How I Made My First $1M - The Andrew Wilkinson Story
Barista To Millionaire In Four Years - July 5, 2024 (9 months ago) • 54:50
Transcript:
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Andrew Wilkinson | I was making a small amount of money for something I hated. Then, I started making a large amount of money for something I would have done anyway.
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Shaan Puri | For free, yeah.
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Andrew Wilkinson | It was fun.
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Sam Parr | Alright, what's up? We got.
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Shaan Puri | Our friend of the house, Andrew Wilkinson, is here. Andrew famously is the co-founder of Tiny. He started off as a barista and ended up creating a design agency that was super, super successful. They designed Slack and a bunch of other popular Silicon Valley products that you may have used.
He started buying businesses after reading about Warren Buffett and Charlie Munger. Now, he owns a portfolio of 30+ companies, I think. Recently, he took the company public and then stepped down as CEO.
Andrew is here on his, I don't know, vacation tour after stepping down. Andrew, good to see you, man!
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Sam Parr | Your skin looks great. The glow looks good. You seem happy.
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Shaan Puri | You got that non-operator glow.
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Sam Parr | Enough about talking about how much of a babe you are.
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Shaan Puri | Alright, so Andrew, I sent you a voice note. You started off as a barista at a coffee shop, and you've done very well in business. I said I want to know what the different income jumps were that actually made a difference. You said there were four levels.
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Andrew Wilkinson | Yeah, totally. Well, I think the best money that I ever made was jumping from being a barista to making **$60** an hour.
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Shaan Puri | So, you go from being a barista to designing websites. You go from $6.50 an hour to $60 an hour. It sounds like that might have been somewhat happenstance. Was that intentional to make that shift, or did you just get an opportunity? A lucky bounce came your way? What made that shift happen?
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Andrew Wilkinson | So, I was working, making coffees every day for all the people that came in. There were these two guys who would come in every single day. They'd roll in looking like they just got out of bed at 10 in the morning. They were probably about five years older than me, so around 24 or 25.
They would just sit on their laptops all day, drinking espresso after espresso. One day, I asked them, "What do you guys do? Don't you have jobs?" They replied, "Oh, we're web designers. We just walk into random businesses, ask them if they have a website, and then we say we'll make one for $500."
That day, I thought, "Forget this! I don't want to make the espresso; I want to be drinking the espresso. I want to be these guys." So, I went and bought a book on web design. A couple of days later, I walked into a place and sold the guy a website. Within a couple of weeks, I had quit my job.
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Sam Parr | Did you know anything about design?
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Andrew Wilkinson | Yeah, I did actually. When I was a teenager, I had a tech news website. I knew how to use Dreamweaver and had really basic web design skills. So, it wasn't rocket science to me. I knew these guys were smart, but they didn't have any crazy qualifications. It was nothing I couldn't learn. So, I just kind of dove in and got lucky. | |
Shaan Puri | Do you remember who you approached? That first one?
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Andrew Wilkinson | Yeah, it was a pulled pork barbecue joint. There is this place called Pig here locally. I think I got like $500 and some free pulled pork sandwiches. You know, I basically got unlimited sandwiches for a while.
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Sam Parr | That's pretty awesome.
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Andrew Wilkinson | I was making a small amount of money for something I hated. Then, I started making a large amount of money for something I would have done anyway. | |
Shaan Puri | For free, yeah.
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Andrew Wilkinson | It was fun designing websites and coding websites.
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Shaan Puri | The first money I really ever made outside of a college job when I was in school was when I actually won a business plan pitch competition. We won $25,000 in cash, and they made some MBA, some grad business school student, work for us for $5,000. So, we won a total of $30,000.
My two co-founders and I lived together for one year on $25,000. It was awesome! We didn't really know how much money a business takes. We didn't know how much money it takes to live because we had just been in college the whole time. To us, that amount seemed like it would last a long time, and we lived off of it for a year.
But it was the best money at that time. It was a big jump because we didn't have to get jobs. It was freedom! It was like, "Oh, we don't even have to think about money or a job because we got the lump sum cash upfront." We got to go try the thing we wanted to try together as friends.
So, that was probably the first level. Like Andrew is saying, the early dollars create a lot more freedom than the later dollars. Those early dollars and early freedom matter a lot more than the later dollars because you only get so much incremental freedom. In fact, you might actually get less freedom if you start buying a bunch of things that now you are a slave to.
