Andrew Wilkinson's $20,000 to $260,000,000 story (#521)

1. 0:00 – 2:00

   Intro

   1. SPSam Parr0:00

      All right, what's going on? This is Sam. We've got an awesome episode today. We have Andrew Wilkinson on the pod. Andrew's one of our good buddies. Andrew owns this company called Tiny. Tiny basically started as like this agency that made a bunch of profit, and he took those profit and he's bought like 18 or 20 different companies. And he took Tiny public. I think today it's trading in the $600 million market cap. So he's got like a really good perspective on what's going on in life. Um, during this episode, I think it's the, the, like, with 20 minutes left in the episode, he's actually has s- said something that I'm, I'm sitting here taking notes. It's gonna change my business. It's about the, this thing he called the profit first m- uh, mentality. And he goes in, in depth on how much money he leaves in each business and how the CEOs are able to operate them. And it's really insightful stuff that I haven't really heard him talk about before. And then also, Andrew is interesting to me because Andrew's my close friend, but he's very wealthy and I get to ask him all types of questions, uh, kinda like behind the scenes stuff on how he spends his money. He talks about how he's now a patient of Peter Attia, who's this famous doctor, and how much he's spending on that and, and, and the outcome of that. I find it very interesting. He talks about shooting his shot with his heroes. So he's done business with guys like Bill Ackman, who's a, you know, worth $10 or $20 billion, is a hedge fund guy. And he talks about how he met Charlie Munger, who's, uh, Warren Buffett's partner. And so there's really interesting insights on, A, how he lives his life, but how he got in the doors that he did when he was still up and coming. Really fascinating. So this is the episode with Andrew Wilkinson. Let me know what you guys think. You can hit me up on Twitter, theSamParr, and let me know if you enjoyed it. [upbeat music]

   2. SPShaan Puri1:36

      All right, what's up? We got the man here, Andrew Wilkinson. Fan favorite, guest of the pod. Um, welcome, Andrew. How's, how's, how's it going?

   3. AWAndrew Wilkinson1:44

      Hey guys, I'm good.

   4. SPSam Parr1:46

      So you gave us like a list of like ideas and things that you're kinda messing with, but you have this thing on here about sexy versus non-sexy things. And you're like, "The things that everyone loves on the outside, they're the hardest ways to make a living." And so you,

2. 2:00 – 12:00

   Business on hard mode vs. easy mode

   1. SPSam Parr2:00

      you said here that... I didn't know this. I, I, or maybe I did. I knew you owned a bakery. Is, you said you own a deli and a bakery. Is that two separate things, or is it one thing?

   2. AWAndrew Wilkinson2:09

      No, that's combined. That's one.

   3. SPSam Parr2:11

      And it's a pain in the butt.

   4. AWAndrew Wilkinson2:13

      Total pain in the ass. So yeah, um, been thinking about this a lot lately because I think when you talk to young entrepreneurs, they're, they always wanna do something sexy. And I was like that too, like I was a product CEO, right? You think every CEO kinda has their thing, and for me it was making great products. So when I was running software companies and stuff, I'd always be thinking, "Oh, when we release this new feature, that's when everything will take off," or, uh, you know, "When we get this partnership," or, you know, whatever big announcements, something flashy. But one of the things I've realized after running a company for like 20 years is it's really not the sexy stuff that pays off. Um, you know, for example, like we have a bunch of companies, um, and, you know, one increased prices 30% after not increasing prices for five years. They massively grew profits, right? That took 10 minutes, a little bit of planning, um, and that paid off big. Um, you know, one significantly re- reduced shipping costs by sizing down packaging. Um, you know, another realized, hey, we've got insane SEO on certain keywords, and now we can drive affiliate revenue. Uh, you know, one had a bunch of customer gift card deposits, and they were like, "Oh shit, we can invest these in T-bills and make 5%," makes 500 grand a year of just pure profit. I just love these boring things like that, and I've realized that it's kinda sad. Like, you know, I grew up being like, "Oh yeah, I wanna be the next Steve Jobs or James Dyson or something," but the things I'm actually good at are these really, really boring... I call them like lever pulls. You get in, you pull a lever, and revenue or earnings just grows, uh, you know, by X percent. [upbeat music]

   5. SPSpeaker3:52

      This data is wrong every freaking time. Have you heard of HubSpot? HubSpot is a CRM platform where everything is fully integrated. Whoa, I can see the client's whole history. Calls, support tickets, emails, and here's a task from three days ago I totally missed. HubSpot. Grow better.

   6. SPShaan Puri4:12

      You know, the, the good thing about that is that the older you get, the more, like appealing those get. And so, for example, like, and, and this also is just in life. Like, you know, I've never seen a couch I don't like. You know, the older I get I'm just like, "You know, it'd be nice to sit right now." And I feel like the same thing happens in business where I used to think I wanted to pull off some like awesome feat of like creativity and hard work, and I actually very rarely wanna do that. There's times, but most of the time I'm like, "Oh, what's the simplest thing I could do that will just make this work better?"

   7. SPSam Parr4:44

      And you were the king of that. You were, you were the king of that. You, you owned a video streaming startup that were, or you were like to the moon or nowhere. Uh, and you spent like five years or four years doing it. I mean, you were-

   8. SPShaan Puri4:55

      Of course

   9. SPSam Parr4:55

      ... you were all in.

   10. SPShaan Puri4:55

       And we were building cr- crazy computer vision features and all this stuff even before AI became like, you know, really big. And, and the reality was like, we had this other business called Birthday Alarm, where Birthday Alarm was like a reminder of it's your friend's birthday today, and it would send them a cheesy e-card, y- you know, if you paid $9 a year. And that business had been printing cash, millions of dollars every year for like 15 plus years. I think it started in 2001, and I'm, this was like, I was working on it like in 2016, 2018. So like, you know, 18 years later. And, um, we, we were like, you know, at one point we finally got our senses and we were like, "Why don't we make Birthday Alarm like a little bit better? Like, uh, it pays all the bills. We could just improve it, right?" And even then the team was like, "List of ideas. Rewrite the whole thing in the new like, you know, make it, re- rewrite it in JavaScript. Oh, it's written in this old like language," 'cause that's what was hot in, in 2001. "We gotta rewrite the whole thing. And then when we do that, we'll be able to make it so much cooler. We'll add these new features. We'll redesign this." We redesigned it. Our designer spends mockup after mockup on like making it cleaner and more minimalist and more cool or whatever. And I tell you what, after a year of doing all that shit, there was really only two things that made a difference. Um, number one, we raised prices. Uh, so, you know, raised prices by 30%, exactly what you said, Andrew, 'cause the prices hadn't gone up in 15 years. And-

   11. SPSam Parr6:22

       You just delete the zero and the $20 a month and change that to a five, so it's 25 a month.

   12. SPShaan Puri6:26

       [laughs] Exactly. And then the second thing was, um, s- we implemented Stripe instead of the old payments platform, because Stripe had a feature where if somebody's credit card expires and they get a new one, like an au- they, you know, their credit card company gives them a new one, it would mess up your subscription. And they... Stripe has a feature for, for 25 cents they would just update it with the new card automatically without the user having to go type anything in. And that one, that like one feature is like a, you know, seven-figure feature that took honestly no work on our... We just had to check a box on, on Stripe to be like, "Yeah, we want that. We'll pay the quarter for every time you do that." And, um, you know, we made like an extra million dollars a year of profit just off of that one thing, basically. And, uh, it, it was a big lesson learned of like, you know, the, the link between effort and result is, uh, so much more disconnected than you think. And, uh, the more mature you get, the more you realize like you should just work backwards from what's actually gonna work, not like what's the cool or m- or difficult thing to do.

   13. AWAndrew Wilkinson7:25

       These, these things too, they're so often they're one day of work, right? Like, we had a similar thing. We had this, um, invoicing software about 10 years ago called Ballpark, and, um, it was the first SaaS, uh, product that we built. And we realized we were doing like, I think, $100 million of payment volume through the credit card processing. So, you know, I send Sam an invoice for 10 grand, and he has the option to pay on credit card, and we just marked it up 2%. And I think that was worth hundreds of thousands of dollars to us. And I remember it was like 10 minutes for me. I was like going through Stripe and realized there's this setting, and I checked a box, and suddenly we make way more money. So I think, um, this stuff is super powerful. And I mean, like, just to tell, to like give an example, so, um, you know, Sam mentioned, so I own like a deli and a bakery, and when I was a kid, there was this, uh, bakery down at the end of my street that I would always go to. On the weekends, I'd go and get a croissant and have a coffee and sit and listen to a podcast or something. And I knew the owner. My brother worked there. Um, the owner would pay me like 10 bucks an hour to fix his computer. And about eight years ago, he comes to me and he's like, "Hey, I'm gonna sell the business. I wanna make sure it goes into good hands. Will you buy it?" And I don't know anything about the bakery or anything, but I kinda wanna protect this like cool neighborhood institution, and so I buy it.

   14. SPSam Parr8:43

       And you wanna be like a big shot. You wanna be like, "Oh, I got-"

   15. AWAndrew Wilkinson8:45

       Yeah.

   16. SPSam Parr8:45

       "C- Come hang out at my place." You know? Like...

   17. SPShaan Puri8:48

       Would you like some of my bread?

