[Rewind] Marcus Lemonis on Profit, Product, People, and the Process

Welcome to today's episode of Business Lunch. And on today's episode, we're going to revisit an interview Roland did with Marcus Lemonis, the star of the hit TV show the Prophet. And this interview was actually recorded last year in the middle of the pandemic when Marcus was supposed to be Speaking at the 2020 Traffic and Conversion Summit. Unfortunately, that conference never happened and Marcus never got a chance to come in and speak. However, he is speaking at this year's Scalable Impact Live. It's a brand new event hosted by the scalable company next month in Austin where you can get a chance to see Marcus speak. Also, NFL hall of Fame running back Emmett Smith, along with Kendra Scott, who's had a billion dollar exit in her fashion brand. So in honor of Marcus's appearance next month at Scalable Impact Live, we thought we'd re air the interview Roland did with Marcus. So get ready for this incredible interview. We're going to get into it after this quick break.

You're listening to Business Lunch with Roland FR. This is your seat at the table.

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Well, I have a whole bunch of fun questions for you and we have a whole bunch of curious people. So let's get started. One of the things that you do is you look at people, product and process, and you do that on the show. When you're evaluating a business to invest in or to do a turnaround, would you Break down that process for us and tell us a little bit about what's important about each of those components and why.

Well, I think before we jump into the minutiae of the three Ps, we really want to understand why it is that that framework works really for everybody. And it was an easy way for me to communicate to people on television or in a classroom how to think about their business differently. Right? And so no matter what business you're in or what, what industry you're in or what kind of company you have, the application of this is pretty universal. Look, when you think about a business, Roland, you want to really understand that there's three things that matter, but you have to rank them in terms of priority. And so I'm going to start by ranking them as I see them. I think the easiest one to enter is, is the product side of things, right? You want to have a relevant product that people can understand, both yourself, your staff and consumers. And whether it's a product that you hold in your hand or it's a service like a lot of us provide, like you guys provide, it has to be something that's real time, it's relevant, and it adapts and changes when the environment changes. Now, the product that you offer today is probably very different than you were offering nine months ago. And as the world changes two months from now, three months from now, that's going to continue to evolve. So the simple takeaway is it has to be relevant to today, it has to be digestible today, and it has to be driven by the market, not by your emotion.

Right.

I think the next one that we want to pivot into is all around the process. And people sometimes laugh and they say, well, does that mean the process of making a hamburger or building a website or building a funnel or delivering some sort of technology? And the answer is it's part of it. The process is really how you develop the idea and how you properly document it and how you build the case study around it and how you focus group around it and how you test it, A, B, test it, and then how you roll it out to people and you continue to improve on it. And where a lot of companies die, in my opinion, and Roland, you've been great at explaining this to people, is that you have to evolve. And that means not just you as an individual, but your process has to evolve as well.

Right?

It has to take into account new technology, new receivers of information, trend changes and a variety of other things. The last thing. Go ahead.

So now we got the people right?

Well, now we have the most important thing, and the reason that I separate it from the first two is that when we think about people, it's an easy thing to say, yeah, I'm good to people, I like people, I'm nice to people, I care about my customers. But when we talk about people, and I've started to really rev this up a little bit more, particularly in 2020. Let's start with yourself, because when you're talking about people, you can't respect other people and you can't give good advice to other people, and you can't lead other people and you can't discipline other people if you can't really respect yourself and do all those things to yourself first. Right now, 2020 has been a really crazy year when we think about people. And Covid has played a lot of tricks on people's minds. We've suffered some losses in the technology world where people sort of had their mind take them to a place, a dark place, where we never would have wanted them to be. And I think as we go through the balance of this year, particularly tonight and tomorrow and the days after, we do need to take stock in who we are as individuals and as family members and as community people and as leaders. Once we understand what that is, it's pretty easy, in my opinion, if you respect yourself and you understand who you are and what your responsibility is, to then apply that to the people that work with you, not for you.

Right?

Yeah.

Really important designation.

I choose that practice with you as.

Well, not for you. You do, and that's why I used it. Right. And I know most of the business owners and leaders that are. That are with us tonight sometimes, me included, actually, me especially, we get confused. We get frustrated with things not going the right way. We get disappointed that our revenue numbers didn't hit what we wanted them to, or that the margins didn't fall or the SG&A didn't work out. And we sort of change our tone and our tense into, you work for me as opposed to, you work with me.

Right.

