3 Things You Need To Outperform 99% Of Entrepreneurs

Episode 599: Sam Parr ( https://twitter.com/theSamParr ) and Shaan Puri ( https://twitter.com/ShaanVP ) talk about the best traits of a startup founder and lessons from how Dana White, Elon Musk, and Emmett Shear cut through the bullshit. — Show Notes: (0:00) Top traits founders should take from Dana White (5:35) 1 - Brute force (10:21) 2 - Extreme bias for action (14:55) Quick audit of Dana White's gambling claims (18:00) 3 - Speed (19:00) Checklist for a perfect niche event business (22:56) IDEA: The Beer Mile (24:45) IDEA: Paddle Prison Break (25:47) IDEA: Skyline Scramble (30:17) Growth vs EBITDA vs cash flow (32:27) Shaan's Guide to Increase EBITDA (34:19) Step 1: create a EBITDA budget (37:08) Step 2: communicate the plan relentlessly (37:48) Step 3: Track and report (38:04) Step 4: Tie into incentives (38:30) Step 5: Repeat every 30 days (40:02) Next stage: Cash flow (41:28) The benefit of playing on Hard Mode (43:38) Is e-commerce dead? (44:54) Shaan's $30M dollar dream house (47:56) Shaan writes an essay (49:43) Sexier core principles (1:00:53) Culture: What people do when the boss isn't around — Links: • [Steal This] Get our proven writing frameworks that have made us millions https://clickhubspot.com/copy • Shaan Puri essays - ​​https://www.shaanpuri.com/essays • Brunello Cucinelli - https://shop.brunellocucinelli.com/ • Grab HubSpot's free AI-Powered Customer Platform and watch your business grow https://clickhubspot.com/fmf • Wander - https://www.wander.com/mfm (Enter to win a free trip and use code MFM300 at checkout for $300 off your booking) — Check Out Shaan's Stuff: Need to hire? You should use the same service Shaan uses to hire developers, designers, & Virtual Assistants → it’s called Shepherd (tell ‘em Shaan sent you): https://bit.ly/SupportShepherd — Check Out Sam's Stuff: • Hampton - https://www.joinhampton.com/ • Ideation Bootcamp - https://www.ideationbootcamp.co/ • Copy That - https://copythat.com • Hampton Wealth Survey - https://joinhampton.com/wealth • Sam’s List - http://samslist.co/ My First Million is a HubSpot Original Podcast // Brought to you by The HubSpot Podcast Network // Production by Arie Desormeaux // Editing by Ezra Bakker Trupiano

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Shaan Puri?

  Extreme force of will, extreme bias for action, and a questioning of the default speeds. It changes everything.

• 0:17Shaan Puri?

  Yeah, you know, I'm on this business entertainment kick where I'm looking for content that is about business, but is made to be entertaining. So it's not just like an informational video or blog post. And so there's a new show called Fighting that I watched that I thought was really good. Did you see it? I saw the commercials for it. How do you get it? It's on Roku, but I don't have Roku. You just Google like watch fighting and it's Roku just lets you just, it's on their website, but you don't have to sign up. You don't do anything. You just click and you just watch it. So it's very cool. I mean, they basically follow around Dana, you know, behind the scenes and then the UFC like kind of the machine behind the show. And the UFC, just to put this in perspective, they're basically, there is no off season.

• 1:00Shaan Puri?

  The UFC is 52 weeks a year. Every Saturday has to be an epic show. It's a live event with pay-per-view. It's got fighters who get injured and pull out or get arrested and now they can't fight. And there's all kinds of things that can and will go wrong, but it's like the actual epitome of the show must go on. So I wanted to share with you a couple of my thoughts watching this from a founder's point of view. So the first thing is,

• 1:26Shaan Puri?

  as silly as this sounds, I do think that Dana White is on my Mount Rushmore of startup founders. And I know he didn't technically found the UFC, but he basically did. He created the goddamn thing. He's a madman. He is a workhorse. He's a machine and I really don't think the UFC happens if there's no Dana White. And this got me thinking, there are some companies that I will call inevitable. An inevitable company is one whose time has just come. So, you know, YouTube today is a giant company. But YouTube's time had come. Like if it wasn't YouTube, if Chad and Steve had not created YouTube, somebody else would have created the equivalent of YouTube. Like the idea of putting, hosting video online was gonna happen. It was happening. Somebody was going to win that space. That's an inevitable idea.

• 2:12Shaan Puri?

  The momentum of internet speeds going up and being fast enough where you can now upload and download videos was, was, was going to a point where video became, and it was an obvious thing. We had Flickr for photos. We were going to have a version of that for videos. I would say that. Google was an inevitable idea. The more popular the internet got, people already needed search engines and portals. Google happened to be the winner of all the search engine portals, but there was going to be a way to search the internet. That was going to happen. So there's inevitable companies. And then there's companies that I honestly don't think if it was not for the force of will of the founder, for the vision, the skill and the determination of the founder, that wouldn't, would not have happened, or would not have happened for like

• 2:53Shaan Puri?

  50 more years. It would have missed a whole generation of people had that person not made that thing happen. My examples that I would put here are Elon's company. So I think Tesla and SpaceX would not have happened, and would not have happened at least for another 50 years, had he not made those happen. I think it required a level of insanity, self-funding, technical brilliance, determination to keep going even against the odds of failure, all of that, for him to be able to pull those off. I think the UFC is in that, that non-inevitable bucket, where if the UFC had just died, it was about to go bankrupt before he, before Dana bought it for $2 million. I don't think that something like the UFC necessarily would have happened.

• 3:38Sam Parr?

  Yeah, I mean, I totally agree, because it wasn't like a wanted thing. We did, it was one of those products where we didn't know we wanted. And at first, it was a freak show. Like, I don't know if you remember, one of the more famous guys who's first started fighting was this black guy who would use one boxing glove and one free hand. And he fought against like a 300-pound

• 3:56Shaan Puri?

  It looked like a creative character in a video game. All of the people looked like creative characters.

• 4:00Sam Parr?

  Yeah, there's one Hawaiian guy who is like a sumo wrestler looking guy, and he fought the dude with the one boxing arm. It's weird. And it was a freak show at first, but then it took like 10 years, and then athletes started doing it, and it became

• 4:14Shaan Puri?

  And it was condemned. Like John McCain, famously, I think in Congress or Senate or whatever. Asked for every state to outlaw the UFC. He called it human cockfighting and he was like, this is terrible. We need to end this. And John McCain, the American hero, the war hero was now saying, this is disgusting, basically. And so Dana had to find venues that would support him, which is why, by the way, Dana and Trump are so close now is because Trump would allow Dana to host fights at his Trump properties in Atlantic City. And so that's why Dana had to fight and scrap state by state, city by city, event by event, almost going out of business many times. They went $40 million in the hole before turning this thing around, turning it into a $10 billion company.

• 4:58Sam Parr?

  Dana's got this great story. It was like during the cockfighting, like when people started saying that stuff. And he was like, well, what do you think these athletes think? And people were like, they're, you know, maybe they're miserable. They got to go through all this pain. And he goes, let me tell you what they think. They're killers and they want to go out and like do something that is active. They need to get this energy out and they live their life like they're on, like they're in heaven and they look at your life. You just go to work at nine, you come home at five, you sit in a cubicle as hell. These guys are free. This is what they were born to do and what they feel like they need to do. So if you take this away from them, you're hurting them way more than when they get in the ring. And I thought that was actually a pretty good spin on it.

• 5:35Shaan Puri?

  So one of the cool things about this show is it showed a couple of things. I'll give you the big takeaway and then some of the small takeaway. So here's the big takeaway. I said the word force of will, and I use that word, that phrase very specifically because I think it describes a certain trait of a founder. And I try to have this. I think the best founders all have this. And by the way, this comes with some trade offs. When you have force of will, it is as brute forcey as it sounds. It is uncomfortable to be around sometimes. You are pushing people. Maybe you're holding a higher standard. Maybe you're demanding that things are done a certain way or done at a certain speed. That does not. Feel good to the other people that are in the organization that are maybe used to working in other environments where they don't have that. And so there's a little story.

• 6:18Shaan Puri?

  So basically, it's like the, one of the big fights of the year is coming up in 18 days. And they've done everything. They've prepped all the marketing. They've got the billboard. They show them painting the billboards at night. They show them making all the marketing videos. They show them doing all the different things that go into promoting a live show. They're selling tickets, all of this. Which fight? This was, I don't remember which one. There was either the one where John Jones had to pull out, or there was the one where Charles Olivera pulled out. Okay. And so 18 days before, he gets a call, fighter got hurt. In his last round of his last sparring session, he was sparring without headgear. I think it's Olivera. This is Olivera. This is recent. Yeah, he gets a cut on his, on his eye and he can't fight.

• 7:00Shaan Puri?

