Daven Michaels Talks About The #1 Mistake Business Owners Make When Growing (Ep. 29)

Welcome to Ideas by Mike, the podcast with Mike Milligan, where you will find one-of-a-kind financial planning advice for your one-of-a-kind life. With over 22 years of experience as a Certified Financial Planner, Mike shares experiences and advice on crafting simple, easy-to-understand financial plans based on your values and priorities. He believes that taking a personalized approach is the best way to prepare for the future and give meaning to your finances. So, follow along as Mike, and from time to time, his guests, explore different strategies and tools that could help you secure your financial future in retirement. Now, onto the show.

Hey, everyone. Welcome back to the Ideas by Mike podcast, the place where we challenge you to live a life that's truly one of a kind. And build a financial plan that reflects it. I'm your host, Mike Milligan, and today, we have a guest who embodies that philosophy completely. Daven Michaels. You might know him as a New York Times bestselling author or the visionary behind 123Employee, a company that pioneered the outsourcing industry. But Daven's story goes far beyond business. From designing clothes for rock stars as a teenager to navigating the complexities of global enterprise, he's Constantly reinvented himself. Now he's creating an exciting new chapter in Puerto Rico with the San Juan Social Club, building a vibrant community and opening doors to unparalleled opportunities. If you're ready to be inspired by someone who doesn't just talk about a one-of-a-kind life but lives it every single day, then you're in for a treat. Let's dive in. Davin, welcome to the show.

Mike, it's great to be here. Thank you for the very gracious intro. And I just want to say real quick, I love your set. It's just the lighting and everything. out about your behind the scenes. It just looks fantastic.

We have a team that does this, right?

Looks awesome.

I've got a retired Navy Chief of Staff in my offices here who, with my Chief Operating Officer, designed this. Those bars back there, we could probably do pull-ups off those things. They're so embedded.

It looks super cool. And I got the memo, you said wear blue, so we match. Love it. We're looking good. I love it, Devin. Looking good.

So, Davin, you know, around here we're about helping people build a one-of-a-kind life.

Yeah.

Uh, your story is the definition.

It actually is. It actually is.

So, so when you look back on your journey from fashion to music to building businesses, what's been your guiding star?

Interesting. So I think the guiding star for me was that I took my personality into all of my companies over the last 3 decades. And, you know, as you know, I'm kind of a unique individual. So I started off, uh, and, and, and a lot of my businesses have been in entertainment and communication. So, uh, when I was a kid, I was designing clothing for music groups. And this, and this was in the early '80s. My bands had nothing going on, but an amazing thing happened. MTV came on the air, changed the face of music, changed my life. I was designing clothing for, for these bands that had nothing going on. Most were playing their garage within about A year. Well, within about 90 days, most of my bands had record deals. Within a year, they were selling millions of albums and kind of rode that wave. And that was the beginning of my entrepreneurial career. And back then, I mean, I was crazy. This was the early '80s. I mean, I looked like, uh, straight out of a Duran Duran video. And, uh, but, but really it was all about kind of entertaining. And so, um, I was, uh, I, I was in, in different businesses over the years. I produced music and television, and then I got into a company that you mentioned earlier. I started a little, little company called 123 Employee. And when we exited that company, we had over 1,000 employees in that company, but we were in the outsourcing business. We owned contact centers, call centers. And if you think about that business, Mike, it's a highly commoditized business. All people care about is cheap, right? But we turned around and really sexified that business. And we did it by bringing my personality into it. We, we made outsourcing sexy, uh, which is hard to believe, but as a result, we ended up with millions of stark raving fan Davin Michaels and 123 Employee fans all over the, the And as a result, we were not the least expensive. We were, we charged about 35% more than sort of the average, but we had people that were glad to give us that because we really made that sexy and fun. And, and I spoke in 51 countries. I speak all over the globe, and that allows me to get that entertainment out of me. So at the end of the day, I'm an entertainer. And, and at the end of the day, people want to be entertained no matter what. Even in the Great Depression, people still paid to go to movies, right? Everybody, you know, no matter what, people want to be entertained.

