← Escaping the Drift with John Gafford
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- [00:00]
A
Hey, it's John Gafford from the Escaping the Drift podcast. And big news. My new book, Escaping the Drift, is coming out November 11th. You can pre order it right now at thejohngafford.com There are tons of bonuses, tons of giveaways. Get the book. If you are somebody that feels like you might be drifting along, this is for you. If you know somebody that feels like they might be drifting along, this is for you. Available everywhere, all bookstores, every everywhere, Amazon, Barnes and nobles, the whole nine yards. But pick your copy up right now at thejohngaffer.com and get a bunch of the awesome bonuses I've thrown out because I promise you, I put my heart and soul into this thing. I want it to help you change your life. Pick it up everywhere.
- [00:42]
B
There was an entrepreneur who I. Who I respected. He'd owned a bunch of businesses, and he would basically hire these territory managers to manage a group of businesses for him. And part of what he would do in the interview process with every single person is he would play golf with them and see if they counted all their strokes and if they were honest. This the last thing he would do, the very last part of the interview, is he'd take him out to a real. And these were guys who only had high school degrees. They kind of had a chip on their shoulder about the fact that they didn't go to college. So he'd go to take them to a really fancy restaurant, have them dress up, and he'd pay to wait, waiter or waitress to dump water on them and see how they reacted, see how they treated him. Yeah.
- [01:20]
A
And now Escaping the Drift, the show designed to get you from where you are to where you want to be. I'm John Gafford, and I have a knack for getting extraordinary achievers to drop their secrets to help you on a path to greatness. So stop drifting along, escape the drift. And it's time to start right now. Back again, back again for another episode of the podcast. Like it says in the opening, man, gets you from where you are to where you want to be. And today in the studio, this is. This is pretty interesting, man. I got to tell you. This is going to be a pretty out there, pretty cool stuff. So we have a couple of guests live in the studio. One of them is a dude that I just was informed to tour his Wharton MBA degree up live on my buddy Dan's Fleischmann's podcast not too long ago. He is the president and CEO COO of Investify and. Yeah, and with him today is an 18 year old protege. And I'll get to what we're talking about, that. So anyway, guys, welcome to the program. This is David Gutman and Anna. Yes, welcome guys.
- [02:24]
C
Happy to be here.
- [02:25]
A
Welcome. Glad to have you guys. No, so, okay, so Anna, we're going to get to you, I promise, in just a second. All right? So David, welcome. So actually let's get to you right away because I think it's weird if you just sit there, we talk about anything else if we do that first. So David, explain to me who Ana is, what she's doing here, what we're doing.
- [02:42]
B
So Anna Prochenko is the daughter of a very close friend of mine. I'm an advisor on his company. Him and I've been friends for years now. And she was originally, she was looking for a summer internship. Going to go to college full time in the fall was the original plan. And, and so I was like, yeah, you know, hey, I need some help on some social media grunt work on some of the stuff I'm doing. We had a conversation, she was wicked smart. I was like, oh, this will be great. She'll make some money for the summer. I'll get some help, you know, be a nice thing to do for my friend. And. And so I was just finishing up the course called the Anti mba. She actually came up with the name of the name what the Wharton MBA never taught me. With the Wharton Business School. Never taught me. So anyway, I'm about three weeks in her internship and she's just blowing me away with everything that she's doing. And so I said, anna, you're going to think I'm crazy, but how would you feel if I made you CEO of a company? We have you start the business in the course and we basically document your journey. And the idea is get the business launched in 30 days, profitable within 90. What better way to demonstrate that so long as you have the right raw materials that anyone can be an entrepreneur with a little bit of. A little bit of information and a little bit of mentorship.
- [03:52]
A
Okay, so when did this process start for you, Arnold? When did this start? When did you guys kick off this process?
- [03:59]
C
It started probably around a month and a half ago, I would say. I started working for David as an intern, as he said. And then I got the offer. I was like, you know, I have no experience, right? And he's like, yeah, that's exactly what I want. So I started working on the company immediately after that. And we're about to launch. So yeah, it's going Pretty well.
- [04:19]
A
So what's, what's the company about?
- [04:21]
C
It's called One of One posters and it's a, and it's an idea that David had the initial thought of. He wanted a poster of Michael Michael Jordan. Right. And with a, with a quote. But he couldn't find it anywhere on the Internet for no amount of money. Like it's, he just couldn't find it. So he made it himself. And then he was like, wow, that, that was super difficult. But also I feel like this would be a great present. So he started giving posters to his friends and family. And all of them said this was the most thoughtful, meaningful gift they've ever received. And that's where the idea was born. That's what David pitched to me. I was like, okay, this is cool. Not the most exciting for an 18 year old though. And so I put on a spin on it and I was like, okay, how about we do an AI feature too? So when you scan the poster, there's going to be a little like concealed QR code or something of the sort. And it will forward you to an AI generated page and where it's content that is suited to your goals. So the poster becomes the portal into your self growth journey.
- [05:26]
A
Okay, so when you guys came up with this idea, David, you had this. What are the steps to getting from a, to launch?
- [05:33]
B
Well, that's the beauty of it, right. Which is I basically said, look, I could guide you step by step, but I've created all the content for the course. Just take the course. And then we would talk once on Friday, once on Monday and answer whatever questions she had. And that was all the guidance I gave her. She makes 100% of the operating decisions. She'll ask my advice when she wants to. But I wanted to be as hands off as I could be. In fact, part of what I wanted was I wanted her to make mistakes along the way. Because I think you learn, you know, you almost always learn more from the mistakes and from the things you do. Right?
- [06:05]
A
Sure.
