#75 with Randy Hetrick - Navy SEAL To $50M TRX

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This is very casual, so we're I don't even care. We can record right now. It's recording now and we'll put that up. So this is very casual and I'm gonna ask you a lot of questions. And, uh, if you don't want to answer something, just say it.

But, uh, oh, I will.

Yeah, it's very casual. What's going on? You're, uh, Randy, right?

Yep, that's me.

So I, um, I'm a fan of your guys's product and typically I, I own it. I have my own, my own gym downstairs. I, uh, I do research on the businesses that we talk to and the people we talk to. But in this case, I didn't do too much research on purpose because I only have the product as a fan of the product's perspective. And I wanted to come from that point of view. But do you know, do you know what this podcast is and who we are or anything like that?

Well, give me a little more background because I mean, I've been, I've been doing a fair number of these since this crazy making period took off and it's hard to keep up with them. It was funny because I love to support, right? Because I do so much in the entrepreneurial community. I love to support young entrepreneurs. So I'm, I'm basically, you know, taking pods that I normally wouldn't take just because it's, you know, we're here, we're home, and if I can support other guys that are getting stuff going, then I'm all about it.

And what you said, you've been doing a lot since the making— what, what, what are you talking about?

No, I said since this mayhem, right?

Oh, corona thing.

Yeah, I mean, I, I do a quite a lot of stuff in the press normally just to promote to promote my brand. But since we've all been locked at home, there's a massive proliferation of digital content in the form, sometimes in the form of video blogs and podcasts. And so I, in fact, I just got off another one with an investment bank, an industry panel basically, but it was just a call. So I didn't have to be as pretty as I am now for you, Sam.

Good, well, you look great. So let me, I'm gonna give you the 20-second or the 2-minute background, and then we're gonna make this all about you. But so I'm Sam Parr. I own this company called The Hustle. And what we do is I started it, we just turned 4 years like 2 weeks ago. So typically we have these conferences where we host trade shows, conferences where we host tens of thousands of people each year. But we also have The Hustle, and The Hustle is our daily email that goes out to millions of people. So millions of people log in and they get our news from us in their email inbox each morning. And it's a great business, it's an 8-figure business. Bigger, wonderful business that we've bootstrapped. And then we also have Trends and trends.co. It's our subscription product. So we, uh, it's just premium content community, which is also a great business.

So awesome.

Uh, and, uh, and we do this podcast as a, that I think, I forget how many listeners we have, but, uh, we've had millions, millions of listens, over a million listens. Um, and, uh, what this podcast kind of started as was me and Sean, my co-host who, uh, isn't here right now. But we both have started companies and we always had these interesting brainstorms with people like you who were our friends and we would just riff on interesting ideas and on cool insights. And most people don't have access to those types of people. And so we just do this publicly. And so that's what we're gonna do today. And so what I wanna do right now is I wanna learn a little bit about your background and kind of how you came to be where you are now and where you are now.

Do you own the company, or have you guys been acquired or anything like that?

How much did you raise from the angels?

Folks? Well, in the way back, uh, I think I raised about— oh, I have to think back to my round— around $5 million from, you know, in several rounds of, of angel money. Um, and, uh, and that's great capital, right? For— I don't know, I don't know what the complexion of your viewership is, but folks that think about raising—

yeah, don't use, uh, you can use jargon. It's a very, uh, it's a very highly intelligent, not beginner audience. So go ahead.

How big was the company when you sold it to PE or sold parts to PE?

Well, it's been 2 rounds of that now. So the first money we took, and I think we were around, I don't know, $30 million, something like that.

In annual revenue?

Well, so you already said the ballpark is $60 million. It could be way higher, but that's a number that's been said. Um, a company like TRX, you guys— so we talked to a lot of like these direct-to-consumer folks, which you didn't start out as, but you are definitely are now. But yeah, when I think of TRX, I think that you guys are in the same category as a CrossFit, or, um, and this isn't an insult, but like Tony Horton. Like, you guys are like a brand, right? Like, you're not just some Amazon— you don't rank on Amazon and that's how you win. TRX is something that people know, and, uh, it's a brand. Do you think that your valuation is significant? Like, would your multiples be significantly higher because of that, you think? Or, um, is it still rough to get a high valuation on products like this?

Well, I mean, so for starters, I mean, we are, we are in it. We're the number one selling fitness item on Amazon.

