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All right, my friends.
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Today's episode, it's special for me and it's going to be special for anyone out there who's a creator or who owns a media company. Let me explain.
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So, I've got this friend named Craig Fuller.
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Craig Fuller runs this company called FreightWaves.
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It's a data business, but they have a media arm and it's a huge company.
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They've raised tens of millions in funding and they make tens of millions in recurring revenue. Huge business.
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However, on the side, he ended up buying a bunch of magazines including Flying magazine, a bunch of boating magazines.
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Very weird of him to do that and I wanted to do a podcast about that.
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Turns out, he's bought all of these niche magazines for a very small amount of money and he's only about 3 years into business and the company's doing around 60 million in revenue and 12 million in profit and it's his prediction that by 2030 it's going to do a billion in revenue.
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Which is A, insane that that's someone's side project that they're doing that and B, I wanted to learn all about it.
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I wanted to learn about the model that he's doing where he's basically buying these magazines and then he's selling the audience different products as products and services including like building an airplane hangar and selling space in that hangar for Flying magazine. Things like that.
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So, if you have an audience, if you want to build an audience, if you want to build a big business on top of that audience, this podcast is for you. All right, check it out. Uh we're we're live.
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This is just how we we just get right into it.
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Well, that It's not often that someone's side hobby becomes almost cooler than their main thing particularly given that your main thing is this like massive hit.
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So, you're Craig Fuller, you've got this thing called FreightWaves which is a data business, but you guys also have a popular media arm and you just you display most of your financials online as if you're a publicly traded company almost and I don't know what the revenue is, but it's somewhere in the high tens of millions uh in recurring revenue and then you also have uh you've raised what? $90 million for that?
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65 in venture capital, but we raised some debt on top of it.
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So, total about a little bit under 80 million or a little bit over 80 million.
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And then your your latest kind of side project that is not really the size of most people's side projects is Fire Crown Media where you've bought dozens of magazines and you've parlayed that into like you've turned Flying magazine into like a country club but for flying enthusiasts and so you've like bought, you know, thousands of acres of land, you've built an airport and now you've you're buying even more pieces of property, more stuff.
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And I think what is Fire Crown does what?
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50 million this year in revenue? million run rate.
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So, um is where we'll we'll finish this year. So. Golly, man.
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And what I didn't realize, I was doing research, I didn't realize that trucking kind of runs through your family, right?
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Yeah, my father started what's now or he sold the business last year, but it became the fifth largest trucking company in the US.
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And then my uncle started the eighth largest what's now the eighth largest trucking company in the US.
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Were your uncle and father competitors? Oh, yeah.
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Yeah, they're pretty pretty dire competitors. But are they tight?
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Are they are they good family members?
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Nowadays, they're much better.
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You know, they're they do get along now, but there was a period of time where they just absolutely hated each other.
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My family is in the My father's a produce broker.
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So, I grew up with truckers and it's an interesting industry because the people who own the businesses can be pretty wealthy, but they're still rednecks.
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Like they're still like blue they're like blue collar guys, but they're not necessarily always traditionally educated and they're still rough even if they're quite wealthy.
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Was your dad like like a blue collar guy even though that he ran this huge company?
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Yeah, I mean he's a blue collar guy.
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I mean he you know, he looks presentable in a suit and he's talking to Wall Street investors.
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I mean he he certainly is you know, he's presentable.
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He's not going to embarrass himself in front of folks.
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But he he is, you know, he's he's a finance guy.
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I mean ultimately in trucking you're operating a business that operates with single digit margins, you know, 1 to 3% margins and so uh you've got to know how to operate that business.
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It's an owner-operator type business and so he certainly is an operator.
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And he eventually, I think recently sold that business for like $800 million, right?
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Yeah, he merged it into Knight-Swift which is the largest.
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It was the second largest trucking merger in history.
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the company did about $2.
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5 billion when it sold for 800 million. So.
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And you were working for him and I read that you worked for him starting at a young age.
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You kicked ass, but for some reason you butted heads with the executive team.
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You got fired, I think in your late 20s or early 30s and you started uh shockingly, which I can't believe you did this, day trading and you were like, I got to build something and so at 36, I think or 34, you were like, I want to do almost like day trading but for freight stuff. Is that right?
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Yeah, I mean I got fired twice.
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So, I got fired from my father's trucking company, US Xpress, in 2005.
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It was actually my older brother who became the CEO uh of US Xpress that had had me fired in 2005.
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And then my family's a bunch of man. Pretty much.
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But um we I love them, but they're this is just this is a family tradition.
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You fire and you go out and start your own business.
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And then uh they had a payments company, a fuel card company that they had incubated uh that I took over and uh scaled up and then we sold part of it to US Bank and we were doing both fleet card processing and debit card processing, payment processing for banks.
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What what's a what's a fuel card?
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I know that truckers have them, but I don't entirely know what they do or how they make money.
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When truckers want to buy fuel, you figure 200 gallons if they're truly topping off their tank uh is they're going to fill up with, you know, a thousand to 1200 to 1400 dollars. Wow, okay.
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And what they use some card and do they get perks or something? What's the business?
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No, they it's for fraud management because what will happen is if you don't manage I mean think about it, you've got you know, US Xpress had 9,000 truck drivers um and you're giving them all an expense account that effectively they they're buying fuel, but they're also doing over-the-road maintenance.
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So, if they need tires or they need a truck breaks down, you know, these things can be 10, 20,000 dollars on a breakdown situation or could be, you know, thousands of dollars in tires um or fuel.
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And so, you know, a truck driver is responsible for probably 6 to 8,000 dollars of expenses per month when you look at total what the total cost of the expenses and so you have a lot of fraud that ends up happening and so fleet cards are there to manage the fraud both from the fuel spend but also on the um on the, you know, all the maintenance and stuff. Got it.
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I never knew what those did. All right, cool.
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Um And so you're you're growing this thing, whatever, it's working out fine and then you get into FreightWaves, uh Freight Alley.
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That that works out good.
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Uh how long did it take to to kind of get into the tens of millions in revenue?
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It was about 20 million dollar business by in 2 years, 3 years, something like that. How did it grow so fast? The formula, right? Like timing was great.
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This is when a lot of venture capital investment made into the space um and then you also had this digitization that was taking place where companies were trying to digitize the supply chain.
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And then, you know, at the end of the day, I had relationships.
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It's funny cuz my dad didn't put any money into the company.