- [06:05]
B
And you know, when you make the right decision, you don't know if you were lucky or good. In fact even the idea. I wanted her to be excited enough about the business idea that she could get behind it. But, but the other part of what I was trying to teach her was I'll take a mediocre idea executed really well over an exceptional idea executed mediocre any day. And so I think that's part of what I was trying to teach her.
- [06:25]
A
Well, I'm just curious in part of your process because you're launching product, right? This is product launch. Did you do any market research to see if there was a market outside of just your friends and family liking what it was?
- [06:34]
B
I had Anna do some market research.
- [06:36]
A
Tell me about the market research you did. An.
- [06:38]
C
So I used AI to do some of it. I did some research myself too. It seemed like there was a lot of generic posters out there. Like if you go to Target or any other like goals or anything like that, you will see an aisle filled with posters and all of them say it's like something like, oh, I love coffee, don't talk to me before I had coffee. You know, it's super generic and like cliche messages that don't really speak to the broader audience. And so I was like, okay, so there is a gap in the market there. And then once I was looking at more customizable products, the only thing they can really do is, is go on Canva and create the poster yourself and then find the manufacturer and print it. No other business really offers the same kind of like customizable, personalized journey from start to finish to creating your own poster. So there was a gap and then adding the tech feature. There is nothing out there like that.
- [07:33]
A
So just to clarify, these are original posters generated by AI, not pictures of Michael Jordan?
- [07:37]
B
Could be both. It could be both.
- [07:39]
A
You're not doing licensing deals right now.
- [07:41]
B
No. But what you can do though is you can basically create a licensing relationship with like a Getty Images. So the way we're going to launch it to start with is we're going to stay away from likeness and, you know, copyrighted related stuff. But although again, that was one of the steps of the process was here are there AI tools that allow you to use the output with, you know, for commercial purposes. So that was one of the steps in the process is, hey, let's make sure there's no legal hurdles that we can't clear.
- [08:02]
A
Yeah, yeah, okay. So that you had to look, look, look and figure that stuff out. Now what about capitalization? How did you capitalize a business?
- [08:10]
C
Well, we decided to go the print on demand route. We don't hold any inventory, which is a really big plus. We found a manufacturer and we basically connected our Shopify store to the manufacturer and they're already integrated together, so we didn't really have to do much there. And also Shopify is integrated with Stripe, which is the payment processor. And so we just developed a custom website with our brilliant web developer who I love very, very much and connected everything up. And this is how we're going to do it. Yeah, we have a custom site, we have a lot of marketing strategies in place.
- [08:44]
A
Let's talk about what are the marketing strategies in place.
- [08:47]
C
So I'm documenting because I'm 18 years old and I have no prior experience. I'm documenting my whole journey from start to finish of building a business because there's not a lot of information out there. There are gurus that say, oh yeah, I have a formula for building your business. That's not exactly true.
- [09:05]
B
Right.
- [09:05]
A
Till it fails.
- [09:06]
C
Yeah, until it fails, exactly. So I will go through and document all the fails that I have, all of the learnings, the mistakes, everything. And I started a social media account called One of One Official where I document that. We're also going to have paid ads because paid ads are one of the best things to get data from so that we can gauge our audience and all that kind of stuff. And we're also going to do a lot of UGC because that's just, it's just the unpackaging videos are extremely, do extremely well for business. Like posters.
- [09:37]
A
Okay, cool.
- [09:39]
B
Yeah. In terms of the capitalization too, like, like a lot of businesses. Right. Oftentimes you're going to bootstrap it to start.
- [09:44]
A
Right.
- [09:45]
B
Try to stay as lean as you can until you can get some kind of revenue and even profitability traction ideally and then raise capital. So I'm basically funding it in the, and in the bootstrap portion of it and then I'm actually going to. Even though I don't think we'll need capital to get the profitability to scale, we will. So we're going to go through the process of actually raising capital once we're profitable. And so she's going to basically, you know, with some guidance for me, actually raise, you know, we'll probably, we don't need that much capital. I don't really need any. Maybe we'll raise 100,000, something like that. But go through the process of what it's like to. How do you structure the equity? Are you an llc? Why do you do it that way? All those things, all the things you normally have to do when you're, when you're doing a startup.
- [10:23]
A
Got it. Well, let's back up now and talk about why you're qualified to do all of this stuff. Right. So, so obviously I know that I read your bio and I saw a little bit about your history and you had a near death experience that changed you. Where'd you live? In St. Louis. Where? What part?
- [10:38]
B
So right by the Arch in the Cleese Landing.
- [10:41]
A
Okay. I lived in Sulard.
- [10:42]
B
Okay. Yeah. Yeah.
- [10:43]
A
Interesting. At a totally different close around the same time. I guess I lived there in probably 95 maybe.
- [10:50]
B
Yeah, there should have been just a little bit before that.
- [10:51]
A
Yeah. Greatest. Greatest show on turf when the Rams were. That is when I was.
- [10:54]
B
Yeah, that's right.
- [10:56]
A
That's funny. Yeah. Keep going.
- [10:57]
B
Yeah. So basically I look, I've been a serial entrepreneur since I finished business school. My dad started a software company in his late 20s that eventually IPO'd. I always knew I wanted to be an entrepreneur, you know, back then, you know, I'm 59 years old. So back then, you know, you went to school. That's how you learned. Right. You went to a library and you checked out a book, or you went to Barnes and Noble and you bought a book. By the way, there were no book reviews to even review, so accumulating knowledge was very difficult. And so more formal education made a little bit more sense then. But bott line was, you know, everything I've learned, you know, I've had one eight and one nine figure exit. And you learn by doing. In my experience, it's not. And that's really the. It's not that. I mean, you know, tongue in cheek. It's not that the education was completely worthless, but in terms of actually actionable insights that have actually helped me in my career, it was almost without. It was almost without value.
