Michael Fertik | On the Homefront with Jeff Dudan #61

Hey everybody, this is Jeff Duden and we are on the home front with Michael Furtick. Welcome, Michael.

Thank you, Jeff.

Yeah. Coming to us live from Paris. So excited to spend this time with you today. For people that don't know who you are, Reputation.com was a big part of what you've done and what you've built. And now heroic ventures which is investing in AI robotic machine learning, which I'm interested to know the difference between AI and machine learning. We use them both, but that's as much as I know about them. But anyway, Michael would love to, to learn a little bit about you and how you grew up. So who is Michael Furtick?

I often say that I started my first company when I was 19. I'm now 45, but that's not the entire story. I grew up on the Upper west side of Manhattan. I was from a very middle class family and I went to a very fancy high school on the Upper east side. Now if your listeners or you go to the Upper east side, upper Upper west side nowadays, you probably might not see a difference. But when I was a kid, those were two very different parts of New York. The Upper east side was known as Silk Stocking because it was very fancy. The Upper west side, there were hookers on my corner when I was growing up and crack vials out there on the street.

And they're on the Upper east side too, but it's just a different price point.

Well, a very different price point. And they don't stand on the corner waiting for customers. So now, now they're both very nice neighborhoods and so forth and so on. Although New York is facing some recent challenges as you maybe, maybe you know. But there was a, a filmmaker in the New York 1980s who made some very famous films and, and one, his first famous film, the name of which I'm forgetting, the entire premise was there was a kid from basically my street who went to this very famous high school, which was basically the high school I went to. His model. After high school I went to and like the world got rocked because this guy from the other end of the side of the tracks went there. So anyway, long story short, that was the, the context in which I grew up. And I grew up a Jewish kid, very liberal household, artists. All the men in my family been artists for three, four generations. My mom was a shrink and I grew up in this, in this not great neighborhood and I went to school in this very fancy place and I'd go across town by bus and this is where the first business came From. So when I was in fourth grade, when I was in fourth grade, I was. Because I grew up in the neighborhood I grew up in, I was comfortable walking down to the avenue on the kind of the wrong direction, so to speak. And this is New York in the early 1980s, okay, so the avenue, the wrong direction. And I would go to the bodega and I'd buy some Snickers bars and, you know, Tic Tacs or whatever, Starburst, I don't know what, what have you kind of candy. And I'd pay whatever, 10 cents, 50 cents, whatever the price point was, I don't remember. And then I'd come back to the bus stop and I'd sell it to all the rich kids at a big markup because they were too nervous to walk down that block and a half to that perfect. It was perfectly safe. It just didn't feel good. Little kids in New York. And so that was my business. And if I had customers, I made a bunch of loot, you know, like two bucks, three bucks a profit. And if I didn't have customers, I would eat the candy. So I had my own loot of a different kind. That was my first enterprise. And I bet you a lot of people who are listening or who aspire to be full time entrepreneurs have that kind of recall today on Instagram or TikTok. You'd call it a side hustle. That was my only hustle. But they have some kind of trading hustle, right where you buy low and sell high. I hope it's not just meme stocks and crypto and so forth. I hope there's actually something that people really want to use in different ways. But that's how a lot of people got started. That's how I got started. And I got started understanding the power of demand, the power of arbitrage, the power of giving people what they want. And how just a little bit of friction, walking around the block and being prepared with a dollar in your pocket and overcoming that little bit of friction could provide just enough value. I didn't say it to myself in those terms, of course, I was in fourth grade, but I understood viscerally that providing a little bit of value, overcoming a little bit of friction was enough to create a business. Doesn't mean it's the world's most scalable business, but certainly was enough to create a business. That was when I got the bug. I got the bug to be in business. And if you asked me in junior high school or high school what I wanted to be, I would have said, well, I want to be an ambassador or something like that. Because I had, I had notions of that and it was still a very wonderful career for people who want to do that. But it turned out that I went to law school, I went to college and all that, but I ended up back in business where I started in fourth grade.

Yeah, convenience. People are willing to pay for convenience. Even fourth grade rich kids apparently.

Convenience, safety and pleasure, you know. Yeah, all those things. Right. It's like, you know, can you get, can you, can you make your own cheeseburger or, or, or burger or hot dog, whatever, what have you. Yeah. By the way, if you've ever tried to make your own pizza, I mean, it's just like a bad decision. I mean, I don't care what people say, right. These homemade pizza ovens and these things, they look great and you buy them and try them and whatever else. And I'm sure some people have a whole hell of a time with them. And one of my best friends built a whole Italian style pizza oven. He made a bunch of money. And, and I gotta tell you something, you know, for like 15 bucks or depending on where you are, 8 bucks or 20 bucks, depending where you can get a world class pizza and they deliver to your house and it's perfect. Or you could spend six hours making it and like, what are you thinking? Like this is not a call. Or donuts. You ever try making donuts? Just go to Krispy Kreme. Yeah, it's great. You know, go to whatever, you know, Dunkin Donut, it's better. So it's flavor, convenience and safety.

Yeah. So that's, I mean that's my argument against gardening. So every mother's day my wife wanted a garden because her family grew up on the west side of Charlotte and they were farmers and they had all this stuff and two experiences. Because I can say this because my in laws don't listen. So, so I was staying with them before we got married and I had my contracting business and I had a seamless gutter guy who did gutters for $2 a foot and he could run a whole house in three hours or whatever. So we wake up on a Saturday and my father in law, he's like, hey, I've got a section of gutter that we're going to replace. It's on the front of the house. We're going to go to Home Depot, we're going to buy the gutter, then we're going to take it down and we're going to put it Back. And I'm looking at this, I'm like, this is going to be a six to eight hour deal. And by the way, to buy the guttering at Home Depot, cost the same, to have my contractor come out and furnish it and install it. And I had to do nothing. So basically I said, you know, I'm not paying any rent, but what I'd like to do is I'd like to take care of this. I bought my Saturday back for like $300.

Yep, there you go.

And it was, it's called, yeah, it's.

Called the division of labor, which is another word for civilization. Yep.

Well, that's subtle but significant. See, I mean, like, they were not entrepreneurial, so they didn't really put a value. They put absolutely. It was absolute dollars where I put the value on my time as to what else I was going to get done that way. Which at that point I was working seven days a week trying to get things moving. But, and then, you know, same thing with gardening. I mean, we're out there. Deers, you know, you let your guard down, the deer come, they eat. You know, you've got 42 hours in this garden and you end up with some wormy zucchini. You know, that looks, I mean, so.

It'S funny, when my father finally made a little script, he bought a house in Connecticut and.

Yeah.

