Neil Patel On Making +$100M/Year, Spending $180k/Month, and Donating Millions To Charity

Sam Parr

To say in your blog post that you earn $15,000 a month is all I need. I'm happy. That was like 10 years ago, I think. But correct, that's... but you used to say $15,000.

Neil Patel

Single and no kids is easy right now. If I had to guess my burn rate, it's between $1,200 to $1,800 a month. What?

Shaan Puri

That's insane! So, how does that break down? What's the bulk of it? Well, the house is probably the biggest one.

Neil Patel

no I have no mortgage

Shaan Puri

okay yep so you're spending a 120 to 180 k without spending anything on your home

Sam Parr

So, Neil, I was telling you a little bit about what you're getting into. We record everything, by the way, so we just hop into it. Sean kinda knows who you are. I've been a fan of yours for like 10 years. Can I tell Sean and the audience who I think you are? You could tell me if I'm wrong and what I'm missing.

Neil Patel

sure go for it

Sam Parr

Alright, so you're Neil Patel. I know you because you used to have this blog called Quick Sprout. I read it maybe 10 years ago; it's probably a 15-year-old blog if I remember correctly. At first, it was mostly about SEO, but eventually, it kind of warped into being about SEO, content, and just about business in general. You would do crazy stuff, like build a business that made $100,000 a month in revenue by just picking a random niche. I think it ended up being supplements, and you blogged every month about how that was going. You used to blog about all types of crazy stuff. Then eventually, you also started a company called Crazy Egg, which I heard was doing many millions of dollars a year in revenue. It was bootstrapped, and you owned the whole thing. Then you and Heaton started Kissmetrics and raised a bunch of money. It didn't end up working out wonderfully, but it could have been quite huge. Heaton wrote a great blog post about where a couple of errors were made. Now you've got a 700 or 800-person agency that is also bootstrapped, like the rest of your stuff. You've just been balling out for like 15 years in the world of business, just killing it with agencies. Is that right? Did I get everything mostly right?

Neil Patel

Mostly closed. So, Crazy Egg came first. Ethan's the co-founder on that; he owns Crazy Egg as well, so it's not just me anymore. Then there's another guy named John Butler, who was also part of Crazy Egg at the beginning. Quick Sprout came later. I started blogging about business and stuff like that. Kissmetrics then came, but it didn't work out. Quick Sprout started to have a big audience related to marketing. We tried to create an SEO software on there. I did that with my co-founder Heath, and at the time, he said, "Alright, how about we create a company out of this? I'll do the software." That didn't work out. I didn't want to be part of it anymore, so he took it over and ended up making it a business site directory, you know, an informational site, whatever you want to call it. It has affiliate offers, which you already know about. Then the last one was the ad agency, which is correct. There have been a lot of things in between here and there; a lot didn't work out. But generally speaking, I tend to do one thing at once and focus. Currently, I spend all my time on my ad agency.

Sam Parr

And that you're at 6,700. How big is that at the moment? And it's only like 5 or 6 years old, right?

Neil Patel

Yeah, so we're on our 5th year. End of this year will be end of year 5. We're at roughly 700 people, I think. Maybe a little bit more... maybe by end of year 900-ish, if I had to guess.

Shaan Puri

Who... who are these people? Do you guys have these, like, 700 anonymous Indians in India? What's going on? Who are these people?

Neil Patel

we do have some people in india but what's funny

Shaan Puri

is how many people do you employ in new york that's what I wanna know that's my agency test

Sam Parr

well you're you're in brazil too though right

Neil Patel

Yeah, we're in Brazil. The majority of our people are in the United States. If I look at it region-wise, the United States has the biggest headcount. We also have offices in: - Australia - Canada - UK - Brazil - India I think we're opening up in Germany soon. We're looking at Italy, France, and a few other regions as well. But our model is... like our ad agency in India markets companies in India. It's not really used to outsource American work into India.

Sam Parr

and what work are people doing like what's the service that you're providing

Neil Patel

All digital. So, like SEO, pay-per-click, email marketing, conversion rate optimization, organic social, paid social... the list goes on and on.

Sam Parr

and do all the customers come from neilpatel.com

Neil Patel

It used to be that way. Then we started getting a lot through word-of-mouth. I would have never really guessed that word-of-mouth drives business.

Shaan Puri

Yeah, how many? Could you say how many? Most people, I would say, like our audience, they'd be like, "Oh yeah, it's cool to have a personal brand." But me and Sam have figured out, "Oh wow, this really does open up more doors than you would have expected." You've been doing this for a long time. So, Neil Patel, which is kind of like a personal blog where you're talking about hacks, experiments, and strategies that you've figured out. How many can you say? How many millions has that brought in client bookings for the agency? Like, how big did just the referrals from Neil Patel get you before other stuff kicked in, like word-of-mouth and being recognized in the industry and other things like that?

Neil Patel

I think the Neil Patel brand got us to around $30-40 million in revenue, and then word-of-mouth started kicking in. Other things started kicking in too: - Employees started bringing in their own deals because they worked in the space for so long - We saw more and more growth - Got awards that brought us deals Being a minority-owned business helps, believe it or not. If you're Indian and you live in the United States, you're considered a minority, and...

Shaan Puri

I was about to say are we a minority I feel like I never get minority

Neil Patel

I feel

Sam Parr

like you're you're the majority of ceos out there so I mean it's

Neil Patel

Funny because we go through RFPs, and some of them ask if you have what is it, like MBE certification or something like that? I forgot what it's called, or Minority Business Enterprise. I was like, "Well, I'm not a minority. There's like 1 + 1,000,000,000 of me in this world," right? And they're like, "Oh, you're a minority." I'm like, "What are you talking about? There's like 1,000,000,000 + Indians in this world. How are we a minority?" And they're like, "Oh, in America, you're a minority." In some of these RFPs, it says in there, "We're looking for LGBTQ..." I don't know what all four of the letters are.

Shaan Puri

the tattoo on your arm

Sam Parr

yeah the q's there

Neil Patel

That and then women-owned businesses, veteran-owned businesses, and the other one was minority. I was just like, "Wait, there's actually a quota that these big Fortune 500 companies have to hit?" And they're like, "Yeah." I was like, "Well, I'm a minority." They're like, "Well, you need the certification." I was like, "I gotta have a certification to tell you that I'm a minority?" At first, I didn't realize I was a minority. They were telling me, "Oh, you're a minority. We reached out to you; we're hoping that you'd be a good fit." And I'm like, "I'm a minority?" They're like, "Yeah, you're a minority in the United States. You'd help us meet our quota. Do you have the certification?" I'm like, "What are you talking about?" Then we went through the process and got the certification.

Sam Parr

you gotta get your papers bro you gotta get your papers right

Shaan Puri

I would have been offended, and then as soon as I realized, "Wait, this is to my advantage," I thought: "Oh, hold on. I also got solar panels on my house. Does that help? You know, like... I'm a dog owner, glasses... whatever." Yeah, exactly. I have a vision impairment called farsightedness, you know? So what else works in my favor here? You know, like... was the certificate just... turned the webcam on and it looked at you and it was like, "Yep, that was it"?

Neil Patel

That's not enough. What's funny is our COO, or VP of Operations—one of the titles, I forgot what Tracy's title is—she asked me for this like 6 months before we did it. She said, "Hey, I need your birth certificate." I was like, "Yeah, why do you need my birth certificate?" She said, "Oh, we need it for this certification," like whatever. Then, the moment someone ended up telling me how Magic Johnson generates a lot of his revenue because he's a minority, he gets a lot of contracts, partners with other businesses, white labels it, and uses his name. He becomes a quote-unquote owner of that business and then outsources.

Shaan Puri

wait wait tell me about that give me an example what's what's what's an example of the magic johnson formula

Neil Patel

Sure, so I don't know if this is true; this is just what someone in the minority space ends up telling. So that's the caveat: I don't know if this is true or real. They're saying, let's say if someone has a food company and they have contracts with a lot of the hospitals that are run by the government, like the VA, they're looking for minorities to provide it. However, there are already a lot of big corporations that provide the food. So, Magic Johnson may go create a business that's in that space, partner with the big supplier who already provides food to these hospitals, he'll go get the contracts, and then work with them to actually fulfill... yeah, wait, Sean.

