3 Things You Need To Outperform 99% Of Entrepreneurs

Shaan Puri

Extreme force of will, extreme bias for action, and a questioning of the default speeds... it changes everything. Yeah, you know, I'm on this business entertainment kick where I'm looking for content that is about business but is made to be entertaining. So it's not just like an informational video or a blog post. There's a new show called "Fighting" that I watched, and I thought it was really good. Did you see it?

Sam Parr

I saw the commercials for it. How do you get it?

Shaan Puri

It's on Roku, but I don't have Roku. You just Google "watch fighting," and it's Roku that lets you access it on their website. You don't have to sign up or do anything; you just click and watch it. So, it's very cool. I mean, they basically follow Dana White behind the scenes and then the UFC, like kind of the machine behind the show. To put this in perspective, there is no off-season for the UFC. It's 52 weeks a year. Every Saturday has to be an epic show. It's a live event with pay-per-view. There are fighters who get injured, pull out, or get arrested, and now they can't fight. There are all kinds of things that can and will go wrong. But it's like the actual epitome of "the show must go on." I wanted to share a couple of my thoughts watching this from a founder's perspective. As silly as this sounds, I do think that Dana White is on my Mount Rushmore of startup founders. I know he didn't technically found the UFC, but he basically did. He created the goddamn thing. He's a madman; he is a workhorse, a machine. I really don't think the UFC happens if there's no Dana White. This got me thinking about some companies that I will call "inevitable." An inevitable company is one whose time has just come. You know, YouTube today is a giant company, but YouTube's time had come. If it wasn't YouTube, if Chad and Steve had not created YouTube, somebody else would have created the equivalent of YouTube. The idea of hosting video online was going to happen. It was happening; somebody was going to win that space. That's an inevitable idea. The momentum of internet speeds going up and being fast enough to upload and download videos was going to happen.

Shaan Puri

Where video became an obvious thing, we had Flickr for photos, and we were going to have a version of that for videos. I would say that Google was an inevitable idea. The more popular the internet got, people already needed search engines and portals. Google happened to be the winner of all the search engine portals, but there was going to be a way to search the internet that was going to happen. So, there are inevitable companies, and then there are companies that I honestly don't think would have happened if it was not for the force of will of the founder. The vision, the skill, and the determination of the founder made those companies happen. My examples that I would put here are Elon’s companies. I think Tesla and SpaceX would not have happened, or at least not for another 50 years, had he not made those happen. I think it required a level of insanity, self-funding, technical brilliance, and determination to keep going, even against the odds of failure, for him to be able to pull those off. I think the UFC is in that "inevitable" bucket. If the UFC had just died, it was about to go bankrupt before Dana bought it for $2,000,000. I don't think that something like the UFC necessarily would have happened.

Sam Parr

Yeah, I mean, I totally agree because it wasn't like a wanted thing we did. It was one of those products where we didn't know we wanted it. At first, it was a freak show. I don't know if you remember, one of the more famous guys who first started fighting was this Black guy who would use one boxing glove and one free hand, and he fought against like a 300-pound sumo [wrestler].

Shaan Puri

Creative characters in a video game, all of the people look like creative characters.

Sam Parr

Yeah, there's one Hawaiian guy who is like a sumo wrestler-looking guy, and he fought the dude with the one boxing arm. It's weird, and it was a freak show at first, but then it took like 10 years and then athletes started doing it, and it became amazing.

Shaan Puri

Condemned, like John McCain famously did, I think in Congress or the Senate or whatever, he asked for every state to outlaw the UFC. He called it "human cockfighting" and said, "This is terrible, we need to end this." John McCain, the American hero, the war hero, was now saying this is disgusting, basically. So, Dana had to find venues that would support him. This is why, by the way, Dana and Trump are so close now. Trump would allow Dana to host fights at his Trump properties in Atlantic City. Dana had to fight, scrap state by state, city by city, event by event, almost going out of business many times. They went $40 million in the hole before turning this thing around and transforming it into a $10 billion company.

Sam Parr

Dana's got this great story. It was during the cockfighting discussions when people started saying certain things. He was like, "Well, what do you think these athletes think?" People responded, "They're, you know, maybe they're miserable. They gotta go through all this pain." He goes, "Let me tell you what they think. They're killers, and they want to go out and do something active. They need to get this energy out, and they live their life like they're in heaven. They look at your life, and you just go to work at 9, come home at 5, and sit in a cubicle. That's hell. These guys are free. This is what they were born to do, and what they feel like they need to do. So if you take this away from them, you're hurting them way more than when they get in the ring." I thought that was actually a pretty good spin on it.

Shaan Puri

So, one of the cool things about this show is that it showed a couple of things. I'll give you the big takeaway and then some of the smaller takeaways. Here's the big takeaway: I said the phrase "force of will" very specifically because I think it describes a certain trait of a founder. I try to have this trait, and I believe the best founders all possess it. By the way, this comes with some trade-offs. When you have force of will, it is as brute force-y as it sounds. It can be uncomfortable to be around sometimes. You are pushing people; maybe you're holding a higher standard. Perhaps you're demanding that things are done a certain way or at a certain speed that does not feel good to the other people in the organization. They may be used to working in other environments where they don't have that. So, there's a little story. Basically, one of the big fights of the year is coming up in 18 days. They've done everything; they've prepped all the marketing. They've got the billboard. They show them painting the billboards at night. They show them making all the marketing videos. They show them doing all the different things that go into promoting a live show. They're selling tickets—all of this.

Sam Parr

Which fight?

Shaan Puri

This was a... I don't remember which one. There was either the one where Jon Jones had to pull out or there was the one where Charles Oliveira pulled out.

Sam Parr

Okay.

Shaan Puri

And so, 18 days before, he gets a call. The fighter got hurt in his last round of his last sparring session. He was sparring without headgear. I think it's Oliveira.

Sam Parr

It's Oliveira. This is recent.

Shaan Puri

Yeah, he gets a cut on his eye and he can't fight. So now, the main event that they've sold all the tickets for, that they've done all the promotion for, and that's been building up for six months, falls through. It's basically him and his guy, Hunter Campbell, sitting in this room. This is business as usual; disasters are business as usual for him. He talks about this and says, "Give me all the stress. I eat that shit up. I can take it all." You can just see he's built up this resilience, this tolerance. Imagine the UFC, which is a live events fighting business, with stadiums full of people. When COVID happened, that killed the business. There was no other business. Dana not only had a sport that survived COVID, where it got shut down and you couldn't do live events for over a year, but you can't just turn off a business for a year and hope it's all going to be okay. Instead, he was the first sport back. He created something called "Fight Island." He created a bubble where he said, "Cool, we'll test everybody, then they get here, and now everybody here is tested. Nobody comes in or out." He found an island in the Middle East where they could do this, and he branded it as Fight Island. They were the first sport back; it was incredible. So, he's used to this. He's talking and saying, "What if we did this fight? What if we did this fight?" The guys in the room are like, "Yeah, we could call them. You know, I put out a call; he's going to call me back, whatever." Then, somebody walks by and says, "His manager's in the lunchroom right now. Yeah, they're all here." And Dana within...

