The Exchanges

Q Take us back to that 80,000 person Canadian town, I believe it was, uh, where were you born?

A Yeah, so I grew up on the east coast of Canada, cities called Moncton, New Brunswick, right on the ocean, pretty much about 20, 20 kilometers or 14 miles away from my American friends. Um, I had a pretty interesting upbringing. I, I grew up in a family of four kids, second oldest, um, My mom was an alcoholic and my dad was in sale, so he's on the road and, you know, short version, um, I got in a lot of trouble and got diagnosed with ADHD at 11, got put into group homes and foster homes due to my behavior. When I was 1213, uh, eventually things spiraled out of control to the point where when I was 16, I had a, um, backpack with a handgun Um, because the police were looking for me and I decided to steal a car. And while I was making my way out of the province, I figured I'd go to Montreal. Um, I pulled off the highway to get gas and a routine roadblock and, uh, got into a high speed chase with the police. And You know, I didn't get too far. I came around this neighborhood, um, to try to get away. I saw an open garage door and figured if I hide out, maybe the police will kind of go past. And as I came into the driveway, I was carrying way too much speed, ended up smashing into the house and went for the handgun.

AI assessment note: “I grew up on the east coast of Canada, cities called Moncton, New Brunswick”

Q Jetta, but you're living a lot with your West Coast. You're saving up. You're making money. A lot of people in this age group would say that's really comfortable, and they end up on a ten-year track at the company and never have the courage to leave and start their own thing. When did you realize there was an opportunity to launch Sphere Holdings in 2003 when you were 24?

A Well, I took, I took, I, I, so I lived off of 60 grand a year. Everything else I put aside, and then I went to Australia for Probably, I think I was there for nine months. And, um, and then when I came back, I came back to my hometown and while I was traveling, I got a lot of people reaching out to me, asking me if I do this plum tree stuff. Cause I was one of the few people that had that certification. Plus now the experience with Syncrude helping them roll up. I had a team of 30 people reporting to me at 21, 23. And, um, I decided that if I could, you know, if I had four people, I remember that the number was 12. If I had 12 people that worked for me, that I outsource and worked with clients, man, I'd be making like a million bucks a year, right? And that was like, that's like, I made it. There's nothing more you can have, right? And, uh, so at 24, I start Spirit Technologies, and I hire three people right out of the gate. Uh, I think I had 75 grand left after my travel escapades. Um, and I bought a lot of stuff while I was at West brand new downhill mountain bikes and snowboarding gear and, um, and a lot of trips, man, lots of trips. And, uh, so at 75 grand, I started spirit technologies and within two and a half months learned a thing called cashflow, right? So hired all these people, paid them very well, bought laptops, office space, started working with clients, flying al…

AI assessment note: “while I was traveling, I got a lot of people reaching out to me”

Q Close out the sphere holding story though. So you sold it in 2008, if it's doing four or five million top line and it's 30% net profit. And this sounds like a great thing. Why'd you sell it?

A You know, That's probably the one decision I would have done differently. Like now that I know what I know about business and assets and scaling teams, I would have kept it hire a CEO, um, because it was a great business. Uh, you know, it was a very niche focus. So why did I sell it? The, the, the cash, like, it's almost like I was reading a lot of business books and I just thought that's what you do as an entrepreneur. You build something and exit. And we had this one, one of our partners was interested in buying and that kind of made me open to like, hey, what is, what is this worth? Because prior to that, I was just heads down building. And, um, it wasn't because I needed the money or wanted the money. It was more of just like, Well, you kind of like lock in the return. So there's no risk, right? Like there was many nights that I, I'd be worried that I was, I was missing something and I'm going to wake up and I'm going to get sued or one of my employees are going to do something stupid, which did all happen along that journey. So I was a little paranoid and I would say that's the big reason why I decided to exit was just, I on, and I was software curious. I wanted to go out. I wanted to go and do something different. I think that's the other thing that happened around that time is I kind of perfected that model and Wanted to kind of spend less time operating, but going back …

AI assessment note: “I was reading a lot of business books and I just thought that's what you do”

Q So that's great. Okay. You sell the company, 20 12, you found Clarity FM. Uh, how'd you get Mark Cuban as an investor?

A I, um, had already kind of closed the round. I, I'm, I'm, one of the things I got really good at is fundraising. So kind of essentially soft circled, originally I was only gonna raise seven 50 K, ended up, uh, one of my previous investors, Steve Anderson at Baseline, Decided he wants to write a check for seven 50 and then, and convinces me to go one six or one four. We ended up closing at one six. And, um, and then at the last two weeks I've made it public on AngelList. So it was kind of like the round was done, but Hey, there could be some friends that I don't know. That might be interested. And Mark saw it there. He saw all of our mutual connections. He doesn't remember this, but we actually met at a summit series in Washington, DC a year prior. Um, but anyways, it was Alex Bard from a Sicily. He sold to Salesforce. Alex is a champ. He was a Mark invested in the Sicily and asked for an intro, but we saw Mark sign up for the product and I right away reached out to him.

