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$520M Exit: The Untold Truth of Selling Big | Yosef Martin DSH #980
00:44:51
🚀 Discover the untold truth of a $520M exit! Join Sean Kelly as he sits down with Yosef Martin, the entrepreneur behind this jaw-dropping success story. 💰
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- [00:01]
A
When you sell this, you enjoy the quietness, but then you don't have the same excitement of running a big business. But yet you have to start all over again. You have to be foolish, and you have to learn something that you have no clue. You cannot just take the skills that you had and think you can do the same because get some new skills and use your skills and build something new.
- [00:24]
B
All right, guys. Yosef Martin here from Fort Lauderdale. Thanks for coming in today, man.
- [00:28]
A
Thank you for having me, my brother.
- [00:29]
B
Not often someone that sells a company for this much is on the show. The show. So I'm honored.
- [00:33]
A
I'm actually very impressed. I love your show. It's something I always watch, so I'm happy to be here.
- [00:38]
B
Oh, nice. Yeah, those reels, you'll. You'll never know what you're gonna see on those, you know?
- [00:41]
A
Yeah, absolutely.
- [00:42]
B
That's what keeps it exciting. But selling for 520 million, when did that happen?
- [00:46]
A
Well, end of 2020. I sold the company also recently.
- [00:51]
B
Wow. Was it a big shift in your life?
- [00:54]
A
To be honest with you, it was very big shift at the time when I actually depart the company that acquired me because I. When you sell a company, mostly they. They'll ask you to stick around. And I was supposed to stay for about two years, but about few months into it, we both agree that it's okay, and I was out, and that that was the moment where I felt my life changed. I. I did not feel anything. When you get a wire into a bank account, it changes nothing in your life. Everything is the same. But at that time, it was kind of like a. I would say, an interesting time in my life. I got divorced. Prior to selling. I don't know if you heard about the virus that was going on, so everything was shut down. So now I'm leaving the house, but everything is shut down so you can go out. And then eventually I sold the business. And just when I sold the business, they opened up the country. And a little after that, I basically, you know, we shook hands, were good friends, good people. But, you know, we. We went our separate ways. And one day, I dropped off my kids at my ex's place. Yeah, I sat down in my new home, and I told myself, I have a week until I have the kids again, and I can do anything I want. And that's when it hit me that my life changed. Because prior to that, for 20 years, I was running companies, and selling. That's not my only exit, so. But I was always having a business running. When I sold the last company, Boxycharm, I had nothing else. It was. I was all in. It was. And then when you pull the plug in, that's it. Now you can do whatever you want. It was the first time that I didn't have that underlying. I always thought that people don't die from stress. It's a lot of excitement that kills us. A heart attack. Because it was exciting to run a business. You're always excited, challenges, exciting. But then suddenly you find that there was an underlying stress that you don't know. You presume because every time you are on a weekend and you get a call related to the business, you know it's no good. You know, there is a problem that no one else was able to solve and they're now calling you and.
- [02:51]
B
Right.
- [02:52]
A
So it's exciting on one hand. On the other hand, you don't know what it is. But when you completely depart, it's kind of quiet. There is no fear now to open up the country. I have a new home. I can do whatever I want for the rest of my life. And that's when I really felt it. So it took me about six months from the moment the wire hit the account to actually say my life changed.
- [03:15]
B
Interesting. That's a fascinating situation because you're dealing with the divorce, but you're also coming into massive wealth at the same time.
- [03:20]
A
Yes. I mean, the separation was going on before I sold the business. And my ex wife is an amazing person. So there was nothing better than having her with me, understanding what's going on. And she was the only person that knew outside of the business, people that were in the loop of the exit. She was the only one that I was able to tell. So while we're breaking up, there was no one else I can talk to. So I was telling her, we're going to have an exit. And I actually didn't tell her what we're actually going to sell for.
- [03:52]
B
She might have changed her mind.
- [03:53]
A
No, I was. No, no, no, no. I was always thinking, it's half and half. I mean, we build stuff together. It's it. She's. But I wanted to. So what I did was I was telling her, well, we're going to get like $10 million. She's like, wow, that's amazing. I didn't tell her. Only at the end. I told her, you know, we're gonna sell this. And she's like, yeah, no, it's. It takes eight months. So you just talk about a little bit once a. Then I said, all right, you know, how much you're really gonna sell the company for? And she's like, yeah, 10 million. I said, nah, nah, it's more. And then when she heard this, you're like, what? Oh my God. What does it mean? It was hilarious.
- [04:25]
B
I love it.
- [04:25]
A
And the thing is, while we're breaking up, we're still going through this. So it was exciting.
- [04:29]
B
Yeah, that is interesting. So six months, what was the next thing from there?
