Episode 331: The Advantages of Being Fresh and Blind in Starting a New Business with Co-Founder o...

Welcome to this episode of the Million Dollar Mastermind. I'm Larry Weddell. And before we get started, if you want to know exactly how to win again and again, go to Wydell on winning.com webinar now to watch something I've put together for you. Now let's get going into this episode of Million Dollar Mastermind.

I'm here this afternoon with Roberto Milk. Hello, Roberto.

Hey there.

Fresh back from Brazil from a month in Brazil. Is that what you're telling me?

That's right, yeah. It feels weird to be back in the States.

Well, congratulations for running the gauntlet of customs and airlines and the health officials and everything else and making, making, pulling that trip off. So that's the kind of thing that's, most people would not even attempt. But you're back, so must be possible.

Yeah, it was great. You know, even during COVID times, it's possible. You know, it was really, really tough. And having littler kids to wear face masks on the planes for like, it was like an eight hour flight to Miami and then a five hour flight to la. It's something else.

Oh, no. How many kids do you have with you?

I've got. It was my wife and I with our four kids and it was quite an effort and people really did keep their face masks on. I mean, I was pretty happy. It felt pretty safe on the long flights. A few times the flight attendants had to say, well, you know what? You can't be drinking that drink for three hours straight.

It's just a slow sip.

Exactly.

Could you top this off for me?

Exactly, exactly.

I need to stretch this two hours out to one more hour.

Yeah, yeah, but I thought people did a really good job. Everybody was, was, was, you know.

Okay, here's the big question. How long did, how long did you stand in line in customs in Miami?

You know what, Miami was crazy because we have, we were flying with 10 suitcases and three of them made it and seven of them didn't. So we were, at one point we said, you know what, if we don't leave right now, we're not going to, we're not going to make it. So. So we got through customs, but then, you know, we ended up getting to the flight almost late and our suitcases, my, my son's guitar is still pending, but it'll be here soon.

Really?

Yeah.

Well, congratulations on a successful trip with your family. You know, they did a study in the past of what, what is a unifying principle between happy families. And they found out that what it was was they they went camping together and they said it wasn't, it wasn't just, it wasn't camping itself. It was the fact that when you go camping, you go through, through so many nightmare experiences together. It brings you closer, you wind up.

I believe that we were camping as a family in Yosemite just like a month and a half before going to Brazil. And that was definitely bonding. Yeah, I love it. I love it.

So anyway, Roberto, let's talk about your company. You guys are really, to the normal mind, already huge 66 million global net sales, 2020 have paid out, you know, and your company is Novika, an online marketing place for selling art. You've got artists around the world, handmade art, and have paid out to these artists around the world $100 million already and you're shooting for a billion. I remember that. Right?

That's right. Yeah.

And that's. You've been doing it for 22 years. But talk about, you got 15,000 artisans to keep up with. You've got a team of 150 people around the world. So obviously there's a lot of moving parts, a lot of people to keep organized, a lot of, you know, you know, just the sight to manage something like that and the communication, every aspect of that seems to be almost as daunting as taking a family with four kids to Brazil.

And back.

And so talk about how that evolved. You know, you launched this thing. What, what was the passion behind selling art? You know, rather than just, why didn't you just go down the street, Roberto, open up a gallery and make life simple for yourself? You know what, you had a different idea and you've made the thing work big. But how did this come about and then how did it grow?

You know what, I think I can answer both of those with one story, which is basically the, that everything is driven from mission, you know, and from the beginning, we wanted to create a system, not a business. It was a system, not a business. It was really creating a whole new system for artisans. And my grandma, my Peruvian side was one of our very first artisans. And growing up, we traveled. We had a lot of these low budget travels. Both my parents were teachers, and it was the best thing ever. We would go town to town, driving around in the States, in Mexico and Spain and Peru, and we would take these extended trips. And growing up, my brother and I saw how many artisans that were super talented were basically living a tough life. And then when the moment came around, when this idea came around, we thought, well, look, my grandma, we've seen firsthand As a Peruvian artisan, how hard it is. And we've seen all the other artisans traveling. Let's figure out a better way to do this. Let's just basically scrap the current system and start over and create a system for artisans, a whole new platform. And I think that, that. So that was kind of the spark, the reason for being. And I think that's also what makes operating such a big company with so many people all over the world a lot easier. And that's because there's a unifying mission that people are really into. And especially our team members that are in our regional offices that are working day to day with artisans. I mean, they are really, really pumped up about what we do. And. And they feel like, wow, we just need to sell more and help more people, you know, so it definitely makes managing the company easier when we've got a mission that's driving us.

