TRX Training INVENTOR Randy Hetrick INTERVIEW (Navy SEAL to Fitness Visionary) | My First Million

Sam Parr

This is very casual, so I don't even care. We could record right now; it's recording now, and we'll put that up. So, this is very casual, and I'm going to ask you a lot of questions. If you don't want to answer something, just say it. Oh, I will. Yeah, this is very casual. What's going on? You're Randy, right?

Randy Hetrick

yeah that's me so I I'm

Sam Parr

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

Randy Hetrick

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

Sam Parr

and what you said you've been doing a lot since the making what what what may what are you talking about

Randy Hetrick

no I said since this mayhem right oh

Sam Parr

oklahoma thing

Randy Hetrick

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

Sam Parr

Good! Well, you look great. Let me give you the 20-second or 2-minute background, and then we're going to make this all about you. So, I'm Sam Parr. I own a company called The Hustle. I started it, and we just turned 4 years old about 2 weeks ago. Typically, we host trade shows and conferences where we bring together tens of thousands of people each year. But we also have The Hustle, which is our daily email that goes out to millions of people. Millions of people log in and receive our news in their email inbox each morning. It's a great business—an 8-figure wonderful business that we've bootstrapped. Additionally, we have Trends, which is our subscription product. It's a premium content community, and that's also a great business. We also do this podcast. I forget how many listeners we have, but we've had millions of listens—over a million listens! What this podcast started as was me and Sean, my co-host, who isn't here right now. We both have started companies, and we always had these interesting brainstorms with people like you, who are our friends. We would just riff on interesting ideas and cool insights. Most people don't have access to those types of people, so we decided to do this publicly. That's what we're going to do today. What I want to do right now is learn a little bit about your background and how you came to be where you are now. Where are you now?

Randy Hetrick

well where I am right now is in my house in mill valley I'm sort of like I I I feel like rapunzel I spend all my time up in the tower above my garage right it's become my sort of everything from the sports marketing department or sponsorship marketing department of trx to the you know production studio for every one of our sort of you know blog interactions and that kind of thing but you know I I so I'm the founder of trx I I live in in you know marin county prior to trx I was a navy seal for 14 years and actually created the first harness while I was at the special missions unit and then just decided you know after I left the seal teams I went to business school at stanford and decided while I was there that this was a viable business concept you know which I think at the time I massively over overestimated how easy it would be because the product was so great but but I used stanford as basically an incubator 2nd year as an incubator for this concept and trx is I guess this is our 15th year in the market and you know we're doing pretty well we're we're one of the the only truly global fitness brands and we you know we've we've put close to 350,000 training pros through our our trx coach qualification courses and we're in about I don't know somewhere between 5,070,000 gyms and studios around the world most of which are closed right now which is an interesting you know experience but fortunately for trx we we we were for 10 years all b to b just serving athletes training centers clubs trainers and and boutique studios and then about 4 or 5 years ago now we decided alright we're ready to start to expand into the consumer the true b to c consumer space and you know it's good that we did that because obviously that side of our business in the covid nineteen environment is absolutely off the charts the commercial side of our business is really struggling because all the all the gyms and all the trainers are all out of work so it's been a little bit of a tale of 2 cities over the last couple months but that's basically the snapshot of you know what trx is and and I'm today I'm co chairman and really promoter in chief of the of the brand

Sam Parr

do you own the company or have you guys been acquired or anything like that

Randy Hetrick

Well, the company is... I raised a long time ago. I mean, I raised a bunch of rounds of angel money when I started. Then, I took on private equity back in 2012. Recently, I recapped the business to exit those initial partners and bring in some new partners. Because that's one of the, you know, the dirty little secrets about institutional capital: once you take it, it's very difficult to get rid of. So, it's a private company, but it's co-owned by a bunch of us, including the capital partners that came in at the end of 2018 and the beginning of 2019.

Sam Parr

how much did you raise from the angel folks

Randy Hetrick

Well, in the way back, I think I raised about... oh, I have to think back to my around $5,000,000 from several rounds of angel money. That's great capital, right? For... I don't know what the complexion of your viewership is, but they... the folks are thinking about raising.

Sam Parr

Don't use... You can use jargon. It's a very highly intelligent, not beginner audience, so go ahead.

Randy Hetrick

Yeah, well, I mean, by far the highest... I mean, look, the cheapest source of money to grow a business is always what they call **non-dilutive capital**. That’s mostly in the form of sales. But if you're going to take on **dilutive capital**, I think by far the best source is **angel investors** for a couple of reasons. I mean, presuming you pick your angels the right way. What you get in an angel investor, if you've chosen well, is you get somebody who has a lot of **domain expertise**. Angels tend to invest in things that they know and think they can contribute value to. If you pick the right angel, you'll get someone who not only has domain expertise but is also super passionate about your venture. Generally, angels are willing to invest on a **common stock basis**, which I strongly recommend to entrepreneurs. They should stay away from preferred structures until they're ready to sell a significant piece of their equity or exit altogether. Because once you bring in a preferred layer of equity into the cap stack, everything's different in terms of the solidarity that you once had across the team and the investors. That changes, and it's a tough change for most people to manage. So, I'm a big fan of angel investors, in which you get not only capital but also pro bono experts who are excited to be involved in your venture.

Sam Parr

how how big was the company when you sold it to pe or sold parts to pe

Randy Hetrick

Well, it's been, you know, two rounds of that now, right? So, the first money we took, I think we're around, I don't know, $30 million, something like that in annual revenue. Yeah, and, you know, who knows? We'll be probably north of $60 million somewhere. Who knows how far? Because COVID is an interesting experience. But we don't really get into specifics because we're a privately held company. So, if you're heading that way, I'm just redirecting you.

