The Capitalism Fund Q2 2021 Update

All right, Sam. So we have just finished at the fund an amazing quarter that I'm so excited about, where we had three deals. You know, we're now on lock. We have, we've completed three deals that we're really excited about and we've got three that are closing here real soon. And I just want to share with everybody what's going on. To start, I, I want to repeat our thesis just in case somebody is not familiar with what we're doing here at the fund. But our thesis inside the fund is that we work with businesses who have a shot at having an eight figure exit. We work with entrepreneurs to get to that level where we can have an eight figure exit. And in my experience, our experience, there is a plateau that happens in, in the low seven figures, like a million to 3 million, usually where the entrepreneur can be full time, but they don't have enough meat on the bone to be able to really scale new product development or order the types of inventory that allow them to drive down costs and increase profit margins. And oftentimes entrepreneurs are solopreneurs where they are doing this for the first time. They don't have a partner who has done this before. So we come in at that point and we act as the partner to the entrepreneur by infusing it with capital, getting strategic help, partnering them with agencies who can help them grow from 1 million to $10 million. And we basically take the position of we have these resources of people that can help you pick your favorite ones and we'll pay for them. And you need inventory. If you, if you need capital to do a larger inventory order, which will drive down your cost by 20%, awesome. We put in the capital to help increase that profit margin, which allows us to help the business owner grow out of that plateau. And a good example of this is our first deal.

Was with an entrepreneur who was right about a million dollars. Daddy crossed a million dollars. When we started.

He had just crossed a million. I think it was like a million, three million, four.

Okay. Yeah. And so we came in with capital to help get ahead of inventory, drive down some costs. And he's up 40% in like six months, you know, and because he's able to drive down those costs and accelerate his sales momentum, because we are able to buy enough inventory to get ahead of that. And so now this $1.3 million business is close to 2 with just a couple tweaks. And now the pace of growth is accelerating. So that's kind of our thesis. We work with these entrepreneurs who are doing low seven figures and help them grow towards an eight figure exit. We've completed three deals. We got two that have, like wet ink on paper essentially, like just waiting for lawyers to say we're all good and the annoying stuff to take place, and then a sixth that we kind of have an agreement on, but it's just early in the process of getting the legal stuff done. So that's my preamble, Sam. And working with you has been so fun and I'm just so proud of what it is that we're doing. So let's talk about these deals that we're doing.

Oh, man, I can't tell you one thing you said at the end that I like is just how proud we are of these deals the entrepreneurs are working with. I am proud to be partner with each of the ones because they not only, not only are they entrepreneurs that I think get it from a business standpoint, but they get it in a lot of other areas too. So each one of these brands, they all have a good mission, purpose behind it. So I think as an impact, that's one of the reasons that I'm so attracted to this fund and why I just love working on it. One of the best parts of my day, to be honest, is getting to go in and just see what we're doing there. But no, to that point, really, the thesis I think summed up as we look for, what we look for in these brands is we look for the three things. We look for an entrepreneur that knows what they're doing that we think can run the distance to a $10 million company. We look for a brand that relates well to consumers. And then we look for products that we believe in and we go find those and we say, hey, we want to make sure that capital never is the limiting factor to your growth. And once we put that on the table now, that doesn't mean you just throw capital at things because more money, more problems. You know how that works. We go through and say, okay, hey, how do we need to shore up your infrastructure so that when we do throw gas on this fire, you're able to scale rapidly. And the call you mentioned there, that's actually one. I just wanted to talk about this real quickly, is because we had that exact conversation saying, hey, we don't want capital to be your limiting factor. And just the act of making sure that you don't constantly run out of stock was what took that business from 1.3 to 2 is so we're not always playing catch up. We were ahead of the Game, you know, one, it makes the business so much healthier, but two, it makes the entrepreneur healthier where now. And that's, that's what gets me excited. I know that's what gets you excited. We just do it different ways. In your world, you're clarifying the vision. In my world, we're clarifying the money. And when we get those two things together, seeing the entrepreneur's mind unlocked, where his mental margin was cleared back up and he was able to go in and start designing new products and setting that vision for the company, giving entrepreneurs that clarity of vision and getting them the capital so they can actually operate is what, what has made this so, so powerful. So taking that one to five run, I think is something that we've created a very predictable model for. And I'm just pumped about it.

So let's talk, let's talk specifics here because. And this is how this is going to go. If we have completed a deal, we're going to talk specifics. If we're still finalizing, we're going to be a little bit vague out of respect for those entrepreneurs because it's not our business yet. So that's because our attorneys yell at.

Us if we don't.

So our first, our first three deals, Scott, Jesse, Nick, three different businesses, three different founders, and all three of these entrepreneurs have had their mental capacity, like you said, free up to launch new products, whereas before it was just keeping things together. Like we're just trying to hold things together. There's a thousand things flying around. And that's been the biggest feedback of working with these entrepreneurs is I finally feel like I have space to think about growth, whereas before I was so bottlenecked, which is the common problem for businesses that are at least have the million dollars in sight, like they're close to it. And now they've just got so many things that they're juggling, they can't even think about innovating on product line. So when we're able to free up some of that capacity, it helps them grow really fast. And so we're really confident and excited about the growth of these businesses. So let's go into each of the ones that we have completed one by one, and we'll talk about why we decided to do it and what the experience has been and why we're excited about. So let's start with Jesse, since that was our first deal. Jesse runs a company called CakesOfEden. He came to us and said, I wanna work with you guys. What does it take to work with you guys and Jesse was. Jesse, I love you. I hope it's okay that I say this. He was not sure he was ready that he was the right entrepreneur to take something to eight figures. And we saw somebody who had a really clear vision and just needed a partner and a capital partner and an advice founder and an advice partner. And he has grown so quickly. He's now innovating on his product line, which is, I think, gonna take it to the level that he wants. So this experience has been really fun. And what sold us on it was his excitement and commitment to product quality. He had a deep desire to have the best product line in his space and to innovate on the product line. When he talks about what he wants to do next and he gets all fired up. Sam and I are both like that guy. We want to invest in that guy.

