From $0 To +$100M With Gas Stations & WP Plugins | Syed Balkhi Interview

Syed Balkhi

Yes, in the early days, I saved everything. I mean, I did not buy a bed until I got married. Dude, just to put it in perspective, would you mind?

Shaan Puri

if you were dating me

Syed Balkhi

no there was no bed

Shaan Puri

What up, dude? This is a long time in the making episode here. I think we've been talking about you for like two years. I think you told us, "Hey, hey guys, don't put me on blast like this." And we were like, "You gotta come on the show." You're like, "Nah, you're just gonna ask me how much money is in my pocket right now, and I don't know if I wanna do that." But somehow, some way, we convinced you to come on. Sayid Balke, you're here! First, why did you just change your mind? How did you decide to come on?

Syed Balkhi

you know I was talking with sam over twitter dm and that's how it happened

Sam Parr

Well, what I told you is that a lot of people think that Sean and I are really aggressive about questions. But what they don't realize is that we'll ask an aggressive question, and if you say, "I don't want to talk about that," we just go, "Alright, cool, we'll move on." We’re not digging that hard, so hopefully that changes your opinion.

Syed Balkhi

that did that did

Shaan Puri

So, Saeed, you're kind of an amazing guy. Let me just set the table here for people. Let me tease everybody with the appetizer. I think you are... you've done something that I don't even know five other people on Earth have done, which is that you've basically bootstrapped a unicorn. You've bootstrapped a $1,000,000,000 company. You've done it, and you're only 32 years old. So you achieved this by 32. You also didn't invent the next big thing. It's not like you did this because you're a super genius. You know, you're not like Vitalik, creating Ethereum on the blockchain or something crazy like that. You just did a very specific set of prudent, smart actions, and it just added up in an amazing way. We're going to talk about it. But also, I didn't know much about you. Sam's known you for a little while. He brought you up on the pod a while back and said, "I know this guy, or I met this guy. He's really interesting. He does this WordPress stuff. Have you seen him?" I was like, "No." We went to your personal website. I don't know if you ever got...

Syed Balkhi

this clip but like way back in the day we went to your personal website we were talking about you but we didn't know

Shaan Puri

Too much! Then we did CampMFM, which was my basketball fantasy camp. We invited about 25 other founders and had an NBA guy come in to basically treat us like we were pros for the weekend. When we were there, there were so many people to get to know. Again, I didn't really get to know everybody at the same time. But then Mr. Beast did something amazing. One night, we were all in the kitchen, basically hungry after basketball. Mr. Beast just sets a chair in the middle of the room and says, "I don't know who any of you guys are." He was like, "We've just been playing basketball all day, and now I'm curious: who the hell are you guys, you tech nerds?" He said, "Sit down in this chair." Then he would just interrogate that person, asking, "Alright, what do you do? Who are you? How does that work? Is that big? What's your dream?" Okay, cool. Then he would move on to the next person. I think you were maybe the third or fourth person in the hot seat, and I was like, "Oh, this is great! I actually don't know too much of Syed's story." Then you just blew us away! Your story was so good. While Mr. Beast was interrogating you, I thought it was just the perfect interview. If we had just recorded that podcast, I would have been happy. So, we're just going to try to recreate that moment right now.

Sam Parr

Well, Syed, you were one of the quieter, more humble people there, and probably the most impressive in terms of traditional business accomplishments. It was very fascinating what you've done. I basically heard about you through my friend Neville Madora. What I know about you is that you had this blog called **WP Beginner**, which wrote a ton of articles. Some of them were really simple, like "How do I set up a WordPress site?" I think that ended up getting, or still does get, a ton of traffic. If I remember correctly—and this is just from an outside perspective—you'll have to tell me if I'm right or wrong. You basically started buying different WordPress plugins that I imagine you saw were popular on your blog. So, it was like, "How do I set up a form to capture emails on my WordPress blog?" You probably got lots of traffic and thought, "Oh, I should just go buy one of these." Or, "Here are the best 5 plugins for this thing," or "Here are the 5 best themes." If you put your cursor over the links on WP Beginner, you'll see which of the links are affiliate. I'm just guessing, but of the top 5 forms for WordPress, based off the URL you own, you probably own like 3 of the top 5. Through that, you've built this into a business. By the way, you've never told me, but I'm just guessing that it makes high tens of millions of dollars in revenue.

Shaan Puri

No, no, no, Sam. Not tens of millions, but nine figures of revenue. Over $100,000,000 in revenue.

Sam Parr

oh I did not know that okay wow

Shaan Puri

So, just to paint the picture here, you have WP Engine, and we'll talk about how... or, sorry.

Syed Balkhi

wp beginner

Shaan Puri

So, WP Beginner... and we'll talk about how you got to that. But that's the content site that's just providing free help, you know, content to other people like you who are trying to make sites in the WordPress ecosystem. That's the mainstay. I'll draw an analogy here because we've had Andrew Wilkinson on the pod, I don't know, a dozen times or something. He's probably one of the most famous guests and most favorite guests of our community. So, you have a business that's a lot like his. He's got a portfolio of companies; you've got a portfolio of companies. He had Metalab, which was kind of his core business, cash cow thing that allowed him to buy these others. You had your WordPress site, the content site, that was your core engine. But I think you've actually done... I think your model might actually be a little bit better. That's no knock on Andrew; it's just to get people excited here. So basically, I think you have a more integrated ecosystem. You're like, "Okay, I'm going to dominate this WordPress ecosystem." The good thing is that WordPress powers like 30 or 40% of all websites. So, it's huge; it's basically like a huge chunk of the internet. Then all your stuff fits together. You know, you have one customer who's trying to make a successful website, grow, and solve other problems. You're like, "Great! I have the content that will help you. Then I have the tools that will help you." You either buy them or you build them. You've created this portfolio that now does, you know, nine figures of revenue, probably worth $1,000,000,000. You own the whole thing yourself with no outside investors. You're only 32 years old. You've built kind of an amazing thing. So, that's just to sketch out the blueprint for what you've done. Sam, would you add anything to that description?

Sam Parr

Well, then there's all his side hobby stuff. I read his annual report and he's like, "I bought a gas station" or "I bought like 8 or 10 gas stations." So that's like a whole other conversation. But yeah, that's that.

Syed Balkhi

a lot of do

Shaan Puri

A quick thing on the origin story so that people have it. You told me once on the phone, you said, "I think you were doing consulting or something. You had an agency. You were like, 'Oh, I was helping people make websites and I was building like CRMs or whatever for them.' Then WordPress came out, and I was like, 'Oh, this is way better. They should be using WordPress.'" You started as a service agency, right? Then WordPress became your core service, and you thought, "Okay, I'm just going to help people make WordPress sites for their business." Is that right?

Syed Balkhi

Pretty much. So, remember the very first websites that I built? They were online proxies because I wanted to play games in school. I was making ad revenue on proxies and some arcade turnkey sites. I was also helping small, local businesses set up their websites. I tried making my own CMS with PHP. By the way, I can code. I'm not the best at it; I would say now I probably suck at it.

Sam Parr

and what age what what what age was this

Syed Balkhi

I would build these websites super cheap, calling it like $250 or $300. I would make you a website back in the day. But what happened is that these clients would always rely on me to make changes to it—changes to the websites. As I started doing consulting at a bigger scale, I didn't want to do these small things anymore. I discovered WordPress around this time; this was in 2006. To put it in perspective, WordPress was only in its inception for three years, having started in 2003. So, I discovered it in 2006. To give you an idea, I'm 32 now, and I've been using WordPress for half of my life. You know, this is the result of compounding in one thing for half of my life.

Sam Parr

way you're you're

Shaan Puri

Are you at the dinner table at night saying, "My clients are a pain in the ass right now, Mom"? What are you saying at home? Also, how are these people finding you? Are they coming to your middle school and you're handing out flyers? What's going on?

