Neil Patel On Making +$100M/Year, Spending $180k/Month, and Donating Millions To Charity — searchlore

Neil Patel On Making +$100M/Year, Spending $180k/Month, and Donating Millions To Charity

My First Million

Published May 10, 2022

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0:00

to say in your blog post that it, you go $15,000 a month is all I need, I'm happy.

0:03

That was like 10 years ago, I think.

0:05

But, uh that's But, you used to say 15,000.

0:09

Single and no kids is easy.

0:09

Right now, if I had to guess on my burn rate, 120 to 180 A MONTH. WHAT? That's insane.

0:14

So, what is How does that break down?

0:17

So, what's the like what's the bulk of it?

0:21

What are the So, house probably is the biggest one. No, I have no mortgage.

0:24

Okay, you have So, you're spending 120 to 180k without spending anything on your home.

0:37

So, Neil, I I was telling you a little bit about what you're getting into.

0:39

We record everything, by the way, so like we just hop into it.

0:42

But, I Sean kind of knows who you are.

0:45

I've been a fan of yours for like 10 years.

0:47

Can I tell Sean and the audience who I think you are and you can tell me if I'm wrong and like what I'm missing? Sure. Go for it.

0:55

All right, so you're Neil Patel.

0:57

So, I know you because you used to have this blog called Quick Sprout.

1:02

I read it maybe 10 years ago.

1:05

It's probably a 15-year-old blog, if I remember correctly.

1:06

At first, it was mostly about like SEO, but eventually it kind of like warped into being about SEO, about content, but just about business in general.

1:15

And you would do like crazy stuff, like you would build a business that made $100,000 a month in revenue by like you just picked like a random niche and I think it ended up being supplements and you like blogged every month about how that was going.

1:26

And you used to blog about all types of crazy stuff.

1:28

But, then eventually you also started a company called Crazy Egg, which I heard was doing many millions of dollars a year in revenue and it was a bootstrap and you owned the whole thing.

1:36

Then, you and Hiten started Kissmetrics and raised a bunch of money.

1:40

It didn't end up working out wonderfully, but it was like it could have been actually quite huge.

1:45

Hiten wrote a great blog post about like where you know, where a couple errors were made.

1:49

But, now you've got like a seven or 800 person agency that is also bootstrap like the rest of your stuff.

1:56

And you've just kind of been balling out like for like 15 years in the world of business just killing it with agencies. Is that right?

2:02

Did I Did I get everything mostly right? Mostly close.

2:05

So, Crazy Egg came first.

2:09

Uh Hiten's the co-founder on that.

2:09

He has it all or uh you know, he owns Crazy Egg um as well.

2:17

So, it's not just me anymore.

2:19

And then uh there's another guy named John Butler who was also part of Crazy Egg at the beginning.

2:25

And then Quick Sprout came later.

2:25

Uh I started blogging on it about business and stuff like that.

2:31

Uh Kissmetrics then came.

2:31

Kissmetrics didn't work out.

2:36

Quick Sprout started to have a big audience related to marketing.

2:37

We tried to create a SEO software on there.

2:39

I did that with my co-founder Hiten at the time.

2:43

He's like, "All right, how about we create a company out of this? I'll do the software."

2:45

And that didn't work out.

2:47

I didn't want to be part of it anymore. He took it over.

2:49

And um he ended up making it uh you know, business site, directory, you know, informational site, whatever you want to call it.

2:58

Has affiliate offers which you already know about.

3:00

And then the last one was the ad agency, which is correct.

3:05

And then there's been a lot of stuff in between here and there. A lot didn't work out.

3:09

But generally speaking, I tend to do one thing at once, focus, and currently I spend all my time on my ad agency.

3:16

And that You're at 6 700.

3:16

How How big is that at the moment?

3:20

And it's only like 5 or 6 years old, right?

3:24

Yeah, so we're on our fifth year.

3:24

End of this year will be end of year five.

3:28

Uh we're at roughly 700 people.

3:28

I think maybe a little bit more.

3:30

Maybe by end of year 900-ish if I had to guess. Who are these people?

3:35

Do you Are these Are they like 700 anonymous Indians in India? What's going on? Who are these people?

3:41

we do have some people in India.

3:41

Uh but what's funny is How many people do you employ in New York?

3:46

That's what I want to know. That's my agency test.

3:49

Wait, you're in Brazil, too, though, right? Yeah, we're in Brazil.

3:51

Majority of our people are in the United States.

3:53

If I look at region-wise, United States has the biggest head count.

3:56

We also have offices in Australia, Canada, uh UK, Brazil, India.

4:02

I think we're opening up Germany soon. We're looking at Italy.

4:08

We're looking at France and a few other regions as well.

4:09

But, our model is is like our ad agency in India markets companies in India.

4:15

It's not really used to outsource American work into India.

4:21

And what work are people doing?

4:21

Like, what's the service that you're providing? All digital.

4:26

So, like, SEO, pay per click, email marketing, conversion rate optimization, organic social, paid social. The list goes on and on.

4:32

And do all the customers come from neilpatel. com? It used to be that way.

4:39

Then, we started getting a lot through word of mouth.

4:41

I would have never really guessed that word of mouth drives business.

4:48

How How many can you say how many Uh so, most people, I would say, like, our audience would be like, "Oh, yeah, it's cool to have like a personal brand."

4:55

But, me and Sam have figured out, "Oh, wow, this really does open up more doors than you would have expected."

5:01

Uh you've been doing this for a long time.

5:02

So, Neil Patel, which is kind of like a personal blog where you're talking about like, you know, hacks and experiments and strategies that you've, you know, figured out.

5:10

How many Can you say how many millions that brought in in client bookings what for the agency?

5:15

Like, what Uh how big did just the referrals from Neil Patel get you before other stuff kicked in, like, word of mouth and being recognized in the industry and other things like that?

5:25

I think the Neil Patel brand got us to around like 30, 40 million in revenue, and then word of mouth started kicking in, and then other things started kicking in, and employees started bringing in their own deals cuz they worked in the space for so long, and then we saw more and more growth, got awards that brought us deals.

5:39

Um being a minority owned business, that helps, believe it or not.

5:46

there's if you're Indian and you live in the United States, you're considered a minority.

5:52

And uh I was about to say, are we a minority?

5:53

I feel like you guys are I feel like I never get minority like you're you're the majority of CEOs out there.

5:58

So, I mean It was funny because we go through RFPs and some of them asked if you're what is it like MBE certification is something like that.

6:07

I forgot what it's called or minority business enterprise.

6:12

And I was like, well, I'm not a minority.

6:13

There's like 1 plus billion of me in this world, right?

6:15

And they're like, oh, you're a minority.

6:17

I'm like, what are you talking about?

6:18

There's like a billion plus Indians in this world. How are we a minority?

6:21

And they're like, oh, in America, you're a minority.

6:23

And in some of these RFPs, they're looking it says in there, we're looking for LGBT Q?

6:32

I don't know what the Yeah.

6:35

all four of the letters are. You have a tattoo.

6:37

You have the tattoo on your arm. What does it say? Yeah, the Q's there. The Q's there.

6:41

Yeah, and then women-owned businesses, veteran-owned businesses, and the other one was minority.

6:49

And I was just like, wait, there's actually a quota that these big Fortune 500 companies have to hit. And they're like, yeah.

6:54

And I was like, well, I'm a minority.

6:56

They're like, well, you need the certification.

6:57

And I was like, I got to have a certification to tell you that I'm a minority?

7:01

And at first I didn't realize I was minority.

7:03

They were telling me, oh, you're a minority. We reached out to you.

7:05

We're hoping that you would be a good fit.

7:07

And I'm like, I'm a minority.

7:09

They're like, yeah, you're a minority in the United States.

7:11

You'd help us meet our quota.

7:11

Do you have the certification?

7:13

I'm like, what are you talking about?

7:14

And then we went through the process and got the certification.

7:19

You got to get your papers, bro.

7:19

You got to get your papers right.

7:22

I I would have been offended.

7:22

And then as soon as I realized, wait, this is to my advantage? Oh, hold on.

7:27

I also got solar panels on my house. Does that help?

7:29

You know, like I'm a dog owner. What else Yeah, exactly.

7:33

I have I have a vision impairment called farsightedness.

7:38

You know, so what else works in my favor here?

7:40

You know, like was the certificate you turn the webcam on and it looked at you and it was like, "Yep." That was it. That's not enough.

7:45

And what's funny is our COO or VP operations, one of the titles, I forgot what Tracy's title is.

7:51

She asked me for this like 6 months before we did it.

7:55

She's like, "Hey, I need your birth certificate."

7:56

I'm like, "Yeah, why do you need my birth certificate?"

7:57

She's like, "Oh, we need it for this certification." I'm like, "Whatever."

8:02

And the moment someone ended up telling me how uh Magic Johnson generates a lot of his revenue because he's a minority and gets a lot of contracts, partners with other businesses, white labels it, and uses his name, becomes a quote-unquote owner of that business, and then outsources Oh, wait. Tell me about that. Give me an example.

8:18

What's What's What's an example of the Magic Johnson formula? Sure.

8:22

So, I don't know if this is true.

8:24

This is just what someone in the minority space ended up telling me. So, that's the caveat.

8:28

I don't know if this is true or real.

