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My First MillionBootstrapping A Small Agency Into A Billion Dollar Business Empire
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60 min read · 11,724 words- 0:00 – 7:30
The value of starting an agency
- AWAndrew Wilkinson
I don't know if you know this, but Warren Buffett made like 97% of his wealth after the age of 55. Um, and so, so it all happens very slowly. He started in his 20s or whatever, and he wasn't really well known until the '90s. And the same thing happened with us, where we didn't really talk about what we did. People would meet us and they'd be like, "Oh, you're some schmoes from Victoria who own some digital agency. You seem to own all these really boring businesses," you know, whatever. And so it requires being kind of underestimated and dismissed, and playing a very boring game while watching everyone else go and make, you know, tens of millions, billions of dollars taking risk in startups. Meanwhile, we're just going, how do we take, you know, 100 grand and make 10, 15, 20K a year on that money and just keep compounding? And so basically, the m- mental model was take 70% of our profits and constantly reinvest, take the other 30%, live a nice life, and that number went down over time. And, uh, yeah, you do that for 17 years and it turns into a, you know, a big number.
- SPSam Parr
[upbeat music] And something that you wanted to talk about today was whether it's better to own 100% of something and bootstrap it, or to give up equity for, to partners, whether that's for sweat equity or money, or money. But you, uh... We were talking about that, and I asked my audience, companies that were bootstrapped and quite big, and there was a few that are doing billions a, a year in revenue, and I know- noticed two commonalities. One, a lot of the things that were bootstrapped to be really big, they were things that were easy to take bank loans against. So it's a lot of restaurant stuff. So maybe they took like loans against some equipment, or they took loans against, um, a building they owned, things like that. The second thing was, I've noticed that there's a lot of agencies that were bootstrapped and became pretty substantial sized agencies, or agencies or service-based businesses, so like recruiting, uh, companies, um, um, IT services, things like that, where it's basically you bill out people's time for $100 and you charge $300 or something like that.
- AWAndrew Wilkinson
Well, think about it. You don't need, especially if you're a young person and you can c- you've got enough money to live for a year, you can go and start an agency. Because at the end of the day, it's you go and sell, you win a contract. As soon as you win the contract, you go and find a developer, or you do the work yourself, and then before you know it, you're cash flowing. And you're always able to hire people w- just in time for the work. And so at the end of the day, there's really no burn, and it's very capital efficient, and you don't need, uh, you don't even need an office anymore. I mean, we, we almost never had an office. And o- you know, I, over time we had, you know, a couple small ones or whatever. But the big fuck up a lot of these big agencies make is they start starting like these fancy, humongous $5 million offices in New York and San Francisco and Spain and, you know, whatever. Um, they're, they're great businesses if you run them right.
- SPSam Parr
And how many people work at Metal Lab now?
- AWAndrew Wilkinson
[clicks tongue] Uh, I think it's about 170.
- SPSam Parr
How often do you say to yourself, "I'm not sure if the, the headache is, the headache of having 170 employees is always worth it"?
- AWAndrew Wilkinson
[clicks tongue] Well, it's very abstracted for me, right? I haven't been in the business for five or six years, and the way we run Tiny now is that we meet with the CEO once a year, and otherwise they check in whenever they need help with anything. And so when I was running it, like first it's exhilarating. Running an agency is awesome. When you're starting out, you get a seat at the table in all these places you don't deserve to be, right? I was like a 22-year-old pipsqueak, and I was meeting the founders of Pinterest and Slack and, you know, all these amazing places, and they were asking me for my opinion, right? It was, it was crazy. But at a certain point, you get so exhausted, you're making a good amount of money. You don't wanna get on a plane to San Francisco every second day to go and sell. And at that point, you know, it starts to become a much more intensive business. And for me personally, I don't enjoy running businesses after about 15 or 20 people. And so once I hit that point, I knew I needed to transition to a CEO.
- SPSam Parr
So when we're, in the document, you say the pros and cons of bootstrapping and owning 100%, what, what do you have under those?
- AWAndrew Wilkinson
Well, I mean, I think that I've changed my opinion a lot on this. Like when I first started, I was like adjacent freed David Heinemeier Hansson acolyte, like 100% every business should be bootstrapped. I now think that's crazy and stupid, and I think there's certain businesses where it's insane not to raise money, right? Like if you have an opportunity to grow your business, it's like the analogy I always use is, if you own a bakery and there's a line out the door and you have a single oven and you need to buy three more ovens but you don't have the money, and in order to service the people in the line you need to buy two more ovens, it's crazy not to raise money or go get debt or something. I just was never in that position. Um, and I think, you know, owning 100% or owning majority in your business, it's like a dictatorship, and dictatorships can be very good, uh, like Lee Kuan Yew from Singapore, or they can go terribly like Kim Jong Un, right? And the question is, what's your personality and what's gonna work for you? I mean, you can move insanely fast. There's no board, there's no committee. You don't owe anyone anything. You don't have an outcome. You know, you don't have to IPO, you don't have to sell. And you have total integrity. Like when Chris and I buy a business, we can look people in the eye and be like, "We're cutting a check." Like, "This is us," right? That's very different. Um, on the cons, I mean, you're on an island. You don't have anyone to really who's aligned and cares and can tell you you're being an idiot, and so you can really drive your business off the rails. Um, and then you also think in a limited way. I mean, I know so many entrepreneurs who could 10X their business, but they're so addicted to their dividends or they're conservative and so they don't. So-
- SPSam Parr
What, what about that conversation-
- AWAndrew Wilkinson
... it's just very nuanced. Like I'm, I- I raise money for our podcasting software company, Supercast. I'm gonna raise money for our news business. Like, there are situations where it's logical.