- [11:47]
A
Well, it's funny, when you said that you tore up your. Your diploma from Wharton on Dan's show, I thought to myself, yeah, but I bet he wouldn't burn his Rolodex.
- [11:57]
B
Well, you know, it's funny. It's not. Again, it's not that that the Wharton network was useless, but it was less. Less utility than I would have thought, if I'm being honest. You know, a couple investors and some early businesses of mine, you know, came from that network. But quite frankly, I raised a lot more capital from people I didn't go to business school with. The pedigree was a value for sure, because, you know, people are, you know, you know this. I'm sure investors are intellectually lazy. They're very smart. But, you know, it's like, oh, who else is in the deal? Oh, that guy. Okay. Yeah, I'm into.
- [12:25]
A
Yeah, yeah, I'm good.
- [12:27]
B
Exactly.
- [12:27]
A
Yeah. It gives you a lot of credibility in the marketplace, which I love.
- [12:31]
B
Ye.
- [12:31]
A
I mean, you know, we were just talking before we went on, you know, my son is getting. Applying to the Ivies, and for us it's like, dude, if you can go to Harvard, you need to go to Harvard. Because I genuinely just believe that that will open every door on earth for you. I just genuinely believe the network you make. I'm with you. I think, I think the education is, is, you know, is what it is. And unless you want to seem specialized like he does, which is fine. But I think the, there's a lot of value that gets dismissed in the networks that you make in college. There's a lot of stuff.
- [12:59]
B
Well, and not only that though, like, but again, back when I was going to school, There was no LinkedIn, there was no social media, there was no Internet, you know, I'm saying. So, yeah, that was a really smart way to try to create a network because otherwise it's really difficult to do. Not, not nearly as difficult now. Like, you know, you think about, instead of spending money on, you know, quarter of a million dollars is what it cost me to send my daughter to college seven years ago. I practically begged her not to go. She did what I asked, which is, hey, let's put the money in. Bitcoin should be sitting on 8 million right now, you know, and, and ultimately she gets a degree in psychology. Yeah, she got a decent job, had nothing to do with psychology. She didn't need the degree in order to do it. Yeah, you know, back, back then, like in my, in the early, in the early 90s, you couldn't get a job as a receptionist at a company like Oracle without a college degree. Yeah, I would say if I look at the engineers I've hired over the last 10 years, 2/3 of them don't have a college degree.
- [13:47]
A
Yeah, well, you're hiring for what you can do now, not, not for what somebody says you can do. It's all about the effort you can put forth. So when you started building these companies, you said you've had a couple eight, nine figure exits. One of the things I read about you that I thought was really interesting was that you interviewed every person you ever hired. Is that accurate?
- [14:05]
B
So any person who directly worked for me, obviously, and I wouldn't say every person that's worked everywhere, you know, all the way down the food chain. But what is true is whenever I would consult in a company, I would. So, like, as an example, there's this one client I had Mind Blazer as a guy, a guy who was my kind of a mentor of sorts to me. He sold the company to Oracle for 50 million and basically he would sell these projects in industries I had no background in. He Would, you know, he would bill me out of 400 an hour. He'd keep 200, I'd keep 200, I'd do all the work, he'd take half the credit. And so he would basically, you know, inject me into these companies that I didn't know anything about. And I would interview every single person in the company. So in a mindblazer's case, I think they were like, you know, maybe five or six months away from running out of cash. And I didn't know anything about the industry they were in, but I interviewed everyone from the receptionist up to the CEO, everyone in between. Two weeks later, I said, here's what you need to do. Company was profitable within a month. And. And the reality was he's like, how the hell do you know my business better than you? I'm like, I don't. I don't know your business, your employees, and you know your business. But you had 20% of the answer. She had five, he had nine. And all I did was synthesize everything they told me. And the answer was fairly clear.
- [15:16]
A
What's the key to hiring good people?
- [15:18]
B
I gotta tell you, my, my opinion about that has changed over the years for sure. My current thinking is the three things I value more than anything are humility, curiosity, and heart. I take those three over anything else I wanted. One of the bigger mistakes I've made in my career, like Elon talks about this sometimes too, is hiring purely based on talent, you know, or aptitude in a particular area. Now look, you know, if you're trying to pick a brain surgeon or you need to do some very, very nuanced thing, and I. Maybe that's the right move. But for most things, you can teach people the things that they need. And especially if you have a long term play where you want, you want to run this business and scale it over 5, 7, 10 years, you want people that are going to come along for the ride.
- [16:02]
A
Yeah.
- [16:03]
B
And so hiring for those, for those softer qualities I think makes more sense.
- [16:07]
A
Well, I think for me anyway, I think the truth is in the abstract and I always try to find, you know, I can teach a smart person how to do anything. You can't. You can't teach an experienced dumb person anything. It just is what it is. But like one of my little tricks that I always do here is whenever somebody's coming into work directly for me in a job, right before they come in, I take a piece of paper and I crumble it up and I drop it right in front of the front Door outside, and they walk in. If they step over that paper, I don't hire them. Huh.
- [16:34]
B
Interesting.
- [16:35]
A
How you do anything is how you do everything. And for me, it's like, if you don't have the conscientiousness to stop and pick that up to try to improve the world a little bit, especially place you're walking into, you're going to walk over everything.
- [16:47]
B
There was an entrepreneur who I. Who I respected. He'd owned a bunch of businesses, and he would basically hire these territory managers to manage a group of businesses for him. And part of what he would do in the interview process with every single person is he would play golf with them and see if they counted all their strokes, if they were honest. The last thing he would do, the very last part of the interview, is he'd take him out to a real. And these were guys who only had high school degrees. They kind of had a chip on their shoulder about the fact that they didn't go to college. So he'd go to take them to a really fancy restaurant, have them dress up. They paid a waiter or a waitress to dump water on them and see how they reacted, see how they treated them. Yeah.