Syed Balkhi

No, no, no. So, we moved from Pakistan to the U.S. when I was 12. My dad had a mechanical engineering degree, but it did not validate when he came to the U.S. He was working 16 hours a day as a gas station clerk attendant, you know, just swiping things. 16 hours a day, I kid you not, every day, Monday to Friday. On the weekend, he had his third job. So, I didn't really see my dad. My mom was busy because there were three of us and the fourth one on the way, right? My youngest brother was born in the U.S. There were not many dinner conversations happening. I wanted to figure out a way to have some chunk of change in my pocket so I could buy junk food like Mountain Dew, Kit Kat, Snickers, and all the stuff that you buy when you're in high school.

Shaan Puri

Dude, your dad was at the gas station. Man, you had the hookup! You just needed to ask. He was not cutting you any breaks there. He's like...

Syed Balkhi

no no way my dad would never do that

Shaan Puri

by the way you went to high school at age 12 also right

Syed Balkhi

Yeah, I started... So I moved here after I had just finished 7th grade in Pakistan. I came here in March, so there was this 2-month gap. The school system said, "Well, we can put you in 8th grade. Worst case scenario, you'll repeat 8th grade because that's where you're supposed to be anyway." But our education system in Pakistan is far better than the one we have here in the U.S. So they said I could go to high school. I was 12 years old in high school, the youngest person in school. I did not speak English that well; I would say probably very little English. I knew how to read English because we were taught the alphabets and such, but my communication skills were not there. So, yeah, that was a pretty challenging time for me. I spent most of my time in the library during lunchtime. I wanted to play games because I couldn't talk to people, so I would just play on the computer. However, those game sites were blocked. I was like, "How do you unblock this thing?" That, you know, drove me down in terms of how I was getting clients. It was through these forums online, right? So you had forums like DN Forum, Digital...

Syed Balkhi

Name pros, a bunch of these online OG communities where you can get business advice. My cousin got me into one of those.

Shaan Puri

they don't know you're 13 you're just a guy in a forum

Syed Balkhi

No, yeah, well, like, we had a family friend who needed a website. They had a local business and they knew how old I was. They were like, "Oh, you can do it, and I'll pay you $300 to build my website." I'm like, "Okay, sounds good." And then, you know, that's how that funnel started.

Shaan Puri

So, you're doing sites. You're trying to make your own CMS. You discover WordPress and you're like, "Oh, this is way better! Here's a CMS out of the box." What becomes the moment, and when do you create the blog?

Syed Balkhi

So, I had discovered WordPress and moved these clients over. I had affiliate sites and was doing affiliate promotions at the time. I also had directories that I mentioned earlier. I wanted to get more traffic, so I created these MySpace profiles. They were fake profiles, and I got hundreds of thousands of followers. I would send direct messages, which were called bulletins on MySpace. I wanted more traffic, and I went down the rabbit hole of SEO, which brought me to WordPress. WordPress was dynamic content, so I added blogs to the directories and started using WordPress for the clients. I also had social media profiles on Digg and StumbleUpon that were super power users. When I wanted to get rid of this consulting business, I needed to figure out how to do it. I asked other agency owners, and they said, "Well, we just have these PDFs that we give to our clients." I thought, "But WordPress updates all the time. How do you keep those PDFs updated?" They replied, "Oh no, we update the PDFs." I thought that was dumb; you should use WordPress to update that documentation. So, essentially, WPBeginner started that way. It was the unofficial documentation for WordPress. Now, WordPress had documentation, but it was written for developers by developers. Nothing was for business owners and beginners. This was in 2009.

Shaan Puri

Well, one good thing is that that's now six years after WordPress started, and you're making the beginner site. There really wasn't a great one. Most people, I think there's a lesson I've seen many, many times as we talk to different guests, which is that sometimes you feel like you're late, but you're rarely ever actually late to the wave. Kevin Van Trump told us this one time. He goes, "For all the best things, you always get a second turn to get on the train." You feel like you're late; you feel like you missed it, but often you're not. You're not that late, actually. Don't talk yourself out of it. There's almost always another chance to hop on.

Sam Parr

It looks, according to SimilarWeb, that right now you get like 2 or 3 million visits a month. The early website, shockingly, doesn't look significantly different than how it looks now. No, you kind of nailed it right out of the gate. It's like it was a simple website where you just have articles about picking the right name, how to install WordPress, selecting the right theme, and picking the right web hosting. But were you writing this stuff? Because I know you're an English as a second language person. So, were you actually writing these articles? A lot of them are long, like "55 of the Most Wanted WordPress Tips, Tricks, and Hacks." Yeah, these are pretty in-depth articles. As well as you're playing the game of SEO, you clearly understand English.

Syed Balkhi

Yeah, no, by this time I was already in college. I started high school at 12 and college at 16. By that time, my English had gotten much, much better. I was writing these articles on WPBeginner, and I had a team of two other people that were helping me with the website. The website looks similar now to what it was in 2009. When I changed it, there was a mistake. People were, you know, I changed the color scheme too much, and the audience didn't resonate with it. So, I changed it all back and haven't changed it since then. The big lesson was, you know, big companies don't really change their stuff because they know if it's working, don't break it. If it's not broke, don't fix it. Don't interrupt compounding unnecessarily, as Charlie Munger says. So, I made it go back to what it looks like, and it's been that way since 2012.

Sam Parr

And what tools do you use to figure out? Because I imagine most of these articles are written based on what people are searching for, is that right?

Syed Balkhi

Yes, it's a combination of that and what they're asking us through our contact form. What they're asking us in our Facebook group... I think our Facebook group has probably over 90,000 members, and support requests are coming in. So yes, we have our own keyword generator. If you go on WP Beginner, it's kind of hidden on the free tools page. It's a keyword generator, and you can put in anything in there, like "WordPress," and it will tell you what people are searching for.

Sam Parr

And you have a lot of comments early on. In June 2010, a year or two after starting, you already had 26 responses on just... I just clicked on a random article. So you're getting traction.

Syed Balkhi

Yeah, so a couple of things happened that worked out for me. Do you guys remember Dig.com?

Shaan Puri

yeah it

Syed Balkhi

It was really popular, so I had a power user profile there. If one out of two articles that I submitted would hit the front page, of course, I used that to my benefit. I used that network to my advantage. How did...?

Shaan Puri

You get a power user profile because there are legitimate ways and illegitimate ways to do that. I'm curious, how did you end up having that?

Syed Balkhi

It's just a social circle, right? So, there are these engagement pods that you go on. Back in the day, I was on MSN Messenger and AIM. We just had the engagement pods. If I submitted something, like, you know, it was a group chat and everybody would dump their items in there. You would upload it. So, yeah, it was an engagement pod.

Sam Parr

And what year did WPBeginner cross $1,000,000 in annual revenue? How long did that take?

Syed Balkhi

maybe a year and a half or so

Sam Parr

oh damn you crushed it right away

Syed Balkhi

Yeah, you're so... you know, we had a good revenue stream. So let me take a step back. There was this business, the listicle business. Collectively, we passed $1,000,000 in a year and a half, so about 2011 to 2012.

Shaan Puri

and so you're early twenties basically at that stage you're a millionaire

Syed Balkhi

that was my first million

Shaan Puri

How does that feel? You said you grew up with your dad working at a gas station. I remember you told me, "Yeah, my dad worked at a gas station." I thought, "Pakistani guy says gas station, you know, you own a gas station." I was like, "Oh, so your family owned a gas station?" You said, "No, no, he sat in the gas station. He swiped the cards in the gas station." You were like, "Everybody in my family, I knew you either worked at a gas station or you were like, 'Oh, you're really smart. You get to be a bank teller.'" That's all you knew in your bubble. So tell me two things: How did you get to see the possibility of being a business person or being wealthy before you even did it? How did that happen? And how did it feel when—like the name of the podcast is "My First Real"—I'm curious, how did it feel when that first happened? Do you remember your reaction?

