She was offered $400m for her business!
just imagine every phase of the business is getting looked at with a microscope and a fine tooth comb which by the way if you weren't prepared for that or you didn't have your numbers or your data that that alone could end the deal they may go I just can't understand your business well and if I can't do diligence I'm out know what uh no it was very under the microscope that microscope you're referring to during due diligence when we did our deal I'll give you guys each one guess your email deliverability your Fitness is a I was questioning my own Fitness what's up everyone I'm Alex Lieberman and I'm Sophia amoruso yo this is Jessie Fuji and this is The Crazy Ones all right everyone welcome back to The Crazy Ones a show that is quickly becoming an entrepreneur's best friend I am pumped to be back to our normal programming with Jesse puji AKA baby Buffett and Sophia amoruso the dean I'm Alex Lieberman the mailman also if you didn't listen to last episode you should I spoke with the founder of a 700 million dollar garbage business uh and he gave away all of his Secrets but also you missed that we came up with a nickname for you all so you all the audience our fans our friends our officially The Misfits and my amazing Misfits I have one ask of you before we do this thing if you're listening to the show please rate and review The Crazy Ones on Spotify or apple and if you're watching on YouTube make sure to click subscribe and leave a comment below with one topic you want to hear us talk about on an upcoming episode okay only five stars works Sephora through one just don't work so don't even try to click them exactly great point I missed that uh housekeeping officially done so let's do this damn thing today we are talking about Spotify wrapped what it is why it's a genius campaign and how to create something similar for your own business then we're talking about selling your business when to do it how to crush the process and what the feeling is like after you sell and we're going to close out this episode with a totally new game that's going to have a ton of hot takes and strong opinions you're not going to want to miss it so stay tuned let's start with Spotify wrapped it is a campaign that has become more anticipated by some than Black Friday or Cyber Monday quick history for you on the campaign and then I have a surprise to share so stay tuned every year since 2016 Spotify has come out with Spotify wrapped which tells a story about users listening habits for the year so it includes things like listening minutes most listened to use songs most listened to artists listening personality and more and rapt has turned into this marketing Behemoth and there's a ton to learn from it now for the surprise Crazy Ones production team let's pull up Jessie's wrapped and Jesse I want to get your initial reactions uh I have kids I'm Chris by the way this is the excuse that every parent makes is that my raft is what it is because of my pit kids but now looking at your wrapped I am assuming that your five-year-old and how old is your other kid seven-year-old that your five and seven year old are not binging Meek Mill uh they are well so in fact this one is like my son's favorite favorite song and I'll find a video of him we got a call from a second grade teacher and he's like you know he didn't bring something for show and tell so he said can I wrap going bad to the class and he freestyle rap going bad to his whole class and I have a video of him doing it so you know he heard us he heard a song I like obviously I play it we play clean versions only and uh wait when you make this switch as a parent from clean to explicit for our we know we our kids have told us they know the f word like they you know they send it to us and they both learned it the same day at the same pool from two different people like I don't know what the chances are of that and we just went around at the pool so this is your Spotify rap yeah yeah it's rap Drake Drake Miranda I love that he he owns it and uh you know and then there's some some religious music what what exactly is that it's just like religious hymns nice like prayer and meditation prayer and that kind of thing I was gonna say the range on your raft between Meek Mill Broadway music I guess there is the the tie there because like Hamilton is quasi-wrap and then uh the the uh the religious hymn music I love it okay enough of you Sophia let's see you're wrapped oh man and I don't know what this is about me I'm waiting for meals on the bus this is a band called Merciful Fate apparently I listened 1045 minutes and I'm the top point five percent of people listening to this band wow and this was a metal show that I went to over at Sofi Stadium at the YouTube theater Sofi Stadium like a few weeks ago and it was so fun and the singer's name is King Diamond and I got to meet the king which is very exciting I have photos of myself and the king um we can check it was your impression of the king the king's amazing so these guys are from Copenhagen their their Peak was really in the 80s and all their songs are basically about like Witchcraft and Satanism and it's so fun and funny to hear like grown men singing about like Satanism and you know coming to the Sabbath and you know casting spell you know whatever it's uh it's my favorite it's my favorite it sounds like really light music I can't tell if a thousand forty five minutes is a lot or you're one of like seven people that listens to this band yeah I mean well just divided by four dude when earlier this year and this was like on a play the time oh my God the most my most listens were on January 8th I guess it was maybe a nice start uh to the year um Have you listened to it since uh the person you dated or does it bring back bad memories no it doesn't bring back bad memories um yeah I feel like we're deeply invading Sophia's privacy right now she seems super uncomfortable I feel like it's very high low this is very very hot you know not high low but like oh my God look at that next album cover yeah oh my God you know you've got a woman who's like a very chill kind of like song and this one's like super duper heavy so I yeah you're listening I've got you're listening on the podcast players right now I'm looking at this Merciful Fate album cover that looks like some uh Reincarnation of the devil coming out of the album ready to grab one of the co-hosts from the screen yeah reaching his arm s are really really light stuff um okay let's quickly finish with mine and then we'll talk about rapt and the strategy I don't even remember who mine was oh Drake Drake is great I feel like there's you guys can't toss me any hate about listening to Drake that was mine too no Drake ever who