Yeah. Now, talk about when that thought occurred to you. It occurred to you and your brother or you and who was it?

Yeah, well, the thought, it was almost like I was taking this. I just met this girl who I was head over heels in love with, and she was from Brazil, and she's like, if you're ever gonna go meet my family, you better learn some Portuguese. So I was a senior at Stanford and I was like, okay, I signed up for that Portuguese class and I was taking this Portuguese for Spanish speakers class. It's a small class, like 10 people in it. And the teacher was talking about how artisans around the world basically had a tough time. And she said, look, I was in San Francisco and I saw some Brazilian artwork there and. And you know, it was like, expensive for what it was. And I know the artist is getting almost nothing of that just because of the way that the system is. And, you know, someone has to do something about it. And she looked at me and she kind of locked eyes with me and I was like, that's weird. She's just looking at me. And then I just. That was like the spark. And I went back to my dorm room and I told my girlfriend. I'm like, you know what? It was just this weird thing just happened in my Portuguese class talking about artisans, and I think there's something there for. And then it basically developed into a much bigger idea from there. But that was the spark. And then, yeah, my brother got involved, my mother in law, my girlfriend, who then became my wife, luckily, and others as well, my roommate. Other people. Yeah. So.

You'Re obviously have a Pied Piper side of your personality where you can get other people excited about whatever it is you're locked in on. But why did you have the idea? What in your background gave you the idea that, hey, I might be able to do something like this, this might be for me. Had you done anything, organized, anything, run anything at this point in your life?

Yeah. You know, did you need to go.

To that far to impress the. Your girlfriend?

That's a good point. You know, I don't, you know, I think that, and I've heard this, I think I heard it in one of your other podcasts. You know, it was someone talking about how the more they knew in an industry, the less likely they thought they would be to start up something new. Because the more, you know, then it's like, oh, there's all these things that could go wrong, you know, And I think we were basically, you know, fresh and blind to a lot of the pitfalls that may have been in front of us. And, and so we felt, you know, I felt, I felt highly confident that we were going to do this, you know, but one thing that we did do is we took four, almost five years to incubate the idea. So everyone went there separate ways. And I changed. I was kind of confused. I was thinking about law school, I wasn't sure what to do with my life. And then suddenly this gave me direction. And I realized that once my mother in law said that she was in and she was with the United, she was a human rights officer with the U.N. you know, I thought, well, this is pretty serious, you know, I better really get some skills. And so I went into investment banking and other co founders, they went and did consulting and other things like that. And so we did incubate for four to five years. And that was what gave the confidence to then start it up and start up big. Like we raised a lot of money pretty early on and from big partners like National Geographic.

And I think we talked about your association with National Geographic before. It's really, you know, you see even the biggest companies partnering up with each other in different areas. And even software, you know, the, the big thing, you know, Facebook, etc. You know, they wind up buying software companies that have developed a technology that they need or whatever, you know, and kind of partnering up allows you to kind of make progress that otherwise you may never make or would take forever to make. And it's like, just go ahead and either partner up with them or buy them out if you possibly can, you know. And what other things happened during those five years that came together to solidify this thing to where you could launch, because the idea was launching with a bang. I'm sure you had the idea. When you're thinking globally and everything, you got to give it everything you've got. You can't tiptoe out into the world, you know. So what are some things that came together that really filled in the blanks and gave you a kind of complete package that you had confidence in?

Hey, listen, there's a lot of information online, but there aren't a lot of people who have actually done something. In my case, I've actually built a successful business, has accrued over $5 billion.

In assets under management, and has done.

Well even during trying times. Now, if you want to know exactly how I've done this, go to Whiteellumwinning.com webinar Now, I've compressed a decade of learning into five short weeks. Just for those of you who want to give yourself an incredible advantage and are tired of waiting and watching others move up.

