← The Money Mondays
The Money Mondays
The Real Reason Most Restaurants Fail (He Beat the Odds Twice) | Michael Chernow🍽️EP129
00:46:25
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Foreign.
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Ladies and gentlemen, welcome to a special edition of the Money Mondays podcast. As you guys know, for the last two years, 99% of these episodes are inside of an RV motorhome. But our special guest happens to be in town from New York City. He came to la, I'm in la. Bada bing, bada boom. We end up here on this couch at the W Hotel in Hollywood, inside of the podcast studio, brought to you by the content CEO now, Mr. Michael Chernell. As you guys know, we cover three core how to make money, how to invest money, how to give away to charity. This gentleman has already exited multiple restaurants. He's building a business that I'm an investor in because I'm passionate about. One, founders have already built up companies. Two, founders that are passionate about their product. Three, someone that can actually build something that people care about. And four, someone that can actually scale it. So. So we're going to dive into all those core topics. But first, Mr. Michael Chernow, can you give a quick two minute bio so we can get straight to the money?
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Sure. Thanks for having me.
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Of course.
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My name is Michael Chernow. I am, I'm an entrepreneur. Started my career about 15 years ago opening up a restaurant called the Meatball Shop in New York City. Had no idea what I was doing, but knew that I wanted to do something and I was in the restaurant business. So I said, fuck it, I'm going to do it. Opened up the Meatball shop, it took off like crazy. Scaled it to seven stores, exited. That kept a little peace. Launched a second restaurant concept called Seymour's. Did the exact same thing, scaled it to seven restaurants and exited. That kept a little piece. And I own, I own a significant piece of both businesses, but I sit on the board and in 2019 or early 2020, I knew that I was going to open up another restaurant. The pandemic hit and as entrepreneurs, you know what we do, we pivot when we have to. And I knew that I wasn't going to open up a restaurant in the middle of the pandemic or the beginning of the pandemic. So I pivoted and created Creatures of Habit, which is a wellness brand rooted in nutritional, healthy habits. We launched with a, with, with the oatmeal that I had been eating as my first meal of the day for, at that point, 16 years. And, and that's it. We created this business. I pitched it to Gary Vaynerchuk. Gary thought it was a really cool idea. Specifically in the time that we were in, he was the first investor. He Introduced me to you. You guys came in and here we are three and a half years later, slinging lots and lots and lots of oatmeal.
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So it was interesting because, you know, Gary and I have known each other for many years. As the first time that he sent me, like, the bat signal, he was like, I really like this one. You know, obviously Gary gets zillion deals put in front of him. He only picks and chooses a few that he actually invests into and joins the board of. So for him, I took it seriously that he messaged me about it, and so I rallied the troops. We obviously did a round with you invest into the company, and now you've just been scaling and scaling and scaling. And what I like best is, like, your passion for the product. You mentioned you've been eating it for 16 years. That's really rare for an entrepreneur to actually be that passionate about their core product. And that was why I jumped. One, because it was Gary Vee, obviously. But two, because you really care about it. Where did that come from? Why is oatmeal in the morning so important?
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You get one day to put numbers on the board. What happens yesterday is long gone, and tomorrow is not necessarily guaranteed. So how you start your day is ultimately going to paint a picture, typically, of what the rest of the day is going to look like. Human beings need food to survive. It is one of the most intimate relationships we have, and it's also one of the most difficult relationships we have. And I actually, my story is, you know, I spent 10 years of my life in addiction. And I made a decision when I was 23 years old, a little over 20 years ago, to get sober. When I got sober, I was introduced to this world of wellness. And it wasn't called wellness 20 years ago, but it was basically. I was introduced to a guy who basically took me by the back of my neck and was like, I am going to show you a different way. And he introduced me to nutrition. And for me, I needed a win. Like, I just needed a win. I had no idea where that win was going to come from, but it came in the form of nutrition and fitness. That's how I was able to control my wins. There's very few wins you can control on a daily basis, right? Like, we all know, big wins, take an army. And if you can figure out a few little wins to kick your day off with, it just builds confidence. Confidence builds courage, and that's how I've built my life. So I just knew that when this guy told me to eat Oatmeal in the morning. I. I never thought it would be a business, but I just knew that I needed a little win in the morning, and a healthy, satiating meal was what that did for me, and it came in the form of oatmeal, so I just stuck with it. And the fact of the matter is, the business is called Creatures of Habit, with a K. It's called Creatures of Habit because when we find something that works over and over and over again, you stick with it, and it essentially creates freedom in your life. I never have to think about what I put into my body in the morning, ever. I don't. It's like, people spend time thinking about breakfast. People spend time thinking about how I'm going to get a bunch of protein into my diet. People spend time thinking about a healthy meal, like, what do I eat in the morning? I just never think about that. And now there's thousands of people that are, you know, subscribed to this product that also just never think about what they're going to put. Oh, my gosh. Hey, guys, I'm on a podcast. Love you. I'll call you back. Sorry, it's my kids.