doesn't like Drake I will say I'm very basic in my listening my top five Drake Eminem The Lumineers Mumford and Sons and Kanye Kanye yeah delete all right through and through I know I will say I listened to most music these days or not most a lot of it on a record player oh wow that's amazing how'd you get that habit Carly uh got me a record player that connects to Sonos for my birthday and so now when I do work in in the kitchen I'll just put the record on and it gives me an appreciation more of an appreciation for Spotify and just digital because a record is done in like six minutes and you have to go turn it over and then keep turning it over it's actually a pain in the ass okay um let's wrap that up pun intended and let's talk about just the campaign that is Spotify wrapped any uh initial thoughts on why it's so genius or what entrepreneurs can learn from it I think it's like the one of the best growth Loops out there right in a growth Loop people talk a lot about is essentially something you do that allows that wants people to share it to drive more and more growth like it never there used to be the concept of a funnel it's still the funnel okay awareness consideration so someone comes aware then they buy it then they transact and I think in the new world it's all about Loop so it's like someone's a Spotify listener they see this content they're craving it they start sharing this content it makes other people want to share it and then other people sign up for Spotify and it just sort of that that cycle just keeps going forward and it's just so shareable and I think that's the growth Loop that has just tons of sharing involved in it I think it's amazing because it's a little bit of like fortune telling or taking a Myers-Briggs test or understanding your Enneagram it's like taking a quiz without having to take a quiz and if people love being told about themselves I mean that's really what just like an astrology reading is there's usually nothing surprising about it's just like oh yeah I am like that and it's something they want to share and for a lot of people people it's just like hey look I'm cool right look this is what I've been up to it's a way to share something with your friends that you may not otherwise and I think it's you know yes it's using data it's you know but it feels really personal it feels like someone made a play I got four playlists made for me from my Spotify wrapped and it's better than what most of my friends could make for me and I haven't heard all the music on there so it's even serving up something new for me which as you mentioned Loops I'm coming back now to listen to these four playlists which is probably four or five or six hours of my time and what's also awesome about it and this is what and I'm sure you guys have also done this it generates something that's called Dark social so that's taking a screenshot and sending it to a friend yes you can export it into an Instagram story you can I tweet it at Mercyful Fate it just pushes a button you can like tweet at the band which whatever it's obviously something that's like a template but I did it just for fun but that's also just like that's really really personal more than just broadcasting it on your social media which isn't I know what they are able to measure uh but it's a brilliant brilliant campaign and also the Art's really pretty like I want to share it doesn't look like some it looks really good yeah I mean at the end of the day it's advertising that somehow people have become absolute cheerleaders of more than just cheerleaders they are the advertisers right it is something that has converted customers into sales people and when you can do that it's incredibly powerful I uh I posted on LinkedIn yesterday about why I think Spotify uh wrapped is really smart and some of people's responses to it were fascinating so this got one guy uh Joseph Gish said I post a photo of me hiking with a mountain Emoji maybe 14 likes no comments I post my 2022 wrapped I get 70 likes 20 comments and people post their top five so everyone can discover new songs right so it's like he's sharing for Spotify he's getting social cred because of it it's literally like his best performing content on social and also artists are getting the benefit of it because people are discovering their music it's like it's a triple win which is amazing there's another one which I find Crazy um Danielle said Spotify does so many things right I actually think Spotify wrapped is one of the reasons that I left Apple music I had fomo and three people said that on my post and then the final one that was interesting is someone said they present uh data in a way that's cool and not creepy right and I think in this world where data privacy is increasingly a thing them being able to get away with using people's hyper-specific data to deliver them a picture basically saying hey we have used all your data and now we want you to share it they do it in an incredibly non-intrusive or at least it doesn't come off as in an intrusive way something that I was thinking about as you guys were talking about your learnings from it is also what one thing I read is an intern in 2013 came up with the idea of Spotify wrapped um and it was this intern who it was called yearn review originally and I actually someone who posts about this said you know they're actually pissed because the intern didn't get any credit for it so I don't know if that's true or not but again it's interesting thing to see but I think what what's also interesting is having a company that allows really cool and interesting ideas to actually be put into production relatively quickly even if it's coming from an intern building that into your culture uh kind of like this idea meritocracy that Ray dalio talks about a lot is actually a really powerful thing that I'm sure people haven't thought about within the context of uh Spotify wrapped and you know Spotify I think people don't really and not everybody uses this but Spotify was built to be social right you can follow people you have a profile I can see what my friends are listening to when they're listening to it mine's pretty private and I think I've made some public playlists it's also like people used to talk about music people used to share records and make mixtapes for one another and that was like really really special and to you know it's a prompt to share music in a way that this guy you're talking about on Twitter I doubt that he's posting his favorite songs frequently is that I mean I'm I'm not I love listening to music but it's not there's now there's like a season where it makes sense for us to do that and we're prompted to do that and it's more okay to do it and maybe even if it's outside of the typical content that