Investing $85,000 for 10% of a Travel Bag Brand Company? (What You Don't See on Reality TV)

Listen, I'm not signing this deal.

I know you wanted to get a certain valuation at this and I'm not comfortable at the valuation that was presented.

We'll see if she's willing to put in the time to develop those skills because they will need to be developed.

We have some opportunity here. We are ready?

Yeah. Anything else?

Yeah.

That's great to see. That's all I can think of now.

I'm trying to see how much I should actually say on camera. Rolling. So I'll just say it. Today's an exciting day because one of my students is flying into Austin, Texas and I plan on writing her a nice size check for a portion of her company. When I started capitalism.com and freedom fastlane, I always had the vision of investing in other entrepreneurs and using my network, using my expertise, using my background and using my capital to be able to create more entrepreneurs. And I've done that through education and through my podcast and through our training programs. And we've created hundreds of seven figure success stories. But what I always wanted to do was actually join forces with some of our students and invest in their companies. My take over the world plan is to own the Cleveland Indians. That's always been my dream since I was a kid. And the way that I plan to do that is by building my own brands, my own physical products, businesses that can be eight and nine figure companies, and also using the profits to invest into other entrepreneurial efforts. And that's by students. It's why I teach what I teach, it's why I do what I do. And I've always wanted to get to the point where I would be investing in our students. And today is one of the days where one of our success stories who was not an entrepreneur a couple years ago now has a seven figure business, is wanting to grow from seven to eight figures. And I know how to do that. So today is a really exciting day for me and I think it's going to be really exciting for our community and for the individual who's flying in as well.

Like we, we can take someone who.

Was not an entrepreneur. They did it on their own and.

Now we're working together and we can.

Grow it to heights that we couldn't have done before. It's just, it's exciting for me.

Wow.

I started NeatPack in 2015 with my husband and my sister. So this is a family business. We are a travel bag company. We specialize on durability, functionality and innovative designs targeting.

Variety of travelers that would like to kind of have like A minimalist travel style. It's lightweight, easy access, better organization. Travel has always been a big part of my life. I'm originally from Indonesia, so my family, everybody still lives there. I go to Asia very often visiting family. And every time I go to Asia, my sister who lives in Indonesia, so we have this little sisterhood bonding trips together. My dad is an entrepreneur and my sister and I had always dreamed about starting a business together where we can be entrepreneurs and creating something that brings us closer together. And it wasn't until 2015, early 2015, we went on a hiking trip in Bali, Indonesia. It was climbing up the tallest mountain there, the active volcano actually. And one day in the middle of a hike, my sister's backpack, the zipper broke. So as you can imagine, it's very frustrating. We had to move her stuff to different bags. It was a mess. And my sister kinda looked at me and hey, you are the engineer. Why don't you create a better bag?

What she has done right, is taken the time to craft her products to be unique and to be something that she is incredibly proud of. And she has done enough marketing to get consistent sales on these products to where she runs a seven figure business. She has done that and that puts her in the top 1% of most people who say they're going to be entrepreneurs. Because most people are usually good at one or the other. They're either obsessed with product or they're obsessed with marketing. And it takes a special person to develop a product as carefully as Hani has and get good enough at the marketing to take it to seven figures and beyond. I think we're gonna have to work to shore up some of her marketing skills if we're gonna grow from 7 to 8. Or she's gonna have to take on some team members that are better at marketing than her because she needs to be freed up to just think about releasing new products.

I've already told you this, but I'm not gonna come in and tell you how to run neatpack. I don't know how to run neatpack. You know how to run neatpack, but I'll serve as your advisor and help.

Network with the right people.

So from your perspective, what do you think are some of the best opportunities that we're sitting on as a company right now?

Well, we have.

Our best selling products. There are three best selling products with good profitability on Amazon. And I think that would be good if we take those best selling products on other channels outside of Amazon, such as retails, REI or Walmart stores that would Be great.

Yeah, I think retail is a big opportunity for us as well. I'll add that to the mental list. What else do you think are some of the big opportunities we have right now?

