Getting Equity in a $2 Billion Company with Jonathan Cronstedt

It's the guy that knows Facebook ads backwards, forwards, and inside out. Or it's the copywriter, or it's the marketing automation or the technologist, or any of those areas. But what you'll find is those people are actually great, but none of them are going to have the value of the person that knows what happens when you put all of those things together. How much more successful would you be if you had lunch once a week with insanely successful entrepreneurs who share their biggest secrets on how they think and achieve success?

Grab your seat at the table. Cause this is Business Lunch.

Roland Frazier and Ryan Deiss.

Hey, business owners At Scalable, we know there are three key steps to getting your team clear on where they are in relation to your company's goals. The first step is to identify three to five metrics that tell the clearest story on how this team is helping the company hit its growth goals. The second step is to create clear targets so your team can declare in advance what winning looks like. And the third step is to measure these targets on a weekly basis. When your team is forced to interact with the numbers themselves, they begin to truly know their numbers. If you want to see how we track our numbers here at Scalable, you can get a free template@businesslunchpodcast.com dashboard. That's businesslunchpodcast.com dashboard.

I want to bring up a good friend of ours, Jonathan Kronstadt. If you come on up, let's give John a hand. I got to meet John. I know it's over 10 years now, right?

Oh, yeah. We're on our second decade, so it would have been 2009.

Okay, awesome. So 13 years ago, going strong, I met John. And John, you want to tell a little bit about what you were doing at the time?

Yeah, absolutely. So I was the VP of Biz Dev for a company called Traffic Geyser, and we were doing our main street marketing machines launch. There was a vocal volcano eruption in Europe that had grounded all flights, which will be relevant shortly. And so we've got this leaderboard in the company, big TV screen of all the affiliates that are moving around. And I just see this MMS like creeping up the leaderboard. And I'm like, who's that? And they're like, I don't know, Br Frazier. I'm like, who's that? And they're like, we don't know, but he's doing really well. So we now have a live event and Roland walks up to me and just reaches out saying, hi, John, I'm Roland. It's great to meet you. And I'm like in event mode. I'm like, hi, great to meet you too. Hi. And he's. The launch was really great. I'm like, thanks so much. He's like, MMs. And I was like, oh my gosh, you're Roland. Okay, got it. Putting two and two together. Like he was very gracious that I had no idea who he was at the time. And so we met and he just says very nonchalantly, as Roland always does, which is if he ever says this to you, you'll know what it'll turn into. That launch thing was really fun. My wife and I were stranded in Europe because the volcano took out our flights and I was in a hotel with nothing to do. And I just thought I would. This whole launch thing and it finishes in the top five at the time for a launch that he just did while he was in a hotel. He's like, if you ever do another launch, I'd love to really go after it, see what I can do. Sure. You know, Great. Every affiliate wants to do that. It should be fun. So Main street marketing machines 2 comes along, which at the time was the largest cash collected launch ever in the history of Internet marketing. And Roland himself took the number one spot selling, I think it was almost $1.8 million or something in that regard of that product. And it was the largest affiliate single affiliate I was ever aware of. And he did all of it, shot the lights out. And he was the only affiliate in I don't even know how many hundred million dollars worth of product launches I've been a part of. The only affiliate partner I have ever had actually say thank you. So after he shot the lights out of this launch, brought my wife and I down to the Grand Del Mar, had dinner at their Michelin Star restaurant. Addison put us up for the weekend and we had a great time getting to know each other. So that was the very beginning of our friendship. And here we are.

And so John worked with Traffic Geyser and helped me track all the companies because it's pretty cool. I think you went from there to Kennedy.

So it was the guy who got me into the industry originally after my mortgage bankruptcy, was Joe Polish. He was at the time $25,000 a day. Gave him $500 for five minutes and we became fast friends. Joe introduced me to Matt. B.A. lived in Atlanta for six months. Matt introduced me to Chet Holmes, spent a building business Breakthroughs which was sold to Tony Robbins. Got to know Tony, then was hired at the Ultimate Business Mastery event by Mike Koenigs with Traffic Geyser, then was hired by Glaser Kennedy after Bill sold it to Silver Oak Partners, came in with the new management team. Was hired out of there by Digital Marketer. Got to spend a year after you partnered originally with Ryan and then after Digital Marketer onto a company that will remain nameless for two years. That's not important. Hired out of there by Success magazine in Dallas, Texas. For those of you that don'. The two years I was the CEO of Empower Network, which was the greatest online MLM marketing pariah the industry has ever seen. A lot of stories there. Hired by Success magazine, spent a year there in Dallas, then partnered with Kajabi for the third time. I consulted for them for six months. They fired me to work with Frank Kern, hired me back as VP of Biz Dev. I quit a week later to take the job at Digital Marketer. Third time was the charm. Kenny and I decided to partner up roughly seven years ago because he said it would be easier to work together than moving all of my out of the office. I was renting from them. And yeah, that was seven years ago. And here we are.