And he had a green thumb, my dad, and so he made us do a lot of gardening. And so I have, I raised chickens and I sold the eggs. This is my next. I sold the eggs to my teachers. And I don't know how we made any money doing that, but we did that. And then I was responsible for the chickens and we had a chicken coop and we run rooster and a whole bunch of hens and you know, proverbial, like cock of the walk kind of story. I'd walk in there to feed the chickens and I had a pail, you know those old aluminum garbage cans with like the pale cover, like that aluminum cover like in the cartoons. And this stinking chicken, this rooster was threatened by my presence and he would attack me every time with his talons. And this is not a, this is like a, like if you ever actually dealt with a real rooster. These things are violent and dangerous and I don't think they're nasty. What part? They're nasty and they're really stupid. Okay. And so they don't stop. So I, I, I started figuring out, I take the pail, I fill my, my little bucket of with the feed I had to bring it to the chicken coop. And I'd take the COVID of this aluminum garbage can and I would bonk him. I'd use it as a shield. And he attacked me. I'd bonk him. And this guy would keep attacking, I keep bonking him, Keep. Right. And so this was like Inspector Cluzo, you know, where Kato comes and, like, attacks you, like every time. Like, I walk through there, the chicken hoop, and I bonk this guy. And this was the. Anyway, this was the. The nature of my. My upbringing. And I don't know, we didn't make any money, but that was sort of the deal. We had to do chores, and then my dad had a green thumb, so we had blueberries, which are. Unless you're a professional blueberry grower, blueberry bushes are just a mistake. Okay, Just to. Just to pay you back. I mean, we had crows, we had, I don't know, all kinds of birds. We probably got one pound of blueberries every year from, like, you know, 30 bushes. And then we had apple trees and pear trees. And what you figure out is that without pesticide, you get these, like, gnarly prehistoric peaches and pears. And so anyway, it was fun, I guess, but you learned a lot. And then my father decided that he was going to be a rose farmer. Not just a rose farmer, but a cold weather rose farmer. So he set up in the state of Connecticut. My old dad, film director, passionate, romantic soul, artistic sensibility, not a businessman. He imported roses, Cold weather roses, meaning hearty roses that sustain the cold weather from Germany. I remember we went to Germany. We bought a whole bunch of roses. We went over the rose places. I want to buy some roses. Yeah, well, we're going to sell you some roses, buy the roses, bring them over the roses. And then turns out in order to import roses, you need a quarantine station. And there were no quarantine stations in the New England at the time or whatever, because no one wanted to do it, because no one was foolish enough. So he opened his own quarantine station. So we had the quarantine station on this, right? So I'm here like, whatever, 11 years old, 12 years old, helping my father manage the quarantine station, which is nuts. And then he terraced this hill, like clear cut it. Terraced the hill, installed all the roses and like a thousand roses, whatever it was. And then within like two, three years, because he had run out of attention and time. And my older brother, who he was hoping would take care of it, take an interest in the roses, didn't These roses basically died. So this. I watched my father try this. This agriculture, this gardening business to make roses, and I watched it just not work. And I was like, okay, guess. Guess which business I'm not going to be in. Roses and chickens and blueberries. That's. That's the answer, that question.

So would you consider your family or your parents to be entrepreneurial?

Extremely entrepreneurial.

So he was in the film industry.

Extremely entrepreneurial, my father. I'm going to use a big word. It's a $5 word, so get ready for it. It's autodidact. He was an autodidactic person. And that means that someone who teaches himself things. Right? So my father went to college. He went to graduate school. He was not what you'd call, like a stellar student. And I was, which is a reason I'm making that distinction. But he was definitely an autodidact. And one thing that I learned from my father, which I retained from him and not from my mom. My mom was, I think, sort of even more talented than my father in certain ways and an exceptional mind, but not an autodidactic personality. Not someone who taught herself things. She was someone who learned through programs and through courses and through lessons, which is how a lot of people learn, too. But my father was someone who liked to teach himself things and learn through experience and learn through doing. And so my father, you know, by hook and by crook, he started in the radio business, and then he got invited to do something in commercial advertising, and then he did films, and he won an Oscar when he was 35 years old or whatnot. And here's a guy who was extremely entrepreneurial in running his own business, which had, you know, four or five employees. The way the film business works is if you're in production, you might have 20, 30, 40, 50 employees. If you're not in production with a certain shoot, you might have one, two or three core staff, skeleton staff. So. And by the way, he had that office in our house. And so I grew up just thinking that you don't have, like this. You have this sort of porous barrier between work and life. Like, his office was right there. I walked through it and go to the kitchen and like, someone I'd have lunch with, someone who works on the team, and I just didn't see any particular difference, which is some advantage and some different disadvantages. But his office was our house. And then he'd go to the studio to shoot the. Shoot the show. And very entrepreneurial guy. I can't say he was, you Know someone, let's say, like you probably like a very good businessman. I can't say that he had a business mind. I can say that he was very entrepreneurial in making things happen for himself. He was an excellent provider for us and our family. But neither my mom nor my father had like a business head, let's say. And so that had some long term consequences for, for the family and so forth, which is fine. No one should feel sorry for us at all. But I did not grow up in a household where someone was like, yeah, also there's something called a spreadsheet. And also like at the end of the month it has to add up. You know, it's like I grew up in a house where I was like, well, let's hope it works or it's going to work out or it's all going to be fine, or let's worry about it later. Which by the way, is a good strategy for about 10 minutes, but not much longer than that. Right. It's not a, it's not a plan. Right. If you have a financial interest in the financial outcome, you have to have a better plan than that. You can't just wing it now. So extraordinarily entrepreneurial person, extraordinarily inventive person, extraordinarily creative person. And my mother was very inventive. She's died, my father's still alive. My mother was very inventive, very creative, but also a very shy person. She had a lot of inventions. She made. She made. I'm going to give an example and I don't know if it's going to be a great example, but it seemed very sensible at the time. My mother got ill towards the end of her life and she was in the hospital and she had, she. So she could sew well. And she had, as one of her many inventions in her life that she devised, she sewed a pair of underwear effectively that you could velcro from the side and attach from the side. And when someone's bedridden, it was easier to kind of attach and detach it from the side. I'm sure in your life, Jeff, through some moment of status, you or someone you know, or someone you know, who knows someone has been bedridden for a time and you know that it's difficult to take off the underwear, the underclothes sort of down past the legs and so forth. And so maybe a Velcro mechanism could very much work. By the way, babies do it, kids, little kids use it. Right. That kind of thing.

Yeah, it's Brilliant, actually.

So. So that was my reaction, too. I didn't know. I didn't. I didn't think about it very deeply. But she was so shy and nervous that when I tried to make some polite suggestions about how she might go talk to people in the garment district in New York about how to, you know, manufacture it and market it and so forth, she just. I remember she was in our. I don't think I'm saying anything too personal. She's now dead. But she would be very proud of me for telling the story, for being so open. She started to cry. She started to cry standing at the kitchen sink because she was so nervous about the prospect of even talking to one person about this. So that was a limitation that she had. We all have our own limitations. That was hers or one of them. And what I can say is that she was very inventive, and my father's very entrepreneurial. But neither of them was, let's say, a business mind. And that's okay. Not everyone has to be. But. But I do think that if you go into business, at some point along the way, you got to develop that vocabulary somehow, at least some rudimentary understanding. No one's gonna ask you to be the best in the world, but you got to do something. Because at the end of the day, the end of the month, the end of the year, the books have to balance, and there's got to be a plan, and it's got to make some amount of sense, and you can always mess it up, but you want to have a plan.

I was having interesting conversation with my oldest son over the weekend, and we were talking. He said, you know, I've been thinking a lot about my career and where I want to go. I've really been thinking. He's 26.

Okay, good.

And we work together. He's a finance and econ guy, so he does our mergers and acquisitions, and he also leads our growth in the franchise development area. So he's really. He's doing a great job. We work together well. I coached him in tons of sports. So we. We developed this kind of working relationship where we could, you know, in stressful situations. So those situations both.

Right. To both of you. Right to both of you. Right. Don't you think?

Well, him, he's. He's a lot more mature than me. He's. He's had a lot to put up with. He's. I'm a. I'm a. I'm an acquired taste. Michael.

Okay.