Shaan Puri

you

Sam Parr

Never heard of this? My in-laws own a moving company, and they're minorities. They're Black, Haitian immigrants, and they win deals partially because of that reason. For example, Morgan Stanley or something like that, if they want to move, they have some type of policy in their company that says, "We want to get RFPs for... or we want to get bids from these types of companies."

Shaan Puri

I had no idea how... Obviously, I knew this exists. I just didn't realize how significant it was. I definitely didn't know the Magic Johnson formula, which is frankly genius on his part, if that's actually what he does.

Neil Patel

We don't know that part, but it is true. Think of it this way, right? It's a quota. So if I go and I get an RFP (Request for Proposal), let's say from Boeing, which, funny enough, we lost the RFP because we were overpriced for what they wanted. Let's say the price is very similar to the competition. I have the awards showing that we were the Agency of the Year. So, like, "Alright, these guys are good at what they do." We have the case studies, and if we're at similar pricing, it's like, "Oh, this is a minority-owned business. It helps us hit our quota. Let's give the business here."

Shaan Puri

right yeah yeah of course you you have some merit to go with it

Neil Patel

for the

Sam Parr

First, $30,000,000 of business. You got that, and you must have gotten that by year 2 or so if you're growing this fast. What was the main... year 3, sorry?

Neil Patel

year 3

Sam Parr

What was the main service? When I think of it, I went to your website and I actually submitted a lead to figure it out. There was the maximum you ask: what your website is and what your budget is. It’s like $0 to $10,000, $10,000 to $20,000, and then just $50,000 and above. So, were you serving mostly small businesses? What were you doing? Were you doing simple stuff like making their Yelp page good? What exactly were you doing?

Neil Patel

Yeah, so it's not that small. We do have some SMBs like that, but we actually first started off in mid-market. Our clients would pay us like a minimum of $10,000 a month.

Sam Parr

and what would you do for 10,000 a month

Neil Patel

So nothing was cookie-cutter; it was all custom. Maybe they need SEO, maybe they need help on paid management, maybe they need some CRO or email marketing. Or $120 a year, right? $10 a month and scale up from there to $20 a month, $30 a month, whatever it may be.

Shaan Puri

What was most in vogue as the service when you started? Like, what was the trend everybody wanted? And then, what's the en vogue thing today?

Neil Patel

when we first started it was mainly seo and what

Sam Parr

Does that mean, though, what does that mean? You use reps or something, and your employees look at which terms they should rank for, and then you write an article for them?

Neil Patel

So it was optimizing their on-page code, helping build links, creating content, promoting the content, and making sure that traffic converted into leads or sales. Assuming if they weren't services, it was a positive ROI for them.

Sam Parr

sounds like a ton of work for $10,000 a month

Neil Patel

It would start at 10. It depended on the keywords, how hard they were to rank for, and it would go up from there.

Sam Parr

and what about now

Neil Patel

sam I

Shaan Puri

I love when you describe people's businesses because you're just like, "So what does that mean? You just Google their name and then it doesn't show up, and then you go write an article with their name?" And it's like, "What's the hustle, dude? You just read the New York Times and then you just cut out half the words and then you hit send in an email?" Like, is that what The Hustle is? "Yeah, yeah. Nailed it."

Sam Parr

I mean, it can be... like, you know, there's always more nuance and complication in reality. But you can explain things in a fairly simple way. For example, what's HubSpot? Oh, they just make software. So when people sign up for your website, you can email them and call them.

Neil Patel

like you

Sam Parr

know what I mean like you could I'm just trying to dumb it down a little maybe you

Neil Patel

When you look at the business when HubSpot first started, they faced massive churn. They had to: - Add tons of features - Figure out onboarding - Figure out training There was a lot that went into making HubSpot a multi-billion dollar company. But many people look at it as just email. However, they do more than email, more than a CRM. They've actually added... if anyone in this space has a ton of traction, they have a history of adding a lot of those features for free, which is a smart model. Then they: 1. Gobble up market share 2. Get customers into the ecosystem 3. Hopefully, those customers stick around

Sam Parr

and so what's what's the popular you should do

Shaan Puri

The ad reads for us... Yeah, that was amazing. By the way, Sam, I think you should make "Suburban Dictionary," which is just you explaining businesses without any of the complicated stuff. Like, "What is it?" and "How do you get customers?" Call it...

Sam Parr

it like the the

Neil Patel

the the 3

Sam Parr

call them

Shaan Puri

syllable dictionary like I I explain

Sam Parr

complicated things but

Neil Patel

no word is above 3 syllables

Sam Parr

that's what we're gonna call it exactly what by the way I

Shaan Puri

Ben brought up something interesting regarding the minority issue. Ben, do you want to share that? You slacked us something about it.

Sam Parr

Neil kind of mentioned this too, but this is really, really popular in government work. The government is very hardcore about hitting their quotas for racial minorities. So, around here, I actually know a couple of guys. Basically, the people I know are all African American. They get the contract, put their name on the contract, and then outsource the entire thing to firms like Deloitte or KPMG. They take about 15% of the revenue or whatever.

Shaan Puri

They create a consulting firm that's like "Minority Inc." Then, Minority Inc. goes against the contracts and farms it out to Deloitte or whoever.

Sam Parr

that's great

Hubspot

"I can find this client info." Have you heard of HubSpot? HubSpot is a CRM platform, so it shares its data across every application. Every team can stay aligned - no out-of-sync spreadsheets or dueling databases. HubSpot: grow better.

Shaan Puri

I lived in Indonesia for a while, and they had such a bad traffic problem. Jakarta has, I think, the worst traffic in the world. You're just going 2 miles, and you might be there for 2 hours. So, they thought, "Okay, we need to create a carpool incentive." How do we create an incentive where if you have 3 or more people in your car, then you can go in the fast lane? This worked for about a month. It was like, "Oh wow, this is great! If we carpool, we get to go faster." Then, a little industry sprouted up where people would just stand at the edge of the carpool lane like hitchhikers. They'd say, "I'll get in your car if you want a 3rd rider. I'll just hop in, and we can ride in the fast lane." Then, they would get off on the other side and ride back with somebody else. They became professional HOV lane participants. They would just spend all day riding with you in your car. So, you'd be sitting there, and someone would just get in the back seat with you. It was just like a random Indonesian person, and you would pay them 10 rupees or whatever, and then 10 baht. They would get out on the other side a mile later. It was amazing.

Sam Parr

You, Neil, was QuickSprout. Ben, there you go, was QuickSprout. I mean, so that was your main business. QuickSprout and Crazy Egg were your main businesses for a while.

Neil Patel

Before, it was just a blog. Then my co-founder, Heath, ended up taking it over, and now it's his blog.

Sam Parr

So, what was your main source of revenue and income? Because, like I said, I've listened to you forever. You've been crushing it, it seems like financially, for over 10 years.

Neil Patel

I don't know if I'm crushing it, but the main source of income was Crazy Egg for most of my life. Then it ended up becoming the ad agency.

Shaan Puri

And Sam, you said something at the very beginning that if I was listening to this, I'd be like, "Wait, hold on! I want to hear that story." You mentioned that just for kicks, he would like to spin up a business that did $100K a month in revenue. What's an example of that? Tell that story because that sounds awesome.

Neil Patel

Yeah, so everyone thinks it's really hard to make money online. Then you have these shysters who are like, "Buy this for $1,000 and you become rich," which never really happens. Maybe every once in a while, but for most people, it doesn't. So I was like, I can create a business on anything. People were suggesting, "Go create a nutrition business." My audience picked it. I gave them a lot of different options, and they chose a nutrition business. I was like, "Alright, let's create a blog, get a ranking, get some traffic, and then funnel people in through quizzes and emails. Let's funnel them into supplements, rank higher on Amazon, get traction, and see what happens." And it did well.

