Neil Patel On Making +$100M/Year, Spending $180k/Month, and Donating Millions To Charity

You used to say in your blog post that you go, $15,000 a month is all I need. I'm happy. That was like 10 years ago, I think. But, uh, that's, but you used to say $15,000.

Single and no kids is easy right now. If I had to guess on my burn rate, $120,000 to $180,000 a month. What?

That's insane. So what is, how does that break down? So what's the, like, what's the bulk of it? Where the, so house probably is the biggest one.

No, I have no mortgage.

Okay. So you're spending $120,000 to $180,000 without spending anything on your home.

So Neil, I was telling you a little bit about what you're getting into. We record everything, by the way. So like we just hop into it, but Sean kind of knows who you are. I've been a fan of yours for like 10 years. Can I tell Sean and the audience who I think you are? And you could tell me if I'm wrong. And like what I'm missing?

Sure, go for it.

All right, so you're Neil Patel. So I know you because you used to have this blog called Quick Sprout. I read it maybe 10 years ago. It's probably a 15-year-old blog if I remember correctly. At first it was mostly about like SEO, but eventually it kind of like warped into being about SEO, about content, but just about business in general. And you would do like crazy stuff. Like you would build a business that made $100,000 a month in revenue by like, you just picked like a random niche and I think it ended up being supplements and you you like blogged every month about how that was going and you used to blog about all types of crazy stuff. But then eventually you also started a company called Crazy Egg, which I heard was doing many millions of dollars a year in revenue. And it was a bootstrap and you own the whole thing. Then you and Heaton started Kissmetrics and raised a bunch of money. It didn't end up working out wonderfully, but it was like, uh, it could have been actually quite huge. Heaton wrote a great blog post about like where, uh, you know, where a couple errors were made, but now you've got like a 700 or 800 person agency. That is also bootstrapped like the rest of your stuff. And you've just kind of been balling out like for like 15 years in the world of business, just killing it with agencies. Is that right? Did I get everything mostly right?

Mostly close. So Crazy Egg came first. Ethan's the co-founder on that. He has it all, or, you know, he owns Crazy Egg as well. So it's not just me anymore. And then there's another guy named John Butler who was also part of Crazy Egg at the beginning. And then QuickSprout came later. I started blogging on it about business and stuff like that. Kissmetrics then came. Kissmetrics didn't work out. QuickSprout started to have a big audience related to marketing. We tried to create an SEO software on there. I did that with my co-founder Heathen at the time. He's like, all right, how about we create a company out of this? I'll do the software end. That didn't work out. I didn't want to be part of it anymore. He took it over. And he ended up making it, you know, business site directory, you know, informational site, whatever you want to call it, has affiliate offers, which you already know about. And then the last one was the ad agency, which is correct. And then there's been a lot of stuff in between here and there. A lot didn't work out, but generally speaking, I tend to do one thing at once, focus. And currently I spend all my time on my ad agency.

And that you're, you're at 600, 700. How big is that at the moment? And it's only like 5 or 6 years old, right?

Yeah. So we're on our 5th year. End of this year will be end of year 5. Uh, we're at roughly 700 people. I think maybe a little bit more, maybe by end of year 900-ish, if I had to guess.

Who are these people? These like 700 anonymous Indians in India? What's going on? Who are these people?

Uh, we do have some people in India. But what's funny is—

How many people do you employ in New York? That's what I want to know. That's my agency test.

You're in Brazil too though, right?

Yeah, we're in Brazil. Majority of our people are in the United States. If I look at region-wise, the United States has the biggest headcount. We also have offices in Australia, Canada, UK, Brazil, India. I think we're opening up Germany soon. We're looking at Italy, we're looking at France and a few other regions as well. But our model is, is like our ad agency in India markets companies in India. It's not really used to outsource American work into India.

And what work are people doing? Like what's the service that you're providing?

All digital. So like SEO, pay-per-click, email marketing, conversion rate optimization, organic, social, paid social. The list goes on and on.

And do all the customers come from neilpatel.com?

It used to be that way. Then we started getting a lot through word of mouth. I would've never really guessed that word of mouth drives business.

Yeah. How, how many can you say? How many? Uh, so most people, I would say like our audience, they'd be like, oh yeah, it's cool to have like a personal brand. But me and Sam have figured out, oh wow, this shit really does open up more doors than you would've expected. Uh, you've been doing this for a long time. So Neil Patel, which is kind of like a personal blog where you're talking about like, you know, hacks and experiments and strategies that you've, you know, figured out. How many, can you say how many millions that brought in in client bookings? What for the agency? Like what, uh, how big did just the referrals from Neil Patel get you before other stuff kicked in? Like word of mouth and being recognized in the industry and other things like that?

I think the Neil Patel brand got us to around like $30, $40 million in revenue and then word of mouth started kicking in and then other things started kicking in and Employees started bringing in their own deals because they worked in the space for so long. And then we saw more and more growth, got awards that brought us deals. Being a minority-owned business, that helps, believe it or not. There's, if you're Indian and you live in the United States, you're considered a minority.

And I was about to say, are we a minority?

I feel like you guys are like, I never get minority. I feel like you're the majority of CEOs out there.

So I mean, it's funny because we go through RFPs and some of them ask if you're, what is it like MBE certification or something like that? I forgot what it's called, or Minority Business Enterprise. And I was like, well, I'm not a minority. There's like 1+ billion of me in this world, right? And they're like, oh, you're a minority. I'm like, what are you talking about? There's like a billion+ Indians in this world. How are we a minority? And they're like, oh, in America you're a minority. And in some of these RFPs, they're looking, it says in there, we're looking for, um, LGBT, Q, I don't know what the, all 4 of the letters are.

Um, you have the tattoo on your arm. What is it?

Yeah, the Q's there.

The Q's there.

Yeah.

Uh, and then women-owned businesses, veteran-owned businesses, and the other one was minority. And I was just like, wait, there's actually a quota that these big Fortune 500 companies have to hit? And they're like, yeah. And I was like, well, I'm a minority. They're like, well, you need the certification. And I was like, I gotta have a certification to tell you that I'm a minority? And at first I didn't realize I was a minority. They were telling me, oh, you're a minority. We reached out to you. We're hoping that you would be a good fit. And I'm like, I'm a minority? And they're like, yeah, you're a minority in the United States. You would help us meet our quota. Do you have the certification? I'm like, what are you talking about? And then we went through the process and got the certification.

You gotta get your papers, bro. You gotta get your papers right.

I would've been offended. And then as soon as I realized, wait, this is to my advantage. Oh, hold on. I also got solar panels on my house. Does that help? You know, like I'm a dog owner.

You wear glasses.

Uh, whatever.

Yeah, exactly. I have, I have a vision impairment, uh, called farsightedness, you know? So what else works in my favor here? You know, like was the certificate, just turn the webcam on and it looked at you and it was like, yep, that was it.

That's not enough. And what's funny is our COO or VP operations, one of the titles, I forgot what Tracy's title is. She asked me for this like 6 months before we did it. She's like, "Hey, I need your birth certificate." I'm like, "Yeah, why do you need my birth certificate?" She's like, "Oh, we need it for this certification." I'm like, "Whatever." And the moment someone ended up telling me how Magic Johnson generates a lot of his revenue because he's a minority and gets a lot of contracts, partners with other businesses, white labels it, and uses his name, becomes a quote unquote owner of that business, and then outsources.

Oh wait, tell me about that. Give me an example. What's an example of the Magic Johnson formula?

Sure, so I don't know if this is true. This is just what someone in the minority space ended up telling me. Telling me. So that's the caveat. I don't know if this is true or real. And they're saying, let's say if someone has a food company and they have the contracts with a lot of the hospitals that are run by the government, like the VA, they're looking for minorities to provide it, but there's already a lot of big corporations that provide the food. So Magic Johnson may go create a business that's in that space, partner with the big supplier who already provides the food to these hospitals. He'll go get the contracts and then work with them to actually fulfill it.