Syed Balkhi

yeah so I'll tell you how it how I knew it was possible so I used to play cricket which if you have a lot of listeners in pakistan and india you know they love cricket we I love cricket so I was playing cricket and there are many leagues in us and south florida there was one and there's many now too I met this pakistani gentleman and he was a sponsor for our team he's a crazy cricket fanatic and he became my mentor and now he's a family friend but back then I just see this pakistani guy you know driving a s class and you know just super humble super nice and I'm like what do you do are you are you like born into money or what what's your what's your spiel I was pretty blunt as a kid so so he's like no I have real estate I came to the us with like $500 in my pocket or $100 in my pocket you know those typical immigrant story and then he you know after we would win the games he would take us out to eat sometimes he will invite us all to his house which is like you know big mega mansion or you know 15 18,000 square foot house and his kids were my age so we'll just kinda go over to his house hang out sometimes we would go over to his house to watch cricket games because they're happening on the other side of the world so time zones are different and in between breaks I was the one who took interest in his business you know and his kids were all roaming around but I was I'm like tell me how this works tell me how this works right so he would tell me stories like oh this is how I took over at burger king for free or this is how I did this and this is how I started so I absorbed a lot of the earlier lessons on business finance just hustle from him right and he was always super encouraging he'll ask me how's how's this going how you know and I felt like I could talk to him about it so that's that was the early stage of me knowing oh this is possible because nobody in my family had any any wealth they were just working at gas stations all my uncles everybody and if you're really smart you're working at the teller at the bank so so that was the motivation part in terms of how it felt when I hit my first million you know you would think it would be like the joyous moment of oh my god look at this I was more scared than than than anything because I was is this gonna is this gonna last that's the question that you have you know in your twenties you're like you come from nothing and you have this thing you're like is this going to last forever like what what is the what am I supposed to be doing I have no guidance so there was like this inherent fear so I always lived below my means like way way way below my means so when I was in college I I did not buy any furniture I just slept on a on a floor on a on a blanket because I mean that's how I grew up in pakistan so I'm just like I'm not gonna buy any furniture why why why waste time and money with this so in my in my apartment I had a blanket and I I got a desk from goodwill so that's what I worked on

Sam Parr

And, I mean, what's amazing is you said, "I would have thought the first million came sooner than 2012." But because in 10 years, you've grown that from 1 to over 100 million or whatever it is. When were the inflection points where you were like, "Alright, blogging is cool and it's working?"

Syed Balkhi

yes

Sam Parr

let's get beyond

Syed Balkhi

Yeah, so I launched OptinMonster in 2013 and List 25 in 2011. These things started really cranking. I had some really sweetheart affiliate deals with certain companies that worked out really, really well for me, and so that was good. At that time, we were coming out of the recession, so there were still some real estate deals to be had. I bought my first gas station primarily because I wanted to offset expenses with an appreciating asset, which was a lesson I learned from my mentor.

Shaan Puri

Yeah, let’s talk about that one real quick. So, just do a quick little monologue on: why did you buy a gas station when you found out you were having a kid?

Syed Balkhi

So, one of the things I learned from my mentor early on was, "How do you justify buying a Mercedes? Because that's a depreciating asset." He's like, "Yeah, but you know, when I drive it, people think of me better. There's the impression game, etc." He justified it by saying, "I buy something that's an appreciating asset, like real estate, and I just use the income from that to pay my lease payment. So my principal never disappears." I thought, "That's a good idea." Your principal continues to appreciate, and you're using the income from it to offset costs. It also helps you stay disciplined because you're not going to overspend your money. Normally, when you get a raise or something like this, everybody just thinks in monthly payments. This approach takes you away from that monthly payments mindset and encourages you to think a little bit bigger. When I was about to have my son, I was 26. By this time, guys, I was doing alright. I had all these VC firms reaching out to me. I could have had a solid 8-figure exit, you know, to a high 8-figure exit. I had offers for that at the time, and I'm just like...

Sam Parr

high 8 figures as in as in 90

Syed Balkhi

as in 70 at the time 70

Sam Parr

for the for wpbeginner

Syed Balkhi

No, no, no. I had OptinMonster at the time, and I had the gallery solution. I had WPForms, and I had analytics, so...

Shaan Puri

were you close to taking it and how did you decide not to

Syed Balkhi

Yeah, I definitely thought about it. But then I was like, what would I do afterwards? My son is going to grow up seeing me not work because I'm like, "I'll be set with that money," right? It's like, I would not go do anything. I mean, if you have $10,000,000 or $20,000,000, you put it in the bank and you're like, "Hey, this is it." I want to... but.

Sam Parr

you were gonna have a lot more

Syed Balkhi

Than, yeah, I was going to have a lot more than that. That's what I'm saying. Even after paying taxes, I would have a lot more than that. I would be set. So, the factor that my wife and I talked about was what instilled my work ethic. It was watching my dad work, and I wanted my son to at least see that.

Sam Parr

Right, what was the multiple on that to get to $70,000,000? Is it as high as a 10x multiple?

Syed Balkhi

at that time no it it it was lower than that

Shaan Puri

so so you turned that down and

Syed Balkhi

I turned that down

Shaan Puri

You turned it down. Was it really because you were like, "I want my son to see me work"?

Syed Balkhi

yeah and also I didn't I I wasn't ready to give up my baby

Shaan Puri

okay and okay so fair enough so you you so

Syed Balkhi

Basically, here's the thing. At this time, my son is about to be born, and I'm like, "Okay, how much does a baby cost?" Right? What are the costs associated with a baby? He's like, "Okay, well, you know, you're going to have diapers, you're going to have schooling, and this and that." I'm like, "Well, now what if I buy something that gives me at least $5,000 or $6,000 a month net? Then the baby costs are covered first." So, like, you know, it's going to give me $60,000 to $70,000 a year, and now I don't have to think about it. My family is taken care of no matter what happens to me. So yeah, that's what I got for the baby shower.

Shaan Puri

Most people take the money they make and then they're like, "Alright, that's what I have to spend," and they spend it. What you do from your mentor is you take the money you make, and that has to now go to buy an appreciating asset that would generate cash flow for you. Then, you could spend whatever that asset makes. So, it's kind of like a savings program, basically. You spend what the asset generates. You go by the gas station; the gas station's going to pay you, and you're like, "That will pay for this child." You know, like, "I'm going to provide for my family. This gas station is going to provide for my family. I'm going to put food on the table."

Syed Balkhi

Dude, it allows me to **1)** sleep better at night and **2)** be more bullish in the deals that I'm doing.

Shaan Puri

how many gas stations do you own now

Sam Parr

10 and you own a bank too

Syed Balkhi

I I bought a bank though yes wells fargo

Sam Parr

Wells Fargo. Because I have a cool blog post where you're like, "I used to go to this bank all the time, and I decided to buy it this year."

Syed Balkhi

Yeah, I used to ride my bicycle around it. I couldn't go to the bank; I didn't have a bank account at the time. I used to ride my bicycle around the bank because there was a Sports Authority there and an Office Depot. I would just ride my bike into that, and then I bought that building.

Sam Parr

What amazes me is how, like, I don't know if your SimilarWeb estimates are right, but do you say what your monthly traffic is on WPBeginner?

Syed Balkhi

no but you know it's it's it's in the millions

Sam Parr

Oh, okay. So let's just assume that SimilarWeb is roughly correct: 2 to 5,000,000. We'll give it a huge range a month. That's a lot, but it's not that much. What's crazy to me is that, I mean, that's high intent traffic. It's likely people who are coming to buy something, like they want an email software, so they're coming for a review. It's just amazing to me that that much traffic has created so much value.

Syed Balkhi

I think when you start your online business, most people think about maybe a CPM model of monetization or a CPC model of monetization. However, there are other and better models of monetization. You can have CPLs, you can have CPA, or you can have a combination of CPL and CPA. You can also have recurring commissions.

Sam Parr

About CPM meaning: just $10 per 1,000 visitors for a display ad versus cost per lead or cost per acquisition, which is when someone buys something. They give you $100 per month if it's Mailchimp, and if someone is paying $500 a month, they'll say, "Alright, you get $100 per month while they're a customer."

