Brainstorming Ideas with The $200M Man | ft. Patrick Campbell (#519)

like one of my, one of my goals, one, something, this is going to sound crazy and this is the perfect, the perfect audience to say this, but like, I get so jacked up about the idea of like toppling a dictatorship one day. I get so excited by it. And I'm like, I'm not even kidding.

All right. Look at what I have on my head. There we go.

Oh, look at that. Look at this guy. Wow, you went from dad to cool dad in one episode with that hat.

I'm hip. I'm hip.

I saw you had the shirt too. Did you buy like a full uniform or are you actually just working there now or what?

Jonathan got the hookup and he, and he got a swag bag from them and he gave, came over to my house the other day and gave it to me.

And have you gotten any compliments or like do you, um, Anybody under the age of like 25?

Yes.

Recognize you now or something?

A few, a few, a few young people. One young person called me cool guy.

That's all the affirmation you're looking for now as a dad.

Get away from me, cool guy.

Yeah. Yeah. Hey, why, why are you staring at me, cool guy?

Do you need something?

Cool guy. That's how it was. Uh, you wanna kick us off?

Who do we got? All right. We got Patrick in the house. Patrick's been on before, so the OG listeners know all about Patrick Campbell, PC, as he's in my phone. He created a company called ProfitWell, sold it for $200 million. He's got the background that we always talk about where I'm like, I noticed that people who have this background tend to be winners more often than not. He was a competitive debater. Uh, some would call him a master debater. He's a, um, he was in the NSA, the intelligence agency. So he brought— last time you were on, you were telling us about all the crazy shit you did to gather intelligence as, uh, in the startup world. So like, how do you learn about what your competitors are doing and whatnot? And now today he's back with a bunch of ideas. And, um, I want to know what you've been doing because you sold your company for $200 million and then you had a bunch of time on your hands and that's a deadly combo. Um, you sent, you sent us something. I want to start with this, uh, thing you texted us about. The Bezos number, and I don't know too much about it. So I want you to explain. You go, I've been, I've been working on it, searching for my Bezos number. I don't even know what that means. Explain what is the Bezos number?

Yeah, totally. So here's the thing, as this started from a premise, so sold the company, basically, um, working at Paddle and also thinking about like what the next thing looks like. And what I found in the ideation process, like I haven't come up with ideas in like 10 years. I've helped like companies come up with ideas, but it's just one of those interesting aspects of the entrepreneurship journey. And my big belief is your job as an operator is to basically know your customer and know your space better than anyone else. And you need to do this before you start building, because a lot of entrepreneurs fall into this trap where we're really good at willing stuff into existence because that's our job, except it's relatively easy to do that today. So this means that like basic ideas are cheap, mostly indefensible, and worse, they waste a lot of our time. And so the first step I come in terms of an ideation process is using this Bezos number framework. And basically when Jeff Bezos started Amazon, he noticed this like crazy stat, you know, this new thing called the internet was growing 2,700% per year. Um, so he knows he's got to build something on it. Um, he didn't know what it was, but he was starting from the trend because when you go where the water's flowing, as they say, and ride a wave, you don't need to be like a genius to figure out what a really cool business looks like. So I have this doc, um, and I'm happy to share it with the audience where myself and a researcher basically call through industry reports, trend and stat websites. Um, and then the hack that no one really probably uses, but they should use, um, is we use Google Scholar and other academic kind of publishing sites, uh, to find all these trends. Because in academia, you have a lot of like undergrads and grad students basically writing a bunch of papers about here's what's going on in this space. Here's all these numbers that are going up or down. Um, and then I put this into a spreadsheet and then basically label a couple of different, you know, categories. One in particular is like, what's the doubling time of this particular trend? Um, as well as like how long or how fast this trend is going, what the causes are, what the effects are. And the basic idea is then I can find like, hey, the world needs something in this space or the world's going in this direction. And partially I can figure out like, oh, this is something that I could get paid for kind of in that Ikigai framework that you like, Sam. Um, I can basically take that by looking at these trends.

So let's describe this sheet. So basically it's like category. So you got like social issues, healthcare, energy, right? So that the big categories, then within each one you have a trend. And so like, for example, a trend would be top college admissions rates are dropping. So, and then it says Stanford admissions went from 4.8 to 3.9 in the last 5 years, and Harvard dropped from 6% to 4% in the last 5 years. Um, so then it says direction, you know, decreasing, uh, in 5 years, you know, what is the kind of rate that this is happening? What's the doubling time? So like, how many years would it take for this to, this trend to, uh, the, the, where we're at today to double? Based on that rate. And then here's the sources and possible causes and possible effects of it. And so you have, I don't know, like 100 in here, basically. Uh, let's read a couple of these out. I want you to, to kind of riff on, on a couple of these, or you can pick maybe what, what does it mean when it's in blue? Does that mean you like that one or something? Or what does that mean?

Uh, those are just some, some interesting trends that we've gone deeper on basically.

All right, let's do this random one. I want you to talk about this number, number of coral bleaching events. I don't even know really what that means. What is a coral bleaching event and why does that matter?

Basically coral is, uh, you know, dying out. Um, you know, essentially when there's like stressful, um, conditions, coral ends up like bleaching. So this particular idea, like, I don't know what a business could look like in here. And that's not the point necessarily of like the Bezos numbers is like, I'm not necessarily trying to find like one particular business. I'm trying to find an overall trend, right? Because some downstream effects of this could be there's more money that's from the government, from regulation, basically going into protecting, you know, international or, you know, national waters. And there's a bunch of different things that are—

Why is coral bleaching bad?

Okay, well, let's go back to your high school biology class. I didn't know that's what I would be teaching today, but the basic idea is like, you're killing off ecosystems in the ocean, right? That's probably the most basic way I can say it. And there's a lot of downstream effects when an entire ecosystem basically falls apart.

And the coral is a major part of that ecosystem. Don't act like I should know this, man. 90% of people, 95% of people listening to this do not know if coral—

it's beautiful coral, it's alive coral, it's part of the underwater ecosystem. And it's like the butterfly effect. You just take away a big part of the ecosystem, it's going to have all these like secondary effects on the fish. Do you care about fish, Sam? Or do we need to explain why fish matter?

Do you not care about fish?

Look, you guys, Sean, you know about cor— don't, don't get off your high horse.

Here's the point, Sam. Sam, here's the point. The point is, we're looking for major trends. And those major trends, like, you ran a, basically a trend service slash website. Like, you understand the nature of trends. What I'm looking for in a particular idea is I'm basically looking for really, really fast growing trends in one direction or another. Because that's where essentially, as I was saying, like, the water is going to continue this coral theme. And basically, if I can ride a particular wave, I'm hedging essentially all these business decisions that I might be making downstream from it.

Got it. So pick another one on this sheet, Patrick, that you find interesting that you, you kind of have noodled on a little bit.

Yeah. So there's, I mean, the obvious ones are like interest in AI, these types of things, but like some, some less obvious ones might be around the kind of like the social issues, right? So right now, a really sad one to kind of talk about are like school shootings, right? So I don't know if you've looked into this particular market, not obviously increasing or, you know, school shootings, but like there's an entire market that has been created around this. Because of the rise of that particular happening. Now you can get into kind of like the government dynamics of like gun control and stuff like that. But like, there still is the fact that schools are looking to like, not only make their students feel safer, but also their parents feel safer. So there's things like bookcases that fly in front of, you know, doors. There's things like clear backpacks. There's an entire market that's kind of propped up against this. And when you see this particular trend, you can then think through the second and third order effects to essentially come up with, is this something that Hopefully you can, you know, obviously help the actual trend go down, but also you can make sure that you can build a good business around it.

