end up not creating at all.
28:58
And so, one of the things I've been looking at is like how some of the big breakthroughs came from doing what you were talking about, which is like you learn from an adjacent space.
29:07
So, you go and you you know, the Wright brothers who ended up creating the first airplane.
29:11
Dude, George I I I read their book and they're amazing.
29:14
But, George Mack summarized their book amazingly in his High Agency blog post.
29:19
Yeah, yeah, yeah, exactly.
29:19
And so, they you know, they were they were not funded, they had no education, they had no team, they had no no specialty, they had no experience doing this, no nothing.
29:28
And like meanwhile, there's a guy over there funded by the Smithsonian, had $2 million in funding, had tons of engineers and scientists on his team, had all the press and the fanfare.
29:37
It was clear that he was going to be the win. He was the favorite.
29:38
Uh so, how did the underdog win?
29:40
Why did the underdog have the creative breakthrough?
29:43
And like one of the reasons why is the two brothers, the Wright brothers, they owned a bike shop.
29:46
And so, they they because they had no money, they did like 200 prototypes in the time that the other guy did two.
29:54
And their 200 prototypes were basically like they weren't even didn't even look like planes.
29:59
They were just testing like individual parts of a plane.
30:01
Uh like they'd make a glider or a wing and then they would make the wheels.
30:05
They would try to find different ways to test these things out.
30:08
And even Kitty Hawk, even the selection of where to go, they were like thought from first principles.
30:13
Like, where should we launch this thing?
30:14
Maybe we should launch it from this spot where we have the best wind and etc. , right?
30:19
So, they they weren't like tied to anything that was like there was they were not tied to anything.
30:22
Everything was first principles thinking.
30:23
And so, similarly, I don't know if you've heard the story about the the Yankees bats. Have you seen this?
30:30
Uh you'll have to enlighten me, but basically, the bats are heavier in the area where the ball mostly hits. Is that right?
30:39
Yeah, like the story, I mean, take the physics of it aside, Like the story is just kind of interesting because here you have baseball, this game that's been around for like, I don't know, hundred plus years or whatever.
30:51
And then, you know, just kind of in a bit of a high agency way, the Yankees were like, "Hey, can we just make a better bat?"
30:58
Like within the rules of the bat, like, you know, we're not going to make a heavier bat, we're not going to cheat.
31:02
And they hired this MIT guy to think about it, and he was like, "Oh, yeah, you could just like move more of the barrel to this one sweet spot.
31:07
And if you hit that, it's going to go way further, way harder.
31:14
Um, and you it's you'll have less misses and less near misses because you're going to have the thicker part of the bat right there.
31:20
And you'll have more barrels.
31:20
And sure enough, the Yankees start the season off with like way more home runs than anybody else this year.
31:27
I don't know anything about baseball, but is it statistically significant or do they just have ballers on their team this year?
31:31
Is it like it is the bat?
31:31
I think it's the bat, um, but I don't know if it's statistically significant.
31:36
I can't I don't know if you can say that, right?
31:38
Cuz it was like they started talking about this when they jumped out to a big lead in home runs, like 14 home runs already.
31:43
And it was like nobody else is even close.
31:45
So So we'll see, you know, we'll see if this this lands.
31:48
But the important part, cuz like who gives a about baseball, the important part was like dude, if if baseball, this like hundred year old sport that like, you know, people spend the teams spend hundreds of millions of dollars a year trying to like find any edge they can, if there's still like an edge like this to be found, it just proves how like so much of the world is like unoptimized and under thought about.
32:09
And like if you actually just took a lot of focus and intensity to any one problem, and you don't assume that people have already figured it out, that's, you know, one of the key things you need to have a breakthrough.
32:20
And so like the way you're talking about studying these other models, um, I think it's so important to do that.
32:25
I remember when we did our our our restaurant, it was my first startup.
32:29
But we did pretty much everything wrong.
32:30
Like every Now that I look back, I'm like, "Oh my god, so embarrassing."
32:34
Every like the way we did our business plan, we wrote 300-page business plan.
32:37
It's like, dude, now nowadays I write one page, if that if that.
32:41
Um we literally printed it out in a binder.
32:43
We were so proud of it and we thought that that was like, oh you know, a mark of our brilliance, when actually it was just a mark of our stupidity.
32:49
Um our marketing, you know, I used to just go door-to-door and knocking on doors trying to sell sushi like an idiot.
32:54
Like I I didn't know anything about Facebook ads or Google ads.
32:55
I didn't know anything about anything.
32:58
But one smart thing we did was we were like we were a delivery-only restaurant.
33:02
So today they call that cloud kitchens, back then that didn't exist.
