Building Assets vs. Chasing Cash Flow - Keynote At War Room #TheOnePercent

So all of you, all of us are optimizing certain systems that if we applied to something else, would drastically increase our valuation and make us a more scalable sellable company. This is why I don't understand why we so easily and continuously give up and trade that ability to build a long term asset for short term wins that produce cash flow in the short term. Those things, if nothing else, should be used as the fuel to build up the bigger long term asset.

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Hey capitalists, this is Ryan.

Welcome to the show. I'm really proud of this talk that you're about to hear. This is a presentation that I gave really off the cuff with my good friends over at Digital Marketer. This was me speaking at one of their war room intensives and Ezra Firestone was the host of this intensive. It was about E commerce and selling and building brands and all that good stuff. And I came into, I think I was marketed as giving a talk on Amazon, but what I really talked about was how if you do any ounce of good marketing, how big the opportunity is for you to just absolutely kill it. It's so wide open, you know, because of the ease of setting up a business in a store, good marketing is at a premium. So if you do any ounce of it, you are. You just smash everybody else who tries to get into this game without it. And that's how you win. This was a bit of an advanced group. Everybody here was an established business owner. So this is not a getting started episode. This is made for those of you who have a little bit of experience. So it's a little bit higher level and it's really good. I had so much fun and I think it might have got cut off, but Ezra and I tried to go.

On a little political rant at the.

End, which was really fun, but Ezra cut me off. So I hope you enjoy this as much as I did from this presentation at a war room intensive.

Enjoy.

I honestly do not know how I got on the email list of some scam artist named Ryan Deiss. Are you familiar with Ryan Dice? And this sent me email after email after email about I don't know what. And somehow I ended up at this event called Traffic and Conversion Summit back in like 2009 or 2009, the first ever one. I thought there were like 1,000 people there. And all of you, I assume, have been to Traffic Conversion Summit. It's like 10,000 people now. Ryan tells me that it was 150 people.

So I remember it. I mean, I'm fresh off the boat, coming out of college, and I decide that I need to figure out this Internet thing that I have been doing that has been paying for college and paying for my life. And I need to learn how to do this well. And I find somehow myself at this event that was here in Austin. It's actually. It was my first visit to Austin. It ended up setting the stage for me moving to Austin. And they said things at this event that were so next level to me as a 21 year old that I said, I just have to get involved with whatever they have doing. And so, as far as I know, I was the first war room applicant, and I was the first war room member at age 21. So it's very kind of serendipitous to me to come full circle 10 years later and to be with you. Today at my first war room meeting.

I approached a nice little white boy in the room named Perry Belcher. Are you familiar with Perry Belcher?

I'm surprised that Ezra thinks I'm controversial when he knows Perry Belcher. But I went up to Perry, and I.

21 or 22 at the time, and I'm making money on the Internet, but I feel like the smallest fish in this room. And that's actually why I joined, because I had gone to school in Indiana, I had just moved back to Ohio. I pretty much the only person I know who does what I do. And I just needed to be around people who would change my brain. And that's why I joined this room. And I went up to Perry and I was like, perry, here's what I got going on. This is what I do. This is, I think, where I want to go. But look, if you were 22 and.

You didn't know what to do, what would you do? And he said, as many chicks as possible.

And then he said, you know what I would do?

I'd sell stuff.

Not hopes and dreams.

Not air like all these other people.

I'd sell stuff. I would sell real stuff.

And that really stuck with me.

Because I've always felt like the.

Internet marketing biz op world was kind of icky.

And a lot of people do it. I never felt really good doing it. It always just felt gross to me. And full disclosure, there was a time in my life where that was part of my businesses, and now I never felt good about it.

And everybody in the room was kind of talking about all Their fast way to make cash, right?

Crushed it with this launch, killed it over here we're doing this much per month and it just becomes like a big ego filled contest. And that just always made me feel really. I don't know why, but I just never felt really good with it. So this idea that Perry mentioned of selling stuff just kind of stuck with me. And at the time, I had been fascinated with the idea of building up a presence on a specific channel. So in the olden days of content marketing, it was this site called Google or Joogle, it might be a soft G.

And then in the info marketing world, there was this site called clickbank. And both worlds there were algorithms. If you gave the algorithm what it wanted, you would show up higher, you would get a bunch of what we called organic traffic.

And I saw this pattern repeating over and over and over again. It's kind of the way the world still works. If you follow Gary Vee, the next one's LinkedIn. Figure out the algorithm for LinkedIn. And as marketers, we're constantly looking for the next white space to ruin, to get in front of the algorithm so that we can make it ours.

And so the next thing that was coming, the next thing that I saw happening, the next white space that happened to have to do with selling stuff, was this small, tiny site called Amazon.com and so taking the skill set of knowing this much about marketing and partnering it with channels was always my aim. And when Amazon made it possible for e commerce sellers to sell at scale.

