The Mindset Shift That Made Me Millions | Robert Herjavec

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Fear is what holds us back. A-players move the needle forward. B-players wallow in misery. The difference between successful people and others is not that they don't have bad days, it's how long they allow themselves to wallow in misery.

Robert Hirschvick went from wanting nothing except to not be poor to building and selling companies worth hundreds of millions of dollars. Today, Robert is going to break down why money isn't what's holding you back and the leadership mistake That Quietly Destroys Great Companies.

You can't have a great pitch unless people are listening to you. The first thing you have to do is get people to listen before you get them to hear.

What are the biggest lessons you've learned about sales?

The biggest lesson I've learned—

What do you think stops most people from breaking out from broke?

Fear.

Abso-friggin-lutely fear. Fear of failure, fear of embarrassment, fear of rejection. Like, fear is what holds us back. Like, kids don't understand no until we teach it to them. And our entire life we're brought up with, you can't do this, don't go there, don't do that. And it becomes ingrained, especially in immigrants. Don't be too loud. Don't make too big a deal of yourself. All those things. And I think people are just afraid. I think that's what holds them back. And also, I hate to say it, many people are lazy. Fear of hard work. Like, you know what it's like. Like, I worked really, really hard. But people don't see the 20 hours you put in. They see the end result. And I think a lot of people are afraid to work hard because they don't know if it's going to pay off. Like, if we all knew how the book was going to end, we would never read a book. And that's your life. Like, you don't know how it's going to end, but you have the ability to control the outcome. But it's hard. You know, you're working out there, you're not going to parties, you're not hanging out. Your life doesn't seem to be progressing forward. You're inching along, hoping that it all works out one day. And I think people get scared. They're like, what if it doesn't? I'm losing all of this.

Yeah.

You know what's interesting is I've never thought about it that way. It's not even fear of hard work. It's fear of what if I'm giving up my life for something that never actually happens.

Oh, I think most people are willing to put in hard work if they can see immediate results? How many people are willing to put in the hours and the minutes and the months and the years without seeing hard, tangible results? Like, I spent 10 years to buy a Ferrari, and it wasn't a new Ferrari. It was a very old Ferrari. It barely ran. But the 10 years of hard work never dissuaded me from getting there.

So what do you say to yourself when you don't want to keep working hard and you kind of want to give up? What's your inner monologue?

I have this trick. So I'm a big runner. I run every day and I try to do a long run at least once a week. Like 10, 15 miles. And people often say, oh, you must love running. And I freaking hate running. There are many days where I didn't want to run, but I've never had a day where I don't feel better after a run. Somewhere during the run, I want to quit. I'm sore, I'm tired, this hurts. I'm old. And so I'm running fast. And I slow down. I never walk, but I'm barely running. And then I say to myself, are you a loser? Are you a quitter? And the minute in my mind I say that, I keep going. I will— my legs will fall off before I stop. But my mind is like, don't say it, don't say it. It'll be easier to just stop. And I think for me, it comes from a greater purpose. So why did I start? Why did you start the journey? And going back to your original question, most people don't succeed because they have easy, flippant goals. Why do you want to start a business, Codie Sanchez? Oh, I want to be a millionaire. Okay, well, that's interesting. Why do you want to be a millionaire? Well, It'd be nice. Like, I wanted to make money to justify my parents' sacrifice for my life. My parents came here at 37 years old, no money, left jail, came on a boat with one suitcase to a country they knew nobody and had no money. So what am I going to do with my life? Just get by. Like, I'm the only kid. I felt if I didn't do something, it wouldn't justify their sacrifice. And so it's purpose. You got to have a greater purpose. Why are you starting your business? Are you doing it for somebody? Are you doing it to build something great? I think you just got to keep going.

Yeah, it's a good thing to ponder. Like, if you don't have that one-liner, that little story that's going to keep you going, you're going to have a dark night of the soul where you give up.

It's true. You know, I think about this all the time with my kids. Like, people are like, gosh, you're so motivated. It was relatively easy for me to be motivated because my life was so hard. And I think when your life is hard, you get to a point where you either accept it or you say, I don't want to live like this, I got to change it. But what if your life is always easy? What if everything you want or dream about is there? Where's that hardship come from? And I always worry about that. And you don't have to be rich to have an easy life. You can be middle class and have an easy life. You can be lower class and have an easy life. But how do you get that motivation?

Oh, yeah. We jokingly call— we spend a bunch of time in San Diego, like I told you, but we would never have an office there and we would never live there full time because we call it the where young people go to retire. And so it's like, you know, everybody's just— there's nothing wrong with it. You can do you, but everybody's kind of baristing, yoga instructing, just doing just enough to go to the beach every day.

It's a great point. You asked me earlier, who do I like to hire? I like to hire people with military service. Yeah, people with military— going to this point, they understand a greater purpose. Life is about having a greater purpose. Than yourself. And so people in the military fully understand that.

How do you know if you are an A player or not? I think a lot of people think that they're A players, but what are the characteristics? You're like, you'll know if you're an A player if you have these characteristics. Gosh, that's a great question.

What do you think?

I mean, I'm so biased, but I mean, a couple of things. One, high signal to noise. The things that you what you say and how you communicate is usually pretty direct and to the point because you don't wanna waste people's time.

Oh, that's a great point.

You know, you follow through on the things that you say you're going to do. Very rare actually.

Right.

You know, you are a proactive communicator and executor. So you don't always have to do everything right, but say, hey, I'm working on this. I know I was gonna get it to you by that date. It's actually not gonna happen. I'm gonna do it at this date. And then 4, I think you actually like hard things, not just you do them, but you've got kind of like that sickness.

And you, you know, I like hard things. Yeah, I would say adaptability.

Yeah.