Shaan Puri

One second, just hops out of his chair. Nobody else does. Dana hops out of his chair, leaves the meeting. You see him, and the camera's following him. He goes to the cafeteria. He's not even at the table yet, and he starts saying, "Usman versus whoever." Usman versus... I forgot who he's gonna fight at the time, but let's just pretend it was Gaethje. The manager's eating a salad, and he's like, "What?" And Dana says, "Usman versus Gaethje! We gotta do it!" The manager replies, "No man, I don't wanna do this." Dana insists, "What are you kidding me? This is a huge opportunity for him if he fights this guy!" Then he comes up with, "Usman versus Khamzat! You gotta do it!" The guy says, "No, no, he's not ready... blah blah blah, not ready. Who do you wanna fight?" Dana responds, "What does that do for you?" He immediately, in like four seconds, cuts the deal with him. Khabib was there, and Khabib said, "No, I think Dana's right. I think this is what he should do. It's gonna be huge for his career." So they cut the deal. The agent, who's a super agent—he's the agent for all these fighters—you would think an agent's like Ari Emanuel. He says in the thing, "This is why I don't talk to Dana anymore. He's too intimidating for me. He's too forceful about what he wants to do." I saw that, and I noticed that most people will watch that scene and they won't even pay attention to what just happened, which is that the greatest founders in the world, the greatest CEOs in the world, they cut through the bullshit. Alright, look, the question that Sean and...

Sam Parr

I get asked constantly, "What skill set did we develop early on in our careers that kind of changed our business career?" That's an easy answer: it's **copywriting**. We've talked about copywriting and how it's changed our lives constantly on this podcast. We give a ton of tips, a ton of techniques, and a ton of frameworks throughout all the episodes. Well, we decided to aggregate all of that into one simple document. You can read all of it, see how we've learned copywriting, and check out the resources that we turn to on a daily basis. You can see the frameworks and techniques we use. It's all in a simple document, and you can check it out in the link below. Alright, now back to the show.

Shaan Puri

There's another video I saw recently of... what's his name? Walter Isaacson, who did the biography of Elon Musk.

Sam Parr

With Elon.

Shaan Puri

And he's on someone's podcast. I think he's on Steve's podcast, and he's telling the story. He says Elon is talking to the Twitter team, and he's like, "Hey, cut costs. We need to shut down the Sacramento server farm." His engineers are like, "Okay, that's gonna be tricky because those servers are used for all of our infrastructure, but we could do it. We'll make a plan, and we'll be able to do that in 6 months." "6 months? What are you talking about? We need to do this faster!" "It's gonna take 6 months, Elon. That infrastructure is critical. It's so interwoven into everything that we do. We're gonna experience big, big issues." "We'll make a plan, and we'll get it done. I promise you, we'll get it done in 6 months." "I need this done in 6 weeks." "6 weeks? We can't do this in 6 weeks. We would have to do A, B, C. It could be done in 6 days." "Let's do it in 6 days." Now these guys are reeling, and they're like, "Elon, it can't be done. 6 weeks, 6 days, it can't be done that way." So he leaves the meeting and...

Sam Parr

I think he was going to Texas for Christmas.

Shaan Puri

Yeah, it's Christmas Eve. He's flying to Texas to go see his family, and his two cousins are, I think, on the plane with him. They're brainstorming, they're like, "God, 6 months? 6 weeks? This is ridiculous." And then someone on the plane has the idea. They're like, "Why don't we just go to Sacramento right now? We'll just rip the servers out ourselves."

Sam Parr

Because one of the cousins, I think, worked at SolarCity or whatever, and he was like, "You know, we could use some servers. We definitely need some servers." And he's like, "Alright, sounds good." And what did he do?

Shaan Puri

The idea was, if we just take the servers offline, they're going to have to figure out how to fix it. They'll fix it in faster than six weeks, I promise you that. I think that was underlying it. So, Elon, on the plane on Christmas Day, basically Christmas Eve, you know, they're flying to Texas. Midway through the flight, he just tells the pilot, "Turn around, we're going to land in Sacramento." The pilot's like, "Okay." Then he says, "Hey, do you have a pocket knife?" and the pilot's like, "Yeah, I do."

Sam Parr

His bodyguard was like, "Here, I got one," and then he whips out this pocket knife.

Shaan Puri

And so, they go to Sacramento. They take the knife and basically, the server, the company that the farm, was like, "Hey, we're closed, dude. It's Christmas Eve." He's like, "Let me in! These are my servers. Open this door right now. I don't need you to do anything, just open this door. I'm going in." He opens the door, gets in, and takes down the servers. I don't know the exact ending of the story, but it's the same thing: extreme force of will, extreme bias for action, and a questioning of the default speeds for everybody in the company. When you know that your default speed or your default clarity of thinking is going to be questioned, it changes everything. I've been on the other side of this. When I was at Twitch, Emmett was somebody who I've always said, "His oven burns a little hotter." He's smarter than the average bear. I felt that if you were in a room with Emmett and you presented a plan that to 9 out of 10 people in the company would sound okay, they wouldn't challenge your assumptions. Emmett would always challenge the assumptions of why we're doing it, how much it's going to cost, why it has to take that long, etc. If your logic was not bulletproof, if you were not already maxed out in your thinking of what was possible, you were going to eat shit in that meeting. You are going to get shredded in front of like 18 people. Not in a mean way, but your logic is going to get shredded. You are going to get verbally undressed. That changes things. Once you know that that's what's on the line, you come in a little differently. You sit a little straighter, you walk a little faster, you know, dot your i's and cross your t's when you go into those meetings. He only had to do it once, and then for the next 18 months, I was ready for every meeting with Emmett. I think that this is just a very valuable trait that they don't teach you.

Sam Parr

Emmett is a courteous person.

Shaan Puri

Emmett sort of has that **autistic forgiveness** where you're like, he's not being mean about it. He's not being nice about it either; he's being very direct. But you're like, "Oh, that's just how he is. He's just being direct." He's not trying to be mean, and I wouldn't even say "mean" is the right word. He's just trying to get to the truth, and he would need you to get out of the way so that the truth can appear. He doesn't care about your feelings in the search for the truth. In fact, the more you kind of try to get in the way of the truth, the more he's like, "What are you doing? Get out of the way! We're trying to find the truth here." That's the way I would describe how it felt from my point of view. I was rarely on the receiving end of it, but I saw it happen many times, and I took note very quickly of like, "Okay, you gotta come correct here."

Sam Parr

Well, because I don't like people who are like... and I used to behave this way, and I regret how I used to behave. It's about being needlessly rude. I think that the people who are needlessly rude, I think Dana would fall into that category because he loves to fight; he loves to battle. He just told the story last week. He goes, "Let me tell you something. I'm going to war right now with Caesar's Palace." And they're like, "Why?" He goes, "For the last 6 months, I've been playing baccarat or some casino game with them. I'm up $17,000,000 on them right now." He continues, "I wake up in the morning and I think, 'How am I gonna win this war today?' I'm gonna lose eventually because they're gonna win, but right now I'm crushing them. Each morning I wake up, I go to work, and instead of going home..." He said, "When my kids are asleep, I go back to the casino, and I'm ready to go to war. I thrive off that. I want my back against the wall, and I wanna go to war."

Shaan Puri

So, I gotta say this because I'm an actual gambling degenerate. If you listen to Dana's gambling story, this is only going to apply to 1% of the audience, so I apologize for the 99% who are like, "Who cares about this?" I care a lot about this. His story has some holes regarding his gambling experiences. Here’s what I would like to list: some of the holes that I'd like some X-rays for. I'd love for Dana to come on and talk about it.

Sam Parr

He tells some of the holes... like he tells us one time that he got too drunk and he lost... he goes, "I think I lost $60,000." And I wake up in the morning and they're like, "Hey man, you owe us." He goes, "Yeah, I'll get you the 60." He goes, "No, no, no, no, no. It's $6,000,000."