No, and it's, it is. I'll tell you, Ryan, that was, that was a really interesting case. And I, I personally, I love Jesse to death. He's, he is a incredibly hardworking entrepreneur. When I, when I look for the boxes to check off for entrepreneur, he just checks off so many of them. And, and that was, that was a very attractive factor to it. But he was the typical entrepreneur at that million dollar space with all the junk and all the stuff where you've got all the business operation concerns are on his shoulders. So his mental margin is not being used for relating to my audience, building my audience, not being used for launching new products. It's being used for making sure the Amazon shipments just show up on time and making sure that the, that what's in the warehouse is juggled to make sure he can manage his stock there and he can try to dial his ads up and down based on the limited stock to make sure he doesn't run out. But he stays and keeps pace. There are all these moving parts that were just filling up the space and when you fill up the tank with all these things of operational concerns, we can't go to that next level. And so what's funny is when we jumped on these calls, I'll tell. Since we're here on the call here, we're going to get it granular. We jump on the calls and Jesse comes out with his list of everything that needs to be done and all this. And Ryan is very good at clarifying things which, which can be frustrating. It was, it was something I'm sitting there listening to and I was, I was a little taken aback because Jesse has his list of 14, 15 things of all these operational pieces. And after a 30 minute call, it was narrowed down to about two. Two action items for Jesse. Yeah, it says you're going to do this and this. And it was like you could just see the weight lifted off of his shoulders for a second. Now, it didn't last long because he jumped back into operation mode quickly. We had to constantly do that. But when he had that weight lifted, he went from a operational mindset and you could tell from countenance and just the way his eyes looked to he got talking about his vision and it was like a completely different person. When you see the entrepreneur go from operational mind to setting the vision for the company, that's the role of the owner of a company is to set the vision, acquire and attract an A level team and keep it funded. And when you get them in that role, he shined so bright. And so we get there, we get to see him. He talks about his new product line. He wasn't sure, like you said, he wasn't sure if he should be the face of it. When he was done talking. There is nobody I would trust more in that space than what he was doing. It was just so, so, so powerful. And so that's starting to shine through though now as he's doing that, you're starting to see it in his audience, his attraction. All those things are happening so much more effectively, getting him in that right role. And so I love it. I'm super excited about where his brand.

Is and that's my gift, is being able to find out kind of that heart of the entrepreneur and find out what they really want and get them to take action towards that. And that's a little bit of a muscle that has to be built. Like in Jesse's case, he had been carrying this ship on his shoulders solo for a long time. He's now learning that he has support and that he can hand things off. And he's starting to operate more from heart. And the business has grown 40% really, really quickly because he's starting to operate from that place. One of the assignments we gave him was spend more time at the beach.

Please go relax more and come up with more ideas. And he's doing that. And that's very counterintuitive to the advice that a lot of entrepreneurs get. But it's kind of what makes us able to do what we do. We free up the founder to go operate from that vision. Sam handles the capital side to make sure the company always has the capital to be able to keep going towards that vision. And then Together we bring towards those, we bring together those resources that allow the company to continue to flourish and keep the owner in the owner's seat. So Jesse, we're really excited about Cakes of Eden is starting to innovate on new product ideas and you know, has, you know, is in a good position to possibly double after us working together for less than a year or so.

Can we talk really quickly here just before we scoot back? We just talk just really quickly on what the products are. Just super fast. I think that might be cool for listeners. So with this. So to kind of give you an idea, if anybody looks up Cakes of Eden, what they do is they sell bakeware. And so it's specialty bakeware for like kids, birthday cakes, cake pops, a variety of other things there related to specialty cake bakeware. So it's a physical product that is not necessarily a consumable piece behind it. So one of the first things in the vision is the business by itself and you're doing a million and a half a year of bakeware is great, that's a good number. But the opportunity here that I think we both saw with this brand was going from not just a one off sale of a bakeware, but into some of the more consumable lines. And that's really where Jesse has a huge, huge pass in the bakeware was the means to an end to facilitate the experience of making quality sweets, to be able to spend that quality time with family that comes around, you know, the celebrations and things we use those sweets for. So that's what, that's what his passion is to do. And so going into that line, the beauty, the synergy between that of having one vertical that is selling bakeware at a good rate there, to be able to launch products on that vertical is just huge. And that's something that I think that is overlooked in these entrepreneurs is when we go in and we take the verticals that are there, we can launch alongside of it, we can really take the shape of a company and get into that first million is piece one, but the next, going from a million to 10 million, that's taken advantage of the tailwinds you have behind product one and using that to go launch products after it. And so he's got a really, really clear roadmap. And it's really cool to see like one of the products is a bakeware where we sell cake pop kits to be able to go make these cake pops, you know, he's designing in his line of consumable products. He's designing a cake mix that is healthy ingredients. It is, you know, some of the things are organically sourced. It's got a lot of the boxes that checks off there to be a premium grade cake mix. But in addition, it's made in such a way that it's dense enough that we can make a cake ball and dip it directly in and not have to go do like mix it with ice and things like that. So it's actually almost mind blowing. It's kind of a little bit of an innovation at piece but to make this whole process so simple and it's a no brainer, somebody buys the cake pop, you say hey, you're already buying this product. You've already found that we already have the traffic to buy. Here's a link for this to be 50% off or whatnot. And then you sell a consumable at the same time. Those that love it. Now we have recurring customers and the model of this business. Instantly that customer base goes from being a million and a half, $2 million a year type business to being a $5 million and our revenue multiples and all those things sell for so much more because now we have our current base. So it's just cool to see that product line develop. I actually really like the direction that's going. I think it's going to be the incredible as we start leveraging the audience and the buyers that are already there to launch this new consummable product line.