We were talking when John was. I think it was maybe as you were looking at leaving Glaser Kennedy. We talked about it and basically said, you should do this as consulting. You shouldn't, not you shouldn't. But rather than being an employee for one company, he's an amazing. Like John's an ocean of knowledge. Grant says I'm an ocean of knowledge an inch deep, which is how I feel I am also. And John is an ocean of knowledge. That's. That's at least 2 inches, but maybe even a few feet deep.

All of the jokes I want to make right now are not appropriate.

Knows a whole bunch. No, you're like an inch deep. It's like that long.

That's why I'm so bad at math.

So, yeah, we talked about going out and doing consulting because he's brilliant at affiliate marketing. Like, he ran the affiliate launches for multiple companies, including that one that set all the records and everything, and then went and did that again and again at other companies and then ended up he was the CEO for a while at Digital Marketer and then left to do all the other things that he's done. But what was really cool is that he consulted for equity into Kajabi and so Kajabi at the time. What was Kajabi doing roughly at the time in terms of ARR.

Roughly 5 to 6 million ARR. 25 team members.

Okay, so think about that. That's a company, a SaaS company that is very successful, that's growing, definitely overrule of 40, and was doing about 5 million in ARR, which would put it at what, maybe 100 million valuation at the time?

No, at the time, multiples were much lower, but I would certainly say probably 50. 40 to 50.

Okay, so a 40 to $50 million CFE deal for significant equity. And then because he's also a fantastic marketer and operator, you guys got a funding round. Was it announced what? The funding round, the first one was.

When Kenny and I stepped out of our operating roles in July of last year, which a retirement will kill you. But we are now over 100 million ARR, 400 team members, and the platform itself just crossed over $4 billion in GMV. GMV, by the way, is gross merchandise volume. So it means what our users have sold through the platform, which, by the.

Way, is, if you're looking at sasses, to me, that's where all of the valuations come these days. It's not so much the ARR as it is what's the gmv, because they're looking at all the ways they can monetize that beyond just the core SaaS. But in that valuation that you got from Tiger and those guys was 2 billion.

Yeah, we raised 550 million in March of 21 on a $2 billion valuation. And we had a minority growth equity round with Spectrum equity end of 2019, which sort of began our transition from bootstrapped and profitable to then being institutionally capital participating to then being institutionally capital influenced. We're still not necessarily controlled. A lot more seats at that table now.

And now he buys all the watches that I want. Even if I tell the guy I want the watch, he sells it to you, which is fun. But so what I wanted to share with you guys is, number one, it is absolutely possible, I know Dustin was talking about this the other day. Is absolutely possible to consult into a significantly valued company if you have cool stuff to bring. So will you talk a little bit about maybe how that relationship started and evolved and then how did the equity conversation come about? And maybe because I think about the specific numbers, like the structure of that deal, because it's a little bit different than a lot of deals.

Yeah, definitely. Kenny and I were friends since about six months after the company was launched.

Where did you meet Kenny?

I actually met Kenny through Andy Jenkins ex wife. They were married at the time, got divorced shortly after that. But she was like hey, you're in Orange county, you're doing really cool stuff. I've got some really cool guys in Orange county that are also doing cool stuff that Andy knows. You should meet him. So literally started over a cup of coffee and it was like, hey, we started this company, love to have you consult, help us with marketing, help us with affiliate partners. And that was the very beginning of what became now a 13 year friendship.

And was that. So that was a kind of a paid consulting type deal.

