Asking A Billionaire Investor How To Prepare For The Economic Collapse (#371)

1. 0:00 – 9:35

   Intro

   1. SPSpeaker0:00

      I'm mostly holding cash and waiting for winter to come, and I'm gonna buy businesses personally as well. Um-

   2. SPSam Parr0:06

      What? Really?

   3. SPSpeaker0:06

      At the end of the day, I just... Yeah, I just want, I want businesses.

   4. SPSam Parr0:10

      You don't own any, like, ah, Vanguard index fund shit? You just are literally sitting on, I imagine, tens of millions of dollars of treasury bills.

   5. SPSpeaker0:19

      Yeah. [upbeat music] All right, on today's episode, we got Andrew Wilkinson joining. If you don't know, you gotta know Andrew is the creator of Tiny. Tiny owns like, I don't know, 20, 30 businesses at this point. They own Dribbble, they own AeroPress. Basically, he buys and sell bus- buys and sells businesses of total value maybe over a billion dollars at this point. Um, definitely over 100 million in revenue. And, um, and he's sort of known as the, the Warren Buffett of the internet, or that's the model that he chose to create. So he didn't do the startup path, where he creates one genius idea. He didn't do the investor path, where he's just putting small checks into these companies. Instead, he was finding these little gems of businesses, buying them. And he's been doing this for like, you know, I don't know, 10, 15 years now. And, ah, Andrew's become a good friend. He's a friend of the pod. He listens to the pod, so he knows the vibe. He's probably the most well-liked guest that we have, so we're always happy to have him back. In this episode, we talk about preparing for winter. So how... What moves he's making or has made in order to prepare for, like, you know, what's going on in the economy. So what he's doing in his business, what he's investing in, that sort of thing. We talked about a couple of his new ideas or businesses that he started. One, ah, like negotiating as a service or procurement, as I'm told. Or, um, or this other company called, um... Actually, I, I want, I don't wanna give it all away. But he talks about a couple of the ideas that he's working on. And then we go on some tangents about why you should only rent your house and not buy houses. We talked about, um, you know, w- w- ah, different ways that he gets together with other entrepreneurs and groups. It's a good episode, so about an hour and a half. I think you'll like it. Ah, all right, enjoy this episode. [static] Dude, wait, hold on. Shaan, I haven't seen you in a minute. Where are you? Where... You, you good? Oh, dude, I've been literally sitting at Tesla charging stations for, like, the last year of my life it feels like. I made a horrific mistake of renting a Tesla for a road trip.

   6. SPSam Parr2:18

      Where'd you go?

   7. SPSpeaker2:19

      Just from here to LA, from the, from the Bay to LA. And I thought, "Okay, that's cool. Might have to stop once or twice." Had to stop five times. Basically, every 90 minutes, I had to stop for 30 minutes. [laughs] It was awful.

   8. SPSam Parr2:31

      How fast were you going? Were you going above 80?

   9. SPSpeaker2:33

      No, nothing. Not fast. Two kids in the back and a bunch of, you know, snacks. Like, this was, this was not, like, some... This is not me, it was you. That's how I felt, that's how I felt towards the car. I was like, apparently this isn't what most Teslas would be like, but the Tesla I had rented, you know, was, ah, was not the greatest. And, and- You know- ... which kinda sucked, 'cause this was my sell my wife on a, a Tesla as the next car trip, and, ah, yeah, had the opposite effect You know what's interesting is, like, I, I bought a Tesla, like, maybe eight or nine years ago, and it was insane. It felt like, you know, going to the future or whatever. And I just bought the new BMW iX, which is, like, their electric SUV, and you realize that the main feature of the Tesla is how quiet and fast it accelerates. And instead of being a Tesla feature, you realize, oh, that's just an electric car feature. And then as soon as I get in my BMW, I plug in CarPlay, so it's like the Apple interface, and you realize, like, at the end of the day, these electric cars, like, there's really not any competitive advantage. Um, you know, and Tesla, frankly, the interior is so much worse than BMW and all these German and American manufacturers. So, like, I'm really curious to see how it all plays out now.

   10. SPSam Parr3:43

       Yeah, they've done such a good job of rebranding, ah, fake leather to vegan interior.

   11. SPSpeaker3:49

       [laughs]

   12. SPSam Parr3:50

       And, ah [laughs] that's what they say. They say it's, it's vegan-friendly interior. I'm like, oh, you're just low quality, like, the fake leather.

   13. SPSpeaker3:56

       [laughs]

   14. SPSam Parr3:57

       And whenever I sit in them, they feel like plastic. I'm not a Tesla fan. I also think that they're, like, super not sexy.

   15. SPSpeaker4:03

       Yeah. Like, the Model X looks like a weird big toe th- or something.

   16. SPSam Parr4:07

       [laughs]

   17. SPSpeaker4:08

       I mean, I think, like, it's... They're great, they're great cars. Like, I, I really like them, but I just think that everyone overestimated their competitive advantage and that at the end of the day, you've got all these legacy manufacturers. And at... You know, ultimately, if Apple and, ah, Google are providing the interface that most people use, it barely matters, right? It's just, like, a platform with an electric motor that takes you from A to B and then, you know, does it work with your iPhone or your Android? Ah, and if you look at the Tesla interface, it's, like, really bad. It... You can't sync your maps up on the screen or anything like that. It's, it's n- not great.

   18. SPSam Parr4:46

       So Shaan, you're not getting one?

   19. SPSpeaker4:49

       Ah, actually, I still probably will get one, but, um, yeah, I gotta, like, do research and shit now. Like, I joined the subreddit for Tesla fans. It's so crazy, by the way, how many products are just for Tesla owners because you basically have, I don't know how many million, but, like, like, in the subreddit alone, there's two million members, and that's a s- and that's Reddit. Reddit's, like, the niche part of it, right? So, like, I don't know exactly how many cars Tesla has sold now, but, um, somebody, somebody can grab that. I think they're doing, they did, like, a million this quarter delivered or something like that, something crazy. Like, a huge, huge jump. But let's say that there's five million Teslas out there. Those are five million high net worth people who can be targeted with specific products, and I've seen some people do this. Ah, one guy had this thing called Tesla... I forgot what it's called. Like, Tesla, ah, Camper or some shit like that, and it basically would turn the trunk of your Tesla... If you fold down the backseat and you open up the trunk of it, it, it would turn it into, like, a sleeper van. And, um, it was just, like, a bed that goes in the back of a Tesla. It's perfectly made to fit in the back of a Tesla. It looks sleek like a Tesla thing. And it was, like... They... And they were doing, like... You know, they're doing pretty well. These guys would do seven figures on just, just this one product with very minimal ad spend 'cause- They can go highly targeted with content-

   20. SPSam Parr6:03

       Right

   21. SPSpeaker6:04

       ... Instagram and stuff like that to, to reach Tesla owners. And then same thing, people selling these adapters that let you charge everywhere, or there's an app, 'cause I was, like, trying to plan the road trip and I just typed in the destination and, like, you know, it gives you a suggestion on where to stop to charge. But it wasn't great, that's why I stopped five times. I was like, there had to be a better, more optimal route, uh, than this. And there's some old-ass app called A Better Route Planner or something like that, ABRP, and it's, like, the number one ranked thing. The interface looks like it's, you know, from the '90s and, um, it just does a slightly better job at, like, giving you some custom control over what, what charging stations you should hit on a, on a trip. And I just realized, like, wow, there's... This is like a, um, it's like Rolex owners or things like that, like these high net worth, um, communities that are super passionate and they're locked into that ecosystem. Uh, you know, Apple being the biggest example of this, like the big, like the Apple blogs that's, that were out early on-

   22. SPSam Parr7:00

       Right, right, right

   23. SPSpeaker7:01

       ... got huge over time. Uh, this is... Like there's the same opportunity with Tesla and, and other products like that.