Sam Parr

Well, so you already said it's in the ballpark of **$60,000,000**. It could be way higher, but that's a number that's been mentioned for a company like TRX. So, we talk to a lot of these direct-to-consumer folks, which you didn't start out as, but you definitely are now. When I think of TRX, I think that you guys are in the same category as CrossFit. And this isn't an insult, but like Tony Horton, you guys are like a brand. You're not just some Amazon product; you don't rank on Amazon, and that's how you win. TRX is something that people know, and it's a brand. Do you think that your valuation will be significantly higher because of that? Or is it still tough to get a high valuation on products like this?

Randy Hetrick

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

Sam Parr

I didn't mean like your way, your path to success has not been like, "Well, we're just gonna rank higher." It was just like, people love and know.

Randy Hetrick

us no yeah we built I mean look from day 1 this was never intended to to be a get get rich quick scheme right it wasn't a wasn't a trend I mean I it's funny because when I first started the business there were no predecessors to the product that I brought to market right our initial hero product which was the suspension trainer the the idea there seemed kinda crazy to bring this strap into the club landscape full of machines and think that you were gonna be successful but one of the things that we did that was that was a really great choice and I made plenty of less than great choices but the one one of them that was a great choice was really finding this sweet spot in helping training pros of all kinds right from from chiropractors and physical therapists on one end out to to mma coaches and power lift and coaches on the other end and then obviously you know and under the under the bell curve you know tons of personal trainers and group fitness instructors we decided we're gonna become the part the business partner of them and that we were gonna give them this great tool that had it's like I was described the suspension trainer like a magic wand right if if you if you know the magic you can really make you can become a magician to your to your clients and your athletes and deliver them unbelievable results that always you know you look at a 12 feet of nylon webbing and go yeah what what can that do with the right pro and the right knowledge in that pro's head you end up going oh my god this thing I've never seen anything like this right and that's that's a unique characteristic that not many products or services ever have which is you have people that come in with a very low expectation and leave with a very high level of astonishment and so that's been a a powerful benefit to us and then we diversified the book the the company's scope of operations we became you know the largest provider of professional education to trainers and then we broaden the product line significantly all the while focusing on this premium brand that you alluded to which I do believe brings you know an an enhanced multiple the reality though is that long term if if all of a company wants to be is a product company right that delivers durable goods because our stuff lasts for freaking ever you know way too long from no no I've had

Sam Parr

I've had the same one for 4 years. I think I got it as a gift on Christmas, and I've had the same one for 4 years now.

Randy Hetrick

I mean, and that's... four years is nothing for a one-on-one, right? I talk to people that are still traveling around using our first-generation strap from 2005 in their bag, you know? And it's... I mean, on one hand, it's a compliment; on the other, it's a nightmare, right? Because you need...

Sam Parr

what's it called plan planned obsolescence obsolescence

Randy Hetrick

yeah yeah

Sam Parr

you need to break after like you know 5,000 push ups

Randy Hetrick

We never planned that because I really wanted to be... and look, I came at this whole thing, you know, I started my entrepreneurial career at 39 after a career as a Navy SEAL. So, I had a set of premium-level delivery, and if I was going to be associated with this brand, then that's what we were going to do. We built everything that way. The unintended consequence is the one that you and I are beating around right now: your stuff lasts forever. That means you either have to create more products to serve your existing customers, which is expensive, right? Because R&D is not cheap. Or you have to constantly be in search of new customers, which is also not cheap. I think that's why pure product companies get what I would say are unfair valuations relative to some of these faker, more fake companies that are tech-based and have the potential—not the promise, but the potential—to scale infinitely. Those kinds of companies tend to get higher valuations than gear companies, and that's just one of those realities. We've never planned to be just a gear company. We have always planned to expand our services into subscription services and content, and that's what we've done.

Sam Parr

So let's talk about that in a second, but first, right now, what are your revenue streams? Your revenue streams are coming straight from purchases from coaches and things like that, or not? Well, coaches and chiropractors and who, like, you know, B2B people servicing clients, right?

Randy Hetrick

We make... well, we're an omnichannel distributor. So, you know, on the commercial side of the business, which is the B2B side, we sell gym gear, services, and education to gyms and trainers.

Sam Parr

yeah and that's what I wanna ask about what is education so you sell

Randy Hetrick

Yeah, so we do... We became, early on, I mean, if you think back, nobody knew how to use a strap that didn't stretch and didn't have any weight attached to it. So if I was with you, or one-on-one, I had almost a 100% close rate in the earliest days. The problem was, I can't be everywhere, right? If I wasn't with you and you were just looking at a picture of it, say on the website, the conversion would drop to, you know, 5%. So that was something that I realized very early. Alright, well, I have to be able to scale my knowledge on how to use this thing. I brought in a guy who was introduced to me very, very early in the company's history—a guy named Fraser Quelch—who had been a career trainer and had written a lot of education in the form of courses for other pros, right? To teach other pros the various skills. I mean, how does a trainer or coach learn his or her craft? They usually get a basic certification from an entry-level certification body like the American Council on Exercise, or NASM, or NSCA. Then they go out into practice and start developing practical skills. Along the way, they want to learn more about, you know, a particular tool or methodology, and so they do... They have continuing education requirements, right? Just like a doctor or a lawyer, they have to do so many continuing education units per year to maintain their basic certification. We became one of the leading providers of those CEC courses that help a new trainer or coach move toward mastery.