- [17:21]
A
Oh, man, that's so funny. It's so funny. You talk about people that didn't graduate from college have a chip on their shoulder. I think that's going away because that used to be me, because. Because I was one of those guys that. I mean, I opened a college bar when I was 20 years old, and I. I was in school for hospitality at Florida State, and I'm like, I own a bar. Like, I feel. I just felt the institution had nothing further offered me. So I remember calling my dad. I thought he was gonna be so mad at me. And he just started laughing because he was like, I've paid my last bill for my last child. Because back then, it really mattered. And the funny thing was, you know, I just went through so much of my life where, because I had a moniker of success and people just assumed that I had that degree, so I just didn't really correct anybody. And you know where it came out, literally. So this is where it came out. I tell the story in my book is I'm sitting there. We walk in to the very first day on the Apprentice 3, right, for filming. I mean, I walk into the boardroom, and in walks Trump, and he goes, how you doing, everybody? This year, we're doing something a little different. We're dividing you between people that have college degrees and people that don't. And I Was like, holy shit. I'm like, everybody's gonn. No. I'm like, I've been living, you know, not perpetuating it, but not toning it off either. I've been living this kind of the truth. And dude, when it came out, you know, four months later, nobody cared. Like, nobody. I don't think anybody ever said a word to me about that. I don't think it matters.
- [18:41]
B
I think in the very, very beginning it can matter, you know, and again, that was 20 years ago. Nowadays it really doesn't matter at all.
- [18:46]
A
Now if especially you look at what, you know, you look at what Elon's paying some of these AI guys, it's like, do you think he's asking for your credentials or what can you do? Yeah, is how it is. So what are, what are you think are the fundamentals that make a successful company?
- [19:01]
B
You know, I think that one of the things I think that a lot of businesses don't do and a lot of entrepreneurs don't do is one of the first things I do if I come into a new company, I'm consulting to a company or if I'm starting one from scratch, is I build a bottoms up budgeting and forecasting model. Because what I really want to do is I want to understand what are the key drivers of the business. Like, so, you know, in our business, it's in a lot of businesses, but. But in ours, this one in particular, what's your customer acquisition cost? What's your lifetime value, how are you performing? What's your marketing spend, you know, what's your cost of sale? All those things most. I mean, it's stunning. I mean, I remember I came on as CEO for this or prop trading firm down in Miami. They're already doing eight figures in revenue and they don't have a budget. And like, that's crazy to me. Like, I don't know how to make sure I'm going in the right direction if I don't, you know, know what I have to work with. So I think that's one of the big mistakes that companies make. Not that you can't get there without it, but you get there a lot cleaner with it. And if you're doing a pure startup too, like one of the things I always say is whatever your model tells you, you think you need to get the break even, you need to double it at least, you know, two and a half. I use two and a half times, but minimum 2x.
- [20:09]
A
Yeah, that capital Runway.
- [20:10]
B
So I think they say that something like 70% of small aircraft accidents are running out of fuel. And it's probably 90% of businesses that fail run out of cash because they.
- [20:19]
A
Because the burn rate, they just don't estimate it properly. They don't have enough front money to get. I was. Somebody was in here yesterday talking about they ran out of room because the, the Runway. They just ran out.
- [20:28]
B
The only total failure business I ever had was we just didn't raise enough capital. We were too early. And there was. We were using LiDAR technology in a very unique way. We were probably three to five years too early. We probably would have survived if we had raised more capital. And so ultimately we just underestimated the Runway.
- [20:45]
A
Yeah. I think the biggest mistake I've ever made was building businesses that I was in love with without finding out if there was a market for them. Yeah, this is so cool. We're gonna do this. What do you mean? Nobody wants it. That doesn't make any sense. So, yeah, I always tell people that proof of concept is so important and find that know that you have a market.
- [21:01]
B
And in this business too, like I. I intentionally wanted a business where, where Anna could brute force it right from beginning to end. So as an example, well, she identified. You know, basically we. We can print the posters for like 10 bucks. Right. With the, with the an API interface and a printable. But our cost is going to start at 50. Right. And I'm fine. I'm like, I don't care if we make any money. Once we prove out our customer acquisition cost and our lifetime value, we can bring our cogs down just by hiring a developer to build that out. Let's brute force at the start. Let's figure out where the bottlenecks are and then we'll automate them in the order in which they impact the business.
- [21:37]
A
Now, something I found interesting on this is your president CEO.
- [21:41]
B
Oh, so I'm not actually not at Investify anymore.
- [21:42]
A
No, you're not in Investify. You were.
- [21:44]
B
No, no. Yeah, so I left there about, probably about six, eight months ago now.
- [21:48]
A
Get terrible data. Well, I'm still going to ask the question because the question is so relevant, which is why were you the president CEO and not CEO is your superpower in operations?
- [21:56]
B
No. No. So. So the.
- [21:57]
A
I came on this just totally wrong. You know what?
- [21:59]
B
No, no, no, no. You're fine. So the, the CEO that brought me on was a guy I had been mentoring. He actually was. He'd had a recruiting firm. I hired a bunch of people through his firm and so him and I became friends and I was mentoring him and the. I was at another crypto company and when I left there, he said, you know, he's like, hey, like, are you interested? I really need an operations guy. And so I basically, I looked at the, I looked at the business model and the revenue forecast they had and I'm like, you're going to run out of money. You're not going to come even close. I said, but I said, if you started a crypto trade desk, we could get you profitable within six weeks. So basically we brought on so. And I know just the guy to run it. The guy who started my trade desk at another company. I brought him on and we did, I think last year we did 18 million in revenue and like 9 in profit. Wow.