  So now the main event that they've sold all the tickets for, that they've done all the promotion for, that's been building up for six months, the main event falls through. And he's like, and it's basically him and his guy Hunter Campbell. And they're sitting in this room and this is, this is business as usual. Disasters are business as usual for him. And he talks about this. He goes, give me all the stress. I eat that shit up. He goes, I can take, I can take it all. And you could just see he's built up this resilience, this tolerance. Like imagine UFC, which is a live events fighting business. It's stadiums full of people. When COVID happened, that kills the business. There was no other business.

• 7:41Shaan Puri?

  And Dana, not only was a sport that survived COVID where it got shut down and you couldn't do live events for over a year. You can't just turn off a business for a year and hope it's all gonna be okay. Instead, he was the first sport back. He created something called Fight Island. He created a bubble where he's like, cool, we'll test everybody. Then they get here and now everybody here is tested and nobody comes in or out. And he found an island in the Middle East that they could do this on. And he branded it as Fight Island. They were the first sport back. It was incredible. So he was used to this. So he's talking and he's like, what if we did this fight? What if we do this fight? And the guys in the room are like, yeah, we could call them. Um, you know, I put out a call, he's gonna call me back, whatever. And somebody walks by, they go, his manager's in the lunchroom right now. I saw that.

• 8:25Shaan Puri?

  And Dana, within point one seconds, just hops out of his chair. Nobody else does. Dana hops out of his chair, leaves the meeting. You see him and the camera's following him. He goes to the cafeteria. He's not even at the table yet. And he starts saying, he's like, Usman versus whoever, Usman versus, versus, I forgot who he's gonna fight at the time, but Usman versus Gagey, versus Gagey, let's just pretend it was Gagey. And the manager's like, eating a salad. He's like, what? And he's like, Usman versus Gagey, we gotta do it. And he's like, no, man, I don't want to do this. He's like, what? Are you kidding me? This is a huge opportunity for him. If he fights this guy, or his comzat, he's like, Usman versus Hamzat, you gotta do it. And the guy's like,

• 9:04Shaan Puri?

  he's like, no, no, he's not ready, blah, blah, blah. Not ready? Who do you want to fight? He says this other guy, he goes, what does that do for you? And he immediately, he basically in like, four seconds, cuts the deal with him and Khabib was there. And Khabib was like, no, I think Dana's right. I think this is what he should do. It's gonna be huge for his career. And so, they cut the deal. And, and the agent, who's an, he's like a super agent. He's like the, you know, like, he's an agent for all these fighters. You would think an agent's like Ari Emanuel. He says in the thing, he goes, this is why I don't talk to Dana anymore. He's too intimidating for me. Like, he's too, too, like, forceful for me about what he wants to do. And so I saw that, and I noticed, and I said, most people will watch that scene, and they'll, they won't even pay attention to what just happened, which is that the greatest founders in the world, the greatest

• 9:46Shaan Puri?

  CEOs in the world, they cut through the bullshit. There's a, another video I saw recently of, what's, who's the guy, Walter Isaacson, who did the bio of Elon Musk?

• 9:57Sam Parr?

  With Elon.

• 9:58Shaan Puri?

  And he's on someone's podcast. I think, I think he's on Steve's podcast, and he's telling the story. And he says,

• 10:02Sam Parr?

  Are you talking about the Twitter servers?

• 10:04Shaan Puri?

  The Twitter servers. So he says Elon is talking to the Twitter team, and he's like, hey, cut costs, we need to shut down the Sacramento server farm. And his engineers are like, okay, gonna be tricky, because those servers are used for all of our infrastructure. But we could do it, we'll make a plan, and we'll be able to do that in six months.

• 10:22Shaan Puri?

  Six months? What are you talking about? We need to do this faster. It's gonna take six months, Elon. That infrastructure is critical. It's so interwoven into everything that we do. We're gonna experience big, big issues. We'll, we'll, we'll make a plan and we'll, we'll get it done. I promise you, we'll get it done in six months. I need this done in six weeks. Six weeks? We can't do this in six weeks. We would have to do A, B, C. It could be done in six days. Let's do it in six days. Now these guys are reeling and they're like, Elon, it can't, it can't be done. Six weeks, six days, it can't be done that way. So Elon is like, he, he, he leaves the meeting. And I think he was going to, uh,

• 11:01Sam Parr?

  Like Texas or, uh, for Christmas.

• 11:04Shaan Puri?

  Yeah, it's Christmas Eve. It's Christmas Eve. He's flying to Texas to go see his family. And it's, his two cousins are, I think, are on the plane with him. And they're brainstorming. They're like, God, six months, six weeks. This is ridiculous. And then, um, someone on the plane has the idea. They're like, why don't we just go to Sacramento right now? We'll just rip the servers out ourselves.

• 11:23Sam Parr?

  Cause one of the cousins, one of the cousins, I think, worked at Solar City or whatever. And he was like, you know, we could, we could use some servers. We definitely need some servers. And he's like, all right, sounds good.

• 11:33Shaan Puri?

  And I think the idea was like, if we just take the servers offline, they're gonna have to figure out how to fix it. And they'll fix it in faster than six weeks. I promise you that. And I, I think that was underlying it. So Elon, on the plane, on Christmas Day, basically Christmas Eve, you know, they're flying to, uh, to Texas. Midway through the flight, just tells the pilot, turn around, we're gonna go land in Sacramento. Pilot's like, okay. And then he says, hey, do you have a pocket knife? And the pilot's like, yeah, I do.

• 11:58Sam Parr?

  His bodyguard, his bodyguard was like, here, I got one. And like whips out this pocket knife.

• 12:03Shaan Puri?

  And so they go to Sacramento. They take the knife. They basically, and the server, the company that, the farm, basically they were like, hey, we're closed, dude. It's Christmas Eve. And he's like, let me in. These are my servers. Uh, open this door. And now I don't need you to do anything. Just open this door. I'm going in. Opens the door, gets in, takes down the servers. I don't, I don't know the exact ending of the story, but same thing. Extreme force of will, extreme bias for action, and a questioning of the default speeds for everybody in the company. And when you know that your default speed or your default clarity of thinking is going to be questioned, it changes everything. And so I've been on the other side of this. When I was at Twitch, Emmet was somebody who I've always said, his oven burns a little hotter.

• 12:47Shaan Puri?

  He's smarter than than the average bear. And I felt that if you were in a room with Emmet and you presented a plan that to nine out of 10 people in the company, it would sound okay. They wouldn't challenge your assumptions. Emmet would always challenge the assumptions of why we're doing it, how much it's going to cost, why it has to take that long, et cetera. And if your logic was not bulletproof, if you were not already maxed out in your thinking of what was possible, you were going to eat shit in that meeting. You are going to get shredded in front of like 18 people and not in a mean way. But your logic is going to get shredded. You are going to get verbally undressed. And that changes things. When you, once that, once you know that that's what's on the line, you come in a little differently. You sit a little straighter, you walk a little faster.

• 13:31Shaan Puri?

  You, you know, dot your, dot your i's and cross your t's when you go into those meetings. And so he only had to do it once. And then for the next 18 months, I was ready every meeting with Emmet. And so I think that this is just a very valuable trait that they don't teach you.

• 13:45Sam Parr?

  Was Emmet nice about it? Was he, is Emmet a courteous person?

• 13:49Shaan Puri?

  Emmet sort of has that like autistic forgiveness where you're like, he's not being mean about it. He's not being nice about it. He's being very direct, but you're like, he's, oh, that's just how he is. He's just being direct. He's just like, he's not trying to be, he's not trying to be mean. And I wouldn't even say mean is the right word. He's just trying to get to the truth and he needs you to get out of the way so that the truth can appear. He doesn't care about your feelings in the search for the truth. And in fact, the more you kind of try to get in the way of the truth, the more he's like, what are you doing? Get out of the way. We're trying to find the truth here. That's the way I would describe how it felt from my point of view. And really like, I was rarely on the receiving end of it, but I saw it happen many a time and I took note very quickly of like, okay, you got to come correct here.

• 14:33Sam Parr?

  Well, because I don't like people who are like, and I used to behave this way and I, and I regret how I used to behave, but of like being needlessly rude. And I think that the people who are needlessly rude, I think Dana would fall in that category because he loves to fight. He loves to battle. So he just told this story last week. He goes, let me tell you something. I'm going to war right now with Caesar's Palace. And they're like, why? He goes, for the last six months, I've been playing like back, back or or some like casino game with them. He goes, I'm up $17 million on them right now. He goes, I wake up in the morning and I think, how am I going to win this war today? And he goes, I'm going to lose eventually because they're going to win. But right now I'm crushing them. And each morning I wake up, I go to work and instead of going home,

• 15:18Sam Parr?

  or he, he said, he goes like, uh, when my, when my kids are asleep, I go back to the casino and I'm ready to go to war and I thrive off that. He goes, I want my back against the wall and I want to go to war.

• 15:28Shaan Puri?

