Transcript

00:00 I want to pivot a little bit and talk about how money has or has not changed. You sure my first lesson which is you know encrypted in my DNA now was the idea of working for it. You know pay and my first job was in high school and I got it specifically because there was a girl in my grade that I was really interested in and she got a job at the shoe store in the mall and I was able to get a job across in the ice cream parlor and my plan was you know when the mall closed down. We could go out you know and hang out together which was a good plan and so I told her look. I got a job across the way and my first day on the job. I'll never forget it. You know she was in the window putting in the shoes.There. It says small mall and I was in this ice cream store scooping ice cream and what people you know my first day was owned by a woman on there forget. She's look when people ask you for a sampler. Here's a little wooden spoon give them a little sample but what happens when that occur when people do samples. They take their gum out of their mouth and they throw it on the floor so all day long. Gum was piling up on the floor Mexican tiles in this place. So the first day is over and she said you did a great job. You you know he sold $4,000 of ice cream whatever it was but now you've got to finish up and you got to take all the gum off the floor. Now at that moment the girl I was interested in was looking at me waiting to see was gonna walk out of the store and I realized if I could down on my knees and scrape gum I'm I'm in trouble. Here. This is not a good look I said for a look you hired me as a scooper not a scraper and she said no no. I hired you as an employee do whatever I say I own this store. Whatever I say you're gonna do and I said I don't think so if you want to hire somebody to come off the floor. That's a different job. If I had known that I probably wouldn't take this position. She said how about this you're fired and I went whoa what's that mean she said.

01:53 It means you get back on your bicycle go home don't come back here. I'll send you for your today's pay. I was so humiliated when I got home and explained that to my mother she said you should have done what she has to and I realized right. Then this is the important lesson this is one of those pivotal moments in life. There's two types of people. There's the people that are on the store and there's the people that scrape the off the floor and you have to decide which one are you.I'm not saying. It's bad to be an employee. But she taught me such an important lesson. The humiliation of not controlling your own destiny is evident in that story because that's the way I read it. I thought this is horrible whatever she says I have to do. I'm not gonna live my life that way. I never worked another day in my life for somebody ever again. Now that case later I can afford to bulldoze the whole mall if I want and I go back there to meet her because I wanted to thank her for that that moment for me that amazing moment. But she just reset my whole dial. All my DNA I just didn't want to scrape stuff off the floor. Ever I wanted to own the store and I couldn't find her. The month at the store was gone. I looked I hired somebody to find her because I wanted to thank her and help her out for making that moment happen to me. But there's a story that tells you a defining moment for one random person. Deciding what path they were gonna take entrepreneurship for me. I've never looked back you know I could probably buy a whole bunch of malls now if I wanted. It's not that important today as it was back then.

03:23 But that's what happens yeah and I think that's a great lesson. I often ask my guests. You know how do you know what you're good at how do you know where to find your passion because you know the sort of the default. Advice is follow your passion and that may or may not be good advice. But I think the point that you sort of crystallized for me is sometimes you have to do stuff that you don't like doing to figure out what you do like that's a great point. That's an absolutely great point and you want to do that early in your career to understand what motivates you the perfect situation. I mean I tell entrepreneurs today. I invest in so many of them you know when I say to them look you're starting this journey I want you to understand something. This is not going to be fun all the time you're. Gonna work twenty-five hours a day eight days a week because there's some guy in Mumbai or Shanghai. That's gonna kick your ass if you don't and it's forever and it's forever. But what will happen if you're successful and you won't see it coming and wake up one day and say oh my goodness. I am wealthy beyond my wildest dreams you'll probably go right back to work but the point is you created something of tremendous value and the and the way it manifests itself to you.Later in life is it gives you freedom to do whatever you want my number one message to entrepreneurs and I teach today is never pursue entrepreneurship for the greed of money it has nothing to do with it at all. The whole reason to be an entrepreneur is the pursuit of freedom that's why you do it. You do it because you want to be free one day to do whatever you like I'm here because I want to be here. I don't have to be here. I don't have to ever listen to a phone call again. If I don't want to that's not what I want to do. I enjoy spending my time doing the things that I want to do and I and I deserve it because I worked like hell to get here and so I'm a huge you know advocate of capitalism. I defend entrepreneurship every day. What people say you don't deserve that I say. I deserve everything because I started with this everything I have I created myself and I deserve what I have and I and I feel ferociously about that and I tell other entrepreneurs do not be embarrassed about success wear it own it. It's yours and you deserve it.So how has success changed you if any like in a personality or your. There's certain things. I really enjoy about you know being able to pursue them for example photography. I own every single camera that I want every lens that I want I work with all the manufacturers to shoot with their cameras now because they want me to I'm going to Botswana. Next week on Safari. I have some of the most eclectic lenses ever made because the people that made them want me to shoot with them and I'll sell the work for charity. I achieved what I couldn't do back then you. Know and I'd say to my dad is still alive. My stepfather look at this and you can see look. This is a passion.