Shaan Puri

and that took you like months years

Neil Patel

how long did it take it wasn't months it was much more than that I think it was like

Sam Parr

a year right

Neil Patel

A little bit less than a year. I think it was like 9 or 10 months, so it wasn't just 1 or 2 months, sadly. But a little bit less than a year, so it was pretty good.

Sam Parr

It was an awesome blog post series. Sean, you gotta Google it. Google like "Quick Sprout" or "Neil Patel." They’ve done like $100,000 a month, and it was like a monthly update. It was pretty amazing.

Neil Patel

I don't think we have deleted it now. I don't know if it's still a line, but... Then, I took the money I made from Crazy Egg and I'll park it into other things. It's like: 1. Stock market - for a long time, the stock markets had a really crazy run, right? 2. Investments - a lot of venture funds, angel investments And then sometimes you just get lucky, sometimes you don't. This is a numbers game.

Shaan Puri

We had talked about doing a content series like this to grow the podcast. I was like, you know, I think one of the best ways to grow the podcast could be if we do a challenge, like what you had described. One of the ideas is, what if Sam created his own condiment brand called "Sam's Sticky Icky"? We could basically show how we build a direct-to-consumer (DTC) brand—from idea to branding to marketing—and we would do it all transparently. This way, we can get people hooked on, "Okay, let me see how you guys actually build this thing." Now, it's a lot of work, which is why I think ultimately...

Neil Patel

lot of work

Shaan Puri

We didn't do it, but how well did that work for you? Was that just kind of like a good content thing, or was it like, "No, that drove a lot of growth for the brand and the blog"? I'm curious how well that worked for you.

Neil Patel

It didn't drive as much growth for the brand, but it did help out every little bit. I did crazy experiments. I spent like $100,000 or $200,000 on clothes and wanted to see what that did in business meetings. I spent money applying first class everywhere to see what that would do. But yeah, I tried a lot of different experiments. It was just for shits and giggles, and it was also a reason to justify some of my expenses. I was like, "Yeah, I want to fly first class." I remember my first time flying first class; someone else paid for it. I thought, "Wow, this is amazing! I've been missing out. This is a lot better than being crammed up in economy flying all the way to Europe from Los Angeles." Then I was like, "Man, let's do some experiments and see if I can justify this expense." But yeah.

Shaan Puri

that's amazing

Sam Parr

And do you just... did you say early on that you just gave Heaton...? So did you invest in Heaton Shaw's other company, Sean? Yeah, yeah. So we're both... Neil, we're both investors in Nira, which is... Heaton's your cousin, right? No, or brother-in-law? Brother-in-law. Brother-in-law, yeah. Sorry. And Heaton's amazing. He's another... he's a great blogger as well. Sean and I both invested in his company called Nira, which is either gonna be a dud or is gonna be like the biggest company ever. I know the... it's like a company that's gonna close multimillion-dollar contracts, I would guess. It's like a big old business... potentially a big old business. But did you say that you gave him Crazy Egg?

Neil Patel

So, with Crazy Egg, what ended up happening is, what I wanted to do was, we were doing business together forever. Eventually, I just said, "Hey, you can have the monthly distributions, and I'm going to go create another business."

Sam Parr

why would you give that why

Neil Patel

He didn't ask for it, nor did he care for it, nor did he want it. You know, he's never been about money. Neither him or I have, and we're not rich. I can't actually speak for him... I'm not rich, I've just done well enough and I don't spend as much. So it's like, I don't really need the money. Does that make sense? Like, if you just don't spend money, you don't really need much cash at all.

Shaan Puri

did you just said you dropped $200,000 on clothes what do you mean you don't need money

Neil Patel

Well, that was like an experiment, right? But that's not my daily life. Like, I'm wearing a white t-shirt with stains that my kids put on it. They're probably like $10-$20 - I don't know what the white t-shirts cost, but they're not really white anymore. So I try not to do video recordings in front of white walls anymore because you can just tell the discoloration from it. Nonetheless...

Shaan Puri

so does samsung you live in brazil is that what you no

Neil Patel

No, I have a division in Brazil. We do marketing in Brazil for Brazilian companies.

Shaan Puri

And you live in Texas? Where do you live? "Vegas." "Vegas? Okay, amazing." And so, have you... is it easy for you to keep your burn rate down? Because like, I was telling Sam this, I spend like... I don't know, $25,000 a month now. Just like... and I don't even feel like I'm...

Sam Parr

Dude, I think Sean, you might spend more than that now. If I bet you add it up, because I know how you spend, I bet it's more than $25.

Shaan Puri

it might be it might be a little more but it's not more than 30 I would say

Neil Patel

I don't

Shaan Puri

I think it's more than 30. But, like, kids... yeah, I got two little kids. They're like babies, right? They don't eat food, you know? So, you know, there's diapers, sure. But, like, it's not them; it's me.

Neil Patel

steep burn rate I would take 30

Shaan Puri

you said it's a steep burn rate or it's a

Neil Patel

good burn rate I would take it I would trade with you

Shaan Puri

Okay, gotcha. So when you say you don't spend much, what do you say is your monthly burn rate? Because I think for most people listening, right, they're like... Most people don't talk about how much they make or how much they spend. Alright, how much you make, sometimes that's sensitive. How much you spend...

Neil Patel

that how much I burn off

Sam Parr

But Neil, you actually wrote this in a blog post. You said, "I spend..." This was, I don't know if you're single or if you have a family, and you can... I would say that if...

Neil Patel

you my burn rate is right now

Sam Parr

But you used to say in your blog post that you go, "$15,000 a month is all I need. I'm happy." That was like 10 years ago, I think. But right, that's what you used to say: $15,000.

Neil Patel

Single and no kids is easy right now. If I had to guess my burn rate, it's between $1,200 to $1,800 a month. What?

Shaan Puri

That's insane! So, how does that break down? What's the bulk of it? Well, the house is probably the biggest one.

Neil Patel

no I have no mortgage

Shaan Puri

okay yep so you're spending a 120 to 180 k without spending anything on your home

Neil Patel

Property tax for both my homes and HOA dues is probably close to $200 a year.

Shaan Puri

okay great so we've

Sam Parr

Got 12,000 of the way there. Alright, yeah, yeah, yeah. So there's... okay.

Neil Patel

Life insurance is $25 a month. My whole life policy costs $25 to $300 a year. No.

Shaan Puri

no wait what what

Sam Parr

What the hell is a $25,000 worth life insurance policy? Can you explain that?

Neil Patel

Is it just a benefit? Like, if I die, my wife and kids get money, like a life insurance policy?

Shaan Puri

Yeah, well, I get that, but is that normal? I've never heard... like, either I'm dumb or you're dumb. What? Who's dumb here? Am I dumb because I've never heard of anybody spending that much on their life insurance policy?

Neil Patel

It's like an investment account; it builds over time, so it's not like it goes away. Most life insurance policies are for, let's call it, 10 years. Then you buy another one. Mine just keeps going, and you can borrow against it. Just think of it as an investment vehicle. So that's $25 a month.

Shaan Puri

okay I see I see I see now I understand

Neil Patel

We have staff including cleaners, nannies, and a full-time driver. I think that ends up being around $57 a month.

Sam Parr

57100 57,000

Neil Patel

1000

Sam Parr

you know a driver uber why why is

Neil Patel

Not affordable, so in Vegas, I optimize for convenience. I go through this company - they charge a hefty premium. I have decals on my car, so if I do a meeting in front of a casino, the car can just stay in front of the casino and doesn't have to move. If I'm going to the airport, you can straight up pull up to the plane or whatever you want to do, and you don't have to go through terminals or anything like that. So that makes it...

Shaan Puri

Part of your strategy, as I'm picking this up, is that you live the best lifestyle you want, and it's all expensable the way you do it.

Neil Patel

I don't know if it's all expensable

Shaan Puri

but with the decal like it's a company it's like marketing it's like a like a marketing vehicle for you

Neil Patel

So, there's a limo company... If I have their vehicle on my windows and pay them, I can end up parking wherever I want, in theory. Not literally wherever I want, but in most cases, I can park wherever I want and the car can just sit there and wait for me.

