Is Trump Media (DJT) a scam or a genius marketing move?

So funny enough, we were talking about Teslas earlier today and the other day. Dude, did you see their Q1 earnings?

Yeah, it tanked.

It tanked. They missed deliveries. It was one of the worst quarters that they had in 4 years. Tesla quarterly deliveries declined for the first time in nearly 4 years. And you saw what they did from a marketing perspective after that?

No, what did they do?

It took them roughly a few days to a week, but then they started discounting the Model Ys by $7,000, up to $7,000.

More. $7,000 more discount.

Yes, because if you look at last year, these cars were really expensive. And I remember my co-founder, Mike, bought a Model X. Is that the biggest one?

That goes like this?

Yeah, yeah, the wings. And he bought a Plaid or Plaid or whatever it is.

Plaid, yeah.

Plaid.

Oh, the X is Plaid or the S is Plaid?

The X. He doesn't have S. He has an X.

Got it, got it.

He has 2 Xs. And one of them's Plaid.

Plaid's the highest tier.

And I think he spent like $150,000 or $160,000 or something like that. I don't have the exact price. But he's like, dude, the prices have gone down a lot. And now not only have they discounted them in 2023, they're discounting even more, which I'm not an economist, but this is gonna definitely hurt their earnings going forward. Because if you keep discounting it, what does that affect?

Their earnings.

Yeah, your profitability.

Yep. Well, look, well, I don't know if it affects earnings. Um, I don't know. I mean, if he sells more volume.

Yeah, but He's not selling the volume, he's discounting to get the volume back up. So if he discounts, it's not the volume— like the volume is going to guarantee to go back to either where it was or even higher.

But it's all he could do right now.

That's all he can do.

All right, real quick, I need to tell you about the group that Neil and I created called the Agency Owners Association. And this is a group that's similar to entrepreneurial organizations such as YPO or EO. By the way, Neil and I are both in YPO, but We thought it'd be really cool if we're able to create a group that's dedicated to agency owners to helping them scale. So you could be at 6 figures, 7 figures, 8 figures. We have different groups for different levels. All you have to do is go to marketingschool.io/agency. Again, that's marketingschool.io/agency, and you can go there to apply. And I will tell you right now, what we're doing is there's an online community. We do calls every now and then. There's stuff that we share in there that we don't share publicly. And you can, at least with the online community, you can cancel at any time. So you can You can go there to learn more about it. And that being said, back to the video.

And funny enough, speaking of stocks, did you see what Barry Diller said about Trump Media?

Yeah, I didn't, but go on.

Yeah, he said Trump Media is a scam and people buying the stocks are dopes. And what's funny is, is when you look at it, the peak of the stock was around $79. Now it's trading at roughly $46 at the recording of this podcast. But here's what's crazy. This is the power of marketing, you know, and I'm— I would short this stock, but I'm afraid to short it.

You can't.

And if you look at it, they did roughly $4.1 million in revenue in 2023. Do you know what their market cap is?

Something a couple, like hundreds of billions or something.

No, no.

$30 billion.

$5.5 billion.

$5 billion.

But that's still high.

Yeah.

You're saying you did $4.1 million in revenue. Yeah. Yeah. You're not making any money, really, in a whole year, not a quarter, and you're worth $5.5 billion. This is worse than the dot-com boom, probably, right? I wasn't old enough, but like, who's worth—

That's 1,250x.

Yeah, it's ridiculous.

I don't think it's that ridiculous. Well, okay, would I invest in it? No. But the Trump stock, so the Truth Media stock, The reason why you wouldn't short it is because there's so many Trump fanatics in the United States, right? You don't know what's going to happen to it. And this is their way of saying that, hey, we support Trump, right? Because what you could say, at least half of the US or maybe 40% or whatever are in favor of Trump. Maybe it's a little higher than that. I don't know. But it's too dangerous to short this thing. You just don't know when, like, because if you short it, you're on a timetable for it.

Yes. Yeah. And you can also play options to even juice your returns. But like, The way I look at it is this, it's too risky and it just shows you the power of a personal brand. If you build a personal brand and this goes towards Eric's model, this new model, I know you're hedging, of going more broad that you started in the last, what, 3 to 6 months?

6, 7 months ago.

Yeah, so 6, 7 months ago. Gary Vee's been doing the same model of going broad. It can work. You can make money from it.

His logic is I want all 8 billion people in the world to know me. And like, I get it. I understand. But that's not a fit for everyone. It's a fit for him.

Yeah. And he also doesn't mind like being livestreamed or having people follow him around.

Yeah. You like your privacy.

Dude, they tried my team. I did not know this, but I was at Collision in Toronto and I met a dude and he's like, hey. And he's like, started taking some videos of me and I didn't know who he was. And my team's like, oh yeah, we hired him for this event. He's gonna follow you around. I was like, no, no, no, no, no. Yeah.

It's just not your style.