- SPShaan Puri
[upbeat music] All right, and then I forgot to tell you this, but this is the most important thing. Uh, I can't believe we didn't talk about this earlier, to be honest with you because if you're listening to this and you like what you're hearing right now and you haven't gone and subscribed to the My First Million podcast wherever you get, get your podcasts, then that's the thing you've gotta do. There's nothing more important than doing that right now. And don't do it 'cause I said to do it. Do it because you wanna do it. Do it because that's who you are.
- SPSam Parr
What about that conversation of employees, employees saying they want equity, and you don't give equity?
- AWAndrew Wilkinson
Well, it just... There's certain businesses, there's certain businesses where we do, and there's certain ones where we don't, right? And the big question is, what I always say to a, um, to an employee is, equal risk, equal reward. And if the business is gonna sell at some point or we think it can IPO, great. We'd love to talk about equity, but there's a cost to it, right? If you wanna make 300 grand a year and you don't wanna give up any of that 300 grand in order to get stock options or buy equity, then doesn't matter. So I love, I love giving people the option and saying, "Look, you can either give up some of your comp or upside or whatever, and we'll give you stock options, um, or you can get the big salary and prioritize cash." And a lot of people prioritize comfort and cash, I find, at least, uh, you know, not- outside of the Bay Area.
- SPShaan Puri
By the
- 7:30 – 9:15
Thoughts on Lee Kuan Yew
- SPShaan Puri
way, Andrew, you mentioned the guy from Singapore. Sam, do you know this guy, Lee Kuan Yew?
- SPSam Parr
Uh, I know a little bit about him. I didn't realize he was a dictator. I thought they called him, like, the CEO or something.
- AWAndrew Wilkinson
No, he's literally a dictator.
- SPShaan Puri
So-
- AWAndrew Wilkinson
But like a good, the good dictator
- SPShaan Puri
... so Andrew, do you, can you give us, like, the two minutes, uh, g- two minute kinda summary of, of who this guy is and why he's awesome?
- AWAndrew Wilkinson
So effectively, he took over... Um, Singapore is, like, a island, tropical island state, um, in Asia. And at the time, it was, like, rice paddies, poverty, like, a bog, and he literally took it over, you know, had an autocracy, had total control, and he basically thought like a business person and was like, "Okay, how do we make this the most business-friendly place? How do we optimize taxes? How do we ensure we have hyper-competent government? How do we pay government really, really well? Uh, how do we incentivize the whole world to manufacture and export, uh, you know, their products from here?" And basically built it into Asia's kinda... Out- outside of Hong Kong, I think it's, like, the central banking and finance, uh, hub in Asia. So it's a pretty incredible story.
- SPShaan Puri
And I think he, his background is, like, he's, like, a math and computer science guy, right? Like, he, he doesn't come from kind of this, like, you know, uh, political background. Like, he came from a different sort of background, and I think that's why you got different ideas from, from a leader in charge.
- AWAndrew Wilkinson
Totally.
- SPShaan Puri
Um-
- SPSam Parr
You wanna tell me, you wanna-
- SPShaan Puri
You, you also had something that you two... I was gonna say, you, you had one thing you tweeted out, uh, that's related to how you run the business at Tiny, which is this, this hire one, hire 10, uh, framework. What, what is that? I, 'cause that, that sounded interesting to me, and I think that that's, like... Uh, from what I understood, it was a pretty useful concept. So, so explain that.
- AWAndrew Wilkinson
Yeah, so our CEOs
- 9:15 – 15:10
Hire 1 to hire 10
- AWAndrew Wilkinson
get super annoyed 'cause I say this all the time. It's probably the number one [laughs] thing I say, uh, and it's probably the biggest hack that enabled us to build Tiny over the last eight years. Um, so I mean, think about it like this. So if you had an army general who is commanding 1,000 troops, but he's still telling individual soldiers what to do, and he's personally restocking their ammunition, and he's shuffling people around, you'd be like, "What the hell is this guy doing?" Right? But I think a lot of people operate their business like this. I mean, I certainly did in the early days. I would swoop and poop, and, you know, instead of hiring a VP marketing, I would go and I'd hire a whole bunch of marketing people and just kind of become the VP of marketing and, or I'd bypass people and tell people what to do. And what I realized is you should never, ever hire the 10 people. You should always focus on hiring the one person. So that could be a CEO who will then go o- out and hire all the executives, or it could be hiring an executive who will hire an entire team. But, uh, it just, it's such a hack, right? It's like 80/20. How do I do 20% of the work for 80% of the result? Um, and, uh, yeah, I mean, it took me ages to figure this out. I feel like I've only cracked this in the last, like, five years, and I still, Chris will still catch me in this. He'll be like, "Hire, you know, hire 1 to hire 10."