Sam Parr

so do you charge them for it I'm on your website now I don't and that costs money

Randy Hetrick

Yeah, our normal... our norm is that we have about 10 courses of different kinds, and they are all B2B. How cheap? Not $89. Well, traditionally, they were $295, right? So, $295 for a one-day qualification course, and it was 8 hours live, in person. What you're probably seeing now is that we've made some pretty incredible pivots with COVID-19 hitting and changing the landscape. One of the things we did early on was try to figure out, "Hey, alright, number one, we're not going to be able to provide education as long as this thing lasts because you can't get people together." Number two, most of the people who come to our courses are out of work. So, what can we do to support them? That was sort of idea number one. Then, number two was, "How do we take this moment, which is really a bunch of lemons being thrown at us, and make lemonade out of it?" We decided that we could take our courses, make them free, and figure out how to deliver them through Zoom instead of live. We'll do that as long as this crisis continues. We'll just try to fill our bucket with a whole bunch of new pros of all kinds of stripes, who, on the other side of this, will then appreciate that we helped them out when they were down. Also, it just grows the community... grows the TRX community. So, that's what we've been doing.

Sam Parr

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

Randy Hetrick

Oh, it's, you know, falling pretty, pretty fast as our education. Now, what's the big epiphany and the big unlock that's gone on over the last two months is that we massively accelerated our migration toward digital delivery and subscription models. We also have an app that we make money off of. It's a $4.95 a month app that supports the end user. We have turned off the paywall on that during COVID, but that will go back on once everybody gets back to work. We're really using COVID-19 as an opportunity to solidify the relationships with our existing customers and bring new customers into the tribe through a free door. Everybody knows that no business can keep their services free forever, but in the meantime, we're using it as a big opportunity to build new relationships. So, the mix is really changing. The other thing that I think you know, but what was the mix pre-COVID? I mean, it's probably 70-30 between equipment. But you're defining equipment way too narrowly. You're looking at our hero products, which are the suspension trainers. We do the entire ecosystem of functional training. We have steel ecosystems that you build the infrastructure that not only you hang straps on but you fill with kettlebells, bands, balls. You do pull-ups on, right? Everything you would see in a gym.

Sam Parr

You're right. Yeah, which I... I've used. Do you have a sales team to handle that? Like, did you have to do hand-to-hand combat for that, or is a lot of it inbound and you're just fulfilling orders?

Randy Hetrick

It's some of both, right? I mean, no, I don't think any business certainly exists for very long as all inbound flow. Generally, you have to be out there knocking down the targets. So, I...

Sam Parr

Guess I mean, are you running paid ads to them, or do you actually have to have a sales force who's hitting the phones and making it happen?

Randy Hetrick

Both. We advertise in the commercial landscape through traditional means to reach gym owners and trainers. However, we also have a pretty significant direct sales force, both inside and outside, that does account development and service sales. I'm looking at a tool that estimates website traffic.

Sam Parr

I, if I were looking at this tool, I would imagine that your sales are like **4x** in April compared to what they were in February. It looks like you guys are just... your web traffic has gone through the roof.

Randy Hetrick

Yeah, well, it certainly has. The reason is, I think, less to do with anything we've changed in our marketing than with the reality that, you know, as a 10-year B2B business, we've served tens of millions of people around the world who identify themselves as TRXers but, ironically, had never bought a product for their home. Right? Because they use us in the gym. I run into people constantly. Some of my best friends will tell me, "Oh, I've never bought..." you know, they'll call me and be like, "Hey, can you give me a friends and family discount?" And I'll be like, "You don't have one of our straps?" These are people that I know are die-hard TRXers. And then they'll be like, "No, man, I do it three times a week in the gym." So that was a reality that comes with being a B2B business for 10 years. But what happened with the virus was, when all the gym doors got shut, all of a sudden, all of those installed TRXers went, "Well, how the hell am I gonna do my workouts?" So they turned to our Amazon site and our website. And, you know, that's been, I believe, the big source of the growth—the explosive growth.

Sam Parr

You have a unique advantage of seeing both consumer goods, or hard goods, and digital products. You're able to see how they both work. From my perspective, I've been an investor, and I have friends who sell direct-to-consumer hard goods. I also have a digital company and I've invested in them as well. What my perspective is that the DTC (direct-to-consumer) guys can grow their revenue from $0 to not $0 very quickly, but there are massive supply chain headaches. Whereas with digital, it's often the opposite. It may be a little more challenging to get started, but the margins are way better, and you never have a supply chain issue. Knowing both sides of the business, which do you prefer?

Randy Hetrick

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

Sam Parr

Is well, that's my question. Which one do you find, which one do you personally enjoy more, both in terms of working on and the results? I'm a...

Randy Hetrick

I'm an inventor, you know? So that is part of my... it's probably what made me want to go into the Navy SEAL teams. I MacGyvered my way through life, and I came up with an old man that can fix literally anything with almost nothing. I sort of grew up out in the garage, you know, until the middle of the night, holding a flashlight for my old man while he was jerry-rigging some kind of fix to an old motor or whatever it could be. It could be anything. I really enjoy a lot of time and energy at TRX developing our next products. I also appreciate and enjoy creating great content, whether it's in the form of pro education or end-user content, like workout content. So I would say I like both. I like the economics of the digital side of the equation for the reasons that you've pointed out, right? You don't stock out of it, and it scales infinitely. But I don't think that it's an easy business to just say, "Oh, I'm going to become a digital content publisher, and I'm going to make a billion dollars." Yeah, like you and the other million digital content producers out there are all on the same path. So, I like them both. I like the multiples on digital content and subscriptions, though. I'll tell you that.