Yeah, but, but I didn't mean like your way— your path of success has not been like, well, we're just gonna rank higher. Like, it was just like, people love and know us.

Yeah, I know, I've had the same one. I've had the same one for 4 years. I got it, it was gifted on Christmas, and, uh, I've had the same one for 4 years now.

Yeah, I mean, and that's— and you're— in 4 years is nothing for a One/On/One, right? I talk to people that are, that are still traveling around using our like first-gen strap from 2005 in their bag, you know. And, and it's— I mean, on one hand it's a compliment, on another it's a nightmare, right?

You need, uh, what's it called, plan planned obsolescence.

Planned obsolescence, yeah.

Yeah. You need a break after 5,000 pushups.

Right now you guys make— what are your revenue streams? Your revenue streams are coming straight from— your revenue streams are purchases from coaches and things like that, or not? Um, well, coaches and chiropractors and who— like, you know, B2B people servicing clients, right?

We make— well, we're an omnichannel distributor, so On the commercial side of the business, which is the B2B side, yeah, we sell the gym, we sell gear to gyms, services. Yeah, and that's what I meant.

What is education?

So do you charge them?

A new trainer or coach move toward mastery.

And that costs money?

Yeah, yeah, our normal, we have about 10 courses of different kinds.

Oh, geez, not $89?

All B2B, and the, well, no, traditionally they were $295, right? So $295 for a 1-day qualification course, and it was 8 hours live in person. What you're probably seeing now is we've done some pretty incredible pivots with COVID-19 hitting and changing the landscape. And so one of the things we did early on was try to figure out, hey, all right, number one, we're not going to be able to provide education, right, as long as this thing lasts because you can't get people together. Number two, most of the people who come to our courses are out of work. And so what, what, what can we do to support them was sort of idea number one. And then number two was how do we take this moment, which is really a bunch of lemons being thrown at us and make lemonade out of it. And we decided that, well, we can take our courses, we can make them free. Figure out how to deliver them through Zoom instead of live. And we'll do that as long as this crisis continues, and we'll just try to fill our bucket with a whole bunch of new pros of all kinds of stripes, right? Who on the other side of this will then appreciate that we helped them out when they were down and also—

So, you guys have revenue from selling the main product, the main TRX, which it looks like you have a few varieties but I imagine most is from the main one. And then you make, um, revenue from these $100 to $300 B2B digital products. What, what's the breakdown? Is, is, is like, is, is the actual product 80% of sales?

What was the mix pre-COVID?

I mean, it's probably 70/30 between equipment, but you're defining equipment way too narrowly, right? You're looking at our HERO products, which are the suspension trainers. We do the entire ecosystem of functional training. So we have steel ecosystems that you built the infrastructure that not only you hang straps on, but you filled with kettlebells, bands, balls, everything you would see in a gym.

Do you have a sales team to handle that? Like, did you have to do like hand-to-hand combat for that, or, uh, is, is a lot of it inbound and you're just fulfilling orders?

Um, it's some of both, right? I mean, no, I don't think any business— it certainly doesn't exist for very long as, as all inbound flow, right? Generally you have to be out there.

I guess I mean, but are you like running ads to them or, you know, have a sales force? So yeah, hitting the phones and, and making it happen.

Oh, both. Yeah, both. We advertise into the commercial landscape through the traditional, you know, means to reach gym owners and trainers, but then we also have a pretty significant direct sales force, uh, inside and outside that does—

I'm looking at, um, I use this tool that guesses website traffic. I— if I'm looking at this tool, I would imagine that your sales are like 4x in April what they were in February. Um, it looks like you guys are just like Your web traffic has gone through the roof.

You have the unique advantage of seeing like consumer goods or, well, hard goods and digital products. So you're able to see how they both work. And my, from my perspective, and I've been an investor and I have friends who sell direct-to-consumer hard goods, and then I also have a digital company and I've invested in them as well. What my perspective is that the D2C guys can grow their revenue from zero to not zero very quickly, but there's massive supply chain headaches, whereas digital, it's often the opposite where it's maybe a little more challenging to get started, but the margins are way better and you never have a supply chain issue. What, uh, knowing both sides of the business, which do you prefer?