I have a random question. Why don't they just make— put a certain thing in the gun that like, you know, for example, we have metal detectors, which is like we're trying to find a gun, but there might be other metal. There should just be a thing in every gun that's like a detectable thing that you can now— if you're a security thing, it's like, oh, we're always looking for this certain compound of lead because that's intentionally put, chipped into every gun that's sold so that it can— we can easily identify, hey, a gun just walked through this door.

Uh, so a metal detector, is that basically what you're saying?

Or— but not metal. I'm saying metal will catch all kinds of metal. I'm saying they should put something that's unique in every gun, in the mold of every gun, so that it could be detected easier than looking for all metals and slowing everybody down for like keys in your pocket.

Got it. Sean, your, your, your California is showing.

Yeah, it's coming out.

Yeah, you, you—

I thought you were going to say something that they can remotely turn off all the guns in case something happens.

Like the gun. Hey, it might even be a status symbol. Like, it beeps. It's like, hell yeah, I'm packing, right? Who knows? I'm not judging.

I'm just saying we're covering the environmental global warming debate and guns. That's what makes my first—

Dude, I was just flying, so I went through TSA like 3 times. I went through Disneyland security. I've just been thinking about how do we make this faster because cause it's a very slow process.

Yeah. Yeah. Imaging is actually getting really, really good. I can't find this client info. Have you heard of HubSpot? HubSpot is a CRM platform, so it shares its data across every application. Every team can stay aligned. No out-of-sync spreadsheets or dueling databases. HubSpot, grow better.

You, you have another thing on here that is interesting, and I think Scott Galloway talked about it, was And I'd never, I didn't see the stat until just now. Teenagers not having sex. So you said that, um, it's doubling every 9 years. It rose from 11% to 21% of teens that do not have sex, that haven't had sex in the last year. Um, that's kind of interesting. I think that Japan, if, I mean, you looked into this more than I, Japan has suffered from this. And isn't there like a, like an idea that like in the next 10 or 20 years, Japan's population is really, really, really going to be hurting for this lack of procreating.

Yeah. Well, there's, there's a lot of countries where that's going to happen. Even China, they're talking about, you know, a pretty big collapse. Um, and so there's a lot of, again, causes for where this is at. And I'm not an expert on like population design or anything like that, but I do think that this is something that's really big, not only amongst just teens in general, but also amongst young men, um, who are kind of, you know, basically checking out of the ecosystem. And this is like a pretty big problem just for the economy in general, let alone like procreation and fertility in and stuff like that. And so this is kind of an interesting space where like, yeah, you have a social issue or like, you know, cultural issue that's kind of driving things in one direction. Are there like private solutions to kind of quote unquote solve this particular problem? Um, you know, cause at least in America, we're not going to do what, you know, China has been rumored to be doing, you know, with kind of like the reverse of a two-child policy, like these types of things. And so, yeah, it's just, this is one of those trends as well. That's like worth going deeper and deeper on to see like what's going on, not only make the world a better place, but like see where business can be.

And this cost of cybercrime one, that's one of your fastest growing ones. What's that?

Yeah, so basically, um, the amount of damages from cybercrime. So this is not only things like targeting old people, you know, for fraud, but also this is things like, um, you know, a DDoS attack on a particular website or for a company. Um, basically cybercrime's exploding. Um, and it's probably going to accelerate even further with AI beyond this like 7x 5-year magnitude that I have in the spreadsheet. Um, And so, yeah, that's, that's something that's really interesting because you don't really have good solutions for it. Um, you have everything from like Aura and some of these like kind of VPN slash identity protection products. Um, but on the corporate side, there's been a lot of money that's sloshed in there, but it's, I don't want to say it's obsolete, but it's changed dramatically with like the birth of AI and all that kind of FUD that's happening with that market.

There was one, there's a couple on here that, um, we've seen people come on this podcast and talk about specific businesses they created off of these trends. So for example, um, you have sports betting revenue and, uh, it's the doubling time you have on here is less than one year. So you said it was legalized in 2018. It's already $4.3 billion in the US right now. So, and that's a 5-year, 5-year span to get to about $5 billion in revenue on, on US legal sports betting. And it's still only legal in what, Patrick? I don't know if you know the details, but it's only legal in a couple of states, right?

It's not like Yeah, it's, it's, it's, there are more states, I believe, that have legal marijuana than they do of sports betting. So it's, but it's, it's getting a little bit easier. The rumor is, and again, not an expert on this in particular, but the rumor is, is that there'll be a lot more states that come with this before the other states kind of legalize marijuana. And so those are both markets that are really interesting because it, you know, gets into all the vice market kind of dynamics that you see with a lot of those different types of companies.

We, the guy we sold the Milk Road to, two guys, one of the guys had this interesting backstory because they bought it with their own money and not, they're not like a company, they didn't raise money. And so we were like, where are you getting the funds to make this size purchase? And they were like, well, you know, here's our backgrounds. And one of the guys had a fascinating background. So he was an affiliate marketer. So he basically would make like content sites for online poker and online poker was legal for a while. Then Black Friday came, online poker is no longer legal in the United States. So it was like business died overnight. And so what every— he was in a really competitive space of online poker affiliates because it was like a, a just absolute cash cow to be a poker affiliate because somebody is going to immediately go deposit money and you would get your, your fee for that. And so when they killed it in the United States, out of the 100 competitors, 99 said, well, I guess we'll optimize for international traffic now. That's the only answer.

Yeah.

He just took a different approach. He sat there and he looked at— he's like, well, okay, It's illegal right now in the States, but is it going to be illegal forever? Probably not. And he's kind of waited and he's like, he was just patient and he saw a little trend pick up where the, um, New Jersey was rumored to be, uh, be the first state that was going to legalize it again, or it was going to legalize, uh, online gambling only for if you lived in New Jersey. And, uh, and I think the way it worked was like, there was like local casinos that could have online portals for you to gamble on. And so when everybody else went international, he's like, I will now be the New Jersey betting affiliate. And he created his website, was like, I don't know what it was. It's like bettinginnewjersey.com or something like that. Like very hyper-targeted, sounded so niche. It sounded almost like a step down. But what he realized was if one state's going to do it and then the second state started to get rumored to do it, he's like, oh, this is a trend I just want to surf. I'm going to start now and make all the content for this, for the states that are rumored. and I will be in the best position when the time comes as this accelerates. And so he did the New Jersey one. He sells it for, I think it's publicly out there, it's like $42 or $46 million to a bigger betting company. And then he just, he's like, oh cool, Minnesota's coming next. He does the exact same thing and does it for Minnesota, sells that one for another $40-something million and to the same company, uh, like within a, like sort of 2-year time span. And then that company was smart and they were like, hey, okay, now this covers like all states. You can't just do this. You can't just keep flipping these to us for $50 million a pop. And so he basically made like $100 million selling the same business, just looking at the data and the trend in the news and realizing, okay, this is going to happen. It's just a matter of timing. This, this wave now. And he was the only one that was really paying attention to that. And it was him and one other guy and they just merged. And so they became— they, they then owned all the supply so they could jack up the rates as an affiliate, which normally is the other problem with affiliates. They get put under pricing pressure, but because him and the other guy merged, they could go demand whatever rate they wanted to anybody who wanted customers because they were the only, only show in town. The other one you have on here is popularity of French Bulldogs. So you say it's doubled in 5 years and French Bulldogs are now the number one breed of an in the AKC, the American Kennel Club, um, which is like a published database basically. And so our friend Ramon kind of did this with wiener dogs. He was like, oh, like, look at how popular these groups are, how fast they're growing on Facebook of people who own wiener dogs. And he's like, what's a pro— then he started brainstorming, like, what's a problem in the wiener dog space? And he found this company that was making ramps for wiener dogs to get on and off of beds and couches. And because he saw the popularity of these groups and how avid the owners were, how fast those groups were growing, how big they were, he knew there's a market for wiener dog ramps, which like if you walk into Harvard Business School and you're like, here's my big idea, they'd be like, you're nuts. You know, you get laughed out of the room. But that business was doing, you know, whatever, $20 million a year because he was able to like correctly identify the right trend.