Yeah. So literally just the time. I think it was like a $5,000 monthly retainer to just review marketing ideas, come up with marketing ideas, make introductions to affiliate partners. Very much something where it was just easy to do while I was at the time. Gosh, I'd have to go back to who I was with full time at the time. But yeah, it was literally just this would be fun to work on. Really enjoyed the people. And then the friendship grew out of that. And that was always the joke is, they fired me six months after that to hire Frank Kern. And Kenny took me to a coffee shop. He's like, hey, man, small company, scarce resources, we gotta redirect them. And I'm like, hey, I get it. And then I took him to the same coffee shop when I quit, a week into the VP of biz Dev role to be like, oh, I'm sorry, Roland. I really like him. And a digital marketer. I mean, come on. So I'm out. But now we're even. Cause you already fired me once. Yeah, totally. And we just always kept up this friendship over time. And it was a very nonchalant conversation when he walked into my office and I was like, yeah, I'm not moving to Dallas for success. I got to figure out what I'm going to do next. And he made the joke. He's like, well, you've done a lot and learned a lot. We've done a lot and learned a lot. It will be easier to partner than it will be to move your stuff out of this office. So we should probably figure out how to go about doing that.

So did you.

Did they.

Did he suggest equity then? Or did you ask for it or how did that come about?

No, he didn't suggest it. And it actually came about because I had spent the better part of. So if you look at the story arc of my life, I moved to California, got obviously confronted as a Midwest guy of, oh my gosh, this is an absolute wealth capital. And I am immediately self conscious about not being able to figure out this universe, because where I Lived in Chicago. An S Class Mercedes may as well have been a spaceship. And like, here it's a Newport Beach Accord. So it just was like, all right, I'm going to have to step my game up. And so got into sales, Sold Mercedes at Fletcher Jones for two years. Led me into the mortgage business because I was selling cars to guys my age that I couldn't afford and had a massive meteoric rise in the mortgage business. I did all of the things you would assume someone smart and attractive like me would do. Bought a lot of shiny things, 100% financed every house that I owned. And when the market corrected and the assets were underwater, everything went back to the bank and I was worth like negative dollars.

So you told me a story about an Infinity Edge tub that you had in your garage that was like breaking.

It was the last, like, my Ozymandia statue moment for anyone who's literary major. Like, my Ozymandia statue was this Kohler soaked tub that would get filled from the ceiling and then flow over the sides. And I had this tub in my parents garage because it was the last thing I had that they hadn't taken out of a remodel I couldn't afford. Not my tub.

Damn it.

I'm the only one like on Craigslist trying to figure out how to sell a $10,000 bathtub for anything. Because, you know, all the people that are buying $10,000 bathtubs are on Craigslist looking for a deal. So it was just a moment of complete reinvention for me. But where that kind of fed into the journey with Kajabi is I had been a hired gun executive for a very long time for a multitude of different companies. And I had joined YPO at the time, which I think actually was Roland's idea. But in ypo, I immediately all of a sudden had this group of friends that my parents didn't have any financial acumen, wonderful people, but just I was like, dad, this is what I'm doing and what I'm making. He goes, don't tell anybody and just keep showing up. And he was like, that's incredible. And didn't really know what to do with it. So when I was looking at my career and at the time I was about to turn 33, all of my friends in YPO were like, dude, you've shot the lights out in all of these executive capacities. But if you don't find something with leverage, if you don't find something with ownership, if you don't find something that can scale outside of your Direct Time for dollars involvement. You're going to stay on this treadmill over and over and over again. So when we had the conversation with Kenny, I just was very upfront and very transparent. I was like, dude, I want this. I'm so excited about this. But for this to be what I need it to be in this season, I need it to have an equity component. And at the time, I was making a gigantic salary. So what I said was, I was like, look, I'm happy to take half off. Like, literally, I'll take a 50% salary cut. But I want to know that I'm in this with you, that we're all aligned in our interests and we're taking it to the moon. And he was like, yeah, of course. And by the way, these are all things that hopefully within these stories, you're able to mine some of the insights. But if you're sitting down with an owner and that owner is not excited about having your interests aligned through equity as the lens that filters those decisions. Wrong partner. Because no matter what you do, they're going to resent the fact that you have something that they believe you don't deserve. You need somebody that absolutely is bought into the idea that together you will do far more than they will do owning 100% of it.

Did you have any fear in having that conversation with them about the equity part?

