Bootstrapping a +$1B Business + Selling To The Ultra Rich | Jesse Pujji

You said a couple interesting things. So let's break this down.

That's pretty sick.

That's an amazing story.

And by the way, there's 8 of them that all have like high 8 or low 9 figures in EBITDA. The whole category has has just crushed.

The two takeaways from this, by the way, are sell to the rich. And then your way of figuring out what they need was— I feel like I could rule the world. I know I could be what I want to. I put my all in it like no days off. On the road, let's go. Jesse, what up, dude? How are you doing, man?

What's up, guys? I'm pumped to be on here.

Good to see you.

Uh, where should we start?

You sent us a doc, had a bunch of cool ideas on it. Which one do you want to start with?

Yeah, I mean, maybe, maybe some of the stuff we've learned at GatewayX as we've been building new ideas. I think the idea I'm most excited about, which I think Sean, you and I have talked about is Aux Insights.

Sam, do you know about this business?

No. What is Aux Insights?

Oh dude, this is sick. Okay, tell us about this business.

Yeah.

Accordion. I mean, you can look at L.E.K. is $800 million and $250 million in EBITDA. McKinsey has an over billion-dollar business just for private equity firms. It's got 55% EBITDA margins.

They're not price sensitive at all. They're urgent.

And they're super rational. They're like, cool, if I can buy something for $100,000, but it's going to help me make a $10 million decision. Great. Uh, you know, the, the math, maths I'm in. So they're, they're, they're wealthy. They're not as price sensitive. They're rational. And in your case, you figured out what the need was because you had one fortunate circumstance, which was like they were calling you to ask you about this thing. And you basically, so what you built was like a marketing due diligence. So they're looking at a company, they need to know, is there, are there digital ads performing very well? Not so good. Is there any red flags in here? Any concerns? In the same way that if I want to go buy a company and I get a bunch of financial statements, I might ask a super financial lawyer friend to go look at it.

Yeah.

Yeah. Like, hey, my accountant, like, can you look at this? Can we do a quality of earnings? Can we, can we get some understanding of like, are these numbers solid or not? They are really financially literate, but they're not as Facebook ads and Google ads and Pinterest ads literate as you are. So you're providing that diligence. And then after they buy, then you're like, cool. And then we'll help you like lever— we'll show you some levers that might be able to grow this, this thing after you buy to create the value, right?

You should get background. So you started and sold AMPush for some tens of millions, I think, dollars.

Digital marketing agency.

And then with that, money, you went and started GatewayX, which is almost an incubator. Yeah, we call it a studio meets holdco, where you have started 3 or 4 or 5 businesses.

We've started 6, we've shut down 2, one is kind of going sideways, 2 have crushed it, Aux being one of them, and one is new.

Got it.

Okay. And, and let me jump in and say 2 things that we, what we call it at GatewayX in the studio, Sean, is we have to have a unique insight and an unfair advantage. I want to build like in 10 years, I want this like holdco studio thing where we've got 5 to 15, I don't care what the number is, operating companies, they're all profitable. They're compounding on top of each other. And we've got this super cool culture of builders basically inside of it.

You don't raise money at the start for them, right?

We don't raise money. We tried it with Kahani, as you know, and it didn't work. Like it wasn't, it just wasn't for me. I shouldn't say it was fine. Just wasn't for me.

What, what, what's Kahani?

Well, there's a great example of Sean's point of like a cool idea so that you're going to think the idea is cool the second I tell it to you and like a shitty idea business. I was like, look, e-commerce sites look like they're 10 years old. And meanwhile, Instagram and TikTok have got these like full vertical videos. So let's make a plugin to let e-commerce companies change themselves to look more like TikTok and Instagram. So the first product was the little stories navbar at the top of, of every e-commerce site. And we had it on Sean's site and I was like, oh, it's going to, people are going to engage with it. The content's going to look bigger. It's going to, and we launched it and everybody, people thought it was a really cool idea. Right.

But nobody actually, like Sean, by the way, I thought it was an awesome idea. In fact, I kind of still think it's an awesome idea.

It is a good idea, but it doesn't solve anybody's problems and nobody's, nobody's lining up for it. And then we're like, oh, it's improving your conversion. But then it's like, well, it's not sure it's improving our conversion. It kind of seems like people engage with it. And then people are like, it's kind of slowing my site down or takes me too much content. And they just ripped it off the site.

Was it basically just a plugin? It's a plugin, just a plugin.

So I mean, we had a big vision for it, right? You'd have landing pages and you could put your influencers on. I still think someone's going to figure it out, but I sat there.. And I was like, I got this other business, Growth Assistant. And here's a funny story. You guys will like this. We go to ShopTalk and, you know, ShopTalk matches you. And I have one sales guy from Kahani and one sales guy from Growth Assistant, and they both do the matching thing. The Kahani guy gets 3 meetings. The Growth Assistant guy gets 25 meetings. One selling like marketing talent in the Philippines. And I go, man, if there's ever a signal for like solving a problem versus, you know, just a cool thing, this is it. And that was like one of the key decisions where I was like, I don't want to do this.

Anymore. And with Aux, so he, so with Kahani, he's like, yo, you want to invest? We'd love to have you on board. Here's the deck. And I'm like looking at it. I'm like, I kind of like the idea, but I'm not fully sold. So I ended up not investing. With Aux, he half tells me the idea in a text message and I'm like, I got to invest in this somehow. Right? Like even I was like, instantly I was like, this shit's going to work. This is a great idea. Much easier to solve. And one really cool thing I had heard, Jesse, can you talk about this? Which is earlier when you were doing Ampush, You signed up for GLG, which is an expert network where basically rich dudes on Wall Street will call you and be like, hey nerd, you know a lot about this biotech thing, or you know a lot about newsletters.

It's like, uh, if a banker is about to take a company public, like an email software company public, they want to talk to all types of users of email software and ask them questions so they could have more conviction in their decision.

Yes. And by the way, there's 8 of them that all have like high 8 or low 9 figures in EBITDA. To be clear, there's GuidePoint Global, there's AlphaSights. The whole category has just crushed.

And it's basically like if Brad Pitt called you and was like, hey, you ever been to this Italian restaurant in New York? He's going to take a supermodel there, but you've been there. And he's like, how's the parm? And you're like, ah, it's pretty good actually. And then they're like, cool. They hang up. You don't know why they asked you.