  So I gotta say this because I'm a, anybody who's an actual gambling degenerate, you listen to Dana's gambling story, and this is only going to apply to 1% of the audience. So I apologize for the 99% who are like, who cares about this? I care a lot about this. So his story has some holes on his gambling stuff. Here's, I would like to list some of the holes that I'd like to have extra. I'd love Dana to come on and talk about it.

• 15:50Sam Parr?

  He tells some of the holes, like he tells us one time that he got too drunk and he lost. He goes, I, I think I lost $60,000 and I wake up in the morning and they're like, hey, man, you, you owe us. He goes, yeah, I'll get you the 60. He goes, no, no, no, no, no. It's 6 million.

• 16:03Shaan Puri?

  Yeah. I'm not saying he, he doesn't admit that he loses. I just, in that interview, he said, I'm up 17 million on Caesar's this year, year to date. He says, my rule is that if I make a million bucks, I walk. And if I lose, I'm willing to lose up to 6 million.

• 16:19Sam Parr?

  Oh my God.

• 16:20Shaan Puri?

  Then he says, um, I've only lost twice this year. So it doesn't add up. How do you, if you win, if you walk away when you win a million, or you lose 6 million and you're up 17 million and you've only lost two days of the year. And it's, we're halfway through the year. The math ain't mathin' on that one. Fourth thing, he represents himself as a like skilled gambler who beats the house. He's playing baccarat, which is like a 50 50 push game and blackjack where you're down for 49 51. There is no skilled, like the biggest loser in the world is a professional blackjack player. I'm just gonna say that again. The biggest loser in the world is a professional blackjack player because you're professional at something that is stacked against you is a by definition

• 17:03Shaan Puri?

  losing game. Secondly, you're probably really smart and could have done so many things with your life and you chose to play a game that is stacked against you as your professional career. And third, you're delusional because there's no such thing as a professional blackjack player. That is why that is the biggest loser job in the world.

• 17:19Sam Parr?

  Well, he's but the fact that he like continues to do it.

• 17:22Shaan Puri?

  I'm not saying Dana's that by the way. Dana's job is running the UFC.

• 17:25Sam Parr?

  Well.

• 17:25Shaan Puri?

  Just a side tangent to any professional blackjack player out there. That makes no sense.

• 17:29Sam Parr?

  He could be a degenerate and also and also a great business. He could be a degenerate gambler and also.

• 17:34Shaan Puri?

  Probably is. As Michael Jordan was and many others are.

• 17:37Sam Parr?

  What else did you learn in that documentary or that show?

• 17:39Shaan Puri?

  So force of will, bias to action, speed, cutting through the BS, I think is tremendous. And his other employees even said this, like the head of PR was like, she goes, yeah, work starts at, uh, work starts at 8:30. It's 6:30 right now. I'm doing my workout, but Dana just texted me saying, are you at the office yet? I told him, not yet, but I'll be there soon. And she was like, you know, Dana's gonna do this press conference. Dana is the type where he, once he decides he's gonna do something, he's like a rhino going to do it. He's, he's gonna bulldoze through and you're either with him on it and you're helping him do that, or you should just get out of the way. And, you know, I, I just thought, man, another really hard job being the head of PR for the UFC is a very, very difficult job.

• 18:18Sam Parr?

  And that woman is with him everywhere. Uh, I forget her name, but, uh, Londa or Linda or something. She's always with him. And what you'll, what you'll notice is they do the press conferences after the fight in New York time. It's like at 2 AM and then you'll see him Monday in France for another press conference. They work their asses off.

• 18:38Shaan Puri?

  Yeah, a hundred percent.

• 18:40Sam Parr?

  Let me tell you, all right. So we talked about a company on here a bunch of times, but I actually just met the, the founder. So I'm gonna do a little bit of a repeat. But remember how we talked about 29029, the Eversting thing?

• 18:51Shaan Puri?

  It's the outdoor race where you kind of run up and down a hill as many times as it takes to run the equivalent of Mount Everest. An awesome thing. Started by friend of the pod, Jesse Itzler and others.

• 19:02Sam Parr?

  Yeah, so it's, I guess Everest is 29,000 feet. So hence 29,029 is the name of their brand. We've talked about them a bunch, but the guy coincidentally joined Hampton recently. So I was able to like, I called them this morning and I was just talking through them because I've been so fascinated. We talked about high rocks and we talked about a bunch of these underground, not underground, but these like niche sporting events. And I actually think they're better businesses than I previously thought. So let me tell you about this one. So, so if you go to 29029, I think it's called 29029eversting.com. You can go to the website, but check this out. So they do seven events a year. Each event only has 300 people. This year, they sold out the entire year in four minutes for all of the events and he's purposely

• 19:47Sam Parr?

  keeping this small. So if you do that math, that's $13 million in ticket sales that he's done. And he told me that basically they want to own all the accommodation and so basically it's turnkey. You pay $6,500, you show up in some locations, you can stay at like a Fairmont Hotel, which is where they partner with, or they do like glamping and you go to like Whistler and all these like really beautiful places. And so you show up, you do this event and the reason they keep it at 300 people is so you can meet everyone and so you can have this experience where you get to know all your people and so you keep coming back year after year. But listen to this. They started in 2017. When they started in 2017, Jesse Itzler was Mark's partner on this, which is like the whole

• 20:28Sam Parr?

  idea of like an influencer partnering with you. Jesse only had 5,000 followers on Instagram when they started. He wasn't that big of a deal. And yet in their first year of business, they made $500,000 in revenue. In 2018, their second year of business, they did $1 million in revenue. By 2020, he said they were doing really great, but COVID happened, the business got wiped out. And so in 2122, they had to start all over again. But he says it's a great business. He's like, it's negative working capital. People pay upfront and I can use that money to go and pay for all the accommodations and pay for everything. And he says it's a great business. I was like, well, what's wrong about this business? Well, he said the first thing,

• 21:05Sam Parr?

  That sucks is it's a fad, meaning Tough Mudder, a bunch of other events like you look at some of these events like Spartan Race, they get really popular really fast and then Tough Mudder was doing a hundred million in revenue. Now it filed for bankruptcy a couple of years ago. Like you have to figure out how to keep people coming back over and over and over again. And I asked him, I said, how do you, how do you do that? Like, what are like the, what are like the keys to make this work? Because this is kind of an interesting thing. I don't know if I would ever want to start one of these, but maybe one day. He said, the first thing, you need a story. So you have to tell your friends, what's something exciting that you're going to be doing? And it can't be really like running a marathon because everyone kind of does that, but it has to be a little bit more exciting. You need a story. You need to be going somewhere beautiful. You need to be doing some ridiculous race.

• 21:49Sam Parr?

  The second thing, it's got to be challenging. Do you know how many people who start a marathon finish?

• 21:56Shaan Puri?

  Seventy percent?

• 21:57Sam Parr?

  Ninety-nine percent. Ninety-nine percent of people who start a marathon end up finishing that particular race.

• 22:03Shaan Puri?

  Not so hard then.

• 22:04Sam Parr?

  It's not so hard. In his opinion, you need roughly a seventy or seventy-five percent chance. He said for his events, roughly seventy percent of people go through with it, thirty percent fail. The third thing, you have to learn some type of skill, like a new skill, or acquire some type of new fitness in order to accomplish it. And the last thing, it needs to be in a beautiful place, or it looks cool in photos. So I was thinking about this. Let me give you three ideas for ridiculous fitness events that could work out. You ready?

• 22:33Shaan Puri?

  Hit me.

• 22:33Sam Parr?

  All right, the first one, we're going to call it the Burly Beer Mile. You dress up like Paul Bunyan, you go in the mountains on a track, near a track. You run one lap, chug a beer, run another lap, chug a beer. You do that four times, four beers, one mile. What do you think about the beerly, the Burly Beer Mile?

• 22:54Shaan Puri?

  Look, if you can give people any excuse to drink, you already have eighty percent of a good business. Okay, there's a reason that like Top Golf is really popular. There's a reason that people go to baseball games still. It's not because they're wondering what's going to happen in the top of the sixth. It's because they want to eat hot dogs and drink beer outside. Like giving people an excuse to drink is a great business model. If you just layer on top of that a contrast, a juxtaposition, oh, it's fitness and beer. Love it. I'm already in. I don't know about the Paul Bunyan. I think that's a, not sure that's on trend with the aesthetics that we're going for here. But I think if we workshop this idea a little bit, you could have something.

• 23:32Sam Parr?

  All right, how about the paddle prison break? A paddle boat race from Alcatraz to the coast of San Francisco.

• 23:41Shaan Puri?

  The prison break? Oh, I like this one. My mind is still on the beer one for a second, by the way. I feel like just the beer mile or the beer, the beer marathon. It's a half marathon and you drink 13 beers, I think has, uh, has legs. Uh, or maybe it's like, maybe it's a, it's a quarter marathon. It's six beers and six miles or something like that.

• 24:01Sam Parr?