We somehow have convinced ourselves that we can navigate people easier if we're demonstrative and we're authoritative in the way we lead, as opposed to collaborative and thoughtful, which doesn't preclude us from being tough.

Right.

It doesn't preclude us from sending people packing if they don't play by the rules. But those rules have to be clear and understandable. And so when I talk about people, I really believe I can go into a hair salon, a technology company, an NBA franchise or any sort of business and really get people to think differently about themselves and other people. And if you're not capable of thinking differently about people, you probably shouldn't be a business leader, shouldn't be a business owner.

Right.

Shouldn't do it.

That's great.

What.

What attracts you to turnarounds? The profit is all about turning around businesses that are having challenges. What. What is it about that that really appeals to you?

Well, take the profit aside. Right. So my primary job that I. That I. My ATM machine, as I like to call it, is my. Is my business camping world. You know, I don't know if you had to pick in a box out of a hat, the perfect kind of business to be in when Covid hit, you could either sell masks or hand solution or whatever it may be, or you could be in the RV business, and it's been great. And I tend to look for businesses, both in my small business ventures and in my big business ventures that are all around things that aren't just right. I sense that the people don't have their mind right. The process is broken or the product needs to be refined. And I'm much better at. And I'm more comfortable. Not that I'm better. I'm more comfortable. Which I guess makes it better in looking at things that are broken and really understanding it. And ironically enough, I just started a new project for HGTV where we're going into people's homes doing the same thing. Hmm. And the process to turn around a business or to grow your company or to run your household or to run a nonprofit, for that matter. They're the same.

Yeah.

And I tend to be more comfortable with things that are fractured because I like to be the guy that walks in with the glue and puts it together. Because it requires you to think, slow down process and have some tough love.

I can't think of the name of it off the top of my head, but there's a Japanese art form where they take broken things like vases and things like that, and they put them back together and they use gold to do it, and they end up with these really beautiful K E N T S U G I Kent Sugi is really, really cool.

So.

So speaking about that kind of fractured thing, and when you have people who are in that way, you have a lot of really challenging people to deal with. On the show, you had Nicholas from Courage B Strudd from Polar Bear Coolers.

How do you decide when to help.

Versus when to cut your losses? Because the issues are just Too much to deal with.

A lot of high powered entrepreneurs tell me that I'm crazy. And I was talking to Rob Dyrdek this morning about a project that we're starting together. And Rob said, man, I don't know why you waste your time with these knuckleheads. And the reality of it is that I waste my time with knuckleheads because of what other people learn while watching that happen. Right. It's very easy as leaders in businesses, and you're a great example of that. It's very easy to just give up on people and sort of say, okay, I'm done with them. Right. But when you invest the time in people to prove to yourself that you can fix it, because it helps my self confidence. I learned something when I deal with crazy people, they learn something about themselves. And the people watching probably look at themselves and say, gosh, that's kind of me. And what I'm trying to ultimately create in doing projects like this with you or projects on the show is to raise everybody's self awareness about their behavior. If you can raise your self awareness, you have a totally different perspective. And it's easy to kick people to the curb. It's hard to say, I'm going to take the broken person and I'm going to kill myself in an effort to try to revive them.

Right, right. And some of the people to kind of try to turn things around on you. The, the folks at My Big Fat Greek Hero Swanson's Fish Market and the Casery, how do you keep that from getting. I think it would be really helpful for people to. Because you deal with some people who are downright attacking you while you're trying to help them.

Yeah.

How do you receive that and process that so that you don't get swept up in that? And you don't, you don't just get, all right, you're on your own.

Well, I'll give you a little inside baseball that's not on the show. You know, when the cameras, when the cameras leave and business really has to happen, those relationships don't always pan out. In fact, the first gentleman that you mentioned, Nicholas Garou, I'm in a lawsuit with him. He sued me because I said, he said that I ruined his perfectly good business. He obviously didn't watch the first episode. I was going to say, and what happens with people is that if they're demented from the beginning in terms of their perspective about themselves or they're delusional about themselves, they usually don't change. But what I would like everybody that's watching and listening to do is not rely on the other person to dictate your own behavior. You got to really develop who you are as a brand and how you want to implore your thesis and your philosophy on people. And you can't let people take you off your game. If I did that, the struts of the world and the big fat Greek weddings of the world and all these people, but actually would have closed the show seven years ago. We've been on. We're one of the longest running shows on television today.

One of the best.