It was very clear that that was the next wave.

But in reality, what was happening, and what my central thesis is to this day, and probably will be until the day that I die or enter the multiverse or whatever Peter Diamandis comes up with at Singularity University.

Is that I've spent my life and my entire thesis is in building assets that can eventually pay cash over time. And in this world, this marketing world, even the digital marketing world, we are so obsessed with short term results and so obsessed with short term profits. And we are so distracted by what other people are doing, how other people are crushing it.

How this dude on a Facebook ad says that he's selling this much so that you sign up for his webinar, we're so distracted and easily persuaded by the short term results that there are very few people that give any thought to building long term assets. Very, very little thought to this. And if you take this much of that and you partner it with the skill set that you've developed both as a marketer, and within your organization.

The value that you can build in terms of long term wealth completely.

Completely outdoes everybody else who is getting into this game. Because whether we talk about it or not, 90% of this community of people who claim to be entrepreneurs are getting into this because they really just want. They're running from fear, they're running from lack, they're looking for whatever short term result is going to get them out of the proverbial rat race so that they can chill. That's why if you go to San Diego, it's a whole bunch of coaches.

So depending on what pocket you're in, it's about what can I do in order to get a short term result versus building really, really long term assets. And the thing that amazes me is how quickly people are willing to sacrifice their skill sets and what will ultimately be an asset that makes them feel fabulously rich and they trade it for short term results. Usually because of a fear based mentality. This is most directly reflected when I see marketers who have ginormous email lists that they've built up through direct response through content marketing and they are so quickly willing to just promote the next launch. Makes no sense to me. It makes absolutely no sense to me why you would sacrifice brand trust.

To be able to make 100 GS or less promoting some dude's launch that you don't even like.

Because you think that it's politically necessary to do that in order for your next launch or the next thing that you're going to promote. I do not understand it. To me, the trust that you have with the people that follow you, with the people who engage with you, who see your content is an asset and you are always trading one asset for another asset. At some point you cash in your chips. But this community is so willing to go after the short term chips over and over and over again and then we look for the next short term set of chips never getting ahead.

That to me is the problem that plagues the marketing community. And the strange thing is is that it's really easy to solve because the foundations of those assets exist in all of the skill sets that we have developed over our careers and have allocated just slightly differently. Build up a lot of really cool long term assets.

Ezra asked me not to say anything controversial, so let's talk politics for a second.

I didn't necessarily ask you not to.

I just, you know.

Ezra, you're killing my story here. So how many of you ever heard of World War II? Ever heard of that? For those of you who didn't raise your hand after you Google the stock market, I highly recommend that you Google World War II. A lot that has happened in history you might want to catch up on.

I studied economics in college. Actually, I went to college thinking I was going to be a pastor. Spoiler alert. That didn't happen. I instead finished with a business and economics degree. And my specialty as an economics student was on the Crash and the Depression and. And the years that preceded it and the years that came after it. The really interesting thing, I think this really formalized my passions, which is why I bought the domain name capitalism.com is I was in college during the 2008 recession. And seeing the parallels between the two was just absolutely fascinating to me. To see the patterns that happened in 1931 reflected again in 2007-2008, which is absolutely fascinating to me. And it actually made me really frustrated in this story that I had been told in elementary school and high school that what got us out of let me just ask the room. What got us out of the Depression?

Anyone? Ehler? What got us out of the depression? World War II. World War II. World War II. One of you said it. I'll give you both Credit. World War II, that's the common story. And this frustrated me because in economics, it's impossible to create through active destruction. So the idea that if I destroy this or destroy this whiteboard that. That somehow stimulates the economy makes no sense to me.

Logically, it doesn't make sense. If you destroy a bunch of things that. That somehow stimulates the economy, how in the world does war.

Make us come out of the Depression? So as an economic student, this frustrated me because I saw that the data didn't support that, and it made me really frustrated. When people say war stimulates the economy. No, it doesn't. It destroys things. It's actually really bad for the economy. What happened instead was that the economy recovered post World War II because there had been so much investment in infrastructure that there were these unused assets that were sitting around. The things that we used to make warplanes, now made washing machines. So we had all of these unused pieces, these unused assets that had been built up for a specific purpose. That purpose didn't need to be filled anymore. We didn't need to make more bombers. So we have these unused, unutilized assets that were then freed up for other means of production. That's what got us out of the Depression. And I tell you that because sitting in your business right now, there are unused assets that if you change the way that you are approaching them. If you change the way that you're deploying them, the result is that you build really great assets that build long term brand, make you a more valuable company, make you a more sellable company, and get you out of the reactive mode that so many marketers and entrepreneurs are in, which is promoting the next launch, figuring out what we're going to sell, reacting to everything over and over and over again. How many of you have an email list or a social media following that? If you put up a piece of content or you mail your list, you know you can get at least 10,000 people to see it.