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You can FaceTime them in.
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But I, you know, when I was thinking about what was the next thing, it literally just popped up for me. I was like, authenticity is. Authenticity and story is ultimately what. What creates community and business, right? Like, community is what carries a lot of you. Like, your whole entire business is built on a community of people that look to you and follow you for years. And so I just knew that I can create a community around this. And that's why oatmeal was like what.
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We did, you know, so pre oatmeal, you open up seven restaurants and seven restaurants again. There's this thing in people's minds that 90% of restaurants fail, especially the first location. How did you get from past that first location to number two, to get up to three, and then eventually get up to seven twice?
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Again, I have to bring it back to authenticity, you know, Like, I grew up working in restaurants, and I. You know, when it. When it came time for me to do it, there was. I had no fear because I was so passionate about what we were doing, and I knew that I was going to be able to tell a story when people walked into the restaurant. And of course, right, like, there is a little bit of luck involved, right? Timing, luck. Like, things like that are real. And the time that we were in, it was coming out of the pit of a recession. Daniel, my partner, and I were like, dude, we have to create a recession proof business. So we knew that if we came out the gate with something unique, fun, almost like a little nostalgic to evoke some emotion and inexpensive, we had something, we had a story to tell and we hired a publicist. Publicist really like sat with us, understood the story, was able to tell the story. And, and I learned very quickly that like, if you're doing it for money, if you're doing, if money is the, is the, is the primary goal, chances are you're going to fail. Most people that open up restaurants are like, a, they want to, they think it's cool, right? Like, they're like, I want to be a part of this cool thing. B, they think restaurants make money. They fucking don't make money if you don't. If you're not like insanely diligent about. The margin is so slim in the restaurant world. Most restaurants fail because people don't know how to be diligent about a P and L in a restaurant. And so for us, you know, we had a story to tell and the story got told really well and the media loved it. And you know, we projected to do a million dollars in that restaurant year one. And we did 4 million.
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4 million out of one restaurant out.
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Of 4 million out of a 36 seat restaurant with a $17 check average.
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What?
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It was insane. And we paid our investors back in six months. And you know, there were lines like, I'm not, I'm not exaggerating what I'm telling you. The day we opened the meatball shop, there was 250 people standing outside of the restaurant. It went to the corner of, of of Stanton street and Allen, all the way to the corner of Rivington Street. It basically wrapped a full city block and New York City block. A New York City block. And, and that line just didn't slow down. You know, it didn't slow down. And, and we were doing it because we were passionate. You said to kick off the podcast. Like you invest in entrepreneurs that are passionate about what they do and you know, I can't do something that I'm not passionate about, but when I'm passionate about something, I can't do anything else.
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Wow.
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So that was kind of it. You know, we, one of the initial investors, like, he was like, oh my God, you guys have paid back the full investment. He was like, boom, here's three and a half million bucks. Like, go open up stores and you know, just tell me what you need. We'll draw it down and and so Daniel and I just kind of like hit the ground running. And we went out, we. We opened up a store in the West Village. Then we opened up a store in Williamsburg, Brooklyn. Then we opened up a store in Chelsea. Then we opened up a store on the Upper west side. Then we opened up a store on the Upper east side. And then we opened up a store on 53rd street and 9th Ave. And, you know, we were just like, you know, this is a wave. And we were young and hungry, and the two of us just went hard, learned an enormous amount. Like, I lost millions of dollars in that deal. Millions and millions of bucks. Billion. Because the two of us didn't know what we were doing. And Meatball Shop is still around, but we had a hard offer from a really, really legit private equity firm that wanted to take Meatball Shop global. And we thought that we didn't need them.
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Yeah, we can do it. We got this.