- [22:53]
A
It's amazing. Do you prefer to be in operations rather than like the visionary seat where.
- [22:57]
B
You know, I like when I, when I was at the telemedicine company, which is a nine figure exit, I had, I had actually never overseen sales before and I'd never done sales directly. I feel like life is a sales call. So it's not like I don't know how to sell. But you know, you want to get a date, you want to raise capital. It's a sales call. Right? But, but that's what the company needed. So honestly, like, I mean, Elon talks about this all the time. You know, when you're running a business, you know, you have to do the toughest problem that no one knows how to solve, that no one else wants to do. And that's kind of what I do. Like wherever I go, I'm just, I'm solving whatever the problem is. That's what gets me excited. I'm fortunate enough to be, you know, kind of a Swiss army knife. I don't, I don't actually love operations. I prefer the visionary aspect of it. But I can do the operational part when I need to do.
- [23:43]
A
You find when you hand the operational stuff off, it's difficult because you just. Nobody can ever do it as good as you.
- [23:48]
B
Earlier in my career it was hard. Now I actually love getting rid of it.
- [23:51]
A
Yeah, well, you do. So, okay, what was the shift then? How do you let go of the ego and just say, okay, this is just getting it done is good enough? Maybe not as good as me.
- [24:00]
B
I think that's one of the hardest things. In fact, when I, when I'm mentoring people that are leaders in organizations that I've run, that's a big part of the part that I am trying to teach them on. It's like it's okay that someone's only going to do it 70 or 80% as well as you, that you're not leverageable. So if you're doing that work. And again, at every company I've ever been at, I will do. I'll sweep the floors like it doesn't matter. There's no job beneath me. But that's also. I also know that's not my best leverage point.
- [24:28]
A
So for me of your time, yeah.
- [24:30]
B
I'll rol my sleeves up and I'll do what needs to get done, especially early stage. But the reality is, once I get to a certain place, I'm not. I'm not operating as an effective leader if I don't backfill myself. Fact. When I was running the prop trading company with, with forethought and malice, I hired a COO with the express purpose of mentoring him so that in a year I wouldn't be necessary anymore.
- [24:52]
A
When you're running a big company like these that you have, what's the key to maintaining great culture in those companies, in your opinion?
- [25:00]
B
So I'll tell you how I do it. And I used to think this is kind of hokey earlier in my career, but I would say at the last five or six companies I've been at, I've made sure we've done this. We had a set of internal core values and external core values. The external core values are the things we figure out, like, hey, if we're going to make changes in product and service and things like that, those are the who we're going to partner with. You know, channel partners, things, things of that nature. I make sure that they pass whatever the filter is for those external core values, for the internal core values. That's how we hire and promote, right? And what I do is I make sure that everyone in the organization is involved in choosing those core values now. I guide them, right? I make the final selection. But ultimately I want everyone involved in that. And then what I would do to. To really cement that is, I would create. I would usually have four core values is what I would usually shoot for. I'd create an award for each of the four core values. Let's say it was grit, you know, integrity, whatever they might be, I would create an award for each one. I would award them in the first quarter, and then whoever got, whoever won the award, it would be their job to award it the next quarter. And so it just reinforced and everyone in the company would know what those four core values were because of that. The other thing that I Did was I think if you want to make people behave like owners, you have to make them owners. So whenever it has been my decision, every employee has equity, every last employee. The other thing I make sure is that every employee understands is financially literate, knows how to read an income statement. So that when. What I would do is when I would have a board meeting every quarter, I would present the results to the board and then the next week I would present to the entire company basically the same presentation. Now, if they're not shareholders, all I'm doing is showing them how much more money I'm making and the investors are making.
- [26:39]
A
That's true, yeah.
- [26:40]
B
But when they're shareholders, now they're interested, now they're interested and, and they get excited about it. So that's what I've done to create. Because if you do it right, everybody acts like an owner and that's what I shoot for.
- [26:51]
A
So now I'm, dude, you've had some massive exits on the stuff that you've done. Are you at a place in your life where you're looking to build something else yourself? Are you just, are you in that season of your life where you're just enjoying pouring into others?
- [27:02]
B
So I, one of the pieces of advice I give because I'm, you know, my wife gives me a hard time sometimes because I'm. I meant. Or anyone who'll ask. Right. And so what I decided was, one of the first things I tell people is tell me what you want the end result to be and let's work backwards. Yeah, it doesn't matter what it is. And so that's kind of of what I decided. So when I, when I left Investify, I basically said, okay, how do I want to spend the next 15 to 20 years of my professional career? I said, what I want to do is I want to basically be on the board of 10 to 12 different companies with that are being run by people I really enjoy as people that are doing things I find interesting. And so I said, okay, how could I do that? So I worked backwards. That's how I actually came up with the idea for the course. The course. I don't give a shit about making money from the course. It's a filter. I'm trying to do like a reverse kind of home office. So what I'm doing is I'm basically using the course as lead gen. I then interview every, I'm calling it a coaching call, but I'm interviewing every person who finishes the four and a half hour course and I'm evaluating them and their idea, if I like them, it's an incubator. And I like the idea that I. Basically, it's invitation only. I'm only going to have 10 people in a mastermind. I'm going to. They have to commit to six months of mentorship. At the end of that six months, I'm going to invest a quarter of a million to 500,000 in no less than one and no more than three of those businesses. So let's just call it to every six months for a year. In three years, it'll be 12, you know, 12 businesses. That's what I want. And so I'm. Because now I've got six months to evaluate these people. You know, can they lead and, you know, attract talent and motivate? Do they take, you know, coaching and guidance and make adjustments in the business model and pricing model and things like that? You know, so, so that's basically that, that, that's the, that's the end goal.
