Eric Siu and Neil Patel debate whether it's better to be rich with high personal payout or king with majority control. They use Microsoft and SAS Institute as examples, weighing trade-offs like founder equity, compounding wealth, work-life balance, and recruiting talent.
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I got a question for you because you're talking about generational businesses. Would you rather be rich or king? Do you want me to define this?
Yes. Okay.
So would you rather be Microsoft or SAS Institute? SAS Institute. Do you know what SAS Institute is?
I do not know SAS Institute.
So I'll break it down for you. So the founders, so they started around the same time, actually, this, let's call it SAS Institute. They started a year before Microsoft started. I think up to—
before you go into it, I don't want to cut you off, but I am. Before you even go, just for shits and giggles, I'm going to go with rich. Because almost always, if you ask me, do I want to be rich or something else? Unless it's unhealthy or something like that, I'm going to pick rich.
Okay. I'm going to tell you why it's— you're going to pick the other one eventually. So like, we'll just go with that. And I think I might actually rather be rich than king. I think you actually might want to be king. So, okay, so let me break this down for you. So SAS Institute was a data software company founded a year before Microsoft was founded, okay? As you know, Microsoft, when they were founded in, I think, late '70s or so, they went public pretty quickly, okay? So they started, you know, participating in public markets. Obviously they had to, you know, you have shareholders, things like that. And Bill's equity, Bill Gates' equity came down quite a bit, right? And Paul Allen, the co-founders. Now, the co-founders of SAS Institute, they actually held onto their equity. They didn't raise outside funding or anything like that. They didn't go public. So I think going up to their very high points, I think Microsoft, I forgot what year this was, but Microsoft got up to like $143 billion in revenue, okay? And SaaS Institute was $3 billion. Now the difference is the founders kept, they were the cap table very much, right? There wasn't anyone else. Microsoft, obviously there's way more people on the cap table, but the difference is you have a multi-trillion dollar company versus a company doing $3 billion a year in revenue. So in this case, the king is Microsoft at $143 billion, okay? And then you have $3 billion for the rich, which one would you rather be? Yeah.
I'd rather be the $143 billion company.
The king. You'd rather be the king.
No, I consider that rich 'cause you have more money.
No, no, no. But king is like you own, you're like, you are better than rich.
So king means in its definition—
Oh no, no, no. Oh shit, shit, shit. No, you're right. I actually had it the other way around. Rich. So yeah, king is like you own the lion's share of the equity. So yeah, you're right. You'd rather be rich. Yeah.
Yeah.
Yeah, yeah, yeah.
I want the number. I don't care if I own 10% or 1%.
Yeah. And actually, if I think about it now, would I rather want like, you know, 1% of like a watermelon or like 100% of a grape.
But let's look at it this way. If king means you're on top, I don't know what definition you're using, 'cause it's a little bit confusing.
King means you're in control.
Okay.
Yeah.
So control of the company or like on top as you're the biggest player in the space?
You're, no, I think in this case it's you have control and then like on the cap, from a cap table standpoint, and you have like, you can make decisions quickly. Obviously you can have a big company to the end and be like Mark Zuckerberg and have control.
I'll take rich.
You'll take rich? Yeah, which is what you said originally.
'Cause with rich you can make yourself a king.
Yeah, which is fair. Which is fair.
I'll go buy a new company and I'll control my destiny.
I think, I think like, you know, let me ask you this down the road. Would you be receptive to a capital infusion? You've talked to people before.
Yeah. I talked to people multiple times a year.
It has to make sense. That's my, my, my take on it. Like the timing has to make sense and where we're going has to make sense.
I, speaking of richer king, the way I genuinely look at it for my life, 'cause I know it's unrealistic for me to be a Microsoft, right? Yeah. I'm not one. I don't think I have that skill level as an entrepreneur or marketer. But B, the bigger thing that's going to stop me from doing, creating a company of that size, I'm in too small of a market compared to like a Microsoft. The TAM is just too small. And if I look at my life, I've done okay. Can I make more money? Yes. Do I want more money? Yes. But I really look at it as balance. I think after having kids, do I want billions of dollars? Yes. But I want billions of dollars with a balance when I'm older. And if you told me I could have double that at that age, but there's no balance, I wouldn't pick it. Because towards the end of my life, I'm not going to remember. I'm not going to die with the money.
Can't take the billions with you to heaven. Yeah.
And there's a certain point where billions is enough, whether I had billions or $10 billion. Like I don't have, The ambition, even if I had the money and I don't, but if someone gave me the money and they're like, you now have enough money to go buy the Los Angeles Lakers or some sports team, it's not of interest, dude. I get invited to games all the time. I don't want to actually go drive to the arena and deal with all the foot traffic and have to sit there.