Yeah. Wait, Sean, you never heard, you, you never heard of this? My, my, my in-laws, My in-laws own a moving company and they're minorities. They're Black, they're Haitian immigrants, and they win deals partially because of that reason. Because like Morgan Stanley or something like that, if they want to move, they want to— they have some type of policy in their company. It says we want to get RFPs for— or we want to get bids from these types of companies.

I had no idea how— I didn't— obviously I knew this exists. I just didn't realize how significant it was. I definitely didn't know the Magic Johnson formula, which is frankly genius on his part if that's, if that's actually what he does.

Right. We don't know that part, but if it is true, but think of it this way, right? It's a quota. So if I go and I get an RFP, let's say from Boeing, which funny enough, we lost the RFP cuz we were overpriced for what they wanted.

Um, and racist.

Let's say my price is very similar to the competition. I have awards showing that we were the agency of the year. So like, all right, these guys are good at what they do. We have the case studies. And if we're similar pricing, like, oh, this minority helps us hit our quota, let's give the business here, right?

Yeah, yeah, of course. You have some merit to go with it.

For the first $30 million of business, you got that and you must have gotten that by year 2 or so if you're growing this fast. What was the main— year 3, sorry.

Year 3.

What was the main service like when I think of like— because I went to your website and I actually submitted a lead to figure it out. There was the maximum. You ask what your website is. And what your budget is and it's like $0,000 to $10,000, $10,000 to $20,000 and then just $50,000 plus. So were you serving like mostly small businesses and what, like what were you, were you doing as simple stuff as like making their Yelp page good? Like what were you doing?

Yeah, so it's not that small. We do have some SMBs like that, but we actually first started off in mid-market. Our clients would pay us like a minimum of $10,000 a month.

And what would you do for $10,000 a month?

So nothing was cookie cutter. It was all custom. So like maybe they need SEO, maybe they need help on paid management, maybe they needed some CRO or email marketing or a little bit of everything, right? But the plans would start at $120 a year, right? $10 a month and scale up from there to $20 a month, $30 a month, whatever it may be.

What was most in vogue as the service when you started, like the trend everybody wanted? And then what's the in vogue thing today?

When we first started, it was mainly SEO. Because that's—

and what does that mean though? What does that mean? You use Ahrefs or something and your employees like look which terms they should rank for and then you write an article for them?

So it was optimizing their on-page code, helping build links, creating content, promoting the content, and making sure that traffic converted into leads or sales, assuming if they weren't services. Um, and it was a positive ROI for the—

that sounds like a ton of work for $10,000 a month.

It would start at 10. It depended on the keywords, how hard they were to rank for, and it would go up from there.

And what about now?

Sam, I love when you describe people's businesses because you're just like, uh, so what does that mean? You just Google their name and then it doesn't show up and then you go write an article with their name and it's like, what's the hustle, dude? You just read the New York Times and then you just cut out half the words and then you hit send in an email. Like, is that what, is that what the hustle is? Yeah. Nailed it.

I mean, it can be like, like, like, you know, there's, there's always more nuance and complication in reality. But like, if you can explain things in a fairly simple way where it's like, what's HubSpot? Oh, they just make software. So when you people sign up for your website, you can email them and call them, you know what I mean? Like, you could— I'm just trying to dumb it down a little bit.

HubSpot.

But when you look at the business, when they first started, massive churn, had to add tons of features, had to figure out onboarding, had to figure out training. There was a lot of stuff that went to make HubSpot a multi-billion dollar company, right? A lot of people look at it as email, but they do more than email, they do more than a CRM. They've added actually, if anyone in this space has a ton of traction, they have a history of adding a lot of those features for free, which is a smart model, and then gobble up market share, get them into the ecosystem, and hopefully they stick around.

And so what's, what's the popular—

You should do the ad reads for us. Yeah, that was amazing. By the way, Sam, I think you should make Suburban Dictionary, which is just you explaining businesses without like any, uh, any of the complicated stuff. Like, yeah, what is it? Well, if you get customers, call them and email them.

The, the, the 3-syllable dictionary. Like I, I explain complicated things, but no word is above 3 syllables. That's what we're going to call it. Exactly.

Uh, what, by the way, I was just gonna say, Ben brought up one point on that minority thing. Ben, you want to say that? That sounds pretty interesting. You slacked us something.

But Neil kind of mentioned this too, but like, this is really, really popular in government work because the government is like very hardcore about hitting their quotas for racial minorities. And so around here, like, I actually know a couple guys, and basically what they do is, uh, the people I know are all African-American They get the contract, they put their name on the contract, they then outsource the entire thing to like Deloitte or KPMG or whatever, and they take like, you know, 15% of the revenue or whatever.

They create a consulting firm that's like the Minority Inc. And then Minority Inc. goes and gets the contracts and farms it out to like Deloitte or whoever.

That's great.

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.

I, I lived in, uh, in Indonesia for a while and they had such a bad traffic problem. Jakarta has like, I think the worst traffic in the world. Like you're just going 2 miles, you might be there for 2 hours. And, uh, so they were like, okay, we need to create like a carpool incentive. So how do we create an incentive where if you have 3 or more people in your car, then you can go in the fast lane? And so this, so it worked for like, you know, a month. It was like, oh wow, this is great. If we carpool, we get to go faster. And then this like little industry sprouted up where people would just stand at the edge of the carpool lane, like a hitchhiker. And they'd be like, I'll get in your car. If you want a third rider, I'll just hop in and we could ride in the fast lane. And then they would get off on the other side and ride back with somebody else. And so they would be professional, like, you know, HOV lane participants. So they would just spend all day riding with you in your car. So you'd be sitting there. And someone would just get in the backseat with you. It's just like a random Indonesian person and you would pay them 10, 10 like rupees or whatever, and then 10 baht, and then they would, you know, get out on the other side a mile later. It was amazing.

You, uh, Neil, was, was Quick Sprout, uh, been—

there you go.

Uh, was Quick Sprout— I mean, so that was your main business. Quick Sprout and Crazy Egg were your main business for a while.

Quick Sprout was just a blog, and then my co-founder Heathen ended up taking it over and now it's his blog.

So, but what was your main source of, of revenue and income? Because I'm, like I said, I've listened to you forever. Like you've been crushing it, it seems like for financially for like 10+ years.

I don't know if I'm crushing it, but, uh, the main source of income was Crazy Egg for most of my life. And then it ended up becoming the ad agency.

And Sam, you said something at the very beginning that if I was listening to this, I'd be like, wait, hold on, I wanna hear that story. You said something like, just for kicks, he would like spin up a business that like did $100K a month in revenue. What's an example of that? Tell that story because that sounds awesome.

Yeah, so everyone thinks like it's really hard to make money online and then you got these shysters who are like, buy this for $1,000 and you become rich, which never really happens. Maybe every once in a while, but for most people it doesn't. So I was like, I can create a business on anything. And people are like, go create a nutrition business. My audience picked, I give them like a lot of different options. They picked a nutrition business. And I was like, all right, let's create a blog, get it ranking, get some traffic, and then funnel people in through quizzes, through emails, and let's funnel them into supplements, rank higher on Amazon, get traction, and see what happens. And it did well.

And that took you like months, years? No, no, no. How long did it take you to get that?

It wasn't months, it was much more than that. I think it was like—

I think a year, right?

A little bit less than a year. I think it was like 9 or 10 months. So it wasn't like 1 or 2 months sadly, but a little bit less than a year. So it was pretty good.

It was an awesome, it was an awesome blog post series, Sean. You got to Google it. Google like Quicksprout or Neil Patel, then like $100,000 a month. And it was like a monthly update. It was pretty amazing.

I don't think, they may have deleted it now. I don't know if it's still online, but, and then, so I took the money I made from Crazy Egg and I would park it into other things. So it's like stock market for a long time. The stock market's had a really crazy run, right? Then you also have things like investments, a lot of venture funds, uh, angel investments. And then sometimes you just get lucky. Sometimes you don't. And it's a numbers game.