But he. But he said. He goes, you know, I've been thinking, you know, we, I could see that. And he played it out almost to 25 years. And I said, you know, it's really interesting, Zach. I said, the things we're doing right now, exactly where we are, what we're doing, the different buckets of, of assets and attention that we give things. I said, I have a, I can show you that from 20 years ago on the, the Steve Jobs, you know, for quadrant thing where I want to focus on IP franchising, real estate, you know, and one other thing, you know, some technology or whatever. But I said that if you, you know, and now somehow based on that we, I've ended up exactly where I wanted to be. Maybe I didn't think I'd get this far, maybe I thought I'd get farther, but you know, having the entrepreneurial experience at home where you're walking through the kitchen and you're, you're seeing this blurry line between. It never turns off, they're always thinking about the business or taking a call on a Friday night or doing whatever that's such a blessing to give your kids, to give them that, that exposure to thinking that way. Because, you know, maybe, you know, in your, your dad, he, he got exactly the life that he dreamed of in producing this film. And he never really developed the. Let me, let me figure out how to make this wildly financially successful. Let me see, I can leverage this, Let me see, I can syndicate whatever it is. I mean, he was an artist, he was a creator. He wanted to make great stuff. And, and you know what? Kudos to him for fulfilling.

Well, I 100% agree with you. I 100% agree very few people can make their living as artists. And he did, he paid for, yeah, university, college for his kid. Like he just did so many things for his kids, you know, private school, just a lot and you know, provided for his family as an artist and by the way, as an artist who did not make a lot of compromises. So he had opportunities to make a lot more money as a director and I think as a producer. If he had just decided that he was going to do stuff he didn't, not he was opposed to, but just didn't really want to do. Like, you know, his, his great passion was classical music and he made films about classical music with his spare time instead of making, you know, big action packed movies where the big dollars come or music videos where some dollars go. Right. So he, he could have, he could have, you know, done it. But he always maintained a balance between his obligations to family and his own artistic integrity. And by the way. By the way, I think you're exactly right. You know, he was one of these rare people, like you, it sounds like, who's able to fulfill his life goals, you know, or almost all of his life goals, let's say. So huge kudos to him. There are a lot of ways to live one's life, and so long as you're doing it according to your vision and plan, it's marvelous. And one more thing I want to agree with you on. You know, this is rare, by the.

Way, but go ahead. Which is rare that people agree with me.

Well, no one's perfect. So what I can say is that he did. You alluded to it, but in case it wasn't clear, I want to pick up on it. He gave us the gift of work, and he gave us the gift of not drawing a very hard line between something called work and something called life. I think it's fashionable today. I think it's, you know, I don't know if they're millennials or the Gen Zers or whatever. There's a group of people who want to say, look, I want to live to live, and I don't want to live to work. Which is fine. Which is fine. But there's a. It's. It's perfectly fine. But there's a. There's a difference in how value systems are articulated. In other words, if you are. There's a. There's a line from a country song I like called Buy Dirt, and the guy says, do what you love and call it work. You know, which isn't going to be true for everybody. Sometimes they call it work because that's how you get paid. Okay? So wake up, grow up. You're getting paid. That's why I call it work. But if you're lucky enough to grow up in a household or environment where work is life and life is work, then your need for a break, which is still there. We're all humans. We all need to have time off. We all need to recharge, decompress, and blow steam off however you do it. We all do it in different ways. But if you're lucky enough to have that combination to find something that you really want to do, it does make it a lot more natural to do it tomorrow morning and to do it Tomorrow morning at 5 in the morning when the rest of family might still be in bed. And my father gave me that gift. He taught me without teaching me. He taught me by showing me that this is how you do it. Michael and, you know, I don't know how traditional you are or whatever else. I'm a little bit traditional, so I'll say it this way. No. He also taught me that's how a man's supposed to live. Okay. That's how a man's supposed to be responsible towards his family. And there are a lot of people who feel that way about how a woman's supposed to be towards her family, and that's also quite wonderful. But he taught me both things, and I am forever grateful for it. And even though he couldn't really run a spreadsheet. Okay. So to speak, so what. In the scheme of things, so what. He was a marvelous dad and a marvelous provider, and he took a lot of responsibility. He took responsibility for his entire family very, very well. And one more data point. I was the third child, but I was the first child between my father and my mother. And my father, in the 1970s, in a very early precedent in New York state law, got effectively full custody of his two kids, who are my older brother and sister, when that was extremely rare in the law. Right. The custodial law and divorce law is still very much sort of in the mom's corner by default as a presumption. And there might be good reasons for that, but there might not be. And certainly back then, it was true 50 years ago, let's say 40 years ago. And so here's a guy who took way more responsibility raising two little kids basically by himself than my mother came into his life. And then they had me and taking responsibility for everybody, all as an artist, doing it as a working artist. So I have enormous respect for that. And so I'm forever grateful that I had that model that, that, that. That I had to follow. What.

What a great testimony and what. What great experience that you were provided. People, I, you know, you go get your hair cut, and they'd be like, are you going back to work? And I always don't know how to answer that question. You know, it's. It's like, I don't consider. I don't know. I don't consider it work. I have things to do, but it's just a continuation of that, of. Of my life. It's, you know, so I just say.

Yes, well, you know, but, you know, Jeff.

Yeah. I'm going back to work.

People listening to this podcast or watching it, you know, as visually as it may be broadcast, too, or. Or who get to know you, you know, I. This is the first time you and I have met, but look, you're you're, you're healthy looking. You got this cool looking studio. I hope people can see it visually, it's like, looks purple. Like it's a, I don't know, like a psychedelic kind of like cool place. Like a man cave. You look, you look, you look fit and you look like you're eating well and you look like you're exercising. You look well groomed. Okay? So I'm saying all this because people may not be able to see you, but you might appear to the people who listen to you, who are just coming into your life as I am the first time after 20 years of getting here, you might appear like you're living on top of a hill. But it's so important to realize that 20 years ago you were probably doing this, whatever this was in your bathroom, right? You were doing this on the floor. You're taking phone calls on the floor of your bathroom because your kids were little, by the way. I did it too, right? I took interviews and phone calls at 3 in the morning or out on the street with a baby in my carrier because I had no office and because there was nowhere to go at 3 in the morning. That's what you got to do. You had to do it. And so you got yourself here and now you might make it look easy, but the same feeling you had then, which was, well, I'm going to work, sure, I'm going back to do my thing, just happens to be in the bathtub with no water in it while I'm making a phone call at three in the morning to some guy. It's a provider, right, A vendor.

Yes. Right.

And so that feeling that you had is now with you still, but that thankless work over decades. I heard you say 20 years, so that's decades. That's two decades. Definitionally, that is what got you to this place where you make it look easy and you can wear like, you know, you can kind of feel a little bit. We probably got a makeup guy now, you know, so the point, the point is that.

No, dude, this is, this isn't my natural complexion, actually. Okay, well, it's, I, I think it's liver function, but, you know, a little jaundice. But it's okay.

I look, it's.

Color is color.

God bless. Well, whether it's jaundice or whatever it is, you know, you look sharp and, and the point is that you're still doing it and, and even though you're still doing it and you look like you make it easy, make it look easy now it's not like you won the lottery. Nobody gets to where you were. Chris Rock, I saw Chris Rock, the comedian in a documentary. And I'm not a big stand up comic guy, but he's, he's a, he's a, he's a guy who worked very hard. And about 15 years ago, I remember seeing this, I was flipping through the channels and I saw Chris Rock in a car doing an interview. And he said, you know, he says, you know, whoever he's talking to, he says, you know, people think I won the lottery. Do you know how hard I worked to get here? I didn't win the lottery, you know. Yeah, so you didn't win the lottery, Jeff, you worked your tushy off and your son's working his tushy off and maybe your other family members are too, in order to keep this empire going that you're building.