It's a hassle.
It's a hassle. I'd rather just watch on TV.
Yep. No, I'm the same way. I'd rather stay at home today. I think your ambitions change over time, but Here's the other thing. I was actually doing an exercise with ChatGPT the other day. I was like, okay, where you're going with software, where we're going with software, I'm like, well, I was arguing with it, right? I was like, the problem is like, you know, you look at like, don't get me wrong, these martech companies have done very well for themselves, like a Marketo in the past, right? But the problem is they are a pimple compared to like the largest software companies out there, right? So it's like, how do we make the argument here? It's like, okay, well, if you're building like the execution layer for whatever it is that you're solving, like marketing, for example, then you make the argument that you're kind of moving into like helping with headcount, for example, right? So I don't know where this ends up going, but maybe our TAM can expand, so.
Maybe, but you said something earlier where your ambition changes as you grow older. For me, my ambition has not changed as I grow older. What's changed is what I'm willing to do to achieve the ambition. So I still have the same ambition and I want it, and that actually grows where I want more and more. I'm just not willing to, grind it out as hard as I used to when I had no kids and I was in my early 20s.
But by default, Noah, doesn't that just mean he's less, he wants it less? That's a yes.
But I want more. I want more. I want to achieve more. I'm just not willing to grind it out as hard because I have other responsibilities in life.
Yeah. Which means, you know, you might want it, but like the willingness.
I look at it as 2 things. Okay. So in my early 20s, I never imagined creating a company that would generate more than $100 million in annual revenue. My goal at that time was to just build a company and maybe by the time I die, have $100 million in total savings.
Liquid.
Liquid. Yeah.
Yeah.
Okay. That was my goal. And I worked way harder back then than I do now.
Yeah.
Now, if you tell me, hey, maybe your goal is to be worth $1 billion, I'd be like, eh, I want to generate a— I have a company that generates $1 billion now plus in revenue per year. So I want way more than I wanted back then. And I would say my, whatever you want to call it, I call it ambition or goals, whatever you want to call it, is actually gets worse each year where I want more.
Yeah.
But my I'll work smarter, but I'm not willing to grind it out and never see my kids.
You know what it is? I think we underestimated the power of compounding in our 20s.
Yes. I never thought about compounding in my 20s at all. And I know people told me like, oh, if you invest in the stock, it goes up over time. Or if you just get going with business. When I was in my 20s, I was very shortsighted with my thinking. And maybe I am shortsighted in my 40s as well, but—
Maybe just a little less. We get a little less shortsighted with time.
Yes. I don't really know what it is like to compound. And we were sitting with Yaniv a while ago and—
It was last week.
Yeah, but Yaniv was talking about, you know, years in business and I was asking him, 18 years, 18 years, that's a long time. I right now think about the 10-year mark with NP Digital. I haven't thought about 20 or 30 and I'm 2 years away from the 10-year mark.
18 years also with the same team. Look at that consistency. If you do have the same team consistency and you do it for a very long time, it's inevitable, right? And then people might like going back to the— He has a good team, very good team.
Yeah, but if you have a shitty team and you're doing it for a long time—
Yeah, well, that's on you. That's like a low IQ move, right? But going back to earlier, we were talking about like if you, the whole like billionaire thing, it's unfathomable, I think, to the vast majority of people. But I think once you get to a number and you just keep compounding it over time, we're not saying this is easy by any means. It's like, You can see it getting there. And that to me is just a game, right? I think however big you can compound to is a function of your personal growth. That's kind of how I look at it as well.
Yes, but you nailed one thing. You talk about IQ. So my kids go to a school where everyone has to take an IQ and you have to hit a minimum threshold to get in.
I don't know. What is it again?
I think the minimum number is like 136.
Okay.
Right?
Which is very high.
So if you don't hit 136, you don't get in. And there's some kids there, A lot of kids there who are much higher than 136.
Have you done an IQ test?
I haven't, but both my kids have because they needed it for the school. So, uh, when going through this process and doing IQ tests, I've met a lot of parents who have wanted their kids to go to that school and they get them to take IQ tests, but they just don't qualify. Does it mean they're dumb? No. But you talk about low IQ, there's a lot of people, the majority of the people in this world don't have a high IQ and you can't do anything to fix it.
Yep.