Well, you've reinvented yourself more times than people change phones.

I have several times, several times. So, somebody was talking to me about this just the other day and I was like, yeah, I guess I have. Interesting.

So, for somebody who's listening and they feel stuck in the shoulds, you know, that to-do list, what's like the first step for them to break out and start living a life on their own terms?

Boy, that's a really good question. You know, I think what I do now, you know, I'm getting older now, and this is something I didn't do when I was younger, but I, I do this now and I, I kind of look at, at my life in, in decades. I'm like, if this was gonna be my last decade, how would I spend that time? Because, you know, time is, is precious, it's fleeting, and, and we only have a small amount of it, right? We're only here for a, a minute. And as you get older, you even have less minutes, right? So I really try to evaluate, you know, I, am I on a path that, that fulfills me, that is profitable, uh, and, and that where I, where I'll be challenged? And that's how I do it today. Now, back in the day, I don't think I did that. I think back in the day I, I probably was not as deliberate. I probably didn't think about it as much, but today. I try to be incredibly intentional about what I'm doing and the way I'm doing it. So, I would say today, it's all about intentionality. Wow.

That's some wisdom right there. I mean, that's the thing. Like, I'm not getting younger too. I mean, I'm 40 years old and I've— You're just a baby.

Yeah.

I mean, and I know, but I feel like I'm making better decisions than I did 10 years ago. And I know 10 years from now, I'll look back on this version of me and realize, man, you were still dumb.

100%. 100%.

Yeah. And that's the thing. Let's, uh, let's, let's switch. Let's switch a little bit and talk about Puerto Rico. Um, you, you, you made a bold move to Puerto Rico, or what many would view as a bold move. Absolutely.

No, for sure.

I don't think that— I don't know if you view it as a bold move.

No, I think it takes a pioneering spirit to kind of pick up and move to a, you know, far and distant land, right?

Yeah. And, uh, you didn't go just for the weather. Uh, you, you, you went for more than that. And so, you've created the San Juan Social Club, which I've had the ability to be surrounded by now. It is absolutely electric.

It is.

But initially, what pulled you to Puerto Rico? Okay.

So, for those of you that don't know, if you're an American citizen, Puerto Rico is a tax haven. And if you jump through the legal hoops and you make Puerto Rico your actual home and you live here at least half the year, We enjoy a 4% corporate federal income tax, and I just want to make that very clear. I'm not talking about state tax, I'm talking about federal tax. Uh, we enjoy 0% cap gains, 0% dividends. Now, I just want to preface this by saying that I am not a tax specialist or an accountant, so always consult with your accountants and team for this kind of advice. But it is a huge game changer. I used to say when we lived in Hollywood, California, I worked over 60% of the year for the federal government and the state. And today I work 2 weeks out of the year, uh, for the, for the government, which is really cool. And the only penalty for this is you have to live in paradise half the year. I mean, it's gorgeous. The people here are lovely. The beaches are beautiful. The food is fantastic. And the reason, you know, one of the biggest imports or exports here in Puerto Rico is, is Tax credits, and and it leads to you know creating a business for the island, if you will. Right? It's it's it's biz dev, and some people come here; they just kind of do their time and go back to the states. Others come here, and they decide they want to you know be a part of what's going on here, and that's what I did. So I created a little group. about 8 years ago that, uh, was to bring, uh, us expats together with the locals for food, conversation, and networking. Fast forward 8 years later, we have over 3,000 people in the San Juan Social Club, and it's an amazing group of individuals. My goal was to bring everyone together. When I started it, it was probably 95% guys like me, expats, but today it's 50/50 and, uh, it's wonderful. It's a high-level group of founders and executives. And like I said, I do everything sort of for free as a public service to bring everyone together. But Mike has alluded to, once a year also we do a cruise, uh, called the San Juan Social Club Cruise. We do it on Virgin. Uh, in year 1, we had 238 cruisers. Our cruisers, though, did $110 million in deals between each other. It's business and pleasure. Uh, the week— 3 months ago, I think, we got off our second annual San Juan Social Club Cruise with 458 cruisers. We doubled in size. We haven't tallied those numbers yet. And our next cruise is March 21st through the 28th. 6? No, what am I saying? March 21st through the 28th of 2026. And it is for people that live in Puerto Rico, people that are interested in Puerto Rico that wanna network, make friends, and learn about all of Puerto Rico's amazing resources and opportunities. But the reality is it's for anybody that wants to connect with a high-level group of visionary founders. That's what it's all about. You've been on the cruise, Mike. I mean, it was awesome. I have.

