Thinking Bigger Than $50M in Annual Sales w/ Robert Herjavec

If you want to grow, growth isn't a fluffy, feely kind of nebulous thing. It's a hard number. Pick a number, commit to it. If you don't get there, there was a reason. You got to figure it out. And so if you're not growing, I know it's a cliche, but it's really true. If you're not growing, you're dying.

You're listening to Freedom Fast lane presented by capitalism.com. this is the show about building businesses and investing the profits so that you can live life on your terms. And now, your host, the future owner of the Cleveland Indians, Ryan Daniel Moran.

Welcome to Freedom Fast Lane. This is Ryan Daniel Moran and today you're going to hear one of the previously unreleased keynotes from our December event, which we call the Capitalism Conference. We used to call it Freedom Fast Lane live, now we call it the Capitalism Conference because it has pivoted to being a global summit for entrepreneurial empire builders. What's an empire builder? It's somebody who is building something that at least has seven figure potential. They want to scale it to eight figures and you might even have your sights set on a nine figure empire. This is not the event for making an extra $5,000 a month. This is not the event for someone who wants to just dip their toe in the water. This is for entrepreneurs with a big vision. If you're just starting out, you'll be learning from individuals who have built seven and eight figure empires quickly. And you'll be in a room of individuals who want to invest with you and maybe even partner with you on your big idea. If you are already in motion, this is going to show you how to build a bigger empire, scale to eight figures and and even start to move over into the nine figure vision. You're also gonna learn what's working right now in marketing and sales because the biggest jump point from businesses that go from seven to eight figures, even nine figures, is those who really dial in their marketing and sales processes. And finally, you're going to learn how to invest for upside wealth, reducing your tax burden and getting passive cash flow so you can actually live the lifestyle that you deserve while you are building your entrepreneurial empire. It's this December 7th, 8th and 9th in Austin, Texas. We've already started releasing the names of some of the celebrity keynotes and technical hands on help that you've come to appreciate here on the podcast. And they'll be there at the event putting on workshops. This event will sell out. So if you have the million dollar Point at least within your sights or preferably in the rear view mirror. This is the event that is going to help you grow faster. This is the event that is going to put you in a room of individuals who are building something alongside you and can support you on your journey. So head over to the capitalism conference.com to grab your spot for this December 7th, 8th and 9th in Austin, Texas at the Capitalism Conference. I will see you there now. Enjoy this clip.

Robert Herjavec probably sees more deal flow on a weekly basis than most of us see in a year, in our lifetimes, most people see in their lifetimes. For us entrepreneurs who are on an exciting growth path, we see some deal flow as opportunities come in all the.

Time and we have to practice filtering them out.

Has anybody reached that point where it's like, ah, I gotta realize when to say no? It used to be I said yes to everything. Now I have to say no to more and more? Well, Robert's putting his money at stake in a public setting. And Robert has personally invested in these companies in front of millions of people. And I wanted to know what makes them break out because we love to talk about the getting started process in the entrepreneurial world. I'm kind of tired of it because I think that success principles of building successful companies are pretty simple and straightforward and once you get them, you don't need to talk about them over and.

Over and over again.

I want to know what's the next part? What's the part that has really created breakthrough companies? And Robert is kind of known on Shark Tank as one of the guys who really invests in, in the companies that he's a part of. And he told me backstage, you know, my goal is for every business that I'm involved in that I invest in to be successful. And I wanna know what are those parts that really break out a company from that getting started point, from the grind from hustling to really breaking out and getting becoming a breakthrough success. So I wanted to unpack that and I wanted to be able to distill it so that we can implement it in our businesses. Sound good? Are you guys ready to bring out Robert Herjavec?

Please rise to your feet and join me in welcoming Mr. Robert Herjavec.

Thank you.

Yeah, cheers. Hey guys.

Let me know when your coffee buzz wears off and then we can.

I drink too much coffee. That's my first.

Thank you for being here.

Oh, thanks for having me. What a great audience. Yeah.

So we are very curious in the process and I just want to jump right in. You invest in. Do you even know how many businesses you've invested in just from the public setting that we know you from?

I'm not Mark Cuban. My money doesn't just flow. Flow out the door. So, yeah, I do. Yeah, we invest in a lot. You know, it's very interesting, Ryan, because we've been doing the show now for seven years and we've learned a lot about the arc of what, you know, I always say in sales, people always want to teach them sales. And I say, before I teach you how to sell, let me teach you who to sell to. I'd rather, you know, it's more important that you're in the right market than that you have the right sales. You know, I always say I'd rather have a medium salesperson next to a broken down bus in the middle of the desert selling water. Right. Because your need defines your market. And so what we've learned around the show is when the show first started, we only invest in stuff we know somewhere along the way we figured out that you can actually make money from these investments. And now we only invest typically in stuff that touches the consumer. Our show is such a great platform that people watch as the product comes out. If they like it, they buy it right away. I mean, you can see it. I mean, we trend all this. Obviously, you guys all know, but somebody comes out and they like the product, they'll begin buying it right away. It's a very unique phenomena. Our show runs in 40 countries.

And you know the mean bald guy, Kevin, he and I used to do the show in Canada. And in Canada, confidentially, we used to argue not about how much money we made, but we used to argue about who lost the least amount of money. There's something very unique about the show in America that doesn't happen in any other country. You can actually make money off the investments. And it's because the business of America is not business. The business of America is. Is consumerism. People here love to buy. And somewhere around the second or third season, we kind of figure that out. And so now we invest in scrub daddy stuff and sweaters and socks. And those are the investments that really take off.

So you did not. You were not born in North America. You came here later.

It's a very, very.

Neat topic or polarizing topic right now. Because I'm an immigrant. I wasn't born here.

Yeah. Can we go right into the polarizing part?

Absolutely. I think I have this view of. I understand, obviously Kim and I were in London when the Attacks in Paris happened. And I understand the fear and I understand the paranoia, and obviously I understand the safety and those concerns. I mean, my core business is cybersecurity, so I'm all about security and taking care of people and data and all that stuff. But on the flip side, I'm an immigrant, and I came to Canada because America wouldn't allow us in. So my view is the opposite. Open up the borders and let me in. I think the risk of not allowing somebody who's going to change our culture and change our destiny is too great to have a very narrow focus on it.

I want to know if you think that.

If being an immigrant gave you a different perspective on business and entrepreneurship. And I ask this for selfish reasons, because I think we're kind of spoiled here. And I think that we forget about, like, when a fish doesn't know it's in water. Right? And I think, I wonder if we don't know that we're in opportunity. I don't know if we can tell that we're in abundance or how much we have and how much opportunity there is. And you didn't come with that perspective right away. So do you think that gave you a different viewpoint?

It's a great question because you think so. I have two answers on this, and one time I got into a huge argument with Barbara around this. So these answers? Yeah, for sure. I mean, I didn't know I was poor until I came to Canada. I was just back in Croatia, and I took Kim with me, and we went back to a little village and my grandmother raised me in. And it's, you know, for those of you who watch Game of Thrones. Does anybody watch Game of Thrones? Great show, right? So we're driving in this village, and Kim and I are driving, and she says, stop the car. And she goes back up. And we back up. And we happened to get to the village I was raised in on the day when they slaughter pigs, you know, and they have these pigs all lined up and there's heads everywhere. Like, it's pretty out there. But the crazy thing is, you know, dirt floors, very poor. I had no idea I was poor. Like, I had no idea I was any different than my environment. It's only when I came to Canada and I went to school and the kids made fun of me that I said, oh, I'm poor. And that really affected me. But it didn't affect me in terms of wanting to make money. It just affected me in the sense of not wanting to live like that. Cuban. And I Have this argument on the show. He says, when I was 12 years old, I knew I wanted to be a millionaire and he's worth more money than I am. So maybe there's something in that. When I was 12 years old, I just didn't want to be poor. But I think that our need to achieve something great rarely comes from wanting something better. When we're younger, I think it's usually trying to escape our situation.