8:30

And they're saying, let's say if someone has a food company and they have the contracts with a lot of the hospitals that are run by the government, like the VA.

8:38

They're looking for minority supply, but there's already a lot of big corporations that provide the food.

8:41

So, Magic Johnson may go create a business that's in that space, partner with the big supplier who already provides the food to these hospitals.

8:48

He'll go get the contract, and then work with them to actually fulfill it.

8:53

Yeah, wait, Sean, you never heard You You never heard of this?

8:54

My My My in-laws My in-laws own a a moving company and they're minorities. They're uh black.

9:01

They're Haitian immigrants.

9:02

And they win deals partially because of that reason.

9:06

Cuz like Morgan Stanley or something like that, if they want to move, they want to They have some type of policy in their company that says, "We We want to get RFPs for or we want to get bids from these types of companies."

9:19

I had no idea how I know obviously I knew this exists.

9:22

I just didn't realize how significant it was.

9:24

I definitely didn't know the Magic Johnson formula, which is frankly genius on his part if that's if that's actually what he does. Right.

9:31

We don't know that part, but if it is true.

9:32

But think of it this way, right? It's a quota.

9:34

So, if I go and I get a RFP, let's say from Boeing, which funny enough we lost the RFP cuz we were over price for what they wanted.

9:43

Um and let's say my price is very similar to the competition.

9:45

I have awards showing that we were the agency of the year, so like, all right, these guys are good at what they do.

9:51

We have the case studies.

9:53

And if we're similar pricing, like, oh, this is minority, helps us hit our quota.

9:58

Let's give the business here. Right. Yeah, yeah, of course.

10:00

You You have some merit to go with it.

10:01

For the first $30 of business, you got that and you must have gotten that by year two or so if you're growing this fast.

10:08

Um what was the main year three, sorry? Year three.

10:14

What was the main service?

10:14

Like, when I think of like cuz I went to your website and I actually submitted a lead to figure it out.

10:20

There was the maximum you ask what your website is and what your budget is and it's like 0 to 10,000, 10,000 to 20,000, and then just 50,000 plus.

10:30

So, were you serving like mostly small businesses and what like what were you Were you doing as simple stuff as like making their Yelp page good?

10:38

Like, what were you doing?

10:41

Yeah, so it's not that small.

10:41

We do have some SMBs like that, but we actually first started off in mid-market.

10:47

Our clients would pay us like a minimum of 10 grand a month.

10:51

And what would you do for 10,000 a month?

10:54

It It So, nothing was cookie cutter. It was all custom.

10:56

So, like, maybe they needed SEO, maybe they needed help on paid management, maybe they needed some CRO or email marketing or a little bit of everything, right?

11:03

But the plans would start at 120 a year, right?

11:05

10 a month, and scale up from there to 20 a month, 30 a month, whatever it may be.

11:13

What was most in vogue as the service when you started?

11:15

Like, the the trend everybody wanted and then what's the in vogue thing today?

11:19

The when we first started it was mainly SEO cuz that's what And what does that mean though? What does that mean?

11:23

You use H Ahrefs or something and your employees like look which terms they should rank for and then you write an article for them?

11:30

So, it was optimizing their on-page code, helping build links, creating content, promoting the content, and making sure that traffic converted into leads or sales assuming if they weren't services, um and it was a positive ROI That sounds like a ton of work for $10,000 a month. It would start at 10.

11:47

It depended on the keywords, how hard they were to rank for, and it would go up from there. And what about now?

11:55

Sam, I love when you describe people's businesses cuz you're just like uh So, what does that mean?

11:58

You just Google their name and then it doesn't show up and then you go write an article with their name and it's like What's the hustle, dude?

12:04

You just read the New York Times and then you just cut out half the words and then you hit send in an email, like is that what is that what the hustle is? Yeah. Nailed it. I mean, it can be.

12:15

It like like like you know, there's there's always more nuance and complication in reality, but like if you you you can explain things in a in a fairly simple way where it's like, "What's HubSpot?"

12:26

Oh, they just make software so when you people sign up for your website, you can email them and call them.

12:33

Like you know what I mean?

12:33

Like you could I'm just trying to dumb it down a little bit. HubSpot.

12:37

But when you look at the business when they first started, massive churn, had to add tons of features, had to figure out onboarding, had to figure out training.

12:44

There was a lot of stuff that went to make HubSpot a multi-million dollar company, right?

12:48

A lot of people look at it as email, but they do more than email, they do more than a CRM.

12:54

They've added actually, if anyone in the space has a ton of traction, they have a history of adding a lot of those features for free, which is a smart model, and then gobble up market share, get them into the ecosystem, and hopefully they stick around.

13:06

And so, what's what's the popular You should do the ad reads for us.

13:08

Yeah, that that was amazing.

13:13

By the way, Sam, I think you should make Suburban Dictionary, which is just you explaining businesses without like any any of the complicated stuff. Like, yeah, what is it?

13:22

What if you get customers to call it like the the the three Call them and email them.

13:26

The the the the three-syllable dictionary.

13:29

Like I I explain complicated things, but no word is above three syllables.

13:34

That's what we're going to call it.

13:36

What I was just going to say Ben brought up one point on that minority thing.

13:39

Ben, you want to say that?

13:40

It sounded pretty interesting.

13:41

You slacked us something.

13:43

But Neil kind of mentioned this too, but like this is really, really popular in government work because the government is like very hardcore about hitting their quotas for racial minorities.

13:53

And so around here, like I actually know a couple guys.

13:56

And basically what they do is uh The people I know are all African American.

14:03

They get the contract, they put their name on the contract.

14:05

They then outsource the entire thing to like Deloitte or KPMG or whatever.

14:09

And they take like, you know, 15% of the revenue or whatever.

14:14

They create a consulting firm.

14:16

That's like the minority minority ink.

14:18

And the minority ink goes and gets the contracts and farms it out to to like Deloitte or whoever. That's great.

14:26

I can't find this client info.

14:26

Have you heard of HubSpot?

14:28

HubSpot is a CRM platform, so it shares its data across every application.

14:33

Every team can stay aligned.

14:35

No out-of-sync spreadsheets or dueling databases. HubSpot, grow better.

14:42

I I lived in in Indonesia for a while and they had such a bad traffic problem.

14:45

Jakarta has like I think the worst traffic in the world.

14:48

Like you're just going 2 miles, you might be there for 2 hours.

14:50

And so they were like, "Okay, we need to create like a carpool incentive."

14:54

So how do we create an incentive where if you have three or more people in your car, then you can go in the fast lane.

15:00

And so this So it worked for like, you know, a month.

15:04

It was like, "Oh wow, this is great.

15:06

If we carpool, we get to go faster."

15:08

And then this like little industry sprouted up where people would just stand at the edge of the carpool lane like a hitchhiker.

15:13

And they'd be like, "I'll get in your car.

15:15

If you want a third rider, I'll I'll just hop in and we can ride in the fast lane."

15:17

And then they would get off on the other side and then back with somebody else.

15:20

And so they would be a professional like, you know, HOV lane participants.

15:25

So, they would just spend all day riding with you in your car.

15:27

So, you'd be sitting there and someone would just get in the back seat with you.

15:30

And it's just like a random Indonesian person and you would pay them 10 10 like rupees or whatever and then 10 baht and then they would, you know, get out on the other side a mile later. It was amazing.

15:41

You, uh, Neil, was was Quick Sprout been There you go.

15:45

Was Quick Sprout I mean, so that was your main business Quick Sprout and Crazy Egg were your main business for a while.

15:53

Quick Sprout was just a blog and then my co-founder Hiten ended up taking it over and now it's his blog.

16:00

So, but what was your main source of of revenue and income because I like I said, I've listened to you forever.

16:05

Like you've been crushing it it seems like for financially for like 10 plus years.

16:08

I don't know if I'm crushing it, but the main source of income was Crazy Egg for most my life and then it ended up becoming the ad agency.

16:20

And Sam, you said something at the very beginning that if I was listening to this I'd be like, wait.

16:24

Hold on, I want to hear that story.

16:24

You said something like just for kicks he would like spin up a business that like did 100k a month in revenue.

16:29

What's an example of that?

16:31

Tell that story cuz that sounds awesome.

16:33

Yeah, so everyone thinks like it's really hard to make money online and then you got these schiesters who are like, buy this for a thousand dollars and you'll become rich, which never really happens.

16:41

Maybe every once in a while, but for most people it doesn't.

16:45

So, I was like, I could create a business on anything and people were like, go create a nutrition business.

16:48

My audience picked I gave them like a lot of different options.

16:51

They picked a nutrition business and I was like, all right, let's create a blog, get it ranking, get some traffic and then funnel people in through quizzes, through emails and let's funnel them into supplements, rank higher on Amazon, get traction and see what happens. And it did well.

17:10

And that took you like uh, months, years?

17:12

How long did it take you to get that months.

17:14

It it much more than that.

17:14

I think it was like right?

17:17

A a little bit less than a year.

17:17

I think it was like nine or 10 months.

17:21

So, it wasn't like one or two months sadly, but a little bit less than a year. So, it's pretty good.

17:25

It was an awesome It was an awesome blog post series, Sean. You got to Google it.

17:30

Google like Quick Sprout or Neil Patel then like $100,000 a month and it was like an a monthly update. It was pretty amazing.

17:36

I I I don't think they may have deleted it now.