  Dude, I did a, by the way, I did a beer mile in college. So you, uh, chug a beer to start, run a lap, whatever. You have for four beers, four laps, one mile. I threw up and if you throw up, you have to run a fifth lap. It took me 15 minutes to do it. It was horrible.

• 24:14Shaan Puri?

  Yeah, but we call that the victory lap. It's like, oh, I had to do a victory lap. Why? Because I threw up during it. Oh, man. You sound fun. All right. So let's do, um, prison break. So prison break is we drop you off the side of Alcatraz in a, in a small boat.

• 24:28Sam Parr?

  A paddle boat. We're gonna call it the, we're gonna call it the paddle prison break.

• 24:33Shaan Puri?

  Is there like a lane setup or we're just gonna lose people into the ocean here? What's going on? We got some liability concerns.

• 24:38Sam Parr?

  We're not gonna let details get in the way of a good idea here.

• 24:41Shaan Puri?

  I think, I think there is definitely something to the prison break, uh, out of Alcatraz. If you can do that.

• 24:46Sam Parr?

  There's a, a swim race that happens every year, but I'll give you my last, uh, horrible fitness idea. You ready? We're gonna call it.

• 24:51Shaan Puri?

  For the prison break, you have to start in cuffs. Great for the photo. Adds a story, adds a challenge. You're gonna have to learn and have to help each other get out of the cuffs. So everybody's in cuffs. You need somebody in this race who like can just get out of cuffs. And then they'll get the little pick and they'll start picking other people out. And then that's how you get out of this.

• 25:10Sam Parr?

  And you have to have a criminal record. In order to get invited, you must have to have at least, uh, a class B misdemeanor.

• 25:18Shaan Puri?

  A little gold patch on your, on the shoulder. If you actually have a felony or misdemeanor, uh, we'll just call you out there.

• 25:25Sam Parr?

  And the last horrible idea, we're gonna call it the skyline scramble. A race through NYC, but you can't touch the ground. You gotta go from building to building.

• 25:34Shaan Puri?

  Like a parkour challenge?

• 25:36Sam Parr?

  Yeah, baby. The only person who survives wins.

• 25:41Sam Parr?

  No, these are all horrible ideas, but I did think it was incredibly interesting to hear this guy's business. I didn't actually think that this company could be as good as it is, but I'll be eager to see if this thing works. I, uh, I, dude, I think these types of experiential businesses, I remember when I ran a conference. It wasn't the same thing, but like having a thing that you work towards and then all the people come to. It was like, it was a very fulfilling thing to do versus just being on the internet all the time. It felt nice to meet your customers and things like that. It was pretty awesome.

• 26:09Shaan Puri?

  So you didn't give me the heads up about this, but I'm down to workshop a few ideas live for you here if you'd like.

• 26:17Sam Parr?

  All right. What, what do you got?

• 26:18Shaan Puri?

  When you were thinking of these, what, what, how did you put yourself in the mindset to even come up with these ideas? What were you, what, what got you going?

• 26:25Sam Parr?

  Well, they're not very good ideas, so, uh, so whatever mindset I was in, I would say avoid that.

• 26:32Shaan Puri?

  All right. We're gonna go with, um, maybe nostalgia. So, uh, the Boston Rover, it's, it's Red Rover. Remember that game, Red Rover? It's, but with just all the people in the city of Boston, as many people as can show up, get on one team and we're playing Red Rover.

• 26:48Sam Parr?

  Just a citywide hide and go seek.

• 26:49Shaan Puri?

  A citywide hide and go seek. Exactly. It's not really fitness at this point.

• 26:52Sam Parr?

  No.

• 26:53Shaan Puri?

  Children's games I've gone into.

• 26:55Sam Parr?

  It's, they're all horrible ideas, but I just thought that this segment is fascinating, dude. I think that, uh, one day I could see myself doing this.

• 27:03Shaan Puri?

  Yeah. To make one of these?

• 27:06Sam Parr?

  Yeah, yeah, yeah. They seem awesome. They, it's like the, um, you know how we talked about, um, like viral food? It's like, how do you make, how do you make your restaurant go viral? Well, you need like some type of food that's either oversized or extra small or is a different color. Or it's typically the aside, for example, uh, cookie dough.

• 27:25Shaan Puri?

  You make it the main.

• 27:26Sam Parr?

  Yeah. It's like cookie dough. You make that the main thing.

• 27:29Shaan Puri?

  Or you mash up two things that don't go together.

• 27:31Sam Parr?

  Or you mash up two things that, yeah. And I'm like, what could you do for fitness? And I thought it was interesting. Um,

• 27:37Shaan Puri?

  Same idea.

• 27:37Sam Parr?

  By the way, Speaking of beautiful settings and doing races in memorable places.

• 27:46Shaan Puri?

  Where should people be racing to right now?

• 27:48Sam Parr?

  I think they should race to wander.com/mfm. Why should they do that?

• 27:54Shaan Puri?

  Well, it's actually a pretty good deal here. So if you go to Wander right now, Wander's a place where you can go rent beautiful luxury vacation experiences. I'm booking one right now. Actually, I have my assistant working on it this morning. So if you go to Wander, they're doing a special deal for MFM people, which is that if you go to wander.com/mfm, you download their app, sign up, you don't have to book a vacation or anything, you are automatically entered into a luxury vacation getaway on behalf of us. And so they're going to be giving away a stay to one listener, which is amazing. Your odds are actually pretty good. This podcast's not that popular. It could be you. There's maybe one in a hundred chance. Who knows? So go ahead, download the app and enter to win. And if you download the app, you'll also get $300 off your next stay.

• 28:35Shaan Puri?

  So you get a discount and you get into the giveaway. But check out Wander. Dude, I was looking at some of these properties. The problem I have with Wander, I got a bone to pick with Wander, which is the pictures are so good that I started booking vacations to places I don't even want to go. I just like normally you're like, I pick a city and then let me find a place to stay. Here I went and I was like, dude, this house is sick. I guess I'm going to Naples. Like where am I going? I don't know. Like I'm going to Florida now. I wasn't even trying to go to Florida. And so.

• 29:07Sam Parr?

  Well, they're setting, they're setting expectations so high. So for example, have you ever seen, have you ever seen like people who take pictures of the pyramids and then they zoom out and there's like hot dog vendors and there's like, you know what I mean?

• 29:21Shaan Puri?

  Instagram versus reality type of thing.

• 29:23Sam Parr?

  I'm like, these photos are so freaking good. If they zoom out, is there going to be like a trailer right next to the home? Like, how are these so awesome?

• 29:30Shaan Puri?

  Dude, I've had people who use these for like corporate offsites because like some of these places are pretty baller. So they use it to like do a, there's like one in Sonoma I know my friends did for a corporate offsite. And they were like, no, it was sick. It was amazing. There might, there has to be, I mean, these photos look so good that there has to be some version of like shoot for the stars and you still land on the moon type of thing. But yeah, if it's anywhere near as good as it looks, I'm, I'm very excited.

• 29:54Sam Parr?

  You have on this document, the difference between running a business for growth versus EBITDA versus cash flow. I'm interested. You got my attention.

• 30:02Shaan Puri?

  Yeah, this is a CEO school, tactical session.

• 30:08Shaan Puri?

  When you were running the hustle, did you, obviously, all of these things are good. You want growth, you want EBITDA, you want cash flow. The problem is, when you want three things equally, you usually get none. So generally, in any business, at any point in time, tends to be some order of priority.

• 30:26Shaan Puri?

  When you were at the hustle, which of these did you focus on? And was there ever a shift in, oh, now we're focusing on this instead of this?

• 30:34Sam Parr?

  I didn't run the business long enough. You know, we sold like four and a half years in to make the shift. But it was, for the longest time, it was revenue was the number one priority, followed by cash flow, followed by profit. And so what I wanted to do was double revenue every year. So I think we went from like 500,000 in revenue to 2.2 to like 5 to 12 or something like that. And we didn't make a lot of profit along the way. I think the year we sold, we did maybe a million in profit, but our cash flow was high. So I was able to add like $2 million to our bank account.

• 31:09Shaan Puri?

  And explain to somebody who's like, wait, how do you have a million dollars of profit, 2 million of cash flow? How does that work in a business like the hustle?

• 31:14Sam Parr?

  So I'll give you guys a really easy example. So we had this thing called trends. It was $300 a year. But for the sake of this conversation, let's just say it was $1,200 a year. And if a customer paid upfront, let's say they paid me on June 1st, $1,200 for an annual subscription. My cash flow was $1,200. That's how much my business accepted into our bank account. But the way that GAAP accounting, generally accepted principles of accounting, the way that works is that $1,200 was really only $100 in June, $100 in July, and $100 each month. And so my revenue was only $100 per month that they stayed with me, even though I collected $1,200.

• 31:55Sam Parr?

  Thus, my profit, let's just say that it cost me $75 to produce the content. My profit was $100 minus $75, so 25 bucks.

• 32:05Shaan Puri?