- [04:34]
A
So, you know, at first I was just enjoying the quiet and all that, but then I decided that I wanted to build financial skills. All my entrepreneurial career, I was so focused on what I do. I did not do real estate. I didn't do into crypto. I didn't do anything. And why should I? There are plenty of ways to make money. Plenty of ways to grow rich and grow yourself as a person. You can just jump into any trend that goes on. So I was doing one thing. Now I figure, let me obtain financial skills and understand real estate a little bit. So when I build my next business, I don't have to learn. All I have to do is improve my skills or continue from there. Because there's a big difference between going into a business, learning all the politics from the beginning when you're busy and you have already a business and it's just your mind is not there. So I figured this is the time to do it, otherwise I'll never be able to do it. I need to know how to manage my money. So I sat down with a friend of mine that he's a day trader, and he sat down with me for two hours and he showed me his strategy, how he does trading. I started doing some options trading for fun. And I started investing in some real estate. And then just looking at the market, you know, you give the money to Goldman Sachs and Morgan Stanley, you tell them to manage your money. And I remember as I played with the market, I kind of noticed something interesting at the end of 2021 where it looked to me as if the market is going to crash. And I had a call with my Goldman Sachs advisor and I told her, let me ask you a question. Do you have any KPIs for a market decline where we're going to get out of the bull market that we've been here? It was very bullish. Do you know when so we can get out and come back in? She said we would never get out of the market. The stocks would always stay there. She said, yeah, but it's, it's not what I want to do. I don't want to stay in the market. If you cry, I want to get out. And then. And you know, she said no over 30 years and so on. Yeah, but you have lost decades. If you actually look at the chart, some people has put their money in at the peak of a bullish run and they wouldn't see the same dollar for 10, 12 years later. And I mean if you look at the dot com people that came at the peak didn't see their money until March 2013. Wait 13 years. I don't want to be, I mean look, I'm not looking to be 70 to see the money back. So I just pulled all my money out of the market at the end of 2021 and then the whole market crashed.
- [07:08]
B
Wow, you timed it well.
- [07:10]
A
Yeah. So I, I cry, it crashed. And then from there on what happened? I decided I don't want to do anymore. I did a lot of options trading. I was very good at that. But then I decided I'm not doing any of this. I need to build some tools. I spoke to a friend of mine, he's a data scientist for a big cell phone company, is my best friend and he's electrical engineer by, by trade. And he said I can build a trading algorithm that would beat any day trader. You just give me the algorithm. So we decided to go ahead and build something like that. So that was the first company I built after that. It's a trading algorithm and so on. So we have that. And then eventually I went through other journeys in my own life.
- [07:52]
B
Got it. So the algorithm uses AI to trade.
- [07:55]
A
So this is the beauty of it. The AI is a term that's very specific. Usually there is a reinforcement, learning agent, tools that would go and do it. It was still not proven to work for the financial market. You have other algorithms that gives you certain intelligence to improve parameters and they were technically proven to work. So if you look at large conglomerates that are or quant hedge funds, you look at the Renaissance technology that are known and like they were the first ones with Jim Simon, they're known to actually use a genetic algorithm and so on. So you have certain algorithms that do known already to be very effective for the financial market. So we use something around that.
- [08:40]
B
Got it. So eventually they might replace these day traders down the road.
- [08:44]
A
Well, obviously, yeah. I mean the idea is that everything you're doing there is a strategy and you have to have a certain discipline. Ultimately you have many ways to skin a cut. If you want to turn profit, you can go with the Warren Buffett mindset where it Says you invest in American business that happened to be public and you want to buy into that, Right? That's one. And then you have the more risky. More. I would say, yeah, much more risky is going to be going in and out as a day trader. And if you already do it, it might be better if you'll have a tool doing it for you. It would always out beat you. Just like playing chess against a computer.
- [09:20]
B
Right. So you're still actively chasing wealth. So is there a certain point for you or are you just going to keep going?
- [09:25]
A
You know, for me, I'm a simple guy. I don't buy expensive stuff. I don't care about any, any expensive stuff. But I just like the game. It's a video game and the money is a way to keep score. I'm repeating someone else's words, but that is exactly what it is. You want to feel that you're doing something right. If I'm gonna go and tell you, look, the, the art, the, I would say the highest art for my entrepreneurial career was when I grossed 500 million in sales, close to 500 million in sales, and I was doubling year over year. I was extremely, extremely profitable. The company was great and it was nice. It was, it was amazing. When you sell this, you enjoy the quietness, but then you don't have the same excitement of running a big business. But yet you have to start all over again. You have to be full again. You have to learn something that you have no clue. You cannot just take the skills that you had and think you can do the same. Because this is not 2018 anymore. This is not 2019. You have to get some new skills and use your old skills and build something new. The part of doing that is, is the challenging part where you, you're not, you're not the. You, you think of yourself when, when people go and all up on your shoulder and say, wow, you're amazing. You're not now because it doesn't work. It. Whatever you do, you're building it right. You don't know if it's gonna work again, right. And you might fail. So you have to start from the beginning. So every time you have to climb that mountain and roll that rock to the top of the mountain, that journey, even though it's, it's challenging, it's very rewarding. But you understand, because you've done those journeys before, that the view from the mountaintop is nothing like the ground floor. And in order for you, because you've had that perspective, you can comprehend what it takes so you want to do it again, and you want to do it again because the journey, as challenging as it is, it's a different mountain. It's a different mountaintop. You don't go. You did Kilimanjaro. Now you want to go and do Mount Everest. Every time is a different challenge that you want to take on yourself because you enjoy that.