I do beat my head against the wall when I go home sometimes, but I remember that I'm ultimately learning for myself and I'm hopefully teaching other people how to. How to think differently. And so it's easy to. Easy to kick them to the curb, but it's also. It's also better to not do that.

So when you're in that heat, like, they're, like you're standing there and they're telling you some crazy thing. What's going through your mind?

I tell you what's on my mind. I think about people like. Like us, all of us that are here tonight who were struggling when we started our first business, who made bad decisions, who maybe failed in some cases, who didn't have the right attitude. And I think about what we would want somebody to do with us, right? We wouldn't want them to walk out the door. We wouldn't want them to kick us to the curb and say, I'm done with you. Your attitude's bad. Right? We would want them to stick to it and, you know, laugh about Mr. Miyagi and the Korea and the Karate Kid, where he had to stick to the discipline of the basics over and over and over again, right? Trying to create a repetitious behavior that got us focused on what we're doing, right? Not bouncing from one topic to the next. That's great, but I do want to punch their lights out sometimes. I'm not going to lie.

I was going to say, I don't know how you do it. Now, I know from Sweet, Sweet Pete's and B. Sweet episodes and those deals you did that you are a fan of sweets. You have a little bit of a sweet tooth. What's your favorite candy?

I do depends on the day, and it depends on my mood. If I'm super annoyed, I get things that are gummy, that are chewy. It's like getting a squeeze ball. And it allows me to sort of process my anger through my Teeth. And I say that jokingly, but I'm actually not. If you saw my office down the hall, you would see that there's tons of candy. But I typically, in the middle of the night, get up and have a lot of chocolate. I'm about 40 pounds lighter than the last time I saw Danny fleischman. I'm about 40 pounds lighter, and I feel leaner and meaner. And I did learn through this process that it's fun to indulge on things. And I'm going to give you this example as it applies to everybody's business. It's fun to indulge on things like sweets, right? It's fun. But it's also important to have balance. And I will tell you that I learned that I was able to be better at my business. I was able to be better with my employees. I was able to be better with my customers when my mind was right and my mind needed to get right by having the proper balance of food and sleep and all those other things. And I'm hoping that Arnold talked to you about that. He always lectures me about the way that I live my life. And it's a little preachy. I would tell him, but I don't want him to beat me. But it is important that all of us, as we're sitting here and we're stuck, you know, in isolation or we're doing certain things that as we can push the reset button tonight and start a new path. And start a new path, mentally and physically, I think it'll make us better. And I know that's been important to you, Roland, for sure.

I love that in several of the episodes like Westin Coffee and the Casery and Worldwide trailer, you run across people that used to be in a romantic relationship. And then you actually acquired the fashion business. Right. Runway with. With your now wife, Bobby Raphael, my wife. So your rule four is accept the crazy if you're going to work with family and friends. So what are your thoughts on people that are in romantic relationships going into business?

There's a couple of stories that people are not aware of that. That I just wasn't comfortable airing. So over the years with people that have applied to be on this show, I have asked to swing. I've been asked to swing with them. I have been asked to go to a nudist colony with them. I've been asked to be in relationships. And I think at the end of the day, there does have to be a separation between. Well, first of all, the answer was no in all cases. Let's start with that. But there has to be a separation between what's appropriate in business and where the lines get crossed.

Right.

And it's tough for me even, you know, I met my wife at a trade show. I ended up buying her business. And it was very sketchy for me because I really didn't want to, but I wanted to get married. And I've had to learn that it's not a good idea to be in business with friends and family. It's just not a good idea. And there, there may be exceptions to the rule, but in more cases than not, because we're all high powered people, because our adrenaline's running hot, because we have a lot at stake, our pride, our bank accounts, all these other things, there does have to be a bright line of separation between mixing business and pleasure. And I've lost friendships over it, and I've made friendships from business. And it is tough, especially when money gets involved. And so my advice to people in that regard is if you're in a business with a family member, it's probably not a great idea. It. Ultimately, you know, business normally ends at some point. Whether you sell it or it doesn't work out. It doesn't always end the way you want it to.

Right, That's. That's good advice. So basically, everyone, if you're with someone tonight and going into business, break up with them first. And that way you won't be. I'm just kidding. Okay, rules five, six, and seven of your 10 rules, they're all related to different types of honesty. Be vulnerable, be authentic, be transparent. Would you expand on what those words mean to you now?