Okay? If you can't, then your focus for the next six to 12 months needs to be on dialing in that strategy. Because 10,000 people is enough of an asset to do a lot of damage.

So where I applied this me specifically was seeing that Amazon.com was the channel that was going to continue to grow. And as we stand right now, Amazon.com is worth almost a trillion dollars. They're actually projected to increase by about another 50% over the next year and a half in terms of overall revenue. That's just the trend of the marketplace right now. So we have a $1.5 trillion marketplace that continues to grow, that continues to buy up other assets, interestingly enough, which by the way, is the reason they don't pay taxes, is because they continue to buy up assets and infrastructure. And they write that down. Really, really fascinating strategy. Jeff was really smart to do that a couple of decades ago. So I'm seeing this overall trend and this trajectory and I know that if I spend the next six to 12 months building up any sort of a following that I can take that following, marry it with Amazon.com, give the algorithm what it wants, and beat everybody else who's trying to compete without it. So I think when we launched, I had a company that had maybe 5,000 people on an email list. I mean, maybe. And if you factor in open rates of, I don't know, 20% at the time, we were getting about 1,000 people, which is literally one tenth of what I just suggested that you have. We had like 1/10 of that. And having 1,000 people ready and willing to buy products was plenty enough to do damage. Because if you take that and you partner it with a channel and you treat them really well, you get them to leave reviews, that snowball starts to build really, really quickly. And that is very, very different than the approach that most people are taking, which is just optimizing for numbers so that they can buy more traffic and get the numbers to where it is and calling that a business, that's an offer that is not a business.

Peter Drucker used to talk about the two functions of business, which was get customers and keep customers. Most people do neither. They just get sales, but they never really turn those sales into customers because their entire focus is on conversion optimization rather than customer experience.

Now when you have something that has a dialed in customer experience and will bring friends over time and you apply half of what you know as a marketer to that, that's an asset. But instead, because we come from this world, we optimize for numbers and we optimize for what is a marketing win versus what builds a long term business. Have you ever experienced a moment where you walk into another business that's way bigger than yours and you realize that you know way more about what they're trying to do than they do?

If you've ever been, if you've known anything about search engine optimization and then you go to a publicly traded company and you look at their blog and you have a meeting with their executives and you're like, you think Google works how? And you realize that you know way more about what they're trying to do than they do. But somehow they're worth a lot more money than you. The difference is they're building assets. You're focusing on marketing tactics. And if you apply your marketing tactics to real assets, you get a really, really cool company. But we have it backwards. We focus on the little tactics and optimizing for the machines rather than building something that people really want. A really good example of somebody who did this well is a friend of mine. He spoke at one of our events. His name is Moise Ali. Moise lives in Silicon Valley. He did not go along the Silicon Valley route. He did what was countertrend to a bunch of his peers. He decided to build a company that was profitable. What a concept. And he started a company that was called Native Deodorant. Are any of you familiar with Native Deodorant? All right, cool, thank you. Three of you. And what Moyes did was first he started on a channel. I don't even remember what it was. I need to go re listen to that. I actually posted his speech on my podcast@Capitalism.com, but Moyes tells a story about how he vetted the idea by sharing it on some forum and watching to see if it would get voted up. And it got voted up. And so we had a couple Prototypes made. He said he had spent $500 building the prototype and it started and he was really proud of the product. They continued to innovate on the product. They had a really happy small customer base that started to share it. Then he took the ounce of marketing that he knew. I mean, he's a good marketer. But once he applied a little bit of marketing to a business that was creating happy customers, within 12 months he had an asset that was profiting a million dollars a month selling $12 deodorant. Now, in our world there's no margin there. How do you buy traffic to that offer makes no sense. But the fact of the matter is that he had happy customers who, who were bringing other customers to the game. And then marketing was made to amplify that asset. Eighteen months into running native deodorant, he got a phone call from a company called Procter and Gamble. They negotiated. Procter and Gamble did their first acquisition in many years. They wrote him a check for $100 million cash. Now, from the marketing world, we would say, how are you going to make money selling deodorant? But when you are building a long term asset, the money comes. And Ryan Dice, to his credit, told me this in one of our first war room meetings.

And Ryan, if you watch, I would suggest that you shout this from the market, from the mountaintop, from the market top, because it changed my perspective. He said, in our little digital marketing world, we all have this dream of killing it for a while and then retiring and going to the beach. And you can do that. That happens. And it happens when you sell, not sell more product. It happens when you sell the business, it happens when you sell the asset. That's when that happens.