- [11:23]
B
Yeah.
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A
And business people are the same, like mountain climbers. This is what we do.
- [11:27]
B
I love that mindset because a lot of people have success in one industry and they think they can replicate it.
- [11:32]
A
But ultimately notice what it is. It is less about the money because, yes, there's always perspective. I have friends that have way more wealth that I'll ever obtain. I mean, up until now. So it's nice, you know, it keeps. It keeps you grounded and humble. But if you're doing this for the money, you would have stopped early on. When you know it's just when is enough. Right. You say, okay, it was. When you have $5 million in your bank account, it's like, okay, that's it. I'm good now. Success in my family and so on. When is it? And every time you have a higher challenge, you have to break in through a bigger wall. Every time you have to climb a bigger wall and there is a barrier that you haven't experience it every time until you get to a point that the barriers account out and most of them are gone and you're doing a couple hundred millions. You have a big, massive company. But most companies stop prior to that because all the barriers to grow your business. So it was really not about the money. If you think about it. If you saw what wouldn't if it was about the money, then I would stop there. I'm okay.
- [12:29]
B
Good.
- [12:30]
A
You just enjoy the competition. You see someone else does a little bit better, and you want to do better than what you did yesterday.
- [12:36]
B
Absolutely. Were your parents super successful?
- [12:39]
A
No. I mean, they're great parents. My. Well, my dad, I'm not in touch with him. So I'll talk about my mom. My mom didn't give me any wealth or anything like that at all. She was a hairdresser. And later on she came in here. She actually worked as a living au pair. She was taking care of all people. But I was blessed to get great values and warm, loving family. And I think that's all what we need. And ultimately, I've seen my mom always working hard, but making money. I mean, you learn that hairdresser, if she's good or he's good, they'll always make a living. No matter where you go, you drop them any place on earth, they'll figure it out. And people want their hair to look nice. Especially women are very specific and they'll marry their hairdresser. So she was always doing good, but to a point because she trade her time for money.
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B
Right, so what was that influence for you on the entrepreneurial side of things?
- [13:31]
A
So I noticed actually from other people as a kid where family members and so on that older that are doing amazing in whatever they do, but they always fell economically. So think of someone that decided to go and you know, really good singer or so on. But there's no money angle for any of this, there's no opportunity. So they always struggle. And whatever they do, you find a genius in them. But he said, why? Why can't you put a genius towards building wealth and then do it for hobby or whatever it is? But why don't you make that your hobby? And I've seen this as a kid now, I never really processed that too much. But as I grew, I told myself I had hobbies. And my hobbies were I like dancing salsa, I like doing a bunch of stuff. But I said, okay, so, so if I'll then salsa, I'm never going to be rich from that or at least stable financially, right? Why not focus on something that can actually make me money? Let me put all my time and energy only on that. And that's how it was when I was early 20s, after the military and eventually putting your mind into this, you know, you find the first nature for your first opportunity, which takes time. The biggest part was what, what am I going to do? How do you make money? You walk down the street, you have nothing. You don't have a podcast right now. You don't have any, any business. I mean, I see over here you have a. Like you don't have any of that, right? You work your student like me, I was international student. What do you do? Right? So you said, well, you know, buying, selling might work. Okay, what do I buy? Where do I buy? You go to any wholesaler, you find out that whatever they have, you can buy it cheaper online, right? So you're too low in the food chain. And you said, so how do people obtain any of this? Like how does it start? So one damn it. Someone that told me you can make money without having any money. I said that's great because I don't have any money. And. But how do I get people to know about the website of whatever I sell? Said search engine Optimization. That was in 2003. And that's when I obtained my first skill. SEO. Search Engine Optimization. That was my first skill. I was able to build awareness for free. Right. And then whatever you stick on it works. So if the business term location, location, location back then was a thing, today is marketing. Marketing, marketing.
- [15:54]
B
Right.
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A
You can get awareness better, faster and cheaper than someone, someone else. And from there on you take off. There's a lot more pieces into that puzzle. But that was my first piece of the puzzle.
- [16:03]
B
Right.
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A
It allowed me to say, okay, from here I know how to connect the rest of the puzzle and to build something.
- [16:08]
B
Yeah, right. Place our time. Because SEO was big back then.
- [16:10]
A
Well, it was, it was different by far. It's nothing like it was today. So I had a liquidation company I started with couple hundred bucks. I was international student and I was flipping merchandise truckloads from Walmart, excess inventory from Walmart, CVS and so on. And I remember that I built a website. I had to learn how to code and then I had to learn SEO. And once you start hitting terms like liquidators, liquidation, and you're on the top, you're in the first position in Google. And back then pre 2009, Google didn't have geo targeted results. Definitely not personalized results based on your searches. If you search liquidators and I'm number one globally, you go to Japan, you go to Africa, I am there, the number one.
- [16:51]
B
Wow.
- [16:52]
A
So you need to understand the amount of traffic that comes into your. Suddenly you have thousands of people coming to your liquidation website. The phone is ringing off the hook.
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B
Wow.