He scaled it, I think, from like $300,000 a year to like $17 million a year in like months or something like that.

Yeah, it was insane.

But this is why, like, again, ideation is treated a little bit more like a science than just this random, like, listening to podcasts, YouTube videos, and like having a notebook. Because there's a lot of these ideas that, like, I couldn't tell you what a good business idea is in them. But if I start to think about it further and further, that's where, like, really good ideas come from, right? So the French Bulldogs, right? Like, I don't know what the pain points of French Bulldogs are, but similar to Ramon's story, there's like something very interesting there, either directly or like sitting around that particular idea that could be really, really interesting.

So basically we've all seen with AI, people can now— it's like generative AI. You can create an image or create a video from just a prompt or from— you could deepfake a video really easily. And so, you know, crypto gets a lot of shit for having like, oh, there's no like use case for this, even though like, you know, money is the main use case. But they're like the blockchain. What are the other use cases for blockchain? And there's a really interesting company that's doing something in the space where they were like, hey, um, crypto has this really cool thing where you have a private key. You have your own address that only you, you own and control. And what, what they normally do is they say, hey, sign it to do a transaction. So if you want to send money, you sign it with your private key. That's how you authorize the transaction. So these guys, what they realize is, hey, there's now going to be so much video out there and there's going to be a big question of, is this Photoshopped? Is this deepfaked? Is this real or is this fake? And they were like, people are going to need— people, companies, they're going to need a way to authenticate or to sign a piece of content and say, this was real. I made this. This is actually me. Um, versus the viewer having the— putting the burden on the viewer and be like, can you tell if this is real or fake? It's like, dude, I don't know.

It's too hard.

Like misinformation is just going to spread. So now there's going to be like a watermark that basically the creator, the original owner, the person in question can use their private key to sign. And say, yep, that was, that was real. That was me. That was my video. Or that was my, my writing. I actually said that. That's my voice. I did say those words. And it will become true very soon that like, if there's a piece of content that's unsigned, it's gonna be like, yo, I don't, you know, I don't know what this is. This isn't, this ain't organic produce. I don't know what this is. This, I don't know where this came from. Um, I don't trust this. And so I think that's going to be one of the, the, the consequences of, let's say you see this rise in generative AI as a trend. You say, oh, that's great. People are gonna create all kinds of content. But wait, that means we're not gonna know what's real and what's been generated by AI. We need a solution for that. And I think those guys are gonna do pretty well.

What's, what's interesting about this is not just the trends, but the fact that you're doing this. And, and I think that that's kind of breaks, uh, a couple rules, or at least rules that people think exist. And a lot of people don't know that Jeff Bezos story, but basically I think he, I think the exact, the exact quote was pretty good. It said something like, uh, I saw the internet was growing at 2,300% a year, and I realized nothing outside of, of a petri dish grows that fast. And I just thought, what can I sell? And well, let's just start with books because they're easy to ship and there's a lot of 'em. And so I can just pack Amazon with almost every book I can find, and I think people will buy that. Whereas a lot of people think they have to start a company because they have like some passion about it or some mission, which I actually think your passion can develop once you start working on it and it starts succeeding. A, have you thought about selling your research process? Because that's actually what I did with Trends and I, and I made a bunch of mistakes with that. I should have charged more. Maybe I shouldn't even have done it in the first place. But, um, A, what's your end goal with this? With, with like your—

Have you thought about making my mistake?

Well, that's what I heard.

It could have done better. I should have charged $30,000 instead of, or I should have charged way differently. That's where I screwed up. But have you, have you thought about turning this into a business? The second question, what is your outcome with your second business now that you have financial security? And like, do you have like a legacy plan? Do you have a number that you're working back for, back from? What are you doing to decide which one to actually go down?

Yeah. So I think that to answer the first question, I've been asked because we've talked about research stuff a lot, like either through DMs or on the last pod, like I think research companies, they have, they have a fatal flaw where they give people a dopamine rush of understanding something, but people are pretty bad at then using that information in some particular way. So like the retention ends up not being great unless you turn into like a McKinsey style, like, oh, we trusted them to come in and do this research and kind of go from there. So like even the competitive intel stuff, like I, I know how to use that because I've been taught how to use it and I've like developed it. People really like the dopamine of like, oh, I can see exactly what's going on, but they don't know how to like get to the next step. So if I were to do it, it would be some sort of, you know, almost do it for you, not only in terms of the research, but then connecting that to some sort of outcome where they can just hook it up and then it targets their ads or something, um, to actually get an outcome. So I can take the thought process out of the, um, out of my customer's, you know, particular evaluation of the product. I think in terms of the second question, for me, I'm like a cliché second-time founder now, right? So I'm basically like, either I'm going to go into like cash-flowing lifestyle style points type businesses, or I'm going to go into like big-ass, you know, innovation type business. And I think the Bezos numbers piece is really, really powerful for the latter one because you know, you're looking at some really big trends that probably have some social and cultural, like, implications, but then you're also trying to build, like, a particularly big business, which is what my intention is, essentially. And I've done a lot of work over the past year to kind of, like, come to that realization with, like, coaches and therapists and all that kind of fun stuff. So for me, what I do is I look at this, and I don't know if the Bezos number piece is, is, is necessarily, like, useful to folks who aren't trying to, like, build big. I think it's really useful for folks who want to do, like, quick hits, But I think like the next framework that I kind of put in there around like, you know, taking different product ideas and then spinning them in terms of different customer bases or different like differentiators. That's what most people should be doing because innovation, like a 10x better product is almost impossible in this particular environment now. Like 10, 15 years ago, you could build an innovative 10x better product because you were the one that had the special relationship with the supplier in Yemen for the coffee or something like that. Or you were the one that only could build this particular feature, but now everyone and their mother can spin up a website. Features are no longer really defensible anymore. And unless you have like some sort of patentable or some sort of scientific kind of breakthrough or regulatory kind of protection, um, your best thing you're going to do is like a 2 or 3x better product. And, um, that's why I think it's just one of those things that, um, you know, innovation isn't something that you should be targeting unless you're really, really going big is essentially what I'm getting at.

Why do you care about doing the cash flow thing? Because many of our friends, Sean and I friends, me and Sean's friends and you, I'm sure your buddies are like this. They're quite wealthy, many tens of millions or hundreds of millions. And they're like, but I would love to have $5 million a year of income.

I, for me, and this is like very personal, it's not for everybody, but like I discovered in going through this like wave of like massive wealth really quickly I discovered that like, like I'll give you like a little bit of an anecdote. So when the money hit the bank account, I felt nothing. Like I was like happy. I was like, obviously, you know, happy for the team. But the thing that like went into the back of my head and I didn't know how to express it in this particular way was very much, well, if I did it, it must not have been that hard, which goes into like childhood. It goes into a bunch of different things. And so when I'm thinking about the next business, I look at those two paths, right? Like there's like more cash flowy business, own your own destiny, lifestyle, style points, these types of things. And then I think that there's like spending your time going after something that's harder and harder and trying to go after innovation, right? Like the perfect like antithesis of how I view the world now is like Nick Huber, right? Nick is like, why would you ever try to like innovate? That's like so much harder, et cetera. And we've had many like long night conversations about that. Um, and for me, it's like, I want to go after that bigger and bigger thing. And it took, it took a long time to like realize that because I went after like Oh, let's do this. Let's do that. Let's do this other thing. Let's go after this quick buck.

You bought 19 gas stations.

I did buy 19 gas stations, but that's Jenny. That's Jenny. That's the wife. The wife handles the real estate portfolio. And it doesn't mean I'm not going to like do stuff, but like my primary focus is going to be like one big thing. Um, I don't want to be an investor. I don't want to like come up with a bunch of cash flowing, like studio style businesses. I respect the hell out of all those things. It's just, I just found out it's not for me, or at least that's, that's where I got to.