Sam Parr

so alright so what else anything else you fly private

Shaan Puri

he's like I I buy a daily disneyland fastpass just in case I decide to go that day

Sam Parr

yeah yeah

Neil Patel

I fly private for convenience of time

Shaan Puri

What's been the number one thing where you feel like most people think it's too expensive and not worth it, but for you, you get way more value? I'll give you an example from my life. I thought I had burned out until we started talking. This is great; I'm feeling so much better about myself. The one thing I did was hire a private chef. I always thought that was the lifestyle of the rich and famous. I thought, "Wow, that's cool because you eat healthy, and it tastes great. You don't have to fuss with time, cooking, dishes, and groceries." To me, it's like a no-brainer. I'm like, "Dude, anybody with any kind of money should consider that." That should be one of the priorities, like a fancy car later, but a private chef now. The value and reward way outweighed the cost for me. I think most people don't typically make that trade. It sounds like you've experimented with many ways of spending money. What has been a good reward for cost trade that you're like, "This one is great, and most people don't do it?"

Neil Patel

I don't know... I'm in a bubble because I have a lot of friends who are like me. Sadly, we spend a lot and we don't know what's reality. I know that sounds bad to say, but it's true. Right? Cook is not bad. Housekeepers and nannies help, so you don't have to do your own dishes and stuff. Although, funny enough, I enjoy doing that and ironing because it's kind of meditative for me. It's relaxing. I don't know why, but watching TV and ironing helps. So, you get the freedom and you can watch your kids when you want to, but you can also do meetings and stuff like that. The probably the best expense I ever spend on is private planes. Not because I like it; I don't mind flying commercial. There's really not any difference for me, but it helps me optimize my time. That way, I can see my kids more. I sometimes have a lot of meetings for work, and just going and then coming back the same day is really in and out, really quickly. Like sometimes I'll be home quick enough to go from Vegas to Utah for a conference, speak, and come back. I'll be home quick enough to pick up my kid from school. To me, that's really valuable. That's worth the money.

Sam Parr

Are you saving any money then? Or, I mean, are you just taking a fat draw from the agency in order to pay for this? Or are you able to expense a lot of it to the agency? How does that work?

Neil Patel

I don't expense any of it to my company I just personally pay

Sam Parr

so you're just the agency is just that profitable of a business it's doing that well

Neil Patel

or investments or savings I've done well enough in life where I'm okay

Shaan Puri

Why did you do an agency? So, me and Sam always talk about, like, we have many mottos on this podcast. For example, we don't do public math. You don't say you're rich; you say you're "post-economic." These are things we've picked up from guests along the way. One of the mottos that we say is, you know, "agencies suck." And the reason we say that is not because they don't do well; it's not that they suck. It's like they suck as a business choice. If I could, I've always thought if I could choose between software or an agency, I'd choose software. Because it's like, oh, it's not a services business. It's going to work while I sleep, and it could scale up. I don't have to open up offices in Poland, Brazil, and all these other places. But you chose that. You did software, and you chose an agency. Now, why'd you make that choice? And what's great about agencies that I'm kind of like not giving enough credit for?

Neil Patel

So you're looking at business as in software is more scalable. It's more desirable by public markets. For example, HubSpot versus Accenture. Accenture has way worse multiples than HubSpot. Accenture is a bigger company from a revenue and EBITDA standpoint, but now take a different approach. Okay, HubSpot's a publicly traded company. You guys are both HubSpot employees, I'm assuming still. Is that correct?

Sam Parr

kinda

Neil Patel

Sure, well, whatever your guys' deal is, right? But you guys are pretty much at HubSpot now. Imagine creating a business and you don't plan on going public, you don't care for the limelight, you don't care for any of that in business. What's a successful business? Good revenue growth and good revenue and profitability, right? All that really matters at the end of the day, whether you grow or not grow, is how profitable are you. Would you guys agree with that statement? Assuming you're doing something that's ethical and you're not selling [illegal products].

Sam Parr

No, I wouldn't agree with that. I would say there's a third thing, which is: is this enjoyable? Do I like my day-to-day? With the more people you have, most people would say that's just a little bit more headache than...

Neil Patel

But that's not software or consulting. Anytime you build a big company, you tend to have a large amount of people. Whether it's HubSpot or whether it's Accenture, everyone has. Yeah.

Sam Parr

But you can have, you can probably have a much higher revenue per employee with software versus, let's say, you own a massive landscaping business. You're going to have to have tens of thousands of people.

Neil Patel

But what's the difference from dealing with how many people HubSpot has? Like 6,000? I don't know, 5,000-6,000 is probably a lot. I'm guessing on the number, but what's the difference of dealing with 5,000 or 6,000 people and 20,000 people? There's a point where it doesn't matter and it's a lot of people either way. They're like... it's not like you have 50 people. You still have thousands of employees to deal with, and you need managers and layers and all that kind of stuff.

Sam Parr

Yeah, but you're hiring a different type of person, whether that's good or bad. For example, if you're VaynerMedia, they're based in New York and can probably only afford to pay some of their lower-level employees $70,000 or $80,000 a year. So, you just have to get a ton of people like that and have to have higher churn. In contrast, a bigger company might be able to pay a significantly higher salary because the revenue per employee is much higher. So, perhaps there's a slightly different day-to-day because of that.

Neil Patel

Not necessarily. Let's say you're VaynerMedia. He could be doing it to optimize for profit. What if I told you his LTV (lifetime value) was 6, 7, or 8 years? You have to have that in mind. You can still hire high-quality people and pay them an arm and a leg. You know what I mean, right? Look at Accenture; they're charging clients so much money, and their contracts are long. I don't know what VaynerMedia's LTV is, but there are a lot of consulting companies that have LTVs of 6 or 7 years for clients. Their clients are spending... you know, HubSpot? Yes, it's more revenue per employee. You could say potentially in software you can get to more revenue per employee, but I know consulting companies that only take on contracts that are like $5 million or $6 million and upwards. So you have high margins, and you can have a high revenue per employee. But either way, no matter what, as you build a big business, you're going to need more people, and it's a headache to manage. Whether you pay them $70,000 or whether you pay them $150,000, it's still more of a headache. The notion that if you hire someone for $150,000... I'm not saying you're saying this, but it doesn't necessarily mean they're a better employee, right? An engineer? No, it just means...

Sam Parr

different types of headaches

Neil Patel

Correct, exactly. Engineers, for example, are very expensive in this economy, right? So the point I'm getting at is... as a consulting company, I had the demand for it. A lot of people want to pay me for marketing, and there was just so much demand it would have been silly not to do it. If I'm not trying to go public or I'm not trying to sell, money's money. Green is green. As long as you're happy doing what you're doing, take the cash.

Sam Parr

will you ever sell the company

Neil Patel

I want to say I would never sell the company, but I don't care to ever sell the company because I love what I'm doing. We also have good growth too, right? Like, I don't know what we'll grow this year... 60-something percent, which is not bad. You know, with the market going up and down and fluctuating, 60-something percent is my guess. At our size, it's decent.