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He told me I'd be a bad CEO and refused to invest in the business and so I had to go raise venture capital.
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Dude, are you and your are you and your family close? Oh, yeah.
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My dad and I talk He's now like after he sold US Xpress, he's now one of my largest investors in Fire Crown.
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He actually is my largest investor in Fire Crown.
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So, we're actually really tight.
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I've been following you for a while and when I think of like a good media CEO, you are one of the the people that I think of.
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Uh what attributes did you have that made him think that you would be a bad CEO? Yeah.
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Well, I had ran a business, a payments business.
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He fired me in 2014 uh because it was a tech business and tech technology businesses, while they generate a lot of margin as they scale, they actually burn a lot of capital.
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You know, trucking's a cash flow business.
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He didn't understand that, you know, a tech business as it would scale would actually consume capital.
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So, he got really mad and he would didn't want to raise any money.
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So, he fired me because he didn't think I could run a a business that would be profitable because that's not how technology companies typically work in their early phases.
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What's funny about that business is is that's one of the most valuable assets in the family's portfolio now.
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Um it just got a $500 million valuation last, you know, sold some stock in September last year.
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So, uh it's done well uh but I you know, I've been out of that business for many years. All right, look.
8:36
The question that Sean and I get asked constantly is what skill set did we develop early on in our careers that kind of changed our business career and that's an easy answer. It's copywriting.
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We've talked about copywriting and how it's changed our lives constantly on this podcast and we give a ton of tips, a ton of techniques, a ton of frameworks and throughout all the podcasts.
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Well, we decided to aggregate all of that into one simple document so you can read all of it.
8:56
You can see how we've learned copywriting, but you can see the resources that we turn to on a daily basis.
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You can see the frameworks, the techniques we use.
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It's in a simple document.
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You can check it out in the link below.
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All right, now back to the show.
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All right, so this is the main thing that I wanted to talk about.
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So, there's this um blog that I love.
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It's called um Flash and Flames.
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I'm pretty sure that like only maybe 10,000 people a month read Flash and Flames.
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So, if you're listening to this and you're a fan of like media businesses, this is my favorite blog on the internet.
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It's written by this guy named Colin Morrison. He's based in England.
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He wrote this article that I think it was called Why Magazines Are the New Trophy Asset or something like that.
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And I read that you saw that article and you're like, I'm going to go out and buy magazines. Is that right?
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Yeah, I mean I was reading it and I was you know, it was essentially the trophy asset and he was using the example of Marc Benioff buying Time magazine and some others.
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And it was really interesting because I like, you know, I could never buy Time magazine.
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You know, the two media businesses that I would own that would be trophy assets far beyond it would be like Bloomberg would be number one and, you know, owning owning something of CNBC scale would also be another.
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Obviously, those are way outside my league, so they're not happening.
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And I was thinking to myself, I had just taken up aviation, taken up flying, and I was reading Flying magazine, and I was pretty uninspired.
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And so, I was like, it would be cool to own like a an aviation magazine, to own Flying magazine, because that would be my trophy.
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I'm a pilot, and that's sort of what I would I would like to do.
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And so, it inspired me to reach out to the owners of Flying magazine and asked if they would sell the magazine, and they said, "It's not for sale, but we're happy to talk to you."
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And uh I made an offer, and they ended up selling it to me.
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And that sort of it was sort of out the same it started off as a side hustle.
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I didn't actually intend I thought print magazines were dead and dinosaurs read print magazines.
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And I became very skeptical of the whole print magazine business model.
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But when I bought it, I fell in love with the not just the content and what you could do with it, but also the value what print brings to an audience.
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And so, what I found is that really these print magazines are completely undervalued.
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Uh that nobody will touch them because they view have the same philosophy that I had about them dying.
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Yet, they own these fantastically great communities and audiences that have been around for decades.
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And and typically, as you get into sort of the older populations that have grown up with magazines is they still have these really important um sort of connections to the brands.
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And we found that that's a really interesting opportunity.
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Were you liquid when you decided to buy it, or were you like, I if they if the price that they want is in the millions, I'm going to have to go get money from someone else?
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No, I had enough money to pull that off, so.
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With your money, do you keep a large percent in like the S&P 500, and this was just a fraction of it, or was this like a meaningful amount?
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It was a I mean, it was a meaningful amount relative to my liquidity.
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I mean, in terms of my total net worth, not significant, but I have a lot of paper worth as a venture-backed founder tends to be.
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Um but you don't have a lot of liquidity.
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So, relative to liquidity, yeah, it was a big it was a big number.
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Then what was the thinking is I'm going to have to buy this, and I'm going to have to spend some hours per week to making sure that it doesn't lose money. Well, it was profitable.
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I mean, it was generating about half a million dollars of EBITDA a year as a stand-alone entity. So, you're about 2. 5 million in revenue.
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Uh so, it was a small This is a small business.
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Uh and we buy businesses at three to five times EBITDA.
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That's typically the number these things trade at.
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So, we're not talking about a huge like this wasn't a huge capital outlay. So, it was like one 1. 5 to 2.
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5 million dollars is what you paid.
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you know, total purchase price is about 3.
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5 million when you look at cash and and some deferred expenses and deferred payments.
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Uh so, it came out to about 3.
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5 million dollars, uh which, you know, seven times five, you know, 2.
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5 million up front and a million deferred, and uh Yeah, but then you got to deal with like do journalists a lot of times I hire journalists.
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They're pains in the asses.
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And like when I think of like all my potential side hobbies, I'm like I'd rather be a beekeeper than like own a freaking magazine and deal with these employees, or I'd rather get to like go on for walks or hikes. I don't know about this.
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Well, look, I I mean, I had, you know, Airways has 40 or if you look at total contributors that are journal that qualify as journalists contributors, they have 40 to 50.
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So, I had I knew the what the you know, I knew what the rodeo was going to look like for running, you know, having teams of journalists work for you.
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What was different though with magazines is these are different than sort of younger sort of uh digital native journalists or or journalists that have been sort of working in newsrooms is magazine journalists don't do it because they make a lot of money.
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They do it because they love the content.
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And and they're also there's a sense of defeatism that has existed across all publishers.
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And I've seen this in the multitude of acquisitions we've done is where the editorial teams feel like the the the owners of the magazines don't love them and aren't willing to make investments in them.
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And they almost look at you, and I hate to use this term uh as almost liberators of their business, because in some ways they they love the content, they love the subject matter, they have the relationships.
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They tend to be sort of micro-celebrities in their own communities.