Well, I think that which do I prefer? I prefer the one that's easier and makes more money. Yeah, well, the reality is that I think creating a digital company, pure digital, is hard because it's a very cluttered field. Especially now, this virus has unleashed the digital universe. Now, just like any other marketplace, there's going to be this explosion of would-be participants, and then there will be a consolidation, and some of the— they'll separate the wheat from the chaff. I think that we're in a really unique position because we started as a physical products company, then we became an education company, education and content, because we made— hell, we probably did 35 DVDs prior to DVDs becoming disintermediated by digital delivery. We've obviously taken all that content and repurposed it into our digital ecosystems, but then we, we became a brand, like a, a really significant premium brand in the space, and then we stretched that brand around the world. So now we're in a really unique position because we have the best of both worlds, right? We have a a large customer base that bought our physical gear and that then came to group classes in clubs around the world that we helped develop and educate the instructors who were delivering those. So they got comfortable and identified with our brand. And then as we've done more and more consumer branding, we've extended that brand from the pro space, which is great from a credibility standpoint, because if trainers and physical therapists love you, the consumer at home tends to go, oh, well, these guys must be a quality operation. And so now, we're in a really unique position. Now, we're turning on some new digital engines, some subscription engines that give us the best of it all. We will have our products, which you're right, you stock out of. We've stocked out over and over and over during this thing because no one plans for a multi-time step function change in the demand curve, and you scramble to try to catch up to it. I think a lot of us will find ourselves just about the time we're caught up and we've got this whole new stockyard full of products. That's scary. Maybe the demand will settle down a little bit and we'll end up with more product. Yeah, but that's part of being a physical product.

Well, that's my question, which one do you find—

Just supply.

Which one do you personally enjoy more? Both in terms of working on and the results?

I'm an inventor, so that is part of my— it's probably what made me want to go into the Navy SEAL teams. I have a MacGyver bent to me, and I came up with an old man that can fix literally anything with almost nothing. And so, I sort of grew up out in the garage until the middle of the night holding a flashlight for my old man while he was jerry-rigging some kind All right, this episode is brought to you by SuperSide.

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End of a, uh, of a fix to, to an old motor or to whatever, it could be anything. So I really enjoy the process of product creation, um, and I spend a lot of time and energy at TRX, um, developing our next products. I also though appreciate and enjoy creating great content, whether it's in the form of pro education or whether it's in the form of end-user content, workout content. And so, I would say I like both. I like the economics of the digital side of the equation for the reasons that you've pointed out. You don't stock out of it and it scales infinitely. But I don't think that it's an easy business to just say, "Oh, I'm going to become a digital content publisher and I'm going to make a billion $1 billion. Yeah, like you and the other billion would-be digital content producers that are out there are all right on the same path. And so, so I, I, I, I like them both. Um, I like the multiple—

so I'm going to ask you on digital content and subscriptions, and I'm going to tell you about, um, interesting ideas that you're seeing in new opportunities. But first, you said something that you're the chairman, right? So does that mean you're not the CEO?

Yeah, I'm— what, we brought in a, a president I've tried a number of times to get out of the day-in, day-out management of the organization because of a couple of reasons. One, at this point, number one, there's one founder, and so you've got a certain amount of founder cachet that is really valuable in working with the press, in working with key accounts, in generating love around the brand. That there aren't others who can do that. Um, there are others who can manage the steady state sort of linear growth of a, you know, of a midsize and growing company. In fact, there's those that can do that better than me because I'm more of a startup guy. So I've tried, you know, several times over the last, call it 6 years, to, to get more out into the market and less in the conference room. And we hired a president about 8 months ago who he and I have been doing a transition where I can basically hand most of the day in, day out over to him and to the team. And then with our new partners, they're very good at the financial engineering side of the equation. So I'm not. I mean, that is just not something that turns me on. I like the outcome, but the process is just not something that floats my boat. And everybody's cut of different cloth. So what I'm really focusing my energy on is promoting the brand, developing new products, and looking at new initiatives. That's something that I'm very good at and passionate about is trying to see what—

We're very similar. So I've done the same thing.

—and what the next opportunity is going to be.

He handles a lot of stuff. And I do the exact same thing where where I can lead vision, but I also come at the very bottom and I can just change pixels and invent. I do it digitally, but the same exact crap where I'm just, I have my computer up late at night and I'm just making stuff. And most of it sucks, but every once in a while I'll show it to someone and they're like, oh yeah, let's go make that.