Oh. Scares the out of me. Like, I. I've never asked for equity before. I was just like, sheepishly. I'm like, I just really want to know that this is something long term and that I'm building long term value. Pause. Wait, hope. All right, cool. But it was one of those things. Yeah, of course. Because I felt like I was coming into a journey, that I'm the one now jumping into a movie that's halfway through. And it's like I'm asking to be essentially a part of what was already done. And that's where to Roland's point, the way that the agreement came about is it was like, okay, I know I wasn't there at day one, so how do I put together a deal that these elements of what happened before me are not stumbling blocks? So it was, how do we lock in and recognize the value that's already created that I'm not starting at the foundation. I'm starting at, like, floor five. Now, granted, I believe we can all get to floor 100, but. But it's not like I can just be like, that's cool. Just give me the same thing you had when you started. So it was Coming up with a number where they were like, look, this is perfect. We feel great about the enterprise value. We also know that the value you're going to bring is what we're going to do together. So we're not expecting you to bring a check today, but we need you to know that at some point there will be a check. So for me, the way that we structured it was.

I had the opportunity just before we do the structure, going back to, how did you get past the fear? Because I think that's an issue for people that are sitting down, particularly. It's like, you have a company that's. In this case, you have a company that's worth 40, $50 million. You're sitting down with them and saying, can I have some. How did you do that? And how would you advise everybody here that might be facing that challenge?

So for me, what helped me to get over the fear of it was just recognizing that if it didn't happen, I didn't want it anyway. So, in other words, if there was not an equity component, I was not going to do it because I had already made the decision that if I didn't find an equity component, I wasn't going to have that be the next season of my life.

As simple as saying, I think if you think about it like a job interview, because it is right, if you think about it as a job interview, if you went into a job and they offered you half of what you felt that you were worth, you wouldn't feel bad about saying no. You wouldn't feel bad about saying, actually, I need 200,000, not 100,000. And then you have that conversation. So would that. That I just thought of that. But would that be helpful to you guys in that? Because it's really just, you're having a conversation about the value of whatever you're bringing to the table and you have an idea, you need to know what that is worth to you. And if you believe that it's also that it also should be worth that to them, then there should be no fear in having that conversation. Because it's simply, are they willing to. And do they see the value that you do? And if they don't, then you haven't lost anything. There's no embarrassment. There's really nothing to be afraid of, except that somebody's going to say no, which leaves you in exactly the position that you were in before you went in there. So if that's helpful, I just wanted to have that conversation real quick because I think it's such a great where they were to me is a great thing for everybody here to think about because that's a great. That's the type of deal that we want you guys doing.

And I would also say too, as you're looking at deals, one of the reasons why I think this was such a home run for me was because I already knew that I could add value. It wasn't like, okay, if I can just get this equity piece, I can just hide and wait for it to grow. It was like, no, I know what the first two to three years of my involvement are to going going to look like. So that's where I would tell you. You have the confidence of knowing what you're going to bring, which gives you the comfort of knowing what you should ask for. But it also really reframes the businesses you should be talking to. Because if you're talking to a business and you're focused on getting a piece of it, but you don't know how you're going to add value, that's going to suck for you and it's going to suck for them. So it is very much one of those things like Roland's always talked about. It's really one out of 100. You're going to look at 100, you're going to talk to 10 meaningfully and you're going to find one that actually makes sense for both of you. That couldn't be more important because it's like, if you're looking at it as I'm on my third or fourth one, I really got to get it. I don't know anything about accounting, but I'm just going to try to scale an accounting practice. You're going to hate life and they're going to hate you.

Hey, business hunch listeners, we're going to get right back to the show, but Roland wanted me to invite you to a brand new training that he's doing on acquiring businesses with no money out of pocket. It's something that he's talked quite a bit about on the show, but he's doing a free training where he's going to walk through the entire process. So if you want to get access to that, go to businesslunchpodcast.com epic that's businesslunchpodcast.com epic and you can get signed up.

Okay, cool.

So then structure wise, let's talk about what that deal ended up looking like.

Totally. So it was a conversation over cheeseburgers at lunch of all right, guys, what do you feel this is worth? And honestly, they were so reasonable about It. I didn't even object. I didn't try to negotiate. I didn't. It was more along the lines of just, I know what the potential is here, so I'm not going to argue over dimes and miss dollars. As a result, it was. This is what you guys feel is fair. Rock on. That's the baseline. We'll lock in my portion at that value. I'm going to buy in with a note. So essentially there was. Was an actual purchase and then that note would be paid upon some type of liquidity event. So whatever, whenever those dollars be clear on the note.

So effectively he used debt, personal or in an entity personal type.

Because I didn't.

Okay, did a personal note. And what liability did that create for you? If. Was it a note where if things didn't work out, you were going to have this giant debt, or was it.

