The Exchanges

Q How much money are they making? Do you guys have, is this like a five million dollar company? 50? 500? Like what's going on with this?

A I would put it in tens of millions, but this is the interesting like bull case is that right now they have like a very respected analysis group, but they're also launching a fund allegedly according to the information to invest in both semiconductor stocks and startups, and they're already doing angel investing. And then also they're going to do credit ratings. And so the real model to think about this, the comp is Moody's. So if you're familiar with Moody's, they do credit ratings and Moody's got started during the railroad build out because the, the, the railroad build that was so capitally capital intensive that there was a huge, there was a huge secondary market for like, okay, is this person that's going to build this railroad from, from Chicago to Atlanta? Like, are they good for it? Do they have the money? And so Moody's is now an eighty billion dollar business. And I, and if you look at the stock, like it, Moody's has not moved during the sell-off, like it's doing fine, and yes, this is very indexed to, to the AI boom, but the, the actual business can be very, very stable, very high margin, and very big, like much bigger than people think when they think of just like publishing analysis.

AI assessment note: “I would put it in tens of millions”

Q That's awesome. You, um, you had, um, a pretty bold, uh, thought last time that you were on. I think you said something, Laura, you, uh, you predicted that America's decade, the next decade for America is going to be flat in terms of economic growth, and, um, I think you also said for the, uh, index funds. Do you still believe that to be true?

A Yeah, I'm selling down my American stocks, mostly because I'm diversifying, because I don't want to lose. I've lost all, I've been rich three times, which means I've lost it twice. I can't go back. I'm not, you guys are young and have good hair. I'm neither, neither of those things. I can't make it back again. So I'm diversifying. And if you just look at the cycle of American markets or the global markets, typically the U.S. outperforms for eight years, then emerging markets outperform for eight years. It goes back and forth. We've been outperforming emerging markets for 17 years. I still believe the markets are cyclical. The Buffett index, stock market valuation versus GDP, he likes it at about 90%. It's at 210%. The S&P is trading at historic highs. 97% of the time, the S&P has traded at lower valuations relative to earnings. So, it's not, it's not a criticism of America. I just think America, America is an asset. The rest of the world is an asset. There's America as an asset, everything, every public company in America, every public company outside of America. They're equally priced right now. They're both, you can own every public company in America for a hundred bucks, or you can own every public company outside of America for a hundred bucks. What do you think is the better value right now?

AI assessment note: “Yeah, I'm selling down my American stocks, mostly because I'm diversifying”

Q Can you do that now? Like if I, if I wanted to implement, I mean, that sounds awesome. If I want to go and do that right now, how would I set that up?

A So you, you can do it today. It just requires a little bit of scripting in Airtable. And that itself you can actually generate with AI. So the idea is like you would go and create like a list of different people you want to send the video to, or even a list of topics you want to create a video for. And then we already have an Airtable, a scripting layer where you can define any arbitrary code. It's hosted in our infrastructure. And in this case, you would just define the code to go and talk to the HeyGen API. A lot of these AI products have APIs. And so you can go and create your own kind of orchestration layer and Airtable To go and automatically for each row ask Heijen to generate a video program programmatically for you using this avatar, and then you get a link to a Heijen video that you could then go and directly send to a customer or download it and then attach it, etc.

AI assessment note: “So you, you can do it today. It just requires a little bit of scripting”

Q doing any door to door sales. Like, have you made a killing and just, you know, Warren Buffett has said this before. He goes, the secret to winning is low comp is, is, is weak competition, right? Like he's not looking to prove that he's a genius at the hardest games. He's looking for very weak competition where he can simply be competent and he can just do best practices.

A Oh, dude. Like, It is so true. We see it on Twitter all the time. Like, just go, go find a business with the fax machine to compete against him. Like, yes, that actually works. I, we own a tree trimming business, and a big bottleneck for us is stump grinding. So we thought, I thought, man, there needs to be a business That's just stump grinding, but B to B. Not stump grinding that goes through homeowners, but only the ones that goes through, uh, the other tree trimming companies. Cause we own a tree trimming company and we could see it from the inside. So I had a thesis. I hired a virtual assistant and today I would just use an AI voice agent. And I took the city of Houston and I scraped every single tree trimming business in Houston. There was about a thousand. And I had this virtual assistant call every single one and notate. Did they answer? Did the number work? If they did answer, say, do you grind stumps? If yes, then would you ever outsource that? If yes, then how much would you pay? So I spent like 200 dollars getting this research.