That's the product creation dilemma, right? Most of it goes nowhere, but about every 10th effort, You go, "Oh, wait a minute, there's something to this one," right? And that's, you know, and that's, you got to be wired to not get frustrated by that. Just like, you know, just like folks who like to manage at that mid-level, they don't like the scariness and the ambiguity and the, you know, the vagaries of the startup or creator. They like the consistent predictability of, you know, weekly staff meetings and a checklist and all the things that make me sort of Well, this is a consistent pattern that I see.

I don't know if you know this woman, Sophia Amoruso, but she had this company called Nasty Gal and it scaled to, I forget the exact number, $100 or $200 million a year in sales and had multiple offers around half a billion. And it, they, they, she screwed it up for a bunch of reasons. One of the biggest ones is she was like, I'm a, I'm brilliant at creating. I'm horrible at operating. And, um, I, uh, I too am like that where I'm, I'm brilliant at creating, uh, but operating, I just don't find it to be exciting. And I think that most people who start stuff are the same way, but I think there's actually a huge issue in your— in Silicon Valley, although you may or may not run in the Silicon Valley crew, particularly amongst that group of people. I've noticed there's a huge problem of people starting stuff who are afraid to hire people to actually run the thing. Um, and what I've really embraced, and it took years to learn this, is that there's actually people who like creating the car from scratch and designing it, and then there's people who love modding it out and making it better. Um, and having both is really important. How did you hire your president, and what was that like going through that process? And also, how many mistakes have you made in hiring the wrong people?

Because that sucks too. Plenty. Yeah, plenty. I mean, I mean, look, first of all, so I, I operated the company, you know, every single day for its first 10 years. That's a long time, right? And at that point, when you're— when the, the engine of both creation—

Well, why didn't you do that earlier?

—and management, that's like dog's years, right? Well, I think that a couple of reasons. One, I did try a couple of times, right, starting around year, maybe around year 8 to bring in a president. My idea was always, I'll bring in a president. And I never took a CEO title for years because I just thought it was sort of ostentatious for a little company to have a CEO. That was my personal opinion. So I was the president. So I brought in a president and the first one that I brought in, it really aligned with bringing in private equity.

Oh, why'd you wait 8 years?

Why not in year 3? Yeah, about year 10. Well, because we were still very much evolving. And I think that one of the challenges with bringing in somebody to take over the daily management is you have to be pretty well-defined about where you're headed. As an entrepreneur before you can now hand the wheel to somebody. If you're wheeling right, wheeling left, that's not exactly the moment to be like, hey, buddy, here, take this. Because then the guy's like, where do I drive, man? So I think that's the answer. The short answer is I wasn't ready yet in terms of our definition and enough certainty to the general direction of our course to want to hand that over. But at about year 8, I was, and I said, okay, I handed over probably the first two presidents that I hired, which are both great guys, but the mistake that I made largely from listening to my then private equity partners that had their Business School 101 playbook they were trying to run, which is go hire—

Kill me, kill me. I hear someone say that.

Kill me. Well, okay. Yeah, I was just going to say, I'm sure you're going to be hearing something familiar here, which is that a lot of the institutional capital investors, they haven't run businesses themselves, so they want to execute what they learned in business school, which is the idea of best practice. Well, what is best practice? That's the problem, right? And generally, they will say, "Oh, it's someone from the upper mid-levels of a great big successful company that we've all heard of." What I've learned, and it took me 2 it took him two go-rounds to learn this, by the way. Totally. Is that, that is almost—

I need a guy with an MBA telling me what to do. I need a fucking hole in the head. I don't like, like what? Like, oh my God. I, so I, I've had a— I got lucky. I've had a lot of great success. We have a guy, uh, Adam Ryan, who's our president, and I've known him since high school. I'm from Missouri, so I'm not from like this fancy San Francisco stuff like I live now. And that was awesome because Adam is wonderful at being scrappy and things like this. But he also can be like a big company suit if you wanted to. And what I found is, and I've hired some MBAs and it didn't work out. What I found is these gray hair, they're not actually gray hair, but it's more figurative. These best practices, this bullshit, they just— these people can't roll with the punches. And I've never had success with that type of— I've hired— I have a few businesses on this, like little investments I've made, and we've hired CEOs who were like this. And it just, man, it never works, but you think that it should.