Launching new products and marketing. We can improve on our website, create better video.

Kind of like lifestyle videos representing meatback and more Facebook ads to reach out to more audience.

Okay, what else? Any other ideas you're sitting on?

Those are it. Yeah.

Okay.

Because we could come up with a lot of additional ideas to throw it. Like we could come up with other product lines to add to neatpack. We could talk about working with influencers, we could talk about developing a really solid social media strategy. What do you think are the areas that if you could do anything to.

Make a priority and we had unlimited.

Resources, which of the areas that we're talking about or other things that come to mind do you think are the biggest areas of growth that we should focus on for the first quarter?

For the first quarter? Yeah, I would say the influencers and marketing.

Why is that?

Yeah, as far as launching new product, we have some, a couple of products that are already in R D just waiting to be launched. So that kind of like a low hanging fruit as far as launching in the next quarter.

But marketing, reaching out to influencers, I think that will really help us tremendously. You know, some months are higher than others. I mean in July we almost hit like 200k there and some months were low. So you know, in average we're about like you know, 130amonth revenue, I would say. And with partnership with Ryan, I'm very excited in growing the business exponentially.

I think that neatpack brings something unique to the marketplace because Hani has taken the time to design each product to be a little bit unique. So she has differentiating factors to lean on that are not just it's better. Better is a terrible differentiation. And she's not competing on price either. These are more high end bags in this market, which I like. I don't like to compete on price and I don't like to compete on better. Neat Pack brands are different in the marketplace. They're uniquely designed and they're higher priced, which means that we've got enough of enough room to play with both on the product side and the pricing side. We've got enough profit margin to be able to market this aggressively. And I think that it has a broad enough appeal in the travel space to where we can go out and buy media and advertise in the way that we'll need to if we want to take this from seven to eight.

Figures as far as the Amazon, the technical aspect of Amazon, running PPC and account management. I do that here with my husband because it makes sense. Amazon is here. My sister handles the supplier relationship. She has textile background. So when it comes to designing the bag, I come up with structure, the sketch structure where the pocket goes. And she finalized the design by selecting the fabric and then the type of zipper, the type of mesh pocket, things like that.

So let's make this practical. All right, so this is one of the best sellers, right? The travel backpack.

This is. Yep. That's one of them.

Okay, so if.

A travel company or if an influencer in the travel space starts talking about this.

What'S to say that their audience is gonna go buy this? Meaning what would the traveler be saying about this that would be cool enough to where it would cause an impact in the business?

Well, the fact that it is foldable, it's lightweight and waterproof, and this is all.

Would other brands be able to say the same thing?

They don't have the comprehensive features as knit bag has. Yeah, I mean, like, other bags have, like, the waterproof feature, but they do not have as many pockets as we do. I mean, look at this. I mean, we have the front pocket. Right. You know, we are focusing on organization and make it easier for access. And we even have. Check this out. This is the back pocket for kind of like a secret pocket. When you put your valuables, you know, like, it's hidden, so it's towards your back.

So you think the difference is in the design?

Yeah, absolutely.

Yeah, I agree.

Look at this. I mean, this is breathable.

I think you are excited about your brand and your products. Oh, yeah.

My sister and I design all of our products. We take the design very personally.

I know you do.

Yeah.

So I think. I think the money shot, if you will, and I'm guessing.

But I think the money shot is.

Gonna be when one of the influencers rolls it up, zips it up, and says, I can take my entire backpack and into, you know, this.

Yeah.

This small, lightweight container. So if we're gonna go to influencers, I think we should be going to the travel and to maybe the minimalist. The minimalist traveler. Yeah, I think that might be. Might be our ticket there, right?

Yeah.

Is there other.

That is the market. That's the. That's the target audience. Because, you know, our bags are all lightweight and. Yeah. The waterproof aspect.

What about.

Let's go into different areas. Like, this is my favorite product in the Line like, who does this appeal to? If we're gonna go to influencers.

Who would this appeal to?