- [28:39]
A
Wow. What's the filter on the front end to get into that? Because I'm sure people listen to, like, like, how do I get in? How do I get in? What's. What's the filter?
- [28:47]
B
Well, they've got to take. They got to take the course. Right? And then, and then it's all. It's all going to come down like, you know, you've interviewed a lot of people in your life. So have I. Right. So I can tell an awful lot in 30 to 60 minutes. So, you know, and then they're going to have to commit to that mastermind for 60 for six months and pay for it. Right. So, you know, how serious are they? It was funny when I was originally pricing the course, you know, because I don't care about making money. I was just going to charge 1000 bucks. And, you know, some guys who know more about, you know, courses than me, they're like, if you charge a thousand dollars, 80% of the people won't even take that, won't even go through it. So charge a higher price and they'll. Almost all of them will go through it. Yeah. So.
- [29:24]
A
Well, they get. Yeah, they have skin in the game.
- [29:26]
B
Yeah, exactly.
- [29:27]
A
And, and, you know, people are funny, man. They value what you give them. If you put that course out right now for free, you said it's free. Nobody would take it.
- [29:35]
B
I agree.
- [29:35]
A
It's the, it's the weirdest thing how people just place this arbitrary value by how much, you know, it's like, weird. The information is because I paid for it because, you know, what it is. People don't want to, they don't want to be embarrassed. I don't want to say I made the wrong choice.
- [29:48]
B
Right.
- [29:48]
A
So if they make a heavy investment in something, you better believe they're finding value.
- [29:51]
B
But it's like a personal trainer. It's like, I know how to work out, but if I'm paying $200 an hour, I'm showing up.
- [29:56]
A
Yeah, yeah. Or worse. Yeah, yeah. I've given away some personal trading sessions of my life where I was like, man, I just, yeah, I didn't make.
- [30:03]
B
Well, look, you know, you got a kid who's going to be going to an Ivy League school, right. Think about how much you're paying per semester, right. And imagine, you know, the tiny fraction of that to pay to go to a mastermind, to pay to go to, you know, to. For a really high quality course. It's a tiny fraction of what you would pay at any expensive school.
- [30:20]
A
I know, but I find it so funny how unwilling so many people are to invest in themselves. Shocking.
- [30:27]
B
It's, I have to say, like, I don't have a lot of regrets in my life, but it's funny, I. One of my goals for the year was to, was to do a TED Talk, right? And so, you know, researching it, figuring how to do it on my own. And I actually had a guy in my podcast who told me in the last, I think he said in the last nine years he spent a million dollars in coaching and mentorship. And he goes, he goes, it's roughly returned 25x.
- [30:50]
A
Yeah.
- [30:51]
B
And, and it was funny, I just had that conversation and then I just got pitched. It was like 30 grand for this TEDx thing where they guarantee to get me on a stage, whatever it might be. I'm like, pull the trigger, let's go. It's like, yeah, it's like. But again, same thing. Like I'm always showing up, you know, If I'm paying 30 grand for it.
- [31:06]
A
Not missing a session for that. You're doing the work because you're like I had. Yeah, I've got to get a return on this for sure. I, I find it so interesting that, you know, the incubator is genius. Like, what you're doing is so smart and how you're doing that and allowing you to evaluate, evaluate people as we do this. How many people have approached you in life before doing this that wanted you to mentor them, that you were like, ah, maybe not. And then tell me why.
- [31:33]
B
So if I, if I had to guess people because I've mentored people to just work for me, right? So because I've run large earnings, I've probably directly mentored close to 100 people probably throughout my career. But I would say people that have approached me that didn't work directly for me, maybe 15. And I would say of those I mentored five. And the 10 that I didn't was because their idea and their approach to it was stupid. I mean, I'm just being honest, right? I remember this one guy, he had an idea for, you know, he had kind of a, you know, tree hugger, save the world kind of thing, which is fine. I don't have an issue with that per se. But, you know, he wanted to basically have metal straws instead of having plastic straws, right. And I was like. So I just did some quick research. Now mind you, he'd been working on this idea for six months. When he came before, he came to me and someone I'd worked with before, but he didn't work directly for me. And he's like, you know, you never run businesses. You know, what do you think did that? Would you mentor me? So I did some back of the envelope math and like the only people who would pay for this, you know, and I don't even think they would pay for it, would be super high end restaurants, right. I said, you're going to eliminate like.0001% of the straws. You got to be at Subway and McDonald's and places like that if you're going to make a dent. And the economics just don't work. So I was able to figure that in 90 seconds. Okay. He spent six months on it. That's not someone I want to work with.
- [32:50]
A
Yeah. So you're looking more at the idea than the person.
- [32:53]
B
Well, I, you know, it's a little bit. Again, I, I wouldn't get involved say in a, in a liquor business or tobacco business or a business that I just felt like, you know, so I wouldn't get into business that I felt like harmed people, you know, if you will. But I don't care about the idea so much so long as a person is, you know, because it's funny what you said about being in love with the business. I agree with you. I don't want someone to be in love with the business, but I want them to really like it.
- [33:15]
A
Yeah.
- [33:15]
B
I want them to be like it, to be excited about it, but not be so in love with it that it's. That they stop taking.
- [33:21]
A
You can't see the truth. You can't see the Truth.
- [33:22]
B
Yeah, exactly.
- [33:23]
A
Just write it to the end.
- [33:25]
B
But the idea, you know, doesn't have to be something that necessarily, you know, sings to me per se.
- [33:29]
A
Yeah. If, if somebody wanted to take your course and they wanted to, you know, first of all, how they find it because I want to make sure everybody figures out, I think.
