Jon Margalit — Billionaire Secrets of Warren Buffett and Bill Gates

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What's up, everybody? You're listening to the Hustle and Flow Chart podcast with your boys, Matt Wolf and Joe Fear.

Wiki Wicky Wiki Yellow. And welcome to another podcast episode of the Hustle and Flowchart podcast. I'm Joe Fear.

This is Matt Wolf.

Mr. Matt Wolf. Today we. Hello. Hopefully you're doing great, as are everyone else. Okay. Yeah. Today we have John Margalit. So this guy is a. I would call him probably the most well connected guy that we both know. Matt and I, we've known him for, I don't know, about five years or so. We've worked with him as business partners in a startup called Toggly. It was a photo site, kind of like an Elance or Odesk. A lot of learning experiences. Good stuff all the way around. He had a very successful towel company that he's going to talk about inside the episode here called Toggly Tao Mate. But he ended up doing really well with that. But he learned a lot of lessons. And we're actually going to dig into kind of the do's and don'ts from what he learned and being well connected. John, I mean, the dude's buddies with Warren Buffett and Bill Gates. And Bill Gates. I mean, two guys that you might have heard of a couple times. He has some. I mean, this guy, he literally meets. John, meets up with these guys once per year, at least with Warren Buffett, I don't know about Gates every year, but Warren Buffett every year. He's done personal deals with him in business and he knows how he ticks. So we're going to dig into all of these lessons in this episode. It's going to be pretty solid. Hey, Hank.

All right.

Hey, John. How you doing, man?

Very good.

You guys. Hey, we're pretty good.

We're doing good.

Yeah. So, I mean, we go way back, and in the intro, this thing, we kind of chatted about it a little bit. But what's new in your side of the world? You're in New York now, which is a change from California.

Yeah.

So, yeah. So what's going on? Give us kind of the scoop of kind of where you're at now. Because from back in the day, you know, we had the Tao Mate days. We talked about that a little bit in the intro. Just how, you know, we, we kind of, we worked together in, in bits and parts here and there. We had the startup, you know, Toggly. So what's, what's kind of new in your day to day? What Kind of businesses are you starting?

Kind of getting to that, Yeah. I most recently started up two different brands of health food products. Consumer packaged health food products that are innovative solutions for people that want healthy food on the go.

And to be specific, I created a line of plant based protein bars and also plant based instant breakfast shakes.

And that's the Jerf and what's the other name?

Yeah, so the bars are called Jerf bars. J, E, R, F as in frank. And it stands for just eat real food. The mission behind it is to provide people with a solution that they can take with them. And specifically when they read the back, the ingredients, the label, nothing sounds like a science project. Everything is just real food mashed up into a bar. We keep the protein as high as possible and we keep the sugar nice and low.

Yeah.

Cool. And those businesses are doing well. How well are those doing right now?

Yeah, they're actually doing fantastic. Jerf Sales launched about five months ago and we've already shoot. We're up to over $1,000 a day in sales. Wow, cool.

And you're brand new. That's a startup, so that's pretty freaking killer.

And there's no paid advertising. I'll talk about that. We haven't spent a penny on ads. It's all organic traffic that was driven because we had a fantastic giant list we built. And I'll tell you guys how we did that.

And so that is going really, really well. Doing over 120, $125,000 in sales in four months, I would say is the actual selling time with no ad spend is definitely a success. And the breakfast shakes, they're set to start shipping out pre orders about a month ago. And it's also been very successful. And they'll start shipping out first week of October. We're a little bit delayed.

That's awesome. Now I do actually, I want to circle back around to that in just a second. I want to talk about the giant list and the organic sales and how you're doing $1,000 a day. But before we go there, I actually want to touch on one quick subject that we were sort of talking about before we hit record on this call. And that was a deal that you helped. I don't know if broker is the right word, but a deal that you were a part of with Warren Buffett. And we're really curious because we actually don't even know that story. So we're, we want to kind of dive into that for a second.

Yeah, absolutely. So this was about seven or eight years ago. Warren Buffett went to China to buy a metalworking company there. It was an Israeli owned company that had factories in China that were making metal parts and steel parts and very profitable business. Warren went there to vet it out more, meet the owners. And while he was there, a mutual friend of the metal working company, the chairperson that was doing the deal with Buffett, had introduced him to this amazing woman that is living in China. And she started out with one sewing machine, and now she has 10,000 employees, 32 factories, and is running the largest suit manufacturer company in the world. Nobody is making more suits than Madam Lee. And that's what she does. She's built a massive, massive billion dollar business. And so Warren was fascinated with this story. He took a liking to her, they got to meet each other, and the company started to make suits for him. And for the first time ever, when Warren came back to the States, he even said it himself, he was getting compliments on his fashion. And so he had written a letter to Madam Lee saying, no one's ever given me compliments on my fashion before. It's not what I'm known for. But if I could get a few more suits and you could make some for Bill Gates, that would be great. And so, long story short, him and Bill both loved the suits. They went on YouTube and made this awesome video as a testimonial for the Chinese company saying, we only wear Madam Lee suits. We gave all of our other suits away to charity. And once that video dropped the phones, the emails at Trans, which is the company Madam Lee owns, just went bonkers with wholesalers, retailers, saying, how do I get these Warren Buffett suits?

And being that I have a friend, very close friend, that is an executive at the company, I got a call saying, we need somebody to go in there and facilitate this deal, get it done. And we basically need you to go to Warren's office and finish the negotiations, finalize everything, and you become the liaison for us as a consult. Next thing I knew, I was in Warren's office. He was one of the nicest people I've ever encountered. He did some really funny things, like he took his wallet out and just handed it to me. And when I gave him a weird look, he said, just trust me. Hold on to it until we're done talking. It'll bring you good luck.