And it's important for anyone who's hearing this to know that Sam and I are always looking at this from the perspective of what resources do we also bring to the table that can help whatever opportunities this entrepreneur is pursuing. So like when Jesse told me that he wanted to do this bake line, one of the things that came to mind is I have connections at Whole Foods that if he makes a product that is a fit for Whole Foods, I can at least get a conversation with him and a Whole Foods buyer to be able to go in that direction. And that type of permission gives Jesse the ability to go develop the product he really wants. Not the one that will rank on Amazon, not the one that is just like the next follow up to his existing product line, but. But the one he really wants. Because now there's a path to bringing that into reality. And so that is kind of the benefit of having this collective mind share of working with the entrepreneur with a vision and then partnering it with the resources and the capital that we have inside of the fund. So let's Move on to the next deal that we did, which was Keto Brownie. Keto Brownie is such a cool story because I met the founder five years ago and in a very small workshop that a friend of mine was putting on. And this young entrepreneur said he wanted to launch a Keto Brownie and I at the time was eating a keto diet. And so it just became kind of a fan of the business itself. And I was a consumer for five years before we invested in the business. And I was thrilled when the opportunity presented itself for us to put capital into the business. So the founder, Nick, is an amazing product creator.

If you eat a low carb diet, this is like your indulgence without the guilt. And his product line that he wants to develop is the kind of product line that will literally make you salivate. It's just he wants to do more innovation and he's more the best person in the world to do this. And it was being held back by operational stuff that he didn't want to manage anymore because it kept him out of his genius. And so we've come on and started to liberate Nick to be able to go in that direction. And the downside of this is that we relaunched. We basically rebooted the business from scratch, which means this is going to be a longer process than somebody like Jesse at Cakes of Eden, where we can just plug in a couple things and he grows 40%. This business is, it's, you know, it's a relaunch. We're talking about renaming it because we don't want to be locked into the Keto Brownie name when we're going to expand the product line. So it's kind of a reboot and a relaunch. But the upside on it is very, very high, to the point where food companies and, and companies like this one have very high valuations, are very easy to raise capital for, and have very long shelf lives.

With long, long ability to be profitable and successful. So this is a little bit different from the fact of it's going to take more work and more time from us, but when we crack this nut, the upside for it is extremely exciting. And I'm a super fan of the brand itself and the.

And the product. No, it's. It is one that relates so well to the audience because really what you're doing is you're giving people a way to stay on the keto wagon and not fall off where you can say, hey, it's. It's difficult enough to stay in a low carb Diet, because all the things we enjoy, but these, the products are just delicious. Yeah. And so I have these.

I ate four yesterday. I'm embarrassed to say I ate four of them, but I did eat four of them yesterday.

Well, you, you have to, Ryan, you have to have one of each flavor because there's two flavors. And then you have to pick, you have to, you have to congratulate the winner with, you know, a bonus. And so it is what it is.

So no, it's.

Nick is already planning like follow up products that are different from the existing line and we're just so excited to support him in this, in this direction. I wanted to talk quickly about our plan. I think it'd be interesting to go through, like, how are we going to turn this into an eight figure company? So this business at its peak was pacing about a million dollars. And then we had this thing in 2020.

That set this company back and Nick needed some help, which I was thrilled that he allowed us to have the opportunity to be the help for this business because I'm such a fan of.

And let's pause for a second there because I know a lot of entrepreneurs that were in similar shoes that had the challenges that Nick's had that threw in the towel, that just said they were done, they're ready to walk from it. And he did not. To his credit. I know he went through some rough patches there, but he, to his credit, when we came along, he went from being dejected with a business that had a lot of challenges to being excited about the opportunity. And that was something I thought spoke a lot to the quality of entrepreneur is saying, hey, I'm not going to throw in the towel, I'm going to fight back and come with this. But needed the help, needed the guidance to be able to pull that off.

Yeah, Nick definitely could have had reasons to quit and he didn't. And he's actually more fired up now than ever. So this is one of those brands where.

I think of it like it's my own, even though I'm an investor and it's Nick's business. But I so badly want Nick to win and know that he's going to because of what we're all doing together, that.