We, uh, had talked about doing a content series like this to grow the podcast. I was like, you know, I think one of the best ways to grow the podcast could be if we do a challenge like what you had described. And one of the ideas was like, what if Sam created his own, uh, Sam Sticky Icky, his own condiment brand. And we basically show how we build a D2C brand, like from, from idea to like Branding to marketing to, and we just do it all transparently to like, like get people hooked on, okay, let me see how you guys actually build this thing. Now it's a lot of work, which is why I think ultimately a lot of work we didn't do it. But how well did that work for you? Was that like just kind of like a good content thing or was it like, no, that was like drove a lot of growth for the brand and the blog. Uh, I'm curious how well that worked for you.

It didn't drive as much growth for the brand. Um, but it did help out every little bit. Like I did crazy experiments, so I spent like 100 and something or 200 and something thousand on clothes. And wanted to see what that did in business meetings. Spent money flying first class everywhere, wanted to see what that would do. But yeah, I tried a lot of different experiments and it was just for shits and giggles. And it was also a reason to justify some of my expenses. And I was like, I want to fly first class because I remember my first time flying first class, someone else paid for it. I'm like, wow, this is— I've been missing out. This is a lot better than being crammed up and flying all the way to Europe from from Los Angeles, you know, in economy. And then I was like, man, let's do some experiments and let's see if I can justify this expense.

But yeah. That's amazing.

And you just, you, did you say early on that you just gave Hiten? So did you invest in Hiten Shah's other company, Sean? Nira?

Yeah.

Yeah. So we're both Neil, we're both investors in Nira, which is, Hiten's your cousin, right?

No.

Or brother-in-law.

Brother-in-law.

Brother-in-law. Yeah. Sorry. And, uh, Hiten's amazing. He's another, he's a great blogger as well. And Sean and I both invested in his company called Nira, which is either gonna be a dud or is gonna be like the biggest company ever. I know the, the, like, it's like a company that's clo— like they're gonna close like multimillion dollar contracts. I would guess that's, it's like a big old business, potentially a big old business. But did you say that you gave him Crazy Egg?

Uh, so with Crazy Egg, what ended up happening is, is What I wanted to do is we were doing business forever together, and then eventually I just said, hey, you can have the monthly distributions and I'm going to go create another business.

Why would you give that? Why?

He didn't ask for it, nor did he care for it, nor did he want it. You know, he's never been about money. Neither him or I have. And we're not rich. I can't actually speak for him. I'm not rich. I've just done well enough and I don't spend as much, so it's like, don't really need the money. Does that make sense? Like if you just don't spend money, you don't really need much cash at all.

Dude, you just said you dropped $200,000 on clothes. What do you mean you don't need money?

Well, that was an experiment, right? But that's not my daily life. Like I'm wearing a white t-shirt with stains that my kid spits up on. They're probably like 10, 20 bucks. I don't know what the white t-shirts cost, but they're not really white anymore. So I try not to do video recordings in front of white walls anymore, uh, cuz you can just tell the discoloration from it. Nonetheless.

So did Sam say you live in Brazil? Is that what—

No, no, I have a, uh, division in Brazil. Like we do marketing in Brazil for Brazilian companies.

And you live in Texas? Where do you, where do you live?

Vegas.

Vegas. Okay. Amazing. And, uh, so have you, um, is it easy for you to keep your burn rate down because like, Uh, I was telling Sam this, I spend like, I don't know, $25,000 a month now, just like, and I'm not, I don't even feel like I'm, dude, I think Sean, you might, I think you might spend more than that now.

If I bet you add it up, cause I know how you spend, I bet you it's more than 25.

It might be, it might be a little more, uh, but it's not more than 30, I would say. I don't think it's more than 30. So I, but like, yeah, I got two little kids, but I got two little kids, but they're like babies. Like, like, you know, like they didn't, they didn't need food.

Yeah.

So, so, you know, there's diapers.

Sure.

But like, it's not them. It's me.

So I would take 30.

You said it's a steep burn rate or it's a good burn rate.

I would take it. I'll trade with you.

Okay. Gotcha. So when you say you don't spend much, what do you say is your monthly burn rate? Cause I think for most people listening, right, they like, most people don't talk about how much they make or how much they spend. All right. How much you make? Sometimes that's sensitive. How much you spend?

How much I burn?

Well, but, but Neil, you actually wrote this in a blog post. You said, uh, you said I spend, this was, I don't know if you're actually, I have no idea if you're single or if you have a family and you can I have a family.

My burn rate right now.

But you used to say in your blog post that you go, $15,000 a month is all I need. I'm happy. That was like 10 years ago, I think. But, uh, that's, but you used to say $15,000.

Single and no kids, it was easy. Right now, if I had to guess on my burn rate, $120,000 to $180,000 a month.

What? That's insane. So what is, how does that break down? So what's the, like, what's the bulk of it? Where the, so house probably is the biggest one.

No, I have no mortgage.

Okay. So you're spending $120,000 to $180,000 without spending anything on your home?

Uh, property tax, property tax, uh, for both my homes and HOA dues is probably close to $200,000 a year.

Okay, great. So we've got $12,000 of the way there.

All right.

Yeah.

Yeah. So there's, there's Okay.

Life insurance is $25,000 a month.

What?

My whole life policy. Yeah, that's $25,000 to $300,000 a year.

Uh, no, no, wait, wait.

What, what the hell is a $25,000 a month life insurance policy? What, can you explain that?

Is it just a benefit? Like if I die, my wife and kids get money, like a life insurance policy. Yeah.

Well, I get that, but is that normal? I've never heard, uh, like either I'm dumb or you're dumb. Who's dumb here? Am I dumb because I've never heard of anybody spending that much on their life insurance policy?

It's like an investment account. It builds over time, so it's not like it goes away, right? Most life insurance policies are for, call it, 10 years, and then you buy another one. Mine just keep going, and you can borrow against it. Just think of it as like an investment vehicle. So that's $2,500 a month.

Okay, I see, I see, I see. Now I understand.

Staff, uh, cleaners, nannies, driver— we have a full-time driver— I think that ends up being around $5,700 a month.

5,700, 57,000? 1,000. You know, a driver, Uber. What? Why?

Uber is more affordable. So I optimize for convenience. In Vegas, I go through this company, they charge a hefty premium. I go through this company and I have decals on my car. So if I do a meeting in front of a casino, The car can just stay in front of the casino and doesn't have to move. If I'm going to the airport, you can straight up pull up into the plane or whatever you want to do, and you don't have to go through terminals or anything like that. So that makes like—

so part of your strategy, as I'm picking this up, is that you live the best lifestyle you want and it's all expensible the way you do it.

Uh, I don't know if it's all expensible.

Is that what you meant with the decal? Like it's a company, it's like marketing. It's like a, like a marketing vehicle for you.

So there's a limo company. If I have their decal on my windows, I pay them, I can end up parking wherever I want in theory. Not literally wherever I want, but in most cases I can park wherever I want and the car can just sit there and wait for me.

All right, so what else? Anything else? You fly private?

He's like, I buy a daily Disneyland FastPass just in case I decide to go that day.

Yeah, I fly private for convenience of time.

Um, what's been the, what's been the number one, uh, like kind of like where you feel like most people don't, most people think this is too expensive and not worth it, but for me, I get way more value. I'll give you an example in my life. Right. So I thought I had burned right until we started talking. So this is great. I'm feeling so much better about myself. But the one thing I did was I hired a private chef. So I was like, all right, that I think I always thought that's the lifestyle of the rich and famous. And I thought, wow, that's cool. Cause you eat healthy and it tastes great. You don't have to fuss with time and, you know, cooking and dishes and groceries and all that stuff. And so to me it's like a no-brainer. I'm like, dude, anybody with any kind of money, you should be like, that should be one of the first, like fancy car later, private chef now. Like, cuz I'm like, to me the value, the reward way outweighed the cost. And I think most people don't typically make that trade. Sounds like you've experimented with many ways of spending money. What has been a good reward for, for cost, uh, trade that you're like, this one is, is great that most people don't do?