Shaan Puri

yeah the part I was actually talking about was a little bit more like I think you're you're totally right that like if you're gonna win big you're gonna end up with a bunch of employees and like you know it might look like a 150 it might look like a 1000 it might look like 10,000 but like you know in either case you're gonna have managerial work and headaches and it's just different types the part I was really talking about was like you know I've now built let's say a media company content and then it's like done educational stuff so courses which are like you know a different thing and then there's like I built a software company and so you know we ended up selling that one and then it's like and then there's services which is the client services like consulting or agency model and what I hate what I what I love about content media is it's actually pretty fun to create and it's cool because a lot of people consume it so they kinda you know you get that like hit but you gotta like you gotta bake the cake every day right so like you know the hustle or like the milk road or this podcast it's like we have to come on and create the content again you know for the most part we we're not doing like super long evergreen stuff so you know like with the hustles the daily newsletter milk roads the daily newsletter it's we gotta bake that cake every day whereas software it was like we built one product and yes we might we will improve it over the course of a year you know every year we're gonna improve it but like fundamentally we did have to like recreate the product come up with a new viral story or a new great content segment that would like require like a new genius with software it's like you come up with one genius moment and then you sort of refine it make it work better over time and get rid of bugs and things like that so I preferred that part of software which was like making a product rather than making kind of like a disposable you know consumable piece of content or like I have a ecommerce company and like it's a pain in the ass to have supply physical products that are supply chain constrained and like we have a warehouse we got warehouse problems with our ecommerce business and so I'm like man digital is sweet compared to ecommerce but ecommerce is quite profitable it kicks off a bunch of profits that's nice so every business has these pros and cons and I always thought agency was like the part I always thought was a pain in the ass was like the client services you are reinventing the next campaign and the next winning marketing you know formula for them and you have to keep clients happy all the time and clients are sort of like never satisfied in a way that like they if software is like you can have nameless faceless customers that like yeah some percentage of them will will write into your help desk that's in the philippines or whatever but like you're not having to like you know send account reports to your you know your your big clients to keep them happy

Neil Patel

Yeah, but everyone has their own problems in software. A lot of people have turned to this issue and they can't figure it out. Or they have competitors that come into the marketplace and just undercut them on pricing for the same features because it's cheaper and cheaper to build software these days, right? So, they all have their own problems. To me, I look at it as if you can find the right people. Every time I start a company, I find people to put in place that have already done it multiple times before. This way, your risk of failure is lower, and they already know everything to do. I don't have to deal with client relationships or customer service or anything like that. I get to do what I enjoy doing, which is creating content and being the face of the company, etc. My wife enjoys what she gets to do as well. She gets to donate the money, although we don't really consider it donations. We look at it as investing. We're investing in people, although we really don't ever collect any money back. It's more about investing in making the world a better place or improving people's lives, or whatever it may be.

Sam Parr

What's a... who were your first three clients at this stage? Because you...

Neil Patel

I don't know they were small companies

Sam Parr

and right now who's an example client

Neil Patel

Like a Fortune 100 software company... That is a typical company. Think of any big, large corporation in B2B - that's a great example of one of our customers. Or even B2C, actually. Think of any Fortune 500 company - that's a prime example of a customer.

Sam Parr

what's and who's the ceo of your agency are you

Neil Patel

No, I'm never the CEO. I'm a terrible manager, I'm one of the worst managers ever. His name is Mike Gullickson. He was the CEO... no, he was the president of iProspect, which is the ad agency owned by Dentsu, I believe. iProspect maybe had 4,000 or 5,000 people, is my guess.

Sam Parr

And how early into the business did you have a hired CEO or hired leader?

Neil Patel

day 1 I won't start a business without a ceo from day 1

Sam Parr

and what did you pay them in the 1st year

Neil Patel

1st year was my cofounder for like a $100

Sam Parr

And that's because you basically went and drummed up $100 worth of business. You're like, "Hey Mike, I got this client. So, to give $100, do you want to run this thing for me and help it get deployed?"

Neil Patel

No, our business didn't start off that way. I probably put a total of **$5,000,000** of my own money into the business. That's bootstrapped, but not really bootstrapped, if that makes sense. It's kind of cheating, and it gets easier and easier as you're an entrepreneur, right? The more successes you have—and I'm not saying I'm successful by any means—the more capital you have to deploy into the next thing. This reduces the chances of failure. When it's your own money, this is just my thesis, and I could be wrong on this; I have no data points. When it's your own money, you're much more careful than when you raise like **$15,000,000**, **$20,000,000**, or **$30,000,000** of venture capital, right? You really look at every single dollar. But Mike was the CEO from day one. He's a great operator and has no agency experience. Eventually, we got in a president, and then eventually from there, we got in a CEO.

Sam Parr

and have you guys crossed a 100,000,000 in revenue yet

Neil Patel

yeah we do 9 figures

Sam Parr

That's crazy, man! So, I mean, that's just pretty wild that you're able to parlay this blog, which was always kind of a juggernaut, into a 9-figure-a-year business. I mean, that's amazing!

Neil Patel

Yeah, this has been a good run. I hope that I'm knocking on wood... although you probably can't hear it from the crisp. I hope it keeps going. More so, we're just having fun. For me, what I enjoy doing is building a business. I know I have an expensive lifestyle. I generally don't do stuff for the money. I overpay for house staff, like nannies and stuff like that. When I say overpay, I drastically overpay. Not by like 10, 20, or 30%, I really mean drastically overpay. I look at people and think, "If you're cleaning a house, how are you going to live on this?" I'll give someone six figures to do that. I know that sounds kind of crazy or stupid, but I'm not giving my kids money, so I might as well take care of other people in this world who need it more than we do.

Shaan Puri

did you say you're not giving kids money

Neil Patel

yeah I'm not gonna give my kids money

Shaan Puri

nothing leave leave nothing

Neil Patel

We have a trust set up. What they'll get, at maximum, is like if they're on the street and they can't provide for themselves and they're going to be suffering, I will help pay their bills or put them in a normal home. For example, if my kids say, "I want to be a doctor and I want to go spend all my time in Africa helping other people out," and I won't get paid for this, and I need, you know, $5,000 a month to live or $10,000 so I can just go volunteer all my time, I'd be like, "Sounds good, I'll pay for that." But I won't give them money for the sake of it. If they're like, "I want to go travel to see Italy," or "I want a Honda Accord," I'd say, "Go buy your own Honda Accord. Go travel on your own with your own dime." You know, I don't believe in just giving people money because I think there are other people that need it more than we do.

Sam Parr

sean are you gonna give your kids money

Shaan Puri

I really thought about it... My oldest is 2, so I think I've got some time to figure that out. But I lean more... I've kind of heard both arguments. Like, I know somebody who... There are some people that are like, "You know, I do this for my kids. I want to leave my kids with a whole bunch." I'm definitely not in that camp. I'm like, that may be the worst thing you could do for them. Not because it means that they're...

Sam Parr

going but like drug

Shaan Puri

Addicts... yeah, you take away, you know, agency in a way, right? Like, you want people to... it's not that it's good or bad, it's actually just way lower on the totem pole of priorities. It's like I just don't even focus on that. It's like I'm going to leave them something. It's going to be a certain set of character traits, skills, and mentality. That's what I'm trying to leave. Money is like, I don't know, 15th on the list of priorities. We haven't even gotten to think about that yet. But I've thought a lot about what are the character traits, mentality, and skills that I think I can help build. And like, that's the focus. That's the one that matters. That's the gift. If whatever else comes from beyond that, I don't know, we can figure out. It's like the footnotes.

Neil Patel

So, like, we're very similar. I have a 2-year-old and a child who is less than 1 year old. I look at it as wanting them to be productive units of society. You want them to be ambitious, hungry, caring, thoughtful, happy... whatever it is. There are a lot of characteristics that you may want children to have. But I look at it as they don't need money. Even with my wife and I, we go over our expenses and we look at what we spend on travel. We do some of this because it's easier, but my wife and I are actually considering cutting out all private travel and just going commercial. Now, the main reason our expenses are high is due to COVID. If it wasn't for COVID, I would just be going to a normal airport. I didn't know how COVID was going to impact traveling with young kids. I could afford it, so I was just like, "Yeah, I'll just start flying private." We haven't gone back to commercial yet, but we're thinking about going back because my wife and I look at the money and think, "Yeah, we spend all this money on travel, airfare, and hotels. If we donated the money, people would have a better life. Do we really need it that much?"

Shaan Puri

What do you do when you donate? What's a good way to donate, in your opinion? There are various options, ranging from not donating at all to donating to one cause, or even donating to multiple causes. You can also get involved or see the impact of your donations. I know people who, if they donate to Africa, will actually take a trip every year with their family. This way, they become more connected to the people and can see the impact firsthand. They even take their kids with them so they can witness the impact as well. What have you found to be a good way to give?

