i don't know if you know this but warren buffett made like 97 of his wealth after the age of 55. um so so it all happens very slowly he started in his 20s or whatever and he wasn't really well known until the 90s and the same thing happened with us where we didn't really talk about what we did people would meet us and they'd be like oh you're some schmoes from victoria who owns some digital agency you seem to own all these really boring businesses you know whatever and so it requires being kind of underestimated and dismissed and playing a very boring game while watching everyone else go and


make you know tens of millions billions of dollars taking risk in startups meanwhile we're just going how do we take you know a hundred grand and make 10 15 20k a year on that money and just keep compounding and so basically the mental model was take 70 of our profits and constantly reinvest take the other 30 live a nice life and that number went down over time and yeah you do that for 17 years and it turns into a you know a big number [Music] and something that you wanted to talk about today was whether it's better to own 100 of something and bootstrap it or to give up equity for to partners


whether that's for sweat equity or money or money but you uh we were talking about that and i asked my audience companies that were bootstrapped and quite big and there's a few that are doing billions a year in revenue and i noticed two commonalities one a lot of the things that were bootstrapped to be really big they were things that were easy to take bake loans against so it's a lot of restaurant stuff so maybe they took like loans against some equipment or they took loans against a building they owned things like that the second thing was i've noticed that there's a lot of agencies that were bootstrapped and


became pretty substantial size agencies or agencies or service-based businesses so like recruiting uh companies um um it services things like that where it's basically you bill out people's time for 100 and you charge 300 or something like that well think about it you don't need especially if you're a young person and you can cut you got enough money to live for a year you can go and start an agency because at the end of the day it's you go and sell you win a contract as soon as you win the contract you go and find a developer or you do the work yourself and then before you know it you're cash flowing and you're always


able to hire people just in time for the work and so at the end of the day there's really no burn and it's very capital efficient and you don't need uh you don't even need an office anymore i mean we we almost never had an office and oh you know over time we had you know a couple small ones or whatever but the big [ __ ] up a lot of these big agencies make is they start starting like these fancy humongous five million dollar offices in new york and san francisco and spain and you know whatever um they're they're great businesses if you run them right and how many people work at meta lab now


i think it's about 170. how often do you say to yourself i'm not sure if the the headache is the headache of having 170 employees is always worth it well it's very abstracted for me right i haven't been in the business for five or six years and the way we run tiny now is that we meet with the ceo once a year and otherwise they check in whenever they need help with anything and so when i was running it like first it's exhilarating running an agency is awesome when you're starting out you get a seat at the table and all these places you don't deserve to be right i was like a 22 year old pip squeak and i was


meeting the founders of pinterest and slack and you know all these amazing places and they were asking me for my opinion right it was it was crazy but at a certain point you get so exhausted you're making a good amount of money you don't want to get on a plane to san francisco every second day to go and sell and at that point you know it starts to become a much more intensive business and for me personally i don't enjoy running businesses after about 15 or 20 people and so once i hit that point i knew i needed to transition to a ceo so when we were in the document you say the pros and cons of bootstrapping and


owning 100 what do you have under those well i mean i think that i've changed my opinion a lot on this like when i first started i was like a jason freed david hannemeyer hanson acolyte like 100 every business should be bootstrapped i now think that's crazy and stupid and i think there's certain businesses where it's insane not to raise money right like if you have an opportunity to grow your business it's like the analogy i always use is if you own a bakery and there's a line out the door and you have a single oven and you need to buy three more ovens but you don't have the money


and in order to service the people in the line you need to buy two more ovens it's crazy not to raise money or go get debt or something i just was never in that position and i think you know owning a hundred percent or owning majority in your business it's like a dictatorship and dictatorships can be very good uh like lee kuan yew from singapore or they can go terribly like kim jong-un right and the question is what's your personality and what's going to work for you i mean you can move insanely fast there's no board there's no committee you don't owe anyone anything you don't have an outcome you know you don't have to ipo


you don't have to sell and you have total integrity like when chris and i buy a business we can look people in the eye and be like we're cutting a check like this is us right that's very different on the cons i mean you're on an island you don't have anyone to really who's aligned and cares and can tell you you're being an idiot and so you can really drive your business off the rails and then you also think in a limited way i mean i know so many entrepreneurs who could 10x their business but they're so addicted to their dividends or they're conservative and so they don't so what about this transformation


[Music] i raised money for our podcasting software company supercast i'm going to raise money for our news business like there are situations where it's logical [Music] all right and then i forgot to tell you this but this is the most important thing i can't believe we didn't talk about this earlier to be honest with you because if you're listening to this and you like what you're hearing right now and you haven't gone and subscribed to the my first million podcast wherever you get your podcast then that's the thing you've got to do


there's nothing more important than doing that right now and don't do it because i said to do it do it because you want to do it do it because that's who you are what about that conversation of employees employees saying they want equity and you don't get well it's just there's certain businesses there's certain businesses where we do and there's certain ones where we don't right and the big question is what i always say to a to an employee is equal risk equal reward and if the business is going to sell at


some point or we think it can ipo great we'll love to talk about equity but there's a cost to it right if you want to make 300 grand a year and you don't want to give up any of that 300 grand in order to get stock options or buy equity then it doesn't matter so i love i love giving people the option and saying look you can either give up some of your comp or upside or whatever and we'll give you stock options or you can get the big salary and prioritize cash and a lot of people prioritize comfort and cash i find at least you know outside of the bay area by the way andrew you mentioned the guy from singapore sam do you know this guy