And I mean, I, I mean, I fully endorse the cruise, right? My, my wife Leanne and I are going back on it again next year. Um, and listen, uh, Davin said consult with your tax person. He's not there. That's what we do, right? I literally wrote the book on taxes, The One of a Kind Financial Plan. And so like everything he's talking about from the tax credits in Puerto Rico is stuff that we are pushing in front of our clients. That's why I wanted to have you on here to talk about that. But the thing is about the, the cruise, I mean, the cruise has so much energy on it. I mean, one day, uh, you know, the first night of the last cruise, there's a, there's a pajama party.

Yeah, that was fun. Um, we all dressed as Lilo and Stitch. Did you, did you, did you do Lilo and Stitch?

Of course.

You know, I, you know, I did too, and I barely made the party. I made it at the very end because we were having AV issues over in— we were getting ready for the next morning's deal. But, um, but yeah, I was— I heard, I heard it was fun.

Yeah. So imagine this, uh, owners and executives of, you know, very entrepreneurial, wearing Lilo and Stitch onesies.

Which is just awesome. And, and that's, that's exactly what it's like. It's like It's all flip-flop and t-shirt, right? And you never know who you're next to, you know, but these are like captains and captainesses of business. And by the way, if I could just do a quick shameless plug, if you go to sanjuansocialcruise.com, you can get more info. Right now the cabins are super inexpensive. It's just like a $400 deposit, I think, to get booked. And if you do grab a cabin, which I highly suggest you do, if you're from anywhere in the world, it'll be awesome for you. Um, when you're booking, just— there's a little dropdown and select Mike's name, and then we'll put you near Mike so you can like hang out with, with Mike as well and his people. So that's pretty awesome.

Even better. That's even better.

For sure. So, um, while we're kind of on the subject, Mike, can I just maybe mention a couple more, uh, just to give people some examples of the different tax programs we have here?

Oh, absolutely.

Okay, cool. So we're all under something that used to be called Act 2022. Now it's called Act 60. They kind of brought them all under one umbrella, and there are a myriad of different tax credits. So so what I just mentioned to you were you know two or three of them, but I'll give you a couple of examples of some other ones. So they're all about creating sort of eco-friendly here in Puerto Rico. If if you have a plug on your vehicle, then you can import your car at zero tax instead of paying a 30 percent tax to bring it in. Another one is. We have a hospitality credit. So let's say it's basically a 40% tax credit. So let's say you, for round numbers, let's say you bought a building, a multi-unit building, uh, for a million and you spent a million on the rehab. Well, you can get a tax credit for 40%, so you can get back a tax credit for $800,000. Now, if you live in Puerto Rico, you probably don't care much about that tax credit because you're paying very little taxes, but you can sell that. We have a market for that. You could sell for around 95 cents on the dollar. So can you imagine you invest $2 million in Puerto Rico and you get back around $750K for doing that. That's unbelievable. But you see how that can, can, um, uh, you know, get, get progress going here, right? Buildings that were just sitting around, they're vacant, now they're getting rehabbed. Um, that's a great example. Another example, we have a 50%, uh, R&D tax credit. Same thing, you can sell that tax credit. We have a 40% Entertainment credit, same thing. My, my cousin Danny is a showrunner, a producer, uh, for Amazon. She came here to shoot her pilot, which the pilot actually takes place in Cuba, but, you know, they cheated it and shot it here and got back a 40% tax credit, which they cashed in to cash for Amazon. Super cool. And that's just some examples. There's more.