   18. SPSam Parr8:49

       Yeah. [laughs]

   19. AWAndrew Wilkinson8:50

       Totally. There's like, there's always like a pride of ownership, right? Like, if I tell someone lo- let's say like locally, I'm like, "Hey, I own this huge social network for graphic designers, Dribbble," they're like, you know, eyes glaze over, they don't care. But if I say, "Oh, I own Ottavio," like the local bakery that everybody goes to with their kids, they're like, "Whoa, that's so cool." So there's a lot of pride of ownership, but there's like 30 or 40 employees. Um, you know, we have to m- ensure like a baker wakes up at 2:00 in the morning to bake the croissants. A million different things have to go right to serve a customer and have them have a good experience, right? And this business is like, you know, it goes from making money one month to losing money for six months. Um, you know, t- huge swings. If like one person quits, it messes up everything. Super complicated to operate. Um, and if we're lucky, at the end of all of that, we'll maybe make 150 grand a year. Now, on the flip side, we bought a business about almost 10 years ago called weworkremotely.com, and it's very simple. It's a job board. People pay money to post like a blue link, kinda like s- uh, Craigslist. So you're hiring remote, you post on We Work Remotely. Uh, it would be like, you know, "I'm hiring a developer for, you know, automatic or whatever." So p- we were ch- When we bought that business, they were charging $199, and it was run by the guys from Basecamp, and they just didn't do any mar- marketing or promotion, didn't do any SEO. So we buy the business. Uh, we pay three or four times earnings or something, which was, you know, a fair price given what it was doing. Um, we immediately take the price from $199 to $299, because that's what all the other job boards were charging, and we hire an SEO consultant. We start doing SEO, we start doing email marketing. That business went from doing about 400K of profit to, I think, a couple of years ago, it did 4 million of EBITDA or something in that range. So these... And that business, that had two employees and one or two part-time contractors, right? And literally, like the entire team could go pens down for six months, and it would still keep printing cash. And so you look at it, and it's like business on harm- hard mode versus business on easy mode. But the inexperienced entrepreneur would look at the bakery and go, "Ooh, sexy," right? And it's like online there's bakeries too, right? E-commerce businesses are bakeries, in my opinion.

   20. SPSam Parr11:15

       How much of, uh... What was, uh... So t- for those who don't know Andrew, he took, uh, his, kind of his holding company, took public. I think today it's trading many hundreds of millions of dollars, 5 or $600 million. What were your earnings that you reported for last quarter? Or, uh, what's like the public, uh, record for your annual earnings? I think it was between 30 and 40. That's like the public number, I think. But what's crazy is that We Work Remotely would've accounted for something like 10 or 15% of y- of, you know, this company worth hundreds of millions of dollars of, of your guys' earnings. That's pretty wild.

   21. AWAndrew Wilkinson11:49

       Well, and I think a lot of people forget that small things can get big, right? We grew that, we took that business, uh, from 400K, we basically 10X'd it, and we bought that business,

3. 12:00 – 19:30

   Cliffs Notes for “Profit First”

   1. AWAndrew Wilkinson12:00

      I think, for about 1.5 million, right? So it's pretty, it's pretty wild how powerful this stuff can be. When you see a business where they're just not, they're myopic on something, they're not doing The best practices, and often it's because they have other priorities. I mean, the Basecamp guys had $100 million ARR SaaS business. The last thing they're gonna be thinking about is this little pimple on their ass, this, you know, remote job board.

   2. SPShaan Puri12:23

      [laughs]

   3. AWAndrew Wilkinson12:23

      Uh, so buying, buying from someone like that is a great opportunity.

   4. SPShaan Puri12:27

      I was talking to one of your company, uh, CEOs last night, and, um, they mentioned this Profit First book, which I think is interesting. Uh, Sam, do you know about this Profit First idea?

   5. SPSam Parr12:39

      Everyone is talking about that. Andrew r- told me about it months ago, and since then I've seen, like, eight or nine friends bring it up. I don't know what it's about, though.

   6. SPShaan Puri12:47

      I'll give you my take, and then Andrew, you, you fill in the gaps. 'Cause I haven't read the book, but I was like, "Can you just explain it to me in five seconds?" And then they explained it to me in five seconds, and I was like, "Oh, got it, and that makes a ton of sense." And so here's the, the ultra I haven't read the book version of, of the book, which is in a normal business you get revenue, top line, and then you start... You know, you get your gross profit, so like, you know, revenue minus what it took to sell it, to sell those goods. And then you have, like, all these other expenses. And then what, what's left is, like, the profit at the end. So profit's at the end normally, and then you sort of take a distribution out of it. That's probably how you ran The Hustle.

   7. SPSam Parr13:25

      Yeah.

   8. SPShaan Puri13:25

      Or you take no distributions 'cause you're just paranoid. Um, and that's how I run my e-commerce business. And I think what the profit first mentality is you take the gross profit and you put that in your bank account. And then a- as you have bills to pay, you have to take money back-

   9. SPSam Parr13:38

      Do you literally put it in your bank account or figuratively?

   10. SPShaan Puri13:42

       I think you literally-

   11. AWAndrew Wilkinson13:42

       Literally, right? Yeah

   12. SPShaan Puri13:42

       ... move it. You move it into a profit bank account-

   13. SPSam Parr13:44

       You sweep it

   14. SPShaan Puri13:45

       ... that you don't, you don't see. You sweep it out of the company.

   15. SPSam Parr13:47

       Got it. Okay.

   16. SPShaan Puri13:48

       So you sweep it out of the company, then the company gets a bill from some vendor or some software, and then you have to go back and you have to now take money out of that pocket and pay it. And there's something psychological about when you just accept the waterfall of expenses and you're like, "I guess I get what's left," you sort of leave the fat in the company versus if I paid you out everything and then I said, "Hey, Sam, um, it's gonna be eight grand to use this software," or whatever. You'd be like, "Eight grand for this? I don't wanna... I have to take eight grand out of my pocket and pay for this?" You start to question a bunch of these expenses, and it sort of forces you to get lean even though nothing changed except for the order of operations.

   17. SPSam Parr14:21

       But does that ruin growth? Does that, like... Does that ruin when you see an opportunity and you wanna pounce on it? Like-

   18. AWAndrew Wilkinson14:27

       Well, well, no, 'cause you would just, you would just, s- you'd take that money and you'd invest it back into the company.

   19. SPSam Parr14:32

       And, and first, Andrew, did I, did I bastardize it or, or was that, was that an accurate description?

   20. AWAndrew Wilkinson14:36

       I, I think you nailed it. I mean, um, the way to think about it is, like, if you wanna lose weight, you know, there's the, all these, um, psychological experiments where they give people food on different sizes of plates. And the bigger the plate, the more they eat because psychologically, you know, they gotta get through all that food. So the idea here is smaller plate. So yeah, you, if you make 100 bucks, you immediately take away 30, and people are just forced to eat off of a smaller plate, and so they eat less, and they're more thoughtful about expenses.

   21. SPSam Parr15:05

       But how do you do the math to figure out how much cash to leave in the bank?

   22. AWAndrew Wilkinson15:09

       Well, I think you would always say that, um, y- let's say that your business historically has run with a 30% net profit margin. You would always scrape out 30%, and over time if there's excess cash, they're more profitable. You keep increasing that threshold, right? 'Cause you wanna be running as, as, um, as optimal as possible. One of the weirdest things I've noticed in business is that everybody, all CEOs seem to go, "You know what? 25% profit, that's good. Let's le- you know, that, that's what we should manage to."

   23. SPSam Parr15:42

       Yeah, that's how I feel. I do that.

   24. AWAndrew Wilkinson15:43

       What I've seen is that some of our businesses historically, not at all times, can operate with 80 or 90% net profit margins. And if we got a dreamer in there, right, if we got a CEO like me from 20 years ago or, or Shaan from 20 years ago, we'd be going, "Oh, let's innovate. Let's do all these new things," and they'd burn through all that cash. So I think it's a way of creating discipline. Now, we haven't actually implemented this. I've gone to all the CEOs and asked them to read it, and some of them have got excited and implemented it. But, um, I think it's a really interesting framework, especially for smaller companies.

   25. SPShaan Puri16:16

       Our buddy, uh, Suly does this. So I was like, how much working... 'Cause, like, our e-com bank balance is getting bigger. I was like, "How much should I leave in there versus, uh, you know, distribute out?" Um, and he was like, "I just distribute it all out." And I was like, "All of it? Like, what about, like, three months of working capital?" And he's like, "Okay, you can leave a month or two," but he's like, "People act like you can't just put money back in the bank account. Like, you can always put money back in the bank account. There's no penalty for this." And he's like, "I think you have way better discipline when there's not this huge bank balance sitting there." And, uh, y- you know, and I was like, "Oh, okay. I guess you're right. There is no, like, penalty or, you know, for just sending the money back into the bank account when it's needed." But you will question, is this really needed, and h- why is this needed, and what happened last month that is leading us to inject capital back in?