33:05
Door-to-door sushi, I think, is the worst idea I've ever heard. Right?
33:09
But I was like, oh, let's try it.
33:12
Actually, by the way, Who doesn't want to eat this at 10:30 and when it's 95 degrees in Dallas?
33:18
No, what we did and I did was I went door-to-door, uh I went floor-to-floor, really.
33:21
I went into a skyscraper.
33:21
I went I just went in the elevator, I pushed a button, 1, 2, 3, 4, and I'd get out and I'd just talk to the office manager of each floor.
33:29
And if I could get her to cater the lunch, it was like getting 50 orders.
33:33
And it actually actually worked pretty well.
33:34
So that's kind of like a bit of a bit of example of this of ignorance is bliss.
33:37
So the the other thing that we did was we were looked at delivery.
33:41
So traditional food delivery, like you were talking about city-to-city expansion, we looked at how all the all the big restaurant chains did their delivery.
33:48
And what they did was they would basically have a delivery driver at the restaurant kind of waiting and waiting for a batch of orders.
33:55
So you would order, but they wouldn't just take your one order.
33:57
They wait till there's like five or six orders to go, right?
34:00
Cuz if I leave, then I'm with one order, that's inefficient.
34:03
So they would first wait for five or six orders.
34:05
Then they would drive out, they'd go one place at a time trying to deliver these things, and then they would drive back.
34:12
And what I was so confused about, I was like, how is this restaurant that's 1 mile away, why does delivery take 40 minutes?
34:17
It just didn't make any sense.
34:19
Like the route is like 2 minutes.
34:21
So like how how is it possible that it takes 40 minutes for the order? And so I watched them. And I studied them.
34:28
And we had our buddy Dan become one of them.
34:29
And it was like, Dan, you you work for Noodles & Company now, you got to figure this out."
34:32
Well, you were doing the deal move before Deal did it.
34:36
You had a Yeah, we sent him to the we sent him to the spy.
34:38
Yeah, you as spy and I was All he came back with was just like, "Dude, don't eat the food at Noodles & Company. There's so much salt."
34:43
And we're like, "But what about the delivery?"
34:45
He's like, "Oh, I didn't even get delivery. I got assigned soup."
34:48
So, he would make it tomato soup.
34:49
He's like, "There's so much salt in this soup, it's insane."
34:53
So, but we we figured out a breakthrough.
34:54
The breakthrough was basically we realized that the it was at the slowest part of the delivery was not the drive.
34:59
It was um the driver doing that last kind of not even last mile, like the last 200 ft to your door.
35:05
So, like finding the exact house or or apartment and you go there and you knock and you wait and then they come out and then whatever.
35:13
That was the way the slow part was.
35:15
And so, what we did was in downtown Denver, we created something called the drop zone.
35:18
So, in between a whole bunch of skyscrapers, we just had one guy stand there.
35:21
He was our delivery guy on the ground and then the driver just kept going back and forth dropping off orders to him non-stop.
35:28
And this sped up delivery like crazy.
35:30
And suddenly our delivery times were like 15 minutes, 16 minutes, 18 minutes.
35:34
And we were just crushing everybody on delivery.
35:35
And like the restaurant failed, but the learning of like you can't really take for granted that like everything's just figured out.
35:41
And if you just do the first principles thinking of like you watch, you look for the slowest part, then you think, "Okay, what can we do?
35:48
Even if it sounds a little weird that we're going to have a we're just going to put a dude there at the bottom and he's going to stand there holding the orders.
35:53
The delivery guy is just a stationary dude."
35:55
But that would eliminate all of the lag of the driver having to wait like for that last, you know, to do all those last mile deliveries. That was the key for us.
36:03
I found when doing this, there's a few hard parts.
36:08
Like just doing the exercise, the hard part one is knowing what things to question and what things to accept.
36:15
For example, uh let's say you're creating Tesla and you're like, "Well, an electric battery that that probably can go long enough."
36:22
Like if I look at this the math behind it, but they didn't like change the shape of the wheel.
36:27
That's a very obvious one, but when you're running a company, it's very hard to decide what to question and what not to question.
36:36
It's also incredibly challenging to get yourself into that mindset of first principles thinking and more challenging to convince your staff or your co-workers or whatever to just like come with like an open mind and and actually get on board and being open-minded to trying this exercise. I found that to be hard.
36:52
What's hard about it and then how did you try to tackle that?
36:55
For example, just like the um people saying like well it it has to be this way for these reasons.
37:01
And it's like you have to say to them, I know, but just like I know you think that, but just try to get beyond that just for a few minutes and let's just have a conversation where it doesn't happen that way. What would happen?
37:11
There's this book called the six ways of thinking for design. I forget exactly.