And progress. A-players move the ball or the needle forward. B-players get stuck in repetition or something. And I think B-players wallow in misery. Adaptability is the ability to wallow quickly and move on. Like, I can't change the past. It is what it is. Barbara Corcoran and I had this great conversation and asked her a similar question. And she said, you know, when I made— she sold her company for $52 million and people always said to her, did you ever have a bad day after that? She's like, are you kidding? I had lots of bad days. She said, but the difference between successful people and others is not that they don't have bad days. It's how long they allow themselves to wallow in misery. And I've always remembered that because, you know, you have a bad day, I have a bad day. My bad days are limited to very short periods of time because I've learned nobody gives a shit. Nobody cares. You just got to move on, work harder.

Oh, it's so true. It's funny, you know, today I was telling one of my producers, Dee, who you met, um, this morning was funny because very little things, but you know, I was getting ready and I have this hair and makeup lady and she's super late, so I'm gonna be late to Robert and we're down in San Diego and then she leaves the house and I got like one eyelash sort of glued to my forehead and the makeup looks awful. So I redid it. And then, you know, more annoyingly, we had this investor that was gonna do one of these deals with us. That investor fell through. I had to go grab another one this morning and, um, And investors falling through is not a big deal to me, but I really, really hate when you ghost somebody. That's like a huge pet peeve. Just tell me, fuck off. No, no problem. No problem. But don't ghost because then I don't know where you're at. And also don't waste my time if it is going to be a no, get out.

But, you know, I had a hard time with— that's, that's a great point. I had a really hard time with saying no to people.

Oh, interesting. Were you a ghoster?

I was never a ghoster, but I was a maybier.

Oh, yeah.

I didn't. And I always thought of what in me made me like that. And I realized I don't like to let people down. Now I'm okay with it. But back then I wanted to please everybody. And so it's not that I was leading you on. I was like, I knew I wasn't doing a deal.

Yeah.

Why didn't I just come out and say no?

Yeah.

Whereas now I'm like, Yeah, this isn't for me. But being on Shark Tank after 18 years and people pitching you, you have to learn that quality because people are pitching you all the time.

Yeah, a fast no is such a gift, you know?

Fast no. Yes.

As opposed to a slow maybe or a fast no. And, you know, I was telling the investor, I'm like, hey, dude, all you got to say is it doesn't meet X. And I go, okay, cool. If we meet X, I'll come talk to you. And until then, no stress.

I saw a great quote, though, on the point about bad days. Just remember, your bad day today is somebody's dream. And that really hit me as I'm sitting in my beautiful house and my pool is leaking the other day, and I'm sitting there going, oh my God, I got to call the pool guy. That's such a nightmare. And I'm like, hang on a second. In the scheme of things, this isn't bad. So I always try to— it's perspective. But I think kids also give you perspective. Like, the thing I've learned from my twins is the absolute constant purity of joy. Like, when they're happy, they are absolutely happy. Like, and little things make them happy. Going swimming makes them happy. Hanging out makes them happy. And the things that are horrible, that get upset about, they forget about them in 10 minutes. And so I try to do that.

I really like that idea of like, you're going to be more successful the faster you move away from whatever's bothering you. Like, yes. You know, and I think Elon's talked about that too. And maybe the flip side, because you talked about those 10 years you grinded to get the Ferrari or the 10 years that you grind to get the plane. Like, for the 25-year-old watching this who needs to start grinding for those 10 years, what is the one thing you'd tell them to grind on, or the one thing that you would tell them, do not waste your time doing this?

I think, as it worked for me, expertise. I think people assume it's so easy to become great at something. I got into a field that was relatively young, cybersecurity in my 20s, and within 10 years, I became one of the top people in the world. But I was also in an industry that was 10, 20 years old. So today we have the same opportunity with AI. How many people my age understand AI? Very— how many businesses, how many service-based businesses could be made better with AI? Like, what a huge opportunity if you're in your 20s. Just the fact that you're in your 20s, You're a perceived expert on AI because you're young. So I think it's a bigger opportunity today than when I started.

Yeah. So it's basically like when you're young, just try to go become really skilled at something, like skill stack.

Your 20s are the foundation of education in yourself. Don't take a job for money. Don't do anything because it pays a little more. Do everything to learn. Don't worry about the Mercedes or the Ferrari or the bigger house. Try not to have obligations that limit you from taking big risks. Take big risks, be bold, do great things, but be great at something.

It's a very good point because I think something that the younger generation has had to fight against, and it's not really even their fault, is that in their face every day are people that they would never really talk to in real life. But now they get to see their Ferraris, their Bentleys, their planes, their houses, their fancy lives. I mean, you saw, um, uh, Kylie Jenner's Meta glasses, you know, that just came out, and it's showing her incredible house and her, you know. And so it's really in their face, all this stuff that you get once you're wealthy. And I think it's made them think, wow, I should have all that right now. And that's what success is. And so I better YOLO into, you know, day trading stocks, or I better go and try to get into crypto. I need to do something to get fast money. And so I guess I'd be curious from your take, what do you think is like the most overrated business or money advice that a lot of people are getting today?

Gosh, I think there's— I think there's so many. I, I think it's the fast path. How many people online are selling you a 2-year, 6-month, you can do it? Yeah, the reality is anybody can do it, but it's, it's going to take you longer than you think and you have to be great at something. And the stuff is not what it's about. I mean, you have to make a certain amount of money to get above debt. Yeah, but once you get above debt, you have to have a greater desire to build something of value. Kylie Jenner is incredible. I'm pretty sure Kylie Jenner didn't start out just to buy a bigger house or buy a nicer car. She had a vision of building a brand, and she has a roadmap for that brand, and everything she does fits into that brand. Look at the cosmetics. Look at the Meta glasses. Like, like, I have so much respect for that family because their business acumen is fantastic.

Yeah, it's a good point. I always used to— I used to not like that because I thought it was so materialistic and, and then just a little tough for young women to see all the different ways bodies look. And is that, is that reasonable? Is that healthy? Should we feel that way? But after I've become less morally absolute, I think, I think that side is so hard to not see.

I mean, like, I'm with you. Like, I, you know, my social media team is always like, let's do more videos with your plane and your car. And I'm like, to me, it feels shallow.

Yeah.