Gary Keller, down the road from here, actually one of the richest people in the world, founder of Keller Williams Realty, likes to say that the most valuable asset in your business is your systems. Now that does not mean your systems and processes that are sitting on a file somewhere on your computer that no one in the organization uses. Your systems is simply the way that you conduct your business that adds value to the marketplace. So what I realized is that by knowing a little bit about Amazon marketing, for example, and I often get labeled as an Amazon guy, which I think is a two kind. I'm an entrepreneur who has used Amazon.com but knowing what I know about Amazon, I now know that I can go into a business, I can acquire a business, I can look at a customer list and I can say, okay, with these tweaks here, we can add an additional channel and very quickly add $100,000 a month or $200,000 a month or more to this existing business. Because I bring a little bit of a playbook to how that system would play out. That's a valuable asset. The things that you are already doing when applied to another area of business that increase the amount of revenue, cash flow and valuation of a company. So all of you, all of us are optimizing certain systems that if we applied to something else, would drastically increase our valuation and make us a more scalable sellable company. This is why I don't understand why we so easily and continuously give up and trade that ability to build a long term asset for short term wins that produce cash flow in the short term. Those things, if nothing else, should be used as the fuel to build up the bigger long term asset or as we talked about the World War II example, to build up the infrastructure that can then build and launch other things that will spawn off cash flow.

Hey, real quick, I'm doing a test.

In my business right now that I think you'll be interested in. We have a training called Million Dollar Brands and it helps business owners and entrepreneurs get clear on those first three to five products that they're going to build that will get to 25 sales a day at 25 to $30 and thus be a million dollar business. And we sell that for $297. And I recently had the idea of what if at the end of that training when somebody completed it and they filled out a form saying that they know what their three products are going to be, they know how they're going to launch the products, let's refund them the cost of the training. Let's incentivize the action of actually making some decisions in your business and getting clear on your business. And I did this because someone challenged.

Me with the thought of what would.

I change in my business if I only cared about my customers results and I didn't care about profitability and, and I immediately said let's incentivize action. And then I said, well, would I really spend however many thousands of dollars a month I spent on Facebook ads or would I take some of that money and put it into a scholarship fund and then fund some of the cool ideas that came from my training. And it was like this whole world of creativity opened up for me. So this is a test right now that we're running. If you are starting a new business or you are still under that million dollar threshold or even that 25 sales a day threshold. Then we have this training called Million dollar brands. That's $297 and it's refunded to you when you complete the training. And I figure if you walk out of that training, you're going to leave with such a clear business plan that you're going to want to work with us on ongoing. So you can find this@capitalism.com brands and depending on when you sign up, we're also opening up strategic windows where you can qualify for a scholarship and have your business funded. So this is all an experiment.

If I lose my rear end on it, we'll probably shut it down.

But for now, you can find it at capitalism.com brands.

When I was in my early 20s, I became fascinated with this dude that I saw on stage say that he wanted to buy the New York Jets. And this dude I started following because I was like, he will contextualize. He will contextualize where I am. He was 10 years older than me. I perceived him as 10 years ahead of me. He was running a wine company at the time, time. And I was like, he's been doing this 10 years longer than me. I'm just going to watch how this guy plays the game. And I watched very closely. And I had the privilege of getting to know Gary a bit. And I was sitting with him at VaynerMedia Studios a couple weeks ago, we did a podcast together.

And he said something really interesting where.

It was clear that his entire thesis was to make as little money as possible.

He makes a shockingly low amount of money because he is constantly investing in the next asset. And if you watch his content right now, that asset is the new business called Empathy Wines. There's the content piece, there's VaynerMedia and their systems. If you look at their profit and loss statement, you would not be all that impressed. And he would happily tell you this. But at any point that he wants to bolt on another revenue stream, that he wants to bolt on another source of cash flow, he has the audience, he has the systems, he has the following, he has the investors. And he can light that fire in an instant. As soon as he wants. As soon as he wants to cash in his chips, he can pull that lever because he's been building a long term asset for long enough that he can build something that's truly scalable and sellable. So I always come back to this idea of what am I willing to invest into building the next asset? By the way, cash is an asset.

Relationships are an asset, traffic attention is an asset. Your network is an asset. And maybe the most important of them all is brand is an asset.

What is brand?

What do we think of when we think of the word brand?

Brand is simply outsourced trust.

We have outsourced our expectation to someone else, and that is what brand is. Brand is the promise that something will be fulfilled, that something is going to happen.

Great example of this is RX Bar.

Raise your hand if you ever eaten an RX Bar.

Keep them up. Keep them up now. Keep your hand up if you have never done CrossFit.

Why you're not the target market.

RXBar started as the protein bar for CrossFitters.