I don't know. I mean, I'm in a bubble because I have a lot of friends who are like me, sadly, in which we spend a lot and we don't know what's reality. I know that sounds bad to say, but it's true, right? Cook is not bad. Housekeeper isn't bad, so you don't have to do your own dishes and stuff. Although, funny enough, I enjoy doing that and ironing because it's kind of like meditative for me. It's relaxing. I don't know why watching TV and ironing. Nannies help so you get the freedom and you can watch your kids when you want to, but you can also do meetings and stuff like that. Probably the best expense I ever spend on is private planes. Not because I like it. It's, I don't mind flying commercial, not really any difference for me, but it helps me optimize for time so that way I can see my kids more. Because I have to sometimes do a lot of meetings for work and just going and then coming back the same day, just really in and out really quickly. Like sometimes I'll be home quick enough, like go from Vegas to Utah for a conference, speak, come back, and I'll be home quick enough to pick up my kid from school. And like to me, that's really well valuable. That's worth the money.

So are you saving any money then? Or are you, I mean, are you just taking a fat draw from the agency in order to pay for this? Or are you able to expense a lot of it to the agency? How's that work?

I don't expense any of it to my company. I just personally pay for it.

So you're just— the agency's just that profitable of a business. It's doing that well.

Or investments or savings. I've done well enough in life where I'm okay.

Why did you do an agency? So me and Sam always talk about like, uh, we have many mottos on this podcast. Um, for example, we don't do public math. For example, You don't say you're rich, you say you're post-economic. Uh, these are things we've picked up from, from guests along the way. And one of the, one of the motto, one of the mottos that we say is, uh, uh, you know, agencies suck. And, uh, it's like, and, and the reason we say it's not because they, uh, like they do well, there's not that they suck. It's like they suck as a business choice. Like if I could, like I've always thought if I could choose between software or an agency, I'd choose software because it's like, oh, it's. Not a services business. It's gonna work while I sleep and it can scale up and I don't have to open up offices in Poland and Brazil and all these other places. But you chose that. You did software and you chose agency now. Um, why'd you make that choice and what's great about agencies that I'm kind of like not giving enough credit for?

So you, you're looking at business as in software's more scalable, it's more desirable by public markets. Ex-HubSpot versus Accenture. Accenture has way worse multiples than HubSpot. Accenture is a bigger company from a revenue EBITDA standpoint. But now take a different approach. Okay, HubSpot's a publicly traded company. You guys are both HubSpot employees, I'm assuming still. Is that correct?

Kinda.

Sure, whatever your guys' deal is, right? But you guys are pretty much at HubSpot. Now imagine creating a business and you don't plan on going public, you don't care for the limelight, you don't care for any of that. In business, what's a successful business? Good revenue growth and good revenue and profitability, right? All that really matters at the end of the day, whether you grow or not grow, is how profitable are you? Would you guys agree with that statement? Assuming you're doing something that's ethical and you're not selling drugs.

No, I wouldn't agree with that. I would say there's a third thing, which is like, is this enjoyable? And like, do I like my day-to-day? And with the more people you have, most people would say that's just a little bit more headache, uh, than, than—

but that's not software or consulting. Anytime you build a big company, you tend to have a large amount of people, whether it's HubSpot or whether it's Accenture. Everyone has—

yeah, but you can have, you can probably have a much higher revenue per employee with software versus let's say you own a massive landscaping business. You're gonna have to have tens of of people.

But, but what's the difference from dealing with— how many people does HubSpot have? Like 6,000? I don't know, 5,000, 6,000 is probably a lot. I'm guessing on the number, but what's the difference of dealing with 5,000 or 6,000 people and 20,000 people? There's a point where it doesn't matter and it's a lot of people either way. Like, it's not like you're at 50 people, you still have thousands of employees to deal with and you need managers and layers and all that kind of stuff.

Yeah, but you're hiring some— good or bad, you're hiring a different type of person. So for example, if you're VaynerMedia, they're based in New York, they can probably only afford to pay some of their lower level employees $70,000 or $80,000 a year. And so you just have to get a ton of people like that and have to have higher churn versus say a bigger company where you're able to pay a significantly higher salary because the revenue per employee is much higher. So perhaps there's a, a slightly different day-to-day with, because of that.

Not necessarily. Let's say you're VaynerMedia. He could be doing it to optimize for profit. What happens if I told you his LTV was 6, 7, 8 years? Right, and you have enterprise accounts, then at that point you can still hire high-quality people and pay them an arm and a leg. You get what I mean, right? Like you look at Accenture, they're charging accounts so much money and their contracts are long. And I don't know what VaynerMedia's LTV is, but there's a lot of consulting companies that have LTVs of 6, 7 years for clients and their clients are spending, you know, a HubSpot. Yes, there's more revenue per, you can say potentially in software you can get to more revenue per employee, But I know consulting companies that only take on contracts that are like $5, $6 million and upwards. So you have high margins and you can have a high revenue per employee, but either way, no matter what, as you build a big business, you're going to need more people. And it's a headache to manage whether you pay them $70,000 or whether you pay them $150,000. It's still more of a headache. And the notion that if you hire someone for $150,000, I'm not saying you're saying this, it doesn't necessarily mean they're a better employee, right? Engineers—

No, it just means different types of headaches.

Correct, exactly. Engineers, for example, are very expensive in this economy, right? So the point I'm getting at is a consulting company, I had the demand for it. A lot of people wanted to pay me for marketing and there was just so much demand it would've been silly not to do. And if I'm not trying to go public or I'm not trying to sell, money's money, green is green. As long as you're happy doing what you're doing, Take the cash.

Will you ever sell the company?

I wouldn't say I would never sell the company, but I don't care to ever sell the company because I love what I'm doing. We also have good growth too, right? Like, I don't know what we'll grow this year, 60-something percent, which isn't bad, you know, with the market going up and down and fluctuating. 60-something percent is my guess at our size. It's decent.

Yeah, the part I was actually talking about was a little bit more like, uh, I think you're, you're totally right that like if you're gonna win big, you're gonna end up with a bunch of employees and like, you know, it might look like 150, it might look like 1,000, it might look like 10,000, but like, you know, in either case you're gonna have managerial work and headaches and it's just different types. The part I was really talking about was like, you know, I've now built, let's say a media company content and then it's like, um, done educational stuff. So courses, which are like, you know, a different thing. And then there's like, I built software company and you know, we ended up selling that one and then it's like, And then there's, um, uh, services, which is like client services, like with like consulting or agency model. And what I hate, what I, what I love about content media is it's actually pretty fun to create and it's cool because a lot of people consume it. So the kind of, you know, you get that like hit. Um, but you gotta like, you gotta bake the cake every day, right? So like, you know, The Hustle or like the Milk Road or this podcast, it's like we have to come on and create the content again. Uh, you know, for the most part we, we're not doing like super long evergreen stuff. Uh, so, you know, like with the Hustle, it's a daily newsletter, Milk Road's a daily newsletter. It's, we gotta bake that cake every day. Whereas software, it was like we built one product and yes, we might, we will improve it over the course of a year. You know, every year we're gonna improve it. But like fundamentally, um, we didn't have to like recreate the product, come up with a new viral story or a new great content segment, uh, that would like require like a new genius. Uh, with software it's like you come up with one genius moment. And then you sort of refine it, make it work better over time and get rid of bugs and things like that. So I preferred that part of software, which was like making a product rather than making kind of like a disposable, uh, you know, consumable piece of content or like I have an e-commerce company and like it's a pain in the ass to have supply physical products that are supply chain constrained. And like we have a warehouse, we got warehouse problems with our e-commerce business. And so I'm like, man, digital was sweet compared to e-commerce, but e-commerce is quite profitable. That kicks off a bunch of profits. That's nice. So every business has these pros and cons. And I always thought agency was like, um, the part I always thought was a pain in the ass was like the client services. You are reinventing the next campaign and the next winning marketing, you know, formula for them. And you have to keep clients happy all the time. And clients are sort of like never satisfied in a way that like, if software, it's like you can have nameless faceless customers that like, yeah, some percentage of them will, will write into your help desk that's in the Philippines or whatever. But like you're not having to like, you know, send account reports to your, you know, your, your big clients to keep them happy.