AI assessment note: “Mark saw it there. He saw all of our mutual connections.”

Q So it's 1996. You're 17 years old. You've got some, you know, you're dangerous to Java. You launched your first company. What was that company?

A Well, okay. So projects and companies first project was, uh, cause I always say like the domains you buy are projects, the incorporations are companies. The first thing I ever built that people paid me for was, um, I built it in visual basic three or four visual DB four, which was a tool for somebody to install on their computer and make a CD, like a mix CD, an MP three CD based on the songs I downloaded off of Napster. Okay. And the reason why I built this app is because I was pissed off with my friends coming over and sitting on my computer and, and doing their mix. I don't know if anybody listening to this remembers that, but that's how you like could burn a CD, but you had to sit there and go through all the songs and put, you know, a 120 or a 150 songs on the CD. So they were able to essentially synchronizing using FTP on their computer. Make the CD for the girlfriend or whatever. I charge him 20 bucks, but I would burn it while I was sleeping so I didn't have to take up my computer time. That was the first thing I ever sold that made me money that really got me thinking about, like, this concept of tools, right? If I could just build something to make my life more productive, even if nobody used it or paid for it, I thought that was a cool trade. Um, so I built a bunch of stuff like that, different websites. And then my dad came home one day and he was just pissed off cau…

AI assessment note: “The first thing I ever built that people paid me for was”

Q You're 19 at this time. I was gonna say you're 19, it's 1999. Okay. 20. I mean, if you put this in perspective and people listening right now, if they have someone with five K is nothing, but how much of your net worth was that five K credit line back when you were in 1920 and 1999?

A I mean, I didn't have any money. Like I, I sold stuff doing maritime vacation, but every dollar was, I bought books. I mean, I spent like thousands of dollars on computer books. Um, I, Um, traveled. I bought a car. Like I didn't have any money, like my net worth. That was, that's why I had a lot of credit. I didn't have the savings. We literally both didn't have money, but because we were young, we had no credit card debt or anything. You know, most banks were willing. We had jobs. Uh, the banks were willing to lend us some money. Um, But yeah, I mean, I felt bad enough that I vowed to my brother that hopefully someday I'd pay you back because it wasn't really his fault. I felt like it was my stupid strategy.

AI assessment note: “I mean, I didn't have any money... I didn't have the savings.”

Q ten million. Did you ever at this point, I imagine through your dad, your mom is learning about your success. It sounds like you weren't close to your mom. A lot of times parents, um, who feel stuck sort of in their own life when their kids start to have success, you get a phone call and there's some awkward moments there. Was your mom ever jealous of your success?

A So what's funny is my mom never was. Um, my mom's a super simple person. I mean, she's, you know, Really straightforward, easy going, simple. It was, it was more my dad. And it's actually something recently we had a conversation. Um, and I'll tell you this story. Uh, my brother's working on a big real estate project and he needed a million bucks. And I said, I just, I'd lend it to him. I think it was like 60 days, right? He just needs the money. And my dad was talking to him and saying, Hey, how are you financing all these new multi-units? He goes, oh, well, it's going to be tight, but I've got a lender in place. And, and he asked, this literally happened last week. And, uh, and this is not like, you know, multiple exit companies in the press, won awards. Mark Cuban is an investor. Like for some reason, my dad still had this like lens of me being this like thirteen-year-old hooligan. And, um, and it wasn't until Pierre said, oh, this guy, you know, it's Dan. And he goes, Dan who? And he goes, Dan, your son. My dad was like, He just has a million dollars sitting in a bank account. He can just lend you like, and I was, and I was just like, dad, I don't think like I've never, and you know me, man, I'm a private guy with my money. Like I don't talk about it. You know, you can talk to the people I'm involved in investing in. Um, I've just never been that guy. And, uh, so I've never …

AI assessment note: “So what's funny is my mom never was.”

Q But, but financially now at this point, you have a couple assets. You bought a car, but you have no cash. You've got a credit line outstanding. Did you use the company cash flow to pay down your credit line? Or when you guys shut the company down, did you still have five K to pay back?

A Uh, I didn't have a lot to pay back. Um, turns out the servers and all the assets weren't worth a whole lot. Um, the software, you couldn't sell the software. I mean, this is the other stupid thing. We went and paid for Microsoft licenses, you know, thousands of dollars. That would say most of our costs went into like six grand of it was Microsoft SQL server access, the mail and the web app ISS as like technologies. And, um, you know, you can't, there's no like market for selling. I don't even know if it's legal to sell software. So yeah, no, we had to take a wash, um, and, and pay, pay off those, that line of credit ourselves.

AI assessment note: “we had to take a wash, um, and, and pay, pay off those, that line of credit ourselves.”

Q You shut this down. You then get your first taste of consulting. Uh, what made you think that you could do consulting and have the patients to work with people that want 10,000 changes after they've already paid and finished your retainer?