   24. SPSam Parr7:06

       That's awesome. Yeah, maybe, maybe I'll be getting one too, but we'll see. Um, so where does-

   25. SPSpeaker7:13

       We should, so, so, so we should reintroduce Andrew. So Andrew Wilkinson's back. Uh, definitely the f- the, the number one guest of the pod, both in our hearts and the fans' hearts. So, uh, and I don't know why we don't schedule more [laughs] of these, 'cause, like, we should. But, uh, every quarter or so, Andrew just texts us, he's like, "Hey, I wanna come on. I got stuff." And we're like, "Great. Pick a, pick a day, let's do this." And so he's back. He's the, uh, founder, CEO of, uh, of Tiny, and they buy beautiful internet businesses. He's done a bunch of pods with us in the past explaining that stuff. But he's also, he also lis- do you still listen to the pod regularly? I know you used to listen-

   26. AWAndrew Wilkinson7:53

       All the time

   27. SPSpeaker7:53

       ... in the sauna at night.

   28. AWAndrew Wilkinson7:55

       Yeah, all the time. I take little breaks 'cause I get too pumped up sometimes when I listen, like-

   29. SPSam Parr7:59

       In the sauna?

   30. AWAndrew Wilkinson8:00

       ... concurrently.
2. 9:35 – 16:25

   Stress testing your business for the recession

   1. AWAndrew Wilkinson9:35

      But what I do when something like this happens is I stress-test my business. So if you think about it like, um, if you're about to drive your family in a minivan across a large bridge that's like, you know, um, a kilometer in the sky, and there's a one in 20 chance that bridge can't take the weight of your car, you don't wanna drive across, right? Doesn't matter if you're probably gonna be fine, you just don't wanna go across. And so I think you wanna stress-test and over-engineer your business for all the worst case scenarios. Now, so effectively, you know, that's what I've been thinking about a lot. And I think what people miss is there's two ways that, you know, something like this can go bad, right? The worst way it can go bad is total loss, right? You go bankrupt, your business fails, you're embarrassed, it's terrible. I think that's the worst. But the less bad option that no one really talks about is missing opportunity. So you get presented with something incredible and you're illiquid, you can't take advantage of it. So for example, let's say you're an e-commerce company and suddenly ad rates drop, you know, 5X, and you could go out and take the market and sell shitloads of your product. Uh, you can't do that because you're, you're illiquid or you're just barely holding on, you don't have any cash reserves. Maybe there's an amazing acquisition, you can merge or take over a competitor or something, but you can't do that. So you get instead of errors of omission, you get errors of commission. You're not able to actually execute on those opportunities. Um, and so, you know, I've been thinking a lot about this over the last couple months, and generally we operate quite conservatively. Uh, our goal is like, you know, any debt we have, we wanna be able to pay it off pretty much at any time. Uh, we try and keep as much cash as we can at head office. But there's a couple specific things that we're doing that I figured I'd share that could be, um, useful.

   2. SPSpeaker11:22

      Well-

   3. AWAndrew Wilkinson11:23

      So number one is-

   4. SPSpeaker11:23

      Can, can you start with what is a stress test? So that sounds cool. I wanna stress test my business. Great. I sit down today, what the heck am I doing to do that?

   5. AWAndrew Wilkinson11:31

      Okay. So you would say, um, "Okay, what happens if revenue drops 50% in this business," right? Are you able to lay people off? Is that a possibility? Are you stuck in a bunch of long-term contracts and leases that you can't get out of? Do you have a lot of debt that you can't pay? Um, you know, you're really modeling out... Like what, what I'll do is just do a simple spreadsheet and say like, "Okay, if revenue goes up by 20%, here's what it looks like. If it goes down by 20%, if it goes down by 50%, if it goes down by 70%." Or for example, one thing that often happens is you still have customers, but in many businesses they have accounts receivable and people stop paying. So people, they're gonna pay you, but they might just pay you late, maybe in 90 days or 120 days. And so what happens if no one pays you for two or three months? Do you have enough money in the, in the bank? Do you have credit lines, et cetera? So you- Um, I think, you know, it's really wise to kind of do that shadow boxing and imagine a bunch of nightmare scenarios so that you can sleep at night.

   6. SPSpeaker12:34

      Great.

   7. SPSam Parr12:34

      What is it-

   8. SPSpeaker12:34

      And then what... Yeah, go ahead.

   9. SPSam Parr12:35

      G- a- actually, c- continue where you're going, continue where we're going, then I'm gonna ask you a question.

   10. AWAndrew Wilkinson12:41

       Yeah. Okay, so I'll talk a little bit about, like, what we're specifically doing. Um, so [clears throat] everyone always says, you know, the best companies get started by a res- uh, during a recession, which is absolutely true. Um, but at the end of the day, I am not gonna be putting a lot of money into crazy venture bets, and what I mean by that is I'm not gonna be taking, like, a lot of risk, right? So I'm not gonna go and invest in the e-commerce company with 500K of revenue at a $12 million valuation. I'll still keep betting on new companies, but I'm doing it in a much more conservative way. So for example, we have an angel list rolling fund. We invest about $12 million a year there, and I'm pivoting it to totally focus on secondary and minority buyouts. So for example, a founder who gets cold feet or wants to buy out their business partner, something like that. Um, I'll do non-binary deals. So what I mean by that is, like, if revenue and earnings get to where they say they're gonna be, the valuation is one thing. If they don't, the valuation is another. So kind of our investors win in either scenario. Um, and then the other one is stra- uh, like, structured deals. So for example, saying to someone, "Look, I'll give you a $5 million valuation, but I want a guaranteed 15% return, uh, in the case of liquidation or, uh, dividends and that kind of stuff." And then also, I mean, you guys have talked about this a lot, but the idea of default alive. I wanna be investing in businesses where if they can't raise the next round, they're not going out of business. [smacks lips] Um, and then the, the other thing with venture is, like, we've realized too, we can do venture internally by incubating businesses with low downside. So for example, like turning our P&L expenses into businesses in and of themselves. So for example, like, we want better procurement internally. We wanna negotiate rates and get our P&L under control, and so we started a business to do that. We want to, you know, get better credit across all of our businesses. We started another business to do that. Um, so that's the kind of stuff we're doing with venture.

   11. SPSam Parr14:48

       We just, we just talked all about that the other day.

   12. SPSpeaker14:51

       And what was your take, Sam?

   13. SPSam Parr14:53

       Uh, on what?

   14. SPSpeaker14:55

       On what he just said.

   15. SPSam Parr14:56

       I think it's-

   16. SPSpeaker14:57

       You're like, "Oh, I'm, I should do that, I am doing that, or I'm doing something different."

   17. SPSam Parr15:02

       Uh, part of me thinks that, like, that's a little... Well, I personally wouldn't do that 'cause I'm like, man, when shit gets bad, I get afraid, and I just wanna focus, focus, focus. And when I think of, like, you starting something new, I'm like, "Whoa, aren't you gonna have to, like, allocate, like, another $500,000 to the salary for buyer.co?" And like, uh, or, you know, like however many the salaries and however much it's gonna cost to do a new website. And so I get, I get nervous about that. So d- are you not... Are you baking those in to, like, new expenses? Are you saying, like, "Look, I could just go and cut costs and save a little bit of money, or I could go spend a little bit more money and build a company around it"?

   18. AWAndrew Wilkinson15:38

       Well, I'm looking at businesses, like there's been businesses where... Okay, here's an example. So when we started Buyer, which is our, um, negotiation service for software that we launched two years ago, and we ended up selling it to Ramp. So I think we started that business for 50K. At the end of the day, we're looking at it and going, this is a very low risk bet where we're basically finding someone who, you know, they wanna start a company, we're giving them all the tools to do it, and we're gonna partner with them, provide all the capital. But at the end of the day, we're looking at really, really simple capital-light businesses that can get revenue within, like, two or three months. I don't want something... I mean, I've done, I can talk about this later, but I've done businesses where we go for 10 years and are never profitable, and we're just pouring good money after bad. I, you know, I don't do that anymore.

3. 16:25 – 30:51

   Andrew's Portfolio

   1. SPSam Parr16:25

      What are you doing with your personal, uh, portfolio at the moment? What's that like, what's those percentages look like where, where each thing is?