   26. AWAndrew Wilkinson16:59

       I've, I've, like, yelled at Sam over text a few times about this-

   27. SPSam Parr17:02

       Many times, but-

   28. AWAndrew Wilkinson17:03

       ... 'cause he's, like, super conservative

   29. SPSam Parr17:04

       ... I'm really conservative. I've changed, though. So starting January 1, uh, we're making the change, um, where I'm taking out a lot of the money, and we're actually just putting it into, like, T-bills, into a different account to figure out what do we wanna do with the money. Um, maybe we'll pay ourselves a little bit. I haven't paid myself anything from Hampton at the moment, but maybe we'll pay ourselves money as well. But yeah, I'm, I'm... You've convinced me that that's the right way, and I'm g- I have to read this book. What I'm still trying to figure out is how much capital to keep in the business. I don't know if I wanna, like, do... So let's say your business is, is spending $500,000 a month in expenses. Do you just leave in, like, one month's expense? What's the equation for-

   30. AWAndrew Wilkinson17:43

       Chris, Chris and I, we used to leave two weeks' expenses in the business.
4. 19:30 – 24:00

   Leveraging incentives

   1. SPShaan Puri19:30

      much net profit per month or this much? I'm not taking it out anyways, so I don't really feel the difference." Whereas if my paycheck is less, I'm like, "Where's the rest of it?" And then I have to go answer that question. And so I think this is such a... I look for forcing functions, and I think this is an amazing forcing function that, like, initially I was ready to poo-poo this book. I was like, "What is this stupid idea?" And then as soon as I heard it, flipped my, flipped my opinion.

   2. AWAndrew Wilkinson19:56

      There's, there's a really good quote on the... I was talking to a friend about this who runs a SaaS company. I won't say who, but he has 65% net margins, and he's been running this SaaS business for 20-plus years, um, growing, you know, 20, 30% bootstrapped every year. Just amazing, amazing business and great entrepreneur. And I was telling him about how we had not done this in certain businesses and how the CEOs had misallocated some of that cash, and he looks at me and he just goes, "If you ask the dinner guests what's for dinner, they will always say steak." And I was like-

   3. SPShaan Puri20:33

      Mm-hmm

   4. AWAndrew Wilkinson20:33

      ... "Oh my God, that's so true," right? It's like, why wouldn't they? You know, it's not their money. They... You know, yes, don't get me wrong, like, a CEO is incentivized for a bonus, but for a CEO's bonus, they can spend $300,000 of your money, and that might only be worth 10 or $20,000 bonus for them. They don't care as much. Um, you know, every dollar counts when it's you and you're the owner/operator.

   5. SPShaan Puri20:56

      I did the same thing when I sold my house. I, I was like, "Okay," um, I forgot. We were selling it for, like, let's say it was 2.1. And I was like, "I think we can get 2.2." And the agent was like, "I don't know. Maybe it's 2.1." And I was like, "Well, I, I get it. You wanna make the sale and move on." But I was like, you know, he... And I thought, "Oh, we're both aligned. If, if it's 2.2, he gets more and I get more." But I realized, well, this guy gets 3%. He gets an extra three grand. I get an extra 97 grand if it's 2.1. I was like, this guy doesn't give a shit about that three grand. Um, you know, he's getting, uh, whatever, you know, 3% of the two million anyways. This three grand is, like, not worth the time and hassle and risk of pushing a negotiation. And so I incentivized him. I was like, "How about this? Let's cut a new deal." He's ready for me to, like, cut him down. And I go, "No, for every dollar you get me above 2.1, you're gonna keep 15% of it." And sure enough, I... And, and I made him... I, I also had a penalty. I said, "And if you don't sell it for e- at least 2.1, you gotta buy my wife this bag." And I was like... 'Cause I was like, I don't wanna take money out of this guy's pocket, but I also want him to feel the pain, so I made it a goofy gift. I was like, "You... Uh, these, like, expensive slippers that, like, clearly are a waste of fucking money." And he was like... And then literally, we got down to it. We got an offer. It was around 2.12, let's say. And, uh, I was honestly ready to take it at that point, but he was like, he was like, "It's about 2.1. I don't know, like, you know, let's see if we can push back." He's like, "I really don't wanna buy that bag." Uh, so he's like, "Well, I'm gonna for sure get it over this." He's like, "Let me see how far I can get it." And, um, he's like, "Let me go push one more time." And he pushed one more time, we got a better deal, and it was just such a simple, like, lesson around, uh, really understanding the incentives, and not just, like, the, like, on-paper incentives, but, like, is this enough to move the needle for this person to behave differently or not?

   6. AWAndrew Wilkinson22:43

      I, I think it's so crazy the more that I go through working with other people in business. I realize that everything comes down to incentives. And if you just think about the incentive, you'll see the, you know, the exact behavior that they're gonna have. I did the same thing when I was selling a house. Chris had an interesting point. He was making, um, stink bids on houses. So if you look at, like, a million dollar house, he would go and he'd bid 650 or 700, and he'd do that 10 or 20 times. And the realtor was pushing back over and over and over again. "Oh, you know, they'll never accept that. There's no point." Because think about it. The realtor's gotta go. They gotta spend 30 to 40 minutes writing out the offer-

   7. SPShaan Puri23:23

      Right

   8. AWAndrew Wilkinson23:23

      ... send it, and for them, they're going, "There's 5% chance." Totally worth it for Chris, but not for the realtor. And they're only gonna get one commission. And so Chris started saying, "Hey, look, for every offer you send, I'm gonna pay you $1,000." Immediately, the guy's totally down to do the stink bids. But before that, he's going, "Oh, you're gonna get a bad reputation in the market. You're gonna offend everyone. Don't do it." It's so funny.

   9. SPSam Parr23:46

      I don't know if this is public, so Shaan will have to verify, 'cause he's closer to this person, but we've got buddies that if you're... Like, I've been with them in LA when we were there, uh, doing, like, a, an event, or when they're visiting New York. You'll be like, "Hey, what are you doing today?" And

5. 24:00 – 28:00

   Breakdown: Holdco acquisition funnels

   1. SPSam Parr24:00

      like, "Oh, I'm gonna go see these three apartments or these three houses that I, that I'm looking at." And I was like, "You're looking to move?" He's like, "No, I just tour these constantly, and I put low-ball offers on all of them. And every once in a while, someone will, will take the bait, and I get a s- a screaming deal." I- is that right, Shaan? Is that what they do?

   2. SPShaan Puri24:16

      Yeah, that's right. That's right.

   3. SPSam Parr24:17

      And they just, like, are doing these, doing this constantly, and they do the exact same thing. Has any of those stink bids ever worked?

   4. SPShaan Puri24:22

      Yeah. I mean, uh, dude, it's just like Some people like bargain shopping at Ross to try to find that hidden gem that's in the basket that they know is worth more. Some people like to go to garage sales. And then if you're just a little bit richer, you do the same thing on the level of houses essentially. [laughs] You're like, "Oh good, if I can lowball these houses..." You know, touring houses are also pretty fun. And, uh, yeah, they've, they've picked up a couple of assets that way.

   5. SPSam Parr24:44

      We have a mutual friend, all of us, and he buys companies, and he was telling me what his funnel was. He basically said, I think they own 18 companies. He said that they looked at 1,000 companies, and I think they met with hundreds, many, many hundreds. And then he said they, they did LOIs for, like, 200 of them, and only 15 or 18 or something like that closed. And I didn't realize, Andrew, how much... All right, when I think of, like, a holding company or whatever you're doing, I think of it this way mostly because you give off this vibe, which I think you mean to do it on purpose, but I don't think it's the reality. Which is like, "Oh, I just sit back and everyone does the work." And maybe they're doing a lot of the work running the companies, but what I've learned about buying companies, and I think Shaan's learning this too, 'cause I know he's meeting with a lot of people, it is a sales job, and you are hitting the phones and you are creating a funnel, and that funnel still has, like, a 3% conversion rate. So in order to buy three companies, you gotta talk to 100 people. I didn't realize how sales-oriented this whole thing was that you guys are doing.

   6. AWAndrew Wilkinson25:44

      Well, I, for us, I wouldn't say it is. I would say in the early days it was for sure. But, um, we've realized that, like, cold outreach is not the way to go. Like, we would much rather go and have a public presence and a reputation and have people actually seek us out and say, "Hey, I wanna sell you my company. I've, I've, I wanna connect with you." I don't wanna be some random private equity firm that's like, "Hey, you know, let me tell you about us," and do the dog and pony show and stuff. I want people to op-

   7. SPSam Parr26:11

      But that's still, you're still doing marketing. So instead of doing s- instead of doing sales, you're doing marketing. The funnel still exists.

   8. AWAndrew Wilkinson26:16

      100%. Yeah, totally.

   9. SPSam Parr26:17

      And I, and I did not realize that. Have you noticed that, Shaan, while you're trying to buy stuff?

   10. SPShaan Puri26:21

       Yeah. I mean, we just started this process, let's say, a year ago, very much inspired by you, Andrew, of like, uh, hey, this is a, a wonderful way to basically, like, own businesses without having to create them from scratch. Gives a good win to the person who's selling them. We will buy minority, which I don't, I don't know if you guys always do, but, like, we will also buy a minority of them, minority stake in them. Um, but the thing that's... Yeah, Sam, you're absolutely right. It's obviously, like, i- you have to sort through so many just to find something worth buying, and then even when you find something worth buying, it doesn't mean the deal's gonna happen. Even when you think a deal's gonna happen, it doesn't mean the deal closes. And so you end up with this, like, tiny, tiny funnel, and you have to be okay with, like, hey, we might do one deal this year or no deals this year. It's so different than, like, entrepreneurship where it's all about action, it's all about features, it's all about, you know, more customers, more, more, more, more, more, and actually less, less, less is al- almost, you know, the, the name of the game when it comes to being very selective-

   11. AWAndrew Wilkinson27:12

       The hard-

   12. SPShaan Puri27:13

       ... and picking the right asset.