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And so I learned a lot. But what I ended up doing was I sold a bunch of my equity after that deal didn't happen because I just knew that there was. There was going to be friction there because I wanted to get that deal done, and I couldn't convince Dan and the board that that deal needed to be done. And so I ended up selling equity about a year later for, unfortunately, a fraction. But, I mean, I still did well for my first business. And then I very quickly opened up the second concept, and I knew that I was able to make meatballs cool. I said I was going to do the same thing with sustainable seafood. I was going to take sustainable seafood. And economically, for me, you know, you think of a seafood restaurant, what do you think of salmon, tuna, halibut, cod, lobster? Right. Like, that's what you think of in a seafood restaurant. I said, I'm going to bring super underutilized fish to the New York City market. That swims local because I found out that these fishermen on the east coast were catching all these underutilized species of fish and then sending them to China and the UK for, like, pennies a pound. And I was like, well, if I can develop relationships with them, these fish are delicious. They're just. They just don't have a marketing campaign behind them, you know, So I can. I can buy this fish for a dollar, $2 a pound, whereas other people are paying 18 to $27 for salmon or tuna. And I can dress them up, I can put them in fish tacos. I can put a really cool brand around it, just like I do with, you know, like this is. This is an oatmeal, dude. This is oatmeal with protein, right? But it's about a brand. It's about a feeling. It's about an emotion that you create when somebody interacts with it for the first time. And so I took these underutilized species of fish that I was paying $1.50 a pound for and created a really amazing atmosphere and a super awesome experience for people. And boom, we opened up, and we were the number one restaurant in New York City for nine months In New York Magazine, it just went bomb bonkers. And I had no partners, but a guy that was a mentor of mine who was running the company Le Pen Couturienne. You know that brand, there's thousands of them around the country. He. He personally opened up over a thousand stores. So he was a guy that I definitely wanted to get close to early on in my career. And he came to the opening night of Seymour's and he experienced it for the first time. And that night, he wrote me an email and said, you came into my office about eight months ago with a back of a napkin idea. The menu, the experience. You told me exactly what it was going to be. And I have never met somebody in my career of restaurants that explained a concept and then did exactly what they said they were going to do. And he was like, I want to leave Lepenco Tinian and help you scale this thing.
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Whoa.
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And I was like, obviously the guy, you know, this guy was like a guy that. I was like, this is the guy, right? But I also knew that he was 15 years older than me. He had opened up about 996 restaurants, more than I had. And if he were to come work with me, he would have to be my boss, right? And I just wasn't ready for that yet. So I said, jay, I really appreciate it. Let me get my feet in the sand and, like, figure out what this brand is and understand, like, what the. What the metrics have to be in order to scale. Because ultimately, if you come on, we're going to scale this thing. Let me just figure this shit out on my own first. And. And I'll. I'll circle back with you in a couple of months to, like, let you know where I'm at. And he just kept knocking on the door. He would come to dinner once or twice a week, bring in other, you know, other big wigs in the industry to show them what I had done. And about seven, eight months, and, you know, he showed up with like, seven million bucks and. And Was like, dude, I really want to do this with you. I've got a team that is ready to just invest in it. And I said to him, look, man, if you come in, I will have to take the president seat. You will have to take the CEO seat. And if we can scale this thing to eight figures over the next three to five years, I would want you to buy my equity out. You can take it from 6 to 600. I would want to mitigate some risk and then create another brand, because that's what I love to do. And he was, like, done. And so that's what we did. Exactly. To the T. And I sold him a bunch of equity in 2019. And, you know, I understand how to open up restaurants. Like, that is something that I figured out how to do. I figured out how to create a brand that resonates with people in the world of restaurants, which is one of the hardest industries, because everybody gets into the business thinking that it's cool to own a restaurant. The fact is, is that it's really hard because I always explain it like this. You walk into your favorite retail store for clothes, right? You want to go buy a pair of jeans. You know you're gonna walk in there and spend 160 bucks, right? You walk in, maybe somebody greets you at the door, maybe they don't. But you know that you're going in for the jeans. You walk over to the rack, you grab your pair of jeans, you say, hey, where can I? You know, is there a fitting room? You walk over to the fitting room. Somebody takes you to the fitting room. So you interact definitely with at least one person there. You try on the jeans, you like the jeans, you bring them over to the cashier, you pay for the jeans, and you leave. So you've had two interactions for $160. Check in a restaurant. You know exactly what you want. You're coming for your favorite dish. But you get greeted by a host. Host takes you to a table. Busboy brings you water. Server walks over to your table, takes your order. Server puts the order in, sends it over to the bar. Two bartenders are behind the bar. That's five. Server comes back to your table, takes your food order, sends it to the kitchen. That's five people in the kitchen. Ten people. You eat your food. Your food gets sent down to the dishwasher. Three more people, 13 people. There's two managers on the floor, one in the front, one in the back. Fifteen people are involved in that same hundred and sixty dollars transaction. That's the difference between the restaurant and most other businesses, it takes an army of people to pull it off. And so it's a human capital business, and human capital is, like, the hardest thing to manage.