How many of you can relate with that? You got into something because you were moving away from something rather than towards something.

And you know, I think it's hard to go to something because.

The pain of what you're living inevitably has to be greater than the discomfort of doing something in the future. Nobody in this room was born to start a business. Nobody here knew how to lose an order. Nobody knew here knew how to get knocked down. Nobody knew how to get rejected 100 times for the 101st time, you would actually move ahead. That isn't something you're born with. That's just something that you wake up and you get the crap beat out of you and you decide, am I going to wake up the next day and do it again? But that's discomfort. You've got to have a point in your life where how you're living is more painful than the discomfort of what needs to be done. And I think being an immigrant helps me with that. On the flip side of that. So when Barbara on our show hears that, she has this saying, she says, I will never invest in a kid who comes from a wealthy family. Right? So I hear that and I say, what does that mean? Does that mean my kids are condemned for life?

And I think it's just as hard to be successful from poverty as it is from wealth. But I also think you can be just as big an a hole from wealth as you can from poverty. I just think it comes down to what your desire is and what you want to do with it.

So a lot of entrepreneurs, like you said, get into business in order to move away from something. And once they move away from it, there's, in my experience, a lot of self discovery that ends up going on because they've moved away from that.

The isn't that the greatest thing about businesses? If you do it long enough, doesn't it strip away?

And not when you're in front of people, but in the darkness at night when Nobody's around at 2 in the morning when you can't sleep and there's some crap going on at work. Doesn't running your own business, strip away all the possible vanity that you have and expose you completely naked about what you're good at and what you're bad at. Because if you don't have that level, I find, of honesty with yourself, you're doomed to failure.

It is a beautiful portal to become self aware, right?

Sometimes that's good and sometimes I've discovered.

That in my experience anyway. I've seen a lot of entrepreneurs go through self discovery once they've moved away from the pain. I'm curious, you've seen a lot of deal flow for those who move past it and they build something much bigger. What have been the individual traits in that person? Because it's one thing to say I want to move away from being poor. That could, I mean that's subjective. That could be being upper middle class. But building a breakthrough company is kind of a different goal. But they can be. Those paths can cross. So when someone has reached a certain level, what have you seen be some of the habits or character traits or even learned behaviors among those who have then gone on beyond the new comfort level and built something really breakthrough or revolutionary or achieved greater success.

So I can tell you from my experience and the companies that I've seen and I've done well in some of the investments on the show, somewhere along the way, you know, running a business is self realization. And when you start a business, typically unless you go out and start some massive venture capital backed thing, which is very rare and not always the path to success, but first it's you and you have to be. What I find is the businesses that survive past step one have an entrepreneur who has a skill set that's great at something.

The world doesn't reward mediocrity. You have to be great at something. So typically from zero to that first plateau, you are great at something. I don't care if it's knowing how to take garbage out, I don't care if it's order processing, I don't care if it's something. But. And so how do you define that? It's a skill that someone's willing to pay you for. Do you have a knowledge set that a customer is going to pay for or are you a generalist? It's pretty rare that a generalist goes from zero to step one because when it's really dark and you can't move ahead, you have to sell your own knowledge. And if you don't have knowledge on something specific, who the hell is going to pay for it? So that's kind of step one. And then as you go through that process, you begin to hire people. And that's a fundamental shift. Some people are great performers, and some people are great individual contributors, but they don't have enough empathy, leadership skills to get somebody else on board. The number one thing to go from a small company or an individual company, however you define that, to a great enterprise, is your ability to inspire others, full stop. You cannot scale yourself beyond a certain degree. No matter how great you are, you cannot do that. If you want to build a great enterprise, you have to have the ability to get some scale. You have to have the ability to get people to come in and want to work as hard for you as they would for themselves.

So the way that I interpret in my business brain, what you just said is there has to be some skill or focus that gets those early adopters in the marketplace or that. That really put you on the map, that get you moving, and that. That can be an infinite number of.

Possibilities in terms of the customer.

Yeah. I mean, getting the business to the point where it's. It's now successful, taking sales, it's now in the marketplace, and then it becomes just a process of scale and bringing other people's unique abilities and talents into that to grow it.

Well, for sure, you have to be in the right market. Right. I mean, you can't. You can't be late to the market. But I found that great entrepreneurs are adaptable. People will change as the world around them change. I always think, you know, the world will not be won by the. By the strong, by the weak or the mild or the meek or whatever. I think the world will be won by those people that are adaptable, because that's business. It changes all the time. You know, stuff happens. We invest in a company called Tipsy Elves on the show Ugly Christmas Sweaters. Right. There's this guy, he's a doctor, he's a dentist, and he's a lawyer. Sounds like a joke, right? And they're really successful and they're tired of being in business, so they start an ugly Christmas sweater company. They do a search on most searched items, and they find ugly Christmas sweaters. And they match against the least amount of stores and they've come up with that, but then they come up with inappropriate, ugly Christmas sweaters. Anyway, the point is, the business starts.

Inappropriate Christmas sweaters?

Yeah, I mean, you got to be different. So imagine three reindeer doing it. Right.

Front row. Do you guys know anything about ugly Christmas sweaters or.

That's hilarious.

Ugly Christmas sweaters. My goodness.

Love these Guys.

We have to license the cat.

Jesus is my homeboy.

Is that what it is?

Yeah.

Yeah.

This is gonna cover up my mic, isn't it? Yeah, I'll just wear it like this.

So these guys are great. They start the business, we're on fire. And believe it or not.

They'Re ugly Christmas straight jackets.

Those are great.

I don't want to tell you what we pay for, what it costs us to make them, but it's a great margin.

Now, as I understand it, this was one of the most successful investments, correct?

It was. They came on a show, they were doing 600,000 a year, which honestly, two guys selling inappropriate, ugly Christmas sweaters. 600 grand a year, purely online, no retail presence whatsoever. I mean, the 600,000 blew my mind. I'm like, I can't believe this. So I invested in it. That was three seasons ago. We'll do 17 million this year.

That's amazing.

It's incredible. But.

Second year in business, somebody in Canada, of all places, knocks off the sweaters. We're selling them. We're selling them purely online. We have no physical store. All of a sudden we find out there's somebody selling ugly Christmas sweaters. But from a store in Canada, you just adapt. We have to go after them.

Front row.

Those are your sweaters, by the way. You can wear them to your next Christmas party.

So what does that process look like? When you have a company that goes from 600,000 to $17 million, that's a bit of a growth trajectory. That can't just be because they got some exposure on Shark Tank. It has to be more than that. I can understand a temporary bump because you've got some exposure on a big platform, but what is the process? What was it like after that?

So I'm curious to see what people think. How many people here think that money or investment is one of the top five things to take you from 600,000 to 17 million? What do you think?