   2. AWAndrew Wilkinson16:33

      So, um, basically, it's cash. So I have treasury bills, um, and then I also have a... The only stock I hold right now is Pershing Square Holdings, and the reason I really like that is, A, it's trading for far less than the value of the underlying assets. So it's a holding company that owns a bunch of blue chip stocks, and it's trading at about 66% of the net asset value. So if there's $100 of stocks, you're paying 66 cents, and then they also are-

   3. SPSpeaker17:02

      But, but that's by design

   4. AWAndrew Wilkinson17:03

      ... highly hedged.

   5. SPSpeaker17:03

      Don't most of these, don't most of these kind of, like, uh, holding company types trade at a discount anyways?

   6. AWAndrew Wilkinson17:10

      Not to this degree, right?

   7. SPSpeaker17:12

      Mm-hmm.

   8. AWAndrew Wilkinson17:12

      At the end of the day, like, this is-

   9. SPSpeaker17:13

      So, so why is it, why is that happening?

   10. AWAndrew Wilkinson17:14

       ... the reason for the type of fund it is. Uh, well, I think there's a variety of different reasons. I mean, it's illiquid. It's traded in Europe. Uh, it's run by Bill Ackman, who has had, you know, a few blowups, and people associate him with blowups. If you actually look at his record, he's killed it. Um, and, and the other thing I like about that business, by the way, is that they own a very large position in interest rate swaptions. So as interest rates go up, the fund actually does better. So over the last, if you look at the net asset value over the last four weeks, it's barely moved while the larger market has gone down significantly. Um, but anyway, I'm mostly holding cash and waiting for winter to come, and I'm gonna buy businesses personally as well. Uh-

   11. SPSpeaker17:56

       What, really?

   12. AWAndrew Wilkinson17:56

       ... at the end of the day, I just... Yeah, I just want, I want businesses.

   13. SPSam Parr17:59

       You don't own any, like, uh, Vanguard index fund shit. You just are literally sitting on, I imagine, tens of millions of dollars of treasury bills.

   14. AWAndrew Wilkinson18:09

       Yeah. And, uh-

   15. SPSam Parr18:11

       That's wild

   16. SPSpeaker18:11

       ... what do you do, I guess where is your main focus with your balance sheet? Like, uh, how much of your worth is in your personal accounts versus, let's say, if you think about, okay, my, my net worth, how much of it is associated inside Tiny, and you need to be smart about what you're doing inside Tiny versus on your personal? 'Cause I think for most entrepreneurs, most of their net worth is in their, in their business, and then their personal kind of- Checking accounts, savings accounts, stock trading accounts are much smaller in comparison.

   17. AWAndrew Wilkinson18:39

       Yeah, I'm like 90% in Tiny, but what I have done is I've had, I've had liquidity and other things outside of Tiny. Um, you know, Tiny is a holding company that I co-own with Chris, and there's been other assets like legacy assets that have sold or cash flowed. And so I've taken that money and compounded it and done stuff with it personally. And the way I look at the personal money is if everything goes pear-shaped with Tiny, I still wanna make sure that I, you know, can retire and be free and have enough money to do stuff. So it's a little bit more conventional, but I... You know, what's funny is, you know, you're like, "Oh, you don't have ETFs and stuff." As far as I'm concerned, I do have an ETF 'cause Pershing Square Holdings owns 10 positions, right? So it's a diversified stock portfolio, and it just happens to be managed by Bill.

   18. SPSam Parr19:26

       What percentage of your net worth... Or sorry, if you have one number in Treasury bills, how's that compared to the other number in Pershing Squares? S- Pershing Square.

   19. AWAndrew Wilkinson19:36

       Mm, I think it's 50/50 right now.

   20. SPSam Parr19:39

       And one thing that I've been following, basically, like, uh, two years ago, so... Or a year ago, you own or co- ... You're, you're a major- or I actually don't know what your percentage is. I think, uh, it's in the r- the annual report, but, uh, uh, you own WooCommerce, which is-

   21. AWAndrew Wilkinson19:55

       Yeah

   22. SPSam Parr19:56

       ... a collection of Shopify plugins as well as a few other products that's like a really, really good business. I forget what it said in the annual report, but it's publicly traded to like $50 or $60 million a year in, in annual revenue. And its peak stock was like $600 million. It was crushing it. Now, like the rest of t- tech, it's just been decimated to like... I, I, what is it today? Uh, do you-

   23. AWAndrew Wilkinson20:19

       I think it's like 80 million or something. Let me look.

   24. SPSam Parr20:21

       So how's it feel? Like, you're the only person I know-

   25. AWAndrew Wilkinson20:24

       [laughs]

   26. SPSam Parr20:24

       ... who's like this wealthy. Well, no, we talked to Dharmesh. Dharmesh was like, "Yeah, I lost like 200, $300 million the other day." Uh, how's, like, what's it feel like? What's it... What, where's your perspective and where's your emotions when you're seeing this thing destroy it and be amazing at 600 million all the way down to 80? Like, how do you feel about that?

   27. AWAndrew Wilkinson20:42

       So I think if I was just like a pure... One of the interesting phenomenons I've seen is people who are great entrepreneurs often are just great entrepreneurs. They don't become investors. They, you know, they don't like thinking about the stock market and finance and stuff. I actually really enjoy that side, and so I've spent the last 10 years learning about investing and reading about Warren Buffett, and Warren Buffett's mentor, Benjamin Graham, has this whole idea of Mr. Market, right? So the stock market is like this moody person. It goes up and down. At the end of the day, if you know what your business is worth, it's irrelevant what the stock market says it's worth. So personally, I mean, yeah, like, sure, there's a little bit of an ego hit seeing your net worth have some zeros pulled off of it, but at the end of the day, I know that number is made up anyway. So for me, it really doesn't affect me day to day. I just go, "Do I still own a great business?"

   28. SPSam Parr21:33

       Well, and it, your, your, personally, you're fine. Like, you've got liquidity, and you have all these other things going on. But like, um, I imagine-

   29. AWAndrew Wilkinson21:40

       Well, let me, let me put it, let me put it this way. There's a great Buffett story, and he says, "You know, Sam, let's say you own a farm, and it makes you a million dollars a year of profit," right? And some yokel walks up and goes, "Hey, Sam, I'll give you $50,000 for that farm." You just go, "Go away," like, "No, I'm not gonna sell." And then someone else one day comes along and says, "Hey, I'll give you $20 million. Maybe you consider that." But the idea is that at the end of the day, these yokels will yell numbers at you, and you don't have to sell, right? Unless you sell, that's when it matters, right? If you sold for 50 grand because you're panicked, because you're going, "Oh, the economy's in a recession, maybe my farm will crumble," and you sell for 50 grand, yeah, that sucks. But if you ignore the yokels, it's irrelevant. And in the same vein, we all own houses. And the houses, the values fluctuate constantly. We don't feel that, right? Because you don't see a ticker. Or if you own The Hustle, there was times where if The Hustle had been publicly traded, it would've been worth next to nothing, and then there are other times where it would be worth crazy numbers, right? And, and you, at the end of the day, you know your business. You know what it's worth.