Sam Parr

So, I'm going to ask you about some interesting ideas and new opportunities in a second. But first, you mentioned that you're the chairman, right? Does that mean you're not the CEO?

Randy Hetrick

Yeah, I'm... we brought in a president. You know, I've tried a number of times to get out of the day-in, day-out management of the organization for a couple of reasons. First, there's one founder, right? So you've got a certain amount of founder cache that is really valuable in working with the press and key accounts. It's important for generating love around the brand, and there aren't others who can do that. There are others who can manage the steady state, sort of linear growth of a midsize and growing company. In fact, there are those who can do that better than me because I'm more of a startup guy. So I've tried several times over the last, call it, six years to get more out into the market and less in the conference room. We hired a president about eight months ago, and I've been doing a transition where I can basically hand most of the day-in, day-out over to him and to the team. With our new partners, they're very good at the financial engineering side of the equation. I'm not. That just isn't something that turns me on. I like the outcome, but the process is just not something that floats my boat. Everybody's cut from a different cloth. What I'm really focusing my energy on is promoting the brand, developing new products, and looking at new initiatives. That's something that I'm very good at and passionate about—trying to see around the corner and figure out what the next opportunity is going to be for the brand.

Sam Parr

We're very similar. I've done the same thing. I have a president who handles a lot of stuff, and I do the exact same thing where I can lead the vision. But I also come at the very bottom, and I could just change pixels and invent. I do it digitally, but it's the same exact process. I'm just at my computer up late at night, making stuff. Most of it sucks, but every once in a while, I'll show it to someone, and they're like, "Oh yeah, let's go make that." That's the...

Randy Hetrick

Product creation dilemma, right? Most of it goes nowhere. But about every tenth effort, you go, "Wait a minute, there's something to this one." That's, you know, you've got to be wired to not get frustrated by that. Just like folks who like to manage at that mid-level, they don't like the scariness, the ambiguity, and the vagaries of the startup or creator environment. They prefer the consistent predictability of weekly staff meetings, checklists, and all the things that make me sort of... you know, make the hair stand up on the back of my neck because I feel like, "Man, this is not where I want to be."

Sam Parr

And this is a consistent pattern that we've seen. I don't know if you know this woman named **Sofia Amoruso**, but she had this company called **Nasty Gal**. It scaled to, I forget the exact number, $100 million or $200 million a year in sales and had multiple offers around half a billion. She screwed it up for a bunch of reasons. One of the biggest ones is she said, "I'm brilliant at creating, but I'm horrible at operating." I, too, am like that. I'm brilliant at creating, but operating just doesn't excite me. I think that most people who start things are the same way. However, I think there's actually a huge issue in Silicon Valley, particularly among that group of people. I've noticed there's a huge problem of people starting things who are afraid to hire people to actually run the operation. What I've really embraced, and it took years to learn this, is that there are people who love creating the car from scratch and designing it, and then there are people who love modding it out and making it better. Having both is really important. How did you hire your president, and what was that like going through that process? Also, how many mistakes have you made in hiring the wrong people? Because that sucks too.

Randy Hetrick

Plenty, yeah, plenty. I mean, look, first of all, I operate a company, you know, every single day for its first 10 years. That's a long time, right? When you're at that point, the engine of both creation, activation, and management... maybe around year 8, I thought about bringing in a president. My idea was always to bring in a president, and I never took a CEO title for years because I just thought it was sort of ostentatious for a little company to have a CEO. That was my personal opinion, so I was a president. When I brought in a president, the first one that I brought in really aligned with bringing in private equity. Right? So maybe it was... maybe it was not year 10.

Sam Parr

why'd we make 8 years why not in year 3 I mean

Randy Hetrick

Well, because we were still very much evolving, I think that one of the challenges with bringing in somebody to take over the daily management is that you have to be pretty well defined about where you're headed as an entrepreneur before you can hand the wheel to somebody. If you're wheeling right and wheeling left, that's not exactly the moment to be like, "Hey buddy, here, take this." Because then the guy's like, "Where do I drive, man?" So, I think that's the answer. The short answer is I wasn't ready yet in terms of our definition and the enough certainty about the general direction of our course to want to hand that over. But at about year 8, I was ready. I said, "Okay," and I handed over the first two presidents that I hired, who were both great guys. However, the mistake that I made largely came from listening to my then private equity partners, who had sort of their business school 101 playbook. They were trying to run which is to go hire a "best practice" president. Well, okay...

Sam Parr

kill me kill me

Randy Hetrick

I guess

Sam Parr

someone would say that

Randy Hetrick

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

Sam Parr

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

Randy Hetrick

Yeah, well, it's a little bit akin to trying to get a cat to bark. Exactly, cats... wow, dogs bark. So saying that either one of them should be able to do this thing is just not right. You wouldn't do it because it would be preposterous. Yet, what people do all the time, especially institutional investors, is make this mistake. They assume that because somebody operated at a scale with a successful brand, that person clearly can do this and it will be easy for them. It's almost the reciprocal because what they don't realize, or haven't thought through, is that those people are playing a different game. Like Michael Jordan, who was arguably the best basketball player in history, when he went over to Major League Baseball, he hit with a thud. Why? He's a great athlete, but he was playing a different sport. What works for a human on the basketball court doesn’t work when you're on the mound of a baseball diamond. So I think it's a very similar thing. Big company leaders have large staffs, generally a lot of certainty in the direction that they're heading, you know, kind of single-digit management objectives, right? Up or down, it's a very long, patient, bureaucratic decision-making process.