Yeah, I think for me, and you know, when we did this at another event, I think the key to business isn't about being the toughest person in the room. And I don't think it's about having a poker face all the time. Look, we all struggle in business, and I'm sure that most of you are doing extremely well. But I remember back at the beginning of COVID I didn't know what was gonna close and what was gonna open. And I've lost some businesses this year, and it's a slash to my ego. We're watching businesses across America close daily from COVID and we want to help them, but it's tough. And I think at the end of the day, being transparent and being honest about who you are, where you come from, how you've been successful, and not trying to create this fantasy life for other people that make you feel better about yourself. I watch A lot of people on Instagram, and I've used Instagram as a tool to learn about myself and to learn about other people. And I think it's important for everybody tonight to have a goal of creating wealth for yourself that allows you to be independent. Creating wealth for yourself, that allows you to build more for your family. Creating wealth for yourself that allows you to invest in other people and build more wealth. Creating wealth for yourself, that allows you to do good for other people. That's great. I think those things are important.

That's great.

But I don't think it's a good idea to create wealth for yourself, to separate yourself from other people in a way that creates this elitist mentality where we're better than other people.

Right.

We all put our pants on the same way, regardless of your gender or your race. I like to put nice pants on. I like to put nice shoes on. And so I don't ever apologize for being a capitalist. I am a capitalist to the core of who I am. But I also like to be a giver. And what I tell people is, don't ever bring me a business that is all about creating wealth and I'm going to give some to other people. Run your business, maximize your profitability, drive the revenue, drive the bottom line, be aggressive, take no prisoners, do it ethically, do it honestly, be fair, fight fair, and then do what you want with your money. And if you choose to do good things for other people, then great, then maybe you sleep better at night.

Exactly. Back in the earlier parts of your career, you worked with AutoNation Waste Management founder Wayne Huizenga and you did, he did roll ups with Waste Management Blockbuster autonation. You created your own roll up with Marcus from Runway Courage B Denim and Soul. Would you tell us a little bit about what roll ups are and what's good about them? What are the challenges?

So my, you know, my big roll up is obviously Camping world. It's a six, almost a $6 billion business. We're put close to a half a billion dollars on the bottom line this year. And so we like our EBITDA margins like I know everybody gets excited about. But the key to roll up strategies are really understanding the audience. And you know, you've seen a lot of rollups fail.

Yes.

And the important part of a rollup is making sure that you're partnering with like minded people. That doesn't mean that you have to agree with how math is done or agree with the sales technique or agree with their digital marketing strategy, but they have to be like Minded in the sense that the goals have to be the same.

Right.

Run a good business. Right. Right. Drive hard. There are no hours in the day, there's no clock in our business. And while a lot of people like to put on seminars to talk about balance in life and you know, you can't work more than past five o' clock and it's just, I don't subscribe to that. And I get kicked off a lot of stages because I don't subscribe to that. Right. I don't know if you can be a business owner and have true, true balance in the same paragraph.

Yeah, I agree.

And so making acquisitions and doing a roll up is about finding like minded people who believe in your vision. And you, you may look at a deal and think, boy, I can steal that acquisition or I can, I can, you know, get that person for cheap. Usually the best acquisitions are the ones you pay a premium for.

Right.

And then you pay the people that run them for you a premium.

Yeah.

Because the key to an acquisition strategy is the longevity of the acquisition, not the hot and cold model. And so as people are watching tonight and thinking about rolling up their business or selling to somebody else.

Right.

Because a lot of you have created a lot of businesses that are worth 10x or 20x or 100x what you put in it, you still want to sell it to people that have like minded, a like minded philosophy and that aren't just going to pay you and trash it. Yes, I think that's the key.

That's great. Thank you. I heard when you were younger you had a nickname of the mayor. Can you tell us a little bit more about that?

I don't know if it's when I was younger. I think it still applies today. I like to be in charge of the environment that I'm in today. And you know, there was a senator from Florida that regardless of your party affiliation, just doesn't operate the way I'd like them to. And I've been very aggressive going after him, saying I'd be glad to run. I think if you, if the reason that people always called me the mayor is because I wanted to understand the community that I lived in and the community that I did business in. And I think it's really important to be a responsible steward in your community. The way to run a successful business is to be the shining light in the community that you're living in.

Right.

And to be the example. And by the way, when you think about what ways you can be an example, drive revenue, drive profitability, Be responsible and generous with your employees. Be responsible and generous with your community. Right. Do right by the people that live there. Don't waste things. Be environmentally conscious. You can do all those things. And so I always said to people, I'm going to be the mayor of this business because I'm responsible for more than City Hall.