AI assessment note: “we own a tree trimming business, and a big bottleneck for us is stump grinding.”

Q You had said something about language too, where you said, it's not just about you write language that will describe it to your customers. First, you're, you figure out the words because you're describing to yourself what you should be building. And it basically gives you clarity as a product builder. Do you have any stories or examples that kind of drive that home?

A Yeah, we had a, we had a company, I don't know, two decades ago, we had a product that was allowing you to store your digital photos. Digital photography was new, and we're like, store your digital photographs here. And people would come, but not very many people were coming, because it wasn't a multiplayer game. I store them there, I retrieve them there, single player game. So I said, okay guys, We're just going to change the homepage to say, share your photos. And I just changed the name. I changed the word. Right. On the homepage. And my team said, but James, our product doesn't let people share photos. We're lying to people. Right. That makes me really uncomfortable. And I said, so fix it. And so three days later, they had figured out how to put in features that allowed you to share your photos. And within six months, we'd registered forty seven million people virally.

AI assessment note: “We're just going to change the homepage to say, share your photos.”

Q What, can you explain examples of the way that, um, you're using it now to save and make yourself more productive, like, both personally and in a business level, or is this mostly, uh, like, theoretical where you're like, it's almost there?

A Well, it's a bit of everything. So I'd say, like, we're in the AOL dial-up phase right now, but like AOL dial-up, it's still pretty freaking cool if you've never used the internet. Um, so, you know, basic stuff that everybody should be doing. Like I have a, I have an agent that preps me for every meeting. So, 30 minutes before every meeting, I get a text and it says, hey, you're meeting Sean and Sam. You were emailing them about this topic. You're going to invest in their company. And here's two bios on them. It goes to LinkedIn and, you know, just summarizes it. So, something very basic that otherwise a human would do. Previously, my assistant would do that. Um, I have it monitor my stock portfolio. I have it tell me about local events for the first one.

AI assessment note: “I have an agent that preps me for every meeting.”

Q You said, you can't skip the struggle if you want the story. So I want to use that. You can't skip the struggle if you want the story. So in telling your story, let's start with the struggle. Can you start where you didn't have it all together? You weren't this sort of business terminator. You, you were struggling. You were trying to figure it out. Can you start there?

A Yeah, I would say that. You know, ever since I was like a teenager, I always wanted to get into entrepreneurship, mostly because I had my father. He was a tenured professor. You know, he did everything by the book, and he honestly was miserable. And so, I really just felt like that wasn't the way to go. I just didn't know what the way was. And I got lost along the way, so much so that like, you know, when I was 19, I had been arrested six times. I was drinking, doing drugs. I was 230 pounds. Like, my life was going nowhere. I was flunking out of college. And that was when I, really when I turned my life around. Just learning how to Live my life in accordance with my goals and values rather than my feelings, and that was really what taught me a lot of discipline. I ended up losing almost a hundred pounds. I moved across the country by myself from Michigan to California, and I went to go to California because I wanted to pursue a career in fitness, um, because then I had to finish school for exercise science, useless, but nonetheless, I had to finish school for it.

AI assessment note: “when I was 19, I had been arrested six times. I was drinking”

Q What are you doing for Velcro? First of all, I didn't, I didn't know Velcro was a brand. I thought Velcro was like Kleenex or tissue. You know, I thought it was a thing. That's pretty wild. But what are you doing for them? And how did you close those guys? Because they look like a big old, old sluggish company.

A Yeah, we had a personal connection to one of the higher ups of the company. We do internal communications for them. So, um, every month there's a 90 minute internal town hall where the CEO basically speaks in English. She's Italian woman. Um, she had a bunch of issues with When she's speaking English, she lacks emotion. She kind of, um, doesn't feel like herself, and we were able to provide them a solution where she was able to provide the company with updates in her true persona in the new language by speaking in Italian for 90 minutes into our camera. We put that into our solution within three hours. We were able to curate a translated video that she's able to send all the plants at Vocal Corporation in 10 different languages, and we provide that solution to them today.