Yeah.

And he called his assistant and said, hey, would you take a picture of us? And I thought he was just gonna put his arm around me in post, but he pretended like he was telling me a secret with, you know, up to my ear with his hand over it. And when she took the picture, I looked at it, I said, what do I. How do I explain this to people? And they're like. And he looked at me and he's like, tell people I'm giving you secret stock tips. Like that.

Yeah, that's brilliant.

The man.

Yeah. And so I was able to get the deal done, and it was a wild, wild success. This is a multi, multi million dollar deal, international deal between two different cultures, two different languages, a lot of different barriers, but it went down and it sort of put Diong on the map. And ever since then, they've received so many big brands, have come to them to produce clothing there because they developed a reputation as worn suit makers. And then, incredibly enough, he has invited me back every year for the Berkshire annual meeting. He's taken me to dinner with Bill Gates and Charlie Munger and some of the most successful business people in the world gathering in one room. And I'm basically the only one that doesn't have my own private jet. Not yet.

Well, you can share those now. So it's a little cheaper than buying your own.

You'll have a Jerf jet soon enough.

That's right. We'll share it with you. It's cool. We can go havesies.

Yeah, go ahead. Go ahead.

Well, I like the fact it's interesting that they actually went for Warren Buffett's market. That's what it kind of turned into, at least. And then you get Bill Gates's market. It's like two guys that aren't really known for fashion little. They've been in the game for a while. There's a lot of money there for suits to be bought. So that's pretty clever in its own right. But what's. What's like a good takeaway or two from working with Mr. Buffett that you experienced, you know, and doing this deal, meeting with him. Anything that stood out?

Yeah. Number one, my biggest challenge to overcome is that I don't play golf. And the first thing he. First thing he said was, you should come play golf. And invited me to the golf course on Sunday, and I went and we had brunch. But I'm such a terrible golfer that I definitely. If you're going to do business at that caliber, at that level, you got to get some golfing. You got to know what you're doing, and you have to be proficient. Proficient enough not to, you know, look like an idiot out there. So I think that's the number one challenge.

That's a Great piece of advice if you want to hang out with billionaires. Learn golf.

Exactly.

Smart move, man. So what do you do? Did you actually hack it around or did you just kind of be the caddy for the day?

Um, no. I mean, no, I mean, we shot, but that was about it. Yeah, it was more of a very chill, relaxed environment. I mean, Warren, you know, the first time he went out there, he was already with 82 or, you know, however oldies. So, yeah, you know, he, he could get around a little bit, but you know, obviously it's a, it's a, it's a slow paced game.

He's not knocking at 300 yards on a drive or whatever.

Yeah, definitely not.

All right, so what's a, what's another take? What's something that's, that's a pretty good one? What's maybe an actionable one that you noticed in just the way of his being or just kind of, you know, orchestrating this whole thing?

Like, is there something that you noticed that Warren Buffett sort of does or says or a way he speaks or anything like that that, you know, is sort of unique to him that you haven't really seen other successful people do?

Absolutely. I'm going to give you one from Warren and I'll give you a quick one from Bill, because I had dinner with Bill Gates and he told me something I'll never. For.

One thing about Warren is that, and people at that level, they're very concerned and cognizant of the way that business deals affect the world around you, even more so than they are within the internal organizations that are doing the business dealings. It's the impact on the world, it's the impact on the population. And what Warren does, and I know JFK used to do this, he does not have a computer in his office. He does not write emails, he has no email address. Every time I email him, it goes to Debbie, who's his assistant. Warren reads the newspaper every morning. He reads and reads and reads and reads. I know he's famous for it. And some people say he reads a book a day or however many hours he spends a day reading, 10 hours or whatever it is. But Warren makes sure that he understands what's going on in the world. And that way when he makes deals, he can then clearly, clearly see or try to predict the impact that it will have. Because people that get that wealthy, most of the time they're concerned with humanity. And so that's what separates Warren, is that he actually gives a shit about people.

Well, I mean, to have that sort of wealth accumulation, you've got to be. Wealth is a byproduct of creating value. So to be able to have that kind of wealth, you've got to create value for a lot of people.

That's perfectly said that. That's if. If you were to ask Warren why or, you know, he has that approach, or why he just innately cares, if he didn't say those exact words, he would say something along those lines. That's exactly it.

I love it. Matt, you're the new Gates. All right. Sorry, Puppet.

All right, so what was. What was your. Your. Your takeaway from Gates?

Yeah, so quick one from Gates. We were talking. Billie Jean King was sitting at the table with us. I don't know if you guys know who she is, but she said there's actually. Emma Stone is playing her in a new movie. Billie Jean King is the. One of the civil rights women's activist leaders in. In not just history, in history altogether, but in sports, she's famous for the battle of the sexes. The battle of the sexes was a very famous tennis match because Billie Jean King argued that women should get paid as much as men for winning major tournaments. And to prove her point, she challenged Bobby Riggs, who at the time was the number one player in the world. Bobby Riggs was the Roger Federer of his time.

Okay.

And they played a straight up fair and square match, and Billie Jean King beat him. And so Billie Jean King has then gone on to not only have a very successful career in tennis, but she's become quite the business person. She's a big investor in Berkshire Hathaway, and she's become very close friends with Warren. And so she was sitting at the table with us, and she was talking about a commencement speech that she was going to make at William and Mary College. They had invited her for the graduation, and she was the guest speaker. And she was asking us at the table if we had any tips or advice about things that she should talk about. And this is what Bill said. He said that the only thing in life that kids never learn in school that they should is that life's not fair. He said, in school, they teach you to form a single file line when you want to speak. They teach you to raise your hand. They teach you to be fair. When you bring something in for some of the students, you bring in for everybody. Right? You bring in donuts, you bring. Bring enough for everybody. He said, life. Life's not like that.