Sam Parr

yeah you're almost more like a politician you're you're a politician a little bit you're not yeah

Randy Hetrick

And that's the emphasis of a small company. By that, I mean anything south of $100 million. A small company is constantly pivoting, and the windows to make those pivots are not, you know, years. They're not even quarters. You're lucky if they're months. I think the difference in the operating cadence and style is profound. Just going to a big company—a successful big company manager—and thinking they're going to be successful as a small company president, it almost never works.

Sam Parr

I think that, look, once my business becomes a financial arbitrage machine, I will need someone to figure out how to milk out 3% off the bottom line by using less materials. Then, I'm going to get one of those nerds. But until then, I need innovative people who understand how to eat. It's a perfect balance of art and science. They need to understand financial analysis and things like that, but also what motivates buyers. They should be able to think of widgets that make people feel good and want to purchase. I've been through this, so I empathize. Are you investing in anything at the moment, or is 100% of your time on this? On Saturdays and Sundays, are you tinkering with anything totally outside of this field?

Randy Hetrick

Perpetually, yes. What interests you right now? Well, I mean, there are a lot of different things that interest me. I'm an angel investor in a bunch of different enterprises, both inside and outside of health and fitness. I'm a startup nerd, so I live and breathe that. I also teach classes at both my alma maters: the Marshall School at USC and the Graduate School of Business at Stanford. So, I get to see a ton of...

Sam Parr

young bad ass so you're a fitness guy a navy seal and an academic

Randy Hetrick

well I mean I'd have to put that in quotes sam I'm not sure that I would that I would put academic

Sam Parr

ethically I'm right though I mean you hey you you do you teach at stanford okay so but

Randy Hetrick

I'm a lecturer, not a professor. So, that means that all you had to do was go there and then do something that didn't suck subsequently, right? I made a lot of mistakes.

Sam Parr

You're just an eclectic dude. You can kick someone's ass but then also, like, talk to them about Aristotle and Britain's economic policy and how it impacted imperialism in the next year.

Randy Hetrick

I'm an eclectic dude; you got that part right. I'm a super geeky inventor, which I love. I mean, I've got like 40 patents, but I could care less about the patents. What I cared about was the thing—bringing the thing to life. Once you do that, particularly in today's digital economy, you have to protect it. If you don't, you'll be knocked off and blown into oblivion almost immediately with factory direct stores out of China that have FBA shops on Amazon now. So, that's why I became... you know, I joke about having a minor PhD in intellectual property law that I never wanted, but I had to learn. All of that—the nuts and bolts of creating, articulating a vision, wrangling a team to share that vision, and then moving that thing forward—that's the stuff that makes my heart pound.

Sam Parr

what are your best angel investments

Randy Hetrick

Well, I mean, I suppose we'll wait and see until they pan out. But have you been paying out yet? No, not yet. I'm sort of an equity investor. I make a good living now, and so I'm not in any of these for a quick turn. But I think that they all will. Most of them are in areas that I tend to invest in and advise on. I only get involved in things where I think I can make a difference. I've taken a couple of different flyers on things that buddies I trust, who are domain experts in other areas, have said, "Hey man, you should get in on this." And also, let's just qualify this: I'm a small investor. I'm not placing six-figure investments one after another. But I tend to invest in things where I can help the operating team based on my own experience. Experience is just the sum of all your mistakes, as much as anything else. So, I can help early-stage businesses set up their partnership arrangements, figure out what makes a good partner, and identify what capital sources make the most sense for them. I know both the pros and the cons of all of them at this point.

Randy Hetrick

And then, you know, team selection. I mean, I've been leading teams since I was a 22-year-old frogman and led all the way up to the national level. So, I've got a lot of experience. Whether I've done it all right? I certainly haven't, but I haven't done it all wrong either. I've got a lot of experience in helping to build culture, create team dynamics that are durable and performance-oriented, and build brands. So, if it's in those categories, that's kind of my wheelhouse.

Sam Parr

I have to pause real quick I gotta go in the restroom really quick go

Randy Hetrick

we'll edit this part out

Sam Parr

sorry about that

Randy Hetrick

no no worries man the I just promise

Sam Parr

are you an mma fan

Randy Hetrick

yeah big time so I'm

Sam Parr

I'm a huge MMA fan, and during this quarantine, I've gotten very healthy—much healthier. I've done Ironmans and things like that. I've actually started using my TRX, by the way, and I've been lifting weights. I've gotten strong. But I have a weight loss challenge, and I have $500 on the line. I have to hit my goal by Saturday, and I'm going to crush it just through diet and exercise. I've been drinking crazy amounts of water because I want to do an MMA weight cut and just destroy the benchmark that I've got to meet. Currently, I'm drinking 3 gallons of water a day, and then tomorrow and the next day, I'm going to taper down. My goal is just to crush everyone. That's great!

Randy Hetrick

That's great! Yeah, well, I've been an MMA fan since before there was MMA. You know, coming up in the SEAL Teams, it was very eclectic in terms of the coaches that we would bring in. I was an MMA guy before MMA was even termed. Everybody was still purists in their arts. But because I had this Bedouin lifestyle of constantly deploying and coming back, I didn't have that luxury. So, I became a kickboxer and a wrestler in high school, then a kickboxer through college. At the end of college, I got into Jiu-Jitsu and leaned into that hard as a SEAL. However, I never had the luxury of being in one place for more than a couple of years at a time. But I've been a huge fan of the sport. We did a ton of sponsorship actually of the fighters in the UFC prior to Reebok buying the global rights to the sponsorship placements. In fact, Mike Dolce could help you with your weight cut, right? He's a freaking master at that stuff.