No, the way that we structured it was the note was really not meant to be a vehicle for enforcement. The note was meant to be something that allowed us to align our interests and have everybody feel great about it. So the note even had a clause that was like, look, dude, if you're a piece of. We don't like working with you and you don't do anything, we have the right to buy you out at this formula. That is the same formula we're using for you to buy in. So it's. That easily could have happened. But again, that was my goal because I didn't want them feeling like, what if you suck and we hate you and now we can't get rid of you?

But. And would you pay interest on it?

I did pay interest on the note every year at. It wasn't a very significant rate, but it was a rate that was necessary to have it be an actual note, which apparently. That one. Yeah. Okay. And it was just designed really, as they knew that I was participating, that there was something that again, all of the elements of aligning our interests. It was a real note that had real payments.

Yep. And then what was the maturity? What?

Because as an entrepreneur, that's a really feeling. It's an even feeling to have somebody sitting on your cap table that doesn't do anything because you're going to resent every single dollar every single day. So the note was meant to be something that made sure I wasn't asking for any value that existed before me and also something that would take away any possible risk or resentment of what the future would look like.

So let's say just for academic purposes, that they valued the note at 20 million they value the company at 20 million. And let's say that you were getting 10%. So then you would have a $2 million note. How. When did it trigger.

I think we had it at 15 years.

Okay, so basically it was due in 15 years. What if something hadn't happened in 15 years?

No, it's just interest only in 15 years and then renewable. And it basically was written that if.

Nothing happened, okay, so there wasn't any true liability on it, but you could exercise it upon a sale or change of control of the company so that you would then get to participate in the exit.

Correct.

And you didn't have to. Actually, they didn't say, haha, you now have to come up with $100 million. It was at the closing.

Correct.

The amount that he would be entitled to for his percentage would be credited to him and then in the escrow, they would deduct the amount that the principal was. That basically allowed the company to recapture the friends and family valuation that they gave them. Does that make sense? Do you guys all understand that that's a different way than we talk about to do things?

So that.

But that is another way.

By the way, this didn't exist when I was doing this, so, like, you're way ahead in that regard. I'm sure that although I'm right now Roland's most successful CFE student, that one of you is probably going to beat me.

Yeah, that'd be great because you did pretty well.

But just to be clear, right now I'm winning.

Yes, you are.

No, it's funny, like Roland and I were talking about after Tiger Global and everything, he's like, wow. So this actually was like a consulting for equity. I was like, yeah. I mean, I had an operating role in like a job title and everything in the business, but I mean, I guess it's the structure. And I was like, so that would make me the top performing cfe.

Yes. So I love it. Okay, so then after, after that deal closed, you're still on the board, you decided you didn't want to continue to be CEO, you brought somebody else in to do that and everything. What are you doing now with respect to this kind of stuff, the consulting for equity or what's kind of the vision of where you're headed right now?

So I think for me, what has been really cool is, number one, had a daughter who's now 2 years old. So it's been great to have a year of just doing absolutely nothing. But what I've definitely learned is that 40 years old is way Too young to be doing absolutely nothing because there's only so much drinking you can do before people worry about you.

Did you conclude that on your own or after your wife kept telling you you should get a job at In n Out?

I would like to say it was concluding on my own, but yeah, it's a true story. My wife was like, I'd really like In N Out for lunch and I think you should get a job application. I was like, huh, is that bad? And she goes, yeah, it's that bad. Like it was about two weeks after you stepped out that I was like, oh, it's going to be super cool. He's going to grow into this super doting father and husband and really involved in that. And then she's. That lasted about two weeks of hope. And I just know now that you're just going to keep doing this. So I would say that what has changed over the course of the last year is getting hyper specific on where I feel I can add the most value and I can have the most joy. Because the one thing that nobody tells you about is just the amount of psychology. Psychology that happens when you actually exit. So picture started working at 16, full time work at 18, and I'm now 40. So take 22 years of going after something and then someone's congratulations, you don't have to go after anything anymore. And you're like, wow, that's so awesome. That's what I always worked for. And then you're like, but who am I? All of my purpose, all of my self confidence, everything about who I was was tied up in what I did. And so working with and serving entrepreneurs, seeing that transformative power that the platform had for people, I never factored that into my equation because I was just so ready to be done because that was always the goal. You tell everyone like, oh, you're going to build something, you're going to exit and then you're going to be done. And then when you're done you're like, what does done feel like? And so next season for me is very much what I love and what I feel most confident in is businesses that are growing in spite of themselves. So I'd love to find companies that are right around that five to $10 million range because it's so transformative in that inflection point to move it from what is a startup to a scale up and then looking at companies that really don't understand strategy, positioning, sales and marketing. So give me that technical founder that was in a thing, that built a thing from for that industry that now has a website that looks like the sales prevention department, that has a TAM that would be exciting, that is preferably bootstrapped and profitable because institutional capital brings with it a lot of weirdness and headaches that make all of this far harder. That's the entrepreneur I'm most excited to meet. And so right now I would say it's getting really clear on that. Deliverable and then going out hopefully in 23 and maybe finding a few of them.