Yeah.

So that's the only thing that if I could change one thing in School, there would be a whole course on how life's not fair.

That's interesting. I like that because. Yes. I mean so many people will just get eat up in business if you try starting a business, client stops working with you or just people don't buy your stuff, you take it personally.

Well it also, it creates.

Entitlement in people. People feel entitled to like if they've got it, I should have it too. And you do learn that in school. Like Valentine's Day. Right. If you're going to bring a Valentine's Day, bring it for every student in the class. If it's your birthday, bring a cookie or a cupcake for every kid in class when you have a. Alana, my wife was telling me this that when the kids have birthday parties now, like for their, you know, sixth birthday or whatever, if they're going to have a birthday party at their house, they have to invite everybody in the class. They can't, they can't choose which of their best friends to invite. The school wants them to invite their entire class now.

So now it's almost getting worse.

Yeah, I mean obviously outside of the school they've got no frickin power over you. But you know, if you're going to hand out the invitations in the school, they want you to hand out invitations to every kid. And I do believe that like this instills that entitlement. It's the whole like let's give trophies to everyone. When you play baseball, even the fucking 10th place team gets a fricking trophy.

Oh it's true.

Well you're in that too.

Yeah, that's what he was, that, that's really the entitlement piece is really what he was focusing on I think. And that end more, you know, if you read some of his books, he talks about how the number one thing he looks for when they hire what he's really entrenched in Microsoft's hiring process and the type of Persona that they look for in a long term employee as an asset to the company is grit. You know, and the people that have that grit in life are the ones that are able to push through those hard times. Because we all know this, everybody listening today knows that when you go into business or when you go into something that many people want in life, it's very, very difficult to achieve it. Right. In the old saying, if it was easy, everybody would do it. Well it's fucking true. And, and, and so you're, when I say you're, I mean the proverbial you, you're Inevitably either going to face a near death business experience or you're going to die and you're going to have to come back to life, you know, and, and I've read the, this, the Nike story, which I'll, I'll tell you about the book later when I recommend a book. I've read Alex Schultz's story. Starbucks and all these guys, they don't talk about close calls. They talk about literally, you know, days or minutes away from bankruptcy multiple times. Right. Really near death experiences. And these are some of the biggest brands in the world, the history of the world, but they had the grit to fight through.

Well, I mean, you look at like Elon Musk, right? Like Elon Musk. That's like his whole story, right, was he had PayPal. He made billions off the sale of PayPal. He took that money and took every cent into Space X. SpaceX failed and failed and failed till he was on the verge of bankruptcy. And then at the last minute he got like another round of investing and managed to actually make Space X go. And then he did the same thing again with Tesla. Almost failed, lost almost all of his money, was on the brink of bankruptcy and then built it up again. You know, it's like you hear those stories over and over again from these, these billionaire entrepreneurs that almost all of them have had times where they've pretty much not only almost lost it all, but been willing to lose it all.

Yeah. And you know what? It goes back to this. I want everyone to take comfort in hearing this even if they've heard it again. Because I can't be reminded of this enough. When we start out on our entrepreneurial journeys, no matter how much experience we have doing or how much we've learned through self education or taking courses in school, reading books, blogs, watching videos, we don't know what the hell's going to happen. We don't know what we're doing until we actually go do it. The reason why we face near death experiences or we almost go bankrupt a lot is because we're figuring it out.

And that's one of the biggest challenges of really pursuing an entrepreneurial dream is that fear of failure. It's that fear of not being able to figure it out. Well, guess what? If you're unhappy in life where you feel stuck where you are and you want something more, it's this simple, the alternative to facing that fear and potentially failing, it's much better than never fucking trying and just staying where you are unhappy. Anyway, what's the worst thing that's gonna Happen, you're gonna go back to being unhappy. I mean, I just don't get it why more people don't try. I do, because I understand the brain chemistry, and a lot of people, I mean, we're programmed to think this way. But I'm telling you now, if you don't go after it, you're just going to be where you are anyway.

Yeah.

You know, you'll never. You'll never advance.

Yeah. Have you ever heard that one commencement speech from. From Jim Carrey where he actually makes a comment, and this is like, so relevant to what you're just saying, but he makes a comment about how you can. You can hate life and fail at doing the things you don't like. Might as well enjoy life and potentially fail at doing the things you do. Like, something along. Something to the effect. I think I totally butchered that quote, but it was something to the effect of you could fail at doing the things you don't like, so why not focus on the things you do like?

Yeah. And I don't care what the actual words are. I love the concept. I get it. I love it. And to me, and I hope people that hear this, this is what we're passionate about. This is why we listen to shows like this. This is why we learn what we do and pursue what we pursue. It's because it's what makes us happy. And personally, I like to. I'm on the innovation side, and that's because I want to change the world. Maybe it's 100 people's lives, maybe it's 10,000 people's lives. Hopefully it's millions of people's lives. But if I can walk away and say I made a positive impact on the world and I changed something, then that's what makes me happy.

So what would you say to the person who. Because I've actually had debates with people who are actually employees, so obviously it's kind of a different mindset, but they might have a dream, but they're just too scared to make that leap from maybe a job they hate to something of their own choosing. You know, maybe starting a new business or something like that, or maybe speaking to someone who's starting out and hasn't. Maybe they're starting to experience their first dip. Like, how would you. What's something you would tell them? And obviously you can't create grit in someone, but at least you can encourage them to look a little differently at things. How would you do that for someone?

Yeah, absolutely.

It's kind of a loaded question.

