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- [00:00]
Sam Parr
I got something. Sean, do you want to hear a story?
- [00:02]
Shaun Puri
Does it have to do with those glasses?
- [00:04]
Sam Parr
No, but I am a cool guy, so that's why I decided to wear them.
- [00:07]
Shaun Puri
I feel like I could rule the world. I know I could be what I want to.
- [00:12]
Sam Parr
I put my all in it.
- [00:14]
Shaun Puri
Like, no days off on the road. Let's try.
- [00:16]
Sam Parr
I have a. I have one interesting thing that I could. That I could bring up.
- [00:19]
Shaun Puri
Let's do it.
- [00:20]
Sam Parr
Billy of the Week. We haven't done that in a minute. I have an interesting person.
- [00:24]
Shaun Puri
Billy of the Quarter.
- [00:25]
Sam Parr
I guess since Billy of the Quarter.
- [00:26]
Shaun Puri
Haven't done this in a while.
- [00:27]
Sam Parr
Well, it's the Billy of this week. It just. We don't do it every other week. Have you heard of a guy named Jim Ratcliffe, sir? Jim Ratcliffe?
- [00:35]
Shaun Puri
No, I don't know who that person is.
- [00:37]
Sam Parr
Okay, so listen to this. Here's a story. This guy named Jim, Jim Ratcliffe, he's really interesting to me. So he's born in Manchester, England, which is sort of like a blue collar. It's kind of like the Boston of America of England. It's like, you know, white, blue collar, you know, hardworking, kind of poor. He studies chemical engineering. He becomes a chemical engineer at an oil company. But, like, things are only going okay. And then he has a background in accountant, accounting. He studies accounting and chemical engineering in college. And he gets a job at a PE firm at the age of 35. And he's like, this is pretty amazing. Like, you know, this is a great way to make money. I, I like making money. But at the age of 40, he was like, all right, I've worked for another guy for long enough. I want to try and do this on my own. He doesn't have a ton of money. I think he had a home that he owned and he had like 100 or 150 grand to his name. And this was in the late 80s. And so he partners up with a guy and they're like, okay, we've been buying companies for our employer, our, the firm that we worked for. Let's try and do it on our own. And they convinced some of their old clients, some of their old LPs to invest in them. And they spend about a year looking for a company. And so with 3 million pounds in equity, they buy a $80 million. 80 million, I'm going to say dollars, but I mean pounds, but $80 million company that is a spin off of BP, basically. BP, the oil company, owns a chemical division which basically makes like chemicals so like the commodity that, let's say like your toothpaste has like, you know, fluoride in it. Well, someone like has to get the fluoride right, whatever it is, the chemicals that make like plastic packaging, whatever. They buy that unit from BP for $80 million, of which $3 million was equity and the rest was debt. So, so like a really heavy debt thing. And he mortgages his home, he uses 100% of his money. He has two kids and a wife and they're like my, he was like my wife. Like we talked about it for six months. Like, should we do this? Is this like, you know, this can ruin us, is going to ruin our careers. This is going to, we're going to use all of our money, but you know what, we have to take a risk. And so he does that in 1990, I believe, and by 1997 it works. This $80 million company is now worth like a billion and a half. And that's how he makes his initial money. And over the years he's kind of kept that one thing I think it's called. Ineos is the name of the company. It's a chemical company that you probably have never heard of. But to, to this day or today, it does about $40 billion in revenue, employs many tens of thousands of people. It's one of the largest chemical companies in the world at this point. And basically the way that he's grown is combination of PE and his chemical engineering background. So he understands chemicals. But his whole shtick was finding like spinoffs that conglomerates didn't want to own anymore because it was a distraction. He would buy it for whatever he would pay for. And he, his goal was to double the EBITDA in five years. That's like sort of standard stuff. That's kind of the boring thing that he did. But now at this point he's I think the number one or number two or three richest person person in England. Amazing. But the more interesting part, in my opinion is what he has done with his money. So check this out. You remember the two hour marathon with Elud Kipchoge that Nike did like four years ago?
- [03:48]
Shaun Puri
Yeah, recently, right, that.
- [03:51]
Sam Parr
Well, someone actually just broke two hours recently. But like four years ago or three years ago there's this amazing runner named Ed Kipchogi and they set up like the world's perfect setup for him. So they had like a pace car that was like perfectly in front of him that went on pace for an hour, 59 minutes. They had, they did it on an F1 track. So it was perfectly flat and they let him wear shoes or he decided to wear shoes that weren't technically allowed in sanctioned races. But he was like, you know, this is just a spectacle, let's do it. And so he broke two hours in the marathon. Well, Jim Ratcliffe is a huge sports nut. He's run 50 marathons. He's gone to the North Pole, the South Pole, he's climbed all these mountains. He's like one of these crazy guys and he was the underwriter of that. He paid for the whole thing. Just cuz he also owns a ton of different sports leagues. So he owns Team Sky Cycling. So that's the team that won the Tour de France eight times. He has. He owns one third of Mercedes F1 team. He owns one of the best America cup sailing team. He owns 25% of Manchester United soccer team. He used to own Chelsea, which is, you know, a big soccer team. But the really cool thing that he's done recently. Have you heard of a car, I think it's called the Grenadier. Have you seen this car? Google this car and tell me if you've seen this. It looks like a G Wagon or a Defender.
- [05:04]
Shaun Puri
Yeah, yeah, it looks a lot like a G Wagon.