And I've met a lot of entrepreneurs who have done really well with low IQ. I think the key is you find a business where you have an edge or you're competing with other people who aren't willing to do it. So you and I know Devin Soni. He's in a space of HVACs and there's a lot of smart people in the HVAC business. But would you agree that most of the people who have really high IQs don't think about starting an HVAC business?
In recent years, they've kind of piled into it, but yeah, before, no. Correct.
And in recent years when they piled into it, they still don't care to start an HVAC business. They're just buying up all the people who own HVAC business Combining them and then selling them for a lot more money.
But Devin's smart. He actually tries to understand the business and how to, the ins and outs of it.
Correct. And when I was talking to him early on about his growth rate for some of these HVAC businesses that he buys, and then in a year they grow 30% when they've been flat for many years, he's like, dude, he's like, the people who are running these businesses haven't tried a lot of stuff. They just haven't thought it through. And he's like, he's like, I just started thinking it through and I thought about the other stuff. Then I started learning their business and that's allowed us to, or that's allowed him to become really deadly within that space. But I think you can still do well even if you don't have a high IQ, you just got to figure out your vertical or your niche.
You know, I shared a Charlie Munger quote this morning to my stories and the whole premise of it is like he knows many people in his life that don't necessarily have the highest IQ, they're not the smartest people. And I think he was even saying he's not necessarily the smartest person, even though I think he's very smart or was very smart. He was just like, No, like the, the, the most successful people are learning machines, whether it's you're reading all the time, whether it's you're talking to people, which is kind of your way of learning. Um, they never stop learning until the very end. And he's like, the way Berkshire Hathaway was, was shaped was because Warren Buffett was learning all the time. Right. And I haven't seen for you or me, I don't think if there's anything we haven't slowed down on over the years, I, I, I don't think we've slowed down on our learning. The rate of learning hasn't stopped. Maybe your working style has changed a little bit.
Yes.
But not the, not the rate of learning. And that's, I think, the most important thing.
Rate of learning has not slowed down. I would say the biggest thing that has changed with our learning is we've shifted what we spend time learning about.
No longer marketing tactics.
No, we used to focus so heavily on marketing tactics and what you and I have gotten to a place in our careers in which we're like, we can just go hire the people to go focus and learn about different marketing tactics. We go spend our time on other things. So for example, I spend a lot of the last few years learning a lot about mergers and acquisitions.
Going global.
Structuring deals, global integrating. And I would say you spent a lot of time on learning about AI integrating within your business, trying to future-proof some of your systems, processes, and operations.
A lot of time on recruiting.
Yeah, a lot of time on recruiting. I would actually say that's the biggest thing I've seen you make a change over the last few years. Most people would probably say it's AI. I would say the number one thing that you've improved in my opinion is recruiting. If you're in B2B, here's the deal.
LinkedIn account-based marketing sucks, but it doesn't have to. With Karrot, it allows you to create personalized ads towards your customers and also personalized landing pages that align with the ads. So you're going to have higher conversions and influence pipeline reporting to prove that your ABM works. So if you want to learn more, just go to karrot.ai and you can join the waitlist. Again, it's karrot.ai, and we'll see you on the other side. You know what we should talk about? The— we should talk about our rate of focus in the beginning. So when I first met you, you were 25, I was 24, I think. How focused do you think you were on a scale of 1 to 10 at that point?
What most people would consider or how I would judge myself?
Most people.
That's a good call because we're both harsh critics. I would say most people, they would say we're focused from a 30 to 50% range.
At 25?
Yes.
Okay. How about age 30?
Let's go with 30 when I was in the early 20s, 50 by the time I was 30.
And then let's go all the way up to now. So 40.
40?
80? Okay. I think I was like, when I first met you, maybe it was like a 1 out of 10, 10%. Okay. And then I think maybe 30, it was like 15%. Okay. Go to 35, I think it was like 20%. Okay. And this is interesting because I talked to one of my engineers who's been with us for like 8, 9 years or so. And he's like, dude, the focus in the beginning was like a 2. He's like, it's like an 8 now. I don't think it's quite an 8 now.
I think it's—
8 out of 10? Yeah, like 80%, right? And so now I'll ask you first, what do you think my focus is now percentage-wise?
I'll give you 60.
Yes.
Somewhere around there. And the reason being is you still have 2 separate companies.
Yeah, 6-0, right? That's exactly—
60 out of 100.
Yeah, that's where I peg us at. You're at 80% right now, right?
Yes. And I would say my biggest flaw is even though it's one company, I get distracted internally with things that I shouldn't focus time on. And a great example of this is you mentioned, hey, have you ever thought about raising money or taking outside money? Yes, people hit me up and I talk to them, but if I was truly focused, I wouldn't even waste my time talking to them.