No, it is But I think it's simple. And I work with quite a few early stage people that sometimes they just reach out to me on LinkedIn and I don't know them, they're strangers. And I just. I feel for them and I understand them. So I take some time. Or it's mentoring very young students in the NYU entrepreneurial program or just friends. And the key is that you can't get too far ahead of yourself. And this. I don't care if it sounds cliche or not. The way I handle it, because I get stressed out too, and I fail too, is that I just. I just worry about today. Did the old additive is that if you think about doing something tomorrow, tomorrow never comes. It's just all about today. Right. So to me, all I have to get through is today and tomorrow. When I wake up, I will worry about tomorrow. I don't worry about things I can't control. I try to predict and look ahead and look at trends. I want to skate to where the puck is going. I get all that. But I don't worry ahead. I just worry in the present. And if I can get through today, that's all that matters.

Cool.

So you're thinking ahead. You're looking ahead. You're looking for potential opportunities that may present themselves, but you're not worrying about what might happen tomorrow.

What might worry you is what you have to deal with today, but you're never thinking about what's going to happen tomorrow, but you are still looking at potential opportunities and where you can take things in the future.

100%.

Sweet. So I know you've done a lot, and with this in mind and all of that, I'm going to switch gears a little bit to. Let's go back to the giant list. Slash this organic growth trajectory that you're. That you're having right now with the bars. Talk a bit, a little bit about that, how you got to $1,000 a day. Obviously you're getting past that, too. What's the strategy? Give us a down low on that.

Yeah. So it happened when. I don't know if you guys even know this about me, and we've known each other quite a long time.

Is that five years ago, I was diagnosed with something called Crohn's disease. And Crohn's disease, for people that don't know what it is, it's a hereditary disease that sometimes you don't find out you have until very later on in life because you become. You have symptoms, you become very uncomfortable because the. It's severe Inflammation of the digestive tract. You have trouble processing food and breaking it down in your body and digesting it. And when you do, you, you could tell that something's wrong. And it's very uncomfortable. And a lot of people suffer from it because it's an incurable thing. There is no cure. At least there isn't now. Hopefully there will be in the future. But what happened is that if I didn't make my own food and was real tight about my diet, it would get worse and worse or I would be way more uncomfortable. And one of the biggest challenges I faced was when I'm out all day, you know, and I don't have my kitchen and my grass fed meats and my, you know, some of the things that I know are safe to eat because I've went out and sourced them myself or cooked in my own kitchen. That became a major problem for me and it almost made me afraid to leave for long periods of time. It got to a point where I moved my office. I literally got out of a lease, paid money to get out of lease to sign a new lease at a place that was a block away from my office so I could go home fast in case I needed to get food or needed to be near a bathroom. So it was a pretty big thing. And so I started to make these bars and these shakes for myself. This is something that I created to solve my own problems. And then once people started to ask about them and I started to share it, people were like, wow, this is really good, this tastes good, I like this, can you make some for me, etc. And then it just, it came down to this moment in time where I went to my business partner, Sean, who happens to be a number one podcaster in the health and wellness space.

Nice. Perfect.

And yep. And Sean and I know each other from college. We've been friends for 15 years. 15 years. And he's a brilliant guy. And he has this giant audience that he built literally over seven to eight years. If anyone thinks that they're going to list build overnight, they're crazy. I don't care how much money you have to spend on ads. I don't care what your lead magnet looks like. It just takes time and all the rest of it too. And so Sean was sitting on an email list of 3, 400,000 people that were reading his email newsletter every week and not unsubscribing. And these people.

The magic recipe for sales was in place. They knew Sean, they liked him, and they trusted him. Yep. No like and trust Right.

That's right.

And so I went to Sean and I said, you preach about all this health and wellness. You. You hold summits, you write this newsletter. Have you ever thought about selling a physical product? And he said, no, but I always wanted to. I said, well, here's my idea. Sean came up with this phrase called Jerf, and he trademarked it. And he was preaching, hey, look, if you want to feel good and look good, and if you have any sort of ailments and you want to get the most natural healing ability from it, you need to look at the fuel you're putting in your body. And every week, someone comes on my show and quote, unquote expert and says, this is the right diet for you. No, this is the right diet for you. No, this is the right diet. And at the end of the day, if we all just eat real food, we'll feel much better.

Just eat real food. There you go.

Yeah. So I brought it to him and I said, why don't we connect all these foodies and people that really care about what they're putting in their bodies to this solution that I've created? Why don't we share it with them? And the Jerf bar was born.

That's awesome. I mean, one of the brilliant takeaways from what you just said, one of the biggest lessons that I think people can take from that is that if you need to get in front of an audience with a product that you're trying to sell, you don't necessarily need to go and build that audience from scratch yourself. You can find somebody that has that existing audience, figure out a win win situation, and work together to put a product out there. I think so many people think of, I'm gonna put a product out there, then I need to build my list, and then I need to, you know, build trust with my list, and then I need to go and sell my product. But if you could find good partners, you can actually, you know, skip over a couple of those steps.

Bingo. Yeah, bingo. That's. I'm glad you pointed that out. That's exactly what I did. And that's why strategic partnerships are such a big piece of the marketing puzzle. There is no magic bullet. There is no magic channel. There's no magic solution for marketing you need. It's a giant puzzle. And a strategic partnership or partnerships is one piece of the puzzle. Paid advertising is another piece of the puzzle. Organic traffic through content is another piece of the puzzle. PR is another piece of the puzzle. Right.

Promoting yourself on podcasts is another piece of the puzzle. Writing a book is another piece of the puzzle. These are all pieces that you need to fit together perfectly in order to build a real marketing engine. You can't just do one of those pieces and expect great success.

Totally.

You need, you know, the funnel from top down has to be built out and you need it all firing at the same time.

Smart. Now, it's so in terms of pricing, so you said about $1,000 a day you're making now. Do you have a recurring, is it a recurring subscription? I think you have the option for that. Right.