Now, I know I referred you a couple people recently. Did any. Did you end up doing a consult with any of them?

So working on scheduling. So yeah, it's going to be a fun one.

So I think it's cool for everybody here to hear too, because some people have done several. Some people have not done anything on the fear of doing a consult. So raise your hand if you are still afraid to do a half day consult and take thousands of dollars from somebody.

Do it.

It's okay. Yeah, okay, cool.

I'm not doing this as an example. I'm admitting that I'm nervous about it. I have a good story about it.

Yeah. So I want you to share that.

I would actually bet that all of you would have raised your hands. You just don't want to admit it because I can tell you that even me sitting here, I feel that. So if you don't, you might be a sociopath and should explore that. But what I will tell you is I was talking to a friend of mine and I was just like, man, I just, I don't know what it is like, the moment, moment I stepped off the field, it was as if I don't know how to play the game. I never knew how to play the game. And maybe I didn't even know what game I was playing. And he's like, I've been in this industry, and this industry being this world of any aspect of books or events or trying to improve yourself. He's like, I've been in this industry 30 years. I've seen every iteration of it. I've met damn near all of the experts in it. And he's like, I can tell you the one thing that I know for a fact. And he's like, the people that have no reservation, that have no fear, that have no any reticence to charge money for their expertise are normally completely full of. And he's like, the people that are the most confident, the most willing, the most fearless in that regard are typically people that have never actually done it and they're doing that as it. And he said, everyone I know that's actually done it, that has the value to deliver. They always have the imposter syndrome. They always have the can I really do it? Do I really know what I'm doing? So if you have that, it probably means that you actually have done some things that would be very valuable that somebody else would be very excited to pay you for. And that fear is much more along the lines of the fact that you have the sensitivity and awareness of how difficult building a business is and how difficult having the wherewithal to build a business is. And an awareness that if you're asking somebody for something, you want to make sure that the multiples of value delivered are well beyond what you're asking for. So it's actually a very good indicator that you're doing the right things and should just move through it because it's very normal. And I would say even it's one of those things that I've watched Roland at multiple times solve for the guy on the other side of the table in every way. Even when Roland and I, who I've worked for Roland, I've worked with Roland, he's somebody that, if we're ever splitting a nickel, he's always giving me three pennies. It is always that desire to give far more than you're ever asking for. So I would just tell you that imposter syndrome, or that fear is an indicator that you really should do it and just give it a shot.

Yeah. That you care and you want to deliver value, which is great. That's a healthy thing. So when we were talking about this because you had the opportunity to sit in on a few consults with me, because John's brilliant at what he does. I mean, helped build a 2 billion dollar company, not a lot of people can say that. But still had imposter syndrome. Still had, I don't know. Would you share kind of some of what you thought the consult would be like and then what it was actually like?

Totally.

I think that'll help you guys. You have the opportunity, like, I'll do a consult with you. You can. As part of one of our programs. You can get me to do a consult, but it doesn't have to be with you. One of the most valuable uses to me of getting a consult with me would be to have the ability to sit in on a consult with whoever you want to do an equity deal with. Because I've done a ton of them. I'm a couple hundred in over the last couple years. But what did you think it was going to be like, what were your concerns? And then how did it feel like sitting through it, seeing, and then the takeaways after?