Well, and a lot of those are talked about on the cruise also.

Absolutely.

That's the, that's, that's the great— I remember, uh, I remember Robert Craig Like the Flip-Flop Flipper, talking about the real estate side. You know, I love Puerto Rico.

Yep.

You know, the whole, uh, the, the whole, the whole topic about, uh, reinvesting, not only technology, the data mining, right? The data centers, right? Uh, Texas Care. So many opportunities came about on the cruise, and you can learn about those by going on the cruise. So yeah, we'll make sure, Davin, that people who listen have that in the comments. Let's talk about connecting people with opportunity. I think, obviously, I haven't been your amigo, which is what you call your friends, for 15, 20, 30 years.

Not 15, but we're newer amigos. Yes. Yes.

Right. That's right. We're newer amigos. But one of the things I am so impressed by you with is your ability to connect problems with solutions. Most people just connect people, right?

Yeah.

Yeah. Right.

So talk about your approach to building relationships that actually matter? Yeah. Not just, okay. Not, not just some superficial relationships.

Yeah, absolutely. So first I'll kind of back up for a second. You know, for decades I've spoken, well, not for, yeah, a couple of decades I've spoken all over the globe and I always used to say, you know, the lifeblood of all business is 2 things, money and marketing. I said that forever. Money and marketing, money, money and marketing, money and marketing. And then one day I, I, I changed that and, you know, I, we, everybody always says business is about relationships and of course, you know, I always thought about that. But I actually ended up, I was in a, a sticky real estate transaction and I borrowed $1 million in a pinch from a friend on a handshake. And in that moment, I, I thought to myself, business is not about money and marketing. Of course, they're an integral and vital component, but it's all about relationships, right? If you had no money and you had no marketing and you were dropped naked in New York City, you would call on your relationships to, to get you started again, right? Yeah. And so it's all about relationships. And what's happened is, you know, I've spoken all over the globe, 10, 10 books, New York Times bestselling author. And that's, so I have a big audience, about 1.5 million globally. It's like an endless audience. And here in Puerto Rico, I have thousands. And obviously I do the San Juan Social Club for free as a public service cuz I just love it. I love it. I love connecting people. I actually love people. My favorite thing is to sit down with like you, Mike, and go, Mike, what are you up to right now? What are you doing? Da da. Tell me more about your business. What? I've never heard about that. Well, tell me more. I just, I love that. Like, I'll tell you a funny story. One time I was in, uh, where I, oh, I think I was in Greece. Uh, and, and I came out to a friend's house and he was, uh, he was doing a mastermind and he is like, just come stay at my house. He goes, I have a mastermind going on. He's like, but it doesn't matter. You can just, you know, go and hang out at my place and da da da. And I came and I ended up spending the whole time in his mastermind cuz I just, That's what I love to do. That's what juices me. That's my favorite thing in the world. So luckily the, my favorite thing in the world happens to generate me a lot of money too. And so what I learned is, you know, your network is your net worth. And the funny thing is it took me decades to figure that out. When I first started my business at 15, I had nothing. I had no network. I had no money. I had no knowledge. I, I yearned for that. Like I'd always said, if I had to do all over again, I would've got better grades in school. I would've gone to an Ivy League college, not necessarily for the education, which I'm sure is fantastic, but for the network, right? To be able to plug into that alumni. I always thought like, could you imagine if I went to Princeton and I plugged into that alumni to have those guys in your Rolodex, right? Those guys and gals. And so it took me decades to, to cultivate that. But now I have like everyone on speed dial. Like I, I know presidents and, and paupers. I mean, everything in between. I love people, but I have this tremendous network that I can pretty much find just about anybody I need and connect them. And what, what I've learned is that as I've grown this massive network, even though I would absolutely do it for free, which I do, it, it really brings me a lot of business, right? It's huge for me. I mean, I, I get asked to be on boards of companies and I get early access to all kinds of investment deals and opportunities, and it's endless. Uh, and so look, if you're not a people person, You just don't do it this way, right? This, this would be not fun for you. But for me, it's so much fun. The fact that I get paid to do it, you know, by— as a byproduct is just icing on the cake. So yeah.