leak on you uh i know a little bit about him i didn't realize he was a dictator i thought they called him like the ceo or something no he's literally a dictator so like a good the good dictator andrew can you give us like the two minutes uh two-minute kind of summary of who this guy is and why he's awesome so effectively he took over um singapore is like an island tropical island state um in asia and at the time it was like rice paddies poverty like a bog and he literally took it over you know had an autocracy had total control and he basically thought like a business


person and was like okay how do we make this the most business friendly place how do we optimize taxes how do we ensure we have hyper competent government how do we pay government really really well uh how do we incentivize the whole world to manufacture and export you know their products from here and basically built it into asia's kind of outside of hong kong i think it's like the central banking and finance uh hub in asia so it's a pretty incredible story and i think he his background is like he's like a math and computer science guy right like


he he doesn't come from kind of this like you know uh political background like he came from a different sort of background and i think that's why you got different ideas from from a leader in charge totally you want to tell me you also had something i was going to say you had one thing you tweeted out uh that's related to how you run the business at tiny which is this this higher one higher 10 uh framework what what is that because that sounded interesting to me and i think that that's like uh from what i understood it was a pretty


useful concept so explain that yeah so our ceos get super annoyed because i say this all the time it's probably the number one thing i say uh and it's probably the biggest hack that enabled us to build tiny over the last eight years um so i mean think about it like this so if you had an army general who is commanding a thousand troops but he's still telling individual soldiers what to do and he's personally restocking their ammunition and he's shuffling people around you'd be like what the hell is this guy doing right but i think a lot of people operate their business like this i mean i certainly did in the


early days i would swoop and poop and you know instead of hiring a vp marketing i would go and i'd hire a whole bunch of marketing people and just kind of become the vp of marketing and or i'd bypass people and tell people what to do and what i realized is you should never ever hire the 10 people you should always focus on hiring the one person so that could be a ceo who will then go out and hire all the executives or could be hiring an executive who will hire an entire team but uh it's just it's such a hack right it's like 80 20. how do i do 20 of the work for 80 of the result um and uh yeah i mean it took me ages to


figure this out i feel like i've only cracked this in the last like five years and i still chris will still catch me in this he'll be like higher you know higher one to higher 10. but when you hire that mistake all the time and when you hire that one person how much so let's say your business is doing uh let's say 1 million in revenue it's small no let's say a little let's say 10 million in revenue 2 million in in like actual cash flow you have you hire that one person you pay him a lot of money 250 000 do you only hire that 250 000 person when you know for a fact you've got budget for like two more


people yeah that i mean that's my approach that's why i've shifted to is like i hire you know here's an example is like we hired the ceo of aeropress and he asked me questions oh you know what do you think about this higher that higher and i just said that's your you know that's your hire you know i hired you i trust you 100 you make those hires right and so it's complete delegation of you know when i buy a business i make two decisions who runs it and how are they incentivized and unless they do something dirty or horrible or the


business goes to [ __ ] you know i just leave them to it what's the trick on the uh how are they incentivized so so what's the how do you think about that when you buy a business and you say all right the business today is here and i think naturally it's gonna get to there and i'm bringing on this person to get it to be some inflection above that and i also know that things can go wrong so how do you think about that incentive structure is it is it case by case you're coming up with very unique patterns or very unique uh you know packages or do you have kind of one base that you that you go off of


it's so different i mean like everyone's incentivized differently there's there's certain people where for example they need to be able to say they're a partner and they have equity there's other people who don't care about that and they want just targets to hit i mean we've done everything from saying okay let's say the business makes a hundred million dollars and it's growing at 15 percent you anything you do over 15 percent growth you get five percent of right that's in its simplest we've also done things where it's like you know hey when the stock price hits x you get a payment and i remember um i got to have dinner with charlie munger like two


years ago and i was like what's the perfect you know incentive structure and he just said i've done hundreds and everyone is different and i still don't know what works i think it's really an art not a science because you know different people are just so differently motivated and you actually like steak so you sorry one more sam when it's usually usually when it's like ah it depends there's there's that what that usually means is the winning formula is different a lot but there's usually a common losing formula so what is the common losing formula for incentives the common losing formula is


them not being aligned on risk so for example if they're able to use my money and i can keep injecting money into the business but it in no way hurts them so for example they don't get diluted or they don't have to pay a high interest rate or you know if it goes bankrupt they don't lose anything that's a huge problem and i've learned that over the last five years and so now what i try and do is if somebody wants equity i always make them write a check right or or i loan them money and it's literally a personal loan guaranteed by their house or something right and it's got it doesn't i don't want it to be so


much money it's going to ruin them or be a problem but i i if someone wants equity i'm like okay you got to put up something because if the business fails or goes down you gotta have a sense of loss people feel a lot that people feel lost more than they feel gain i just imagine the wilkinson moving truck coming in from the house they're like no honey it's all gone wrong you have to come when you put your own furniture your own art on the walls they get to live there but they have to know that it's your house now and they truly we have [ __ ] we have done it we i obviously you know i never want to do that and it's always structured in a way


where it's not you know we're not going to have to take their car or something but i just want i want a feeling of like there's got to be some downside you know sam is going to take this like way too far he's going to take their car and it's like a punch plus like i get to punch you just because if you lose my money i'm going to punch you [Laughter] yeah i love this game you uh you also speaking of that of risk you also hire people really early you told me um i don't know if you talked about those but you were tinkering around with this bake


