David Packouz: WAR DOGS | The Tyler Wagner Show #1105

All right, everyone, welcome back to another episode. Today we have David Pakowicz with us. So welcome to the show, man.

Thank you. I appreciate it. Of course.

Grateful to have you here. So, yeah, if you can just start us off a little bit more about you and what you got going on.

Well, I think most people know me. I guess my claim to fame is that— is that there was a movie made about a certain part of my life called War Dogs. When I was in my early 20s, I had gotten into dealing weapons and ammunition to the US government primarily. So they called us the stoner arms dealers in the media because we were so young and, you know, we won a massive $300 million contract, one of the biggest small arms contracts ever awarded by the US government to arm the entire country of Afghanistan, of the army and police force of Afghanistan. And The shenanigans that occurred with that is what made it into the movie. Currently, I am working. I have taken a little detour in my career and am currently the CEO of Singular Sound, which is a music tech company. We produce products for musicians like a hands-free drum machine, the world's most advanced loop pedal, and things of that nature. And I am also a partner with my brother on another venture that we just launched called InstaFlow. Floss, which is a new device that we designed together that can floss all of your teeth for you in 10 seconds. So yeah, you can check it out at instafloss.com, like Instagram but flossing.

Oh wow, that's so cool. Okay, I want to talk about everything. That's all.

Yeah.

Um, it seems— so being entrepreneurial, it seems— is that always kind of been in your blood? Like, because it just seems like your first go at it was just maybe a little bit outside of the law, but then, you know, it's always been entrepreneurial. I guess is the question. Is that?

Yeah. Well, my first, my first entrepreneurial venture was actually when I was 6 years old.

Oh, okay. Cool.

Yeah. Yeah. So it was, I was living in Israel at the time. And my, we were living in an old apartment building that didn't have a garbage chute and it didn't have an elevator either. So anytime you wanted to take the trash out, you'd need to take the trash out, you know, down the stairs to the dumpster on the corner. And my mom, asked me and my older sister, who's like a year and a half older than me, she was about 7 and change, uh, to take the trash out. And we were complaining because we were playing with Legos and we didn't want to take the trash out, and, and she was getting annoyed with us. And then my dad walks by and he's like, oh, you guys are looking at this all wrong, you know. You think this is a chore, but really this is an opportunity because all of our neighbors, they don't like taking the trash out either. So you can start a service where you can go to them and charge them some money, and, you know, they don't have to take the out every day. So maybe every other day you take their trash out, and you can charge them, I don't know, maybe like a quarter a week or something for taking the trash out 3 times a week. And we thought, well, that's a great idea. And he's like, yeah, yeah, you should go talk to the neighbors, but first practice and go take your mother's trash out. I love it. And so we went to all the neighbors, and we, uh, we told— we offered our service, and we got 8 neighbors to sign up to our service. And, um, at the end of the week, uh, we were small, so we had— we put all the trash in this like metal cart that was on wheels that our mother had, and we take it down the stairs, you know, going down the stairs to the dumpster. And then we together have to haul it over the dumpster. And at the end of the week, we complained to our dad. We're like, you know, this is, this is way too much work. You know, it's not really worth a quarter a week. And he said, well, what if you were making twice as much money? Would you do it then? And we were like, well, maybe for 50 cents a week, that's worth it. And he's like, well, then just "Tell the neighbors that you're raising the price." And we said, "Well, we can't do that. We just literally a week ago, we said it was a quarter a week." And he said, "Well, if you don't raise the price, you're going to quit anyway. So why don't you— so either they are willing to pay it or you're not going to do it. So you might as well make them the offer and see if they take it." And so we went to all the neighbors and we're like, "We're raising the price to $0.50 a week." And most of them just said, "Yeah, no problem. $0.50, good deal." One neighbor quit. And from then on, we saw their own daughter take out the trash, which we'd never seen before. I guess they realized, why are we paying the neighbor's kids for this when we have a perfectly healthy kid of our own? And another neighbor complained. He, in classic Israeli fashion, he's like, why you raise the price? You can't just double the price.

This is crazy.

This week maybe you put it up 5 cents, next week maybe 10 cents, double. This is crazy. And we're like, well, we stuck to our guns and we're like, well, that's the new price. And he's like, okay, fine, fine, fine, fine. And he paid us the price. And then after a few weeks, my sister just decided she didn't want to do it. And I realized, hey, I'm making double again. And so I kept on doing it for a few months and built up quite a few quarters. It was shekels in Israel in a little Ziploc bag. And every day the ice cream truck would come by singing its little ice cream song. And I would think to myself, you know, I've got money. I could buy myself an ice cream. And because my parents would never buy me ice cream, you know, unless it was like a special occasion. And And so I'd go into my, into my Ziploc bag with all my shekels and take out a few coins and go buy myself an ice cream. And after like a couple of months, I had an aunt visit me from the United States and she looked at me and she's like, huh, you're gaining a little bit of weight. I was eating way too much ice cream. And so that business ended up ending because I turned 7 years old and my dad got me like a little Styrofoam airplane for my birthday where you would wind up the propeller. It was powered by a rubber band, and then you could throw it and the propeller would spin and it would fly. And my older brother wanted to play with it. He's 3 years older than me, so he was 10. And I told him, you could play with it, but if you break it, you're going to owe me a new one. And he's like, I promise, if I break it, I'll owe you a new one. And of course, on the first throw, he— it breaks. It was a Styrofoam piece of garbage, you know, that's— and of course, he had no way to— he didn't have any money. So my dad said, well, why don't you take over his job? And you could earn the money that way. And it took him like a good month and a half to earn the money back to pay me for a new airplane. And at that point, I was just used to— I don't even think I ended up buying a new airplane. I just ended up buying ice cream instead. And at that point, I was just used to not working and getting the money. And so, I just didn't want to continue the job. And I had already had a bunch saved up. So, I figured in my 6-year-old, 7 at that time, year-old mind, I realized, you know, hey, this ice cream money is going to last me a while. I I didn't really feel like doing the work, so I never went back to it. And that's— so that was— so that's the story of my first entrepreneurial venture.