Yeah, these are more for travelers that are doing business and leisure travels. Such as entrepreneurs? Well, you know, like me. I mean, when I go travel, I mean, I like to combine business and vacation at the same time. So it's got the multiple compartments, right? For. You can even have, like two laptops if you have an iPad. This is the main compartment. It's well padded, right? I mean, securely hold your laptop. And this is for your. All your stuff here, electronics. And it's got all these compartments. Organize your business stuff, itineraries and things like that. And then you can even put your clothing, if you want to, in the front compartment.

So let me ask you this.

Do you think that each of the.

Products has a different market to.

Targets.

Different personalities of traveler, but all travelers?

All travelers.

Okay.

So that was my concern, that if we went after influencers, that there might not be a very specific type of traveler that would really impact the business. But if they're all travelers, that makes it easy to be able to narrow.

Down who we're going to be targeting.

All right, so can we just go over the terms of the deal so.

We'Re all on the same page? Yep.

All right, so this is the version that Haney, your attorney, sent over.

Okay.

Like this morning. So we threw it. But let me. Let me just rehash it for you guys. So this page basically sets out that you are a company. You are authorized to work in Illinois and the United States.

That better be true. Yeah.

Ryan, you got all the financial information that you needed. That's what part D is about. Okay. Part three says that Ryan is a authorized investor. He can make this. He's making the decision. He understands that it's a lot of.

Money as long as the check clears, which, who knows?

Ryan understands that this restricted stock, you can't sell it. It basically is just a holding until something happens like the sale of the company.

Okay, so, Hanny, I know you wanted to get a certain valuation at this, and I'm not comfortable at the valuation that was presented. So what I know we're looking at.

$85,000 as a potential investment, and you.

Wanted that at a valuation of that being 10%.

Correct.

So where I proposed in this contract is $85,000 for 17 and a quarter percent with the option of earning back that seven and a quarter so that.

You can get the valuation that you want. I'm trying to see how much I should actually say on camera. We're rolling, so I'll just say it. We came back to the negotiation table and we played with the numbers and we came up with a valuation that we, we both were happy with. There was some, some give and take, meaning I was not happy with the price that she wanted for her company and she felt like her company was worth what, what she was seeking. So we came up with a little bit of a flexible arrangement, which made us both happy. Which means that if the company grows, she's going to have the opportunity to take back a decent amount of the equity that I'm getting for purchasing in the company. So she ultimately has the ability to get the valuation that she wants. But she has to prove that she can put in the work and the time with the advice that I'm going to give her and the opportunities that I'll open up for her. And if she does that, then she'll get the valuation that, that she wanted.

Ryan has proven success in brand building and selling Amazon business. And he's also excellent in Internet marketing. Right. I'm a chemical engineer by trade. Internet marketing is really honestly not my strong suit. So I believe that partnering with Ryan, this is a strategic partnership, is really what we need to move to the next level.

So would you go over the terms of that piece?

So you've got 100 shares outstanding between you and your husband and then Ryan's gonna get 21.21 shares today. That's the 17 and a quarter percent. If you go through and you do at least $100,000 per month for two consecutive months. Within the first 12 months you get a portion back, you get another portion back for hitting a million dollars in EBITDA within 18 months. And then you get a third portion back for 2 million in EBITDA within 24 months. If you hit all three markers, Ryan's investment will be reduced to 11.11 10%.

Understood.

Okay. Would you talk about why it's important to you to have the non confidentiality.

The non confidentiality, confidentiality, confidentiality and non disclosure.

Yeah. Would you explain why that's important to you?

The confidentiality, the confidentiality? Well, we, we have good standing relationship with our supplier. We built that relationship. So we have certain pricing that's kind of advantage of Knitback and also the.

Like the plan that we are planning to do for next year. So we're launching products that are having like some certain features that we want to, we don't want to leak to the market.

Meaning you don't want me to talk about, be like hey Everybody. Look what NeatPack is doing right.

Knee Pack is about to launch this product with these certain features. It's not in the market yet. Well, we.