17:38

I don't know if it's still alive, but and then so I took the money I made from Crazy Egg and I would park it into other things.

17:44

So, it's like stock market.

17:46

For a long time the stock market's had a really crazy run, right?

17:50

Then you also have things like investments, a lot of venture funds, uh angel investments.

17:54

And then sometimes you just get lucky, sometimes you don't.

17:58

And then there's a number's game.

18:00

We uh had talked about doing a content series like this to grow the podcast.

18:02

I was like, you know, I think one of the best ways to grow the podcast could be if we do a challenge like what you would described and what one of the ideas was like, what if Sam created his own uh Sam Sticky Icky, his own a condiment brand.

18:14

And we basically show how we build a D2C brand.

18:16

Like from from idea to like branding to marketing to and we just do it all transparently to like like get people hooked on, okay, let me see how you guys actually build this thing.

18:26

Now, it's a lot of work, which is why I think ultimately we didn't do it.

18:30

But how well did that work for you?

18:30

Was that like just kind of like a good content thing or was it like, no, that was like drove a lot of growth for the brand and the blog.

18:38

Uh I'm curious how well that worked for you.

18:41

It didn't drive as much growth for the brand, um but it did help out. Every little bit.

18:45

Like I did crazy experiments, so I spent like a hundred and something or two hundred and something thousand on clothes and wanted to see what that did in business meetings.

18:55

Uh spent money flying first class everywhere.

18:57

See wanted to see what that would do.

18:59

But yeah, I tried a lot of different experiments and it was just for shits and giggles.

19:02

Um and it was also a reason to justify some of my expenses.

19:10

And then I was like, well, I want to first class because I remember my first time flying first class someone else paid for it.

19:15

I'm like, "Wow, this is I've been missing out.

19:18

This is a lot better than being crammed up and flying all the way to Europe from Los Angeles, you know, and economy."

19:26

And then I was like, "Man, let's do some experiments and let's see if I can justify this expense." But yeah. That's amazing.

19:33

And you just you did you say early on that you just gave Heaton?

19:36

So, did you invest in Heaton Shah's other company, Sean, Nira? Yeah.

19:42

Yeah, so we're both Neil, we're both investors in Nira, which is Hea- Heaton's your cousin, right? No, brother. brother-in-law.

19:48

Brother-in-law, yeah, sorry. And uh Heaton's amazing.

19:49

He's another He's a great blogger as well, and Sean and I both invested in his company called Nira, which is either going to be a dud or it's going to be like the biggest company ever. I know.

20:00

The the it Like it's like a company that's close Like they're going to close like multi-million dollar contracts, I would guess.

20:07

That's it's like a big old business.

20:09

Potentially big old business.

20:10

But did you say that you gave him Crazy Egg?

20:15

Uh so, with Crazy Egg, what ended up happening is is what I wanted to do is we were doing business forever together, and then eventually I just said, "Hey, you can have the monthly distributions, and I'm going to go create another business."

20:32

Why would you give that why?

20:36

Uh he didn't ask for it, nor did he care for it, nor did he want it.

20:38

You know, he's never been about money. Neither him or I have. And we're not rich.

20:42

I can't actually speak for him. I'm not rich.

20:47

I've just done well enough, and I don't spend as much, so it's like don't really need the money. Does that make sense?

20:52

Like if you just don't spend money, you don't really need much cash at all.

20:57

Dude, you just said you dropped $200,000 on clothes.

20:58

What do you mean you don't need money?

21:00

was an experiment, right?

21:00

But But that's not my daily life.

21:03

Like I'm I'm a white T-shirt with stains that my kids spits up on.

21:06

Um They're probably like 10, 20 bucks.

21:09

I don't know what the white t-shirts cost, but they're not really white anymore.

21:14

So, I try not to do video recordings in front of white walls anymore cuz you can just tell the discoloration from it.

21:21

Nonetheless, it's So, did Sam say you live in Brazil? Is that what you No, no.

21:26

I have a division in Brazil.

21:28

Like we do marketing in Brazil for Brazilian companies. And you live in Texas?

21:32

Where do you Where do you live? Vegas. Vegas. Okay, amazing.

21:35

And uh So, have you um is it easy for you to keep your burn rate down because like uh I I was telling Sam this.

21:43

I spend like I don't know $25,000 a month now just like I'm not I don't even feel like I'm Dude, I I think Sean you might I think you might spend more than that now.

21:52

If I bet you add it up because I know what how you spend.

21:55

I bet you it's more than 25. It might be.

21:56

It might be a little more.

21:58

Uh but it's not more than 30, I would say.

22:00

I don't think it's more than 30.

22:01

So, I but like It's Yeah, I got two little kids but I got two little kids but they're like babies, right?

22:06

Like you know, like They don't They don't need food, you know?

22:09

So, so you know, there's diapers, sure, but like it's not them. It's me.

22:15

So, That's a good burn rate. I would take 30.

22:18

You said it's a steep burn rate or it's a Good burn rate. I would take it. I'll trade with you. Okay, got you.

22:23

So, when you say you don't spend much, what what do you say is your monthly burn rate cuz I think for most people listening, right?

22:28

They like Most people don't talk about how much they make or how much they spend.

22:31

All right, how much you make sometimes that's sensitive.

22:32

How much you spend bad if I knew how much I burn on a monthly Well, but but Neil, you actually wrote this in a blog post.

22:37

You said uh you said I spend This was I don't know if you're I actually I have no idea if you're single or if you have a family and you can I have a family of people.

22:46

My my burn rate right now.

22:46

But you used to say in your blog post that it you go $15,000 a month is all I need. I'm happy.

22:52

That was like 10 years ago, I think.

22:54

But uh That's but you used to say 15,000.

22:58

Single and no kids is easy.

22:58

Right now, if I had to guess on my burn rate, 120 to 180 A MONTH. WHAT? That's insane.

23:03

So, what is How does that break down?

23:06

So, what's the like what's the bulk of it?

23:10

Where does it So, house probably is the biggest one. No, I have no mortgage.

23:13

Okay, you have So, you're spending 120 to 180k without spending anything on your home.

23:20

Uh property tax, property tax uh for both my homes and HOA dues is probably close to 200 a year. Okay, great.

23:31

So, Well, let's add up what we have so far.

23:33

We've got 12,000 of the way there.

23:33

We're what's the All right, yeah. So, there's there Okay.

23:40

Life insurance is 25 grand a month. What?

23:44

My whole life policy, yeah, that's 25 to 300 a year. Uh uh No, no, wait.

23:48

What Wait, I can't What What the hell is a $25,000 a month life insurance policy?

23:53

What Can you explain that? It's just a benefit.

23:57

Like if I die, my wife and kids get money.

24:00

Like a life insurance policy.

24:02

Yeah, well, I get that, but is that normal?

24:04

I've never heard uh like either I'm dumb or you're dumb. One of Who's dumb here?

24:08

Am I dumb because I've never heard of anybody spending that much on their life insurance policy?

24:12

It's like an investment account. It builds over time.

24:15

So, it's not like it goes away, right?

24:16

Most life insurance policies are for, call it, 10 years, then you buy another one.

24:20

Mine just keep going and you can borrow against it.

24:22

Just think of it as like a investment vehicle. So, that's 25 a month. okay, I see. I see. I see. Now I understand.

24:30

Staff, uh cleaners, nannies, driver.

24:31

We have a full-time driver.

24:35

I think that ends up being around 57 a month. Um 5,700 or 57,000? Thousand.

24:43

Yeah, uh you know, a driver, Uber?

24:48

What Why Uber is more affordable.

24:48

So, I optimize for convenience.

24:51

In Vegas, I go through this company.

24:55

They charge a hefty premium.

24:56

I go through this company and I have decals on my car.

24:59

So, if I do a meeting in front of a casino, the car can just stay in front of the casino and doesn't have to move.

25:06

If I'm going to the airport, you can straight up pull up into the plane or whatever you want to do and you don't have to go through terminals or anything like that.

25:12

So, that makes life easy.

25:15

of your strategy that I'm picking this up is that you live the best lifestyle you want and it's all expensive the way you do it.

25:27

Uh I don't know if it's all expensive you meant with the decal?

25:29

Like it's a company, it's like marketing, it's like a like a marketing vehicle for you?

25:35

So, there there's a limo company.

25:35

If I have their decal on my windows, I pay them I can end up parking wherever I want in theory.

25:42

Not literally wherever I want, but in most cases I can park wherever I want and the car can just sit there and wait for me.

25:47

So, all right, so what else? Anything else? Do you fly private?

25:50

He's like I I buy a daily Disneyland fast pass just in case I decide to go that day. Yeah.

25:57

I like private for convenience of time.

26:01

Um What's been the What's been the number one uh like kind of like where you feel like most people don't Most people think this is too expensive and not worth it, but for me I get way more value.

26:11

I'll give you an example in my life, right?

26:12

So, I thought I had one right until we started talking. So, this is great.

26:15

I'm feeling so much better about myself.

26:17

But the one thing I did was I I hired a private chef.

26:18

So, I was like, all right.

26:20

That I think I I always thought that's the lifestyle of the rich and famous and I I thought, "Wow, that's cool cuz you eat healthy and it tastes great.

26:28

You don't have to fuss with time and you know, cooking and dishes and groceries and all that stuff."