And they pay you $1,000 for the, for the, for the feedback. Well, here's the story of GLG is hilarious. So, so I don't usually tell this part of the story, but it starts earlier. Young Jesse's an associate at Goldman Sachs. He decides— my best friend, who's my co-founder's hedge fund blew up during the financial crisis. So he doesn't have a job. So he kind of sits around. He's like, I don't want to get a job, Jesse. I want to start something. He gets me excited enough that I'm like, all right, I want to start something too. Let's go start something in a few months. I give my notice at Goldman. They're like, take 90 days, wind down. And I was like, me, I'm like, hey, do you mind if I use the firm's resources to research my future business idea? And Goldman, by the way, probably has a multimillion dollar subscription with GLG. So we have unlimited calls. They don't charge us per call because at Goldman they're paying them so much money. So me and my co-founder line up 3 phone calls a week with like digital ad experts and lead gen people. And we research e-commerce, like you name the category, we were talking to an expert in it for like the 90 days before we left, before I left Goldman. We also had all the sell-side analysts come and tell us like, what are the internet trends that we should be paying attention to? So. This was the research before Ampush started. I'm 24, 25 years old. Then I start Ampush. QuinStreet, which you guys may or may not know, is a publicly traded lead gen business. It goes public and the same thing happens. A couple of my hedge fund friends call me and go, dude, isn't this what you're doing? Like, and I go, well, here's what you need to look at and here's how their margins work. And then I get the idea. I'm like, we have no money. We're bootstrapping. Let's get ourselves on GLG as experts. So I call my old rep.. And I go, hey, can I be an expert on, on your GLG? Or they ask me, they go, yeah, we need someone. I'm like, okay, my charge is $500 an hour. She goes, no problem. So now me and my co-founder are doing on the other side of the marketplace, we're doing 5 calls a week. We're making $2,500, you know, it's good money. But we talked to like someone after a few weeks and he goes, do you guys have research that you can put together? Because you can, the way you're explaining is so helpful. And we looked at each other and we're like, yeah, yeah, we have a report. It's $5,000. I'll send you guys a report. You can link to it. It's super outdated at this point. It's a 50-page report. It's going to explain the lead gen industry to you, tell you who the competitors are, blah, blah, blah, blah, blah. He's like, yeah, I'll take it. So we, we basically spend 4 days all weekend putting this report together. And then GLG is like, hey, we're getting a lot of other questions about this report. Can you sell more of it? By the time it was all said and done, we sold 30 of the reports. So I always joke that was Ambush's angel round. We raised $150,000 selling research reports to hedge fund people.

That's insane.

I don't know if you heard on the pod, but Anand from CB Insights did the same thing. Did you hear, did you hear his story?

He basically sold a PDF. He's smarter. He turned it into a huge business.

Well, he started with the, with the PDF and then he's like, you know, he's trying to charge like $500 and then he's like, the best thing that ever happened to us is my buddy was like, no, no, no, you need to charge like $12,000 minimum, $25,000 as your medium. And then have a $100,000 option. He's like, dude, it's a PDF. Like, are you sure?

And that's what they did.

And they made like $300 grand that year.

How come you don't charge 75% more and say we're better?

That was, so one of the things I didn't tell you when, when I, my friends were calling me and I was like, isn't there someone who does this? Why do you keep calling me about this? And what they told us, this is part of the market research, was they said, look, McKinsey, Bain, and BCG are $200,000 a week and they don't, they're not practitioners of marketing, Jesse. So they don't actually know the answers. And then every time we ask an agency, agencies come back with recommendations like change your match types or do more lookalike audience or whatever. And they're like, we don't know the the fuck they're talking about. Like, we don't understand what they're saying. What they want is you do this and this much revenue and EBITDA will come. So a big part of our work is literally just translating marketing levers into revenue and EBITDA terms so that they can actually understand what they're, what they're going to spend money on or what the risk levers are in the business.

Do you run like fake ads? Like, um, like, you know, a lot of people when they have a company, they'll be like, you know, we want to make this product, but we're not actually sure if anyone's going to buy it. And so they make an ad for the product that doesn't exist. And sometimes the landing page will be like, oh, you caught us a little bit too soon, but let us know, uh, if you want this, whatever. We've done it in value creation.

We haven't done it in diligence. Diligence is like you've got 4 weeks, they're trying to discern whether they want to buy the business and you're just like, you're head— you have so much data, you have to figure out what's going on and be able to give them a smart answer. Value creation, you have 12 or 20 weeks sometimes depending on the engagement there. We will definitely run experiments, we'll make ad changes, we'll do all these things and come back to them and say, hey, this is a good idea, this is not a good idea.

So to make this actionable, like even for me or Sean or listener, what do you look for? Like what can I look for in my business? And I assume obviously this is only if you are running digital ads. Facebook and Google basically ads, what can you look for to be like, there's opportunity here or this is stupid, shut it down?

And if a business that you're looking to buy has all these things that they're doing wrong and they're still succeeding, and you, for you, you're like, there's opportunity here. If they get this right, you're going to be even better after buying this.

Exactly. And size, right? So the key deliverable, the first 5 slides of every deck are, here's the grade for every channel, and then here's the waterfall that says what's your current EBITDA. And then if you improve the things that we think in a pretty moderate way, here's what your EBITDA of the business could be. And that's the money chart for a private equity guy.

Yeah, it's, it's a super cool business. And, and honestly, like, the validation that we've gotten, like, that's the other cool thing, is that my— one of my other tests for a business is If in my discovery phase, people start asking me to buy it, I know I'm onto it. Like, that's what happened with Growth Assistant. That's what happened with Aux. In early days of VanPush, that happened. I was like, hey, this is an idea we have. We want to get you offshore marketing people. And they're like, can I get one of those people? And I'm like, oh, okay, we're good. Same thing with the private equity thing. I call some of my buddies, I go, here's this idea we have, we want to do this. He's like, oh, I actually have a deal right now. Can you guys start looking at it?

That's awesome. How big is this business now? Is it a year old? Could you say like, it's like $5 million?

Dude, that's insane.

Yeah, it'll be $5 million. And we, by the way, we invested 1/10 of what we put into Kahani into it.