- [05:06]
Sam Parr
Okay, so check this out. So in 2016, this guy Jim, he loves Defenders. Now the thing about Defenders is Land Rover and I think Land Rover is owned by Jaguar. So Jaguar still makes the Land Rover, but the real famous ones are the old ones, the ones from like the 80s and late 90s. Those are really cool, they're really boxy. But although enthusiasts love them and they pay sometimes hundreds of thousands of dollars for these cars, you can't really buy new parts anymore because Jaguar just quit manufacturing it. And he is a huge enthusiast of this, of the Defender. He loves it and he's a rich guy. So he was able to get a meeting with someone high up at Jaguar and they go to a bar called the Grenadier Bar and the gym's like trying to persuade them, like, hey, you know, I'll even help pay for the tooling. Is there a world where like I think it could be for shits and giggles, it would be fun. Let's remake some of the parts for the Defender because the Defend, it's the most comfortable off road car. But unlike a lot of new cars, it's still got a little edge on it. You know, it's got like, it's like, it feels not too luxurious, it feels like a proper off road car. And they're like no, man, this doesn't make sense. We're not going to do it. So he's like, you know what? Fine, I'm just going to create a car company. That's what we're going to do. And so within his chemical business, they create this thing called the Grenadier. It's a SUV that you just saw. I think it sells for like 80 or 90 grand. It has a small cult following in America. I think it's pretty big in Europe as well. And. And he's like, screw it, we're going to make a car company. Just because I love these cars so much, but they don't make them anymore. So I'm going to make what I think it should be, the way it should be done. And so there's this famous line where just to give you an idea of what he's like, he said it's the most comfortable off road vehicle, bar none. And the journalist says, like, yeah, but like those late models, they don't like feet. They don't like, fit the environmental standards of today, nor are they really that safe. And he was like, what's wrong with that? And he's like, he goes, what's wrong with that? They're effing great cars. And so he starts making these cars. And that's where we are now. So these cars have a huge following in America. A bunch of like my car nerd buddies like them. They're known for being, like, kind of sparse on the interior. So if you look at the interior, they got these, like, the switches look like switches from like a tank a little bit. Like, it's like all mechanical stuff and they're kind of a pain in the ass. And the truth is, is that it's a horrible business. Since 2018, he has lost $2 billion on this car company. Last year, the company was negative $300 million in profit. It's not going so good, but it's awesome.
- [07:45]
Shaun Puri
All right, let's take a quick break. This podcast is called My First Million. And it's probably the question we get asked the most. How do I go from zero to making my first million? And. And so I did an episode a little while back where I broke down exactly the sort of philosophy and frameworks that I would use. So things like finding your white belt business or identifying your bear on a unicycle advantage, the core way that your two skills can overlap, or why maybe starting a service business is better than starting a software business for your initial businesses to make that first million. And so the team at HubSpot has created a guide that took the stuff I said in that episode. They laid it all out for you. You can get it for free in the description below. Just click that link and it's all yours. All right, back to this episode. What do you love most about this guy?
- [08:26]
Sam Parr
I. He's got a you attitude that I really dig. I really like. If you Google him, you'll see that he's wearing a barber wax jacket, which is sort of like an adventurer like jacket. It's like, what, like kind of like rough and tumble blue collar like guys wear. It's like work wear. And I appreciate that he still has a little bit of edge to him, even though I think he's like the 90th richest man in the world. And so I really appreciate that. And I also appreciate that he does shit just cuz.
- [08:56]
Shaun Puri
Yeah, there's something great about the. I don't know if you want to call it side quests or the just because or the fu attitude, but I think both of us love that. I have this thing that I keep running called the side quest hall of fame. And it started because Palmer Luckey was on Joe Rogan. Palmer created Oculus. We created the leading VR headset, sold it for a few billion to Facebook. Then he created Anduril, the leading. The first kind of significant tech company that was doing defense stuff. It's worth whatever $100 billion, whatever it's worth right now. And he goes on Rogan and he says, oh, you know what I want to do next? And I'm expecting him to say a company, another startup. And he's like, I want to create like a privately funded version of the X Files. He's like, I just want to go hunt for aliens. And he's like, I'll fund it and we'll go find them. We'll figure out what's going on. He's like, I feel like the government's not telling us everything. I was like, well, that would be an epic use of this person's talent and money. And, you know, since then he's done. He did this thing where he like, basically brought back the Game Boy.
- [10:06]
Sam Parr
I own one. I was about to bring that up. He's done N64 and Game Boy.
- [10:10]
Shaun Puri
Yeah, he's got mod, retro, and so he's just. He just does cool shit. And then, you know, he's kind of like these, you know, dresses eclectically, all the stuff. And I saw this video recently that it was, I thought, a more endearing side to him. Did you hear the Video about why he wears the Hawaiian shirts.
- [10:26]
Sam Parr
No. Would someone make fun of him one time and he, like, was going to do it out of spite?
- [10:30]
Shaun Puri
Well, he was like, we grew up. He's like, I grew up really poor, and so I didn't have any. We didn't have any money for new clothes, so I had to wear my dad's old Hawaiian shirts every day. Like, that's just all I had. My wardrobe was, like, seven of these, and I wore them, and I got made fun of, but that's all I had. So I wore them. And he's like. And then when I sold my company, you know, he says something where it's like, I got, like, I got some money, and I tried to change. Like, I tried to change. And then he's, like, basically reverted. He was like, actually, I'm just gonna wear the shirts that, like, I like. And I know and like, this is what I'm all about. And I don't need the fancy clothes to, like, validate me as, like, I've done it.
- [11:08]
Sam Parr
And I love that.
- [11:09]
Shaun Puri
I just think he. He carries that fu. Energy with him pretty much everywhere.
- [11:13]
Sam Parr
A thing that he has that I don't find him to be a hard o. I don't find him to be insufferable. I find him to be someone who's confident in his opinion, and you could challenge him, and he's open to new ideas, but he's very confident. I find him, like, at a very young age. I mean, when we talked to him, I think he was 33, and he was like, saying, like, here's the thing about defense contractors. They're doing this wrong. That's a very bold thing to say. Right. And I appreciate that about him. And I used to meet these people, and I used to think, how do I become like that? But now I think, how do I raise children that are that way? How do you raise kids that are that confident at such a young age? But not in an insufferable way, and also in a way where I think they've backed it up by studying with whatever they're going to say. Have you ever thought about. What do you think his parents were like? I. I guess he said he was raised poor, so he had a. Not a wealthy family. And yet they still were able to, like, instill this sense of, like, you can do it and you can figure this out.