do you want to talk about the bait can you mention the bakery or no yeah well the bakery is kind of sad no sorry not the bakery the ghost kitchen ghost kitchen you tinkered with this thing where you hired a baker and you were making stuff to sell on doordash and ubereats and i don't know if it was entirely illegal so we don't think about it but the point i'm bringing up is that well no i can i can i can tell well tell the story then let me ask my question sure so basically you know i'm pretty interested in health and stuff and i was


trying to get off sugar and so i went to a baker friend and i was like look can you try and make like like sugar-free cookies using modern you know there's always like crazy modern sugars like you guys have heard of magic spoon yeah yeah like magic spoon uses uh allulose and stevia and monk fruit and stuff so he started making these and i was like okay these are like not as good as a chocolate chip cookie but they're like 90 percent there and i bet you a lot of people would be into this as like a replacement like think about halo top it doesn't taste as good as ice cream you can eat a [ __ ] load of it and it's not bad for you in the same way so i


basically made that we started making all these treats we were cooking it out of our office which is not technically legal um and what happened was um i got a call from island health which is like the local health authority and they just said hey you're using an ingredient that's not approved in canada and unfortunately allulose has not approved in canada and so you just legally can't serve food with it even though it's generally regarded as safe and everything um so i'm still gonna do it at some point i think but i just legally can't it sucks and i've never it's insane to me you can hit up against these regulatory issues like imagine


being a real estate developer and like you have this amazing vision and then city council is just like nope yeah like that is insane to me as an internet entrepreneur and that's what i was gonna ask so you like hired a baker to do it but then also with your uh newsletter business your local news business you hi i forget the guy's name but he's i've talked to him a bit he's a nice guy you've hired him to be the ceo and so you you hire people pretty yes and you you hire people pretty early on and hiring someone to do something to me is a huge risk because in my head i'm like man if this guy's got a kid like i'm like his kids now kind of my kid too


um you know like it's like a big risk if he's quitting it that's how i felt when my when my one of my first employees got married i was like oh i've got a family now um because i was like some of the decisions i make are going to impact this entire family and that's really stressful and it's also a huge conversation to convince someone who's in their 30s 40s or whatever and they're even in their late 20s to leave their fancy gig at salesforce to bail and come to my company that i'm going to pay them 45 000 that's a huge thing i i go when i go to bed at night that stresses me out but you seem like you overcome that pretty easily you hire people relatively


early and you're like yeah it's no big deal i'm just going to hire this person what's that like like what are you thinking when you do that [Music] all right what's going on just a quick break a quick interruption scroll down into the description box on youtube and you're gonna see a link to the hustle the hustle is a daily email it gives you all you need to know about business and tech news i started it years ago um and it's awesome it's kind of how this podcast got started so check it out the hustle scroll down do it well i've lost i've i've messed that up


a lot and i think you guys know my whole story about losing 10 million dollars building project management software like that was a perfect example where i got ahead of myself the business didn't make sense and i threw a bunch of spaghetti at the wall and none of it stuck and i had to let a whole bunch of people go and it was really horrible and sad and you know it was like a 10-year slow death right so i've been through that so now it's more with the amount of scar tissue i have i've enough i have enough signal where i can be like okay i'm going to try this and with the bakery i was just contracting a friend right that was the


best example i said this is an experiment with the news business i actually ran it for three years before i partnered with farhan and he took over as ceo and by that point there was enough signal it was slapping me in the face i was like this is a big opportunity and is that the case with all with all the things that you start we take that yeah usually like if i if i go and i i hire a ceo i'm pretty high conviction that there's something there or there's already a business that supports has cash flow what i would never do is be like hey there's uh you know i have an idea for this i'll just


go hire a ceo like i i would never do that andrew i feel like you've reached this point and i used to be like how did these [ __ ] do this where i remember i was doing a startup it was so hard to get my one thing to work and then i would meet people who were like oh yeah so i have that past success then i have my current success and then here's my three side successes that i had this idea and then we just started doing it and then guess what the lines out the door and then this other one it's like kind of cool we just started


it you know like i accidentally you know my hand just fell on my keyboard and i accidentally wrote this app it was amazing it went viral and this other thing that i just tweeted about and then this all coming together nicely and i just remember being like what do they know something i don't know is there just like extreme luck component and i felt that way for many years five six years straight when i was pushing the boulder up the hill with my startup and then i now have experienced exactly what the thing that i was most jealous of and i have no idea what switched in between where like the last five things i've tried have all worked and all


worked pretty much immediately and it doesn't matter how big or small like you know whether it's like the podcast or the course or uh you know my e-commerce business or my the new milk road newsletter business like each of these has just worked straight away in a bigger way than anything i'd ever done before um with less work and less stress than like the old stuff i used to do and i have no idea what changed or i have a kind of an inkling but i don't really know sam have you ever thought about this or you know what i'm talking about what do you think i know i know exactly what you're


talking about and i completely agree you're on a roll right now um and what's your inkling i i have a feeling my my my answer is it's kind of like a shitty it's like a mindset like abundance attitude and being on being on offense versus defense but what's your what's your what's your inkling so my inkling is that i switched up my situation so like i was in one situation for a very long time like it was a nice situation very nice situation but it was like where i was going to this office every day working with these people in this hierarchy with