Shaan Puri

Yeah, I'm not saying he doesn't admit that he loses. I just, in that interview, he said, "I'm up $17,000,000 on Caesars this year, year to date." He says, "My rule is that if I make $1,000,000, I walk. If I lose, I'm willing to lose up to $6,000,000." Okay, my God. Then he says, "I've only lost twice this year." So it doesn't add up. How do you... if you win, if you walk away when you win a million or you lose $6,000,000, and you're up $17,000,000, and you've only lost two days of the year, and it's... we're halfway through the year? The math ain't mathing on that one. The fourth thing, he represents himself as a skilled gambler who beats the house. He's playing baccarat, which is like a 50/50 push game, and yeah, blackjack, where you're down $44,951. There is no skill. The biggest loser in the world is a professional blackjack player. I'm just going to say that again: the biggest loser in the world is a professional blackjack player because you're professional at something that is stacked against you. By definition, it's a losing game. Secondly, you're probably really smart and could have done so many things with your life, and you chose to play a game that is stacked against you as your professional career. And third, you're delusional because there's no such thing as a professional blackjack player. That is why that is the biggest loser job in the world.

Sam Parr

Well, he's... but the fact that he continues to do it, I'm not.

Shaan Puri

Saying, "Dana's... by the way, Dana's job is running the UFC." Well, just as a side tangent to any professional blackjack player out there, that makes no sense.

Sam Parr

He could be a degenerate and also a great businessman. He could be a degenerate gambler and also a...

Shaan Puri

Great business is what Jordan was, and many others are.

Sam Parr

What else did you learn in that documentary?

Shaan Puri

That shows **force of will**, **bias to action**, and **speed**, cutting through the BS. I think it is tremendous. His other employees even said this. The head of PR was like, "Yeah, work starts at 8:30. It's 6:30 right now, I'm doing my workout, but Dana just texted me saying, 'Are you at the office yet?' I told him, 'Not yet, but I'll be there soon.'" She was like, "You know Dana's gonna do this press conference. Dana's the type where once he decides he's gonna do something, he's like a rhino going to do it. He's gonna bulldoze through, and you're either with him on it and you're helping him do that, or you should just get out of the way." I just thought, man, another really hard job. Being the head of PR for the UFC is a very, very difficult job.

Sam Parr

And that woman is with him everywhere. I forget her name, but Landa or Linda or something... she's always with him. What you'll notice is they do the press conferences after the fight in New York time. It's like at 2 AM, and then you'll see them on Monday in France for another press conference. They work their asses off.

Shaan Puri

Yes, 100%.

Sam Parr

Let me tell you, alright? So, we talked about a company on here a bunch of times, but I actually just met the founder. I'm going to do a little bit of a repeat. But remember how we talked about 29 029, the Everesting thing?

Shaan Puri

It's the outdoor race where you kind of run up and down a hill as many times as it takes to run the equivalent of Mount Everest. An awesome thing started by friend of the pod, Jesse Itzler, and others.

Sam Parr

Yeah, so it's... I guess Everest is 29,000 feet. Hence, 29,000 is the name of their brand. We've talked about them a bunch, but the guy coincidentally joined Hampton recently. I was able to call them this morning and I was just talking to them because I've been so fascinated. We talked about high rocks and a bunch of these niche sporting events, and I actually think they're better businesses than I previously thought. So let me tell you about this one. If you go to 29029, I think it's called 29029everesting.com, you can check out the website. But check this out: they do seven events a year, and each event only has 300 people. This year, they sold out the entire year in four minutes for all of the events. He's purposely keeping this small, so if you do that math, that's $13,000,000 in ticket sales that he's done. He told me that basically they want to own all the accommodation, so it's basically turnkey. You pay $65,100, you show up, and in some locations, you could stay at a Fairmont hotel, which is where they partner with, or they do glamping. You go to places like Whistler and all these really beautiful locations. You show up, you do this event, and the reason they keep it at 300 people is so you can meet everyone and have this experience where you get to know all your people. This way, you keep coming back year after year. But listen to this: they started in 2017. When they started, Jesse Itzler was Mark's partner on this, which is like the whole idea of an influencer partnering with you. Jesse only had 5,000 followers on Instagram when they started; he wasn't that big of a deal. Yet, in their first year of business, they made $500,000 in revenue. In 2018, their second year of business, they did $1,000,000 in revenue. By 2020, he said they were doing really great, but then COVID happened, and the business got wiped out. So in 2021 and 2022, they had to start all over again. But he says it's a great business. He's like, "It's negative working capital. People pay upfront, and I can use that money to pay for all the accommodations and everything." He says it's a great business. I was like, "Well, what's wrong with this business?" He said the first thing that sucks is it's a fad. Tough Mudder and a bunch of other events, like Spartan Race, get really popular really fast. Tough Mudder was doing $100,000,000 in revenue, and now it filed for bankruptcy a couple of years ago. You have to figure out how to keep people coming back over and over again. I asked him, "How do you do that? What are the keys to make this work?" Because this is kind of an interesting thing. I don't know if I would ever want to start one of these, but maybe one day. He said the first thing you need is a story. You have to tell your friends about something exciting that you're going to be doing. It can't be something like running a marathon because everyone kind of does that. It has to be a little bit more exciting. You need a story, you need to be going somewhere beautiful, and you need to be doing some ridiculous race. The second thing is it has to be challenging. Do you know how many people who start a marathon actually finish?

Shaan Puri

70%

Sam Parr

99% of people who start a marathon end up finishing that particular race.

Shaan Puri

Not so hard then.

Sam Parr

It's not so hard, in his opinion. You need roughly a 70% or 75% chance, he said, for his events. About 70% of people go through with it, while 30% fail. The third thing you have to learn is some type of skill, like a new skill or acquire some type of new fitness in order to accomplish it. The last thing is that it needs to be in a beautiful place or look cool in photos. So, I was thinking about this. Let me give you three ideas for ridiculous fitness events that could work out. You ready?

Shaan Puri

Alright, hit me.

Sam Parr

Alright, the first one we're gonna call it the **Burly Beer Mile**. Here's how it works: 1. You dress up like Paul Bunyan 2. You go in the mountains near a track 3. You run one lap, chug a beer 4. Run another lap, chug a beer 5. You do that 4 times total: 4 beers, 1 mile What do you think about the Beerly... I mean, the Burly Beer Mile?

Shaan Puri

Look, if you can give people any excuse to drink, you already have 80% of a good business. There's a reason that places like Topgolf are really popular. There's a reason that people still go to baseball games. It's not because they're wondering what's going to happen in the top of the sixth; it's because they want to eat hot dogs and drink beer outside. Giving people an excuse to drink is a great business model. If you just layer on top of that a contrast, a juxtaposition—oh, it's fitness and beer? Love it! I'm already in. I don't know about the Paul Bunyan idea; I'm not sure that's on trend with the aesthetics that we're going for here. But I think if we workshop this idea a little bit, you could have something.

Sam Parr

Alright, how about the paddle prison break? A paddle boat race from Alcatraz to the coast of San Francisco.

Shaan Puri

The prison break... Oh, I like this one! My mind was still on the beer one for a second. By the way, I feel like just the beer mile or the beer marathon... It's a half marathon and you drink 13 beers. I think it has legs. Or maybe it's like... maybe it's a quarter marathon—it's 6 beers and 6 miles or something like that.

Sam Parr

Dude, I did a beer mile in college. So, you chug a beer to start, run a lap, and you do that for 4 beers and 4 laps, which equals 1 mile. I threw up, and if you throw up, you have to run a 5th lap. It took me 15 minutes to do it. It was horrible.

Shaan Puri

Yeah, but we call that the **victory lap**. It's like, "Oh, I had to do a victory lap." Why? Because I threw up during it. Oh man, you sound fun! Alright, so let's do **Prison Break**. So, **Prison Break** is we drop you off the side of Alcatraz in a small boat.

Sam Parr

The paddle boat, we're gonna call.

Shaan Puri

It's the paddle boat.

Sam Parr

We're gonna call it the **Paddle Prison Break**.