Yeah, you know, it's interesting because you guys are a business audience. If I was to ask that question in a non entrepreneurial business audience, 99% of the hands would go up. People that aren't in business always think that money is the reason they haven't started a business, aren't successful and things like that, but it's really not. I mean, cash flow, there's so much money on the sidelines today. You look at Dell just bought EMC for $42 billion. The, the interest rate on that is prime, prime plus a quarter or something. It's crazy. How much money there is today. So cash flow was not one of them. To go from 600,000 to 17 million. It's understanding how big your market is. That's the first thing you have to understand is if you're on a jet ski and the lake is this big, you can only go so far. You know, if I'm on a jet ski and I can see the shore on the other side, I'm only going to get to a certain speed. You have to know how big the market is. The first thing we realized was that the pure ugly Christmas sweater market wasn't that big. So we went after colleges, we went to colleges and we got a license for college ugly Christmas sweaters. So a USC ugly Christmas sweater, a Stanford ugly Christmas sweater, and that brought in $4 million in the second year. And so constantly expanding the market, sometimes you're stealing market share away from somebody else and sometimes you're growing the market. It's only the fool that doesn't know which one is about to happen.

So that's interesting because when you say the market, I hear the customer.

Me too.

And by that I mean that's an individual, that's a demographic. It's a type of person, a type of buyer. An ugly Christmas sweater, to me, I think that has a short life cycle, that that customer isn't gonna come back. And this is my perception, they wouldn't come back and buy more. So if I were to look at that, I would have thought that there wasn't much of a market there, that there wasn't much room to grow. Because outside of November and December, what else can we sell? That demographic.

Oh, Ryan, you're so naive.

So let's go into that.

It's funny, you, that's why the other four sharks being so short sighted as they are.

That'S why they didn't invest in it. That's exactly why they say it's only a couple months, young kids are going to buy them. I actually saw it a little differently. I saw it as a cool factor and I thought that young people are cool to begin with, but I thought that the sweaters would appeal to old guys like me who, who want to be cool. It's one thing to be cool, and that's a certain size demographic and market. There's a whole bigger market of old guys trying to buy their way to cool.

And I am definitely one of them. So I thought, oh my God, what old guy or old lady or older demographic is not going to want to buy a cool hip sweater? I mean, Imagine this, somebody in their 20s shows up at a Christmas party wearing a cool sweater like that. You go, wow, that's kind of cool. But they're cool. Anyway, a 49 year old guy like me, I'm actually older.

Shows up at a party with on those sweaters. All of a sudden I feel cool. Anything. Anytime a consumer buys something that makes them feel better about the purchase, you're onto something. And so I kind of saw it that way. And it's interesting that's turned out to be true. Third year into the business, the guys, Evan and Nick wanted to appeal to the younger market, that demographic. So they came up with T shirts that were around drinking because now we're doing well in colleges. So they had like Jesus, drinking a beer and stuff like that. And we had a big meeting about this and we shot an update for beyond the Tank and they spent like six months working on this and they did this test market and they had a whole presentation. They say, here we go, what do you think? And I'm like, I hate it, I really hate it. I think you're going to alienate your existing market. I don't want to wear a T shirt, I don't want to wear a product from somebody who's associated with binge drinking or college kind of cool product. And so we didn't come up with that product. We didn't think it was right for a demographic.

And they were probably targeting a different demographic than what you just proposed. And that's a huge disconnect.

Sometimes you go to the market and sometimes the market finds you adaptability. Right. They had a vision. Young, cool, hip university college kids. That's not our market, the average. And by the way, looking back, it seems so self evident how many college kids are going to spend, what are those, 80, $90 for a sweater? Right. Like that just wasn't our demographic. So the market found us. Okay.

I like to say sometimes it's not you, it's not your product, it's the.

People you're targeting with the product that.

Makes all of the difference. So with a company like this, when. And again.

My perception is there's not a whole lot more that you can sell to that audience. So from me looking on the outside, I would see that as a red flag. And when you're growing a business like that.

Is the only way to grow a business like that to bring in new customers or are there other ways that you're looking at, at increasing customer value?

It's a great question. So you know, I believe that you have to be willing to eat your young before somebody else does it for you. In business, you're never standing still. If you're not willing to take, if you're not willing to compete with your own product, somebody out there is going to do it for you. And by the way, I often meet entrepreneurs who I say, well, why is your business better? Ah, because I'm smarter, we move faster. All this other stuff. I'm like, never underestimate your competition. I always think my competitors are better, smarter, faster. It just keeps me on my toes. It just makes me want to keep going harder. So when we had the product we came out, we weren't sure whether we can add products or extend the product line. Sometimes you can extend the brand, then sometimes you can extend a brand and kill it. So what our first, you know, your first knee jerk reaction is, we make ugly Christmas sweaters for $90. Let's come up with a cheaper version, right? I mean, it seems logical. If we're selling $10 million at 90 bucks, how many more could we sell at 50 bucks? So we launch a $50 sweater, you know, cheaper material, blah, blah. Guess what happens? Our $50 sweater goes through the roof. Guess what happens to our $90 sweater? Falls way down. Sales actually decrease because you have to sell a crapload more sweaters at 50 bucks to make up for the price point. And so our sales actually go down. So we said, not a good idea. Brand extension from a price perspective didn't work. So instead we went to add on product. I love selling stuff to a demographic or a customer that I can call on again. At the same time, I don't like selling stuff to a customer that I have to call a different customer. So the guy or the lady who's buying the Christmas sweater, what else would they naturally want to buy? So we came up with onesies, then we came out with socks and all those other things and that kind of stopped. And then we said, well, hang on, what are we, what business are we really in? Because you've got to understand your business. You know, Nike is not in the sports business. Nike is in the marketing business, right? I'm pretty good friends with the founder of Under Armour, Kevin Plank. And he'll tell you, I'm not in the sports business. I'm in the performance business business.

So we decided we weren't in the sweater business. We were in the celebration of holidays, in the cool, kitschy celebration of holidays business. So now we have a Irish Day product, St. Patrick's product. We now have a Fourth of July product with, you know, Uncle Sam on it and stuff like that.

And was that something that you coached the founders through?

It's all me, Ryan. Those guys don't do anything. They're just puppets.

Yeah. Yeah. You know, I think that's one of the keys to being a great entrepreneur is you have to take all the credit for yourself and blame. No, you know, it's another reason why it works is, you know, after seven years, you learn, you want to invest in people that aren't going to call you with problems. I don't ever want somebody to call me with a problem. I want people to call me with options for a solution that I can help with. It's not my job to fix the problem. And if I have people in my company at our size that come to my office, just dump a problem on me, I have to tell you, I stop listening to the problem. And my first thing is thinking, where can I replace them? And how quick is it going to take somebody else to get? Because I don't have the time. Time becomes your most valuable commodity. And so Evan and Nick, they were just great entrepreneurs. They come up with the ideas. We just kind of give them direction. You can't. You know, the other thing I'll tell you that we've learned in terms of building and operating a large business is.

Poor people try to save money. Rich people try to buy time.

So one thing I've learned is when I had my first small business, I thought I knew it all. I thought I could do it on my own. Now I'm a sponge for knowledge. And I want to get that knowledge not from somebody who kind of knows what they're doing, but somebody who's already been there. I used to race cars. I did crappy in the first year. I think I hit the wall 4 out of 10 races. So finally I said, what the hell am I doing? And somebody said to me, you should hire a race coach. I'm like, I don't need a race coach. I'm a great driver. And they said, really? How many races have you won? And I'm like, maybe I need a coach. And so I hired. I didn't hire a coach. I hired the North American drifting champion. Because I figured my problem is I kept going off the track and hitting walls. So I had a challenge with sliding. And so I said, I'll hire a guy who really knows how to do that. You know, it's just like dancing when I was on Dancing with the Stars. You don't get somebody who's kind of a pro. You get the best dancers in the world to teach you. If you want to get somewhere, try to learn from people that have been there. And that doesn't necessarily mean firsthand knowledge like this. And by the way, congratulations with the fact that you're making the effort to be at an event like this, because there are things thousands of other people who have thought about being here but have never actually took the action to make the effort to actually show up. Right.