AI assessment note: “We had a personal connection... We do internal communications for them.”

Q describe, you know, a test is, would you describe this person as an animal? Would you say, yeah, he's, he's an animal. And if you can say, man, that guy's an absolute animal, or she's an animal when it comes to this, That's the sign of a winner. And I think that's the, the output of a high agency person. How do you describe them? They're basically, they're an animal.

A Yes. And he has a great bit in there of inverting it, which was what would be the opposite? And it would be hapless, which is probably a good case of life happening to them. And I think there's a few, there's a four kind of tenants, I would say, why high agency is probably not a sticky idea as much as it could be, because it kind of has four ideas in it, which is one, locus of control. So I have control. Two, intentionalism. So they've thought about the direction that they want to go in. Three, resourcefulness, which is I'm capable of getting the outcome. And then four, high bias for action, which is they've already fucking started the thing before they've even listened to this podcast. They're just constantly moving. So those four things.

AI assessment note: “four kind of tenants... locus of control... intentionalism... resourcefulness... high bias for action”

Q So to make this actionable, like even for me or Sean or listener, what do you look for? Like, what can I look for in my business? And I assume obviously this is only if you are running digital ads, Facebook and Google basically ads. What can you look for to be like, there's opportunity here, or this is stupid. Shut it down.

A Yeah. I mean, we do, we approach it in a few different ways, right? One is top down. Like we use Veros and a couple other third party data sources and our own data to figure out benchmarks of the company. So if you're an e-commerce business with a, you're selling water bottles, what should your click through rate, what's your conversion rate by channel? That's our top down way of kind of assessing where they stand. And so that's just whatever you can get that data anywhere online. And then the bottom up part of it is, for example, for Facebook, right? We'll say like, Is the account structured correctly? Oftentimes, there's too many ads trying to, like, breaking the signal in too many different places, and it needs to be consolidated. The other question we'll ask is, is their event match quality good? Oftentimes, these old, old school companies owned by private equity, they don't even, they have, like, a three out of 10 match quality, which means Facebook's signal is super crappy for them, and I bet Sean's company and most startups have nine out of 10, because they've, like, major data, Facebook's getting all the right data. Then there's all the creative stuff. Are they You know, the easiest thing, someone says, my performance is bad. I go, how many creative do you test a week? A week? What are you talking about? Oh, we do two a month. Well, yeah, of course, your performance is …

AI assessment note: “we approach it in a few different ways, right? One is top down.”

Q And, uh, I mean, I either, this is a complete, uh, this is a fake AI generated guy, or he's got a nephew. He's got like a nephew with the fade who is doing this because it is remarkable how much they've done. Give me a sense of the numbers. How big is this thing? I thought this was the number one selling product On TikTok shops for a while.

A Yeah, it was. Um, they're, they're doing like, I think they had done like 1.2 million in sales for the app, a 100,000 units a week. They've got 40,000 reviews and there's like 30,000 videos tagged with Guru Nanda on TikTok. Um, and again, this is only seeing the numbers directly through TikTok shop using these websites that you can find them. But the crazy thing is all of these products It, they've got way more reviews on Amazon, because the thing that they're doing so smart is that, like, you've got a lot of people that are promoting the product on something like TikTok, right? And they're getting a lot of attention and eyeballs on it, but then the people arrive at something that is much more trusted, like Amazon, and then they get that little bump in conversion rate, this trust already, they're sold from a video, and then they get all of these secondary sales. So the opportunity here is twofold.

AI assessment note: “I think they had done like 1.2 million in sales for the app”

Q skeletons in the closet or this thing turns out to have been built on some quicksand, then we're going to forgive the rest of that seller's note. Right. And he was able to structure it accordingly. So, so it's a, it's a good mechanism for, for any buyer, um, That's doing it. I, I don't know. Did you do that, or did you just do a seller's note as is?