Shaan Puri

Is there like a lane set up, or are we just going to lose people into the ocean here? What's going on? We have some liability concerns.

Sam Parr

Oh, we're not going to let details get in the way of a good idea here.

Shaan Puri

I think there is definitely something to the prison break out of Alcatraz. If you could do that...

Sam Parr

There's a swim race that happens every year. But I'll give you my last horrible fitness idea. Are you ready? We're gonna...

Shaan Puri

Call it for the prison break. You have to start in cuffs. Great for the *thardo*; it adds a story and a challenge. You're going to have to learn and help each other get out of the cuffs. So, everybody's in cuffs. You need somebody in this race who can just get out of cuffs. Then they'll get the little pick and start picking other people out. That's how you get out of this thing.

Sam Parr

And you have to have a criminal record in order to get invited. You must have at least a little gold.

Shaan Puri

Patch on your shoulder if you actually have a felony or misdemeanor. Yeah, we'll just call you out there.

Sam Parr

And the last horrible idea, we're going to call it the **Skyline Scramble**. It's a race through NYC, but you can't touch the ground. You have to go from building to building.

Shaan Puri

A parkour challenge.

Sam Parr

Yeah, baby! The only person who survives wins. No, these are all horrible ideas, but I did think it was incredibly interesting to hear this guy's business. I didn't actually think that this company could be as good as it is, but I'll be eager to see if this thing works. I think these types of experiential businesses are fascinating. I remember when I ran a conference. It wasn't the same thing, but having an event that you work towards and then all the people come to it was a very fulfilling experience. It felt nice to meet your customers and things like that. It was pretty awesome.

Shaan Puri

So, you didn't give me the heads up about this, but I'm down to workshop a few ideas live for you here if you'd like.

Sam Parr

Alright, what do?

Shaan Puri

You got... when you were thinking of these, what... what... what? How did you put yourself in the mindset to even come up with these ideas? What were you... what... what got you going?

Sam Parr

Well, they're not very good ideas. So, whatever mindset I was in, I would say avoid that.

Shaan Puri

We're going to go with maybe nostalgia. So, the Boston Rover... it's Red Rover. Remember that game, Red Rover? It's just with all the people in the city of Boston. As many kids as possible get on one team, and we're playing Red Rover.

Sam Parr

Just a citywide game of hide and seek.

Shaan Puri

A citywide hide and go seek. Exactly, not really fitness at this. No children's games I've gone into.

Sam Parr

It's... they're all horrible ideas, but I just thought that this segment is fascinating. Dude, I think that one day I could see myself doing this.

Shaan Puri

Yeah, to make one of these.

Sam Parr

Yeah, they seem awesome. It's like... you know how we talked about viral food? It's like, "How do you make your restaurant go viral?" Well, you need some type of food that's either: - Oversized - Extra small - A different color - Typically a side (for example, cookie dough)

Shaan Puri

Which makes it the main.

Sam Parr

Yeah, it's like cookie dough. You make that the main thing.

Shaan Puri

Or you mash up two things that don't go together.

Sam Parr

Or you mash up two things that... yeah. And I'm like, what could you do for fitness? I thought it was interesting. I think it's the...

Shaan Puri

Same idea.

Sam Parr

By the way, speaking of beautiful settings.

Shaan Puri

mhmm

Sam Parr

And doing races in memorable places.

Shaan Puri

Where should people be racing to right now?

Sam Parr

I think they should race to **wander.com/mfm**. Why should they do that?

Shaan Puri

Well, it's actually a pretty good deal here. If you go to Wander right now, Wander is a place where you can rent beautiful luxury vacation experiences. I'm booking one right now, actually. I have my assistant working on it this morning. So, if you go to wander.com/mfm, you can download their app and sign up. You don't have to book a vacation or anything; you are automatically entered into a luxury vacation getaway on behalf of us. They’re going to be giving away a stay to one listener, which is amazing! Your odds are actually pretty good. This podcast is not that popular; it could be you! There may be a 1 in 100 chance, who knows? So go ahead, download the app, and enter to win. If you download the app, you'll also get $300 off your next stay. So you get a discount and you get into the giveaway. But check out Wander. Dude, I was looking at some of these properties. The problem I have with Wander—I got a bone to pick with them—is that the pictures are so good that I started booking vacations to places I don't even want to go! Normally, you're like, "I pick a city and then let me find a place to stay here." I went and I was like, "Dude, this house is sick! I guess I'm going to Naples." Where am I going? I don't know! I'm going to Florida now, and I was not even trying to go to Florida.

Sam Parr

Well, they're setting expectations so high. For example, have you ever seen people who take pictures of the pyramids and then they zoom out? There are hot dog vendors and, you know what I mean? Instagram versus...

Shaan Puri

Reality type.

Sam Parr

Of thing, like, these photos are so freaking good. If they zoom out, is there going to be like a trailer right next to the home? How are these still awesome?

Shaan Puri

Dude, I've had people who use these for like corporate off-sites because some of these places are pretty baller. They use it to... there's like one in Sonoma, I know my friends did for a corporate off-site, and they were like, "No, it was sick. It was amazing." There has to be... I mean, these photos look so good that there has to be some version of like "shoot for the stars and you still land on the moon" type of thing. But yeah, if it's anywhere near as good as it looks, I'm very excited.

Sam Parr

You have on this document the difference between running a business for growth versus EBITDA versus cash flow. I'm interested; you got my attention.

Shaan Puri

Yeah, this is a CEO School tactical session. When you were running The Hustle, did you... obviously, all of these things are good. You want growth, you want EBITDA, you want cash flow. The problem is, when you want three things equally, you usually get none. So, there’s generally, in any business at any time, some order of priority. When you were at The Hustle, which of these did you focus on? Was there ever a shift in, "Oh, now we're focusing on this instead of this?"

Sam Parr

I didn't run the business long enough. You know, we sold after about four and a half years to make the shift. For the longest time, revenue was the number one priority, followed by cash flow and then profit. What I wanted to do was double revenue every year. I think we went from like $500,000 in revenue to $2.2 million, then to $5 million, and finally to $12 million or something like that. We didn't make a lot of profit along the way. I think the year we sold, we did maybe $1 million in profit, but our cash flow was high. So, I was able to add like $2 million to our bank account.

Shaan Puri

And explain to somebody who's like, "Wait, how do you have $1,000,000 of profit and $2,000,000 of cash? How does that work in a business like The Hustle?"

Sam Parr

So, I'll give you guys a really easy example. We had this thing called Trends. It was $300 a year, but for the sake of this conversation, let's just say it was $1,200 a year. If a customer paid upfront, let's say they paid me on June 1st, $1,200 for an annual subscription, my cash flow was $1,200. That's how much my business accepted into our bank account. But the way that GAAP (Generally Accepted Accounting Principles) works is that $1,200 was really only $100 in June, $100 in July, and $100 each month. So, my revenue was only $100 per month that they stayed with me, even though I collected $1,200. Thus, my profit—let's just say that it cost me $75 to produce the content—was $100 minus $75, which equals $25.

Shaan Puri

Exactly. And so I'm in the situation right now... I have a business, my e-commerce business, where we've been running it for maybe 4 years now. It's doing really well. I was only growth-focused, so I was like, "I wanted to double or more every year." And so we did.

Sam Parr

We went from... The reason being is, typically (not always, but typically), it's harder to grow revenue. But it's easier, once revenue has grown, to become profitable.