To me, it feels like you're telling people the pursuit is only for the end goal.

Yeah.

If you don't enjoy the journey, I, I don't think you're ever gonna get there. But, um, everybody's different.

Yeah. And I think what I've realized is it's inspirational. And so I think for a lot of people, it's like, I have a, a good friend, Andy Frisella, who runs this company called First Forms, and he's got all these crazy cards and he's kind of a crazy dude and he has a tank and all this stuff. And I was, remember I was kind of giving him some crap about it and he looked at me and he's the scariest guy. Like, if you, have you ever seen Andy Frisella? We'll put a little video of it. He, you know, when I first met him, he has this scar across his face and his back. And I'm like, what happened? And, uh, he's like, oh yeah, I was walking through a park in St. Louis and this man, you know, stabbed me in the face and then tried to stab me in the back. So I chased him and wrenched the knife. I was like, oh my God, you know, remind me to never make fun of your cars again. And, um, and he's so intense, but he stopped me and he was like, don't ever make fun of somebody else's inspiration. And I was like, That's a really good point.

Like, it's a great point.

Fair, fair point. He's like, why is it better that you get inspired by small business ownership and that somebody else gets inspired by a car if we both build and give back? And I'm like, you're absolutely right.

It's not.

Yeah.

So I kind of had to get over myself. And so with the Kardashians now, I'm like, wow, you cannot build $1 billion business by accident. Not to mention the 6 or 7 or however many that family has. That's fucking hard. And to your point, you know what you should— why don't you talk to us about— I didn't know that statistic you told me earlier. You told me a statistic about how rare it is to be a billionaire, and I don't think most people realize it. Like, how rare is it to be a billionaire, and how hard is it?

I think, what is it, there's 3,600 or 4,100 billionaires in the world, and a billion dollars is 10,000. You could have spent $10,000 a day since the day Christ was born. It's really hard. But certain things today with social media make it seem easy. Like SpaceX went public, 4,400 people became millionaires on that day. 400 people became deca-millionaires. Like, how hard is it to make $100 million, $500 million, a billion? It's hard. But just because somebody did it, what you perceive on as being overnight doesn't mean it was overnight and doesn't mean that most people are going to get there. It's still hard. It's still really hard.

Yeah, it's a good perspective to have. Not to mention you have a lot more, you know, a lot more issues at that level of wealth. I mean, one of my friends runs a family office for actually some people in that ecosystem in Austin.

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And he said, I wish you not one more penny than $299 million. This back was back in the day. And I remember saying to him, why? Because he managed a multifamily for a couple of these guys. And he's like, at some point you can lose all sense of reality. And then he said, jokingly, kind of, he's like, and then you're always just like one yes away from an approved genocide.

I thought, dear God, I don't know if I buy that. I think you are what you are. I think if you're flippant and don't appreciate the things that you have, you're going to blow $50 million and act like an asshole. I think if you're grounded, love your family, want to give back, want to do great things, you're going to be the same person with $2 billion, $3 billion, $1 billion, $800 million. It doesn't matter. I wish I— well, I don't wish. I would definitely love to have more money. Definitely love to build another business and create even more wealth, but it doesn't define— it's not going to change my life. It's not going to change my kids' lives. It's not what I wake up to do. But would I want to do it? Yeah, absolutely. Because I can. I mean, it's what— it's the game that I'm good at. And I think at a certain point in life, you want to play at the things that you're good at. Like, I don't want to start from zero again. I want to start at 5 and go to 10.

You get really rich even if you don't like rich people.

Yes, because I've met incredibly wealthy people who could care less about the money. Like, could care less. I've met incredibly wealthy people that Charlie Munger used to go to his house once a month for lunch.

I didn't know that.

When he first invited me to the house, well, his team invited me to the house. It's in LA, in an area of LA. I drove around for 15 minutes because I couldn't believe it was his house. Like, I'm like, he can't possibly live there. It's such a crappy house. Sorry, Charlie. And it is. It was just like this crappy little house. And then I walk up to the door and I'm like, I opened the little screen door and there was no buzzer even. I knock, there's no security, nothing. And I asked him about it one time, and he's like, just don't care. It's where I live. I'm like, did you ever buy a fancy car? He's like, it's just transportation to me. Cuban gives me a hard time about my cars. He always calls me shallow and arrogant because I love cars. And I always say to him, really? That's really interesting from the man with 4 jets.

Exactly.

Like, I'm shallow because I buy a $500,000 or $1 million car and you're not because you have 4 jets? We all love something. And so, yeah, I've met rich people who just don't care. Like, just don't care. I don't think you can become successful if you hate other people's success. So there's a difference between hating or not liking rich people or not liking money or not being important to you. But there's a difference between hating how people got there. If you're rich and you did it in a business that you loved, I'm okay with that, right? If you got a billion or $100 million, it doesn't matter to me. But if I despise your success and your journey, it's hard for me to have that same ambition to create something.

Couldn't agree more. I think it's kind of the same. Like sometimes you'll hear women say, I hate men. Men are awful. I don't want, you know, I can't date anybody. Everybody's terrible. I'm like, you're going to have a damn hard time finding one if you put that out there.

Right.

You know, and maybe you have had terrible experiences in a lot of dating stuff, but man, you're not going to be able to attract that if every time you talk to a man, you're telling them how terrible they are. It's probably not going to go well.

But I also think, don't you think that's part of the problem today? It is we are— we have somehow, or becoming a society that despises people's success and tie it to their wealth. Like, I have a house in New York. I love New York. I hated— and I've met the mayor. I don't agree with his politics, but he seemed like a good guy. We had a meeting. I hated when he stood in front of Ken Griffin's apartment and said basically that that was bad. You don't have to love Ken Griffin. You don't have to love the fact that he's worth billions. But I think you have to respect the hustle and the grind and what that man did to create that wealth. So I think I worry that we've become— somehow we look down on that.