And by the way, Sam, like, I think the key, because you were like, what are the marketing levers? And like, he gave you like a, as good as answer you give not having like the thing you need. It's like, doctor, what can I do to be better? But here's none of my data and none of my scans and none of my notes. It's like, well, you should, I guess, you know, check on your health. So the key here with this business though is it's, he won't say this is not part of a sales pitch, but like it's not that he has to be like this marketing savant that's going to like find the genius levers. These companies are really buying certainty and it's CYA, right? It's why a lot of consultants get hired in the world is there's a CYA component. You're doing a deal. You need to understand that the thing you're buying doesn't have any like, you know, horrible warts. That's the first piece. And then cool. What is a like best case, base case, worst case kind of scenario of what we can do to grow this thing? And it's not even like a specific tactic, like, oh, change the audience segmentation. But it's like, we need a plan made by people who know a lot about this. And that's enough to like kind of move the ball forward. And then of course, like when you could go in and you actually like do the shit, you'll figure it out case by case. Like there's not like, like you go to 100 e-commerce companies and you could take the 10 smartest people in Facebook ads and Google ads. They're going to give you 10 different answers for every single company because one guy likes cost caps, another guy likes ASC, another guy says simplify the structure. Another guy says use all the new shit. You know, another guy says do this attribution method. Another guy says this. There's no real uniform answer for like, how do you do, how does this work better versus worse?

Yeah, well, I'll, I'll disagree. Like, I'll show you. Can I share my screen? Yeah. Yeah. I mean, this is an example of the internal tool or the internal like analysis to give you the detailed answer, Sam, of like everything we look at when we're trying to assess and grade inside of a private equity. Right. So there it's top-down, it's bottom-up. How much spend is getting spend plays? What's campaign structure? What's how fast— you made this? I mean, my team made this.

Yeah.

That's so cool.

Um, so this is what we go through and do, and we're going to turn this into software at some point, by the way.

Any color-coded Excel sheet, we're like, oh, this is fucking great. I remember Steph Smith came on and showed me like a, just like a beautifully formatted Excel sheet. I don't think I even read anything that was in it, but I was like, you're great. This is fantastic. Like I'm, I'm such a sucker for formatting on an Excel sheet.

Well, but, and Sean's right, which is like the other thing I would think about too, that I think a lot of entrepreneurs miss because we were so caught up on ourselves is the humanness on the other side of the table. So you say private equity firm and you're like, oh yeah, private equity firm. But what's really happening is there's a, there's a mid-level partner. If they buy a business and Facebook blows up in a year on them, it's career limiting for them. Right. So the human being on the other side wants to go in and sell this deal to their committee. Be able to put a good case together. And the reason McKinsey and Bain both built billion-dollar businesses doing this is because those people wanted to go, look, McKinsey says the market is big. Now the dream is they go, look, Aux says there's X amount of EBITDA available in marketing, and look at the analysis they put together that's convincing of that.

What percentage of the deals do you say it's shit? You're like, no dude, like, there's no opportunity here.

We've had— I mean, it's, it's a young business, we've only done 20 projects, but let's say in 25% we've said we, we should You should stay the hell away from it. One, I mean, one, there was just straight up fraud in the SEO backlinking that they would have never spotted without us. That was a huge win. And I mean, they paid us, obviously they didn't do the deal. And then we've had a couple where we were not convinced that there was as much leverage, like the management team puts together projections, right? So they share projections in these things. And we look at those projections and we basically go, dude, this person would have to be the best Facebook ad marketer on the planet to hit these projections. Like. We, we think they can grow, but we don't think the projections they put together are reasonable and we need to double-click. And as they double-clicked on that, they lost excitement about the deal.

Wow.

What a cool business. Good job.

Thank you. Much better than Kahani.

So, so your thing was like kind of office for the CMO. You talked about how Accordion and the, there's, there's the equivalent for the CFO side. Can you talk about other businesses that are like this to sell to the like ultra-rich customers? So let's call it hedge funds, investment banks, whatever. I heard you talk about a business that I had never heard of called— I think it was First Ring or First Rain.

First Rain.

What is that? That sounded very interesting.

Well, the first thing I always tell people, I go like, who's the richest man in New York? Sam, who's the richest man in New York?

I don't want to ruin your story. Okay, fine.

I'll say Ari, who's the richest man in New York? Do you think it's—

here's the homie guess.

I hear the homie guess. A hedge fund guy.

Some real estate guy.

Yeah, Daniel Aok or Steve Schwarzman or whatever.

Nope, nope, nope. It's Michael Bloomberg.

It's the guy who's selling information. And so sitting at Goldman, I like had this terminal we were paying $1,200 a month for. And you know, they never negotiate price. Every single terminal, they never do volume discounts. And you're like, damn, this guy's just, I mean, they're printing money in that business.

It also helps that he owns the entire thing.

He owns the entire thing, but dude, whether he did or didn't, the thing makes like $5, $10 billion a year in EBITDA.

It's huge.

It's a ridiculous business, right? And so I'm sitting there, I'm an entrepreneurial person.. And, and my boss comes up to me and she goes, you got to set up First Rain, Jesse. And I'm like, oh, cool. What's First Rain? And I'm like looking through it and it's like, pull the stock ticker and get an alert to your inbox when there's news about this company. And I'm like, this is just Google Alerts. She's like, what's Google Alerts? And, and I'm like, what do we pay a month for this? She's like, oh, we pay like $2,000 per license. And I'm like, well, our group is like 40 people. Like we're paying $80,000. No, no, we got a discount. It's $50,000 a month we're paying for, for this. Google Analytics thing. I'm like, what the fuck? And so, you know, one of the, one of the categories for us now, and again, remember unfair advantage is very important. I happen to have lots of friends in this world because of where I went to college, just whatever unfair advantage.

Where'd you go to college?

I went to Penn.

Fancy.

Dude, dude, even easier. We, uh, like, why not just go to Triple Whale, who already has all the data?

Yeah, that's—

and be like, hey, Triple Whale, let's, uh, you know, do this line of business, basically.