- [12:12]
Shaun Puri
Well, I'm not sure how much it is watering the plant versus the soil you. You grow up in. So, for example, there's a reason that the most Successful people on earth typically come from disadvantaged backgrounds. You go look at why is sort of dyslexia so common amongst successful people? It's just disproportionate. You would expect it to be the proportion of dyslexia in the population, but no, it's a higher percentage in successful people. Or why are so many athletes come from poor families and single mother homes and things like this? You know, they don't have all the training and the advantages and the best gear and the best anything, right? But like they have the one thing that can't be bought, which is like this sort of insatiable hunger. And so I think that confidence is a byproduct of the adventure and adversity you've faced in your life. So you don't just say be confident. Actually, the advice to somebody who wants to be confident is go have more adventure and adversity. It'll make. You will get hardened by confidence over time because the more adventure you do, where you put yourself in unfamiliar situations, or the more adversity you face and you come out still surviving. Even if you didn't win, but you survived, then the next thing doesn't seem all that scary. You sort of think to yourself, well, I did all those things, of course I can go into this new unfamiliar situation and thrive as well. And so I think that the confidence is not so much like, you know, as parents told you, but, but like, you know, the environment, like if you grow up and you're poor, but you're tinkering or you're nerdy or you have access to certain books that, you know, it's kind of amazing how these very small things make a difference. There's a story I read this morning actually about Dan Brown. You know who Dan Brown is? The author. He wrote the Da Vinci Code and like, oh, okay, a bunch of other, like, thriller adventure books, right? Where a hero goes on a quest, there's sort of a puzzle. They gotta figure it out. Growing up, Dan did not find Christmas gifts under his Christmas tree as a child. His father, Richard Brown, a math teacher, instead put a treasure map under the tree. And Dan would have to follow the treasure map for a trail of clues all over the house and sometimes all over the neighborhood until he finally found the present. This sparked a deep love of solving puzzles, cracking codes and hunting treasures. He channeled this into Da Vinci Code, Angels and Demons, and other thrillers that have sold more than 200 million copies, all about cracking ciphers, untangling coded messages, which is the heart of his Books A lesson from this. A childhood obsession can be a source of infinite inspiration. If you want to seek a meaningful quest as an adult, look towards the childhood toys and games that you couldn't get enough of. There may be clues in there.
- [14:50]
Sam Parr
It's so funny. That's the. That sounds like a cute thing. But there's been so many times and I wonder if there's actually like research that verifies this, but there's been so many times. We had Robert Green on MFM a while ago and that was really great. And he said to find the thing that you want to dedicate your life to, you have to do something that sounds easy but it's really challenging, which is you have to revert back to what you were like as a 12 year old, before you had people who put pressure on you, before you realized that something was stupid or uncool and before you got jaded and when you were excitable and you have to ask yourself, what was that thing? And I've heard people talk about this constantly of like, in order to be great as an adult, you have to do this challenging thing of pretending to be a kid.
- [15:31]
Shaun Puri
And where were you weird as a child? What would it be for you? So if you think back to that era, what were you doing? You're 12, 13, 14, you know, let's take this window eight to kind of 14 years old.
- [15:43]
Sam Parr
Skateboarding a ton. I was skateboarding a ton and I was always taking apart remote control cars and building them back to building them in interesting ways to get out doing chores. For example, I spent a whole six months trying to rebuild the remote control car so it had a mop on it because I hated sweeping the floor. And I distinctly remember doing that and being obsessed with it and building modeled airplanes, like assembling things that had clear instructions I love doing.
- [16:12]
Shaun Puri
So I mean, in a way you're. You chose to build things instead of do a 9 to 5 instead of doing a job.
- [16:18]
Sam Parr
Yeah, well, I also loved, I. I had a huge passion for selling CDs. I remember I used to make like $30 selling like $3, you know, burned CDs. And I love doing that. And for the longest time I thought I was going to be in the entertainment industry. My hero was Ari Gold from the TV show Entourage. And I went to Belmont University because they had this degree called a music business degree, which I made it through three years. And then I was like, I'm going to drop out of school. Just give me like the easiest degree I can get, like with the credits that I got, so I didn't get to complete that degree. But the reason I got into media and the reason why I probably enjoy doing this and working in the content game is because I wanted to work with entertainment people. But then I realized that Hollywood is full of idiots and I hated them. But I can build my own little world like that.
- [17:05]
Shaun Puri
Yeah, I don't know how much of this is like horoscopes or whatever where you just sort of, you try to back test and fit anything into it. But I just was in Austin yesterday and I did a podcast with Mohnish Pabrai. And Mohnish has this thing where he tells these stories about Buffett. And he says his, his theory is basically that a huge percentage of your personality is pretty hardwired and baked by the time you're five years old. And you don't want to spend your whole life fighting your nature. So that's the first thing. And then he says that for kids, we do pretty much the opposite thing we're supposed to do. So he says the human brain, if you just look at brain science, is that there's a golden window between, I think he says, the ages of 8 to 18. So there's this 10 year window where a child's brain is developing in such a way that it can specialize and do some incredible things. If you specialize during that window and the people who do, and if you go look at like, oh, Bill Gates when he was coding, or Mark Zuckerberg when he picked up programming, or Mr. Beast when he started doing YouTube videos at age 12, like, it's often that these people who become the extreme performers, that they were doing something pretty specialized during this golden window. And he's like, in school we tell them to do the exact opposite. I go to school, spend 30 minutes in eight different subjects, don't, you know, go an inch deep in each one. Don't care about anything. You know, don't specialize. Become this like, super generalist. That's the factory model that we have. So he's like, we're doing them kind of a disservice. He's like, your job as a parent is, you know, by 5, their nature is somewhat baked. You observe it in 8 to 18. If they show an interest or an obsession at anything, feed it. Let them go crazy with it. Let them get obsessed. And lastly, like, get them around as good of a peer group as you can. Those are really only things you're going to be able to do is kind of his opinion. I don't know if I fully agree with that, but I think it's interesting. And then he tells a story of Buffett and he's like, you know, when Buffett was a kid, he did all kinds of little hustles, right? Like he would buy a thing and he would sell it, right? So Coke bottles and pinball games inside of barbershops. But one of the things he loved to do was he would go to the racetrack and he would watch other people betting. And he didn't bet he was a kid, but he would watch other people betting. He would watch the horses, study the track, and then what he would do is at the end of the day, he would go collect all of the discarded betting slips that the, you know, people go to the horse track, they drink, they watch the thing, they're having a good time, they just check away their, their, their betting tickets. And he would see that, oh, actually this wasn't a, this wasn't a losing ticket, that actually they got a third place payout here, they didn't realize it. Or they got a second place payout here, they didn't realize it. He would collect all the, and you know, 80, 90% of its trash. But if even 5, 10%, he could make some money. Then he would ask his aunt to go cash the tickets for him and shoot. And that's how he made money. And like, it's not that different than what value investing is, right? He would go look at a thousand companies, a thousand tickets, you know, most of them are rubbish, but when he found one that had, like, hidden value, he would pounce on it and he would make money. And that's essentially how Warren Buffett, you know, invested for the first, you know, whatever, 10, 15, 20 years of his, of his investing career. And he bought his first stock when he was 7. And, you know, so he was doing things in this kind of golden window as well, which I think is interesting, especially, you know, for you and I. We have kids not at that exact age yet, but, you know, I think about that stuff. I don't know to what extent you can control it or you want to try to control it, but it does seem like it's worth knowing that and looking out for the right signals rather than being blind to it.