- [33:36]
B
Yeah. So they just go to my, my social media. If you just go to my Instagram, you know, Dave R. Gutman, my Instagram handle, you know, it's launching next week. So by the time this podcast. Yeah, so by the time this podcast releases, you know, it'll be out there and there'll be links to it. It'll be, it'll be really obvious. Or you can go to Gut and there's a page there where they can see the, the anti MBA course. It'll be there.
- [33:56]
A
Well, let's talk about, let's talk about the mastermind group because what is that going to entail? What did you envision that being?
- [34:02]
B
So, basically. So it's, you know, I would say the closest thing to this model and I wasn't even aware of it when I came up with the idea was what Alex Ramosi is doing because you brought him up earlier too with his book launch, which I think what generated over 100 million in revenue or something. Insane.
- [34:13]
A
So I mean literally. Thanks, Alex. I went from a seven month plan to come and compress that to three weeks. Thanks, appreciate you.
- [34:20]
B
But so, but what he does is probably the closest to what I'm doing. But what he does, he does it in a seminar format where they're talking, where people are in the room together and they're doing it in a more generic way. I don't want to do that. I want to, I want to take 10 people that I pour myself into. So yeah, there'll be some group stuff we do every week, but I'm going to be spending one on one time, probably two to three hours a week with each one of those 10 people on their idea.
- [34:44]
A
Yeah, I think you know the word the mastermind, that word has gotten really diluted for to mean a lot of different things. I mean I'm in a couple of them that I love that are high level mastermind groups where we go and share our business and get shredded. It's, it's, I love it. It's the only time that anybody ever criticizes my business in this room, which I love those things. But I think, you know, some people hear that word and they're like, oh, what is this really? Is it like it's a sales pitch, but. So I love that you're doing that, but yeah, I agree. Having that community and creating that where they can lean on each other, I think is going to help, help them whether you end up investing in them or not. How much equity, when you invest in these, in these businesses, how much equity you look at?
- [35:21]
B
So it'll depend. That's part of what I, what I try to help people understand too, is how do you value a business? How do you value a business pre revenue? How do you value a business post revenue? How do you value a business on exit? Because one of the big things. And you know, if you've sold businesses, you know that the, the main goal of due diligence is to reduce the purchase price.
- [35:38]
A
Sure.
- [35:39]
B
So how do you, how do you, you know, fight against financials? Yeah, exactly. So, you know, so, so part of what I'm going to do is we're going to work on it together. And the thing about it is, don't get me wrong, I'm not allergic to money. I'm. Yes, I want to have it be work out for me, but I want it to work out for them. Because if it works out for them, for sure it's working out for me. Whether I end up with 3% or 5% or 10% of the company won't really matter that much to me. What I'm going to do is I'm going to teach them how to value their business fairly and then I'm going to take them out of equity. That's fair. Because the other piece of it is we're going to have to figure out how much capital they need.
- [36:14]
A
Yeah.
- [36:14]
B
You know, and so that'll be part of the process too. So. But my rough estimate is most businesses are going to need between a quarter of a million and a half a million, but there'll probably be some exceptions.
- [36:22]
A
Yeah. Let me ask you this, because it's something I struggle with for years and I probably screwed this up a lot, which was, man, I just, I turned into the free business advice guy. Right. A lot. And I, and I, I put a lot of help into places where I was never compensated. So I made a promise to my wife two years ago and I said, if it gets past a certain point, it's going to be, hey, I'm happy to consult for equity. I'm happy to consult for equity. I'm happy to consult for equity. And I've. Since I've started doing that, I've found that nobody has a problem saying, yeah, dude, sure, you know, you bring value. We'll do this. We'll put a stop on it, see where, you know, we'll have a Runway, figure out where we're going. But, yeah, I haven't had an issue with that. At what point do you go from just like, okay, I'm going to give you some free advice to okay, this.
- [37:06]
B
Is literally the point I'm at right now. Literally. Because it got to that exact place.
- [37:11]
A
You were doing the same thing.
- [37:13]
B
That's how we got here.
- [37:14]
A
Okay. You're doing the same thing. Okay. It's fair, I feel. Look, I'm 53. You're 59. All right? I got it six years faster than you did. I'll take it. Because, man, it's just, like, you love to help people, and you want to be a go giver, man, you want to help, but at a certain time, you're like, when you see somebody take something that you gave them, and all of a sudden you're like, did they just make, like, $8 million?
- [37:37]
B
I will say I have been fortunate where there have been a number of situations where I've helped, and someone's just given me equity.
- [37:43]
A
Yeah.
- [37:44]
B
Without me even asking.
- [37:45]
A
Yeah.
- [37:45]
B
That's happened a few times, and that's nice.
- [37:46]
A
That hasn't happened to me, which is why. Which is why now it's. We have a conversation about that. Hey, I'm happy to get sold for equity. Happy to do it. All right, Juana, so you got the business coming, man. You're excited. It's going to be moving. So you're launch. You're officially going live. When you. When.
- [38:02]
C
Tuesday next week?
- [38:03]
A
Tuesday next week. And you got 90 days to get profitable, right?
- [38:06]
C
Yes. Okay, let's make it 60.
- [38:08]
A
All right, so how many units do you need to move to become profitable? Based on the current cost of sales and current.
- [38:13]
C
Around 45.
- [38:15]
A
So 45 units you're making, you're in the black. You're making money per month? Per month. Okay, so how far are you. So the initial investment you made, are you immaturizing that over. Over space?
- [38:25]
B
Yeah. So the people asked me. I was on a podcast the other day, and they were saying, well, how much? I said, I think because the other thing I'm doing is, you know, part of my deal. You know, her father is a close friend of mine. Her mom was, let's just say, at the biggest fan of this approach, she's a little more conservative in the. In her approach. Want her to just spend, you know, go all in on college. So I basically committed to. Is Like I'll basically pay her salary until the business can afford to pay her, which I think it will be within 60, 90 days. On the outside.