Yeah. But you, everyone has their own problems in software. A lot of people have churned this issue and they can't figure it out, or they have competitors who come into the marketplace and just undercut 'em on pricing for the same features cuz it's cheaper and cheaper to build software these days. Right? So they all have their own problem. To me, I look at it as if you can find the right people. So every time I start a company, I find people to put in place that have already done it multiple times before. 'cause your risk of failure are lower and they already know everything to do. So I don't have to deal with client relationships. I don't have to deal with customer service or anything like that. I get to do what I enjoy doing, which is go and create content, be the face, et cetera. And my wife enjoys what she gets to do, right? She gets to donate the money, although we don't really consider it as donations. We look at it as investing. We're investing in people, although we really don't ever collect any money back. It's more so, You're investing into making the world a better place or people's lives a better place or whatever it may be.

What's a— who were your first 3 clients at this age?

Because I don't know, they were small companies.

And right now, who's an example client?

Like a Fortune 100 software company. Like that is a typical company. Think of any big large corporation in B2B, that's a great example of one of our customers, or even B2C. Actually think of any Fortune 500 company, that's a prime example of a customer.

What's, and who's the CEO of your agency? Are you?

No, I'm never the CEO. I'm a terrible manager. I'm one of the worst managers ever. His name is Mike Gullickson. He was the CEO, no, he was the president of iProspect. Which is an ad agency owned by Dentsu. I believe in iProspect, maybe they had 4,000 or 5,000 people is my guess.

And what, when you, how early into the business did you have a hired CEO or hired leader?

Day one. I won't start a business without a CEO from day one.

And what did you pay them in the first year?

First year as my co-founder, so like $100 grand.

And that's because you basically went and drummed up $100 grand worth of business and you're like, hey Mike, I got this client to give $100 grand. Do you want to run this thing for me and help it get deployed?

No, our business didn't start off that way. I probably put in total of $5 million into the business of my own money. So it was bootstrapped, but not really bootstrapped, if that makes sense. It's kind of cheating. And it gets easier and easier as you're an entrepreneur, right? The more successes you have, and I'm not saying I'm successful by any means, the more capital you have to deploy into the next thing. So reduces chances of failure. And when it's your own money, this is just my thesis, and I could be wrong on this. I have no data points. When it's your own money, you're much more careful than when you raise like $15, $20, $30 million of venture capital, right? You really look at every single dollar. But Mike was the CEO from day one. He's a great operator, has no agency experience. Eventually we got in a president and then eventually from there we got in a CEO.

And have you guys crossed $100 million in revenue yet?

Yeah, we do 9 figures.

That's crazy, man. So, well, I mean, that's just pretty wild that you were able to like parlay this blog that was already all always kind of a juggernaut, but this blog into a a 9-figure-a-year business. I mean, that's amazing.

Yeah, it's been a good run. I hope it, I'm knocking on wood, although you probably can't hear it because of Chris, but I hope it keeps going. And more so we're just having fun. Like for me, what I enjoy doing is building a business. I know I have an expensive lifestyle. I generally don't do stuff for the money. Like I overpay like house staff, like nannies and stuff like that. When I say overpay, I drastically overpay, not by like 10, 20, 30, 40%. Like I really mean drastically overpay. Because I look at people, I'm like, if you're cleaning a house, how are you going to live on this? Like I'll give someone 6 figures to do that. I know that sounds kind of crazy or stupid, but like I'm not giving my kids money, so might as well take care of other people in this world who need it more than we do.

Did you just say you're not giving kids money?

Yeah, I'm not going to give my kids money.

Nothing. Leave, leave nothing.

We have a trust set up. What they'll get maximum is like, if they're on the street and they can't provide and they're going to be suffering, like I will help pay their bills or put them in a normal home. Or like if my kid's like, I want to be a doctor and I want to go spend all my time in Africa helping other people out and I won't get paid for this and I need, you know, X, $5,000 a month to live or $10,000 so I can just go volunteer all my time. I'd be like, sounds good, I'll pay for that. But like, I won't give them money for the sake of like, if they're like, I want to go travel to see Italy or I want a Honda Accord and like, go buy your own Honda Accord, go travel on your own with your own dime. Like, you know, I don't believe in just giving people money because I think there's other people who need it more than we do.

Sean, are you going to give your kids money?

I really thought about it. Like, my oldest is 2, so I think I got some time to figure that out. But I, lean more towards— so I've kind of heard both arguments. Like, um, I know somebody who—

they—

if some people are like, you know, uh, you know, I do— there's some people that I, I'm definitely not in the camp of, I do this for my kids, I want to leave my kids with a whole bunch. So I'm like, that may be the worst thing you could do for them. Um, not because it means they'll be ruined, but you have drug addicts. Yeah, you take away, you know, agency in a way, right? Like, you, you want people to, um, like, it's not that it's good or bad, it's actually just is just way lower on the totem pole of priorities. It's like, I just don't even focus on that. It's like, if I'm going to leave them something, it's going to be a certain set of character traits and skills and mentality. That's what I'm trying to leave. Money is like, I don't know, 15th on the list of like, I don't know, we haven't even gotten to think about that yet. But I've thought a lot about what are the character traits and mentality and mindset and skills that I think I can help build. And that's the focus. That's the one that matters. That's the gift. If whatever else comes from Beyond that, I don't know, we can figure out, it's like the foot— it's like the footnotes.

So like, we're very similar, Mike. I have a 2-year-old and a less than 1-year-old, right?

Yeah.

And I look at it as you want them to be productive units of society, right? You want them to be ambitious, hungry, caring, thoughtful, happy, like whatever it is. There's a lot of characteristics that you may want children to be, but I look at it as like they don't need money. Even like with my wife and I, we go over our expenses. And we look at what we spend on travel. And we do some of this because it's easier, but like my wife and I are actually considering cutting out all private and just going commercial now. The main reason our expenses are high is due to COVID. So if it wasn't for COVID, I would just be going in a normal airport. I didn't know how COVID was going to impact with young kids, could afford it. I was just like, yeah, just start flying private. And we haven't gone back to commercial yet, but we're thinking about going back. Because like my wife and I look at the money as like, yeah, we spend all this money on travel and airfare and hotels, if we donated the money, people would have a better life. Do we really need it that much?

What do you do when you donate that? Like, what's a good way to donate in your opinion? So there's like, uh, you know, ranging from not donating to donating to one thing, to donate to a bunch of things, to like getting involved or seeing the impact, or like, you know, I know people who, if they donate to Africa, they'll actually, their family will go take a trip every year so that they're more connected to the people and they actually see the impact and they take their kids with them so that they see the impact. Like, what have you found that's a good way to give?