A I did it as is. There is something called an earn out, which is similar to what you're saying, and it's based on the performance of the business, and you choose, am I going to do it on revenue or profits? For me, I tried to keep this extremely simple, because the devil really is in the details here, and these sellers, a lot of them don't even have high school degrees, but they're very good at business. They've been very successful, so I'm trying to do a deal here where these terms are extremely straightforward, and when you start doing terms like that, the seller freaks out. Because then it's, wait, I may not get this money. I don't even know you. All of a sudden, he's skeptical of you. So I'm not a big fan of those.

AI assessment note: “I did it as is. There is something called an earn out”

Q And how'd that model work? Is it like a Costco model where you were breaking even on the two hundred million in sales, but you made money off the, uh, membership?

A No. So we, the original deal with NetJets was we were leasing time on their planes, but I wouldn't have to, we wouldn't have to enter into a long-term lease until we sold it. So we had no risk. They were carrying all the paper. So if I bought, if you and if Sam, Sean, you guys bought a hundred hours, we'd go buy a hundred hours and it was marked up. So we were just a marketing organization. They owned and operated the planes and we were leasing it. As we got big, all of a sudden, you know, we have 4000 members. We're doing a billion dollars a year. Then the model changed, and we had to start buying our airplanes. But by that time, we had, you know, significant cash, and we were able to do that. So it started off with literally, it was an incredible deal for us, and for them. Um, it was a true Um, no lose for both parties.

AI assessment note: “No. So we, the original deal with NetJets was we were leasing time”

Q How much did, was that like a huge, I mean, did your economics drastically change?

A Totally. I mean, we used to sell the product for 500 dollars, one time fee, everything included. Then we went to, you can sign up for as little as 30 dollars. Like picture the, just all the cash implications, gross margin implications, everything that happens almost overnight when you do that. And it was also about the business moment because, okay, companies founded in 2012, if you're changing your business model that profoundly, six or seven years later, you're also admitting you haven't Figured out the right business model six or seven years into building a company. So, uh, yeah, that was all, that was all quite, quite, uh, painful and concerning, but we, you know, we created a really cool business model that now has been amazing.

AI assessment note: “Totally. I mean, we used to sell the product for 500 dollars”

Q And so how would, how does somebody actually do this? How do you go buy a three billion dollar company? Because you're rich, but you're not three billion dollars to spend on a company rich, so how does somebody do this?

A Yeah, um, I think three billion, the three billion dollar thing is probably too much for my, uh, you know, personal balance sheet, but the way you would go about it is just like the guy at CSC generation is doing, which is, um, make a public offer. It's the same way Elon Musk did it. Uh, you first make a private offer, then you make a public offer. You, um, make sure that all your financing is lined up when you do the public offer. And, you know, the way that U.S. stock market works and, um, shareholder rights laws work is a board has to respond to that offer, and they have to have a really good reason to not take it if it's, if it's at a material premium to the current stock price. Um, otherwise they're gonna get sued out the wazoo by shareholders.

AI assessment note: “make sure that all your financing is lined up when you do the public offer”

Q trying to, we hired a bunch of writers. Sean hired some writers as well for his thing. It was a crypto thing, and I, I've always debated this in my brain. I'm like, do I hire good writers and teach them about business, or do I hire smart business people and teach them how to write? What did you find was the best way to do that for, uh, watches?

A Yeah, I mean, the best way to do that was to find people that had the natural, organic, built-in, a love for, uh, horology. Like, just this, this, like, for, for all things mechanical watches. So, you know, we would have writers that, um, if you take, for example, like, the Speedmaster, the, the, the watch that made it to the moon from Omega, um, you know, they could tell you every single Variant and movement change and the reasons why, and they were just super geeky on this stuff. And they may have been just like B plus writers where you get them, but they had the technical knowledge in their brain. And that's a lot easier to fix because you get them to put that, that technical information out, uh, in draft form. And then you just apply an editorial layer over the top of it where you have copy editors that come in And help, you know, stitch together a better, more, more cohesive story before you actually publish it out to the world.

AI assessment note: “the best way to do that was to find people that had the natural, organic, built-in, a love for, uh, horology.”