  Exactly. And so... I'm in a situation right now. I have a business that my econ business where we've been running it for maybe four years now and it's doing really well. It's been I was only growth focused. So I was like you, I wanted to double or more every year. And so we did.

• 32:21Sam Parr?

  Which the reason being is typically, not always, typically it's harder to grow revenue, but it's easier to, once revenue has grown to become profitable.

• 32:32Shaan Puri?

  Exactly. I think it's the right order of operations. Actually, there, there's one pre-step even before growth, which is just product market fit, meaning have I made something that people want? Do I feel like if I produce this, that there's a market pull for this? So once we, you know, it was a verified product market fit, great. Now it was grow. I think in year one, we did six or seven million. I think in year two, we basically got to 12 something. Year three was bigger than that. Now year four is bigger than that. So we've basically been, you know, growing by somewhere between 50 and 100% every year for the four years. But I had pulled out exactly $0 from this business. I have put in my pocket $0 from this business in four years.

• 33:11Sam Parr?

  Wait, really?

• 33:12Shaan Puri?

  Yeah, I've taken nothing out of the business. I've reinvested everything, but it's not a, oh, I could have took a ton of money out of this business. It's like, well, like for example, one year, we basically had no profit. We did, you know, eight figures of revenue and we were break even essentially. And I was like, what are we doing here? How did this happen?

• 33:29Sam Parr?

  So like the bank, did, but did the bank account ever go up? Like was your, was your cash position ever good?

• 33:34Shaan Puri?

  Well, in econ, you have one other variable, which is inventory.

• 33:37Sam Parr?

  Which sucks.

• 33:38Shaan Puri?

  The, the cash has been pretty steady, but the inventory assets are going up, but they're also inventory that might take a while to move. It might be slow. It might be whatever. And so you don't, I don't want my cash tied up in inventory. That is not actually the, the plan. That's a, it's a byproduct.

• 33:52Sam Parr?

  Unless you can pay your employees and bills and inventory, it sucks.

• 33:56Shaan Puri?

  Yeah, exactly. So I've been going through this process where I shifted from where I first was in growth and then I shifted to EBITDA. And so that required a certain set of skills. So I'll share with you some of the lessons learned shifting to EBITDA first. So we, and we've successfully shifted to EBITDA.

• 34:10Sam Parr?

  And so we. EBITDA being earnings before interest, tax, amortization, amortization and depreciation.

• 34:18Shaan Puri?

  Exactly.

• 34:21Shaan Puri?

  Okay, so what did I do to make that shift? The first thing was, and the reason I'm saying this is because there's probably people out there who are running a business that's been high growth, low cash flow, or high growth, low profit. And for some businesses, that's the right move. You want to stay in that mode for a very long time. Maybe it's a winner take all market, maybe it's a land grab situation, maybe you're venture backed and it's a billion dollar bust. This is not that. This is a business I own that I, you know, if we sell this business, it might be, you know, a hundred million dollars or less is like where this thing will land, but that's great. We own the business. We have no outside, you know, investors. And so it's no big deal. So anyways, the point of this, point of this branch is basically, how do you make that shift? So I first went and talked to people who, so step one, figure out what the right EBITDA

• 35:06Shaan Puri?

  target is. So I go talk to people who are in the same space to figure out what EBITDA margin is kind of the low end of what's possible to the high end of what's possible. And then I ended up shooting for somewhere like, you know, the 60% mark.

• 35:18Sam Parr?

  Like 10 to 25%?

• 35:19Shaan Puri?

  Yeah, so for me, that's like 17% margin. So the best ones were like, yeah, we have 25% like the Ecom ones, but then you dig under the hood, it's like, oh, you don't do any marketing like somehow? Well, I do, so that's just not going to happen. But getting to 17, 18% is like, wow, that would be really great. And then the low end is like 10%. So that's the first thing. Then envelope, create like an EBITDA, what I call it, EBITDA budget. So basically you take for every hundred dollars of revenue that comes in, what percentage is going to go to each of the following categories? My overheads, my cost of goods sold, my OpEx, my advertising and marketing, et cetera. And so you create an EBITDA budget and you basically say, where does the dollars flow today?

• 36:01Shaan Puri?

  So you do a last 12 months, look back, say, we're on average, every month we're spending 5% of revenue on overhead and, you know, 12% on, in the Ecom case, maybe it's shipping and fulfillment, whatever. So you create a current status budget and then you say, well, in order to get my margin, I need to find, you know, eight points of extra profit margin somewhere. So where's it going to come from? And so you start to basically pull calories from, from these different departments. All right, marketing, you're gonna have to give me two points here. And shipping, you're gonna have to find a way to cut off one point. And you basically find the extra eight points of margin that you're gonna need.

• 36:36Sam Parr?

  And that stuff is, uh, it's, it's not hard to do it in a spreadsheet. It's really hard to track it on a weekly and monthly basis to make sure that it's really hard.

• 36:46Shaan Puri?

  So once I did that, now it's time to communicate. So step three, communicate the plan relentlessly. So I then go to the leaders of the company, I say, hey, guys, forget everything I said before. Now this is what matters, right? Uh, we still want to grow, sure. Secondary priority. First priority is we're gonna grow EBITDA. What's EBITDA? Where, where are we tracking this today? So I'll show them, hey, here's what it is. Here's what it needs to be. Here's how we get there. And here's the cadence of how we're gonna track this. And now I put the vote, the onus on them. I said, you need to find me one or two points of, of margin in your department. Or you need to find me three points over here. How are you gonna do it? So come to me tomorrow or in two days with a plan of how you're gonna get that extra margin. And also, I want you to create a report that tracks this, you know, the sort of, uh, you know,

• 37:30Shaan Puri?

  if you're a cost center or you're a profit center of the business, you need to create a little dashboard and you need to show me how you're gonna basically update that every single week or every single month. So we do that. And every single month I start hammering people on this. And then the fourth step is tie their incentives to. So I go to my CMO and I say, great, last year, your bonus was based on revenue. This year, your bonus is based on EBITDA. Do you want your, and by the way, I'll actually increase your bonus. You, you can, it will remove the cap. You can actually get a bigger bonus if you're able to get even bigger EBITDA. So now it's on you to figure out how that happens. But if we don't hit our EBITDA targets, you get no bonus. Okay, so now incentives are aligned to achieve that thing. And so those are the kind of the first four steps. Last step, which is basically actually go do the thing over and over and over again.

• 38:15Shaan Puri?

  Somebody gave me some great advice along the way. They go, oh, you're in EBITDA mode? Yes, called spring cleaning. So here's what you're gonna do. You're gonna go and you're gonna say, there's gotta be some low hanging fruit. You're gonna go and you're gonna find a bunch of SaaS subscriptions that you should cut off. You're gonna find this, this agency you're paying too much. You realize that we don't need that agency, whatever it is. And you're gonna feel like, cool, we cut the cost. Schedule a calendar reminder in 30 days, you're gonna do the exact same thing again.

• 38:37Sam Parr?

  Yeah.

• 38:37Shaan Puri?

  And you're gonna feel like, well, we already cleaned it out, but it's just like cleaning a house. You first clean out the surface level mess. Once that's gone, now you start to realize, oh, we never actually dusted this area or this closet and actually stuffed. Now let's start to unpack this closet. And so we've done, I would say, three or four of these spring cleanings now this year, and it's only six months into the year. So I've done it at least three times, maybe four. And each time we go and we unearth more stuff. And you can't do it every day. That's not the right way to focus on it, but like, you know, on a monthly or every two months basis to go back through and say, all right, let's, uh, let's trim some more fat. Where's more fat? And inevitably you will find more things.

• 39:16Sam Parr?

  But why are you, why are you going after EBITDA? Because so I, I'll mention this a little bit, but if people rag on me, I'm not like incredibly well versed, but I've been looking into like, EBITDA might be bullshit. Like, so there's this thing called GAAP, generally accepted principles, whatever it's like what we all like abide by. There's a lot of bullshit in there. Why EBITDA versus cash flow?

• 39:40Shaan Puri?

  Cash flow also works, cash flow required me to do a second big project. So the second big project was, okay, where's that cash going? Why doesn't the cash go in my pocket? Oh, the cash goes into inventory. And so separately, we did this, like, after I did the EBITDA cleanup first, first couple of months. I said, okay, great. Now the EBITDA is great every month, but my bank balance is not going up proportionate to the EBITDA. And so first three months of the year, we killed it on EBITDA. Awesome. Where's the money going? Oh, it's going into inventory. How do we get our inventory levels to be right sized so that this cash flow flows to the owners of the business and not to the warehouse? Because today it's going to the warehouse and, um, which is a separate challenge and a separate discipline altogether. And it's a three-legged stool. You need all three legs to have an amazing business. You need a growth leg.

• 40:25Shaan Puri?

  If you're not growing, the business is not worth very much.

• 40:29Shaan Puri?