   13. AWAndrew Wilkinson27:14

       The hard part, I think, is a lot of people over-invest in building that funnel, and they have a lot of conversations. And what I've done is when someone emails me and they, they say, "Hey, I wanna sell you my business," I'll say, "Okay. Hey, I wanna make sure I don't waste any of your time, and so tell me these three things." So it'll be like, "Okay, um, who runs the business?" Right? "Is that you? Do you wanna stay or go? And, um, and then what are your earnings?" And then after that, once I have that info, I say, "Okay, we would probably pay about X." Right? And if they say y- you know, "Let's talk," then I know I should spend the time and talk. But I think a lot of people will actually have three or four conversations and, like, slow roll. And I'm like, I'm like, via email, I wanna send the first offer. I want them to say, "Yes, that's interesting." And then I'll spend

6. 28:00 – 32:30

   Andrew sends Sam a private jet

   1. AWAndrew Wilkinson28:00

      time on it. And what I used to do is I would spend all this time getting to know people and unboxing the business, only to realize that their expectations were insane, and we would waste a ton of time. And just like with, um, bidding on real estate or anything else, we throw out LOIs constantly. Like, I have no qualms about that. They're not binding documents. Uh, you know, we'll send someone an offer, and there's something about if I, if I write an email and I say, "Hey, I'll offer you $2 million for your business," I don't think people take it as seriously as when there's, like, a formal-

   2. SPShaan Puri28:29

      Right

   3. AWAndrew Wilkinson28:29

      ... document laying it all out. "Hey, on April 30th, you will get $2 million in this exact structure. Uh, this is what we commit to." People take it seriously, so we, we send them out all the time.

   4. SPSam Parr28:40

      So I've never told this story, I don't think, publicly. But Shaan, about four or sh- six years ago, The Hustle was two or three years old. I was down in the dumps. I was feeling really bad about myself. I was feeling bad about the business. And I told this person that I was not feeling great, and they said, "You know, have you thought about selling it? I would really be interested in buying it." And this guy, um, I was like, "Uh, maybe." He goes, "Look, let's just hang out and meet. Come up to, uh, where I am and, and fly up here." And I was like, "Okay. Maybe." And he goes, "Yeah, yeah, I, I'm gonna send a jet. I'm gonna, I'm gonna send you a jet." And I was like, "What do you mean a jet? Like, I get... Like, I'm gonna fly private?" He's like, "Yeah, I'm sending the jet." So I take all these... This is right when TikTok came out. I remember one of the first TikToks was me on this jet. It was like a-

   5. SPShaan Puri29:26

      [laughs]

   6. SPSam Parr29:26

      I was like, "I can't believe this." I go to the private executive airport, my first time ever doing that. I get on the plane. I'm in my own jet. I have got the Wall Street Journal sitting there, and they offer me, like, champagne and all this stuff. I'm like, "This is the craziest thing. I can't believe this." I was in heaven. I meet with the guy, and I'm wooed. I'm so floored by this. And I'm, like, days away from being like, "Yeah, I'm willing to do something." Then thankfully, I snap out of the, the, the mood, and I'm like-

   7. SPShaan Puri29:50

      [laughs]

   8. SPSam Parr29:51

      ... "It's okay. I can keep going." But that, my friends, is how I met Andrew Wilkinson in real life.

   9. SPShaan Puri29:56

      [laughs]

   10. SPSam Parr29:56

       He was the one who sent me the jet. He sent me a jet, and it, he totally wined and dined me. I was such a redneck. He goes, I lived in San Francisco. He goes, "Oh, I'm in Vancouver." I was like, "I gotta go to New York, though, and I don't wanna have to, like... I guess I'll fly to New York, and then you can send the jet, and we'll just bolt right up." And I was thinking Vancouver was Toronto. I didn't... I thought Vancouver was next to New York. I didn't even know where it was. He goes, "Dude, Vancouver's right by San Francisco. It's only gonna be two or three hours." But, uh, he flew me up there. And I don't know if you owned a bakery at the time. You took me to a bakery.

   11. SPShaan Puri30:24

       [laughs]

   12. SPSam Parr30:24

       And you guys totally tried to, like, wine and dine me. That's how I met Andrew. I was, like, head over heels just 'cause he sent this jet. It worked

   13. AWAndrew Wilkinson30:31

       That, you know, that's actually the only time I've ever done that. I think it was 'cause you said you were afraid-

   14. SPSam Parr30:35

       That's, you are so full of shit. [laughs]

   15. AWAndrew Wilkinson30:36

       It's g- No, I'm ser- 100%, I'm, I'm, I've picked up friends and we've done that kind of stuff before. Like, if we're having an event, we've flown people in. But, um, I've only ever done that for you. That's the one time, and I think it was 'cause you said you were afraid of flying or there's some reason-

   16. SPSam Parr30:48

       It totally worked. It totally worked

   17. SPShaan Puri30:51

       I'm afraid of flying commercial. [laughs]

   18. SPSam Parr30:53

       [laughs]

   19. AWAndrew Wilkinson30:54

       If only there was some other option. [laughs]

   20. SPShaan Puri30:56

       At the time, I was thinking about, uh, I was thinking a lot about newspapers, and I was like, "Oh, Sam, you've built, like, the modern version of the newspaper. You've got something really incredible." I think your deal with HubSpot, though, is better than what we would've paid.

   21. SPSam Parr31:08

       Well, and it was like-

   22. SPShaan Puri31:09

       I think we actually, we got to the numbers, and we would've been cheaper than HubSpot.

   23. SPSam Parr31:12

       Well, th- and it was, like, I think a two years difference. I, I, I remember, we, I went to, I even... I was supposed to get married on a Friday or a Saturday, and you wanted to meet me on a Tuesday, and I was like, "Sarah, you think I could swing this? This guy's gonna fly me private. I gotta do this. Well, you know, I'm, I'll be, I'll, I'll miss maybe one of the events. I have to do this." And it was like, uh, so that was in 2020, and so we ended up selling a little bit later. So it worked out for everyone. But that's how I met you.

   24. SPShaan Puri31:34

       Well, I will say, one of the things I've learned from you, Andrew, is, uh, you are a master networker. And normally, networking is like this, it's like this compliment you don't wanna get, [laughs] um, you know? But, but you're actually great at it, and obviously networking is valuable. People would love to have a great network and meet cool people and have excuses to do things together. And I've seen you kind of throw your weight around in that area, and this might be like asking Michael Jordan, like, you know, "How do you shoot a jump shot?" Or, "How do you jump so high?" You know, like, it's like they can't really explain. It's not conscious or the, they don't really know how to explain it. But I've seen you do this with, like, you wanna meet somebody who's really interesting, and you'll find a good excuse to get connected with them. Or even how we met, like, you know, you listen to the podcast, and then you were like, "Hey, I'd love to, you know, meet you. Let's do a call." And you really kinda, like, took the time to do something that you didn't h- otherwise have to do.

7. 32:30 – 38:00

   Shooting your shot with your heroes

   1. SPShaan Puri32:30

      Um, and that's how we met. We had a great conversation, and then that led to kinda, like, us hanging out a little bit more. And so I've seen you do this with, like, pretty influential people. I've seen you bring people up to Canada where you're at, like, you know, the sort of home court advantage type of thing. Like, do you have, if I was to say, like, you know, "How do you do it?" Um, and, and by the way, I a- the, when I was having, uh, dinner with the CEO of one of your companies the other day, they said the same thing. They go, "Nobody's better than Andrew when it comes to, to building an awesome network."

   2. AWAndrew Wilkinson32:57

      Who'd you meet, by the way?

   3. SPShaan Puri32:58

      Uh, Zach. He lives like-

   4. AWAndrew Wilkinson33:00

      Oh, yeah. Right on

   5. SPShaan Puri33:00

      ... a minute away from me.

   6. AWAndrew Wilkinson33:01

      Nice. Nice. Um, that's funny.

   7. SPSam Parr33:02

      So, so what's your, what's your first date routine for meeting all these people and building a network?