100%. Yeah, let me license your data for the exclusive use in the financial service, because that's not going to be important for them. And then you can basically create a thing that hedge funds would pay for. And the best thing you— what I would do to hedge funds, I'd say, I'm only going to sell it to 20 of you, but let's do a reverse auction. So now make them bid against each other for this data. And as long as you limit it, they'll do that, because they don't want everyone having the data, right? That's a really important thing to them. But anyway, the, the, the lesson here is that category, alternative assets, are a great thing to bootstrap into because they, like, one deal basically can make you as a business, and then you can go from there.

And it was like the same work, same product. It was ridiculous. And I did the exact same thing, Sean, that you said you did where you're like, I have an idea, but I'm broke. So I'm just going to assume that everyone else is broke. And that's what I do.

I'm going to go hang out with other broke people.

Yeah, it was like—

and do the easy thing, which like the two takeaways from this, by the way, are sell to the rich. You know, you're going to be able to add a zero to what you're, what you're doing. And then your way of figuring out what they need was you had friends in that circle, you could go make friends, or you were using GLG. You were like, I have one area of expertise that can be my calling card to get in the door. And then that will be how I, you know, understand what these people need. And then maybe I can pair what I know with what they need into a, you know, either a data product or a consulting product.

Can I, you didn't put on this sheet, but I want to talk, I want to ask you a couple of questions about this, particularly because I don't know if Sean knows much about this company and I know a little bit about it, but I know that what I know, they're like crazy impressive. So I think you sold your company to Red Ventures. Is that right?

So we saw it. It's a longer story. We sold a minority. They wanted to buy the whole thing. We couldn't get to terms. We sold a minority. We gave them an option to buy the rest of the business. They started buying content assets and decided not to buy the rest of our business. So we ended up eventually selling it to someone else, but we did for basically— you got to know them for 2 years. We operated as one company because the plan was originally for them to buy us. So I know them and Rick incredibly well.

Do you know about this company, Sean? Red Ventures?

I know about the surface level. And actually we've, uh, we've hit up Jesse being like, dude, this is fascinating. Should we get Rick on? Like, and I would, I want to know more.

Well, but there's one part of the story that I just want to mention, which was amazing, is like he started this thing and then he was actually on the plane that solely landed in the Hudson. And he like gave this like amazing talk when he was like, I was like 1 or 2 years into my business. And for some reason that life and death, that life or death situation kind of changed his outlook on life. And now Red Ventures is known as like one of the best places to work. And it sounds like they're, it's a great company. So yeah. What's the background?

Stuff. And basically, if, if someone became a reseller of the TV tech, uh, Dish Network or whatever it was, DirecTV, they gave Red Ventures like $1,000.

They get $500 bounty for every single customer they get, and Red Ventures just had to do it for less than that, right? And so between their media— and of course, after a few years, DirecTV is like, well, we can't get rid of you because you're driving all of our customers, but we don't like the deal we made. So then they renegotiated a million different times, and I, you know, they still probably work with them. But then they went and took that out and then General Atlantic, the big private equity firm, invested and has crushed it on that deal. And they, um, they went and did that for any high LTV purchase you can imagine. So every credit card company worked with them, American Express, um, Verizon Wireless, people who sell pest control, like anything that was like a long-term purchase, basically Red Ventures was either running their marketing. And when they invested in us, we want to do the same deal for direct-to-consumer companies. Which did not work nearly as well as it worked for them, which is a different story for a different day. But that's what they got to. Then they got to 2015, they're doing $200,000, $300,000 in EBITDA, and there's no more growth left, which is why they invested in us and they bought— they did, they did a bunch of other things. Rick's really smart and he goes, okay, I'm gonna invest in Jesse. He did 5 other deals at the same time, same year. And a year later, Ambush is going okay. The other one went down to zero, one, you know, but they bought an SEO business that they use their same playbook. And within 9 months they took it from 3 in EBITDA to 9 in EBITDA. And they go, oh shit, so that worked. Okay, let's go do a bigger deal. So then they bought like a $10 million EBITDA SEO content business and they took it to like $25 million.

When you say SEO content business, you're talking about like, uh, The Points guy.

Yeah, the first one was reviews.com. The second one, I'm forgetting the name of it, but yeah, like The Points. Then they finally, Rick, like, they did a couple of those and Rick's like, all right, I'm ready for the big time. He went and bought Bankrate, which is a billion-dollar publicly traded company for 100 in EBITDA. It owns The Points Guy, it owns CreditCards.com, it owns— and in less than 2 years, they tripled the EBITDA of the business. And then they bought Healthline, they bought CNET. I mean, so they basically took their— and now the services part of their business is a tiny part of their business, and the SEO content part is a massive part of their business, but the same culture, the same playbook, and it's an incredible business.

Incredible. Can you explain what they're doing? So they buy these SEO businesses, which is— let's just take Bankrate as an example. People Google best Yep. Mortgage rate, more current mortgage rates, whatever. And they— Bankrate has done the content work and the SEO work to be the top thing that shows up on Google. So then you click it, you go in and they have like these affiliate offers and that's all great. And what, what Red did was they basically— am I right that they bought a business that was like primarily SEO driven and then they layered on paid to that? Is that the main thing that they did or what did they do to the assets?

There's 4 major levers they pull. And the first thing I have to tell whenever I tell this story is Rick and it's the most unique culture. Like at some point you guys, I just take you there and you got to tour the campus and check it out because you've never seen anything like it. And there's a great New York Times article where they describe it as like part Wall Street trading desk, part like Southern politeness and part like hard-nosed direct response marketing. And that's exactly, it's a very apt description, but anyway.

Well, and that's why I wanted to ask you about it because Rick seems like an anomaly. Like he seems like a, like a, like this is normally like kind of a, not, this could be a shady industry. Yeah. It often is a shady industry.

Yeah.

He doesn't seem like a shady guy. And they seem like a, like people love working there, which is rare.

He's one of the most special people I've ever met in my, he's one of the most special people in the world, I think.

What would we notice if we toured the campus? What would we see?

You're using a lot of words, my friend.

Dependently. But when you put them together that way, it was just a combination I wasn't familiar with.

I hate that.

So it's actually was owned by the USPS and then it got—

I hate that.

Now Red Ventures owns it. I go, so how'd you decide how to reduce the headcount? He goes, we took the top 3 managers in the company and we held a draft. So we basically put everyone's name on the board and, and we said, there's only 40 people of 80 staying. Now go draft your best people. And again, they, you know, they're compassionate with obviously the people they let go. That's not, that's not, it's not meant to be a negative towards them, but like these organizations, they're very good at leanly staffing these organizations. Right. So those are the 4 big levers and that's how they get the kind of results they get.