Well, I appreciate those comments very much. My time to your point, I mean, we, I built our first house. It was a small house. We had three small kids. So at 4, 4:30 in the morning, I would re, I would sit on my bathroom floor with my back against the tub and I would read because that if I went out and turned the lights on and the dog barked, then people are getting up and then I'm in trouble. So I would just, I knew that that's where I went. And I would just read good to great and all the things that I needed to, you know, like how can I, how do I think about building a business? And people, people don't see that.

So can we just point, Can I point something out here? Can I point thing out here?

Yes, sir.

So you and I just met about 40 minutes ago, is that correct? We've never talked before in our lives, is that correct? And here I am, I said, I pulled it out of my drawer here. The concept that early in your business building career, you were sitting on the floor of your bathroom.

I just said it 100%.

And by the way, you just said, yeah, I did that. And I would love your listeners to know how often this exact fact pattern comes up. And maybe your kids were little at the time. Is that correct?

Yes. Right.

You had nowhere else to go because you go to the living room, someone's gonna wake up, you go, if you've got a living room, you go to, there's no extra bedroom. Or you go to the, maybe the garage is too cold. Okay. Or it's got bugs in it or whatever it is. So you go to the bathroom. And so the number of people I know who are very successful today who took hours and hours and hours and hours and hours and hours of work in their bathroom sitting next to that tub that you just mentioned is legion. And I'm so glad that you just told me that story, because I want your listeners to know. Some people I know sat in their closets. They sat in their bathrooms, they sat in their garages. They didn't need to make some magical studio in their garage. They just sat wherever they could on the stoop and they got it done. And that's why they're. That's why they are where they are today.

Yeah, Stephen King, I think he had a stacked washer and dryer, and I think he pulled it out of there and he put it like a child's desk and a chair in there. And I think that's where he wrote, like, Carrie. He was. They were broke. Like, they were. I mean, they. I read all of his, like, how Stephen. On writing and you know, how. What his process was and. And all of that. I used to read a lot before I had kids. I read a lot of Stephen King. But then after I had kids, I'm like, I don't. This is a little dark for me with. But. But yeah, I mean, he. He literally wrote the stuff in, you know, a 4x6 closet or whatever it was, and he just sat there clicking.

Another writer, another writer who comes to mind is a guy named Thomas Wolfe. Not Tom Wolf, who wrote the right stuff, but Thomas Wolfe, who wrote Look Homeward angel, he was six foot six. And the story goes that he would stand on top of his. His refrigerator. At the time they called it. What do they call fridges at the time? They call them whatever.

Ice box.

Ice boxes. Yeah, icebox. Thank you. And he would stand next to the ice box and he'd put his paper on top of the ice box and he'd write because he was tall enough, like, he'd lean over the ice box. Now it's his desk, you know, so. Yeah, look, you do it. You do what you got. Like, the people who. Who. Who tell you they got to have an office, they can't be productive. You know, people like you find a way. They really do. People like Jeff find a way.

Awesome. Well, and last, before we leave, this. Awesome. I guess I'm. I forgot we're recording. I'm just really enjoying this conversation with you, Michael. But, you know, I do if. Call me traditional if you want to, but I think a big. The big difference is I do take a huge responsibility in providing, even to the extent that it's not to my, I mean, I'll sacrifice whatever it is for me to give my, my wife and kids what they need and also the people closest to you. You know, it's just we, I come from a generation where everything we were taught was service. It was just, you need to serve, you need to, you need to work hard, you need to, you know, pay attention to what other people need. And I think that served me well in some ways. I could have definitely been a little sharper early on, maybe a little bit greedier, probably a little bit more thoughtful about, you know, not wanting everyone to be happy or comfortable. I think could. You can get better outcomes when there's good conflict and healthy conflict and you're, to your point, you're managing to a specific set of financial or deliverable type outcomes and stuff like that. But the underlying, you know, big, big part of who I am is, you know, just being able to finish impeccably and to make sure that I, you know, that I finish what I started and take care of people and, and that kind of thing. And it's, and it's. Certain people will give you $10 for every dollar that you can take from them. And, and, you know, it's, it's worked for me so far. I might not, you know, I might not end up as, as far as I would have, but I'm, I think I'm going to be happy with it.

Well, it sounds like you are and sounds like your, your vocation is your vocation. There's no luckier thing in the world.

Yeah.

You know, I know a lot of guys who are really rich were always pissed off and that's not a nice way to be. Oh yeah, they're just not, they're just not as rich as the other guy they know. You know what?

That's right.

That's never possible. There's always another guy.

Invest in, invest in Nvidia. That's all I got to tell you.

Oh, no. Oh, no, no. I can't. I get asked about Nvidia all the time because I, I do a lot in AI and I don't comment on public stocks, but I do own some Nvidia and thank God, so far it's worked for me. But I'm not a public stock investor. I'm not knowledgeable about those things. I can't recommend those things. But certainly Nvidia is one of the most remarkable companies, period, just in terms of what they're able to pull off and how they're catalyzing this AI Revolution. Incredible.

Yeah, really well done. Well, Michael, I'd love to move on to your early career and understand how you got from Harvard and what happened between them and what your vision was for reputation.com and what you saw during that time. And then, you know, bring it forward to what's relevant for people today. I mean, you know, we're all competing for attention on the Internet. You walk into places and people, you know, with the big data, people already know who I am. They already know what to sell me. They already know what to charge me, which is more, you know, and you can just tell by the advertisements that I get. You can tell by the direct mail that I get. So, like, like, you know, how do you think about, you know, how people can balance the privacy versus free speech aspects of what's going on with big data today? And then reputation.com, what is its role inside of that?

So we'll cover a lot of ground pretty fast. So I went to college at Harvard. I grew up in New York. I went to college at Harvard, and then I started a company in college that was my first software company. It turned out to be pretty good for some kids, but not an enormous outcome. And then I went to law school. And I went to law school. I went to law school because my. I grew up in the family I grew up in, which was a Jewish family with the kind of a sense that my grandfather, my mother's father, had been a lawyer, and he died when I was six weeks old. And it was like the concept that I had inherited is neshama. Neshama is the Hebrew word for soul. So you can imagine, like, you know, Michael, you have inherited his soul. So you hear that like 200,000 times when you're growing up like, wow, I have inherited his soul. Then you're like, fuck, I gotta go to law school, right? So I went to law school.

No, no pressure.

Well, no, it's like, yeah, it was like, so. And my parents, you know, I didn't even diligence what law school was. I went. So I went to Harvard Law School. It was like a famous law school. And I thought law school was going to be like, we're going to talk about philosophy and the Constitution. It's not. It's a professional school. You got to learn evidence and corporations and commercial paper and all this stuff. And I was like, this just sucks. That was my feeling about it. I'm not asking you a degree. And so it took me about a year to figure out where I belonged in law school. And I found Some professors I loved, and I found a way to make law school something that I liked. And by the way, that is something that I'm teaching my oldest child right now. It's very, very important to me right now is that trying to find the pony, my father called it find the pony. Finding the thing that's fun and sustains you in the stuff that you've got to accomplish is a incredibly important skill. And in this period of coddling of children where it's like, you don't feel amazing in the swimming pool, like, and you don't like doing laps, just don't. Let's do horseback ride. You don't, like, feel amazing doing horseback, like, okay, let's try it for a year, and then if you still don't like it, let's try something else, right? Find the pony. Learning how to find the pony. And there's always a pony, right? There's always a pony. There's always something you can find. It may not be a big enough pony for you, but find the pony, find the fun, find the pleasure, find the thing you can get out of it. Because that is. Right. So as a general rule, if I am spending, I think this might be of interest to your show, and that's why I'm saying it now. If I'm spending, let's say, of the time in my day that I'm working, If I'm spending 25% of that time that working time, doing something that I really like doing, that's pretty good. If I'm spending 25% of the time doing something I don't like doing, that's also pretty good. And the middle 50% is somewhere in the middle, right? But if I'm spending more than 25% of my time, my work time, in an activity that I love, the actual activity, like talking on zoom or doing interviews or whatever, let's say making it up, because we're on zoom and on an interview right now. That's why I'm saying it. If I'm spending much more than 25% of my time for a long period of time on a sustained basis doing something I really like doing, I'm probably doing something wrong because I'm not doing the stuff that's hard for me. So then if I'm spending much more than 25% of my time, on the other hand, doing something I don't like doing in terms of the minutes, like, you know, emailing another customer or emailing recruiting a particular kind of person or whatever, or working on marketing collateral or Whatever it is, if I'm spending a lot more than 25% of my time on something like that, then I'm probably doing something that isn't quite right, because I'm probably not doing something that's the best use of me, but it should be.

