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Digital Social Hour
Avoid These Venture Capital Pitfalls: A Founder’s Journey | George Stoitzev DSH #885
00:50:27
Dive into the exhilarating world of venture capital with this episode of the Digital Social Hour featuring Sean Kelly and his guest! Discover the highs and lows of a founder's journey as they navigate the challenging landscape of venture capital.
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- [00:01]
A
My goal is so for this year, I call it the blossoming where all these companies begin to take take shape and become self sustaining. Once I feel like all those are self sustaining now, the bigger you want to go, the deeper your foundation has to be. No one cares about the words you say. They care about who said it.
- [00:24]
B
All right, guys. George stuff I tried.
- [00:28]
A
What is that, a Bulgarian?
- [00:29]
B
Bulgarian. Wow. Where your family's from?
- [00:32]
A
Yeah.
- [00:32]
B
Nice. Thanks for coming on though. We've known each other for man, what, seven, eight years?
- [00:36]
A
Seven, eight years. I think it was 2018.
- [00:38]
B
Yeah. You were doing E commerce back then. E charging cases.
- [00:41]
A
Yeah, mainly people know me from E Commerce so I started in 2013, was the first time I had a Shopify store and I've done over $15 million in e commerce sales and, and then in 2020 I decided to branch away from E Commerce and dip my hand in software. So I started a venture backed software company called Blue Receipt which was SMS marketing for Shopify brands. That was the first time I raised capital. So we raised $1.5 million of venture backed capital. But then what I realized was that was a completely different game than a cash flow based approach. You see an E Commerce, what you want to do, especially if you're drop shipping, you want to make your money tomorrow. Whereas in the software game there's these things called payback periods. So imagine a lot of these companies, they'll pay back the money they spent to acquire a customer 15 to 28 months ahead of time. And so you need a lot of that capital to burn to be able to sustain that long term, you know, value of that software product. So what happened was we raised this money. When you raise money you become almost a glorified employee because now you're not paying yourself out, you're paying yourself out a salary like a W2 employee. And now you're relegated to this opportunity that you're kind of stuck in. And what happened was a lot of my competitors, especially in 2020, 2021, raised so much capital. Attentive Mobile, one of the biggest competitors, raised $1 billion in essentially a coffin. They started giving away $500 gift cards to Amazon just to book a demo call with them, giving break even pricing because they had all this money they needed to spend. Klaviyo raised 400 million, PostGrip raised 250 million, Emotive raised 50. You had a lot of these other ones raised 10, 15 and then some auxiliary competitors, Active Campaign raised 250. And what I realized was now I'm in A bad position. You know, I'm in a rock and a hard place where I can't just say, you know what, I don't want to do this business anymore because remember, I have obligations, I have employees, I've raised this capital, I can't just walk away. But at the same time I can't just do other businesses to make an additional income like you know, other ventures because I feel like I'm committed, I want to be all in on something. And so then in 2022 I was like, you know what, I gotta sell this company. Because it didn't seem like when you go in a venture back approach, you want to go into a venture back approach for two reasons. One is you're looking for 100x outcome or two, you're looking to validate an unknown opportunity and there's a lot of capital intensive things that need to happen before validating that aspect. If that's not going to be the case, there's no need for you to raise venture back capital. And so for the vast majority of people that I recommend today, for any young person, there's only a couple things you got to do. I would focus on drop shipping number one, because you're making cash the next day, info products, building out your social presence and producing things that have massive gross margin, I'm talking 90% margin or more with almost no upfront capital. That's the number one thing you need to do. And, and then you're going to be taking that distribution and transitioning it into other aspects. Maybe it's branded E commerce, maybe it's software products, maybe it's something else. But everyone that I'm seeing talented today, they're not taking on, you know, these more standard approaches of business back in the day. Everything nowadays because distribution's so cheap, if you're good with organic, you want to be focusing on things, you're making money the same day with huge margin and, and you're not taking on crazy upfront capital risk. There's no, there's no need at all, right?
- [04:08]
B
Because a lot of people see these headlines of people raising millions and they assume they need to do that for their company.
- [04:12]
A
For every one person you see that has like an amazing success story of like selling their company or something really amazing happens, there's 100 dead bodies you don't hear about, right? And that's by nature the, the game of venture capital. The venture capital is like placing a number on a roulette wheel. You're supposed to lose 36 times for every one hit. And so the venture capitalist, well, he's somewhat concerned about the dead bodies laying around, but he's not the dead body laying around. See, all the people who took on that investment are now obligated to that, you know, position on doing something. And for a lot of times, there's a lot of stories where even if you raise so much capital, you're in a bad position. You raise 40 million bucks, that's not, that's not also a great thing because now you have a threshold to uphold if you sell your company for 50 million. Well, there's a waterfall schedule where this.
- [05:00]
B
Episode is brought to you by BetterHelp. Give online therapy a try@betterhelp.com DSH and get on your way, becoming your best self. My fiance Arielle plays a big role in my mental health, helping me realize my true potential. Everyone's trying their best around you, so take time to appreciate someone close to you. I've tried therapy in the past and it helped me go through some tough times. When I was in college dealing with mental health, I was on prescription medication. I actually had agoraphobia when I was in college and therapy helped me figure out some answers to how to fix that problem. For two months, I couldn't even leave my house or I would have a full on panic attack. So I love companies like BetterHelp that can get therapy in front of the masses. But therapy definitely helped me get better. And I definitely appreciate companies like BetterHelp because it's completely online and it's conveniently suited to fit your schedule and accommodate life surprises. Fill out a brief questionnaire to match with a licensed therapist today with the freedom to switch therapists anytime for no additional charge. Visit betterhelp.comDSH to get 10% off your first month. That's better. Help. H E L p.com/DSH Check them out.