we create it's something that we're able to share at the end of the year with people that allows them to get to know us on a more personal level than you know for those of us who are tweeting about thought leadership right so as you as you look at what Spotify wrapped has done how do you think about ways to apply some of the learnings from it in your businesses whether it's business class for you Sophia or Jesse any of your three businesses um what are what are some of the lessons you can take that you actually right now could like brainstorm things to do within your within your company yeah that's a great question I mean there's a couple other ones by the way just to like remember the Coke cans that had everyone's name on it yeah I was so dumb about that and then someone realized no that's because people take the cans and take a picture and they post it and they're so excited to see Jesse on a Coke can and I fell for it multiple times and then the other one I heard that's even crazier is I've heard I know this is true that Starbucks purposely misspells people's names because it also has a social uh a social element dude which is genius if it's true you know for the the most obvious one for us is Kahani which literally I mean they're using the stories format so hell yeah like the the mobile web is just moving more towards that format which is a big part of our thesis but we've seen the same exact thing we share back with all of our customers you know what um what people are engaging on on their site and it's actually a great data tool for them to know it's way better than typically what they have on their Ecom site we have talked about the opposite which is could you show consumers what they're looking at on these stories across like the Shopify sites right the the different things that they're shopping on or that are super popular so we have lots of ideas around that but it's it's a one-to-one almost I'm trying to think of any of the other ones are interesting I mean you know the we have some things where we share hours and stats and data about how someone's using like their growth assistant um does Kahani do companies who use Connie and just for people who are listening uh Jesse to your business I don't know why I'm explaining it but basically stories format that makes the mobile shopping experience significantly better so you can click on the circles like you see in stories and it shows some of the best products that companies have on their mobile site uh do companies choose what go in those circles yeah it's both so there's some automation where they can say they want to show certain best sellers or automate the product of price points or type of product but then they can also literally just upload or edit the content any way they want yeah because I was even just thinking my head as a way to again use this site this notion of how to use personalization and data in a in a really compelling way now you have this network of all these companies that are on the money right like how do you learn basically what are the personas of everyone in the Connie Network and use that to like actually decide what goes in the bubbles on certain sites that's right yeah yeah there's crazy I mean you could have an app that's just Discovery based on which stories are getting the most interest across the Ecom Network I mean for a business clarable is gold right at Nasty Gal the clothing was shareable right that's not something that you have for a digital program for entrepreneurs and so that's why I did the flight manual this blue thing back here which is this beautiful portfolio that you get when you join business class that you house all 300 pages of your worksheets in and then it's an opportunity for people to share their own personal Journey or and you know there's pictures of someone at their desk with their flight with their flight manual and you know they're sharing like their personal workspace in the context of building their business or you know they take a screenshot or a photo of themselves watching one of our live videos Alex joined me this week uh it was a live call with students which we do and so that's and then often I they tag me and I repost that stuff so it's not as granular as like using data per se but it's an opportunity to create user generated content for a digital program that's really really hard to do yeah I also just think you've done it in a different way Sophia but like a big part of I think what makes Spotify rap so successful is it integrates with people's behaviors already existing behaviors through like the stories format right but also Simplicity like it is so easy to understand they don't over complicate it and I feel like something that's so powerful about what you've done with all of your companies whether it's business class Nasty Gal girl boss is the names we're all so simple yet so powerful like they they in some ways we're accessible yeah they were little literal they were accessible but they also had an edge to them and I think like that's such a powerful thing that you probably intuitively did with all of your companies I mean the first two Nasty Gal was an identity right it was I'm a nasty gal and then with girl boss it was I'm a girl boss and there's nothing more Peak for a brand than to build a culture where somebody is able to identify with it and not just identify with it but propagate that term publicly because they're proud of it right and that's like yeah that's free marketing that's some genius Sophia thank you the business class isn't quite doing that but maybe there's another one in me honestly I don't want to play into people's identities anymore I've played enough in that in that realm I just want to be really good at things and build things that people love that aren't necessarily like I'm a blank because this sounds like a good Dave topic that can get outdated it can get it can play get played the the last thing I'll add and then um I want to uh move on to the next topic about selling companies is one lesson that or there's two lessons from wrapped that I absolutely will take with me with within morning brew and anything else that I do the first is just this idea of creating fomo right and they're they're all different ways to create fomo but I think rapt has done it really well well in two ways one is by building an unpredictability and what I mean by that is wrapped the last three years has come out the first week of December but it has come out a different day of the year every year it was December 1st one year it was December 5th another year it was actually November 30th I believe this year and so you always know when it's coming but you don't know exactly when but they tease it out on social that it is coming so I think