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So, that So, these are the old-school influencers, if you will.
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And yet, they get no love from corporates, because what's happened is the whole magazine business model has collapsed in the last 10 years.
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Because the way that magazines made money in the past, the internet has destroyed that business model.
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And rather than sort of digitizing their business model or sort of evolving the business model, they just started to cut costs.
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And so, that was the way they sort of fended off the inevitable.
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And the problem is at some point the value that the community gets and the audience gets is diminished, and these things are just it's a it's sort of a death circle.
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And so, what we do is we we come in, we buy them, in some ways we liberate them from this sort of inevitable decline, and they feel really encouraged by that.
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You know, we we upgrade the paper, we upgrade the quality, we make investments in the editorial team.
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You know, Flying's editorial team went from sort of three folks when we bought it to 30.
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So, you have three primary full-time employees, and then you have contributors that are submitting an article that goes in the magazine.
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Very different from the world you and I sort of come from, digital media, where you actually have a full-time staff that's writing content on a daily basis.
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They're writing they're contributing a piece that's once a month.
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And so, it may be an airline pilot or a flight instructor or someone who really knows the jet market or the turbine market.
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And so, you want subject matter expertise, and typically writing is a second is is not their primary job.
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They do it as a sort of a side hustle uh to make a little bit of money.
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Uh and that's why these businesses have operated.
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But what they've what they've also done is they've they've not made investments in like print quality or online assets or any of that stuff.
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Ooh, how much revenue did you do do in the first year of owning it, revenue and profit?
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Uh in 2022, I think we were about $7 million in revenue, 6.
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5, 7 million, something like that.
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Oh, so you like aggressively grew it, yeah. How?
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Um because we invested in So, a couple things we did was we invested in the magazine. We raised the price.
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Uh the magazine was losing $7.
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So, the magazine was taking in $8 per subscription, but it cost them $15 $8 a month.
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It cost $8 a year was the net revenue.
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I know, you look you look For folks that are listening, but your face is exactly what mine was.
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They were generating on average $8 in revenue per subscriber per year, and it cost them $15 to fill that subscriber.
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They were losing and have since as far back as our data went to 2006, losing $7 per subscriber.
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And I say Wait, so Flying magazine costs $8 a year to subscribe to.
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the average yield, the average across the whole subscriber base, the magazine generated $8 on average per subscriber.
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And when you say yield, that's not uh uh revenue minus the hard costs. is that is the revenue.
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That's the top-line number. Oh, that's stupid.
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That you got to like Sam, they were losing $7 per magazine per subscriber per year.
17:26
Yeah, so like a Flying magazine subscriber is definitely going to pay $50 a year or whatever or You would think, right?
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That was my reaction to it.
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Is essentially our communications to the staff were to the sales team was basically, you're going to raise the rates uh of advertising sales because we want to go to people who who So, on the ad sales, we raised the cost of ads, but we also to subscribers basically said, "Look, if somebody's not willing to spend 30 or 40 dollars a year, then they're not really they don't care about the content.
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I mean, think about this.
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To buy an airplane, you're going to spend, you know, minimum 50,000.
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That's a, you know, old aircraft.
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To buy a most of the folks are buying, you know, quarter of a million to million dollar aircraft.
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And and some of our audience is 75 to 100 million dollar airplanes.
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And so, you have a you have a a natural audience that is going to spend a lot of money because they care about the hobby or they care about their careers or whatever it is.
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They're if they're not willing to spend 30 or 40 dollars, they're also not going to buy advertising.
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Because what happened is in the old days Well, and how many subscribers?
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So, we when we bought that, it was about 108,000 subscribers. That's pretty great.
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Um we actually when we raised the price, we raised it to 30 initially, it actually went down to 32,000 subscribers.
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No We bled it out, but that's okay.
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Like we wanted to do that.
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We wanted to get rid of and it was a lot of what we call freeloaders.
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They were essentially targeted for advertising purposes.
18:52
Uh or the people like do you remember this I when you were younger is your like your school would have a fundraiser, and you would bring home a form and your parents would sign like buy a magazine they didn't care about.
19:05
There was a lot of subscriptions like that where the people that were actually subscribing didn't care about the content.
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I basically said, "I don't want any of them.
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I want people who actually care about the content."
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And we were very successful in doing that.
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And then so, we saw uh subscriptions grow substantially in terms of actual full-paid subscriptions.
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And subscription dollars, we were basically doubled the subscription revenue over the course of a year.
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Yet, it still had like a third of the subscribers. We went down to 32,000. We're now about 45,000. We've grown it since.
19:35
And are you able to manage this growth off the cash flows of the business, or did you have to put more capital in?
19:39
I put more capital uh that I I wanted to put more capital in.
19:42
Like I could have ran it tighter, but I didn't want to. How much did you put in?
19:47
Um you know, look, I we total invested about 40 million dollars in the business, but that's not flying.
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That's That's all the acquisitions we've done and everything we've acquired.
19:57
point in the story, you've not raised outside capital.
19:58
No, no, I didn't raise I actually had a I had half a million dollars in from two brothers of early investors in FreightWaves that bought in.
20:06
They got 15% of the business for $500,000. So you grow it to 7.
20:10
5 in and how much profit?
20:12
Um business was about break even at 7.
20:16
5 million cuz we were not we were not optimizing for profitability.
20:19
We were optimizing for growth.
20:21
Who'd you hire to run it?
20:22
So I was I was doing a lot of more day-to-day and I I I recruited a team to come in uh to to run the day-to-day operations.
20:31
Okay, so uh we're at the end of '22 and I think around this time you actually were like holy Uh I might have just like hit on something interesting.
20:40
I should go out and buy more and do this again or did you first come up with the crazy idea to buy all that land?
20:49
So I bought the land in 2021. About 1,500 acres.
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So originally it I didn't plan on being a real estate.
20:56
What we actually wanted to do was uh go out and build a media center connected to a runway cuz I was you know if people are going to fly in airplanes remember at the end of the day the content for flying is all about the airplane.
21:11
Like people care less about the pilot.
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They care a lot about the airplane.
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And this is no different than a car magazine where you're going to look at the Lambo or the Ferrari.
21:18
For the aviation audience, they want to see the newest aircraft being produced.
21:22
And so we wanted to create a video center and to connect it to an airport.
21:26
The problem was that none of the airports in the community five regional community airports around Chattanooga were willing to sort of do anything.