When you're working with a business and tweaking their processes and they come to you and it's the beginning stages of a deal's been done on the show, and now you're looking at where the opportunity is, and it's time to grow into that opportunity. What are the leverage points that you look for? What are the levers to pull in order to start growing that business into the vision that you can see from the outside?

The first thing we look for is operational stability. We look for places that can. If you can't measure it, you can improve it. So we want a business that knows what revenues are, cost of goods, all that boring stuff. We have another investment called Nuts and more.

Mark and I invest in it. We just had a huge argument with the guys. They're doing $8 million a year. They want to launch a new product that they think will get them to 12 million, but they're not sure if they're making money at 8 million.

They don't really know what their cost of good is. And, you know, to a certain degree, that's okay. You know, when you're doing 200,000 a year or 300,000 a year, you know what your problem is? Your problem is sales. To get past that first thing, it doesn't matter how good your accounting is, you got to sell more. Sales cures all ills up until a certain point. Then we look for operational. You know, do they know their cost? Do they know their numbers? How are they going to do it? The second thing we look for is the demographic and the sales process. Are they clear about who they're selling to and how are they going to get to that market? And then we try to find a tipping point of scale.

If my cost of good to get one customer is X, does X go down when I get the second customer, or does it stay continuous? Like, for you to grow sales like this, your acquisition cost is always like this. You're not really building a business, you're building a consulting business. What you want to do is you want to have a cost of sales that goes like this and a cost of acquisition that flatlines and then starts to rise again because that's where you make a lot of money.

That's beautiful. I want to talk about where. About your core business. Your core business, we don't hear about all that much. But it's.

What, it's not very sexy.

Well, that's why I want to unpack.

It, which I like, by the way.

You like that the business is not sexy?

I like businesses that have a high barrier to entry. So I'm in a cybersecurity business. I'm one of the top people in the world on cybersecurity. I've been doing it since I was in my early 20s. Nobody in this room could leave here today and do what I do in a month. Doesn't mean I'm great. It just means it takes a long time to accumulate the knowledge to compete with me. I like that. Real estate, you know, selling a house. The barrier to entry is not that high, which means different skill sets. I like businesses that are difficult to get into, which makes it easier for me to compete.

Tell us about the growth of that business. Because it's gotten to the $100 million point and you're the top or one of the top in the industry. What was the process of.

Getting it to that point? And specifically, I mean, you. There's again, a high barrier to entry. So you're looking at that market to. To break into it. Why did you go in there? And what was that. What was that point of scale? I can see how a high barrier to entry market would be. Would be an interesting to scale, but to go into it, that would scare me out, which you like, of course, but for you, what was the decision point and what were the factors that got it off the ground and established?

Yeah, you know, I was saying to Ryan, it took us five years. It's called the Herjavec Group, and we're now. This can sound very up myself as, you know, like arrogant, but it's not meant to be. We're the largest privately held cybersecurity company in the world. Part of that is because we've grown, and part of that is because everybody larger than us has been acquired. Right. So we're the only independent ones left right now. And we thought in the first year, our forecast said we would do $5 million in sales. We did 400,000. 400,000, which is a lot when you're expecting to do 100,000. But when your forecast was 5 million, you do 400 and as a guy who likes to sell, we didn't sell anything until the latter part of the year. Took us five years to get to 6.2 million. In the next five, we got to 150 million.

So there was a real tipping point, and I can almost remember it. So number one is what you said, which is so interesting and very astute, is market size. You know, it's market size. Ten years ago, we were selling managed cybersecurity, and we used to go see customers and they would say, no one's going to hack me. I don't have anything that's important. So we spent half our time educating people. And I know as entrepreneurs, we like to educate people. But I got to tell you, when you're educating, you're not selling. People don't buy into education. People buy into need. People buy to satisfy a need, not for the curiosity of education. And so three quarters of our sales calls were a waste of time because we're trying to educate people today. Target, Sony, all those breaches. I don't need to educate people. In fact, one of the qualifiers we use now is if we walk in and a customer says to us, I don't know if cybersecurity is important to me. We literally just try to end the meeting and move on to the next one. Because our market's growing so quickly, I don't have time to teach you. Four years ago, I was sitting down with the CIO of Sony because Shark Tank's own by Sony. So I kind of work for them. I thought they should buy some stuff from me. And she said to me, I don't think we really need cybersecurity. What do we have that someone's going to want to steal?

I don't get that anymore.

So that's the first thing. It's, are you calling on the right demographic with the right market? The other big one is, what are you doing?

Why are you doing it? Is it a business to make a paycheck? Are you doing it to buy a nicer car? Are you doing it to buy a house?

It's the extent of your vision. They'll always limit your effort.

Would you expound on that?

Yeah. You know, when we started the business, we had this goal. We wanted to get to 50 million. By the time I was 50.

Somewhere around our fourth year, we realized we were going to get there. And you would think that we would have been happy about that. You would think that we would all sit around, go, high fives, whoo.

It had the complete opposite effect. It was Almost. I remember very clearly. It was this hollow feeling. Nobody in Canada, because that's where our business used to be, had ever built a company that did 50 million in security. Our goal seemed impossible. It was the unattainable dream. And you wake up every day and energized you, and you wanted to go, but you kind of knew you were never going to quite get there. And then one day it's there and we're like, holy crap.

What'S the next dream? And our dreams weren't big enough. Our dreams were so small that they were attainable.

Does that sound familiar, by the way? You're at least the third person this weekend to say that getting what I wanted sucked and that the process of getting there was way better.

I don't know about that, Ryan. Having a private jet is really cool.

I think there's a part of getting what you want is really cool, but I think it's constant evolvement.

Well, when you got to that point and there was a disappointment, almost. Is that an adequate word, disappointment? You got the thing you wanted, you got the goal, and it was disappointing. Were you disappointed because it was empty, or was it disappointing because you realized that goals weren't a big deal, so you might have. You should have shot for something much bigger.

It was disappointing because I felt like we wasted time playing the little game when we should have always been preparing for the big game. Wow. It was disappointing because I felt like, what the f have we been doing for three years? Why aren't we good enough? Why can't I be that guy? Why did I always get limited by doing something in that? And it pissed us off. And it pissed us off to the point that we said, screw them. We weren't really sure who them was.

But we knew we wanted to screw them, and we knew that they were the inanimate enemy. We just had to put some color around it. And then we really started to play. You know, it's kind of like when you're good and you play a sport and you're the best kid in your little high school, you're the best kid in your school, and you think, wow, I rock. And then you become the best kid in your entire town, and you're really kind of feel like a big kid, and then you go to a college and you're the best kid in college, and then you get to the NFL and you realize you're not the best kid in the NFL, but you have the ability to play in that game and the rewards are greater, but the competition is Harder. And we just. We felt like we could be that person. By the way, interesting stat for you about the NFL, because I'm a big NFL guy. There are something like 100,000 kids a year that play football. Out of 100,000 kids, I think it's 8,000 across the United States that get to play at some level of college. Out of those, 8,250 get drafted into the NFL. 12 are still playing the NFL more than four years later. Like, the stats are just incredible. But once we saw the ability that we could be one of those, it really lit a fire under us.