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So a few years from now, you sell Creatures of habit for $145 million. Would you get back into the restaurant game?
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That is a great question. I love the restaurant business, and I think now that I've moved out of. I've actually moved out of New York City, and I live in a really beautiful place in upstate New York. There's a lot of people like me that have actually vacated the city after, you know, when the pandemic hit. And so the area is kind of littered with lots of really cool, creative people that wanted to get out of the city, but there's just not a place that is the. The place to eat there. There's a lot of cool, great restaurants, a lot of chefs have come up, but there's not, like, the spot. And so, chances are, yes, I. My superpower is connecting with human beings at scale. It is the. It is what I do best. It comes absolutely naturally to me. I do not have to work at it. I love it. It wakes me up in the morning. Like, what drives me is meeting people and creating environments where people feel stoked about themselves and life. And I know that that is, like, the best place for that. The best place to do that is in a restaurant, you know, and so chances are probably. But, yeah, I mean, this is. The Creatures of Habit right now came at the perfect time in my life. It really. Because it's given me an opportunity. My real story, you know, coming. You know, I wasn't able to really tell my story of coming out of adversity and, you know, building a. Building a life based on wellness. And then, you know, everything that I've created in my life today is only because I've committed to this, like, life of better. And so this business has allowed me to tell that story, which has given me a bit of a platform to do that, you know.
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So why is it important to invest so much into brand? You have all these different colorways, different styles, graphics that's expensive to come up with the feel and look of a brand. Why is it important to invest so much into branding?
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You know, the truth is, is that first impressions are important. They're important. And being able to, like, fabric is not as important as creating inexperience. And so typically, you know, you're. The brands we all know and love evoke feeling. They evoke feeling. And that's why you want to participate in it, right? Like Nike, Apple, they all have created this ability to like, make you feel a certain way about a pair of sneakers, about a phone. And in my opinion, you know, brand is. Brand and culture kind of stand together and as sort of the pathway to success in business. And so I just know inherently, I think also maybe growing up in New York City and being in the epicenter of like real sort of modern culture, as a kid, seeing a lot of stuff, it was all brand. Brand is what moves people, Brand is what moves needles. And so I just, every time I've created a business, brand has been sort of where I start. I start with brand and then kind of build everything underneath that.
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So you have a passion for an industry that has multi, multi, multi, multibillion dollar players, right? You're up against Quaker Oats and some of the most humongous companies on the planet that own the shelf space. They own our minds. It's called top of mind awareness. Like, how do you fight versus the 800 pound gorilla like Quakeroats?
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They don't have the time to think about community. They just don't. And so they, I'm sure they know about us, of course. Poking the bear. Yeah, I'm sure they know about us. And they would much rather have guys like me who are just like, like ferociously passionate about community. Do it, build it to a place where it's viable and then knock on the door and say, yeah, we want you. And so I'm not concerned about, like, you know, I had a meeting early on in my entrepreneurial career with a guy named Ron Shaikh, who is the founder of Aubon Pen and now Panera Bread. And I sat down with him at one of the meatball shops. And in the meat, like when we started the thing, there was, within the first three years, I mean, there was hundreds of meatball shop knockoffs around the globe. The Wall Street Journal wrote a huge piece about it. Like, these two guys started this restaurant in New York and there's meatball restaurants everywhere now. And I said to Ron, as this was happening probably like a year and a half in, I was like, how do we think about the competition? And he fucking flipped. He was like, competition? The second you spend thinking about your competition is a second you're not spending thinking about your business. Fuck the competition. Do what you're doing. Keep pushing forward. Don't waste your energy thinking about that, because if they're going to get you, they're going to get you. You got to spend all of your Time focused on what you're doing. And, you know, that I think was massive for me in my career just to be. Just to say, you know what, man? Like, do it the. Do it to the absolute best. Put everything you've got into this thing and the big guys will take note, the big guys will take note and then they'll want a piece, you know.