Yes.

I'm responsible for City hall and its residents and the roads and the surrounding communities. And I want my city to run on time, all the time. And so I think you have to think about it that way. And your business is no different than running a town.

That's a great analogy. You said that in any partnership, a partner has to bring capital, expertise, or contacts. Do you value those equally? Should it be like those three are key? If somebody brings expertise, is that more or less valuable than the other two? How do you kind of balance that?

So if I'm looking to take on a partner, and I have partners in my camping world business today, I look at capital as the least important asset that they're bringing to the table. Now, it's not that it's not important. And I understand that there's moments in all of our careers where by, by fault, we have to make it the most important thing. Like we don't have a choice. But I really want you guys to surround yourself with people that can be additive. I'm a big networker. It's why I do events like this. I want to meet people that can make me better. I like to learn from people like you, Roland. I like to learn from people that are watching on the screen today. And I like to share my experiences, particularly the things that I suck at and I've made mistakes on so that you don't make the same mistakes. I love contacts because they open doors to drive revenue. They open doors to make acquisitions. They open doors to find better vendors or new technology. But what I really want to bring, what I really want a partner to bring to the table is a different way of thinking about something. I want you to teach me something. I want you to make me better. And it's no different than hiring people. I want to hire people that are smarter than me, stronger than me, bring more to the table. That's the definition of a good leader. I think when you bring a partner to the table, you want to have those same things. But a lot of us who are starting new ideas, and I know not all of us are as successful as you, Roland, we all need partners that can bring capital sometimes too. And we got to take some of their with It Right. And we have to. And that's just the nature of it. But if you can avoid it, I want you to find people that can make you better.

This is a great advice. I know you had a town that you kind of turned around one time that was flooded, and it seemed like that might have been a trial. Political dabbling. Any interest in the political world? No.

You know, I. When I got out of college, I went to Marquette in Milwaukee. And when I got out of college, I ran for the state representative. At 20 or 21 years old, I had no political experience and I was going to win. I was fighting to win this job. Wayne Huizenga, Bob Graham, Major People Campaign. And Wayne Isinga walked into a fundraiser for me one night with a lot of high powered people and said, nice to meet you. Seem like a fine young man. You know you're gonna lose, right? Like you have a zero chance of winning. And I said, well, why'd you come? And he said, well, I came to hire you. Ah, Because I'm so confident you're gonna lose. I want to offer you a job. I want to offer you a job to join my company. At the time, it was Republic Industries that turned into autonation. And what I learned in that process is that politics aren't profitable. Real politics may be profitable, but the kind of politics that all of us want to participate in, they aren't profitable. You can change the world more as a business leader than you can as a politician. But I'm not born in this country, so I can never do anything like that. But it wouldn't surprise me if later in my life I didn't dabble in the state of Florida. In fact, I just moved back to Florida for a lot of financial reasons. And potentially down the road, I may look at something like that, but when I look at whether it's the profit or whether I look at social media or what I'm doing to help small restaurants and food insecurity right now across the country, I can impact a lot more by getting Matthew McConaughey on a social media chat to raise a million dollars for people. If I was a politician, people would have to pick a side and I would have less friends. And I like people. And even though they don't like me, I like people.

I think a lot of people like you. You said at one time that you're a little bit of a sneaker head and you like wearing cool, fun sneakers with suits. Do you happen to have cool, fun sneakers on right this moment?

My sneakers aren't Fun today, but my pants are. And they're kind of matching. Yep. I have my camo pants on. I have about 450 pairs of sneakers. And the reason that I collect them is because it's a simple vice for me. I don't wear jewelry other than my wedding ring. I drive a Jeep. I have a plane. It's not the. I can afford a bigger plane. But my wife, gosh, I got married and all these rules started to happen. But the one thing that she allowed me to do is continue to have sneakers. And the louder and the crazier and the brighter, the better. But there's not one Nike or one Adidas in my sneaker collection. They're not athletic sneakers.

Were those Tom Ford? They looked a lot like the new Tom Ford ones.

They are Tom Ford's. And I have every color and every style. Yes, they are. Not all of them are great, but I do, I do think it's important for all of us, regardless of what your guilty pleasure is.

Yes.

That when you're working as hard as everybody is, it's okay to treat yourself. And, you know, whether it's sneakers or planes or cars, there's no apologizing and working hard and being successful and this whole socialistic attitude that we have to not make a lot of money and give our money away and it's. It's a sin to be, to be wealthy. It's just, in my opinion, I'm sorry if I'm offending anybody. It's kind of a bunch of nonsense.