- [06:07]
A
Now, investors get their money first, depending on the liquidation preference, and then the debt gets paid out and everything else and you get the little sliver at the end. So it's about the value you create. And nowadays, I mean the, they're super successful people. Like one of these, these, these young killers that I know, his name is Rib. And Daniel and Musi, they created a software product and in a couple of months they're crushing over $500,500,000 in monthly recurring revenue.
- [06:34]
B
Wow.
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A
With absolutely no cost to create this product, essentially.
- [06:39]
B
Damn.
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A
Why? Well, because Musi and Daniel, they're the one in number two on wap for distribution, for short form editing, for making money on TikTok. Making money with shorts. And the product called Crayo is creating faceless content, creating AI generated content, and allowing people to make money. So if you're building software today or you're building anything in that regard, you want to be thinking about how does the software make someone money? Because if it's costing $100 a month and it's making them $500 a month, that's where they're going to stay in, and that's where you're going to have a reduction of churn. But simply saving people time or all this other stuff is not how most software is really growing today. Rapidly.
- [07:18]
B
So your advice would be get something with high margins and operate lean.
- [07:22]
A
Operate lean, do. There's so many amazing AI tools today. The cost of executing a product is like this today. The most expensive thing today is distribution by far. And it's only going to get more expensive marketing. Marketing, but not just marketing. It's really having an identity and a piece of resonating content that captures an organic flywheel. That's really the most important thing. Because you can layer on paid ads afterwards, right? Paid ads is where you're going to be able to scale up, but you lay the foundation with quality organic distribution and an initial flywheel. Almost like, you know, if you want to create a fire, you don't pour the gas first. You build the foundation. You get a little spark once that's. Once you get that little fire working, that's your organic. That's your kind of initial distribution. You could pour the gas easily, but without that initial flywheel, you're kind of left chasing your tail because as soon as you stop your ads, it fizzles out. You see a lot of these people or a lot of these brands where they'll make the vast majority of their revenue from paid ads. But no one's commenting on their stuff.
- [08:24]
B
Nope.
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A
They might have half a million followers and they have, you know, five people liking their. Their post on Instagram. And that discrepancy happens because there's no underlying value of their organic distribution. No one really cares about them in particular or the. Or the offer. They're just selling people in pain in a specific moment of time to get that sale.
- [08:44]
B
Yep.
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A
But then people fall off tremendously after that.
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B
I've noticed that the, the people who.
- [08:49]
A
Make the most money on info get the least amount of results. And it's this kind of paradoxical situation because I talk to thousands of the world's best entrepreneurs. My network is like a very, very dense network. Of people who are absolute killers. And across the board almost no one has really ever bought a generic click funnels based type of program. Yet those click funnel based type of program, those are the ones making the most amount of money. I'm talking about 10, 20, sometimes even someone like, I don't want to call it names but over $100 million and no talented person has ever gone through that. In fact, I don't know someone who's successful who's gone through those types of programs. The people who are very talented, what they do is they'll focus in on something specific, a specific niche and then they'll go find a relevant person in that, in that corridor who doesn't have such a big following because they can get personalized support and they can build out their mastermind in their kind of smaller community to get over the threshold. Their action takers themselves are not looking for a handout. The people who make the most money, they're selling community college level people, they're selling people who are in pain, who don't have that much money. They have a couple thousand dollars and they need to do something because they've been thinking about it for so long. Those people are never going to get success. In fact, there's no information or education that can make them successful because you got to move their hand. Yet those are the people you can consistently sell on a high ticket over and over again like butter. And it's just like add to a sales call to a pain point to get a sale. And the drop off rate is like that because remember these are, I mean community college level talent. They're not talented individuals, they're 26 to 35. They're not going to be the next E commerce superstar. I'm sorry, they're not. They're not.
- [10:31]
B
That's why you see them getting called as scammers because.
- [10:34]
A
Yeah, a little bit. Because I mean scam by definition is you're saying a promise that you can't fulfill upon. I don't know if I would classify it such a scam because a lot of these times these people are in pain and they just want education, they just want like a, you know, if there's, imagine you're 28 years old, you don't, you have like $5,000 in bank account, you're working a regular job and you've been thinking about making money online and E commerce for so long and yeah, we know you're not going to make millions on it, right? I mean let's not kid ourselves, right? If you were that talented, you would have tried to, you would have made something happen before, but you just want some hope, you just want someone to like. You want to commit some money, you want to take some action. You want to just like have some change in your life. And there's nothing wrong with that. And I think that. So to label a total scam, I don't think is the right way to do it. What I'm just saying is that the people that I help with my, my business model, which is called redacted, those are the world class talent across the board. Of those people, they never buy generic programs. They did. I just never see it. No one really talented is like, oh my God, yeah, I bought this generic program from this clickfunnels thing and then I became successful. No, they took it upon themselves to take proactive action. They found their small community, they learned from someone in particular, like a mentor. They built out their, their connections within the industry. They found the kind of gray loopholes and they made it work. They didn't rely on a program or anything else. They relied upon their own actions and finding their own communities to make it work.
- [12:06]
B
Right. You've done thousands of consultations as you mentioned earlier. Is there any similarities between your top 1% students out of those consultations?