That's actually something we're rolling out next week. It's funny you mentioned that.

Nice.

Yeah. This is a work in progress. We weren't sure what the reception would be to these bars. Luckily enough. Well, I say luckily because I feel blessed to be in the situation and to really have something on autopilot that is doing 1,000 plus dollars a day in its first, you know, in its infantile stage or infancy stage.

For those of you that don't understand how this business model works, the upfront work is where all the heavy lifting is. It's formulating the products, developing the packaging, setting up a third party logistics center, getting all of your apps dialed in and optimizing your website for conversion. That piece is the heavy lifting. Then what happens is that the products get made, they get shipped to a third party logistics center and people that order online, because we're just direct to consumer, we're not going into stores until next year. They order something online, it goes straight to the fulfillment center, they pick, pack and ship everything and then it goes out to the customer. I don't touch anything. Literally don't touch a thing.

So you've always been good at this. That's what I like about you're always thinking out of the box. You're always partnering. For the most part, you have some strategic partner there. And I know that's kind of a failure that a lot of entrepreneurs, they think they just do all this shit themselves, but they don't think about all the intricate details, the leveraging to get your marketing out, your word out. No, this is really good. And I think anyone can apply this even to a digital product.

Now there was. So it's funny, the actual topic that we were planning on talking about today, you know, now 30 minutes of the podcast. Let's, let's go ahead and actually break that down real quick. And that's actually your process for trying to figure out if a product's even going to be viable. It's Kind of testing the market, testing the waters and deciding, should I go in on this product idea and go down this path? And I believe you said you had like a three or four step process to sort of uncover whether or not this product can be viable. Can we speak on that for just a couple minutes?

Oh, absolutely. It's a three step process. I'm going to simplify it so that it's actionable and I'll just go ahead and jump into it. One of the biggest challenges I had early on, and this is step one, is that I know that you guys are the same way, Joe and Matt, because I've known you for a while now. But I know that all of us entrepreneurial spirits, our minds don't stop. We keep thinking of ideas. And one of the hardest things to do is to decide, is this a really cool idea, is this a really great idea? Versus is this a really great business?

I've thought of a ton of really cool products and services that have made zero profit.

I've done it before.

I'm sure we all have something and we're like, oh, that's a great idea. And again. And I'll go back to Talmade. Big success in terms of how many units were sold, not a big success in how much profit was made. I'll explain to people what Town 8 is. I was at the gym and I was the person who was leaving my keys and my phone around all the time. And eventually I would either lose it or would get end up in lost and found, or I would go out to the parking lot and then say, oh shit, I left my phone on the treadmill and run back in. Luckily it'd be there. And then I said, you know what, what if I, what if I made a gym towel with hidden zipper and pockets that could hold the cell phone and keys and be functional? And my mind went crazy and oh, this is gonna be great. Long story short, it was a really cool product and we sold thousands of units. I mean we. I was at Bed Bath and Beyond negotiating tens of thousands of units of sale to them. Problem was is that the products required a lot of hand sewing machines, couldn't make them. And at the end of the day, the market wanted to pay 10 to $12 for a gym towel like this. And I had to sell it for 30. Bed bath and beyond wanted to buy tens of thousands of my beach towel version from me. They fucking went nuts over it. The buyers were going crazy. They said it was one of the best and most innovative products they'd ever Seen, but they wanted to buy them for the same price I was making them. For a couple of dollars more, I could have sold them tens of thousands of units and made no money.

Oh, my God. So there you go.

Yeah. So going back to step one, really.

Don'T try. It's not a qualitative analysis. It's a quantitative analysis. Does my idea pencil into a good business model? If people buy this product or service after I create it, can I actually make a profit? And I'll tell you what I think I've told you the guys this before. Eben Pagan said something a long time ago in one of his webinars that, hey, I'll never forget. That was so awesome. He said if you're. He said that if you build a business.

Or if you're doing business and you're not making a profit, then you're not an entrepreneur. You're just purnewing.

That's right.

That's right.

So true. I mean, what's the point? I mean, you can, yeah, you want to sell a bunch of shit and not make any and be in the same place you were before, you'll have a big list. But if you can't sell and make money, then what's the point? Yeah. So doing that analysis front to back, top of funnel down, I feel like there's a lot more cost, even on a digital product than anyone ever thinks of before jumping into it.

Yeah, absolutely. And that's the thing. You've got to put a pen to paper. You need to open up Excel. And if you don't know how to do that, if you're not. If you don't have experience modeling or. Or you're just. It's just not your thing, get some help. You can go on upwork. There are plenty of people for 100 or 200 bucks, that can build you a simple model that you can play with. But just remember all the overhead and factor in everything and make sure that it actually makes a profit. I can't tell you how many great ideas I've seen that don't make good businesses.

Mm. All right, cool. Step two. What you got?

Step number two. Ask yourself this question.

Am I changing user behavior, or am I showing people that already behave this way a better way?

Am I trying to totally change the way people behave? Or is my product or service a better way to continuing that behavior?

Got it. Now, do you have some examples of both sides of that coin?

Yeah. The reason why that's step two is because if you think you're introducing new behavior to somebody or the masses, your chances of success dramatically decrease.

So what you're saying is it's much easier to show people a better way to do something they're already doing than to try to completely Change somebody's behavior 100%.

Let me give you a couple of examples. Airbnb is a great one. People travel and book accommodations. They were used to booking hotels. Right. Or maybe some people went on Craigslist and tried to find somewhere to stay. I don't know. But this was a common behavior. Airbnb didn't change people's behavior from booking accommodations on their travels. They just showed them a better way to do it.

Yeah, I mean, really, the process of actually booking an Airbnb is very similar to the process of booking a hotel room. I mean, the way you actually book it is pretty much the same where you're booking it is. What's changed?