You're not sorry. You believe good things. You let them know. Absolutely. No apology.

But what you do with your success. Okay. And I always tell people what I do with my money once I make it. If I choose to give it all away to poor people, that's my choice.

Yeah.

If that's what. If that's what fuels me, that's my choice. But if you get in the way of. Of me making money or you try to dip into my pocket and tell me that I have to do something, I'm not okay with it.

I agree.

And I really don't believe that. That anybody should be told what to do with their money. We all work hard for our money and we take chances.

I agree.

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.

So you've said that you like partners that aren't afraid to push back. Said it even. Even here a minute ago. And I know there's a line, though, where equal partnerships can. Can stall out if one partner isn't pulling their weight. Like the guy in my Big Fat Gira. He owned. He owned 45%, I think, of the company, but he wasn't doing anything. So how do you move forward when you're stuck in a deal like that?

I won't ever do a deal that's 50 50.

Okay.

I won't ever do it. I'll either be the minority and let the other person take the lead because I believe in their vision and I trust them as a steward of my capital in the business, or I want to drive. But you can't get in a car and have two people at the steering wheel. It doesn't work. And so if you're in a business today that has a 5050 partnership, you may try to fill my head with a bunch of gobbledygook about how beautiful it is and how wonderful is. And I understand that there are exceptions to the rule.

Yeah.

But the question that I always ask people in any business where there's a partnership is if there's a fire in the building, who's determining which door we're going to go out? And if there's equal partners and they both have an equal opinion, and one says left and one says right, we're going to burn to death. And we can't afford to do that. And so you have to really structure your business in a way, whether you're in charge or not, where there's a clear leader.

Yeah.

51, 49, 50.14. Whatever the math is.

Right.

That's important. Now, when I get into a deal, Even if I'm 10%, I do like to have financial control.

Right.

And that's a really big thing for me because financial control ultimately is what it's Total control.

Yeah, exactly.

It's total control. And people say to me, I need to have operational control and you have financial control. It's like, okay, all right. By the way, when you. When you need money, which is pretty much how it works, you're going to have a problem.

That's great. I like that.

And by the way. Roland, I do want to say something. For those people that own 100% of their business, okay. For those people that own 100% of their business,. And I, I get fought on this piece of advice all the time. I would encourage you to not own 100% of your business. I think it's okay to not own 100%. I think it's okay to have different perspectives and different opinions and different ways to think about things. I think it's really important to have gender diversity in your business. I think it's important to have racial diversity in your business. And I'm not saying that to check a box. I'm saying it because I believe that the consumer, any product or any service or any technology has to be represented by a, by a company that understands who that consumer is. If all consumers were led by, you know, middle aged white guys, you know, then we would all be walking around in white shirts. Yeah, it wouldn't work. And I don't know about your house, but I know about, in my house, the decisions that are made on everything that happens and flow through my household and flows through my business, they're not made by me.

Right?

Yeah, yeah. And they've even. I've seen study after study that not only for the consumer is it better, but for your business generally to have the diversity in management for input for you, the experience, diversity alone is always more valuable.

This one line that I, that I want to just belabor one more point and I hope you don't cut me off in 6 minutes and 52 seconds. But you know, there's this phrase, and for those of you that have gone out and done presentations like Roland is doing, to always know your audience. That's a theatrical term. Know your audience, deliver a message. The advertising agencies talk about it. I want to break it down to your own specific business. When you, when I say know your audience, to you, I'm saying your audience is your customer. And in order to know your audience, you have to reflect who your audience is. And if you don't, you're going to serve them one thing when they're asking for something different. And so for those of you that are trying to build a business or in the process of building a business, you got to really make sure that you know who your consumer is. And the best way to do that is to surround yourself with people that think like your audience.

Yeah, that's really, really great advice. Your Rule 8 is all about the follow through. And you've had a lot of deals where people just couldn't seem to follow through, even though you gave them so many opportunities. The father at Las Vegas Grand Prix. I was so frustrated watching that episode. I wanted to be like, dude, you don't understand the Facebook guy at Schumer's barbecue and the guys from Artistic Stitch. Why do you think it is that some people just can't seem to follow through, even when presented with giant opportunities? And is there anything that. Because you do a lot of coaching of pretty much all of these businesses. Right. How do you help somebody like that to get through that, or can you?