this boundary box of like what project or projects we can work on and like what success might look like and as soon as i got out of that i was just me i was like oh okay so now that it's just me that i have to look out for i guess i could just do a podcast i didn't have to have like this big venture billion dollar outcome i didn't have 20 engineers to go tell what to do i had no engineers so i just did what i could do with no engineers which was like i'll do a podcast i'll do a course i'll do i'll just try to get big on twitter let's see what happens and oh you know like five tweets go viral and boom got 200 000 followers it's like


there's these things that i just wasn't doing before because i think before i had a really set thing of like here's what i need to do like here's the only way to win and i had like almost too much ammo i had like too many people at my disposal too much funding too much everything and because of that i had a very narrow window of what could work and so i was just trying to come up with ideas that might work versus oh let me just try this because i'm i just kind of want to try it and then when once i got into i just kind of want to try it and i didn't have


it i didn't have to worry about what other people thought or i didn't have to come in and manage anybody in that day and tell them what to do i didn't have like investors to go pitch to i just did the thing and then all of a sudden i feel like you know sort of like all the talents and skills that i had been building up over the past 10 years like finally got to just do them yeah don't you think it's like dating or something though where it's like you know you date a couple crazy girls and it's really exhilarating and then over time you're like wow that was horrible and there's pattern matching you're like okay when i go to a restaurant and a


girl is rude to the waiter that's a no right and in the same way with business you go oh okay like i used to think i wanted to build all these kinds of businesses but those were 10 foot hurdles i don't want to jump 10 foot hurdles i want to jump one foot hurdles and so if you think about it all the stuff you're doing they're in your you know circle of competence and they're relatively simple to execute they don't require a lot of people they don't require funding i think learning that is like a 15-year overnight success kind of thing where it just clicks suddenly right and i'll catch myself occasionally getting pulled down rabbit trails of


like oh what if i did this crazy you know drone ai startup whatever but then i always go back to base hits and i and i think there's this third component well go ahead you go ahead all right oh my god what's going on all right i'm gonna go there's this third component of of confidence and so i think that because of like my work i've been more confident and i understand like well if i invest a dollar here i think i can make at least uh three dollars the next two years so like just understanding how machines like money making machines work


investments but then also i think sean because we get to hang out with we hang out with each other we hang out with andrew we hang out with our circle of friends we hang out with all the people we've had speak at our events we hang out with our um podcast guests it becomes more normal like succeeding has become far more normal than not succeeding actually and not succeeding is just like oh yeah it's going to happen but then you just move on you do the next thing and it's like and then inevitably it works so it's not if it's not when it's if and i think that confidence has actually helped a ton where so for example now if someone


wants to like real estate's an an easy one because it's so predictable but with real estate you're like oh man putting a hundred thousand dollars down on this house is a lot of money that's a you know that's six figures it's like well dude but it's going to make 12 it's like well i don't know that and i'm like yeah i know but it's going to do that so you actually want to invest more so like that confidence of just knowing the emotions and knowing the routine and process has actually helped a lot totally yeah the other thing i was gonna say is uh which is what you guys both just said but framed differently is i was taking a shitload of market risk


before and now i basically take almost no market risk i just take execution risk and before even if i felt like i executed great which i did i feel like i did and a couple of the projects that we had done and during my like kind of like the the previous startup um the market risk was too high like there was just no it was like inventing a new [ __ ] like a new science you know on a new land and it was just the market risk was way too high now i'm just doing things that are like oh i knew i just know that this works and i just need to do it well so it's like ecommerce is


nothing there's no fancy science to it um and i had buddies who did it and i just used their model and i just did my own in my own lane of their model milk road is the hustle but in the crypto lane which is the crypt the lane i like right it's like i just took your blueprint for the hustle and i just copy pasted over here from there i know dude i saw that you literally copy and pasted the twitter handle it was hilarious your twitter description is literally copy i sent you some old resources from the hustle and we call themselves this your smart good-looking friend or something


who tells you everything you need to know about you just copy that and you put in a business attack you just put like delete crypto or something like that and actually the thing is it wasn't even you know why it did that uh i remember seven years ago or eight years ago when you first said that to me and the very first like you know like you kind of sat me down you're like look people are not people our age like we don't watch msnbc and like cnn and this stuff for our our information that's not the brand we trust and you you said it you're like i just


want to be like they're smart and i remember you said it i shouldn't be like you're smart no [ __ ] friend who just explained tells you what's going on and i was like i like it clicked with me eight years ago and so when it came time to do this i was like that's the exact description the smart no [ __ ] friend i think one more thing andrew is that i look at i i used to you kind of said that andrew and in terms of like financial success which is a big but not only uh measure of success andrew you're like a grand slam at the moment you know you're you're i imagine you're incredibly wealthy and


you've built businesses that are incredibly large so by that measure of success you are like way out there and for a while i think i like admit you're like mystical to me where i'm like how is he doing this now it's changed to where i think i acknowledge that you definitely have talent that makes you special you for sure have skills that make you special but really a lot of it is also i don't know what percentage of it is each but let's just say a third a third a third a third of it is well he's just been doing it for like 15 years now or a certain amount of time