So when you hit that point and there was reflection upon that, and you wish that you had gone after something bigger or that you realized you'd been thinking too small, what in that mindset did you wish that you had done differently when you were starting the company? What did that illuminate that you wish that you had understood that would have changed the way that you manage things or the trajectory that you set when you started the business?

It made us start planning for the sun coming up tomorrow. You either build for success or you build to avoid risk. And we were too conservative.

Well, $50 million is. I mean, that doesn't sound like you played small ball. It doesn't sound like. I mean, that puts you in the top.

Yeah, it doesn't. I mean, about 1%. Yeah. On the large scale of business, we're a big deal. But, you know, as you get bigger when you start out, here's who you compete with. And today, with the Internet, you compete against people all over the world. As you get scale, the amount of competition narrows. So I don't compete against faceless, nameless people that I can't name. I can name you every one of my competitors, but I still want to be better than them. So my biggest competition is IBM. You know, I always say the quality of your company is determined by the quality of your competition. I love IBM. It's a frigging great company. It was started in, I think, 1911 by Thomas Watson. The company was in business for four years. Thomas Watson gets in front of 20 people that work in the company and has this amazing speech that says, this is a company built for the ages. I mean, think of the balls of a guy with 20 employees in 1911 to say that to his entire company. Love that. We really admire them, but we still hope they go out of business.

So I think we just started building on scale and all the things that needed to be done.

What I'm trying to understand is you hit this goal that you had worked up as this big thing, it's an impossible dream. Our theme here this weekend is to demystify the impossible. You got there in the.

It's like the man of La Mancha.

I do not know that reference.

You've never seen. Has anybody ever heard of that? Yeah, it's right. You gotta go out and see a couple of musicals every now and then.

I. I'm an entrepreneur. All right.

Anyway, it's this musical about a guy, man of La Mancha. He's chasing the impossible dream. Go ahead, I cut you off.

So.

Our theme is to demystify the impossible. You got to that level, it's demystified for you. What did you understand differently? Because you said that there was a disappointment in getting to that level because you realized you had been playing small ball. So what did you understand at that point that you couldn't see when you did 400,000 your first year, that had you understood, you would have built the company differently?

I think just the size of the markets and the speed and scale of the markets.

So. I'm sorry to interrupt, but did you realize that the market was much bigger?

We did. That's a function of being in the right market. That's why marketing and understanding your demographic is so critical. You really have to understand the scale of the market. You really have to understand how big the opportunity is. We saw that and we thought that, how can we scale into that?

Okay, so there was a better understanding. Obviously, being at $50 million, you understand your market better than when you're at $400,000 a year. So you understood differently the market size. And so you wished that you had built the company differently to capture a bigger market. Because at the beginning, you weren't playing that way. Is that correct?

We weren't playing it quickly enough. We would try things. We would try it again. We would try it again, and we made sure it worked. So a few years ago, we wanted to enter the U.S. market. We come to the U.S. we get a big order. We say, oh, this is really good. I wonder if we'll get a second order. We get a second order. We say, oh, this is really good too. I wonder if we'll get a third order. Then we lose an order. We're like, oh, maybe. Anyway, a year later, we have a game plan to roll out in the US So we're waiting for the revenue, and we're trying to build behind the sales. In August, I went to Australia, thought, this is a great market. We got a half a million dollar Order in September. We're building an office there. Same idea. It's your ability to invest ahead of the revenue. Are you willing to invest ahead of the curve or are you going to wait behind the curve? Part of the function is money. Sometimes you can't invest ahead of the curve because you don't have the money, but sometimes, honestly, it's just fear you're being too conservative.

Now I understand. So there's a lot of entrepreneurs here who have bootstrapped companies and they've built it up to a level that may have even exceeded their expectations, but it's been bootstrapped. They haven't sought outside funding. Obviously funding exists, but they haven't sought that. And so then staying ahead of the revenue is a little bit of a new concept because there's a lot of attention on the profit and loss right now. What advice would you give to somebody in that situation?

Well, I.

And keep in mind, they want much bigger. They want to. They want much more.

By the way, you've got to grow. I mean, I. For everybody in this room, you've got to want to grow. Whenever I bought, I bought eight businesses in the last 11 years in this current business. And so I have these trick questions. I ask entrepreneurs to figure out if they have a good business or a bad business. One of the trick questions I always ask is, what's your forecast for next year? Good businesses. Give me a clear answer. Because good businesses are willing to make themselves accountable for growth. Bad businesses, you know what they say to me? You know, whatever we can do, we'll try our best. What the hell does that mean? What are you going to put on the board? Our goal next year is try our best.

People that aren't willing to commit to a number aren't willing to take responsibility for that number. If you want to grow, Growth isn't a fluffy feely kind of nebulous thing. It's a hard number. Pick a number, commit to it. If you don't get there, there was a reason. You got to figure it out. And so if you're not growing, I know it's a cliche, but it's really true. If you're not growing, you're dying. If you're not growing, there is no such thing as standing still in business. There is only death and survival. So you gotta grow.

So let's, let's go through an example then. If somebody, by the way, sorry to.

Go, but bootstrapping, there's nothing wrong with bootstrapping. I mean, our current business was bootstrapped to $150 million.

Bootstrapping isn't always a function of your size. Bootstrapping can take you a really long way. You just gotta be cognizant of how you're getting that money.

Hey, guys, this is Ryan. We're gonna take a quick break and we'll return to the show in a second. Hey, fastlaners. Ryan here and I wanted to take a second and brag on one of our backroom members. Our backroom is our mastermind, really. We're focused on getting to $10 million in top line revenue. And I wanted to brag on athletic greens. They're in the back room and they have just absolutely killed it, not only with expanding their sales, but really by making incredible frickin products. So the products were made out of need by the founders and as a result, they've been featured on Tim Ferriss, they were featured in the four Hour Body, and you've probably seen them all over the web. The reason why I'm telling you about them today is because I want to support them by encouraging you to go over to athleticgreens.com/Amazon. Obviously you know that I am really big on maximizing your Amazon presence and I also just really believe in the product. So for example, I like to wake up in the morning, put my greens in a water bottle, add in some creatine. Sometimes I add in a fat burner. If I'm on a cut, shake it up. And that's sometimes my morning pick me up. If you've ever heard me talk about my tribe. Five, I have four, five habits that I practice on a daily basis. My B point every day is getting to the gym and having my greens. And when I don't have time for a big salad or making a smoothie, I supplement with athletic greens. So I'd highly encourage you to support them. Head over to athleticgreens.com Amazon and give their 30 day packs a try. All right, let's head into the episode.

So if there's a business that's at that $1 million point, they did a million dollars in 2015 and they say 2016, we want to do $10 million, I have no idea how we're going to get there. What processes do you go through to look at? Okay. I mean, if we're committed to a number, if that's how we're going to define it, rather than just say let's do our best, if we're going to commit to going to the $10 million point. But there's not a clear path at Least immediately of how we're going to get there. What's the process that you walk through one of the companies that you're advising to start to unravel that well.

So great question. So let me ask this question. Everybody here has heard of Oracle, right? How long do you think it took Oracle to get to $50 million in sales? What do you think, 10 years, 12 years? Microsoft? I think it was 11 or 13. So that's the first thing, the first thing we look for is people that actually understand how long it takes to grow.