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So when you're first starting up a brand and you want to go get the dream investor like Gary Vee could be number one really for most entrepreneurs is what they want as a most strategic investor that you could get, right? Someone that has humongous social media following, humongous access to the planet, has a ton of data because he has like 2,800 employees within his own vaynermedia. Like, that is pretty much the one for an entrepreneur. But he's got hundreds of deals pitched to him and hundreds of friends and acquaintance, thousands of acquaintances. Like, how do you stand out where he actually wants to put his name on something like this and get behind it in some fashion with his friends, his circle, his social, et cetera.
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I'm going to ask you a question, putting Gary Vee aside, like, why did you invest in creatures of habit?
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You already had exit, so that was important to me because it reduces my risk that someone can build something to exit. And you did it twice. So that's a big deal for me. The, the cool factor, right? Like, you have it. You as the entrepreneur, founder, you are easily marketable, you are easily talked about. I can proudly message people and feel confident that you're going to go try to build this thing. And if it doesn't work out, I feel confident that I picked the right person, right? I picked the right horse to bet on. Because you've already done it. You like this thing, you've been eating it for many, many years. Like, everything about it has what I call the checklist. And the checklist to me is kind of like the four things I mentioned earlier, the founder. Number one, do I believe that this person cares? Right? Number two, do other people care? And typically I don't raise money or invest in a company that doesn't have sales. Typically I have to do 2 million to 20 million revenue. We raised $56 million the last three years only for companies doing 2 million 20 million. You were the exception. You were just getting started, but it's you. And I believed in you and you had the previous exits and you had some interesting characters behind you already. And so we haven't made an exception since, by the way, not once besides you three, can this product sell in the wild when you're not there? Can this product sell on a shelf or on a website or on social media? When the founders executive staff someone you know, the cheerleaders are not explaining what it is, can it sell in the wild? And then four is, can you back it up? Meaning can you explain to my CEO, my accountant, my lawyer, my advisors why the things that you say are true? Can you back up what you're saying? I'm going to build this. I'm going to design this. That's great. Let's talk. Can you prove it to my lawyer, accountant, my CEO, and my advisor? And you had all the things across the board fast. Like, that whole scenario was fast. Gary told me about it. I talked to you, we became friends. I asked some questions. I asked for a deck. Bada bing, bada boom. Everything about it was fast. And so my decision came from those four elements. But ultimately, I literally have never before, and I don't have any plans to do it after. Still. I raised money for 17 companies in a row. I've never considered when people message me that they were doing less than 2 million, it's not an option. And so you had all the IT factors on the checklist, and then you did back it up, and then you did scale a company. You are doing millions and millions of dollars in sales. You did it. And so to me, I'm proud about it. Whether it doesn't work out becomes humongous, takes longer. I don't care. I made a bet on the person that cared.
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I think. I think, first of all, thank you for that. I think for anybody that's listening, that is either an emerging entrepreneur or someone that's just looking to. That's not an entrepreneur, but just understand more about the business. I would just say 10 out of 10 investors that I've been lucky enough to work with over the years invest in me. Way before, like most savvy investors know, you invest in a restaurant, you piss your money away. Most of them, right? So if there's not a strong person behind it that they believe will. Will die on the Hill, like, I think that is what Gary knows about me. Because one of the first times I met Gary, he immediately had me on the AskGaryVee show. It was like I came into the office. We were. I had a sneaky way of getting to Gary. He had launched Empathy wines. I had 12, 13 restaurants in New York City. It was a D2C business. I was like, dude, I'm a New York City guy. You're a New Jersey guy. Like, I got a bunch of restaurants. You know, my restaurants. Let me be the one guy to sell empathy in New York at retail, you know? And he, like, he fucking shot me a DM right back. Like, get your ass over to the office. I go to the office. We immediately hit it off. He's like, tyler, boom, podcast drock. Let's go. And that was it. And we just. We just did it. And that's how our relationship kicked off. And so I think what Gary saw is what I have been lucky enough to attract in other investors like you, which is, hey, I'm not. I'm not the smartest guy at the table. I'm not the guy that's going to go build you out. You know, all this, all the models to tell you exactly what this business is going to do on a P and L for the next four years. But what I do know about a good entrepreneur is I might not have all the answers personally, but you bet your fucking ass I am getting you those answers. I am going to get you those answers expeditiously. Like, I'm really good at getting the answers. And I also. I'm relentless. Like, I will not most people quit. Like, 99.9% of the people quit when it gets tough, because it always gets tough. Like, there are. How many. How many times in your career have you been like, shit, this is every day. This is. This is not looking so good, right? Like, we're going to. We got to figure this out now, right?