21:37
They said you know basically you have to go from the state the municipality the state and the FAA have to approve it in order to get to build a media center.
21:45
When you say media center, you mean Yeah, to take video.
21:47
We wanted to have a hangar that had a basically a video studio and photography studio that we can bring airplanes in.
21:52
And you have to build that because it wasn't there's no hangar there's a national hangar shortage across the country.
22:00
Um and and because what happens is nobody wants to municipalities who own all these airports don't want investment in private hangars for small aircraft.
22:10
They they want the big airplanes.
22:10
And there's just a a problem of allocation.
22:14
So we decided to go build our own headquarters.
22:18
And I was looking for land to look for about 50 acres and I came across this piece of land had 1,500 acres.
22:24
And um it was priced at 3.
22:24
65 million and uh I I drove up there and it reminded me of this resort in East Tennessee called Blackberry Farm Yeah, I love it. wife absolutely loves.
22:35
It's sort of back to farming agricultural.
22:36
So I show up there and I'm like this looks and feels a lot like Blackberry Farm and that was sort of the real jaw inspiration is we wanted to create a flying community with a runway and home sites that are connected to the runway that had that Blackberry Farm inspired sort of experience.
22:56
How much did you pay for that? 3. 6 million.
22:59
Did you pay it or did you raise money?
23:01
No, I borrowed from the bank.
23:01
I mean real estate is one of those things you can go borrow money.
23:05
Um and so remember I'm I have a a relatively high net worth.
23:10
I don't have no liquidity.
23:10
This is why I'm asking these questions because your net worth is significantly higher than mine because um you you your business is bigger than mine, but I'm liquid and even me I'm like scared to make some of these bets.
23:28
You don't seem to have that same fear.
23:32
You seem to be way more offensive and you seem way more I mean look it's not like we're inventing like electric cars or going to Mars and so I don't want to like grandiose it make it too grand, but like you're out laying a lot of cash on some really crazy ideas.
23:47
You're like I'm going to build an I'm going to buy an old magazine and I'm going to spend more of my money build an aviation community.
23:55
Like that's like really weird.
23:58
Uh and that's really ballsy.
24:01
Why what do you think you have what's that gene inside of you that makes you think these wacky things are going to work?
24:06
Because the day that like my experience suggests that it will, but it you know it's taking more shots on goal.
24:12
Like yeah, I got 3 and 1/2 million dollars in an investment for a real estate project, but if it goes to zero, I still own 3 and 1/2 pingos of land, right?
24:20
Yeah, but that's a huge project to get into cuz do you know anything about real estate?
24:25
No, but you can you can bring in teams to go run those things which we had.
24:30
So like Sam, it's a matter of scaling businesses and and hiring teams to run these things.
24:36
Yeah, it's risk, but Yeah, I agree with you.
24:38
This is just this is just outside your your expertise and you've made it your expertise very quickly.
24:45
Yeah, I mean but but media was outside my expertise.
24:47
Date running a data business was outside my expertise, but real estate is actually frankly I wouldn't say it's easier.
24:54
It's a it's a it's a different playbook that frankly can be learned.
24:59
It's not as if you know building a SaaS business and building a data business there's a very small number of sort of models to follow.
25:05
There's a very few companies that you can sort of model your business after.
25:09
the risk is lower for that though.
25:09
The risk is lower for software.
25:13
I think real estate real estate is uh so much less riskier because you actually have finite assets at the end of the day. That's true.
25:20
The difference though is when I I can start a software I can start an internet or data company with significantly less money than it costs to purchase a meaningful piece of property. But I own the land.
25:32
Remember that land at 1,500 acres at $2,400 an acre has value.
25:37
You can sell that land for something else.
25:39
You can partition it out.
25:39
Um you know if you looked at that at what an acre would go for in that community 50 to 60,000 if it was subdivided. It just wasn't.
25:48
And so we knew that the land had some underlying value.
25:51
What we didn't know if there would be any demand for pilots.
25:55
Uh we advertised it was in January 2022.
25:58
We actually took out ads in our own magazine to test the market.
26:01
What did you say in the ad?
26:01
You know it was written as if it was written to my wife effectively.
26:05
Like my wife was the target audience which is your Blackberry Farm audience.
26:09
And we wrote a story about we're building a resort and we didn't focus on the aviation which is really what you would expect us to focus on.
26:18
We focused on the amenities around the experience that we're going to build.
26:22
We shape we vision shaped it.
26:22
And we didn't expect to get a lot of response.
26:26
We had over 300 inbound inquiries on that one ad we took out in our own magazine.
26:31
And we were able to get people to sign contracts to basically reserve their spot.
26:36
And we knew then we had a winner.
26:38
Did you like make a joke about the fact that you're new to this or or were you like more professional, but you're like mean I didn't make a joke about new, but we I mean like we were very transparent about the fact this was a Not a joke not a joke, but being light-hearted.
26:52
You're like who knows what's going to happen?
26:57
I mean ultimately Sam, it's about like we recruit recruited people that actually had experience in doing you know the development the master planning community.
27:07
There are groups that actually take on a lot of the burden to do the work that you need to build these things.
27:10
It's not as if I'm having to 1,500 acres is a huge project.
27:14
You're not going to do that yourself.
27:16
You're going to you're going to want teams to deal with zoning issues, environmental issues, engineering issues.
27:21
Yeah, we brought in air airport planning to uh uh consultants.
27:25
We brought in um uh development consultants.
27:28
And so it's not as if I'm doing all this work myself. I have a whole team.
27:32
You asked who's running these projects.
27:33
I have a team that's running them uh that's managing all the different pieces of it.
27:38
And they and people wrote in and they basically said if you're able to build this count me in for buying a $800,000 home on that property or something like that.
27:47
that's the pri the lots are 600,000.
27:47
The homes are probably 2 million to 3 million dollars.
27:51
And did they sign and you they what did they what did they give to you that the bank took as uh They signed a a contract and they let they put a deposit.
28:01
So $40,000 an acre on a $600,000 purchase price, but they put $40,000 in per acre.
28:10
And you raised it $10,000 per lot.
28:10
And was it like you basically quote pre-sold was it like 15 million dollars worth of these properties?
28:17
Yeah, we actually got up to about 28 million dollars in total bookings.
28:21
Yeah, total reservation deposits.
28:24
But we thought we were going to get through this process for environmental approval, quicker zoning approval.
28:28
We actually thought we'd break ground by the end of '22.
28:31
So we had it some turn out.