Neil Patel

so we have a balance it's my wife and I team up this is gonna sound bad but I don't like volunteering my time my wife loves volunteering her time I think it's very inefficient for me to volunteer my time I should make the money versus volunteering my time because the money or the hours spent if we donated the money it would have a much bigger impact to the cause than if I actually spent my time I don't think so yeah and my wife loves spending the time and like from going to soup kitchens or whatever it may be so she picks the causes we have a few theses so like one thesis is is we or not really thesis but rules one rule is is we don't like money going to organizations that have tons of high overhead we actually want our money going to the causes so if it doesn't go to the cause then we tend to not pick that organization the second thing that we look for is organizations who are like self sufficient right it's just like how can this continue going even if someone wasn't managing it so like a great program for example is my wife likes donating to women's education we used to donate also to men's education as well so you find these people in these villages you say hey you can't afford to go to school get a degree we'll pay for you to go to college go get a degree come back teach kids in your village for a few years whether it's under a tree or anything people can learn anywhere right and then you know go move on with your life and do whatever you want but at least you're giving back to your own community and what we found is when we started giving because we've been doing this for so long now well actually not that long but when I mean long I'm talking about like 10 11 years where we've been donating and it it's picked up quite a bit over the last like 5 6 years when we started giving the money to men a lot of the men we saw a very low conversion rate from them actually coming back and teaching people in the village well when we gave the money to women for their education a lot of them came back and fulfilled on the promise because it's not like you get a signed contract right it's just like hey we're gonna pay for everything come back help people out within your village

Sam Parr

which country

Neil Patel

We've done this in both India and Africa, in different parts of Africa and in India. Another program that we've implemented is about growing gardens. Many people who have AIDS don't take their medication properly and aren't doing well. They are given the medication for free, but if their body doesn't have the right nutrients, it rejects it. So, what we'll do is run programs like growing gardens. We'll provide them with money to grow food. Not only do they eat nutritiously, but they are also more likely to take their medication. Additionally, they grow enough food so that others in the village can also eat. I was like, "But my wife picks all the causes. She vets them; she loves it." She'll go to a function in two days, scouting out more nonprofits and organizations. I won't go because I think it's a waste of time. I'm like, "If I go, I can make more money. She can donate it. It's a better ROI than if I spend 3 or 4 hours mingling when she could just do that, and I can go make more so we can donate more."

Sam Parr

Other than your own private businesses, what have been your best financial investments that have allowed you to donate and give away a lot?

Neil Patel

The stock market has done really well. Companies like Apple, Amazon, Google, and Facebook—though I know Facebook's down—have been on a tear. If you just bought the stocks early enough, some of these companies have grown 30-40% a year in the public markets, compounding, right? It really adds up. Angel investments have done really well for me, and I would say those are probably the two biggest areas. The stock market still has done well, although in the last six months, I've taken a beating because I'm in 100% tech companies. I don't diversify. Everyone's like, "Oh, you need some oil and you need this." I'm like, "Yeah, I'm just going to go all tech." People are like, "Oh, you're silly, look how much you lost." But if you look at the whole time when I first got in, I've done well. I invest in what I understand. I'm 37, so who cares? You know, in another 10 years, everything should rebound, assuming you pick the right companies.

Sam Parr

What's your portfolio look like in terms of percentages? I probably don't have that in private businesses.

Neil Patel

My public portfolio, if I had to guess, I probably don't even have more than 20 stocks. I won't be able to name them all, but here are some: - Amazon - Google - Facebook - Apple - Microsoft - HubSpot - Salesforce - Adobe - Atlassian - Shopify I'm missing some as well.

Sam Parr

And of your liquid net worth, how much is in public equities versus other investments?

Shaan Puri

versus real estate

Neil Patel

liquid net worth

Shaan Puri

else yeah

Sam Parr

Just non-agency. If I think your agency is the only company that you own a significant stake in, if yes, exclude that. Then what's your portfolio look like?

Neil Patel

No, I have quite a bit of other companies because I started using a lot of the cash to buy other companies for like 3-4-5x EBITDA. And then you just fix them and grow them, and then just cash flow. I would... so if I look just at cash invested in other companies that aren't mine - like not companies I'm buying out or anything like that - I would probably say 80 to 90% is in stocks.

Sam Parr

what companies were you buying

Neil Patel

Any that we can find that we like. Like, we bought Ubersuggest. It was a software company. We bought it for $120,000, put $3,000,000 into it. It took, I think, less than 7 or 8 months to get to $1,000,000 a month in revenue. What? So that would be a deal!

Sam Parr

what's it called

Neil Patel

Ubersuggest is a competitor to Atrius. That one did well. We just bought another one from a lady named Lisa.

Sam Parr

crazy and

Neil Patel

Then we just bought another one. We haven't announced it yet. We bought it for $8.6 [million], I think, a month ago... a month and a half ago. So we'll see. It does $100,000 a month. We think we can grow it within 12 months to probably like $400,000 or $500,000 a month in profit. So forget revenue, we'll just look at it as a cash flow.

Shaan Puri

So, do you have rules around that? Like, okay, I have to be able to grow it using NeilPatel.com or it has to be in the marketing niche so the agency benefits? No, it's like... would you buy like, brick... you know, like a fucking laundromat or...?

Neil Patel

If I can grow it, I won't do too much brick and mortar. However, I've invested in other people's brick and mortar businesses. For example, I have a friend who runs a lot of brick and mortar businesses. One of my buddies has a roofing company, and I was like, "Oh cool, you can buy it for 3x. It's a good size, and I can show you a few things. We can probably increase the profit by like 60% within 12 months." So, it's just good cash flow, right? If you're getting like 30, 40, or 50% returns on your money, it's great. You also have to keep in mind that because of my history and the fact that I've been doing this long enough, I can get debt at really cheap terms and in large amounts. I can get debt at like 3.6% plus something else. So, if I'm buying a business for 5x, in many cases, because of the economics of my whole portfolio, you know, some businesses I put down like on the one that was 8.6, 2.6 was paid over 12 or 18 months or something like that. But we put $6 million up front. I could've gotten a loan for it, but I was like, "Yeah, it's just easier to put the $6 million and not deal with the paperwork." But sometimes, we'll just do loans on 100% of it with zero down.

Shaan Puri

Right, and what do you like? Okay, so you do what you do now. You have your time, and it's pretty much fully allocated, let's say, to the agency and then some of these other things. If somebody was smart but didn't have your visibility, you kind of know where your industry is going. You see adjacent opportunities, but hey, I'm not going to go do them. I don't have the time. What are opportunities that you see that you think somebody listening to this—who's just like a smart hustler, like "I got more time than I have ideas, I got more time than I have money"—where would you go if you were that person? What would you suggest for them to look at as opportunities that you see today?

Neil Patel

I would look for opportunities in anything that they're good at. I know that's not the answer you're looking for, but what I've found is that the issue arises when people go looking for opportunities that make money without passion. When you're not passionate, you don't put in the time and energy required to actually make it successful. That's a big issue we see. Maybe some people have it in them where they can make something successful because they'll just push through, but most people we see will just quit because they hate what they're doing.

Shaan Puri

And so, I think a lot of people don't know what they love to do. They don't have it figured out. If they already had what they love to do, they wouldn't be looking for opportunities. So, you know, it's sort of like a by-definition problem there, right? So, somebody who's thinking about, "Okay, I don't love what I'm currently doing. I'd like to get to where this guy's at," which is basically someone who seems happy and successful. He seems like he loves what he's doing. I'd love to do that, but what if I don't know? It's like when my sister was going to college. My dad asked her, "What should I major in?" She said, "I don't know. What's your favorite subject?" And she replied, "Lunch." You know, she didn't have a favorite subject. She didn't love any of these subjects. So, what am I supposed to do? Am I just out? You know, I'm just not one of those people? No.

Neil Patel

You just never know a lot of different things until you find what you're passionate about. If you try a lot of different things, you'll typically find something that you're naturally good at. Usually, what you're naturally good at, you'll also tend to favor in what you like, and then just double down on that. But if you're looking for industries with opportunities, I see a huge slowdown in e-commerce. I'm not saying that the e-commerce market is shrinking, but the growth in the e-commerce market isn't what it once used to be, especially when COVID first kicked off. So, you're going to see the multiples go down for buying e-commerce shops and B2C brands. This presents a great opportunity for buying, fixing them up, and growing them. Another great opportunity right now is in the software market. I look at the whole software market as really backwards. Right now, it doesn't matter if you're HubSpot or Canva; eventually, someone can just create a "me too" company and undercut you on pricing. What I've learned is that if you can create a software company that already has a brand with a free product, and you just make it really good for free while continuously adding more and more to it, you can succeed. A great example of this is Photopea. So, there's this company called Photopea...