The only time I ever see myself talking about this is if we're bringing you on to talk about how the company is doing and performing and what we did to grow it. And ultimately, you are the star of this company. And I probably won't bring up Neatpak unless I say. Unless I'm bragging about you publicly. I'm so proud of what you've done with this company. I'm so excited to be a part of Neatpack, but I don't care to know all the nitty gritty details. So I won't find it interesting to talk about the nitty gritty details either. So if there's ever anything that you don't want me to know, you don't have to tell me. I just want to brag on you, feature your story, advise you on how we can grow and have a nice exit together in a couple years.

Okay, sounds good.

Let's talk about the non compete.

Okay.

Because I know the non compete was kind of an issue.

Well.

I understand your concern. I've thought about it too.

You are my lawyer and I understand you're doing your job here. But I do feel comfortable with Ryan. I've known him for a while. I've been with his mastermind, the Tribe for over a year. I know his integrity and I'm comfortable with removing the non compete from the agreement. Let just go with that.

In this deal, I am without question betting on the jockey more than the horse now.

The horse is great.

I love Neatpak's products. I'm proud to represent them. We give them away to a lot of our students at our events. We've featured them at the Capitalism conference. Her story will be great on a podcast. But I'm ultimately betting on Hani. I'm betting on the fact that, that she cares so much about her products that she meticulously designs them all. So I am betting on Hanny's ability to work hard and implement and take the advice that I'm giving her to be able to scale this company. And we'll see how that pans out. We'll see if she's willing to put in the time to develop those skills because they will need to be developed. She will have to learn some new skill sets in order to scale this company. But I'm betting on the fact that three years ago, Hani was not an entrepreneur. Now she runs A seven figure company. Hani was an immigrant to the US and.

Developed a corporate career and then became an entrepreneur. She has a proven track record of developing grit. And that ultimately I think is what determines if someone is successful. Are they willing to have grit for long enough to hit pay dirt? And she has started to hit pay dirt. And I'm betting on Hanny to continue driving that forward. Even more than I'm betting on the product line. Even though the product line is really solid.

Yeah.

And I don't want to sign a non compete. So what does this, what does this reflect?

We've removed it. So there's no more non competing here. There's no more non solicitation.

Rather than try to figure out something that would be kind of a very tiny carve out of Ryan's companies will not do a very specific type of bag or something like that. In some cases, Ryan might not even be the person managing his investment. So it's pretty hard for him to say that he will not sell any type of bag or any type of camping gear.

Right.

And so we took it out. And so if there is an overlap in the customers or products, I mean, that, that will. There'll be no, like, that's okay for Ryan to do. So if he started a bag company, he could do so.

Understood.

Are you comfortable with that?

Comfortable with that.

Okay.

You guys ready?

Yeah.

We have a deal?

Yes. All right.

All right, let's do it.

Okay. All right, Ryan, you're at the bottom there.

Your name is.

It's amazing how many people sign in the wrong spot.

Really?

That's why I have two. Okay. Okay. And then Haney, you're gonna sign up here for the company.

Okay.

So you need your buy is. So yeah, you sign there.

As someone who is not married and doesn't want to be married. This feels strangely like as soon as we sign this, we're married. This is kind of funny.

So as soon as we sign this, we are business partners.

Yes.

All right.

Your signature, your name, your title, and then you're gonna date. That's for tax purposes.

Okay.

A telephone number and an email that you want the company to send you updates to.

Okay.

That's what that's for.

What is my title in this case?

What would. Is it, is it advisor or is this in the company how I be represented?

So no, it has nothing to do with how you represent. It's going to be individual because you're investing as an individual. So we went back and forth on whether you were investing as a corporate entity or as an individual. Since you're an individual, just put that.

Could this theoretically be anything?

The title?

I suppose it could be.

So I could be Director of Unicorns? Yeah.

I wouldn't put that on there.

Throw up a red flag.

Yeah.

Okay.

It feels weird to be writing an $85,000 check out of.

Well, you can't.

My personal account.

But you do a wire.

Nope.

We're gonna do this. It means more if it's a real check.

I wonder if the bank.