You. You would be shocked how many times people come into their show and say they're doing a million dollars a year in sales and we say, what are you going to do next year?

$35 billion.

They say 40 million. They're like, wow, that's really good. So make me a company that's gone from 1 to 40 million in that same time frame. And they're like.

There aren't that many. Growth is really hard. So if somebody says to me, I want to grow, you know, it's good to have a dream, but your dream's got to be rooted in some element of reality. And so you got to understand how did you get to the million? I can't tell you how to go from 1 million to 10 million unless I really understand how you got to 1 million. If you got to 1 million by selling one big deal to one customer, well then it's pretty easy. Go find 10 others. And then what's the close ratio? So if you got one at 1 million, how many did you call on? How many quotes did you do? How many did you lose? Blah, blah, blah, blah. If you got to a million by selling 1,000 customers a little bit, by investing X dollars and finding them into an SEO search or some type of online marketing, well then what's the tipping point? In other words, if you invested more money into your program online, would it result in more customers? There's, there's got to growth just doesn't fluffily happen. There's got to be, there's got to be a game plan. You got to have a way to get there. And the best way to do it is understand how you get there. The person's opinion that matters the most is your customer. It doesn't really matter what you think or what your significant other thinks or anybody else. It's who you're selling to and how they're going to respond to you.

In this audience, there's many people have experienced diminishing returns after seeing a lot of growth.

They grow.

Yeah. And then there's a plateau because there's a sense of, I've done all I can do in this way of getting customers.

And how do they typically get the customers?

Usually it's by marrying some sort of a channel like Amazon or getting really big by building an audience or by maximizing Facebook or building an online audience. And those are. Those are fantastic. And that's the fast lane to getting to an established business. But there's diminishing returns in some cases because there's only so much that outside channel that you don't control can give you. So we work with our clients and customers on building scalable pieces of that that they're in control of. But have you ever worked with one of the companies that you advise and saw that they were getting diminishing returns from one of the strategies that were sending them leads and customers? And then you had to sit down and say, how are we going to grow this thing bigger than what. What you've been cornered into up until this point?

One of the things we've done this year is we found that a lot of our small businesses that had a singular channel really weren't maximizing that channel. And they were trying to become experts at everything. Online marketing, digital marketing, website content, searches, and so on. So we did a very interesting thing. A company called Deluxe Corporation who actually invented checks. Can you believe that this is their hundredth year in business? Some company actually invented checks. And it was started by a farmer in Minneapolis who was tired of going to the bank and exchanging hens and eggs for barter. And he got his bank to print checks. True story. And they started a company called Deluxe that invented checks. So what they do today is they do a lot of online digital type of stuff. And so we had them come in and work with some of our very small businesses in doing a better job with their search and all this other stuff. Online. We found something like a 78% increase in profit in a very short amount of time. So what we find is a lot of people who think they've maximized the channel don't understand really how to get the most out of it. So that's step one. Yeah.

So they think that they've done all that they think they know how to do, but they really haven't been maximizing all the opportunity that's there.

There's a lot of great people who know how to do that. You know, as you know, that world is becoming an expert onto itself. And you can hire that. You can. You can find that you can go out and look for that help.

When you're working with companies that are on the show and they come to you, how do you identify a business or an investment that you think is going to. Is on the cusp of breaking through to the next point? So what are the factors that are in place that send off signals that this is a company that's about to break through?

You know, one of them is how close it is to lunch.

And you know I'm joking. But a lot of it is right place, right time. We had 50,000 people or 70,000 people apply to be on the show this year. Out of that, we brought 230 to LA. And out of 230, we probably see about 200. We film, believe it or not, we film 17 days. For the whole year, we never filmed more than three days in a row. And by the way, that's nothing. 17 days. We're the highest bot show on network television. They buy 35 episodes. We film 17 days. To give you an idea, when I was on Dancing with the Stars, that show, I think is 12 episodes. I was there 75 days. I had done more TV halfway through that than I had done almost in the entire seven years. So it's nothing, but it's 12 hour days. We're cold, we're hungry, we're not TV people. We all have real jobs. Sometimes it's as crazy as how we feel. And when you come out close to lunch, you know, sometimes we're like, oh, my God, I'm starving. Are they going to feed me? Somebody comes out and we're like, okay, looks okay. Let's just do it.

You know, it's true. Sometimes you do it just to piss off Barbara. All right, I'll never forget one time Barbara's sitting next to me and she's like, oh, blah, blah, blah, blah, blah. These people are negotiating with her. And she goes, fine, fine, I'll do it. I'll give you the 80,000 for 25%. And the people leave. And I lean over to Barbara and I go, you know, Barbara, they were only asking for 60,000 for 35%. She's like, oh, shit.

But the reason the show works is.

The. And you know, keep in mind, the producers are not business people. So we're not a business show that happens to be entertaining. You don't win two Emmys by being a business show. We're entertainment that happens to be around business. So the people that are screening those 70,000 people aren't us. They're producers. They're not looking for the quality of the business. They're looking for entertainment. You know, is Kevin going to yell at them? Are they going to piss somebody off? Is Barbara going to get lost? Is Barbara going to hit on the guy? Is, you know, like, it's all that kind of stuff. But we're the ones that Sherman. And the great thing about it is, you know, there's so many great businesses in America. We see some fantastic ones. And what we look for is people that have proven they can grow and the investment is simply going to take them to that next level. We don't want to invest in something that's zero. It's very hard to start at zero. It's very, very difficult to go from zero to the first 5 million. I think you can get to 1 million by being lucky. I think you can get to one million and do it one time by doing scale. If you can do it consistently, then you've got something. If you can break up from one to five, man, then you've really got something. If you can go from five and up, then you're getting into rarefied air.

And what are those points that if someone's presenting on the show, regardless of the mood that everybody's in or how hungry everyone's in, when you see that certain things are dialed in, like the team or the story, is it the sales volume? What are those indicators that regardless of how everyone feels, you know, that there is obvious potential here?

The first thing we really try to look for, because we know nothing about people, just for the sake of the audience, if we know them, they can't pitch to us. Our show is absolutely live. There's no, let's do it again. People are in front of us on average for over an hour. The shortest pitch was, I think, 25 minutes. The longest was two and a half hours. Damon literally got up, went to the cafeteria, had lunch, came back, and the guy was still pitching. I mean, two and a half hours, it doesn't matter how long you are. It gets edited into seven to eight minutes, and we know nothing about them. So it's a process. But the very, very, very first thing is, can you sell me or the other sharks on yourself? If you watch the show, sometimes people come out, they don't know anything about their numbers, and we're helping them. We're like, oh, don't worry about it. We'll figure that out. Sometimes people come out, they don't know anything about their numbers, and we're like, you're an idiot. Get out of here. How did you get here? What's the difference? It's what did you do in the first two or three minutes to sell yourself to us? And I don't mean on the way that you look, I mean on the way that you present how well you know your business, how well can you get your value proposition out in that short a time?

So it sounds like to me that in a lot of cases you are betting on the person.

I'm always betting on the person.

Even more so than numbers or market size. A lot of times, most of the time it's on the person.

A great intrapreneur can take a bad business and turn it around. A crappy entrepreneur can take a great product and ruin it. And so we've seen that over and over again.

We don't have enough time to do research on the product. I mean, if I have a patent on something and exclusive rights on something, yeah, I guess I could get rid of the entrepreneur and replace them. But in the context of our show, we've got to take a bet on the person in front of us always.