06:11 It's not a business I said but I'm doing it is the whole point so that's freedom. That's a wonderful thing and that's because of what I've achieved I collect watches some of the rarest watches in the world as an asset class and I get access to them because I've been successful well so that's lifestyle stuff. I have a personality stuff like as it made you jaded or has it made you more optimistic. Or I talked about how you know the emotional side or the emotional risks of wealth because yeah. Oh that's a good point. I mean you know one. The biggest challenges well look let's go to telling the truth in business because shark takes a great place to show this as an example people. The show's been on for it's going to second decade. It's but we've we've craved on tens of thousands of jobs. We've invested hundreds of millions of dollars. You had phenomenal successes catastrophic failures. We've had it all but the point is when people come out there and you hear an idea and you've had a lot of experience in that space. Perhaps that's the great thing about Shark Tank.Each one of these investors is a self-made millionaire. A billionaire they've done. It themselves. It's not like they were given anything and so you have to respect that opinion. It's like a venture capital firm on steroids. He's a real operators. A lot of VC firms are a bunch of bean counter MBAs and they try and analyze stuff against the market uh that that to me that that ain't the real thing the real thing is a one operator to another trying to figure out what the path of least resistance is. That's what Shark Tank is. But you have to make a decision and I have this fight with Barbara all the time or Lori. You're listening to the pitch. You know the chances of success are practically zero.They're burning their family's money why not tell them the truth. Why not say the idea has no merit its bankrupt. It's going to zero. It doesn't mean you're a bad person. It just means the idea is bad and maybe you want to take this life example that you've learned and try something else you've made a mistake that's okay the sting of failure can be the greatest motivator for an entrepreneur and you know Barbara say I don't want to hurt their feelings and I say well. Then you're just gonna give them. You're gonna lie to them and that's disingenuous use. A burden hell for that Barbara you Lori all of you. I'm the only one that tells the truth and everybody says I'm the mean guy. I'm their best friend. I'm the only one telling the truth and I'm never gonna change on that no good deed goes unpunished right well.

08:29 The point is in business. It's binary or either make money or lose it right and I say in a start-up. If you can't make money within three years. It's just a hobby. It's not a business. It's gonna go to zero so what you're saying is. If we pull peel back some of these layers of the onion of mr. wonderful. This is it. This is at your core you. Really your intentions are great. You want to save them time and money blood sweat tears you just want to you have this experiences hindsight. You want to say listen. I'm going to tell you right now. Today this is not working. Just you know cut bait and do something else and it comes off as kind of you know being a hard-ass or whatever but you know at the heart that you're really trying to do them a solid well. I want every entrepreneur to be successful but that's not going to happen. The truth is 8 out of 10 businesses fail in America within three years for one singular reason.They're never able to get their customer acquisition costs below the lifetime value. You know fancy way of saying they blow their brains out advertising because they can't get traction they can't get viral. They can't get people to their site or their business in an economic way and I'd rather deal with that and I think I want them to be successful but the markets a very competitive place. The barriers to entry today's world economy are practically zero and so you need a great idea you need a certain type of motivation. You need a team most often that helps each other and augments the weaknesses or helps mitigate them and and you know I look at it that way. And I've got you know thirty nine portfolio companies in any one day that phone's gonna ring it.