- [12:12]
A
Absolutely. So what's really interesting, people ask me, like what? Why am I doing this business model? You see, I didn't even. My social media is not really big. In fact, I'm not a public influencer by any stretch of the imagination. All the money I've made has never been from my face or my voice or anything else. I've made my money from e commerce and software before. But when I sold the software company, I realized something in that moment. The guy who bought me, Bruno, he bought me with a handshake and we raised $15 million after I came in at $70 million valuation, essentially with a handshake. What that means is Bruno showed me he did a thousand consultation, a thousand like calls with VCs and investors the year prior. So a year and a half prior and this he, you can look back like years prior, he's had all these connections he's built up. So when there was an opportunity, in this case Magna, he had all those people to go reach out to right away. And I noticed, I was like, I have all the skills and ability, I have no leverage. And leverage comes in the connections where you have something and someone else has something. And through a handshake a huge value creation can happen. Right. You have maybe Distribution, someone has execution and a connection happens and boom. Money gets kind of built out of the ether because there's some kind of multiplication happening with these two individuals. And so I said to myself, you know what, I'm going to spend the whole 2023 under this vision called redacted. And the vision of redacted is that there's so much information, there's so much things going on today. You need someone to give you that level of trust to redact all the irrelevant information and just tell you, talk to this guy, talk to Sean, talk to Daniel, talk to here, someone who knows your particular pain points. For a world class entrepreneur. I'm, I'm talking about people who make over 20 to 50k a month minimum. Like that's the. I really don't talk to people under that mark because level 1 is 20k a month. Level 1 is 20k a month. Because it means you're never going to go back to a regular job if you make 20k a month as an online entrepreneur. There's no W2 job for your level of talent. For the most part that could sustain around a $400,000 a year W2 career. It just doesn't exist. And so once you cross over that threshold, you almost can't go back. And so they stay in the industry forever. And so I focus on those people, find those exceptional talents, connect them with the right people, be kind of like their mentor. I'll give you some cases in 2020. I did a call with Sebastian Jordy and Jordan Walsh.
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B
Wow.
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A
During, during COVID they were back in their mom's place and they were kind of having a little bit of a, a rough passion in their life. But they had amazing potential. They had a little under 50k on YouTube. I told them the exact same advice. Double down on your personal brand, utilize that niche you are good at, which was E commerce. To produce better content, to build out your, your name in the industry. But you're going to make all the money with your highest leverage, which is going to be your brand identity for, you know, larger gross margin things, whether it's education, whether it's software. You know, Jordan sold the software and Sebastian Georgie crushed it with his TikTok low ticket course for the back end affiliate commission for Shopify. And so both of those cases you need more leverage and that leverage comes in being a winner in distribution. And so the same thing over the last year I've done over a thousand of these consultations. People I think just as talented as Sebastian Georgi and Jordan Walsh were in 2020. And so imagine three, four, five years from now. I'm investing in individuals. What I mean by that is if I do a call with you, it creates something very different than a piece of content. It's a relationship that just no amount of content can replace. And it's almost like I buy shares of you in a way where it's like I establish a credit line with someone, a trust level. George has seen me at my lowest, and then George has seen me on my highest. And I can know a person very differently than someone else. Just meeting Jordan today, Right? If someone meets Jordan today, they can never really know Jordan. In the past, it's not possible. Yeah, they can hear the story, but Jordan's in a different place now in the way that this person's finding Jordan is here. So the relationship can never really be that way. But if I can meet someone here and I can spot that talent, I can be like, dude, you do have this talent. Let me connect you to these people. And I could be a cause of their next breakthrough. Well, that relationship, imagine those people become hyper successful. Well, now there's a big deal to be had because I'm looking for 10, 20 $100 million deals in the next four to 10 years.
- [16:49]
B
Right.
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A
And those things take time to marinate. It's like planting a seed. So the first year in 2023 of redacted, I essentially planted the seeds, a thousand seeds, and I started watering the plants. What do I mean by that? I follow up with people, I encourage them, I introduce them to people. I just invest, invest, invest, invest, invest. Just water, water, water, water. And people ask me, george, what can I do for you? And I tell them, the best thing you could do for me is be the best version of yourself. Because in the future, I'm looking for huge deals. I'm not looking for a couple thousand dollars from you right now. What am I going to do with a couple thousand dollars? Not much. And really, when you take on money, you're taking on an obligation. So if I take on someone's four, $10,000, whatever. I'm now taking on the obligation of some of their success and. And some of the other aspects. And it also changes the dynamic.
- [17:32]
B
So you don't charge at all for the call?
- [17:34]
A
No.
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B
Wow.
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A
Now, of course, we're. How do I make money from this? Well, sometimes if I introduce someone to make some affiliate commission from an introduction, whether it's a3PL, a payment process or a Google Ads guy, etc. But really I'm looking for 5050 partners. I'm looking to spot that one of one talent. And now I have 11 of these companies, one of one talent. What that means for me is they are resonating with an audience for a specific type of vertical offer that has amazing underlying distribution and they could be the winner. So I'm look because the power law states that the, the people who, there's a few people who get all the rewards and so you're looking at like the Jordan Welshes, the Sebastian Jordy, the Iman Gadzis, the Luke Belmars, right. The sliver makes 80% of the reward. And so I'm looking for that talent before their breakthrough. And I'm and I could spot that talent I think better than anyone because I've just had so many of these conversations because I've focused in on that. Remember I'm, I'm doing these calls under that premise. I'm looking for what, what makes someone that level of caliber and what makes someone that level of caliber is they have to be playing their own game. So if someone come to me and they're really talented but they're playing E commerce well I have to compare you to E commerce guys and now I got to compare you to you know the Josh Snows. I got to compare you to you know the, the guy who runs Cut, Stephen Brumate guy, you know Christian. I got to compare you to really hitters but if you could narrow out your niche and you could be a one of one in a corridor. So one of my initial partnerships was this young superstar talent. His name is Hudson archer. He's a 17 year old who had two mobile detailing vans making over $200,000 a month in his profession which is mobile detailing. And I came together, we put together this concept called Drive Systems and the first product was called Driven Elite helping mobile detailers get to 10k a month. And so there's over 30,000 mobile details in the United States. I am now comparing Hudson to other people who teach mobile detailing in the space. And what I noticed was ah, Hudson could be a one of one talent meaning he could be that guy, the Iman Gadzi of mobile detailing. And I could build around that infrastructure and next person like Shelby Sapphire teaching high ticket sales education for women. What's a competitor? There isn't that many. She could be the one of one talent. I'm looking for the one of one talent in specific verticals which could have a practitioner like niche meaning that you start off in this career like a trade whether it's you know, mobile detailing, high ticket sales, closing pressure washing E commerce, whatever that might be. You're going to make your first five to $15,000 a month, eight in that profession. But at the same time we're going to be building out your content generation and your distribution such that when you cross that threshold, you then become a partner within the system. So what's crazy is within Drive systems now we have seven partners we've signed on. What that means is people have come on, have learned from our program and then we've signed them on to build up their social media to promote our product and get 50% commission. But they're not affiliates, they're partners. And the difference is this. An affiliate sends traffic to someone but is not, doesn't do any of the fulfillment for us. The partners actually do the fulfillment of the one on one. Because in order to scale out an info product correctly, from my perspective and keep attracting great people and service, you have to do one on one. But most people do the one on ones with hiring coaches and some random people. Look, if you're hiring a guy for 5, 10k a month to be a coach, that person probably isn't the best person to be honest.