Sam Parr

Well, do you know who Ben Askren is? Sure! I've become friends with Ben through this podcast and media. He's been helping me out, and I'm name dropping a little, but I was a huge fan of his. Then I started talking to him, and I'm like, "That's awesome! I'm friends with someone I looked up to." I think we're having Michael Bisping come on and do a podcast as well.

Randy Hetrick

Yeah, you're great, man. I mean, Askren's a stud wrestler, and Bisping's just... you know, you're talking about one of the veterans of the sport. I was so happy when he finally got to the mountaintop after all those years of blocking, fighting everybody that was there to be fought. He just kept somehow falling just short, but he finally got there before retirement. So, I was stoked for him. So, you...

Sam Parr

I know about all this stuff, and sometimes whenever I talk about MMA and UFC, I'm like, "I think I'm being too niche right now. No one cares." I think it's way bigger than I actually realize. But when you were in the SEALs, this SEAL thing interests me for two reasons. One, Jocko Willink... is it Willink?

Randy Hetrick

yeah sure willink

Sam Parr

Willink... that guy's everywhere right now. He's always fun; he's got good clips that are fun to watch. I'm also reading David Goggins' book, *Can't Hurt Me*. It randomly came up on my Audible thing, and I started listening to it. It's emotional, it's sad, and it's hard to listen to. Have you heard it?

Randy Hetrick

Or I haven't... No, I mean, I know David. You know, I never worked together, but you've crossed paths. Same thing with Jocko. Those guys are both way behind me in terms of age. In the SEAL teams, if somebody is more than a couple of years ahead or behind you, the likelihood of you knowing them is possible but not high, unless you worked at the same places. In which case, you transcend the age barriers because you're all at a command together and you work together. I never worked with either one of those guys. In fact, I think as I was getting out, they were both coming in. But I certainly know of both of them, and I like what they've both done with their brands. Jocko's done some really, really cool stuff with his podcast and his other appearances. In fact, he popped up the other day on *Billions*, which I was laughing about. He... oh.

Sam Parr

I haven't watched the season premiere does he show up

Randy Hetrick

So, this new season, he popped up in that, and I was like, "Yeah, man! That's what I love." I love it when I see other frogs doing good stuff versus stupid things where they're out there, you know, telling and selling secrets that are going to put other guys at risk, which I do not admire. But I really love when I see guys out there doing great things post-career because that's what the whole country is supposed to be predicated on, right? It's the citizen-soldier. You come in, you serve for however long, you try to serve as well as you can, and then you go on to do something cool out in the civilian community and be able to share some of the things you learned. I love that Jocko does that, and I love that Dave's doing that as well.

Sam Parr

So, when I started my business, I was like you. I like to invent things, I like selling them, and I like making money. What I didn't realize was that I had always done track and field, running, weightlifting, and swimming. Those are all individual sports. What I really struggled with early on was how to be a leader. It's super hard because, for a lot of people, they start things because, like I said, it's fun, it makes money, and it's cool. But then, if it was successful, they think, "Oh, I gotta be a leader of men and women," not necessarily a creator of products. What do you think? I mean, I know the answer; the answer is definitely yes. But what specifically helped you, being in the SEALs, in terms of business leadership and managing a team? And by the way, how many people do you have?

Randy Hetrick

Oh, we've got about **100** full-timers, and then we use another **350** master instructors to deliver our education courses. So, they're **1099s**. But, you know, it's **100** full-time, plus or minus, and another several hundred that we employ as contractors.

Sam Parr

Do you think people would say you're a good manager and/or a good leader?

Randy Hetrick

I think they'd probably say I'm a better leader than I am a manager. That's my guess because it maps to... I mean, I can manage, and the distinction between that, to me, is quite a wide gap. There are people, I think, who can do both at a very high level, but not many. I believe that most of the characteristics that make someone really good at one or the other almost prevent you from being good at both. I mean, there are some extraordinary people out there that can do both, but management requires just a different level of... you know, attention to minutiae. I want to say detail because I'm very detail-oriented, but ongoing minutiae, which is important in making a business go. You know, I don't have the patience for it. I also... I never really liked corporate management. I like leadership a lot, and leadership's about storytelling, being authentic, motivating, and communicating.

Sam Parr

And you think you're good at that? I mean, you seem very charismatic. Do you think you're a good leader?

Randy Hetrick

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

Sam Parr

What are some things I can learn from you then, through your SEALs experience, and that our listeners can learn, do you think?