   30. SPSpeaker22:50

       Yeah, Dharmesh said this thing. He goes, "Valuation oscillates around value." And I just had this image. So, you know, so imagine you're creating value in this business. The line is going up, and it's pretty steady. It's really, it's, it's quite hard actually to have like dramatic jumps in the value of your business or dramatic downs and then dramatic highs again. It's like that's not really how value is created in most businesses. And, um, and he's like, "But then value is this like crazy moody line that's swinging up and down on, like, higher and lower than the value at any given time. And if y- you have to be able to differentiate between the value of a business and the valuation of a business." And that's, I think, what you're, what you're talking about.
4. 30:51 – 34:11

   Meeting someone belly to belly and Shaan's folder of sayings

   1. SPSpeaker30:51

      Um, by the way, that little kiss and tell line, I have this sheet on my phone where I just save- Little throwaway lines that, like, I call them get out of jail free phrases, where it's basically like, how do you use a phrase in cer- specific situations? I'll give you a, another example. So Andrew just did one where it's like you get kinda put on the spot and you don't really wanna share, so you have a phrase that gets you out of it smoothly, safely, securely, and, like, no damage done. Versus, um, you know, what, uh, there were many other things that he coulda said in a response that just would've been, like, sort of awkward. And, um, another one, my, uh, my uncle, uh, told me this once. He goes... He was, like, trying to do this deal and it wasn't really working, and I kinda, we all kinda felt like, I feel like this deal is doable, but we're just not there yet, and, like, maybe we just need to, like, you know, if you, if you just wine and dine this guy a little bit, like, I think it would happen. But it, you can't just tell somebody, "I'd like to, you know, wine and dine you." That doesn't really work. And he's, he's just like, "You know, my mentor told me you gotta meet someone belly to belly if you're really ever gonna do a deal with them. And, like, whether it happens or not, you never regret meeting another man belly to belly." The guy laughs and he says, "Okay, yeah, sure." And, and he used that as the, to get what he wanted, which is, "I'd like to meet you in person in a kinda informal way, and I have no agenda. Like, I can't come up with a new agenda to do it. I'm just telling you that this is something I believe fundamentally, that, that two people need to meet belly to belly if they wanna, if they ever wanna do a deal now-

   2. SPSam Parr32:16

      Do you have an entire folder dedicated to these phrases? [laughs]

   3. SPSpeaker32:20

      Yes.

   4. SPSam Parr32:20

      What other folders do you have, and what other words are in that folder?

   5. SPSpeaker32:24

      Like, you use one all the time.

   6. SPSam Parr32:25

      Mm-hmm.

   7. SPSpeaker32:25

      Like, don't, don't piss on my leg and tell me it's raining. Um-

   8. SPSam Parr32:28

      [laughs]

   9. AWAndrew Wilkinson32:28

      [laughs]

   10. SPSpeaker32:28

       You know, like, it's like how do I, how do I get my point across, you know, with a little bit of humor, a little bit of showmanship, and a little bit of, like, uh, ambiguity versus just b- speaking so fucking... Like, 'cause I have this problem. I'm really direct. So I kinda needed these tools in order to do stuff, and I stole this actually from Neville. Neville, in his copywriting course, when I was creating my copywriting course, I had taken other people's to see what do they know that I don't know, what are, what are some thing, useful things they've taught. And one of the things he teaches in there is he goes, um, what does he call it? Like, he's like, transition... Well, he has this long list of, like, transition phrases, and it's like, or, like, he calls it, like, slippery transitions or something like that. And basically it's like we all know that you should kinda start with small talk and then get to the meat. If you just go straight to the meat, it's a little bit, like, a- aggressive and up front. Um, but also it's hard to be like, you know, "Small talk, small talk, small talk. So, anyhoo, um, do you wanna do..." You know, like, "Would you like to buy my product?" [laughs] And it's like, oh, damn, like, you know, awkward. And so he, uh, he has this long list of, like [laughs] his little connector phrases. And I was like, oh, that's really useful actually. Like, this is a useful thing to get out of a course. So when I created my course, I started creating, like, these banks of, like, phrases, headline formulas, transition words, like, different things, and I'm like, this is your go-to when you need to sign off or so- like, say hello in a fun way. Sign off in a fun way. Give a, you know, transition, or, like, you know, give somebody something that's direct. And I, and so I tr- started creating those for myself.

   11. SPSam Parr33:54

       Dude, belly to belly is a good one.

   12. SPSpeaker33:56

       Yeah, it's a good one, right? Like, f- face to face doesn't have the same touch.

   13. SPSam Parr33:59

       Yeah, belly to belly.

   14. SPSpeaker34:00

       Belly to belly gets a chuckle, and you're like, "Okay, I understand what you're trying to do."

   15. SPSam Parr34:04

       Andrew, are you doing any writing at the moment? You're al- you've always been a great writer, but you have, it doesn't seem like you're really producing a lot. Are you writing for your companies-

   16. AWAndrew Wilkinson34:10

       I-

   17. SPSam Parr34:10

       ... or

5. 34:11 – 40:16

   Why to write a book

   1. SPSam Parr34:11

      anything?

   2. AWAndrew Wilkinson34:12

      Yeah, I'm working on a, a book actually.

   3. SPSam Parr34:14

      What? Really? On what?

   4. AWAndrew Wilkinson34:15

      Yeah, yeah. Just about, um, the story of building our business and just, yeah, like the experience that I've had over the last 15 years.

   5. SPSam Parr34:24

      What's it gonna be called?

   6. AWAndrew Wilkinson34:26

      I don't know yet. I'm still figuring it out.

   7. SPSam Parr34:28

      [laughs]

   8. AWAndrew Wilkinson34:28

      I just signed, like, a book agent, and, uh, I think I, I think I sold it. But yeah, we'll see.

   9. SPSam Parr34:34

      [laughs]

   10. AWAndrew Wilkinson34:35

       It's fun. I mean, it's fun. It goes back to, like, um, I think I've spent so many years frantically writing, like, Twitter threads that disappear into the ether, and I lo- I love the idea of actually building a narrative story and writing something more substantial, and I'm really enjoying that process. Um, and it's just a, it's a new thing, right? It's a totally new thing to learn. Um, I'll, I'll share some stuff with you guys soon.

   11. SPSpeaker34:58

       Well, let me tell you a little book story that will give you... So somebody, when you tweeted out you're coming on, you're like, "Oh, what should we talk about?" There's a bunch of questions. Bunch of good ones, honestly. But, uh, one that stood out to me was this guy goes, "Give a sto- uh, tell, can you guys each tell us, like, an example of a, a butterfly effect moment in your life?" Meaning a chance encounter you had with somebody, uh, or somebody or something that, like, just, like, nudged you in a different trajectory that kinda changed your, your thinking.

   12. SPSam Parr35:21

       [coughs]

   13. SPSpeaker35:21

       And at the time it didn't seem like this monumental decision or event. It just seemed like this kind of harmless chance encounter. And, um, and your book thing reminded me of my answer to that, which is that once upon a... I think I've told this story before. Once upon a time, my dad, uh, was supposed to come to this meeting, and he's like, he, he was supposed to go to this meeting in San Diego. He's like, "Oh, you should come with me." I was a college kid at the time, I think a junior or senior in college. And, um, he's like, "Come with me." And I was like, "Okay. I guess, like, I'll just tag along. I'll shadow you for this." I'd never done that before, so it's kind of a random thing that my dad tried to do. And then my dad's flight gets canceled. My dad's coming from Indonesia at the time. So his flight gets canceled, and I'm like, "Oh, shoot, I'm already at my connecting stop." Like, I'm, like, in Ki- wherever, Kansas City, and like, "Should I, what should I do?" He's like, "Oh, just go. Do the meeting." And I'm like, "Well, I don't even know the contacts. Like, I don't even know what you do for a living. How am I gonna talk to this guy?" He's like, "Don't worry. This guy's great, um, and I told him you'll be there," and he, he just said, "Come hang out with me." So I go to San Diego. I meet this guy, and the guy comes in as, like, a ball of energy, and he's got Neil Centuria. He comes in as this ball of energy, charisma. He's immediately cracking jokes. He's telling me a story. He walks in and he's late, like 25 minutes late. I'm just sitting in this room, and he goes, he goes, "Ah, man, I'm sorry. I just got off the phone with Co- whoever, Comcast." He, he's like, "Let me tell you one thing. You got a pen? Get out your pen. Write this down." And I'm like, "I, I, I just met this guy. He hasn't even said hello yet. He doesn't even know my name." And I, like, go get my pen, 'cause, like, I'm the little bitch that I am, and he's like, um, he's like, "Write this down. If you have great customer service, you can run the world. You hear me? Run the world."