And just going to a big company, a successful big company manager, and thinking they're going to be successful as a small company I think that, look, President, um, almost never financial arbitrage machine, and I need someone to figure out how to milk out 3% off the bottom line by using less materials, then I'm going to get one of those nerds. But until then, I need innovative people who understand how to be— it's a perfect balance of art and science— who understand like financial analysis and things like that, but who also can understand what motivates buyers and who can think of widgets that, uh, you make people feel good and want to purchase and be— it's just, I've been through this, um, I, so I empathize. Um, you, uh, are you investing in anything at the moment, or is 100% of your time on this? Or like on Saturdays and Sundays, are you tinkering with anything totally outside of, uh, this field? What interests you right now perpetually?

Yes. Yeah, I'm Well, I mean, there's a lot of different things that interest me. I'm an angel investor in a bunch of different enterprises, both inside and outside of health and fitness, 'cause I'm a super— I'm a startup nerd. So I live and breathe that. And I teach classes at both my alma maters, at the Marshall School at USC and the Graduate School of Business at Stanford. Dude, you're badass. So you're a bit of an academic. So I get to see a ton. Of young— you're pretty— well, I'd have to put academic— I'm not sure that I would put academic, uh, yeah, but I'm a lecturer, right? Not a professor. So, so that means that all you had to do, all you had to do was have gone there and then you're just something that did subsequently.

You can kick someone's ass but then also like, you know, talk to them about Aristotle and like Britain's economic policy and how it impacted imperialism in the 1960s.

I'm an eclectic dude. You got that part right, right? I'm an eclectic dude, and I'm, I'm a super geeky inventor, you know, which, which I love. I mean, I've got like 40 patents that I didn't— I could care less about the patents. What I cared about was the thing, right? Like bringing the thing to life. And then once you do, particularly in today's digital economy, right, you got to protect it, because if you don't, you'll be knocked off and blown out blown into oblivion almost immediately with factory direct stores out of China that have FBA shops on Amazon now. So that's why I became— I joke about having a minor PhD in intellectual property law that I never wanted, but I had to learn. And so all of that, all the nuts and bolts of creating, and then articulating a vision, and wrangling a team, to share that vision and then moving that thing forward, that's the stuff that makes my heart pound. Well, I suppose we'll wait and see until they pan out, but I've got— no, not yet. I'm an equity investor. I make a good living now, and so I'm not in any of these for a quick turn, but I think that they all will. Most of them are in areas that I tend to both invest and advise only in things that I think I can make a difference in. I've taken a couple of different flyers on things that buddies that I trust and are domain experts in other areas have said, hey, man, you should get in on this. Also, let's just qualify this, I'm a small investor. I'm not placing 6-figure investments one after another. I tend to invest in things where I can help the operating team based on my own experience. Really, experience is just the sum of all your mistakes as much as anything else. I can help early-stage businesses set up their partnership arrangements, figure out what makes a good partner, figure out what capital sources that make the most sense for them are, because I know both the pros and the cons of all of them at this point. Then team selection, I mean, I've been leading teams since I was 22-year-old frogman and led all the way up to the national level. I've got a lot of experience, whether I've done it all right, I certainly haven't, but I haven't done it all wrong either. But I've got a lot of experience in helping build culture, create team dynamics that are durable and performance-oriented, and build brands. Wow. Categories, that's kind of my wheelhouse.

Are you, uh, an MMA fan? I'm a huge MMA fan. And I, uh, this quarantine thing— yeah, big time— I've gotten very healthy, much health. Like, I've done Ironmans and things like that, but I've like actually started using my TRX, by the way, and lifting weights, and I've gotten strong. But I, uh, I have a weight loss challenge and I have $500 on the line and I have to hit it by Saturday. And I have— I'm gonna crush it just through diet and exercise. But I've began just— I'm drinking like crazy amounts of water because I want to do like an MMA weight cut and just like destroy the, the, the benchmark that I've gotta— yeah. And so I'm, uh, I'm currently drinking 3 gallons of water a day, and then tomorrow and the next day I'm gonna taper down. My goal is just to crush everyone.

Um, what, uh, that's great, that's great. Yeah, well Well, yeah, I've been an MMA fan since before there was MMA because coming up in the SEAL Teams, right, you do a— it was very eclectic in terms of the coaches that we would bring in. So, I was a— I've been the full gamut. I was an MMA guy before MMA was termed, right? Everybody was still purists in their arts, but because I had this Bedouin lifestyle of constantly deploying and coming back. I didn't have that luxury, so I became— I'd been a kickboxer and a wrestler in high school, kickboxer through college, then I got into jiu-jitsu at the end of college and leaned into that hard as a SEAL. But, I never had the luxury of being in one place for more than a couple years at a time. But, I've been a huge fan of— we did a ton of sponsorship actually of the fighters in the UFC prior to Reebok buying the, you know, the global rights, uh, to, to, uh, the sponsorship placements. Um, so yeah, I, I— in fact, Mike Dolcek could help you with your weight cut.