By the way, can you tell us the gas station thing real quick?

Did you meet Syed and he told you about his gas station portfolio?

So, okay, here's what happened. So I bought 19 gas stations. Um, they're in North and South Carolina.

You bought them all at once or like one at a time? Like you bought a chain?

All in one pot. So essentially there was, there was a kind of a patriarch of a family who had built up a portfolio of about 120. He passed away. And then, um, basically I think it was the trust or the estate. I don't know which, which, but he was, they were selling them off in blocks.

Right.

And they don't want to sell off like one at a time because it's 120. Cause the kids, they had a tax bill coming up because the inheritance, yada, yada, yada. So, um, this actually is, is this started with Nick Huber and Mitchell, um, Balbridge, um, of the cost seg world because they started talking to me about, oh, there's, there's some tax implications where if, if your partner, your wife or your husband is a real estate professional, your passive losses on like real estate become active losses and they offset active gains. So got a big pile of, you know, kind of gains from the sale of the company. And then all of a sudden I can offset those with depreciation of the gas stations. And I can do that with bonus depreciation in one year. So just to use some round numbers, like if I buy $10 million of gas stations, I basically can take $8 million of depreciation essentially, and that can offset some of those particular gains. And so in October, September, um, Nick starts telling me about this. I start talking to Mitchell. Trying to figure it out. I start talking to tax lawyers. All of a sudden we got intro to someone who saw this deal, these 120. Jenny has been in the real estate game for like 10 years. And so it was one of those things where we were able to kind of like, you know, we weren't starting from zero, but it was still like a big, big purchase. Um, and we closed, I think like December 23rd or something like that. So like right, right at the particular edge of the end of the year to, uh, to not only get a good deal, um, because we had, you know, we looked at the real estate deal independent of the tax implications, but the tax implications kind of put it over the top to be really, really good.

And has there been like, are they, is it just like, wow, this was a great asset, great smooth sailing. Or is it like, oh my God, I have 19 pain in the asses now. Or what's the, what's the situation? Like what's the verdict of guy who didn't own real estate and gas stations, like tech entrepreneur does this thing that has clear benefits on the tax side.

Yeah.

Might have a, might be a nice diversifying part of my portfolio. It might be good cashflow. Might also be a headache. What's your answer now that you've come out the other side?

So they're triple net leases. So that basically means we don't manage, don't handle any operations, anything like that. They're owned by a big flag, a big company. So they're corporate-backed, which may or may not mean anything depending on who you ask in the real estate world. So we've had very little headaches. We also have a partner on the deal who's, you know, we were the money. They're handling most— they handled all the analysis and all that kind of fun stuff. So it's been pretty smooth sailing. I mean, there hasn't been any issues. That's famous last words. I think there's a way to basically, you know, manage these into more investments and things like that. Those— that's where it can get a little tricky. But like, yeah, we got at least, knock on wood, pretty lucky in terms of what's going on.

But you got to— can you give any numbers? I mean, how much income is that bringing in? How much did it cost? Can you give any numbers on that? Do you feel comfortable?

I can give you some numbers. So Well, I don't know. My wife runs it.

So if you don't want to share the specifics on yours, you could just be like, you know, I think about this like, this business is a box, like a restaurant. Restaurant will typically cost you, let's say, half a million to open. And then you're trying— your goal is to net $150K a year per location. You want to get to 20. That's how you get scale.

Like, it's simpler than that. So it's $30 million in gas stations. I believe— I can't remember the exact cap rate, basically what we're getting out of it, but we're getting I believe the caps are at like 5.5%. Um, and so we're not getting like an immense, like an immense amount of income from that. Um, but we are getting income basically from it. And then the leases on this particular deal, what made it so great is, um, all of the like rent increases were based off of CPI and they were, they were written in like the early 2000s. So basically what's happening is, as you've seen all the inflation data, when these rent increases go into effect, the increase in rent is pretty significant. And so that's what made the deal really, really good. But like, yeah, we're cash flowing. I don't know, it's, it's, it's definitely over $1 million a year on these. I don't know the exact numbers, which I feel good about because it's one of those things where I trust my wife to figure it out.

And you also said that there was like, you sell the company and you're like, you go through this wandering phase for like a year. Uh, you said there's 5 phases. What are the 5 phases of, I just sold my company for a bunch of money?

Yeah, this is like the, the champagne problem cycle, I think. And it's, it, it's just this crazy roller coaster. And I don't know if Sam, Sean, if you guys went through this, but for me, like I was pretty even keeled emotionally before the actual sale. What I mean by that is like something bad would happen to the business. I'd be like, oh, that sucks. Okay, let's figure it out. Something good. I'd be like, oh great, but we have all these other problems. Um, when the sale goes through, especially if it's like announced, like everyone kind of starts treating you like a god for like a hot second. And then that leads you to go like, wait, am I a god? Right? You have this little bit of this, like almost this like imposter, like, I don't know what reverse imposter syndrome is. And like, I never got, like, I have good friends around me who are like, yeah, you still, your shit still stinks. But like, it was one of those funny things where you're just like, oh my God, I can do anything. And then like. You go through the second phase, which is like, oh my God, I fear death. I'm going to screw this up. I'm going to like, I don't know how to rich. How does one rich correctly? I'm going to lose it all. And this is when you're like, tax lawyers, accountants, other lawyers, how do I evaluate how they're good or not? Like all these crazy things. What is a wealth manager? Like, oh my God, the wealth managers, every single one of them tells you just put it in index funds. And then you ask them, well, then what's your job? And then they're like, oh, we just, advise you and you're like, okay, what does that mean? And they can't answer the question. So do you get one? Do you not get one? Right? And then, um, you start to get a handle on things. You start to kind of like get your feet under you. You buy a bunch of gas stations, you do this type of a thing. And then like phase 3 is like, or like part of phase 3 is like, I call this the delusional peak of cocaine energy. And this is like, you have all this energy and you're like, I'm going to do everything, right? This is what I was getting into with Sam before. It's like, I'm going to hire 19 people or not 19, 17 people. It's 19 gas stations, 17 people to do research, to look into things, to go look at this deal, to go look at that deal and just like do all of these things. And I'm going to build this and I'm going to build that because you just have this all this energy and this optionality. And that leads to just a full-blown identity crisis. And so I hired a couple of shrinks to basically help because, you know, it was a major change in my life and, you know, just kind of a major, thing where like, it's kind of like, you know, figuring out like who you are, what you want, which I kind of talked about a little bit before and starting to realize like, oh, like I don't have to do these things. I can do these things. What do I want to do? What does that look like? And then, you know, then you kind of even out and you go back to the grind. So that was like my last year of just up, down, down even further and then kind of back up to figuring out like, hey, this is what I want and kind of going from there.

You even did this cool study or this survey where you talked to— didn't you survey a bunch of people who are wealthy and you asked them about happiness and things like that?

Yeah, this is how I cope with things, research, as you clearly can see. So I spent $50 grand on like a study basically running, and this is one of our products at ProfitWell, was like basically running research studies. Um, and so I spent $50 grand basically trying to get in front of as many like rich folks as humanly possible. Um, and then doing a bunch of qualitative conversations with like, you know, you know, a number of billionaires, a bunch bunch of like centimillionaires, etc., and just trying to figure out like, okay, what, what makes them happy, what makes them unhappy, so that I can, you know, kind of take some of those lessons for, for me personally.

What, what were the lessons?