I love that. It's so— it's so interesting to me too, where it's like, as you get older and you make more money and stuff, it's not necessarily the most money where you feel the richest. Like, you have felt the richest at 6, 7 years old, just because comparison— you, you went from exactly maybe 5 ice creams a year to 5 a day or something.

Exactly, 5 a week. But yes, yeah, 5 a week. Yeah.

And it's like that you had no worries in the world. You could get everything you wanted, the ice cream.

Exactly.

It's just funny.

It's not always more money that makes it feel the richest, but it's all relative.

All relative. Yeah. Got it. And then between, I guess let's go and I guess just not logical, but what do you call it?

Sorry, it's later chronological.

Yeah, that is the one I'm talking about. So before the movie stuff, because I like, I think I told you before the recording, I've seen the movie like 5 times. One of my favorite movies. But before you got involved in that, were there any other entrepreneurial adventures or adventures?

Yeah. So when I was— I mean, there— this is a relatively short podcast, so I won't go into all of them. But before I got into the arms business, which the movie was made about, I was, I was, let's see, I was about 20. So when I got into that business, I was about 22. I was in college studying chemistry. And I had a friend of mine told, had gotten into business supplying nursing homes. And actually, before, let me back up before that, the way I got into that. At the time, digital cameras were becoming a real big thing, and so I bought myself a digital camera, and I realized that the SD card, if you wanted to have a high-quality, high-memory-level SD card, was almost as expensive as the camera itself. And so I was looking for a better deal on SD cards, and eventually I found a better deal, but only if you bought like 50 of them. So I realized, hey, the deal's pretty good, on eBay, they're selling for more than I'm paying. So I could just buy the 50, keep one for myself, and sell the rest on eBay. And they sold very quickly, and they were very easy to deal with because they're tiny. You could just mail it, you know, in an envelope. And so I started selling SD cards online, expanding that into different types of memory chips and things like that, started doing pretty well. And then I talked to a friend of mine, and he, yeah, I told him about the business I was doing, and he's like, oh, you, you know, you have some experience in searching for sources internationally and importing. I'm actually dealing with bedsheets and linens, selling it to nursing homes in the United States, and I buy from distributors who are importing it. If you could get a better deal, I'll buy my bedsheets and linens from you. And so I said, okay, and I looked online for manufacturers, eventually found some good quality manufacturers with good, with low prices out of Pakistan, of all places, and started importing bedsheets and towels and various other stuff for nursing homes like patient gowns and things like that. I started selling it to him and started selling it to other things that made it into the movie.

[Speaker:AC] I was gonna say—

[Speaker:CB] Yeah, yeah, yeah. So in the movie, they show me as going door-to-door in these assisted living facilities where I'm trying to sell it to each individual owner. That's not how it was really, I was just doing brokering. I never even took possession of the goods really, I would just do it in bulk and ship it to a warehouse. And I wouldn't even buy it before I already had a buyer lined up on my end. So I was just— so I never got stuck with a whole bunch of bedsheets like they show in the movie. But the movie wanted to make me look a lot more down on my luck in the beginning so that the dramatic arc of the success from the arms deal would be more dramatic. You know, that's why they make it look like my life has completely fallen apart in the beginning. And then I, you know, get into this whole thing. Living the high life until it all comes crashing down. Makes a good Hollywood story. In reality, I wasn't doing so badly. I wasn't doing great or anything like that. But you know, I was doing okay. And, and while I was doing that is when I bumped into my former friend, Ephraim Divaroli, who is played by Jonah Hill in the film. And he asked me, oh, what are you doing these days? And I told him about my businesses. And he was like, hey, you know, that's actually a lot of similarities to what I do. I look for suppliers internationally, and I arrange logistics and work on the, uh, the licensing and the financing and etc., etc., etc. And, you know, I— but I bet I'm making way more money than you, so why don't you come and work with me? I could use a good partner who I can trust and is smart and works hard. And, uh, I've been looking, you know, for a partner, and, uh, I think we can make a lot more money together than than either of us could make on our own. And so I told him, well, how much money have you made? And he goes to me, he's like, okay, I'm gonna tell you, but only to inspire you, okay? I'm not bragging, right? And he was 4 years younger than me. So he was 18 years old at the time.

Oh, wow.

Yeah, yeah. In the movie, they say we're the same age. He's actually 4 years younger than me. I was 22, he was 18. And so he logs into his laptop and he goes into his Bank of America account and he shows me and he has $1.8 million in his bank account. And I know his family, I grew up with him, and I knew that his parents didn't give him that money, so he definitely had earned it. And he'd only been working on his own independently for about a year. He had learned the business from his uncle in LA when he was 16. He got kicked out of high school for smoking weed, and they sent him to his uncle to work for his uncle to teach him a lesson about, you know, taking life seriously. And he got obsessed with guns and learned how to bid on government contracts from his uncle. And then they had a falling out. He moved back to Miami when he was like 17 and change and worked on his own for about a year until like we bumped into each other. And that's, and I was like, that blew me away. I'm like an 18-year-old kid who has $1.8 million in the bank, has only been working at this for a year. That, I mean, I wasn't doing so badly, but that was way, way, way better than I had more money than I was making. And so I was like, okay, I'm in, you know, teach me what you know. And that's how we started working together.