26:32

And so, to me it's like a no-brainer.

26:33

I'm like, "Dude, anybody with any kind of money, you should be like that should be one of the like fancy car, later. Private chef, now."

26:38

Like cuz I'm like to me the value, the reward way outweighed the cost.

26:43

I think most people don't typically make that trade.

26:44

Sounds like you've experimented with many ways of spending money.

26:48

What has been a good reward for for cost uh trade that you're like this one is is great that most people don't do. I I don't know.

26:59

I'm in I'm in a bubble cuz I have a lot of friends who are like me, sadly.

27:04

Um in which we spend a lot and we don't know what's reality.

27:05

I know that sounds bad to say, but it's true, right? Cook is not bad.

27:12

Uh housekeepers and baths you don't have to do your own dishes and stuff.

27:15

Although funny enough I enjoy doing that and ironing cuz it's it's kind of like meditative for me. It's relaxing.

27:20

I don't know why watching TV and ironing.

27:24

Um nannies help so you get the freedom and you can watch your kids when you want to, but you can also do meetings and stuff like that.

27:30

Um The The probably the the best expense I ever spend on is private planes. Not because I like it.

27:39

It's I don't mind flying commercial.

27:41

Not really any different for me, but it helps me optimize for time so that way I can see my kids more.

27:48

Cuz I have to sometimes do a lot of meetings for work and just going and coming back the same day just really in and out really quickly.

27:54

Like sometimes I'll be home quick enough like go from Vegas to Utah for a conference, speak, come back, and I'll be home quick enough to pick up my kid from school.

28:01

I like to me really well valuable. That's worth the money.

28:06

are you saving any money then or are I mean are you just taking a fat draw from the agency in order to provide pay for this or are you able to expense a lot of it to the agency? How's that work?

28:15

I don't expense any of it to my company.

28:18

I just personally pay for So, you're just the agency is just that profitable of a business. It's doing that well.

28:26

Or investments or savings.

28:26

I've done well enough in life where I'm okay.

28:28

Why did you do an agency?

28:31

So, me and Sam always talk about we're like we have many mottos on this podcast.

28:34

Um For example, we don't do public math.

28:41

For example, you don't say you're rich, you say you're post economic.

28:43

These These the we've picked up from from guests along the way.

28:46

And one of the one of the model one of the models that we say is you know, agency suck.

28:50

And it's like and and the reason we say is not because they like they do well.

28:58

There's not that they suck.

28:59

It's like they suck as a business choice.

29:01

Like if I could I've always thought if I could choose between software or an agency, I'd choose software because it's like oh, it's not a services business.

29:08

It's going to work while I sleep and it can scale up and I don't have to open up offices in Poland and Brazil and all these other places. But you chose that.

29:16

You did software and you chose agency now.

29:20

Why'd you make that choice and what's great about agencies that I'm kind of like not giving enough credit for.

29:28

So you're looking at business as in software is more scalable, it's more desirable by public markets EX HubSpot versus Accenture.

29:36

Accenture has way worse multiples than HubSpot.

29:41

Accenture is a bigger company from a revenue EBITDA standpoint.

29:42

But now take a different approach.

29:45

Okay, HubSpot's publicly traded company.

29:47

You guys are both HubSpot employees I'm assuming still. Is that correct? Kind of. Sure.

29:54

Whatever you guys' deal is, right?

29:56

But you guys are pretty much at HubSpot.

29:58

Now imagine creating a business and you don't plan on going public.

30:00

You don't care for the limelight.

30:02

You don't care for any of that.

30:03

In business what's a successful business?

30:08

Good revenue growth and good revenue and profitability, right?

30:13

All that really matters at the end of the day whether you grow or not grow is how profitable are you.

30:16

Would you guys agree with that statement assuming you're doing something that's ethical and you're not selling No, I wouldn't agree with that.

30:21

I would say there's a third thing which is like is this enjoyable and like do I like my day-to-day?

30:27

And with the more people you have, most people would say that's just a little bit more headache than than But that's not software or consulting.

30:39

Anytime you build a big company, you tend to have a large amount of people.

30:43

Whether it's HubSpot or whether it's Accenture, everyone has a lot you can have you can probably have a much higher revenue per employee with software versus let's say you own a massive landscaping business.

30:53

You're going to have to have tens of thousands of people.

30:57

But but what's the difference from dealing with how many people does HubSpot have? Like 6,000?

30:59

I don't know, 5,000, 6,000 is probably a lot.

31:02

I'm guessing on the number.

31:03

But what's the difference of dealing with 5,000 or 6,000 people and 20,000 people?

31:07

There's a point where it doesn't matter and it's a lot of people either way.

31:11

Like it's not like you're at 50 people.

31:13

You still have thousands of employees to deal with and you need managers and layers and all that kind of stuff.

31:19

Yeah, but you're hiring at some good or bad, you're hiring a different type of person.

31:24

So for example, if you're VaynerMedia, they're based in New York, they can probably only afford to pay some of their lower-level employees 70 or 80,000 dollars a year.

31:32

And so you just have to get a ton of people like that and have to have higher churn versus say a bigger company where you're able to pay a significantly higher salary because the revenue per employee is is much higher.

31:43

So perhaps there's a a slightly different day-to-day with because of that. Not necessarily.

31:49

Let's say you're a VaynerMedia.

31:51

He could be doing it to optimize for profit.

31:52

What happens if I told you his LTV was 6, 7, 8 years? Right?

31:58

And you Then at that point, you can still hire high-quality people and pay an arm and a leg. Okay.

32:05

You get what I mean, right?

32:05

Like you look at Accenture, they're charging accounts so much money and their contracts are long and I don't know what VaynerMedia's LTV is, but there's a lot of consulting companies that have LTVs of 6, 7 years for clients.

32:18

And their clients are spending, you know, a HubSpot, yes, it's more revenue per you can say potentially in software you can get to more revenue per employee, but I know consulting companies that only take on contracts that are like 5, 6 million dollars and upwards.

32:32

So you have high margins and you can have a high revenue per employee, but either way, no matter what, as you build a big business, you're going to need more people, and it's a headache to manage, whether you pay them 70,000 or whether you pay them 150,000.

32:46

It's still more of a headache, and the notion that if you hire someone for 150,000, I'm not saying you're saying this, it doesn't necessarily mean they're better employees, right?

32:54

Engineers No, it just means different types of headaches. Correct. Exactly.

32:58

Engineers, for example, are very expensive in this economy, right?

33:02

So, the point I'm getting at is a consulting company, I had the demand for it.

33:07

A lot of people wanted to pay me for marketing, and there was just so much demand, it would have been silly not to do.

33:13

And if I'm not trying to go public or if I'm not trying to sell, money's money, green is green, as long as you're happy doing what you're doing, take the cash.

33:21

Will you ever sell the company?

33:24

I want to say I would never sell the company, but I don't care to ever sell the company, cuz I love what I'm doing.

33:30

We also have good growth, too, right?

33:32

Like, I don't know what we'll grow this year, 60-something percent, which isn't bad.

33:37

You know, with the market going up and down and fluctuating, 60-something percent is my guess at our size is decent.

33:42

Yeah, the part I was actually talking about was a little bit more like I think you're you're totally right that like, if you're going to win big, you're going to end up with a bunch of employees, and like, you know, it might look like 150, it might look like 1,000, it might look like 10,000, but like, you know, in either case, you're going to have managerial work and headaches, and it's just different types.

34:00

The part I was really talking about was like, you know, I've now built, let's say, a media company, content, and then it's like, um, done educational stuff, so courses, which are like, you know, a different thing, and then there's like, I built software company, and so, you know, we ended up selling that one, and then it's like, and then there's, um, uh, services, which is like client services, like with like consulting or agency model.

34:22

And what I hate what I what I love about content media is it's actually pretty fun to create, and it's cool, because a lot of people consume it, so they kind of you know, you get that like hit, um, but you got to like you got to bake the cake every day, right?

34:33

So, like, you know, the Hustle or like my the Milk Road or this podcast, like, we have to come on and create the content again.

34:39

Uh you know, for the most part, we we're not doing like super long evergreen stuff.

34:44

Uh so, you know, like with the Hustle it's a daily newsletter, Milk Road it's a daily newsletter.

34:47

It's We got to bake that cake every day.

34:49

Whereas software, it was like we built one product and yes, we might we will improve it over the course of a year, you know, every year we're going to improve it.

34:59

But, like fundamentally, um we didn't have to like recreate the product, come up with a new viral story or a new great content segment uh that would like require like a new genius.

35:07

Uh with software it's like you come up with one genius moment and then you sort of refine it, make it work better over time, and get rid of bugs and things like that.

35:14

So, I prefer that part of software, which was like making a product rather than making kind of like a disposable uh you know, consumable piece of content.

35:21

Or like I have an e-commerce company.

35:22

And like, it's a pain in the ass to have supply physical products that are supply chain constrained and like we have a warehouse We got warehouse problems with our e-commerce business.

35:31

And so, I'm like, man, digital was sweet compared to e-commerce, but e-commerce is quite profitable.

35:36

That kicks off a bunch of profits. That's nice.

35:37

So, every business has these pros and cons and I always thought agency was like um the part I would always thought was a pain in the ass was like the client services.

35:46

You are reinventing the next campaign and the next winning marketing, you know, formula for them.