- [21:18]
B
Really.
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A
I mean look, they can do some of the stuff but they're not, they're not the hardcore practitioner because they're not going to have enough time to service people correctly for 5, 10k a month. Being, being a coach. Come on. So that's what we do. The partner model where these people are so incentivized because they're getting $2500 a sale. They're so incentivized for teaching and being a coach and doing those one on ones because they're making so much margin. They're so incentivized and building. They're not just a coach behind the scenes no one knows about. They're getting paid, you know, essentially a salary, essentially a worker. These are not workers, these are partners. And I think that's how the model really grows effectively.
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B
It's a win win. Wow. So are you still taking more calls or did, was that years ago?
- [21:58]
A
No. So I'm doing still a lot of calls. I think the crazy enough, even though the vast majority of the call, almost none of the calls are paid. Sometimes people want to pay me for like George, can I pay you for consulting? So we'll do sessions for consulting. You know the rate is $4,000 an hour. But again it's not just, it's not about the one hour. People are not paying for the Advice. They're paying for the Rolodex. They're paying for. What have I done in the past? And the relationships I've set such that when you need something like George, do you have a guy? I have. I have $200,000 on hold, on stripe and on Shopify. Do you have a guy? Yes. Hey, I. You know what? I'm selling so much. Do you have a guy for 3 PL? Do you have a solution for me? Yes. That's what they're paying for advice is go ask GPT. Go ask Google. You know, if you can't think about a good enough question to. If you have a good enough question, you can go ask these other tools. That's not what you're paying for. You're paying for the Rolodex. You're paying for. George is going to redact and tell you just do this, because not only have I done it before, but I've talked to people who are in all the realms of your position. If you're in E commerce, I've talked to people here, and I've talked to people here.
- [23:01]
B
Right.
- [23:01]
A
So if you're here, I know your turn by turn directions to the next stage. That's what people are paying for when they're paying for, you know, a very high ticket for Alex Hero or. Or Grant Cardone. They're not paying just for his time. There's nothing Grant Cardone can tell you in an hour. I don't care. There's nothing. No one can tell you Wes Watson, Alexi, no one could tell you anything in an hour that I couldn't tell you or GPT couldn't tell you. Okay. What you're paying for is the relationship.
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B
Right.
- [23:28]
A
Okay. Alex Ramos remembers me now, he might follow me. I can leverage his Rolodex when I get bigger or when something happens, I can ask him for something. I have a. I have a direct line. You're paying for a direct line. That's what you're paying for. Nothing else?
- [23:41]
B
Yeah. The access, the relationship.
- [23:43]
A
Yes.
- [23:43]
B
The years they spent networking those relationships.
- [23:46]
A
The. My number one recommendation is if you're in any industry, go after the best people and say, hey, how much can I pay for 15 minutes of your time? 500 bucks. 500 bucks to a thousand bucks for 15 minutes of their time. There's nothing they're going to tell you, bro. It's not about that. You're not paying. You're paying for the introduction. You're paying for when you get on a call with them and you're like, and you impress them like, whoa, okay, I remember this person. What I do for Hudson is I connect them with Sebastian Jordan, Jordan Welsh, Brett Malinowski, everyone. And we p. We pay people, we say, hey, Colin, Wade, Houston. We pay them 500 to 1,000 bucks for a 15, 20 minute call. And then what we do is we say we take whatever their advice was because remember, all their advices have some meaning. And then we make sure to follow up with them and say, hey, because of your advice, I'm now on my next level. And then every time Hudson goes to another milestone, we go back to all the people we've ever paid and had a relationship with and say, hey, because of you. That advice you gave me, that's what helped me. We give them a testimonial, they then also promote on their socials. Because how do you provide value to the biggest people if they're selling info? Testimonial. And the more the value you provide to them is your testimonial and your success because that's how they're going to get more people. But remember the people who have, who are doing those testimonials, those people are going to be successful regardless.
- [25:02]
B
Yeah, I love that.
- [25:04]
A
That's the reality of the situation.
- [25:05]
B
So the people that are doing 20k a month, those are probably more common than the people doing 100k a month. Have you noticed any big differences with those two groups?
- [25:12]
A
Leverage, leverage, vehicle. That's it.
- [25:15]
B
That simple.
- [25:16]
A
That's it.
- [25:17]
B
Wow.