   8. AWAndrew Wilkinson33:06

      Well, it totally depends. I mean, I am... So f- here's an example. So in 2016, I was reading, um, a profile on Dan Gilbert. Shaan, I th- or Sam, I think you know-

   9. SPSam Parr33:18

      Yeah

   10. AWAndrew Wilkinson33:18

       ... or both of you guys know who he is. He's the Quicken Loans Rocket Mortgage guy. And it was really cool. It was all about how he'd taken his entire fortune and basically was trying to rebuild the City of Detroit. Uh, and I j- I thought that was really cool. I thought, you know, you see all these guys who get super rich, and then they put their money into, like, mutual funds, right? I think that's incredibly boring. This guy's trying to rebuild a city. He's buying skyscrapers. He's starting all these businesses. So I just emailed him. I cold emailed him at, like, 1:00 in the morning, and I said, "Hey, you know, here's three bullets about me." And I thought about, what is he interested in? And so I mentioned that I own that bakery. I mentioned that I'm passionate about my city. I mentioned I bootstrapped my business. You know, tried to find a few points of similarity and said, "I would love to meet you, um, anytime, anywhere. You know, i- if you're gonna be in a random city in Del- you know, somewhere in Delaware, I will fly to you. Just tell me when we could meet." And I got an email response back like 20 minutes later saying, "Sure." And we ended up meeting up in Detroit, and he was amazing. We spent an afternoon together. Gave me a tour of the city. Um, got to know a whole bunch of people on his team. And it was awesome. So I will shoot shots like that when I see someone that I'm interested in, but there's certain people that are, like, inaccessible. Like, I wanted to meet Bill Ackman. I'd, you know, been reading about him for years, been following, you know, watching every YouTube video, listening to every interview. And first I was like, "Okay, he's an investor in Chipotle. Um, maybe we could redesign... I own all these agencies. Maybe we could redesign the Chipotle website. Maybe we could do an app." And so I email him and I say, "Hey, I'm a shareholder in your public company. Um, you know, I'd, I've got this amazing design agency. I'd love to help in any way I can." And he intros me to, like, one of the board members. So I was like, "Damn it," you know? Like, I just got handed off.

   11. SPShaan Puri35:05

       Got passed off.

   12. AWAndrew Wilkinson35:05

       And so-

   13. SPSam Parr35:06

       But he, but he re- he replied to the email, though. That's good. I mean, he saw-

   14. AWAndrew Wilkinson35:08

       He replied to the email. He just, yeah, he basically just forwarded it to somebody. But I was like, "Okay, I know his email. Like, there, something will happen here, and I just have to wait for it." And then I saw this charity lunch go up, and, uh, basically every year he auctions off a lunch. And th- this year, this was in, like, 2017, he was having a terrible down year. He got divorced. He had, like, the Herbalife stuff. He invested in Valeant Pharmaceutical. Everyone was kind of, like, shitting on him. He was being very quiet. And so there weren't as many bids as usual to do this. And so I ended up bidding $57,000 to go have lunch with him, and my bet was, I had no, I had no expectation there'd be any business to do because he's a hedge fund manager, I'm a tech investor. But, um, but I knew he'd be, like, an interesting person to meet. And so I went, and we ended up connecting, and then at the end of the lunch, he kinda pulled me aside, and he's like, "Hey, I like you. If you ever wanna do a deal together, let me know." And so years later, we ended up buying a business, and he invested with us. Um-

   15. SPSam Parr36:12

       Just, like, slips you a piece of paper that says, "Do you like me back? Yes or no?" Like, click the box.

   16. AWAndrew Wilkinson36:17

       [laughs] Step on my foot twice.

   17. SPSam Parr36:18

       [laughs]

   18. AWAndrew Wilkinson36:18

       Yeah.

   19. SPShaan Puri36:18

       Well, uh, uh, see, that's what I'm talking about. That's amazing. You did the same thing I think with Charlie Munger and Buffett, right? You, you did the charity lunch. You bought, you bought the charity lunch. Is that right?

   20. AWAndrew Wilkinson36:26

       No, no. So that was a friend, just a, m- that was totally random.

   21. SPShaan Puri36:30

       Okay.

   22. AWAndrew Wilkinson36:30

       That was a, my friend Andrew Marks, who, um- He, he knew Charlie personally, and he said, "Hey, I'm putting together a dinner." And then through that, you know, I started sending Charlie letters. I knew that Charlie is not someone you communicate verbally with. He likes, he likes to talk a lot, and so, and, uh, you can't communicate it with him that way. You gotta write him letters. So Chris and I started writing him letters. But, um, but yeah, I mean, I don't know. I like people. I'm very extroverted.

   23. SPShaan Puri36:55

       So what are you saying in these letters?

   24. AWAndrew Wilkinson36:55

       I, I would just say like, "Hey, here..." Before the dinner, I said, "Hey, here's who we are. This is the business. This is what we do." And he, you know, throughout the dinner, knew who we were as a result. And then we started asking for his opinions and talking about different ways we could help him with stuff. Um, I, I think, like, the fundamental principle is be of value to other people, and then also, um, say yes to interesting people. If someone can... If someone appears to be interesting, I will have lunch with them.

   25. SPShaan Puri37:23

       Did he reply to the letters?

   26. AWAndrew Wilkinson37:24

       Y- He would just call us. We would... We'd... Then we'd call him. And he would verbally... He's, he, like, verbally, um, he'll communicate to you verbally, but you have to write to him if you want to remem- him to remember anything.

   27. SPShaan Puri37:35

       [laughs] That's amazing. Uh, yeah, I, I-

   28. AWAndrew Wilkinson37:39

       Sounds like a book, like, uh, like My Pen Pal Charlie. You know, you gotta, like, save all the letters and the back and forth.

   29. SPShaan Puri37:44

       Yeah. Totally. I, I think, uh, it's great to see, uh, you know, like, I would say there's, like, two takeaways for me. One is, like, I feel like you check your ego really well. Like, um, you are humble about wanting to meet these people, and you're open about wanting to meet these people, and you're not, like, you're not

8. 38:00 – 43:00

   Crashing the Oscars afterparty

   1. SPShaan Puri38:00

      beyo- you're not, like, above just shooting a shot and saying, "Hey, you know, I think you're great. Here's what we do that might be relevant for you and helpful for you. Uh, you know, would love to connect." I think the other thing is, um, you're willing to spend money. You're willing to hop on the flight. You're willing to buy the charity thing. You're willing to, to, to be a part of their, their program that they're launching 'cause you know they care about that right now. And, uh, I think people are pretty... Everybody sort of understands that, like, having a valuable network is valuable, but very few people are willing to invest because it's not a clear, like, dollars in, dollars out thing, and that's one thing I've picked up from you.

   2. AWAndrew Wilkinson38:33

      You gotta be really careful about it, though, because... So about 12, 13 years ago, um, I remember w- I w- when I was first starting my company, I would watch TED Talks back when they were, like, really early, and I would always go, "Oh my God, I wanna be in this room." Like, "Who are these people?" It's, like, Jeff Bezos and Bill Gates and, you know, all these amazing people. And so, um, probably, like, 13, 14 years ago, I started going to TEDGlobal, and I started at the kinda baby event, the junior one, uh, the only one I could get into, and then I slowly worked my way into going to the main event because I met Chris Anderson, who ran TED, and I pitched him on doing a TED app. And so I designed the TED app. I used that to get into the main one, and then I ended up meeting all these interesting people. And so that was an example where I belonged, but I was, like, the baby. I was, like, the kid who's, like... You know, people would ruffle my hair.

   3. SPShaan Puri39:26

      [laughs]

   4. AWAndrew Wilkinson39:26

      "Oh, isn't that cute? This 23-year-old with a, you know, cracking voice runs a company." Um, but I kinda belonged. So I, I think that's a great strategy sometimes. But this year I went to the Oscars, and I went to the Vanity Fair after-party, and that was an example of something where I'm like, "I should not be here," and you do not want that experience, right? That's not a good time.

   5. SPShaan Puri39:46

      Tell, tell that story. Tell that story.

   6. AWAndrew Wilkinson39:48

      So yeah, so it's really random. So I was at a conference, uh, about a year ago, and I sat across from this guy, and I asked him about his startup. And usually when you're at these conferences, they're like, "Oh, I own a B2B software company for doing HR or something." And this guy said something that really caught my attention. He goes, "M- I run a startup that helps people convert money into an interesting life." And I was like, "Whoa, okay. What is this?" And so he has this company called Myria, M-Y-R-I-A, and the idea is basically they deep dive with you on, um, you know, what do you care about? What are you excited about? What do you want your life to look like? So they kind of, like, paint out a blueprint. Like, in two years, you know, do you wanna be, um, what kind of people do you wanna be hanging out with? Uh, what do you aspire to get involved with? You know, what are your passions? What do you wanna do with your money? And then they help you figure that out. And so I did it. I signed up, and they interviewed me, and I said, "I love movies." And they said, "Well, do you wanna go to the Oscars?"