He's a freaking master at that stuff. I've become friends with Ben through this podcast and media, and so he's been helping me out. And I'm name-dropping a little, but I'm, I was a huge fan of his, and then I started talking to him. I'm like, that's awesome, I'm friends with someone I looked up to. And then I think we're having Michael Bisping come on and do a podcast as well. Uh, yeah, both of those guys are great, man.

I mean, uh, Askren's a stud wrestler. And Bisping's just, you know, you talk about one of the veterans of the, of the sport. I was so happy when, you know, he finally got to the mountaintop after all those years of grinding, fighting everybody that, you know, that was, that was there to be fought. And he just kept sort of somehow falling just short, but he finally got there before— you know about all this stuff.

And sometimes whenever I talk about like MMA and UFC, I'm like, I think I'm being too niche right now. No one cares. I think it's way bigger than I actually realized. Um, but when you were in the SEALs, this, the SEAL thing interests me for two reasons. One, Jocko Will— is it Willick? Willink? That guy's everywhere right now. So, and he's always fun. He's got good— yeah, sure. That are fun to watch. And then I'm also reading David Goggins' book, Can't Hurt Me. Um, it randomly came up on my Audible thing and, uh, I started listening to it. It's emotional. It's sad. It's hard to listen to. Have you, have you heard it or read it? I haven't.

No. I mean, I know, I know David. Um, again, I did never work together, but I, you know, you cross paths. Same thing with Jocko. Those guys are, those guys are both way behind me in terms of age. But the, and so in the SEAL teams, you know, if, if somebody is more than a couple of years ahead or behind you, the, the likelihood of you knowing him is possible, but not high unless you worked at the same places, right? In which case, then you, then you transcend the age barriers because you're all, you know, at a, at a command together and you you work together. And I never worked with either one of those guys. In fact, I think as I was getting out, they were both coming in. But I certainly know of both of them. And I like what they've both done with their brands. And, you know, Jocko's done some really, really cool stuff with his podcast and his other appearances. In fact, he popped up the other day on Billions, which I was laughing about. He— yeah, so this new— the new season, he popped up in that. And I was like, yeah, man, that's what I— I love it when I see other frogs doing doing good stuff versus stupid shit where they're out there, you know, telling and selling secrets that are gonna, you know, put other guys at risk, which I do not admire. But I really love when I see guys out there doing great things post-career because that's what the whole country is supposed to be predicated on, right? It's the citizen soldier. You come in, you serve for however long, you try to serve as well as you can, and then you go on and do something else cool out in the civilian community and be able to share some of the things you learned. I love that Jocko does that, and I love that Dave does that as well.

I'm just like, I like to invent things and I like selling them and I like making money. Um, what I didn't— what I always did track and field and running and weightlifting and swimming. And those are all individual sports. And what I really struggled with early on was how to be a leader. Um, it's super hard because you like, for a lot of people they start stuff because, uh, it's like I said, it's fun and it makes money and it's cool. They don't, but then they like, if it was successful, then they're like, oh, I gotta be like a leader of of men and women, not necessarily a creator of products. What do you think— do you think that— I mean, I know the answer. The answer is definitely yes. But what specifically helped being in the SEALs in terms of business leadership and managing a team? And by the way, how many people do you have?

Oh, we've got about 100 full-timers, and then we, we, uh, you know, we use another 350 master instructors to do— to deliver our education courses. So they're 1099s. 100 full-time, plus or minus. Do you think people would say you're a good manager and that we employ as contractors? Or a good leader? I think they'd probably say I'm a better leader than I am a manager. That would be my guess because it maps to— I can manage and the distinction between that, to me, is quite a wide gap. There are people, I think, who can do both. Both at a very high level, but not many because I believe that most of the characteristics that make someone really good at one or the other almost prevent you from being good at both. I mean, there are some extraordinary people I think out there that can do both, but management requires just a different level of attention to minutia. I won't just say detail because I'm very detail-oriented, but ongoing minutia, which is important important in making a business go. Um, you know, I don't have the patience for it, and I also, you know, I never, I, I never really liked corporate management. I, I like leadership a lot, and leadership's about storytelling, being authentic. I mean, communicating.