Syed Balkhi

Correct. There are verticals that are not available on WPBeginner. Remember, I was telling you I did a lot of affiliate marketing as well. There are articles that will pay you on a lead basis—$100 just for a lead. Not for commission, like as an affiliate, not like you made a sale. Just a lead will get you $100. So, I did a lot of those, and I still do. That's a good cash cow. Those verticals are available where you can go and promote something and get over $100 per lead.

Sam Parr

Has the WPBeginner revenue grown like the rest of the business? Or is it just like, "I'm perfectly fine with it just being a steady $10 or $15 million a year thing"? I bet you it's super profitable. I'm looking at your team page, and I would bet you make 50% profit or something crazy. You're like, "I'm just gonna take that profit and buy more stuff," and I'm okay with that being steady.

Syed Balkhi

pretty much you know on on a content business you cannot compound it as much you know eventually what what happens is you will hit the traffic mass that you hit and you can unlock as many levers as you can but the compounding will stop because it's a reoccurring revenue you know like the person that I referred this year to something is not gonna compound next year I'm not gonna get that + new customers which is what happened in a software business which is recurring revenue so yes your assumption is right that while wpbeginner has grown it hasn't grown at the same pace as the software companies and that's like a very big you know mental shift in between recurring revenue and reoccurring revenue for all the creators that are listening because once you understand that you'll start thinking about your business a little differently so I I took all of our profits and invested in you know software and tools I I still have niche tools that are not even related to wordpress that I bought off of flippa and sometimes just private outreach because I knew those verticals were gonna be lucrative because I had a better offer than they were promoting and I paid like one guy I think like $15,000 upfront and in the very first month it made me $18 and now every month it makes me over $10 like and it's pure profit nobody touches that tool right so I think about that just as good as a gas station because like my hosting cost for that tool is maybe like $8 a month right maybe 10 is and and that's it so so you can have these cash flow income streams that come through and that's how I was able to buy the businesses that I did without any outside financing without any outside debt I was also in a market that wasn't fully mature so so like there there was that advantage that you know those shrewd pes and vcs are not in in the in the market they didn't understand the market and I could see the potential of a business so I I might buy something and you're you're saying well this this has no revenue it just has user base and I can come in and say yeah but if I do this and this it can it can be a 7 figure business so I might buy something for like you know 6 figures and then in 2 years that thing will make 7 figures in profit

Shaan Puri

You told me something once that sounded almost like a real estate philosophy. In real estate, they always say—or some people say—you make money on the buy, not on the sell. This means that you should buy something knowing that it has both a margin of safety and that you have a plan for how it's going to be different than what the current owner values it at.

Syed Balkhi

and I

Shaan Puri

I think you had a similar thing. I forgot what the example was, but it was sort of like... Let's say, for example, you're like, "Great! I buy this company and they're paying 3.5% on their payment things." But I have a contract with that same payment provider because I have more scale that's at 2%. So now I know I have 1.5% off just off the gross from day one because I have this contract. You kind of have this principle of like, almost like you make the money on the buy because you already know, "Well, I know I can throw this much traffic at it, maybe from WPBeginner. I know I can renegotiate these payment terms because I already have the contract with the payment provider or the affiliate contracts with the companies on the other side." Is that accurate?

Syed Balkhi

A hundred percent! This was one of the lessons I learned from my mentor, who had a real estate background. The philosophy is very much derivative of real estate: you make money on the buy. You have to be cautious; otherwise, if you're paying a high multiple based on future projections, that might work out, but it carries a bigger risk. From my perspective, I want to have heads I’ve been tails. I don't lose much, and I got that formula from reading Monish Pabrai's book. I was a huge fan of his, and now we're friends. So, that's very much about finding a margin of safety.

Shaan Puri

**Explain that more: "Heads I win, tails I don't lose much." What does that mean, and what's an example?**

Syed Balkhi

So, a good example would be if, in your perspective, the intrinsic value of a business is $1,000,000 and you end up paying $700,000 today. Heads, you know you're gonna win if this business continues growing. Tails, you know you still have so much upside because you paid $300,000 less—30% less than market value. In that case, if something doesn't go right, it has to be like 40% of the time for you to still only lose $100 in that situation. So, you need to be able to look at the deal and say, "What are my downsides?" You have to invert the situation. Think about how you're going to die in this, and then don't go there, sort of.

Hubspot

**Thing, our software is the worst. Have you heard of HubSpot?** See, most CRMs are a cobbled together mess, but HubSpot is easy to adopt and actually looks gorgeous.

Syed Balkhi

I think

Shaan Puri

I love our new CRM. Our software is the best: HubSpot. Grow better!

Sam Parr

You sort of have this "pay attention to the cents and the dollars will follow" type of vibe. I'm really surprised at how small some of the things that you do are, and yet, because you own 30 or 40 of them, they're really accumulating.

Syed Balkhi

Exactly. So, dude, when you come from nothing, you have to have a good sense of where the money is going to go, right? You have to be very conservative to not lose it all. Because I came from nothing, I don't want to go back to that. So, I'm very, very cautious. The funny thing about compounding is that if you compound at a healthy rate... and I have a very, very good compounding track record.

Sam Parr

what what is

Syed Balkhi

I've been compounding in double digits for the past 7 to 8 years.

Sam Parr

what's that mean 20% like what would

Shaan Puri

What would be considered good? Like, you know, for you, you're like, "Alright, 30% or 40%." That's like, I mean, that's amazing! You can't get that in any normal investment, right?

Syed Balkhi

Exactly. So, the market compounded about 8%. Yeah, private equity might get you in the teens.

Shaan Puri

right

Syed Balkhi

You know, I'm way, way... I'm double private equity, more than double. So, that is... and that only happens when you can identify a mismanaged gem. Okay? When somebody has a business and they might only be thinking about monetizing from one angle, they're not thinking about it from a full perspective. So, I can look at it and say, "Well, yes, this is the current revenue today, and I'm getting a bargain on today's revenue." But here are my contracts that I have with so many different partners and vendors and such that I'll be able to unlock extra revenue here, here, here, here, and here. So, I turned this business that has one revenue stream into having multiple revenue streams. And that's how you take something that was doing like no revenue, or very little revenue, to having, you know, $5, $8, $10 million in revenue. You do it enough times, and you just let it compound. Like, these businesses are not rocket growth, right? So, this is not a business that's gonna hit $1 billion in revenue. That's not what's gonna happen. But these businesses are gonna consistently compound because more people are gonna need websites. The web presence just keeps growing.

Shaan Puri

you you had a tailwind which was wordpress was just gonna keep getting more and more and more popular right

Syed Balkhi

that's a huge yes

Shaan Puri

Tailwind... that's like a generational tailwind. That's huge! This is already going to grow faster than the average growth rate because of that. Then you could do things smart operationally. But I gotta ask you a question. Our buddy Moise has this phrase: "The two sexiest words in the English language are distressed asset." You just said "mismanaged gems" as a catchphrase for something you look for. I like that idea, but also, I'm kind of a lazy motherfucker. When I hear "distressed asset" or "mismanaged gem," I think work. Oh, I gotta go clean up. I gotta manage this better. Isn't that going to take a bunch of work and a bunch of mindshare to turn things around? It's kind of like the Buffett cigarette butt companies versus just buying a beautiful business that's already working and letting it grow for a long period of time. Am I wrong? I must be wrong about the amount of effort that goes into fixing a mismanaged gem or a distressed asset. What do you think about that?

Syed Balkhi

So, I think a distressed asset, from a real estate perspective, is slightly different than what a mismanaged gem is. My real estate buys, Sean, that I did in the early days were distressed assets. Okay, but it was just that the banks needed to get this off their books, right? I was a cash buyer. You know, I'm not looking to finance anything; I'm a cash buyer. I had the right contacts, so I was able to buy some of those gas station properties. They were already leased out to Tipperland and leased out to, like, Couche-Tard, the Canadian multibillion-dollar company that owns Circle K. All I had to do was just give cash to the bank and take the deed over. So, those are distressed assets. I got lucky; I mean, I bought a gas station. When it was all said and done, I paid $90 for it. And you're like, "Holy crap, how did you do that?" That was a distressed asset because you had to do environmental cleanup on that thing. Okay, that was work. So, those are distressed assets. When you're thinking about a mismanaged gem, this is a property where somebody, maybe due to a lack of effort or lack of experience, has not fully understood the potential that is there.