Q all the, the reason I'm listing all these crazy stuff, crazy things that you do, and all these projects that you've got going on, which are very substantial, how are you balancing all of this? And what's your current business structure? I mean, do you have like a Rob Dyrdek Media, which only does the MTV stuff, and you get some type of fee from them, and then you have

A Let me tell you, let me tell you, hey, hey, if you want to talk structure, let's talk some structure. I basically operate as a very Probably like a hybrid entertainment family office, right? Slash venture creation studio, right? So I have a single entity, the Dyrdek Machine LLC that owns everything, including Rob Dyrdek Inc., which is the, the entertainment side of Rob Dyrdek's business. So all of that capital flows into this single LLC. And then I distribute that capital into real estate holdings, right? The, Cash flowing real estate holdings, or I distribute it into ventures that I co-find and create, right? So I co-find And create almost every single company that I build. And I, I do, I co-find it with common shares. And then I do the initial funding, uh, usually in the 800 to a million and a half, a million dollar, uh, sort of pre money. And then I put two, two 50 to 500 into every venture. I try to own between 25 and 70% of every single venture that I have at maturity. Um, I have built 17 companies sold six per and netted four hundred and fifty million since I launched the company in 2016. One of those is the production company, but all of these entities sit under the umbrella of the venture side of the direct machine business, including Rob Dyrdek, the television business. So my production company that was acquired, my earn out goes into the LLC, um, that I own a hundred …

AI assessment note: “I have a single entity, the Dyrdek Machine LLC that owns everything”

Q And so tell, tell people a story. So you got into crypto, Bitcoin, uh, Bitcoin specifically. You're, you're a Bitcoin guy. I shouldn't, I shouldn't keep saying crypto too much. Um, Bitcoin back in, I think, 2012 or so, Bitcoin was maybe 10 bucks back then. Um, what, you know, what caught your interest? How did you hear about it? What's the origin story for you?

A Yeah. So I got back in 2012. Uh, my buddy paid me back for a beer with something called a Casatius coin. A Casatius coin are those gold coins that you see in all those news articles where they talk about Bitcoin. They were physical Bitcoins essentially. And that was a good time. And in that 2012 era, Bitcoin is so new and weird and different that that was like a good bridge from the physical fiat paper money world to the, to the digital Bitcoin world. Uh, from there, My background is in finance. I really dug the twenty one million hard cap as a solution to bad central banking policies. Uh, I mean, I was in undergrad during the 2008 financial crisis studying finance and I'm like, my professors don't know shit. Neither do the people on TV and neither do these books that I'm reading. And that's what kind of, kind of shook my foundational, uh, trust and belief in the existing financial system. And that's when Bitcoin came around. When I saw that I was like, this is a good, New, uh, way to be rebuild the financial system without having to trust these institutions.

AI assessment note: “my buddy paid me back for a beer with something called a Casatius coin.”

Q And then we'll all try to, uh, Steer clear of too much controversy and, you know, let's, let's play ball. Nobody get canceled. Here we go. So, um, so apologies here. At one point you were, you're a founder of, I believe, um, a genetics company or a biogenetic company. How would you describe your, your first company? What, what was the kind of category you would call that one?

A Um, clinical genomics. So basically, um, you know, one of the first, uh, companies to use genomics in medicine, uh, and basically we took, if you've heard of Tay-Sachs or sickle cell, these sort of genetic diseases, Mendelian diseases that you probably learned about in, in high school, um, those are simple genetic diseases where they can be predicted by usually just variation in one gene, and, um, we did, we took all of those at the same time, And test them at once with a universal genetic test. And that was one of the first, um, applications of genomics in the clinic where, uh, the scalability of it, the fact that you could assess many different markers, many different variants at the same time, allowed you to cut costs relative to traditional one, one gene or one variant at a time blood tests.

AI assessment note: “Um, clinical genomics. So basically, um, you know, one of the first, uh, companies”

Q uh, when you kind of introduce yourself? Cause you have A newsletter. That's pretty cool. You know, uh, this country and cashflow newsletter, you have an investment fund and business there. You have built and owned businesses. I think majority share in some businesses. So like, what do you, how do you describe this Jack of all trades? So hi, I'm Cody. Here's what I do. What do you say?