What do you think defines a good entrepreneur?

Humble arrogance.

You have to. You know, when I started out, I wasn't very confident. I couldn't speak to people. My vision was, if I'm great at what I do, the world will be the path to my door. You know, as an immigrant, you're not taught to go out and market yourself. You're just taught to be great at something and, you know, be really good at it. Don't shout from the rooftops. The world will find you. As I've gotten older, I've come to realize is there is no Sartre. There is no such thing as genius. In the darkness of a basement, you've got to go out and tell the world about yourself, but in a way that the world still wants to do business with you. If you're arrogant, no one's going to want to do business with you. If you're so humble that you fade into the wall, into the wall, no one's going to want to do business with you. And it's that fine line.

I want to ask you a question that is, it's very ambiguous, but I can't think of a better way to ask it. And so it's simply this. How long do you think success takes?

Well, I think you never get to success.

Interesting.

I think that people who are, I mean, does anybody spend.

Does a world class athlete or a world class dancer or a world class figure skater or a world class anything get up every day, sleep three, four hours a day, work their ass off and then spend 20 years or 15 years or 10 years doing that and wake up one day and go, eh.

Glad that's over. I just, I don't think success works that way. I mean I, I think that people that build something of greatness or something that's going to survive do it because they constantly shift those goals. Success breeds success and desire breeds more desire. But I don't think people, I mean, I think you have to be happy along the way with the process. But I think it's really a personal question.

Yeah. I ask because it's so common to try and compare yourself and to hear someone who has breakthrough success and say how old is that person? Where did that come from? Because there's always a measuring up game.

Is that bad?

I think it's normal. Good or bad? I think it's normal. I think it's disempowering. But I think you can be conscious of the comparison and make it very empowering. What's your opinion?

I mean, I think you have to have a timeline. I think it's. I never compare myself in terms of my worth as a human being to somebody else. But I certainly look at people in my field and how long it took them to grow to a certain point.

Absolutely.

And compare to that and say why am I not there? Not that I resent their success, but how do I get ahead of them? I mean my experience in business is that business is a full on contact sport. In my business, for me to win a deal, somebody has to lose. I didn't create the iPhone, I didn't create a brand new market that expands everybody else. For me to win, there's a sales rep at IBM that has to go home crying. So in my world it's a zero sum game because my customer is making a. By buying from me, my customer is making a conscious decision not to buy from somebody else. So I think it depends what business you're in. Right. How that affects that.

I think a lot of the disempowering comes from what Travis talked about this weekend about having your own self worth.

Connected to your results.

And if you sever that, then you can actually manage numbers. But if you're tied to that, then it can be the most disempowering thing in the world.

So I have another way to say the same thing. You'll find this interesting a number of years ago because I, you know, in my mind I like to think I'm a great athlete. Right. It's good to fool yourself sometimes. And a number of years ago, the Army Rangers invited me to go to their training camp. So.

There'S 2,000 Rangers in the entire US military. I think once you're a Marine or something else, then you get invited to try to join the Rangers, and 1 out of 85 people make it, and it's this brutal. Anyway, so they invited me to come for a week and I thought, oh, yeah, this is great. I'm going to go there, I'm going to learn, and it's going to be incredible. And over the course of a week, it really breaks you down. It's very humbling, and it kicks your ass and you don't sleep and people, you know, figuratively, psychologically, beat the crap out of you and really strips you down. Anyway, if you think about it, it was an incredible experience for me. You learn a lot about yourself. But the end of it, I thought, wow, these guys in the Rangers are the best of the best. When they leave the military, they must be super successful in business. They're all about discipline. They're all about hard work. You would think if anybody understands commitment, oh, yeah, baby, it's going to be those guys.

So.

So I'm sitting down with the captain who runs the training program and I say, my God, the people that leave this program and one day go into business, they must just frigging kill it. He goes, it's very rare. It's very, very rare that they succeed in business. And going to your point about self worth, I didn't understand that. So I said, why is that? And he said something very interesting, which I'll never forget, which is they have a hard time rationalizing business with something greater than themselves.

You've got to have a reason why you're in business. People that go into the army, into the military, have an incredible ability to do something greater than themselves. They have an incredible desire to give back to country.

To family, to these goals that are greater than they are. They're selfless. Then they get a job in business, Their boss comes along and says, you gotta make quota. And they have a hard time rationalizing that with those big goals. My experience is people that get into business to make a buck burn out. People that get into business to justify the sacrifice from their family to take care of the ones they love, to do something for their mom to prove a point because somebody made fun of them. Those things tend to last.

We're gonna take some questions from the audience. So Mike runners, if you want to get ready.

Yes, sir.

One second.

You gotta go right.

Just.

Robert, I want to ask you a couple more questions. And that's when you either, in your experience or one of the other sharks makes an investment in one of these companies, what in the majority of cases has been the best use of those funds. I recognize that the money is not one of the top drivers of if a company is successful or not, but what has been a useful use of those funds when one of you puts.

The cash in easy inventory for sales.

Really?

Yep.

That seems so easy to get funding for outside of being on Shark Tank.

It is, but not quickly. People that grow quickly need funds on an immediate basis. And sometimes people that come on our show have a hard time scaling that. And if we can just help them with inventory funding for distribution, sales, or any kind of sales, it allows them to prove the model.

That's not what I thought you were going to say at all. I thought for sure you'd say a bigger team or equipment, all of those.

But those take longer.

Okay, so a quick hit. First thing is, if they can scale their. Their inventory, they can scale.

That's one of the tricks to look for, is, have you ever. Have you ever taken it? How come you're not in home hardware? How come you're not in Bed, Bath and Beyond? Well, because I can't live with their return policy. The risk is too great for me to build that much inventory. Are you saying if you had more inventory, you would be in those stores? Yeah. Great.

And do they usually have the contacts for that, or does the relationship with sharks open up some doors?

That's another great use of Shark Tank, is people rarely don't take our calls. And not that we're bigger than life. It's because it's the platform of the show, so we can really help them leverage into larger retail, larger distribution. But I love entrepreneurs to say to us, how did you get into Bed, Bath and Beyond? I picked up the phone. How many people spend planning.

And doing all this other stuff instead of just picking up the phone or sending an email?

What outside of. Outside of Shark Tank, do you also invest privately? Do you also do deals that are not. That don't come from that flow? I know some of the other sharks do.

Yeah, we're all different. Some of us are pure investors, like Kevin. And Mark.

Damon does a lot of licensing stuff where he goes out and buys older licenses.

He just bought the Bill Cosby sweater, You know, that cool sweater from Australia. Unfortunately, he bought it before the whole Bill Cosby thing came out. But, you know, he Buys a lot of brands like that. I operate. So my core business, I'm more of an operator than I am an investor.

Let's go into. So you don't take outside deal flow unless it comes from that. So from an operator's perspective, when you are looking at one of these companies, what flaws do you see in the way that they're getting things done? Where you provide advice on how they can make things run better and that provides new opportunities for growth.

It's team. Where we see a lot of the failing is how they deploy the resources on the team, what they're doing, what they're willing to give up and what they know they're great at. I don't like to invest in generalists. I would rather have somebody who's great at this because I know I can hire an accountant. I know I can hire a production manager. I want somebody who's great at something. When you're a generalist, inevitably as your business gets bigger, you're going to come across somebody who's an expert and they're going to, you know, they're going to kick your ass. So we like people who are really passionate about one thing and then we can hire other stuff. We did an investment last year with a product called Natural Grip. Lady was in the army. She's a reserve marine. She makes these sports products for doing chin ups and extreme sports.