That's dope. I appreciate the, uh, the Red Ventures masterclass.

That's great.

They're like a juggernaut that I didn't know much about in terms of how they actually operate.

Your boyfriend, uh, the guy from Silver Lake, the guy you love. Who's the guy? What's his name that you have a crush on?

Uh, I should probably know his name if he's my boyfriend. Uh, Egan. What is his name? Egan?

I think he's on their board.

Yeah, he's on their board. Um, GA is on their board. And I mean, look, they, they, they're all minority holders. They've never raised a dollar of primary capital. So they're, in my opinion, they're a bootstrap giant, right? They've taken secondary, but they've never raised primary.

Their headquarters is in like North Carolina or something, right?

Yeah, they're in Charlotte. But again, dude, Rick is a hustler of all hustlers. It's right across the border in South Carolina because the state of South Carolina has paid for the whole thing with tax incentives.

You, you have on here, every profitable founder should understand PE and roll-ups. What's that mean?

Yeah, I think one of the biggest value creation levers, if you're running a $2 to $5 million EBITDA business, is a roll-up. And I'll tell the story of the company that ended up buying Ampush because it's kind of like still hurts me a little bit when I tell it. So there was a business called Elite SEM. It was an SEM agency, $4 million EBITDA, same year that I think Ampush had like $6 or something in 2015. We went and did this deal with Red Ventures, whatever, learned a ton. But these guys sold to a business called Mountain Gate Capital. And let's assume, I don't know what they paid, but let's assume it was on 8 times EBITDA, which is fair multiple. So they paid $32 million for the business, right? The founders rolled 30%. I don't know for a fact, but I'm just, let's make that up in this scenario. Founders roll 30% of the value. They take $20 million off the table and they roll the rest in. Mountain Gate goes and buys another 6 different businesses in the $1 to $2 million EBITDA range. Now for those businesses, they pay like 4 to 5 times EBITDA. Then they grow the whole thing organically, right? So then they go for, what was the math, 4? Let's say they buy another 5 or 6 companies. They buy 10 and EBITDA, right? Total invested capital, let's call it 60, ballpark.

But now the business is worth 15 times.

Right. You mentioned AI. I want to ask you about that because you were early to the social networking wave. I think you were doing like a social networking type of thing in the first year of Facebook. I think there's some story where Zuck called you and, uh, I called him on his cell phone pretending to be somebody else.

That was a good one.

Uh, you called Zuck, uh, tell that story, by the way.

Who did you pretend to be?

So, summer of '05, we're like, Facebook's, oh my god, Mark Zuckerberg, he's a year old, he's our age, right? We're like, he's our age, he's like gonna crush it. But he's never gonna go into high school. Somebody should start a high school Facebook. And we're like, why not us? So we started the High List. I have like, I have like the docs. We had these little iconography and all this stuff. We basically rebuilt a clone of Facebook. And at the beginning of the summer, we went to go buy hsfacebook.com. And some kid at Columbia, I don't even remember his name, maybe he's listening and he can, he can throw himself. He owns it and he goes, well, I'll sell it to you for like $20,000. And we're college kids. We're like, no thanks. We'll call it The High List. And we say peace. We build the whole product. We launch it. Literally on the eve of the launch, he calls us and he goes, Mark Zuckerberg wants to buy HS Facebook. So I'm giving you a last chance, buddy. Like you can get it. And I was like, oh my God, we need to. And I was like, my first question was, is he going to launch in high school? He's like, yeah, he says he is. And I'm like, no, are you sure? Like, I think the guy's bullshitting me. So I'm like, prove it. So he forwards me the email from Zuck, and this is not, this is just a guy named Mark Zuckerberg. It's not Zuck Zuck today. Right. And the guy includes a 917 area code number. Sorry, Zuck, your area code is 917 on your cell phone. And I don't know what the rest of it was. I don't remember, but basically it has a cell phone number. So I'm like, okay, how do we call and how do we verify this is true? So I call Zuck, by the way, I call him from my summer internship office at Bain Capital. So I'm like sitting inside some finance company calling him. And I go, my name is Tom Goldberg. I'm partners with this guy, Bob, and we own HS Facebook together. So I want to make sure that you're not like, I'm not getting cut out of this deal that you apparently have with him. And he goes, yeah, I'm going to buy it from him and you need to sort that out with him. And then I go, well, what are you going to do with it? And I kid you not, he spends 30 minutes and to his credit, he outlines the entire strategy of Facebook has executed. He goes, first, we're going to go to high schools. Then we're going to go to workplaces. Then we're going to go into pods. Then we're going to like— he had the whole strategy. This is in '05, dude. This is a year into Facebook. And he's like, he's like, when I start wearing chains and cool shirts. Yeah, he didn't know that. Right around. He's like 20. Yeah. He's like 22 or what? I'm 21. And then he's like, wait, by the way, what was your name again? And I'm like, Click. Needless to say, our high school Facebook plan did not work out. They launched and they crushed us and we went and got jobs in finance.

That's an amazing story.

A sad story.

Um, and by the way, isn't the funny thing that like the actual answer was go join Facebook?

Like just go do whatever you think is the right thing. At every point in my life, that has been the right answer to maximize my outcome. And when I started Ambush, dude, for 10 years, like I was before all their ads and I did the math because a buddy of mine got a job with same resume, got like a corp dev and he didn't take it. I was like, he's an idiot, but he didn't take it. But he should. We have his offer. We have his physical offer still. It's like, oh, that would've been worth $75 million.

Dude, I know. I talked to a guy the other day who was like the 200th or 300th employee of Facebook. Yeah. And he was like, I had $100 million in Facebook stock. Yes. Uh, you know, he worked there for 7 years or something like that.

Uh, what I should have done is said, hey, look, I started this high school competitor. Do you wanna hire me, dude? Because I'd probably be like a billionaire right now because it was a year into the, the business existing.

And by the way, like to start Facebook, unbelievable amount of work and, and, and genius. To be the founding kind of like first 5, 10, 15, 20 people there, tremendous amount of work. You're scaling something that's, that's massive and you got to be like really sharp or you're going to get washed out. To be the 100th or 200th person at Facebook, don't need anything special to be honest.