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A
And you're in school, you have to go and you have a class now and doesn't stop ringing. So that was my beginning days and suddenly it works. So then let me throw some Google AdSense. People click on a Google AdSense and you have thousands of dollars every month. Now that pays off your out of state tuition. Every thing starts falling into place and you say, well, they'll call you genius, but all you have to do is obtain a skill of marketing.
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B
Right.
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A
You're not really a genius. You just happen to understand something in marketing and you do it better than someone else.
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B
Yeah.
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A
And then eventually you learn how to make it an actual business. You, you, you know that this is an ingredient in a bigger recipe and you have to learn how to cook it and do it right.
- [17:38]
B
Yeah. It reminds me of Facebook ads. Like eight years ago they were so cheap.
- [17:42]
A
Yeah.
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B
Oh my gosh. But now they're so expensive.
- [17:44]
A
Yeah. If you think about Facebook ads, I remember when it just started, it was kind of challenging to. I didn't do ads for a while, but I had friends that that was their space. Everyone was doing marketing differently. And the story was, you know, this guy was talking about how he made some ads. He wasn't telling me, it's just a video that went online. The guy named Jeremy Shoemaker, and he was talking to a Facebook, I guess, executive, and he told him, you know, I went to a dentist. He asked me, what do you do? I told him, Internet marketing. He said, can you market my business? So he did some campaign for that, for that gentleman, for that dentist. And he said, we did two different ads, a B testing. And that was early on. So no one knew how to even do it. It was very complicated to understand how to drop an ad over there. So he went and he did one with a coat, a lady with a coat, like a doctor, and another one, white teeth. And he said it was ringing off the hook. It was jerk targeted this to Lincoln, Nebraska, and the doctor had to go and hire 20 girl, a bunch of girls to go and pick up the phone. And that was in Lincoln, Nebraska. So think about it, it was just random. That's how easy it was. It was money on the floor that you can pick up and walk away. So if you look at marketing every time there is a new platform or every time there's a new feature in a platform, most marketers that are good, they understand that you have to adapt to it quickly because in many cases the algorithm is. If you have a new platform, say TikTok 2020 or 2018, it was much easier to go viral because the supply and demand between user, between content creators and content seekers is not balanced. Tons of people are seeking content, not allowed create the content yet. So then whoever drops anything, the probability to go viral is much higher. As it goes on and on and on, you have more and more content creators. And now it's just a matter of luck by the end of the day. Agreed. So, by the way, I think LinkedIn is still there. You have 2% content creators.
- [19:51]
B
That's it.
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A
LinkedIn. Yeah. That's really small. So you can. It was always something I was chasing until I sold the business. I run $500 million business, but I always looked at those little details because that's what counts, that's what keeps you relevant and that's how you stay cool. So when TikTok came along, we sat down, I took anyone, I went to everybody in company and said, who knows TikTok? And they gave me A bunch of them raised their hands from customer service, from. It doesn't have to be for marketing. Okay, let's go. We're going to grab dinner or lunch somewhere. And we all sat down, talked about this and we did a focus group just for TikTok. Every day sitting about just TikTok and all users. But you can't explain to them how the business needs to look at TikTok. And we went very quickly viral. We kept going viral all the time and we build our followers very quickly.
- [20:36]
B
And now TikTok shop is killing it, right?
- [20:38]
A
Yeah, they're killing it.
- [20:39]
B
TikTok shop people took advantage of that when I was running YouTube ads on the podcast last year. They were crushing it. And now they're double, triple the price.
- [20:47]
A
You talking the YouTube ads?
- [20:48]
B
Yeah, yeah.
- [20:49]
A
YouTube ads can be very effective, but for few people. The monetization of that is challenging. But at the same time, if, if you have a way to go viral in general just doesn't have it organic content, even your ads will do better. Everything goes better.
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B
Right.
- [21:08]
A
It just. The algorithm on both ends is looking for who's. Who needs to. To see this ad. So going viral is always easier. Everything makes it easier.
- [21:17]
B
Mr. Beast's content strategy got leaked last week. I was studying that and watch time is a really important metric for YouTube.
- [21:24]
A
Absolutely. So you know what you do for watch time? I guess the, the easiest way to see this. In 2014, I noticed an influencer named Kathleen Light and I, I knew that she's going to go big and every day she would grow 3,000 followers. That was in 2014. I said, but why, why is she. Why am I looking at her video all the way through? Yes. I mean, she's charismatic and all and there are lots of charismatic people. And then I noticed it's her editing. She would go and do her editing different than the most. It was very basic editing, but every two seconds or so there was a cut in her editing. If you see that which keeps you a little. It keeps you stimulate. And you don't understand that because it wasn't crazy things, but it became. I mean, if you think about our generation now I know about you, but I can barely watch a movie now I can. I'm stimulated enough for movies. I need something short form content. So imagine the kids. So yeah, the editing needs to be good enough to stimulate you to stay on that. There is one particular person, if you look at Antonio Garza, it's in a beauty industry, which that person took it all the way to a different level. Where it's zoom in, out, in, out, sideways. So it's for little kids that have a whole add that. That's what they're going to go and watch. Right. But Antonio Garza blew up because of that.