I think about this brand a lot. And so I'm in pretty regular communication with Nick on what we need to do here. But what we've done is first we infused the company with capital so that there's a little bit of breathing room so that we could get ahead of inventory, so that we could launch the new flavor that Nick had developed but had never hit the marketplace. It's a peanut butter chocolate chunk and it's delicious and it hadn't seen the light of day, but it was already developed. So we got ahead of inventory and that new flavor is the most popular flavor right now. And so we got this nice bump in sales when we did the relaunch and the new flavor announcement, which was really good momentum to get us to the level where we have now. Consistent sales, consistent reviews. And just from a really tactical perspective, most of the negative reviews that had been listed on the product listing on Amazon were from two years ago and were dragging down the overall review rating of the product, even though it's been improved several times since then. And so now we have a lot more positive reviews coming in and getting back to a four and a half star on Amazon, which is going to give a significant bump in sales as well. So we've been kind of fighting uphill with this review rate and these old reviews and a listing that had been kind of buried in the search engine because we kept running out. He had run out of product a couple times. Well, now we're through those hurdles and so there's momentum that's starting to build. So that's like, that's like phase one, we get consistent sales, good reviews, get promotions to the audience again. And phase two, we're starting to look at what audiences and influencers can we partner with because the product has been mentioned on Joe Rogan, it has been talked about by a bunch of influencers. He has made really good relationships with people with audiences because they like the product. And so now we're starting to enter into conversations with people with audiences that we can partner with and help to accelerate sales of this product and give Nick the flexibility to launch these additional products that he wants to bring to the table. And those two stages alone will take the company back to its peak. And then we get to work in other things. Like we created a partnership with Turnkey that is managing the sales side on Amazon. We're starting to talk about when it will be appropriate to hire a good e commerce agency that will run Facebook and YouTube traffic to drive up total demand of the business. And like just full disclosure when we make those investments.

That makes the company break even or even less than break even for a while because we know what the long term Runway of the business looks like. Two years out is a high seven figure, low eight figure business if you're willing to make those investments now. And that's just not the type of thing that a solopreneur could do if they didn't have a capital partner who also can bring those relationships to the table.

Yeah, no, that's something that, it's a really cool thing, the economy of scale where when we have all of these companies that we're working with, which we have the three that we've already locked in, we've got three more behind it. What that does is when we go to these providers that service the different aspects of the business, whether it's a turnkey or accounting or ad agencies and whatnot, is we're getting almost like bulk pricing when we go do these things as well. So it just makes us even more efficient on that. I would like to believe that we even potentially get quicker and better service because of the volume that we bring. And that is really, really cool to see. Is like, I think that getting those relationships, where we get to utilize our relationships to grow these brands has been a big piece in the puzzle of getting the entrepreneur out of the space they shouldn't be in, into the space they should be in. And that's where Nick is at for sure is getting those things plugged in. Huge, huge opportunity.

So let's move on to the third deal which, which took a little bit longer than we wanted, but we kind of operate on a handshake for a little bit and it's the company Migrastil, or Migrastil is the hero product of the line and this is a pain relief company with one of the products being for migraines. But they're a pain relief company. And what I was most excited about, first of all, the path to victory is super clear on this business. How are we going to make this an eight figure business? It's like super clear. Like we're going to win in this space. But what was really exciting for us was the structure that we found to be a win win for both us as investors and for the entrepreneur to be able to get into this deal and help the company grow.

Without starving anyone of resources. And it's kind of set the frame for the types of deals that we're starting to negotiate moving forward. Because the founder of this business did not need capital as much as he needed a partner, needed somebody who could bring in relationships and marketing help and help him build a team and help set a bigger vision and, and help put capital in if he needed it. But it wasn't the primary problem. And so Sam, do I get into any legal issues? If we talk about the structure, is that okay.

Oh no, not at all.

Okay, cool. All right. So the way that we did this was we came in as a very small, like a couple points in the company advisor. So we take an advisor role in this company that has almost no risk for anybody. It's risk of our time. And Scott, the founder, risks a couple points in his company to have us be advisors to the business. And.

It was an insignificant amount of shares in the company, but it allowed us to get in the door and help the business start to grow and clear and, and get moving towards an eight figure valuation. And our incentive there was that if we grow together, then we get to invest in the business at today's valuation. So if we grow, if we work together and we create millions of dollars worth of value, then we all share in that. But if we don't, then we were advisors that took a few shares in the business and, and Scott can buy them back from us or we can have a way to separate that to where it's no harm to all of us. And this has really helped us see how we can start to help more businesses in win win scenarios. So if we see a business that's established that needs help, but they don't need capital, we now have a structure in place where we can get in and help them grow. And as we grow, then we get to invest, then we get to put money into the business. But not until we all proven that we like working together and that it's valuable for us to work together. And that has widened the net for the amount and the types of companies that we can work with. Because a lot of entrepreneurs don't want to give up 20 to 35% of their business on day one. It's like, let's how do I test working together? And this is a way that we found to be able to do that for the companies that we know that we can help. Because as that business doubles, which we know we can do, we're all sharing in those rewards. And it doesn't happen unless we all see that we can create that growth together.

Yeah. Nope. And a lot of businesses don't want to do that, nor should they. Because I really, I love creating the win win proposal that we've done here. This was one I was, I was so excited to present to the entrepreneur because I knew exactly what he needed after we chatted with him. And it was something that just was the clarity, the connections, all those things. Was someone who had normally would have faced burnout at a million dollars and he was at two. And A half.