So we, we have a balance. It's my wife and I team up. This is going to sound bad, but I don't like volunteering my time. My wife loves volunteering her time. I think it's very inefficient for me to volunteer my time. I should make the money versus volunteering my time because the money or the hours spent, if we donated the money, it would have a much bigger impact to the cause than if I actually spent my time. I don't think that's bad. Yeah, and my wife loves spending the time and like from going to soup kitchens or whatever it may be. So she picks the causes. We have a few theses. So like one thesis is, or not really thesis, but rules. One rule is we don't like money going to organizations that have tons of high overhead. We actually want our money going to the causes. So if it doesn't go to the cause, then we tend to not pick that. Organization. The second thing that we look for is organizations who are like self-sufficient, right? It's just like, how can this continue going even if someone wasn't managing it? So like a great program, for example, is my wife likes donating to women's education. We used to donate also to men's education as well. So you find these people in these villages, You say, hey, you can't afford to go to school, get a degree. We'll pay for you to go to college, go get a degree, come back, teach kids in your village for a few years, whether it's under a tree or anything. People can learn anywhere, right? And then, you know, go move on with your life and do whatever you want, but at least you're giving back to your own community. And what we found is when we started giving, because we've been doing this for so long now, uh, well, actually not that long, but when I mean long, I'm talking about like 10, 11 years where we've been donating. And it's picked up quite a bit over the last like 5, 6 years. When we started giving the money to men, a lot of the men, we saw very low conversion rate from them actually coming back and teaching people in the village. Well, when we gave the money to women for their education, a lot of them came back and fulfilled on the promise. Because it's not like you get a signed contract, right? It's just like, hey, we're going to pay for everything. Come back, help people out within your village.

Which country?

We've done this in both India and Africa, so different parts of Africa and in India. And then another program that we've done is like growing gardens where a lot of people who have AIDS don't take the right— don't take their medication and aren't doing well. They're getting— they're given the medication for free, but if your body doesn't have the right nutrients, it rejects it. So what we'll do is we'll do programs like growing gardens. We'll give them money, they grow food. And then not only do they eat nutritiously or well, they're more likely to take their medication. And you're also growing enough food so that way other people in the village can also eat. So it's like, but my wife picks all the causes. She vets them. She loves it. Like she'll go, this is Wednesday, in 2 days she'll end up going to a function scouting out more nonprofits and organizations. I won't go. Like I think it's a waste of time. I'm like, if I go make more money, she can donate it. It's a better ROI than if I go spend 3, 4 hours mingling when she could just do that and I can go make more so that way we can donate more.

Other than your own private businesses, what have been your best financial investments that's allowed you to donate and make a lot to give away?

Stock market has done really well. Companies like Apple, Amazon, Google, Facebook. I know Facebook's down, but they still have been a tear if you just bought the stocks early enough. 'Cause some of these companies have grown 30, 40% a year in the public markets compounding, right? And it really adds up. Angel investments have done really well for me. And I would say probably those are the two biggest. Stock market still has done well, although in the last 6 months I've taken a beating 'cause I'm in 100% tech companies. Companies. Like I don't diversify. Like everyone's like, oh, you need some oil and you need this. I'm like, yeah, I'm just going to go all tech. And people are like, oh, you're silly. Look how much you lost. But if you look at the whole time when I first got in, I've done well and I invest in what I understand. And I'm 37, so who cares? You know, another 10 years, everything should rebound assuming you pick the right companies.

What's your portfolio look like in terms of percentages? I probably— not including private businesses.

My public portfolio, I, if I had to guess, I probably don't even have more than 20 stocks. Amazon. I, I, I won't be able to name 'em all, but Amazon, Google, Facebook, Apple, Microsoft, HubSpot, Salesforce, Adobe, Atlassian, Shopify. I'm missing some as well.

And of your liquid, of your, of your liquid net worth, how much is in public equities versus other?

Versus real estate, whatever else.

Yeah, just non-agency. If, if I think your agency— is your agency the only company that you own a significant stake in? If yes, exclude that, then what's your portfolio look like?

Uh, no, I have quite a bit of other companies because I started using a lot of the cash to buy other companies for like 3, 4, 5x EBITDA, and then you just fix them and grow them and then just cash flow. Um, I would— so if I look just at cash invested in companies that aren't mine, like not companies I'm buying out or anything like that, I would probably say 80 to 90% is in stocks.

What companies were you buying?

Uh, any that we can find that we like, like we bought UberSuggest. It was a software company, bought it for $120K, put $3 million into it. Um, it took, I think, less than 7 or 8 months to get to $1 million a month in revenue. What? So that was a good deal.

What's it called?

Ubersuggest, Ahrefs competitor. That one did well. We just bought another one. Who's running that? A lady named Lisa.

Crazy.

And then we just bought another one. We haven't announced it. We bought it for $8.6, I think a month ago, a month and a half ago. So we'll see. It does $100,000 a month. We think we can grow it within, 12 months to probably like $400,000 or $500,000 a month in profit. So forget revenue, we just will look at it as a cash flow.

So do you have rules around that? Like, okay, I have to be able to grow it using NeilPatel.com or it has to be in the marketing niche so the agency benefits. No, it's like, would you buy like brick, you know, like a fucking laundromat or—

If I can grow it, I won't do too much brick and mortar, but I've invested in other people's brick and mortar. Like I have a friend who does a lot of brick and mortar businesses. Like one of my buddies has a roofing company and I was like, oh cool, you can buy it for 3x. It's good size. And I can show you a few things and we can probably increase the profit by like 60% within 12 months. So it's like, it's just good cash flow, right? Like if you're getting like 30, 40, 50% returns on your money, it's great. And then you also have to keep in mind because of, my history and I've been doing this long enough, I also can get debt at really cheap terms and large amounts of debt. I can get debt at 3.6% plus so far. So if I'm buying a business for 5X, in many cases because of the economics of my whole portfolio, some businesses I put down, like on the one that was 8.6, 2.6 was paid over 12 or 18 months or something like that. but we put $6 mil up front. I could have got a loan for it, but I was like, eh, it's just easier to put the $6 mil and not deal with the paperwork. But sometimes we'll just do loans on the 100% of it and put zero down.

Right. And what do you like? Okay, so you do what you do now. So you have your time and it's pretty much probably fully allocated, let's say, to the agency and then some of these other things. Um, if somebody was smart but didn't have your— you have a bunch of visibility, you kind of know where your industry's going. You see adjacent opportunities, but hey, I'm not gonna go do 'em. I don't have the time. What are opportunities that you see that you think somebody listening to this who's just like smart hustler, like I got more time than I have ideas. I got more time than I have money. Where would you go if you were that person? What would you, what would you suggest for them to look at as like, you know, opportunities that you see today?

I would look for opportunities in anything that they're good at. And I know that's not the answer that you're looking for, but what I found that the issue is when people go look for opportunities that make some money, when you're not passionate, you don't put in the time and energy required to actually make it successful. That's a big issue we see. Maybe some people have it in them where they can make something successful because they'll just tough it out. But most people we see will just quit because they just hate what they're doing.

And so, but I think a lot of people don't know what they love to do. They don't have like, they don't, if they already had what they love to do, they wouldn't be, you know, looking for opportunities. So, you know, uh, sort of like a by-definition problem there, right? So somebody who's, who's thinking about, okay, I don't love what I'm currently doing. I'd like to I want to get to where this guy's at, but which is basically like seems happy and successful, right? Um, he, he seems like he, he said he loves what he's doing. I'd love to do that. But what if I don't know? Right. It's like when my sister was going to college, my dad asked her, you know, she's like, what should I major in? He's like, I don't know. What's her favorite subject? And she was like, lunch. Like, you know, I don't, I don't have a favorite subject. I don't love any of these subjects. Um, so what am I supposed to do? Like, am I just out? Uh, you know, I'm just not one of those.

You can study a lot of different until you find what you're passionate about. Cause if you try a lot of different things, you'll typically find something that you're naturally good at. Usually what you're naturally good at, you'll also tend to favor in what you like and then just double down on that. But if you're looking for industries with opportunities, I see a huge slowdown in e-commerce. Not to see the e-commerce market shrinking, I'm not saying that, but the growth in the e-commerce market isn't as what it was once used to be, right? When COVID first kicked off. So you're going to see the multiples go down to buy e-commerce shops, D2C brands, right? So Great opportunity for buying and go fix them up and grow them and scale them. Another great opportunity right now is free. So I look at the whole software market as really backwards, okay? In which right now it doesn't matter if you're HubSpot or Canva, eventually someone can just create a me too company and just undercut you on pricing. And what I've learned is if you can create a software company that already has a brand that has a free product and you just make it really good for free and you just keep adding more and more to it. A great example of this is Photopea. So there's this company called Photopea. It's a—

We love it.