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Even when everything's great and you're scaling, things are breaking, right?
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And so I've just, you know, I think, you know, some of the most, you know, the necessary components of entrepreneurship is like, insanely high threshold for stress, like, abnormally high, and a relentless mindset. And, you know, I'm going to die on the hill. Like, that's it. It's like there's. It's not a negotiation. It's like, no matter what comes down the pipe, you figure it out. And hopefully you're able to figure it out with the right people around. You surround yourself with the right people. And so I think that's what Gary saw that I. He just. He kind of just saw the guy that was going to do that, you know, so.
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B
Walk us through creatures of habit. Now, it's gone through its iterations. You've perfected it, and you're always going to keep adding features and products and things to it. Walk us through where does it sit now and what's the plan? Where's it going?
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So creatures of habit is, you know, we'll do roughly five to six, five and a half million bucks this year. In our third full year of business, 70% of that revenue is driven through subscription. So that was the goal, right? We wanted to get people excited about the product, try it, and then subscribe. And so we made that super easy for people to do. I think, you know, getting. It's called a slippery funnel, right? Like you get people in and then it's just really easy to get them to the, to the goal, which is to subscribe. And so now, you know, our business is really sort of. It's, it's, it's sustained. It could be self sustaining if we weren't so focused on new customers. So now the goal is what we're doing. We're doing something really interesting, which I told you about a couple of weeks ago ago. You know, I'm big on community. I'm huge on community. And every business that I've built to date has been driven and held and supported by the community that participates. And so I was thinking about, like, what is, like, the coolest thing I can do with community? And I was like, I had heard of crowdfunding, but I, like, never thought of crowdfunding. And then I just started doing research on crowdfunding and I, like, found out, like, brands like Liquid Deaths did crowdfunding and like big brands. And the reason why they do it is because they have amazing communities. They have amazing communities that love what they're doing. And so I was like, you know what? Instead of going back to you guys and saying, hey, like, we're going to go raise a bunch of money, why don't I allow the community to become owners and creatures of habit, like, give the whole. The community that love this stuff that, like, I mean, if you knew the conversations that I've had with customers, I spent a lot of my time calling customers. Like, that is where I think my time is almost best spent. I literally will open up my computer three to five days, three days a week, two to three hours a day, and just go down the list of people that have ordered and I call them and I'm like, hey, I'm Michael. I'm the founder of the company. I just wanted to first of all, introduce myself. Second of all, thank you. Like, thank you for your 44th order of meal one.
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B
Right.
- [31:58]
A
You know, thank you for your second order of meal one. I'd love to hear about your experience. So I get data from, like, people that have ordered since day one and people that just made their first order and connecting with people that way. And like the stories that I've heard, I mean I'm telling you that I. And, and it's people that are, you know, fired up. CrossFit athletes that found it at their gym to like 65 year old men and women who, someone told them about it and like got them off their statins. Like literal stories like that where people are like, yeah, like I started my wellness journey. I, I spoke to a guy who was like 65 years old, he owns a casting warehouse in New England. And he was like, yeah, some kid that works for me came into the office, came into the warehouse eating this oatmeal and, and knew that I was dealing with some high cholesterol heart issues and came up to me one day and was like, hey, you should just try this oatmeal. Like this could be something that you should be eating in the morning. Look at me, I'm in great shape. This is what I have every day. And he started eating meal one. And that literally kicked off a complete new journey for this guy. He lost over 100 pounds, he's off his statins and his cholesterol was at like 280. He told me his cholesterol is like at a 170. And this guy like fucking brought me to tears, man. You know, and so I said, look, you know, the community has spoken. They love this stuff. Let's open up creatures of habit to the community and allow them to invest and be an owner with me and let's build it together. You said $145 million exit, like that's the plan. Somewhere between 145 and 150 million. If I can get the community, if I can not only have the community stoked about it, using it every single day, like allowing them to make better decisions in the morning, changing their lives. Like let's make them some money too, you know. So we're kicking off a crowdfund and you know, we're doing it on StartEngine. So anybody listening? If they want to check it out, you can go to StartEngine and check out creatures of habit with a K and you'll learn about it there. But you know this like it's not when we sell it for, or if we sell it for like we are going to sell the company for somewhere between 150 and 200 maybe more million bucks. And I want to bring the community along with us, you know, so there's.