And so he was, he was there. And this just created such a no brainer where it says, hey, unless we have done X or unless you've seen this growth in your company, then we're not exercising our option to buy more. It only executes once we have shown and proven that the relationship is providing a value to you as the entrepreneur. And that's just something that makes it so easy. It makes it the easiest. Yes. Possible for an entrepreneur. And it's a way where we went into that relationship with a really, really good footing and now it's one that it's blossomed into a phenomenal relationship with the entrepreneur. And I mean, I feel like it's going to be. I don't think it's a question of if it gets to 10 minutes. I think it's a question of when.

Oh yeah, this is such a layout. Such a layout.

I see a completely clear path there. And it's always funny to me what the first steps are because every business is so unique. It's like people, each one has its own unique thing that needs to do. And it's so funny to see like what the first step is like in that first domino we tackle to get to the 10 million, the first domino we tackle is different for each one. In Scott's case, it was hiring operations manager. It was kind of funny. We sit down there and go through all the possible things that could be done. And in one phone call, one of the things Ryan does well is clarify vision and next steps. And a one phone call. The determination was made. Hire ops manager. Test your product price point and see if you can pay for your ops manager by bumping your price point up 75 cents or a dollar. And surprisingly enough, all that stuff that Ryan had swirling around in his head worked out pretty dang well for the entrepreneur.

So just to reiterate, we were able to increase profit margin on the business.

By just doing some price testing. And that paid for our first few hires.

That was when I knew it was going to be a beautiful relationship with Scott because I suggested that on our kickoff call where I was like, let's test this. And I was like, if it works, what this will do for you is it'll allow us to hire an operations manager, a sales manager, and somebody to drive Facebook ads. And he put down his pen and he said, ryan, I like working with you. Because he had been doing this whole thing himself. And what we did was we just found a way to build a team without driving down the profit margin of the business. So we freed up some cash flow, which we've now hired at Ops Manager. And we're either close to hiring that sales team or he already has with an Amazon agency. And as a result, Scott sent me the best email ever. He's like, I took a half day off and went to the beach. I was like, yes, this is progress. Cause that's where all the creative juice happens. And he now launched a new product that he wasn't planning on launching before. And it's already exactly going.

Exactly. And it's crazy. Like, I know, I know we talk a lot about entrepreneur mental health and those things, but when setting that vision, it's just so key to be able to get in there and to be able to do that. Because as soon as he was freed up, his mind started going away from fixing problems to the next steps for the company. And it's such a, such a no brainer when you have a company that's doing well, that's doing a couple million dollars a year on close to one product line. There's so many ways to launch side by side with that. And him going in and using that massive juggernaut to go launch this new product is a no brainer. But you have to have that creative vision of how do you relate to your audience. And that's where once he got into that space, that's where we take this from where it's at to the 10 million mark with no question in my mind that that'll happen. And so I could not agree more that him having that half a day where he's able to go step to the beach, that is a byproduct of him being in the right space. And that's just so, so cool to see not only the effect on the entrepreneur, but the effect on the business is I think that like that move of having the new product launch, I think he added a million dollars to his valuation with that move. And I think each time we do it, it'll happen more and more.

That's right. So these three completed deals are right at these beautiful inflection points where we've freed up the entrepreneur to be creative, to take calculated risks. They now have support in the form of other people on the team who are helping them grow. And every single one has grown significantly in the few months that we've started working together. Like every single one. And that just gets me so fired up because we're kind of at the beginning of an exponential curve up to where each one of these businesses has a shot at having an Eight figure exit. And that just absolutely fires me up. Now we have a couple deals that are about to close. I think one we can talk about, I think we can talk about rolling Bleu.

That one.

Is happening.

So.

And what's exciting for me about Roland Blue is the founder. Josh won a contest here@capitalism.com that we had in 2020 which was cast a vision and we're gonna pick five scholarship winners to win $5,000 to kick off your business. And Josh was one of those five winners for this million dollar brands scholarship. And we offered to him the option to work with us in the event of growing. So he took that five grand, he used it to launch his business and we gave him the option, hey, if you go in this direction, we'll invest more into the business to help you grow a seven or an eight figure business. And he just never stopped. And this young entrepreneur launched the product, got it to consistent sales and then came to us and said, I'm ready, let's go. And so we're putting some capital into the business and helping him fund the next round of inventory and the second product line. And it's real. Like this is a really early stage deal for us. He's not pacing a million, but there's a vision for it. And so we're coming in as really early investors and mentoring him along the way with the expectation that because he has shown the willingness to implement what we've talked about, that this is going to be a winning deal for all of us. And he's already shown that he can take it to the level where we're comfortable putting more capital in.

Oh yeah, no, 100%. And it follows a lot of the same models of each of these businesses. We look at, you start to see similar patterns. And so with his, he's in a spot where he is already at an early stage, you know, low six figures. He is profitably acquiring customers. That's huge. So he's able to do that right off the bat in a physical product space, which is good. He's making a few product innovations. He's actually bringing some new products in here. So he's going to have a couple physical products that will be launched that he's going to continue to build on where he's profitably acquiring customers for him. He's got that dialed in. But then what excites me is the vision for the brand is something that I think really locks in or can lock this into being a much more valuable brand. And that his game plan is to use Those physical products as step one. And then he has a consumable product line that will launch in tandem with that as well. And so we get to use all the profitable customer acquisition, audience build and those kind of things that happen from building a business selling a physical product, you know, product that makes sense. And then now we're going to launch these consumable on the same side. I love the vision. I actually the vision is phenomenal. He's executing so well at a small level, it's a no brainer for us to finance inventory and make sure that capital is not his restrictive factor because it is a machine that builds money. Why would we not dump more into it? And so we on our side and our risk, I love the risk profile behind it because we're buying inventory at such a good price, in a worst case scenario, we can always discount and liquidate. And so it's a phenomenal value proposition for both us and the entrepreneur. And that's what I love to be in. And so I think we're going to build that up and it's going to grow exponentially and I think it's going to do very, very, very well.