A Well, I think if I'm on an airplane sitting next to somebody, I usually tell them I'm a salesperson, so I don't have to talk too much. Uh, but in, in a conversation where I was trying to impress somebody, you know, I, I'd probably say I'm an investor. I, I'm a private equity investor. I run a fund that's about a couple hundred million bucks focused on cannabis. Before that, I did emerging markets, a couple billion dollars raised there. And, uh, and now I write about all the things I wish I knew when I was first figuring out anything to do with this green language of money. Um, and I do that at Contrary and Thinking and I mailed the two, but I think these days that's not that weird. There's a ton of VCs, not so many PE investors out there probably that Write about investing and share their ideas. And I kind of think that's probably the future and why it's going, going forward.

AI assessment note: “in a conversation where I was trying to impress somebody... I'd probably say I'm an investor”

Q Can I ask you, Elaine, what is SignalFire? I'm on your website. Um, like, your landing page is, I want whatever you're selling, but I'm still a little confused as to what it is.

A So we do that a little bit on purpose. We are a venture capital firm, but we're actually structured and operate a lot more like a technology company. So if you look at our team, we're about a third engineers and data scientists building products. We're about a third people on our platform. These are the in-house business people doing PR recruiting growth, and then we have investment, and we, you know, we essentially monetize via the investment vehicle, and we're currently investing on our fund three, which is five hundred million dollars, but, you know, we're not, we don't have capital in the name, we don't have ventures in the name, we definitely try to be a little bit more startup-y than the traditional VC.

AI assessment note: “We are a venture capital firm, but we're actually structured and operate a lot more”

Q Okay, what else? So you get the morning brief. That's pretty standard, I would say.

A So let's talk about, so I think the morning brief is pretty standard, but the one that I really like is the, the evening brief in the scribe. So, you know, I've had, I played with a couple versions of it. One is it runs after every meeting, and then I have another version that runs at the end of the day. I actually think this is way better than the morning brief. And the reason why is you could actually have the AI help you do stuff. So, you know, it, this loops over all of my meeting notes from the day. So I'm using granola for all of my meetings. It loops over all of the to-dos that are still in my to-do list for the day. It loops over all of the outstanding emails that are in my inbox for the day. And it, and then it prompts me and says, Hey, how did the day go? So there's two key things that it does for me. One, when I say how the day went, I basically said it was a good day for this reason, or it was a bad day for this reason. So now all that stuff is getting logged and it's learning how to tune my day to help me have more good days than bad days. But the second thing that it's doing is it's actually taking action items on stuff. So it says, Hey, you know, you were in a meeting with Sam and Sean yesterday, and they asked for an intro to your buddy over at this company. Do you want me to go ahead and make that intro for you? Great. Please do that. Right. So it's drafting th…

AI assessment note: “the one that I really like is the, the evening brief in the scribe”

Q are comfortable, available, skilled in that way around you, right? Like this is, this is like who you would want on your team when you want them to spin up. Quick, uh, stupid question. You said I use cursor for my AI. I thought cursor is a Coding tool, but you're, it sounds like you're using it to chat, make decisions. Am I just wrong about what cursor is or?

A Yeah. I mean, cursor, you can use cursor, cloud code, codex, like these are all ostensibly coding agents, but they have this like agent mode where you can just talk to it. And the thing is it talks to it, but because it can write code, it can do stuff for you. And so the way, the way I try and talk to people who are not engineers and say, Hey, you should try using this is don't think of it as a tool for, You know, engineers to build stuff. Think of it as like you're hiring Cursor or Cloud Code or Codex to be the engineer you delegate things to. Where it's like, you, you probably have engineers you've worked with. You like to tell that engineer, go build this for me or go build that for me. Like, that's why I use Cursor is because it goes and builds stuff for me, not because I'm using it to actually go build a bunch of stuff. I don't really write any code.

AI assessment note: “ostensibly coding agents, but they have this like agent mode where you can just talk”

Q think you owned a bunch of different companies and I was trying to figure it out. And I was like, is it sort of like if an airline needs to like buy parts to build an airplane, your, you built software that would help them decide how many bits and pieces for each, like how many seats they need, therefore what they should order from the manufacturer. Was that right?