Holy cow, I heard so much like life advice in that answer you just gave. I mean, can you imagine telling a 16-year-old right now, go to college, the best college you can, for the connections?

Forget about the education, the connections. I mean, but you know, Unfortunately, youth is wasted on the young. So I'll give you an example. So my kids are not scholars. Uh, I have 2 kids. Uh, they're grownups now. Uh, they are not scholars. Uh, but they're incredibly happy and their social EQ is through the roof. And my goal was just to have happy, self-sufficient kids. I was not a happy kid. Took me a while to get happy. And so the fact that they're so happy makes me happy. They, but But, you know, I, so, so, so they are making money. They're, they're doing well financially, which is great. And so my mission right now is to teach them investing because they're in their early 20s. They will never have this opportunity again. And that opportunity is time, right? They have so much time on their side that if I can just teach them the discipline of investing 10%, you know, of their pay, for them, I'm actually having them do 30% cuz they can afford to do it. If I can teach them that discipline, In a decade, they'll be millionaires, maybe a decade, 12 years or what have you. That will change everything, right? But, but even if they screw up everything in their life, if they can just follow that discipline, they, and, and starting at this age, they will be deca-millionaires. And even if they screw it all up, they'll be deca-millionaires. So I try so hard to drive that into 'em. We have weekly meetings that they often don't show up to. Uh, and, and my point is, you know, it's just, It's, you, you try, you know, when you're a kid, you just don't have that knowledge, right? I mean, even the idea, had I gone to Princeton, uh, I, I wouldn't have tapped into the network. I would have joined a fraternity and partied my ass off, right? I mean, that's the reality. But, but, you know, unfortunately, you, you don't know all this stuff till you're older and wiser, right?

That's right. Yeah, that's right. I mean, that's really great advice. Uh, how about, uh, how about this one? Right. We talked about you living more lives than most.

Yes.

Right. And you, and you were, you now are a very successful entrepreneur, but you were, you originally started in the music business. What's the most over-the-top rock star moment you've ever had?

Oh, yeah, I had a few. That's a really great question. The greatest thing that kind of happened to me in that space, I guess there were a A couple. Um, but, but really the greatest was, um, okay, so this was kind of the evolution. I had my clothing company, then I had a, a non-sexy business in the communications business. Then I was the biggest EDM event producer in the US. I would throw parties for 20,000 people a night, and that's what kind of springboarded me into music. I was an artist and production, and that all happened. Unfortunately, we don't have enough time to tell the whole story, but It all happened in an evening. So in one night I became the biggest EDM event producer in the US overnight, and that changed the trajectory, trajectory of my life, changed everything for me. But I mean, it was a crazy story. It was a twist of fate. But, but that, I, I, it's too long a story to tell. The, the other really cool, I guess, one, one of the cool turning points, if you will, or tipping points in, in my entertainment career was from there I, I became a recording artist. Uh, did a couple of albums and then I produced music and television in Hollywood for about 15 years. And what was very cool is I had a record label and I had 4 partners in that label. And one of my partners, Layla, discovered Tupac. And so that plummeted me into the hip-hop world. You know, produced a lot of big bands and, uh, and, and that was strategic, but it turned out really, really well. Yeah. Yeah. So those are a couple.

So no, so no trashed hotel rooms or Fans following you, like, in the middle of the night down the alley?