Yeah. And the cool thing for me, like before, before I worked with you and before I worked with my other partner, Clement, I didn't have a lot of experience.

Raising capital or managing capital. I was a bootstrap entrepreneur. And so what I have seen after working with Clement and with you for a couple years before we did this fund together, was I started to see the leverage and the benefit of what happens when you have capital brought to the table. And now I get to be on the other side of it and say, you know, if I had started Sheer Strength, the company that I sold for eight figures, if I had started that with $250,000 or $100,000 instead of $600, how much faster I could have gone, how much bigger I could have gone, how I could have insulated some risks that I wanted to take but couldn't because we were bootstrapping and putting everything back into inventory and like trying to save every dollar. As we scaled up and then built a team, I remember one team member asking for a raise at one point and we said, let's look at the numbers because you make more than us. Because like we're just trying to scrape enough together to keep this machine going. And I now realize if I had been given $100,000 and a mentor who had built an eight figure business.

How much faster we could have gone. And we're Starting to see that with people like Josh, who was bootstrapping this. He had 5k that we gave him as a scholarship, but now he's able to think bigger, acquire more customers, roll out his vision a lot faster, and will be there the entire step of the process. Now, Sam, I want to talk about one of the deals that we won't mention names or the business yet because it's, you know, ink is not dry yet, but there is one, one supplement company that we are investing in that this founder did something that impressed me and us so much that, you know, I was on the fence. I think I even told you, I was like, this isn't a deal that's. This person isn't ready for us. This business is not quite ready for us. And then the founder pulled just. He just did something so impressive that we were like, all right, let's go. Like, we're ready. This guy means business.

It's always funny because a lot of times I will interview the entrepreneurs before they have talked to you, Ryan. And so it's interesting seeing the differences, talking to me. They'll have their chat. And then this one entrepreneur got on the phone with Ryan and it was used a little starstruck, I think, because he went from me this energetic to really professional with Ryan.

And so we're done. Ryan says, well, I'm just not sure we're quite, quite ready. And so I was advocating for him because I really liked the entrepreneur and I liked the brand, like the product. It just, for whatever reason, it resonated with me. I said, well, let's see. I said, I think there's a little more to it. I said, whatever version you just got of this entrepreneur, I don't know that you're getting a full picture because I really think he's on point. And you said, well, if he did X, Y and Z. Because on the call, like, and that's one of the cool things me and Ryan, I just, I can't speak enough to how awesome it is watching you work. And in our 30 minute interview call with the guy of reviewing his business, you gave him some clarification on his business plan that if he were to follow, would take his business from being a $500,000 a year business to probably a $5 million.

Type valuation year. 500, a 10x multiplier for sure. If you followed with what you told him to do. And you just said, hey, here's the steps I'd take and here's a domino number one. And so we hang up the call and you said, well, if he were to go reach out to this particular person and get this done, domino number one would be toppled, and I'd be pretty excited about the brand. I said, all right, let's see what happens. And so, to be honest with you, and this is a moment of full candor, because I have not told you this yet, but I had considered my mind. I was getting on a flight, so I didn't have time to do it then. So I did not do this. But I had considered waiting a couple days and then pinging the entrepreneur saying, hey, if you'll just go do this, just know if you do this, this may happen. And so I did. I didn't do it, Ryan, but I thought about it, because I really like the brand and I like the entrepreneurs. I was going to kind of give a little help and just say, hey, just go do this, and problem solved. And what was so funny is, what was it? Was it 24.

It was four hours later, days or less.

It was.

It was.

It was. It was less than three days. And I think he literally.

No, the first. He said is the first update within 24 hours. You're right.

You're right.

He actually did what we told him to do within 24 hours, which I thought would take weeks.

Yes. That was what just blew my mind. Yep.

And then it was. And then he. Then he, like, almost completed it within three days.

Yeah.

And. And just for context, what it was was I. I told this person, what would convince me is if he went out and had a partnership with an audience. And I said a specific person that I thought would be difficult for him to lock down.

And he just worked his way in and.

Well, and I'll tell you what, you told him the framework and said, here's what. Here's how I would approach it. And said, here's how I'd approach it. Here's what I do. And it's still. You didn't make a call, you didn't make referral, you just said, go do X. And, you know, it's amazing when you actually go do it. That's. That was a very cool moment for me, is just seeing, like. Because it all comes back to, like, how can you impact entrepreneurs? How can you impact the business we work with? And what you can't do is you can't do it all for them, but if you have an entrepreneur who's saying, I'm going to go do it, and you just point me the right direction and I'm going to bulldog it and make it happen, that's such a stinking powerful partnership there. That's something that I don't know if you're comfortable speaking to it, but you told me the other day kind of just your background, like how you had your partners in the past and like how you came in and there's a lot of things that would be ideas in Ryan's head until you're able to work with someone who's going to bulldog it. And that was something that just hammered home to me.