- [25:17]
A
There. I mean, I'll tell you, there's people who make 5k a month who I think are vastly more talented people making 200k a month. Yeah, I don't think, I don't think talented intelligence has to do so much with the amount of money you're making. I mean people who make anywhere between 100 to 500k a month, I, I would consider them like the vast majority, like middle talent.
- [25:36]
B
Really?
- [25:36]
A
Yeah.
- [25:37]
B
Interesting. Because a lot of people just assume they're geniuses.
- [25:39]
A
No, I would say they're. It's not so correlated. It's about leveraging vehicle. Like if you're, if you're operating in a specific niche which has a really, if you become a practitioner in a very good profession that has good replicatability and you sell an info product, it's really great. Right. Because you're able to then compound that effect. But if you do it in like E commerce and you don't become one of those big winners, you can't really scale out your info too well unless you kind of narrow down like if you narrow down to someone like a, a Brook, a Brooks which does high ticket e commerce with a, a very clean funnel and a great KPI of success. Right. It's very clean. Hey, I'm going to mentor you until you hit your 10k in total sales. So you pay 5,800 bucks because I'm guaranteeing you you're going to hit 10k in revenue.
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B
Right.
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A
It's a no brainer if you don't have some of those, you can't scale very well. If you're in e commerce and you become, and you become pretty good, you could scale out really quickly, I've noticed. Yeah, the e commerce has the most scalability if you, if you hit it. But again there's a lot of dead bodies which you know. But if you cross a certain threshold, you could scale out really quickly because all you got to do is add a couple zeros to your ads. You know, I mean Facebook and all these platforms are doing a lot of the targeting for you these days.
- [26:57]
B
Yeah. You don't have to type in anything.
- [26:58]
A
Nothing rates about your creative, it's about your offer, it's about everything else. So if you could just, if you can dial it in, you can add a zero and you could scale out.
- [27:06]
B
Yeah.
- [27:07]
A
Whereas operationally if you're in another business, Hudson can't just add a zero. He can't just add a van like that easily. It's, it scales operationally and it's just more difficult. But yeah, the biggest differentiator between someone making 20k a month and 200k a month is leverage and vehicle. That's it. Very little to do with talented. Now if you're talking about the same people in same industries. So we're comparing people who make 500k a month in same industries. Okay. Then you do see a differentiator between talent level systems and processes and everything else in the long term. Right. So over the over a year's time, people will come in, fall off. So you'll know how good someone is based on their longevity and their underlying systems and, and how well they've been able to execute once they've crossed a certain threshold. But those two gaps now, 20 to 100k a month, you want to K a month. I don't see too much of a, there's no correlation too much with intelligence.
- [28:06]
B
Yeah. So this is how you'll become a billionaire. Similar to Hormozi's model too. Yeah.
- [28:11]
A
So her Moses model. What's interesting is people think he, this is also very interesting. About her Mosey. So he doesn't invest in too many companies. He only does, like 12 deals a year.
- [28:22]
B
Really? That's it? I thought it was way more. No, I actually, he almost invested in one of my companies.
- [28:28]
A
So he doesn't do too many deals. He's looking for really big deals. And he's leveraging this idea of, like, almost like the hot girl method. We just keep leading them on. Right. Like, oh, fill out the type form, like, we're gonna invest in you. He's just, like, leading them on, like, I don't know. I don't know. Edging them.
- [28:43]
B
Yeah. Apply here.
- [28:45]
A
Yeah. So he's building out all this, like, juice. Just keep building out the juice. The juice. The juice. And then he makes a big bet. He'll be like, okay, Now I'll be 50% owner in school because I know I have a distribution audience that was.
- [28:58]
B
A big one for. Right. Yeah.
- [28:59]
A
So he'll be looking for deals like that because he doesn't need too many winners to get his outcome, whereas he doesn't. He doesn't want to be placing too many small bets. He's saying he's placing these small bets because that's his audience, but he doesn't really do too many of them because they're operationally more intensive and there's obligations, there's. Whereas his highest leverage, he'll tell you, is focusing on the book, focusing on his brand, focusing on the company creates, and then focusing on big opportunities like school, which you can get 40, 50% of, and hit 104, $500 million sale or leverage that distribution towards another, bigger vehicle.
- [29:32]
B
Right.
- [29:34]
A
But all those, like, sign up, you know, newsletter, all this stuff, it's free value. I mean, same thing he did with his event. He got 1 million people sign up for his new book, and then he, like, built up how much he's gonna provide them, and then it's free.
- [29:48]
B
I was shocked when he didn't charge on that call. Yeah.
- [29:50]
A
I mean, because what he's doing is he's just trying to. You can call it the hot girl method. You. You're leaning them on and like, oh, my God, yeah, let's go to dinner. And then you. You flake on the last minute.
- [30:01]
B
Yeah.
- [30:02]
A
And you kind of just keep building up the juice. They keep kind of following you, thinking about you, but you never give it to them. That's what I think he's doing. And I mean, you can. Look, he hasn't invested in many things.
- [30:15]
B
Yeah. So slightly different from when you're kind of spreading out more. Right.
- [30:18]
A
I'm spreading out more right now. Think about me as like a dispatcher. I'm looking differently from her. Mosi Hermos is looking for very established businesses because he's already in that position of, of status. So people who are like 3 to 10 million dollars a year, like, kind of like getting on their knees for her mosey to, you know, look at them and tell them how good they are and help them get to their next chapter. I'm not looking for that person. I'm looking for the young superstar before their breakthrough because I know how I can replicate their success and I can make them a winner. So I just need a winner and I'll make them successful. Whereas her Mose is looking for an established person to do some tweaks and get to the next level. I'm looking to make them. It's a little bit of a longer play, but I don't have the status to go after those people making 3, 10 million a month and do the types of deals that I'm looking to make.