- [22:42]
B
So that's smart.
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A
Yeah.
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B
I need to tell my editors that stimulation.
- [22:45]
A
You have to go and stimulate people better than someone else.
- [22:49]
B
You have to these days. Yeah. I watch all my YouTube at 2X, all my podcasts at 2X, even movies on Netflix. You could change the speed now. So I do one point.
- [22:56]
A
You can do that faster?
- [22:57]
B
Yeah.
- [22:58]
A
Oh, okay.
- [22:58]
B
So 1x is too slow for me, man.
- [23:01]
A
Interesting.
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B
You know, way too small. Yeah. Especially audiobooks because they're too slow.
- [23:07]
A
That's a good way. I actually do that when I'm listening to messages on. Oh, I message WhatsApp.
- [23:12]
B
And yeah, yeah, WhatsApp.
- [23:14]
A
It's just easier. 2X makes it easier because I have the patient when someone drops a voicemail. Why couldn't you just write it? I have to listen.
- [23:21]
B
I was like, yeah, those people are annoying, man. Those two minute voice messages. Yeah, dude, it's been cool. Are you buying companies right now still?
- [23:30]
A
I invest, but not much. I mean, I'm not an investor per se, but what I decided I'm gonna do is I'll invest alongside professional investors.
- [23:41]
B
Smart.
- [23:42]
A
That have great success. And you know, they might say, okay, you know what, we kind of want you to be on the board. Or they're just friends and they can say, well, you can come in some valuation, same everything, same terms, the casp, but I'll let them do the due diligence. And it's actually something very common around investors where I've seen this. I mean, I learned a lot through selling the business. I mean, selling the business is an experience that teaches you about money. So you first of all understand how private equity works and you understand why it's very hard to lose in a private equity game. Because one thing is the private equity companies that are coming, investors, it's very common to say, we have a lead investor. So if there's a lead investor, he does the heavy lifting. They do. All the due diligence can be pricey. Actually pretty pricey. And it's time consuming. And then they decide if to buy or not a company. Right through that process, you can go and say, okay, you know what, let me look at your record. Okay. You've done pretty good in that space. Say a restaurant. You guys know everything about restaurants. You decide to invest in this one, I'll invest. But not just on one, I want to do it on the next five restaurants because the probabilities usually 1 to 10 will fail. So usually do it good. So let me come in with them. That's one. And that was my best investment. Everything else I played with my money. I didn't do good and. But I barely threw money into small startups.
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B
Yeah, yeah, I've lost on pretty much all mine. I think I'm like over 8.
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A
What did you learn from that?
- [25:12]
B
Similar to you, I think because when you make money you kind of just want to spread it out. That's like your first reaction. But you don't do enough due diligence and you don't talk to the right people. So you're just like yeah, I'll invest in that restaurant, that AI trader, whatever. And I got too excited, move too fast. I need to take more time and probably partner with the right people like you did.
- [25:29]
A
Yeah, I kind of learned that no matter who you want to invest in their businesses, no one is going to go and show you a chart that goes down. They're all going to show it's only going to be hunky dory over there. So you know if, if you go through. So then you go and you show this to some friends that that's your job. An analyst in the private equity. And he said yeah, I wouldn't touch it with a stick. Like what sounds so good? Everything. How can you come. And then he breaks it down right away because that's what they do every day.
- [25:58]
B
Yeah.
- [25:58]
A
So eventually I said okay, I'm definitely not doing this by myself until I'm more trained. There's politic in every business that's no different than anything else.
- [26:06]
B
Yeah, I'm also pretty risky. So like I have financial advisors and they're happy with 8% a year but to me that's, that's too low, you know cuz I'm young so you want.
- [26:14]
A
To throw more than 8% to.
- [26:16]
B
I want to get like 15 to.
- [26:17]
A
20 honestly to put in into. You're saying to invest in like make.
- [26:21]
B
15 to 20% on your money?
- [26:23]
A
Oh I got.
- [26:24]
B
Cuz they're happy with making 8% but that's pretty low in my opinion.
- [26:27]
A
Well no, I mean I get that but. Well I mean we can talk about this later but yeah, I don't understand. I'm not a financial, I'm an entrepreneur. I know I'm good in building businesses. So in terms of investing, maybe in 10 years we'll sit down again. Your podcast is going to be bigger Than Joe Rogan maybe. And then I'll tell you, well, here's my strategy and that's how I work both, both the cashew weights or something.
- [26:48]
B
So you'll be a billionaire by then 10 years.
- [26:51]
A
Well, what's going to be worth what's a billion in 10 years then?
- [26:53]
B
Right?
- [26:54]
A
It'll be half 100 million today.
- [26:56]
B
That's true. Because inflation.
- [26:57]
A
Right. Damn.
- [26:58]
B
Yeah. Because even being a millionaire today is not even impressive to me.
- [27:01]
A
Every second person called himself a billionaire now. It's just, it's a, it's, it's kind of scary where you tell yourself, well, wait a minute, if someone in the 80s sold the business for 100 million, I mean, yeah, I sold for 500 million. It's like, I don't, I mean, no, they made more. There's no way. Because, I mean, from the 80s, I cannot see how 500 in 2020 is worth the same or more than the 100 million back then. I don't, I don't think so. I mean, look at, look at price of homes. Look at, look at the differences.