28:34
We refunded their money cuz these are refundable deposits.
28:36
It's not as if they're giving you money that you get to hold on to.
28:39
It's no different than if you bought you put a deposit on an airplane or put a deposit on a car.
28:42
Uh these are fully refundable, uh but we're about 15 million dollars in in total reservations right now.
28:51
So this project alone is awesome.
28:54
But then it gets even crazier and like this is I'm just fascinated by you because I view you a little bit as a peer and that we're both like media nerds.
29:03
But the way that we're different is that you're you're doing great with risk.
29:07
Like you you're you're going you're taking more risk I think but it doesn't it's all working out.
29:12
And this is where it gets interesting is you're like all right, this thing works for flying magazines.
29:18
What what magazine what happens if I go out and get more of these titles and do this whole content to commerce thing?
29:25
And did you raise money for that? Um not initially.
29:29
Uh so I've not raised any My father invested when he sold his trucking business last year.
29:38
So he's my only outside investor other than the initial round.
29:40
Everything was done by myself.
29:41
And I was just using bank debt frankly.
29:45
Borrowing money from banks and liquidating my portfolio because I felt like I would rather invest in myself than to invest in the S&P.
29:51
I think the difference between Sam isn't necessarily that I'm like I am willing to take more risk.
29:57
I'm also willing to take more shots on goal.
30:01
I just think fundamentally, like an asymmetric mindset that I have is is I may lose, let's say the real estate project went to zero.
30:08
I'm going to lose three and a half million dollars. That sucks. But you know what?
30:13
I had been My dad cut me off. My dad fired me in 2014.
30:15
I had basically like no job, nothing.
30:21
Like it was I was for all intents and purposes on my own at rock bottom. I had to figure it out. I'd done that before.
30:28
And so I'm not afraid of losing it all.
30:30
And I know that I can get it back.
30:33
And so we've applied that rule to everything that we've done.
30:37
And we make acquisitions under the philosophy that it's asymmetric risk.
30:42
It's like let's say that we buy a business or buy a magazine that's we spend half a million dollars or million dollars.
30:47
And let's say it goes to zero.
30:49
Let's say that we're completely wrong about our thesis and the thing is just a dog.
30:52
Well, then we write off that half a million or million dollar investment.
30:55
But if we're right and we get a three or five or 10x multiple on that business, that creates an enormous amount of value for us.
31:02
And so that's how we've approached our acquisitions.
31:07
Um and I'm willing to take bank debt because bank debt is frankly pretty cheap.
31:12
By the way, I think about money differently than you.
31:13
And I think it's cool to hear your perspective cuz I think I should do it more.
31:15
But the way that I think about it with privately as a entrepreneur of private companies, I think if most of my money if most of my net worth is illiquid, any liquidity that I get, whether it's annual cash flows or it's from selling I I sold one of my companies, I take all that money and I stock it away in like a safe thing where it's like uh if all else goes to from whatever I have, that is enough forever.
31:44
And so that's how I view it.
31:44
So like whatever how much money I have, I I stick it away and I'm like that doesn't exist basically.
31:50
And uh I'm going to go and use a very much smaller sum to go start more companies and I'll try to live off of my income from those companies. And if they sell, great.
31:59
If they don't, hey, I still have this other thing that I have.
32:03
What you're doing is different than me.
32:05
And I like what you're doing because I think it's bolder and I think it's probably a bit more fun if it works.
32:09
Which is you're like even though I've got this private uh this other private company that it's doing quite well.
32:15
So it's not going to go out to nothing.
32:16
But I have some liquidity.
32:19
I'm going to pile that liquidity into more interesting but potentially risky things.
32:24
Well, I like FreightWaves at some point will sell.
32:26
Like it will sell and it will do be an exit.
32:27
That to me is the nest egg like for for my long term.
32:33
Like I know it's going to sell.
32:33
Who knows what it sells for.
32:35
But there is value fundamental tangible value in the business.
32:39
So for me and it's big enough that it's slightly de-risked or very de-risked.
32:42
mean it's it's totally de-risked.
32:42
And and there's a lot of value in that business. And I had a salary.
32:47
It's not as if I I'm not like the board takes care of me.
32:50
And I So for me, I have that asset.
32:52
Everything else is that will set my family up for genera you know, for at least a generation.
33:01
Like my kids would be able to go to college, be able to buy a house and so forth.
33:04
So I'm not worried about like my ability to survive if everything else falls down.
33:09
But I do think diversifying my risk through all these other projects actually enhances my long-term returns uh particularly if I'm using my balance sheet to borrow money from the bank at frankly relatively low cost.
33:22
What about diversifying your time?
33:25
That's probably that what Well, that's what teams do for you, right?
33:27
Like you hire people to run it.
33:29
Like you know, Preston Holland who I did I think you know, um we brought Preston in to initially run Flying.
33:33
He's now running a finance business that we've got.
33:39
That is doing aircraft financing.
33:41
Uh we brought in a team to run We have Reese that's running our real estate project.
33:44
So again, and I fired myself from almost every functional role I had at FreightWaves is I like Hold on.
33:50
Are you are you chairman or CEO of FreightWaves?
33:53
but I the day-to-day day-to-day functions inside that business, I have uh Spencer Pilon who's my CFO and COO is running most of the day-to-day.
34:03
Most of the day-to-day decisions are going through him.
34:05
I'm working through strategy and thinking about the long-term prognosis of the business.
34:10
So I can run and do deals and look at additional ways to leverage this business up without getting caught up in the individual sort of minutia of running a business.
34:20
So how many titles has Firecrown acquired at this point?
34:24
We're about 54, I think is the number.
34:27
Did you buy them in batches?
34:29
Like you bought You typically I mean publishers in the magazine business, it's hard to get scale with one title.
34:36
Just because there's a finite audience that will care about that content.
34:37
And so typically a publisher And here's the thing about magazines is that only 25% of the content a 25% of the operation of that business actually is value added to a customer.
34:50
You have audience development, you have magazine production, you have layout.
34:55
Like a customer doesn't experience that.
34:56
They only about 25% of the cost structure is the editorial product or the photography.
35:02
So you you need a lot of infrastructure to run a successful magazine or frankly media business operation.
35:08
I think you know the media side.
35:09
Magazines Dude, it was insane.
35:10
Basically the Hustle we could have I mean we had about two million subscribers when I sold and now I don't know what it's at.
35:17
Let's say three or three and a half.
35:20
Basically three people on editorial if we were selling ads.