   14. SPSam Parr36:54

       [laughs]

   15. SPSpeaker36:54

       And I was like, and so he's, like, this character, and it turns out this guy had this crazy career where he- He built, like, a skyscraper in San Diego 'cause he's like, "Oh, real estate's where I'm gonna make my money." Then he's like, he got into Hollywood, he wrote two, like, you know, like, s- scripts for films or something like that. He was a showrunner for, for, for a bit. And so he thought that's how he would make it. Then he started tech companies with the internet boom, and then he married the woman who started 1-800-Flowers, and he's like, he's just had this crazy career. He invested... He bumped into a guy in an elevator, invested in his company, and it ended up becoming, like, Chegg or something like that, like, this big multi-billion dollar thing. So he had this crazy se- like, he's just wowing me with all this, like, this, like, afternoon, basically. He takes me to this restaurant to go eat. They have a special table for him, and the tablecloth is all made out of paper. It's a high-end restaurant, but his was made out of paper, like a kids' table, and they had crayons, and he would just draw diagrams and, like, cut deals at this table. And he di- he never had to order. They would just bring out loads of food, and then he'd walk away at the end like an Uber. He never had to pay. And I was like, "I don't know who this guy is, but, like, that's what I wanna be in life. Like, I wanna be this ball of energy who's just cutting deals, drawing on tables, and, like, you know, has had five different arcs of his career in these different spaces," and he still s- like, I don't know, this guy's, like, 65, 70 years old, he still seems to have all the energy in the world. So, and then I just, like, went back to school. And, like, but if I hadn't had that, I don't think I would've had this blueprint that, like, being a entrepreneur could be cool, and it could have, like, more variety, and I didn't have to, like, choose one thing. I, like, s- I just saw this one example for one day, and it was like a dream, basically, and then it was done. I never talked to this guy again.

   16. SPSam Parr38:20

       Where is this guy now?

   17. SPSpeaker38:21

       He's still there. He's still in San Diego, and he's, like, guest teaches at some school there, and he's got this ma- mega mansion on the top of the hill. And, uh, that's still what he does.

   18. SPSam Parr38:29

       Dude, that's awesome.

   19. AWAndrew Wilkinson38:30

       That's crazy.

   20. SPSam Parr38:30

       I lo- that was a good story.

   21. SPSpeaker38:31

       But, oh, sorry, the, the book part, on the way out, he's like, um... So I'm with this guy for two and a half hours, and then I'm just like, "Whoa, I don't know what the hell I just saw." I'm 21 years old. I've never, I've never in c- like, in college, you don't meet people like this. I didn't, at least. So it was the first time I ever met somebody, like, dynamic like this and somebody who had made their own path and didn't just, like, follow their major into some career. And, um, on the way out, he just sh- shoves a book in my hand, and it's his book, and, uh, it's called I'm There for Your Baby. And if you wanna read this guy's book, it, it don't, it never sold a lot of copies, I don't think, but he wrote a, he wrote a note to me in it, handed me this book, and then on my plane ride out of there, I, sure enough, read the book cover to cover. And by the... I liked the guy. By the time I was done with the book, I loved the guy. And so I always... I, I remember that 'cause I was like, "Oh, I've always thought of books in one way as this, like, I don't know, mass market. You, you're trying to become a best-seller or something like that." And then I realized a book is just a tool that, like, anybody can use. Like, s- some people use their book to get public speaking gigs, but this guy used it for a different thing, which was he could turn a like it into a love it, uh, just by handing th- this book. It's like, "Cool, I met you for two hours or an hour. I'm not gonna talk to you anymore, but this book will sell you on me and, like, what I'm all about through entertaining stories and whatever." And, um, and I was just remember thinking, "Oh, that's a great idea to do," so that every person you meet for the rest of your life, you can t- convert them into being a, a, a believer and a buyer of, and a fan of what you do, and that's actually how I wanna use my book when I write a book.

   22. AWAndrew Wilkinson40:00

       I can't find this client info.

   23. SPSpeaker40:02

       Have you heard of HubSpot? HubSpot is a CRM platform, so it shares its data across every application. Every team can stay aligned. No out-of-sync spreadsheets or dueling databases. HubSpot, grow better.

6. 40:16 – 54:50

   The value (or lack thereof) of taking random lunches

   1. AWAndrew Wilkinson40:16

      I did this, um, like, personal values exercise, like, six months ago or so, and, uh, when I thought about what do I actually want, what do I actually like, w- why do I do business, it's I wanna meet interesting people. And one of the great things about being on Twitter or coming on this podcast is that I'll randomly bump into people in a coffee shop. So I'll be sitting there, and some guy'll walk up and say, "Hey, I heard you on My First Million. Uh, I wanna tell you about my business," and I end up meeting all these new friends. So I've probably made, like, 20 new friends from this podcast. I've had random lunches with people. Uh, literally, like, I've been in line for lunch, and someone's been like, "Hey, wanna have lunch?" And I have.

   2. SPSpeaker40:51

      [laughs]

   3. AWAndrew Wilkinson40:52

      And so the next level of that is, yeah, like, a book, you get to exist in someone's brain-

   4. SPSpeaker40:57

      That's a great question when you're in line for lunch-

   5. AWAndrew Wilkinson40:58

      Like-

   6. SPSpeaker40:58

      ... 'cause you can't say no. [laughs]

   7. AWAndrew Wilkinson41:01

      Well, yeah.

   8. SPSpeaker41:01

      They're like-

   9. AWAndrew Wilkinson41:01

      Well, I could've said, like, "Oh, I'm-

   10. SPSpeaker41:02

       ... "You're in line. I know you want my book." [laughs]

   11. AWAndrew Wilkinson41:03

       ... I'm in a rush," or... Totally. But it was great. The guy w- the guy was super interesting. He had, like, a airplane leasing business. It was, it was crazy. But, um, but I think a book, you get to exist in someone's brain for, like, 20, 25 hours, and it's exactly that, right? You can actually get someone to truly understand who you are. And then when you meet them, you don't have to do your preamble. You don't have to do your pitch. You don't have to do what that guy did with you. You don't have to sell. You can just be yourself, and they already know the deal. Um, and I think there's something really cool about that.

   12. SPSam Parr41:31

       So speaking of meeting interesting people, let me a- ask you guys if you would do this. So I was talking to Nathan Barry the other day. Nathan Barry, you know, he owns ConvertKit, or he owns the mo- most all of it. He's probably worth $200 or $300 million. He's worth a lot. And he told me how when he travels sometimes, he'll organize, like, he'll stay... Like, if he wants to go somewhere for seven days, he'll plan an eighth day that's dedicated to work, and what he'll do is he'll do, like, a six-hour meeting where he'll let, like, 20 or 30 people all come and hang out with him. But he charges them, and it's almost like a very miniature conference. And I could... Uh, maybe I'm butchering a little bit about what he does, but basically, he's like, "I got the inspiration because Basecamp, Jason Fried and those guys, used to do these things where they would charge $200 to $2,000, and, um, you can come hang out at their office." And I thought, uh, "You know, I should do this when I travel, and it will pay for my trip, and also I can meet interesting people." And I thought about this, and the cons are it could feel, like, sleazy and weird to, like, "Well, I'm charging money for my time." But I think he actually said, Andrew, he went to one of your things, and you gave the money away, I think. Uh, like, you, you-

   13. AWAndrew Wilkinson42:38

       Yeah

   14. SPSam Parr42:38

       ... and I was like, "Yeah, that is the sleazy part." But it is kind of a cool way to, like, meet people that cross a certain threshold, and it could, if it could, like, uh, pay for your trip. And even though it's like, "Well, I don't, I don't... I have enough money that I could pay for my trip," there's something about it that I find so intoxicating to do this. Have you ever thought about doing it?

   15. SPSpeaker42:56

       I real-

   16. SPSam Parr42:56

       Have, uh, uh, Shaan-

   17. SPSpeaker42:57

       Yeah, I really-

   18. SPSam Parr42:57

       ... personally, would you do this, Shaan? And Andrew, what, yeah, what were you gonna say?

   19. AWAndrew Wilkinson43:00

       I, I was just gonna say I really struggle with this. So like you guys are, I think one of you guys is on Intro.