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Sam Parr |
My first level was almost the same as yours, Sean. It was $24,000. I think I was 23 or maybe 24. I had a small website that I sold, but I still had to work there. It was basically an acqui-hire, but after taxes and everything was said and done, I think I had $24,000.
At the time, I was spending $2,000 a month in living expenses, and I said, "I have a year. I have a year of expenses saved up." I felt like I was... let's go to Australia! It's like, "Let's live! Let's go take a trip! Let's go to Thailand!" Not like having $24,000 was a lot, but I felt incredibly wealthy.
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Shaan Puri | By the way, that's a powerful thing to do: change the denomination into time instead of money.
So, you know, if you have $24,000, $36,000, or $90,000, it's kind of like Chuck E. Cheese money—tokens that you don't really understand what they do for you.
What most people do is they just sort of keep working blindly. They'll put it in the bank, and then they don't really know how to use it or what to do with it.
A more important question is: How do I get myself a year of freedom, or 18 months of freedom, where I could either just go enjoy myself purely or take a shot at creating a new life for myself? A new chapter, a new path.
Early on, it doesn't take much to get a year. Both of us basically did it on $25,000, which I think is surprising even for me to hear right now because my current life burn rate's a lot higher.
But, you know, we slept on air mattresses. It's like, "Well, why do we need...?" And then we eventually got to mattress and headboard money.
But at first, it doesn't really matter. A year of freedom, or 18 months of freedom, or 24 months of freedom is a good way to dominate things when you don't have a huge sum of money.
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Sam Parr | I use this app. I didn't use Mint; I use this one app where every time I spent anything, I typed in how much money I'd spent for that. So if I went and got coffee, it's $2.50. I wrote $2.50 in there, and then I had this spreadsheet where I took the average of the trailing 6 months. I said that is my monthly burn, and here's how much money I've saved to get to 12 months.
Alright guys, really quick. Back when I was running The Hustle, we had this premium newsletter called Trends. The way it worked was we hired a ton of analysts, and we created this sort of playbook for researching different companies, ideas, and emerging trends to help you make money and build businesses.
Well, HubSpot did something kind of cool. They took this playbook that we developed and gave to our analysts, and they turned it into an actionable guide and a resource that anyone can download. It breaks down all the different methods that we use for spotting upcoming trends and identifying different companies that are going to explode and grow really quickly.
So if you want to stay ahead of the game and find cool business ideas or different niches that most people have no idea exist, this is the ultimate guide. If you want to check it out, you can see the link down below in the description. Now, back to the show.
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Shaan Puri | Alright, so you've made it to level 2. Now, the next level, you said, "I went from self-employed to boss." So, what does that mean?
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Andrew Wilkinson | What I over time discovered was that there were all these online job boards, and there were companies in San Francisco posting, looking for freelance designers and developers. I was doing these little $500 local websites, and I found these Silicon Valley startups posting. This was like what you would call today "product designer" or "interface design."
So, I got this project designing an interface for an ad manager for some startup. I did a really good job; the guy really liked it, and it was like $2,000 for basically no work. This is the project I mentioned before. It was like maybe 5 days of work for $2,000, which ended up being $2,6100 Canadian, so it was very sweet.
The guy goes, "Hey, this is pretty good. Can you do coding? Can you do some JavaScript work?" I just said yes, even though I didn't know anything about JavaScript. I thought, "Whatever, I can figure it out." So, I frantically tried to learn JavaScript, but I couldn't.
I went to my friend, who was literally just my girlfriend's best friend's boyfriend, and he was in computer science. I said, "Hey, how much would you charge me to do this JavaScript work?" He replied, "I'll do it for $500." I thought I was going to get negotiated down by this client, so I went to the client and said, "It'll be $1,000." They said, "Okay, sounds good."
In that moment, I was like, "Oh my god, I just made $500, and I did absolutely no work." That's such a crazy transition of going from being a self-employed person selling your time to being someone who can sell other people's time, which to me is like the big leverage.
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Shaan Puri |
That's great! So you had that realization. Did you start devouring any books, or how did you learn how to do that better than... you know, than being an absolute rookie at it?