35:22
So when I ran the company, three people on editorial and 37 people selling ads and managing ads and making it grow.
35:32
Yeah, and those three people bring all the value. It's crazy, right?
35:37
It's I mean it's just how these media businesses work is you have a couple people that are up front and the rest of it is infrastructure.
35:45
And so what you typically see when we buy a magazine is we're having we're buying a portfolio.
35:51
We're buying not just one title but three or four titles that come along with it.
35:55
And so we've done a you know, maybe two maybe maybe 20 different acquisitions that that made up that portfolio.
36:01
But some of them have been really big.
36:02
We bought Bonnier which is like the the the largest publisher in Sweden, the sort of a Rupert Murdoch family of Sweden.
36:08
And they owned a bunch of boating titles which we bought uh last in last fall.
36:17
And really we own boating, yachting, Sailing World, Fish Saltwater Sportsman.
36:23
Uh so really this large marine title.
36:23
In aviation, we bought a a number of aviation titles uh through various portfolios.
36:29
And then we just recently bought uh Model Trains a bunch of railroad titles and astronomy titles.
36:35
So bringing that all together, that puts us the whole portfolio.
36:38
Just whatever 12-year-old Craig is into.
36:40
Boats, planes, RC trades.
36:45
So it's almost like my five-year-old's like dream.
36:47
So I mean think about it.
36:48
It's boats, it's airplanes, it's trains, and it's space.
36:52
It's pretty cool for you know, like a five-year-old boy, it's pretty magical.
36:56
You know, but what we're buying are these audiences that love the content.
37:00
They're they're enthusiasts.
37:03
And effectively by owning the the magazine which we financed through the the P&L of the magazine itself, subscriptions and advertising, we make money in media.
37:13
But we're ultimately buying the audience itself to sit to offer some other product or service to them.
37:19
Yeah, so let's walk through this playbook.
37:22
So the playbook is to acquire customers profitably.
37:25
And you do that by having a media arm that is its own business or having a media company that's is its own business and makes a profit via subscriptions and advertising.
37:35
Step two is to make sure the audience, I imagine you'll have to correct me, it's you're you're doing something in your head of like will they spend a lot of money on something? Is that right? Yeah, essentially.
37:46
But if they're if they're enthusiast if the if a category is big and they're enthusiastic about the category, then the answer is pretty much yes.
37:55
I mean if they're The thing to remember about magazines and particularly magazines that are decade-old magazines is these things have survived potentially the great Leo magazines that are over 100 years old.
38:06
They've survived multiple wars, they've survived multiple pandemics, they've survived uh the Great Depression.
38:10
Like the audience truly cares about the content enough to subscribe.
38:16
And if they've if these magazines have survived the internet age and multiple phases of it, they're going to be around for many, many years.
38:24
And so essentially we're buying it because they care deeply about the content.
38:28
And then ultimately they can buy another product or service.
38:30
And then is step three like raise prices and sell ads better or like do you think about that?
38:38
Well, I don't think we look at it in the same step, right?
38:40
So like we do we treat these we have a we have a media business which runs the media operation.
38:48
And then as we go find commerce, so let's say aircraft finance, we find essentially an executive, a CEO if you will, that can of run that business through its own P&L.
38:58
That's separate than the media business.
38:59
But in order to finance that, like these people wouldn't be selling you these businesses if they were kicking ass.
39:05
But you're been able to you've been able to make them kick ass a lot better.
39:09
And so you must be doing something just on the media side that they didn't do. What are those things?
39:16
Yeah, I mean effectively you're fixing a lot of the cost structure and looking at it in the terms of the spend opportunity of that audience and create data that can you know really uh look at data from the perspective of intent for someone that wants to buy a product.
39:32
So if you're if you're reading Flying magazine, you're either a pilot, an aspiring pilot, or an aircraft owner, or somebody who wants to own an airplane.
39:42
This is that's the four primary There's people who read flying cuz they like airplanes, but it's a small piece of the audience.
39:49
And so we know each of those categories are going to spend some money in each of their outcomes.
39:53
So a student pilot's going to take flying lessons, it's going to cost him $10,000.
39:57
If he's going to be a career pilot, he's going to make $15 million over the course of his career.
40:01
A lot of opportunity to to help him along his journey.
40:07
If they're an aircraft buyer or prospective buyer, they're going to buy an airplane.
40:10
They're also going to buy insurance finance out of that.
40:12
They're also going to have a lot of expenses to own that aircraft throughout their life.
40:17
And so these are the journeys that we we have and that's ultimately what we're doing is we're optimizing the the magazine, the advertisers based on intent, not based on the fact that this is a number.
40:27
And what we've explained to the owners, the advertisers, is wouldn't you rather reach the 100 people that are going to buy them buy your airplane versus the 100,000 people that you know, 99% of those people are never going to buy any of your products.
40:42
That's what we need to do is actually get into that intent data and we do that through digital.
40:48
Like print is just one aspect of what we do, but it's driving intent data to actually be able to demonstrate to them there's a value to that customer.
40:56
That was a very good pitch.
40:58
And then uh you when you hire these guys to create so I guess airplane financing means you help people get loans to buy a plane and then I think you have like a classified section so people selling planes and then now you have the real estate one.
41:15
I don't know what you've done with the other titles, how you've done the same content to commerce type of play, but I want to hear more about what those are.
41:22
But when you're hiring people to build these businesses on top of an audience, so do you hire how much do you decide to invest in them until in in invest in their their new the new business until they're able to make a profit?
41:35
You know, we we have a we're pretty patient.
41:37
I mean, it depends on the business itself.
41:38
If it's growing and it's it hits KPIs, then we'll continue to support it.
41:42
You know, every business is different.
41:44
Obviously, the real estate business has you know, we haven't broken ground yet.
41:47
So that that is going to take many years to sort of generate a a profit.
41:52
It has its own sort of journey.
41:54
The finance business is a finance brokerage business and it should generate profitability much quicker than some of the other projects.
42:00
You know, we buy e-commerce businesses.
42:01
We we've now own six e-commerce businesses. What are you selling?
42:05
We own the largest NASA or the largest space merch store on the internet called the space store.
42:10
Uh so it's like collectibles.
42:12
The aviation nerds and the space nerds are the Venn diagram for both of them is pretty tight.
42:18
So if you want to if you want like a model of a rocket or a patch from one of the missions, we we can sell that whether it's SpaceX or NASA.
42:24
And so what are some of the like what what are you going to do with boating?