09:57 It will today some time with some euphoric outcomes something amazing happen to one of my companies and some disasters happening to another one that happens every single day. That is the ebb and flow of life as an entrepreneur and I'm used to it but if you're just starting off. It's very hard to stomach yeah and there's there's a lot of questions I want to ask within that. One of them is this burning question. I always think about which is you know our entrepreneurs born or is it something we can learn and maybe frame or answer in the context of it. What do you look for you know. When someone goes on Shark Tank are you looking that individual their personality or the way they present and how how are you sort of judging them aside from the numbers. Let's talk about maybe the more touchy-feely or emotional intelligence side of things. I'm gonna answer that by telling you a story from decades ago and I think you'll understand the analogy when I was in my final months of getting my business Master's my MBA in that class of maybe a hundred and sixty cohort.You know that was at that size we thought we were such hot. I mean you know you're finishing and you know everything and you're ready to go and just take on the world and in comes this guy and he says he looks up. He was a guest lecturer but usually guest lecturer. You know get some slides up or starts talking about a presentation about the company they're worked for. He was different. He walked in no slides no PowerPoint nothing. He just walked around and looked at all of us and he said you guys think you're so damn. Good don't you well when you walk out of here.

11:29 The real world is gonna kick the living out of you and you won't know what hit you. It'll be brutal about a third of you will be a complete failure. Another third will be spinning their wheels a decade from now and the other third will be. Phenomenal. Successes too too bad about the other two-thirds. But I'm just telling you the truth and I look down at him and I thought what an what he claimed in.That presentation was that experience is very important in life and that in fact intuition is just experience distilled the longer you're at something the better. Your intuition is about businesses and people. And I thought what a load of crap today. I'm that guy I'm that guy walking in those MBA classes at Harvard and MIT looking at them and saying you know nothing and the real world's gonna kick the living out of you and I can't believe this has happened to me. But he was absolutely right and so today with all of the experiences I've had all the good the bad and the ugly and all of the horrible things that have happened the businesses I've invested in and all the euphoric ones and the amazing outcomes that experience is distilled to intuition. I can sit in a room with somebody for 15 minutes and know if I've got a winner or not and 99% of the time. I'm right so I listen to the gut and I listen to the person I listen to the plan. I know it's gonna work or it isn't I just know I'm that good. But he was right the only way to get to where I am today is having spent 30 years doing it. It's the only way you can do it. You can't you can't buy it and so I really really believe that about in entrepreneurs and investing in them and supporting them. You need. The experience that the road traveled gives you that turns into a new wish intuition and that becomes a very powerful tool how much of your success. Let's just lump it in one bulk statement. Some of your top success how much of that you think is luck. Now you know you could say I made my own luck and yes baron and I think you're right. You do make your own luck yeah but like sometimes like come on Marc human right place right time.

13:41 Yeah right cashed out that was lucky yeah. I think timing he's a very smart guy ya know and he's gone on to do it and we all have we've all had we've all had you need the first big one that gives you the capital to do the next ten. That's what I've learned you know somebody told me once way on the beginning when I was in the second year of you know my my software venture. He said the first five million is impossible. It's just impossible. The next five to get to ten is really hard getting to twenty five is pretty easy. After you get to ten and the rest he was right. The first five was hell. It was hell the second five was hell. Then it got a lot easier because you by then you've got you're deploying capital with an understanding of how hard.It was to make the first five million and I tell my entrepreneurs that in America if you can acquire five million dollars of wealth and have it sitting in a bank you can live off the rest of your life. It's it's it's a great thing to have happen but in acquiring it if you're trying to over-talking numbers. Now you're just in the middle of the game. At your first five million you don't want to stop. There you want to what it lets you do is take capital to invest in a whole lot of other ventures that you're maybe an operator in or maybe an investor in or both and my path has been you know the big exit of the learning company mattel. There were nine of us is a 4.2 billion dollar transaction that set me up for a lot of different things of which I had great successes and crazy failures losing millions of dollars on some making millions on others and what I've learned is goes back to what you just said you need a little luck. So if you're gonna have a portfolio if you're gonna be an investor like I am you a lot of companies because the ones you think are gonna be your best. Winners never are and the ones that you think are gonna be dogs that you know maybe you're taking a huge risk and end up being fantastic successes and and the path that this occurs on is very serendipitous markets. Change economics changed products change poopoo happens and the outcome of that is never known until you get to the end of the road and so I consider myself a pretty good investor. Today I have a very good track record.I use the intuition that I learned from that guest lecturer as my guiding light. I have a huge team that I work with that does all the due diligence but ultimately when I deploy the capital you know. It's just a gut feeling and I say to the guys. Okay great analysis. Great spreadsheets I want to sleep on it. I do that every week I mean we're putting money and we work all the time whether it's just that second or third round or a new deal. Sometimes it feels right sometimes it doesn't and when I have to tell them much more I'm not going to invest. They said why not I've got a feeling. That's my answer.