Now, RXBar started five years ago, 2014, by a guy named Peter, literally in his basement. In 2013 and 2014, did we have a lack of protein bars in the market? Did the world need another protein bar? Were there people sitting at home saying, you know what the problem is with this world?

Not enough protein bars. Thanks a lot, Obama.

Peter created a protein bar in the midst of the height of success of Clif Bar.

You're familiar with Clif Bar, which, by the way, is a protein bar for male endurance athletes.

If you look at the packaging, it's a dude hanging on a cliff. The brand story. I was riding my bike, doing another ultra marathon or ultra bikeathon or whatever you call it, and I just couldn't eat another dry protein bar. He's actually throwing shade at Power Bar. So he was starting Clif Bar as a response to Power Bar. And later comes RXBar. It's not like there was a lack of protein bars or prepared foods in the marketplace, but RXBar was really, really smart in the fact that they had a very, very specific core target market. And they took one specific position in the marketplace, which was, we're going to be completely transparent about what's in our bars.

So the result was this very specific target audience, which was CrossFitters, which is why it's called RX Bar. It's a CrossFit term.

They have a very specific core group of people with one singular promise. What we say is in our bar is in our bar. That's it.

The CrossFit community gets exactly what they want, which is they tend to be a paleo community. They tend to care about knowing what's in their food, eating clean, if you will. They start buying up our X bars. That passionate audience, that small, tiny, passionate audience, which that community was a lot smaller in 2014 than it is today.

Ravenously buys up that product, ravenously buys up RX bars. If you buy an RX bar, there's no upsell. There's no one click checkout.

You simply have trust that you are getting what you think you are getting when you buy the product. And as a result of that, they have what Warren Buffett will call a moat on their business. Because there are other people who now will defend their decision to buy rxbar and not buy other brands, even if the other brands are better, cheaper, cleaner, because that community trusts that company. And that is brand RXBar. Four years into existence, exits, sells to Kellogg's. Does anyone know the number? $600 million started by some dude named Peter in his basement who created a product that was very specific to one core group of people. I would be willing to bet that every single one of you has a bigger following and more access to other resources and assets than Peter Rohan had in his basement in 2014. You know, more people, you know, more investors, you have more followers, you probably have more money, you have more expertise, you know more about marketing. You have more resources than that Entrepreneur had in 2013 and 14, which, when he decided to create a specific product for a specific group of people and never compromise brand.

That's what happens when you sell. They're buying your assets. They're buying your brand. I was working with a student. I occasionally do workshops at my home of like six to 12 people. Or we work on building the assets within their business and aligning it behind a strategy of having an exit. And his name's Matt. And this guy Matt was sitting in my little conference room, a tiny little conference room. And he says to me, man, I gotta be honest with you. I'm working like 14 hours a day to make like 200 grand a year, and I really, really just want to sell this thing. I understand. Tell me more. He's like, well, I'm making, like 200 grand. I think I could get maybe like a three or four times multiple for this. I would really like just to sell it, take my 600 or 800 G's and start the next thing. I was like, okay, let me just talk this out with you. You're working 14 hours a day, and you're a solopreneur, right? It's just you? Yeah, it's just me. You're working 14 hours a day to make 200 GS. You're really unhappy in your business, so you want to sell this and move on to the next thing? Yes, that's exactly what I want. And I looked at him and I was like, dude, nobody wants to buy your shitty business.

No one wants. You think that someone wants to pay you to work 14 hours a day to make 200 GS?

Now he thought he was operating his business under the false belief that cash flow and profit was the thing that someone else was going to buy. That's a broken thesis. People are not buying cash flow. They are buying assets that complement their other assets.

If you think about this selfishly, you going in and looking at a business to buy, a business to start, something to learn. You are looking at it from the context of how does this complement my life? How does this complement my business?

That is the evaluation that you are constantly making. That is the trade off that you are constantly making. That is the comparison of ROI that you're making. Is this course worth the two GS and the time that I'm going to put in it in the context of building my business, which is built in the context of optimizing my life and happiness. But somehow we forget that when we are building a business and we think that the only thing that somebody else is going to want to buy is the cash flow that the business is spinning off. That's a false assumption. If you look at the report that Unilever put out about why they bought Dollar Shave Club, they bought it for a billion dollars. That company was built on the back of a couple viral YouTube videos.

I spoke with Michael the founder Michael Dubin, and at my event called the Capitalism Conference, put the recording on capitalism.com if you want to find it. He tells a story about that business was built with $100,000 of venture capital and he basically danced out of there. Super stoked to have $100,000 worth of investor money. I asked him, were your investors happy with their return? They were.

He sold that business for a billion dollars. If you look at why Unilever bought that business, business had nothing to do with cash flow. Nothing had everything to do with the customer list that they had acquired.