Got it. Okay. So let me, yeah, let's go through this. And obviously, I bet every podcaster is curious, right? So just be curious of the differences in the movie and what happened in reality. But I guess because I do want to make sure that I want to talk about what you got going on now. But so in this whole situation, I guess there's a few questions. One is like, So you start working with him and then you start making some good money. And I just rewatched the trailer actually before we hopped on this. What was that one big deal where you're at the table and then they ask you or they tell you that you are $50 million below the— So basically you guys won the deal because you were so much lower. But the reason Jonah Hill was pissed is because you basically could have made an extra like $48 million or something like that.

Yes, exactly. Exactly. Yeah, that was the Afghan deal that It was in total, it was worth $300 million, and we were about $50 million lower than the next competitor. And so we could have made an extra, you know, almost $50 million and still won the contract. Of course, we didn't know that because the way the government works is they ask you for your best price and they don't tell you what everyone else is bidding. And then whoever has the lowest price combined with some other factors like who they think could actually realistically deliver and how trust worthy they are, their past performance, they call it. Then they award that to whoever they feel overall provides the best value to the government. And then you deliver and they pay you, and hopefully you worked in a profit margin for yourself so you actually make some money.

Got it. And what, like, in the beginning, was everything legal? Like, what about it became illegal?

Right, right. So as they say, it was completely legal until it wasn't, right? Um, so what, uh, it was completely legal. What happened was when, um, so this, this contract, the $300 million contract, uh, was with the United States Army. With the U.S. Army was the agency that was paying us, but they were providing the ammo to the Afghan National Army, who were, who were our our allies at the time. They were fighting the Taliban alongside us in Afghanistan. And, um, and so, uh, uh, in our contract with the U.S. Army, it said no Chinese ammunition could be delivered under this contract. Uh, and the reason it said that was because there's, there's an arms embargo placed against China, uh, that was placed against China in 1989 after the Tiananmen Square massacre where famously thousands of Chinese university students were protesting for democracy and for human rights, and the Chinese military came in and more or less killed them all. And yeah, there's a very famous picture called Tank Man where a line of tanks and there's a single Chinese man standing in front of them that came out of that. And so because of that, that became worldwide news, a huge scandal. The United States put China on a a military, you know, you cannot transact with them list. So there was an embargo against them.

So, but that wasn't your fault, was it?

No, no. So no, I mean, Bradley Cooper, right?

No, it was that ammunition, right?