Randy Hetrick

well I mean we do you know so I do I do a key I do a keynote that is pretty massively oversubscribed frankly called lessons of a frogman and it's leadership lessons business leadership lessons that I learned as a seal which turns out almost all of the key lessons that I know I actually learned as a seal the leadership lessons not necessarily the tactical business lessons but and and you know you would think and I actually had one of the assistant deans at stanford business school when I was out interviewing for to to to be accepted there you know give me this sort of patronizing put a shoulder hand on my shoulder and basically said well then you know why do you want why do you think we should take you randy and I talked about you know my leadership experience you know I was at that. I was at the special missions unit as a as a troop commander and had been in the seal teams for you know I don't know 10 years or so and you know then he put his hand on my shoulder and said well then it's it's a bit different leading in the real world than it is in the military don't don't don't you think because out here you can't just tug on your caller device and have everyone snap to and do what you say and I'm I was so astonished man I was like is this guy for real right now or is he baiting me and and I basically said to him you know dean if that's your view on military leadership then I think it says a lot more about how little you know than it does about the subject of leadership and you know not surprising that I didn't get in that time but but but you know I think that if you're talking about people and groups of people there are many many more commonalities to how to lead and motivate the group then there are differences depending on you know like irrespective of domain because you're talking about anthropological behavior and that changes very slowly over millennia you know and whether you're a you know a baker or a freaking frontline soldier or a software developer if you're dealing with other people humans behave you know largely the same way they have different micro cultures but but we're all part of the homo sapiens species and we we've evolved our behaviors over you know hundreds of thousands if not millions of years so the commonalities are that people want to be inspired they want to be they want to associate with something they believe in and other people who share that belief system they want to feel important right like they're contributing everyone wants approval and and reinforcement that what we're doing is is good and so figuring out how in a context to provide those basic human needs is what leadership is all about and and I think that it's it's not actually very domain specific whereas management arguably is much more domain specific right depending on the industry and and I think that requires you know a different set of skills and very often the things that make someone a good manager prevent them from wanting to be on the podium prevent them from wanting to take risks right and and those are things that you know you can't lead anybody if you're not willing to get on.

Randy Hetrick

And and so I think that you know leading and managing are are related but not the same thing

Sam Parr

and is this lessons of a frogman is that available publicly if I Google that can I watch it

Randy Hetrick

I hope not because it's one of the side hustles that I enjoy doing. I actually... you know, obviously I haven't been doing them during COVID-19, but I'm working on a couple of books in the early stages. One of them is going to be a deeper look into the substance of my keynotes that I do for corporations. The other is going to be an entrepreneur survival guide. What I discovered is that the gap between what I learned at Stanford Business School and the stuff I actually needed the day I launched this scrappy little startup couldn't have been wider. And that's at one of the best business schools in the world. What those business schools really prepare you to do is enter as a mid-level manager into a large organization. Very few of them prepare you to be a bootstrapped entrepreneur who needs to walk out and figure out how to find some space. How do you get pesky little things like insurance? When you start thinking about someone you're going to partner with, what's that all about? How do you go about the nuts and bolts of raising money without screwing yourself? You don't really get that in business school. You get that by getting out there and doing it... and hopefully, you learn along the way.

Sam Parr

No, I agree. We're going to be wrapping up soon, so I want to ask you... I wanted to wrap up the questions on angel investing. Are there any companies that you've written checks to that we would know about?

Randy Hetrick

Well, I mean, I can tell you a couple of ones that I'm super excited about right now. There's one, ironically, one of my board members started a company called **Basil Street Cafe**, which is a really cool automated pizza kitchen concept. I think COVID-19 has actually made it more viable than before. It's a really sophisticated combination of technology, branding, and distribution to create a nationwide, and then global, automated pizza kitchen. It produces some of the most kick-ass pizza that I've ever had in my life, which is really astonishing because your expectations out of a machine are very low. It turns out it's every bit as good, or better, than Blaze or any restaurant-quality pizza. So that's one of the concerns.

Sam Parr

SoftBank backed one of those automated pizza companies. Hopefully, you guys have a better run at it than those guys.

Randy Hetrick

I think sometimes, you know, there are things that were a great idea but were ahead of their time. Some of the players that have attempted to do this before had an interesting idea, but the technology they used didn't get it right. It's largely a distribution business as well because you have to make great pizza and be able to keep the machine stocked with it. But I'm excited about that one. You know, I've got another buddy that I'm helping who has a company called Everence, which I think is really cool. It's the opposite end of the spectrum in a lot of respects. It's basically a very unique way to collect, capture, and then encapsulate anything. The idea is that it could be hair, ash, or any kind of material. For example, it could be a flower from the mountaintop where you got married or where you buried your grandmother. Then, it enables that material to be put into jewelry. For instance, I'm having some stuff done right now where I'll have my boys' locks of hair encapsulated and put into a bracelet. That way, I'll have them with me always.

Sam Parr

And so have you. It's like when Billy Bob Thornton and Angelina Jolie had vials of blood. Did you ever read about that? They're... weirdos.

Randy Hetrick

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

Sam Parr

I feel like if you tell me that category and that you're starting a company in there, I would just invest in it. Just because it's like, probably, maybe.

Randy Hetrick

It's kind of in that category. Then you look at the leaders and go, "Well, those people are really smart." This is a sector where someone's going to win, probably more than one. So, you know, reasonable. And again, as I said, I'm a $20,000 to $50,000 investor in any given one thing. I'm not taking huge exposed positions usually. I like to invest in things where I can help based on my experience as a brand or as an entrepreneur. You know, some government stuff that I've gotten involved with because obviously, I spent a long time in the government space. And then just some cool companies, right? There are cool companies that I'm trying to help right now. For example, Indie.com is an awesome new platform to help influencers monetize their followings with content. I'm a big believer in that space, and it's an area where I can help them by exposing them to our large installed base of trainers, all of whom are influencers in their own right. We're trying to figure out how to scale themselves and create new passive streams of income. So, you know, it's a smattering, right? And there are a handful of others that are kind of in the same categories.

Sam Parr

Were you able to get some liquidity from the first PE event in order to...?