Yeah, yeah. It's one thing to look down on the wealthy when you're in Russia and you get, you know, oligopolies where they're gifted things from the government or things are nationalized. That's totally reasonable, you know. We don't like thieves. But when you actually in this country have to create— I mean, how many trillions of dollars in value does Elon have to create to become a trillionaire? An incredible amount.

Well, forget that side of it. The trillionaires, billionaires. What I've always admired about you, even when you were first starting out, when I reached out to you, is your message is the right message in America at this time, which is anybody has access to small business. Anybody. There is no magic. There's no God-given talent you need. You just need a little help. And I think that's what you're doing for people. You're showing them how to get there. So you don't have to love Elon Musk or hate Elon Musk, but you can buy a car wash.

Yes.

And that car wash can provide a living for you and your family. And I love that. I love that message because that's what democracy is and that's what capitalism is. We came from a communist country. My dad, hated communism. He got up, he was 22 when he got thrown in jail the first time, and he was in jail like 25 times or something. Because if you go to a bar, you say bad things about communism, you get thrown in jail. So one time I asked my dad, what's the difference between communism and capitalism? And my dad thought about it and he said, a capitalist is somebody who owns more than one Cadillac. I don't know why I thought of that, but that just reminds me, like, in his world, two Cadillacs or two cars, you're a capitalist. You're showing people how to build a single business. Too many people have lost sight of the fact that, oh, I can't become a trillionaire, so I should just give up. What's wrong? A donut shop, a bakery, a dry cleaning business. The business of America is consumerism. So many great businesses people can start everywhere.

You know, what do you think was the most valuable lesson you took away from the years that you didn't have any money at all?

Urgency. Urgency tempered later on. Urgency gets you out of poverty. Patience gets you to wealth is what I had to learn. Without urgency, I would still be broke. I didn't wait for tomorrow. When a customer wanted a quote, I would say end of the day. My competitors used to deliver the quotes or send them by mail or email. I would hand-deliver them. Be like, where's your address? And I said, I'll drop it off this afternoon. And people say, oh, no, you don't have to drop it off. I'm like, no, I'll drop it off. Like, why? I don't have time to see you. I said, it's okay, I'll just drop it off. If you have a few minutes for me, that'd be great. If you don't, I'm okay with that. And I drop it off. And you know, the funny thing is, 80% of the time, people will come out and say hi. Go to their office, I drop it off, and they're like, oh my gosh. Because how many people go the extra mile? How many people are willing to wait until tomorrow? So that urgency, like, we got to go, we got to go now, now, constant forward momentum, like, go. The downside of that is when your company gets to a certain size, you can't, you can't move 100 people or 1,000 people at that same pace. You have to plan. Just scale.

So good. Yeah. One of my other people that I adore immensely, his name's Bill Perkins, and he always tells me that, you know, he doesn't win because he's smarter than anybody else. He just moves faster than everybody else. He goes, so by the time they've thought about it, I've already made 3 mistakes and found a better way.

And so true.

Yeah.

And I— but it's really interesting because it's hard to get people to think that way. You know, we've been programmed like if I say, hey, let's circle around next Everybody goes, "Week." Why? Why is it a week? That's such a weird thing. Why couldn't it just be later today?

I think an action today is better than the perfect plan tomorrow. When I sold my business to an equity firm and I got into the equity world and I saw how much planning equity firms do, it drove me nuts because how many businesses are built on your gut feel? And to Bill's point, I'll make a decision today. If I'm wrong, I'll know pretty quickly and I'll make another decision tomorrow. And I'm okay with that. Yeah.

What can you do if you know you need to get faster? Like, what would be a lesson to somebody that's listening right now and they're like, God, I know I need to get faster. If you're like, just do this one thing every day to get faster, what would it be?

Find a way to fail quickly. So if you're creating a product, instead of waiting till the product is done 100%, wait until it's done 20% and call a paying customer? How many people wait till the product is 100% and then they beta test it with non-paying customers? Finish 20% of it, test it with real customers. Because the beauty of commerce is when people exchange money. What did Robin Williams say in the movie Cadillac Man? Selling something to somebody is as close as you can get to another human being without sleeping with them. And it's true. When I sell you something and you give me money for a product or service, it's magical. There's so many things that happen on a subconscious level. I'm telling you, I accept you. I, I agree with you. Like, all those positive things happen. Get as fast as you can to acceptance or failure as quickly as you can. Too many businesses fail for constant evolution.

How many billions of dollars in sales do you think you've done over your career?

10, 15+ billion. Wow.

And what are the biggest lessons you've learned about sales doing $10 billion in sales over your career?

The biggest lesson I've learned is great salespeople solve problems and sell value. Bad salespeople sell product or something tangible. So I've also learned great salespeople never ask for an order. They make the client believe it is the right solution for them. I will bring you to my solution as opposed to forcing it on you. It's the complete opposite of what we're taught, right? Like going for the close, always be closing. And there's a magic to it. Sales is on a subconscious level. Those are things I've learned.

Yeah, it's so fascinating because, you know, on Shark Tank, you guys are having people sell you basically nonstop every day.

Every day.

And, you know, you're either deciding who's going to hold the frame. The stronger frame is the shark that's like, nope, I'm out, or the person who's pitching that's like, no, you should be in and here's why. And so sales, I mean, we call it— you guys call it, or many people call it pitching on Shark Tank, but I really think it's just sales.

It's just sales.

Even if Nobody ever pitches an investor or nobody comes on Shark Tank, I guess. What do you think the best sales pitches have in it? Or if you want to get somebody to do just about anything in sales, are there lines you go to? Are there— is there priming that you do?

Interesting about Shark Tank, the power or the leverage is with the sharks to start.

Yeah.