And then within like, uh, 10 minutes, he quickly realized I was not down. He's like, how about when you just talk to him? I'm like, no. He's like, how about if they're cool with it? I'm like, no. And then it was funny because I was like, oh, you're cool. You can just go home. We'll pay you for the day. And he's like, yeah, but I haven't finished recording the content. I'm like, yeah, it's okay. I don't want to be recorded.

See, the funny thing is your team knew to like stick it in there and see what happens versus ask, because they knew if they asked you, you would say no, right?

That's so true.

Now, when I've hired people to do that initially, remember Noah, right? I hired him to follow me around initially. And after like, I don't know, 3, 4 weeks of it, I was like, dude, let's just shoot videos in the office. Like, don't follow me anymore. Because like, also it's dangerous when they follow you. I saw him almost like eat it on the floor, like on the street. It's like, I just don't want that. I'm good with that. Yeah. I think it was really novel when Gary first started to do it. But the thing I didn't get to talk to him about is like, hey man, your YouTube views are kind of fading. Like, it's all documentation. And that's why the views are fading. But I think it's because talking about stale formats, that format might be getting stale.

Yeah, but some of his formats also do well. I agree with you, but some of his formats are still performing well on TikTok.

He crushes on Reels.

Yes, TikTok, Instagram. He's doing well still on many platforms out there. I don't believe you can win all the platforms. I think you can start doing well, but there's phases. And what I mean by that is if you look at, If you look at mass consumption of content, a lot of people even in the Bay Area are like, hey, do you know Alex Hormozi or Cody Sanchez? If you look at their view count, forget follower count, they're crushing most people, including you, me, and almost most social people.

When I look at their views, it's like 130 million per month. And that includes Shorts views, obviously, but that's still a lot of views.

Yeah, they're getting more than most people with a fraction of the followers.

Yeah.

But just like the people before him, there's going to be new people after Cody and after Alex that are going to start getting the limelight. It's just a question of when.

You know, I had a conversation— oh, actually, speaking of fame for a second, the thing with fame is let's say you become the most famous person in the world, it fades very quickly, like maybe in a year or 2, and then somebody else comes up. Like, it keeps going back and forth. People keep cycling in and out. Um, so food for thought if you're trying to become famous. It's not forever.

No. And when I was younger, I tried to focus on like getting my name out there in the marketing industry as much as possible. And as I grew older, I met people and some of these people worked at private equity funds or they're venture capitalists and they had competing companies. And I was like, how the heck are these companies so much bigger than us with a fraction of the traffic, barely any social followers or any of this? And a lot of them were just running basic M&A playbooks. And when I look at a lot of my competitors who are larger than us, they're just like, yeah, we're just going to spend $200-$300 million here, $500 million there. And if you look at their numbers, they're better than ours.

Mm-hmm.

And that model has made me shift my strategy over the years to instead of spending as much time creating social content, I actually spend more time on M&A calls and doing outreach and trying to find companies to buy. than I actually spend on creating content. And that's including having a head of M&A who worked for Dentsu Aegis, one of the biggest ad agencies in the world. He ran all of M&A for Americas and we have an M&A team. I still spend, with having that person and a team, I still spend more time on M&A than actually building content or doing marketing now.

It goes back to people playing to your strengths. So for example, if I said, Neil, go manage someone, he'd be like, no, never, right? But if it's like, hey, let's talk strategy, M&A goes into strategy, then it's like, yeah, all day, let's talk about that. And I think you've— instead of talking about content strategy, now you just talk about M&A strategy. And going back to Neil being a math boy, he's just going to where the numbers are. It makes sense at, you know, your scale right now.

Yes.

Alright, so I wanted to take a second to tell you about Leveling Up Founders. This is an event/mastermind for people doing 7, 8, 9 figures. These are founders that are doing that amount. And we've been doing this event for a couple years now. We've had amazing speakers. But more than anything, it's about the people. What I mean by that is like-minded people want to hang out with like-minded people, and this is the best spot to connect with people of a certain caliber. And we vet every single person that comes through. So if people are— even though they make a lot of money, but their character, we don't really align with that, we're not necessarily going to let them in. We did this event in Beverly Hills, and it's happening in the beginning of August. All you have to do to learn more about it is just go to levelingup.com/events. Again, it's levelingup.com/founders. If you want to hang out with amazing people, Neil, my podcast co-host, is going to be there. I'm going to be there. People like Syed Balkhi, he will be there as well. And again, it's going to be a great time. levelingup.com/founders to learn more. And we'll see you inside. Speaking of which, we had a mutual friend today tweet something about how— so Andrew Wilkinson tweeted that private equity sucks at marketing. And then Neil, for the first time ever, I've seen Neil respond to something on Twitter. Do you want to— you want to give the story?

No, no, you could talk because I think I just responded with, but they may not need marketing and they still make a ton of money.

That's exactly what happened. So do you want to explain the thinking behind that? Because again—

Well, first off, I'm going to load up Twitter because I didn't even see what happened.

You got 4 likes on that post from when I saw it.