- SPShaan Puri
Then, then but when you hire that-
- AWAndrew Wilkinson
Yeah, I feel like I make that mistake all the time.
- SPSam Parr
And when you hire that one person, how much... So let's say your business is doing, uh, let's say 1 million in revenue. It's small. No, let's say a little lo- let's say 10 million in revenue, 2 million in, in, like, actual cash flow you have. You hire that one person. You pay him a lot of money, $250,000. Do you only hire that $250,000 person when you know for a fact you've got budget for, like, two more people?
- AWAndrew Wilkinson
Yeah. That, I mean, that's my approach. That's what I've shifted to, is, like, I hire... You know, here's an example, is, like, we hired the CEO of AeroPress, and he asked me questions, "Oh, you know, what do you think about this hire or that hire?" And I just said, "That's your, you know, that's your hire. You know, I hired you. I trust you 100%. You make those hires," right? And so it's complete delegation of, you know, when I buy a business, I make two decisions, who runs it and how are they incentivized? And unless they do something dirty or horrible or the business goes to shit, you know, I just leave them to it.
- SPShaan Puri
What's the trick on the, uh, how are they incentivized? So, so what's the... How do you think about that when you buy a business and you say, "All right, the business today is here, and I think naturally it's gonna get to there"? And I'm bringing on this person to get it to be some inflection above that, and I also know that things could go wrong. So how do you think about that incentive structure? Is it ca- is it case by case you're coming up with very unique patterns or very unique, uh, you know, packages? Or do you have kinda one base that you, that you go off of?
- AWAndrew Wilkinson
It's so different. I mean, like, everyone's incentivized differently. There's, there's certain people where, for example, they need to be able to say they're a partner and they have equity. There's other people who don't care about that, and they want just targets to hit. Uh, I mean, we've done everything from saying, "Okay, let's say the business makes $100 million and it's growing at 15%. You c- anything you do over 15% growth, you get 5% of." Right? That's in its simplest. We've also done things where it's like, you know, "Hey, when the stock price hits X, you get a payment." And I remember, um, I got to have dinner with Charlie Munger like two years ago, and I was like, "What's the perfect, you know, incentive structure?" And he just said, "I've done hundreds, and everyone is different and I still don't know what works." I think it's really an art, not a science. 'Cause you know, different people are just so differently motivated.
- SPSam Parr
And you actually-
- SPShaan Puri
What's at, like, stake? So you... Sorry, one more, Sam. When, when it's usually, or usually when it's like, "Ah, it depends," there's, there's, that ma- they, what that usually means is the winning formula is different a lot, but there's usually a common losing formula. So what is the common losing formula for incentives?
- AWAndrew Wilkinson
The common losing formula is them not being aligned on risk. So for example, if they're able to use my money, and I can keep injecting money into the business, but it in no way hurts them, so for example, they don't get diluted, or they don't have to pay a high interest rate, or, you know, it, if it goes bankrupt they don't lose anything, that's a huge problem, and I've learned that over the last five years. And so now what I try and do is if somebody wants equity, I always make them write a check, right? Or, or I loan them money, and it's literally a personal loan guaranteed by their house or something, right? And it's got, it doesn't, I don't want it to be so much money it's gonna ruin them or be a problem. But I, I, if someone wants equity, I'm like, "Okay, you gotta put up something," because if the business fails or it goes down, you gotta have a sense of loss. People feel lo- the, people feel loss more than they feel gain.
- SPShaan Puri
I just imagined the w- the Wilkinson moving truck coming in front of the house. They're like, "No, honey, it's all gone wrong."
- AWAndrew Wilkinson
Totally.
- SPShaan Puri
You have to come and you put your own furniture, your own art on the walls. They get to live there, but they have to know that it's your house now, and they truly have fucked up. [laughs]
- AWAndrew Wilkinson
We have, we have done it. We, I, obviously, uh, you know, I'd never wanna do that. And it's always structured in a way where it's not, you know, we're not gonna have to take their car or something. But I just want, I want a feeling of like there's gotta be some downside, you know?
- SPShaan Puri
Sam is gonna take this, like, way too far. He's gonna take their car, and it's like a punch clause, like-
- AWAndrew Wilkinson
[laughs]
- SPSam Parr
100%.
- SPShaan Puri
I get to punch you.
- AWAndrew Wilkinson
[laughs]
- SPShaan Puri
Just because if you lose my money, I'm gonna punch you. [laughs]
- SPSam Parr
Yeah, I love this, Gabe. You, uh, you also [laughs] speaking of that, of risk, you also hire people really early. You told me, um, I don't know if you talked about this, but you were tinkering around with this bake- Do you wanna talk about the bake- can you mention the bakery or no?