Well, you know, you talked about partnerships, and I completely agree with you. And I think a lot of times people discount their ability to do partnerships based on. Based on, hey, we're too small of a company, you know, or we're just not ready for that, or they're. They're not going to take it seriously. And you know what's funny? Sometimes big, big organizations and companies, they actually need kind of little. Little nimble, you know, hungry companies and entrepreneurs to kind of get in there and do stuff that they're not doing. Like National Geographic, they were talking about preserving culture, but they're like, here's this little startup, you know, that's like, actively preserving culture, working with artisans. And they got a lot of, we'll say in Spanish, ganas, which is like, you know, the hunger to make it happen, you know, energy, you know, and they're like, you know, so. But, you know, what was critical for that Nat Geo deal was the right introductions. And, you know, I think that going back to your question about those five years, one of the best things that I did was basically I worked my butt off in investment banking, and I did it with pleasure. You know, I had colleagues that would just complain about it. And I think people know when you're doing something, you're not into it. I was into it. You know, I was trying to learn everything. I wanted to be on as many deals as possible. If any of the senior bankers asked me to do something, I was happy to do it, you know, and so basically, I was kind of getting the job done and doing it. Doing it really, really well. And I impressed a bunch of the senior bankers and a lot of them ended up investing. Like our chairman was the head of our LA office. And I remember when I, when I, I was so nervous to leave the firm, I had just gotten a promotion, I was making more money than I had ever imagined at age, like 24 years old. And, and then he, he had set up this deal with, this meeting with Michael Jackson and I was going to be the junior banker on the deal. So, so we were going to pitch Michael Jackson on, on, on a company that had the rights to Casper the Ghost. And so we were going to do this and ended up that Michael Jackson, he didn't, he didn't show up at the meeting that day because his psychic said that he couldn't fly. He was going to take a helicopter over to Century City in la. And anyhow, the meeting didn't happen. And I had this chance of one on one chance with my boss, you know, basically to tell him that I was quitting. And I told him I was quitting, I told him what I was going to do and he's like, well, how much money do you need? Because he's like, I want to be involved with this. And he's the one who ended up helping open the door with National Geographic later on. And so I think that more than anything it was those, those senior level connections and looking for mentors if you're young, like I was young. Mentors, mentorship is so important at that age, you know, because you might have the ability to do all this, believe in yourself, you have the ability to do it. Sometimes you just don't have the connections. Right.

And what was your, you know, you go into investment banking, you got this other idea in the back of your mind, long term, down the road. What gave you that drive to attack the investment banking? Did you realize you're going to, you, you know, the harder you work, the more experience, the more deals you do, the more experience you could pick up for down the road, you know, because I've talked to, I talked to a lady right now, I'm drawing a blank. But she was, she went through the corporate world. And we were talking about the fact that she'd worked with three or four Fortune 500 companies. And I said, usually that's enough to just suck the inspiration out of anybody, you know, they just beat you down, you know.

Yeah.

And I said, how did you avoid that? She said, well, I was on a kind of, she didn't say this way. But what she was Saying is I was basically on a mission. I knew down the road I was going to open my own business and I was in there to learn as much and make as many contacts as I possibly could. You know, pick them dry with information in context and then move on to the next one, you know, and you know, she was prepping and so she didn't go in passively, she went in aggressive. Like you're talking about how you went into investment banking, but what, what drove you to do that?

That's so interesting. That is such a parallel in so many ways. Although for me I think it's better to be working for like as an investment banker. We're working on lots of deals. And so I didn't, it wasn't, I didn't feel like there, there was nothing stagnant about it. But, but yeah, you know what I like?

Okay, let me ask you this. When you work on a deal in investment banking, what does that mean?

Working on a deal, right? So then you know what? I think it's best if I back up just a second on that. You know why? Because I really didn't know anything about investment banking when I got in. All I knew is that I needed to raise a lot of money to start this business idea. And where do you raise money on Wall street and corporate finance. And so I had a few people tell me, oh, I guess, you know, that's probably a good path, especially if you can get into private equity or something like that. But all that stuff was Greek to me. I mean, I was basically like, I was a 20 year old student coming from San Antonio, Texas, you know, and didn't really, didn't have a whole lot of like in my, my upbringing it was like, oh, you're going to be a doctor or a lawyer, you know, it was kind of like, you know, and if, you know, and so that was kind of the path, like, oh, if you're smart then maybe you can do one of those things. But there wasn't. So I really didn't know anything about investment banking. And I remember I failed so miserably at, in all the interviews. It was, first of all, it's hard to get the interviews. And then when I went to them I was. Because there was people that had family connections and then an internship and then I had friends that had done internships and I'd ask them about stuff and I wouldn't understand anything about what they're talking about. And I basically felt like such a fish out of water. And I remember I went to a Goldman Sachs interview and failed. Didn't get to second round. Morgan Stanley didn't get the second round. You know, Lehman Brothers. I didn't get anywhere. And then there was this Prudential opportunity that wasn't even for the investment bank. It was Prudential Insurance. And it was this, it was kind of like a mini university called pace. And so I interviewed and I did really well for that. And there weren't that many people interviewing for that spot for those spots. And so then they flew me out to Jersey and There was about 50 people there interviewing for 15 spots. And I thought, well, this is going to be hard, a math test. And if there was one thing, like, okay, I was pretty good at math. And so I did this math test and I got the job, you know, and so, so that, and then from there I had to interview into, to get into the investment bank, but that's how I got into investment bank. I didn't know what investment banking was. And then later what I learned is that it's like it's deal after deal and the deals are almost all around. Either you're acquiring another company and so you're raising the, you're providing the financing for that, or you're going, you're taking a company public. And I did a few IPOs, or you're raising private equity for the company. So some venture capital or some, some larger, a larger amount of an equity investment like A, B or C or D round. And I did a lot of those. And so to do those, I would put the decks together, the model financial models, write the business, business plan and all that stuff was really good, really good prep for later on for doing it for our own company.