35:50

And you have to keep clients happy all the time and clients are sort of like never satisfied in a way that like name if software it's like you can have nameless, faceless customers that like, yeah, some percentage of them will will write into your help desk that's in the Philippines or whatever, but like you're not having to like, you know, send account reports to your, you know, your your big clients to keep them happy.

36:11

Yeah, but you everyone has their own problems.

36:13

In software, a lot of people have churn this issue and they can't figure it out.

36:16

Or they have competitors who come into the marketplace and just undercut them on pricing for the same features cuz it's cheaper and cheaper to build software these days, right?

36:23

So, they all have their own problem.

36:25

To me, I look at it as if you can find the right people.

36:29

So, every time I start a company, I find in people to put in place that have already done it multiple times before cuz your risk of failure is lower and they already know everything to do.

36:38

So, I don't have to deal with client relationships.

36:40

I don't have to deal with customer service or anything like that.

36:43

I get to do what I enjoy doing, which is go and create content, be the face, etc.

36:47

And my wife enjoys what she gets to do, right?

36:50

She gets to donate the money.

36:52

Although, we don't really consider it as donations.

36:54

We look at it as investing.

36:55

We're investing in people.

36:57

Although, we really don't ever collect any money back.

36:59

It's more so you're investing into making the world a better place or people's lives a better place or whatever it may be.

37:07

What's a Who Who were Who were your first three clients?

37:12

At this at this agency cuz you I don't know.

37:15

They were small companies.

37:18

And right now, who's an example client?

37:22

Like a Fortune 100 software company.

37:27

Like that is a typical company.

37:27

Think of any big large corporation in B2B.

37:29

That's a great example of one of our customers or even B2C.

37:34

Actually, think of any Fortune 500 company.

37:36

That's a prime example of a customer.

37:37

What's And who's the CEO of your agency? Are you? No. I'm never the CEO. I'm a terrible manager.

37:45

I'm one of the worst managers ever.

37:47

Uh his name is Mike Gulliksen.

37:48

He was the CEO No, he was the president of iProspect, which is the ad agency owned by uh Dentsu.

37:56

I believe in iProspect, maybe they had 4 or 5,000 people is my guess.

38:03

And what when you How early into the business did you have a a hired CEO or hired leader? Day one.

38:10

I won't start a business without a CEO from day one.

38:13

And what did you pay them in the first year?

38:16

First year was my co-founder. So, like 100 grand.

38:20

And that's because you basically went and drummed up a hundred grand worth of business and you're like, "Hey Mike, uh I got a I got this client to give a hundred grand.

38:27

You want to run this thing for me and and help it get deployed?"

38:32

No, uh our business didn't start off that way.

38:34

I probably put in total of five million bucks into the business of my own money.

38:38

So, it was bootstrapped but not really bootstrapped if that makes sense. It's kind of cheating.

38:43

Um and it gets easier and easier as you're entrepreneur, right?

38:45

The more the more successes you have and I'm not saying I'm successful by any means.

38:48

The more capital you have to deploy into the next thing so reduces chances of uh failure.

38:55

And when it's your own money, this is just my thesis and I could be wrong on this. I have no data points.

39:01

When it's your own money, you're much more careful than when if you raise like 15, 20, 30 million dollars of venture capital, right?

39:07

You really look at every single dollar.

39:10

Uh but Mike was the CEO from day one.

39:14

He's a great operator, has no agency experience.

39:16

Eventually, we got in a president and then eventually from there we got in a CEO.

39:22

And have you guys crossed a hundred million in revenue yet?

39:26

Yeah, we do nine figures. That's crazy, man.

39:28

So, well, I mean, that's just pretty wild that you're able to like parlay this blog that was already all always kind of a juggernaut, but this blog into a nine-figure a year business. I mean, that's amazing.

39:43

Yeah, this is it's been a good run.

39:45

I hope it I'm knocking on wood, although you probably can't hear it over the Chris.

39:49

But, uh I hope it keeps going and more so we're just having fun.

39:53

Like for me, what I enjoy doing is building a business.

39:58

Um I know I have an expensive lifestyle.

40:00

I generally don't do stuff with the money.

40:01

Like I overpay like house staff, like nannies and stuff like that.

40:03

When I say overpay, I drastically overpay, not by like 10, 20, 30, 40%.

40:08

Like I really mean drastically overpay cuz I look at people and I'm like, "If you're cleaning a house, how are you going to live on this?"

40:16

Like I'll give someone six figures to do that.

40:17

I know that sounds kind of crazy or stupid, but like I'm not giving my kids money.

40:21

So, might as well take care of other people in this world who need it more than um uh we do.

40:28

did you just say you're not you're not giving kids money?

40:31

Yeah, I'm not going to give my kids money. Nothing? Leave Leave nothing? We have a trust set up.

40:36

What they'll get maximum is like if they're on the street and they can't provide and they're going to be suffering, like I will help pay their bills um or put them in a normal home.

40:45

Or like if my kids like, "I want to be a doctor and I want to go spend all my time in Africa helping other people out and I won't get paid for this and I need, you know, ex- $5,000 a month to live or 10,000 so I can just go volunteer all my time." I'm like, "Sounds good. I'll pay for that."

41:01

But like I won't give them money for the sake of it.

41:03

Like if they're like, "I want to go travel to see Italy or I want a a Honda Accord."

41:06

I'm like, "Well, buy your own Honda Accord.

41:09

Go travel on your own with your own dime."

41:12

Like you know, I don't believe in just giving people money cuz I think there's other people who need it more than we do.

41:20

Sean, are you going to give your kids money?

41:22

I haven't really thought about it.

41:22

Like my oldest is two, so I think I got some time to figure that out, but I I lean more to So, I've kind of heard both arguments.

41:30

Like um I know somebody who they You know, some people are like, you know, uh you know, I do There's some people that I I'm definitely not in the camp of I do this for my kids.

41:39

I want to leave my kids with a whole bunch.

41:41

So, I'm like, "That That may be the worst thing you could do for them."

41:43

Um not because it means that they're going to be ruined, but like drug addicts.

41:48

Yeah, you take away, you know, agency in a way, right?

41:49

Like you you want people to um Like it's it's not that it's good or bad.

41:54

It's actually just It's just way lower on the totem pole of priorities.

41:57

It's like I just don't even focus on that.

41:58

It's like if I'm going to leave them something, it's going to be a certain set of character character traits and skills and like uh mentality.

42:05

That's what I'm trying to leave.

42:05

Money is like, I don't know, 15th on the list of like, I don't know, we haven't even gotten to think about that yet.

42:09

But I've thought a lot about what are the character traits and mentality and like mindset and skills that I think I can help build and like that's the focus.

42:19

That's the one that matters.

42:19

That's the That's the gift if whatever else comes from beyond that, I don't know. We can figure out.

42:24

It's like the foot It's like the footnotes.

42:27

So like we're very similar.

42:28

My I have a 2-year-old and a less than 1-year-old, right?

42:32

And I look at it as you want them to be productive units of society, right?

42:38

You want them to be ambitious, hungry, caring, thoughtful, happy, like whatever it is.

42:42

There's a lot of characteristics that you may want children to be, but I look at it as like they don't need money.

42:47

Even like with my wife and I, we go over our expenses.

42:49

And we look at what we spend on travel.

42:52

And we do some of this cuz it's easier, but like my wife and I are actually considering cutting out all private and just going commercial now.

42:59

The main reason our expenses are high is due to COVID.

43:02

So if it wasn't for COVID, I would just be going in a normal airport.

43:06

I didn't know how COVID was going to impact with young kids, could afford it.

43:11

I was like, "Yeah, let's just start flying private."

43:12

And we haven't gone back to commercial yet, but we're thinking about going back cuz like my wife and I look at the money as like, "Yeah, we spend all this money on travel and airfare and hotels.

43:19

If we donated the money, people would have a better life.

43:23

Do we really need it that much?"

43:25

What do you do when you donate that like What's a good way to donate in your opinion?

43:29

So there's like uh you know, ranging from not donating to donating to one thing to donating to a bunch of things to like getting involved or seeing the impact or like, you know, I know people who if they donate to Africa, they'll actually their family will go take a trip every year so that they're more connected to the people and they actually see the impact and they take their kids with them so that they see the impact.

43:48

Like What have you found that's a good way to give? So we have a balance.

43:53

It's my wife and I team up.

43:55

Um this is going to sound bad, but I don't like volunteering my time.

43:59

My wife loves volunteering her time.

43:59

I think it's very inefficient for me to volunteer my time.

44:03

I should make the money uh versus volunteering my time because the money for the hours spent, if we donated the money it would have a much bigger impact to the cause than if I actually spent my time.

44:12

My wife will Yeah, and my wife loves spending the time.

44:17

And like from going to soup kitchens or whatever it may be.

44:19

So, she picks the causes. We have a few theses.

44:25

So, like one thesis is is we or not really thesis but rules.

44:28

One rule is is we don't like money going to organizations that have tons of high overhead.

44:33

We actually want our money going to the causes.

44:35

So, if it doesn't go to the cause, then we tend to not pick that organization.

44:41

The second thing that we look for is uh organizations who are uh like uh self-sufficient. Right?

44:48

It's just like, how can this continue going even if someone wasn't managing?

44:54

So, like a great program for example is my wife likes donating to women's education.