- AWAndrew Wilkinson
Yeah. Well, the bakery's kinda sad, so-
- SPSam Parr
No, sorry, not the bakery
- AWAndrew Wilkinson
... basically, uh-
- SPSam Parr
The, the, uh, the ghost kitchen.
- AWAndrew Wilkinson
Ghost kitchen.
- SPSam Parr
You tinkered with this thing where you hired a baker, and you were making stuff to sell on DoorDash-
- AWAndrew Wilkinson
Yes
- SPSam Parr
... and Uber Eats. And I don't know if it was entirely-
- AWAndrew Wilkinson
Yeah. So, okay
- 15:10 – 20:00
Andrew's ghost kitchen
- AWAndrew Wilkinson
Sure. So basically, you know, I, I'm pretty interested in health and stuff, and I was trying to get off sugar. And so I went to a baker friend and I was like, "Look, can you try and make, like, like sugar-free cookies using modern..." You know, there's all these, like, crazy modern sugars.
- SPSam Parr
Like stevia or monk.
- AWAndrew Wilkinson
Like you guys have heard of Magic Spoon.
- SPSam Parr
Yeah.
- AWAndrew Wilkinson
Yeah, like Magic Spoon uses, uh, allulose, and stevia, and monk fruit, and stuff. So he started making these, and I was like, "Okay, these are, like, not as good as a chocolate chip cookie, but they're like 90% there, and I bet you a lot of people would be into this as, like, a replacement." Like think about Halo Top. It doesn't taste as good as ice cream, but you can eat a fuckload of it, and it's not bad for you in the same way. So I basically made that. We started making all these treats. We were cooking it out of our office, which is not technically legal. Um, and what happened was, um, I got a call from Island Health, which is like the local health authority, and they just said, "Hey, you're using an ingredient that's not approved in Canada." And unfortunately, allulose is not impr- approved in Canada, and so you just legally can't serve food with it, even though it's generally regarded as safe and everything. Um, so I'm still gonna do it at some point, I think, but it, I just legally can't. It sucks. And I've never... It, it's insane to me you can hit up against these regulatory issues. Like, imagine being a real estate developer, and, like, you have this amazing vision, and then city council's just like, "Nope."
- SPSam Parr
Yeah, it sucks.
- AWAndrew Wilkinson
Like that is insane to me as an internet entrepreneur. [laughs]
- SPSam Parr
And that's what I was gonna ask. So you, like, hired a baker to do it, but then also with your, uh, newsletter business, your local news business, you hi- I forget the guy's name, but he's, uh, I've talked to him a bit. He's a nice guy. You've hired him to be the CEO, and so you, you hire people pretty-
- AWAndrew Wilkinson
Hired him
- SPSam Parr
... Yes. And you, you hire people pretty early on, and hiring someone to do something to me is a huge risk because in my head I'm like, man, if this guy's got a kid, like, I'm like, his kid's now kinda my kid too. Um, you know, like, it's like a big risk if he's quitting it. That's how I felt when my, when my, one of my first employees got married, I was like, "Oh, I've got a family now." Um, 'cause I was like, some of the decisions I make are gonna impact this entire family, and that's really stressful. And it's also a huge conversation to convince someone who's in their 30s, 40s, or whatever in their, even in their late 20s, to leave their s- fancy gig at Salesforce to bail and come to my company that I'm gonna pay him $45,000. That's a huge thing. I, I, I go, when I go to bed at night, I'm, I, that stresses me out. But you seem like you overcome that pretty easily. You hire people relatively early, and you're like, "Yeah, it's no big deal. I'm just gonna hire this person." W- what's that like? Uh, like what are you thinking when you do that? [upbeat music] All right. What's going on? Just a quick break, a quick interruption. Scroll down into the description box on YouTube, and you're gonna see a link to The Hustle. The Hustle is a daily email. It gives you all you need to know about business and tech news. I started it years ago, um, and it's awesome. It's kinda how this podcast got started, so check it out, The Hustle. Scroll down. Do it
- AWAndrew Wilkinson
Well, I've lost, I've, I've messed that up a lot, and I think you guys know my whole story about losing $10 million building project management software. Like, that was the perfect example where I got ahead of myself, the business didn't make sense, and I threw a bunch of spaghetti at the wall, and none of it stuck, and I had to let a whole bunch of people go, and it was really horrible and sad. And, you know, it was like a 10-year slow death, right? So I've been through that. So now it's more, uh, with the amount of scar tissue I have, I've enough s- I have enough signal where I can be like, "Okay, I'm gonna try this." And with the bakery, I was just contracting a friend, right?
- SPSam Parr
Yeah, that was, that was the best example.
- AWAndrew Wilkinson
There was no risk. I, I said, "This is an experiment." With the news business, I actually ran it for three years before I partnered with Farhan and he took over as CEO. And by that point, there was enough signal, it was slapping me in the face. I was like, "This is a big opportunity."
- SPSam Parr
And is, is that the case with all, with all the things that you start, where you take that long?
- AWAndrew Wilkinson
Yeah, usually. Like, if I, if I go and I hi- I hire a CEO, I'm pretty high conviction that there's something there, or there's already a business that supports, has cash flow. What I would never do is be like, "Hey, there's a, you know, I have an idea for this. I'll just go hire a CEO." Like, I, I, I would never do that.