Randy Hetrick

Make these investments. The first one—no, I should have, right? That's one of the big lessons for anybody who's listening, and I really believe this. Unfortunately, I didn't hear it, or if I heard it, I didn't listen the first time I heard it. But I really think for entrepreneurs, you really should not... I'm speaking generally because there are exceptions to every generality. But in general, I don't think entrepreneurs should take institutional capital without pulling a significant piece off the table. It just... you know, from the time that you do and you introduce a preferred class of shares into your cap stack, things change, right?

Sam Parr

What would be your definition of significant? $1,000,000, $5,000,000, or $500,000?

Randy Hetrick

Well, I think it depends on the venture. I would view it from where I sit now as, you know, if you were building and then running a successful company, and you thought that the only option for financing was to go raise it from institutions, I'd sell at least a third of my holding to bring those people in. Enough, basically, to be okay if things go differently than you expected. That would be sort of the rule of thumb answer. So that... but you...

Sam Parr

had to wait but you had to wait for the 2nd round then to make that happen

Randy Hetrick

Yeah, and you know, I probably could have sold more at the first stop. But I was very bullish, and very, you know, as entrepreneurs need to be. I thought, "Hey, this is... you know, I'm not selling anything right now," and that was a big mistake. When I look back on it later on, you don't realize, "Hey, you could be locked up with these guys for a long time," right? Once they're in front of you, then getting any kind of liquidity becomes really problematic. So, you know, that's just something that entrepreneurs need to keep in mind. You could lose control, obviously, if you sell control. But there are other ways where, you know, through the preferences that institutional investors tend to get into term sheets, your autonomy and your ability to drive the bus, at the very least, get impaired in ways that you didn't expect.

Sam Parr

And you didn't have the ability - and we'll wrap this up in a second - you didn't have the ability to take a couple million dollars, take a million dollars off the profit each year to pay yourself? I mean, so like, were you just strictly earning a low salary as the company grew? Or were you able to... because if you raised $5 million right out the gate, I would imagine you wouldn't even have had the ability to say, "Well, this year we made $3 million in profit, I'm gonna write myself a $700,000 check." No?

Randy Hetrick

Of course not. And you don't... you know, and that's not... frankly, that's a tough way for an early-stage entrepreneur to think. Because if you're starting to think about trying to extract stuff out of an early-stage business, chances are you're going to impair that business's growth. So my view was never of that. I mean, I wanted to start making money right away. Because the first, if you count, you know, two years of business school where I was working on this idea, I went the first two years plus the next three without any pay. So I was five years into a no-pay environment, basically.

Sam Parr

and that's why I'm saying like but you were like 10 years in before you raised the 1st round I think right or

Randy Hetrick

yeah we were we were we were maybe a little less time maybe we're 9 years in so it's

Sam Parr

It's like, "Alright, look, if we're doing okay, I could definitely..."

Randy Hetrick

I should have taken money off the table. That was one of the mistakes, right? What I focused on instead was, "Hey, I want to up my salary and my bonus structure to a level at which I can start making a good living on an annual basis." But I should've done both, right? Because that was possible. I chose to just focus on, "Alright, let's get my cash compensation up to a level that feels right for what I've built in the 100 hours a week that I'm working," and not worry so much about extracting value right now.

Sam Parr

oh wait dude wait you're saying you should

Randy Hetrick

Have you just increased your salary and bonuses? No, I should have done both, is what I said. I did increase my salary and bonus structure. I did not pull money out of the business, and that was a mistake.

Sam Parr

what were you paying yourself that to where I mean were you paying $50 a year

Randy Hetrick

Well, I mean, no, probably more than that by then. But early on, yeah, I mean, for the first three years, I was paying myself nothing. Then I think I started paying myself $50. You know, it just sort of... if you dollar-cost average back, it would have been a very bad financial decision, right? On an hourly basis. But, you know, you get there, and I make a good living today. That's plenty. So, you know, it all evens out. But if you dollar-cost average the first ten years, I probably made $50 a year. You know, which, after 14 years as a Navy SEAL with a Stanford MBA, right? Ain't killing it. I was living in Mill Valley and San Francisco at the time. I fled Mill Valley like everyone does eventually, or to Marin. But, yeah, I was living in the city, paying a mortgage up on Twin Peaks.

Sam Parr

I'm in glen parks

Randy Hetrick

Oh, well, that's where I was. I was right behind Tower Market. Awesome! Glen Park was my regular spot. You know, the Chenery Restaurant? I don't know if it's still down there, but that was my regular jam. I live down the hill, and I used to run Glen Canyon every day.

Sam Parr

Yep, I live in downtown Glen Park. I ran Glen Canyon today, and I have a house here with a garage and a gym with my TRX. This is awesome, man! You're cool as shit. I appreciate you taking the time. What's your preferred method of...?

Randy Hetrick

I'm a rock

Sam Parr

what's your preferred method of chatting with people the twitter fuck

Randy Hetrick

That Randy Hetrick, right? Instagram and Facebook at TRX Training is the brand, and trxtraining.com is obviously our website. I'm working on a randyhetrick.com website right now where some of my stuff will be featured. You know, my next big vision is to take a page out of Richard Branson's handbook and basically figure out ways to grow my brand that can help the brand I gave birth to do things that maybe it can't do, and vice versa. You ladder yourselves up just like he's done with Virgin and the Richard Branson brand. That's sort of a goal that I have. Maybe, you know, I'd be wildly fortunate to get to his scale, but I could be happy with a lot less than that scale as long as I'm still contributing value to the mothership and it's giving me opportunities to do cool stuff.

Sam Parr

Well, I think you have the story, you have the luck, you have the charisma. A Navy SEAL who's fit and also went to Stanford. I mean, you're...