When you come out. If all the Sharks go out and there's one Shark left, that Shark has all the leverage. And they pitch for about an hour, it gets added in the 7 minutes. But we often say when there's only one Shark left, when we make an offer and people don't like the offer, we're like, what are you going to do? I'm the only one left. But if it's a great pitch, sometimes we all want the deal. Then the leverage switches and now the sharks are selling the pitcher. Here's why you should go with me. And it's very real. Like when we see a great product, we really, really want it. And so I think that there's a, there's a switch there. Great pitchers start with the subconscious. So we talk about this all the time. I think we always know what makes a bad pitch. We don't always agree what makes a good pitch. So what makes a bad pitch? Somebody that comes out and is not in line with what they're pitching. So you're selling me an enterprise software product, but you're wearing shorts and a t-shirt on a subconscious level. I'm not connecting. I don't like what you're selling me, but I don't know why. It's subconscious. Or you're selling a surf product and you come out with a jacket. Like, if you're selling fun, be fun. Humility. Like, if I don't like you, it's going to be hard for me to listen to you. The first thing you have to do is get people to listen before you get them to hear. We had somebody in season 2 come out, and they were saying something, and I think Barbara said something, and they were rude to Barbara, which bothers me. And they said, "You're not listening to me." And I said, "Hang on a sec. It's not my job to listen to you. It's your job to be heard." And so you can't have a great pitch unless people are listening to you. So I think that's the first thing is you got to find a way for me to listen to you. And then you have to find what my need is. You know, the old sell me this pencil or pen trick. The perfect answer to that is, before I sell you the pen, can you tell me why you need a pen? And sometimes the answer is you just don't need one.

You know, it's interesting. When I was on the set with you guys the other week, um, they were talking about how to value a company, right? So, right. And I realized how few people know what numbers really matter if you want to get somebody's money.

Oh my gosh.

And so like, what would the answer be? Or what are like the 3 to 5 numbers you better know if you ever want somebody rich to give you money?

Well, the number one thing we see, the number one mistake people make when they value their company is they value it based on what they would like, not what the business is worth. So, like, why is your company worth $10 million? Because we need $10 million. Like, okay, but why is it worth that? People don't understand the metrics in an industry. Every industry has a value. A car wash, a tech business? Is it a multiple of EBITDA? Is it a multiple of ARR? If you're going to ask somebody for money, you have to understand the range of values for that industry. It's a guideline. You know that you're teaching people this all the time. What is a donut shop worth? Well, here's what donut shops trade for in this range. So once you know the range, you have to tell me why yours is at the top of that range. And people just don't understand that. And it's easy to find. I mean, people can go to you, you can look it up online. Everything has a real value.

Yeah. And you can look so smart by just knowing a few numbers. If you're like, here's my profit and loss, here's my margin, here's my EBITDA, here's, you know, what I think our enterprise value will be. Here's our multiple based on industry standards. You could literally Google, or I guess you could AI all of these.

The best example I give people is if you're going to sell your house, would you sell your house based on what it's emotionally worth to you? I love my house. I'm going to try to sell it for $1 million. Or would you bring somebody in, give you the value of every home that's sold around you in the last 6 months, and then try to understand what makes yours different? No different than in businesses. Everything has a value. You have to understand why it is for your industry.

That's so true. You know, what do you think most people don't understand about business, even if they run one? But if they did, they'd make more money in business.

Scale. Yeah, it's a two-edged sword because the theory of scale, you can hire people to do, you know, when you get your company gets to a certain size, you can hire professional managers, you can hire people to come in, they understand scale. They understand systems, they understand all that, but they can't go from zero to something. When I worked for Warren Avis, he said to me, you can hire great managers, very hard to find great entrepreneurs. And so again, it's a two-edged sword because for me, I was very, very good at go and urgency. But it took me a few years to learn how to scale my business. If I would have learned how to scale my business better, I would be wealthier today. And I think most people running a $5 million business or a $10 million business, every $5 million business that you're integral to is a point of weakness. Understand that. I saw it as a point of strength. So when we were $5 million, I was like, oh, everything I'm doing, yeah. Later on, I learned I got to replace all those things and be kind of like the glue that holds things together. So if you're watching and you're running a $5 million business, sit down and look at—

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You go on vacation for a week and don't call in. Write down all the things that broke, and every one of those that broke is holding you back.

It's so, it's so true. It's, isn't it so hard? I mean, you start out in business and you think that your skill is correlated to how much money you make, right? Mm-hmm. Because that's true. Yes. It's in the beginning, you're, you get more skill. Yes. You get more money. And then when you go to run a business, you go, no, the more skill I have, the more revenue we make. And that's true at a certain point. And then you realize, oh my God, my skill should have nothing to do really with the revenue that I make. It shouldn't be how much I work equals revenue. It should should actually be how good is the business model, how good is the team, how good is the market. And so that's a really hard lesson.

I think we all take a certain amount of pride in working hard when we start, but if you don't take pride in that, you'll never get— I mean, these are all first world problems. Yeah, scale. Yeah, getting bigger. These are all first world problems.

For somebody that's listening, I mean, you've sold— I know you sold companies for $30 million, you've bought companies for $75 million. I could find you've done really big transactions multiple times, both building, buying, and selling, as far as I can tell. I'd be curious your take. What do you think most people don't know about businesses? When a business— like the difference between a million-dollar business, a $10 million business, a $100 million business, you know, a couple hundred million-dollar business. Like, what does it take to be an entrepreneur at each level of that game?

What people don't understand is when you're selling a $1 million or $10 million business, you're typically selling some element of you. So if someone's buying that, they're going to lock you in. There's going to be a non-compete. You're coming with the business.

So that's $1 to $10 million. You're the integral part.

You're the integral part.

Then what happens?

One or two staff is— once you get past $10 million, you have to build a business that will stand on its own two feet.

That's like 10 to 25 or 10 to 50.

Yeah. Every time I bought a business above $10 million, I hoped that the founders would stay.

Mm-hmm.

But hope is not a great strategy. I also built the system to know that if they left tomorrow, when I bought a $1 to $10 million business, I had to have the founder stay.

Yeah.

So I would lock him in with a big earnout. I would pay very little upfront. Give them big options, all that kind of stuff. Above $10 million, I was okay if they left the next day.

And then what about $100 million plus? Like, what are those entrepreneurs like that's different from somebody who can get to $20 million or $1 million?