and he just like took the risk of raising or building the business and then he raised the money a little bit for the fun and so it's not a matter of like how is he doing is doing this it's just like well if i want that life like i probably could do it i just have to dedicate 15 or 20 years and go through the same motions that he does and that may or may not fit the what i like the interesting thing is i don't know if you know this but warren buffett made like 97 of his wealth after the age of 55 um is so so it all happens very slowly he started in his 20s or whatever and he wasn't really well known until


the 90s and the same thing happened with us where we didn't really talk about what we did people would meet us and they'd be like oh you're some schmoes from victoria who owns some digital agency you seem to own all these really boring businesses you know whatever and so it requires being kind of underestimated and dismissed and playing a very boring game while watching everyone else go and make you know tens of millions billions of dollars taking risk in startups meanwhile we're just going how do we take you know a hundred grand and make 10 15 20k a year on that money and just keep compounding and so basically the mental model was take 70


of our profits and constantly reinvest take the other 30 percent live a nice life and that number went down over time and uh yeah you do that for 17 years and it turns into a you know a big number um ironically i still feel just as at risk and terrified as i did 15 years ago that's real and i think it's the classic thing of you you're not you're not actually scared i'm scared are you because i have liquidity now and i'm i'm scared but i'm like am i as scared as when i only had twenty thousand dollars in my bank account i can't just say oh no no but it's it's maybe it's different for me because you know i have a an un


for if you told me 10 years ago how much you know cash we have or what our cash flow is it would blow my mind and i'd say how could you ever feel at risk the problem is that the stakes are bigger you know we have almost a thousand employees now right so there's a lot more um you know there's the stuff that can go wrong do i feel that i've built out a castle with a whole bunch of moats and stuff yeah absolutely and i'm better diversified than i was 10 years ago but there's still that kind of dust bowl farmer mentality right it's actually something i want to talk about um like just


we all kind of have this feeling of like the way i'd put it is i started chopping wood just because i was anxious right like 15 years ago in my backyard and my neighbor pokes his head over the fence and he's like hey can you chop some wood for me for my fire i'll give you 20 bucks and i'm like okay amazing i didn't know this was a business and then before i know it i've hired three or four buddies we're all chopping wood in the backyard we're a merry band we're selling to the whole neighborhood it's awesome i love it and then one day 15 years later i wake up and i'm in a sawmill and i own 15 sawmills and all i do all day is file


papers but there's still this part of me that beats myself up for not chopping wood right i still have this mindset even though all the machines do all the labor there's still this part of me that's constantly saying you need to chop wood you need to chop wood and so i think you're gonna you know you you guys have this for sure like it doesn't matter how much you have how diversified whatever it is you have a need to do labor and there's an anxiety that you're harnessing to perform that's a good ass analogy i'm not gonna lie the first 30 seconds while you're explaining it i thought you


legitimately took up wood chopping as a hobby and i was like oh that's cool it must be uh cathartic and then i realized i was inside of a charlie munger uh or warren buffet analogy like parable um you have this thing on here that's that's pretty cool bad guys usually win as a bad guy myself i would love to hear yes uh what you mean by this oh man okay so do you think you're a bad guy i've got a story i don't think you're a bad guy go ahead


i think a bad guy is a full-on con artist who lies i call myself a bag rather than calling myself a good guy and having all the comments on youtube tell me i'm a bad guy it's easier just to call myself a bad guy and have people tell me the opposite or bad meaning uh not bad meaning bad but bad meaning good that's how it is so i'm sure you guys have had this experience and i'll kind of anonymize this story in this case it's a bad girl bad girls usually win but um so this this happened to me like almost 10 years ago i was really overwhelmed i was running like five businesses i got


introduced to this older woman and she had just sold her business for 20 million bucks super successful and she kind of says hey i'll mentor you i'll help you out and so she comes over to my office we start white boarding and i'm just like holy crap this person is a genius she could help me so much and so first she's an advisor and mentor and then eventually she's like hey how about i come in and i'll help you with marketing and sales and so i inject her into the business she starts killing it like business takes off everything going great um but i did zero diligence right she legitimized herself


by being this super successful person and because she was so successful i was just grateful to have her she was like a miracle and made all these problems go away for me and then suddenly the cracks started appearing so people started saying she was lying she was spending money in weird ways there you know her expenses were out of control you know staying in crazy hotels all sorts of stuff and it turned out that she was lying and like falsifying documents she hadn't sold her business she wasn't rich or successful and when i called a bunch of people that she'd worked with in the past like a bunch of


them had had terrible experiences right so we fired her we move on and i'm in this very odd spot where ethically you know i want to be like okay this is a bad person i want to shoot up a flare and i want to be like everybody watch out right and i'm thinking like okay you know people will diligence her they'll call me you know she she won't be able to keep you know pulling this off um but legally i don't know what it's like in the us but in canada when someone calls you for a reference call you're quite limited you can basically just say you know i wouldn't work with them again and do your diligence and so i usually


say and i just want to like i'm not allowed to talk about it and they get the hint right that's smart i i said a bunch of stuff like that like you know i i would never work with this person again it's one of the worst professional experiences of my life whatever but almost always those people go on to work with them and you realize these people are just incredibly charming and they always assume you're the bitter ex-girlfriend right because they've obviously buttered you up and told some story and so this woman you know i see her on linkedin and she's still succeeding and going every year


she's somewhere new and you know people like this they don't get super rich they're so short term and if they only knew how much money you could make by not being a crook they would probably be ethical um but it just it was so sad to me and i wanted my sense of justice was like i gotta put a stop to this and you just realize like no like you just have to let go never wrestle a pig you'll both get dirty but the pig will enjoy it and so you know these people are out there and they continue to succeed and unless they're elizabeth holmes and they get you know in the wall street journal they're fine i want to know who the person is