A I thought my brother would deal with all that. I literally thought I know me, I can do the configuration and stuff and write code. If somebody else can take care of talking to customers and negotiate better than me, because clearly I was a shitty negotiator because I would just start doing stuff and not realizing there was no money. Right. I mean, the biggest lesson I learned with MB host that I took forward from that moment was don't get into a commodity business. If you don't have any differentiators that have value in the market. I mean, I was, I was competing in hosting, right? And like, I, I wasn't Amazon web services. I was literally competing against at that point, probably 500 companies that offered hosting, right? With real infrastructure. I mean, I was just trying to be a low cost provider and figure I'd make it up on volume and, and the fact that we had no overhead, but still is a shitty business.

AI assessment note: “I thought my brother would deal with all that.”

Q And she ran it. Okay. She didn't, didn't work out so well there. Okay. Well, let's, so let's go back to your story here. So you, you sell the company for more than eight figures to function one, your angel investing at this point, uh, 2009, you founded flow town. Uh, what did the flow town do and why did you raise 700,000 dollars when you were already privately wealthy?

A Well, so I, I had a co-founder named Ethan, and at that point I probably had made a dozen angel investments. Um, and when we started the company, Originally I was just like a non-employee co-founder. So I actually funded the first, you know, a hundred grand or whatever to get the thing going. And then, you know, as Ethan executed the business and I saw the traction he was getting, I just, I just thought to myself, like I didn't come to San Francisco to kind of do what I've been doing back in Canada and raising venture was kind of like the path if you wanted to build something big and meaningful. So it was really for me, just an opportunity to build, to like learn the process Through this, this company Flowtown. So Ethan wanted to play a big game. I wanted to, it felt like the right thing. And, um, we decided to raise capital.

AI assessment note: “raising venture was kind of like the path if you wanted to build something big”

Q What was the most surprising question? What was the most surprising question he asked you out of that list? Um, you didn't expect.

A I don't think there was anything specific. There was, he was just a really good, he had good product sense. He was asking me about distribution. Are you going to make this work on Pinterest? You know, cause he says, I think women and crafts, they really, they, they like to communicate more than men. So like that was a really interesting insight from his perspective. Um, and the one thing I love about Mark is that he's always responded to every investor update. And that's one thing I'm religious about. Every six weeks I send an investor update and he's one of the only investors I can say has always replied to everyone with something thoughtful. Very short, but always replied.

AI assessment note: “I don't think there was anything specific. There was, he was just a really good”

Q So which, I mean, which drug were you selling when you were 15 and what was the analogous, what was analogous to like the freemium strategy?

A Yeah, I mean, well, it's, um, essentially freemium was try before you buy. So, I mean, weed, mushrooms, mescaline, which is like a horse tranquilizer, speed, um, some coke, although that started later on, right when I got into that high speed chase, um, which I was high and drunk the whole time I was, I was driving that car. Um, I even started growing my own weed. So I had a whole grow ops in a house. Uh, and that's what caused the police to be looking for me. Um, somebody called the police on me and they found that in my, you know, so, um, you know, growing, growing weed and just, um, you know, essentially be being a trafficker, you know, so freemium is just like giving people stuff and then, or even just like cashflow. It's like, Hey, you know, distribution, somebody else is going to sell it for me. Um, but I've got to carry because I got to make payments on whatever timetable, you know, can I trust this person? You know, how do I set the, the, how do you create the rules of the game to win? Right. In any situation.

AI assessment note: “freemium was try before you buy. So, I mean, weed, mushrooms, mescaline”

Q Can't say. Okay, good. Uh, what do you do? What are you working on now? Talk about SAS Academy sort of back in consulting with productized.

A Yeah. So, uh, after clarity took a year off, went to San Francisco or San Diego with the family, had a young family. Then we had two kids back to back while I was building clarity. It was crazy. They're 11 months apart. Um, Went to San Diego, and while I was there, I had a buddy, Travis, convince me to start doing videos on YouTube. He knew of me from Clarity, and when we met, he's like, you're the Clarity guy. He goes, yeah, he goes, he was working with, um, uh, health influencer Uh, what is her name? Anyways, he, and he said, you should really consider doing videos, right? Like, I would love to hear more about your perspective on scaling these, these venture backed companies. And, uh, I gave Travis Houston credit that I just started shooting videos and a few of the first ones I didn't even publish. Like I, they were so bad. I was like, I looked at myself, fuck, I look like an idiot. I'm not going to publish those. But eventually I started doing it and, you know, I just decided, and then there was this other incident happened with my buddy, uh, Todd, who got diagnosed, uh, with, um, this brain, uh, Herman thing. Yeah. I, I don't, and he's talked a little bit about it since, and he's, and he actually, it's gotten better, but at the point him, he had two young daughters. So the same age as Max and Noah. And he's telling me that he's already shot the videos for his kids. And I wa…

AI assessment note: “So, uh, after clarity took a year off, went to San Francisco or San Diego”