Photoshop. And it's like they make very little to no money. So I hit up one of my buddies who is great at outreaching and I told him I want Photopea. I offered him $10 million. He said no. Offered him $20 million. He said no. I can take Photopea, make it a really good Canva competitor, undercut them on pricing, whatever be worth, 10, 20, 40 billion, whatever they are? No, but I probably can cash flow that thing to like 4 or 5 million a month in EBITDA, right? It's like, who cares what it sells for, what it's worth?

You're saying make it free and you're saying it cash flows like a motherfucker. So what, how do you take a free product and cash flow like a motherfucker? How would you explain that?

Well, he said, he said a Canva, a Canva knockoff.

Canva knockoff. So you make, you make almost 99% of it for free. You charge for 1%, but that 1% is enough where you can drive in the revenue. So you don't ever make as much as like a Canva or like a Mailchimp or a HubSpot, but hey, if you can make millions a month in profit, it's still good.

What's your math there? So when, what's the calculus when you were thinking, so like let's say Photopea according to SimilarWeb has 10 million uniques a month or something. What was your math? Is that right?

Yeah, it is right.

Uh, we researched it.

Yeah.

So like what was your calculus to get to, uh, 4 million in EBITDA a month? Like what would, how many people would you need to run it and what was the, What's the calculus there?

Sure. So I can probably get the thing from 10 million visitors. I can, so let's say I bought it for 20, right? He wouldn't sell it to me for 20. I've never outreached him, but I had a buddy outreach to him for me who just does all my outreach. So let's say I bought it for 20, I would put another 10 into it. So now I'm out $30 million. I'm really good at growing traffic and I know I can grow the thing to roughly 40 million uniques a month. I just have a, I don't know how, but for some weird reason I know traffic really well and how to calculate what I can get it to and all this kind of stuff, right? And I've done enough research of competitors of what features drive X amount of traffic, just looking at so many competitors in the space. So let's say if I get it to 40, um, what is it called? 40 million.

And what, what, what are the one or two things that you'd get it to 40 million?

Like SEO basically.

So, uh, more SEO, more virality, uh, increasing the quality of the templates. Increasing features, adding AI in there, like click a button, we can automatically detect backgrounds, remove it, filters for social media, because a lot of people use them for social media.

Logo generator, website as a lead gen, shit like that.

Right, so then, so let's say you got it to 40 million, right? At 40 million, I can easily monetize, let's call it like 1% of the traffic, or let's be even more conservative, like a half a percent. 200,000 people. If I have 200,000 people hypothetically paying $3 a month, okay, that's $600,000. The reason I give you on average $3, in certain countries you may want to charge different pricing like India and stuff like that so it's more affordable. So $3 a month, and at $3 a month, if a customer stays for 10 months, that's $6 million. You can probably run the thing with less than a million, million and a half in burn each month.

So then you think, oh, so then for a million and a half burn, you would need—

you burn those up once you have tons of revenue, right? When you don't have tons of revenue, your burn is much lower on a monthly basis.

Yeah. But so then how many people then, if it's— you're looking at 30 people you would need to run that operation?

I, I don't even think 30, but let's say 30 total. So I think I can actually run the thing for under a million dollars a month.

Right. So I'm just trying to do the math in my head, but I mean, the revenue was like under a million too.

There. It was like $600,000 or something, right?

$600,000 a month. But if a customer stays for 10 months, you're looking at $6 million.

Because you charge up front?

No, no, no, no. Okay. If they're paying $3 a month, if you have 4— 40 million, not 4 million, but 40 million, you're converting a half a percent. That's 200,000 paying customers a month. If they pay you $3 a month, that's $600,000. They last for 10 months. That's $6 million a month in MRR. Over a year, you're making $72 million in revenue.

That's crazy. You're a very interesting person. I think I dig you because you've got your hands in so many different things.

I honestly don't. At this point, I don't run anything. I come up with ideas. I have really good operators who are great at the execution. I'm like, go do this. It'll make money. Here's a playbook. Go and just do it.

So how many businesses do you own?

I don't know.

I don't really count.

I look at over or under 10.

Over.

Over or under 20?

I don't know. 20 is probably getting close, so probably under if I had to guess.

And how many of those 20— how many of those 20 companies have more than 5 employees, full-time employees?

I don't know. I don't really count employee headcount. I only know my ad agency headcount because they do reports and I get in my board meeting decks. I go like, oh, we got 700 people.

And you own own 100% of most of these companies, it seems like. You're not raising external capital. You might— do you give your CEO—

I don't own 100% of really anything. Um, I always give equity to, uh, profit share. I usually have a partner who runs things will get equity, and then I'll do profit share.

What's the, uh, ideal setup for profit sharing and equity for your partner?

Uh, partner, give them maybe 10% of the business. They run it plus a really nice salary. When I mean nice salary, industry or more than industry. And then you have a pool for employees, like another 10% pool. So then you lose in total 20%. I'm left with 80% myself. I put up all the money. If it does well, great. If it doesn't, I lose the money. No one else is on the line. If it does well, no one has to pay me back the money. Everyone just takes their distributions the moment it turns profitable from a monthly standpoint. Does that make sense? They don't actually have to pay back any of the other stuff.

And then do you also— do you give them 10% of the distribution or do you make that even heavier? For them?

Well, if I'm losing 20% in total, which is my deal structure, then 20% of the profits gets distributed on a monthly basis.

That's crazy. I love hearing about this. What do you think, Sean?

Yeah, I think it's dope. I, um, I had just seen you kind of from afar for a while that I got, I know Ethan, you know, loosely like we're friends, but, uh, so, you know, I didn't know a lot of the story. I know I knew Sam, Sam has talked about you before on the pod. I think it's, or maybe off the pod, I'm not sure, but Sam had told me some cool stuff. Um, but I didn't know a lot of this. So for me, this was dope because I got to learn a bunch of new things. Uh, sometimes when we have a guest, it's like, dude, I've already listened to 10 of your things. I've been following you for 5 years, you know? So it's like, I already know a lot of it and I'm doing sort of like translation work for the audience of like, tell them about this. Hey, tell them about that thing you did. Uh, versus in this, like I genuinely wanted to know a bunch of this stuff and I thought, you know, uh, This is interesting to me. Yeah, you're, you're great.

There's two people that I've wanted to talk to, Sean, who are like Neil. So, I mean, there's Neil. So I wanted Neil. I, I like finding these people that like are doing really well and a lot of people know about, but there's also this whole other world of people who have no idea who they are. Neil, you're one of those folks. I've been, I'm an OG reader, so I've known you forever. The other one is Syed. So Syed, we've talked about Syed a bunch on here. Him and Neil, I think, are very similar, which is very generous, but also like pretty cutthroat when it comes to business and has their hands in just dozens of different things and they're just quietly crushing it and not even talking about it.

And he's a very generous person too. I know he has a school, I think in the same city I have a school in or a different city. I don't know. He actually went to go see his school, but, uh, really generous guy. Uh, him and I have built schools in third world countries and stuff like that.

Yeah. It's just like you, you two. You guys are— I don't know if you're like this, Neil, but I know it seems like he's like this where he like has this, uh, you know, software business that's making, who knows, tens of many tens of millions, uh, in revenue and probably that much in profit. But any, like, buys a gas station or like, he like bought it. Just, it's just like, dude, are you kidding me? Like, you're a, you're like a tech tycoon and you also own like 30 gas stations. It's just kind of funny.

Here's the thing. Some of those businesses sell for like 3x EBITDA. You get 33% returns on your money. If you have good operators and you can put technology in place and marketing and you can grow to maybe 50 times IRR, that's great. It's just the question of can you scale it up and can you do ones that are large enough?

I know.

I'm just saying it's cool that you know this stuff. That's what you're eclectic.