i will never say [Laughter] you had another example of a guy at a famous company who you know you had some fraud or you had some issues with people not being honest as well remember you told me that about that one folk i don't know i don't know which one that is i mean look at like you guys talked about um navi and jane uh on a podcast maybe like 10 episodes ago and i mean like there's a perfect example right there's this guy who basically did a pump and dump that's my


understanding alleged alleged pump and dump um but these people go on right unless they're criminally indicted and even you know people who are criminally indicted look at michael milken michael milken was literally uh front-running his own investors committing tons of like outright fraud that if you were his investor you would hate went to jail for 10 years and now he's lauded as a philanthropist i mean or how about him always win i mean you know the guy do you guys know uh i think his name is gerbash he's g is what people would call him he's a i think he's indian an indian guy indian american and he started a thing called


gravity something what was it called gravity gravity four and then he started another one called like radium blue radium is that what it was and radium radium one and he got arrested he was on oprah as this like you know uh 150 million dollar man under 30 or something like that like the best bachelor most available bachelor all this stuff he's good looking guy he got in trouble three two or three different times both times he basically locked his girlfriend in their apartment and it was there was a


camera there i don't know what he was thinking and he was hitting her and just being an i mean just a horrible guy got arrested spent time in in in uh jail months got out raised money again for starting the same company now he's overseas because he's kind of burned all of his bridges here in in san francisco in america he's overseas i think he raised money again for another ad tech company this is the hard part is if someone is a i mean typically someone who does bad things like truly unethical things they're either a psychopath or a narcissist and they're very very charming they're very compelling they're


fun to hang out with they're fascinating they're great to listen to it's hard not to like them i mean one one actually heuristic after having that experience is i actually had a company that i looked at investing in and i liked the ceo so much and he was so compelling that i didn't invest because it made me suspicious right or wrong i was just like i left the meeting and i was like i would buy anything from this guy and i just want to give him all my money right now and i stopped myself and i was like this is that feeling don't invest right i probably made a mistake but you know maybe i'm too concerned but it's crazy the same i'm the same way and i'm


willing to throw out the good with the bad just to steer clear of the bed because i know how intoxicating that type of grifter is um and you know i've actually put in some like you you talk about air gapping for like you know security purposes i've now done that on on decision making for some investments as well like so andrew you sent out an email to to uh to me say a couple others about a business that you're raising money for and it's a really great email like it's a truly great email i gotta give you a lot of credit and i actually wanted to ask you sam some help me with this i was gonna


ask you what goes into writing an email like that it wasn't like oh the writing wow this this uh sentence structure was so fantastic right obviously that helps but it was the thinking it was the way of framing the business and the opportunities telling how you stumbled into the opportunity what time you know like your your analogy to you you can bleep this if you want to chipotle like you really did a good job of framing this business and it was so good in fact that i said i am not going to reply to this for like at least 48 hours because if i read this email i'm going to say


give this person my money instantly like rega it was almost like whatever out of 10 the business opportunity was it was a 10 out of 10 like pitch and i actually when i look back at businesses that i invest in that that go on to do well it's usually actually a nine out of ten business opportunity um with a you know sort of five out of ten pitch and in fact it's only midway through the conversation with this person that i'm like oh wait so you basically have x and they're like yeah i'm like well why didn't you just say that and they're like well no i did kind of right and i


was like oh dude you have no idea how to pitch your own business but that to me once that happens i know wow i'm actually like i underweighted the opportunity because the pitch was so bad versus overweighting a business opportunity because the pitch is so good and that's become like a standard practice yours was just one example but that's become a standard practice for me of like beware of the 10 out of 10 pitch be aware of the 1010 charm person that you want to hire or that's gonna help you with your business the biggest one that i've seen is you get this uber charming pitch and then


you say okay what could go wrong and they say nothing right and you're just like no this is insane this is terrifying i've had like five or six different pitches where that was the one signal and it went to zero or bankrupt or criminal how's the news business going um it's good it's really good actually we just uh hit a profit in my hometown in victoria our first market uh we're now in eight different cities and i'm super stoked about it as you can witness uh based on that email that email how how quickly because you might have a knack for just understanding and framing


businesses that's probably a superpower of yours i think he has that how quickly did that come together for you uh how quickly did i write it um well i mean it's something i've been thinking about and kind of talking about a little bit publicly for two or three years now so i had all the analogies and stuff formed um but i mean i wrote that in like an hour or two and then sam just helped me touch it up and then my typical writing structure is i'll write something in the first draft and then i'll sit with it for two weeks or something like that so i sat with it for a week and then finally i sent it out um but it's crazy like i don't know if you


guys get this something that drives me insane is i get all these emails from people who are raising money and it's literally just a template like it almost looks like they're sending it out with salesforce or something the formatting is wrong it's generic it's not properly addressed to me and i always think like what i was trying to do with that email is i wanted the first sentence to hook you and so i think the first sentence in that email was in 2019 i was pissed off right and then dave you know line one you're like what's he pissed off about what's going on right there's a bit of a hook nobody knows how to use those copywriting tools to pitch in written