45:01

We used to donate also to men's education as well.

45:03

So, you find these people in these villages, you say, "Hey, you can't afford to go to school, get a degree.

45:09

We'll pay for you to go to college, go get a degree, come back, teach kids in your village for a few years, whether it's under a tree or anything, people can learn anywhere, right?

45:19

And then, you know, go move on with your life and do whatever you want, but at least you're giving back to your own community."

45:25

And what we found is when we started giving cuz we've been doing this for so long now.

45:29

Uh well, actually not that long, but when I mean long, I'm talking about like 10-11 years where we've been donating.

45:34

And it it's picked up quite a bit over the last like 5-6 years.

45:38

When we started giving the money to men, a lot of the men we saw a very low conversion rate from them actually coming back and teaching people in the village.

45:46

Well, when we gave the money to women for their education, a lot of them came back and fulfilled on the promise.

45:54

Cuz it's not like you get a signed contract, right?

45:55

It's just like, "Hey, we're going to pay for everything, come back, help people out within your village." Which country?

46:02

Uh we've done this in both India and Africa.

46:06

So, different parts of Africa and uh in India.

46:08

And then another program that we've done is like growing gardens where a lot of people who have AIDS don't take the right uh don't take their medication and aren't doing well.

46:17

They're getting They're given the medication for free, but if your body doesn't have the right nutrients, it rejects it.

46:21

So, what we'll do is we'll do programs like growing gardens where we'll give them money, they grow food, and then not only do they uh eat nutritiously or well, they'll more likely take their medication, and you're also growing enough food so that way other people in the village can also uh eat.

46:41

So, it's like but my wife picks all the causes, she vets them, she loves it.

46:45

Like she'll go This is Wednesday.

46:45

In 2 days, she'll end up going to a function uh scouting out more nonprofits and organizations. I won't go.

46:52

Like I think it's a waste of time.

46:55

I'm like if I'm going to make more money, she can donate it.

46:58

It's a better ROI than if I go spend 3 4 hours mingling when she could just do that and I can go make more so that way we can donate more.

47:06

Other than your own private businesses, what have been your best financial investments that's allowed you to to donate and and make a lot to to give away?

47:20

Stock market has done really well.

47:21

Companies like Apple, Amazon, Google, Facebook.

47:24

I know Facebook's down, but they still have been a tear if you just bought the stocks early enough.

47:27

Um cuz some of these companies have grown 30 40% a year in the public markets compounding, right? And it really adds up.

47:34

Uh angel investments have done really well for me.

47:36

Um I would say probably those are the two biggest.

47:39

Um stock market still has done well, although in the last 6 months I've taken a beating cuz I'm in 100% tech companies. Like I don't diversify.

47:48

Like everyone's like, "Oh, you need some oil and you need this."

47:52

I'm like, "Yeah, I'm just going to go all tech."

47:53

And people are like, "Oh, you're silly. Look how much you lost."

47:56

But if you look at the whole time when I first got in, I've done well.

48:00

And I invest in what I understand, and I'm 37, so who cares?

48:04

You know, another 10 years, everything should rebound, assuming you pick the right companies.

48:07

What's your portfolio look like? In terms of percentages.

48:14

I probably private businesses.

48:17

My public portfolio, I if I had a guess, I probably don't even have more than 20 stocks.

48:22

Amazon, I I I I won't be able to name them all, but Amazon, Google, Facebook, Apple, Microsoft, uh HubSpot, Salesforce, Adobe, uh Atlassian, Shopify.

48:36

Um I'm missing some as well.

48:36

Uh And of your liquid of your of your liquid net worth, how much is in public equities versus other? Versus real estate. Liquid net worth? Just non-agency.

48:48

If if if I think your agency Is your agency the only company that you own a significant stake in?

48:52

If yes, exclude that, then what's your portfolio look like?

48:58

Uh no, I have quite a bit other companies cuz I started using a lot of the cash to buy other companies for like three, four, five x EBITDA, and then you just fix them and grow them, and then just cash flow.

49:07

Um I would So, if I look just at cash invested in companies that aren't mine, like not companies I'm buying out or anything like that, I would probably say 80 to 90% is in stocks.

49:21

What companies were you buying?

49:23

Uh any that we can find that we like.

49:27

Like we bought Ubersuggest, it was a software company, bought it for 120, put 3 million into it.

49:32

Um it took I think less than seven or eight months to get to a million a month in revenue. What?

49:39

Um so that was a good deal. called? Ubersuggest. Ahrefs competitor. That one did well.

49:43

Uh we just bought another one. that? A lady named Lisa. Crazy.

49:51

And then we we just bought another one. We haven't announced it. We bought it for 8.

49:54

6 I think a month ago, a month and a half ago.

49:58

Uh so we'll see it does 100,000 a month.

49:59

Uh we think we can grow it within 12 months to probably like 4 500 grand a month and profit. So forget revenue.

50:11

We just will look at it as a cash flow.

50:13

So do you have rules around that like, okay, I have to be able to grow it using the neilpatel.

50:17

com or has to be in the marketing niche so that the agency benefits.

50:21

No, it's like would you buy like brick you know, like a laundromat or If I can grow it, I won't do too much brick and mortar, but I've invested in other people's brick and mortar.

50:31

Like I have a friend who does a lot of brick and mortar businesses.

50:35

Um Like one of my buddies has a roofing company and I was like, oh cool, you can buy it for 3X, it's good size and I can show you a few things and we can probably increase the profit by like 60% within 12 months.

50:51

So it's like it's just good cash flow, right?

50:52

Like if you're getting like 30 40 50% returns on your money, it's great.

50:57

And then you also have to keep in mind because of my my history and I've been doing this long enough, I also can get debt at really cheap terms and large amounts of debt.

51:09

Like I can get debt at like 3. 6% plus SOFR.

51:12

So if I'm buying a business for 5X, in many cases because of the economics of my whole portfolio, you know, some businesses I put down like on the one that was um 8. 6, 2.

51:21

6 was uh paid over 12 or 18 months or something like that.

51:29

But we put 6 mil up front.

51:31

I could have got a loan for it, but I was like, yeah, it's just easier to put the 6 mil and not deal with the paperwork.

51:35

But sometimes we'll just do loans on the 100% of it for zero down. Right.

51:41

And what do you like, okay, so you do what you do now.

51:43

So you have your time and it's pretty much probably fully allocated, let's say, to the agency and then some of these other things.

51:50

Um if somebody was smart but didn't have your you have a bunch of visibility.

51:55

You kind of know where the your industry is going.

51:56

You see adjacent opportunities, but hey, I'm not going to go do them. I don't have the time.

52:01

Uh what are opportunities that you see that you think somebody listening to this who's just like smart, hustler like so I got more time than I have ideas.

52:13

Um I got more time than I have money.

52:14

Where would you go if you were that person?

52:16

What would you What would you suggest for them to look at as like, you know, opportunities that you see today?

52:23

I would look for opportunities in anything that they're good at.

52:24

And I know that's not the answer that you're looking for, but what I found that the issue is when people go look for opportunities that makes them money, when you're not passionate, you don't put in the time and energy required to actually make it successful.

52:34

That's a big issue we see.

52:36

Maybe some people have it in them where they can make something successful cuz they'll just tough it out, but most people we see will just quit cuz they just hate what they're doing.

52:45

And so, but I think a lot of people don't know what they love to do.

52:46

They don't have like they don't If they already had what they love to do, they wouldn't be, you know, looking for opportunities.

52:51

So, you know, uh sort of like a by definition problem there, right?

52:55

So, somebody who's who's thinking about, okay, I don't love what I'm currently doing.

52:58

I'd like to I want to get to where this guy's at, but which is basically like seems happy and successful, right?

53:02

Um he he seems like he he said he loves what he's doing.

53:05

I'd love to do that, but what if I don't know, right?

53:09

It's like when my sister was going to college, my dad asked her, you know, she's like, "What should I major in?"

53:12

He's like, "I don't know.

53:13

What's her favorite subject?"

53:13

And she was like, "I don't have a favorite Like, you know, I don't I don't have a favorite subject.

53:16

I don't love any of these subjects.

53:19

Um so, what am What am I supposed to do? Like, am I just out?

53:20

Uh you know, I'm just not one of those You just try a lot of a lot of different until you find what you're passionate about.

53:26

Cuz if you try a lot of different things, you'll typically find something that you're naturally good at.

53:29

Usually what you're naturally good at, you'll also tend to favor in what you like, and then just double down on that.

53:34

Um but if you're looking for industries with opportunities, I see a huge slowdown in e-commerce.

53:40

Not necessarily the e-commerce market shrinking, I'm not saying that, but the growth in the e-commerce market isn't as what it was once used to be, right, when COVID first kicked off.

53:48

So, you're going to see the multiples go down to buy e-commerce shops, D2C brands, right?

53:51

So, great opportunity for buying and go fix them up and grow them and scale them.

53:57

Another great opportunity right now is uh free.

54:02

So, I look at the whole software market as really backwards. Okay?

54:07

In which right now, it doesn't matter if you're HubSpot or Canva, eventually someone can just create a me too company and just undercut you on pricing.

54:15

And what I've learned is if you can create a software company that already has a brand, that has a free product, and you just make it really good for free and you just keep adding more and more to it.

54:24

Um a great example of this is Photopea.