So what happened was we made a deal with, with an arms broker named Henry Tomei, who is in the movie, is played by Bradley Cooper. And he arranged this deal for us to get a bunch of ammo for the AK-47 out of Albania. And Albania, for those who don't know, is a tiny little country near Greece. And they had gotten— so we didn't know anything about the history of Albania at the time, but when we went over there to inspect the ammo, we found that all the ammo had Chinese markings on the boxes because they had originally gotten that ammunition from China in the '70s when they— there's an interesting history there, but they used to be allies, Albania and China. Uh, now we didn't know that until we went over there to inspect the ammo. Um, and at that point, by the time we went to inspect the ammo, it had already been like a few months into the contract. We had already arranged all the licensing, the export permit, the import permit, the flyover permits where you— because we were flying everything into Afghanistan. Whenever you fly anything over any military equipment over another country, you have to get every country you fly flyover permission from them to fly that stuff over. And it's very— it was very difficult to get because some of those countries were not friendly to the United States. So it took us a few months. Um, so, uh, we had already arranged everything, and then we were like, you know what, we're going to do a last-minute inspection here just to make sure everything's good. And that's when we discovered that the, the stuff was all Chinese. And the, the Army was pressuring us, deliver, deliver, deliver as quickly as you can, because it was turning into springtime, which is fighting season in Afghanistan. They can't fight during the winter because the mountains are very high and the snow is very deep, and so you can't really go through the trails to go and fight your enemy. So they have a fighting season, which is the spring and summertime. And the snows were melting and fighting was starting, and our Afghan allies were running out of ammo. And so the Army was yelling at us, "Hurry up with the deliveries," And if we had, we're going to change sources, it would have taken us another few months. So at that point we realized, well, we have two choices. We could either go to the Army and say, hey guys, you know, we, uh, we kind of messed up. We know that our contract says no Chinese ammo, but you know, this ammo, but we know that you meant to put that in there because of the arms embargo against China. But this ammo was given to Albania in the '70s before there was an arms embargo. So it technically doesn't violate the arms embargo, but because you guys didn't mention this issue in the arms embargo in the contract, it just says no Chinese ammo, period. So therefore this ammo violates the terms of our contract. So can you give us a, you know, a signed waiver that allows us to deliver this ammo? It doesn't violate the embargo. No harm, no foul, right? So they could have said, yeah, sure, no problem. We really need the ammo as quickly as possible. Here's a waiver. Go ahead. Here's an amendment. Into the contract. Or they could have— and this is what we were afraid of— said something along the lines of, yeah, it doesn't violate the embargo, you're right, but all your competitors had to bid on this contract on the condition that there was no Chinese ammo, period. And so it's not fair to your competitors to change the contract now. So we're gonna have to take this $300 million contract away from you and put it out for open bid again. And so you guys could bid it again. Good luck. And we did not want that. And so we're like, you know, should we tell them? Should we risk losing the contract, maybe we shouldn't tell them. And that's where— that was the big mistake that we made, is that we decided not to— not only not tell them, but to hire someone to cover it up. So we hired someone to repackage the ammunition into these cardboard boxes so we could remove all the Chinese markings from the boxes and, um, and disguise that it was originally Chinese. And we were delivering that stuff and everything was going great, and the Army was happy with the ammo, they were thrilled. And And Ephraim, of course, wanted to make more money on the deal as he always did. So he tried to get— he got rid of the guy who was doing the repackaging operation for us and got someone cheaper instead. And the guy he got rid of ended up stuck with about $20,000 worth of cardboard boxes that he could do nothing with. And he asked to be paid for that. And Ephraim never paid him because he just didn't want to. And so that guy got really pissed. And he told the New York Times about what we were doing, and he told the FBI about what we were doing, and his— and they started investigations. And, uh, his big mistake was that he told the Albanian press, the local Albanian press, about, you know, the deal. And he also told them that the local politicians were getting kickbacks from the deal, which could have been true and probably was true, but it wasn't coming from us because that would have been illegal for us to do. We were— our contract was with the Swiss arms broker, Henry, Bradley Cooper, right? And we assume he was paying kickbacks, but he obviously didn't tell us about it. But because he said that, we assume a few weeks later he ended up dead. He got into a very mysterious car crash in the middle of nowhere with no other cars on the road, and he was thrown from his car like 30 feet, and they found him dead next to his car. So So we assumed that the local power brokers weren't happy about him talking to the press and took him out. But because of that, so at that time, everything was kind of going smoothly for the contract, and Ephraim decided that he didn't really want to pay me any money because he felt I didn't deserve it. And so I told him, well, I'll see you in court, motherfucker. Fuck you. I quit and I was getting ready to sue him. And then like a month-and-a-half or so after I quit, I heard that federal agents raided his office and took all his documents. And eventually I found the federal agents told me later on after I had pled guilty to my part in it, they told me they found a to-do list on Ephraim's desk and one of the items in the to-do list in his handwriting was 'repackage Chinese ammo'. So, so yeah, so they had a lot of evidence that about the, about the scheme to repackage the ammo. Uh, not only did they find his handwritten note, but they also found emails between us and between the people doing the repackaging. Note to any, uh, any, uh, people considering committing crimes: don't put it in an email. Emails, emails and text messages live forever, and that's how they always get you in court. So But at the time, we were super stressed out. We were working 18-hour days, very low on sleep, and a lot of different time zones. And so instead of waiting a few hours on very low sleep for someone to wake up and tell them to do something, we're like, I'm just going to write this in an email. And that's how that incriminating stuff ended up in the emails that was our downfall. So I pled guilty because there was email evidence of my involvement. There was no— and anyway, even if I didn't, even if I wanted to plead innocent, I didn't. I was completely broke because Ephraim, you know, didn't pay me a penny, and you need a few hundred thousand dollars to fight the feds in court with a decent lawyer. So it wasn't really an option. So I pled guilty. Ephraim fought them for about 2 years but ended up pleading guilty too. Um, I ended up getting sentenced to 7 months of house arrest, which, you know, extremely lucky, very fortunate. I avoided jail time completely. Uh, he probably could have gotten something similar. But he committed a second crime before he was sentenced for the first one, so he invalidated his plea agreement. And so he got caught up in a— what happened was, after he pled guilty, they said, you know, the way it works is you sign a plea agreement with the prosecutors saying that you admit your wrongdoing, and the prosecutors say, well, for admitting your wrongdoing and saving us the time and money and effort of taking you to court, we're going to recommend to the judge that the judge gives you minimum. And however, you know, you can't commit any further crimes, uh, before the judge sentences you, because how are we going to tell the judge that, you know, you, you regret your wrongdoing and you're going to be a good citizen from now on if you commit a second crime? So they told Ephraim, stay out of the, uh, just stay out of the arms business. And you had— he had to stay in Miami because he was out on bond, right? Um, and of course he didn't stay out of the arms business. He kept on doing it through like a friend of his, an intermediary, and And through his friends, he got caught up in a sting operation by the ATF where they— an undercover ATF agent said, yeah, we could do this deal, but you have to come meet me in Orlando, which he was not allowed to travel to, you know, because he had to stay in Miami. And so he travels to Orlando. The ATF, the undercover ATF agent says, hey, you know, I just bought this, the latest HK handgun. You know, this thing's so cool. Look at this. Because he knew Ephraim was a gun nut. And Ephraim picks up the gun and he's like, oh, I'd heard about this thing. I wanted to shoot it. Let's go to the range and pop off a few rounds. What can I say? Once a gunrunner, always a gunrunner. Am I right? And then the undercover agent slaps the cuffs on him and says, you're under arrest. You're a felon in possession of a firearm. Yeah, because he had already pled guilty to the, to the fraud charge. So he was already technically a felon. And, and if you are, if you're in possession of a firearm as a felon, you can get up up to 10 years in prison. So, and he could have gotten 5 years for the, for the fraud charge where, you know, for the, uh, changing the Chinese ammo. Um, so he could have, he could have gotten 15 years total. Um, but he hired the best lawyers in Miami, spent millions of dollars on them, negotiated it down to 4. He ended up getting out in like 3 and a half on good behavior, and now he's out and about in Miami. Um, and from what I've heard these days, he is in the business of funding lawsuits because he's been, uh, sued so many times, and he's sued other people so many times that he's very familiar with how lawsuits work. And so if someone wants to sue somebody and they don't have the money to sue them, he will go in there and fund the legal costs for suing them and probably take the vast majority of the money as well, is what I'm assuming, um, if not all of it, the way he works. So, so yeah, so that's, uh, so I haven't talked to him in years we ended up settling for the money he owed me for a tiny fraction of what he owed me just because I want to get him out of my life and move on with my life. But, you know, one good thing that came out of it is I, while I was under house arrest, I got the idea for my current business, Singular Sound, which so, yeah, so the way, the way that worked was while I was under house arrest and it wasn't so bad. I mean, house arrest, it wasn't like a, like a COVID lockdown. Where nobody could visit you and you're by yourself for months and months on end. I had an ankle tracking thing that you can't take off, but my friends could visit me, so it wasn't so bad. I've been playing guitar since I was 15, and so I'd have my musician friends visit me and we'd jam. But of course, no drummer was gonna bring his entire drum set over, so I really missed playing with a drummer. And so I bought a drum machine, which is an electronic tabletop device that you could make— it has a bunch of buttons on it. You can make beats on it by pressing the different buttons and then it plays the beat in a loop. But the problem with the drum machine, you know, so I was using that to play along to, but every time I wanted to change the beat, like to go from verse to chorus or throw in a drum fill or something, I had to stop playing my guitar, press a button on the machine, and and go back to playing my guitar, and it interrupted the flow of the music. It was very annoying. So I realized I need a drum machine that's hands-free, that's controllable like by your foot, so I don't have to interrupt my guitar playing. So I went online to look for like a drum machine inside a guitar pedal. That was the idea, and I couldn't find it. I asked my musician friends if they'd seen anything like it. They said no, but let me know if you find it because that sounds super cool. I want one too. And I realized nobody's making this. Everybody he wants it. So I created it. It's called the Beat Buddy. For people who are watching this on video, you see it's— there's a poster right there. It's called the Beat Buddy. Gizmodo called it a genius idea, right? They said it, not me. And yeah, and you can control a drum beat hands-free while you play your guitar. So if you tap the pedal, it does a drum fill. If you hold it down, it does a transition. When you let go, it goes to a different beat. You could put your own beats in there, you could create beats on musical software and put it in there, you could create your own drum sets. So there's a huge amount of capabilities that you have with this. So it became a huge hit. I was completely broke at the time because I spent all my money on lawyers to keep me out of prison. I did a crowdfunding campaign for it. It did extremely well, raised $350,000 in a month, and that was enough to do the manufacturing and launch my company. And since then, I've come out with an additional 5 music-related products, all for musicians, and just recently launched our first non-music-related product, which is the Instafloss, the device that flosses all your teeth for you effortlessly in 10 seconds. And yeah, and you can check it out in instafloss.com. I highly recommend everyone check it out and you can buy, you can buy one now.