- [31:08]
B
Right. You're.
- [31:10]
A
I would have to do a very different type of deal. Now. My goal is. So for this year, I call it the blossoming. The blossoming is where all these companies begin to take, take shape and become self sustaining. Self sustaining to me means about 100k a month. So that's what self sustaining means. And there's a natural flywheel happening. Once that happens. We're going to layer in secondary products, software, e commerce, things which have a little bit of lesser margin but have more scalability. But we need the distribution. So we're looking to build distribution and high ticket and high cash flow from high ticket sales. We're then going to funnel that into more distribution. We're going to funnel that into agency e commerce software to build out essentially a vertical, a vertical value proposition in each industry. Sales, you know, mobile, detailing, other industries like smaller verticals. And then in the next year, once I feel like all those are self sustaining now and have their own distribution, then I could be thinking about, well, how does George then become like an Alex Rosi or a Iman Gi? And I think the, the bigger you want to go, the deeper your foundation has to be. No one cares about the words you say. They care about who said it. So if I regurgitate the same thing Iman Ghazi or Alex Shamozi says, the value isn't in the words, the value is in the foundation and who said it. So the same words can be said by two different people. Mean completely two different things. So those things are relevant. So I'm looking right now to keep building my foundation. So because I have a very high threshold of who I want to be perceived as in the market, and I don't want to be playing a game that I feel like someone's better than me at. I don't want to be producing a lot of content and be like, oh, he's a copycat of Alex Moses, a copycat of Imam Ghazi, someone else. I want to play my own game. Because if I play my own game, if I become a one of, and I tell everyone this, why are you going to produce the same videos as someone else who's better than you? You just look like a clone of them. No one's paying for a replica of a Picasso painting, okay? There's no value in a replica of a Picasso painting, even if it's more beautiful. So a splatter of paint like the. The image itself isn't so valuable. It's the artist who made it.
- [33:26]
B
Oh, yeah.
- [33:26]
A
And it's the resale value of that artist's name.
- [33:29]
B
That's what you're saying. There's a piece behind us that's going in an art museum. You and I could have painted that one right there.
- [33:34]
A
So it's not about that same thing. It's not about the words you say. It's not about the edits you have. It's about who you are and who's saying it and what's the audience you're saying it to. And who are you in that industry as a tastemaker, right? That's what the value is. And so if I want to be. If I. If I believe I'm this type of person, well, then in order for me to do that, I have to build a deep enough foundation to sustain it. You can't build a skyscraper without a deep foundation. And so right now, it's. It's that phase. It's building out. Okay? Yes, I have experience in E commerce. Yes, I have experience in software. Yes, I have experience in info. Now if I want to go big and be a big personality in my space, I feel I have to lay this foundation in this way. And this is the edge I have today, which is this partner model. And it's leveraging all my prior experience to make this next generation even more successful than me and avoid all the potholes, right? Because I look back at all the mistakes I've made has nothing to do with my skill or my talent. Had everything to do with, like, one sentence. And one wrong move. Wow, it's, it's that crazy. Imagine you're on a highway. It's like a, there's this, there's this highway in Florida called Alligator Alley. It's a two hour straight. If you make a, if you get a wrong turn, you have to loop around, right? So that's kind of what I would describe a mistake as at a critical moment of your life. And I look back in my life and there's a couple of those big ones where you just make one sentence, just one sentence like, oh, I should date this girl, I should not do this, I should do this, I should take on this thing. Or I should even timing and now two years maybe to loop around.
- [35:07]
B
Damn right.
- [35:08]
A
Or your one example is you want to sell your company and you're like, oh, well, I'm going to wait till I make more, make more sales and then I'll think about selling. But then when you're kind of peeking out and you're kind of going like this and you're like, fuck, I need to go sell. But now's the worst time to think about selling because now in order to sell your company, you're six to seven months away from selling it. And so by that time, and it's its own business trying to sell your company now, you're mentally drained and your business is failing at the same time and you have no leverage to sell. The best time to do something like sell a company is 6 to 12 months before you want to sell, before you even think about wanting to begin the process. That's when you want to start much in the same way, that's what I help people do when I'm partnering up with them. I can, I know the map because I've gone through it and I've talked to all the people who are currently in it and I could spot the pothole and I can give the connections needed to empower these people. I could take this world class talent and I can give them the connections. Rolodex, support, execution, introduction, avoiding mistakes, capital, anything. And align them towards their highest potential. That, that's really what I, what I do. And you know, when you're young, you have so much more years to compound, right? So if I take someone like Hudson who's 17 or someone else who's 18 to 20 and I can just establish their foundation at that age. Now they're 25, 27, they're still going to have so many, so much more years ahead of them and they're going to be in, in A crazy position. And now when I'm 35 to 45, it's not just me, I have the drivers, those partners who are now driving. And I believe execution cost is dropping to nothing. And I believe that identities and distribution is going to skyrocket in cost and the power law is going to mean that a few people are going to have so much distribution of rewards. You're looking now at like the Kim Kardashians, the Logan Paul's, et cetera. There's going to be hundreds if not thousands of those people across all small industries. So you look at the Logan Paul's now you kind of see the broad ones. But in each one of these industries like mobile detailing which might have 30 to 50,000, that's still a billion dollar industry. There are thousands of these billion dollar vertical industries and there's going to be five to ten identities who capture 80% of that reward. And I want to find the 1, 2 who can get 50% of that reward. In a lot of these industries that's really the value of redacted. It's find that identity, build around that identity. I can go execute everything. The cost of me making a software and e commerce company, it's like that. As soon as I see it, I can make it. The cost, it's, it's, it's so low, it's so cheap, it's so simple. It's, there's no, there's, the value is not there. The value is in. How can we build around the right identity? Get the distribution, get the cash flow, get the more distribution, get the partners, get the affiliates layer in the software, e commerce, in all that vertical.