   20. SPSam Parr43:05

       I'm on Intro, uh-

   21. AWAndrew Wilkinson43:06

       [laughs]

   22. SPSam Parr43:06

       Because I... Listen, I'm friends with the founder-

   23. SPSpeaker43:08

       Oh, Sam's on Intro. [laughs]

   24. SPSam Parr43:09

       Listen, listen. I, uh, first of all, I don't even have any... I don't even think I have... Well, I don't have that many dates available, but my friend started it, and he's like, "Hey, use this." I was like, "Fine." I started using it. Then he puts my ad everywhere on, on Facebook. And so I only make like an hour or two available a month, and it's just crazy. My fricking face-

   25. AWAndrew Wilkinson43:28

       Intro is just a service that lets you meet Sam Parr. That's... I'm pretty sure that's what Intro is. Based on the ads that I've seen, that's what Intro is. [laughs]

   26. SPSam Parr43:34

       Oh my God. They are k- killing me with all these ads.

   27. AWAndrew Wilkinson43:38

       Well, it's a terrible way to use your time, right? Like what we did, we did a, um, a charity Ask Me Anything. So we were like, "Okay, anyone who pays, whatever you donate, we'll double it." And, um, I think we, like, suggested the donation or whatever, but with Nathan and about 20 other entrepreneurs, we did like a Zoom, spent two or three hours answering all their questions. I think we raised, like, 50 grand for a charity, which was pretty cool. Um, but I really stru- struggle with this kind of stuff because at the end of the day, you're selling your hours, and I don't wanna be in that business. Um, but it's fun, it's a fun way to do it, and... But I, I feel like it compromises the... It, like people expect value, right? So if you're on day eight of your trip and you're exhausted, you now have to dial it up. Like that guy that met you in San Diego, you have to be like histrionic, you have to wear a mask, you have to like pump yourself up. And I find that one of the things I've realized is I'm very capable of doing that. Like, I can, I can be miserable, and I can pump myself up, like Tony Robbins style, like jump on the trampoline and all that crap, but it makes me miserable. And so I just don't wanna do that.

   28. SPSam Parr44:40

       Would you do it, Shaan?

   29. SPSpeaker44:42

       I would not charge, um, for that. Mostly because if I'm doing that, it's because I want to meet interesting people, so I'd rather say it's filtered or I have the right to just stop talking to you or boot you out in like the next fi- like I can make these meetings 10 minutes, right? So Brad Feld did this in... Brad Feld's a VC in Boulder. He's probably like one of the main n- well, most well-known venture capitalists in Boulder, Colorado. And he used to have this one day on his calendar every month called the random, random day or something like that, and he would just let you book a 15 or 20-minute meeting with him, and he'd just sit in a coffee shop, and he'd sit there for four or five hours, and he'd just try to meet as many people as he could, and he had no filter there. He's like, "You don't need a warm intro. You don't need this. You don't need that." And at first, that was great branding for him of like, "I'm a man of the people." Uh, you know, it's like when Gary Vee does these TikToks, and it's like, it's just some- you know, somebody who comes up to him, and they look, you know, they're like haggard, and they're, and they're like, "Gary, can I just get a, a minute of your time?" He's like, "Of course. I'm anything for my f- my fans." And he's like, he's like, "Gary, you know, how do I, um... I, I, I don't have enough money for dinner." He's like, "Here's what you're gonna do. You're gonna take that guy's dinner and sell it. Now you got two dinners. Give him back one, and you got one for yourself." It's like he gives him this like pump-up thing, and the guy's like, "Thank you so much," and they hug, and they embrace. And I'm like, wow, I don't wanna touch anyone who listens to the podcast, you know? This is like... I just, here's a rule. We're not touching. [laughs] Like, touching is not happening. [laughs] You know, like that's just not a thing. But he does... It gives a, a, a brand vibe of like, Gary's one of the people. He's a man a m- man of the fans. And so, um, similarly, Brad would do this, and I thought there was immense brand value for him doing this. And then the second thing was I'm sure there is some... Uh, when I met him, I was like, "Why do you do these?" Uh, uh, 'cause I went to one. And he goes, um, he goes, "You know, you have to create a, a landing spot for luck." And o- other people call this a surface area for serendipity, but, like, you want to give in your schedule someplace-

   30. SPSam Parr46:32

       First of all, those, both those ph-
7. 54:50 – 1:03:00

   DealMaker

   1. SPSpeaker54:50

      so you talked about creating businesses off your, off your P&L. So you look at your expenses and you say, "Oh, we spend money, you know, on SaaS fees. What if we could create a business..." Is it, by the way, is the new one called Buyer or is it called something else now?

   2. AWAndrew Wilkinson55:04

      No, we actually started one called DealMaker, and because Buyer did software, we sold it to Ramp. They're doing that. We have to do something different, right? So the, uh, basically the story there was we, Chris and I were maniacal about negotiation in the early days, right? When you're the owner of a business, say you save 30 bucks, that's 30 bucks in your pocket directly. And what we noticed was as we, as we got bigger and bigger and bigger, we had managers and CEOs running the businesses, they're comp-based on hitting a very large number. And so, you know, 30 grand or 30 bucks doesn't really matter anymore. But to us, the owners, that really matters. And so we were like, "Okay, how can we make this easy for the CEO?" 'Cause nobody likes the discomfort of negotiating.

   3. SPSam Parr55:47

      I hate it.

   4. AWAndrew Wilkinson55:48

      And so the idea... It's, it's very uncomfortable. I, I don't like it either, right? I know all the tricks. I've done it. Now I just don't enjoy doing it. But if I can outsource it to some scrappy person who loves to negotiate a car or a house or a lease or whatever it is, I'll do that all day long. And so we created this business called DealMaker, dealmaker.co, and instead of doing software, we're doing like office leases, furniture, insurance, like all the random stuff in your P&L, and basically just cc them and they take a cut of whatever the savings are. Um, and I, I just, this is something I wanted myself, 'cause I was going, "Oh my God." Like, I had the experience of, um, you know, when you're, when you're rich or, or people know you're rich, they will rip you off if they can, right? So a recent example is I got Wi-Fi installed in my house, and they had to wire the house and do some stuff. It was tens of thousands of dollars. And I was like, "Holy shit, it's too late now." I could have just had, like an Eero installed and a mesh network or whatever, but instead I did like the, you know, rich, fancy thing and got it all custom wired, right? Or another one is in our office we got drapes, and we got a quote and it was $20,000 for some white drapes. I looked at Ikea, we could buy them for like $2,000. Right? So I- I'm just realizing that we have a target on our back. I think anyone who runs a business does, especially when times are good. And so I think having someone to negotiate on your behalf is a very good idea.

   5. SPSam Parr57:14

      How did you, how much did you fund this business with? It looks cool. The site looks good.

   6. AWAndrew Wilkinson57:18

      [drum music] Yeah. I think it may be like 50K. Like, like I said, we don't put large sums of money into this stuff. We basically find really scrappy operators where we can basically say, "Look, we've got all the back office, all the structuring, legal, it's ready to go. We'll build the website for you. You just need to take it and run with it." And we go typically like 50/50 or 70/30, depending on the amount of capital we have to put into it.

   7. SPSam Parr57:42

      Is it working?

   8. AWAndrew Wilkinson57:43

      Yeah, so far. I mean, I think it's profitable at this point.

   9. SPSpeaker57:45

      And you said it's pretty, you said you just-

   10. AWAndrew Wilkinson57:46

       It doesn't, it doesn't need much to be profitable

   11. SPSpeaker57:47

       ... you just cc DealMaker, so you're like, when you're talking to your vendors or whatever, uh, you just cc DealMaker, DealMaker in-

   12. AWAndrew Wilkinson57:54

       [laughs]

   13. SPSpeaker57:54

       ... and it's like, basically like-

   14. AWAndrew Wilkinson57:55

       Yeah

   15. SPSpeaker57:55

       ... "Hey, you know, here's my brother who's gonna beat you up." [laughs]

   16. SPSam Parr57:58

       [laughs]

   17. AWAndrew Wilkinson57:59

       It's like, think of it as like procurement department, right? So like if you go to Walmart, like we used to work with Walmart, uh, at Metalab, and it would be like, "Okay, here, here's what we want." We'd say like, "This is the number." And then they send you to procurement, and procurement is a guy who's literally a professional negotiator who crushes you.