42:28
Are you going to build a harbor?
42:31
No, I don't think we're doing real estate cuz I think real estate's a real like the the arbitrage in aviation is that you're taking a piece of land that has beauty it's a beautiful piece of land, but it's not next to a body of water to build a lakefront home.
42:46
And so essentially what you're doing is you're taking this land and you're arbitraging because the the runway itself is the arbitrage.
42:53
The fact that pilots want to be there.
42:56
And so with boating, it's not as if I can arbitrage a lakefront property or an oceanfront property.
43:02
Cuz that's already awesome. Exactly.
43:02
And there's the market's already priced that in accordingly.
43:06
So for us, we're looking at financing, we're looking at e-commerce, we're looking at other categories that we think we can be successful.
43:12
So probably won't be real estate, but it will be in other categories that we'll we'll look at commerce.
43:18
You I think you said 40 million that you've raised for this whole thing?
43:23
Yeah, I didn't raise I mean, in between I mean, my father funded has invested the money into it.
43:27
We haven't used outside capital, if you will. It's a family office.
43:30
Of that 40, how much have you spent on acquisitions?
43:36
No, that's been the predominance of the investment has been through M&A.
43:38
But you're going to do 60 million in revenue this year.
43:41
I think on the tweet you said 10 or 15% profit?
43:45
It's about to Our profit in March was 18% and we we think we can sustain 20 and we think ultimately it sort of like levels out around 30%.
43:56
Uh so you're going to do 60 million in revenue, I think you said.
43:59
So that means 12 million in profit.
44:01
Yeah, remember that's a run rate number.
44:03
So that's not the full but yeah, 60 million in revenue run rate a little bit over 60 with 20% margins.
44:10
And then what do you think that would be worth?
44:15
You know, if you look at sort of public comps, then you're probably talking 12 to 15 times earnings.
44:20
That's probably what If it was a public Our goal is to get to a billion dollars.
44:25
I got I have no plans to sell this business. I like having cash flow.
44:26
Same, I do appreciate cash flow.
44:28
So it's not just taking risk.
44:30
I actually love cash flow.
44:31
You know, it's funny as a venture-backed founder, you're kind of jealous You've heard this you've talked about this on your podcast before is you get jealous of the cash flow guys.
44:41
The cash flow guys get jealous of the valuation in venture and the venture guys, almost every founder that I know, are super jealous of the cash flow guys because like, wait, we built this fantastically high valued business, but we don't see any of that money.
44:54
It goes, you know, ultimately until exit.
44:56
So but you you have both at at this point, but you have so on 12 million in profit, 10 times is a 120 is or no, sorry, you said 12 times. 12 or 15.
45:09
can If it was a private trade, probably 10 times is a fair number.
45:11
Um so the business is worth at 60 million run rate, 12 million profit.
45:16
I don't I don't know if it's a trailing 12 months revenue, whatever, but roughly 120 million to 180 million dollars.
45:21
That that's what the business is worth.
45:26
And you started this in '22 or '21? '21. Yeah. That's awesome. Okay.
45:29
And then you said, I think this is going to get to a billion in revenue by 2030. Is that what you said?
45:38
And we can do that through both organic and inorganic growth.
45:40
I mean, here's the reality is there's 4,500 magazine publishers in there.
45:43
And Sam, there's no exit for these guys.
45:45
I mean, a lot of them are they're either owned by large corporations, which frankly want to divest their print products because public comps are challenging for them.
45:57
Uh or they're you know, family-owned businesses where they've been running the business for multiple generations or perhaps they started it 50 years ago, whatever.
46:05
And they don't have an exit.
46:07
And so we can go find I mean, we're doing a deal right now where it's a little you know, business about a million and a half revenue.
46:14
Um about $600,000 and and when you take out all the expenses, all the owner expenses, about $600,000 of contribution.
46:22
We'll we'll pay less than one time for that business.
46:26
And so there's just not a lot of folks buying in this category.
46:28
And ultimately, you're buying the audience.
46:31
I mean, that's really what it's all about is yes, we own and generate profit and that's great and cash flow, but ultimately So I like to say we're a private equity business meets venture capital because ultimately VCs want the asymmetric 100X return.
46:46
We're going to incubate businesses that can potentially bring those high-level returns, but using the audience, which we already and so I mean, e-commerce is never going to hit that mark.
46:56
But you have an aircraft finance business, you have a real estate project that very well could and we'll find other business models as we grow.
47:03
You're basically building a a Hearst-style company.
47:05
So Hearst um have you read The Chief, the biography of William Randolph Hearst? I have not. You should, man. It's awesome.
47:14
So William Randolph Hearst, he he had a successful father.
47:18
His successful father was a miner, I think, or like gold gold.
47:21
And in a gambling bet, he won, I think, the San Francisco Chronicle.
47:28
And he goes to his son and he goes, "Well, William, you've got the Chronicle.
47:34
Hopefully, you can make it into something.
47:35
You've got a year to to make it not lose money."
47:37
And so he he does that and he does it by creating what's called yellow journalism, which is like clickbait of the late 1800s, early 1900s.
47:47
And he kicks ass and he crushes it and he starts buying another thing, another thing, another thing.
47:53
He starts buying all these titles and he's killing it. He's crushing it.
47:57
This is like a cable business before cable where it's recurring revenue subscriptions, massive margins.
48:04
And then they they get so big so they do a bunch of things.
48:09
One, they invest in this new sports network called ESPN.
48:11
So now Hearst owns something like 30% or 40% or 50%.
48:16
I forget the number of ESPN.
48:16
That's they've made a billion off of that.
48:19
Then they buy Fitch Ratings, I think, which is a data business, which is exactly what you're in.
48:27
And they start buying all this stuff.
48:27
At this point, Hearst is owned by the family.
48:30
It's one of the largest family-owned businesses in America.
48:32
They own this massive building in right in the heart of New York City.
48:37
My in-laws live literally five like I'm on my wife's like bedroom that she like grew up in and I can like reach out the window and touch like the Hearst building.
48:48
And I remember that was funny because I almost sold my company to them and I was like sleeping in that room when I was visiting New York City.
48:53
And anyway, they own this massive building that I don't think they got a loan on.
48:57
I think they own this like multi-billion dollar building.
49:00
They own a ranch in like Wyoming or something like that.
49:04
They own everything and it's owned by this family and it's kind of sick and it's been around for 100 years.
49:09
That's sort of what you're you're doing.