- [27:34]
B
Right? Yeah, so that's a good point.
- [27:36]
A
Yeah.
- [27:36]
B
Because people think like a million is a lot these days, but maybe it was in the 80s.
- [27:40]
A
Look, the, there are some things that are in our head, right. If you look at, if you ask yourself, why is it that people fail when they're building businesses and they want to scale their businesses. And you know, there's, that, there's just a statistic that we pulled back then that one out of ten companies will gross more than a million dollar a year. And then you said, okay, how many do 10 million a year? And about 10% of companies will do. 10% of that will do. So one out of 100 companies will do about 10 million a year.
- [28:12]
B
Got it.
- [28:12]
A
But then here's where it gets tricky to make 100 million. And I'm giving you numbers that we pulled in 2018. One out of 35,000 companies.
- [28:22]
B
Wow.
- [28:23]
A
So you kind of need to get. So if you made 10 million, your probability is 1 to 350 to actually make it just impossible to get to that part. And we, we, we threw that, we found that number when we surpassed 100 million. But where it gets trickier is now from about 100 or 200 million to get to a billion, it's 1 to 20. So you say, oh, wow. So the barriers were from 0 to 100 somewhere over there. And there's just a lot of barriers because you start with whatever is obvious. It's so easy to get to a million because everyone can come in and figure out something that can gross a million dollar. But then it gets a little trickier. One out of ten will actually gross ten for many reasons. But there's a big crash that falls there. By the way, when you say why is it that you still have about 20 from I think it's 250 million to a billion. It's about one out of 20. He said. But why are they failing from there? And majority of them end up selling their businesses when they. When you get to from 100 to 50. So there's a dropout all the way to a billion. There's a big dropout because the founders leave and they're cashing out. And usually 90% of acquisitions fail. And that's why you do not see. But the barriers to grow the business comes down early on. You get through this and then it gets easier because you have to reorg your company at least twice.
- [29:48]
B
Right?
- [29:49]
A
You have to decide and then it starts with you. What do you do during the day? And most people, I would argue fails CEOs because they decide that they no longer have to look at the little details as they scale the business and they feel oh, I'm a CEO now, I shouldn't be dealing with this. However, you need to understand what is the steering wheel in the car that you're driving and time. Often they feel like everything else is important and their job is to monitor monetize the entire company from above. And now you still have to hold the wheel. Otherwise you're going to start getting off road and you're going to have some choppy ride from there on. And that's what happened when you pull yourself out of the product or out of the service. If you don't pull yourself out of this, you understand what it is and you just need to identify what is the true steering wheel for my business. And I can never let that go. And you're going to have some pressure board members or other people would go and tell you you're bigger, you're bigger than that. Now you're a CEO of whatever 200 million or 500 million business. You shouldn't be dealing with little TikTok stuff. Well sometimes that what makes you relevant cools and stay stay on top.
- [30:53]
B
Right?
- [30:54]
A
You just need to understand what it is for. Every business is different but there is every business would have that piece that the CEO should not let go even if someone manage that. But that's what keep you tuned to the market.
- [31:04]
B
You got to keep in Tune with your customers too correct. Some, some companies just stray too far away I think from their customer base.
- [31:10]
A
You can see, you can tell by looking at the day to day of the schedule, the day to day schedule of the CEO and the C levels. And you can see if it's a company that forget where they came from. If all they do is strategy meetings, corporate meetings, follow up meetings, they forgot where they came from. Because if you take any engineer and you ask him, do you want to be a manager? An engineer that does, AI will tell you, I do not want to be a manager because once you pull me out of the day to day stuff, I lose the edge because there's a lot of progress every day in that space. If you're making me a manager, I'm no longer touching it and I can never go back to it. There's a, there is a knowledge debt that I'm acquiring every day not being there. And I don't want to get out of this because it's hard to go in near impossible later on. So it's the same with, with CEO and C levels where they forget where they come from. And eventually the C levels, the VPs and above all the way to the CEO, they don't know how to do anything at that point. They used to. And then at the same time when someone wants to tell them you can't do it anymore, it doesn't work like that. It's very hard because it's hard to tell someone to do a. It's hard. It's going to be very hard to teach you something that you think you already know.
- [32:20]
B
Right.
- [32:21]
A
And that's where companies go today.
- [32:23]
B
Yeah. And I think 10 to mil to 100 mil, you really need to make some important hires. I think that's very. A lot of people struggle.
- [32:28]
A
This is exactly it. That's on point.
- [32:30]
B
So which ones from your memory were super important when you were scaling.
- [32:33]
A
You need to start hiring from the top. And you, I would always advise get someone that work for a company. If you're at 50 million and you need to get your, your vision is high hundreds or billions, get someone that worked for 50 to $100 million business and stay with them through a transformation in a key position to billions. That he saw the transformation from say 100 million or 50 million to a billion or 2 billion because he's seen the transformation. And that's gonna help you because your, your job is to find someone that can build underneath you the organization properly. And that's one advice. The second advice, as soon as you hire them, if you feel it's not it, fire them quick. Your job is to fire them quicker than the competition would have fired them. It's not about how good you are in firing in hiring. It's also how good you are in firing.