Sam Parr

what are the commonalities of not realizing potential or common mistakes

Syed Balkhi

So, you know, you might be a creator and you have a lot of user base. You just haven't thought about monetization for all the different potential monetizations that can be had in that one business.

Shaan Puri

We have a friend who was doing this. They were just looking at businesses on Flippa or similar websites to find products or companies to buy. They said, "Yeah, I just want an owner who cares a lot about the product." They thought 95% of their brain was just stamped with the word "product." Then you're like, "Cool, so what were you doing for marketing?" And they're like, "Well, it's word-of-mouth." They were so proud of the word-of-mouth strategy. He said, "Great! As long as their answer isn't Facebook ads, then I'm just going to start doing Facebook ads." Even if their answer was Facebook ads, he would ask, "What's the budget?" They'd say, "Oh, you know, like $8 a month." It's like, "Why $8? That's... you know, I don't want to spend too much." And he's like, "I want to spend $80 on Facebook." Basically, that was his entire approach. You'd think, "Oh, this person made $20,000,000. Wow, they must be a genius." But it's like, "No, I just found a business that was so common." Someone makes a product, and all they think about is the product. They really care about it, but they don't spend much on marketing—maybe none because they don't know it—or a small amount because they just don't think about it. They don't ask themselves the question, "Why don't I spend 10 times more on Facebook ads? What would that take?" And that's literally the only change they needed to make.

Syed Balkhi

That's a good barometer. The other thing that worked in our favor was the ecosystem effect. So, if I buy an analytics software, I can cross-sell OptinMonster and vice versa. You know, if I buy MemberPress, then I know that all the people who are creating a course will need to buy OptinMonster for lead generation or will need analytics to track all the things. So, the synergy effect compounds, and that was a big, big win for us.

Sam Parr

And I read somewhere that you said something like, "I don't buy whole stakes anymore. I don't buy 100% of the company anymore. I try to buy 49% because I have too many things. I can't run all of them." Then, in the pre-call they did with Sean, you have this really cool line. It's in quotes: "How I manage a $1,000,000,000 portfolio without stressing out." And that's why I...

Syed Balkhi

guess by

Shaan Puri

the way he didn't say that

Syed Balkhi

that was sean who wrote that

Sam Parr

oh really

Syed Balkhi

well when I a good quote

Shaan Puri

When I met him, he said something like, "You were like, I travel." I was like, "What do you do with your time? How are you spending your time?" And you were like, "Oh, I love to travel. My family, we go travel." I thought you meant like, you know, going to LA or seeing the Grand Canyon. But you were like, "We're going to Egypt, and then we're going to the Serengeti." I was like, "Oh, okay, this guy's doing exotic travel every month. That's cool." You said something like, I don't know if this is exactly right, but my brain heard you basically stack a bunch of calls with your kind of operators in the last week of the month. That's your only time to stress out or think about those calls. The rest of the month, you're not thinking about those things. You're reading, you're playing basketball, you're doing other things. So, A: is that accurate? And B: I interpreted that as, "Wow, this guy's managing a $1,000,000,000 portfolio and he's not stressed out. That's awesome."

Syed Balkhi

Yes, that is fairly accurate. Now, it didn't start that way. I want to emphasize that it didn't start that way. I didn't figure this out until maybe 2 years ago. Okay, so just to put in perspective, in terms of me being as chill.

Shaan Puri

what was like what were you doing before that

Syed Balkhi

You know, I would have to go in sometimes to clean the business. I would think, "Oh, this is not doing right." I would get involved too much.

Sam Parr

were you a hard ass

Syed Balkhi

yeah depending on who you ask yeah sure

Shaan Puri

according to me no according to everyone I ever worked with hell yeah

Sam Parr

You seem to have a ruthless side to you. Even though you're polite and kind, it seems like you could be ruthless.

Syed Balkhi

I I would say I could be very disciplined ruthless might not be the right word

Shaan Puri

did that sound so ruthless the way you said that that was awesome

Sam Parr

yeah that's a ruthless thing to say

Shaan Puri

like a ruthless thing to say I loved it

Syed Balkhi

So, the trick is, you know, it proves that higher good people get out of the way. But that sounds easier than it is. We use EOS in our companies, and some of your audience might be familiar with it, while others might not. EOS stands for the **Entrepreneurial Operating System**, and it emphasizes transparency and accountability. Oftentimes, I’ve found that I’ve sometimes bought businesses from founders who started delegating, but they really abdicated their responsibilities. Then the business went down, and now they’ve already checked out. They think, "Ah, this thing sucks," and now they’re back in business, and it’s a mess. They will come and exit to us. That’s a mismanaged gem, by the way, because all you have to do is put back those accountability measures and maybe add the right team member, and this will start kickstarting again. You have to delegate but not abdicate. The EOS scorecards and good P&Ls monitoring will help you with the accountability piece. The P&Ls for all of our companies are managed by my finance team at the HQ level.

Shaan Puri

That's cool! So, I want to talk a little bit about ideas. You built this amazing thing, and you've been basically building cool stuff and making money since you were 12 to 32. So, you've had this run. I'm curious, you know, one of the questions we always get is, "Alright, well, you know, now it's easy for you. It's easy for you to just keep doing what you're doing." But like, "Yep, I'm not you." So, that's inspiring, but it's not entirely helpful. What would be more helpful is, like, what ideas or opportunities do you see that someone else could do? You're too busy to do them, or they're too small for you now. What ideas or opportunities do you see that other people can pursue?

Syed Balkhi

I think about cash flow. If I had nothing, you know, of course, it's a lot easier for me now. I can say, "Hey Andrew, I want to spend, I want to invest in Tiny, I want to go do this," and I can do a lot of those things with the means that I have now. But if I was starting all over, the first thing I would do is build cash flow again. The easiest way to build cash flow is through services, you know, an agency business. Right now, a content agency—since I know content well—using AI, I would crush it. I already know that brands like Shopify, etc., are using AI agencies to create top-of-the-funnel content. Of course, there's some human editing involved, but this changes the game. If an article used to take maybe 4 hours to write, now you can do it in 45 minutes, right? If you know the game. So, a hustler, younger version of me, that's what I would be doing: content agencies, copywriting agencies, all AI-powered with human review. I would use tools like Clay.com. I'm not sure if you've seen Clay.com, but it helps you automate your sales outreach. You dump a profile, and it finds all the data on that person. You can use GPT to write emails to them and then just hit them up—cold outreach, cold outreach, cold outreach. Because not everybody, but a small portion will take you up on it. Deliver a great service, go above and beyond with them, watch them word-of-mouth take you places. You raise prices, and I think that'll be the way to go for me if I wanted to start all over again. Step 1: build cash flow. Then figure out how I can take this cash flow to build some recurring revenue stream. Because in an agency, you still only have a recurring revenue stream.

Shaan Puri

And so then, would you buy versus build from there? Let's talk about that distinction. You started off as a builder, and you've now bought, like, I don't know, 30 companies or something along the way. Yep. I think you studied not just Charlie Munger and Warren Buffett, but also Mark Leonard at Constellation. You had told me something like you read all his annual letters, and there was one thing in there that really stood out to you about building versus buying. What was that?

Syed Balkhi

Yeah, it was one of his earlier letters, maybe like the third or fourth one, or something like that, where Mark talked about that there were three types of growth that Constellation was experiencing. One was growth through organic means, which is just your business growing organically—in their case, maybe 7% or 8%. The second part of revenue growth was coming from acquisitions, where they would just go buy revenue. The third one was initiatives. Initiatives would be things like new builds. "I have this product, and I'm going to build a second product." He was like, "These turned out to be very expensive because it required more resources than the time that you planned for." It takes away time from your senior people, and you're not even counting those things, so they're distracted. He's like, "You know, I'm a capital allocator, and from a pure capital allocation perspective, the return on invested capital isn't always great because builds have higher risk." So if it doesn't work out, it's tough for the first year or so when you're building. There's a 0% return on your investment during that time, so the compounding return is lower. This was my take: you can have ad spend of three years' customer acquisition cost (CAC) at that.