- [34:26]
B
A Company that we raised capital for the year after you. And literally yesterday they did a round. We raised them 4 million out of 30. They raised 30 million at a 135, 135 million yesterday. And wired us money at Elevator syndicate today like 6 hours ago through a crowdfund, through the Elevator Syndicate, through the round that we did for another food and beverage brand. And it just happened this literally six hours ago. And well, the press release will come out shortly, but the wires literally happened six hours ago.
- [34:59]
A
Wow.
- [34:59]
B
And so when I throw out the number of 145 million, well, 135 million round literally happened today from a brand in our same ecosystem. And so it's very real that you continue building the way that you're building it. And people, by the way, you'll get even higher valuation because it's subscription. Like you get a different multiple for a business when you have subscription, as you know. And so you can, you keep going at the rate you're going. It's really compelling because those valuations are much different than a traditional CPG brand or a food and beverage brand. Okay, take off the making money and investing money hat. Put on the charity hat. Why do you think that brands should have some type of charity element, whether it's public facing or just within their staff to get their employees behind it?
- [35:41]
A
I think mission moves mountains. And I, like, as we spoke about a little bit before, I've got a real history with addiction. Our country is experiencing the worst addiction epidemic of all time. People, hundreds of thousands of people are dying every year. It is the number one, it is the number one cause of death in people 18 to 45 years old in this country. Drug overdose. And it's just got worse and worse. And so in my opinion, every business that I've ever launched has a responsibility component. I find the greatest gratification in helping others. And that could be helping people within the company on the staff. Right. That could be just helping other people in my life. But when I'm building a business that's generating revenue and it gives me an opportunity or gives, you know, a business an opportunity to give back a piece of, to, to actually like save someone's life. Save someone's life. I mean, how can you, how can that not be the greatest thing on the planet? You. To save someone's life. So, creatures of habit, every year we do an event called Will Wear the Weight, which is, which is our charity event. And we partner with GoRuck, which is a rucking company that I love. Our foundation partner is The Release Recovery Foundation. And we couple hundred people fly from all over the country that are passionate about this. And we meet in New York City, we put on weight vests, and it's called we'll wear the weight because for that day, we're wearing the weight. For those who cannot get out of their own way with addiction, we're taking the weight right off of them. We're putting it on and we raise money, and we've raised close to $200,000 to get addicts who are struggling that don't have the means for treatment, but want treatment into treatment. We pay for their whole entire journey. We fly them to the treatment facility, we pay for their treatment, we pay for their post treatment, we pay for their, like, whatever they need to get on the right path. And we've done that with a number of addicts. And I can honestly say, like, that in itself for me is creatures of habit success. Right? Like you said, right. Like, this business will not fail. But in the event another crazy catastrophic things happens in the country, in all business, you know, shit goes down, I'm successful. Creatures of habit is successful. We have literally saved lives. And so that, in my opinion, is like, if you're not doing something like that, feeding people, figuring out a way to use the money that you've generated through a business that you're passionate about to help be of service towards others, you're missing. You're missing a really big opportunity and component of what I believe business is a big responsibility in business. So, you know, I think it's just important. And I think guys like you and people like, you know, probably all of the people that you, you. You raise money with, look at that. And they're like, hey, like, these guys are going to do awesome business. But, like, what are the. What else are they doing? Is there a component where they're. Where they're taking off their business hat and participating in real community?
- [39:19]
B
You know, there's only one question that I ask on every single episode, and I've never gotten the same answer before. I'm not gonna get it right now either. One day, you finally sold the company for 145 million. You do another chain, you do a restaurant chain, another couple hundred million dollars, and eventually you've got hundreds of millions of dollars, but unfortunately, you pass away. What percentage of those hundreds of millions of dollars do you leave to those children?