  You need profit. If you don't have profit, the business is not worth very much. And then you need that profit to result in free cash flow. And if you can get all three, you have a beautiful, amazing business. But in order, I kind of wanted to go in, in those three, because again, there's not going to really be much cash flow if you're operating at a net loss. So I needed to first be making sure there's a surplus of profit. Then I needed to make sure that circles of profit is resulting in free cash flow.

• 40:51Sam Parr?

  And you just so happen to be in an industry where those EBITDA and cash flow things, they're really hard. It's really hard, like to figure out the inventory and stuff like that. That is a science. I, uh, I am not envious of people who go through this.

• 41:06Shaan Puri?

  My major takeaway is e-comm is a terrible business to be in.

• 41:11Sam Parr?

  When is it not a terrible business?

• 41:13Shaan Puri?

  If you are, if you are winning the game and you still think it's a bad, bad category to be in, that's when you know it's a bad category. Most people, they lose the game. They're failing at it. And then they blame the category. Right? So for example, and the opposite is true too. I was telling somebody about podcasts. Oh man, podcasts is great, blah, blah, blah. He goes, well, yeah, you won the lottery. So of course you love lottery tickets. Like, you know, your podcast is popular. It works. Like, of course podcasting is great for you. But for the million podcasts that are not really getting listened to, is it, would you, would it feel the same way? Right? Is it winning dependent? And so this one is interesting because our e-comm store is winning. And even in winning, I'm like, note to self, this is not the category to be in next time.

• 41:56Shaan Puri?

  Beyond that, I would say playing the game on hard mode has a bunch of disadvantages. And I wouldn't put myself in this position voluntarily. However, once you're in a position where you're playing some game on hard mode, there is one big benefit, which is if you ever get to play an easier game, you will dominate. It's like a, it's like I was playing pickleball with a guy and it was his first time playing pickleball. He's amazing. I'm like, yeah, why are you doing that? He's like, well, I'm like college tennis. It's like, I played a harder game and I won that game. So like, yeah, I'm pretty good at pickleball. It's not so, it's not that hard for me. In the same way, I was listening to Andrew and Chris from Tiny. They were doing like a Q and A and they, the guy was like, yeah, I'm in e-commerce, D to C. Would you guys say you don't love that space? Would, would you recommend I just quit?

• 42:41Shaan Puri?

  What should I go do? And he goes, well, one of the things that worked for us was because we ran agencies, which are, can be low margin, grindy businesses with a bunch of HR problems and hard to scale. Because we did, you know, e-commerce, once we went into easier businesses, we just cleaned up. We could buy a software business that was running at 10% margins and get it to 40%. Just because that guy wasn't really, he wasn't willing, ruthless with pricing. He was not negotiating with vendors. He was not, you know, taking care of, you know, all these little things that we had, we had to do to survive in these other categories. That in a softer category, you're, you're not as on the hook for.

• 43:15Sam Parr?

  Who do you think is winning in e-commerce and what attributes do they have?

• 43:21Shaan Puri?

  Shopify?

• 43:23Sam Parr?

  No, I mean, of course, of course, of course, retailers, uh, D to C, whatever you want to call it.

• 43:31Shaan Puri?

  I think right now, the retailers that are taking advantage of TikTok, the TikTok flywheel, are cleaning up. And what I mean by that is, there is a very specific moment of time right now, where you can create content on TikTok, either yourself as a brand, or even better, you use an army of affiliates and UC creators. And whether it's with TikTok shops, or people just hear about the brand so much on TikTok, they go Google search it, and they find your Amazon, or they find your D2C shop. That flywheel, I'm invested in a couple of companies that are doing this, that flywheel is pretty unreal right now.

• 44:09Sam Parr?

  But only for certain categories, I would imagine. Is it only for things where young people are using?

• 44:14Shaan Puri?

  Nope.

• 44:15Sam Parr?

  That's amazing. That's ridiculous. Right?

• 44:18Shaan Puri?

  Let's move on. I've said too much.

• 44:21Sam Parr?

  All right. I want to talk about one thing that you actually had on here that I have no idea, like, it's way out of character for you. Your dream house? Or do you want to do painted chickens?

• 44:32Shaan Puri?

  Well, I don't have much to say about the dream house, except for, dude, look at this sick house.

• 44:37Shaan Puri?

  That's the entire topic, but let's go there. It's an amazing house. This is a house that this guy on my team sent me. And I can't believe it. It's the most beautiful house I've ever seen in San Francisco.

• 44:51Sam Parr?

  It's 11,000 square feet, estimated market value $23 million. And it's on the ocean in San Francisco.

• 44:58Shaan Puri?

  I mean, there's just a few photos. So this house is, first to get an 11,000 square foot home in San Francisco is very, very hard to do. Every view is like the Golden Gate Bridge. You're right on the water. You're right on the ocean. But even if you didn't want to go in the ocean, well, guess what? You have an infinity pool in the back that's just spilling over into the Pacific Ocean. On top of that, there's one photo in here that I just have to show you.

• 45:19Sam Parr?

  I see a beautiful porch that's overlooking the San Francisco Golden Gate Bridge.

• 45:25Shaan Puri?

  Next photo, 24.

• 45:27Sam Parr?

  Like a wine cellar that is big enough that it was bigger than my childhood bedroom.

• 45:32Shaan Puri?

  25?

• 45:33Sam Parr?

  A huge home theater that looks like they're just watching like some type of nature documentary. So awesome.

• 45:41Shaan Puri?

  And here it is. The reason I want this home to begin with, 26.

• 45:45Sam Parr?

  A half court basketball court with all windows where you can see the Golden Gate Bridge. This is awesome. Is this?

• 45:51Shaan Puri?

  Floor to ceiling, like 25 foot ceiling, all glass window. You're seeing, you're looking at the ocean, the breeze. It's all, there's a glass door that's open. You see the Golden Gate Bridge and you have a beautiful basketball court inside your home. With all, all this light wood that I just love. Oh my God, this is crazy, dude. This house is unreal. I must buy this house. It's not for sale, so that's the first problem. But besides that, I am, I now have a target. I now have a desire, you know, I thought I had enough money. Now I have a desire. I need to be able to drop 30 million bucks on this house.

• 46:29Sam Parr?

  Dude, in order to buy a $30 million home, oh, check this out. Okay, so it was owned by Sharon Stone before that or after that. Do you know who owned it? A dentist. A dentist owned this house.

• 46:40Shaan Puri?

  What the hell?

• 46:41Sam Parr?

  Yeah, it says this guy was a dentist. In order to buy a $30 million house.

• 46:45Shaan Puri?

  I'll tell you how much money I need. 28 million and then I'm gonna borrow two. And I'm gonna buy this house with every dollar I own and that's it.

• 46:53Sam Parr?

  No, I think you need, I think you need a hundred million dollars to buy a $30 million house. Would you say that's accurate?

• 46:58Shaan Puri?

  Probably at minimum, yeah.

• 46:59Sam Parr?

  At minimum.

• 47:00Shaan Puri?

  Cause the maintenance, the taxes on a house like this is gonna be pretty insane too. Like your carrying costs are gonna be what? Half a million to a million bucks a year?

• 47:08Sam Parr?

  Yeah, it could be, no, it doesn't, well, it could be that, it would be that high probably because you're on the coast and you got the sea.

• 47:14Shaan Puri?

  Taxes alone in San Francisco of this, on this house is gonna be like quarter million to $300,000 a year. That's just the property taxes. So all the maintenance, all the insurance, all the, all, all the cleaning, all that stuff on top of this thing is gotta be at least another quarter million. So at least half a million bucks.

• 47:29Sam Parr?

  Yeah, that's insane. That's insane. This is a, it's a sick house. The, uh, the last thing I wanted to ask you about, you said you wrote some essay.

• 47:39Shaan Puri?

  Yeah, your boy's getting his Paul Graham on. I started writing essays.

• 47:42Sam Parr?

  Why?

• 47:43Shaan Puri?

  I told you, I'm just in a creative season and I wanted to do different things. I like writing and I was like, well, what do I want to write about? And I realized I want to write about the stuff that I'm curious about, or whenever I feel like I have a a golden insight, something that, anything that feels insightful to me, I want to be able to write it down. And why do I care about that?

• 48:03Sam Parr?

  You want to spread your seed, baby. You gotta spread that seed.

• 48:06Shaan Puri?

  Well, that's part of it, but I, actually the bigger part is I've known, uh, there's this feedback loop that happens, which is once you have to deliver something, you start to look for it. Meaning when we start this podcast, and let's say every week we got to do this podcast. And when you show up to this podcast, you gotta have three interesting business things to say, right? You need to have three interesting business topics. And in order to do that, your brain starts to now go see, go find interesting business topics, starts to ask a few more questions, start to write a few more notes, start to pay a little more attention. And this wonderful feedback loop gets built where you start getting smarter about business more because you have this outlet where you gotta go put it and you're on the hook to go put it somewhere every so often. So in the same way, one of my favorite things is to learn something new, right? I'm a, just kind of like a, a learning junkie, right?