I'm gonna check it out for sure, dude. Because it's funny, I think both, you know, you're, you're just like a very good problem solver. I mean, and I guess entrepreneurs are at the end of the day, but no, dude, flossing is something nobody likes to floss.

Exactly. That's exactly Exactly it.

Yeah, I always have intentions of doing it and then I'm like, oh, I don't feel like doing it.

Yeah, it's a pain in the butt.

Yeah, I think I can handle that.

Yeah, exactly. That's— and that's how I came up with the idea. I was hanging out with my brother and we had just eaten some mango and gotten like the fibers stuck in our teeth and we were, you know, getting rid of it with dental floss and we were thinking, you know, we're— there you go, exactly. I love mango. And yeah, and we were thinking you know, we were saying, you know, like we're in the music business, but only like at most 10% of people are musicians and maybe 10% of those buy like professional quality gear of, you know, the high level stuff we make. So we have like an addressable market of maybe 1% of the population. I mean, we've done very well and I'm not complaining. We've won a whole bunch of awards. I've got to meet my musical idols, you know, like famous musicians that I grew up listening to their music and now they use my products. It's super cool. But, but, you know, we were, we were always thinking about products or service or something that anyone could use because the market is just so much bigger. And so while we're flossing our teeth, we're like, you know, flossing is such a pain in the butt. If we could make flossing easier, that everyone would want that. And so we started brainstorming of different ways of, you could, ways you could make flossing easier. Eventually we came up with the Instafloss design, which uses 12 water jets to floss the entire, all 4 quadrants of your teeth. And all you have to do is slide it across your teeth and it gives you a, a perfect floss every time.

Dude, that's so sick. Yeah. All right, a couple quick questions and I, I can be a few minutes late to my next thing. I wanna make sure, 'cause I don't wanna rush this. This is an awesome interview, man. So one question is, so for the Instafloss, I'm I'm just curious, so far, and maybe it's super new, I'm not sure, but what has been your marketing strategy for it? Or do you have like an outline strategy? Or because I think word of mouth will take over eventually, but what have you thought about doing marketing so far for it?