   7. SPShaan Puri40:50

      [laughs]

   8. AWAndrew Wilkinson40:51

      And I was like, "I've never contemplated that," but I was like, "You know what? That sounds like a fun experience." I think spending money on funny experiences like that is worth it. And so we go, me and my girlfriend go down. They set up, like, a personal stylist. We buy, like, ridiculously expensive clothes and tuxedos and, you know, I get, like, a $500 haircut. Like, just silly, silly stuff. And, you know, it's, it's kinda cool. We're in, um, the actual Oscar event, and we keep seeing famous people, and it's great people-watching and stuff. Um, but after that, we go to the Vanity Fair afterparty. And I don't know if you guys know, but Vanity Fair afterparty is this, like, super exclusive event where literally everybody is famous. If there's five people there, four of them are B or A-list celebrities, and the one that you don't recognize is probably, like, a super famous director or producer or something. So I'm standing at the bar, and, like, to my right is Jon Hamm chatting it up with Jeff Bezos. Uh, you know, I see this guy checking out my girlfriend, and I realize it's Andrew Garfield. Like, very weird. I can hear, like, Seth Rogen laughing behind me. Rihanna struts in. Like, it's just pinch me, like, the weirdest thing in the world. And then there's me and my girlfriend. And over and over again, every person that walks by us looks us up and down, looks a bit excited, looks us up and down, realizes we're not famous, and then immediately turns on their heel. And we're just like, "You know, this is kinda weird. We don't belong here." And I start making conversation with people. I'm, you know, I'm very social. I start trying to chitchat with people. And as soon as I said, "Oh, I'm not in the film industry. I'm in tech," people would just immediately glaze over-

   9. SPShaan Puri42:35

      [laughs]

   10. AWAndrew Wilkinson42:35

       ... and start looking over my shoulder. Like, did not care. Could not care less, right? And, you know, it was... I kinda gave up at a certain point. I just kinda was like, "All right. Let's just people watch or whatever." But I realized that I'm really used to being in rooms where, like obviously I'm not famous, but I have, like, respect. Like, you know, if I, even if I'm at a dental conference, I can probably chat with someone and be like, "Oh, you're the,

9. 43:00 – 47:00

   Buying vs earning your way into the room

   1. AWAndrew Wilkinson43:00

      like, you know, you're the business guy at the dent- at the dentist, you know, clinic or whatever. We can talk business." But I realized I had no shared language for these people. Um, and it's just not fun. Like, you wanna be in a room where you actually have value. And so imagine, like, I was a web designer, and I'm like, "I wanna be an investor. I wanna meet Bill Ackman." If I have no value to him or I'm not interesting to him, I should not meet him. You have to wait until you're interesting. And ironically, since I went to the Oscars, we ended up buying Letterboxd, which is a social network. It's like the largest social network for film buffs.

   2. SPShaan Puri43:34

      Your re- revenge buy [laughs] .

   3. AWAndrew Wilkinson43:35

      Now if I go back to that same party, I'm sure people would be like, "Oh, cool." Right? But [laughs] but it's interesting.

   4. SPShaan Puri43:42

      You s- you had a great phrase. You said, you said, "I realized that you wanna earn the room that you're in."

   5. AWAndrew Wilkinson43:48

      Yes.

   6. SPShaan Puri43:48

      And, uh, I thought that was, like... 'Cause I didn't know at first, like what was the, what's the takeaway of the story? Is it just like, you know, I don't know, sometimes you go to these parties, you feel uncomfortable? But you're, you're actually right about that. You do wanna... You don't wanna buy your way into a room. You wanna earn your way into a room. And, uh, I do think that that's a, that's a great takeaway.

   7. AWAndrew Wilkinson44:06

      Totally.

   8. SPSam Parr44:06

      Li- listen to the, uh, the copy on The Myria. So it's myria.us. It says, "Parker, Wayne, Kent, Stark. Why should they have all the fun? Myria Memberships gives you and your team special powers to make your life more enjoyable and the world a better place." And they say, "Say 'open sesame' to the world's top private clubs and make 'sold out' disappear from your vocabulary."

   9. SPShaan Puri44:26

      Well done.

   10. SPSam Parr44:27

       This is a very well-done site. Is this, is this company gonna be something legit and big? I know they went through Y Combinator. It doesn't seem like a YC s-

   11. SPShaan Puri44:34

       We talked about them, like, a couple episodes ago, too.

   12. AWAndrew Wilkinson44:36

       I think, um, I think it's a really, really cool idea, and I think the idea... Like, do you ever go to a city and you're like, "Shit, you know, we didn't plan"? Like, I remember me and my girlfriend went to Tokyo, and we kinda went last-minute, and we ended up eating bad food. We didn't really, like, see the best of the city. We just hadn't planned it. And so it was just so wasted. And it's one of those instances where I wish I had something like this. It's like the key to the city where you're like, "Hey, I'm in Tokyo. I wanna go to all the coolest stuff. You know all my tastes. Curate something for me." Or like Chris wanted to go to F1, and he doesn't know anyone at F1. He doesn't know how it works. He wanted to go last-minute. These guys got him, like, I think he met Lewis Hamilton. He went in the pit. You know, stuff like that is, like, pretty cool. Um, but I, yeah, it would be interesting to see 'cause they raised venture. We actually invested in their, um, their angel round immediately 'cause I was like, "This is such a funny idea."

   13. SPShaan Puri45:29

       [laughs]

   14. AWAndrew Wilkinson45:30

       But, um, I don't know if it'll be venture scale. We'll see.

   15. SPSam Parr45:32

       They have a competitor that I, uh, looked at, and I was poking around the website. They say you have to spend $80,000 a month in order to make it be worth it, so on average, a million dollars a year, uh, to make these-

   16. AWAndrew Wilkinson45:44

       Yeah. 25, I think it's 25 grand, and then they take a cut of everything you do. So if you spend $100,000, I think they would take a 15% fee or something on that. There's another service I just got invited to, and my friend... So he tells me about it, and it's basically, um, last-minute, super high-end reservations at any restaurant you wanna eat at in, like, New York, London, and Miami. And I'm like, "Oh, cool. You should invite me." And he's like, "No, you don't get it. If you don't use this invite, I lose access-

   17. SPShaan Puri46:15

       [laughs]

   18. AWAndrew Wilkinson46:15

       ... and the guy who invited me loses access," which I think is, like, genius. So it's like, forget what it's called, but basically you inv- if I invite Shaan, um, you have to use it within 30 days. Otherwise, I lose my access. And S- if Sam invited me, he loses it, too.

   19. SPShaan Puri46:32

       There's some, uh, little trend I've noticed, which is people, as they get m- more successful or notable or whatever, the number of times they hear "no" in their life goes way down. And I've actually noticed that, like, there's a whole business in just the business of "no" for people that no longer hear "no." And what this means is twofold. One is they still run into some things that they don't know how to... They, they can't... Like, their, their powers are, are useless here. It's like, "Ah, it's sold out. What do you want me to do?" And so

10. 47:00 – 50:00

    POV: Peter Attia is your doctor

    1. SPShaan Puri47:00

       these guys with Myria have created a business around, "We eliminate the last few nos of your life." And I've noticed other people like this kind of, uh, "Hey, if you don't use this, I get kicked out." It's like, I don't get kicked out of anything nowadays, right? Like, I'm paying the fees. What, why would they kick me out? But there's a whole business around give people something to lose who never hear "no" anymore. They never get rejected anymore, and it's like give them some rejection. Give them some way that they have some, some risk, uh, because it makes them sort of, like, feel like something matters when everything is in easy mode for them at that point.

    2. AWAndrew Wilkinson47:29

       So I, um, I, I've been on the wait list to go to Peter... Do you guys know who Peter Attia is?

    3. SPShaan Puri47:35

       Yep.

    4. AWAndrew Wilkinson47:35

       Super famous doctor. Um, I, I, um, I've been on the wait list there for, like, three years.

    5. SPSam Parr47:41

       G- his private practice, you mean?

    6. AWAndrew Wilkinson47:42

       Priv- private practice, which is, like, you know, I think he only has 50 patients.

    7. SPSam Parr47:46

       It's like getting-

    8. AWAndrew Wilkinson47:46

       Huge wait list

    9. SPSam Parr47:47

       ... it's like getting Huberman or someone to be your doctor.

    10. AWAndrew Wilkinson47:49

        Yeah. It's super expensive, and so I pay, I pay, like, this absurd amount of money up front, and they do this thing where they psychologically test you before they [laughs] allow you to become a patient. And so I go through this test, and Peter calls me, and he goes, "Andrew, um, there was something concerning in your, uh, your personality test. I'm worried that you won't have good follow-through. Will you do what I say? Will you execute on the plan?" And I'm like, "Peter, no. Like, you got it all wrong."

    11. SPShaan Puri48:19

        [laughs]

    12. AWAndrew Wilkinson48:19

        Like, I, I, I pay attention to my diet. Like, I track everything. I wear a glucose monitor. Like, you don't have to worry about me. And he goes, "Okay, cool." And so, you know, I've been working with them, and last month I pull him aside, and I'm like, "Peter, look, be honest with me. Did I actually have, like, something in my psychological test?" And he goes, "You, you did." I was like, "Is that even a real test?" And he's like, "Yeah, that is." Right? So I actually did flag something, but I was thinking what a great strategy because- I'm like the dream patient now. I'm like terrified of getting booted out because-

    13. SPSam Parr48:51

        Right

    14. AWAndrew Wilkinson48:51

        ... of this thing he said. And I think doing something like that, you're right, pushing someone away creates this desire to be a good customer.

    15. SPSam Parr48:59

        Has it been worth it, his, his, hi- him being your doctor?

    16. AWAndrew Wilkinson49:03

        Well, I think, I think it's... So it's a lot of money, obviously. It's hundreds of thousands of dollars. Um, but if, think about it this way, if you're gaining five years of life or 10 years of life, what is that worth? And there's been quite a few things. I have, I have an amazing doctor, a primary doctor that I go to, um, who I love, and he's amazing, but Attia, they have like a neurologist, a cardiologist, um, exercise physiologist who works with you. So it's this team of people. And they caught, um, a bunch of issues with cholesterol and other stuff that I may not have caught otherwise. So, I, I mean, I think it's worth it. But for a normal person, is that a good use of money? No, I would say that's a crazy use of money.