That was all done by design.

Exactly. Smart, right? Yeah. So Airbnb is a big one.

Yeah. So an example of maybe the opposite. Someone who is trying to change too much, that whole behavior.

Yeah, the opposite. No, no, the.

Well, they're probably mostly the businesses you don't hear about very much because they just don't make it very far, you know?

Well, it's like. Yeah, it's trying to sell motorcycles and saying they're the best shit compared to people who don't know how to ride motorcycles, you know, or something. I don't know. Different behavior of getting somewhere.

Well, actually.

Matt, you're right. You usually don't hear about them because they fail.

And I'm just trying to think of if I'm sure that there are so many that I know just because I have friends that tried things.

Well, I mean, this is probably actually not a great example, but I'm just. You know, Joe and I were actually having a conversation earlier today about, you know, bitcoin and the cryptocurrencies and stuff like that, and they haven't really caught on mainstream because it's a completely different way of transacting. There you go. Now, the reason I say it's probably not a great example is because I actually do think the Bitcoin technology is actually a pretty groundbreaking technology that's going to change the world at some point. But the fact that you're trying to change people's purchasing behavior is why it's. You know, bitcoin's been around since, like, 2005 or something like that. And here we are, you know, 12, 13 years later, and it still hasn't caught on mainstream probably because of the sort of behavioral element that exists there.

I couldn't agree more. That's actually a very good example because people are stuck in, you know, in the ways that they like to do things. People are afraid of change.

And, and you know what, I'm going to give that some thought. I know by the end of the show I'll come up with a good one. But that's a, that's a good question and you're right, you don't normally hear, they normally come in and out very quickly. I'm sure that there's probably, I mean there's, there's a zillion of them but yeah, I'll think of a good one.

If you think, if you're going down that route, I'm just going to say like an Elon Musk, I mean look at SpaceX. He, he wanted to get to Mars I think was the whole motivation and put greenhouses up there was like really what he wanted to put attention there. So he had to figure out how to get cheap rockets, you know and launch these things not for billions of dollars but so you better have a lot of budget and you know, maybe investors buy ins and long time you'd actually see this thing through rather than a quick win.

Yeah, I mean I think what you're, you're, you're trying to say is that people's behaviors can be changed. I mean there's, there's actually, you know, throughout history if you look people have changed behaviors over time. It just takes a lot of time and a lot of money for that behavior to change. So you know, there's a very good chance if you're trying to change people's behaviors like you may not even live to see it happen.

Possible.

Yeah, correct. And trying to change users behavior is possible but there's one thing that's factual about.

Usually takes a fuck ton more money. Oh yeah, and a lot more time like you just alluded to. So if you don't want to swim upstream, try to show people a better way to do the things they're already doing.

Yeah, definitely, definitely.

All right, so what's that third step?

Yeah, so the third step is an interesting one and it's a specific tool and I shared this with you guys before. It's called Peak User testing. P E E K. It's one of my favorite tools. It's free. There's a paid version of course that you can really go crazy with. But I think that the mistake a lot of entrepreneurs make is that they either guess and they don't test things enough first to validate it or they test it the wrong way.

To me, there are so many free tools out there that you don't need to spend money to validate something these days. And if you don't want to do it with boots on the ground and guerrilla tactics, you can do it online. And the old school of thinking and what people taught me before that I just didn't make sense to me was you create a landing page for something, you introduce your concept to people by paying for traffic and you, you introduce some sort of a lead magnet to them or you try to pre sell or sell something to them and you see if it resonates and converts. Right. With, with Peak you don't have to spend a dime. And it's amazing because they have audio video screencasts that you can define who you want in terms of the traffic that lands on your page and then Peak records the user test for you. So you can script it, so you can say you've just googled business phone service, you've now landed on this page and you're looking for a new business phone service for your office. You know, you can give them context, right? You, you eat protein bars and you're a vegan and you've just landed on this page. You know, what are your thoughts? Yeah, right. And you can not only see where the person's clicking and what they're doing from the screencast recording, you can hear their thoughts. They, you, they, it's, it's literally a real life stranger hitting your, hitting your page and giving you feedback for free. And you can do it. They give you five tests per IP address. Don't tell them I told you, but you log in somewhere else, you could get five more. And then there's the paid version. But the feedback you get is so valuable and it's so important to understand. Don't spend money driving traffic until you've taken advantage of all the free tools out there to really validate what you're doing. And the reason why I recommend Peaks on Much is because it'll give you much more in depth feedback on a whole other level than traffic coming in that you're just maybe using Hotjar for and you're trying to track where they're clicking and make light of it. These are people actually telling you almost face to face.

Yeah, yeah, that's amazing.

Yeah, no, I've actually seen the other end of it where you can be one of the user testers and they actually pay the user testers 10 bucks per per test that they go through and, and do. And they actually, last time we chatted you mentioned this tool. So I went and looked into it more and I was like, huh? If I want to be a user tester, what, you know, what does that mean for me? They met you make 10 bucks per test that you do. They want you to actually stay on the site for about 20 minutes or so.

Really.

And you have to speak out any sort of thoughts as you're looking through it. Like oh, this, this color here looks a little funky or this is hard to read or this, you know, I don't think I'd buy this because I don't trust this person because of this or I bet these testimonials are fake or whatever. You have to speak out all of your thoughts and they want you on the page for a good like 20 minutes.

You're getting literally 100 minutes of free feedback. That's insane. Yeah, okay. Yeah.

Matt, what's mentioned? Joe, you can target with filters and say I want people between the ages of X and Y. I want females only. I want, I mean you can, you can literally target on top of it.

So John, have you done user testing only to females to your match.com profile?