- SPShaan Puri
Y- Andrew, I feel like you've reached this point, and, um, I used to be like, how do these motherfuckers do this? Where I remember I was doing a startup, and it was so hard to get my one thing to work, and then I would meet people who were like, "Oh yeah, so I have that past success, then I have my current success, and then here's my three side successes that, oh, I had this idea, then we just started doing it, and then guess what, the line's out the door. [laughs] And then this other one, it's, like, kind of cool. We just started it, you know, like, I accidentally, you know, my hand just fell on my keyboard and I accidentally wrote this app. It was amazing. It went viral. And then this other thing that I just tweeted about, and then this all coming together nicely." And I just remember being like, what? W- do they know something I don't know? Is there just, like, extreme luck component? And I felt that way for many years, five, six years straight when I was pushing the boulder up the hill with my
- 20:00 – 29:30
Why certain people can have success after success
- SPShaan Puri
startup. And then I now have experienced exactly what the thing that I was most jealous of, and I have no idea what switched in between, where, like, the last five things I've tried have all worked, and all worked pretty much immediately. And then it doesn't matter how big or small, like, you know, whe- whether it's, like, uh, the, the podcast, or the course, or, um, you know, the, uh, my e-commerce business, or my, the new Milk Road newsletter business. Like, each of these has just worked straight away in a bigger way than anything I'd ever done before, um, with less work and less stress than, like, the old stuff I used to do. And I have no idea what changed. Well, I have a kind of an inkling, but I, I don't really know. Sam, have you ever thought about this? Are you what I'm talking about, and what do you think makes sense?
- SPSam Parr
I know, I know exactly what you're talking about, and I completely agree. You're on a roll right now. Um, and what's your inkling? I, I have a feeling... Uh, my, my, my, my answer is it's kind of like sh- a shitty, it's like a mindset, like abundance attitude and being on o- and being on offense versus defense. But what's your, what's your, what's your inkling?
- SPShaan Puri
So my inkling is that I switched up my situation. So, like, I was in one situation for a very long time. Like, and it was a nice situation. It was a very nice situation. But it was, like, where I was going to this office every day, working with these people in this hierarchy, with this boundary box of, like, what project f- or projects we can work on and, like, what success might look like. And as soon as I got out of that and it was just me, I was like, oh, okay, so now that it's just me that I have to look out for, I guess I could just do a podcast. I didn't have to have, like, this big venture billion-dollar outcome. I didn't have 20 engineers to go tell what to do. I had no engineers. So I just did what I could do with no engineers, which was like, I'll do a, a podcast. I'll do a course. I'll do, I'll just try to get big on Twitter. Let's just see what happens. And oh, you know, like five tweets go viral, and boom, got 200,000 followers. It's like, there's these things that I just wasn't doing before because I think before I had a really set thing of like, here's what I need to do. Like, h- here's the only way to win. And I had, like, almost too much ammo. I had, like, too many people at my disposal, too much funding, too much everything. And because of that, I c- I had a very narrow window of what could work. And so I was just trying to come up with ideas that might work versus, oh, let me just try this because I, I'm, I just kind of want to try it. And then when, once I got into I just kind of want to try it, and I didn't have, I didn't have to worry about what other people thought or I didn't have to come in and manage anybody in the w- uh, that day and tell them what to do. I didn't have, like, investors to go pitch to. I just did the thing. And then all of a sudden I feel like, you know, sort of like all the talents that and skills that I had been building up over the past 10 years, like, finally got to just do them.
- SPSam Parr
Yeah.
- AWAndrew Wilkinson
Don't you think it's like dating or something, though, where it's like you, you know, you date a couple crazy girls and it's really exhilarating, and then over time you're like, "Wow, that was horrible," and there's pattern matching. You're like, okay, when I go to a restaurant and a girl's rude to the waiter, that's a no, right?
- SPShaan Puri
[laughs]
- AWAndrew Wilkinson
And in the same way with business, you go, oh, okay, like I used to think I wanted to build all these kinds of businesses, but those were 10-foot hurdles. I don't want to jump 10-foot hurdles. I want to jump one-foot hurdles. And so if you think about it, all the stuff you're doing, they're in your, you know, circle of competence and they're relatively simple to execute. They don't require a lot of people. They don't require funding. I think learning that is like a 15-year overnight success kind of thing, where it just clicks suddenly.
- SPShaan Puri
Right.
- SPSam Parr
Yes.
- AWAndrew Wilkinson
And I'll catch myself occasionally getting pulled down rabbit trails of like, oh, what if I did this crazy, you know, drone AI startup, whatever, but then I always go back to base hits.
- SPShaan Puri
Right.
- SPSam Parr
And I, and I, and I think there's a-
- SPShaan Puri
And the only thing, like, I think-
- SPSam Parr
There's this third component-
- SPShaan Puri
Let's just say that
- SPSam Parr
... uh, well, go ahead. You go ahead.
- SPShaan Puri
Okay. I'm sorry.