form i think a lot of people are very good at pitching um you know in a in an actual pitch setting or whatever um but yeah it's been it's been a great tool to be able to do those tweet storms and emails and stuff the most important sentence of of anything you write it's the it's the first sentence well i love that one what's the line that you said um let me be very clear right you're just like oh [ __ ] like this person means business what's going on here [Laughter] yeah sam is [ __ ] good at this and in fact i made the criminal mistake when i asked you this question which is if you


go to michael jordan and you say mike how do you jump so high he'll if he's being nice he'll try to answer something something but it's not going to actually tell you in the same thing how do you know steph steph curry how do you shoot your jump shot to be and how do you shoot better than anybody else uh people who are truly great at something they have very low awareness to the actual like how why and what is making it so great um and there there is a way to ask questions about greatness but it's not how do you do the thing you're great at uh because people will sort of fumble


around and they'll try to tell you something but it really has nothing to do with with how they do the great thing like for example what you did great in that uh email was first you decided to not make it a template that decision probably comes from you some of you you're some way that you view the world and like that you know observation you had about pitches that we're coming to that most people just don't have the second thing was when you framed the business you used the analogy of like these local franchises that was because you had studied other


other great businesses just for fun you probably studied the business of chipotle and mcdonald's and other businesses not that you were ever going to start a restaurant but you stored that somewhere in the recesses of your mind and so when you saw something else that was a local franchise you knew how to like apply that and and so like you know it's very hard to actually describe what goes into the art of making that happen right um well not only that but being able to communicate emote you know why does this have a competitive advantage and in this email i kind of go through the history of the news business local news why


local news is so much more uh white has a better moat right and you think about it you go why would that be interesting you know 50 000 people to 300 000 person cities that seems like a small market but in reality it's the stuff nobody wants you're fishing where the fish are off the beaten but and you can dominate a local market you've always done this so i actually read your email um when i was when you sent it to me in google drive and i was like oh this is really good i'm gonna because i was putting together this course where i just like aggregate good writing and i send it to people and i was like i gotta i'm gonna use some more


of his stuff let's see what's out there and i went and read all your stuff on medium and i think there's like 10 or 12 things or something and you follow the same format over and over again which you it's it's you clearly are influenced by warren buffett and uh you're influenced by like traditional storytelling techniques but if you go to your medium you're actually uh pitching your business on medium constantly you're just not actually there's just no call to action so you don't actually care if it seals a deal but there's like things where your cat


you have a headline called so you didn't mean to do this but you could have done this so it could have been we're raising a million dollars for our company but instead you made the headline we're um uh you you the headline was joe rogan could be the world's first podcasting billionaire is that what it was that was that it no it was he got rid of joe rogan first is joe rogan got ripped off which is funny because he just signed 120 million dollars yeah that's what it was counter so that was it was a good ass headline


and then you explain so that the emotion there was shock which always does really well so you're shocked like what the hell you're saying that he got low ball a hundred dollars is so much money and you're like no you see it's nonsense you see howard cern does this rokin could have done this it just so happens that we have a company that does that that's how i know about it and then like if you wanted a call to action so you have your attention interest desire already there if you want your action to make this a full ada formula you could have been like ps4 of course you can't do this it's illegal but you go to the ps we're raising money for our company and


see this is this is like you've you've always said like the most valuable skill is copyrighted i think both you guys have said that like a hundred percent i i chuck up the only reason meta lab worked was because we would pick fights we'd write these controversial articles and we knew how to like we i i if there's one thing i'm good at it's just like taking um taking a boring topic and just finding a wedge and getting people going on it and that always results in people knowing of you and passing your name around and you become a topic of conversation and it led in our case to lots of client work and other stuff so i if i think everyone needs to read the


book made to stick that was the book that like really clicked for me i don't know if you guys are very chip heath out of stanford we talk about this totally and it's that one that first line the first line just has to hit you the um the best thing you do so so i think uh if i was going to break it down the middle of your writing is is like inspired by or influenced by you know some ways warren buffett but you're his stuff is very dry right warren buffett grew up without the clickbait generation he doesn't need to to do that uh but like 37 signals so like dhh or jason freed like to me your writing is so


similar to theirs that i can tell you know that was like a you know pretty major influence on it and one thing that they do amazingly well is they they will basically pick a fight while simultaneously taking the moral high ground and i think you do that amazingly well too what i mean by that is you'll say like you know joe rogan got ripped off but you're not you're not criticizing joe rogan you're actually saying uh you know joe you you sold yourself short and you know an artist and a creator like you should not sell yourself short for some to some company who's gonna take advantage of you here


and so you're taking the moral high ground while picking you know going against the grain and like sort of doing a call out which is amazing most call outs just basically it's somebody you know slingshotting from the crowd and you know they're sort of a sniper that's like you know angry at them and so i've never been able to do this but i've noticed that you do this and thirty seven students does this amazingly well they say facebook is overvalued and they'll talk about why facebook is overvalued and then they'll talk about you know like we're sorry we're just the kind of guys that like businesses that


have actual revenues and profits but oh you know call us crazy and so they're taking the moral high ground and they're saying that this facebook valued at the time remember it was famously like why billions of dollars i would i would argue i would argue those guys would not be where they are today without copyright i doubt and i think that's like the sawdust from their sawmill right it's like hey we got [ __ ] on the app store what would most people do okay we'll just go in with apple they used that as the biggest marketing opportunity ever they were on every talk show they were their names were everywhere i mean they also got kind of