A The first product we had that started the company was a configurator. Just think of a configurator on like, you know, a car website or Dell computer where you're configuring your computer. Now just imagine it if it's a million times more complicated, which is a room size phone switch or a Boeing airplane, or, you know, back then main brain computers, you know, big manufacturing systems that the problem back then is reps would be out in the field selling these complicated products. And then what would happen is They get to the manufacturing line and the manufacturing line didn't build that. It was an unbuildable configuration. And so being able to take that knowledge of how, what is a correct configuration, put it in your thousands of sales reps hands. So they would sell accurate configurations would save millions of dollars a day to the fortune 500. So we just found all the fortune 500 manufacturing companies and said, we can take what all this huge problem is costing you just eight zillion dollars, put it in this Sales builder, which your sales reps would be able to build correct configurations, and then you'd pay us millions and millions of dollars for it. And so that was our first product, and that's what launched the company, and that was the first one that, you know, drove the billion dollars revenue.

AI assessment note: “The first product we had that started the company was a configurator.”

Q You are very good at understanding how to get people to do what you want them to do. Did you learn how to do this because you wanted to build an awesome company and you're like, I got to figure out how to motivate people and how to make them productive? Or were you always into human psychology and business was a good example of just making it work?

A No, I was not good with human psychology and, uh, I, I did want to build the company and how I got there is one of the most important hires I ever made is this guy, Jim Abel, who was my head of HR. Who would coach me through a lot of this where I, I started very much as high standards, low support. He was the one who was like, look, here's the part, here's what you have to do. If you want to bring your team with you, here is the organization you have to build. If you're going to bring, once I had, you know, 2000 employees and I'm like, oh my God, you know, what do I do? He was the key insight on that side. And then, you know, on the school side, now there's this, there's a professor, Dr. Yeager. Who's written a great book that every parent should read, which is called 10 to 25, the science of motivating your kid from age 10 to 25. He's the one who actually developed our, our child development side and how our, our adults, our guides work, which is he mentor mindset, high standards, high support. And he's done a ton of studies that actually show literally with wording changes where you can take a student and just say, look, I'm about to give you feedback. That's gonna be hard. But it's only because I know you can go crush this, right? Because I know you can do it back to the growth, the Tony Robbins part, right? The growth mindset. And it's, I'm giving it to you because I know y…

AI assessment note: “No, I was not good with human psychology and, uh, I did want to build”

Q number one driver, right, of sales, and so there's this crazy ambitious goal to start the thing, and it sounds pretty unreasonable, especially because you're starting not from a position of strength, but from a position of weakness. Can you talk about that side of things, the like, let's just start by laying down the gauntlet of a somewhat impossible goal on something that today is actually a weak area?

A Goal setting, Can determine like what outcome you're going to get. And so if you set a goal for five to seven percent improvement, you're probably going to get three to five. If you set a goal for an order of magnitude improvement, now you got people that have to think way differently about that problem. Cause you can't tweak the status quo to get to a hundred percent improvement or a 20 X improvement. And so part of the secret to Elon's part of his secret sauce is he sets these order of magnitude improvement goals. Uh, so, 10 X, a hundred X. And it forces you to think way differently about how you would solve that problem or what, what you would do with the product or what you would do with a process, et cetera. And so like you're referencing this example of, he came to me and said, hey, look, we have continuous demand challenges. We got to figure out how to sell cars online, which sounded crazy at this time because nobody was buying a 120,000 dollar thing sight unseen online. Click, click. But we both knew because we'd both been in consumer, Um, that every click you have, you ask the consumer to make, your conversion goes down. And that's, that's, I'm saying an obvious, every entrepreneur in e-com knows that, but we looked at our clicks and there were 64 clicks to buy a car. And so he turns to me, he says, improved, let's improve digital sales. This is your goal, improve digi…

AI assessment note: “If you set a goal for an order of magnitude improvement, now you got people”

Q And you had these two terms, cycle time and touch time. Can you explain what those two are?