Wears your battery down. You'll wear your battery down doing things you don't. Your will is an exhaustible resource. And when you're doing stuff you had, you just burn it, right?

And then, by the way, at some point, if you're doing it right, you might be able to hire or partner with someone who's better suited for that. Okay? So that's a good signal. Now, 25% is pretty good, right? One out of every four hours is pretty good. It's not zero, but it's not six out of 12 hours. Right? So. And by the way, this goes in waves. This goes in waves. But if over an extended period of time you find yourself doing something that's out of whack with that rough percentage, you might want to reconsider it. That's my percentage. Okay? So anyway, right now it's very personal to me, right? Very important, where I say, look, you got to find the pony, because there's always something you can find. And right now, my oldest, who's extremely good at. Thank God, just everything he's touching, he's hitting a patch where he's like, you know, this is just. Not everything is feeling oppressive to him. It's feeling like a burden. And I'm like, listen, he loves fencing. He's very good at fencing. Like, he's really good at fencing. And now he's being invited to perform at higher levels, and he's feeling pressure. And I'm like, look, you know, this is not. This is still a game. This is still a game. It's fencing, right? This is not. This is not your life. This is fencing. And if you're not finding the pony in it, not every day, not every second, but if you're not finding the pleasure in it, not every second, but if you're not even finding the pleasure in losing some bouts, because you know what? Your hero, the Olympian, you think is so great. You watch him on YouTube. He's lost thousands of matches. Michael Jordan lost thousands of games, right? Thousands, Right? And he's the greatest ever in basketball and in fencing, your heroes lost thousands of matches. If you can't find the pony in that loss some of the time, then you and I gotta sit down and rethink it. So, anyway, yeah. So that. That lesson was very important. And we. I was able to apply that lesson to law school. I found a version of law school that I liked. And then I started a company right after I clerked, which was called Reputation Defender. Sorry. While I was. Right after I started law school, finished law school, called Reputation Defender. And at the time, I was working for a federal judge in Kentucky, in Louisville, Kentucky. He's the chief of the judge of the sixth Circuit Court of Appeals in the United States, Danny Boggs. Danny J. Boggs. I'm still in touch with him. Amazing man. Amazing Reagan appointee. Appointed at the age of 36 to be deputy Secretary of Energy. Which means he was, like, fourth in line to handle nukes at 36. And then at 38, he's appointed to be circuit judge of the 6th Circuit Court of Appeals in the United States. Amazing guy. Son of a postal worker, son of a Cuban mom, right? Danny Boggs. You wouldn't look at him and say, that's a Cuban guy, but definitely a Cuban guy. And grew up in. In Bowling Green, Kentucky. An amazing guy, very literate, loved Rudyard Kipling. And he and I would talk all the time. And I was his. I was a liberal clerk, and he made me his death clerk, his death penalty clerk, because he knew I was going to fight him on the death penalty. And even though I supported the death penalty, I told him, but I was like, listen, this is like, this is just really bad. So he made me his death penalty clerk, which was big responsibility. And a long story short, it was during that clerkship that I started the company called Reputation Defender. I didn't launch it till after the clerkship was ended because it would not be appropriate. But we started the company, didn't launch the website. And then I launched the website, and that company became very famous very quickly. Through some luck. We. We were hitting a nerve at the time, right? Like, you know, your privacy, your reputation is all being. Is all up for grabs here by the Internet. And we're here to help you. So it was like this antidote to the risks of the Internet.

Boom.

So, you know, the wired guys covered us and the big, big iron, the big press covered us. And so we got. We got well known and we got. Built a big business. And then eventually I realized that, well, we had a chance to buy the URL of reputation.com, which was better than Reputation Defender. So we bought that reputation.com and then we had a. An opportunity to realize that the big companies in the world, like the big car dealerships and big hospital systems, they needed this too. They needed to understand their reviews, they needed to understand their surveys and how people are talking about them on social media. And so that became our biggest business and we sold that consumer business to now part of a company called Gen Digital, which is, owns Norton, Lifelock and all those things. Big companies. So that's good. But Reputation.com continues, now called Reputation, officially continues as a company that faces the enterprise and sells the biggest companies in the world to manage their surveys, reviews and touch points and customer experience and manage their reputation online. And that became a really, really big business. And all these concepts of privacy and reputation, which are part of a continuum. What do you do with your data? Right, that's what the question is. Fundamentally it's the answer to a couple different ways. Well, it's your private information or your reputational information. For some people it's the same, for some it's not. That became the big thing that we, that we started and I started the first, you know, effectively big privacy company online and then, then I had an opportunity to step back and to become executive chairman of that company and to start some other companies which turned out to be pretty good, pretty lucrative. And the AI space and the eyeglasses space and so forth sold some of those companies. And then I had an opportunity to become an investor. I call myself Heroic Ventures and that means we, we fund heroes. And I, in the last four years or so, five years, I've started to invest in something now people talk about all the time called AI, which even the most casual observer can spell. It's spelled AI and it stands for artificial intelligence. And there are lots of different kinds of AI. It's not going to solve all problems. Some people think of it like something that's going to cure cancer. It's not, but it's going to solve a lot of problems, going to make a lot of things more efficient and it's going to change people's jobs and take away a lot of bunch of jobs as well. That's part of the deal. But that's one of the things I specialize in, AI and yes, ML, if you want the difference between AI and ML, I can give you a, I can give you a blurb on that if you really want.

I do. So we've. One of the things we've done well is we have a good technology structure where with all of our different brands we've been able to get nearly all. But aspirationally we will have all of our data flowing into a data lake which in franchising is difficult. Because you've got these different brands, typically they're acquired into a platform. The switching cost is too high for them to change the technology stack. So even though they're owned by the same company, they operate as independent businesses within a, within a platform. And it's very difficult to get real insights across all the customer sets. So we start our, our, our thesis was that we would start with companies that were relatively small and we'd have to be more patient and have our develop, have a competency in growing those quickly. But then because of that we could force them all onto the same technology platform and be able to, you know, have a, have a shot at getting all the data. So we've done that and we, we have machine learning running across it and we're starting to really understand how to help our business processes with AI. But I don't understand the difference between machine learning and AI. So I'd love to hear your explanation.

There's probably no circumstance in the world. Well, you will ever actually have to know the difference between ML and AI. Let's let me say it that way.

Okay?

Right, it's, it's.

Well, we can skip it.