    17. SPShaan Puri49:44

        It's like you went to your primary doctor. You're like, "Doc, I love you. It's been a great 20 years."

    18. SPSam Parr49:48

        Yeah. We have to talk. [laughs]

    19. SPShaan Puri49:49

        "But I met Angelina Jolie now, and, uh, we have a thing going too." [laughs] "We're now in an open doctor relationship." [laughs]

    20. AWAndrew Wilkinson49:57

        It's really... Yeah, it's one of those things. I used to think you could only have

11. 50:00 – 57:00

    Barnacle on the Whale Strategy

    1. AWAndrew Wilkinson50:00

       one lawyer. Like, I had one, one lawyer, and then I'd feel like I was cheating on my lawyer if I used other lawyers. Then I realized, like, no, you have lawyers for different things or whatever. But yeah, I have, uh... Now I've got a polyamorous, uh, doctor relationship.

    2. SPShaan Puri50:14

       Let's do, uh... You have this, this idea of Be The Barnacle On The Whale. What does that mean?

    3. AWAndrew Wilkinson50:21

       Yeah. So, um, if you think about one of the biggest costs in most businesses, it's marketing. So, um, you know, if you think about it, it's like 15 to 30% of most businesses is just getting people to know you exist and getting sales. So, if you can own a business that doesn't have to market itself, then you're golden. You can run a super, super profitable business. So let's say that with marketing, you run at 15%. Cut marketing, you could run at 45, 50, 60%. So, for example, um, let's say that you're a fitness influencer. So, like, think about, like, Derek from More Plates More Dates. So he sells, um, uh, supplements and energy drinks, and he's got this shampoo for hair loss. He's got a great business because he has free marketing. He just talks about the product on his podcast, his YouTube, uh, his Instagram, and he gets free sales, right? So it would be an... As an e-commerce business, if he was paying to acquire those customers, it'd be a crappy business, but he's got free marketing, right? Now, the problem is most of us don't have access to that. Most of us are not influencers. But anyone can do that in a different way by being a barnacle on a whale. So, here's the story of how we, I kinda stumbled into this. Um, so I was at a conference about 12 years ago. Um, at the time, I met, um, Harley and Toby from Shopify. Shopify was this tiny little startup. They were bootstrapped. They were like 15 people. And they said, "Hey, we really like your design work. Um, would you design some themes for us? But there's a catch. This won't be client work. We're not gonna pay you. Uh, we want you to list them in our marketplace." So the idea is, like, when people sign up for Shopify, they wanted people to be able to select a theme and pay like 49 to $250 to do that. I started making $5,000 a month, $10,000 a month as these themes sold. And I was like, "Hey, this is really cool." Like, I'm not having to promote it. I don't have to think about marketing or SEO or anything. You know, people, they, they send all the traffic to their marketplace. And so we started building more and more themes, and we ended up spinning out that business. But what, what I didn't realize was that in the theme marketplace, there was only so many squares, and it took time to build the themes, and it took time for them to get approved. And so I started owning more and more squares. So let's say that in the early days, if you were to choose a theme, there's a 50% chance that it was one of ours. So we had, like, saturation early in this marketplace that was very small when we joined it. But then as Shopify grew, I mean, you guys know what happened. They go public. They start pouring hundreds of millions of dollars into marketing. I get free marketing. I get to be the little barnacle on the whale and keep growing. And it got to the point where that business was big enough, um, that we ended up taking that public at a $260 million valuation a couple years ago. So, um, it's an incredible strategy. Now, I think Shopify is hard because you're late. You know, the, the marketplace already exists. It takes a lot of time to get approved. You know, that might not be the place to go. Where you might wanna look is, um, like Discord or Adapar or any kind of software ecosystem that's not super saturated. If you can go be a barnacle on a whale, you can make a ton of money.

    4. SPShaan Puri53:41

       I totally agree. I have a, a, a business that's cooking up that's like this. I'll, I'll, I'll tell you later, uh, o- offline 'cause I can't, can't announce it yet. But totally agree with this strategy. I think it's amazing. You invested... So you said it went public at 260 million. How much did you invest to get there? Sounds like it was kind of some free labor to get the themes going, but, like, how much capital did it take for you to get going, 'cause you were early?

    5. AWAndrew Wilkinson54:04

       $20,000 maybe.

    6. SPShaan Puri54:06

       So that's incredible.

    7. SPSam Parr54:07

       And didn't you sell... You sold that business for 15 million, or did you sell it for 10 and bought it back for 15? There was, like, a story where you sold it and then bought it back, right?

    8. AWAndrew Wilkinson54:14

       Yeah. So basically started it for 20K, sold it for about 7 million, um, took... And then I ended up buying it back from the guys who bought it for 25 million, and then about a year later, we took it public for 260 million.

    9. SPShaan Puri54:30

       So talk about that. Like, w- did you sell it, like, or did you regret selling it? Or what, why sell it in the first place? Was that a mistake? And then psychologically, how'd you get yourself to buy it back for-

    10. AWAndrew Wilkinson54:40

        So-

    11. SPShaan Puri54:40

        ... three times as much?

    12. AWAndrew Wilkinson54:42

        Yeah, like Sam, I was, like, in this kind of, like, existential crisis. I was super burnt out. I'd been running... So I, I had that business. I had Metalab. I had two SAS companies. I had an e-commerce business. I was running all of them, kind of running around like a chicken with my head cut off. And finally, I hit a wall, and I was feeling really depressed. Talked to a friend. He said, "Hey, why don't you sell one?" And, um-

    13. SPSam Parr55:04

        Were you, were you liquid at that point? Like, were you financially secure?

    14. AWAndrew Wilkinson55:08

        No. No. I w- I, I was liquid in that we had a lot of cash flow, but the problem was I'd be, um, borrowing from Peter to pay Paul, right? So I have... At any given time, I'd have a highly profitable business, and then I'd have a startup, and the startup would burn all the profits. So I didn't have a nice house. Like, you know, I, I, I was okay, but I always felt like I was gonna go broke. And so getting that cash influx was amazing. So I sell the business. Um, suddenly I'm sitting on millions of dollars and feeling very secure. And the first thing I do is I go, "Okay, now that I've got all this money, I gotta learn how to invest it." And so I pick up a book about Warren Buffett, and I start reading about this idea of competitive advantage and moats and what a good business looks like. And as I'm reading, I'm going, "Oh my God, I just sold the business-

    15. SPSam Parr55:54

        [laughs]

    16. AWAndrew Wilkinson55:54

        ... that has all these qualities. What the hell was I thinking?" Uh, and I was still on the board, so the nice thing was I helped them choose the CEO, this amazing guy named Ben Moore, and I just kept watching, and eventually the guys who we sold it to, they were fatigued. They wanted to... They had, they had, um, they had kind of transitioned to doing something different, so they wanted to sell the business. And so I just stepped on their foot. I said, "Hey, if you guys wanna sell, we'll do a deal." And so we did, and then we did a bunch of M&A and, you know, packaged it up and took it public.

    17. SPSam Parr56:26

        That's insane.

    18. SPShaan Puri56:27

        So the 20K you invested was the initial amount, but then you bought it back for 25, and then you guys bought a bunch of other Shopify-

    19. AWAndrew Wilkinson56:34

        Yeah

    20. SPShaan Puri56:34

        ... plugins and apps, right?

    21. AWAndrew Wilkinson56:35

        Yeah. I think our total amount, if you look at it from that perspective, our total amount of investment was about 36 million. So we, we took it, you know, start- started it for 20K, sold it for seven, bought it back for 25, did $10 million or so of M&A, and then took it public. And we optimized the business and grew it quite a bit over that year.

    22. SPSam Parr56:56

        God, that's awesome. That's a, that's a, that's a good insight.

12. 57:00 – 1:00:00

    People always suffer in silence

    1. SPSam Parr57:00

       I mean, I, I remember seeing, like, the press release for Pixel Union, and I remember you talking about it, but I didn't know that you actually had to buy it back for more than you sold it for.

    2. AWAndrew Wilkinson57:09

       Yeah, it was 5X basically.

    3. SPSam Parr57:12

       That's insane. Um, Shaan, where do you wanna go from here?

    4. SPShaan Puri57:14

       Let's do the, the life philosophy. So you said, um, people always suffer in silence. What does this mean?