- SPSam Parr
All right. There's this-
- SPShaan Puri
I think-
- SPSam Parr
Oh my God, what's going on?
- SPShaan Puri
The connection is fucked up.
- SPSam Parr
We're like... All right, I'm gonna go. There's this third component of, of confidence. And so I think that because of, like, my work, I've been more confident, and I understand, like- Well, if I invest a dollar here, I think I can make at least, uh, $3 in the next two years. So like, just understanding how machines, like money-making machines work, investments. But then also, I think, Shaan, because the way you get to hang out with p- we hang out with each other, we hang out with Andrew, we hang out with our circle of friends, we hang out with all the people we've had speak at our events, we hang out with our, um, podcast guests, it becomes more normal. Like, succeeding has become far more normal than not succeeding, actually. And not succeeding is just like, "Oh yeah, it's gonna happen," but then you just move on, you do the next thing, and it's like... And then inevitably it works. So it's not if, it's... Or it's not when, it's if. And I think that confidence has actually helped a ton, where, so for example now, if someone wants to, like, real estate's an, an, an easy one because it's so predictable. But with real estate you're like, "Oh man, putting $100,000 down on this house is a lot of money. That's a, you know, that's six figures." It's like, "Well dude, but it's gonna make 12%." It's like, "Well, I don't know that." And I'm like, "Yeah, I know, but it, it's gonna do that," so you actually want to invest more. So like, that confidence of just knowing the motions and knowing the routine and process has actually helped a lot. Totally.
- SPShaan Puri
Yeah, the other thing I was gonna say is, uh, which is what you guys both just said, but framed differently, is I was taking a shitload of market risk before, and now I basically take almost no market risk. I just take execution risk. And before, even if I felt like I executed great, which I did, I feel like I did in, in a couple of the projects that we had done in, during my, like kind of like the, the, the previous startup. Um, the market risk was too high. Like, there was just no p- it was like inventing a new fucking, like, a new science, you know, on a new land, and it was just, the market risk was way too high. Now I'm just doing things that are like, "Oh, I kn- I just know that this works, and I just need to do it well." So it's like e-commerce is nothing f- there's no fancy science to it. Um, and I had buddies who did it, and I just used their model, and I just did my own, in my own lane of their model. Milk Road is The Hustle but in the crypto lane, which is the cryp- the lane I like, right? And it's like, I just took your blueprint for The Hustle and I just copy-pasted over here-
- SPSam Parr
Well, and also-
- SPShaan Puri
... and then it's execution risk from there.
- SPSam Parr
I know, dude.
- SPShaan Puri
It's that, it's that thousand true fans thing
- SPSam Parr
I saw that you literally copy and pasted the Twitter handle. It was hilarious. Your Twitter description [laughs] is literally copied... I sent you some old resources from The Hustle, and we called ourselves the s- your smart good-looking friend or something who tells you everything you need to know about-
- SPShaan Puri
Yeah. [laughs]
- SPSam Parr
And you just copy that and repla- instead of Business of Tech, you just put like Delete Crypto or something like that.
- 29:30 – 47:30
Why bad guys always win
- SPSam Parr
$20,000 in my bank account?" I can't decide.
- AWAndrew Wilkinson
Well, no, no, no. But it's, it's, maybe it's different for me because, you know, I have a, an un- t- for, if you'd told me 10 years ago how much, you know, cash we have or h- what our cash flow is, it would blow my mind, and I'd say, "How could you ever feel at risk?" The problem is that the stakes are bigger. You know, we have almost 1,000 employees now, right? So there's a lot more, um, you know, there's the stuff that can go wrong. Do I feel that I've built out a castle with a whole bunch of moats and stuff? Yeah, absolutely, and I'm better diversified than I was 10 years ago. But there's still that kinda dust bowl farmer mentality, right? It's actually something I wanna talk about. Um, like just, we all kind of have this feeling of like- The way I'd put it is I started chopping wood just because I was anxious, right? Like 15 years ago in my backyard, and my neighbor pokes his head over the fence and he's like, "Hey, can you chop some wood for me for my fire? I'll give you 20 bucks." And I'm like, "Okay, amazing. I didn't know this was a business." And then before I know it, I've hired three or four buddies. We're all chopping wood in the backyard. We're a merry band. We're selling to the whole neighborhood. It's awesome. I love it. And then one day, 15 years later, I wake up and I'm in a sawmill, and I own 15 sawmills, and all I do all day is file papers. But there's still this part of me that beats myself up for not chopping wood. I, I still have this mindset. Even though all the machines do all the labor, there's still this part of me that's constantly saying, "You need to chop wood. You need to chop wood." And so I think you're gonna ... You know, you, you guys have this for sure. Like, doesn't matter how much you have, how diversified, whatever it is, you have a need to do labor, and there's an anxiety that you're harnessing to perform.
- SPSam Parr
That's a good-ass analogy.