No, no, no, no. I will tell you so that, and I'll say in a way I think that everyone can understand, but it's not, it's not really important. For most use cases, machine learning, you almost answered it accidentally by yourself without knowing it. Maybe machine learning is a set of technologies that you apply to a large data set, your data lake, to discover patterns. That's what ML is for. That's what machine learning is for. It effectively identifies patterns and you can teach it through a set of instructions to look for certain kinds of patterns. And once in a while you can teach it to look for any kind of pattern. And as it enters that second part, looking for not one set of patterns like who are the best customers? That's classic ML or who spends the most money? That's classic ML. Or what do you observe about spend per customer? Or what do you observe about seasonality? In my business those are machine learning pattern, pattern recognition questions. But as you start to ask it a question that's more open ended, like tell me something interesting about my data. That's when it starts to emerge into a field that we would call artificial intelligence. And artificial intelligence is the set of technologies that we use to achieve a complicated human task. And you would ask your son or someone on your son's team, hey, you know, come back in a month with interest or a week with interesting observations about Our best customers. And that could lead to any number of answers. It could be, oh, well, they turn out they live in Texas. It turns out that they use us twice a month, whereas the average customer uses us once a quarter. They turn out that they use us for things that we didn't really expect to be used for. Meaning, you know, I'm picking up on your gutter example. Even though it was just from a long time ago, it wasn't necessarily your business. But you know, they use this for the gutters, for their homes, but also for their offices. So, okay, so, and guess what? They spend approximately nine times what the average customer spends. So that's an amount of analysis that is, that is a concatenation. It's a combination of a whole bunch of patterns. And there's an insight that comes from that, which might be the following. And this is where AI becomes generative AI or really could a cool frontier tech AI. I am oversimplifying for reasons of sanity, everybody. Okay, so when it becomes really cool AI, it's where like, okay, now I'm going to offer you an insight. Hey, Jeff, says the AI. Now that I have figured out all of these things about your best customers in your empire, let me propose to you a few action items. One is let's invest more in, let's say in this example, Texas. Number two. And stop investing in, let's say I'm making it up, Oklahoma or North Carolina, I'm making it up for the sake of this example. Number two, let's identify really early customers who are probably candidates to be big customers. How do we identify them? Well, they look like this in the first 30 days of our meeting them. Now number four, after we identify them, how do we husband them? How do we go find them and make them love us? How do we give them enticement to use us more? And so it's almost like, you know, finding your business class customers or your corporate travel customers if you're an airline or your regular customers if you're a restaurant owner or if you're a hotel person, right? How do you identify that loyalty and how do you reward it? Probably the best people in the world this are Las Vegas casinos, right?

100% right.

So they just know like, oh my God, Jeff's back. Give him, give him my tie now and make it a double, right? So like, and you know what, your hotel suite's waiting for you. But don't go in yet. Stop by this table, right? And your old, you know, your old dealer, John or Sarah, she's he's waiting for you, she's waiting for you. Right. So that kind of, that kind of sense, they're very good at it. And so the AI part is what turns the pattern recognition of ML into a kind of human like task completer or open, open ended question, answer.

Yeah, you know, analogy that comes to mind. I was, I was in a meeting, it was with one of the national Security advisors and it was, it was prior to the Cold War and they had said, is the Soviet, is the Soviet Union going to fall? And they said, well, if the Soviet Union was going to fall, you would see evidence by these 15 or 20 different things. So let's send word out to our, our spy network and see if these 15 to 20 things are happening.

Okay.

And then immediately it started coming back. Yes, this is happening on the trains and this is happening with food and this is happening here too. And then the question was, why didn't you report this? It's because we didn't understand that the relevance of it. It's just data along with all of our other data. So to find the needle in the haystack, you have to ask the question the right way. You know, where is it? Like what is the, you know, and, and now rooms and rooms and rooms of analysts are trying to, used to have to try to figure this out. And you would only hope that they would pull on the thread that was the right question that the data could give them the answer to. Where now with generative AI, it's, it might even ask questions that you wouldn't have even known to ask. Is that fair?

Yeah, that, that's about right. Look, it's going to, you know, we've seen AI answer and understand. For example, a team at Stanford is, has come to understand secrets of the human genome and a biology that have taken either decades or hundreds of years for us to understand. And they did it with, you know, by, by mining a data set and took, you know, weeks to do, including comprehending what particular genes do and how they express themselves and what diseases they can cause or cure. That's astonishing. One of the, one of the, I.

Bought tests for my whole family to do exactly that this last December because it can.

Genetic disease profiling.

Yeah. And it's okay, you're, you're 22, you're 26, you're 19. But you know, you know, based on your DNA, you know, you, you, you clear these things, you harbor these things and if you do that, then you're more predisposed for Alzheimer's or stuff like that. And the reports that came back were incredibly specific about, like, what they should and shouldn't eat, what supplements they should take, and why.

I'm talking about something that's a little different. So what you're describing is in the same bucket, but I'm talking about something that's slightly different. And I'll tell you what it is. It's the machine in the case that I'm giving, and it's not super important to our discussion, but the machine in the case I'm giving was able to understand what specific genes do, not for any given person, but for all of humanity. And they might release an enzyme in your kidney. And when that gene is not operating, then your kidney does not benefit from that enzyme. And when your kidney does not benefit from that enzyme, something might be going wrong or right with your body. And so just understanding what that particular gene does is something that the machine was able to isolate, even though it took decades for scientists doing research manually to isolate that same fact. Right. But by ingesting millions and millions of pages of data and billions of rows of data, probably that machine was able to figure that out. That's AI and so, you know, how do I make my garden grow? Might be a question you would ask, how do I solve the problem of the crows eating my blueberries? Might be a question you might ask in AI and you know, for most topics, that's going to be pretty darn good. And it's going to take away a lot of the responsibilities of some people who are kind of professional analysts. On the other hand, it's not going to be perfect. It's going to be a garbage in, garbage out. And if you're talking to an AI that has a certain political persuasion because the people who made it are very lefty or very righty or whatever, it's going to give you an output that's very politically oriented or potentially politically oriented. Right. So very famously recently it was shown that OpenAI or similar could be asked a question or Google AI I think it was Gemini in that case, could be asked a question, who was more evil, Adolf Hitler or Elon Musk? Now, for people who are watching this, they'll see that there's a. There's an image, there's a poster of Elon Musk right there at the. In the kind of pride of place behind you, Jeff. So I, I bet you haven't answered that question. I bet you you don't think that Elon Musk is nearly as evil as Adolf Hitler. But this A.I.

Well, if I, if I'm. If I move slightly to the. No, I'm not going to say that.

No, no, don't do that. The bad joke. Bad joke. Too soon. So that. But. But the. And he didn't mean it, ladies and gentlemen. He did not mean it. But the. But the joke is that Gemini did not want to answer that question. Gemini said, well, it's hard to say who's more evil. And so you can have an AI that is taught falsehood, or you can have an AI that knows how to mimic human behavior but make stuff up. So AI was recently caught. A lawyer was recently caught submitting a brief to the court using AI and that AI had very cleverly mimicked all the briefs that it had ingested. It had seen all the briefs and understood the briefs and copied the briefs and mimicked the briefs and mimicked the voice of the briefs and so forth and so on. A brief is just a document you give to the court. And it turned out the AI had invented some precedents, invented cases, and was citing cases that did not exist, totally made them up with, by the way, very correctly constructed citations. They were just false. Not, by the way.

Wow.