- [39:46]
A
My children. Oof. That's a great question. Hmm. Well, I guess I'm gonna try to make this not a long winded answer. But I think I have to think about where I. How I ended up in the seat that I'm in today. I got nothing. I didn't get any help from anyone. That gave me grit, that gave me drive, that made me really think, that made me triple, quadruple down on my God given gift of emotional intelligence. And I would not have had that had I been given a silver platter. And so I haven't really thought of that. What am I going to give my kids when it all goes down? But they're definitely going to get something. My dream and my goal would be that they see their dad and how their dad creates and how their dad builds, that they do the same thing. And you asked me, are you going to open up a restaurant after you sell? Creatures of habit and the whole. Honestly, secretly, the main reason why I would want to open up a restaurant is to put my kids to work in a restaurant. Because I know working in a restaurant was one of the greatest things that's ever happened to me. I wish I had a great answer for you. I wish I could. You know, I'm not the guy that's gonna be like, they're not getting anything. It's all going to charity, because I don't know if I believe in that. I think that's incredible for people to do that. But I just, I do think that, you know, my kids will participate in the money that I've earned. Damn, that's such a hard one. Do you know what you would do now that you're a father?
- [41:54]
B
My answer has been evolving mostly because I get to hear 130 episodes of answers. I've heard every answer from zero to all of it to everything in between. I would definitely have a structure so that I'm not handing Ariana hundreds of millions of dollars in one shot, because that's cuckoo. But I would like to build her into someone that I trust to run it.
- [42:21]
A
Yeah, I think, you know, it's hard to say what percentage of that money I would give. And I. And I. And I'm sure, right, like 10 years ago, I thought, you know, an old farmhouse in upstate New York was awesome. I now have an old farmhouse in upstate New York. And I can't wait to be in a more modern house. Right. Like, shit changes, you know, like our whole, like, how we see through our eyes, how we hear things. It just changes as we evolve as humans. And so right now, probably I would imagine that I am going to give them a chunk of cash that they're going to have to earn into as they as they get older and there's going to be, there is definitely writing and very, very clear directions stipulations that if, if either one of those kids follows my path of addiction, there's zero money going anywhere. So there's going to have to be some sort of a steps and procedures, a standard operating procedure for them to receive money. And it's, and like you said, it's not going to be like yeah, but I would imagine that, you know, I pray to God that my wife outlives me. I'm gonna be like, you deal with this. But man, ask me in a couple years after we sell Creatures of Habit.
- [43:39]
B
You know, do you have any idea what she would say? 0 to 100 now with the 0.
- [43:45]
A
To 100%, she would probably, the way, the way my wife is like, I think she'd probably give it all. She'd probably give it all. Yeah, she probably give, she probably, she, you know, I mean I think that she would probably, knowing her, she'd want to like give a bunch of charity to like equestrian, you know, like therapy because she's big into that probably to you know, there I, I, I, I imagine that over the course of my career I'm going to build facilities for addicts. I know that's going to happen for me that I'm going to be able to build really amazing facilities for addicts to find recovery. And so I would imagine that's probably going to be 50% of my, of my wealth and then chances are the family will as right now, family gets the rest.
- [44:40]
B
50. 50. There we go. All right, so tell us where can people find you on social media? Where can they find creature habit? Tell us everything.
- [44:46]
A
Yeah, so you can find creatures of habit@creaturesofhabit.com It's Creatures of habit with a K. And just so you know what's in this product? It is a high protein overnight oatmeal, 30 grams of gluten and glyphosate free oats. Excuse me? Gluten and glyphosate free oats. 30 grams of plant based protein. Chia seeds, flax seeds, pumpkin seeds for omega 3 fatty acids, pink Himalayan salt for, for electrolytes. There's also a probiotic, digestive enzymes and vitamin D3 in there. It's super easy to make in 30 seconds. It changes, it really does change your morning. And then we make this creature sleep which is a sleep support hot chocolate. So you start your day with meal one, you finish your with hot chocolate. That helps you wind down and get good restful. Sleep. So creatures of habit.com also online on social media, Reechers of habit. Remember, it's with a K. And then you can follow along my journey. Ichael chernow everywhere. And this was super fun.
- [45:38]
B
All right, guys, as you know, the core reason for the Money Mondays is to have these discussions with your friends, family and followers. We grew up thinking it's rude to talk about money. I think that's ridiculous. We have to have discussions about money because it's real life. Taxes, accounting, loans, borrowing money, leases, should I rent? Should I buy this? Like, we don't know if we don't talk about it. And so many times we're in massive credit card debt or massive situations because someone didn't talk to us about it because it was like, oh, you can't say that. You can't ask about salaries, you can't ask about money. You can't ask about bills, things like that. So have the discussion with your friends, family and followers. Follow Michael Turnout across social media. Check out Creatures of Habit on social media and creaturehabit.com and we'll see you guys next Monday onmoneymondays.com.