Jul 5, 2017 · 22m · top-founders
711: Bootrapping into Silicon Valley
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of The Top Podcast, host Nathan Latka interviews entrepreneur Dan Faggella, who details his journey from founding an MMA gym to building and selling the digital platform Science of Skill for over one million dollars, using the proceeds to self-fund his AI market research firm, TechEmergence.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 32.3% of the talking time here. How this is scored →
Nathan as informed peer 4.3 Guest teaching 2.7 Guest disagreement 1.6 Nathan pushing back 2.6
speaking balance: gold is Nathan, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 18:34 Dan reacts defensively to monetization confusion
Faggella expresses exasperation when Nathan questions TechEmergence's business model, retorting with 'Are you techemergence.com, man? What are you talking about?'
Hardest push from Nathan ▶ 18:24 Nathan cuts through grand philosophical framingLatka interrupts Faggella's speech about post-human sentience by declaring they are running out of time and forcefully demanding to know the actual product being built.
Biggest teaching moment ▶ 15:04 Dan clarifies EBITDA and owner salary mechanicsFaggella corrects Latka's back-of-the-envelope margin calculations by explaining that his $120,000 owner salary was an add-back on top of reported QuickBooks net income.
Nathan holds their own ▶ 11:11 Nathan cites affiliate data from past interview archiveLatka validates Dan's mention of affiliate partner Survival Frog by instantly reciting exact 2015 revenue ($4.7M) and net margin figures from his prior interview with the founder.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Nathan as informed peer | Guest teaching | Guest disagreement | Nathan pushing back | Why |
|---|---|---|---|---|---|---|
| Founding and Growing the MMA Gym | 3 | 2 | 1 | 2 | Latka guides the conversation casually, inquiring into gym startup costs and teasing Dan about recording the podcast in a bathrobe. Faggella explains his background as a competitive fighter bootstrapping in the back of a carpet store. | |
| Gym Financials, Sale, and Pivot to Online | 4 | 2 | 1 | 2 | Latka presses for specific figures regarding the gym's trailing revenue, owner-financing structure, and actual cash collected. Faggella transparently explains getting paid only $30,000 of the agreed $113,000 before liquidating his IRA. | |
| Launching and Scaling Science of Skill | 6 | 3 | 1 | 2 | Faggella details his Infusionsoft setup, merchant processing costs, and affiliate economics. Latka actively demonstrates domain familiarity by quoting historical revenue and margin data from past guest Byron of Survival Frog. | |
| Paid Email Media Buying and Blog Outreach Tactics | 4 | 3 | 1 | 2 | Latka asks how Dan avoids spam filters and cold outreach rejection when buying email placements. Faggella breaks down using remote research assistants and targeting existing banner advertisers on niche firearm forums. | |
| Science of Skill Exit and Valuation Breakdown | 6 | 4 | 2 | 4 | Latka challenges Dan on his valuation math, calculating top-line versus net margin and noting that digital publishing businesses rarely command 3x multiples. Faggella clarifies his six-figure salary addback and EBITDA calculations. | |
| Funding TechEmergence and AI Market Research | 4 | 3 | 4 | 5 | When Dan launches into broad philosophical commentary about post-human intelligence, Latka interrupts to demand how the business actually makes money. Faggella shows mild frustration before explaining the ad model, future marketplace, and $20k monthly burn rate. | |
| Sponsor Break: HostGator Web Hosting | 3 | 2 | 1 | 1 | Latka delivers a HostGator ad read before moving swiftly through the Famous Five questions. Faggella reflects thoughtfully on reading Marcus Aurelius and directing ambition toward grander moral purposes earlier in life. |
Statements from this episode (12)
Faggella's martial arts gym reached $250,000 annual revenue before its sale
“Anyway, yeah, that, that business was a quarter million dollars a year when we sold it. That was like three, four years after starting it.”
Faggella sold his martial arts academy for $113,000 with 10% down
“That business was sold for a hair over a 100,000 dollars, but with only 10% down in dough, cause the guy who I sold it to is my right hand man. So he was my purple belt. So that was like a kind of owner financed, you know, enough down to do something with it a…”
Faggella's online business generated $20,000 monthly before he sold his gym
“By the time I actually sold the gym, just I was actually making more per month online than I was in the academy. So I knew I'd need to be location dependent. I knew I'd have to be in the valley at some point. I knew I'd have to have my own cash and a good deal…”
Science of Skill reached nearly $2.5M in revenue using only Infusionsoft
“So I was with infusion soft with a martial arts gym to get it, you know, to a quarter million bucks. And then, you know, we got to shy of 10 times that size with the e-commerce business, all in infusion.”
Science of Skill paid $50 affiliate commissions on $100 customer lifetime values
“So our CLV for our membership programs were like a hundred and can, a 120 bucks. So we paid affiliates 50 or 60 bucks on a front end sale. But we wouldn't make that money back sometimes for three or four months.”
Affiliate Survival Frog generated $4.7M in 2015 with a 10% net margin
“They did 4.7 million dollars in revenue in 2015 with a 25% gross margin and a 10% net margin.”
Faggella scaled Science of Skill via an unexpected, high-converting firearms audience
“For us, I've never owned a firearm in my life, but for some reason, the firearms market just, they bought our stuff. They bought our stuff hot. They bought our stuff heavy. They took the upsells. I can't tell you, but I was interested in getting an exit, so we…”
Direct ad outreach works best on sites that already run banner ads
“And then whatever responses we got back, it's kind of like you're already accepting money for advertising. I'm not the first guy to ask you. And I could probably actually pay you more than those guys are paying. Let's just chat. And that's actually quite an ea…”
Faggella sold Science of Skill for $1M, a 3x net earnings multiple
“The multiple of net for us was like around three X in terms of bottom line. So I think, you know, 3:30 something in terms of net at the end of 2016 was multiplied by three and we brought ourselves to a little bit over a million dollars adding, well adding in i…”
Digital publishing businesses typically command low acquisition multiples, Faggella learned
“These sort of digital publishing businesses, as I had to learn the hard way, don't get huge multiples.”
Faggella predicts AI will yield post-human intelligence within our lifetime
“Neuroscience and artificial intelligence and the stuff that I think within our lifetime, Nathan, will kind of tinker us beyond sentience and intelligence as we know it today into something kind of post-human and I don't think that's going to be in the next two…”