- [20:35]
Sam Parr
There's this, I'm not religious, but I grew up going to Catholic school and you got to read the Bible a lot. And there's this biblical story where it's like someone's by a volcano or something, or I forget what it is. But if there's Like a loud, like, earthquake or, like, a natural disaster. And then they're told, like, you have to listen to God, what God's telling you. And they're like, well, I hear this really loud noise, but it doesn't. Like, I don't hear, like, a person talking to me. And they're like, even when things are really loud, the whisper or the God talking to you, it's going to sound very faint in a whisper. And that's the challenge is you have to, like, you know, like, really pay attention when there's a lot of loud noise, because the most important stuff is just going to be a really faint whisper, and you have to, like, try and hear it. And I don't really care about the message when it comes to God on that one, but I do think that, like, one. That's what this thing is, because it's like that. That whatever you're being told what to do or you feel compelled to. It's a lot of times it's not a yell. It's like this really small whisper that you have to, like. And that's, like, quite challenging. It's really hard to try and listen to, like, where you're being drawn to, you know, like. Or where your energy is pulling you to. It's not a push. It's a very, very, very small, like, faint nudge.
- [21:46]
Shaun Puri
Right? Yeah. There might be false positives along the way, and it's only obvious in hindsight. Like, when I was thinking about that, like, what was I doing when I was 12? Because I wasn't. And I used to actually be, like, kind of insecure about this. I was like, I wasn't really selling lemonade as a kid and, you know, flipping CDs and sneakers and whatever. Like, the entre. The pattern I see now that I invest in a lot of founders, I'm like, I didn't really have that. Like, the light bulb didn't come on for me, at least in terms of, like, trying to do business until I was 21. And frankly, like, I don't think I'm the best entrepreneur or CEO anyway. So, like, maybe that's. That's true, that that was the signal, but there were a couple of. Couple of signs that I. When I did think back and I actually, like, took more time to think about, I was like, what the hell was I doing back then? What was I really into in a way that, like. Or what was I naturally pretty good at that I didn't maybe pay as much attention to? But now I can think about it, and the Two that came to mind was I randomly entered an improv class and an improv competition when I was in sixth or seventh grade and we made it to the Texas state finals or whatever for what we were doing. It was a duos improv, which. That's what this is. This is duo improv, what me and you do twice a week. And that actually did come pretty easily. I did have a lot of fun doing it. I didn't triple down into it because whatever life happened, my parents didn't help me and I didn't know to ask for it. But maybe there was a signal there of like, hey, you kind of like this. Making things up, thinking on your feet, riffing off a partner. If there was another way to do that, what would that look like? And, you know, I don't think I could have predicted podcasting, but it does make a little bit of sense now that I live in.
- [23:22]
Sam Parr
Well, I did a podcast the other day and someone asked about you and I was like, in another lifetime, or maybe even this lifetime, Sean's gonna be either like a comedian or something in show business.
- [23:33]
Shaun Puri
So that, yeah, I was in a movie or two when I was like, a little like in same. Same era. 6th, 7th, 8th grade, something like that. And then the other one that I noticed was I love video games, which is pretty common. You know, boys love video games. But the way I played video games was a little bit weird. And so if I said, hm, what was? Let's pay attention to the weird. You know, I used to play Madden or NBA 2K, but I would basically never play the games. I would only do franchise mode, which is just where you're the general manager, you're building the team, drafting the players, you're basically making bets, you're investing, essentially, like scouting, investing, simulating to see the result. And I would just simulate, like decades in these games without ever playing the actual game. And my sister would make fun of me, like, are you ever going to play this game? Like, what is this, like, fantasy roster you're building? But yeah, I don't know. I think. I think it's interesting to go look back. I'm not sure again, how much of it is like forced narrative versus reality, but maybe there's something to it. I've now heard this enough times where I kind of got to take it somewhat seriously. And I think it is important because it's like when you are screwing a screw into the wall or whatever, and if you start out crooked, right, if you're at the wrong angle, no matter really how Hard you push. It's just constant friction, right? You're just like breaking the wall, breaking the screw and breaking your own wrist, trying to make it go in. And then if you get things like aligned right, it's like, oh, just, you know, four spins to the right. Click. And I feel like a lot of my life was pushing screws into walls at the wrong angles, you know, trying stupid projects, trying things that weren't really in my nature, trying to be somebody who I wasn't. And man, life got a lot easier and it got a lot more successful when I sort of figured out like, oh, what do I actually like, naturally pretty inclined to doing?
- [25:12]
Sam Parr
What do you think? You figured it out?
- [25:13]
Shaun Puri
Yeah, I think like what we do is like probably the closest approximation to it. Like if I look at what I do today, I get to nerd out on topics, which has always been something that I would do. Like I would always go down these rabbit holes and then this kind of duet, improv type of thing, like being able to riff on topics and being generative with ideas has always been good. And then the other side of it is investing. I don't want to like play the game, but I like being the gm. I like being the sort of the franchise mode of doing this. And so I've had way more success, you know, investing or even incubating companies with other CEOs as operators now. Right. Like I think in our portfolio is probably like, forget like angel investing, just like in the companies we own a big chunk of, there's like four companies or so where there's four CEOs and I don't do any of the day to day work and it's performing so much better than, you know, back when I used to do my own startup and I was all in on it. Right. So it's like it's a better fit for me to do that.