- [33:27]
B
Right.
- [33:28]
A
So that's, that's the two things. First, get someone from the top, a coo, someone that was in a, in a. At least a VP position in a billion dollar business, but was working in the same company and he saw the transformation from, from. Because it's not the same.
- [33:44]
B
Yeah.
- [33:44]
A
50 million to a billion. So that, that's what I did eventually. And it wasn't easy, but we had to kiss a lot of frogs. But I'm good in getting rid of them quick. And the ones that made the difference are some that came in with that skill set. And your job is to bring people that are better, at least as good or better than the current employees that you have. And eventually people on the bottom would either get better or they'll turn right. And now you have a better team.
- [34:10]
B
Yeah. Firing is tricky, especially when you develop personal relationships. So did you have friendships within the business?
- [34:16]
A
Look, of course, yes. But, you know, it's a friendship around business. The beautiful part is after that, after we all exit, after we all left, many of us are still friends now. And now we can actually build true friendship.
- [34:31]
B
Right.
- [34:31]
A
It's. It's part of that.
- [34:33]
B
Yeah. So you just keep in mind it's. It's mainly business first. And then.
- [34:37]
A
Well, you know, there is something called chip popularity. If I'm your CEO and you're my vp, I'm not gonna go and talk to you about my new girlfriend. It's just not gonna happen. Each his own, right? But for me, it's all cool. We can talk, we can laugh a little bit, but. But you don't want to drag yourself into cheap popularity where, you know, because tomorrow I might have a problem with something you're doing and I have to talk to you seriously. I mean, I don't have a problem anyway, even if we're laughing today, because it would never, I would never attack your character. I would, I would attack your action in the business. Right. So it would never be personal. Some people might take it personally, but they need to distinguish the two. But by the way, I want you to feel just as comfortable to attack my actions in the business, not my character, if I did poorly in something. Because I need to hear why. I want you to tell me that. So there is no problem there. But friendship obviously can form, but it's going to be a different type of friendship than someone else that doesn't work for you or something like that. It's going to be a lot of respect and so on. But I would always advise people, do not forget not to turn it into a cheap popularity. You don't want to be the fun boss or something. You can be a fun person. Everything else. But that's not what you're looking for. Yeah, you need to make sure that you're the guy that have proficiency in what you do and you're serious about. When it's business, you're serious. And outside of that, we can laugh a little bit.
- [35:55]
B
That's interesting. So you allow your co workers to challenge you on some business ideas.
- [35:59]
A
I would fire you if you don't know.
- [36:01]
B
Really?
- [36:01]
A
Yeah. If you're just a yes man, you don't bring me leverage.
- [36:03]
B
Wow.
- [36:04]
A
I'm sorry. Like, my idea was that if I have an idea and the idea is wrong and you know it's wrong, and on the aftermath, you tell me, I knew it was wrong. Xyz, you're not attacking my character. You just tell me why. Look, ultimately I'll give you a great example. More Rolla had. This is a great case study. I mean, I can tell you I wasted my time when I went to business school. But there's one good story I picked out of there. It's a case study that I learned about Motorola. I did not have to go to school for that. But here it is. In the 90s, satellite phones were the thing because there was no antennas all over the country. So very expensive phones, all the satellite phones. And there was a problem in the satellite phones where there was a slight delay while you're talking to someone. So this engineer in Motorola found out that if you use a different frequency, you're not going to have this delay. So I went to morale. They built the plan. They said, well, we need to launch 53 new satellites to orbit Earth and it would take us 10 years and $10 billion. And they had this business plan that over six months, they need to have at least 60,000 subscribers. And that would be the price to pay thousands of dollars every month, $50,000 for the phone. That was the prices back then. Ten years later, when they finished, they had their satellite phone. But guess what? No one bought it. Because at that point, regular phones were the thing. There were a bunch of antennas all over the country. In 2000, no one bought a satellite phone unless you work in military or Alaska or something like that. So they bankrupt within six months or a year. The whole business $10 billion went to waste.
- [37:41]
B
Wow.
- [37:42]
A
The point is Motorola was the main builder for those antennas. They knew the projection many years out. They've seen the decrease the data around decrease in buying satellite phones was there. And you ask yourself how come it's not a government agency that you can blend all idiots. No no. It's a private company for profit. Very successful. But yet no one likes change. Nobody likes to challenge anybody. A lot of politic. And here you go. You have a company that lost $10 billion which was painful. And again in 2000 a billion. $10 billion was. Who knows what it is today. Right. I don't even guess. I don't know realize loss realized for today. So that was a story I would tell people my company I said we're not Motorola. If you feel there's a problem, let us know and we're okay stopping at any point. I'm okay losing. If it was a $10 billion budget and we lost a billion but we at least saved the 9 billion. That's all I'm looking at. Let me know. So if you come to my company I'll tell you come in. We might work on a project last minute we'll decide to kill it. Don't be discouraged. And if you find there is a problem, I think that there is a red button and you press it and you just let me know. No one is ever going to be mad at you for that. If it was Sarah's project she would never have a problem with you challenging. We in fact we want you to. We don't want to launch something that had no life, no. No reason to exist.