Brilliant.

Oh man, that's one of my deepest, darkest secrets.

You need to spend 20 minutes telling me all about. What do you think about that?

Funny you brought that up. I didn't do any peak user testing. But I do treat my online dating profiles from a marketing perspective because we're marketing ourselves and if we want to attract a certain type of people, we want to put a certain type of message out there and portray ourselves as certain way. And I do split test quite a few things.

Give me an example. Give us an example of what you split test.

Oh, I'll do. I'll split test different call to actions. Like if you like this profile, like click on send, send me a message button, things like that. I'll literally tell them what to do and really emphasize the CTAs and then I'll switch them up and then I'll split test, you know, different opening lines and things like that.

And again, it's not to manipulate anybody. It's to put out there what I want to get back.

No, it works. I knew one other guy that did a very similar approach. He's a very good marketer and he got the chick that he was looking for, but he got, he just had a lot of fun interactions in the meantime. But hey, don't lie. You know, you're going to try this website now, this testing and get free feedback on yourself.

It's probably the best idea I've ever heard come out of your mouth. Perfect.

Good. I like to hear that.

Yeah, so those are good. Awesome. Three steps. And I think you're the best guy to say those. I mean even though they sound kind of simple on the, you know, the kind of surface level there that you can go deep with this and you said it's very quantitative. You're, you're, you're not just qualitative but you know, you're getting very specific feedback. You can, the whole thing, you can measure what is. I wanted to ask you because you know, you do deals typically with folks, you guys with Warren Buffett, Gates, you always have partners. What's one thing that you feel like you're world class? This is like your X factor.

That's a really good question.

I mean you're so awesome. You know.

My God given gift is the ability to.

Make real friendships and connections with people.

And so I think that that is the main reason why I had been asked to go on this journey to Omaha to see these people and to finalize terms and facilitate the deals. It's because.

It'S not because I'm the best business person. It's not because I had the most industry knowledge or expertise. It really just came down to I think the likability, the eq, the emotional quotient. I think that that's my gift. I'm all about establishing real connections with people and really not only showing an interest, but demonstrating an interest into what's important to them and what their values are and then structuring a deal around that. So it really coincides.

I, it's funny, I'm very into non verbal communication, what that means. When I make a business deal with people, I never sit across the table from them. That's really adversarial just by nature. I always sit next to them and some people, it takes them by surprise, but it just feels more comfortable. And so for me, I think that the confidence that they had in sending me was that they were confident enough to say, hey look, at the very least we think that they're going to genuinely like this guy. And when people like each other, there's a much higher likelihood that they're going to want to do business together.

Now I could definitely see that trait in you as well. You're, that you're just that type of person that I think the very first time I ever met you, you know, you kind of have that. That quick connection. You kind of feel like you've known that person forever. Because, you know, the very first time I met you, I think within, like, three minutes of me meeting you, you were telling, like, dirty jokes and stuff. You know, like, just like, all of a sudden, like, within. Within a very few minutes, like, the filters off and you're just. You're just. You.

I don't know if he's getting deals with Warren Buffett.

Well, I'm not saying that's how you can deal with Warren Buffett, but he is very good at making people around him feel very comfortable with him very quickly.

That's true.

I appreciate that. I appreciate it.

All that. And am I allowed to say the commercial you were on as a kid?

Oh, yeah.

I'm not even sure I know what this is about.

Oh, Matt doesn't. Oh, man, I got to see it. It was great. He was. He's a freaking child star, man.

I don't know about that. I did. I was one of those kids that went on a lot of auditions, and I landed a national TV commercial for McDonald's. I was about nine years old. And, you know, this is around the time of Super Mario Brothers and its emergence in the video game.

You know, History of the World. And so there was an animated sequence where they. They had a cartoon Mario that was running around in some of the scenes, and I had to follow him with my eyes, but on set, there was nothing there. They used an apple and a soda can, you know, and this is. I mean, you're talking about 1989, when, you know, this type of technology was just brand new. There was no Pixar and didn't do things like that back then. So anyway, I did dabble in that. I've done a lot of different things, but at the end of the day, I feel like all the wins, even that audition when I was nine years old, I just made a connection with the casting director, and I was able to do that. And it followed me all throughout life. It followed me into sports. I was the guy that got to play a lot. Not because I was really good or athletic. It's just because everyone liked playing with me. I shared the ball. I sacrificed for other players. I was willing to be the guy that did all the dirty work, and people liked it. And I've always just found that, you know, I think it maybe ties back to winning friends and influencing people and these types of books. You know, if you're. If you're a genuinely nice person and you actually care and give A shit about what others want, think and feel, it's going to come back to you. It might feel like you get kicked around in the mud a little bit and you might. Yeah, and I'm not saying to be weak. I'm just saying to really, you know, consider other people's feelings and what they want. Especially in deals, when deals are fair and both sides win, then they typically have a very fruitful, lasting term to them.

Sure, yeah, absolutely. Absolutely. Well, this has been so awesome. This is, this has been just like a really, really great conversation. We went into all sorts of places that I didn't even think we were going to go. So that's, that's very, very cool. But I do want to be respectful of your time and ask our last couple wrap up questions. And you sort of alluded to this earlier, but you had a book recommendation that you wanted to talk about that, that I think you read recently and you said you'd probably reread every once in a while. Do you want to talk about that book real quick?

Yeah, it's my favorite book. It's a page turner. It's about life, it's about business, it's about grit, it's about team building, and ultimately, in my mind, the most. It's my favorite brand ever. And it's Nike. Phil Knight co authored the book, it's called Shoe Dog. And in, it's his story, it's his memoirs. It's a real account of him, you know, struggling.

But having a vision.

He never was without food or shelter, not that kind of struggle. He wasn't like Tai Lopez when he was living on people's couches and he only had $47 in his bank account.