- [26:11]
Sam Parr
I didn't know you had four. You're doing shit that you don't even talk about.
- [26:15]
Shaun Puri
Well, I want to talk about some of them soon and hopefully I will have some news sometime in the next few months that I can come on in and maybe start to tell these stories. All right, let's take a quick break and I got a question for you. When a buyer asks AI for a solution like yours, does your business come up? Most companies have no idea. And by the time they found out, they've already lost the deal to another company that did. HubSpot has AEO, which helps you show up in the moments when the right buyers are looking for A company like yours, before the first click, before they fill in the form, that is the moment HubSpot AEO is built for. Check out HubSpot.com, the agentic customer platform for growing businesses.
- [26:53]
Sam Parr
What did you think of Austin?
- [26:55]
Shaun Puri
Austin is a funny place.
- [26:58]
Sam Parr
Funny place.
- [27:01]
Shaun Puri
I went to my like hotel room and I walked in and housekeeping was in there. But I was surprised and I came out and I told Ben, I go, y' all got white housekeepers here.
- [27:13]
Sam Parr
I had a white housekeeper that my wife hired. And I was like, I bet you she's gonna be a drug addict. And I was right. She was a drug addict. I don't hire these guys anymore.
- [27:24]
Shaun Puri
It's like there's this great stand up bit where I forgot who it was. Like Aziz or maybe it was Hussin. I forgot who it was. Like an Indian comic was talking about, like how they made it and they were like, I'm gonna go adopt a white baby. Just bring a white baby to like events and like stunt on people. Because it's like, yeah, I adopted a white child. So I don't know. Austin's a fun place. I mean, one interesting thing is because we're in Austin, which is much more populated city, and we were just sitting in a coffee shop, basically working all the time. So many people came up that love the podcast. That was fun.
- [27:56]
Sam Parr
That's crazy, right?
- [27:57]
Shaun Puri
And then they would tell me their story, right? And it's like, oh, wow. So, you know, it's almost like you get a lot of ideas for the podcast. Just talk to these people. Like this guy came up and he's like, I'm all in on social selling, social commerce. I know those two words apart. What, like, what is it together? What is, what does that mean? And he's basically like, you know, you know, people who are making, you know, hundreds of thousands, if not millions of dollars just making TikTok videos for products and they're just getting affiliate fees, just making content. And they're not influencers, they're not famous people, but they make like the best way to sell this soap, this teeth whitener, this, you know, these leggings, this hoodie and that. They're generating, you know, 40,000amonth, 100,000amonth, you know, 200,000amonth, 400,000amonth. What platforms on TikTok and whatnot. So like there's the lot, there's like live selling that's like whatnot and TikTok and then there's like just short form video. And I mean, I'M not, I wasn't like, unfamiliar about this concept. We use it in our E commerce brand. But it's amazing just to hear the individual person story. It's like, yeah, she worked at this, like, hair salon, and then she just took the product from the hair salon and started talking about it on TikTok. She doesn't have a following, but the way TikTok works is any video, you know, it's like America's funniest on videos. Any, any video gets to have its, you know, its day on the for you page. And she realized, like, wow, if I just get good at kind of like, authentically and I use quotes because it's like, obviously not authentic, but like, they tend. They don't look dressed up. They're not in a fancy place. They're in their bedroom. They look like they're just talking informally to you. Like, they're, hey, y', all, I just want to tell you about, oh, my God. This, or like, whatever this thing is. And they're just making a killing on it. And so, you know, this guy was like, trying to build the agency around it and a podcast around it.
- [29:45]
Sam Parr
What's an example? Product soaps. You said just anything, Anything, dude.
- [29:49]
Shaun Puri
Like, I don't know if you've seen, have you, Are you, like, are you tapped into this, like, wave of what's going on?
- [29:53]
Sam Parr
No, no, no, no. So I don't, I, I, I don't know have a TikTok and I've seen whatnot, but I buy a ton of stuff off ebay. So, like, I know about, like, buying used stuff.
- [30:03]
Shaun Puri
I'm not stupid. And so I don't know what you're talking about.
- [30:09]
Sam Parr
I read it's not part of the ebay trend, right? Like, this is all new ebay.
- [30:14]
Shaun Puri
I should say ebay.
- [30:16]
Sam Parr
What I mean is social comment. Like, it's all like new products. It's not like, it's just commission based. Like, they're selling someone else's stuff and they're getting an affiliate fee. They're not selling like three without permission.
- [30:26]
Shaun Puri
So it's not like they needed to cut brand deal. Right?
- [30:29]
Sam Parr
Got it.
- [30:29]
Shaun Puri
You just grab the product from the shop and then you sell it. And then brands start and then brands can see if you move product, right, you move weight on your corner and then they start sending you free shit to try their stuff. And then you could send, you could try to sell their stuff. And if it works, it works, right? Like, and if your video is good, then the brand puts ads behind it. So, like, There was a really good podcast by our buddy Sean Frank, I think their podcast called the Operators Podcast, like an E commerce specific podcast. He did one with the CEO of Comfort. Have you heard his brand?
- [31:00]
Sam Parr
I see that guy and I see this other guy named Greg Luvecki who started a thing called Bloom, which I think is energy drinks. But I'm seeing these guys all over the place and they're using phrases that I've never heard before. Like I knew what UGC was, but like they're using it in way different phrasing. And they're also like implying that they have like tens of thousands of people making this content on their behalf. And this is a totally different foreign concept to me. And so this company, Comfort, as far as I could tell as a total outsider, went from something like zero to $500 million a year in revenue in like five years. And I went to their website. It's just like a fleece hoodie, I think, right?
- [31:35]
Shaun Puri
Yeah, super basic hoodie, but yeah, so, so they're, they're a good example of this.
- [31:41]
Sam Parr
How big did they get to?
- [31:42]
Shaun Puri
So the, the model is this, the model is you have a product. The old way of selling it was. The old way, as in the last 10 years was you run Facebook ads and you run Google Ads, and for both of those ads, you, your team makes the content. You typically will have an ad creative team in house. 1, 2, 10, 15 people. Their job is to come up with concepts. They do photo shoots, they do scripts, they do static images. Give it to the designer, the editor, you make it, you run it, you see what works. You're putting paid ads. That's what's been working. Well, there was a new game in town, and if you remember, I kind of hinted at this maybe a year or two ago where I said I invested in this company and it's gone 0 to 30 million in revenue in like a few months. It was.