• 48:51Shaan Puri?

  Well, what, by having a place to go write it, I now am hunting for more insightful things. I'm reading more. I'm talking to people more. I'm having more, you know, connections between two different ideas that are disconnected. And so that's the real reason, because the thing I shared with you, I haven't even published yet. I'm going to publish all these on my website, just seanprue.com, but right now this one's on a Google Doc. I'll throw it up after, after this so that it's at least online. So the essay is called Painted Chickens and, uh, or Painted Chicken. And the reason it's called Painted Chicken is because have you ever been inside of a Subway? Do you eat Subway?

• 49:21Sam Parr?

  When I was a kid, yeah.

• 49:23Shaan Puri?

  And so I like Subway, I admit it. Um, but Subway, the quality has gone like way down since I was a kid.

• 49:29Sam Parr?

  And I can't tell, has the, has the quality gone down or have our tastes, uh, gone up?

• 49:35Shaan Puri?

  No, the quality's gone down. You know, I know this. Do you know all the controversy with Chipotle right now?

• 49:40Sam Parr?

  No, no.

• 49:41Shaan Puri?

  Dude, like, uh, Gen Z hates Chipotle.

• 49:44Sam Parr?

  Why?

• 49:45Shaan Puri?

  So basically the, this thing started trending on TikTok. There's like Chipotle, uh, gipping you on quantity.

• 49:52Sam Parr?

  Okay.

• 49:52Shaan Puri?

  Or just like, you know, basically like the way that this, like Chipotle used to be bomb, now it sucks. Here's why. And different people have different reasons why, the taste, but one of the big ones is like, they're just skimping on the, on the thing. And so then the, the CEO came out and did this hilarious thing. You didn't see this?

• 50:07Sam Parr?

  No.

• 50:07Shaan Puri?

  It's so funny. The CEO came out and he goes, Oh man, look, if you go into Chipotle and you want a little bit more, our guys are great about this. Just, you just give them the look.

• 50:19Shaan Puri?

  And he does this like stupid look, like you do that, our guys are, and girls, and girls. Our guys and girls are great at, at hooking you up with this. And so there's all these memes now of people being like, yeah, when I go into a Chipotle and I make this face, like their reaction is just like, they're not like, I got you, bro. Let me hook it up.

• 50:38Shaan Puri?

  And they're like also impersonating him where they're like, when you go into a Chipotle and you give the look, our guys and girls and trans and, and black people too. They're all great at doing this and people are making fun of this CEO for like, you know, flubbing this, uh, this, this speech that he gave. So anyway, Chipotle is under, under the microscope right now.

• 50:56Sam Parr?

  Well, now they all like Kava, which I just went to, it's awesome.

• 51:00Shaan Puri?

  Yeah, they like Kava. Well, one of the reasons, so then the founders fully, I think came out or somebody who was like the ex CEO came out. And he said two things, he goes, it's insane that people think, uh, we would tell our staff to, uh, like skimp on portions. That's terrible for business. Like we've tested this. The thing you do for business, if you want to grow revenue and grow profits in a store is you give people bigger portions, which makes them love the place to come back. Sales go through the roof and waste also goes down because you're giving them the food versus throwing it away. If you actually want to save on food waste, it's not by doing less portions, it's by having more customers first, so that you sell through all your food. That's the way you reduce food waste. It's not by skimping to customers and then they don't come back because they're angry, right? Like that would be counterproductive.

• 51:42Shaan Puri?

  The second thing that came out was the guy said, basically when Chipotle had all those E. coli scares, they had to change their whole supply chain. I don't know if you remember this, like there's a couple of years ago where like two, three times, like whoops, whoops again, oh, E. coli again, sorry about that. So they changed all of their operating procedures. So what they used to do was in the store in the back, they, that's where they would, you know, chop the veggies right there. They would do whatever. Now it all comes pre-bagged, sealed from like a central headquarters where they can have really tight food safety. Vacuum seal it or whatever, ship it to the store, store just has to open it. They're not doing the food prep on site. Well, the result of that is the food tastes less fresh. And the result of that is that they go and say they cut down the number of suppliers they were working with because it was too much risk.

• 52:26Shaan Puri?

  So instead of local produce, local farms for the meat. They now started going to a few vendors that are now shipping out much farther distances and maybe are more mass production, less taste. So the taste actually has gone down, not just the taste, but because of the supply chain changes.

• 52:42Sam Parr?

  So they need to, I mean, bring back E. coli or whatever it was like.

• 52:46Shaan Puri?

  Yeah, dude, let's roll the dice. Let's live a little, right? Like, the food's gotta taste good. Who cares if you get sick once a year?

• 52:52Sam Parr?

  Which is insane if they sell, if they serve millions of customers when it's like four people, you know, that is, that's like statistically insignificant, I would imagine.

• 53:00Shaan Puri?

  Which is always the worst argument. Like, whenever one of the social networks, they're like, dude, do you realize, like, they're getting hammered by Congress? And all they want to say is, there's 2 billion monthly active users. How many people are in your state? How many murders are there in your state per day? Do I blame you? No. I run a state 100 times bigger than yours. Like, they can't say that, but that's the reality is the law of large numbers. If you're Facebook, literally, anything that can happen is going to happen on your platform every single day. That's just the rule of statistics, even the most, like, oddest, strangest, most screwed up behaviors are gonna happen because it's so many people.

• 53:35Sam Parr?

  It's insane. Yeah. And so now they've had to change this whole thing. But what was your essay about then?

• 53:39Shaan Puri?

  So my essay is about, I call it painted chicken because if you go to Subway, Subway's motto was eat fresh. And if you go into Subway, it's just hilarious to hear eat fresh. And then literally, he's opening up a bag of chicken and you see the chicken and the chicken has grill marks on it. But you're like, hmm, how come all the grill marks are so uniform? What kind of grill do they use? If you go look it up, that grill marks are painted on. They don't grill the chicken. That's not what those grill marks are. The grill marks, the grill marks are literally painted on the chicken. And so I love this analogy because in every business, there are, there's always lip service. You know, every business has these stupid things that they say. Go, go read the website of like BP. And BP will be like, we care about communities and the environment. And they're like spilling oil into the ocean,

• 54:23Shaan Puri?

  right? Like, everybody has their, their version of eat fresh, which is, you say eat fresh, and then you just, you're painting on chicken. And so what I, what I wanted to talk about was, what are the few examples where there's not painted chicken? Meaning, what are the examples where? A company has values that they actually live by and they actually mean something. Because I think anybody would agree that like a value system is very, very important. I remember in my first business, I was trying to make a decision and we asked our mentor, we're like, oh, we're, we were doing a sushi restaurant thing. It was like, should we use the eco-friendly packaging? But it's more expensive and it's kind of like the paper straw, it disintegrates. But it's good for the environment or should we use this one? That's cheaper, bad for the environment. And it's super durable, it's actually good packaging. And she was like, well, you're asking the wrong question.

• 55:08Shaan Puri?

  You're asking the question of which packaging should we use? But the question is, what do we value more? The environment or the convenience and affordability? There is no right answer. It's just a question of what you value more. And you should just, all your decisions need to come upstream, move your decision-making upstream. Once you know your value system, everything becomes obvious after that. And this is just a good life, a good bit of life wisdom. If you're, if you're in a situation where you don't know what to do with somebody, oh, should I? They treated me this way, but I should, should I respond kindly? Should I be mean back? Should I, should I ignore them? What should I do? Well, if your value system is, I'm a kind person, that's what I do. I don't, I don't change my behavior based on other people. Well, then the answer is obvious, just be kind and move on, right? Like, that's it. So what I started to look at was what are the company values that I actually remember?

• 55:53Shaan Puri?

  That meant something to not only me, but, but the people who worked in that company. And the first one that comes to mind is Facebook's move fast and break things.

• 56:01Sam Parr?

  Yeah, I loved it.

• 56:02Shaan Puri?

  You, I like, I think we've heard that, everybody's heard that phrase by now, right? So I said, hmm, move fast and break things, like, okay, that's great. Is that popular because Facebook is popular? Like, maybe it's just a popular value because Facebook was so popular. All right, that's theory one. Well, Sam, what's, uh, what's Microsoft's core value? What's Microsoft's move fast and break things? No idea.

• 56:21Sam Parr?

  No idea.

• 56:22Shaan Puri?

  Twitter, Lyft, Uber, pick any of these companies, right? Do you know any, any of them? Like, no, we don't know any from any of them. In fact, the only other one that I could remember, like move fast and break things was Google's. Do you know what Google's is?

• 56:34Sam Parr?

  Do no evil.

• 56:35Shaan Puri?

  Yeah, don't be evil, exactly.

• 56:36Sam Parr?

  Don't be evil. But then it got, it got silly because. They maybe did a little evil.

• 56:42Shaan Puri?