So I can just like deposit the check.

How does that come.

You need to put the check into.

The.

Sunartech Inc's bank account.

Okay.

I don't know if I've ever actually.

Seen anybody write a check, but I'm doing it.

Okay.

All right, Hani. This is a check for $85,000 written.

Out to Sonar Tech, and we are officially business partners.

Awesome.

Looking forward to working with you.

Yeah.

I think once a brand hits that million dollar mark, that's when you've got legs in the marketplace. If you can hit 80,000 to $100,000 a month in sales, you've got something. And that's when I think it's time to go all in on a brand. It's why our training programs are all focused about getting someone to that million dollar mark as fast as possible. Because that is what ultimately is. That's the go sign. You've got green light to go all in on this business and scale it from seven figures to eight, and that's when you can get a big payday. So Hannie's done that. Neatpack has crossed that million dollar mark.

Now that we have capital, is there anything that you've wanted to do, like the influencer, like running cold traffic ads or like using viralaunch.com. are there any opportunities that we could pursue now that there's capital and there's some flexibility in the business that we haven't been able to do before?

Well, sort of the retail side. Right. So we can build up more inventory. So when the time comes that the retail broker. Hey, we. We have some opportunity here. We are ready?

Yeah.

Yeah.

Anything else?

Yeah, that's, that's, that's all I can think of now.

Okay.

So I'm gonna put my advisor hat on for a second because there's three of these opportunities that keep coming up a lot, and I think we should pick two of the three.

Okay.

And decide which ones we're gonna just rip open and go for full force toward. And to me, they are release new products, dialing in Facebook.

Whether That is using influencers or driving cold traffic. It's like choosing one form of marketing and then the third is retail. Those, to me are the three areas that keep coming up that I think are our best opportunities. How fast can we roll out new products? What is the strategy that we're going to pursue with social media? And can we get into retail? To me, I think we should pick two of those three.

And go all in on those two.

Okay.

I think we should talk to my retail guy and see how marketable he thinks the products are in retail. I think they're super marketable. I think rei, Walmart, and maybe some other like outdoorsy retailers are on the table and we'll just have to see what opportunities he thinks are viable there. And I think the new products are going to. I always am a fan of releasing as many products as you can release profitably.

Right.

In 2015, I was on stage with Gary Vaynerchuk. And Gary Vaynerchuk said what his vision was to buy the New York Jets. And I hired Gary specifically because I wanted to know what his plan was to own the New York jets. Because my dream since I was a kid was to own the Cleveland Indians. So I hired Gary to come in.

And.

Share his vision for buying the New York Jets. And what he said was that he was going all in on his singular skill and that he would maximize that singular skill and apply that to the businesses that he impacted. And I sat on that for more than a year and have realized that my singular skill is developing successful, profitable physical products brands. And I've helped inspire hundreds of seven figure businesses. I've been a part of an eight figure business and an eight figure exit. I've also helped a handful of my students get to eight figures and have eight figure exits. I haven't had my nine figure payday yet, but I know that I can get.

Involved with these seven figure businesses and help them scale. And that is in. That is the most profitable thing I can do with my time and my brain as of right now. And it opens up opportunities for me to continue to refine my skills and for us to continue prove this model, which ultimately I think is going to give me the most growth as an entrepreneur, both what I learn and discover the opportunities that are opened up. But most importantly, I think it's going to have the greatest ROI for our students because I have done this before. So I've just decided to emulate the same strategy of going in, going all in on my singular skill. And I know a if I'M going to get what I want, which is a major league baseball team. I'm going to have to help a lot of people get what they want, which is a successful business with probably an exit at the end of the day.

So here's what I think we should do then. I think we should go with the, with retail as the like. We should earmark a certain number of dollars from the capital investment to go into inventory on the existing product.

Right. The best selling products and build up inventory.

Yes.

Okay.

And the second thing we should do is we should make a list of the biggest blogs and individuals and influencers that we would like to be talking with us.

Okay.

You're now think bigger than who you've been targeting until now. We can include that, we can include those smaller influencers. But I want you to think, I want you to think like, what if.