- [38:52]
A
Is there a lot? Is that a loan?
- [38:54]
B
No, I'm actually, because again, I have, I have 49% of the equity.
- [38:57]
A
Okay, so you're paying her?
- [38:58]
B
Yeah, yeah, so I'm going to pay her. Basically I'm like, I've hired her for basically $50,000 a year. And so basically when the business can afford to pay her 25, I'll pay the other 25. When the business can pay her 40, I'll pay 10 until the business is paying all of it again, which I think will be in 60 to 90 days. And then you know, the. But I think probably all in, when the dust settles, I'll have invested somewhere between, again, not a lot of money. Maybe somewhere between 25 and 50 grand.
- [39:23]
A
Okay, perfect. And you guys think you'll be in the black in 90 days from that?
- [39:26]
B
I think in 60, 60 days I think we'll be, I think 90 days on the outside. We should be able to do it within 60 because again, once we've figured out the customer acquisition costs and at least a rough ltv, then we'll build the interface into printables and that's going to reduce our cogs by 80%.
- [39:41]
A
Yeah, any time you can, you can do that. So let me ask you this and Anna, because this is your business we're back to now. So what are the bolt ons you're looking for? Starting with, start with posters. Are you thinking about any. What else are you thinking about? You can bolt on and remarket to these customers?
- [39:56]
C
Well, there's, I don't know if you heard about a brand called Successories. They do a lot of products for corporate offices. They do like mugs, they do like posters, all that kind of stuff.
- [40:07]
A
Swag is what you're looking for.
- [40:09]
B
Swag.
- [40:09]
C
Exactly, swag. So then we can go into that. We can also go into. David had an idea to go into NFTs so that you can print your own line of posters and then you can get royalty fee for it.
- [40:22]
A
Spoken like a true crypto guy. NFTs are coming back, baby.
- [40:25]
B
Well, the bigger issue there is there's a network effect opportunity here. So let's say that you're a huge, you know, Lakers fan, right? You could create a whole bunch of posters, you know, Kobe, Shaq, with all cool quotes from Kobe and Shaq. You create a whole little store within our ecosystem. And now every time someone buys one, you're getting paid. And so you could have people create all these different things.
- [40:47]
A
Yeah, that's the move. I mean, a buddy of mine right now just has a. They started a brilliant company, which is amazing. Effectively. What it is is he is a singer, songwriter, pretty famous guy in Nashville and has a lot of other famous friends in Nashville that are there. And essentially what they did was they built AI producers that are them and how they would mix and write a song. Like how we would do it if we were sitting here with you, working with you, how, how we'd set the board, how we'd set everything up. And now they have this network of people can sign up for it, and they can write and mix and make songs with these very famous Nashville producers in this ecosystem. And then every time those songs get spun within that ecosystem, they get a royalty or if they get licensed out to TV or production or whatever. So creating this bank of not AI created, like, like, not that stuff, that's still a little. Little weird. But this is actual musician created, but just mixed and produced by these famous guys. And now they're getting royalty on it as it goes out.
- [41:46]
C
It's really cool.
- [41:47]
A
Yeah. Having. You know, anytime I think you can have a creator network or a place where people can think they're doing their own thing. I think that's smart. That's smart. Look at you go. That's smart. That's good stuff.
- [41:59]
B
There's a reason I picked her.
- [42:00]
A
Yeah, I get it. I get it. All right, well, if they want to find you more, where, how exactly can they find you?
- [42:05]
B
Look, the best place to go is, you know, to my YouTube channel, official David Gutman, and my Instagram is, you know, Dave R. Gutman and Instagram. Those are the two best places to find me.
- [42:14]
A
Okay, what about you on where they find you?
- [42:16]
C
One of one official. It's an Instagram handle, and we're also going to launch our website. So one of one posters.
- [42:21]
A
Is that one of one or O n e O N e O N.
- [42:24]
C
E. One of one.
- [42:25]
A
There you go.
- [42:26]
C
One of one. So your poster has to be unique as well.
- [42:29]
A
I'll look at you. Go.
- [42:30]
C
All right.
- [42:30]
A
I like the slogan. Well, guys, listen. Hey, man, if Anna can do it and you're sitting at home with an idea trying to figure it out, I mean, this is a pretty good pathway to making those things a reality. Because, dude, if you're waiting around for somebody to come to save you, like they said in the best Christmas movie ever, die Hard, no one's coming to Savior. So do it yourself. See you next week. Hey, it's John Gafford from the Escaping the Drift podcast. And big news. My new book, Escaping the Drift is coming out November 11th. You can pre order it right now at thejohngafford.com There are tons of bonuses, tons of giveaways. Get the book. If you are somebody that feels like you might be drifting along, this is for you. If you know somebody that feels like they might be drifting along, this is for you. Available everywhere, all bookstores, everywhere, Amazon, Barnes and nobles, the whole nine yards. But pick your copy up right now at thejohngaffer.com and get a bunch of the awesome bonuses I've thrown out because I promise you, I put my heart and soul into this thing. I want it to help you change your life. Pick it up everywhere. What's up everybody? Thanks for joining us for another episode of Escaping the Drift. Hope you got a bunch out of it, or at least as much as I did out of it. Anyway, if you want to learn more about the show, you can always go over to escaping the drift. Drift.com you can join our mailing list. But do me a favor, if you wouldn't mind, throw up that five star review. Give us a share. Do something, man. We're here for you. Hopefully you'll be here for us. But anyway, in the meantime, we will see you at the next episode.