You seem very charismatic. Do you think you're a good leader?

Yeah, I, I think that's one of the strengths that I have developed largely as a result of my experience.

That our listeners can learn, you think?

Well, I mean, we do, you know, so I do a keynote that is pretty massively oversubscribed, frankly, called Lessons of a Frogman, and it's leadership lessons, business leadership lessons that I learned as a SEAL, which turns out almost all of the key lessons that I know, I actually learned as a SEAL, the leadership lessons, not necessarily the tactical business lessons. And you would think, and I actually had one of the assistant deans at Stanford Business School when I was out interviewing to be accepted there, give me this sort of patronizing, put his hand on my shoulder and basically said, well, then why do you think we should take you, Randy? And I talked about my leadership experience. At that point, I was at the Special Missions Unit as a troop commander and had been in the SEAL teams for, I don't know, 10 years or so. And, you know, then he put his hand on my shoulder and said, well, then it's, it's a bit different leading in the real world than it is in the military. Don't, don't, don't you think? Because out here you can't just— when it is on your collar device and have everyone snap to and do what you say. And I'll never— I was so astonished, man. I was like, is this guy for real right now or is he baiting me? And, and I basically said to him, I said to him, you know, Dean, if that's your view on military leadership, then I think it says a lot more about how little you know than it does about the subject of leadership. And, you know, not surprisingly, I didn't get in that time. But, but, but, you know, I think that if you're talking about people and groups of people, there are many, many more commonalities to how to lead and motivate the group group than there are differences, depending on, you know, like irrespective of domain, because you're talking about anthropological behavior and that changes very slowly over millennia, you know. And whether you're a, you know, a baker or a freaking frontline soldier or a software developer, if you're dealing with other people, humans behave, you know, largely the same way. They have different microcultures, but, but we're all part of the Homo sapiens species and we, we've evolved our behaviors, uh, over, you know, hundreds thousands, if not millions of years. So the commonalities are that people want to be inspired. They want to associate with something they believe in and other people who share that belief system. They want to feel important, right, like they're contributing. Everyone wants approval and reinforcement that what we're doing is good. And so figuring out how in a context to provide those basic human needs is what leadership's all about. And I think that it's not actually very domain-specific, whereas management arguably is much more domain-specific depending on the industry. I think that requires a different set of skills. Very often, the things that make someone a good manager prevent them from wanting to be on the podium, prevent them from wanting to take risks. Those are things that you can't lead anybody if you're not willing to get on point. watch it? I hope not, because it's one of the side hustles that I enjoy doing. Obviously, I haven't been doing them during COVID-19, but I'm working on a couple of books in the early stages. One of them is going to be that. It's going to be a deeper look into the substance of my keynotes that I do for corporations. The other is going to be an entrepreneur survival guide, because what I discovered is that the gap between what I learned at Stanford Business School and the stuff I actually needed the day I launched this scrappy little strap startup couldn't have been wider. That's at one of the best business schools in the world, but what those business schools really prepare you to do is enter as a mid-level manager into a large organization. Very few of them prepare you to be a bootscrape entrepreneur, right, that needs to walk out and figure out how to find some space, how to get pesky little things like insurance. When you start thinking about somebody you're going to partner with, what's that all about? How do you go about the nuts and bolts of raising money without screwing yourself there and ever after? All that stuff, you don't really get in business school. No, I agree.

And we're going to be wrapping up soon, so I wanted to wrap up the questions on angel investing. Any companies that you've written checks to that we would know about?

A better run at it than those guys.

It's like when Billy Bob Thornton and Angelina Jolie had vile blood. And then did you ever read about that? They're fucking weirdos, but they—

yeah, yeah, that's a little creepier than I, than I, you know, than I'm into. But the other thing they do that's really interesting, you either choose, uh, to put it into jewelry or into tattoos. So for everybody who has tattoos and wants to describe a little more meaning to them, right? It's kind of a cool thing to be able to cut a lock of, you know, everything from your dog's hair to your kid's hair or a cheek swab, and you send it off to them and they've got this patented unique process of putting it into what, you know, a keepsake, basically a permanent keepsake, whether it's jewelry or a tattoo. Everence, E-V-E-R-E-N-C-E. I think their website is everence.life. But yeah, there's a couple, you know, and then I'm involved in a, in a technology company in LiDAR radar called Luminar, which is a cool company. And that's one of the examples of one of those that, all right, not exactly in my wheelhouse, right? Not an area that I can necessarily add value to, but very exciting. And another friend who pays a lot closer attention to that space put it in front of me and it just made sense. It's one of the companies that's out there vying for supremacy in the self-driven automobile.