One of the biggest lessons that I think is most helpful, and I don't know if everyone's going to be able to like hear it, or they'll hear it, but I don't know if they'll actually like internalize it, is when you look at the stack of like how money can actually bring happiness, um, there are some really, really obvious things like, um, people who spend money on stuff, they are happier than people who don't spend money on stuff, but they're not as happy as the people who spend money on like a particular hobby or a particular like narrowing of stuff. So buying a Birkin bag that you guys talked about, I think last episode, like that brings some joy. It actually does. It's not something that's like completely joyless, but if you're really into F1 and you buy your own car that you go race on the track, that brings you more happiness. Right? And then one layer above that in terms of increasing even more happiness is experiences. So this is something that we've all heard about, like buying experience actually does bring more happiness. And what was really interesting were the top two. One is really, really obvious. So above experiences was like giving money away in like a targeted way, not just like general, like, here you go, this, um, organization or this nonprofit, but like actually giving it to a cause that you really cared about. But the top one was kind of fascinating. Like, the things that we coded that built or brought the most happiness were what I kind of labeled freedom-inducing events or freedom-inducing items. So things like a jet, if you can afford a jet and you can fly private, it's not the nature of the jet, it's that it brings you so much freedom. And so we saw this kind of coded in all the responses. And so things like, I know Sam, you've been a little hesitant to it. Things like getting a personal assistant, things like getting someone to take care of stuff at the home. Those things actually bring a lot more happiness because unless you really, really like buying the groceries or doing something like that, that brings more freedom. And that, that actually increases happiness levels even more than all the other things that we talked about. Um, the other big thing that was really interesting is that, um, the, the happiness scales that you see kind of online in those studies, for both income and net worth, like typically they can't, they're bullshit. I, I, they're limited. That's what I would say. Um, like meaning like, um, they basically are like, oh, $75,000, your happiness doesn't increase. And then there was another study that found enough people, you know, up to about a half million where happiness increased. Well, I took it all the way to, I think it's like $3 to $4 million a year and the happiness just continues to increase. It's not at the same rate, but like more income and more net worth does bring more happiness. Like I'm not sure where it's going to like level off, but right now in my data on net worth, I have a good enough sample that I can actually map it from 0 to about 50 million, um, in net worth. Um, but the one really interesting thing was no matter the net worth, um, particularly for the folks who have more than 5 to 10 million in net worth, um, no matter what it was, if it was higher and some of the billionaires qualitatively, this was also the case. Um, you would see that if the net worth went up, they got happier. If the net worth stayed the same, they were a little bit happier. If the net worth went down, even just like a minuscule amount, that the, like, the, the reduction in happiness was considerable. And so it's one of those things where it's like when you get wealthy, it's like all about protect, protect, protect. That's, you know, for a lot of obvious mathematical reasons, but also from a happiness perspective, that's where a lot of like the anxiety was coming from, from some of the, the more wealthier folks. Um, there's a couple other things. Oh, like this was really fascinating because this was like a little more personable. Um, of wealthy folks, let's just say, I think it was like folks over $5 million in net worth. Um, but it continued the trend even higher. Um, there were only a couple of like trends that everyone did, like almost every single person, not 100%, but like, you know, let's just say 90-ish percent plus. Um, lists was a big thing, like lists or like a to-do list of some sort. Um, wealthy folks almost to a T had some sort of system where every day they were like, here's what I'm going to do. For some, it was like, I got one big thing each day. For others, it was like some hardcore, like, to-do list app and all this other fun stuff that was organized. But that was a really big thing. Um, everyone still in the game, meaning still building a business, still trying to build their wealth, worked out or had some sort of fitness regularly. Folks out of the game. They started to kind of like fall off on that particular fitness. But like 90% of people, like it wasn't they're all doing CrossFit or all doing anything crazy, but a lot of them were doing, um, at least something consistently every single week. Um, so that was really, really fascinating to see as well. There were a couple other things that were like pretty consistent, but, um, those were the really, really big ones that stood out that would be most helpful, I think, to folks.

I have a nerdy question about the happiness thing. How do you— what is the actual like How do you know how happy somebody is? How do they know how happy they are? So are you just saying, how happy are you? Did you get happier when you got more money? It's like a self-reported, like, 1 to 10 thing, or is there a better way to ask that question?

Yeah, totally. So my instinct is to, like, teach stats right now. So I'm going to try to avoid that as much as humanly possible. But that you don't— when we look at, like, temperature, just trust me for a second. Like, we can get very, very accurate readings on, like, how cold it is in your apartment right now or your house right now. Right. And we can be very, very confident in that that particular, like, measurement, right? Now, we can also get the temperature measurement by, like, maybe measuring the outside temperature and subtracting what we think the insulation is of your house and trying to figure out, like, in a backwards way. That would be less accurate than, like, measuring the actual temperature, but still more accurate than if I went and I asked you what you thought the temperature was, right? And there's different ways that I can ask you temperature, right? If I just straight up ask you, what's the temperature? It's like, it's actually kind of a difficult question for you to answer. But if I ask you, do you think it's more than 68 degrees? It's a little bit easier for you to answer. So there's different ways to answer these questions. Now what that means is, and the way, the reason I gave that little metaphor is like, there's, we're not looking at measuring temperature like the way that we would in a very scientific way. Like we just can't do that because like happiness, it is relative. There's a bunch of different factors, but that doesn't mean we can't like measure it purely, right? So what I did, and, um, I'll try to like keep this as, as helpful as possible is, um, I looked at how the $75,000 study does, and, and there is a happiness kind of research center. There's a number of different— actually, the first undergrad research I ever did was how do tax rates impact happiness, um, in, in the economics department in school. And so there's different ways to ask it. So the way that this was asked, there's a number of different ways. There was a scoring system, there was a, this happened, how does that affect your happiness? So there's a composite score that we kind of put together based on those different inputs to come up with essentially Here's what their happiness level is comparatively. And then you keep that consistent across the board. Um, and there's ways you can adjust the model. Um, but long story short, like it's, it's the way I described temperature. It's a little bit closer to like, hey, what do you think your temperature is? So it's not—

Dude, I think that's just fascinating. I think it's incredibly fascinating. And I think it's amazing that you're doing this. Uh, I, I, you, I like seeing your nerd come out. I think it's, this is very, this is very cool.

Yeah, yeah. I got really excited. I felt my heart rate just go up there. Sorry.

I think Sam, Sam hit the nail on the head where he's like, these things you said are interesting, but what's more interesting is that you did this. And, you know, you were just describing like people spend on stuff, but they're more happy if they spend on a targeted set of stuff.

Yeah.

That's you spending $50 grand on a study about wealth, right? That's you. You don't have a model train hobby. You have a research hobby. And you were like, oh, how do I use these funds to scratch my itch in a way that I haven't done before? And I'm sure that it was like, It wasn't the takeaways from the study, probably it was doing the study that actually made you happier and felt like a good use of your time. I'll also say a lot of people listen to this podcast will probably make this mistake. And so I'll say it out loud because I made the mistake, which was I thought my goal was, oh, I don't want to be rich, I want to be free. I think that's a common thing people say, makes themselves feel a little bit better than I'm just chasing money. Say, no, I'm chasing freedom. And it's true, like, it is better to chase freedom than money. Uh, but I thought, you know, there's a number. And I remember thinking, uh, when I was like maybe 26, 27, I was like, oh, you told me it was $6 million, right? Yeah, I was like, $6 million, that's my freedom number. And I really, I like, I was focused on 6 as my freedom number. I even had it in my passwords. It would be like a 6 in there because I was like, every time I log in, I want to be thinking about that number. And that's how I was thinking about things. I passed that number and I was like, well, Uh, all right. Was my math wrong or is this concept of a freedom number wrong? And I had a very simple realization, which was that being financially free doesn't mean you have a certain amount of money in your bank account. It means you are now free from money owning you. And that is a decision you make. And so for example, the simple test is, um, how much of, how much of what you do is because of money? And somebody who's truly absolutely financial, financially free, they do not make a choice based on money. So that could be, they buy something and they're like, oh, why'd you buy it? Why do you shop at this grocery store? It's more expensive. Well, because I'm not making my decision based on money. It could be, um, a job you, why do you, why are you working on this? Oh, because I think it's gonna have a big payoff. Or I think the salary, the salary's, you know, too good to pass up. Well, you're making a decision based on money. And the true financial freedom isn't on some number. It's when you can get to the point where you stop making choices that are based on money, which is half minds, at least 50% mindset, if not 80% mindset. And maybe the remainder is an actual, you know, uh, financial reality of how much money, how much money you have in your bank account.