So my concerns were entirely unfounded. Like, everything I thought would happen totally didn't happen. So where I would go back to is there's a meme floating around online which is the difference between a $500 and a $50,000 client. And the $500 client is I'm really excited about this, but it'd be great if we could schedule four hours together to make sure we have energetic alignment. And I'd like to to know about the refund policy and what you're going to do if this doesn't do what you thought it would do and how you're going to feel about our core values and to make sure that this is really something we're all prepared to do together. $50,000 client wire sent. So it's just. That's the difference. And so what my fear was that I would go into a consult and it would be like, no, I'm going to open up my Facebook ads account and you're going to show me how to optimize my audiences. And I'm just like, nope, like, only hired the Facebook ad guys. So my fear was really that it was going to get into these hyper technical areas of expertise that I don't have because I've only hired and built teams to achieve those outcomes. So I immediately was fearful that it's, if I don't have an answer for that, that's going to be a problem. And then sitting through a consult with Roland, that's where I realized the brilliance of Roland's approach and the company selection, selection and making sure that you're doing these kind of deals. Because when you sit down with a business owner who has a team and has a business, odds are he's not going to ask you to optimize his Facebook ads, because odds are he's not optimizing his Facebook ads. He might say, we know we could be getting more out of our media strategies. Who do you know? Or how would you fix that? But it was this fear that it would get into hyper technical realms, that as a solo solopreneur, you probably know elements of all of it and you're probably doing elements of all of it. And I had exited that season of my career a long time ago. So it was the fear that I would be confronted with that and I would look like an idiot, and it just flat out never happened. And it's something as well, that I think is a good indicator of, as you look at the businesses you want to serve, asking yourself how you want to serve them. So me, I'm a terrible zero to one guy. I am not a starter. I am not the idea guy. I am very much the scale it up guy. Like, I am not the French chef that figured out how many layers go into the perfectly crafted croissant. I'm like the Burger King croissant witch guy. And so you've got to know that's where you play. That's where you win. And you got to just scope the conversations because the fear comes from feeling like you're stepping into something that you have no control, that who you are is put on display for everybody to know how little you know. And you're going to walk out of there dejected and ruined.

And what really the real fear, though, right, is that that they're going to ask you something you don't know, or they're one of their challenges you won't be able to solve, and you will look bad or feel dumb. That's. Is that kind of. Yeah. So it's almost impossible. I would say impossible. I imagine that if I tried, I could look dumb, but it would be. It would be really hard for anybody to. Because you always have the ability to say, I want to understand that challenge a little better. Let's get specific on what does the solution, the outcome look like? What would have to happen for that challenge not to exist? And you are helping them discover. Like I said, they have all the answers already. Our goal is to be a facilitator, to help them help coax the answers that they already know about in their business out of them right now. If we don't know something and we're doing that and we say, okay, so what would have to be true for this challenge not to exist anymore? Will it have to be this and this? Then the first thing is going to be, can I solve that on my own? Do I know the answer to that? And if I don't, then it's, can I connect them to a resource that I already know that can solve that for them? And you either can or you can't. And if not, then it's okay. So what I'm going to do for you is I'm going to reach out and see if I can locate somebody that can help you with that. You don't have to have all of the answers. They're not expecting you to have all the answers. They just want to, number one, really understand what Is the problem? What is the challenge? And clearly delineate the things that they can eliminate that they already have that reduce the challenge and then what resources can be brought to the table?

Is it you?

Is it somebody you know? Or is it somebody that you will figure out how to know? And that's all. That's all that really is.

It's very simple.

So you'll never be caught looking like you don't know what you're talking about. It's just too hard.

And I think the two elements I would add to that, it's one of the reasons why the community that Roland is curating and caring for in this room and in this endeavor is so important. Because you're never going to get caught with your pants down. Because it's going to be. That's really interesting. I'm sorry, the challenging part of your business. Let's figure out how to wrap a solution around that. And then it's one message via Facebook or whoever to the community. Hey, got a guy that needs to figure out Facebook ads, post iOS 14, cookie update, whiz, bang, rocket ship. Somebody let me know how to fix this and someone's going to know somebody that can fix that. And it was one of those things that it really flipped it on its ear for me because I again suffered from this tremendous, like I don't know that thing anymore. And what I began to realize and Roland and I had a long conversation about this is the idea in this space especially is that the hyper skilled subject matter expert is the one that is successful. It's the guy that knows Facebook ads backwards, forwards and inside out. Or it's the copywriter or it's the marketing automation or the technologist or any of those areas. But what you'll find is those people are actually great. But none of them are going to have the value of the person that knows what happens when you put all of those things together.

Because they're technicians.

Yeah.

And they sell their time for nothing. They're so inexpensive for what they bring. And so as you within the community, like you said, We've got over 2,000 people in the community that you guys are part of that all have different skills that you can reach out to or you can ask us to connect you to people. Right. So you'll never be without the skills. And many of them have technician type skills. Now they're aware of the consulting for equity thing. So they might not be your ideal because they might say, cool, but I want to do a little, little something for the boys. But for the effort, but they will also know people.