Shaan Puri

Exactly. I think it's the right order of operations. Actually, there's one pre-step even before growth, which is just **product-market fit**. This means, "Have I made something that people want? Do I feel like if I produce this, there's a market pull for it?" So once we verify product-market fit, great! Now it’s time to grow. I think in year one, we did $6 or $7 million. In year two, we basically got to $12 million. Year three was bigger than that, and now year four is bigger than that. So we've basically been growing by somewhere between **50% and 100%** every year for the past four years. But I have pulled out exactly **$0** from this business. I have put in my pocket **$0** from this business in four years. Wait, really? Yeah, I've taken nothing out of this. I've reinvested everything. But it's not a case of, "Oh, I could've taken a ton of money out of this business." It's more like, for example, one year we basically had no profit. We did, you know, **eight figures** of revenue and we were breakeven essentially. I was like, "What are we doing here? How did this happen?"

Sam Parr

So, like, did the bank account ever go up? Was your cash position ever good?

Shaan Puri

Well, in e-commerce, you have one other variable, which is inventory. The cash has been pretty steady, but the inventory assets are going up. However, there’s also inventory that might take a while to move. It might be slow; it might be whatever. So, I don't want my cash tied up in inventory that is not actually the plan. That's a byproduct.

Sam Parr

Unless you can pay your employees, bills, and inventory, it sucks.

Shaan Puri

Yeah, exactly. So I've been going through this process where I shifted from where I first was in growth, and then I shifted to EBITDA. That required a certain set of skills, so I'll share with you some of the lessons learned shifting to EBITDA first. We've successfully shifted to EBITDA, and so we...

Sam Parr

EBITDA stands for **Earnings Before Interest, Taxes, Amortization, and Depreciation**. Exactly.

Shaan Puri

Okay, so what did I do to make that shift? The first thing was... and the reason I'm saying this is because there are probably people out there who are running a business that's been high growth, low cash flow, or high growth, low profit. For some businesses, that's the right move. You want to stay in that mode for a very long time. Maybe it's a winner-take-all market, maybe it's a land grab situation, or maybe you're venture-backed and it's a $1,000,000,000 or bust. This is not that. This is a business I own that, you know, if we sell this business, it might be, you know, $100,000,000 or less is where this will land. But that's great! We own the business, we have no outside investors, and so it's no big deal. So anyway, the gist of this rant is basically: how do you make that shift? So I first went and talked to people. Step 1: figure out what the right EBITDA target is. I go talk to people who are in the same space to figure out what EBITDA margin is, kind of the low end of what's possible to the high end of what's possible. Then I ended up shooting for somewhere like, you know, the 60% mark.

Sam Parr

10 to 25%

Shaan Puri

Yeah, so for me, that's like a **17% margin**. The best ones were like, "Yeah, we have **25%**," like the e-commerce ones. But then you dig under the hood, and it's like, "Oh, you don't do any marketing." Like, somehow, well, I do, so that's just not gonna happen. But getting to **17%** or **18%** is like, "Wow, that would be really great." The low end is like **10%**. So that's the first thing. Then, create like an **EBITDA** budget. So basically, you take for every **$100** of revenue that comes in, what percentage is gonna go to each of the following categories: my overheads, my cost of goods sold, my operating expenses, my advertising, and marketing, etc. You create an **EBITDA** budget and you basically say, "Where do the dollars flow today?" So you do a last **12 months** look back. Say, on average, every month we're spending **5%** of revenue on overhead and, you know, **12%** on, in the e-commerce case, maybe it's shipping, fulfillment, whatever. So you create a current status budget, and then you say, "Well, in order to get my margin, I need to find, you know, **8 points** of extra profit margin somewhere. So where is it gonna come from?" And so you start to basically pull calories from these different departments. "Alright, marketing, you're gonna have to give me **2 points** here, and shipping, you're gonna have to find a way to cut off **1**."

Shaan Puri

And you basically find the extra 8 points of margin that you're going to need. 8 and...

Sam Parr

That stuff is... it's not hard to do it in a spreadsheet. It's really hard to track it on a weekly and monthly basis to make sure that you're... so once I...

Shaan Puri

Did that. Now it's time to communicate. **Step 3: Communicate the plan relentlessly.** I then go to the leaders of the company and say, "Hey guys, forget everything I said before. Now this is what matters." We still want to grow; sure, that's a secondary priority. **First priority** is we're going to grow EBITDA. "What’s EBITDA? Where are we tracking this today?" So, I'll show them, "Hey, here's what it is, here's what it needs to be, here's how we get there, and here's the cadence of how we're going to track this." Now, I put the onus on them. I say, "You need to find me 1 or 2 points of margin in your department, or you need to find me 3 points over here. How are you going to do it? Come to me tomorrow or in 2 days with a plan of how you're going to get that extra margin." Also, I want you to create a report that tracks this. You know, if you're a cost center or a profit center of the business, you need to create a little dashboard. You need to show me how you're going to basically update that every single week or every single month. So we do that, and every single month I start hammering people on this. **Step 4: Tie their incentives to me.** I go to my CMO and say, "Great, last year your bonus was based on revenue. This year, your bonus is based on EBITDA. Do you want your bonus to increase? By the way, I'll actually increase your bonus. We can remove the cap; you can actually get a bigger bonus if you're able to achieve even bigger EBITDA. So now it's on you to figure out how that happens. But if we don't hit our EBITDA targets, you get no bonus." Okay, so now incentives are aligned to achieve that goal. Those are the first four steps. The last step is to actually go do the thing over and over again. Somebody gave me some great advice along the way. They said, "Oh, you're in EBITDA mode? Yes, it's called spring cleaning." So here's what you're going to do: There’s got to be some low-hanging fruit. You're going to find a bunch of SaaS subscriptions that you should cut off. You're going to find this agency you're paying too much and realize that we don't need that agency. Whatever it is, you're going to feel good about cutting costs. Schedule a calendar reminder for 30 days later. You're going to do the exact same thing again. Yeah, man, that's tough. Well, we already cleaned it out, but it's just like cleaning a house. You first clean out the surface-level mess. Once that's gone, you start to realize, "Oh wait, we never actually dusted this area or this closet." It actually stuffed. Well, now let's start to unpack this closet. I would say we've done 3 or 4 of these spring cleanings now this year, and it's only 6 months into the year. So I've done it at least 3 times, maybe 4. Each time we go and unearth more stuff. You can't do it every day; that's not the right way to focus on it. But, you know, on a monthly or every 2 months basis, go back through and say, "Alright, let's trim some more fat. Where's more fat?" Inevitably, you will find more things.

Sam Parr

But why are...?

Shaan Puri

Why are you?

Sam Parr

Going after EBITDA... So, I'll mention this a little bit, but if people rag on me, I'm not like incredibly well-versed. But I've been looking into it, and EBITDA might be bullshit. Like, there's this thing called GAAP (Generally Accepted Accounting Principles) ... whatever. It's like what we all abide by. There's a lot of bullshit in there. Why EBITDA versus cash flow?

Shaan Puri

Cash flow also works. Cash flow required me to do a second big project. So, the second big project was, "Okay, where's that cash going? Why doesn't the cash go in my pocket?" Oh, the cash goes into inventory. Separately, we did this after I did the EBITDA cleanup. The first couple of months, I said, "Okay, great! Now the EBITDA is great every month, but my bank balance is not going up proportionate to the EBITDA." In the first three months of the year, we killed it on EBITDA. Awesome! Where's the money going? Oh, it's going into inventory. How do we get our inventory levels to be right-sized so that this cash flow flows to the owners of the business and not to the warehouse? Because today, it's going to the warehouse, which is a separate challenge and a separate discipline altogether. It's a three-legged stool. You need all three legs to have an amazing business. You need a growth leg, and if you're not growing, the business is not worth very much. You need profit; if you don't have profit, this is not worth very much. Then, you need that profit to result in free cash flow. If you can get all three, you have a beautiful, amazing business. But in order, I kind of wanted to go into those three because, again, there's not going to be much cash flow if you're operating at a net loss. So, I needed to first ensure there's a surplus of profit, then I needed to make sure that surplus of profit is resulting in free cash flow.