Let's see. He said private equity sucks at marketing. And I put, but they don't need to be good at it, wink. A lot of them have their own playbooks and the returns on large sums overall has been great. Especially with the use of debt. And, you know, got 8 likes and 2 comments. I don't know what the comments are saying. I don't, you know, I'll read them later on. But the overall thinking about this is I've been an LP in a lot of companies over the years— venture funds, private equity funds, hedge funds— and, you know, some of them are large where they're managing billions and billions of dollars. And what I've learned over the years is my way of growing a business plays to my strengths. You end up finding something, you figure out where they're messing up on conversion optimization and marketing, you fix it and you grow the traffic, you grow the conversions, you add in more upsells and downsells, you make more money, you know, you create a great return on the buy. And a great example of this is when I bought AnswerThePublic, I paid $8.6 million.

On revenue?

Yeah, for a company that supposedly did around $130,000 a month in revenue. And they said most of it was profit other than server costs.

$130 grand.

$130 grand, sorry.

Yeah.

And that wasn't true because you know this just like everyone else, you got to actually have employees for support and all this kind of stuff. The real profit on that company Was closer to like $800 grand from our calculations. And I was paying roughly 10 times profit.

Mm-hmm.

Now, when I look at that business today, playing on my strengths, once I bought that and it took— we had someone in place who was in charge of running it. Things moved slow. I took it over. I made my changes, no joke, in less than 2 months, 2 and a half maybe max. And once I made my changes, wiped my hands clean, I was done. I moved on. And I now bought that business. If I look at my EBITDA for less than 3x, I'm at 2 point something.

So it worked out.

Yes, but that's playing on my strengths. When I look at a lot of private equity companies that I know, they'll be like, Neil, and I'm making this scenario up. I know Single Grain does everything, you do SEO, pay-per-click, et cetera. But private equity will look at it and be like, Eric, you mainly sell SEO services. This is what you're great at. And they'll say, hey, I forgot that dude who's based in Fullerton, nice guy. He owns a pay-per-click shop. You know who I'm talking about too. Either way, let's say a guy's name is John. John, you only sell pay-per-click services for e-commerce and businesses that are mid-market. Eric's focusing on the mid-market business.

Huh.

And then we got this other person over here, Susie, who is focusing on conversion optimization and email marketing and social media. So what they'll do is they'll take Eric's company, they take John's company, they take Susie's company, they combine them. They take all of Eric's customers and they sell them pay-per-click, social media marketing, email marketing, conversion optimization. They take all of John's clients, sell them SEO, social media marketing, email marketing, and conversion rate optimization. They take Susie's customers, they're already paying for social, email, and conversion, and they sell them pay-per-click, and SEO. When they do that, there's a few things that happen. The average revenue per customer goes up. The LTV goes up also because the customers stay longer and churn goes down. And the accounts are much more profitable. You only paid so much to close the deal. They're staying longer. You only need one account manager. You don't need 3 account managers. At scale, the economics get better. That playbook for private equity has done really, really well. Look at MountainGate in our space. They bought Elite SEM, bought a few other companies, tucked them in, turned it into Tenuity. They sold that thing for a crazy multiple. It wasn't 20 times EBITDA, but it was close to it. MountainGate isn't the best at ranking on Google or building a social following, yet the model's worked really well for them.

It's going back to playing T-Rex trains and actually, So, when I asked Gary Vee, I was like, hey, how do you plan on buying the New York Jets? And one of the things that he said was VaynerX, his agency holding company, he's looking at this from a private equity angle. He wants to go acquire not just agencies, he wants to acquire a bunch of different businesses and add in his thing, right? Which is marketing. His argument is, I'm going to do private equity, I'm going to add in marketing because private equity sucks at marketing. But to your point, maybe private equity doesn't need to be good at marketing because they have the roll-up strategy. And what Neil's also talking about too is multiple arbitrage. You guys can Google that if you want to understand, wait, how come if I combine a bunch of things, it's worth even more? Well, multiple arbitrage. Yeah.

What Eric's saying on multiple arbitrage is if a company is smaller, they're typically not worth as much from a multiple. So if a company is doing $1 million in EBITDA in the marketing space, they may be only worth 3, 4, 5 times profit, and they may not get all that money up front. If someone's at $20 million in profit, someone may pay them 10, 12, 13 times profit. So what a lot of private equity shops do is they're buying a lot of these companies that are doing $1, $2, $3 million in profit and paying no more than 5x. You start buying 4 or 5, 6 of them over a few years. Next thing you know, after cross-selling and everything, you're at $12, $13 million, even though you paid 5x, 6x max. If you're able to sell the business at 12 times, you just doubled your money. And a lot of these guys aren't just buying these businesses with cash, they're adding on debt to it. So they didn't double their money in many cases because they're adding debt. Sometimes they can triple their money or the economics can even be better than that.

Yeah. Yeah, yeah, yeah. Anyway, that's it for today. Let us know what you think about this longer episode. We'll probably chop it up a little bit for YouTube. And that is it for today. And also don't forget, go to marketingschool.io/agency to learn more about the Agency Owners Association. That's where we help agency owners grow. And hopefully we get it to a place where we don't need to have ads on this podcast anymore. So yeah, there's that for you. Goodbye. Goodbye.