She was great at designing the product, understanding why people buy it, we invest in it. Things are going okay. All of a sudden we hit a plateau. You know why she's doing production, she's trying to understand where to source product. We went in, gave her a little more money and she hired an operations manager.

Does this sound familiar, by the way? We covered this in detail.

Oh, you did? Yeah. So she found an operations manager for like 40,000 a year, which is a lot for her. It's all relative. But now we're going to double sales. Let go of the stuff that doesn't matter and you're not great at and focus on. And it's funny because when we're growing up, people always say you got to be balanced. You got to be balanced.

Focus on your weaknesses.

Yeah. Focus on your weakness. Screw that. Find something you're good at and become the best at it because that's how you're going to win in the world.

All right, let's take some questions. Who did you point at over here? Do you have a mic runner by you?

Where are my mic runners? Let's go over here to start. Do you have somebody Yeah, I got it. All right, thanks.

Hey, Robert HK From New Jersey. Just gotta say, love you on Shark Tank. I just love learning from you and your. The way you analyze businesses. So my question is, when you realized you were playing small, how did you strategize your shift?

So that is a great question. The first thing I realized is, why are we playing small? And one of the things that I found was we had a great team of people who'd been together for a really long time. And, you know, the downside of that was we had a great team of people who've been together for a really long time. So our shared experience was very common. We had to expand beyond that. So we started bringing in some people who'd been where we want to go, who'd worked at larger companies and had bigger experience. The second thing is, we had to accept shorter time frames. So the thing is, as you get to 50 million or 100 million or 10 million, it takes longer to effect change, but it's less evident when you're doing half a million dollars a year in sales and you try something, it doesn't work. The effect is immediate. You see it when you're doing 10 or 20 million, a $50,000 order, or 100, like, is that helping me? What's going on? So we had to have the confidence to let go of things faster.

One of the biggest challenges as you get bigger is you like the status quo. Do you know what I mean? When you're doing 100,000 a year or 50,000 a year, and you're trying to get to a million, it's easy to be motivated. Why? Because everybody in the frigging world is bigger than you. Everybody's bigger than you. You're out to get everyone. When you get to 10 million, 20 million, 50 million, 100, you don't always wake up with that same spirit anymore. Some days you wake up and you say, you know, it's pretty good at this level, too. And all of a sudden, you're not as hungry anymore. You don't want to drive as much anymore. You. And you start saying to yourself, some days, yeah, let's just stay where we are. This is pretty good. And it's that. It's that constant hunger. I have a sign in my office right above my desk, and it says, every day, somebody wakes up with the sole intention of kicking your ass.

And you know what? It seems really easy when you're small to think that way. When you get bigger, you got to keep doing it.

Do you have a point where you Feel like you're done. Do you have. No, not at all.

Not at all. But to your very first point. Depends on the scale of the market. My market is this big, so Even though we're 150 million on a global scale, we're very small. You can only be as big as the pond you're playing in.

I think if you're aware of the fact that you're in a small market, but you still know that there's never going to be time when you're done. You just know you're going to have to get a new market at some point. You're going to have to pivot into your career.

To your point, though, sometimes you wake up and you're done. You just can't do it anymore. You're not motivated, you don't want to compete. I mean, and I'm not talking about shitty days, because we all have shitty days. I'm talking about you just don't want to do it anymore. Might be the time to sell the business. Might be the time to partner with somebody, because it's a journey and it never really gets that much easier.

I want to go into that point for a second because you've been very public about the fact that it hasn't always been roses and that you've gone through challenges in business and in your personal life that have really kicked you around. And would you talk about the failures, either business or personally, that have really kicked you around and.

How you looked at that and how it affected you and how it changed you? And I ask because in this world of success, it is so easy to look at the people that we admire and the people who are at the level that we want to be and just assume that they're happier, healthier, and more positive than ever and that they have no challenges. And we hear our internal noise, but we don't hear theirs. We see their external projections, we see how the media represents them. We assume their life is great. And there's a comparison that's unfair, that goes on because I hear my noise. I see the media says you're great. So I must be this. And it's an unconscious conversation that goes on. But you've been very public about the fact that. That it hasn't all been roses.

Yeah, I mean, really well put. I mean, I think that you've got to. You know, I don't think it ever gets any easier. I mean, I think to your point is you've got to have a pretty happy attitude about life. I mean, I think I'm pretty happy 98% of the time. The other 2% of the time, when somebody asks me how I'm doing, I still say I'm wonderful to most customers, because the reality is, most people have their own problems, especially in business. And I think sometimes to get an order over your competition, you just have to be a ray of sunshine.

Right?

I mean, I think the world is a really hard place for a lot of people, and I think you've just got to. You've got to keep going, and you've got to. You've got to bring some joy to people. But it's a constant challenge. I mean, I think that you just got to find what works for you. For me, it's been hard. It's been easy. It's been everything. But on a consistent basis, what I found is it's your ability to absorb failure that determines how far you go and how much you're willing to. To move forward.

Has there ever been a time that you thought about giving up?

Oh, my God. Yeah. I mean, I think that's another thing. People think to be strong, you can't be weak. I think strength is the ability to keep going even when the fear is so overwhelming that you can't move forward. So have there been days where I can't even get up? Have there been days where I can't. I can't imagine tomorrow because there's just so much failure and fear and scared. Yeah, absolutely. But I think what you come back to is why you started in the first place and what those reasons are. And sometimes, you know, sometimes success is a big goal, and sometimes success is just putting one step forward, forward. And that's your only success for that day. And I'm lucky that I have the ability to fool myself into finding success every single day. It's one of the reasons I run. I try to run every day, and I've been running for a long time, and people say, oh, you must love running. I hate running. I hate running. I try to run five miles a day. When I run, I hate it. I mean, I literally, on the way to the gym, I'm like, oh, my God, I hate running. Why am I doing this? First mile, I'm like, this is stupid. And I try to think of reasons to stop. By the third mile, I'm kind of into it. By the fourth mile, I'm ready to kill something. By the fifth mile, I've accomplished something. And there are days where that little bit of accomplishment is all I need. I'm a simple guy. I just need to feel loved. And I need to feel like I've accomplished something every day.

There has been some disagreement over this question. Does money buy happiness?

Absolutely.

It is a fundamental reality in this society that you need a certain amount of money to be happy. There is no happiness in watching the people you love not being able to get the right medical care. There is no happiness in not having enough to eat. There is no happiness or joy until you can take care of of the fundamentals of life in this society. And what does that mean? It means food on the table, it means health care, and it means a roof over your head. It doesn't mean a Ferrari that is just beyond that. But without money in this society, you will be picked on and you will be taken advantage of. And whether you do it for yourself or not, the people you want to take care of, you won't be able to. Full stop.

So you answered it differently than most. So let me phrase it a little bit differently. Does more money equal more happiness all of the time?

Absolutely not more money. Great wealth simply amplifies who you were before.

That sound familiar? Yeah, it's been a theme.

Oh, has it?

Yeah, yeah.

I mean, I have to tell you, I've met some of the wealthiest. One of the great things about being a celebrity on TV is you get to meet a lot of really cool people. I met a lot of really powerful wealthy people and some of them are absolute assholes. And some of them are really nice, like incredibly nice. And from my experiences, it's just more of who you started out with.