Sam Parr

we love it

Neil Patel

Photoshop, and it's like they make very little to no money. So I hit up one of my buddies who is great at outreach, and I told him I want Photopea. I offered him $10 million, he said no. I offered him $20 million, he said no. I can take Photopea, make it a really good Canva competitor, undercut them on pricing... whatever. [It could] be worth $10-20-40 billion, whatever they are. No, but I probably can cash flow that thing to like $4-5 million a month in EBITDA, right? It's like, who cares what it sells for or what it's worth?

Shaan Puri

And then I can... you're saying to make it free, and then you're saying cash flow is like a motherfucker. So how do you take a free product and cash it like a mother? How would you explain that?

Sam Parr

well he said he said a canva a a canva knockoff

Neil Patel

A Canva knockoff, so you make almost 99% of it for free. You charge for 1%, but that 1% is enough where you can drive in the revenue. So you don't ever make as much as like a Canva or a Mailchimp or a HubSpot, but hey, if you can make $1,000,000 a month in profit, it's still good.

Sam Parr

What's your math there? So, what's the calculus when you were thinking? Let's say Fotopea, according to SimilarWeb, has 10,000,000 uniques a month or something. What was your math? Is that right?

Neil Patel

yeah it is right yeah we researched it yeah

Sam Parr

So, what was your calculus to get to $4,000,000 in EBITDA a month? How many people would you need to run it, and what was the calculus there?

Neil Patel

Sure, so I can probably get the thing from 10,000,000 visitors. Let's say I bought it for $20 million. He wouldn't sell it to me for that amount; I've never outreached him. However, I had a buddy reach out to him for me, who does all my outreach. So, let's say I bought it for $20 million. I would put another $10 million into it, so now I'm out $30 million. I'm really good at growing traffic, and I know I can grow the team to roughly 40,000,000 uniques a month. I just have a... I don't know how, but for some weird reason, I know traffic really well and how to calculate what I can get it to, and all this kind of stuff. I've done enough research on competitors to understand what features drive a certain amount of traffic, just by looking at so many competitors in the space. So, let's say if I get it to 40... what is it called? 40,000,000.

Sam Parr

and what what what are the one or two things that you'd get it to 40,000,000

Shaan Puri

like seo basically

Neil Patel

So, more SEO, more virality, increasing the quality of the templates, increasing features, adding AI in there. Like, click a button and we can automatically detect backgrounds, remove it. Filters for social media, because a lot of people use them for social media.

Shaan Puri

logo generator website as a lead gen shit like that

Neil Patel

Right, so then let's say you got up to 40,000,000. At 40,000,000, I can easily monetize, let's call it like 1% of the traffic, or let's be even more conservative, like half a percent. That would be 200,000 people. If I have 200,000 people hypothetically paying $3 a month, okay, that's $600,000. The reason I give you an average of $3 is that in certain countries, you may want to charge different pricing, like in India and stuff like that, so it's more affordable. So, at $3 a month, if a customer stays for 10 months, that's $6,000,000. We'll probably run the thing with less than $1,000,000 to $1,500,000 in burn each month.

Sam Parr

so then you think oh so then for a 1,000,000 and a half burn you would need to

Neil Patel

Once you have tons of revenue, your burn is much lower on a monthly basis. When you don't have tons of revenue, it can be quite different.

Sam Parr

but so then how many people then if it's you're looking at 30 people you would need to run that operation

Neil Patel

I don't even think it's 30, but let's say 30 total. I think I can actually run the thing for under $1,000,000 a month.

Sam Parr

right so I'm just trying to do the math in my head but I mean the

Shaan Puri

revenue was like under my under 1,000,000 too there it it was like 600,000 or something right

Neil Patel

600,000 a month but if a customer stays for 10 months you're looking at $6,000,000

Sam Parr

because you charge upfront

Neil Patel

No, no, no, no. Okay, if they're paying $3 a month: If you have 40,000,000 (not 4,000,000) and you're converting a half a percent, that's 200,000 paying customers a month. If they pay you $3 a month, that's $600,000. They last for 10 months, that's $6,000,000 a month in MRR [Monthly Recurring Revenue]. Over a year, you're making $72,000,000 in revenue.

Sam Parr

That's crazy! You're a very interesting person. I just think I dig you because you've got your hands in so many different things.

Neil Patel

I honestly don't know at this point. I don't run anything. I come up with ideas. I have really good operators who are great at execution. I'm like, "Go do this. It'll make money. Here's a playbook. Go and just do it."

Sam Parr

so how many businesses do you own

Neil Patel

I don't know I don't really count I only look at

Sam Parr

over or under 10

Neil Patel

over

Sam Parr

over under 20

Neil Patel

I don't know 20 is probably getting close so probably under if I had to guess

Sam Parr

And how many of those 20 companies have more than 5 full-time employees?

Neil Patel

I don't know. I don't really count employee headcount. I only know my ad agency headcount because they do reports, and I get them in my board meeting decks. I was like, "Oh my God!"

Shaan Puri

We got 700 people, and you own 100% of most of these companies. It seems like you're not raising extra capital. You might do...

Neil Patel

You're CEO? I don't own 100% of really anything. I always give equity to profit share. I usually have a partner who runs things who'll get equity, and then I'll do profit share.

Sam Parr

what's the ideal setup for profit sharing and equity for your partner

Neil Patel

Partner, give them maybe 10% of the business. They run it and receive a really nice salary—when I say nice salary, I mean more than the industry standard. Then, you have a pool for employees, like another 10% pool. So, in total, you lose 20%. I'm left with 80% for myself. I put up all the money. If it does well, great! If it doesn't, I lose the money. No one else is on the line. If it does well, no one has to pay me back the money. Everyone just takes their distributions the moment it turns profitable from a monthly standpoint. Does that make sense? They don't actually have to pay back any of the other stuff.

Sam Parr

And then, do you also give them 10% of the distribution, or do you make that even heavier for them?

Neil Patel

No, well, if I'm losing 20% in total, which is my deal structure, then 20% of the profits gets distributed on a monthly basis.

Sam Parr

that's crazy I love hearing about this what do you think sean

Shaan Puri

Yeah, I think it's dope. I had just seen you kind of from afar for a while. I know Heaton, you know, loosely; we're friends. But I didn't know a lot of the story. I knew Sam has talked about you before on the pod, I think, or maybe off the pod. I'm not sure, but Sam had told me some cool stuff. I didn't know a lot of this, so for me, this was dope because I got to learn a bunch of new things. Sometimes when we have a guest, it's like, "Dude, I've already listened to 10 of your things. I've been following you for 5 years." You know, so it's like I already know a lot of it, and I'm doing sort of like translation work for the audience. I'm like, "Tell them about this. Hey, tell them about that thing you did." Versus in this, I genuinely wanted to know a bunch of the stuff, and I thought, you know, that's interesting to me. Yeah, you're great.

Sam Parr

There are two people that I've wanted to talk to, Sean. One is Neil. I like finding these people who are doing really well and a lot of people know about, but there's also this whole other world of people who have no idea who they are. Neil, you're one of those folks. I've been an OG reader, so I've known you forever. The other one is Syed. We've talked about Syed a bunch on here. Him and Neil, I think, are very similar. They are both very generous but also pretty cutthroat when it comes to business. They have their hands in just dozens of different things, and they're just quietly crushing it without even talking about it.

Neil Patel

A very generous person too. I know he has a school, I think in the same city I have a school in... or a different city. I don't know. He actually went to go see his school. But really generous guy. Him and I have built schools in rural countries and stuff like that, Fred.

Sam Parr

Yeah, it's just like you... You two. I don't know if you're like this, Neil, but I know it seems like he's like this where he has this software business that's making, who knows, tens of millions in revenue and probably that much in profit. But then he buys a gas station or he just... It's just like, dude, are you kidding me? You're like a tech tycoon and you also own like 30 gas stations. It's just kind of funny.