building unpredictability into your products into your drops I think is a really smart and interesting thing the second is involving the people that your customers aspire to be into your marketing is also super smart so for example they now have thousands of artists this year doing their wraps and creating videos around their reps they got professional soccer players on uh Barcelona to create videos around their rap this year right so now it's not only part of your identity it's also an aspirational thing because you want to do it because your heroes are doing it and so I mean we could go on for hours but super smart campaign and you know that is proliferated when like my Town's Instagram story Hoboken girl I live in Hoboken Hoboken girl uh created a meme out of Spotify rap specific to Hoboken so pretty amazing to move on to the next topic you know something that I get asked by entrepreneurs all the time is the sale of the business right like this is the North Star everyone feels like that is when they're gonna feel true joy and excitement around the process of building their company um but there's so much that goes into it and both of you have had the experience of selling companies so I just want to hear your perspective on what it's like when it's the right time and how it felt at the end once the process was done um Jesse let's start with yeah it's it's like it's probably multiple it's truly probably multiple podcast episodes you know from my perspective and you guys you know Alex you've been through it also I I think the there's a I'll hit on the kind of beginning in the end a little bit but I want to spend a lot of time on the process because I feel like that's the most unknown part that people don't think about or know when they when they talk about selling like you know there's you're building your business you're not thinking about selling it maybe somebody pings you from nav someone in private Equity or some investor person or maybe maybe a competitor or bigger company in your space wants to get to know you and I think one funny thing that oftentimes happens entrepreneurs would be like oh my God they want to buy you know they take it super seriously and I always tell entrepreneurs just like there's some guy in corp Dev and private that's their job their job is to know who you are it doesn't really mean all that much and the flip of it is there's nothing down downside about building a relationship with them but it's towards the bottom of your priority list and and anytime you get a business of any reasonable scale like we're tweeting about growth assistant Adrian's inbox is filled with private equity and other people being like I saw this thing and I you know let's talk and I'm like hey don't worry about that like that's all low priority so that's the first thing is that it comes up from now and you know time and time again typically people sell because maybe they've been added a few years and they want to try something different maybe you know the opportunity they can see how the world is changing and they think that they'll be better as a part strategically of another company you know back in the day with ampush it was Facebook ads were a big thing we were becoming big but we could see that like you couldn't just do one of those things you eventually would have to search and maybe Amazon these other things were like this makes we either have to get into that by buying companies or building that capability or we need to go sell and become part of something bigger which is what led to the Red Ventures conversation and so there's there's reasons right and those things come along and there's soul searching and there's a million other you know parts of it so that's one piece from my perspective the other piece is always just like what do you want you are you ready to take some chips off the table do you want to go for the goal do you want to find some hybrid and and what I also entrepreneurs whatever you want the world can kind of accomplish and it's funny because entrepreneurs start these things they do anything and then they start to realize they start to think very binary like I can either sell or keep going it's like there's always multiple options uh in that you know in that approach but I want to spend the time on okay then what so let's just say you get approached with an offer or you decide you want to sell your company what's that process like because I feel nobody understands it so typically what happens is you'll get an offer if you're lucky but that's not often typically people just go no we're ready to sell the company we're gonna go run a process that's kind of the lingo or maybe they're raising money and then during that process well the first step of that and you guys know this but just for everyone listening you know you think about should I get an advisor if I'm a big enough company and find an investment banker did you did you guys use investment bankers Alex did you guys use a banker yeah we used like a boutique Banker so typically I was gonna say one one reason was because honestly we didn't want to pay the fee that some of these big Bankers charge typically if you're selling it for under 100 million you'll find a boutique Bank who knows your industry but you're selling for over 100 million you'll call up Morgan Stanley or one of the big big kahunas and they charge one or two percent and there's a whole debate of whether or not that's worth it I I actually think it is generally worth it um which I'm happy to talk about but then you got you got to go build a deck you got to get all your financials together you got to get your numbers squeaky clean because people lots of people are going to be running through them you build this thing called a data room which is a multiple week exercise of literally putting every contract you have and everything you've ever your whole life into one huge Google doc basically um and then you gotta pitch it and what does that look like it can be anywhere from well first you got to reach out to a bunch of people that's maybe what the bankers do or you do if you're lucky you know you reach out to making up numbers 50 people maybe 100 people and you get 20 meetings called management meetings and those 20 meetings are I mean they are three to five hour meetings you're going through everything in your business you're being asked a million questions and at the end of that you know week or two process and typically you try to keep it concentrated because you want competition to exist so you can't you can't do that over two months of course right so you kind of go through that process and then you know you hope that one or two or three people go hey you know what we're really excited about this maybe out of the 20 maybe