I would, I would edit that very slightly and it's almost semantic. I, I think it's, it's almost a, it's a, it's a function of force rather than, um, choice. So what I mean by that is there are a lot of people, myself included, who are still making decisions with money in mind, right? Because to me, there are certain goals that I have that are probably going to change as I get nearer to them, not just for a number's sake. Like, I'm not one of those people who, which I don't judge, but like, there are people who just want the number to continue to go up. Right? There's other folks, and I count myself as one of them, is like, I want ever-increasing, um, waves of like freedom, the ability to do stuff, and money unlocks that ability. So I still make decisions based off of it, but I don't have to, right? Like I can rationalize as to why I don't want to. So I just found that there's still a lot of people who have, like, there's this billionaire who I was talking to about this and we were, we were basically having coffee and You know, he's going through like he's, he's still in the game. He sounds just like us. He's still like, oh yeah, I'm going to go do this. I'm going to go do this. Like the stakes are different. The numbers are different. And some of them, the moves are very different. But I asked him, I was like, so why, like, you don't need to do any of this, right? But it seems like you don't want to do this decision, but it's going to net the most money for you in this particular situation. So like, why do you want to do this? And his answer was basically what I was just saying, which is like, well, if I get another billion, I can go do this thing. And his thing was like this nonprofit thing that he kind of wanted to do. And so does he actually believe that? I have no idea, right? I can't read his mind, but like for me, the idea of like, okay, I can buy 19 gas stations. I'd like to buy a skyscraper next. Do I need a skyscraper?

No.

Do I want a skyscraper? Not really, but I'd like the idea that I can, right?

But you realize that sounds totally ridiculous, right? Like, if I'm—

I understand it sounds ridiculous, right? Like one of my, one of my goals, one, something, this is going to sound crazy and this is the perfect, the perfect audience to say this, but like, I get so jacked up about the idea of like toppling a dictatorship one day. I get so excited by it. And I'm like, I'm not even kidding. And I'm like, okay, well, if we, if we go after Cuba, it's going to cost this much because I have this idea and this idea that you've done research on this.

You have spreadsheets.

Oh, 100%.

Yeah. Well, how much does it cost?

In which order of countries do you put, like, what's like your top 3 of like, yeah, I don't want to name, I don't want to name countries quite yet because I think that that like could get me in a little bit of trouble and also like Again, my point is more like, will I ever actually do this? I have no idea, but it gets me so jacked.

But maybe.

I think there's some—

I think that there, there are certain countries that I think are in really, really dire straits that I think like 300, 400 million, you could really immediately make a dent. And it wouldn't involve like doing anything like crazy illegal or anything like that. It would involve basically, uh, um, cause if you think about, if you really want to nerd out on this, which I don't think you want to, but it's like, countries breathe with their GDP, right? The money coming in, the money going out, et cetera. So when you look at that as like an axis that you can attack, um, there's so much you can do. Um, and that doesn't even get into like stuff you can do with social media and with the actual, like, you know, people.

We haven't even mentioned murder yet.

No, no, no, no.

Yeah, yeah, yeah.

You're the second successful entrepreneur I've met who has researched this and has seriously, not, they haven't seriously considered it because they're not there yet, but they're like, You know, I think I could take over Bangladesh.

Uh, like, like, I don't want to take it over. I'm not going to install myself as a leader or anything. I just want to like genuinely help, right?

Like, he wants to better the place.

Like, look at Cuba. Like, Cuba, you know, it's one of those things where it's like, it's been in problematic, you know, a problematic state for a long time. Part of that's our fault as the United States. Another part of that's just, you know, the people who, um, governed it. But like, I think it'd be really cool to like basically free Cuba.

People can't even free the city of San Francisco right now. Like, they're trying to Trying to get the mayor, you know, to actually like, you know, enforce, uh, you know, punishment on crimes or, you know, to try to recall Gavin Newsom. I think it is a lot tougher than you think, but it's surprising how many, uh, you know, I guess like the game from, you know, sort of wealth to status to power, uh, you know, it's, it is interesting to see how many people end up in the power game.

Um, it's not a, like, I want to be clear. It's not a, it's, it's not a, uh, it's actually more of like a social entrepreneurship thing than it is anything. Yeah.

No, that's not true, dude.

That is not true.

No, it is. I guarantee it.

I— okay, I've done the work, I've done the introspection.

Yeah, well, like, like the debate you're having in your head, it's basically like if you are Marc Benioff and you create the Benioff Hospital in San Francisco, what ratio is because you want the Marc Benioff Hospital or because you want to cure cancer? And I don't think it's wrong that it's higher on the I want my name on it. It's not wrong.

If there was a pie chart, right? There's like the challenge of it, the intellectual stimulation and the challenge. That's definitely one. Uh, there's the impact and the wanting to do good in the world. That's two. There's the bragging rights slash power game of like, yeah, I did that shit. Um, you know, like I helped do that. That's what I did with my, uh, my, my time, my talents, my, my money. I think there's some combination, whatever the combination is.

I don't think it's zero on all the other things, but there's a really big difference, right? There's a really big difference, right? So like I am, I'm as close to nihilist as like I think one can get without being a full-blown nihilist, because I just, from, from a, just the way my brain's wired, if I was like a nihilist, I just would be like, well, I'm, I don't know if I'm going to be a net positive, therefore like nothing matters, et cetera. So to me, it's like you get to design the game, right? You get to design the game that you want. And when I look at like spending money to put your name on something, it does feel kind of like a waste. I don't, I don't like, at least personally, like I haven't had my name on anything. I don't really get excited about that. But what I do get excited about is like the challenge part. And then, yeah, like, oh, I, you know, if I could be the person who did X, like that is really, really interesting, right? Like that is interesting, but it's not like a, it's not, it's not this, like this, this, uh, I want to name a journalist who has a very cynical view of our industry, but it's not like this, like, you know, cynical view or it's not this like, oh, I need to, you know, have a dick measuring contest or something like that. Like that's, that's not how I think about it. And that's why like. I think that like doing stuff in San Francisco, I think some of the worst days in San Francisco are still better than some of the other stuff that's happening in the world. Right. And so that's why, like, looking globally, I think are really, really fascinating.

I think after this podcast, you're going to be adding a third shrink to the payroll.

Yeah, probably, probably just based on this.

Yeah.

You have two other really interesting things that you sent over that I want to, I want to hit. So one is you had this remix framework that you kind of talked about earlier, but I want to like Double down. And we should put the slide up on YouTube because it's hard to describe. It's too, it's too much to describe, but the slide makes it really easy. So you basically were like, look, innovation, you know, maybe you're not like all innovation, nor are you Nick Huber, you know, innovation is a waste of time. You're kind of like, your goal is to, you know, I don't know, you could say this, but you want to take a product and you want to remix it. That's one way to think about how to come up with a novel business opportunity is to remix an existing one. And you had these remixes. I thought the good example was you took consumer products and you were like, if you take it and you make it cheaper, that's a way to differentiate, um, through better supply chain. You could take it and you could say, I'm going to align it with a celebrity. That's a differentiator. And then you got like, you have the example here of Feastables with MrBeast. You have, um, you can align it with a lifestyle like keto or Christian or hunting, and you have like Yeti coolers here. Um, science-backed. You have another one that's like you align it with a, uh, an identity like a political party or LGBT, or you have here as the example Black Rifle Coffee. So does this— first talk about this, and then is this only for consumer products or does this work across the board in your opinion?