They had a new group of customers that they could market all of their other holdings to. They now had acquired a demographic that they were not hitting in their other businesses and their other holdings. And they acquired other systems of YouTube, marketing, distribution and subscription services that they currently couldn't focus on. Had nothing to do with cash flow. This story that we play or this analysis that we make is as bootstrapped entrepreneurs. Where we're looking at acquisitions and we say why in the world would this company pay X amount of dollars for this business? This makes absolutely no sense. Is because they are not buying on cash flow, they are buying on on other assets. And if you forget that then you will compromise your long term valuation and your long term happiness and the long term pride that you have in your business in exchange for short term win after short term win after short term win over and over and over again. And you will have a nice lifestyle business and put on Facebook that you're killing it all inside, wondering why am I not more ahead. That is the plague of the modern day Internet entrepreneur. Because they have bought into the lie that cash is the end game rather than building a long term asset that will spawn off other assets.

At capitalism.com, my logo is a C with a flame at the end of it. Because my idea of Building Capitalism.com is to simply light the fires of other assets assets. So I want to have an audience so rabid and I want to have followers so excited and I want to have content that is so good that at any point in the future I can say this is the fire that I want to light. Whether that is a message, whether that is a product, whether that is a politician.

Whatever I want, I want to control the assets, to be able to influence the change that I want in the world. And all of you have that ability in the form of your customer list, in the form of your relationships, in the form of the content you produce, in your distribution, in the systems that you're creating. And it's a real shame.

It is a real. It's a sad day when entrepreneurs who have that type of impact trade that for some sort of a short term win that is going to serve them in the immediate and compromise the long term. And usually we do it out of survival, usually we do it because we either need cash in the short term or same part of the brains still the survival mode, we're comparing ourselves to somebody else and we want to keep up. So it's always done in a short term evaluation of survival. You realize those things are very freely accessible. Cash is easy to get, debt is easy to get, raising money easy to get, selling product to fund your next wave, easy to get. Cash is very easily solved in the short term, especially with where we are in the economic cycle. I mean, cash is just everywhere. Cash is like the least valuable asset in the world right now. It's everything else that is valuable.

And we're trading those for cash which is available everywhere. In the meantime, my thesis and my recommendation for entrepreneurs who are actually building something and not just in this because they want to optimize their Free time for the individuals who are actually building something or want to leave something behind or want to pass their peers. You trade cash in the short term for assets in the long term, and that asset pays you more cash over the long term, which you can then reinvest into more assets. That's the game.

That's how you build something that actually lasts. I was in LA a couple weeks ago. I interviewed one of my entrepreneurial heroes is a man named Brian Lee. He was actually introduced to me by Roland Frazier. And Brian Lee is the founder of LegalZoom, billion dollar company ShoeDazzle, $100 million.

Company.

Honest Company, Billion dollar company Art of Sport with Kobe Bryant and Odell Beckham Jr. And a bunch of other athletes. Probably going to be a billion dollar company. I advise him a bit on his Amazon strategy, which is I really do it because I want to spend as much time understanding how Brian's brain works. And I'm interviewing him for my podcast and I realize that he strategically positions himself to be in one spot, and it is the spot where he can stand back.

Look at the assets and bring them together.

And watch.

So if you look at something like Art of Sport, this is his new venture. He says, I know the people who will fund this. And he brings in the cash. I'm going to go find this CEO who will run this. You over here. And Colby Bryant's my buddy. He'd make a really good face of this company. Hey, Kobes.

He has the money, he has the people, and he has the distribution, and he owns the asset and it is his job to manage the little pieces. Doesn't know anything about Amazon market, doesn't know anything about search engine optimization. He knows how to bring together assets to make them more valuable. I had an economics professor in college who changed my life. His name is Dr. Tom Lehman.

He said that the entire reason for economics and for markets was to take things from where they are of less value and to bring them to where they are of more value. And we entrepreneurs have bought into the position that it is all about learning a skill set and being the Facebook guy or the webinar guy or the this girl.