seven or eight double click and go we want to know a little bit more then you have another series of meetings then you finally get to maybe two or three people go you know what we're gonna we're gonna put something in then you gotta make sure well do they have all the information they need then if you're lucky sometimes you go through that process you get nothing and then you scramble to go find more if you're lucky you may get two or three offers you may get one it just depends then you go back and forth and negotiate that um and then everyone's like okay this is three page document it kind of highlights the the you know most of the stuff and everyone's like okay sign that and you're like okay can I breathe yet and you're like no no no now the hardest part starts and this is crazy that's the LOI you've agreed to the financial terms you agreed now you go through and for anyone who's ever bought or sold a house it's kind of like you you get under contract then there's a you got to get inspections and they want to inspect every part of your business they want to know does your sales is it really real can I talk to your customers let me meet the mid-level employee who you told me was really good and actually make sure they're good and just imagine every phase of the business is getting looked at with a microscope and a fine tooth comb which by the way if you weren't prepared for that or you didn't have your numbers or your data that that alone could end the deal they may go I just can't understand your business well and if I can't do diligence I'm out so it's a very intense process it's usually 30 to 90 days depending on that business no what uh no it was very under the microscope that microscope you're referring to during due diligence when we did our deal I'll give you guys each one guess your email deliverability Sophia your fit your Fitness is a damn wow I was questioning my own Fitness um but uh no my mom because because my mom has been my chief of staff for the last five years they saw another Lieberman on the employee list and they're like What's hap what's happening here like like why is Alex's mom on the payroll so that was that was where uh the most questions actually came about it all was fun why did you guys choose to sell your companies I think we're leaving that out Alex why why was that you know because you're you guys continue to grow right it's a great business yeah um it's funny because as you say that I would say there are people today who would say you guys sold too early right you know we sold for a reported 75 billion dollars this year the business will do around 75 million dollars people are like you clearly sold too soon I mean it is such a personal decision I'll start by saying just to kind of layer on to what Jesse was saying what convention says are the reasons you should sell a business so Eli Gill who's you know a um a really successful angel investor he has basically said there's five reasons to sell your startup the first is you're exhausted and you don't want to keep going the second is that the founding team is about to blow up not in a good way uh the third is that the acquire acquirer is willing to pay ahead substantially and you don't think that there's a likelihood that you will ever grow to that value that they're willing to pay the fourth is that you're about to get massively crushed by a competitor so an example he used is how Microsoft would oftentimes launch uh businesses or buy businesses that it would integrate into its operating system it would have a built-in distribution of hundreds of millions of people on day one and it would crush competition just as a function of access to that channel and the fifth was you need Financial Security or regular cash flow like now not in the future um I generally think my view of when you should tell is I agree with the you're tired you no longer want to build the thing um but but also on that there's a caveat which is there are other ways to even get out of if you're exhausted the business right like you don't have to sell it you could move someone internally like you're second in command to be the CEO the day-to-day operator of the business you could hire someone externally generally I would say there's more risk pendant up in that it's the most important hire you can make and you're it's someone who hasn't grown up in the business um I also think a good time to potentially sell is you get an offer that's worth more than you think you're worth now and you don't think the risk is worth it to see if you can grow above that value and then the third one that Elon uh pointed out that I think makes sense is if you want liquidity as in getting cash today but again I think there are other options like taking distributions selling a minority stake or selling secondary shares meaning your shares not issuing new shares into the business or the third is a dividend recap where you take a loan in order to take a special dividend or distribution to yourselves as Founders I personally the reason I wanted to sell morning Brew is twofold one because I had made this internal promise to my family that I wanted to take care of my family after my dad passed away um and I I just couldn't get over this mental hurdle of just visualizing that the Lieberman household no longer had inflow of cash because my dad worked on Wall Street for 20 years after he passed away my mom had already retired from working on Wall Street I just couldn't like stomach this idea that we were all cost centers to this now fixed pie that wasn't growing at all so I'd say that was part of it the the second reason is you know the deal we were able to do in my mind was able to give uh life-changing money and one could argue sure but you could get 3x the life-changing money if you don't sell your business for me my view was I didn't want to be greedy and I knew it would open up a lot of options for me in life at the age of 28 I also think your age matters a lot and when you choose to sell and I would say the second reason for me is in Business Insider I saw a partner that could help us grow our newsletters specifically way faster because they get hundreds of millions of page views a month so how could we convert any of that traffic some amount of that traffic to be subscribers to The Brew so we don't have to pay as much for marketing I'd say my co-founder did it for slightly different reasons but for me it was a combination of of money and growth opportunity and I think that's one thing that you know you read elod's I think it was five reasons to sell and that's one that he left out which is there's a bigger this is more proactive than like you know they think you know we're gonna eat their lunch they need to buy this upstairs you know there's