Neil Patel

Here's the thing: some of those businesses sell for like **3x EBITDA**. You get **33% returns** on your money if you have good operators. If you can put technology in place, along with marketing, you can grow to maybe **50 times IRR**. That's great! It's just a question of: can you scale it up? And can you do ones that are large enough?

Sam Parr

I know I'm just saying it's cool that you know this stuff that's what you're eclectic

Neil Patel

Yeah, him and I... Actually, I shouldn't speak for him, but I'm a little off. But the madness or the methodology, I think, is great for cash flow. It's terrible if you want to be like, "Oh, I'm gonna create the next Airbnb and take this thing public and be on the Forbes list." Like, it's not what I do.

Sam Parr

Are you motivated to become a billionaire? What's your motivation factor? What are you motivated by?

Neil Patel

Well, I won't ever be a billionaire. I'm not saying I have the opportunity to, but even if I did, I would never be there because we donate our money. And when I say donate, I mean not waiting until you're dead to donate, but actually donating on an annual basis.

Shaan Puri

How do you figure out how much you want to give? Because there's always... like when I think about it, I think, "Well, I could also invest this money. It's gonna grow, I'm gonna give more later." But then I'm not helping somebody now. So what's the right number? What's the right percentage, basically, for me to be giving on an annual basis? How do you figure that out for yourself?

Neil Patel

whatever my wife wants to give

Shaan Puri

what% what percentage does that come out to

Neil Patel

We don't have a percentage. Keep in mind, businesses are so large. I can get loans for almost any type of business. I can't go buy a business for $1,000,000 or $1,000,000,000, but if I wanted to buy a business for $100,000,000, I can go get a loan on that—like literally for most of it. So, I don't have to worry anymore about whether I need more to invest. It's just about finding the right causes and whether it's going to make a big enough impact. That's more about how we look at donations. We don't really consider it from the aspect of, "Am I donating X dollars or too high of a percentage?" We look at it as, "Do we actually think it's going to make a big impact in the next year or short run, or two years?" We don't want to wait like 10 or 20 years to see an impact. We also don't want to put money towards things like cancer research. I think cancer is really important. I know a lot of people who have died from cancer, but I don't have enough money to make a dent in cancer. Versus, you know, solving some of the basic issues out there, like I can make an impact on things like education in a region. I can't make an impact on cancer; I just don't have enough cash for that.

Shaan Puri

where what is your school you said I have a school it sounds tight I want a school

Neil Patel

I've never seen it. We have a school, I think it's in Cambodia, and we've done a few others, but I don't really keep track. My wife does. You know, the bigger thing is it's not *my* school, it's more so the kids' school now. They're learning and getting value from it and less...

Sam Parr

I I remember the first school that I bought and forgot about

Shaan Puri

I was gonna say, when I buy my school, it's for sure gonna be my school. They might attend my school in Cambodia. Yeah, you know, I'm like that, you know.

Sam Parr

I've got a couple of schools in this couch cushion back here. I just forgot about it. It's this little scene I played in a while ago.

Shaan Puri

I remember when I was on a college campus. I saw, you know, whoever the Rothschilds or like the Rockefellers nameplate or whatever on the library at Duke campus. I was like, "Who would do this? Why? What's the point of this?" You know, like, so it's already nice.

Neil Patel

not not that kind of schools I don't have that kind of money mine like little kids schools

Shaan Puri

I understand the appeal until you said you basically described a school you have and forgot, and I was like, "Ah, that sounds like something I want." I don't want my nameplate on, you know, the Villanova 10th library on campus, but just to know that there are 12 kids in Vietnam attending my school, they're wondering, "Why does this name have so many A's in it? Who is this benefactor, this silent benefactor who has forgotten where our school is?" That sounds like the perfect blend of giving and egomania that I live for, so that's perfect.

Sam Parr

Neil, we usually don't have guests on often, and when we do, we typically never just ask them questions like this. We like it to be more of a conversation where we're brainstorming stuff. We ask you tons of questions because you're just a very fascinating person. I hope you'll come on soon, and you could actually brainstorm something like another Ubersuggest or something like that. You know, actually go through some of this. I hope you'll come back again because this is awesome.

Neil Patel

Yeah, it was so funny. I was doing the interview and I'm like, "Oh crap, I should've never told people how much I spend a month. Should've never told people I donate money." And I was just like... it goes against a lot of what my wife and I do. We're more of a "don't tell anyone anything, live our lives, and do whatever makes this happen" [type of people].

Sam Parr

You only told it because it's not like you're bragging. We kind of begged you to tell us. We were like, "Yeah, tell us! Go, go tell us!" It's not like you're bragging. I don't think that's bragging.

Neil Patel

It's not even bragging; it just feels weird to talk about expenses, right? Because there are so many people who struggle for things like clean water or shoes, right? It's just like, yeah.

Sam Parr

yeah so yeah but this is interesting

Shaan Puri

those people if they ever listen to this podcast they've already been filtered out by our douchiness in other episodes so don't worry those anybody who's sensitive to that is probably gone by now but also there's there's actually a lot of like I actually pretty passionately believe this like not only am I curious from like a oh I wanna know I wanna learn but like I actually pretty strongly believe that the way that people are like treat money is a pretty taboo thing actually it's like a net like a huge net negative on most people so like you know people don't know what other people make therefore they don't know what like they don't know when they're underpaid they don't know what's possible they don't ever like sometimes the most valuable conversations I have with somebody is just somebody for whom they do something like something's very normal to them and it would be abnormal to me but it has now expanded my world view of what's possible and what could be normal for me like oh maybe it could be normal to actually like give more donate more have a school actually that sounds like something I actually go to go talk to my wife about today is like something we should go do that like it's not because you aren't bragging about it you high you just kind of were honest about how you live your life which is no there's nothing wrong with that that's that's great I in my opinion and it expands other people's worldview for something maybe they wanna go do or something that they haven't considered and like it's really weird to me that we keep this stuff under wraps and if somebody's just honest about like the way they live their life it's sort of like there's like all this like negative taboo around it and like fuck that I don't like that at all and it's it's been like when when sam first met me I think this I think I've told this story before but like the second day I met him and then like the next day he messaged me on facebook messenger I was like so like well how much do you make and he was like no like what do you pay yourself he's like so then what do you and then I like I was like woah that's like super forward that'll help you figure out what's normal what's the range of like possibilities here and then after that he was like so what do you do with the money like what what do you invest he's like wow that's a lot you know what are you investing that and I was like yeah he's like what are you investing in I started telling him and he's like cool I'm investing in this and now I got new ideas about what I could be investing in it really became very obvious to me in that moment I was like oh shit you're at a massive advantage if you have a few people you trust that you can talk openly about this sort of thing with and the podcast was basically taking that and doing it at scale I was like alright well what if me and sam are pretty honest about like the shit we do and like what if we could get guests to be honest about the shit they do they're like that's actually a pretty valuable resource for people who don't have 5 they don't happen to have that lucky group of 5 friends who are all motivated entrepreneurs who are also open and honest about what they do it's like well not everybody is located in a place where they have 5 people geographically around them that they can trust to talk about that stuff and so the pod kinda like serves as that so that's my justification for why you shouldn't feel bad about about sharing that information

Sam Parr

do you did it work neil do do you not feel bad but if

Shaan Puri

you want we'll bleep it out or whatever if if you feel like that too

Neil Patel

okay it is what it is I still feel bad but it is what it is

Shaan Puri

so mission accomplished

Sam Parr

I thought it was a great speech, Sean. I felt good about that. Thank you, Neil.

Shaan Puri

oh no

Neil Patel

It was a great speech, but I still feel bad because I look at money as a tool to help other people. I'm not saying that's right or wrong, that's just how I do it. But I also know I spend more than I should, and I probably should cut back and live a more humble life and spend a lot less.

Shaan Puri

Yeah, dude, I'm inspired by how you spend and how you live. You've done some good in the world by inspiring me.