Syed Balkhi

Might not just go buy a company that has guaranteed revenue, and then you can cross-promote. So, that sort of took me away from the initiatives idea. Most of our focus, and all of our focus, is on buying.

Sam Parr

One thing that I imagine Sean is a little bit like this, but I'm definitely like this: creating products and new businesses is part self-expression. It's just exciting; it's fun to do that stuff. I'm not the most disciplined person. The reason I don't like real estate is that I'm like, "Dude, I'm not very great at just looking at this Excel sheet and unlocking value." That's not what I'm skilled at, and I don't know if I even particularly like that. Where did you learn how to find value that you could unlock? What are some of the common themes that you see with that? I don't know, Sean, are you like that too?

Shaan Puri

Yeah, I am. But then I'm also a natural short-cutter. I like to find the simplest path to the solution. So, like, while creating, you had this thing you said on the podcast. It was hilarious. You were like, "I'm an artist, bro. I'm just an artist. I gotta create." I definitely feel that. I have a creative itch to me, but I also have a path of least resistance itch to me where I'm like, "Oh, there's some beauty in just finding a simpler way to win." You know?

Sam Parr

I agree with that. I also think it's fearful... or it's fear to put out, like to pay. With the internet, you could start with nothing, spend time, and you can get something.

Shaan Puri

But I think that's just the... He's like, "You could build something new. High chance it's just not gonna work. It's a 0."

Sam Parr

it's also gonna take

Shaan Puri

A long time. If you're buying something that's already working, yes, you outlay cash. But are you actually taking more risk? There's a difference between putting out cash and putting out risk. I think what he's saying is that.

Sam Parr

That's what I'm asking: what is the difference? I'm asking about the difference between putting out capital. How do you make that gap smaller?

Syed Balkhi

So, I'll say this: when I started Sam, I was very much an artist. Like you, I enjoyed my creation. I enjoyed putting my, you know, fingerprint, footprint, whatever you want to call it, on those. So, if you were looking at the early days of OptinMonster or those products, you would have my footprint on them.

Sam Parr

and then you had like a $20,000 bill to the serengeti with your family of 5

Syed Balkhi

No, they're like, "Sir, I was not doing Serengeti when I was building the business." You know, I was very, very much involved. But a big mindset shift that happened in my career, which has led to, I would say, tremendous growth for automotive, is the mindset of going from a creator and operator to a capital allocator. This happened when I was studying Buffett, Munger, Monash, etc. Buffett says, "I'm a better investor because I'm a businessman, and I'm a better businessman because I'm an investor." Now, you read that and you're like, "Okay, sounds good too," right? But when you think about that from a first principles point of view, what's the commonality between the two? Both investors and businessmen are resource allocators or capital allocators. So when you can tie that together, that was the moment for me. When I think about, "Okay, if I start this new thing, yes, I will make X," but if I buy something—if I shortcut it and let's say I buy something that's doing $2,000,000 in revenue—20% or 30% of $2,000,000 is always going to be better than, you know, 10% or 30% of $100,000 or 100% of $100,000 for that matter. You see what I'm saying?

Sam Parr

what's the biggest what's the biggest deal that you've bought

Shaan Puri

you don't have to say which one but like what checks out what check made you sweat

Syed Balkhi

What check made me sweat? None of them. Because I'm not buying. I'm not putting 80% of my net worth or my cash in any one of those deals.

Sam Parr

but have you bought things for 10 tens of 1,000,000

Syed Balkhi

no no and have not bought anything in the tens of $1,000,000 range

Sam Parr

but these are so single digit millions and then

Syed Balkhi

single digit millions single digit millions

Sam Parr

That is **fucking insane** that you've built that much value with like these little small... what's that? Whatever Sean said, the "cigarette butts." Like, you've made the cigar with it. But are you doing all cash up front? There's no way you do that. You're mostly way too sophisticated.

Syed Balkhi

Mostly, it's all cash up front. You do that. There might be some pieces of seller financing, but one of the advantages that we have compared to somebody offering a higher valuation is that we can make the process really seamless for the seller. That also allows us to get a better and more attractive valuation. But, you know, if you ever try to sell to a private equity firm or a VC—mostly private equity—you'll be on the hook for like six months. They'll be dragging you along, asking you for all sorts of nonsensical stuff. By the time the entrepreneur is burned out, it just feels really frustrating. With us, you send me a message over the website. My assistant sorts through it, and I'll look at it and say, "Okay, yeah, this is good." We'll ask you for the P&Ls within about a week or so. After that, we'll give you a Letter of Intent (LOI), and then we can close in 30 to 40 days.

Sam Parr

Holy shit! Are you the only decision maker? Yes? That's insane.

Syed Balkhi

I I I like to think that I'm the chief risk officer of the company

Shaan Puri

You told me a story about risk. Because I was like, "Okay, you buy all this stuff. How much debt do you have?" You're like, "No debt." And you're buying, you know, with a margin of safety. And you're like...

Sam Parr

even with his mortgages he says no mortgages

Syed Balkhi

No mortgages. And look, there's going to be a lot of financially savvy listeners here. I have many financially savvy friends who are billionaires, and they disagree with me on this. But the way I was raised in Pakistani culture, that is considered bad; it's considered taboo. Short leverage can help you grow faster, especially when used in a smart way. However, it also takes away the margin of safety, which in troubled times can really destroy your autonomy if you're not being careful. So, you know, I'm okay with getting rich slowly, and I think I've done alright for where I am. I see myself as a turtle in a rabbit race.

Shaan Puri

bro you're a 32 year old like pretty much billionaire dude you didn't go that slow

Syed Balkhi

You know, in 60 years, I think I'll be okay. It helped me sleep better at night and be more bullish. I don't know, Sean, Sam, do you know about Charlie and Warren's third business partner?

Shaan Puri

no no tell the story

Syed Balkhi

See, nobody knows about the third business partner. They did have a third business partner; his name was Rick, right? Rick Warren or something like that. He was just as smart as them but was in a hurry to get rich. Monash asked Warren about what happened to Rick at one of the lunches that he had, and this is public information.

Sam Parr

I'm not sharing with you anything warren's like rick's a bitch

Syed Balkhi

No, no, no. Warren... Warren said something along the lines that Charlie and I always knew we would become incredibly wealthy, but we were just not in a hurry to get wealthy. We knew it would just happen. Rick was just as smart as us, but he was in a hurry. So, like in the seventies, during the 1973-74 downturn, what ended up happening was that Rick had margin loans. He was highly leveraged, and the stock market went down 70%. So all those margin calls happened, and he had to sell his Berkshire shares to Warren. Warren bought them for about $40 apiece. Now, the same share is worth like half a million dollars or more.

Shaan Puri

I'm going to get a framed picture of this guy, Rick, on my wall. It's just going to be a reminder every day: **Don't be in a hurry to get rich. It'll happen. Don't be in a hurry.** That's going on my wall.

Sam Parr

sean I cut you off what were you gonna ask him

Shaan Puri

I wanted him to tell that story, but I also wanted to go back to ideas. So, you had given us the first move. If I needed cash flow right away, I would do a service agency—maybe something around creating content for brands and using AI for leverage. Or, I could generate leads for brands and create a lead agency using AI for leverage. Okay, that's the "get started" plan. But you don't want to be in the service business forever. You want to get... that's just the "escape from broke jail" plan. Now that you've done that, what are some level 2 type of ideas or opportunities you see?

Syed Balkhi

I would look into the quick cash cow of tools right now. They are these AI wrappers. You think, like, "Upload your PDF and we'll turn this into a ChatGPT." There are several of those out there right now, but you can make it vertical-focused. That's what I would do. I'd create a ChatGPT for lawyers, adding all of your internal SOPs, and now your team can just talk to it. For real estate internal processes, you can do this. My team built this internally in about a week, so it's not very hard to build. You can pay someone on Upwork to do it and then work with the different AI influencers on TikTok, Instagram, etc. This can easily get you to $10K+ a month. I know, as a matter of fact, several kids that are making over $10K a month, and some even over $100K a month, doing just the AI wrappers. So I think that's pretty easy. I would also look at how I can leverage the Freedom of Information Act (FOIA) to my advantage, trying to go into the student businesses. Are you familiar with FOIA?