   18. SPSam Parr58:16

       [laughs]

   19. AWAndrew Wilkinson58:16

       And they crush you in so many different ways, right? It's like-

   20. SPSam Parr58:19

       Ooh. [laughs]

   21. AWAndrew Wilkinson58:19

       ... "Your hourly rate is too high. Your payment terms, you know, you said 15 days, we want 45."

   22. SPSam Parr58:24

       [laughs] Dude.

   23. AWAndrew Wilkinson58:24

       And so it's just about getting the most out of you.

   24. SPSam Parr58:26

       In my, in my head I'm just imagining, like, a bunch of like young guys like, like shaking in their boots, like, "Oh, we gotta meet Mr. Procurement."

   25. SPSpeaker58:33

       [laughs]

   26. SPSam Parr58:33

       And he's like this scary guy. And he'd walk in and it's just this like dork with like a horrible like half beard with like mustard on his white shirt, that short sleeve and buttoned up, like looking like Dwight. And, and he's just like the nerdiest guy ever. And he just like starts rubbing his nipples like thinking about a good deal. [laughs]

   27. SPSpeaker58:51

       [laughs]

   28. AWAndrew Wilkinson58:51

       [laughs]

   29. SPSam Parr58:51

       Like, "Oh, yeah."

   30. AWAndrew Wilkinson58:53

       Like, you guys probably read-
8. 1:03:00 – 1:07:51

   How to get the maximum salary

   1. AWAndrew Wilkinson1:03:00

      social awkwardness.

   2. SPSam Parr1:03:01

      Dude, you need, instead of DealMaker, you need to have, like, CompMaker or SalaryMaker. So many people, myself included, when it was for salary, when I was negotiating my salary for HubSpot when we sold the company, they, I remember my wife was in the room, but she was, like, on the other side of the computer screen, so they couldn't see. And they were, like, telling me a number, and they told me a number, and I was like, "Yeah, whatever. You know, whatever, whatever's cool." [laughs] And my wife was on the other end like, "What the fuck? Shut up. Don't say a thing."

   3. SPSpeaker1:03:27

      Yeah. You shouldn't be saying it's all good during a negotiation. [laughs]

   4. SPSam Parr1:03:31

      [laughs] Yeah. I remember.

   5. AWAndrew Wilkinson1:03:33

      That's actually, that's actually a really good business idea.

   6. SPSam Parr1:03:35

      Yeah.

   7. AWAndrew Wilkinson1:03:36

      Maybe we should add that on.

   8. SPSam Parr1:03:36

      Dude, it is that, like-

   9. AWAndrew Wilkinson1:03:37

      Like a coach, a, where it's like a coach, so it like, you know, you don't, 'cause it'd be weird if it was like-

   10. SPSam Parr1:03:42

       A third party

   11. AWAndrew Wilkinson1:03:43

       ... "Hey, I'm doing a comp review. This is Jerry from my procurement team who's interested in-"

   12. SPSam Parr1:03:46

       Well, here, here's how you could-

   13. AWAndrew Wilkinson1:03:47

       But if you had that guy telling you, like, "Do this, do this, do this-"

   14. SPSam Parr1:03:51

       Dude, listen

   15. AWAndrew Wilkinson1:03:52

       ... that would be really interesting.

   16. SPSam Parr1:03:52

       Here's why it could be cool, is because I remember I got a speeding ticket recently during the pandemic in, like, rural Kansas when I was driving cross-country, and they were doing Zoom things. So, like, Zoom, I, and I was like, "Oh, I'll fight the ticket because I actually think it's nonsense." And so I had a lawyer, I don't know if I'm breaking any laws here, but I had a friend lawyer, and I would be like, "Hey, I'm gonna put you on speakerphone so you can hear what they're saying, and then just text me what you think I should say in court so I could fight this ticket and try to get off of it." And she was on the phone, like, listening to like, "All right, ask them this." And I asked them this. So then, "Ask them this." And the lawyer or the, the, the judge was like, "Wow, you really know what you're talking about." I was like, "Oh yeah, you know, like I just, I really didn't think I did anything wrong." And, uh, you really just need that for, like, when someone's, just CC all emails a part of the salary negoti- negotiation or have them there, like, listening to the Zoom and like, "All right, now say this. Now say this."

   17. SPSpeaker1:04:44

       Mm.

   18. SPSam Parr1:04:44

       And then just give me half of what the earnings that you, you just got, gone up by.

   19. SPSpeaker1:04:47

       When I was at Twitch, they were like, um, "Yeah, the salary, uh, is this." And I was like, "Oh, um," and I just let them sit in it, and I was like, and they're like, you know, they're like, "S- uh, sorry, did you say something?" And I was like, "Uh, no, just, yeah, lower than I thought." Um, and then I was just like, I don't know, buying time. And they're like, "Well, you know," I was like, "Can you explain how the process works? I just..." So instead of, like, saying I want more, here's a different number, I was like, "Can you explain how you guys get to a number like this? Where does this number come from?" And like, you know, where do babies come from? They're like, "Uh," they don't know. And then they're like, and then they said the magic word. They're like, "There's a, we have these bands," which is like a band is like code for, like, a range, which is code for, like, we're trying to see how much of a sucker you really are. Like, basically, I was like, "Oh, so you're telling me for my role, uh, there is a specific minimum and a maximum band of r- of compensation that I could get, and you're offering me anything but the absolute top of the band? Or better yet, have you ever gone out of band and gone higher? What situations would cause that to occur?" They're like, "Well, somebody needs to vouch for it. Like, they have to go to bat. They have to write a memo." I'm like, "Cool. All right. Now I know what I'm gonna go ask for," and I basically just, like, worked through the system. But once you realize that these are all A, negotiable, and B, like, there's actually, it's like playing a, a, a, like a, a robot, uh, you know, like, that can only make certain moves on the board. And you're like, "Oh, you can only go forward and backwards? Oh, great. So I'm just gonna go around you over here because you're bound by these rules of, like, this is how the process has to work." And, um, and so, you know, at most companies, you can get a lot more than you're currently getting.

   20. SPSam Parr1:06:22

       What, have you guys ever, like, thought about this? When, like, you know, my wife works at a big company, and she's been offered jobs at other big 10,000, 20,000 person companies, a fif- 100,000 person companies, and I'm like, "Sarah, what would happen if you just told the interviewer like, 'Hey, look, like, uh, let's, let's screw this place a little. Like, just tell me the most amount that you can give me.'"

   21. SPSpeaker1:06:41

       Let's screw this place a little. [laughs]

   22. SPSam Parr1:06:43

       Yeah, like, no, I mean, not really screw this, but, like, what, like, what's stopping you? They're like, "Look, I don't give a fuck. It's not my money. I'll, yeah, let's just, like, let's, let's, let's, let's rob this place if, if we can." So let's just, like, I'm just gonna tell you, like, why-

   23. AWAndrew Wilkinson1:06:55

       Slide a napkin across the table.