    5. AWAndrew Wilkinson57:22

       Yeah. It's something Chris and I have noticed. So we have this real culture of, um, autonomy at Tiny. So we always say that when we hire a CEO, we leave them alone, and there's certain people who really love that. So, for example, often founders who sell their company to us, when a founder sells their company to us, um, and keeps running it, often they sold because they wanted to buy out a co-founder, or they wanted to buy out their VCs, and they wanted to operate the business profitably. So they're kinda saying, "Look, I've got this great business. I know what I'm doing. I want an investor who's gonna leave me alone. I just wanna buy out these guys. I wanna buy out a co-founder or something." And so, um, usually those guys, they just wanna be left alone, and we say, "Great. Um, talk to us if you need anything, and, uh, you know, sail off into the sunset and run your business." That works fine. But often when we hire a CEO, they're used to having, um, somebody who oversees them, so, like, a really active board, or before they were in, like, some big corporation and there's constantly someone checking in. And so they associate check-ins with everything is okay, and we don't do that. We literally throw people in the pool, and we say, "Okay, go and swim. Do whatever you need to do." And, um, and so often... And because there's so many companies, there's 40 companies now in Tiny, there's always someone we forgot about, that we're not checking in on, we're not texting. They've just fallen off our radar, or we think they're okay. And so we look at their numbers, and they seem to be good. We assume everything is fine, and so we just say, you know, "They're not contacting us. Let's leave them alone." Well, so often we've found that people will fester in silence. They will actually assume that, um, here I am, I'm doing this great job for them, and they won't even do me the honor of picking up the phone or checking in or, um, you know, whatever it is. And, and it's this... I always... I remember about 10 years ago, I was complaining. I was, um, I was hurt. Somebody... I'd sent someone, uh, an emotional email, and they didn't respond. And my friend says, "Do you know what Hanlon's razor is?" And basically the idea is it's, um, never attribute to malice what can otherwise be explained by ignorance or stupidity, right? So never assume negative intent. But everybody assumes negative intent. You know, we all know what it's like to send an email that's really important to us, and the person doesn't respond for three or four days. You assume that they're going, you know, "Fuck this person," or, "I'm gonna ice them out." In reality, they're busy. They've got kids. They're doing their email. They're, they're behind, whatever it is. And so I've just observed this fact. I don't know what to do about it, but people will always assume silence equals malice.

13. 1:00:00 – 1:06:58

    Hitting rock bottom

    1. SPSam Parr1:00:01

       And then you have this other one that says people don't change. So you first said people always suffer, or pe- people suffer in silence [laughs] and people don't change. Is... You're-

    2. AWAndrew Wilkinson1:00:11

       Yeah

    3. SPSam Parr1:00:11

       ... you're getting a little pessimistic on us, but-

    4. SPShaan Puri1:00:13

       Kind of a tough worldview. [laughs]

    5. SPSam Parr1:00:15

       But I agree with you. I... There's this author called, uh, Robert Greene. He's got, uh, you know, 48 Laws of Power, and he has this other bl- book called Human Nature, and he's like, "Why should you study human nature? Because very rarely do people change." It's the same stuff over and over and over again, and then when you look at their individual habits, whatever they've done in the past, they're gonna just do... just assume it's gonna happen again and again and again in the future.

    6. AWAndrew Wilkinson1:00:36

       That's one of the best, that's one of the best books I've ever read, The Laws of Human Nature by Robert Greene. Uh, I just got the audiobook, and I just keep listening to it every year. It's amazing. Um, I, I've just seen this over and over again. I find that you rarely hire someone and... Let's say, like, um, you know, I love to hire people based on scrappiness. Will they figure things out? Will they learn? Do they have high pace? I've never hired someone who doesn't have high pace- And then coached them into having high pace, right? People either do or they don't. And the, the only thing I've seen where people change is w- it's kind of like addiction. You kinda have to hit rock bottom, right? So if you're kind of an asshole, and you ta- you, you interrupt people all the time, and you always talk about yourself, maybe you stop having any friends, or you have an intervention. Your friends have an intervention with you. Maybe at that point you hit rock bottom and you go, "I need to change. I have a problem." But most people generally continue on their track that they're on. Um, and I, I don't know. I, I see this all the time with, with, um, people I work with, and especially people will not change their ideas. So if you... Let's say a CEO comes to me and they say, "I've got... I think the best way for us to grow is SEO." And I say, "Oh, well, let's think about that. What about X, Y, Z opportunity? I think we should focus on PPC marketing," or, "Have you thought about changing the product in this way?" They will actually double down. When I challenge their idea, they will double down, and they will keep, they will now defend the idea, and as soon as they defend the idea, they will commit and con- they will be consis- what is it called? Commitment and consistency bias, right? Now they will double down on that. So I've just realized, like, trying to change people is impossible, and at the end of the day, we're all like, um, people are like elephants, and you're just the rider, you know? You just kinda go where the elephant's gonna go and hope for the best.

    7. SPSam Parr1:02:31

       You see a beg, uh, a poor guy on the side of the street begging from cha- begging for change. You just say, "Change comes from within, my brother. Change comes, comes from within." [laughs]

    8. AWAndrew Wilkinson1:02:42

       [laughs]

    9. SPSam Parr1:02:44

       I, uh, I, I completely agree with people don't change. I, I had a thing in my life where at 22 or 24, I forget, it was like, "Oh, this is rock bottom," and I had like, there was like a distinct moment where I'm like, "I'm just gonna change that trajectory just a few degrees, and if I just keep going, it's gonna make a massive impact." I, I had... But there's really only, like, I remember I think two times in my life where I'm like, "Oh, that's gonna change," and it's happened. But then, like everything else, it rarely changes. It's very hard to break any type of habit or human nature, uh, characteristic.

    10. SPShaan Puri1:03:16

        I think I would disagree with that. Uh, the only thing I would disagree with is I would just say, I would, instead of the phrase being people don't change, I would say assume people don't change, as a reminder to myself. Because the, the, the problem-

    11. SPSam Parr1:03:27

        That, that's fair

    12. SPShaan Puri1:03:28

        ... is you're like, if you assume that people are gonna change 'cause you're being hopeful, and you're, you're gonna make a bunch of bad decisions 'cause you're gonna be baking in change when change is quite rare. And so it's not that they don't change, it's that you should not be assuming that they will change is the, the trap that you wanna avoid.

    13. AWAndrew Wilkinson1:03:44

        It's like when you get married, there's that classic saying, like, you know, "Don't try and change the person that you're with." Um, and it, I think it's like, it, be pleasantly surprised.

    14. SPShaan Puri1:03:53

        Right.

    15. AWAndrew Wilkinson1:03:53

        Like, it has happened, for sure, but it's, it's really a fool's errand to try and go and change a person.

    16. SPShaan Puri1:04:00

        And also, uh, it's sort of like ads. People are like, "Oh, ads. Ads don't work on me." It's like, okay, everybody thinks ads don't work on them. Everybody thinks they're not average. I think, uh, you know, the same way, it's like, I think we think that other people don't change, but if I, if I separately had asked you, you know, like, "Hey, have you, are you the same guy you were when, you know, the last 20 years?" Like, "No, I've learned so much. I've evolved. I've just matured. I've, I've changed so much." And, um, but we think other people don't change. And I think this... I, I guess I'm a lit- I'm a little more optimistic about the change. Um, although my sister has a funny phrase about this. She goes, "Pe- pe- people say that people don't change. They do. They get worse." [laughs]

    17. SPSam Parr1:04:37

        [laughs]

    18. SPShaan Puri1:04:37

        And, like, and, and I think that that's, like, you know, more of the how to protect your downside mentality is you assume that people are not gonna change, or it's just gonna, they're gonna dig in even further into their current set of patterns. Um, but of course, there's so many outliers that I think you can only make it an assumption, not a rule.

    19. SPSam Parr1:04:52

        Um, Andrew, it was awesome being able to catch up with you. I'm happy, uh, things are going well, and you, um, you said a few things here. Like, I, I, I hope the listener does this, but I actually have a notepad here that I take down notes for, like, everything that we're writing. This profit first thing and how much money leave in the bank, I, like, I have a note here. I'm like, "Shit, all right. I actually have to go and actually do that." Um, Moyes said something a few times ago, or, uh, and so did Patrick Campbell. We had Patrick Campbell on from ProfitWell on, and I still have his notes here, and I had a meeting with my company right afterwards. I was like, "Here's what Patrick Campbell said. I just did a pod with him. We gotta do this, this, and this." And this is another one of those episodes where you've actually given me things that I'm actually, I gotta go and run and, like, tell my company right now. This, Andrew said this.

    20. SPShaan Puri1:05:34

        Everybody loves that CEO who comes in with a whole, with a whole new life, life approach every, every three days because they listen to a podcast.

    21. SPSam Parr1:05:40

        [laughs]

    22. SPShaan Puri1:05:40

        Like, if I was at a company, I'd be like, "Hey, dude, you're not allowed to listen to podcasts anymore, or go to these dinners."

    23. SPSam Parr1:05:45

        [laughs]

    24. SPShaan Puri1:05:46

        "'Cause every time you come back, everything's changing." [laughs]

    25. SPSam Parr1:05:50

        That is an annoying person.

    26. SPShaan Puri1:05:51

        Totally is.

    27. SPSam Parr1:05:51

        There is a good way to, to deliver it, though.

    28. AWAndrew Wilkinson1:05:53

        It's, it's amazing how just a lack of awareness can change the results of a business, right? Like, as soon as I stop... I remember I used to obsessively look at my credit card statement. As soon as I stopped looking 'cause I got too busy, I started spending so much on stupid SaaS crap or whatever, and I think just building those processes into your company can make such a big difference. Like, it literally is those, Sam, you described that thing of, you know, if you were a plane taking off from New York, you change three degrees, and that was the difference between ending up in Seattle versus Tijuana. I think that same thing is true in a company.

    29. SPSam Parr1:06:27

        Yeah, and I think that this thing might change the trajectory of, of, of a bunch of things that I'm doing. Um, thanks for doing this, and we appreciate it.

    30. SPShaan Puri1:06:35

        Thanks for coming on, man.

Episode duration: 1:06:58