Shaan Puri

no what is that

Syed Balkhi

Okay, so basically in the United States, this works only if you're in the United States. We have something called the Freedom of Information Act that allows you to request any kind of data from any government-run authority.

Sam Parr

so usually journalists use it so we use to use

Syed Balkhi

it at

Sam Parr

The hustle all the time. So, like, when big stories break, oftentimes it's because the journalists did that. They uncovered some, you know, controversial fact.

Syed Balkhi

So now, you can get creative with it, right? You can go and say to a government agency, maybe a university or whatever, "Hey, I want to see the contracts of your last 3 or 5 construction projects that you undertook." That will give you an advantage in terms of how to approach terms and pricing that were approved before. So when you're submitting your bid, it's better. But you can get really creative like that. I remember I was talking to a guy in the Atlanta area. He would request student information from public universities, targeting nursing school graduates and so on. If you were coming out of nursing school, he wanted your information. The schools have to give it to you, and you might pay them a processing fee of like $100 or something like that. But you'll get the whole graduating class's name, email address, and their physical address that the university has on file. They give that to you. Then, he would send those students an affiliate offer for a student loan forgiveness program that was passed under the Obama administration. The affiliate offer was for a company that would fill out those forms for you, and they would charge you like $500 or $600. They would pay this guy, and he was like, "I just send one email, and I make six figures." So, I would find arbitrage opportunities like these to build up more cash flow, and then I would go invest. But, you know, Sam, when you're talking about the earlier days, you're very focused on the W3 beginner. There were a lot of creative things happening like this that were helping my cash flow grow, and that allowed me to invest in software.

Shaan Puri

some fun creative cash flow things you were doing at the time

Syed Balkhi

I I'm not gonna talk about this

Shaan Puri

there's gotta be one prolific one that that is

Sam Parr

I've heard a bunch through friends of friends. I'm not going to mention any of them, but I've heard some of your things. I mean, like the space that you're in, everyone starts sometimes black hat, gray hat, and then as you start making real money, you're like, "Alright, I gotta go legit." But I've heard some crazy stories about what you used to do.

Syed Balkhi

that's good

Shaan Puri

Yeah, Justin Maris had a good phrase. He goes, "Do whatever you gotta do to make your nut and then go on your noble mission." I was like, I don't know if I agree with that, but I like the way you said it, let me put it that way. I know several people who have done that. It's like, okay, what were you doing before this? So I was running, you know, this dating site affiliate, you know, affiliate ad network. It's like, okay, cool, Plenty of Fish. This is not really where you want to hang out for too long. Or like these poker, you know, poker arbitrages, poker affiliates. There's one guy...

Sam Parr

on ringtones with subscriptions

Shaan Puri

There's a guy who emailed me and said, "You could say this on the potty." He's like, "Yeah, I go on sportsbooks. Every sportsbook has a welcome offer." So, he's like, "I go on Sportsbook A, and they have a welcome offer of like, they'll match up to 20% of your deposit, up to whatever, $1,000 on it." Sportsbook B has the same welcome offer. I go and max out both welcome offers and I bet on the same game for Team A and Team B. I lose the small rake, but I take the whole welcome offer and I just do that again and again and again. I was like, "This is so simple and so funny that you do this."

Sam Parr

What are you? Have you ever had liquidity from selling a business, or is the majority of your liquid wealth coming through annual cash flows? Are you pulling out a significant chunk from the...?

Syed Balkhi

**Business.** Yes, I'm pulling out massive chunks from the business in terms of a liquidity event. Yes, I sold 22 businesses, relatively small, you know, 7-figure exits on both of those. One was with a YouTube channel business and another was a software photography business. In terms of cash flow, we operate with a very healthy cash flow. So, I moved that out to the holdco level and then used that cash to invest in private businesses as well as in real estate and public markets.

Sam Parr

If you had a pie, a good question Sean always asks is, "What do you do with your money?" If you had a pie of your net worth, what's that allocation looking like?

Shaan Puri

pie chart not just a pie

Sam Parr

a pie chart or a pie yeah

Shaan Puri

or a pie

Syed Balkhi

It's so heavily skewed towards my business. The online business portfolio is extremely, extremely heavily skewed. I would say then a good chunk is in the public stock market, and then I have cash.

Sam Parr

do you actively manage your portfolio or are you are you just doing boring shit

Syed Balkhi

Big chunk of it is boring, you know? Dollar cost averaging index. I have begun to play with, you know, a little bit of money to see what I can do with it. I've done alright.

Shaan Puri

like stocks or other stuff

Syed Balkhi

no no stocks this is only I'm only talking about public investments because real estate is separate

Shaan Puri

You talked about coming from nothing, literally sleeping on the floor because you thought, "Why would I buy furniture? I should not buy furniture," even when you had money. But I believe two things: 1. Money is a tool; it's not the end goal. It's a tool to enable you to do something with it. 2. There's no purpose to money except to enhance your lifestyle, improve other people's lifestyles, or improve lives in some way. It would be a shame to just have the money and never use it. Spending money is as much of a skill as making money. You just start it later in life. Have you learned how to spend money? What have you learned? What can you teach us?

Syed Balkhi

Yeah, yes. In the early days, I saved everything. I mean, I did not buy a bed until I got married. Dude, just to put it in perspective.

Shaan Puri

did you remember you were dating dude

Syed Balkhi

no there was no bed I

Shaan Puri

ladies find you a man find you a man with no bed

Syed Balkhi

So, you know, I met my wife in high school. She's known me since I was broke, and her parents weren't that well off either. In terms of learning how to spend money, yes, now I have. For me, and the culture in which I was raised, we take care of family first. My first priority was to ensure my parents are retired because my dad worked really, really hard when we moved to the U.S. So, my parents are retired. They go to Pakistan maybe about four times a year. They're in Pakistan right now, for example. That was the first thing in terms of making an impact. In terms of traveling, I realized that I get a lot of creativity and joy out of just going and seeing new places. I spend money on those experiences.

Sam Parr

Are you giving equity to your people? Is the structure such that there is a holding company that you fully own, and then the holding company owns 80% of this company and 70% of that company?

Syed Balkhi

yes in the early days that's what I did now I don't do that

Sam Parr

now you don't give equity to the operators no do you regret giving equity

Syed Balkhi

No, I enjoy working with those co-founders, and I don't think I would be able to do what I did without them.

Shaan Puri

What now? You're only 32. How do you get up in the morning and feel motivated? You know, what's driving you now?

Syed Balkhi

I want to build a generational company. Sounds like you're there, though. No, I think it's generational when, you know, when my kids are older and grandkids are around. I'm probably going to be doing this until I'm dead. I enjoy the game; I enjoy the fun of it. I know Sam doesn't get excited about buying a business, fixing it up, and growing it. I get a thrill out of it, you know? Because for me, that's the opportunity; that's the hustle. Finding the edge, getting that deal... you can say in some sense, just getting an unfair advantage. But knowing those tricks, knowing those tactics gives me a head start. You know, like if you play basketball... I mean, we all play basketball. I sucked at it, right? But there were some people, like Alex, who was amazing. Right? Because Alex has been doing this for a long time and he has tactics. He could just cross you over or whatnot. I like having those tactics in the business.

Sam Parr

What's crazy is you might be in the top 50 richest, maybe even the top 100 or top 200 richest under 40-year-olds in America.

Syed Balkhi

I've kept a very, very low profile. The only way this would be validated is if I were ever to raise a round or if I were to exit. Right now, what I can see in looking at our numbers and what similar companies trade at and exit at, my assumptions are based on that. But it actually doesn't matter to me one way or another. I'm pretty uncomfortable.