- [32:26]
Sam Parr
Can you say what it was?
- [32:28]
Shaun Puri
I can't. I don't want to say the exact. So the, the brand blew up. It was in a bad way. Not the good blow up. It was a supplement brand. It was crushing it. The product was all fine, but they got banned off Amazon because they were like, like manipulating like reviews of other companies or something like that, like of other brands or something. And so Amazon was like, oh, you guys were the ones who wrote a bad review about them. Boom, shut down your ad account.
- [32:52]
Sam Parr
They were doing it. They weren't playing by the rules.
- [32:54]
Shaun Puri
Ruin the company. But, and I think I even told you at the time I go, this is growing faster than any E commerce brand I've ever seen. And you know, 0 to 30 million in a couple of months. And I think I told you I was like, I hope I can come on in a year or two and say the playbook that they use, well, the playbook is more or less out now, now, two years later, which is that what E commerce brands do is you basically gift or you know, called seeding. You seed your product out to not one, not 10, not even a hundred, but maybe thousand creators that are out there. And these creators are everyday people, non famous people. So not, not influencer, not micro influencer, not influencer person with time on their hands who has been on TikTok and reels enough to know what type of content could work. And those people will make sometimes just like you know, one video. But what, what ends up happening is that they realize, oh I should just make 34, 30 to 40 videos a month, I should make a video every day and I'll have multiple accounts and I'll post it now, you know, and so they basically rapidly test content. And so now you've got instead of having an in house team of a couple people doing 10 to 20 creative assets a month and usually just thinking inside the box because it's like, this is my job, this is what I do, I work at the company. We have a way of doing things. You're just letting the market, letting the crowd figure this out. You're crowdsourcing your creative and that's UGC means User Generated content. So you're getting in a given month 3000, 5000 different pieces of content that go out there, most of which get absolutely no views, but a few of which pop off and then, and then all of them look at you. Then you tell all the creators who are like, you know, on board, you
- [34:38]
Sam Parr
say, look at this works best, this worked.
- [34:40]
Shaun Puri
And then they all start to remix and then the hive mind gets smarter every single month and they keep trying to do it and they keep trying to sort of one up themselves. And brands like Goalies, Goalie's a gummy like vitamin brand. I don't know if you've seen their like commission structure for this. They started out with apple cider vinegar gummies and grew it to like whatever, 500 million or something in revenue and very short order. And then they got slapped on the wrist and they kind of tanked and they're coming back whatever. But like, point is they were pretty aggressive on this model. So what they were doing was as they found good creators who are good at making this content, they started incentivizing them more than the commission. So there's a default, like, commission on these platforms, right? 15%, 20%. You set your commission.
- [35:21]
Sam Parr
What's the platform?
- [35:23]
Shaun Puri
TikTok. TikTok Shop.
- [35:24]
Sam Parr
Oh, so. So. So you find all your influencers on TikTok?
- [35:28]
Shaun Puri
Usually, yeah. Wow. And. And so you. What you do is you go to those TikTok influencers. Again, sorry, not influencers. TikTok creators. And they get. They get a commission. And so again, just to describe the system, it's crowdsourced. It's way higher volume. So you're talking about thousands of pieces of content a month instead of, you know, maybe 100. You don't control it. You don't operate it. In many cases, you never even met them. They just pull. Pull your product and your shop listing, and they just decide. You just say, I'm. If you're an affiliate, use this. Use this tag so that you get paid if you sell product. Right. That's the core idea. Now what happens is, on top of that, Goalie started going crazy. So they were like, yeah, if you do $10,000, you get 15% commission. If you do $100,000, you get, you know, a trip to Miami. You do $1 million, you get $1 million in a month. You get this condo in Miami, you get this Lamborghini. They started giving away crazy shit. I'm making up the tiers, right? The math made sense for them, but they have this, like. I have this, like, one cheater that goalie was giving creators. And, like, the top thing was a condo in Miami. The next thing was a Lambo. It goes all the way down to just like, you get, like, a bracelet. You know, like, you go to Chuck E. Cheese, and there's the prize wall. And, like, you know, you end up with the shitty rubber frog. But, like, up there is, like, you know, the Nerf Blaster. And they. This is basically the model that they were doing. And so there's been several brands that. I mean, several hundreds of brands that have aggressively use this strategy. And yeah, it works. It works very well.
- [36:58]
Sam Parr
What I'm looking. I just googled it. It said that they went from zero to $4 million a month in 30 days.
- [37:03]
Shaun Puri
Oh, they got way higher than 4 million a month. Maybe they did in 30 days, but they went way high, way past that.
- [37:09]
Sam Parr
Okay, so let me ask you a bunch of questions. This is so fascinating to me. One, is this stuff profitable? So a company like that, like, that Got however big. So 4 times 12 is 36 million. So they were at least doing 36 million a month. They were probably doing hundreds of millions a month. If you're doing that amount of money, are you actually creating a valuable company?
- [37:29]
Shaun Puri
Well, you asked two different questions. Is it profitable and is it a value valuable company?
- [37:33]
Sam Parr
When I say profitable, I'm going to say cash flow positive.
- [37:35]
Shaun Puri
Should be profitable. Here's just basic math. Let's say you're giving a 20% commission. So the way to think about that is you outlaid, no cash up front. Okay. So no ad spend. This is they take the risk of making the content. If they sell, then you pay. So you pay out of the revenue, not upfront, the way that normal ads work. Right. I go to Facebook, put 10 grand in. I have no guarantee I get anything out. So with this, I only pay when they sell. I pay a fixed percentage of the revenue that they sold for. So let's say it's 20%. Well, that means my marketing spend is 20% of revenue. Now a normal E Commerce brand is spending somewhere 20 to 50%, depending on their level of aggression, what phase of the business that they're in, et cetera, et cetera. Usually at the beginning they'll run 40%, 50% aggressively to go get a big customer base. And then those customers hopefully will repeat by. And that's where the profits come from, those customers. And then, you know, over time, your ad spend as a percentage of revenue shrinks because you have all this returning revenue coming in, but at the beginning of no returning revenue. So it's, it's, it starts out pretty high. So is it profitable? Yeah, it should be profitable. I mean, it doesn't take a lot of. It doesn't take a lot to make something unprofitable. So, but, but you should be able to do this profit. Now, are these companies valuable? That's a different.