a more positive kind of proactive elective reason to sell your company which is like this is an amazing platform they offer shared services we're not going to have to worry about HR or health care they're going to take over that part of the business we're going to get to focus on our zone of genius and you know when I sold girl boss my second company I did it because you know Joe Marchesi was doing a roll-up of other media companies and had been the head of advertising at Fox networks and had this huge portfolio of advertisers and relationships that he was going to be able to sell across in addition to girl boss and really blow it out in a way that would have taken us a lot longer too and that was why I did that I wish I had sold and it would have been for the same reason an urban retailer of millennial clothing once offered over 400 million dollars for my company uh for nasty GAO I owned 80 of it I would have pocketed 320 million dollars oh my God and my investors and I took advice right I controlled the board this is on me they told me to ask for more and it went away the chance of any deal happening is Slim so you know would it have ever happened is this Urban retail retail or even acquisitive would an integration with them have completely failed right you can sell your company and then fail to integrate it into the other company and end up with absolutely nothing and another thing I think worth mentioning is a lot of people sell their companies you know don't take cash off the table it's maybe an all-stock offer they have opportunities for an earn out which is like okay if you hit your metrics you know then you'll get paid this year and then you'll get paid another chunk next year it's a bit of like golden handcuffs but if that if this acquire doesn't give you the resources that you need to actually do that or set you up for Success you're not even in complete control of your destiny your your company's Destiny because you've got a boss yeah so I think I think one other one other reason I want to add hold on real quick is like does not in that list is you know you said as you kind of said this Alex but entrepreneurs have careers also I think people miss that right and getting an exit under your belt at a young age is a is a broad validate to say that you're ex you know 20 however 29 I've sold my company it opens up doors it opens up doors that otherwise wouldn't be open even if your company was bigger and you were you were running it along and I think people don't realize that there is I always like used to look at this with the like Zuckerberg is such an exception even Elon Musk his first company was like a little ad Tech business that put like ads in newspaper websites that he sold and I was just a joke I'm like yeah like people work their way up to these massive massive insane bets they don't know very few people just end up and start there and I think that's like a I think the rhetoric in the in the world is different it's like no no you got to go all the way you got to go all the way and as opposed to like it's okay to have a small win start a Consulting business sell it for five or ten yeah that's a huge outcome and it will set you up for the next thing and you can keep swinging bigger each time it's funny that's uh uh Andrew gazdaki who has micro acquire yeah he's big on that proud investor one of his best pitches for micro acquires like yeah if you're an entrepreneur who's just starting out you're you know your first at-bat should be build a micro SAS business that you can sell on micro acquire a year or two later get uh you know a few uh million in your pocket then take a bigger swing yeah I think what early entrepreneurs don't realize is that if they're a great entrepreneur they're going to have many lives in them right it's easy to get attached to your first company and be like oh my God if this doesn't work out if I you know just hang on to it and be overly optimistic and be like well what would I do next this is my baby you know be emotional about their business which I don't think is completely healthy but it's like we've got many businesses in us all of us right Jesse you've done it I've done it Alex is um but I think it's you gotta like sorry uh this is a great thing um but it's a there's a level of confidence to saying like you know what like I've built this thing I'm really proud of it but I'm I I there's more in me and it may not be this and and I want to go back to the process for one second like just because I feel like people don't see it and get it it's it's a mo it's a grueling process there's tons of lawyers involved you could spend a big fee by the way if the deal doesn't close you're you're stuck with those fees like which is which happens to people and you know Sophia you said this in passing earlier that even once you sign that Loi it's probably maybe a 60 40 shot right and and so that's another thing for entrepreneurs when you're in that zone manage that process very carefully the easiest way by the way I would tell anyone to think about it is it's really simple imagine you were spending millions or tens of millions or hundreds of millions of dollars to buy a business what would keep you up at night just think that's you got to put yourself in the shoes of the acquirer and and that's what a lot of the legal stuff is about are you telling me the truth well you promise you're telling me if you're not and I find out later can I get my money back and that's you'll spend tons of times with these things called reps and warrants and indemnifications inside of that agreement because if you are buying a company if anyone's buying a company they really want to know that each thing that they're saying that is being said to them is true in fact or they have some recourse around it and then just like last thing you guys have all been through this but I always think it's hilarious like the closing is like a Bond movie at least mine was I don't know for you guys it's like you have these documents you sign them some lawyer holds all of the documents in one central place computer pops up and you're like we've sent the wire like it literally is a real time we sent the wire and you're like refreshing your screen it's like holy holy [ __ ] like that happened and then you show everyone sends the wire and then the person distributes all the signatures and then it's like it's not you you sold your company that you don't understand anymore yeah I I will say I wish was it like that for you guys I wish mine was as intense and cool as that mine was in my mom's living room during the pandemic my mom and my fiance in there with uh champagne bottles and balloons trying to pump me up they're all excited Austin and I are on a zoom call with you know let's call