At $100 million, you're providing something that is fundamentally disruptive to an industry, or you have some element of scale. Interestingly, I actually worked less hours when we got bigger than I did when we were smaller. And that was a real key to me. Like, when I sold my business at the end, the last one, we were just about $400 million in revenue. I used to go on vacation all the time. I used to go away all the time. And we were fine. The world didn't end when I wasn't there. When we were $1 million, if I didn't call the office 2, 3 times a day, if I was on vacation, oh my gosh, it would be disaster.

What system did you put in place that freed you up the most in your business? If you could go back and look at, like, gosh, when I started doing this, my business stopped owning me and I actually started owning the business.

That's a great question because I wasn't getting there. Every business— people that don't run businesses think growth is linear. Growth is linear, plateau down, plateau up, and over time it's linear, but in the process it's not. So I hit a plateau and we weren't growing. We were just kind of stuck, and I didn't know why we were stuck. And what I began to understand is I didn't understand cash flow and finance. Like, I wasn't doing a good job of managing money. And money is an asset, just like a machine is an asset. We weren't using our receivables, payable. Like, I didn't understand what was going on. And so I said, do I have time to learn this and become world-class at finance, or can I afford a world-class CFO? I hired a world-class CFO. And then as we got bigger again, I didn't understand logistics. I didn't understand that I was good at it, but was I the best in the world at it? No. And then I hired those things and let those people run. And I found a way for those people to do their job but keep me informed. So I think every part of your business has a heartbeat. Finance has a heartbeat. In my business, it was cash flow. I needed to know what our cash position was every day. I need to know what our receivables were and aging every Friday.

Explain what receivables and aging are really quickly in case somebody doesn't know.

So whenever you sell something to somebody at a large company, very rarely do people pay you upfront or in cash.

Very sad.

Unfortunately, they usually pay in net 30, which means they'll probably pay you in 60 days, and today it's 90. But you have to pay for those goods in 30 to 60 days. So there's a balance between those two, and we have to balance those things because I built my company to almost $400 million with my own money. We didn't have any outside capital. So that was really, really critical. And so we had to always constantly balance that for us. Every person I meet who has never started a business, has never run a business, and I ask them, why have you never done it? Number one reason typically is I don't have the money.

Oh, I hate that answer.

If I had the money, I would have started a business. I'm like, you know what? I had no money. Like, people don't understand. And you and I were talking about this on set. I bought 13 or 14 businesses in my tech business with no outside funding.

You got to explain that.

So I went to buy a business the first time when we were smaller, and I think it was a $3 million business. It was probably valued at 2 times EBITDA, so it was about $700,000. And EBITDA is simply how much a business earns. And there's a multiple of that, which basically means if a business earns $300,000, you pay it $600,000, it's going to take you 2 years for you to make the money that you paid them. But then after 2 years, it's all your money. Simplistic explanation. So I sit down with this business. It's really key for us. We're going to— it's going to change our profile. And we were only doing about $6 million a year at the time, buying a $3 million business. Oh, and I sit down with the guy and it's like, great, I want to retire older. How many businesses today are owned by people my age or a little younger, but they have no exit anyway? So I sit down with this guy and I convince him. I said, look, no one's going to buy your business. It's small, it's tiny. And he's like, great, I'll sell to you $600,000. Great deal. He's like, great, cut me a check. And I'm like, oh, I don't have $600,000. I go to the bank. Bank won't lend me the money. I go back to him and I say, I don't have the cash, so give me another option. How much do you have? And it gave me the first idea of an earnout. So I said, hang on a sec, I can pay you $100,000 on closing. I can pay you another $100,000 in 60 days. I can pay you the third $100,000 by the end of the year. So in 12 months, you will have $300,000, and the other $300,000 I'll pay you over 2 years. He's like, well, how do I know you're going to pay me? I said, well, of course I'm going to pay you. It's in my best interest to continue to pay you. And that's how I bought the first business on earnout. So basically I used half my money and half the business's money in order to buy that actual business. It's great.

So good. And you even did that with a $75 million business.

I did it with a $75 million business. I did it with a $30 million business. And people do it all the time. You hear M&A activity, that's what it is. Leverage buyouts. That's what a leverage buyout is.

And isn't it so funny? So we talk about it like seller financing because that's what they call it, obviously, in lower middle market or even, you know, mom-and-pop acquisitions, which really doesn't even touch Wall Street. And what kills me is half the time why people will not buy a business is exactly what you just said: I don't have the money. And I'm like, no, no, no. And, and this is so hard for people to internalize. I have to come up with a better way to say it, so maybe you have it. And I always say, there— it is never a lack of money. You never suffer from a lack of money. You suffer from a lack of knowledge on how to get money. But if you could fill the knowledge gap, you will find the money. And, you know, could you imagine if the richest people in the world were constrained by their bank accounts? They would never be doing deals like KKR is not doing deals because they have the cash sitting in the bank. But it's, it's our programming somehow has told us that if it's not in our bank account or in our 401, we can't afford to do deals.

If money and a formal education were the keys to success, every trust fund kid, everybody with an MBA would be wealthy. There's a reason why most people never achieve wealth is because they look at the constraints. Money is not holding you back. Your lack of education is not holding you back. Your lack of knowledge is holding you back. For sure. You can find the money. How many businesses in America today are run by people in their 50s or 60s that they have no exit plan? They're never going to get out. Their kids are not going to take over their business. Their spouse is not. So in your town right now, is somebody running a million, $2 million business making a few hundred thousand a year been in business for 20 years, loyal customer base. That person's kids is not going to take it over. Their spouse has no interest in running it once they pass away. What's that person going to do with it?

Close it down.

Close it down. All that value, all that inherent customer is gone. Is that person not better off to sell it to you and help you fund it for a couple of years and then continue to get money for their family, for their kids, and so on.