37:16
Uh do you know what I'm talking about that book? No, I haven't read that.
37:18
Basically, it's like an exercise where there's six different colored hats and you're like all right, your green hat when you put your green hat on, that means you're just thinking of profit.
37:26
When you put your red hat on, that means you're going to come and be very pessimistic and poke poke holes in everything.
37:31
Your black hat means you're open-minded and so it's this way of saying right now I'm going to put this hat on, which means I'm going to by default I'm not going to hate on anything cuz a lot of people default to this is why you can't do it to I'm going to figure out all the reasons why this could work. Yes. Yeah.
37:47
And so you did that you tried that?
37:50
Yeah, and it helps, but it's still I I guess what I'm saying is Like no I didn't have any hats.
37:53
Like no I didn't have any hats. No, it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it
37:57
it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it
38:01
it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it
38:04
it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it it Yeah. Yeah, yeah, yeah. I I feel that Yeah, yeah, yeah.
38:08
I I feel that people like it like so once you give people permission to do it, they actually get excited about it.
38:13
Um you're right that you have to sort of like frame it the right way.
38:18
If you just go into a a and your hope and expectation is that people are going to be like open-minded and creative and come up with a novel solution, it's like not going to happen at all.
38:27
Like you have to either tell a story at the beginning that gets them in the mindset of So, I've done that before.
38:32
Which is basically the the Yankee bath thing.
38:34
I mean, that was pretty good.
38:37
Yeah, like it'll be one like that or it'll be like I remember back in the day I watched this um thing on YouTube that was like really inspiring to me.
38:44
I don't know if you've ever seen it.
38:45
It's the IDEO grocery cart challenge.
38:48
So, IDEO was just this design thinking lab this group.
38:50
So, companies go and pay them lots of money to come up with like novel innovative solutions and designs.
38:56
So, I think 60 Minutes or somebody went to them some TV show and they were like, "Hey, we want to understand how you guys think.
39:05
And so, we have a challenge for you guys uh as part of the show."
39:07
And they were like, "We want you to redesign reimagine the grocery cart in a day.
39:11
You have 24 hours 48 hours to do this."
39:15
And so, they break up into two teams and they show their process of how they do it. All right?
39:19
So, like there's like a process of like fact gathering.
39:21
So, they first they go get a grocery cart, all right?
39:24
Or they go watch it in a grocery store.
39:26
They want to see how the customer uses it.
39:27
They don't want to take anything for granted.
39:28
So, they're like, "Oh, like certain set of customers actually use this as like a kid baby center."
39:33
It's like their kid sits inside it.
39:35
They need a thing to play and that's like a key part of this.
39:37
Like if you lost the kid seat, you would lose that mom as a customer.
39:41
Um or other people are loading up and they need the two racks and then, you know, so you're seeing how people use it.
39:48
Then they were like, "Cool, you and you state those observations."
39:49
They put them on index cards.
39:50
You start throwing them on the wall.
39:51
And the guy sets the tone.
39:53
He's like, "We're in the diverge phase."
39:55
And basically he draws this little cone.
39:57
I don't know if you've ever seen it.
39:57
It's like a like a cone going out and he's basically like, "During the diverge phase, it's like whatever a predetermined set of time, our team knows how to do this, which is when you're super crazy wacky ideas, free play, what if mode and you don't judge the ideas during this phase.
40:11
You're just trying to riff off riff as many ideas you can.
40:14
And then we're going to switch modes switch hats.
40:15
And you're going go to converge where we basically ruthlessly narrowing down the set of possibilities of where we might go with this.
40:22
Um, but we we distinctly have two phases because you don't want in the one phase, the one brave person to be courageous and throw out a half-baked idea, and then somebody immediately smart guy slam them and be like, "Why the hell wouldn't work?"
40:34
And now nobody wants to suggest ideas again for the rest of that hour.
40:37
So, you have to like really explicitly do like what you're allowed to say during this hour is only, you know, yes and, and then during this one it's a no but.
40:45
And then they end up with this redesigned grocery cart where it's like it was basically like I don't know, you can look up the image of it online, but it was like a thing that was designed for a new type of grocery cart.
40:56
And I thought about that, I was kind of inspired by that cuz hey, I just thought, "Wow, what a cool job.
40:59
These guys get to be creative for a living."
41:02
The top This video is 15 years old and it says the top comment is, "They're still making us watch this for school by the way in 2024."
41:10
Yeah, that I actually think there should be a Netflix show of this like, you know, the you have chopped where they give them a random basket of ingredients, you got to make a meal out of it.
41:18
I I would love to see like two teams that are like, you know, engineer designer types, and you basically give them like a challenge like redesign the grocery cart, like redesign make make the inside of an elevator more entertaining.