But if you're an entrepreneur, your job is to bring together assets and create what is more valuable than where they were to stand on their own. That's capitalism. That is entrepreneurship. My game is launching physical products, brands. That's my asset because it's the people that I know, because it's the distribution that I know, because it's the skill set that I have, because it's the ideas that I come up with. And so my filter on the world is usually to look at people's businesses and to say, you know, if you were to launch this physical product, sports, that could be another bolt on business, as Roland would call it, a bolt on business that you could slide into your existing customer base, apply some basic systems to it and have another revenue stream. That's my view on the world. Just like somebody who has a Facebook agency is going to approach any other business and say if you were to run this ad and optimize this, you could be more valuable or make more money. I'm yet to see a business and yet to see a following that doesn't have six physical products brands sitting on like sitting on the shelf somewhere. For example, if you are a fitness business that sells info products about fitness and you don't have three lines of physical products, food, supplements and workout gear, even if they're the exact same as everybody else's, you have internal trust, you have internal brand equity. That's the asset that can then light the fire of all those physical products brands and be sold independently. Real quick tangent. Great example of this would be Legion Athletics. Mike Matthews is a blogger and a podcaster and a YouTuber who just creates an insane amount of content and then he launches supplements and whey protein and food bars and at any point he can sell one and keep doing the other. Keep this group of assets and sell this group of assets. That's how I see businesses in this world. That you've got assets sitting around that you can apply other income streams to and create other assets that grow really, really quickly rather than operating within your internal business and trying to see how we optimize the this little piece. There are people better in the world than you to come in and optimize those pieces. It's your job to sit in the director's chair and direct the assets and complement them against one another to create new areas of value that did not exist before. That's your job as an entrepreneur and I would encourage you not to trade your long term assets and valuation for short term wins. Your entire wealth, your entire happiness is dependent on that. And entrepreneurs are the most powerful people in the world because we control the assets. And it's a real shame to trade that for short term scarce ideas that compromise everything that we can be in the world.

I want to leave a few minutes for Q and A. If you want to go deeper into where you are or how you would apply a specific business or asset to what you've got. Or if you want to talk about Amazon or physical products, we can go into that.

But regardless of where that goes, the shift that happens from going to a cash flow business to building assets is probably the most profitable shift you will ever have in your career because you will finally make that transition of building something that is scalable, that's valuable and is not dependent on you. And that's when you actually build something that has an impact and creates the change that you want in the world.

Give it up for Ryan Daniels.

Thank you.

If you want to go more specific or into the granular, I'm happy to take questions for Ryan.

Put your hands up. And Ryan, you can throw that softbox there.

All right, Josh. Woohoo. That was fun.

What's your take on Apple, for instance? They have a lot of cash, right? They're sitting on a lot of cash they can move. They could invest into a million different things. So with where we're at in the economy right now, right, who knows when the next downturn is going to be? You've talked about on your podcast kind of being able to take advantage of when those assets do become cheaper. So that's kind of my question to you is what's your take now? Yeah, you want to go acquire more assets, right, for the long term. But where we're currently at, is it better maybe to have more cash heavy side on your balance sheet right now?

I don't know. My strategy is always to look at where assets are undervalued and go there. And all that really happens is that changes. So right now, cash is kind of a cheap asset. If the market tanks, cash all of a sudden becomes much more valuable to hold. And so that's why you see.

Cap rates and interest rates go up, because it's more valuable to have that cash. And right now that's not the case. In the case of Apple, you obviously had a big shift when you went from Steve Jobs to Tim Cook. Steve Jobs was more an asset builder. Let's take that cash and let's put it into infrastructure and let's put that into innovation, which created their rabid customer base. Tim Cook is more of a cash flow entrepreneur. You've seen far less innovation over the last couple years. Does anyone you know, have they expressed any frustration with Apple products over the last couple of years? Because there's been like a lack of innovation, a lack of setting the curve doesn't seem to have hurt their valuations. But where I'm concerned for them is over that sentiment. They're suddenly a little bit vulnerable. Just a little. They got plenty of defense. They're gonna be fine. But for the first time in Apple's history, there's just a little bit of a demand for more innovation where they were the innovative company for a long time. I'll be also curious to see if the economy tanks what they do with that cash, because they may just be operating under the thesis that they can acquire cash really easily so they can make the next acquisition. They did do that a couple of years ago when they bought Beats by Dre. So are they going to do that in the next downturn? I don't pretend to know what Tim Cook is thinking, but there was definitely an obvious shift in strategy that happened, which is why they're sitting on so much cash. And my guess is that they get more acquisition hungry when it becomes profitable for them to do so.

One more.

We got Yoon back.

Let's pass the mic to Yoon.

I'm just curious what your.

Amazon kind of consulting or advice that you gave to Brian kind of was like what.

That kind of looked like or what.

You look what you suggest to him or. Yeah, so like my Amazon strategy in 30 seconds. Yeah, so in the same way that I launch my businesses by building an audience and sending that traffic to Amazon, Amazon rewards outside traffic. So Amazon, if they see you sending outside traffic and sales specifically through keywords, that's like a link in Google's world. If a sale happens on Amazon and it happens from outside traffic or somebody goes to Amazon searching for something finds you, that's like a vote, just like a link would be a vote in Google's world. So what I worked on with Brian was getting the influencers like Kobe and Odell Beckham Jr. And the other athletes that work there that have a part of that company of sending traffic from the outside from their social media following to their products in order to rank higher in Amazon and get more organic traffic. Part 2 Call the best Amazon agency in the world. Their name is Turnkey, they're in San Diego and pay them whatever they want to do. Your internal Amazon management, that's the one, two punch. I think people obsess too much over the internal workings of Amazon. So like a real Amazon guy is going to tell you all about how the algorithm works, what PPC strategies are working and what new advertising platforms are opening up on Amazon. That's not my game. I pay people to do that. The real asset and valuation increases happen. When you can look at that and say, great, how do we add fuel to this Fire. And that comes in the form of taking outside audiences and sending that traffic to a fire that's ready to be lit.