That's the sales pitch right there. You're not even selling them, you're just telling them why it's better for them. So in Wall Street, obviously you call it earnouts. Um, sometimes people call it also, you know, hey, we'll do milestone-based investing. Like if you buy the company for $75 million, but you know, the company ends up doing double what you thought it was, you could pay them more. So you could even negotiate sort of these seller financing or else.

That was what I learned. I mean, I oversimplified it, but as you can imagine, that conversation with the first business, I agreed to buy the guy's company for $600,000. Then I show up the next day and say, guess what? I don't have the money. Not a comfortable conversation. But to his credit, he was a great guy. And what I learned was I said, well, exactly your point. Me running the business does better, I will pay you more. So instead of paying you $600,000, maybe I'll pay you $800,000. It's like, well, how do I know you're gonna run the business better? And I said, well, you don't, but look at my track record. So in a way, he had to buy into me. And once I bought the first one, and paid him and actually paid him, I think it was $760,000 or something. The next one became so much easier because people are like, well, why would I believe that? So we'll talk to this guy again. It goes to your word and your credibility in business, especially for small business. It's so critical. People need to believe in you.

Yeah, it's interesting. It's like show, don't tell. Have you show them that you're going to do what you said you're going to— you're going to do, not tell them how great you are, what you're doing. And this feels like today more than ever, there's lower trust society, right? Everybody says a lot of things and then doesn't follow through. So that's a great way to do it. That's selling by testimonial or selling by social proof or selling by reference. You know, those are things that what you're doing is complex, but it's really not that different from saying if you buy this coffee, a bunch of other people like it. You know, if you sell your business to me, a bunch of other people liked me and they're glad that they sold their business to me.

Yeah.

In our business, we call that third-party verification.

Yeah.

People will always believe more what others say about you than what you say about yourself.

Let's get a little bit more detailed on some of the deals. Like you have, I mean, gosh, how many deals do you think you've done in your career, including like Shark Tank and then buying in your business and maybe even some of your like complicated JV or partnership structures?

Probably a lot with Shark Tank, 50+ over time in my business, probably 30 over time.

So you just have a lot of reps. Yeah. So for somebody who's like, I can't even imagine structuring some of these deals, like, what are some— is there a deal where you're like, this was really smart, we did it this way, or I'm really proud we kind of finagled it like this?

I'm really proud of my earnout deal. I'm really proud of— I'm looking back, I'm really proud of building a $400 million business with my own money. I'm really proud of that because I got to keep 100% of the profit the whole time.

You never ever raised any capital?

Never.

Good for you.

Until I sold it.

Yeah.

I'm really proud of that because I have so many friends that built $400 million businesses or billion-dollar businesses and end up owning 8% of it or 10% of it. That's why we say to people, keep as much equity as you can for as long as you can. People sell too early and end up with too little at the end. And I'm really proud of that. A big part of that was my ability to structure earnouts and to leverage cash flow within the business.

Yeah, yeah. It's interesting. We've— we have one business that we raised for now, BizScout, which is our business buying and selling marketplace. We didn't raise that much, $5 million. It's quite a large business now. But raising is also really not fun. You know, it's— it's not fun. We got lucky because we had a lot of, you know, social proof. And so that— that fundraise was easy. But I remember there's just such a difference. You sit down with somebody who's actually operated companies while investing and buying in them, it's always so valuable. And then, you know, the other day I was, I was so frustrated, Robert, you'll get a chuckle out of this, but one of the investors was like, well, we like to invest in companies in the second round. Um, these are startups. So going from, you know, zero idea, little seed check to Series A or the next one based on how closely they perform according to their projections. I know. And I thought, so I just had to go look at what this person's background was. And I was like, oh, you've never fucking built anything. Because that's the most ridiculous thing I've ever heard. Have you ever had one business where you're like, oh, my projections were perfect in the first 3 to 5 years?

That drives me nuts. Like when, when I sold out to Equity and I got into that world and know a lot of Equity people, I often go to these meetings. I'm sitting there and I'll be at a board meeting, and somebody on the board will say something, one of the equity people, and I'm like, that doesn't make any sense. And I realized they've never operated a business.

I know.

There's a difference with being a financial operator and actually operating a business. And I think you can appreciate that. Now, I wish I would have learned how to play equity sooner, because in some ways I could have sold my business sooner and gotten more money than when I did. But I think every business is different. Some businesses just need a certain amount of capital in order to grow and start and get bigger. I didn't understand that, and I probably should have raised money and built better systems and better software We had great sales, great service, a good product, but we didn't have a great product because our product was based on our ability to finance it. If I would have raised money and given up some equity, I could have built a great product. Now, hindsight is perfect. I could have also raised money, blew up the whole thing, and end up with nothing. So You never know. But I've learned to appreciate both. I think some businesses you just have to raise money early.

Yeah.

Can't build rockets without it. That's for sure.

Yeah.

Did you ever have a moment where you had to get permission for somebody in your business to get to the next level and you were like, man, you know, I have to get this person to say yes to me, or I have to get— within the business anyway. And they were like, I'm not going to bet on you. Have you ever had somebody that's created a chip on your shoulder? Basically not really.

I think—

or do you just forget about that because you're more of an optimistic person?

I think so. Every business has a speed and a cadence to itself. Tech is very fast. So I've always been in tech. Tech moves very quickly. And I used to jokingly, but not really, say to people, I am a great person to work with 99% of the time. The other 1%, you're going to do it my freaking way. I don't care. So I used to get into rooms and we'd talk about it. And I'm a great guy to work with. I really am. I listen to people. I have a huge respect for people. I appreciate the hard work people put in. Sometimes if I say we're going left, we're going left. If you don't want to go left, you are more than welcome to leave because we are going left. And so that is the speed of the businesses. Many tech businesses fail because they can't make a decision. They want to go left and then want to go right. They want to go left when it's self-evident we should go left. When I sold my business, there was a small part of our business that was just growing as a new technology, and the people I sold it to didn't believe in it. They're like, I don't know if we want to get into that. I was like, oh my gosh, this is going to be huge. So I did a lot of market research. I did some studies, and all the studies said to them, that it wasn't clear this business was going to work out, that part of the business. So I said to them on closing, I said, tell you what, I will take less money for my business. Let me keep that part of the business, leave and do that. I oversold it. My conviction was so hard that made them step back and say, maybe we should keep that part of the business. And they did. And now it's huge. When a decision is self-evident in tech, it's probably too late. Meaning when I know something is going to happen and you know it also, one of us is too late if we haven't done something about it.