So I got that going for me.

So I got that going, which is nice.

Bill Murray, Caddyshack, in case you guys are missing it Galunga on your deathbed.

I want to. Is there anything else you'd like to share before we open to questions? So I just, I really love having John here because he's. He has done the most with a CFE deal so far. So far. And I think it's really cool to understand his perspective because he had concern. The Guy had a $2 billion valuation and is concerned about how do I do these consults. It's, you know, so. And is kind of over. Do you feel like you're. You're past that now? Are you comfortable with the.

Honestly, I think I'll work on it every day till the day I die. Because it's like the idea of ever self identified, identifying as an expert for me is hard because everybody I know who's an actual expert is always learning. They're always plugging into new people, new groups, new experiences. I don't know anybody that actually ever says, yeah, I'm an expert and I'm done. So I think for me, it's a. I'm healthy enough past it to move past it, but I don't know that I'll ever try to get rid of it because I actually think in a way it's helpful for me, it will prompt me to continue to want to get back better, it will prompt me to want to challenge myself, and it will keep a healthy level of not believing your own bull. Because I think whenever you get to the point where you start believing that, then, you know, very quick to return.

I like that perspective. Mine's a little bit different. I don't consider myself an expert. I consider myself a facilitator that with masterminds, that's a good one. And with those consults, I'm really just a facilitator. So I'm not trying to be the person that has the answers, which also takes a huge amount of pressure off of me personally, because if I felt like I had to have all the answers, I would be freaking out.

The only other things I would add that I would say is in my imposter syndrome side, I had a lot of free advice with a lot of friends. And free advice is a terrible deal for the person giving it and the person receiving it. Because even with all of my friends, the free advice almost never gets taken anywhere. And these are people that it's like, dude, you could have made 10 million more dollars last year. If you just added this one click upsell to your e Comm sales sequence and they're like, we'll get to it. I'm like, I know if I charged you for this, you'd be doing it before the meeting was over. I see you splitting dinner checks with me. I know you would have paid attention. So it's just one of those things where the free advice side is one that is a terrible idea for the giver and the receiver. It truly is. Even with my friends at this point, like, I'm literally like, I'm going to chart you and then you're gonna get it back at some point when you actually do it, because I don't want to charge you, but I know if I don't and you have a way to get the money back, you'll actually do it. So the free advice thing, total waste of time. The other thing that I would say.

Is you got caught up in that, where your time was being increasingly taken by all the people asking for free advice, right?

Yeah. Because everybody thinks after an exit, you get smarter. So then all of a sudden everybody wanted my advice. But it was very much something where I would say that looking at this type of vehicle, especially in today's environment, this is truly the greatest wealth creation vehicle you could ever ask for. There is no asset like a business that has pricing elasticity in a highly inflationary environment with enterprise value increase and cash flow all at the same time, all available at any time. The real estate market and cap rates right now are getting abused with the interest rate changes. The stock market, if you understand it, God bless you. I still don't. This idea of looking at the amount of businesses that are owned by baby boomers that don't have a second generation to take them over that quite frankly need a home. This idea of how to build deals that are win win across the board, that don't have you have a capital intensive event of writing the check is without question the greatest business opportunity I think ever seen. So it's something that I'm looking very forward to, diving back into early stage, but not startup and getting to do what I miss and what I love. And so it's very much something that you really do just want to do this. And the first time you start having those conversations, you'll be like, man, I should have done this so much sooner. Like, I wish I knew a year ago what I know today because I could have transitioned all of those conversations up. Hey, can you help me? Hey, can you look at this? Hey, can you help me fix this? Now I know 10 companies right now, so whoops. 2023 will be great though.

Anything else you want to share before we do Questions?

No. Thanks for the opportunity guys. As you can imagine, 13 years into friendship with Roland. I told him when I met him I was like, dude, every friend of yours that I meet is on like decade one, decade two. And the thing that pisses me off is unless some of them don't make it, they're all going to be longer friends of Roland's than what. I'm a big that friend of Roland's, but I'm very proud to have made it into the decade club and it's certainly something that I'll support anything Roland does because it's been an awesome time. I didn't know it then, but I knew being close to him would significantly impact my life and it certainly has. So always fun to get to come down and chat with new people and medium term, long term friends. All of it super.

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