Not by the way. Bad interpretations of cases that existed, cases that were just made up whole cloth. Okay, so if it. If the AI can do that, and it can, then we're in for a big battle on our hands, which is probably closer to nuclear weapons level of challenge than to social media level of challenge in which the AI is going to be very smart and going to be able to spread falsehood, either as encouraged or engendered by the Russians or the Chinese or just political officers who run some of these bureaucracies inside large, big tech. Or we'll just make stuff up because it's funny and convenient to do so. And it's like, that's what you taught me to do. I just make stuff up. And I'm not trying to cause harm or chaos. I'm just doing it. And guess what? You asked me a question about how to operate that car in this situation. I just made up an answer. And now you're driving backwards along the highway because you followed my instructions. You know, I'm making up a vivid example that's unlikely to obtain, but there it is. So, you know, I am very bullish on AI But I also, I also want your listeners to understand that, at least in my opinion, there's a lot of. A lot of room for the entrepreneurial person to be able to sit on top of these tools and sit on top of businesses and make use of them and not be abused by them. And so I don't think that you should be scared of the future if you're hearing this broadcast or podcast, I think you should be interested in it and not worried about it in a way that paralyzes you.

Yeah. I was meeting with another tech investor who's had a lot of success, and they said, well, and they're a builder also. And they said, people that look to invest in us look for three things. They look for the rider, they look for the surfboard, but then they look for the wave.

Oh, cool.

And they're the rider. They're the team with the experience that understands how to put it together. The surfboard's the tool, and what is it they're building. But then the wave is the momentum. Like what is going to be so compelling that these people and this tool can take advantage and be wildly successful? Inside of that, how do you think about your investments that you make into these emerging private companies in the AI?

You know, I'm a really. It's a very good question. I'm a really early stage investor and I invest in venture capital. I think it's probably worth doing, spending about two minutes on what venture capital is and is not. And then I'll answer your question very directly. But to set, to set the table, to set it up, what is venture capital? Venture capital is a very narrow asset class that does not belong in most successful businesses. Most successful businesses do not need venture capital. They have. You can build it with sweat equity, you can build it with a loan, you can build it with a little bit of your own money. Venture capital is for one very specific use case only when you have a thing that takes some amount of money to build, because the people or the parts that are required to build it are expensive. And there's a period of time where your company might have no income because until it builds enough of that thing, it cannot make any sales. And then once you build it, the margins are extremely large. Okay, so I'm not talking about 20%, I'm talking about 70, 80, 90, 95% margins, which is extremely rare. That's software, some hardware, and biopharma biotech, basically, the margins are enormously high. Then there have to be a couple other conditions met. And the most important conditions are that it has to be defensible and scalable. So scalable means it can become very large. There are a lot of people who could spend money on this. You know, tens of thousands of businesses or thousands of large companies or millions of Consumers. So that's a lot. A lot of people can spend money on this scalable, and then it has to be defensible. So what is defensible? Defensible means that it's very hard for someone to copy it. And that can come from having some intellectual property that you can take someone to court on top of and say, look, you can't compete with me because I invented this and I patented it or whatever. Or that can be something that you have a unique proprietary data set, right? So you have a data set in your business, Jeff, that begins to sound defensible. You have all these customers from all these franchises, and maybe that's defensible. Okay? And maybe you've got a unique relationship with a vendor, right? You've got an exclusive deal with a really big school district or exclusive deal with a really big company, or exclusive deal with someone else that could be. Or maybe you've got a product that has a trade secret around it, like Coca Cola. The most famous trade secret in the world. Like six people alive at any given time know what the formula is exactly for Coca Cola, right? Something like that. So if it's defensible and scalable, that means that you can sell to a lot of people and still keep your margins very fat. If it's scalable but not defensible, someone's going to find you, copy you, and then they're going to sell you, sell the same or similar product at a lower price, and then you're going to have to reduce your price and then your margins will get less fat over time. So venture capital, venture capital really only ever works for a company that requires a certain amount of capital to get going and will have no revenue, usually for some period of time not close enough to cover its costs, in other words, and can be scalable and defensible. The nice thing about venture capital is if your company doesn't work, you don't have to pay it back, right? It's amazing. God bless America. Okay? But the downside of venture capital is that you're selling a piece of your company, you're selling it basically forever. And you're selling it forever basically from the very first moment you started your company. So that's venture capital. Now what do I look for? I am a really, really, really early stage investor. I look for a company that has what we call a team and a tam. So a team is obvious. It's who's working on it. And the TAM is the total addressable market. Is there a big, big honking market that we think is going to want this. And if I can see those two things, that's usually the beginning of a yes to me. Now, there's some other criteria. It's got to be something I can believe is defensible. And that goes to team, because the team is a group of people who get what defensibility is and know how to make things that are defensible. And I invest very heavily in Silicon Valley and Israel. So I have a, I have a bit of a relaxed geography since the start of the pandemic, because now everyone's an avatar, right? Everyone just exists on Zoom. You invest in companies where you don't even ever meet the guys, you just meet the whole gals. Like, you just see them on Zoom and eventually you meet them in person a couple years later, like, wow, you are much taller than I thought you were. Happens to me all the time. And so I tend to focus on these, these two geographies, right? There are a lot of people invest in India. I don't do that because I don't have any advantage there. For example, even though great companies coming out of India, great, great companies, I just don't know how to find them. I don't know how to qualify them the same way I can for Silicon Valley or America and Israel. So those are my focuses. Now, what I don't say, and this is something that you might hear people talk about who are other professional investors. What I don't say is I look for a product market fit. Product market fit is immensely important. Product market fit means this guy, this team, this gal, they have figured out what they need to make and that's the product. And they found the market. They know how to sell it and the people are buying it. Well, why don't I need a product market fit? I'll tell you why I don't need it. Because by the time a company's got a product market fit, you've got 1 million investors who want to invest in it. And they bid up the price. And then I can't make money anymore.

Okay, that's too late.

It's too late. So now it's not too late for some people, some of the best investors in the world with funds that are bigger than mine, they say, hey, Michael, who's got product market fit? And I say, hey, Jack. Hey, Jane, I got this company here for you. You want to invest in that company? And sometimes they say yes, and they look to people like me or they look for other companies, hey, you know who's got product market fit? But I am willing to go before there's product market fit. I'm willing to go when there's a higher level of risk. And sometimes, you know, you never get to product market fit. And that's a, that's a fact. But when you do, oftentimes you get a really big markup from a really great fund and all of a sudden you're off to the races and you're much more valuable set of shares than I had when I invested. Right.

When did you first take money or, or how did you, how did you stand up? Reputation.com, was it. How long did you go before you, you took outside capital?