canceled as well so there's a cost to that but um they've done an amazing and that's 100 where i learned it i worship those guys for years i call it like the malcolm gladwell effect so with malcolm gladwell you um read his books and you have to remember that a lot of what he's saying is just theory there's no there's some proof that it's real but it's not proven and um but he's such a good storyteller that you think like oh what you're saying is just a fact like have you heard a story about david and goliath it's wonderful and he likes it he's like actually david goliath wasn't that hard of a contest because it turns


out goliath was like mentally uh challenged or like had some issues where he like and he's also blind he couldn't see he he like he had this thing where he was so big that it ruined it it had like giganticism or something like that and so and then also like david was a shepherd and they're actually so good at throwing these rocks that they could take a bird out of the sky so it's really like just basically taking a a big dumb blind giant and shooting him in the head with a gun that's not hard and like that's his argument about he's like david goliath it's nonsense and is he right i don't there's no proof who knows is david goliath even real we


don't even know that but you like hear this story and it changes you but the problem that i have with base camp and other good writers and this is something that you have to be really careful of i i work on all the time like i can be such a good storyteller that i can get you to think that something's real even though like i'll tell you but there's no proof but like i'm gonna write it in such a way and base camp does this all the time where they say well they'll write something and i'm like oh this is the truth this is how the world is like well no let's let's not forget this is an opinion right


totally and there's lots of nuance and going back to what we're talking about with bootstrapping i i read all their stuff i drank the kool-aid and i you know i love those guys they built an amazing business but you can't just have that perspective it's very nuanced there's there's you know like i said there's so many situations where it is logical to raise money and if you talk to dhh 10 years ago he'd say salesforce and facebook will be bankrupt in 10 years and this doesn't make sense and again i love these guys and i know them both they're awesome guys a huge fan wouldn't have built my business without them but um i do think they they present


everything in a very black and white way which i think benefits them in a because it makes them more compelling no one wants to hear nuance this has been a good pod what do you think sean yeah it was good there's i mean there's a couple others we wanted to do but we're way over so we should uh we should wrap it and do another one soon i know we didn't really yeah i think we got like we have like we have like 20 topics to do so it's like here's the five pillars of happiness like do i want to be happy i should probably ask about that one like i would like to be happy


and then the jamie dyson thing there was the whole you wanted to come on because you're like i read this book about dyson i want to come talk about it we didn't even talk about it oh man i'm so excited to talk about him he's incredible all right well let's do it let's do another one unless you have time i don't know we could keep going if you want but otherwise let's do another one and uh we'll do dyson and smothers yeah i gotta i gotta roll i got a lunch in 12 minutes all right man good good sweetie okay see you guys that was fun [Music] you

Key Themes, Chapters & Summary

Key Themes

  • Compounding Growth Strategy

  • Bootstrapping vs. External Funding

  • Scaling a Service-Based Agency

  • Management and Leadership Evolution

  • Psychological Dynamics of Entrepreneurship

  • Ethical Business Practices

  • Navigating Business Challenges

  • Long-Term Vision and Sustainable Growth


  • The Philosophy of Compounding Wealth

  • Pros and Cons of Bootstrapping

  • Strategies for Scaling an Agency Business

  • Transitioning to Hands-Off Management

  • Dealing with Entrepreneurial Anxieties

  • Upholding Ethics in Business

  • Overcoming Business Obstacles and Setbacks

  • Fostering a Long-Term Business Outlook


The transcript titled "Bootstrapping A Small Agency Into A Billion Dollar Business Empire" is a detailed account of a podcast episode from the "Acquired" series, hosted by Ben Gilbert and David Rosenthal. The episode features a discussion with a guest who has successfully transformed a small digital agency into a billion-dollar business empire. The conversation delves into various strategies, philosophies, and experiences that shaped this remarkable journey.

The guest begins by comparing his growth trajectory to that of Warren Buffett, noting the slow but steady progression of wealth accumulation. He emphasizes the importance of being underestimated and playing a "boring game" while focusing on compounding small gains. The strategy involved reinvesting a significant portion of profits back into the business while living a modest life.

A significant part of the discussion revolves around the pros and cons of bootstrapping a business versus raising external capital. The guest mentions how businesses in certain sectors, like restaurants and service-based agencies, have successfully bootstrapped by leveraging assets for loans or capitalizing on efficient business models. He highlights how agencies, in particular, can scale quickly due to their capital-efficient nature and minimal overhead costs.

The conversation then shifts to the topic of managing a growing business and the complexities involved. The guest shares insights from his experience, particularly on the challenges of running a large organization and the transition from an active manager to a more hands-off role. He discusses the importance of hiring the right people and delegating responsibilities effectively.

Further into the discussion, the guest reflects on the psychological aspects of entrepreneurship, such as dealing with insecurities and the constant pursuit of success. He talks about the anxiety of managing a large business and the responsibility that comes with it, comparing it to a farmer's mentality of always being prepared for the worst.

The podcast also touches on the importance of ethical business practices and the pitfalls of getting entangled with unscrupulous individuals. The guest recounts a personal experience with a deceptive business associate, highlighting the challenges of navigating such situations and the importance of due diligence.

In conclusion, the transcript provides a comprehensive view of the journey of bootstrapping a small agency into a billion-dollar empire. It offers insights into effective business strategies, the nuances of entrepreneurship, and the balancing act between maintaining personal integrity and achieving professional success.