Well, I think we have to recognize individually what we're good at and what we're not good at. Like, I know the things that I'm not good at. I'm not very organized. I need people to keep me organized. I have trouble staying on task because my ADD kicks in a lot. But I do believe it's important to do what you say you're gonna do. And the key to follow through doesn't mean that you specifically have to actually do it, but you need to surround yourself with people that are going to do it. And the one, the fastest way to lose a client or lose a potential acquirer of your business or to lose a relationship is to not do what you say you're going to do. And when I use the word follow through, I'm essentially telling people, like, if you say you're going to do something, you got to finish it up.

Yeah.

If your kid tells you he's going to make his bed, and I know that seems like a very small idea, then you got to do it.

Yeah.

If you tell somebody that's looking to acquire your business or invest in your business that you're going to build a cash flow model for them, or you're going to build a pro forma model that encompasses X, Y and Z, or a sensitivity model, or you're going to give them a five year plan and you tell them you're going to give it to them Tuesday at 3, it better be there Monday at 5:00pm, right. And I think that's really important because you're wanting to instill confidence in people. And every time you miss on a follow through element, you're essentially taking this rock of confidence that people have in you when they first meet you and you're chipping away at it. You're chipping away at it and at some point it's going to look like rubble.

Yeah.

And their confidence in you as a vendor, their confidence in you as a partner, their confidence in you as a. As A whatever it may be, isn't going to be as strong. And I think we minimize the importance of follow through and just saying. Just do what you say you're going to do.

Absolutely.

Did I get an extra two minutes? Can I get an extra two?

As long as you want, man.

Okay, great.

But I definitely want.

Because I'm not. I don't have anywhere to be. I know you guys do, but I'm good.

We got you. Okay, so it seems like you prefer businesses that have the ability to turn into a national franchise, like Automatch or to get national distribution or play off of other businesses that you've got in your portfolio, like Precise Graphics. Would you tell us a little bit more about how these factors impact your investment decision?

My investment thesis has changed.

It has? Okay, great. I'd love to hear it.

Yeah, it has. In fact, I used to be very public about not investing in technology. And I used to tell people I don't do it because I don't understand it. And I got a phone call from two guys that you guys may know. Their names are Drew and Alex, AKA the Chain Smokers. And they started a private equity a little fund about a year ago. And they called me up and they said, marcus, we want you to be in our deal. It's a technology driven fund. And I said, guys, I just don't invest in these things. Like, I'm scared of them. I like brick and mortar. I like tangible products. I like E commerce. And they said to me, look, it's 2 million bucks and we really need you in the deal. Believe me, we have all the capital we need, but we need you in the deal because we don't look at business the same way you do. And it's important that you learn how to look at business differently. And so I'm invested in things like Pop Menu, which is the technology platform. Loansnap, which is the new technology platform. And now I'm finding myself kind of only looking at things like that.

Really.

And I credit a lot of people like yourselves because you've had me start to think differently about digital marketing. And Covid accelerated my need to change my thinking because I realized that the brick and mortar environment that we used to live in isn't going to exist anymore. I started thinking about food delivery services and I partnered with grubhub to feed a bunch of people. And I started fighting with small businesses. I used to be on their side where they would say to me, I don't want to pay GrubHub all these fees. And I Said, geez, if we didn't have grubhubs of the world or the door dashes of the world, y' all would have been out of business four months ago. And if it wasn't for these small, these smart people who knew technology was the future of America, future of the world, and that brick and mortar is a dinosaur.

Right.

Then we would, we wouldn't be here. What, what, what I've learned through that process is that Amazon proves that there can be both. You can own Whole Foods and you can deliver world class E commerce and you can invest in new technology AI. And they don't have to be. It doesn't have to be one without the other. There's a beautiful music that gets behind. What I do hope happens though, is that technology people and digital marketers can lend their credibility and their intelligence to those folks who are running brick and mortar businesses.

Yeah.

So that they don't become dinosaurs and so the world doesn't collapse.

There's so much opportunity there, so much opportunity to have those two marry. It really is.

And so just to just to close that point on your question, national franchises can be national. With one click on the Internet, they can. Everything's national and everything's worldwide. And so I've learned that process and that's an example of me growing as an investor.

That's really cool. One last question. So Farm girl Flowers, you were faced with a kind of a crazy valuation, right. They said $20 million for a business that was basically making no money. A lot of times when any of us are getting together with the business and thinking about investing or acquiring, they'll come up with a crazy valuation. How do you value the businesses that you make offers to invest in? And then what do you think is the best strategy to negotiate with somebody that has a crazy valuation opinion like that?