I feel like if you type that category that you're starting a company in there and I would just invest in there just because it's like, "Eh, probably, maybe." Right.

It's kind of in that category. And then you look at the leaders and go, "Well, those people are really smart people. This is a sector someone's going to win in, probably more than one." So reasonable. And again, as I said, I'm a $20K to $50K investor in any given one thing. I'm not taking huge exposed positions. Usually, I like to invest in things where I can help based on my experience as a brander, as an entrepreneur, some government stuff that I've gotten involved with, because obviously, I spent a long time in the government space. Then just some cool companies. There's cool companies that I'm trying to help right now, like Indie.com is an awesome new platform to help influencers monetize their followings with content. Content. And, um, I'm a big believer in that space, and it's, and it's an area where I can help them by exposing them to our large installed base of trainers, um, who all of whom are influencers in their own right and trying to figure out how to scale themselves, right, and create new sort of passive streams of income. So, you know, it's a smattering, right? And, and there's— were you able to— full of others that are kind of insane from the first same category.

Each event in order to make these investments?

The first one, no, I should have, right? And that's one of the— I mean, one of the big lessons for anybody who's listening, and I really believe this, unfortunately I didn't hear it, or if I heard it, I didn't listen the first time I heard it. But I really think for entrepreneurs, you really should not— I'm speaking generally because there are exceptions to every generality, but in general, I don't think entrepreneurs should take institutional capital without pulling a significant piece off the table. From the time that you do and you introduce a preferred class of shares—

What would be your definition of significant? A million, $5 million, $500,000?

And you didn't have the ability— I'll wrap this up in a second. You didn't have the ability to take a couple million bucks, take a million dollars off the profit each year to pay yourself. You were just strictly earning a a low salary as the company grew, or were you able to like— because if you raised $5 million right out the gate, I would imagine you wouldn't even have had the ability to say like, well, this year we made $3 million in profit, I'm going to write myself a $700,000 check.

No, of course not. And you don't— and that's not, frankly, that's— I mean, that's a tough way for an early-stage entrepreneur to even think, because if you're starting to think about trying to extract stuff out of an early-stage business, chances are you're going impair that business's growth. And so, my view was never of that. I mean, I wanted to start making money because the first, if you count 2 years of business school where I was working on this idea, I went the first, those 2 years plus the next 3 without any pay. So, I was 5 years—

And that's why I'm saying, but you were like 10 years in before you made your first round, right?

A no-pay environment basically. So, it's like by that point, all right, look, if we're doing okay, I can definitely 9 years in, um, I can definitely treat myself a little, and I should, I should have taken money off the table then. That was one of the mistakes, right? Because what I focused on instead was, hey, I want, you know, to up my, up my, my salary, right, and my bonus structure to a point at which I can start making, you know, a good living on an annual basis. Um, but I should have, I should have done both, right? Because that, that was possible, and I chose to just focus on, all right, let's get my cash comp up to a, up to a level that feels right for what I've built in the 100 hours a week that I'm working and not worry so much about—

Oh, wait, you're saying you should have it just a fixed salary? —no, extracting value bonuses.

Right. I should have done both is what I said. I did increase my salary and bonus structure. What were you paying yourself? I did not pull money out of the business.

I mean, we paid $50,000 a year.

Yep, I live in downtown Glen Park. I, uh, ran Glen Canyon today, and I have a house here with like a garage and a gym with my TRX. Um, this is awesome, man. You're cool as shit. I appreciate you taking the time. Um, uh, right on. What's your preferred method of, uh, what's your preferred method of, uh, uh, chatting with people? Twitter?

You have the story, you have the look, you have the charisma. Navy SEAL who's fit and also went to Stanford. I mean, you're a— you, you, you have it, man. You got the it factor. Doctor. So I, uh, well, and that's okay.

There are days when it feels like that, and then there are the other days.

This is sick. Um, thank you.