Right. So part of our marketing is for me to go on podcasts and talk about it. For sure. Exactly. Luckily, I've been blessed with this awesome story which gets me onto podcasts. So using that as like a, you know, a hook. But, but we also— my brother is also doing podcasts. He's my partner. He's the CEO of Instafloss. I'm this— I remain the CEO of Singular Sound, which is our music company. And so he's been doing podcasts, which is more focused on the business and the dental aspects of it. So he's been doing like dental-focused podcasts and business-focused podcasts. And but we have, we have an online marketing strategy where we're using all the usual stuff like influencers and, yeah, and online advertising. Currently, our focus is to sell it to direct to consumer for the first year because, well, obviously we make a lot more profit that way than selling to Walmart. And we also get the direct interaction with our customers. So if there's any issues with it, we could take care of it immediately. We don't have to get a whole bunch of returns from Walmart and like get no feedback from the customers. So we're doing direct to consumer so we can have immediate feedback as well as capture more of the profits. And then in about a year, we literally just delivered the first few hundred units to customers a few weeks ago. So yeah, so this has literally just happened. Very good response so far. We've had a few issues that we had to take care of, but we took care of them. As with any new product I've meant is gonna— this is my 8th product that I've manufactured at this point, and every single product has a few problems in the first production run. So there's, you know, nothing— no, no huge deal breakers there. But, um, so we're going to be selling direct to consumer for the first year through our website instafloss.com, uh, and then we will move to retailers and to dental offices. So that's, uh, that's our strategy.

Got it. Okay. After we stop recording, I want to share something with you then about this. I have an idea for you. Sure. So, oh, I had one more here. Maybe it'll come to me before I ask the next question is, what do you think— two-part question on the War Dog stuff, and then we can put away with— I guess we'll call him your old friend. What do you think it was like? Do you think it was just greed? Like, is that just what it came down to, just greed? Is—

you mean like, why did it fail?

Yeah, like, why? Like, because it was— it's like he was already making a good amount of money. Like, when people— I just never understand that stuff. So I guess it's just like our greed. Is that kind of what you—

yes, yes, I 100% attribute it to greed. And, uh, the truth is, is that I should have seen it coming, right? Because I saw how he acted with other people. I mean, just to give you the kind of mindset, he's He was a very special person, I guess, you know, to be nice about it. And, you know, there was advantages to his specialness as well as disadvantages. It was a big part of why he succeeded so early in life was because of the way he was, but also a big part of why he failed was also. So one thing that he was very good at was working very hard. He was an obsessive workaholic, worked 18-hour days on a regular basis, and so did I. When I was working with him. And he was also extremely good at negotiating. Like, he could really— I mean, I've seen him wipe the floors with, like, you know, 50-year-old executives from major corporations in negotiations, you know, just like wipe the floor with them. And he was like 18, 19 years old. He was just much better at negotiating with them. And, and, but he— and I think I think one of the reasons he was so motivated was because it wasn't really necessarily about the money, right? So I saw him once be on the phone with, I think it was AT&T, for like 45 minutes bitching and screaming because he felt like he was overcharged $5 on his bill. And I told him, I'm like, you know, after he finally got them to remove the $5 extra charge, I'm like, Ephraim, why are you spending all this time, you know, about this $5 charge. You know, you'll make more money just working on another contract. And he goes to me, he's like, nobody fucks me. Nobody. You know, he does— he fucks other people, but nobody fucks him. Again, you know, he's like, it's a matter of principle, you know. And so I was like, okay. And I'd also seen him like completely destroy someone, uh, someone's business to, in order to make like an extra 2% profit, you know, something that would've not moved the needle for him at all. He completely destroyed this guy's business. He did some like tricky business maneuver. It wasn't illegal, but it was definitely unethical. And he completely screwed this guy over and put him in a really bad situation. And, and Ephraim made just a tiny bit more money, like an extra 2% of what he was going to make. And I told him, like, why are you, like, you know, why are you doing this to this guy? And he's like, it's like, it's all money, man. It's all money. You know, one thing I actually heard is just really encapsulates Ephraim's personality is I ended up— so Ephraim, while he was in prison, had a— wrote a book, I should say. He had a book ghostwritten for him. And he— his book called Once a Gunrunner, right after the famous line he told the undercover ATF agent. Uh, his book, uh, was written by one of his fellow inmates named Matt Cox, who was in prison for real estate fraud. And Matt actually— when, of course, Matt got out of prison, uh, as well as Ephraim, and they published the book, and in true classic form, Ephraim screwed Matt out of all the money that he promised him for the book, right? And so Matt called me up, and, you know, he was getting ready to sue Ephraim, as everyone else does, right? And he called me up just to ask me for my advice dealing with him. And, uh, and so I talked to Matt for a bit, and he told me a story, you know, that like while he was writing this book for Ephraim in prison, uh, he, you know, and Ephraim was telling him all these stories about all these people he screwed over, you know, and all these, you know, yeah. And he said, you know, that Matt told him, he's like, Ephraim, you can't keep on burning all your bridges. And Ephraim looked at him and said, there's lots of bridges out there, man.

Oh my God, dude, it is like— yeah, it's like not funny, but it's a little funny.

No, I mean, it's, it's hilarious if it's not— if it's not you, if you're not the bridge he's burning. Yeah, I mean, he's just, he's just that kind of person, you know? Like, that's, that's just how he operates and who he is. And so, yeah, I mean, it was absolutely greed. It wasn't just me, it was everyone. It was like the person he replaced me with after I quit also sued him. The person he replaced that guy with sued him. Like, literally, that was like just how he worked. He would get people, he would promise them the world, make them a deal, and then screw them over when it came time to pay. And that's— and he just managed to do this very, very well.

Yeah, crazy. Um, okay, so last two questions I have is, um, the last one on the War Dog stuff is just like, what were, you know, when you knew things were not going to pan out favorably, like, or maybe before your sentencing, like in the movie, I think you're, you know, you're in this like penthouse in Miami and stuff. And I think, yeah, you have like a wife and children.