   24. SPSam Parr1:06:57

       Yeah. [laughs]

   25. SPSpeaker1:06:57

       Write down a number here that you wouldn't-

   26. SPSam Parr1:07:00

       Just like why-

   27. SPSpeaker1:07:00

       ... get fired for giving me. [laughs]

   28. SPSam Parr1:07:01

       Why is this, like, 100,000th person employee who has the power to allocate certain dollars, like they don't care. You know? It's not the company's money, and I've just, it's always shocked me that the culture is such that, like, they are actually being honest in many cases to the employer when they could have been like, "Look, I like you." You like me, here's the rules

   29. SPSpeaker1:07:22

       [laughs]

   30. SPSam Parr1:07:23

       I need you to tell me this, and I can then give you this
9. 1:07:51 – 1:23:48

   How to lock down for economic winter

   1. AWAndrew Wilkinson1:07:51

      applicable. We were talking about winter coming, and I had a story I wanted to tell. So one of the other things, um, you know, obviously we're like n- you know, stress testing all the businesses, we're dialing in our P&Ls, we're pulling excess cash into head office, we're, you know, loading the elephant gun, so to say. We wanna get ready for a big acquisition in winter. And two, two, like, kind of interesting things we're doing. One, you know, this is very obvious, if you have debt, you know, lock in, right? Even at a higher rate. I think a lot of people are doing this thing where they're going, "Well, it was, you know, interest rates were at 3%, I could've locked in then. Now they're at, you know, 5%, I don't wanna lock in." And they're kind of anchored to that 3% thing. To me, it's about certainty. I wanna know that when I build a model, when I stress test the business, that I know that my interest is gonna be at 5% or whatever, even if, you know, they go up or down or whatever. I just want that certainty. The other kind of weird thing we're doing, we've done this once before, is we're buying, um, we're buying options on the stock market. So this is... And this is kind of speculative, but I look at it as an insurance policy. So [clears throat] here's an example of what we did in 2020. So, um, we started freaking out about COVID, we're a little bit early on it. Chris and I locked down kind of like late January or early February, and if you remember, everyone was kind of saying like, "Oh, this might be a bit of a nothing burger," up until March 1st or 2nd or 3rd, kind of in that zone. And so what we ended up doing is we're looking, we're doing these stress tests, and we're looking across all of our businesses, and at the time, a lot of our revenue came from our agency businesses. And we had these large Fortune 500 customers, but we're going, "Okay, what's the first thing all the Fortune 500s do? They pay everyone late." And so we're looking at, okay, we're gonna get some late payments, that's gonna cause cashflow issues. We might also have some of our startup clients go out of business, and they may just not pay us. And so we started looking at, what is the number there that we want to insure? And it was like 5 or 10 million bucks where we were like, "Okay, these are all companies that may just not pay us. We might, you know, lose that revenue, and if that's the case, we're gonna have a bad year. We're not gonna have liquidity." And so what we did is we basically said, "Okay..." In late February, we said, "Okay, if the s- if the S&P 500, the index of the 500 largest companies in America, goes down by 20%, we will get a big payout." And so we bought, for $500,000, put options that were, went out about a year. So if any time in the next year, uh, the market dropped that much, we would get a large payout. And the idea is it's kind of like buying an insurance policy on your house, right? You pay this premium, you put the money out, and you hope that you just pay that premium and nothing bad happens. But if your house burns down, they'll give you $5 million to rebuild it. And so what ended up happening is we bought these put options, they went from being worth $500,000 to $7 million all of a sudden. And Chris and I are, like, laughing our asses off. Never ha- you know, never bought put options, never been through this or whatever. So they go to $7 million, and we're like, "Holy shit, this is amazing. Let's sell them," right? And so we sell them, we cash in, we take $7 million under our balance sheet, and then we look at each other and we go, "Well, this could be the worst recession of all time."

   2. SPSam Parr1:11:23

      [laughs]

   3. AWAndrew Wilkinson1:11:23

      Uh, you know, "Are we, are we the guys who just sold our insurance policy? Like, should we keep holding this? You know, what if, what if this is 1929 and the stock market's g- really gonna go down 50%? And the whole point of this is to have this insurance policy and sleep well at night, now we don't have it." And so we take all the money, except for 500 grand, we, we took 500 grand out. We took all the money and we re-bet it, and we lost everything.

   4. SPSam Parr1:11:49

      Ah. [laughs]

   5. AWAndrew Wilkinson1:11:50

      Because the Fed came in, and the markets rebounded. Now, there's two ways to look at that story. You know, one is we, we s- we, uh, got hit with gambler's fallacy. You know, let's go in, we'll do one last, uh, roll at the roulette table. Uh, the way that I think about it is I go, "I lost my premium," right? I, I paid for insurance, and the bad thing didn't happen, therefore I didn't deserve to get the $7 million payout. And the fact that we sold it is just a, you know, that's... Yeah, it sucks that we had that money in our bank account for five days or whatever, but it really is irrelevant. And so the way to think about this, let's say that you own a SaaS business, and your entire net worth is in the SaaS business, and you currently, uh, you know, you've raised money at 20 times revenue or something. You might wanna find a SaaS business that's publicly traded that is a comp to you, and you might wanna buy out of the money put options or buy a basket of those, and basically say, "If the market gets crushed, that's probably an indication that the larger economy got crushed too, or my part of the world got crushed, and businesses like mine are doing badly." And so it's kind of an interesting way to buy an insurance policy. It is certainly a little bit gambly, right? But it is an interesting way to sleep at night.

   6. SPSam Parr1:13:06

      Where'd you come up with the math of, like, all right, 500K?

   7. AWAndrew Wilkinson1:13:09

      Well, you can model these out. There's a website called Options Profit Calculator, and you basically say, "This is the stock," and it'll show you in a variety of scenarios. And so, for example, in that one, I just said, "Okay, in previous recessions..." You know, a recession is defined as what? You know, more than-

   8. SPSam Parr1:13:25

      Like four quarters

   9. AWAndrew Wilkinson1:13:25

      ... 15% -

   10. SPSam Parr1:13:26

       Yeah

   11. AWAndrew Wilkinson1:13:27

       ... drawdown over two quarters or whatever. I just said, "Look, if that happens over the next year, I will get a payout," and I could look at the different payouts based on where it went.

   12. SPSam Parr1:13:36

       Are you buying any real estate right now?

   13. AWAndrew Wilkinson1:13:39

       No. I hate real estate.

   14. SPSam Parr1:13:41

       Uh, are you, Shaan?

   15. SPSpeaker1:13:43

       Buying real estate? No.

   16. SPSam Parr1:13:44

       Not at the moment.

   17. AWAndrew Wilkinson1:13:45

       I, I hate real estate so much that I don't build equity in my own houses. So I do interest-only mortgages 'cause I want everything in businesses, because businesses, a business can earn a, a million dollars of revenue and then the next year do $100 million using creativity. There's no, uh, apartment building you can buy that'll do a million dollars of revenue and do $100 million next year.

   18. SPSam Parr1:14:07

       [laughs]

   19. AWAndrew Wilkinson1:14:07

       It's just not possible.

   20. SPSam Parr1:14:08

       How do you qualify for an interest-only loan? You just gotta make a lot of money?

   21. AWAndrew Wilkinson1:14:12

       You, I think, I think you can do it via most banks. Um, general- it might be the sort of thing where you have to have some sort of collateral or other assets or be at a larger scale. Um-

   22. SPSam Parr1:14:23

       Are you fixed or are you adjustable?

   23. AWAndrew Wilkinson1:14:24

       But effectively... Yeah. I, I'm fixed.

   24. SPSam Parr1:14:28

       Yeah. So then you, you, you got locked in at what, what, what rate? Like, to the 2, 3- when it was back at 2, 3%?

   25. AWAndrew Wilkinson1:14:33

       I think I, I think I locked in at five, right? I'm one of those people where I was like, you know, "Hey, let's lock in at three." Didn't do it. Let it go too long. Ended up locking at five. But it goes back to I wanna sleep at night. It's possible interest rates go back down to 2% and I feel like an idiot, but I wanna sleep at night. I just want... I, if, if interest rates go to 8%, 10%, which is, you know, maybe not high probability but it's certainly possible historically, I don't wanna deal with that.

   26. SPSam Parr1:15:00

       Shaan, are you buying a house now?

   27. SPSpeaker1:15:02

       No. I just rented this place so it's like a two, two-year, three-year rental. Um, yeah. I like renting. I like renting the place I live. Um-

   28. SPSam Parr1:15:10

       Me too. I love it

   29. SPSpeaker1:15:10

       ... 'cause-

   30. SPSam Parr1:15:11

       I, it's awesome

Episode duration: 1:23:48