41:28
And just see what they do.
41:31
Like I I would find that super fascinating as like a TV show.
41:34
And I think it would inspire a lot of people to become like engineers or designers if you watch that.
41:37
The same way like Shark Tank, although it's like totally like bogus in terms of like the entrepreneurship that they show, it's super accessible and it gets people excited about the idea of entrepreneurship.
41:47
This book sounds pretty great. Bad Art.
41:49
It sounds It sounds like a pretty good idea. It's a great book. I'm excited about it.
41:55
My my The only hesitation I had on it was like I feel like I already got a ton of value out of it doing the like research and the kind of the prep like of outlining the Oh, here's the big ideas and then crystallizing them in my mind.
42:05
So, you're going to be like Derek from LA and you're going to just say, "F you, reader. I don't care about you.
42:09
It's already Do I need to go the extra mile of publishing it for other people to benefit?
42:13
I'm not sure that I I care about that.
42:15
Like I'm not going to I'm not going to make any money off this.
42:18
I'm not trying to get famous off a book.
42:19
What do I Why do I need to do that? So, I might publish it.
42:20
The other problem is like I'm not sure how many other people nerd out about this idea of making great art, making making great products, just insanely great things, and caring about being the like wanting to learn the creative process.
42:34
Cuz you know what I what I figured out after that I mean that that's obviously foolish.
42:37
What about that guy like that's a philosophy. Uh yeah, yeah, yeah.
42:39
You you you got you caught you got me on the hook.
42:44
Uh you got the compliments on the hook.
42:46
Because what about that Austin guy?
42:47
Like uh you know, artist What was it called? Great Artist Steal.
42:49
Is that what it's called?
42:51
to just be that Austin guy?
42:51
You don't even know what this guy's last name I know the book cover.
42:54
What's Isn't it like a What's it called? Great Artist Steal.
42:57
Yeah, like I know that a lot of smart people whose books I read, they always say that that like we had a Jack Carr on the podcast who wrote all these amazing fiction books I love, and he talked about it.
43:08
Ryan Holiday talked about it.
43:09
Mark Manson, who I know you like, talked about that book.
43:11
Everyone likes that book. that's the thing.
43:13
It's a lot of authors Like I wrote this I wrote this thing cuz I was studying how to do this cuz I wanted to write a book.
43:17
I didn't want to write the book about this, but that that's just where I landed.
43:21
It's for sure super important for anybody who's like an author or screenwriter type of person.
43:26
It's just that such a small percentage of population that I'm not sure it's worth the pain of of publishing, but Dude, if I don't know.
43:33
If you feel if the comments on YouTube persuade me enough, then I might be open to publishing this.
43:40
If Sahil Bloom can convince everyone on Twitter to share his book, you can, too.
43:45
What he's What's hilarious about Sahil?
43:46
Cuz Sahil's great, and Sahil's such an achiever.
43:48
He brought the PE energy to to Totally.
43:51
He brought the PE He He brought the the the Ivy League energy, right?
43:53
He like PE He like achieved his way into Stanford, achieved his way to being a good athlete, like a like a D1 athlete, achieved his way into private equity successfully, achieved his way into a six-pack, achieved his like he's just basically like all right give me a target and like show me a show me a ladder and I shall climb.
44:11
And it was like when we were like yo, you should do Twitter dude.
44:15
Like your your posts are kind of interesting.
44:16
I think you could do this. He's like cool.
44:18
Monday through Friday 6:00 a. m.
44:20
get up, cold plunge, write thread, publish thread every day for the next 900 days straight.
44:27
And then dude, he got like a million followers.
44:28
He achieved her the out of Twitter too. It's amazing.
44:32
Yeah, now you're going to have to do the same with bad art.
44:33
As Elon once said when they asked him are you afraid of failure?
44:37
He said it is not in my nature.
44:39
That's how I feel about achieving.
44:41
It is not in my nature to do this.
44:48
Is that going to be that should be the reply to everything now?
44:50
As a great Elon Musk has once said, this is not in my nature.
44:54
Dude, how sick is that phrase?
44:56
How how how like timeless and alpha is that phrase? All right, is that it?
44:59
Are you going to go and enjoy the um enjoy the sand or doing whatever you do?
45:04
Do you even leave your apartment when you're in Hawaii? Yeah, dude. I'm in the ocean.
45:08
I'm in the I'm at the beach. I got kids dude.
45:09
They want to do everything.
45:10
Are you going to wear Tweety Bird shorts at the pool?
45:13
every day for six days straight. Like it's the same day.
45:15
But they love it so much that I I can't help but love it too. All right, that's it. That's the pod.