Yeah, I have a daughter. Yeah. Yeah.

Yeah. Married. So are, well, I guess, are you still, uh, and some of these maybe are personal, so you don't have to answer all that.

Sure.

Was, what was that just from an emotional standpoint? What was all that like if, if you could like kind of tell it in a way of like, we were like right next to you or something? Like, what was that? Then what are— if you're willing to answer, are you still, uh, with her, or did that not work out due to this scenario?

Just— yeah, uh, no, we got divorced about 5 years after that, uh, story.

Um, oh wow, so it wasn't that, or, you know, or whatever.

No, no, it was not. That was not the, uh— so, okay, so one, one, one difference between the movie and real life, I'll tell you, is that in the movie, they have me lying to my girlfriend at the time, you know, telling her where, you know, you know, about, about the business and not, you know, and that she gets really upset that we're doing these arms deals. In real life, she knew the whole time. And I never lied to her. I told her, you know, I'm selling guns, I'm selling ammo, I'm selling— we're also selling fuel and, and, and clothes and, and food. And we're selling all sorts of things to the federal government. We weren't just doing arms. Arms ended up being the vast majority of the money we made, but we were selling all sorts of things to the federal government. And I, you know, and I was completely open with her and she was totally cool with it. She had no problem with any of it. As long as I was bringing in the money, she was happy. And, and we ended up being married for about 5 years after this whole story occurred. Eventually we got divorced. Been divorced for 11 years now and, and happily divorced. My daughter is 16 old now. So, yeah, so that's quite a trip. She was a baby when the— she was born literally a few weeks after we won the contract. So, yeah, yeah. So that's how long it's been. It's been 16 years since we won that contract, 2007. Yeah. And yeah, I mean, that was like, I mean, during the lead-up to that, I mean, you know, my wife was pregnant and I was working completely on commission, and so I wasn't getting paid a salary. I was living off my savings with a kid on the way. So I was extremely stressed out, extremely stressed out and extremely motivated to make this thing work because it was the only thing I had going for me at the time. So that's why I was working 18-hour days for months and months on end because it was, it was that or go bankrupt, you know. So yeah.

Oh, I guess last question is because you've done, I think you said 8 products now. Do you have any insight on like manufacturing and stuff? Like, is it like Alibaba or just curious? Because I think that for a lot of people that want to do products, that's one of the most difficult parts, right? Is like finding manufacturing that is cost effective and trustworthy And you've done it 8 times now, so you have insight.

Yeah, so I will say that it's difficult. You know, manufacturing is not easy and things always go wrong. So you just have to prepare yourself for that. As far as finding good manufacturers, Alibaba is actually pretty good. I found a few of my manufacturers on Alibaba. If you can, if you have a way to get referrals from people you know, that's even better because then they, you know, people who've already have experience with these particular people, but most people don't. Most people don't know anyone who's doing manufacturing, so they're kind of going into it blind. I would start with Alibaba. That's a, that's, and then just find a manufacturer that makes a product that is as close to the product that you want to make. There are, yeah, and then you get, you find a few of those, don't find just one, right? Find as many as you can. And you get them to sign if you're depending on the product you're making, you know, if it's like a unique design, you'll probably want to get to get them to sign a nondisclosure agreement. A nondisclosure agreement, or NDA for short, is not particularly enforceable. It just makes everyone feel better. So people do it as kind of like a matter of of course. But, but most companies are in business to do business on, you know, the right way. You know, they're not, they're not in business to screw people over, especially if they have a bit of a track record. So I would recommend that people first of all find a manufacturer that is, makes a product as close to what you want to make, a business that has been around for at least several years, not a brand new business. So Alibaba will tell you how old the business is, and that's one good thing about Alibaba. You could also ask the manufacturer for references. You know, they will, they will usually give you, you know, contact information for some of their customers that you could contact and ask them, you know, how's it been doing business with them? Of course, that's not the, the no guarantee because they'll only give you contact information for people that are happy with them. But at least it shows that they can do legitimate business with somebody, right? And I would highly recommend that when it comes down to actually manufacturing, that once you are doing the first, what they call the pilot production run, which is a small amount in the beginning to see how it goes, that you go to the factory and you stay there until you, until the first production run is completed because there will always be issues that you are not, that you did not foresee. And there is almost always issues that you have to see in person when you're manufacturing a product. You can't like pictures over the internet are usually not enough. Like you need to be able to feel it and to, you know, jiggle it around and make sure it doesn't fall apart and see how it sounds and smells and, you know, and tastes. So who knows? I mean, depending on what you're making. And so, so you need to be there. And when, you know, then you could point out to them, I need this and this and this change. This is not good. You know, the manufacturing, the packaging is not good, you know, whatever it is. And then you have to be there and wait until they fix it and fix it on a consistent basis. So I would highly recommend going there. The first time I, when I manufactured the BeatBuddy, I ended, I was planning on going to China for a month. I ended up staying there for 3 months because we discovered new issues that had to be fixed and I had to stick around for them to fix it and it would take them a week to fix it and it wouldn't make sense to fly back to the United States just for a week and then come back and, you know, it's much cheaper to just stay there. Currently, my brother, the CEO of Instafloss, is in Mexico. He's been there for the last 6 months because we're doing our first manufacturing of Instafloss in Guadalajara and we encountered all sorts of issues. Instafloss is actually pretty challenging to manufacture because it has high water pressure and things like it, like that can leak. It's so it's got 12 water jets, which is 12 times more than like a standard Waterpik. So we needed a bigger motor, which causes more vibration, which could loosen the joints. And so we have a lot of like problems that we had to fix. And so he's been there for 6 months, but he's actually coming back next week because we finally fixed all the problems. And so that's, that was one of the reasons we decided to manufacture in Mexico because it's just so much easier to get to. And with the tariffs with that Trump put in place, it turned out to be more or less about the same price for the Instafloss as manufacturing in China. So it made sense for us to go to Mexico. For our music products, it's there. We actually don't have any tariffs on that, so it still makes sense for us to manufacture in China. So yeah, I would highly recommend to anyone doing manufacturing, go to the factory. If you really want to feel better about it, go before you sign a contract and put a deposit just to meet people and see that they're real rather than scammers online, which is always a possibility, you know, but that depends on your budget, whether you could afford to make that trip and depending on where the factory is, where you're at, but definitely you have to go for the first manufacturing run. I would definitely say that. Yeah. Yeah. Yeah. And sorry. Yeah, before we, before we end, I do have one other venture that I would like to talk about.