I've told this story in the past, but sheer strength. I started with my partner Matt Davis and if it wasn't for me.

The.

Business was originally my idea. Matt was the implementer, did all the work. I'm crazy visionary. He is implementer. I came up with the idea and the plan and Matt executed it and we worked beautifully together. Now if it wasn't for me, the big thinking, driving entrepreneur, Matt would have had a little side business that made $2,000 a month and paid for his vacations. I mean he has said that. He even told me when we started, he's like eh, if it pays for my vacations I'm kind of happy.

But it.

So if it wasn't for me that would have been just a tiny little business that never did anything. But if it wasn't for Matt it would have never happened. It would have been another crazy idea in my brain that never got executed upon. And so what doing this fund has allowed me to be and Sam and I to be is we get to be ourselves. I get to be me for now. Five different mats.

And just so you know, they're not all named Matt. And like we have, we have an all woman run company that is one in due diligence right now. But I get to be myself crazy visionary for emerging mats of implementers who are doing the right things and need a little bit of a push going from where they're at and stuck right now to having a multimillion dollar, even an eight figure business and not doing it alone and not doing it by guessing, doing it with resources so they're doing it faster. And so I get to do it with multiple people and help them have that same growth from being something that is sort of working to something that is possibly going to change an industry and change their lives and their communities lives and that is really fricking fun.

Oh man, it is. And I know every entrepreneur and every brand we've worked with, I believe that they have a high likelihood, a higher likelihood of making it to eight figures of value than A likelihood of not. And so everyone who work at, I believe has that, has that likelihood. And I think that most of them have that likelihood even, even sans a fund involvement, which is what's, what's kind of cool about that is every single one of them I think has the strength to be able to do that. The difference is it's how quickly are we going to get there. Correct. And so the thing is, it's kind of like if you're doubling money, doubling a dollar a day gets you there eventually, but you get there fast. If you start with $100,000 and double that. And so if we're going to double year over year in growth, which is the pace that we kind of target with most of these brands, that it's very reasonable to do is knowing how to strategically deploy capital. And that's something that I, I hate losing money, I absolutely hate wasting money on anything. And so.

We'Re pretty strict about making sure infrastructure is ready for capital. But when we have it, when we have that infrastructure ready, it's just the path is so, so clear and we're able to take this time for a brand to get from a million to 10. Instead of that being a four year, five year process, which is normally what that would look like, we're able to, I think we're able to accelerate that curve down where I see some of these paths, honestly I see a couple of these hitting that number. I could see it being in 18 to 24 months. And that's just mind blowing to think that we can have that kind of acceleration growth. But that's what happens when we have those relationships because we have so many relationships we haven't even tapped into on our side for this growth because we're building the foundation one piece at a time so that once we get ready, we will never be limited by capital and growing these businesses. And as long as we have the resources to build the infrastructure where capital throws gas in the fire and doesn't burn the ship, we're able to do really, really well.

Yeah. And our target is to double every year for four years. So you take a million dollar business becomes 2, 2 becomes 4, 4 becomes 8, 8 becomes 16. That's kind of our target for these businesses. And in the early stages that's, I shouldn't say common, but that can be expected if you have proper resources to be able to support that growth. And so the first year when you've got somebody coming out of the gate, 40% growth in a few months, we're not surprised. We're excited, but we're not surprised. We're just right on pace to double from one to two in that first year. And then next year is going to be more exciting. Goes from 2 to 4, then 4 to 8. And that's where we can start thinking about, hey, we're in striking distance of an eight figure exit within those three years or so. I want to talk about one final deal that is really early, but it's just fun. And this is something that is going to come up a lot in future months and future updates because we have chosen an entrepreneur that we are going to be working with and mentoring from the very beginning, from launch to seven figures. Like we are getting involved in this business from the ground floor and we're going to document the entire thing. And so we get to kind of relive the incident entire process and we're going to serve as mentors and the financial partner behind this business because we think we found the right entrepreneur with the right vision that we are going to support and document the entire time. Our selfish reason for doing this is because we want to show entrepreneurs the benefit of working with us and show the entire process of what it looks like. Because if people see that entire process, we'll probably have more deal flow. We'll have more entrepreneurs who get to that million dollar point that we can invest in and help even if they don't work with us at the very beginning. And so this is about, first of all, we love this entrepreneur, we love this vision, but also it's a way for us to show the whole process and show what we can do so that we can help more entrepreneurs and we can invest in more entrepreneurs and we can raise more capital from people who want to invest in these exciting companies. And so that final proposal is still in process. So we will be sharing more on future updates but we'll be documenting that entire business on its road to a million dollars.

I'm really pumped about that because the biggest thing is I love equipping entrepreneurs and having an impact on entrepreneurs. And so I think that sharing that process, we don't have the capacity, I mean, I know you have the capacity to do a lot. We don't have the capacity to take every entrepreneur from 0 to 1 million to where they really have a business that's investable. But being able to show that is going to give a lot of people, I think in your audience the roadmap to follow for how to get to that 1 million when you really become an attractive business. And we can talk about scaling as opposed to building the business. This, this particular assets. Assets look different to each business. And so this particular brand that this entrepreneur is launching has some very, very unique assets. I think it's a very blue ocean space to work. There's a lot of, lot of opportunity to work in. And then I think that the entrepreneur brings over some very significant audience assets as well. Where he has a background and building audiences. That, that is very, very attractive to me. I think we talked about that a little on the phone. So I am really still a new entrepreneur.