it 14 people half of which are in Berlin and it's night time there half of which are people in the U.S and they they say you know we're gonna send the or like uh we're gonna initiate the wire um can you verify this information they verify the information they say uh wire initiated and then they say congratulations guys and Austin and I are just like two schneebly is just like oh thank you and I I honestly I was like oh that's my favorite word um and yeah we like I was excited it does end up being very anticlimactic in that moment I think I don't know if you guys felt that too because you've been grinding so hard and it's like you knew it was coming you knew it was coming and obviously you don't want it to not happen and then you're like oh okay it's relief more than excitement what if it was the first thing you bought a dog I got an M5 wow actually I told you guys about the the Vinnie's graduation present story right no so I was an expecting father right and my wife had a baby like right around the time to steal clothes our son Ricky seven years ago I was like I want a splurge on something and I've been looking at jet smarter it's like the app where you can book private jets and they had this amazing deal where for ten thousand dollars a year you could hop on empty legs for free and I would like watch it every day and there'd be tons coming from San Francisco and I'd be like I can just take private jets like how cool would that be like I as soon as the deal closed I spent 10 grand on this this stupid app and I had a newborn I didn't know what I'd like to have a newborn but turns out you can't just jump on a random flight that pops up because you want to get on a private jet right this is not how it works and so my younger brother who looks like me the same height I gave him like I gave him my ID that's probably illegal whatever but he was in New York City and he was 22 years old working in finance and he literally would go every weekend with his buddies on a private jet somewhere didn't cost me anything right it's unlimited and guess how many times I used it during the year of the ten thousand zero two zero I never used it once and then I called to cancel the answer I just want to I called to cancel and I'm like I'm sorry I'm not getting a lot of use out of there like Siri or one of our top users you got brownie points of Vinnie so my co-founder calls it Vinnie's graduation present that's that's it that's amazing um well last question for you guys then we're moving into uh the fun final game uh where you guys are just going to go off about different topics is if you have one lesson or one thing you would do differently if you sold another company what is that 30 seconds Max what I do differently yeah just Jesse be as buttoned up as you can be and and manage every every day manage the process every day like especially once you've signed the LOI I think pick a more established acquirer so the company who acquired girl boss was still a newish company they had raised money they were doing Roll-Ups of existing businesses but they hadn't done it before they were in the process of raising money so somebody that really has kind of Legacy doing that and has has done it has done it and done it and done it over the course of years and understands what that looks like that would have been nice yeah for sure yeah I I think to your point you're when you're acquired you know sometimes we don't think about it kind of in the moment of we're going to be making money but it's like actually the stability of the partner you're working with because in some cases you're making a many year commitment to them it's um it's important to have a point of view on them uh I'll just quickly add I think Leverage is your best friend um in in the deal process so having other offers in hand not needing to do a deal like the acquired knowing that you have you would be very okay with just walking if you're not satisfied and also performing really well while the deal is going on which is why I think I think uh Justin Khan's um advice of like the best time to sell a business is when you don't want to or need to sell a business is oftentimes um kind of the best way to do it so that's my thought there guys we're gonna do a final game to end the show despite getting bullied by both my ghost I'm sorry the only one who called me a five-year-old but we're gonna go into this okay like a baby baby on in my mind we need to get rid of this baby Buffett name that's like what they call the Sam BF guy I didn't go to college I don't know what a deal can we call it something else a dean of a school you do you do business class you run this this business class okay we'll do a refresh we'll talk about it um you know off show and then we'll we'll see what people think okay we're playing okay composure we are going to play a new game called thumbs up thumbs down so this is how it goes I am going to make a statement um of fact and you're going to say you're going to show thumbs up or thumbs down and then provide like five to ten seconds of commentary on why you gave the thumb you did okay so we're gonna start from the top I'm gonna go Jesse then Sophia and I guess I'll give my answer after you guys Jesse Elon will get revenue of Twitter from 5 billion to 26.4 billion by 2028 which is what he promised investors who invested in the deal uh I'm gonna go thumbs up I don't think he'll quite get there but he'll get he'll get good enough Sophia I have no opinion here I don't know enough about Twitter's business and I'm gonna just be honest about that so so thumb to the left yeah left okay neutral uh I'm going to go thumbs down uh I believe I believe in Elon I just think that it is going to take more than call let's call it five years to 5x Revenue given they haven't even really proven that they can scale one Revenue stream let alone what I believe will need to be multiple to get it to 26 billion dollars in Revenue uh okay next one Jesse it is a good time to start a company double thumbs up why um people I mean the competition when everything is hot like it's hard to hire people salaries and and compensation is out of crazy out of whack during those times like really Bubblicious it's yeah it's hard to get find and get people I think there's a lot of money out there but there's a lot of noise also and it's just hard to operate in the noise sometimes I think when it's quieter there's not as many people I think starting something you sort of whoever you get at that time comes in with the expectation that like this is a risky Venture and that's actually like great versus there's almost stability in the risk if that makes sense versus a big company who never knows when the next layoff is going to happen and they're constantly worried about