Sam Parr

And you just so happen to be in an industry where those EBITDA and cash flow things... they're really hard. It's really hard to figure out the inventory and stuff like that. That is a science I am not envious of.

Shaan Puri

People to.

Sam Parr

Go through this.

Shaan Puri

<My major takeaway is that e-commerce is a terrible business to be in. However, it's not a terrible business if you are winning the game. If you still think it's a bad category to be in while you're succeeding, that's when you know it's a bad category. Most people lose the game, fail at it, and then blame the category. For example, I was telling someone about podcasts. I said, "Oh man, podcasts are great, blah blah blah." He responded, "Well, yeah, you won the lottery, so of course you love lottery tickets. Your podcast is popular; it works. Of course podcasting is great for you." But for the million podcasts that aren't really getting listened to, would you feel the same way? Is it winning dependent? This is interesting because our e-commerce store is winning, and even in winning, I'm like, "Note to self: this is not the category to be in next time." Beyond that, I would say playing the game on hard mode has a bunch of disadvantages, and I wouldn't put myself in this position voluntarily. However, once you're in a position where you're playing some game on hard mode, there is one big benefit: if you ever get to play an easier game, you will dominate. It's like I was playing pickleball with a guy, and it was his first time playing. He was amazing. I asked him, "Why are you doing this?" He said, "Well, I'm playing college tennis." He played a harder game and won, so he was pretty good at pickleball. It's not that hard for him. In the same way, I was listening to Andrew and Chris from Tiny during a Q&A. A guy asked, "Yeah, I'm in e-commerce D2C. Would you say you don't love that space? Should I just quit? What should I go do?" They responded that one of the things that worked for them was running agencies, which can be low-margin, grindy businesses with a bunch of HR problems and are hard to scale. Because they did e-commerce, once they went into easier businesses, they just cleaned up. They could buy a software business that was running at 10% margins and get it to 40% just because that guy wasn't really ruthless with pricing. He was not negotiating with vendors and wasn't taking care of all these little things that they had to do to survive in other categories. In a softer category, you're not as on the hook for those things.

Sam Parr

Who do you think is winning in eCommerce, and what attributes do they have?

Shaan Puri

Shopify, Facebook

Sam Parr

No, I mean, of course, of course, of course. Retailers, D to C, whatever you want to call it.

Shaan Puri

I think right now, the retailers that are taking advantage of TikTok—the TikTok flywheel—are cleaning up. What I mean by that is there is a very specific moment in time where you can create content on TikTok, either yourself as a brand or, even better, by using an army of affiliates and creators. Whether it's with TikTok Shops or people just hearing about the brand so much on TikTok that they go Google search it, they find your Amazon or they find your D2C shop. That flywheel—I'm invested in a couple of companies that are doing this—is pretty unreal right now.

Sam Parr

But only for certain categories, I would imagine. Is it only for things where young people are using? Nope, that's amazing. That's ridiculous, right?

Shaan Puri

Let's move on. I've said too much.

Sam Parr

Alright, I want to talk about one thing that you actually had on here that I have no idea... it's way out of character for you. Your dream house? Or do you want to do painted chickens?

Shaan Puri

Well, I don't have much to say about the dream house except for, "Dude, look at this sick house!" That's the entire topic, but let's go there. It's an amazing house. This is a house that this guy on my team sent me, and I can't believe it. It's the most beautiful house I've ever seen in San Francisco.

Sam Parr

It's 11,000 square feet, with an estimated market value of $23,000,000. It's on the ocean in San Francisco.

Shaan Puri

I mean, there's just a few photos, so... This house is first to get an 11,000 square foot home in San Francisco, which is very, very hard to do. Every view is like the Golden Gate Bridge. You're right on the water, you're right on the ocean. But even if you didn't want to go in the ocean, well, guess what? You have an infinity pool in the back that just is spilling over into the Pacific Ocean. On top of that, there's one photo in here that I just have to show you.

Sam Parr

I see a beautiful porch that's overlooking the San Francisco Golden Gate Bridge.

Shaan Puri

Next photo, 24.

Sam Parr

... like a wine cellar that is big enough that it was bigger than my childhood bedroom. A huge home theater that looks like they're just watching some type of nature documentary. So awesome. The study is...

Shaan Puri

Here it is. The reason I want this home to begin with is 26.

Sam Parr

A half-court basketball court with all windows where you can see the Golden Gate Bridge. This is awesome! Is this floor...?

Shaan Puri

To the ceiling, like a 25-foot ceiling, all glass windows. You're looking at the ocean, feeling the breeze. There's a glass door that's open, and you can see the Golden Gate Bridge. You have a beautiful basketball court inside your home with all this light wood that I just love. Oh my God, this is crazy! Dude, this house is unreal. I must buy this house, but it's not for sale, so that's the first problem. Besides that, I now have a target. I now have a desire. You know, I thought I had enough money, but now I have a desire. I need to be able to drop $30,000,000 on this house.

Sam Parr

Dude, in order to buy a $30,000,000 home... Oh, check this out. The... okay, so it was owned by Sharon Stone. Before that, or after that, do you know who owned it? A dentist. A dentist owned this house.

Shaan Puri

What the hell?

Sam Parr

Yeah, it says this guy was a dentist in order to buy a $30,000,000 house.

Shaan Puri

You can... How much money do I need? $28,000,000. Then I'm going to borrow $2,000,000, and I'm going to buy this house with every dollar I own. That's it.

Sam Parr

No, I think you need $100,000,000 to buy a $30,000,000 house. Would you say that's accurate?

Shaan Puri

Probably, at minimum, yeah.

Sam Parr

At minimum.

Shaan Puri

Just the main maintenance and the taxes on a house like this are going to be pretty insane too. Your carrying costs are going to be what? Half a million to a million bucks a year.

Sam Parr

Yeah, it could be... No, it doesn't. Well, it could be that it would be that high, probably because you're on the coast and you got the CR.

Shaan Puri

Taxes... taxes alone in San Francisco on this house are going to be like a quarter million to $300,000 a year. That's just the property taxes. So all the maintenance, all the insurance, all the cleaning, all that stuff on top of this thing is going to be at least another quarter million. So at least half a million dollars [in total annual costs].

Sam Parr

Yeah, that's insane. This is a sick house! The last thing I wanted to ask you about: you said you wrote some essays?

Shaan Puri

Yeah, your boy's getting this Paul Graham on. I started writing essays.

Sam Parr

I'm sorry, but it seems there was an error in my response. Here is the cleaned transcription: Why? I told you I'm just...

Shaan Puri

I'm in a creative season, and I wanted to do different things. I like writing, and I was like, "Well, what do I want to write about?" I realized I want to write about the stuff that I'm curious about or whatever I feel like I have a golden insight on. So, anything that feels insightful to me, I want to be able to write it down. And why do I care about that?

Sam Parr

You wanna spread your seed, baby, you gotta spread that seed.

Shaan Puri

Well, that's part of it, but actually the bigger part is I've known there's this feedback loop that happens. Once you have to deliver something, you start to look for it. Meaning, when we start this podcast, and let's say every week we have to do this podcast, when you show up, you need to have three interesting business topics to say. In order to do that, your brain starts to look for interesting business topics. It starts to ask a few more questions, write a few more notes, and pay a little more attention. This wonderful feedback loop gets built where you start getting smarter about business because you have this outlet where you have to put it, and you're on the hook to share it every so often. In the same way, one of my favorite things is to learn something new. I'm just kind of like a learning junkie. By having a place to go, I now am hunting for more insightful things. I'm reading more, talking to people more, and making more connections between two different ideas that are disconnected. So that's the real reason. The other thing I shared with you, I haven't even published yet. I'm going to publish all these on my website, just seanprue.com. But right now, this one's on a Google Doc. I'll throw it up after this so that it's at least online. The essay is called "Painted Chickens." The reason it's called "Painted Chickens" is because, have you ever been inside of a Subway? Do you eat Subway?