I actually have some of those crazy stories, from, from crazy parties to death threats to— yeah, uh, because I was at the time, I was one of the only white producers in the hip-hop world. Now there's a gazillion of them, no big deal. But, but it was a very different time period back then. But it was super fun most of the time.

Super fun. Davin, you have a tagline that's on your website. Which is?

I don't even know what it is. What is it?

You don't even know what it is?

Oh, wait, wait, wait. Let me guess. Does it say, live your true life adventure? It is. That is my tagline. Absolutely.

It is. Yes. For decades. And so, like in 15, 30 seconds, what's the next 20 years like in your live your true adventure is going to be like?

Yeah. Boy, that's a really good one. So, I did say I've been strategic. So, What I'd like to do, the focus is the San Juan Social Club is really just a hobby for me, but I would really like to put my full focus on it. I'm on a bunch of boards, which is not a full-time job, so I'm trying to make do some shifts where I could just really focus on that all the time. That and the philanthropic side of it as well. So we give a lot of money to different charities here. That all stems from San Juan Social Club, and I'm launching my own nonprofit called Eyes Over Puerto Rico, where we'll actually be doing free LASIK eye surgeries for the underserved in Puerto Rico. And I just think it's gonna be so fun and so fulfilling that I'd like to put my full effort into that. I also have another idea for a great project for Puerto Rico. So Puerto Rico, like any place, has its challenges. We have just shy of about 3 million people that live in Puerto Rico. That's about the size of Vegas on our entire island. Wow. And obviously there's been plenty of challenges here over the years, but in my opinion, the biggest challenge and the thing that could change the face of Puerto Rico is our diaspora. So we have about 3 million people here in Puerto Rico, but we have over 6 million Puerto Ricans in the States. And if we could Even bring back 5% of those, that would make a big difference in Puerto Rico. And I, I have a way that would absolutely do it. And so the question is, am I going to do that? I have to— again, I'm being very intentional, you know, about the next decade. Is that where I want to put all my time? Maybe. Maybe it's something I think I'd like to do. So we're looking at that. So we're looking at things. We happen to be in the evaluation of the next decade right now. That kind of is what prompted me to mention it. We're, we're doing— we're in that process right now. So, so when we do our next interview in the next month or two or what have you, I could— I'll give you a better update.

Well, I'll tell you, if in the short time that I've known you over the last year, right, if you reach 20% or 25% of what's in your head, uh, Puerto Rico will change.

I appreciate that. You know, I, I, I love— you know, I think of myself sort of as a guest here in Puerto Rico. They've opened their arms to me. And I hope that I can just leave this place, you know, a little bit better than when I got here. And I feel like I'm, I'm helping. Yeah, I hope so.

So, uh, you mentioned the website for the cruise earlier. What is that website again?

sanjuansocialcruise.com. I could certainly give out the site for the San Juan Social Club, but honestly, if you don't live in Puerto Rico, no need for you to be in the club. But if you are anywhere else in the world, you definitely want to be on the cruise. So sanjuansocialcruise.com. And you'll meet some unbelievable people, probably add some zeros to your bank account, and have a blast. Yeah.

And we've got—

we've got other opportunities for people, right?

Yeah, thanks for saying that. Yeah, we've got some other great opportunities for accredited investors to connect with you too that will, uh, that, that we'll do that in private meetings with those folks. So if you are— if you're an accredited investor and you want to To hear some of Davin's great ideas on how to add zeros and commas to your net worth, connect with us at ideasbymike.com, and we'll have a conversation to get that started. So, Davin, thanks for sharing your story.

Thank you, amigo.

Your energy. You are proof that one-of-a-kind life isn't just possible. It's out there waiting for anyone willing to take the next step.

Thank you, amigo. Appreciate that.

Absolutely. Let's keep building lives and plans as unique as the people living them. Thanks for listening to the Ideas by Mike podcast today.

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