that's a very different orientation so um rent is cheap like yeah I think it's a great time your expectations are low you don't have to like become the best business every you know five five months and raise another round every five months yeah yeah Sophia I think it's I think it's a great time to raise a business for some for a Founder who isn't looking for evaluation that's going to be like it has been over the last few years uh for a Founder who's going to be really honest with themselves about okay like I'm gonna maybe I'm gonna raise money maybe I shouldn't raise money quite yet it's like not a great time to do it but the investors who come in are going to be investors who aren't like over you know they're going to be people who have a lot of conviction because there's less money getting thrown around and will probably be more helpful because they have a lot more to lose um in a market like this and in the same way that it's like you know maybe a good time to be investing in the market because things are down it may be easier to fundraise in some ways again if you are conservative uh and kind of mirroring that advice on to yourself as a founder and being really honest with yourself like building it for the right reasons you know if you're in it for the right reasons it's a good time to start a company so is that a thumbs up uh it's a thumbs up okay thumbs up perfect a few more uh SPF Sam bankman freed will go to jail I hope so Jesse feels weird to thumbs up that but I guess I'll thumbs it up that's a yes it's not you're not interested I feel bad for the guy so you think he will go to jail yeah definitely I can't believe he's like tweeting like I'm just like Sophia I think it's defense I think that I very much by the defense people are talking about that he's doing it's genius apologize I made a big mistake I'm sorry I'm a little baby so far um it's so far beyond but it's so genius if you're him why is it genius because it makes people like just like anything it makes people less upset you're saying sorry like it versus you know Elizabeth Holmes was just like I don't do anything wrong I don't know what you guys are talking about like not taking ownership and responsibility it pisses people off and on a lot these things are driven we like to think the justice system is not driven by the media or whatever but it is it's driven by how upset some prosecutor gets how aggressive people want to get around something like this and it's a good strategy it's also like incompetence versus versus shadiness or fraud and I think it's a good it's just a good angle but he's gonna go to jail yeah so Sophia thumbs up her thumbs down thumbs up you know it's one thing to lose investor money it's another thing to lose the money of investors that you're managing and if they're going if those and you know anybody who invests in any Market especially crypto should ex you know be expect to lose all their money possibly right we've all if anybody have has have crypto it's obviously worth a lot less than it used to be but that's not something you expect from the company who's managing it um that you know that we don't really see that with traditional Banks and I think that's I just think that's really messed up um yeah and I think he had a responsibility way bigger than pretty much I mean almost any anyone out there uh I mean yeah and and I think I think the punishment will fit the crime yeah I'm gonna give a thumbs up uh because fraud is still fraud even if you act like a baby even you if you act like Alex Lieberman and uh you're a five-year-old are you well now I'm comparing myself to SPF I'm not like him at all guys uh um but no I think yeah it's still fraud even if he's acting like he made mistakes still fraud um last one for you guys before you wrap up the episode I think this is going to be a tough one you can build as successful of a business 100 remote as 100 in person Jesse as someone who is doing it right now this is a really tough one I'm gonna I'm gonna aspirationally give it a thumbs up but I don't know how yet like I I have my own sense of skepticism and I think like successful is one question I think like fun and enjoyable is a whole nother you know like those are kind of two different questions but that could just be your definition of success yeah I think aspirationally yes I'm gonna say but I don't it's not obvious to me and I feel worried about it Okay Sophia I mean are you a retail business like are you a digital business or you know it's like some people have to go to work um and you know I once saw a meme that said introverts rejoice in the comfort of your own home so remote work for an introvert is a dream it's like school not everybody learns the same way and not everyone works the same way and I've done my best work behind a computer I started nasty gal I wrote girl boss and I built business class almost completely behind a computer and while I'm very public and I've employed a lot of people I'm very much an introvert and working remotely is something that is a blessing to me I mean I could leave the house probably more and I could not eat at my desk a little bit more but what I've built has been in a pilly bathrobe I haven't had to put on a show for anybody or raw raw you know you know teams walk into the office like good morning guys it's not natural for me I've done it it's not my favorite thing and I do my best work as an intern from behind my computer yeah I'm gonna go thumbs I'm gonna go thumbs down um I just think it's impossible to build the connection that is necessary to have people have enough affinity for a company to stay there for a long time so I think retention becomes really difficult Beyond other things like communication and creativity um okay we are done with the show Jesse or Sophia what do you guys want to do the send-off anything anything to say to our listeners before we go [Music] have a great week keep grinding keep s Misfits keep being Misfits addressing the fit yeah keep missing the face anything else Sophia um last uh thing before we go everyone we would love for you to rate or review the show on podcast players but as Jesse said only five stars if you have four below just don't bother raiding And subscribe or comment on YouTube if that is where you watch The Crazy Ones plus if you want to say hey and uh introduce yourself shoot us an email at thecrazyones morningbrew.com but uh we can't wait to see you next week for the best show on planet Earth for entrepreneurs take it easy everyone thanks everyone thank you guys so much for watching this episode of The Crazy Ones if you're an entrepreneur or a builder and want more great startup content make sure to subscribe on our YouTube channel or wherever you get your podcasts
2022-12-09 18:08