So here, here's where this comes from. So we had 50,000 different— there are subscription companies, but 50,000 companies using our financial analytics. Um, and we were helping them with pricing, their churn, and giving them this data. And they were from across the map, B2B SaaS, subscription nonprofits, D2C was one of our big segments. And I started to notice that like, for just under 10,000 of these D2C brands, the playbook was almost the same over and over and over again, right? Like it wasn't like there was some innovation in creating mattresses. It was literally like, we will be cheaper through better supply chain and we will help the environment and maybe we donate money to people who don't have beds, right? Like it was just over and over and over again. So I wanted to create essentially a unified theory of like creating products, right? And so I shared the consumer one because that's probably the easiest one to talk about, but there's just, there's only 10 things that these brands differentiate on and there are a number of the things that you talked about. And my point around innovation is that like, don't try to necessarily innovate. Maybe don't even try to like raise money for any of these types of like consumer ideas because all you really need to do is take a particular product and then remix it with some of these differentiators, right? So for example, like you mentioned Black Rifle Coffee, that's basically aligning with an identity, right? So Black Rifle, you know, it's guns, it's right wing, it's veterans, it's all these other fun things. Well, identity-based products increase willingness to pay by about 20 to 40%. So if I just had regular coffee and then I had regular coffee or I had regular coffee that was built particularly for this, like We'll just say like conservative, but I don't think they necessarily claim that party. All of a sudden that coffee is worth 20 to 40% because you're niching down into that particular group. So I put together these 10 things and also the data around increased willingness to pay. But for example, if I was a, you know, particular entrepreneur who didn't necessarily like want to necessarily innovate, which most people shouldn't, um, I might go and be like, cool, well, I like coffee. I think coffee is great. I think I'd get really excited about that. What's a, what's another lifestyle, right? So creating woke roast, right? Coffee for the left, basically, um, where all of a sudden you can have coffee, you know, basically for that particular identity and people flock in. Your retention is typically much, much higher when you do this as well. Um, it's something that really works, right? Um, I had a friend, a really good friend who wanted to create a business. Um, he's involved in the LGBT community. So we talked about kombucha specifically for the gay community, calling it Bubbles for Bottoms, which was kind of a fun name. And so it was just one of those things where it's like creating this like product remix. And you can do this in a bunch of different ways. Like you could be the premium version of whatever you're actually selling. You know, Shinola, right? It's watches, it's notebooks, etc. But they're premium versus, you know, some of the other stuff that's out there.

You have here, you have health plus lifestyle, Athletic Greens for dogs, condoms plus organic materials. Yeah, organic condoms. They're just going to sell you a package with nothing in it. That's the organic condom.

That's basically all natural. I didn't even think of that.

That's good. Made out of air. Honestly, I bet you could sell that. That's Liquid Death, right? Liquid Death is water in a mean-looking can. I think you could probably sell, uh, like, an all-natural condom, uh, that's just nothing. Uh, you could literally sell, like, do it the natural way.

Yeah, yeah, yeah, there's a way. Yeah, you got to look at it like sustainable, right? I don't know a lot about the sexual wellness market, but it's like Yeah, long story short, like it doesn't have to be complicated. The effort and the execution is really, really hard, but the ideation doesn't have to be that hard.

Did you make this chart? This is really good. This is great. Where'd this come from?

Yeah, so this is, this is based on like probably collecting, I don't know, I don't know the number, but it's hundreds of thousands of willingness to pay data points because we did the pricing. I don't know if you guys even know that we've never talked about pricing. That was like my core thing. That's what I was most well known for in the SaaS community. Um, so we did the pricing for like Blue Bottle Coffee, we did Lyft's pricing, we did a bunch of other like B2B style pricing. So we have a lot of data in the pricing space. And when I say we did it, it's like we might have done it or we might have helped them do it. Depends on the company.

If you had to summarize your learnings with pricing, is there like 2 or 3 bullet points where you'd be like, just do these 3 things and you're 90% there?

Sort of, um, but with like giving you a little bit more bulleting, um, you should be changing something about your price every 3 months. That does not mean raise your price every 3 months. But it means like changing up your packaging, going upmarket, downmarket, changing up an add-on, changing up your discounting strategy. It's this forgotten growth lever in most businesses. You acquire customers, you monetize them, retain them. We focus probably 60% of most budgets, more so in D2C, less so in B2B, on like basically acquiring customers. We spend a little bit of time on retention. We spend like no time on pricing. So change something every 3 months. Um, one of the biggest hacks that's easy to talk about on a podcast, add-ons. Um, they're the most underrated, underutilized aspect of all pricing, consumer, B2B, enterprise. Um, they boost lifetime value by about 20 to 50%. So just to make sure this is clear, like, hey, they bought your core product, which is a fitness shirt. Well, add a white t-shirt for $10, like stuff like that. Those are like add-ons. Hey, they bought your SaaS app, add priority support for whatever 10% of your list price is for the software. Um, Most companies, like the most high growth companies, at least in the subscription space, they have 12 or more add-ons typically. Customer never sees them all, all 12 of them, but they'll see like 1 or 2 of them. And then one other really quick hack is, um, localization. This doesn't work for every company, but like internationalizing your pricing. So the Nordics, um, you know, when we take into account exchange rates and stuff like that, they're still willing to pay about 30% higher than the US. For the exact same product. Folks in like Southeast Asia, it's about 40% less. There's a really large variance on that. But that's a really quick thing where you can boost typically your revenue per customer by about 15-20%, literally by just like changing what the pricing looks like depending on where they come in across the world.

Dude, you're insightful as shit.

Fascinating. Yeah, that was good.

Yeah.

You also said a really good thing in the sheet here that you didn't say, which was how do you measure if your pricing change is like a good change or a bad change? Right. How do you know Um, how do you know if you did it right? What's the metric you choose?

Yeah, it's, it's, it's revenue per customer, which is going to be different for every company. So in your business, if you're doing pricing properly, that revenue per customer number should be going up and to the right. So like ARPU, ARPA, ACV, however you're measuring it, um, that, that should be going up. Um, and now it's not going up as fast as your sales or as some of your other numbers, but like you should, if you're changing something about your pricing every 3 months, you should basically be seeing that number go up. I don't know, it's hard to give like a benchmark because later stage it goes up slower, but it should just be going up every single year, if not every 6 months.

Is that assuming you have free and paid as a mix? Because like, for example, if I'm an e-com store, I could quadruple my prices. I would make more money per customer, but I would just have less customers and less money overall if I did that, right? Because, yeah, because it's e-com. Like, you know, for example, what we use is, uh, revenue per visitor, which is like, uh, For, for, if somebody hits the site, how much do we make? $2 off them, a dollar off them for every average customer? Because that takes into account conversion rate and how much they spend when they convert.

Yeah. So I would say, and you can get into like cart, average cart, those types of things. I think that as you get more sophisticated in how you think, like for example, like for an e-commerce world, I would probably want to look at like maybe lifetime, like dollars in, like that average number going up, because what that means theoretically is assuming revenue is going up and all those numbers are great, that means like I'm monetizing better, right? So it's not necessarily in a vacuum, right? Like if my revenue per customer goes up, you know, 1,000x, but I don't have any other customers, obviously that's not great. But it's one of those things where most people, again, they don't like, like the average, like people don't, it's, it's kind of crazy. Like it takes, when we looked at how often people raise their prices, so you should be raising your price at least once per year. Um, there are some top outs and there's some exceptions to this particular rule, but everything about your price is basically this exchange rate on your value. So like you've created this value and because, you know, we don't trade goat for wheat anymore, you're basically saying this value is worth this much dollars, right? And so it's that exchange rate. And there's a bunch of things that influence that, like Your brand, um, the quality of the product, who, which customer you're going after, like some customers will value your product higher. And so if your product is improving every single year, your brand's improving, you should be able to demand higher prices. But most people, I think the average amount of time they take between pricing changes, like actual price increases, is like 3 years. And I've seen so many companies—

Oh, why? Because they're fearful? Because the CEO is fearful?