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Andrew Wilkinson | It was mostly trial and error in the beginning, and it was really stressful, honestly. I think when you start delegating to other people, they always do a worse job than you do. So, you are kind of panicking, and there's no process or system in place.
Around that time, I read this book called *The E-Myth*. It's kind of cheesy; it's by Michael Gerber, but I recommend it to everyone. He really talks about this idea of trying to think of your business as a machine. For me, that was a big breakthrough. The mental model of my business being a machine, and I'm the engineer. All the different people are widgets within the machine. If one doesn't work or something is squeaky, you can swap out the people.
But at the end of the day, you have a process, you have a strategy, and you have people on the bus. If you have the right people on the right bus, the right strategy, and the right vision, things will go well. That was when things really took off.
That was when I started hiring. I had like a dozen people, and I was making over $1,000,000 a year personally. I got a BMW, I started dressing nice, and really, that was like the sloppy first phase. I could do all the stuff I wanted to do in college; I could buy beer, go for nice dinners, and so on.
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Sam Parr | Wait, how old were you when you made your first million in profit?
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Andrew Wilkinson | Yeah, I think I was 20, 22, or 23.
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Sam Parr | That's huge.
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Andrew Wilkinson | Somewhere right there. | |
Sam Parr | That's huge.
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Andrew Wilkinson | Oh yeah, it was amazing.
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Shaan Puri | You didn't go to college, right? Or did you drop out?
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Andrew Wilkinson | I dropped out of college. I went to journalism school for like 2 or 3 months.
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Sam Parr | So, you did $1,000,000 in profit two years into being an agency.
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Andrew Wilkinson | I started when I was 19 years old, and so probably 3 or 4 years in.
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Sam Parr | That's massive.
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Andrew Wilkinson |
It was crazy. I mean, it felt like... it felt like an absolute fortune, and frankly, it was. At that point, I was like, "Oh, I'll just buy whatever I want." I would walk into Best Buy and just buy a crazy TV. I would buy, you know, the best speakers money could buy. I would buy video games... like whatever an idiot 23-year-old wants to spend money on, I would spend money on that. And ultimately, it was like $800.
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Shaan Puri | You're like, "Okay, well now what? My taste doesn't even match my income."
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Andrew Wilkinson | Now, yeah, it was very... it was very kind of empty and hedonistic.
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Shaan Puri | Do you ever read *Rich Dad Poor Dad*, Andrew? Yeah, he has that... Sam, have you read that book? He's got that quadrant thing. Do you know about that?
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Sam Parr | Yeah, people hate on that guy. I'm not sure why, but what about it?
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Shaan Puri | Well, I mean, any business guy who becomes popular and starts selling anything, I think he sells a lot of stuff. He sells like gold, he sells real estate courses, he sells a lot of things.
But Andrew, you basically just described his thing. I remember reading this book, and I had this mental model of what you're supposed to do in your career.
So basically, he has this four-quadrant grid. The first one is "E" for employee. You have a job, and he's like, for most people, this is what your parents tell you: "Go to a good school so you can get a good job." They kind of make it sound like getting a good job is the end. That is the end of the rainbow, that's the pot of gold.
What he points out is that you start as an "E," then you go to the bottom quadrant "S," where you're self-employed. So you go from employed to self-employed. That's what you described: barista to solo freelance web designer.
Then you go to "B," business owner. That's when you own your agency. And the last one is "I." He's like, the goal for everybody is to get to "I," where you're an investor. Your money works for you, and you do whatever the hell you want.
Eventually, with Tanya, you became "I," you became an investor. But this path, going from E to S to B to I, is one that for me, I didn't even really understand how the board game was laid out. I didn't know where you were supposed to go.
It's like playing a video game but not understanding that you need to save the princess from the castle. It's like, "Oh, once I know that, now I can start to move in that direction." But until I even knew that, I didn't really understand what the hell I was supposed to be doing. This one diagram was very useful for me. | |
Sam Parr | And that was in level 2 for you, was between what, $1,000,000 a year, and what was your upper limit?
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Andrew Wilkinson | Yeah, I mean, I was paying myself $500 to $1,000,000 a year, and I was profiting more than that. I started incubating businesses, and I had that classic thing where I had overconfidence.