49:11
You know, Hearst is amazing cuz it's 10 10 billion or 12 billion in revenue, no debt.
49:16
Like that's what's pretty astounding about Hearst.
49:18
Not even on the real estate?
49:18
They they they're they're no debt.
49:20
They actually have a very large venture capital portfolio.
49:24
They're They're an investor in FreightWaves, by the way.
49:26
So that's one of the reasons know all about them.
49:28
I I met I forget who I met with there, but I learned a lot about them.
49:31
But they're like older guys.
49:34
They're like they wear suits.
49:35
They're like the Mad Men era where they like you know.
49:37
So, it would have been a bad fit, but that's what you're building and it's awesome.
49:42
Look, I think media businesses are under-appreciated.
49:44
And I I think what's happened is they you know, Hearst during Hearst is they own a bunch of newspapers as well.
49:50
But I think what we're seeing now is this if you own a strong sort of thesis around a media asset and you can build products that take that audience, that's ultimately the playbook.
50:03
It's like I we have these audiences, they love the content they're subscribing paying for a product, which is a print magazine or a digital experience.
50:14
They're already the audience.
50:14
We can offer them products and services that they naturally would buy anyways.
50:19
Yeah, that sounds like when you say that, I'm like yeah, that's so obvious, but like everyone not everyone, a lot of people have tried this. Few have succeeded.
50:26
Hodinkee I think is succeeding.
50:29
There might be a couple others, but like when BuzzFeed says they're going to do it, it's It never works out.
50:34
I think it doesn't work out because they have like a committee deciding on these things, whereas you could be a bit more of a kind of a monarch where you're like this is what we're going to do. Go do it.
50:45
I think BuzzFeed along with a lot of other publishers have sold out to programmatic and and have relied upon the the the platforms, the Facebooks and the And no one really like loves them too much.
50:56
I mean what is BuzzFeed anyways?
50:58
It's like a holistic like and I think the difference is that we're we're buying magazines and media properties that had been around for decades, where the audience like the people talk about their father or the grandfather and they you know, reading Trains magazine or Model Railroader or or flying.
51:18
Like they they they have it has a a lot of affinity to it and then effectively we just have to find services.
51:24
So, we make money in media, but then we have to find services that we can offer on top of that.
51:31
How many hours a week you working?
51:34
You know, I don't I don't count my hours.
51:36
You think but like maybe like a normal 9-5 40-hour week?
51:39
No, I mean I I I do when I wake up at 6:00 in the morning cuz my kids wake me up till midnight.
51:45
I'm pretty much either with my kids or or working on the businesses. So, you're a grad.
51:51
That's not work to me, man.
51:51
Like like to me this isn't work.
51:55
These are this is a game in some ways.
51:57
I mean I But you're still you're in grind mode.
52:01
It's not like this is all like Yeah, I'm not sitting on a beach.
52:03
Like I I do it to myself, too.
52:05
Like I end up getting overwhelmed and then I'm like I only have myself to blame. What's your goal?
52:11
To you want to be a billionaire?
52:13
You want to just do cool You want to create something that last for 100 years?
52:16
What's what what No, I mean one of the reasons I like media businesses is because you're you're always learning something new and you get intellectually stimulated by a new challenge. It's a new audience.
52:25
It's a it's a new product. I don't know.
52:27
To me it's You don't want all the power, fame, sex and drugs that comes with owning space magazine. com.
52:36
Trains magazine is going to give me an enormous amount of power?
52:38
Yeah, or Model Railroader?
52:39
No, it's not that at all.
52:42
And it's not even the wealth. It's more of the chase.
52:44
It's the it's the putting up the score in some ways of solving problems and learning about a a different I mean I we have a business that I paid $10,000 for. It's called Arrow Swag.
52:54
It's an e-commerce business.
52:56
It it will do $100,000 this year.
52:56
That is I spend more time on that business proportionally than any other one just because I think it's cool.
53:03
It's a print-on-demand t-shirt shop for for pilots.
53:07
I frankly should not be spending that much as much time as I do, but I enjoy the to me it's a hobby.
53:11
It's a tinkering kind of thing.
53:13
I bet it feels awesome to make your dad regret firing you.
53:20
It was fun proving that I could make it work, but I had a lot of that.
53:22
I mean a lot of doubters when we first started the business.
53:25
Yeah, look behind most successful people is a girlfriend or boyfriend that broke up with them or a father who said no.
53:31
Yeah, they like one rude comment or like in my case it was an immediate executive who like he like half hazardly like in passing was like man, these newsletters will never make more than a million dollars a year.
53:44
And like I was like you And you thought about that every day, right? Every day.
53:48
And I see this guy on sitting at floor seats at the Knicks and I'm like you son of a So, I would say the best thing to give a founder is an enemy.
54:00
So, at Freeways I had a guy who was a he was a CEO of our largest competitor and he really pissed me off cuz he told me I couldn't couldn't compete against him.
54:09
He like I he was I'd like to see you try with our products.
54:13
And I I woke up every day thinking about him, but he got fired and I tell you the motivation it wasn't as fun anymore because I needed him to be the guy.
54:19
All of a sudden the company became nice to me and it was like no, I want you Like please go back to being because it like you know, I wake up more slightly more motivated every day.
54:31
I was like that with the founders of Morning Brew.
54:33
I was like I want to kill you.
54:35
I'm like if I see you in public, I'm I want to like get a fight.
54:39
Now they're like my they're family to me.
54:40
They're like my best friends.
54:42
Well, you you are doing a you're hosting a one of the podcasts on their platforms.
54:47
Uh You know, people say uh uh you know, don't don't be hateful towards this person and in my head I'm like your rage is like the greatest fuel ever. It completely.
54:58
I don't you know, someone once told me if you got hate in your heart, let it out.
55:01
I'm like nah, I'm burying that deep.
55:03
That ain't going nowhere. That's fuel I need that.
55:07
But Sam, you know, it's also it's good for the team. Yeah.
55:10
Because if they also have the hatred of the enemy, then they will they'll go much further and and fight harder than if than if you don't. Yeah, I love that.
55:20
And it's sort of like a sport where you know like once you once the whistle blows, you're like anything goes, but once the game's over, like it's like all right, you nothing but love, nothing but respect, but while we're in between those the the lines, like we're getting after it. Yeah, exactly.
55:35
And so I think it's good.
55:37
Dude, thanks for doing this. Yep, enjoyed it.
55:39
Craig Fuller, that's the pod.