I'm having a good time. So if there are more Q and A. If you're just going to come up on stage, politely asking you not to.

See if anyone has any more questions for Ryan. I'm like your backup now, do you? Dude, I got your back.

We do make a fun duo, don't we?

We got some good content questions for Ryan. You could ask him anything about his personal.

Oh, politics. It would be fun.

Politics.

Politics and religion are my favorite things to talk about.

I mean, you could if you want.

Business is like fourth or fifth, so.

We basically just have a physical products brand and a pretty decent social media following. Would you recommend, like, reaching out to someone who's, like, really good at, like, info products or something to try to, like, increase our assets in that way or just keep building up the community we have with our physical product?

Yeah. Could you tell me a little bit more about the products and the people? Yeah, so we get a little more context.

We build body armor, so bulletproof vests, basically. Yeah. So we have a very small product selection. We just basically build, like, accessories for the things we sell. So we probably only have like six or seven products.

Okay, cool. And how are you taking orders right now?

We just do it online and then over the phone. And then we get big, big agencies, usually through word of mouth from, like, someone who buys our product that works at one of those places will take it to their chief or something.

Okay, and so how do customers find out about you or how are you advertising to find your.

It's mostly through Facebook right now.

Okay, so Facebook ads to. It's not B2B, but it's basically like big orders. It's not like you're not going direct to consumer.

No, no, we sell direct to consumer.

Oh, you do? Yeah. Okay, cool. So and your question is, should you develop an info side of that as a.

Just like some other types of assets as well?

So, I mean, the thing that strikes me most immediately is rather than an info business, there's probably a really cool community that wants content around that. So my friend Brandon Webb in New York.

Shoot, he's gonna kill me.

I forget his business name, but puts out a ton of content that is all like the.

Conservative Republican gun owners. And then he sells, like, ammo and other stuff.

Right.

But, like, it's not a direct correlation between who the audience is. It just happens to be the type of buyer that will end up Buying that type of product. So if you're selling something like body armor, that's a pretty specific purchase in order to build up like the next asset that can launch other assets, there's probably an opportunity to be had of just building the community of people that will eventually buy that. But the content isn't necessarily around how to use body armor, or you're probably looking at a more person centered content arm. So the first thing, when I'm working with a physical products brand, the first thing that I have to reverse engineer for them is.

They'Re so focused on I have this product, how do I sell more product. And we have to do a lot of mental jujitsu to get them to realize that behind every purchase of a product is a person. And that person has certain psychographics and demographics and friends and emotions. And if you're able to communicate to that person, sales come as a byproduct of that. And most people are looking at like, I have the product, how do I sell more, what do I optimize to sell more of this? And the real way that you do this is you get more people who reflect the type of people who are already buying. And for something as specific as body armor, I would probably suggest that you back up one step. Think about who's the type of person that's buying this. What do they talk about when they're not talking about where'd you get your body armor? And then start building assets that serve that person. What that will allow you to do is to go out and buy complementary assets or launch complementary assets that may not look like they're a direct support for the body armor business, but they serve that same person. And as a result, the body armor business will grow and so will what other assets you launch out of that community. Does that make sense? Yeah, absolutely. Thank you so much. Cool. You bet.

That was a great answer.

Thanks.

Additional questions for Ryan Daniel Moran.

Who do we think is going to get the Democratic nomination? All right, here's what we're doing. I don't think it's Biden. I really don't think Biden can pull it off. I don't think he's going to. If they're smart, they'll put up Mayor Pete. If they're smart, you think so? If they're smart, they'll put him up. He can't win, but he's got the best shot.

I don't know enough.

But will Pence be the running. That's the interesting question. Will Pence be VP of for the Democrats. Yeah, yeah, yeah. All right, all right, I got one voice of God coming in from Nico. Thoughts on the Federal Reserve and can it continue this economic cycle? So I'm sorry, actually, I cannot see who's asking me the question asking from the back. But here's what we're gonna. I think, I think God is asking.

Me about the Federal Reserve right now.

And I am super pumped that God has interest in the American Federal Reserve System.

Give a round of applause for Ryan.

Thank you so much.

You're awesome.

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