The way I would put it is that my first business was a very easy business. I did the equivalent of walking into the gym and getting lucky. I picked up really light weights, and it built my confidence. Then, for the next 5 to 10 years, I would walk into the gym and try to deadlift £300, but I didn't know that was hard.
So, I started an e-commerce business, a restaurant, and multiple software businesses that I bootstrapped. I lost, in one case, over $10,000,000. But it was really fun because I would just be in the shower and think, "Oh man, that's a great business idea! I'll start that right now." I had no filter whatsoever, and it was really exciting, frankly. I was constantly starting new stuff.
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Sam Parr | Starting a restaurant's an awesome way to lose money, though.
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Andrew Wilkinson | Oh yeah, and I lost, I think, I lost $1,000,000 doing that.
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Sam Parr | You still have it.
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Shaan Puri | Cat furniture, restaurant, skin cream, SaaS company... you tried. You did the full decathlon of business ideas. | |
Andrew Wilkinson | We had a blog. We had a viral blog. We tried to write a book for it. We had a concierge service.
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Sam Parr | What was the viral blog?
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Andrew Wilkinson | We had clients from hell. It was really big on Tumblr for a while. Do you know it?
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Sam Parr | No, I don't know it.
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Andrew Wilkinson | We basically would go to conferences and meet other designers. Everyone would complain about their crazy clients and share screenshots of insane emails they had received.
For example, there would be a guy asking them to make the logo bigger over and over again. We started sharing those, and it just went crazy viral. As a result, we ended up making a book.
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Sam Parr | Dude, we need to bring back Tumblr. Tumblr was great.
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Shaan Puri | Oh, that was great.
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Sam Parr | I love the Tumblr days. I still go back and I'll read old people's Tumblrs. It's awesome! I love it. I mean, Twitter kind of is that now, but I felt Tumblr had a better environment. It was more friendly and had better content.
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Andrew Wilkinson | I made so many friends from Tumblr, and I still meet people at conferences who know me from Tumblr back in the day.
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Sam Parr | What age were you when Level 3 ended or Level 2 ended?
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Andrew Wilkinson | I ended that probably around 27. I think that was when I sold my first business.
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Shaan Puri | What did... | |
Sam Parr | You sell it for... and what was it?
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Andrew Wilkinson | So, I sold it for **$7,000,000**. It was the one business I started in level 2. I started all these different companies. I had my original web design company, **MetaLab**. It was profitable; I would live off part of that profit, and the rest of it went to starting all those other businesses I talked about.
The one business that worked was when I met **Toby** from **Shopify** and **Harley** as well in 2010 at a conference. At the time, Shopify was pretty small. They said, "Hey, we really love your design work. Would you make some templates, some themes for Shopify?" I was like, "Oh, you know, I guess we could do these guys a favor; they seem nice."
I tried to get them to pay me, and they actually said, "No, no, no. This is gonna be like a store, like the iPhone app store." I was like, "Ugh, okay, I guess so." So, we did it. I literally thought we were doing them a favor, and we put up a bunch of themes in their store. We started making like **$10,000** to **$20,000**.
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Sam Parr | A what a month.
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Andrew Wilkinson | A month, like, basically immediately.
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Sam Parr | What year was that?
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Andrew Wilkinson | 2010 or 2011. | |
Sam Parr | Alright, 2011. You're doing $20,000 or $30,000 a month. Is this called Pixel Union?
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Andrew Wilkinson | It's called Pixel Union. I had the original design agency, Pixel Union, and it started making quite a bit of money. Then I had all these chaotic other businesses.
Basically, what happened was I decided that I wanted to have a nest egg. I wanted to have enough money in the bank that I didn't have to worry about money anymore. What I had was cash flow; I had a ton of cash flow, but I never kept much money in the bank. I'd spend whatever I needed personally, and everything else would get invested, even though I didn't really understand investing in these businesses I was incubating.
I ended up getting an offer to sell that business for $7,000,000. It was $3,000,000 upfront, $1.5 million earn-out, and then the rest in stock in the new business. I remember I went to the ATM on the day it closed, and I checked my balance. I was in like a strip mall, and I saw $3,000,000. It was like $3,100,000 or something like that on the chip, and I was like, "I'm done. I'm rich. I'm good forever."