They're scared.

Is that the number? That's probably, is that like 80% of the issue? They're just scared.

It's just scared. Yeah. And we tried to fill this gap with our pricing product and we still do because it just gives them confidence because we're like, all right, here's data that says you sat in a room when you founded the company and said, uh, Basecamp does $50. Let's just do $50 too. And then you never revisited that, like for years. We have this data that says you can actually charge this customer $500, this customer $100. And we're going to like roll it out in like a nice way just for new customers first. And all of a sudden your conversion goes up and your revenue per customer goes up and you're really excited. Um, and then all of a sudden you're like confident enough to basically put that for your existing customers as well. Um, so yeah, I think that's, it's just a lot of fear. You get all these, like I've been in so many, like so many exec teams with this product where it's like the smartest people I've ever met just sitting there and like If I give them any other problem in their business, they're like, okay, um, I'm not an engineer, but like, let's figure it out. What's a, what's a stack? What is this? Like, they'll go like attack it. You give them pricing and they're all like, I don't know, what do you think? What do you think? Because it touches every area of the business and they just lack that, that confidence in looking at it. And so I think like starting off with like, let's introduce an add-on. Let's introduce some of this stuff. That's typically like the gateway to, oh, this pricing stuff works. Let's, you know, let's raise our prices. And I have it. I have an email that I've, um, I've basically cultivated over the past decade for like changing prices. I'm happy to share it and we can put in the show notes or I'll throw it on Twitter where it's literally like just steal the template. Like T-Mobile used it. They stole it from the website and they used it, which was kind of fun to see. Um, but it basically just goes through like how to communicate a price increase. Um, the TL;DR is don't make it about you, make it about them. Um, cause they don't care about your costs or whatever. They care about their costs. And that's the biggest mistake most people make, but yeah, I'll share that. You're, uh, you're—

this is very insightful. You're very fascinating. Uh, you have a lot of really interesting insights and I think you approach things in a really cool way where you have a good amount of self-deprecating humor, but also like academic rigor. You're, you're a fascinating person. So are we going to—

is that something we're going to do the skin-to-skin bonding now? Or is that later in the podcast? Is that—

bro, when I told Sean the same thing, pop the top, baby. Come on. Let's go. Let's go cheek to cheek.

I'm losing weight. So I don't, I don't feel uncomfortable taking my shirt off. Yeah.

You've lost 40 pounds, right? Yeah.

Yeah. I'm down like probably about 90 total, but 40 since I saw you guys. Um, wow. And as Gucci Mane once said, money makes you handsome. So like all clichéd post-exit founders, I have to get healthier and, uh, basically take it seriously.

What's been the number one driver? Just eating less or what?

Uh, I use MyBodyTutor. So I know you're a big fan of that. I don't know if Sean, you're still using it.

Um, Sean, you're using it?

Yeah, I went back to it and I'm having such a good time. The key was doing the, uh, call, the daily call.

I do the daily call. Yeah.

Basically we have to tell people it's My Body Tutor. So basically it's like the simplest thing ever.

We don't get paid for this. There's no, I don't at least, Sam, maybe you do, but I don't get paid for this.

I talk about this constantly. They said eventually if I tweeted about it, I sent a bunch of people and they're like, hey, we'll give you a little bit of money, but I don't care. Don't even mention me when you use them. I don't give a shit. But basically it's, it's $650 a month and they call you daily and it's like a 5-minute call and they're like, why did you eat this?

You're too fit. Let the fat guys talk for a second here.

All right, go ahead. Yeah. Thank you. Thank you.

Here's the deal, Sean. I didn't want to say anything, but no one wants to hear the shredded guy talk about this. All right.

Yeah, yeah, yeah.

I'm down to like 2% body fat. I'm still experimenting with Ozempic. It's not a big deal.

If you're in a spot where you feel a little shitty about yourself, you're like, all right, I'm overweight. I know this was completely in my control. And you've done all the things, you've, uh, listened to the podcast, you got your Andrew Huberman's got you injecting sunlight into your eyes in the morning and you've, you've, you've tried keto, you tried paleo, you did all the shit, right? And none of it's working or it all kind of works. And actually the problem was not in the plans. It was all you to begin with. What My Body Tutor did was smart, which is they realized it's not the diet that's the problem. It's you sticking to the diet. That's the problem. As we all actually know deep down inside. And so they help you with that root cause, which is, How do they hold you accountable and help you actually stick to the thing you actually want to know? They do give you some strategy along the way. They do give you some helpful ways to think about things. I'll give you a very simple example. Haley was like, um, hey, when you eat, um, I want you to just take note for a second, like on a scale of 1 to 5, 1 being like, I'm totally satisfied, 5 being I'm like ravenously hungry right now. Where, where are you when you sat down for that meal? If you're sitting down at 5s, The problem was like we spaced out these meals the wrong way or we're not getting the right meals in and you're not expected to have good willpower when you're just like completely ravenously hungry. And so like we want to be eating at a 3. Um, and we want to leave it at like, you know, you know, we want to leave the meal also not completely stuffed. You want to leave it at about a 3, 2, 2 or 3. Like you want to get in and just get your meal that way you're just fueling up versus like, you know, going to this like feeding frenzy. So there's little mindset tips, but more than anything, it's you get a call in the morning and she's like, so what's the plan for today eating-wise? You're like, I don't fucking know. I'm just going to eat everything I see, I guess. Oh wait, no, that's not the right answer. Hold on. I'll eat at these times.

I'll eat these meals. No, I think the only thing I would ask is like, or also add is it— health is in your control. Like if you're listening to this, like, you know, Unless you have like an obvious like disability or something like that, like health is very much in your control. And what I love about My Body Tutor is it kind of cuts through the BS. I asked Haley about all these like esoteric things. Like, hey, I read about this, like, you know, the cold plunging movement. And she's just like, fitness? Strength training?

Which country should I take over, Haley?

Haley and I don't have that relationship, but, uh, no, I think it's, um, I, I just think it's one of those things where we're bombarded with a lot of like either quick fix or very marginal stuff. Like even the, the, you know, I, I'm a big Huberman fan. Uh, Sam, you tweeted recently, you would, I also would like, that's, you know, he's, he's, he's a very, very, uh, awesome guy. But I think it's one of those things where a lot of that stuff, like, unless you have the basics in place, it doesn't matter. And so Haley, like, has kept me accountable on like, no, no, no, no, we're gonna We're going to do Peloton today and we're going to do this.

We're going to do that. It's not even anything she says that keeps you accountable. It's just saying the shit out loud and you're like, actually, what the fuck am I talking about? Never mind. Sorry. Uh, I apologize.

Well, and for me, it's been, it's been like a, you know, probably a year-long journey. And it was, it started off with like, you know, basically just breaking all of these conventions. Like Sean, you were saying where it's like, oh, I can't like BS myself out of doing the right thing here because I'm going to have to talk to Haley tomorrow about it. And she's going to not be like sympathetic. She's going to be like, why'd you do that? And she's like, you shouldn't do that. And I'm like, yeah, I know. And it's like, cool, let's not do it tomorrow. Which is, you know, obviously really helpful.

We appreciate you coming on, man. You're super insightful. You're always fun to talk to. I don't remember the last time you came, but I feel like this time definitely probably kicked its ass because this was the 10th.

Awesome. That's my goal in life. I'm not Jesse. I'm not all these fancy people. I got to bring the noise. That's the goal.

All right, go follow him on Twitter. He's @patakis.

Yeah, we appreciate you. That's the pod.