Sam Parr

When I was a kid, yeah.

Shaan Puri

And so, I like Subway. I admit it. But Subway's quality has gone way down since I was a kid. And the irony...

Sam Parr

Has the quality gone down, or have our tastes gone up?

Shaan Puri

No, the quality's gone down. You know, I know this. Do you know all the controversy with Chipotle right now? No? Dude, like Gen Z hates Chipotle. Why? So basically, this thing started trending on TikTok. There's like "Chipotle chipping you on quantity."

Sam Parr

Okay.

Shaan Puri

Or just like, yeah, basically, the way that Chipotle used to be bomb, now it sucks. Here's why: different people have different reasons for the taste, but one of the big ones is that they're just skimping on the ingredients. So then the CEO came out and did this hilarious thing. You didn't see this? No? It's so funny! The CEO came out and he goes, "Oh man, look, if you're going to Chipotle and you want a little bit more, our guys are great about this. Just give them the look." And he does this like stupid look. It's like, you do that, and our guys and girls are great at hooking you up with this. So there are all these memes now of people being like, "Yeah, when I go into a Chipotle and I make this face, their reaction is just like, they're not like, 'I got you, bro, let me hook it up.'" And they're also impersonating him, where they're like, "When you go into a Chipotle and you give the look, our guys and girls, and trans and Black people too, they're all great at doing this." People are making fun of this CEO for, you know, flubbing this speech that he gave. So anyway, Chipotle is under the microscope right now.

Sam Parr

Well, now they all like Cava, which I just went to. It's awesome.

Shaan Puri

Yeah, they like kava. Well, one of the reasons is that the founders, or I think someone who's like the ex-CEO, came out and said two things. He goes, "It's insane that people think we would tell our staff to skimp on portions. That's terrible for business." Like, we've tested this. The thing you do for business if you want to grow revenue and grow profits in a store is you give people bigger portions, which makes them love the place and come back. Sales go through the roof, and waste also goes down because you're giving them the food versus throwing it away. If you actually want to save on food waste, it's not by doing less portions; it's by having more customers first so that you sell through all your food. That's the way you reduce food waste. It's not by skimping to customers and then they don't come back because they're angry. Right? He's like, "That would be counterproductive." The second thing that came out was the guy said basically when Chipotle had all those E. coli scares, they had to change their whole supply chain. I don't know if you remember this; like, there were a couple...

Sam Parr

Of years ago where...

Shaan Puri

Like, 2 or 3 times... whoops, whoops again. Oh, E. coli again. Sorry about that. So, they changed all of their operating procedures. What they used to do was chop the veggies in the back of the store. They would do whatever food prep right there. Now, it all comes pre-bagged and sealed from a central headquarters where they can maintain really tight food safety standards, vacuum seal it, or whatever, and then ship it to the store. The store just has to open it; they're not doing the food prep on-site. Well, the result of that is that the food tastes less fresh. Additionally, they cut down the number of suppliers they were working with because it was too much risk. Instead of sourcing from local produce and local farms for the meat, they now started to go with a few vendors that are shipping from much farther distances. These vendors may be more focused on mass production, which results in less taste. So, the taste has actually gone down, not just in flavor but also because of the supply chain changes.

Sam Parr

So, media needs to... I mean, bring back E. coli or whatever it was like.

Shaan Puri

Yeah, dude, let's roll the dice a little. Right? Like, the food's gotta taste good. Who cares if you get sick once a year?

Sam Parr

Which is insane. If they serve millions of customers when it's like 4 people, you know, that is statistically insignificant, I would imagine.

Shaan Puri

Which is always the worst argument. Whenever one of these social networks is like, "Dude, do you realize they're getting hammered by Congress?" All they want to say is, "There are 2,000,000,000 monthly active users." How many people are in your state? How many murders are there in your state per day? Do I blame you? No, I run a state a hundred times bigger than yours. They can't say that, but that's the reality. The law of large numbers states that if you're Facebook, literally anything that can happen is going to happen on your platform every single day. That's just the rule of statistics. Even the most odd, strange, and most screwed-up behaviors are going to happen because there are so many people.

Sam Parr

It's insane, yeah. And so now they've had to change this whole thing. But what was your essay about then?

Shaan Puri

So, my essay is about pay. I call it "Paid to Chicken" because if you go to Subway, Subway's motto is "Eat Fresh." If you go into Subway, it's just hilarious to hear "Eat Fresh," and then literally, the employee is opening up a bag of chicken. You see the chicken, and it has grill marks on it. But you're like, "How come all the grill marks are so uniform? What kind of grill do they use?" If you go look it up, you'll find that the grill marks are painted on. They don't actually grill the chicken; those grill marks are literally painted on the chicken. I love this analogy because in every business, there's always lip service. Every business has these stupid things that they say. Go read the website of BP, and BP will say, "We care about communities and the environment," while they're spilling oil into the ocean. Right? Everybody has their version of "Eat Fresh," which is saying "Eat Fresh" while just painting on chicken. What I wanted to talk about was what are the few examples where there's not painted chicken? Meaning, what are the examples where a company has values that they actually live by and that actually mean something? I think anyone would agree that a value system is very, very important. I remember in my first business, I was trying to make a decision. We asked our mentor, "Oh, we were doing a sushi restaurant thing. Should we use the eco-friendly packaging, which is more expensive and kind of like the paper straw that disintegrates but is good for the environment? Or should we use the one that's cheaper, bad for the environment, but super durable and actually good packaging?" She was like, "Well, you're asking the wrong question. You're asking which packaging should we use, but the question is, what do we value more: the environment or convenience and affordability?" There is no right answer; it's just a question of what you value more. All your decisions need to come upstream. Once you know your value system, everything becomes obvious after that. This is just a good bit of life wisdom. If you're in a situation where you don't know what to do with somebody—like, "Oh, should I respond kindly? Should I be mean back? Should I ignore them? What should I do?"—well, if your value system is "I'm a kind person," then that's what you do. You don't change your behavior based on other people. The answer is obvious: just be kind and move on. So, what I started to look at was what are the company values that I actually remember that meant something to not only me but also to the people who worked in that company. The first one that comes to mind is Facebook's "Move Fast and Break Things."

Sam Parr

Yeah, I loved it.

Shaan Puri

You know, I like... I think we've all heard that phrase by now, right? "Move fast and break things." Okay, that's great. Is that popular because Facebook is popular? Maybe it's just a popular value because Facebook was so popular. Alright, that's theory one. Well, Sam, what's Microsoft's core value? What's Microsoft's "move fast and break things"? No idea.

Sam Parr

I have no idea.

Shaan Puri

Twitter, Lyft, Uber... pick any of these companies, right? Do you know any of them? Like, no, we don't know any from any of them. In fact, the only other one that I could remember, like "move fast and break things," was Google's. Do you know what Google's is?

Sam Parr

Do you know evil?

Shaan Puri

Yeah, don't be evil. Exactly, don't be evil.

Sam Parr

But then it got silly because they maybe did a little evil.