- [38:50]
Sam Parr
Hold on. When we say profit, I'm actually saying like, can the owner pay themselves a huge sum? If you're making.
- [38:56]
Shaun Puri
Yeah, yes. But it depends on when you at where, where you are in your life cycle. Year one? No. Year two? Maybe. Also no. But also could be yes, if you just decide to grow slower. Right. So it's like up to you how much you want to prioritize taking market land and like going for the opportunity.
- [39:13]
Sam Parr
Because Sean, Frank, well, always say, like, you could have a business. He's put the numbers out there. I forget exactly what he said, but it was something like $100 million a year. And like the two can are barely drawing seven figures a year.
- [39:25]
Shaun Puri
E commerce is like saying is like startups where the spectrum of outcomes ranges from everything to, you know, you can go from loser shirt to oh my God, this person is rolling in profit. I know people on all ends of that spectrum. There's operational excellence, how you're going to run. And so there's no like rule. What I'm saying though is that in some cases it's like, let's take startups for example. Startups. You're fighting gravity. Almost every startup fails. Even the ones by smart people, even the ones by smart people who work hard, who are like doing all the best practices of management, right, they'll still probably fail because building a billion dollar startup, which is usually a novel idea or disruptive company, like the venture startup game, I'm not talking about like person who starts a barbershop, I'm talking about venture startups. It's such a hard game. The gravity is that you're going to fail. E commerce is not like that. E commerce is. The gravity is you should, you should be able to succeed if you were, you know, smart and hardworking and so same thing here. Now, are these companies valuable? No, not really. Because values typically based on defensibility. And a buyer of this business doesn't know how long this channel, this tactic is going to last. And if this is what's driving all your growth, then you're going to trade at a much lower multiple.
- [40:36]
Sam Parr
This is for the folks out there who have a business that does at least $3 million a year in revenue. Because around this point, that's when you're able to look up after being heads down for years building your company and you realize two things. One, you've done something great, but you're still a long way from your final destination. And two, you look around and you realize, I am all alone. I've outrun my peers. Which means you're now making $10 million decisions alone, by yourself. And that is when mediocrity can creep in. My company, Hampton, we solved this problem by giving a room of vetted peers of other entrepreneurs who are going to hold you accountable, call you out on your nonsense and help show you the way. Because the fact is, is that there's only a tiny number of people in your town who know what you're going through and who have been there. And they're hard to find. And if you can find them, it's hard to have this explicit time, this explicit place where you sit down where the rules are clear that we are here to help each other and to be one another's board of directors. The biggest risk is not failing. You have a company and it's working. You're going to be fine. But the biggest risk is waking up 10 years from now and saying, I barely grew in business and in life. And for people like you who are ambitious, wasted potential and regret is what we want to help you to avoid. We have made so many of these groups and we have a thousand plus members. And I know this stuff actually works whether you work with Hampton or you get your own group on your own. But having a group like this, a group of people who you meet with in real life once a month, it can change your life. It changed mine and I know it will change yours. So check it out. Join Hampton.com. it seems like you could start off being a nobody company and you sort of have a get rich mentality. I do think you can. It's better to start off like thinking my brand should be amazing, my product should be amazing and that's how I should grow. And I add ads and all these tactics on top of it. But I think that some companies do start off doing these like stupid things early on and they, and they swap. They can switch. Like I don't know anything about Ridge, but like there's a world where this was like a silly dumb thing and then he switched it. I'm just hypothetically making this up. It could have switched to like, oh, this actually product is good and we are going to invest in our brand.
- [42:44]
Shaun Puri
I mean, have you seen like original athletic. Have you seen the original athletic greens?
- [42:50]
Sam Parr
No. Was it lame?
- [42:52]
Shaun Puri
This is, you know, one of the early days landing pages of athletic greens. I mean it's like this is Internet marketing. 101 Beachbody MLM infomercials, right? Dude with six pack girl Eyeingham all your vital nutrition in 30 seconds or less money back guarantee 100% satisfaction. Limited time offer. Act now giant orange arrow rush. My order is the name of the button for buying it. The world's number one superfood cocktail. Antioxidant, rich with great sweet taste. Okay, so that's like, you know, an old version of that. That's not even the original version. That's the old version. Right? And you go look at it today, right? If I go to like the AG1 website.
- [43:35]
Sam Parr
Yeah, it looks great.
- [43:36]
Shaun Puri
It looks like you have Hugh Jackman drinking from a glass vase. His daily, you know, green nutrients, right? With clinical trials and you know, blah, blah, blah, blah and like, you know, who knows who knows if this shit works or not? But, you know, yes, you're right. Like, you can absolutely start a little janky, a little move fast and break things a little. Little, you know, fake it till you make it, and then you can adapt. And you could, like, legit, you know, go, go, go. More and more legit over time. You can improve your formula, you can improve your packaging, you can improve your sales methods. You can get off one hacky sales tactic and get more diversified. Right? Like, go from there. I mean, Moyes, who did Native, I think, is one of the best examples of this. I think he's told all this publicly, so I don't think we're saying anything that's out of school here. Here's. Here's the timeline that I love. Moyes is sitting next to you in a co working space. And he's. At some point had this idea of. He looked at Etsy and saw that the number one selling product on there was a natural deodorant. And he realized, oh, wow, that's market validation. Cool. Like that contacts. A woman on there says, hey, can I take your natural deodorant? Can I put my label on there? You know, goes outside the office. There's like.
- [44:55]
Sam Parr
It was like. It was like homemade. It was like homemade ammonium. I don't. I forget the drug or the chemical. Something free. You know, what's it called?
- [45:05]
Shaun Puri
Parabens and aluminum and. Parabens.
- [45:07]
Sam Parr
Aluminum free, whatever. And. And it was like a mom and pop thing. And he was like, let's commercialize this.