54:26

So, there's this company called Photopea. It's a uh uh we love it. Photoshop.

54:31

And it's like they make very little to no money.

54:33

So, I hit up one of my buddies who uh is great at outreaching and I told him I want Photopea.

54:39

I offered him 10 million, he said no.

54:41

I offered him 20 million, he said no.

54:44

I can take Photopea, make it a really good Canva competitor, undercut them on pricing.

54:48

Would it ever be worth 10, 20, 40 billion, whatever they are? No.

54:51

But I probably can cash flow that thing to like 4 or 5 million a month in EBITDA. Right?

54:58

It's like who cares what it sells for or what it's worth?

55:01

saying you're saying make it free and you're saying it cash flows like a So, what how do you take a free product and cash flow like a How would you explain that?

55:09

he said a Canva uh a Canva knockoff. Canva knockoff.

55:12

So, you make you make almost 99% of it for free, you charge for 1%, but that 1% is enough where you can drive in the revenue.

55:19

So, you don't ever make as much as like a Canva or like a a Mailchimp or a HubSpot, but hey, if you can make millions a month in profit, it's still good. What's your math there?

55:29

So, when what's the calculus when you were thinking so like let's say Photopea according to SimilarWeb has 10 million uniques a month or something. What was your math? Is that right? Yeah, it is right.

55:41

Yeah, that's we researched it. Yeah.

55:44

But like what was your calculus to get to 4 million in EBITDA a month?

55:49

Like what would how many people would you need to run it and what was the what's the calculus there? Sure.

55:54

So I can probably get the thing from 10 million visitors.

55:56

I can So let's say I bought it for 20, right?

55:59

He wouldn't sell it to me for 20.

56:02

I've never outreached him, but I had a buddy outreach him for me who just does all my outreach.

56:06

So let's say I bought it for 20, I would put another 10 into it.

56:10

So now I'm out $30 million.

56:12

I'm really good at growing traffic and I know I can grow this thing to roughly 40 million uniques a month.

56:16

I just have a I don't know how, but for some weird reason I know traffic really well and how to calculate what I can get it to and all this kind of stuff, right?

56:24

And I've done enough research on competitors of what features drive X amount of traffic just looking at so many competitors in the space.

56:31

So let's say if I get it to 40 Um what is it called? 40 million.

56:37

And what what what are the one or two things that you'd get it to 40 million? Like SEO basically.

56:42

So more SEO, more virality, increasing the quality of the templates, increasing features, adding AI in there like click a button we can automatically detect backgrounds, remove it, filters for social media cuz a lot of people use them for social media.

56:57

Logo generator website as a lead gen, like that. Right.

57:01

So then so let's say you got it to 40 million, right?

57:03

Uh 40 million, I can easily monetize let's call it like 1% of the traffic or let's be even more conservative like a half a percent, 200,000 people.

57:16

If I have 200,000 people hypothetically paying $3 a month, okay? That's $600,000.

57:23

The reason I give you on average $3 in certain countries you may want to charge different pricing like India and stuff like that so it's more affordable.

57:30

So $3 a month and at $3 a month, if a customer stays for 10 months, that's $6 million.

57:38

You can probably run the thing with less than a million, million and a half in burn each month.

57:42

So, then you think So, then for a million and a half burn, you would need those up once you have tons of revenue, right?

57:48

When you don't have tons of revenue, your burn is much lower on a monthly basis.

57:51

Yeah, but so then how many people then if it's you're looking at 30 people, you would need to run that operation?

57:58

I I don't even think 30, but let's say 30 total.

57:59

So, I think I can actually run the thing for under a million dollars a month. Right.

58:05

So, I'm just trying to do the math in my head, but I mean was like under under a million too there.

58:11

It was like 600,000 or something, right?

58:14

600,000 a month, but if a customer stays for 10 months, you're looking at $6 million.

58:20

Because you charge up front. No, no, no, no.

58:22

Okay, if they're paying $3 a month, if you have four 40 million, not 4 million, but 40 million, you're converting a half a percent, that's 200,000 paying customers a month.

58:32

If they pay you $3 a month, that's 600,000.

58:37

They last for 10 months, that's $6 million a month in MRR.

58:39

Over a year, you're making $72 million in revenue. That's crazy.

58:48

You're a very interesting person.

58:48

You I just I think I dig you because you've got your hands so many different things.

58:55

I honestly don't at this point. I don't run anything. I come up with ideas.

58:57

I have really good operators who are great at the execution.

59:01

Like, go do this, it'll make money.

59:03

Here's a playbook, go and just do it.

59:04

So, how many businesses do you own? I don't know. I don't really count.

59:07

I really look at them Over or under 10? Over. Over or under 20? I don't know.

59:17

20's probably getting close.

59:19

So, probably under if I had to guess.

59:22

And how many of those 20 How many of those 20 companies have more than five employees, full-time employees. I don't know.

59:29

I don't really count employee headcount.

59:30

I only know my ad agency headcount because they do reports and I get in my board meeting decks.

59:34

So like I'm like, "Oh, we got 700 people."

59:37

And you own 100% of most of these companies, it seems like.

59:40

You're not raising external capital.

59:41

You might Do you give your CEO any of really anything.

59:46

Um I always give equity to uh profit share.

59:50

I I usually have a partner who runs things will get equity and then I'll do profit share.

59:54

What's the uh ideal setup for profit sharing and equity for your partner?

1:00:01

Uh partner, give them maybe 10% of the business.

1:00:04

They run it plus a really nice salary.

1:00:06

When I mean nice salary, industry or more than industry.

1:00:11

Um and then you have a pool for employees, like another 10% pool.

1:00:12

So then you lose in total 20%. I'm left with 80 myself. I put up all the money. If it does well, great.

1:00:19

If it doesn't, I lose the money.

1:00:21

No one else is on the line.

1:00:22

Uh if it does well, no one has to pay me back the money.

1:00:25

Everyone just takes their distributions the moment it turns profitable from a monthly standpoint. Does that make sense?

1:00:29

They don't actually have to pay back any of the other stuff.

1:00:32

And then do you also do give them 10% the distribution or do you make that even uh heavier for them? Uh no.

1:00:38

Well, if I'm losing 20% in total, which is my ideal structure, then 20% of the profits gets distributed on a monthly basis. This is crazy.

1:00:50

I love hearing about this. What do you think, Sean? Yeah, I think it's dope.

1:00:53

I um I had just seen you kind of from afar for a while that I I I got I know Heaton, you know, loosely, like we're friends, but uh so you know, I didn't know a lot of the story.

1:01:04

I knew I knew Sam Sam has talked about you before on the pod, I think.

1:01:08

It's uh or maybe off the pod, I'm not sure.

1:01:09

But Sam had told me some cool stuff.

1:01:12

Um but I didn't know a lot of this.

1:01:12

So for me, this was dope because I got to learn a bunch of new things.

1:01:15

Uh sometimes when we have a guest, it's like, "Dude, I've already listened to 10 of your things.

1:01:19

I've been following you for 5 years, you know?"

1:01:20

So it's like I already know a lot of it and I'm doing sort of like translation work for the audience of like tell them about this.

1:01:28

Hey, tell tell them about that thing you did.

1:01:29

Uh versus in this like I genuinely wanted to know a bunch of the stuff and I thought, you know, uh this is interesting to me.

1:01:35

Yeah, you're you're great.

1:01:37

There's two people that I've wanted to talk to you, Sean, who are like Neil.

1:01:40

So, I mean, there's Neil. So, I wanted Neil.

1:01:42

I I like finding these people that like are doing really well and a lot of people know about, but there's also this whole other world of people who have no idea who they are.

1:01:50

Neil, you're one of those folks.

1:01:52

I've been I'm an OG reader, so I've known you forever. The other one is Syed.

1:01:55

So, Syed, we've talked about Syed a bunch on here.

1:01:58

Him and Neil, I think are very similar, which is very generous, but also like pretty cutthroat when it comes to business and has their hands in just dozens of different things and they're just quietly crushing it and not even talking about it.

1:02:10

And He's a very generous person, too.

1:02:13

I know he has a school, I think in the same city I have a school in or a different city, I don't know.

1:02:19

He actually went to go see his school.

1:02:20

But, um really generous guy.

1:02:23

Uh him and I have built schools in third world countries and stuff like that for a Yeah, it's just like you you two you guys are I don't know if you're like this, Neil, but I know it seems like he's like this where he like

1:02:35

has this uh you know, software business that's making who knows tens of many tens of millions uh in revenue and probably that much in profit, but and he like buys a gas station or he like he like bought it just it's just like, "Dude, are you kidding me? Like you're a

1:02:46

Like you're a you're like a tech tycoon and you also own like 30 gas stations." It's just kind of funny.

1:02:51

Here's the thing, some of those businesses sell for like 3x EBITDA, you get 33% returns on your money if you have good operators and you can put technology in place and marketing and you can grow to maybe a 50 times IRR. That's great.

1:03:02

It's just the question of can you scale it up and you can you do ones that are large enough?

1:03:07

I know, I'm just saying it's cool that you know this stuff.

1:03:10

That's what you're eclectic.

1:03:13

Yeah, him and I I actually I shouldn't have speak for him, but I'm a little off, right?

1:03:17

But the the madness or the methodology I think is great for cash flow.