A Yeah, so I went to the shop owner and I said, tell me what the average time it takes between a customer dropping it off and a customer getting their car back. And he said, yeah, I can tell you that it's 18 days. I said, how do you know that? He said, that's the average rental car time. I said, okay, that's pretty good proxy. I said, um, how many hours of labor do you bill on each job on average? He said, oh, that's easy. Six to eight. And I went, 18 days to get six to eight hours of work done. That looks like an opportunity because that's the difference. Cycle time is the 18 days. That's from the beginning to the end of the process. And touch time was the amount of time that those technicians were actually touching the car, six to eight hours. And I went, oh, that looks like an opportunity to maybe turn this industry around for the consumer. What if you could go to market and say, you'll get your car back in a day. Versus the 18 days of the rest of the guys down the street. That's when I, like, started to diligently say, let's start a business. So I, uh, I grabbed some guys that I had worked with, uh, and we started to work on just doing that. We ended up with, um, the largest, at the time, collision repair chain around the country.

AI assessment note: “Cycle time is the 18 days... touch time was the amount of time”

Q like, they're like, yeah, we're a small fund, a billion and a half under management, and I'm like, that was the story all day. I was like, how much money do you guys have, and what the hell do you guys actually do? So, can you give me the simple, what the hell do you guys actually do? Are you guys buying, like, HVAC companies? Are you buying software companies?

A So, um, I mean, private equity is a very broad Classification. There's lots of different strategies. So I'll tell you specifically what we do. I know, um, there's a lot of talk around AI buy and builds if we can dive into in a little bit, but we do primarily buy and build. So we'll, we'll take a, we'll find a really amazing CEO that a lot of times has worked with us in a smaller capacity, maybe they were the CFO of a company we had, or they came through our training program and then we'll back them. We'll go find an industry that we think is really interesting. We like the prosaic industries, like the ones you mentioned, plumbing HVAC. We also do software too, because, uh, there's a number of strategies where rollups and software can be really attractive. So we, it's a small part of what we do though, smaller than the services stuff. And, but a lot of these really prosaic industries are massive. You know, the plumbing and HVAC industry mentions like, it's like a hundred and seventy billion dollar industry. So it's, so if you get it right and you actually figure it out, you know, you can, you can grow You know, almost forever, because you just don't run out of, run out of TAM, which is why we like the buy and builds, because we'll get it right once, and then we'll stamp it out a number of times. The other thing that's really cool about buy and builds is it really is, plays to ou…

AI assessment note: “we do primarily buy and build... We like the prosaic industries, like the ones you mentioned”

Q What was going on? Was it that, uh, you just, you guys just went on an acquisition spree and picked up all the mom and pops? Or was it that they weren't doing any sale? They didn't know, they didn't have a good website? Like what was, what was missing that you guys added?

A We got, we got fortunate that the third deal that we bought, we partnered with this guy. So the CEO is our name, uh, AJ Brown and Will Madison. And then the, the third deal we did, we partnered with this guy named Ira Pruitt, who was like the, the grizzled HVAC veteran and just this wonderful guy. He had seven of his kids in the business and like, and he gave us a lot of the playbook levers. And then the next deals after that, we were adding to that playbook. So eventually We just ended up with this amazing playbook about how to run those businesses. And then we began that talent program we were talking about earlier, where we started attracting a lot of incredible leaders, a lot of the, not all of them, but a lot of them veterans. And, and then that allows us to go buy businesses that other people can't buy because like really the line of people that wants to go buy a twelve million dollar revenue plumbing business in the middle of Louisiana, that requires a management change. Is short.

AI assessment note: “he gave us a lot of the playbook levers... we just ended up with this amazing playbook”

Q Where did you grow up? I mean, like your dad was like a, uh, I know who your dad is, and he was like, he was like a well-known academic, but where were you growing up where you, uh, were around guys who got shot and rapping?

A Well, so I grew up in Berkeley, uh, California, which, you know, kind of is either like an academic town or part of Oakland, depending on You know, where you are, and I was in the kind of more part of Oakland, Berkeley, and then, you know, I went to school in New York, uh, and so I got into rap in New York, and then Seth got shot back in the Bay Area, and he was very, very depressed because, you know, he's blind, he was only, he's a kid, you know, so I sent him these, um, DJ Red Alert, Check Chill Out mixtapes, um, you know, were tapes that I taped off the radio show, which had the, Brand new hip hop, which was, you know, really new at the time. And, uh, that kind of cheered him up. And so that's how we got into rap when we came around and we didn't succeed, but we tried real hard.

AI assessment note: “I grew up in Berkeley, uh, California”