- [39:04]
B
I love it. Yeah, that probably helped you avoid some big losses.
- [39:07]
A
That mindset 100% you fail faster than anybody else and eventually you tell everybody. But all that wouldn't you know I can go and tell you to tell us to stop but then I also still need to give you directions of what actually going to work for us. Right. I was selling monthly beauty subscription box with five full size makeup items. And then when many companies did the same there were hundreds of us only we were the only one that had an exit at the end. But it was us and Ipsy. We're the only one that made it to the end. Right on the monthly beauty side and you said but why? I mean we had Sephora competing with us. We had Macy's. Even Amazon was trying to come into it at one point. They all failed and not to mention hundreds of just entrepreneurs like Us. Now you ask yourself why and how is it that our decisions throughout the days were better than others and so on. And it's just one of those parts where you said, sometimes it just takes a group that's a little bit more focused and better to win. If I'm focused more than you, and I never forget what's important, what's urgent, I will win. So in order to do it, there was a part where I had about 30 employees. And I felt like I'm a. I was small, I was doing 10 million in sales at that time. And I felt like I'm a chicken with their head cut off every activation I had to be involved, and it got to be challenging. So I had to hire more people. But even if I hire more people, I still have to manage them because. So someone told me, friend of mine, she said, you need to write a goal, the company goal, and then you need to write four, a couple strategies. That's how many. What are the main strategies? And I had to understand what is the strategy and what is a tactic. That simple question I couldn't answer clearly to myself, so what do you do? You Google that. So a strategy is a. Com is a common denominator for multiple tactics. Then you start asking, okay, if I do, if I go and I do an influencer event, I know it, what do I want to do first? I want to grow. I. That was easy for me. I knew the goal, the common goal is to grow. As long as I'm profitable, just head above water, I want to grow. I want to get more members because that's my engine. Okay, so that's my goal. Very easy. Grow. Now, every idea that I have, how do I define it as a strategy or just a tactic? Eventually you understand that you say, if you said it's a strategy because it's not an actual thing you're doing. So we said, all right, I want to get the best product in the box. That is not a tactic. This is just the idea that's a strategy. If I have the best product in the box, I'll have. I'll have growth. Because people would stick around, they'll refer friends and so on. So company rule number one, strategy one is get the best products in a box. So if I do an influencer and brands event, they're all coming together now. More brands that I don't have relationship with will come in to meet influencers. From there, they build personal relationship with us, and then from there we can have their product. So now I have more options to choose to create more product that would help me get better products. So that's, that's a tactic. Right? So I would explain this then. Another one is get the best customer experience, get the best brands experience, and then get the best influencers experience. Each one was a strategy. So every team, one is in marketing, one is in logistics. Every person that worked in the company understood what is the goal and how we're getting there. Now everyone can work if there is no officer on site, they knew what to take, what action to take. Hmm. And now you have 100 employees, for example. Then you have a hundred brains that can think independently with great ideas that I'm not going to come up with. So we can pierce all these vectors, go very, very focused and you can pierce through any challenge. And that's when we started growing. That was a major change. I love that you just give great directions. Very, very simple. Think of if you have all the Hebrews living Exodus in Egypt, you can drop on them the Bible. They don't even know how to read, but you can give them the ten Commandments. So if you have some big group of people, make it very clear, like a billboard what needs to get done so everyone understand, otherwise you've lost them. Then you go into specifics. Then you say, okay, now we're going to go throughout years and years, we're going to build kind of like textbooks for something more specific. But first everybody knows not to kill, not to, not to steal, not now they're all behaving good, we can breathe a little bit. No more craziness. Now we can start perfecting ourselves. Now let's go and go and write the Bible and let's go deeper into rules. So that's the same in a company. That's how it should be.
- [43:38]
B
Loveless. A lot of people write their goals, but they don't get nitty gritty with the tactics and the strategies, you know, even the goals.
- [43:45]
A
I can say that most companies said company mission and never, I mean, I'm not judging everything. Just you ask every person, what is the company mission? They wouldn't even know. Well, if you, if you have a mission that nobody remembers too long, make sure you find something that they can say and understand what the mission is at least.
- [44:04]
B
Right?
- [44:06]
A
I like, I like to see it as, as simple as possible. More simple than the four strategies are to write, because that's where it all starts. If you, if you look at, at a company that has a very long like a whole paragraph of a company mission, I bet you that you know I'll pick up any employee that you won't be able to answer.
- [44:27]
B
Yeah.
- [44:27]
A
So what's the purpose of that?
- [44:29]
B
Absolutely. Joseph. It's been fun, man. Where can people find you? Keep up with you, Joseph.
- [44:34]
A
Martin. Yosdf and then I'm on Instagram. Yfl Martin.
- [44:39]
B
Cool. Keep the link below and we'll link the trading algo below.
- [44:43]
A
Awesome.
- [44:43]
B
Awesome. Thanks for watching as always. See you next time.