It's a great point because I think a lot of times in my career I've failed because I've started early as a salesperson, which sometimes meant I was trying to get consensus. Well, what do you really want? Well, what are you trying to— and I would kind of try to frame what wanted, because I wanted to sell you what I got. And the more I've realized in entrepreneurship, it's like, no, no, no, whoever has the most confidence in this ability to execute is the winner.

Do you think Elon Musk sits around and says, guys, how— what, what should we do next with this company? Nope. He has a vision, he has a goal. I'm sure he's a great leader, brings the team along with him, but I'm pretty sure they're living his vision. And I used to be like you. I used to think, oh, because I think something, I can't be right. I need everybody else to be right. And very few people in life can see the future for— until it's obvious.

Yeah.

I'm also curious your thought. Like, do you think that even other successful people, sometimes they want you to tell them what's going to happen? Not necessarily always, you know, get their consensus in it. Do you think that's true?

I think that's human nature for everybody.

Yeah.

I think we have a need for certainty. I think most people want certainty in their life because what's the alternative? How risky is it? Like, but when you think about it and you step back from it, how precarious is life? The other day I bought this old vintage car, custom-made, blah, blah, blah. Anyway, long story made short, I started it and the accelerator got stuck, and my house is up on a hill, and I actually smashed into another one of my cars. Everybody was fine, cars were totaled. But if that car wasn't there, I would have gone off the hill. And you think about that. I didn't wake up in the morning. I didn't know what was going to happen to me that day. Like, how precarious is life? But most of us want certainty. We always think the good is going to last longer than it is. And same with the bad. And so people that have the ability to live with risk and make hard decisions and go where others don't want to go or can't see and bring others along, I think that's the definition of leadership. And, you know, I think Elon Musk is a great leader. Look at the vision, like the Boring Company. How incredible is that? Like, I just think about that, like tunnels underneath cities. That's so cool.

Do you think that you can be a really good leader and a people pleaser?

Yes. Yes. To a point. I think inevitably to be a great leader— you asked me good— inevitably to be a great leader, you have to be great with people up to a point. And then you have to have that level where you don't care. I don't care if you agree with me. I don't care if you like me. I don't care what you think about me, but I need you to follow me. If you're willing to follow me, I respect you. But if you're not in 100%, I need you to leave. Like, I think you have to have that edge. That was my problem. I was too nice a guy. I didn't have that edge. That's why guys like Mark, I had like, oh, but you have to have that edge in business in order to be great.

Yeah. My husband jokingly calls it being a benevolent dictator. So I always say this is a dictatorship. It's a nice one, but it is still a dictatorship.

My wife always says, because sometimes we'll be planning stuff and she's like, oh, Robert's in business mode. And it's true. I'm like, okay, no, we're going here, we're going there. Like, here's where we're going. Everything else is irrelevant.

Yeah, I heard this great story about Jony Ive, you know, the, the designer for Steve Jobs. And he talked about how at Steve's funeral, he kind of told a couple of stories. And one of the stories was that him and Steve used to get into it quite a bit because Jony one time told Steve, hey, you know, maybe you could be nicer. To the team. You're kind of too direct. You could be a little nicer. And Steve looked at him and said, why? And he said, well, you know, because I want— I like the team. I care about them a lot. And Steve looked at him and said, no, you don't. You care about them liking you. I thought you cared the most about creating an incredible product and having the best team in the world. And instead you're actually being quite vain. And Johnny Ives was like, and I was so pissed because he was right. And I thought about that a little bit. I think about that a lot now in teams. You don't have to be a jerk, but maybe you do really have to hold the line.

The quote I always remember, the mistake I used to make is, and now I get like, I shiver when I hear it, when people say our business is like a family.

Oh yeah.

We're like a big family here. I'm like, that's such bullshit. Because there are things I would do for my kids and things I would put up with from my wife and my kids that if you worked for me, I would fire you tomorrow. We are not a family. We're a team of people that respect each other towards a common mission. The best person I've ever worked with worked with me in 3 companies over 35 years. I've never been to his house for dinner. We've had dinner maybe twice. Do I like him? Sure.

Would I—

if I had a free day, would I call him up and hang out? No. But I love his business acumen, and I respect him more than almost anybody in business. That's the difference.

So true.

You don't have to like me. You have to respect me and you have to respect the mission that we're here to do.

To wrap up, what is, what is the best lesson you've received from a mentor in business as you've come up? Like, do you remember a moment where somebody had that Steve Jobs, Johnny Ives with you?

You know, Codie, I've been really, really lucky. I've had so many great mentors. I've worked for Warren Avis. I've Shark Tank, you get to meet all these incredibly successful people. I think for me, the big turning point to create where I am now was the difference between a paycheck and creating wealth. And I always call it— I had a poverty mindset. And a wealth mindset. And a poverty mindset works to make a living. I started my first company to make a living, started my first company to pay my mortgage payment. I got fired, didn't have enough time to make a mortgage payment, started a business. Somewhere along the way, I made enough money to earn a living but not build a life. That I wanted. And my dad had a great saying. It's great to dream. It's better to pay your bills.

Good.

And it's so true. I think that's probably the best piece of advice I've ever gotten, is once you've taken care of paying your bills in life, you can have grand dreams all you want.

What a good spot to end it. Robert, you're the man. I learned so much from you. Watching you on Shark Tank over the years, but then getting to know you and watching you, you know, build but then pour back into other people. It's just really inspiring. So thank you for having me today.

Love what you do.

Thank you.

I think your message for America is the right message at this time. Anybody can buy a business and be successful.