- SPShaan Puri
I am not gonna lie, the first 30 seconds while you were explaining it, I thought you legitimately took up wood chopping as a hobby. And I was like, "Oh, that's cool. [laughs] It must be, uh, cathartic." [laughs] And then I realized I was inside of a Charlie Munger, uh, or Warren Buffett analogy [laughs] or like parable. Um, you have this thing on here that's, that's pretty cool. Bad guys usually win. As a bad guy myself, I would love to hear-
- AWAndrew Wilkinson
Yeah. [laughs]
- SPShaan Puri
... how this, uh, how this ... What, what you mean by this.
- AWAndrew Wilkinson
Oh, man. Okay, so, um-
- SPShaan Puri
Do you think you're a bad guy?
- AWAndrew Wilkinson
I've got a, I've got a story-
- SPSam Parr
Do you think you're a bad guy?
- AWAndrew Wilkinson
I don't think you're a bad guy.
- SPShaan Puri
I'm just joking, but go ahead.
- AWAndrew Wilkinson
[laughs] I think a bad guy is a full-on con artist who lies-
- SPShaan Puri
I, I call myself a bad guy-
- AWAndrew Wilkinson
... um, and hasn't achieved anything
- SPShaan Puri
... rather than calling myself a good guy and having all the comments on YouTube tell me I'm a bad guy. [laughs] It's easier just to call myself a bad guy and have people tell me the opposite.
- SPSam Parr
Or bad meaning, uh, not bad meaning bad, but bad meaning good. That's, that's how it is.
- AWAndrew Wilkinson
So I th- I'm sure you guys have had this experience, and I'll kind of anonymize this story. In this case, it's a bad girl. Bad girls usually win. But, um, so this, this happened to me, like almost 10 years ago. I was really overwhelmed. I was running like five businesses. I got introduced to this older woman, and she had just sold her business for 20 million bucks, super successful, and she kinda says, "Hey, I'll mentor you. I'll help you out." And so she comes over to my office, we start whiteboarding, and I'm just like, holy crap, this person is a genius. She could help me so much. And so first, she's an advisor and mentor, and then eventually she's like, "Hey, how about I come in and I'll help you with marketing and sales?" And so I inject her into the business. She starts killing it. Like business takes off, everything going great. Um, but I did zero diligence, right? She'd legitimized herself by being this super successful person, and because she was so successful, I was just grateful to have her. She was like a miracle and made all these problems go away for me. And then suddenly the cracks started appearing. So s- people started saying she was lying. She was spending money in weird ways. There, you know, her expenses were out of control, you know, staying in crazy hotels, all sorts of stuff. And it turned out that she was lying and like falsifying documents. She hadn't sold her business. She wasn't rich or successful. And when I called a bunch of people that she'd worked with in the past, like a bunch of them had had terrible experiences, right? So we fired her. We move on, and I'm in this very odd spot where ethically, you know, I wanna be like, okay, this is a bad person. I wanna shoot up a flare, and I wanna be like, "Everybody watch out," right? And I'm thinking like, okay, you know, people will diligence her. They'll call me. You know, she, she won't be able to keep, you know, pulling this off. Um, but legally, I don't know what it's like in the US, but in Canada, when someone calls you for a reference call, you're quite limited. You can basically just say, you know, "I wouldn't work with them again," and do your diligence. And so-
- SPSam Parr
I usually say, uh-
- AWAndrew Wilkinson
... people would call and-
- SPSam Parr
I usually say like, "I'm not allowed to talk about it." And they get the hint.
- AWAndrew Wilkinson
Right. That's smart. I, I said a bunch of stuff like that, like, you know, I, I would never work with this person again. It's one of the worst professional experiences of my life, whatever. But almost always, those people go on to work with them, and you realize these people are just incredibly charming, and they always assume you're the bitter ex-girlfriend, right? Because they've obviously buttered you up and told some story. And so this woman, you know, I see her on LinkedIn, and she's still succeeding and going. Every year she's somewhere new. And you know, people like this, they don't get super rich. They're so short term. And if they only knew how much money you could make by not being a crook, they would probably be ethical. Um, but it just, it was so sad to me, and I wanted, my sense of justice was like, I gotta put a stop to this. And you just realize like, no, like you just have to let go. Never wrestle a pig. You'll both get dirty, but the pig will enjoy it. And so, you know, these people are out there and they continue to succeed. And unless they're Elizabeth Holmes and they get, you know, in the Wall Street Journal, they're fine.
- SPSam Parr
I wanna know who the person is.
- SPShaan Puri
[laughs]
- AWAndrew Wilkinson
I will never say. [laughs]
- SPSam Parr
You had another example of a, of a guy at, at a famous company who it, you know, you had some fraud or you had some issues of people not being honest as well. Remember you told me that about, about that one folk?