1:03:21

It's terrible if you want to be like, "Oh, I'm going to create the next Airbnb and take this thing public and be like on the Forbes list." Like it's not what I do.

1:03:30

Is that Are you motivated to become a billionaire?

1:03:32

What what What's your motivation factor?

1:03:33

What what What are you motivated by?

1:03:36

Well, I won't ever be a billion I'm not saying I have the opportunity to but even if I did, uh I would never be there because we donate our money.

1:03:42

And when I was mean donate like not wait till you're dead to donate like actually donate on an annual basis.

1:03:49

How do you figure out How do you figure out how much you want to give?

1:03:50

Uh cuz there's always like like when I think about it, I think like, "Well, I could also invest this money. It's going to grow.

1:03:56

I'm going to give more later."

1:03:58

But then I'm not helping somebody now.

1:04:00

And so what's the right number?

1:04:00

What's the right percentage basically for me to to be giving on an annual basis?

1:04:03

How do you figure that out for yourself?

1:04:07

Whatever my wife wants to give.

1:04:09

What person What percentage does that come out to?

1:04:12

Uh we we don't have a percentage.

1:04:12

Keep in mind businesses are so large I can get loans for anything on almost any type of business.

1:04:18

I can't go buy a business for a million dollar a billion dollars.

1:04:21

But if I wanted to buy a business for a hundred million dollars, I can go get a loan on that.

1:04:24

Like literally for most of it.

1:04:28

So at scale, I don't have to worry anymore about do I need more of it to invest?

1:04:31

It's just we find the right causes and is it going to make a big enough impact?

1:04:35

That's more That's more about how we look about donations.

1:04:37

We don't really look at it from the aspect of am I donating X dollars or do I have a percentage?

1:04:43

We look at it as do we actually think it's going to make a big impact in the next year short run or two years?

1:04:48

We don't want to wait like 10 20 years to see an impact.

1:04:51

We also don't want to put money towards like things like cancer research.

1:04:56

I think cancer is really important.

1:04:58

I know a lot of people who have died from cancer.

1:04:59

But I don't have enough money to make it dent into cancer versus you know, solving some of the basic things out there like I can make an impact on things like education in a region.

1:05:10

I can't make an impact on cancer.

1:05:12

I just don't have enough cash for that.

1:05:16

Where What is your school?

1:05:16

You said I have a school. That sounds tight. I want a school. Uh I never seen it. We have a school.

1:05:21

I think it's in Cambodia and we've done a few others, but I don't really keep track.

1:05:27

My wife does and you know, the bigger thing is it's not my school.

1:05:30

It's more so the kids' school.

1:05:32

And are they learning and getting value from it and that's how I I I remember the first school that I bought and forgot about it.

1:05:40

going to say when I buy my school, it's for sure going to be my school.

1:05:43

They might attend my school in Cambodia. I'm like that guy.

1:05:49

I bought a couple I I bought a couple schools in this couch cushion back here.

1:05:52

Just I just forgot about it.

1:05:54

I just It's just a little scene I played in a while ago.

1:05:57

I remember when I was on college campus I saw like, you know, whoever the Rothschilds or like the Rockefellers nameplate or whatever on the like the the library at at at Duke campus.

1:06:06

And I was like, who would do this?

1:06:06

Why what's the point of this?

1:06:08

You know, like So it's already nice.

1:06:10

Not that kind of schools.

1:06:12

I don't have that kind of money.

1:06:13

Mine's like little kids' schools.

1:06:15

understand the appeal until you basically described a school you have and forgot and I've never visited it and I was like, ah, that sounds like something I want.

1:06:22

I don't want my nameplate on, you know, the Villanova like 10th library on campus, but like just to know that there's, you know, 12 kids in Vietnam attending my school.

1:06:34

They're wondering, why does this name have so many A's in it?

1:06:36

You know, who is this Who is this benefactor?

1:06:38

Silent benefactor who has forgotten where our school where the school is.

1:06:41

That sounds like a perfect blend of giving and egomania that I live for. So that's perfect.

1:06:49

Neil, we we usually So we don't have guests on often and when we do, we typically never just ask them questions like this.

1:06:55

We like it's more of a conversation where we're brainstorming stuff.

1:06:58

We asked you tons of questions cuz you're just a very fascinating person.

1:07:01

I hope you'll come on soon and you can actually brainstorm like the another Uber suggest or something like that.

1:07:08

You know, like actually go through some of this.

1:07:09

I I I hope you'll come back again cuz this is awesome. Yeah, it was so funny.

1:07:14

I was in the dinner and I'm like, "Oh, crap.

1:07:15

I shouldn't have ever told people how much I spend a month.

1:07:17

Shouldn't have ever told people I donate money."

1:07:18

And I was just like it goes against a lot of what my wife and I do.

1:07:23

We're more of don't tell anyone anything, live our lives, and do whatever makes us happy.

1:07:29

Well, you only told it because it's not like you're bragging.

1:07:31

We like kind of begged you to tell that like we were kind of got under your We were like, "Yeah, tell us. Go. Go. Tell us."

1:07:36

It's not like you're like I don't think that's bragging.

1:07:40

It's It's not even bragging.

1:07:40

It just feels weird to talk about expenses, right?

1:07:43

Cuz there's so many people who struggle for like clean water or shoes, right? It was just like, "Eh."

1:07:49

Yeah, so Yeah, but this is interesting.

1:07:51

Those people, uh if they ever listen to this podcast, they've already been filtered out by our douchiness in other uh episodes. So, don't worry.

1:07:56

Those Anybody who's sensitive to that is probably gone by now.

1:07:59

But also, there's there's actually a lot of good like I actually pretty passionately believe this.

1:08:04

Like, not only my I'm curious from like a Ooh, I want to know. I want to learn.

1:08:06

Uh but like, I actually pretty strongly believe that the way that people are like treat money as a pretty taboo thing um actually is like a net like a huge net negative on most people.

1:08:18

So, like you know, people don't know what other people make.

1:08:22

Therefore, they don't know what like they don't know when they're underpaid.

1:08:25

They don't know what's possible.

1:08:26

They don't ever Like, sometimes the most valuable conversations I have with somebody is just somebody for whom they do something like something's very normal to them and it would be abnormal to me.

1:08:34

But it has now expanded my world view of what's possible and what could be normal for me.

1:08:39

Like, oh, maybe it could be normal to actually like give more, donate more, have a school.

1:08:43

Actually, that sounds like something I actually want to go talk to my wife about today is like something we should go do that like it's not because you weren't bragging about it.

1:08:51

You You just kind of were honest about how you live your life, which is no There's nothing wrong with that.

1:08:56

This That's great, I in my opinion.

1:08:58

And it expands other people's world view for something that maybe they want to go do or something that they haven't considered and like it's really weird to me that we keep the stuff under wraps and if somebody's just honest about like the way they live their life, it's sort of like there's like all these like negative taboo around it and like that.

1:09:13

I don't like that at all and um it it's been like when it when Sam first met me, I think this I think I've told the story before but like the second day I met him and then like the next day he messaged me on Facebook messenger was like so like well how much do you make?

1:09:24

And he was like you know like what do you pay yourself?

1:09:27

He's like so then what do you and then I like I was like well that's like super forward and he's like but then he told me why.

1:09:31

He was like I'm trying to figure out how much to pay myself as an entrepreneur.

1:09:33

I have no clue and like my investors think I should make this much but I don't know if is that normal?

1:09:37

And like I can kind of ask you and dance around it or like I'm just asking like five friends what they make and the same role as I am like startup CEO and like that'll help me figure out what's normal or what's the range of like possibilities here.

1:09:47

And then after that he was like so what do you do with the money?

1:09:52

Like what do you what do you invest?

1:09:53

He's like well that's a lot you know like what are you investing that?

1:09:55

And I was like yeah and he's like what are you investing in?

1:09:58

And I was starting to tell him and he's like cool I'm investing in this and now I got new ideas about what I could be investing and I it really became very obvious to me in that moment.

1:10:05

I was like oh you're at a massive advantage if you have a few people you trust that you can talk openly about this sort of thing with and the podcast was basically taking that and doing it at scale.

1:10:12

I was like all right well what if me and Sam were pretty honest about like the we do and like what if we could get guests to be honest about the they do then like that's actually a pretty valuable resource for people who don't have five they don't happen to have that lucky group of five friends who are all motivated entrepreneurs who are also open and honest about what they do.

1:10:29

It's like well not everybody's located in a place where they have five people geographically around them that they can trust to talk about that stuff and so the pod kind of like serves as that.

1:10:37

So that's my justification for why you shouldn't feel bad about about sharing that information. Do you did it work Neil? Do you do not feel bad?

1:10:46

Well if you want we'll bleep it out or whatever if if if you feel like that too. Okay it is what it is.

1:10:48

I still feel bad but it is what it is. Mission accomplished.

1:10:55

I thought it was a great speech Sean.

1:10:55

I I I felt good about that. Thank you, Deal.

1:10:59

Uh a great speech, but I I I I still feel bad cuz I look at money as like a tool to help other people, and I'm not saying that's right or wrong. That's how I just do.

1:11:07

But, I also know I spend more than I should, um and I probably should cut back and live a more humble life and spend a lot less.

1:11:16

Yeah, dude, I'm inspired by how you spend and how you live, and it uh you know, you've done some good in the world by inspiring me.