That was a big mindset shift. Suddenly, I had more money than I could use to incubate businesses. I'd also incubated a lot of businesses, and I realized that starting companies is really hard. If you think about my failure rate, I probably started 10 different projects or companies, and only one of those worked really well. There was a lot of pain, and I had to lay a lot of people off and go through a lot of hard times to do that. Frankly, I felt pretty burnt out.
Around that time, I was like, "Well, I guess I've got to learn how to invest." But to me, investing was something that guys in suits did; it was super boring. I had no interest in real estate or stocks. However, I'd always heard about Warren Buffett, and when I read about Warren Buffett, that changed everything for me.
What I ended up doing is I had all the incubated businesses, and I actually shut almost all of them down. I had sold that business for $3,000,000, I had another $1.5 million coming, and I also got dividends out of that business because I still owned 20% of it. Then, Metalab by this...
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Andrew Wilkinson | Was making $3 or $4 million in profit a year. I went from burning a lot of cash and living a nice lifestyle to suddenly having a pile of cash and a lot of unencumbered cash flow coming in that just kept piling up.
If you think about it, if you're making $4 or $5 million a year, I bought a really nice house. Not as crazy as I could've gone, but I bought a responsible, nice house. I bought a nicer car; I bought myself a Porsche, and I had a Tesla, which at the time was like super crazy. I started getting into investing at this point.
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Shaan Puri | What was this **20% rule** you had?
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Andrew Wilkinson |
So basically, I was like, "I will spend up to 20% of my cash flow personally, and the other 80% has to go back to investing." I knew that on 20% of $5,000,000, you know, I could live a pretty damn good life spending $1,000,000 a year. I wouldn't go out of my way to spend that much.
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Shaan Puri | Post tax or pre? | |
Andrew Wilkinson |
Pre-tax, I would basically live it up as much as possible, but then I also knew I'd always be compounding the rest. That model actually worked really well for me because I didn't have this mindset that so many entrepreneurs have where they're like, "Shit, I gotta live like a pauper and then I gotta become a prince. I gotta sell my company for some huge amount of money." I was just able to live on cash flows the entire time.
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Sam Parr | **Sam, can we talk about some of your popper?**
**Yeah, what the fuck is a popper?**
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Shaan Puri | Popper tendencies you had as Sam chugged a Dr. Pepper while you were talking to people.
So, Sam, what were you doing when you were building The Hustle? How did you live in it? Were there any cheapskate strategies?
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Sam Parr | Oh yeah, so that you did. My wife worked at Facebook at the time. Dinner was like, I gave her Tupperware containers and she would bring home prosciutto and cheese because they always had a charcuterie board.
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Andrew Wilkinson | So, I was... | |
Shaan Puri | Dinner was sponsored by Meta every night.
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Sam Parr | So, I was on a prosciutto diet because that didn't get old fast. The second thing I'm ashamed to say I did is this: Do you guys remember when Uber Eats, DoorDash, and Caviar all came out at the same time? These meal delivery services offered $20 for free on your first order.
So, I built an iPhone emulator on our computer where we created this ring, constantly referring each other to these new services. I basically had $5,000 of free Caviar! People would ask, "Is your startup funded?" and I would say, "No, but we are fueled by VC (venture capital), we're not funded."
I did that for a long time. I also would sneak onto the bus and not pay. I would get caught all the time, but the thing is, if they ask for your ID, you just say you don't have one. It's not illegal not to have an ID, so I got away with about $2,000 worth of bus tickets.
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Shaan Puri | Yeah, there's nobody checking on San Francisco on the bus.
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Sam Parr | I used to get in trouble all the time. They would say, "Do you have your ID?" and I would be like, "It's in my purse."
So, hopefully, there's a statute of limitations on these things because I definitely broke the law a little bit. I was also on a Whole Foods scholarship as well. Let's just say that the hot bar was right next to the exit.
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Shaan Puri |
So, Andrew, when you were spending 20% pretax, that's like you're spending 40% of your post-tax money. That's a lot to be spending during that time. And then you shifted it... you once you started investing, you made a change. You're like, "No, no more 20% rule." You changed it to some other rule, right? What did you [change it to]?
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Andrew Wilkinson | I just kept dropping that percentage over time. As the numbers got bigger, I just kept dropping it and dropping it and dropping it. |