Yeah. You used to not respect your time. Now you respect your time a lot more. Neil used to sell courses where you get a free call with him for every course. I was like, that was really— and I was only 24 at the time. We were really young. I was like, what are you doing?
So yeah. Yeah. 30-minute phone calls.
But also you've been in business for how many years? On NPD or just overall?
Like I think— Since I was 16, 24 years.
So in the very beginning, your focus was what?
Like a 1 out of 100.
1 out of 100, right? Then like 10. So my point is like over time you learn to focus more because in the beginning when we're younger—
Actually, no, I would say when I first started, my focus was probably like 60, 70 out of 100. My focus started getting screwed up when I started making money.
Yeah, 'cause you thought you could do everything. I remember there was a period of time, I'm gonna try, you saw things going well with online education, I'm gonna do online education, I'm gonna do this affiliate thing, I'm gonna do this, right? So it dropped down quite a bit for you.
Yeah, but when people are young and starting their first business, they usually have decent focus because they can't afford to not have any focus.
That's true.
It screws up when we start making money. Like, just think about when you started focusing less is when you started making more money.
No, I never learned my lesson in the beginning. I was all over the place from the get-go because I thought I— because here's the thing, once you have some money, once you think you have it figured out, you like, you start to get a little more, oh, I feel I can do more.
But no, but let's go back when you jumped into Single Grain. So for context here, Eric did not create Single Grain. It was started before him. He joined as a partner, but when you first got into it, I would say you had really good focus. It was as you started making more and more money, like millions, that's when your focus really started changing.
So you're missing a point. So I'll give you, I'll tell you what happened here. So there's a period of time when I first took over, we dropped all the way down to 1 employee. Thank God we were ranking number 1 for the keyword digital marketing agency because we're just doing all these guest posts, right? For, so for that—
What do you mean when you took over?
So when I took over, it was 2014. I actually had disengaged from the business because I read the book, Let My People Go Surfing. So I disappeared from the business. So we dropped all the way down to one employee.
Oh, you're talking about when you bought it?
Yeah.
Not when you first started with Susan.
Yeah. When I bought it. Yeah. And what happened afterwards, once I got it back in, it was like a wake-up call when the outside accounting firm was like, hey, I think it might be time to shut it down. Right? And then from 2015 to 2018 or '19, very focused there. And that was a point where it's like there was actually a launchpad. And then I got unfocused again, to your point.
Yeah.
To your point.
Yeah.
So you're partly right. Yeah.
Yeah.
Yeah. So I think this lesson's helpful for everyone 'cause it's like you, there's like ebbs and flows with focus and we learn over time. We're just hoping that you can learn that lesson sooner. And even if you're younger right now, you're probably going to think that you can do everything. Trust me, you can't.
I remember you talked about letting your team learn and learn from their mistakes 'cause you mentioned a book to me back then. I don't know what it's called, but there was a book.
Yeah.
And you even quoted things like the IBM CEO making a mistake with some hire they lost.
I don't know.
Yeah, it's a million-dollar mistake. Or $100 million or something. Yeah. And I remember when Eric first told me about it, I'm not saying there's a right or wrong approach because I don't have a company the size of IBM, but my philosophy has always been fire, hire the people that know this stuff. I don't have time for them to learn on my dime.
Yep. Anyway, hopefully that's helpful for you guys that it applies to marketing too. Don't think you can do every channel. Don't think you can learn every channel. We're still very much SEOs.
I would say I'm less SEO than anything else.
Like I would say our base level skill is still SEO.
Our base level skill is still SEO or GEO or AI SEO, whatever you want to call it.
But we're much different now as people. So yeah.
I still write my copy for my landing pages.
That's good.
Like for our SaaS products, I rip apart all the landing pages they send to me. I can do that shit on my iPhone. Excuse my language. I just install the Grammarly app and I just type what I'm trying to explain. And I'm like, oh, does this sound good? And I can usually do the copy for a landing page, like a really important landing page, like a home screen or the pricing page. I can usually write the copy in like 5, 10 minutes.
I think it's SEO and conversion for you.
Yes. And then I had to think about it, but within an hour I'll have it fine-tuned because I can write the rough draft and then I keep going back and forth and then tweaking.
Yeah.
And then it's pretty good.
See, back in the day when we're like 25, 24, Neil didn't have Grammarly, so he would just Skype me. So Neil would Skype me and then ask me, is this good? Is this headline good? Yeah. Are we good there, Noah? All right guys, that's it for today. Catch you later. Bye.