  Well, exactly. So then I was thinking, well, what is it to learn from this? The first thing I learned is maybe these are memorable because they're catchy, right? Maybe that's the first thing, which is that instead of just saying integrity, you should, you should say, don't be evil. Don't be evil is more provocative. It's more catchy. It's more interesting than integrity or honesty or be good, right? If they just said be good versus don't be evil, none of us would remember that Google's values be good. But a lot of us paid attention when they said our values, don't be evil. So I think there's something to lesson. One is if you make it provocative, you make it memorable. If you make it memorable, people might actually use it. So that's the first, first little takeaway. The second is, well, there are other catchy rhyming thing, you know, there's, you could just try to be catchy, like the quicker picker upper.

• 57:25Shaan Puri?

  That's, it's cool. But why does, why does move fast and break things have a little bit more weight to it? I think it's because it, you have to pay the price, right? So you gotta pay the cost to be the boss. And what I thought was interesting was if I went to a hundred CEOs of Fortune 500 companies and I said, hey, we think that you should, you're, the company should move fast. That speed is an important value. Speed is important, right? Moving fast. Would you say that's a value for your team?

• 57:52Sam Parr?

  Of course.

• 57:53Shaan Puri?

  Hundred out of a hundred would nod their head and say, yep, of course, definite. We value speed. Awesome.

• 58:00Shaan Puri?

  And if you said, well, when you move fast, like naturally, something, sometimes things might go wrong. You might, you might bump into some things. You might break some things when you're moving so fast. So let's, let's, let's agree that it's actually, uh, it's going to be move fast and, and break things. How many of the, out of the hundred would now agree? And the reality is that 99 would be chicken shit. And they would be like, well, no, no, no, and we're not trying to break things around here. It depends. It's, it's speed without breaking things. And once you go to speed without breaking things, you're now subway eat fresh painted chicken. You're bullshit, right? It's now a unusable, non-useful value. It might be something you put on your website, but it's never going to have any weight. You're never going to be one of these generational type of companies that operates differently and is known for how they operate. And so I went and read this quote from Zuck and I want to read this to you.

• 58:45Shaan Puri?

  So he says, "The values actually move fast, but my theory on values is that most organizations have a lot of values that don't mean very much. They're just table stakes. Like if you say, just be honest, of course you're going to be honest. You should be honest. Everybody agrees with that. Everybody knows that. It means nothing. It's not an option to not be honest. That's automatic." So he goes, "I think the defining principle for a company, meaning your company's going to have one thing that you guys really do is your A-plus strength, should be something more interesting that has a trade-off. So move fast is interesting for us because we had to give something up to get it. So the question is actually, what are you willing to give up? Values are not free. Nothing is."

• 59:26Sam Parr?

  Dude, that's insane. I mean, what an insightful person to, I mean, he's just like an eloquent guy for how young he was. I mean, that's a, that's a, that's a really good quote.

• 59:36Shaan Puri?

  And so if I think about other great values that have like had resonance and stuck with people and meant something to people, you know, for example, Nike's, this is more of a slogan, but just do it. If you think about the phrasing of just do it, is Nike's just do it as powerful if it just said, "Do it?" Or "Do things?" It's very different, right? The word "just" changes it because "just" implies there's a cost. "Just" implies that it's, "Don't hit the snooze button. Don't, don't shy away from it. It's going to hurt. It's going to be painful. It's going to be uncomfortable, but just do it." And so I thought there's something to learn in that. That's kind of inspiring for me.

• 1:00:15Shaan Puri?

  So my essay was basically, if you want your culture, your values to mean something, and my friend Siki has this great phrase, he said, "Culture is, there's many ways to define it, but the best way is, what do people do when the boss isn't around?" I love that. I thought that was pretty powerful. It's your default behavior. And if you want your default behavior to mean something, to be different, to be a defining characteristic of your company that is different than the way other companies in your space operate, here's the three-step formula, which is, you choose one thing, not 10 things. So for Facebook, it was moving fast. For Apple, it's thinking differently. For Nike, it's action. Then you make it real by acknowledging the cost or the trade-off. And lastly, you make it catchy. You make it provocative. You phrase it in a way that's going to turn heads. So that's my, that's my essay called Paints Chicken.

• 1:01:00Sam Parr?

  First, that's awesome. Second, have, while you're on this little like value-driven, mission-driven company,

• 1:01:07Sam Parr?

  Quest. Have you heard of this company called Brunello Cuchelli? You probably haven't because it's not your shtick.

• 1:01:12Shaan Puri?

  Is that an opera singer? Who is that?

• 1:01:14Sam Parr?

  No, it's this Italian company that makes really expensive cashmere clothing. And their most famous, their most famous thing is like sweaters. So it's

• 1:01:23Shaan Puri?

  I'm wearing a free T-shirt made out 100% polyester from a YouTuber, bro.

• 1:01:28Sam Parr?

  Yeah, that's why I knew it wasn't your shtick, but it's not my shtick either. But it kind of has, is becoming it because I like it so much. But Brunello Cuchelli, the founder started it because he was like an expert at, I guess, cashmere. Like he was, I don't know what the term is, but he, he knew how to put together clothing. And he basically was like, you know, my dad worked his ass off. He was working seven days a week and I wanted to create a humane workplace. And so we're going to do that by creating these amazing sweaters where we hand stitch and it's done perfectly. What do you say? It's done beautifully. And he makes these really high-end sweaters and the clothing is great, whatever. But what's more interesting is this guy, the founder, and I just saw that someone shared this photo of his schedule.

• 1:02:11Sam Parr?

  6:00 AM wakes up at his countryside home, slowly gets dressed, goes to the office at 8:30. And then he says, at 1:00, I walk home for lunch. Then I take a 30-minute siesta. At 3 o'clock, I go back to work. At 5:30, the whole company stops working and takes a late afternoon walk because we believe that rest is super important to being soulful. And personal study is important as well. He has light supper at 8:00 PM and from 9:00 PM he heads out to the cafe to meet friends where they discuss politics, philosophy, religion, and other subjects latent to the night. And I was like, is this guy legit? Is he the real deal? He is. So this company, this sweater business, it's a publicly traded company. I didn't realize that. It's a publicly traded company with a market cap of like $4 billion.

• 1:02:54Sam Parr?

  He's building his company to build a great workplace and to create great products, not to make money first. And it just because of that, I want to give him more money and he's going to make more profit.

• 1:03:05Shaan Puri?

  Yeah, I'm on the website right now and it's, you know, just from a swipe file, like, you know, there's so many little things that they do in their brand and marketing that is congruent, completely congruent with everything you just said. One of the great marketing lessons I learned a long time ago was somebody said, yeah, it's gotta be epoch. Epoch, what's epoch? E P O C. They said every point of contact. So they said, once you decide what you're all about, every point of contact, meaning when somebody hits you on your, if you're all about luxury, but then your customer service hotline is like some janky old web form, it's not every point of contact. Like, I'm looking at, for example, one of the little gifs on the site for, you know,

• 1:03:48Shaan Puri?

  he's just like, go click on the sweater section or whatever. It's this guy and it's a model, but the model, he's peeling an orange and he pops like an orange slice into his mouth. He's just kind of wandering. He's like walking a little slightly aimlessly. He's just sort of like, he's chilling. He's not trying too hard. He's enjoying himself. He's right by the water. And I'm like, man, the creative direction to say, because, you know, normally what you said is, you have the founder who's got their beliefs, then you have the revenue team that's trying to jack up revenue and they're adding pop-ups on the website, try to make it like, you know, improve conversion. Then you have the creative director who's not even invited to the meetings and they're trying to do one thing over here and it is not congruent at all. And people, whether they can see it or not, they feel it. And you could feel when something is congruent.

• 1:04:30Shaan Puri?

  It's the same reason that the Apple Store looks the way it does and the iPhone looks the way it does and the packaging looks the way it does and the commercials look the way they do. It is congruent when it's done well as a brand. But it's very rare to see that, to be honest.

• 1:04:41Sam Parr?

  Yeah, these guys are on top of it. Now, I like them. I don't know if I want to spend, like, I'm looking at $1,500 for a polo. I don't know if I'm there yet, but I'm definitely thinking about it. Maybe I'd buy, maybe I'd buy a $2,000 sweater, but like, everything they have is high end. Like, it's one of those.

• 1:05:01Shaan Puri?

  He wants to attract a good customer and I think he has repelled me successfully. I would not be a good customer of this. But you know what's cool? You've said his schedule, light supper. Light supper. I don't think I've ever had a light supper. I'm eating heavy dinners over here. And I just realized, just changing the words. If I said, if I just changed my words, I said, okay, what am I gonna have for my light supper tonight? I bet that would fix my diet. Just that one, you change your words, you change your life. I bet you if I just changed that one word, light supper, it wasn't even in my goddamn vocabulary until just now.

• 1:05:34Sam Parr?

  Yeah. Uh, thank you. I'll be taking that.

• 1:05:39Sam Parr?

  Um, is that it? Is that the pod?

• 1:05:42Sam Parr?

  All right, that's pod.