Yeah, I took some friends and family money pretty early. I don't remember exactly how early, but it's not a lot. It was very small. It was tens of thousands or a hundred thousand bucks, something like that. I don't quote me because it's not, it's in that zone. I don't, I don't Right. Recall exactly. But then I took a little more, that's a little more. We got some more traction, a little bit more. And then a very famous VC in Silicon Valley found me and I had like a full year on the books at that time, and I had like a million two or something like that. My first ever year of, of, of operation. It was subscription revenue and I had no idea how valuable that was. And also I realized after I looked back, because I'd been, I hadn't, you know, spent, I'd spent a year at breakneck speed. I hadn't breathed. I was like, he's like, hey, you got some financials? I'm like, well, I got this here shoebox, right? And so, and I got some receipts. And so, you know, it's been like, you know, a few weeks cleaning up the books, you know, and I realized that we had been cash flow break even or profitable the first year as well, which was, I mean, first year, first 15 months, whatever it is, don't quote me, but something about that. And I was, I couldn't believe it. And so that does not happen every day. That was lucky. A lot of hard work, but lucky. And also, and, and then we were off to the races. And then, by the way, the 2008 financial crisis hit and then everyone's like, well, the world's dead, everyone's going broke. You're going to be a waiter, you know, and nothing wrong with being a waiter, but I was a CEO of a company. I had like 30 employees. I was like, well, crap. And I remember, I remember Telling my employees, I remember coming out, out because the, because the 2008 financial crisis. You remember your. You can cast your mind back. It was sort of like upon us, but no one really knew how bad it was until, like, it was really upon us. Then it was again upon us. And then it got really bad. And I remember after, like, as the news was really bad and people got really sad and people got really worried and the news was really terrible and there were layout. And I came out and I said to my employees, like 25 employees, I said, look, we're not going to have any layoffs. And I believed at the time. And sure enough, about five, six, ten weeks later, I don't know what it was again, don't quote me, but about that I realized I had made a big mistake. This is now 16 years ago, so some of your listeners may be interested to know that I had made this mistake and I had kind of made this sense of. I can't say I made a promise, but I made a sense of like, this is what I believe is going to be true and you don't have to worry about it for your jobs. And I realized I had made a terrible mistake. The world got so much worse so fast. If you, if you did not live through the 2008 crisis, you may not know it was like as bad as everything except since the Depression. And then the, the coronavirus pandemic for, for a year or half a year was even worse. But then the government's bailout was so vast that they were able to put us back to work and make the stock market go. But the 2008 financial crisis was worse because it was a depression in the financial markets that lasted for years. That's terrifying and. Terrifying and full illiquidity. It was a full Ice Age lockup of money. Money wasn't moving. It was the textbook example of a disaster. You know, you couldn't get a loan, you couldn't get investment, you couldn't write nothing. And so I came out and I said, look, guys, I've cut my salary by 50%. I cut it, whatever, four, six weeks ago. Whatever it was, it's not enough. I've cut all the candy, I've cut all the stuff. I'm making it up. I cut the air conditioning, whatever it is not enough. And I gotta, I gotta fire. You know, I fired these three people or I let these three people go, or four people go. Whatever it was, this is years ago, right? And so that was a. That was a moment where I was like, well, Michael, you gotta not say it until you're certain it's true. And I was a younger guy. Like, I didn't. I really believed it, but I didn't. I wasn't careful enough with my words at the time. Yeah.

I'm interested. You're living in France now. How many kids? How old?

So let me not answer that question, but my oldest is 12. Okay, yeah, but I will answer that question offline. I'm very protective of my family. But. But. Okay, turn off recording. I'll tell you all about my kids and all the details and all that.

Yeah, yeah. I was more interested. I was interested in the. You know. What did you see that led you to move to Paris?

Well, there came a time when I was ready with my family to leave California, and we decided for a number of reasons to leave California. We relocated to Texas, and that was a good fit for us. And then there came an opportunity to move abroad, and we decided to take up that opportunity because my. My oldest two kids were of an age when that could make sense, and I could still get them back for high school in America. And, you know, my oldest son, who is. He's now 12. I remember asking him. I asked him every six 12 months. I said, hey, you know, kid, you know what? What do you think you want to do when you grow up and you're allowed to change your mind after dinner or tomorrow morning? There's not a big commitment question. He says, he's probably nine at the time. Okay, Jeff? And he says to me, michael, sorry. He says, me, dad. He's nine years old. He says to me, dad, you know, my whole life, I'm like, okay, fine. My whole life I've wanted to be a chef. By the way, he's a really good chef. And I said, great. He says, you know what, Dad? I said, what? He says, you know, being a chef is a really difficult life. Owning a restaurant's really difficult life. I'm like, well, I don't know how you came to understand that, but it sounds true to me. I think it's a difficult choice. But, you know, if you love it, you love it. He says, so the wording is important, right? We're in the middle of Palo Alto. We're living in Palo Alto, right? You have to understand what I've been doing my whole life, right? But his whole life. He says, well, dad, I've decided I want to be an investor or a startup, okay? So he wants to be an investor or a startup. So I'm like, oh, boy, this kid is Definitely a Palo Alto creature. So, anyway, anyway, so I. Oh, another. Another funny, funny story. I. I invented the technology. Just a company I sold. And for a while, the conversational AI company, which means you talk to the computer, it talks back to you like it's a human. And for a while, I was. One of the use cases was that we had an Alexa and we could, you know, talk to a pizza company about ordering, you know, like how you want your pizza. We wrote this. This conversational AI that could help us command, you know, relay an order of your pizza order to whatever Domino's or Pizza Hut or whoever it was. And so I remember we had a friend to come over to the house, and my other. My other son was probably 6 at the time. What does your dad do for a living anyway? He says he orders pizzas on Alexa. That's what. That's what he thought. My. My life was ordering pizzas and Alexa.

Not. Not on. Not completely untrue.

Not completely untrue. So. And then the other guy said he does what he has to do. That was his other answer.

So. Nice.

Yeah, nice. Anyway, long story short, I had these two Palo Alto creature kids, and I was like, look, I gotta get them out of here. And. And the world's changing and God bless, but I don't think I really need to be in Palo Alto anymore, in Northern California anymore. So we decided to make a move and go to Texas. And then we had this opportunity and I had some freedom in my life, thank God, to go. Hey, where do you want to move abroad? And Paris is a wonderful place. Many of your listeners will have been here or certainly seen in the movies and maybe want to come here. And it's everything you think it is and some things that you don't. But the idea was to expose them to the big world and maybe they can learn another language and maybe we can travel around Europe and we go to Israel a lot and go to Israel more easily. It's only a few hours by plane. And then we'll come back to America because we're Americans, we want to live in America. But now they've come back with, you know, a different perspective and a broadened perspective and maybe not the language and so forth and so on. And we'll move to Texas and live our lives in Texas, which is the plan. So that's what we want to do. But the idea was really to broaden the kids and to say, look, there's a lot of different ways to live your life, a lot of different kinds of people, and you don't have to just think about being a. An investor or a startup.

Everybody needs an adventure in life. And for. At least for my kids, I've really invested heavily in experiences and just get them exposed because, you know, similar to AI, your kids really will make decisions based upon a subset of the information that's available to them and what they've been exposed to. And I think, you know, entrepreneurs come from entrepreneurial families. And my dad was a. Had an engineering business, and I would say it was kind of a failed business. I mean, he.

He.

He kept it for a while, but, you know, it didn't scale. I mean, when he had clients come in, I'd have to put a sport coat on and go sit in a cubicle so it looked like there's people in there and stuff. And that's funny. Raid the snack box and stuff. But, you know, so, you know, giving, they'll. You never know what they'll be exposed to on this incredible adventure that will speak into them and. And then their life will be a tapestry of the. Of the, you know, kind of the raw material we give them. So that's. And I know. And that's the best we can do, man. That's the best we can do, so.

Well, God bless. God bless. I appreciate everything you're saying, Jeff.

Yeah, man. Hey, this has been great. Michael, I can't thank you enough for being on. Last question for you. If you could. If you had one sentence to speak into somebody else's life, what would that be?

Have guts.

Nice. All right. Simple, two words. Have guts. Got it. All right. Well, thank you so much for being on. Michael Fertig. This has been incredible. So nice to meet you. I've really enjoyed our time.

It's my pleasure. I hope we'll meet each other in Charlotte one day.

We shall. You've got friends here, so when you come by, please look me up. We'll break some bread together.

That'd be great.

All right, Sounds good. This has been Michael Furtick. You've been on the home front with Jeff Duden. Thank you for listening.