Shaan Puri

This model of "buy, don't build" and of becoming a holding company (holdco) and having a portfolio... There are a whole bunch of people I know who are trying to do this right now. I'm sure you get a bunch of questions. I think I've called you asking you a bunch of questions about this. What do you think they get wrong? What's the common mistake or trap you think smart people can fall into when trying to pursue this path? Or what's a misconception that smart people have when they come into this?

Syed Balkhi

One thing that I've noticed—I've noticed several things, but this is the primary one—is that excitement takes them away. They will overpay on a deal and then regret it later on when they find out. Oftentimes, they're taking investors' money and are on a timeline. Most of them are trying to raise a fund, you know, your typical 10 years plus 2 years, whatever. So they have it, but they're not disciplined enough to wait. I have no rush; like, you know, if I don't buy a company this year, it doesn't make a difference. So, it allows me to be more measured and disciplined in the deals that we do. That's probably the biggest thing. Yeah, and they often underestimate the problems that exist in a business.

Sam Parr

The first interview that I saw with you was on Mixergy, our friend Andrew Warner. It looks like it might have been in 2014, but I think it was even before that. Andrew was like, "How much revenue do you do?" and you go, "Andrew, I told you I'm not gonna tell you this." It was pretty funny. Then I asked you to come on here, and you're like, "I'm not telling you these numbers." You've told us a lot of things. It seems like you're in a different sphere than you were before, where you don't mind talking about some cool stuff. I think that's neat because you're maturing from being this hacker, probably a gray hat hacker, from 20 years ago, 15 years ago, to kind of a tycoon.

Syed Balkhi

I think, you know, when I was younger, I was afraid. Either it was just from taboo things, but also I didn't want to fly under the radar, and I still do. I wasn't very vulnerable; I struggled with vulnerability. That changed as my network changed, as I continued leveling up. You know, my form is amazing now, and it was YPO, but it's not a YPO form. Everybody's in YPO, and those kinds of groups really help you mature and find your blind spots and things like that. So, I'm definitely appreciative of the friends that I have who call me out on those things. They have helped me become better.

Sam Parr

I'm gonna have to use that little clip for my new company as an ad thanks

Shaan Puri

we'll use ai to replace what's the company you said with hampton

Syed Balkhi

got hampton there

Sam Parr

No, man. I think, by the way, if your goal is to have a low profile, I have a feeling that's going to change when the headline of this podcast comes out because...

Shaan Puri

I I don't think honestly that he's trying to keep a low profile I just feel like you care about being humble and and you came across a lot of humility you know and not false humility you know false humility is basically like I'm gonna downplay everything and not tell you anything and that's actually like a different form of sort of you know I don't know arrogance or narcissism the the non flex flex yeah the not flex flex right or the it's kind of sort of this close the door behind me on the on the way in so you know I'm in but you can't get in because I'm not gonna really do anything like you know I think the best people are the ones who sort of become the person they needed when they were younger and I think that like you know the younger version of you if you heard something like this it's like alright this guy came from nothing moved here for pakistan didn't speak english was like sitting in the library because he didn't know how to make friends in the school he was like alright I wanna play video games the library had a firewall so his first business was creating a proxy to get around the firewall and he started giving that to other kids as a both a way to like make friends and make a little bit of money and then he took money and like he was like okay how do we get more customers it's not like he's some business savant he just kept asking how do we get more customers oh what if a directory posted about me how do I get them to do that what's in it for them and like you know use one foot after another so I think you yeah I think you did a good job of basically like without putting yourself in a position where you said something you're uncomfortable with you know you you did share stuff that I think is you know for me at least pretty pretty inspiring you're somebody that you know I gave ben a list of like 5 people I was like you know who are the 5 people that we've met because we met a lot of people last 2 years I said in the last 2 years who are the people that we've met that were kind of the most inspiring they seem to have a blueprint for life not just business that was working for them so like their business part of their life was working but they were also like content and they weren't you know like in the first five minutes of meeting them like weirdly bragging about stuff or like saying something that reveals some like weird insecurity that's driving them still and that they haven't gotten over it it's like I don't know those people are the they're characters they're fun to be around but like I'm not trying to be them you know like somebody who's you know has a family life that they actually care about so we put you on that list and I'm glad you came on because

Syed Balkhi

for sure

Shaan Puri

I don't think most people even know your story, and that's a shame. You know, I think more people are going to know your story now after this. Where should people follow you, or where do you want to send them to go from here?

Sam Parr

Really quick, Sean, before we wrap up, I want to tell you something. He has this website, so Google "Syed." So, S-Y-E-D, and then his last name, B-A-L-K-H-I. Then Google that along with the words "net worth." He's got this hilarious blog post.

Shaan Puri

oh this is yours sam told me about this

Sam Parr

Yeah, yes. Where it says, "What is Syed's net worth?" The first line, you're probably faking. His website comes up first, and it's a blog post. You're probably thinking that I'm some sort of narcissist writing about my own net worth in the third person. It's quite the contrary. I was looking through search traffic for my blog, and I noticed that I have a lot of type-in traffic for users simply searching my name and then the term "net worth." Then he goes on to explain that it's always changing, but knowing someone's net worth is not going to help you succeed. He's got those hilarious posts that he... and it was really funny. Also, I want to give a shout-out. We talked a lot about money and stuff. You've got amazing posts where you do an annual wrap-up. I've been reading that for years. I think it started in 2017.

Syed Balkhi

15 2015

Sam Parr

2015, you put a big emphasis on philanthropy. So, like, you have a school. I think you're big on schools, right? You build schools... I forget where, Pakistan I think. And you are giving away... you put a lot of emphasis on philanthropy. It's you, your wife, and your kid in a lot of these things. You have your own foundation and you're giving away a lot of stuff. I think it's awesome. To reiterate what Sean said about being a total man, in a way that's kind of like what you are. It's like you're a holistic person, and your personal website does a really good job of explaining that.

Syed Balkhi

Yeah, you know, I started doing those write-ups when we found out we were going to have my son. I was like, "Okay, I should start recapping this." Well, we started trying to have a kid, and I thought I should start recapping what's happening in my life so that way, because I'm going to forget it. At some point, I may want to tell him, "Oh, check this out, check this out." And that's how those year-end reviews came about. I enjoy writing them, and a lot of people love reading them, including you. Thank you, Sam, for reading it. In terms of education, I do believe that it levels the playing field, and that's why we do what we do.

Shaan Puri

Was just gonna say, Sam gave you a compliment. I'm gonna make fun of you. The homepage needs a revamp. You go "entrepreneur, investor, and marketing extraordinaire" with *extraordinaire* in italics. Then there's a photo of you with the headset, the Bono mic, the TED phone, the Madonna mic. You've got the flicker and you're doing the hand gesture, talking about, you know, "you gotta start with why." And you're above that now, bro. You've elevated to tycoon status. Now you gotta have the super minimalist thing where it's like, "Yeah, all white," and it's like, "We buy companies of all sizes. Please inquire."

Syed Balkhi

that's what you should say

Shaan Puri

yeah like if you have a company for sale I like to buy it

Syed Balkhi

If you go to the automotive website, I really want people to know about automotive instead of me. If you go on my website, I barely spend any time on it. I write once a year; that's the year-end review, and it's really more for me than for anybody else. But if you go to awesomeotive.com or am.c0, that website hopefully should...

Shaan Puri

It says, "Helping small businesses grow and compete with the big guys." Now that's what we're talking about! That's a good one. It has all the companies that you've mentioned that are under the umbrella. Dude, this is awesome!

Sam Parr

Do you want to keep coming back? You gotta keep coming back on. You're fun to talk to.

Shaan Puri

that's sam's that was pretty good for me was that good for you question

Sam Parr

yeah no you're fun to talk to

Syed Balkhi

I enjoyed it I enjoyed it and happy to come back

Sam Parr

I told you we're not we're not we're not assholes

Syed Balkhi

no I loved it

Shaan Puri

More importantly, are you in for Camp MFM Part 2 that we're about to host in a few months?

Syed Balkhi

I I'm in

Sam Parr

alright and that's the pod