Like has this skill set but applying for like a first time entrepreneur.

Yes. So I mean.

From a impact standpoint I'm excited. But also just from like a profitability standpoint, I think that this is one that I think will do really, really well. Because we're getting in. So we're getting into very minimal risk to us because of the way we structure the deal. So most of it will be in us is providing debt, finance, inventory and those kind of things. But taking someone who has been in a non entrepreneurial role that has been the operator the entire time. So he has all the skill sets to do every aspect of this. Perhaps more so he may be one of the more talented entrepreneurs that we have worked with or that I've personally.

Come across more talented, less experienced as an entrepreneur.

Exactly. And so being able to.

He's been an intrapreneur like he's worked for other businesses and done a great job. He's never had the flexibility to go do this on his own.

But being able to take and just harness that energy and direct that energy is something that I am really, really pumped about. I think it's going to be a great brand. And it's so there's so many. One of the cool things about this fund is the synergies. There's synergies within your relationships, but even within the fund there's some very specific synergies that are coming up within each business where there's going to be levers that'll happen as they do their growth. There will be relationships that they will all be able to play off of. And I think that's going to be very, very effective for growing these businesses. And that's cool to see the scale that happens within the fund as we now when we go create relationship one, it may benefit for other businesses because all we're trying to do is take that customer along their journey and meet their needs along the way. No one brand is going to meet every customer, every need. A customer will have along the journey, we're just trying to say, hey, in your journey from here to here, how can we best serve you? And so we plug in our six brands and we might hit six of the 15 touch points of service and then we'll talk to them about the other nine service points and maybe we'll add brands to fill those out. And that's what we're doing. And it's just so cool to see that take shape and starting to see the scale that's happening there.

So if you're an entrepreneur who has a vision you're really excited about and you've at least got the million in sight, we like to, you know, we've made exceptions. We talked about a couple of them on here that weren't quite at a million. But if you've at least got the million in sight and you're excited about what you're doing and you're in that low seven figures, it tends to be under 5 million. And you need a partner who has done this before who can bring capital to the table and help you accelerate the growth to eight figures and beyond. We'd love to work with you. We'd love to at least hear what your vision is so we can see if we can help. So you can go over to capitalism.com fund and fill out a form, puts it right on Sam and my desk. It comes to us, we look at it and if we feel like it's a fit, we'll set up a time to chat. And if you're an investor who's like, oh my goodness, I'm kind of seeing some benefit here. These guys raised $1.6 million and they've deployed it into five or six businesses that each have a shot of having an eight figure exit. I'm running the numbers in my head and this sounds kind of exciting. Well, there's nothing for you. Sorry, we're a closed fund right now. But you can go over to capitalism.com fund and get on the waiting list and we'll just let you know if we do another raise or if we do another round. Our intention right now is to prove the model and show what is possible with these entrepreneurs. And then we'll explore going bigger with additional funds and being more aggressive with deal flow. So just stay tuned if that's you, and we'll let you know if and when we do we do another round. Sam, anything you want to close us out with? Anything we missed today, I don't think.

We did it all. I'm just, I'm super Excited to see as these brands go. It's cool to see the growth of the brand paired with the growth of the entrepreneur as well as the growth of the fund. It's just, it's, it's a, it's a cool ship to be on. And I have thoroughly enjoyed the experience of each of the entrepreneurs we've had the privilege of working with.

Yeah, this is the most rewarding thing I'm doing right now because I get to be so hands on in seeing these businesses grow. So it is. And by the way, like, full disclosure, Sam and I are paying ourselves nothing.

We are not making money on this in the short run. We are keeping costs as low as possible to protect the integrity of the fund and the trust that our investors put into us. And Sam and I don't need to take salaries from this. Like, we're, we're not. Like we have other incomes and other businesses and we're putting everything that we can into the businesses themselves. And so we're playing a very long term game here. Like we are, we are. Our money is where our mouth is and we don't make anything if the fund doesn't succeed and our investors get paid first. So we believe in the entrepreneurs that we are backing and the model that we are following enough to where we are working as much as we are for no pay with the expectation that there's going to be a lot of pay in three to five years and operating on that thesis and being willing to take that risk with the entrepreneurs who are also risking their time and capital and energy and we're just becoming partners with them and it's the most rewarding thing that I am doing right now. And Sam, publicly, I couldn't have picked a better partner. So thank, thank you for doing this alongside me. I am having so much fun and I'm so excited to continue the progress that we've started in the Capitalism fund.

It's a true stat that 99% of business owners never clear a million dollars. And that is why I started a mentoring group called the 1%. I have helped hundreds of entrepreneurs cross seven figures.

There's a reason why that's the case.

And it's because we have a formula that works really well. And this year in 2021, we've introduced mastermind groups at each level in the process. That's the grind, the growth and the gold. So when you come join us inside the 1%, you'll be partnered with other entrepreneurs who are at your level to help you get through that level and accelerate onto the next step in your journey, you'll be following the same roadmap that I teach in my book 12 months to 1 million. That's why we have such a high success rate getting people to where they want to be. So go to capitalism.com1, scroll to the bottom, hit the join button, and for less than you spent on eating out.

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