- AWAndrew Wilkinson
I don't know. I don't know which one that is. I mean, look at like you guys talked about, um-
- SPSam Parr
Oh, okay
- AWAndrew Wilkinson
... Naveen Jain, uh, on a podcast maybe like 10 episodes ago, and I mean like there's a perfect example, right? There's this guy who basically did a pump and dump. That's my understanding. Alleged, alleged pump and dump. Um, but these people go on, right? Unless they're criminally indicted. And even, you know, people who are criminally indicted, look at Michael Milken. Michael Milken was literally, uh, front running his own investors, committing tons of like outright fraud that if you were his investor you would hate, went to jail for 10 years, and now he's lauded as a philanthropist. I mean-
- SPSam Parr
Or how about, um-
- 47:30 – 52:23
"The Macolm Gladwell Effect"
- SPShaan Puri
writing is, is m- like, inspired by or in- influenced by, you know, some, some ways Warren Buffett. But your, he, his stuff is very dry, right? Warren Buffett grew up without the clickbait generation. He doesn't need to-
- AWAndrew Wilkinson
[laughs]
- SPShaan Puri
... to do that. Uh, but, like, 37signals, so, like, DHH or Jason Fried, like, to me, your writing-
- SPSam Parr
The Masters
- SPShaan Puri
... is so similar to theirs that I can tell, you know, that was, like, a, a, you know, pretty major influence on it. And one thing that they do amazingly well is they, they will basically pick a fight while simultaneously taking the moral high ground, and I think you do that amazingly well, too. What I mean by that is you'll say, like, you know, Joe Rogan got ripped off, but you're not cr- you're not criticizing Joe Rogan. You're actually saying, uh, you know, "Joe, you, you sold yourself short, and, and a, an artist and a creator like you should not sell yourself short for some, to some company who's gonna take advantage of you here." And so you're taking the moral high ground-
- AWAndrew Wilkinson
[laughs]
- SPShaan Puri
... while picking, uh, you know, k- going against the grain and, like, sort of d- doing a call-out, which is amazing. Most call-outs just basically it's somebody, you know, slingshotting from the crowd and, you know, there's sort of a sniper that's, like, you know, angry at them. And so I've never been able to do this, but I've noticed that you do this, and 37signals does this amazingly well. The-
- SPSam Parr
Oh, yeah. Those guys are-
- SPShaan Puri
They say Facebook is overvalued, and they'll talk about why Facebook-
- SPSam Parr
Yeah
- SPShaan Puri
... is overvalued, and then they'll Talk about, you know, like, "We ... Sorry, we're, we're just the kinda guys that like businesses that have actual revenues and profits. But oh, you know, call us crazy." And so they're, they're, they're taking the moral high ground and they're saying that this Facebook value that w- at the time, remember, it was famously like-
- AWAndrew Wilkinson
Well, I would-
- SPShaan Puri
... billions of dollars
- AWAndrew Wilkinson
... I would, I would argue, I would argue those guys would not be where they are today without copywriting.
- SPSam Parr
Without a doubt.
- AWAndrew Wilkinson
And I think that's like the sawdust from their sawmill, right? It's like, "Hey, we got fucked on the App Store." What would most people do? "Okay, we'll just go in with Apple." They used that as the biggest marketing opportunity ever. They were on every-
- SPSam Parr
Right
- AWAndrew Wilkinson
... talk show. They were, their names were everywhere. I mean, they also got kinda canceled as well, so there's a cost to that, but, um, they've done an amazing job.
- SPSam Parr
I call it-
- AWAndrew Wilkinson
And that's 100% where I learned it. I, I worship those guys for years.
- SPSam Parr
I call it like The Malcolm Gladwell Effect. So with Malcolm Gladwell, you, um, read his books, and you have to remember that a lot of what he's saying is just theory. There's no... There's some proof that it's real, but it's, it's not proven. And, um, but he's such a good storyteller that you think like, "Oh, what you're saying is just a fact." Like, is he... Have you heard his story about David and Goliath? It's wonderful. And he likes to... He t- he's like, "Actually, David and Goliath-"
- AWAndrew Wilkinson
Mm. Mm
- SPSam Parr
... wasn't that hard of a contest because turns out Goliath was, like, mentally, uh, challenged or, like, had some issues where he, like... And he's also blind-
- SPShaan Puri
[laughs]
- SPSam Parr
... couldn't see. He, he had, like, he had this thing where he was so big that it ruined, he had like gig- gigantism or something like that. And so, and then also, like, David was a shepherd, and they're actually so good at throwing these rocks that they could take a bird out of the sky. So it's really like just basically taking a, a big, dumb, blind giant and shooting him in the head with a gun. That's not hard.
- SPShaan Puri
[laughs]
- SPSam Parr
And, like, that's his argument about... He's like, "David and Goliath, it's, it's nonsense." And is he right? I don't... There's no proof. Who knows? Is David and Goliath even real? We don't even know that. But you, like, hear this story and it changes you. But the problem that I have with Basecamp and other good writers, and this is something that you have to be really careful of, I, I work on it all the time, I'm like, "I can be such a good storyteller that I can get you to think that something's real even though, like, I'll tell you, but there's no proof." But, like-
- SPShaan Puri
Totally
- SPSam Parr
... I'm gonna write it in such a way, and Basecamp does this all the time, where they say... Well, they'll write something and I'm like, "Oh, this is the truth. This is how the world is." When it's like, well, no, let's for- let's not forget this is an opinion.
- SPShaan Puri
Right.
Episode duration: 52:23
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Transcript of episode 2G12i-vdyk8