- [38:21]
B
Yeah.
- [38:21]
A
And then it be in, it just becomes easy. Then anything you throw at it just works and you gain this like compounding effect in it.
- [38:29]
B
No, that's a brilliant model man. I love it. I mean look at Logan Paul with Prime and Jake Paul even.
- [38:34]
A
Absolutely.
- [38:34]
B
Six months, his skincare company is already worth 150 million.
- [38:37]
A
Absolutely. You have the distribution. And so funny enough, so the, the people who partnered up with Logan Paul, they also did a deal with Christian Guzman and Lonnie New. So they look for identities and then they build out the product. Because remember that part is not that difficult if you have the right distribution and the right branding and the right messaging and the right need in the market. I mean look how fast it grew. Skims. You, you take the right identity, the right distribution, you put in the right specific product line.
- [39:15]
B
Boom.
- [39:15]
A
Instant.
- [39:15]
B
Yeah. Mr. B's chocolate bars instant.
- [39:18]
A
And that's really what I'm looking for, again, these are established because they've happened five, 10 years ago. I mean, you're looking at, you're looking at the success that Logan and Jake and Kim and everyone else has done 10 years ago. I'm, I'm, I'm investing in the ones today which are going to come about in five to 10 years. It's like a vintage, you know, you buy a wine, you don't buy a wine, you know, it just got made. You buy the wine 10, 20 years ago.
- [39:45]
B
You're playing the long game. Most people don't think like that, though.
- [39:47]
A
Well, I think I'm in a different position in my life. If you're not in this position, you know, you got to build out your practitioner, you focus on a niche, make some, make some cash flow, you know, build out the type of life you want and then figure out what's your next step. You know, you don't start here.
- [40:03]
B
Right.
- [40:04]
A
How would I be able to sign these types of partnerships and do these types of deals if I wasn't in my position? It doesn't, it's only the, it's only because of the edge and the person I am today that is what I'm doing. If I'm not this type of person, if it's not my edge, I'm not going to do that. Yeah, I'm only. You should only play games where you make the rules. You're a one of one type of individual and you have some type of an edge. You want to be playing games that you can win. You don't want to be playing someone else's game where, you know, you have a massive disadvantage in a 9 to 5 job. Basically a 9 to 5 job, you know. Yeah, it's very difficult because you have to be such a superstar to make significant amount, significant amount of money in a W2 job. You know, you got to be a. There's just, it's just, it's just very difficult.
- [40:50]
B
Plus the politics of it too.
- [40:51]
A
You got to deal with politics, bureaucracy, and you know, then when you're four, five, six years deep into that, the threshold of you then leaving to go do your own thing graces because your lifestyle goes up. So you're living kind of paycheck to PayCheck in your W2 and you need to kind of like for your survival. But now you're 28 to 30 and now the threshold for you to go make 5 to 10k a month as your, you know, your E commerce business or something else is the gap is so large where someone's starting off, they have no expenses, they have no lifestyle inflation, they have nothing. They have nothing to risk. So even making 2-4k a month and building up their initial snowball is Right. Is nothing at all. But now they're already in this game and now it's. It's harder for them to go back to doing a W2 job than to stay in it. And so that's why the dangers of W2 are. Are there is. Is not. Is that you get deeper into your lifestyle, your inflation, your relationship, your all your stuff. And the gap it's going to take for you to kind of build your own stuff is getting larger and larger by the day. And less and less and less people take that jump.
- [41:56]
B
Absolutely. I want to end off with religion because as someone as logical as you are, this surprises me. So you've gone more religious recently?
- [42:01]
A
Yeah, I would say about a year and a half ago. And the reason. So I started off like four or five years old, maybe kind of being atheist. So on this side of the spectrum, meaning that I thought the puck ended with me and, you know, no one else is coming to save me. It's all on me. And people who believed in these kind of fairy tales are almost like believing in Santa Claus. Right. That there's so much understanding about science and physics and everything else that there's no need to believe some of these, you know, traditions or mysticism. But as I got older and I started learning about all these different types of things, you kind of. My threshold kept going like this and I was like, oh, well, I'm spiritual. Like, I see the value of the mindset of these ideas, but I would kind of redline and not go over the edge and say, yes, there is a God, 100%, yes, I would kind of like redline there. I'm like, oh, yeah. Well, these are good mindsets to have. And because of your mindset, your actions, your habits, you change your life. But it was never like, yes, there is, and someone can maybe move you and change the network. And so it was only when I had to sell the company and I was like, I have to make this. I have to sell this company. The next day I read this, the next day after I read this book called Reality Transurfing. It's a book I read on my YouTube. It has over 200, 000 views now. And every single top entrepreneur loves this book, ranks in their top three. And I read this book and it's all about writing your own book, picking the variance space you want to embody. And so I look back and I was like, the moment I was in there, I wished upon. I wished it upon myself years back. It's almost like I wanted to suffer. I wanted to prove how tough I was. And I realized in that moment was like, oh, shh, I don't want this story anymore. Almost like I visually visualized tearing, you know, throwing away the. Throwing away that story and writing a new one. I'm. I'm selling this company, I'm living in Miami, I'm doing this, I'm having this business, etc. The next day I do a consultation call. And this is why I love the consultations with some. I'm in Miami and some 18 year old is in Stanford, Freshman in Stanford. I'm doing a consultation call with him because he's looking to raise a round and I'm giving him some advice. He tells me at the end of the call, george, I appreciate you so much. I'm going to connect you with my mentor. I was like, yeah, sure, no problem. He connects me with Anil. Aneel owns Soma Capital. His dad owns the Sacramento Kings.