Yeah. Him and I actually, I shouldn't speak for him, but I'm a little off. Right. But the madness or the methodology I think is great for cash flow. It's terrible if you want to be like, oh, I'm going to create the next Airbnb and take this thing public and be like, like on the Forbes list. Like, it's not what I do.

Is that— are you motivated to become a billionaire? What's your motivation factor? What are you motivated by?

Well, I won't ever be a billion— I'm not saying I have the opportunity to, but even if I did, I would never be there because we donate our money. And when I mean donate, like, not wait till you're dead to donate, like, actually donate on an annual basis.

How do you figure out— how do you figure out how much you want to give? Because there's always like— like, when I think about it, I think like, well, I could also invest this money. It's going to grow. I'm going to give more later, but then I'm not helping somebody now. And so what's the right number? What's the right percentage basically for me to be giving on an annual basis? How do you figure that out for yourself?

Whatever my wife wants to give.

What percentage does that come out to?

Uh, we don't have a percentage. Keep in mind, businesses are so large. I can get loans for anything on almost any type of business. I can't go buy a business for a million dollars or a billion dollars. But if I wanted to buy a business for $100 million, I can go get a loan on that, like literally for most of it. So at scale, I don't have to worry anymore about do I need more of it to invest? It's just we find the right causes and is it going to make a big enough impact? That's more, that's more about how we look about donations. We don't really look at it from the aspect of am I donating X dollars or too high of a percentage? We look at it as do we actually think it's going to make a big impact in the next year or short run or 2 years. We don't want to wait like 10, 20 years to see an impact. We also don't want to put money towards like things like cancer research. I think cancer is really important. I know a lot of people who have died from cancer, but I don't have enough money to make a dent into cancer versus, you know, solving some of the basic things out there. Like I can make an impact on things like education in a region. I can't make an impact on cancer. I just don't have enough cash for that.

Where, uh, what is your school? You said I have a school. It sounds tight. I want a school.

Uh, I never seen it. We have a school. I think it's in Cambodia and we've done a few others, but I don't really keep track. My wife does. And you know, the bigger thing is it's not my school. It's more so the kids' school and are they learning and getting value from it?

And that's why, uh, I remembered the first school that I bought and forgot about.

I was going to say, um, when I buy my school, it's for sure going to be my school. They might attend. My school in Cambodia. Yeah, yeah, I'm like that guy.

I bought a couple— I found a couple schools in this couch cushion back here. It just— I just forgot about it.

I just—

it's a little scene I played in a while ago.

I remember when I was on college campus, I saw like, you know, whoever the Rothschilds or like the Rockefellers, uh, nameplate or whatever on the like, uh, the library at Duke campus. And I was like, who would do this? Why? What's the point of this? You know, like, so it's already nice.

Not that kind of schools. I don't have that kind of money.

Mine's like little kids.

I didn't understand the appeal until you said You basically described a school you have and forgot and have never visited. And I was like, ah, that sounds like something I want. I don't want my nameplate on, you know, the Villanova, like 10th library on campus. But like, just to know that there's, you know, 12 kids in Vietnam attending my school. They're wondering, why does this name have so many A's in it? You know, who is this? Who is this benefactor? Silent benefactor who has forgotten where our school, where his school is. That sounds like the perfect blend of giving and egomania that I live for. So that's perfect.

Neil, we, uh, we usually, so we don't have guests on often. And when we do, we typically never just ask them questions like this. We like, it's more of a conversation where we're brainstorming stuff. We asked you tons of questions cuz you're just a very fascinating person. I hope you'll come on soon and you can actually brainstorm, uh, like the another Ubersuggest or something like that. You know, like actually go through some of this. I, I, I hope you'll come back again. 'Cause this is awesome.

Yeah, it was so funny. I was doing the interview. I'm like, oh crap, I should have never told people how much I spend a month. Should have never told people I donate money. And I was just like, it, it goes against a lot of what my wife and I do. We're more of don't tell anyone anything, live our lives and do whatever makes us happy.

No, you only told it because it's not like you're bragging. We like kind of begged you to tell the, like, we were kind of got under, we were like, yeah, tell us, go, go tell us. It's not like you're like bragging. I don't think that's bragging.

It's not even bragging. It just feels weird to talk about expenses. Right. Cause there's so many people who struggle for like clean water or shoes. Right. It's just like, eh, yeah.

So yeah, but this is interesting.

Those people, uh, if they ever listen to this podcast, they've already been filtered out by our douchiness in other, uh, episodes. So don't worry. Those, anybody who's sensitive to that, it's probably gone by now. But also there's, there's actually a lot of good, like I actually pretty passionately believe this. Like not only am I curious from like a Ooh, I want to know, I want to learn. Uh, but like, I've actually pretty strongly believed that the way that people are like, treat money as a pretty taboo thing, um, actually is like a net, like a huge net negative on most people. So like, you know, people don't know what other people make. Therefore they don't know what, like, they don't know when they're underpaid. They don't know what's possible. They don't ever, like, sometimes the most valuable conversations I have with somebody is just somebody for whom they do something like something's very normal to them. And it would be abnormal to me, but it has now expanded my worldview of what's possible and what could be normal for me. Like, oh, maybe it could be normal to actually like give more, donate more, have a school. Actually, that sounds like something I actually gonna go talk to my wife about today is like something we should go do that. Like, it's not because you weren't bragging about it. You highlight, you just kind of were honest about how you live your life, which is no, there's nothing wrong with that. This, that's great. I, in my opinion, and it expands other people's worldview for something that maybe they want to go do or something that they haven't considered. And like, it's really weird to me that we keep this stuff under wraps. And if somebody is just honest about like the way they live their life, it's sort of like there's like all these like negative taboo around it and like, fuck that. I don't like that at all. And, um, it's been like when Sam first met me, I think this, I think I've told the story before, but like the second day I met him and then like the next day he messaged me on Facebook Messenger, was like, so like, well, how much do you make? And he was like, no, like, what do you pay yourself? He's like, so then what do you? And then I like, I was like, whoa, that's like super forward. And he's like, but he told me why. He was like, because I'm trying to figure out how much to pay myself as an entrepreneur. I have no fucking clue. And like, my investors think I should make this much, but I don't know. Is that normal? And like, I can kind of ask you and dance around it, or like, I'm just asking like 5 friends what they make in the same role as I am. It's like startup CEO. And like, that'll help me figure out what's normal. What's the range of like possibilities here? And then after that, he was like, so what do you do with the money? Like, what do you invest? He's like, wow, that's a lot. You know, are you investing that? And I was like, yeah. And he's like, what are you investing in? And I started telling him and he's like, cool, I'm investing in this. And now I got new ideas about what I could be investing. And I, it really became very obvious to me in that moment. I was like, oh shit, you're at a massive advantage if you have a few people you trust that you can talk openly about this sort of thing with. And the podcast was basically taking that and doing it at scale. I was like, all right, well what if me and Sam are pretty honest about like the shit we do and like what if we could get guests to be honest about the shit they do? Then like that's actually a pretty valuable resource for people who don't have 5, they don't happen to have that lucky group of 5 friends who are all motivated entrepreneurs who are also open and honest about what they do. It's like, well, not everybody's located in a place where they have 5 people geographically around them that they can trust to talk about that stuff. And so the pod kind of like serves as that. So that's my, uh, justification for why you shouldn't feel bad about, about sharing that information.

Do you, did it work, Neil? Do, do you not feel bad?

But if you want, we'll bleep it out or whatever. If, if you feel like that too.

Uh, okay. It is what it is. I still feel bad, but it is what it is. So mission accomplished.

I thought it was.

Yes.

I thought it was a great speech, Sean. I felt good about that. Thank you, Neil.

It was a great speech, but I still feel bad because I look at money as like a tool to help other people. And I'm not saying that's right or wrong. That's how I just do. But I also know I spend more than I should. And I probably should cut back and live a more humble life and spend a lot less.

Yeah, dude, I'm inspired by how you spend and how you live. And it's, you know, you've done some good in the world by inspiring me.