Barack Obama were to talk about us?

Now that would be, that's a terrible example because we don't think of Barack.

Obama as a traveler.

Right, Right. So you're thinking about more. You still on the travel, travel blogger side or perhaps step out of the travel blogger?

Yeah, we could go one level higher. For example, a lot of travelers and entrepreneurs follow Tim Ferriss.

Yeah.

So this shirt is, is a mizzen and mane shirt. A lot of travelers wear mizzen and main clothing because it's hard to wrinkle. So Tim Ferriss talks about this clothing company on the podcast and they explode.

Okay.

That's how I found out about that.

So that's a good example. So Tim Ferriss is not all known for traveler. Right. But that's one aspect of it. So that's interesting.

Correct. So if we go one higher level than just your travel blogger, for example, the points guy. You familiar with the points guy?

Points guy. I've heard about him.

Right. So he talks about travel hacking.

Hacking, yes.

For maximizing points.

Right.

Huge, huge audience.

Right. But he mostly talks about credit card points.

That's right.

So if he were to talk about NeatPack, what type of an impact would that have? Let's find out what his rates are. So I'm thinking the Tim Ferriss of the world, the points guy, the nomadic Matt, big entrepreneurs. When Gary Vaynerchuk is in the airport, if he's using a bag, what type of an impact does that have? These are the things that I want you to explore. So one higher level up than just travelers, but you can include the biggest travel people as well.

Does that make sense?

That makes sense.

All right, so I want you to.

Start making a list of them.

Okay.

And find out what their advertising rates are on their podcast, their YouTube channel, their blog, their email list.

Okay.

And then you and I can explore what the best opportunities are from there.

Okay.

So our two focuses will be dialing in influencers and pursuing retail.

Okay.

Sound like a plan?

Yeah. Sounds like a plan, right?

All right, let's do it. That's gonna be our focus.

Yeah.

You know, Henny, I. I know this is exciting for you, but what you might not know is this is actually kind of a dream come true for me too. So I always started the tribe with the idea that I would be investing in students and advising them and helping them grow. And it took longer to get to this point than I expected. This is a big, actual hallmark for me, too, to be like, you're part of our community. I bet on you. Like, we're gonna do this together. We'll use our resources together.

So this is.

I know this is a big deal for you, but it's a big deal for me, too. I take the trust that she's put into me very seriously.

Because.

Three years ago, she was not an entrepreneur. This was just an idea to her. And I know that she considers me a valuable resource and I know she doesn't necessarily need the money. It will help grow her faster. But ultimately, I know she's putting a lot of trust in me, and that makes me nervous and excited at the same time because I know I can help.

But I also.

You know, when you have a student who has had success and they're hoping that you can help them grow.

I take that seriously because I don't have a magic wand.

I am not a fairy of eight figure businesses. Like, I can't knight eight figure business. I know what to do. But ultimately it's going to come onto Hani. It's going to come onto this company, and can this company grow into its fullest potential? And I know she's up for the challenge, and that's why I'm willing to back her. And I watch her light up when she thinks about the potential of the business or what it means to her to see people all around the world using her products. And I remember what that was like. I remember when I started businesses and brands and I started to see the ripple effects of that. And I don't know that you can relive that twice the first time that you see.

The world responding to this thing that you've created. But it allows me to live vicariously through my students to help them have the light bulb come on and start to see what they can do and what their companies can do well keep me posted on what you do let.

Me know where you need me and I'm here to support you okay sure.

Thank you so much how's hatred back.

Good to see you thank you so it's incredibly rewarding for me to see an individual blossom into the type of entrepreneur that they can be and know that I had a hand in helping them get to this point.

Action listen I'm not signing this deal unless there's a midget included in the contract.

This is a midget thank you so much for trusting in us I mean.

This scene is over.

We ended up.

Trusting in us let's let's let's go over here but yes you could immediate.

Advisors.

That sounds bad right I wonder.

If the bank so I can just like deposit the check.

How does that.

Help put it and seen Sam.