- [44:16]
B
Wow.
- [44:17]
A
Like the craziest connection. Aneel lives here in Miami.
- [44:20]
B
Damn.
- [44:20]
A
Like, what was the odds of this being his mentor? And Neil then texts me right away after the group chase, says, george, come to zz, which is a private membership club here in Miami. I'm hosting a business dinner with a couple of people. I said, perfect. The guy sitting to my left, Bruno, ends up buying my company.
- [44:38]
B
What?
- [44:39]
A
Crazy.
- [44:40]
B
Wait, his name's Bruno? Yeah. Holy crap.
- [44:42]
A
So, you know, it was almost like too much of a coincidence where in that moment I was like, okay, deal, I believe now. Let's see. And as soon as I said yes, I realized that's just level one. And I started realizing just how far the rabbit hole goes in that regard. And I'll give you a very maybe simple idea of how I think about God. I think about God is the higher leverage abstraction of consciousness. So you are the amalgamation of trillions of cells, bacteria, et cetera, in your body. Yet you have like one point of contact, your like conscious, one singular sliver that almost like controls this whole thing, controls the network. If you ever see a flock of birds, they kind of operate in unison. It seems to me that when singular forms of consciousness, in this case us or birds or whatever it might be, come into a flock, come into a. Almost like a close proximity, they start to act in unison. It's almost like they gain a higher level Consciousness, it's a weird concept to think about, but imagine that this flock of birds is operated by a singular source of consciousness on top of it that maybe you can't see. And so I think about God as the network architect and what he's looking for is good people and good nodes. An individual is like a node which is having like, good things happen to it. Imagine like you work out your bicep and it gets bigger. Like this is a node in your network and you start to like, value it more. It's almost like if I become a good person, I become a great node. God starts to favor me more. He starts to say, ah, there's good things happening here. Let me focus in more on it. Let me put things into its, into its position. And that's how I see my relationship to God and everything else. I see him as this network architecture, a higher level abstraction of humans or of. You can kind of keep. There's. Think about how many levels there are. I mean, think God could be like an Elon or Mark Zuckerberg. Mark Zuckerberg and Elon control billions of people. On a whim. They could change their algorithm and move billions of people like this.
- [46:55]
B
Right?
- [46:56]
A
They're almost a single point of contact for a higher level abstraction. A godlike figure. You're a godlike figure to your, to yourselves. That's how I see. That's how I see. And there's just so many levels, I think there's so many forms of God. And you know, where does the last one end? I don't know, but I just see it as that way. And I want to be a good note in the network. So I get favored, and I get favored because this higher level consciousness is saying, oh, good things are happening here. Good value is happening here. As a good person. There's. There seems to be something to that effect where when you're a good person, seemingly potentially more good things can happen.
- [47:37]
B
Karma, right?
- [47:38]
A
Karma. You know, these things have been spoken about for thousands of years. There must be something to it for sure. It can't. You can't have billions of people in. Over the last, you know, however long civilization has been around, you know, 4,000 years, maybe from the first written word to tens of thousands of years, have a lot of these reoccurring patterns. There's something to it. And in a way they're all right, in a way, like they're all symbols pointing at something. And that thing is you can abstract it in a way that maybe helps your life, right? Because they're all pointing at the same thing. And you could, when you look at it, you could take those aspects and you can kind of help it for your aspect, for your life.
- [48:25]
B
And what an interesting point of view, man.
- [48:27]
A
Yeah.
- [48:28]
B
Did you come up with that on mushrooms?
- [48:29]
A
No, I didn't. Come on. I actually don't. I'm very straight edge. I actually don't do anything. Oh, wow. I don't do anything. And I, I came about because I've. I think I've just consumed so much data. Much in the same way that. How do you make these AI models today is you let it consume. They just want to learn. They consume tremendous amount of data and they almost like gain a level of consciousness.
- [48:51]
B
Right.
- [48:52]
A
They predict the next word effectively. And I've. My whole life, all I've cared about more than money is just consuming high quality data because I knew that what I wanted to do was what I was that I wanted to everything. But I can't do everything because I can't be everyone. And that's why the redactive model is what it is. It's almost like in a. In a way, it's modeled after some aspects of God.
- [49:16]
B
Yeah, it's.
- [49:17]
A
I want to be a dispatcher in the node, in, in the network. I want to find these nodes and interconnect them. Where's George? He's redacted. What does he do? No one knows what I do. I don't do anything. I just enjoy. I tried to change. I try to move the network.
- [49:35]
B
Yeah.
- [49:36]
A
And you know what they say, you know, the Illuminati or people above us. There definitely is some level of consciousness or maybe even individuals like an Elon and Mark Zuckerberg who can at a whim, change the direction of society and people at large.
- [49:50]
B
Absolutely. I love them. And where can people watching this book a call and how do they qualify?
- [49:53]
A
Well, you qualify if you have some mutuals, go on my Instagram, George tweets, have. And we'll probably have a lot of mutuals and just reach out to me. I'll look through your stuff. I'll see if you're. You're just a cool, cool person to talk to and we're connected. Or if you have a referral, just to say, normally what I tell people to do is like, be the best person yourself. After that, call and introduce me to, to the best person you meet. So if you meet a superstar, tell them you got to meet George.
- [50:17]
B
I love it.
- [50:18]
A
Perfect. Cool.
- [50:18]
B
Thanks, Sean. Thanks for coming on, man.
- [50:19]
A
Pleasure.
- [50:19]
B
Yeah, thanks for watching, guys, as always. See you next time.