I don't ever invest purely on valuation tables. And the point that I was making with this young lady who wanted $20 million for a flower delivery through the mail service wasn't about whether her business was worth 20 million or not. It was the way she was looking at a partnership and she was looking at capital agnostically, as if every single person on the screen in this room was bringing the same thing to the table. And when you think about valuing your company, it's okay. And in fact, I'll use Rob Dyrdek as an example. I invested in a company this morning with him called Mindright. Get Mindright. And it's a Neutronix, a bar company. And he was telling me about all the people that were investing and the valuation that they had established. And I just said, listen, I'm not arguing with your valuation. I'm just telling you that I'm bringing capital to the table and I'm bringing me to the table.

Right.

And I'm putting both of them on the table. And so when you guys are meeting with people that want to invest in your company, like I said earlier, it can't just be the money. Keep your valuation strong, but assign some value. Like if Russell Brunson wanted to invest in my business and I had a 20 million dollar valuation and he said, look, Marcus, I don't, I buy off on your valuation, but I want to bring a little bit of this and some cash to the table. And I'm using him as an example. Or if Roland, you wanted to invest in my business, I wouldn't hold you to the same standard that I would hold a banker.

Right.

You guys don't bring the same thing to the table.

Yeah, does that. So they call that sometimes smart money. Although not if it's me. But if, if you had somebody that did have that extra. Is there any, any like, process that you go through to kind of be sure that you're going to realize that value that you're, that you're valuing differently? Like, is there something that you use to do?

Yeah, I, I look at, when I'm, when I'm bringing investors into businesses that I'm in.

Yeah.

I either look at, I can, I can pay for it one of two ways. I can either hire outside consultants and it's going to run through my P and L and I'll cross my fingers that it works, or I bring in somebody who will serve that same function and I give them the upside that's ultimately going to give me upside as well.

Right.

And if I give somebody 10 or 15%, I'm saying to myself, are they going to make my 85% worth more than owning 150%? Right. And in more cases than not, people in this room will bring more value than most other people.

Yeah, absolutely.

I think, look, one of the reasons that I love working with organizations like this and with, with, with people that are, that I wish we could be together is really, we all come from different places and we all have different experiences and we all think about life differently and business differently. And I think that's a good thing. And I think we don't ever want to get into a homogenous way of thinking about things or adopting things or arguing about things. I think the Key for me in business, and I feel stronger about this today than I ever have because of COVID is that conflict in business is healthy. People disagreeing in business is healthy. Looking at things differently is healthy. Getting other people's opinions is healthy. Meeting in groups like this is essential. Learning from other people, regardless of what it costs, is essential to growing yourself and your business. The key for me, though, is respect and respecting other people's opinions, even when you vehemently disagree with them. And we've gone through a year where differing opinions led to disrespect. And whether it was about a business or about politics or about race, the reason that I bring this up is because those things, they infiltrate our businesses, whether we like it or not, through our social media, through our websites, through our staff members, through the way we think about things. And I think it's good to disagree. It's good to have differing opinions. It's good to argue and fight in a respectful way.

I'm not sure about that, but it's.

Good to argue and fight in a respectful way.

I'm arguing with you as a joke.

I'm sorry, but.

But it. But it is important to respect how other people see things.

Yes.

Because I think the key to growing your own company is by respecting other people's opinions. Even when you don't like it.

Yes.

And when people tell me they don't like things that I'm doing, I get my feelings hurt and I get offended for a minute. When people tell me that I should take my business public or I should sell it or what my business is worth or what it's not worth, I get offended. Take that information in, process it, learn from it, have a healthy debate. You know what, Roland? I don't agree with you. I see where you're coming from, but can you explain that to me? Because I'm open to learning.

Right.

But the information I have doesn't say that. And so as we. As we leave tonight, as I leave tonight, all I would ask from all of you in exchange for how we share information is share your opinion. Tell me why you don't agree. Make me better. My goal is to make you better. And you have an obligation as a business owner and as a business leader to do that.

That is awesome. That is very, very wise, man. Thank you so much.

I will see you. I will see you all in person next year. We better be showing up.

Yeah.

And you fired up.

You'd be looking listening to Business Lunch with Roland Fraser. If you're enjoying the show, let us know by subscribing and leaving a review. And for more information go to businesslunchpodcast.com thank you for listening.

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