All you have to do is be around.

Hey, get over here. Can you lift boxes for a bit? All right. He lifted boxes for a bit. Hey, can you, um, We got a bunch of spammers. Can you look at all these and figure out like what we're going to do? Tell the team like we need people to filter this. And by employee 200, you no longer need to be at the top of the genius curve. Oh yeah, dude. Work, you know, an incredible amount and you still get rich.

I, 4 years into Ampush, I was looking for a head of sales and our best place to hire salespeople was from Facebook itself because they knew how to navigate the beast and get us more kind of leads from that. Get this guy. We love each other on the first dinner. You know, he meets two other people on the team and he's four, four interviews in and I do the classic talk. All right, let's talk comp for a second, right? We're a startup. We'll give you a couple of points of equity. And he like gets this very scared look on his face. He goes, Jesse, I'm investing $800,000 a month in Facebook stock. How are you going to match that? And I'm like, I'm like, dude, what?

What?

Good to meet you, buddy. I'll see you later.

That is absolutely insane. Sean, have you heard the story about Noah Kagan and how Noah was hired to work at Facebook? Noah was the 32nd or 30th employee, and basically what happened is he was out at a party and he was drunk or something like that, and he tells a reporter, a TechCrunch reporter, we're going to launch this thing and that thing and it's going to be the best thing ever. And it becomes a news article the next day, and Zuck goes to his desk and he goes, you're fucking with my company. You're out. And he fires him on month 9. So Noah was 3 months away from his first vest. And Noah told me, he goes, had I just made it that 3 months, those, that those shares today would be worth about $100 million. Those 3 months, all because he kind of, you know, had a big mouth when he was 21 and drunk at a party.

He was, he was Ambush's first Facebook ads client, believe it or not. AppSumo was.

That's awesome.

I bought his first— I got his first customers for him.

Yeah. And now it's like, you know, a business that does $100 million a year in revenue. So it kind of worked out, but it would have worked out a lot easier if he kind of kept his mouth shut.

Yeah. You know, but my thought— I don't know how you guys feel about that. I've done that math and I'm like, but I don't think I could have worked— like, I don't want to work for someone.

Of course you can't look back and be like—

but even if I could even now make that decision, I'm like, I don't think I would have wanted to work for Facebook or anywhere for that, that long.

Or like, dude, I would. That would have been awesome. What were you going to say, Sean?

I agree.

That's insane. I've got the same story, by the way, with Airbnb. I think I was going to be employee 120 or something. And I don't know, I also, it was a $20 an hour job. I don't even know if the equity would have been a lot, but you do the math and it does, it does sting a little bit.

But dude, I mean, the one way, like, I was, I worked at Goldman. I was 25. My 29-year-old boss made $2 million a year. My 35-year-old boss was making $15 million a year. And I got off that path because I was like, I don't want to like sit here and look at spreadsheets all day. Like, it's a very not dynamic job. I didn't— I looked at my boss, I said, do I want to be them one day? And I said no. And I literally wrote this down to keep myself honest. I said I would— I'm okay with like half my personal expected value to be able to like do my own thing in the future. I don't know, I've never rerun the math, but, but I had to like make that, you know, decision for myself.

What's a, what's a $15 million a year employee at Goldman do?

There's a bunch of jobs that make that kind of money, but in my world, I was in the like the buy-side hedge fund. They were investing. We had a $7 billion fund. 2 and 20, right? If the thing delivers 10% a year, they make the fees on $7 billion are like what, $140 plus on 10% is $700 million. It's like $350 million in carry. And there's 4 senior people. Now Goldman might even get half of it or whatever, but like they're paying 50% out of whatever the people make in that. So, but then bankers make that much. I mean, all these financial services at a seniority level, they're all, they all make tons of money. There was a guy who endowed a scholarship I got when I was at Penn, who was a partner at Goldman, at the head of the infrastructure fund, who was making $55,000 a year is what he told me.

And then when he told you, did he just like smirk the biggest smirk you've ever seen in your goddamn life? And it just, it was permanent. He had a facial—

I saw that. I was like, yeah, but you've been there 30 years. And like, have you ever been in those atmospheres? None of the three of us would last more than two or three years in those atmospheres. They're not, they're political.

They're smart.

It's not I don't know. There's more than money.

All right.

I totally agree. I think our actions have showed that, but I also think it is entertaining to see like just the sort of mind-bending amounts that people make doing certain things. And in the case of joining companies early, like, wow, that's kind of it. That's all you really had to do in terms of like financial success. There's a funny tweet that Chamath put out the other day where he was like, Bill Gates, you know, if he had just basically held his Microsoft stock, would be, I think, the richest man in the world, or, you know, number 1 or number 2, something like that. And instead, you know, he did the Gates Foundation and he did a whole bunch of other things. He like sold and then has his family office. And, um, the top reply, which was like a huge ratio, was like, now do you with Meta, right? Because they think he leaves Facebook, he's like, great, I got a billion bucks, and then I'm going to do Social Capital, I'm going to do this, I'm going to do that. And I'm going to do SPACs. I'm going to do all these things for like, you know, the next 12 years, 15 years. And if he had just simply like held the Meta stock and chilled, he would've financially outperformed his own, you know, his own brilliance doing all this different investing action.

Yeah. I, you know, but that's the thing. That's why you got to do things that you actually care about or that light you up or that motivate you in a way that's different from cash. Because I mean, dude, the other thing, how many, I mean, you guys probably have friends like this. I have friends who are worth more than I am, who have much more money and but they got it through like a meta type situation. They're like the most insecure. Like, they're like, oh, I just got lucky. They're afraid to talk about it. Like, it seems like a, like a horrible existence. Like, and there's a lot of people I know like that. I met one of the founders of YouTube once and the guy was like, my lotto ticket success, you know, I don't like, he was, he was very unhappy with the amount of money he had made. So you think that it's like, I'm on easy street. I get it. Like, but the psychological thing, those people feel like fraud. I mean, it's a whole nother, there's a whole nother vector of challenges that come with it versus I think all the three of us are founders. You start a business, whatever it is you made, you made it, you know, you did it. Like there's a different element to it in my opinion.