- [45:13]
Shaun Puri
Yeah. So he was like, I'm gonna put my label on it. We've both seen right outside where you guys worked, there was a restaurant or something called Native that looked exactly the same with the exact same logo. Somehow that ended up to being his name and his logo. You know, he grew the thing with cheap Facebook ads and grew it like crazy and was like, packing orders himself on the kitchen table when she was like, dude, I can't make, like 10,000 bars of deodorant in my bathtub anymore. He's like, okay, like, can I buy the formula off you? And I'll move to, like, another person and figure that out. He used to put deodorant on his armpits. Run around the block. Two. Two different sticks, two different formulas. Run around the block. Have his brother smell each one and be like, which one's better? And like, that was his, like, clinical trial that he was running. And so, you know, like, you do what you got to do. If somebody asked him I remember early on, like, he told the story where somebody said, like, you're starting a deodorant company like, Moise, do you know anything about deodorant? And he goes, today, I know nothing about deodorant, but in six months, I'll know everything there is to know about deodorant. And that was true. And like, you know, ends up selling the company for a hundred million dollars to Procter and Gamble. And now it's in Target. It's like the best selling thing.
- [46:20]
Sam Parr
Probably a multi billion dollar company.
- [46:22]
Shaun Puri
Multi billions in revenue.
- [46:23]
Sam Parr
Right?
- [46:23]
Shaun Puri
Like, unbelievable, Unbelievable. Like, sort of story, right?
- [46:27]
Sam Parr
And there's a even better part where Proctor Gamble or someone was in the meeting to buy the company and he was like, well, how do you expand? He's like, well, can you put the Native logo on a shampoo bottle? And they go, yeah. I go, okay, that's what you do.
- [46:41]
Shaun Puri
You think you guys could print it on toothpaste? All right, you'll be fine. And by the way, there's. There's another great story. People should go back and listen that he. He was like, in the first 20 episodes of this podcast.
- [46:51]
Sam Parr
I'm shocked that he says some of the stuff he says. Moises, very good with words.
- [46:55]
Shaun Puri
Oh, he's super entertaining. He tells a story of how when they were trying to sell, they didn't own the trademark for Native. And he's like, shit, Proctor Gamble is not going to buy this. I don't have the trademark for my, like, consumer, you know, good. That's going to be on the shelf of Target someday. And so somebody was squatting on it. And the negotiation story of getting that trademark was great. Like, there's just so many great stories in the, in, in the. The formation of Native.
- [47:18]
Sam Parr
A lot of people don't realize this, but Moyes, now that I think about it, it is. So Moyes used to have a company called Casker or Caskers, which. Did you know about this?
- [47:28]
Shaun Puri
It's like a spirits brand, but I don't actually know what was it? Was it actually a liquor or was it a DTC shop? What was it?
- [47:34]
Sam Parr
It was basically like they would get rare whiskies and I think wines that only had limited runs and they would do drops. So it was sort of like this was like during the guilt group or guilt craze, where it was like, you know, crazy good deals, but you only have a limited amount of time to buy it. So I think it was basically like a email list of, like, wine and alcohol buyers of who like rare stuff. And then they would broker deals where they would, you know, send out an email, an email drop of like a rare whiskey. And he sold it. He sold it for. I forget how much. But he, he, you know, changed his life at the age of 30. But he has this cool blog post that, interestingly, it's actually on the Hustle, my old website, but it used to be on medium. But the first listen to the first few sentences. The Hair of a Dog is a sports bar located in Lower east side of Manhattan. Like, like most sports bars in New York. It has an ungodly number of televisions, a beer pong table, and 3.5 stars on Yelp. More importantly though, Hair of the Dog has a single dollar price rating, which is really important when your goal is to be drunk by 3pm it was October 2013. My co founder and I were in negotiations to sell Caskers, an e commerce site we founded with just one and a half years ago that sold spirits, meaning booze, not ghosts online. Negotiations had already dragged on for a few months and we were days away from our scheduled closing date. And then he goes on to like explain the story of how he sold. But is that a beautiful, like first couple sentences. That's awesome. And then he like tells. He like gives five lessons about his starting casket. He called it Birchbox for men, if you ever heard of that. But he's like, says, be frugal, be relentless. And then he says, be experimental, be careful. And he gives like all these cool tidbits about it. Last question. Can this work for B2B products? Why don't. Why do people only do this for consumers?
- [49:22]
Shaun Puri
I think, I think one of the great arbitrage is that B2B businesses don't do the proven tactics of B2C companies. So B2C companies are out there fighting for their lives with customers and marketing to try to build their brand. And B2B companies, if they simply borrowed the playbooks from B2C, not everything would work. But way more would work than doesn't work. And I think it's woefully underused and usually the skill sets.
- [49:48]
Sam Parr
A lot of people who are in
- [49:49]
Shaun Puri
B2B don't know this because they don't come from that world. People in consumer tend to stay in consumer or they go to. They go to B2B and they are so scarred they only bring over like a portion of it. But I think a lot more of it would work.
- [50:02]
Sam Parr
This turned out to be pretty cool. We were supposed to have a guest on this is a little behind the scenes. We were supposed to have a guest on something happened last minute and here we are. And it turned out to be quite fun.
- [50:12]
Shaun Puri
That whole thing was live and improvised. I'm prepared. Here we go.
- [50:15]
Sam Parr
All right. That's it. That's the pod.
- [50:17]
Shaun Puri
I feel like I can rule the world I know I could be what I want to.
- [50:22]
Sam Parr
I put my all in it like
- [50:23]
Shaun Puri
no days off on the road to hey, let's take a quick break. I want to tell you about a podcast that you could check out. It is called the Science of Scaling by Mark Roberge. He was the founding CRO of HubSpot and he's a guest lecturer at Harvard Business School. The guy's smart and he sits down every week with different sales leaders from cool companies like Klaviyo and Vanta and OpenAI. And he's asking about their strategies, their tactics, and how they're growing their companies. As, you know, head of sales or chief revenue officer, if you're looking to scale a company up. If you're a CRO or head of sales that's looking to level up in your career, I think a podcast like this could be great for for you. Listen to the Science of Scaling wherever you get your podcast.