Oh yeah, please do.

That is, is is brand new. Um, it has not been launched yet, so I'm, uh, giving you a little, uh, giving your listeners a little, a little sneak peek. Um, it's— so a lot of people over the years, uh, since the movie, the War Dogs movie came out, um, have asked me to teach them how to do government contracting. And yeah, and I, you know, I mean, I've— I had— I was not allowed to do this business for the last 15 years, right? I was banned from doing government contracting, but that ban has recently expired. Um, and so I partnered with, um, with, uh, actually these two guys who were inspired by War Dogs to start their own government contracting business. They contacted me like about a year ago, and they're like, hey, just want to let you know, um, because, you know, usually— I'm sorry to go out of order here, but usually what happens is I get like a message on like Instagram or Twitter or, you know, email or something. And it's usually some, some guy who's down on his luck and he's like, hey, you know, I'm, I'm willing to put in whatever level of, of work is required. I'm just like you were in the movie when you were down on your luck, you know, I'm willing, you know, just teach me and I'll do all the work and I'll give you a cut, right? And first of all, I'm not allowed to do that, or at least until recently was not allowed to do that. But second of all, I've got these other businesses, right? And I'm I'm not really particularly interested in getting back into government contracting. But I, uh, so, uh, so then I got this, uh, email one day from, from these two guys and they, they said, you know, just wanted you to know, we, around 5 years ago, we saw War Dogs and we were so inspired that we decided to try giving it a go ourselves. And it took us like a year, but we finally won our first contract in doing laundry services of all things, right? Because the government buys everything. I mean, they buy literally everything. They're the biggest customer in the world, uh, the federal government. So they specialized in laundry services, and now they have a multi-million dollar government contracting business specializing in laundry services. And they just contacted me saying, hey, just wanted to let you know that we really appreciate it. It was a very— the movie was very inspirational. I wanted to say thank you. And, you know, I, I was like, wow, that's really inspiring that someone act— because most people just come to me, say, hey, you know, teach me me everything, and, and, and then I never hear from them again, you know. I mean, I'll give people like a link here, you could, you know, start off by learning a little bit here, but, but obviously I don't have time to sit down and mentor every single person who comes my way. So I had the idea, you know, that I— to partner with these guys and start an online course that we're calling War Dogs Academy. I love it. Exactly, exactly. And it's going to teach— we're going to be very detailed and make it as easily digestible as possible, um, to get people, uh, up and running and, uh, and teach them how to do government contracting. And we're going to, you know, we're going to have War Dogs Boot Camp, which is the initial course, and then we're going to have, you know, the War Dogs Army, which you could join, um, for, from a reasonable monthly subscription, uh, which it will give you access to a community and to— you could network with people. And we have investors who interested in funding government contracts, uh, who will be part of it. Uh, because one of the biggest challenges doing government contracting is even if you win the contract, you need to pay your supplier, pay the logistics person, and then after you deliver to the government, you need to wait at least 30 days for them to pay you, which means that you need the money to float that, right? So if you have a— if you win a $100,000 contract to deliver, you know, boots or guns or anything to to the government, you need that $100,000 to pay for the materials and you won't get paid for a few months later. So having access to financing is a huge stumbling block for people who don't have contacts. Now, the good thing from an investor's point of view is that a federal contract is one of the safest things to invest in because the federal government always pays its bills. So as long as the supplier is reliable, and the logistics plan is good, which, you know, since we will be doing a high-quality job with War Dogs Academy, we're going to teach people how to do it the right way and not mess up. We have investors who are very interested in funding these federal contracts. So that's going to be part of the appeal and the sale point of War Dogs Academy is that we're going to teach you how to do it and we're going to give you access to financing and to professional services like legal and accounting that you're going to need in order to actually turn it into a real business. And so anyone who's interested in that, it's not up yet. So it— there's nowhere to sign up yet. However, if you could follow me on Instagram, @DavidPakouz, my name is David Pakouz, and I'm going to make an announcement on my Instagram account when we have it up and running, which will hopefully be in a couple months.

Dude, that is awesome. And then one more time before we hop off, what's the website? So it's Singular Sound and then Instafloss?

Yes. And yeah, so it's Singular Sound is my music company. Instafloss is the flossing device company. And, and anyone who wants to stay in contact and see, you know, the new things I'm launching, like War Dogs Academy, should follow me on Instagram, which is @DavidPakaus. Also Twitter, X as they call it now, @DavidPakaus.

Perfect, man. Thank you again for coming on, man. Really enjoyed it.

My pleasure. Thank you.