True story.

Yeah, true story, of course. But he was able to.

Build this incredible following, incredible brand, and he changed the world. He's one of the most influential people in the eyes of the greatest athletes that the world has ever known and seen. You know, when Tiger woods won his first Masters, Phil Knight's the first person he called. When Andre Agassi won the US Open, he didn't run up to his girlfriend or wife or to his parents. He ran right into the arms of Phil Knight. When, when LeBron won his first NBA championship, the first thing he did was thank Phil Knight. You know, this is a guy that is a legend behind the scenes. And when these type of people know him and respect him and love him, then you know that he's just an incredible human. And he actually has a story in the book where he was with Bill Gates And Warren Buffett at an event, talking to them. Nice.

That's awesome. That'll add, like, a little personal connection there. You're like, I've sat at that table.

I think what I'm getting here from what you're saying and this book and then just your nature, the way you approach business and life, is that you don't really have to be the spotlight dude. You don't have to be. And I'm horrible at basketball. You guys can help me out here. But you don't have to be, like, the Michael Jordan, the guy that's in the spotlight. You could be the dude that's assisting him and funneling. I don't know who that guy would have been back in the day in the Bulls.

Scottie Pippen.

There you go. Pippen. He was still kind of a big name.

Dennis Rodman.

He was. Sorry, Rodman.

Yeah, there you go.

But you know what I mean? I mean, like, it's Phil Knight. Most guys don't know that name. Most people don't, but they know the brand. So he made the brand famous and then created this kind of aura, this feeling around it. But obviously he was orchestrating and whatnot. So it's kind of. It seems like sentiment, like how you approach business and everything. You're leveraging, you're. You're putting the vision out there, but you're not really the guy.

Yeah. To bring it into present day, you're the. You're the Lonzo ball.

Exactly. There you go.

Wait, is Lonzo the dad or the kid? I'm getting him confused.

Alonzo's the kid. Lavar is the father.

You're the Lonzo because Lonzo is actually known for how well he spreads the ball around.

There you go.

There you go.

Bam.

I'll take that comparison.

There you go.

I thought Rodman was pretty cool, too, but.

You'Re just friends with the most scary guy in the world right now. I'm just kidding.

All right, so last question. To wrap things up. Where can people go check you out more, see what you're up to and all that?

Yeah. My own personal website is under construction. I'm revamping it. But the best thing to do, if you want to get a glimpse of what I'm doing.

Just go to jerfbar.com j e r f b a r.com or go to completestart.com Complete Start is the brand name of my instant breakfast shakes.

Man, completestart.com is such a great domain name. Yeah, I'm surprised you're able to get that domain name.

I got it in an auction and I was anticipating anywhere from eight to $10,000. And I was able to bid it down to 600.

Oh, wow, that's crazy.

Yeah. And this came after me reading an email or a blog post from Noah Kagan on Okdork about how he paid a million dollars for Sumo.com.

Yeah, I read that.

Yeah.

And so I read that and I was like, all right, I'm getting this website.

Is that how you did it?

What's that?

Did you use that kind of tactic?

I don't know. I forget the details. But basically the point of his article was that URLs matter and dotcoms matter. And the more people say, oh, it's okay to have a.net or a.biz or a.IO or whatever it is, he's still a very firm believer in that the dot com real estate is important. It builds trust and it matters to the customer.

I agree.

I agree. That's why none of our businesses have nets or IO or anything else. It's all dot coms. But we've paid a hell of a lot more for our dot coms than you paid for. Complete start. Damn it.

Oh, man.

All right, that's awesome. So Everybody check out jerfbar.com, completestart.com.

Do you have a social media platform that you tend to favor that you're on more than others?

He's not in the spotlight, bro.

Well, you know, if people want to follow his next business, where the.

Yeah, the best way to connect with me is.

Of course you can find me on LinkedIn. But I actually, I'm a huge Facebook guy historically. And now I'm really starting to like Instagram. I'm Oach Margulit is my last name. M A R G A L I T. It's Coach Margalit. And the reason why it's coach is because I coached basketball for many, many years. And when Instagram came out, the kids had it and they would tease me and say, oh, you're not cool. You're not even on Instagram, coach.

And then I was like, yeah, fuck you, I'm gonna download it.

These are like high school kids, by the way.

Yeah, welcome to the world.

Yeah, exactly. And so life's not fair, just despite them and a spy on them to see what they were doing and things like that outside of, of, you know, our time together. But. But then I became a huge fan. I think it's a great way to connect with like minded people through hashtags and I think it's a great way to find content easily that you want to consume. I'm a big Instagram guy, so Oachmargalit, if you want to follow me there, I post a lot of personal things and on Facebook, John, Margalit, Jon, you can connect with me there as well.

Very cool.

Thank you, man. Awesome has been real. It's been awesome. And hope everyone got a good takeaway from it. So thank you very much, dude.

Thank you, guys. I really had fun.

All right, we'll chat soon. See ya. Hey, thank you. Thank you. Thank you for listening to this podcast. Now, if you want to learn more and hear from us every single month, which a lot of people do, it's pretty fun. We actually write this thing called the Evergreen Profits Letter, and that is a printed newsletter that we actually send to hundreds of people every single month to your doorstep. So you actually get it in the mail. You can read this sucker. You can highlight it, you can dog ear. You can scratch some stuff out. If you don't like that one, you say, no. Joe and Matt, that's not cool for me. But you can take a lot of different strategies, about 15 or so from every single issue, and it's really cool. So basically, these are actionable strategies that you can use in your business right away to test out and pretty much build on what you already have going on. So check it out. It's at www.egpletter.com. it's pretty amazing, and you should go check it out, see what it's all about.

Bo.