I like talking about it the same way I like looking at mega mansions on the internet. It's fascinating to one part of my brain, but then the main part of my brain's like, I wouldn't even want that.

Like, yeah, exactly.

Like not even in the, it's like, dude, that's way too big. That wouldn't be fun to live in. That'd be uncomfortable. And man, the maintenance of that would be like a pain in the ass. Like that's not what I want in the same way that When we got acquired by Twitch, I had thought in the last 7 years I had worked towards like, I want to build a, you know, like a successful tech company, right? I was in the venture capital world. Success in that world is you build a billion-dollar-plus company. We were doing like a social type of product, a media product, and Twitch is like one of the 10 winners that, that like actually existed. And then I saw Emmett's day-to-day and I was like, oh man, I would be miserable if I was doing this. And not even in a like, like, it was just, that wasn't fun. Like, his job fundamentally was like putting out fires and all problems roll up basically. And like, it's the worst problems that roll up. Yeah, shit rolls uphill. Exactly. It's the worst problems that rolled up past your executive team because they would solve a bunch of them, but the ones that they can't really solve cleanly roll up to you. So you get the worst of the worst that roll up to you. And he would sit in a conference room and basically, you know, his calendar was managed by somebody else. There's a 30-minute block and another 30-minute block, another 30-minute block, and he's reading memos and he's doing decisions all day. And I'm like, man, this is not like, like the fun factor is not there. And that's when I started asking a question. That's why I started this podcast is I was like, who's having the most fun rather than who is the most successful? Who is the most rich? It's just fundamentally who's having the most fun. And I remember looking at Joe Rogan. I was like, I think Joe Rogan's having a blast. It seems like he basically, the podcast, which is like an unedited, unscripted thing, he's hanging out with comedian friends or super interesting scientists and paleontologists and just fascinating people like that. And then on the side, he does comedy, which is like, you know, a craft that he really cares about that he does. He does the UFC, which is like his hobby, and he gets to commentate for that and sit ringside. But he also doesn't overdo any of the things, meaning he doesn't do his podcast in a way that's like optimized for views. He's not like, he's like, I want to do a 3-hour conversation because that's what I want, not because that's optimal for the algorithm. For UFC, he doesn't travel. He's like, I'll do the ones that are nearby me, but I'm not going to fly around the world every weekend commentating this. Like, I hope that works for you guys. Same thing with this comedy stuff. He's like, you know, I'm going to do it the way that I want to do it. And when I saw that, I was like, okay, that is a different model of success that I, you know, I want more than, than kind of what I wanted in my 20s.

You use Joe Rogan, but I honestly think you can apply that to anyone. Like my hedge fund friends who love hedge funding. They're happy, they love it. It's finding your thing. It's finding the thing that you really enjoy and then just going all in on it. Those are the people I think who are winning.

You really got to enjoy like doing it a lot because it all really sucks to get there. Like, do you guys remember Zuck in '06 to, maybe it was like '08 to like '15? Like I would not have traded places with him. I wouldn't, I would never in a million years trade places with Elon Musk, but the idea of like having all these things, me neither.

No trade. I also reject that trade, Sam Parr.

Yeah, very, very, very fair of him to say that. But it does seem cool. Like, I guess what I mean is like, I could acknowledge that, that seems awesome. That would be cool to have. And also, I'm not willing to do it, but it's, that's like fantastic.

Yeah, I think one of the most powerful things is figuring out what's cool. There's a difference between cool for you and cool for me, right? Like, there's so many things where I see people's life set up and I'm like, that is super cool for you. And like, I don't mean that in a negative way. It's like, I do think it is super cool and I think it's even cooler that it's what you wanted, but I have to figure out what is cool for me look like.

You know what's funny is our last episode you talked about the Seven Spiritual Roles and I, you talked about that book that you were reading or how you were thinking about reading it or something like that. And I went and bought it because I personally, I'm in a little bit of a place now where it's like, I think some people call it the Second Mountain. You know, you already like achieve a little something to where you're like, you, you're secure, but you're like, all right, but what's a problem that I want to work on or a way to spend life that may be a little bit higher up on Maslow's hierarchy of needs? And so I'm personally still like asking myself, I, I, it's not defined yet for me.

Jesse, do you have one?

That's a good idea.

And, and in one funny way, he says like, what's the thing that comes in the room when you show up? Like, what's the stench? Because his, his point was we try to make purpose. This far out thing we have to go get. And it's actually the thing already inside of us that we just need to like tap into and live more fully. And for me, it was, I love helping other people like be the best versions of themselves, like raise their game to the next level of what they're capable of. Even in this podcast, like I think I taught you guys two new things. Like it just, it comes out. It's not purposeful. I've made it more purposeful now, but like at the time it wasn't, but it was a thing. Any of my friends would tell you about me. Any of my employees would tell you about like, dude, Jesse walks in and like, The bar goes up and it's like an exciting go up. And, and so I really like one, one of the interesting examples of this, he goes, so how do you keep your to-do list, Jesse? And I was like, oh, initiatives or clients. And he's like, what if you kept your, your to-do list based on your people you worked with, like executives and how you're helping them be the best versions of themselves? He's like, you'd probably still like get the work done that you need to get done, but you'd do it in this very inspired way. And GatewayX, I mean, GatewayX is a whole function of me going, The thing I want to do is help other people learn and grow. I'm not the CEO of any of these companies. Like, now I do actually keep my to-do list that way. I don't write Growth Assistant or Aux. I write Adrian and Casey. And I'm like, how am I helping those, those people? And I find it's a weird thing when I frame my success or my life through the P&Ls of those businesses. I get very like, like I'm not, I'm not as powerful. I'm like a, you know, more scarce-minded person. And when I frame it as the like, how do I help those individuals, which is the same shit because they're running the businesses. I'm like creative and I'm happy and I'm more flowing. And so for me, it's like, that's the thing. And it feels really energizing for me. Like, I think I could do it for a really long time. And obviously the setup, the way I've got it set up matters a lot too. Like, I'm, you know, not running any of the individual businesses. I don't think I want to. I don't want to run staff meetings. I don't want to run comp plans, hiring, like all these things. I did it. You guys have done it. Like, it's not what I want to do, but I do want to help grow each of these businesses.

Dude, you're awesome. I appreciate you doing this. Thanks, man.