Shaan Puri

Well, exactly. So then I was thinking, "What is there to learn from this?" The first thing I learned is that maybe these are memorable because they're catchy. Right? Maybe that's the first thing. Instead of just saying "integrity," you should say "don't be evil." "Don't be evil" is more provocative, it's more catchy, and it's more interesting than "integrity," "honesty," or "be good." If they just said "be good" versus "don't be evil," none of us would remember Google's value of "be good." But a lot of us paid attention when they said, "Our value is don't be evil." So I think there's something to lesson one: if you make it provocative, you make it memorable. If you make it memorable, people might actually use it. That's the first little takeaway. The second is, well, there are other catchy rhyming things. You know, you could just try to be catchy, like "the quicker picker upper." That's cool, but why does "move fast and break things" have a little bit more weight to it? I think it's because you have to pay the price, right? So you gotta pay the cost to be the boss. What I thought was interesting was if I went to 100 CEOs of Fortune 500 companies and I said, "Hey, we think that your company should move fast, that speed is an important value. Speed's important, right? Moving fast, would you say that's a value for your team?"

Sam Parr

Of course.

Shaan Puri

100 out of 100 would nod their head and say, "Yep, of course, definitely we value speed." Awesome! If you said, "Well, when you move fast, naturally, sometimes things might go wrong. You might bump into some things; you might break some things when you're moving so fast." So, let's agree that it's actually going to be "move fast and break things." How many out of the 100 would now agree? The reality is that 99 would be chicken shit. They would say, "Well, no, no, no, we're not trying to break things around here." It depends. It's speed without breaking things. Once you go to "speed without breaking things," you're now "Subway, eat fresh, painted chicken." You're bullshit. It's now an unusable, non-useful value. It might be something you put on your website, but it's never going to have any weight. You're never going to be one of these generational type of companies that operates differently and is known for how they operate. So, I went and read this quote from Zuck, and I want to read this to you. He says, "The values actually move fast." But my theory on values is that most organizations have a lot of values that don't mean very much. They're just table stakes. If you say, "Just be honest," of course, you're going to be honest. You should be honest. Everybody agrees with that; everybody knows that it means nothing. It's not an option to not be honest. That's automatic. So, he goes on to say, "I think the defining principle for a company, meaning your company's going to have one thing that you guys really do as your A+ strength, should be something more interesting that has a trade-off." So, "move fast" is interesting for us because we had to give something up to get it. The question is actually, "What are you willing to give up?" Values are not free; nothing is.

Sam Parr

Dude, that's insane! I mean, what an insightful person. He's just such an eloquent guy for how young he is. I mean, that's a really good quote.

Shaan Puri

And so, if I think about other great values that have resonated and stuck with people, and meant something to them, you know, for example, Nike's slogan, "Just Do It." If you think about the phrasing of "Just Do It," it is powerful. If it just said "Do It" or "Do Things," it's very different, right? The word "just" changes it because "just" implies there's a cost. It implies that you shouldn't hit the snooze button. Don't shy away from it. It's going to hurt, it's going to be painful, it's going to be uncomfortable, but **just do it**. So, I thought there's something to learn in that. That's kind of inspiring for me. My essay was basically about how, if you want your culture and your values to mean something... My friend Siki has this great phrase. He said, "Culture is... there are many ways to define it, but the best way is: What do people do when the boss isn't around?" I love that. I thought that was pretty powerful. It's your default behavior. If you want your default behavior to mean something, to be different, to be a defining characteristic of your company that is different from the way other companies in your space operate, here's the three-step formula: 1. **Choose one thing**, not ten things. For Facebook, it was "moving fast." For Apple, it's "thinking differently." For Nike, it's "action." 2. **Make it real** by acknowledging the cost or the trade-off. 3. **Make it catchy**. Make it provocative. Phrase it in a way that's going to turn heads. So, that's my essay called "Paint to Chicken."

Sam Parr

1st, that's awesome! 2nd, while you're on this little value-driven, mission-driven company quest, have you heard of this company called Brunello Cucinelli? You probably haven't because it's not your shtick.

Shaan Puri

But they make... Opersinger? Who is that?

Sam Parr

No, it's this Italian company that makes really expensive cashmere clothing. Their most famous thing is like sweaters, so it's Doug.

Shaan Puri

I'm wearing a free T-shirt made out of 100% polyester from a YouTuber, bro.

Sam Parr

Yeah, that's why I knew it wasn't your shtick, but it's not my shtick either. However, it kind of is becoming it because I like it so much. Brunello Cucinelli, the founder, started it because he was like an expert at, I guess, cashmere. He was... I don't know what the term is, but he knew how to put together clothing. He basically said, "You know, my dad worked his ass off. He was working seven days a week, and I wanted to create a humane workplace." So, we're going to do that by creating these amazing sweaters where we hand stitch and it's done perfectly. What do you say? It's done beautifully. He makes these really high-end sweaters, and the clothing is great, whatever. But what's more interesting is this guy, the founder. I just saw that someone shared this photo of his schedule. He wakes up at 6 AM at his countryside home, slowly gets dressed, and goes to the office at 8:30. Then he says, "At 1, I walk home for lunch." After that, he takes a 30-minute siesta. At 3 o'clock, he goes back to work, and at 5:30, the whole company stops working and takes a late afternoon walk because they believe that rest is super important to being soulful. Personal studies are important as well. He has a light supper at 8 PM, and from 9 PM, he heads out to the café to meet friends where they discuss politics, philosophy, religion, and other subjects late into the night. I was like, "Is this guy legit? Is he the real deal?" He is! This company, this sweater business, it's a publicly traded company. I didn't realize that. It's a publicly traded company with a market cap of about $4 billion. He's building his company to create a great workplace and to create great products, not to make money first. And just because of that, I want to give him more money, and he's going to make more.

Shaan Puri

Profit. Yeah, I'm on the website right now, and it's, you know, just from a swipe file. There are so many little things that they do in their brand and marketing that are completely congruent with everything you just said. One of the great marketing lessons I learned a long time ago was when somebody said, "Yeah, it's gotta be EPOC." I was like, "What's EPOC?" They said, "EPOC stands for Every Point of Contact." They explained that once you decide what you're all about, every point of contact matters. For example, if you're all about luxury but then your customer service hotline is some janky old web form, that's not every point of contact. I'm looking at, for example, one of the little GIFs on the site. It's for the sweater section or whatever. It's this guy, and it's a model. The model is peeling an orange and he pops an orange slice into his mouth. He's just kind of wandering, walking slightly aimlessly, and he's chilling. He's not trying too hard; he's enjoying himself right by the water. I'm like, man, the creative direction to say that... Because, you know, normally what you said is you have the founder who's got their beliefs, then you have the revenue team that's trying to jack up revenue. They're adding pop-ups on the website to try to improve conversion. Then you have the creative director who's not even invited to the meetings, and they're trying to do one thing over here that is not congruent at all. People, whether they can see it or not, they feel it. You can feel when something is congruent. It's the same reason the Apple Store looks the way it does, the iPhone looks the way it does, the packaging looks the way it does, and the commercials look the way they do. It is congruent. When it's done well as a brand, it is very rare to see that, to be honest.

Sam Parr

Yeah, these guys are on top of it now. I like them. I don't know if I want to spend like... I'm looking at $1,500 for a polo. I don't know if I'm there yet, but I'm definitely thinking about it. Maybe I'd buy a $2,000 sweater, but like everything they have is high-end. It's one of those things.

Shaan Puri

To attract a good customer, and I think he has repelled me successfully. I would not be a good customer of this. But you know what's cool? You've said his schedule is "light supper." I don't think I've ever had a light supper. I'm eating heavy dinners over here. I just realized that by changing the words, if I said, "Okay, what am I going to have for my light supper tonight?" I bet that would fix my diet. Just that one change! You change your words, you change your life. I bet you if I just change that one word, "light supper" wasn't even in my vocabulary until just now.

Sam Parr

Yeah, thank you. I'll be taking that. Is that it? Is that the pod?

Shaan Puri

That's it.