Well, one thing, you get in there and you're exposing those opportunities to other people and they start asking questions. And that's an education in itself, isn't it?

Oh, every time I saw a deal, why people didn't want to invest, because then you would go and break it to the, to the management team, you know, and be nice about it. But like, we would hear, we don't like, we don't like the management team or we don't like, you know, we don't think they're a players, we don't think they can scale this thing, you know, or we don't see the, we don't see their, their plan. Their, their plan being something that can be big, or we don't see the target market, you know, big enough, you know, or all these. Yeah, every single time there's a. No, there was like, okay, okay, I get that. I got it.

It's kind of like you, you have a different set. It's like you're, it's like the Shark Tank, except every time it's a different group of sharks.

Exactly that. Exactly that. That's exactly that. Yeah, yeah, yeah.

And they, and they, they're educated sharks. I mean, they know where to find the weakness. And, you know, they have no, they can all be Simon Cowell, you know, attacking viciously because they could care less about you. They're, you know, they're trying to make up their mind whether they like you. They could care less how, you know, they affect, you know, they're not trying to make you feel better. You know, you're, you're supposed to impress them. And if you don't, they're going to let you know it.

I learned a lot about that in terms of just like trying to figure out who is good for the company as an, as an investor. And we were really careful about not letting too many, you know, shark types in because it's a mission based company. We wanted to get the right mix of investors. But I saw firsthand how getting the wrong investor, that then you have all kinds of issues between the founding team and the investors and fights and conflicts and it becomes a power play, man. Things get ugly really fast. And yeah, I saw a lot of that and I was very careful about who came in to Navica and we have an incredible investor base.

Would you say, you know, you had a phrase that you rattled off in the beginning, unifying mission. Don't you feel like that's where those conflicts come in? You know, when they're more of a short term, you know, slice and dice, let's package this up. Let's make the most money of it out of it. Now, a lot of the guys who come in and they're not in it for the long haul or the mission or, you know, the original founding crusade that was created around the purpose. If you, and you have the people that are left behind, maybe for what reason or another, they didn't make it go and they bring in the other people who, it's rare if they share the same. They're showing up with money, they're not necessarily showing up with the same passion for the mission and the purpose. Would you feel like that idea of mission is where the conflicts come in?

Absolutely. I mean, that is probably the biggest area of conflict for most companies because they don't necessarily have a unifying mission. So their initial vision might be, okay, we're trying to get 10% of this target market. And so there's all kinds of ways that that can happen in different ways and people might have different. So for us, having a mission like a social impact mission was helpful in terms of making sure that investors that are interested in that kind of stuff, then we're aligned. Because if you're aligned in the why from the very beginning, then you're most likely not going to have any problems.

It really does give you a distinguishing power when you do have that clear mission that people can buy into. And there's no doubt about it, that is a huge differentiator among companies. It allows you to stand out. Don't you think?

I think so. I mean I think about. You're going to probably laugh at this. But how brave. Jeff Bezos because if you think about his early, early on. See our mission's easy because we're empowering artisans. That's like first and foremost. It is really. And basically artisans get to set their prices and artisans will make more. You know, we're cutting out all the middlemen. Customers pay less, artisans made more. It's a very customer friendly, artisan friendly company. But like if you think about something like Amazon, where early on, you know, Bezos basically said look, this is going to be a customer first company almost at the sacrifice of, of employees and suppliers and everything, like it was all about the customers. Because I know, like I know plenty of people in my industry who supply to Amazon can't stand them, you know, because they are so tough on. Because it's all about the customer. Customer's always right. But like for him to come out and create and basically let that be the guiding light. Look, if it's good for the customer, it's good for the company. And going against some things that probably didn't weren't financially prudent. Like the, like the early on, like let's, let's send this two day, two day, you know, the prime, the two day air, all that stuff, you know, free shipping, our margins, we'll make it work later with volume, you know, that kind of stuff, that kind of stuff is pretty, it's pretty challenging. And so companies that take a stand, I mean I gotta, I gotta, I gotta really, really know give him a lot of respect for that. You know, companies that take a stand in something that's not easy early on, that's pretty impressive.

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