What do you think?

Great to see you, by the way. How'd you get Nelly at your birthday party? What was that about? Tell that story before we go. Give us the quick one.

So I turned 40 in May, as you guys know, and I have a cool video montage of the party. My wife threw an awesome party, but I've been telling all my friends about St. Louis since I was 18. So I went to college. I'm like, St. Louis is the best city, whatever. And everyone's like, I was like, I'll move back there one day. They're like, no, you're not. And then I moved back. And they're like, oh shit, you moved back. And so I had 200 people in town who I've been raving to about St. Louis for like 10+ years. So I'm like, what's the most ridiculous thing you could do if you're me having your 40th? Nelly, I mean, you guys are somewhat similar in age. From my high school to early college, Nelly was like the biggest rapper on the planet and he's from my hometown.

Nelly was our guy. He was the first famous St. Louis guy. And it doesn't matter what race you are, where, how old you are. Music Nelly was like our son. He made us so proud.

If you're in your 30s or 40s, just close your eyes. I'm just gonna say a few words that'll just take you back. Country Grammar, Air Force Ones, EI, cotton hair. Oh my God. Like just the memories that come with those words.

So, so, so I'm like, all right. I'm, you know, what's a ridiculous thing I could have at my party? I'm like, have Nelly perform there. So my wife goes through the normal channels. They're like, you know, he basically doesn't do this, right? So he's like, look, it's $300,000 just as a starting price. By the time you do it all, it's half a million dollars.. And I'm like, I want to die with zero, but like, that's a little, little rich for my blood.

So I don't want to live with zero.

Yeah. So I'm like, all right, we're not going to do that. And then I kind of am sad for a few months. And then, and then the entrepreneur in me goes, wait, come on, there's got to be another way to approach this. Right. So St. Louis is not a big place. I asked a couple of people, I go, you know, Nelly's people, right? And I'm like, can you introduce me? And so I get to know, they're great by there. There's this guy, Mike Chaffin. They're wonderful guys. I get to know them and, you know, they introduced me as this guy who's like an expert digital marketer, e-commerce guy. So I'm like, hey, what's going on? What's going on in your world? Oh, da da da da da. You know, Nelly's actually working on two big e-commerce businesses, like his team is. And I go, ooh, tell me more. And they tell me all about it. And I'm like, okay, well, here's the thing you should think about and make sure you tag this pro— and they're like, oh wow, you know a lot about this. And I'm like, okay, how can I be helpful? Right. And, and then I just basically have been working with them and right here's the Shopify app, do this. Here's a good contractor for this. Really helping their team get it going. And at some point it came out, the Aux business came out and I'm like, yeah, I charge private equity firms like $200,000, $300,000 to do this.

Right.

And they're like, oh, but you've just been doing it for free. Like, what can we be helpful? I'm like, it's funny you ask. A young man's dream would be to have Nelly at his birthday party. And you know, they're, they're his people. So they're like, well, let's go talk to him. And they go, well, he's got to meet you because he doesn't know who you are. And if he doesn't know you, so I take my wife. You know, I get my, I get my sort of urban, like, going. I'm there and we become— he's super nice guy, really friendly.

Dude, have you ever been more nervous walking up to that meeting?

I was nervous. My wife was super nervous. She's like, why the hell am I here right now? We meet him in like this, the SoHo wannabe in St. Louis. So a club wannabe.

You go for the handshake, dap up? What are you doing?

Uh, yeah, you know, not the handshake, but the, you know, pull in.

Yeah.

Yeah, of course. And, and so he, that goes really well.

Yeah, my guy. He started using that phrase, my guy.

Yeah. And he asked me, so what do you want to do? And I think like, I was like, oh man, you got to come out to EI. We got to have the intro. It's gonna be like, and he, and he like looks at me. He's like, okay, you're a real fan. I'm like, yeah, man, this like, you were, you were the guy. So then they're like, okay, Nelly loved you. We're in. Then they're like, wait, what was the date again? It was May 25th. Like, well, he's in Napa on the 24th night. At some festival, and then he needs to be in Vegas on the 26th day for a day party. And they're like, there's just, he would do it as a friend now, or because you've helped him, but he just can't make the date work, Jesse. And so again, I'm like depressed for 48 hours. And then I'm like, no, fuck this. I'm like, what if I fly him private both ways? And they go, look, we'll talk to him, come back next day. Okay. He'll do it, but it's gotta be a G4 or better.

Oh my God.

Nelly does not fly in anything below a G4. So I go and I do a bunch of like, you know, I've, I've been flying private a little bit since the Amper sale, but I was like, talk to a bunch of these brokers and I basically get them to beat each other up and it was round trip. So it got a little cheaper per hour than it normally would. But for $60 grand, I got him a round trip on a G4, Napa to STL, STL to Vegas. And he rolls into the, you know, he rolled and he, by the way, he was amazing at the party. Like I'll, I'll text you guys videos and stuff. Like he, but it was scary because he wasn't under any contract with me. So he could have come out, said, hey, happy birthday, Jesse, E-I-E-I, and he could have left. He ends up doing a 45-minute set. And he told like his manager, manager told me, he's like, dude, he was like so hyped. There's like all these Indian people who like knew his music. Like he was so pumped that you guys are all just like rapping. My brother and I are on stage rapping E-I with him. Like it was, dude, it was a top 3 life moment. Like it was unbelievable.

That's so awesome.

Yeah, it was the best. Like, it was honestly one of the best hours of my life.

That was super cool.

Lil Dicky, if you're out there listening, I would, uh, I'm turning 40 in a few years. I would love to start, you know.

Yeah, you gotta save that money, dude. You gotta save that money.

Yeah, you have to hope that his like career just goes down.

Well, I told my wife, I'm like, for your 50th, I'll get Beyoncé because hopefully by then I'll have a little more money and you will— her stock will be down.

Yeah, we gotta just catch them right before they hit Cameo so they can't be peaking. They gotta be on some sort of a decline, but like not all the way rock bottomed yet. So that's, that's what we're going for.

Jesse, we appreciate you. You're the man.

Thanks for doing this. Thank you guys. Good to see you.

All right. That's it. That's the pod.

I feel like I could rule the world. I know I could be what I want to. I put my all in it like no days off on the road. Let's travel. Never looking back.