Episode 144 - Brian Mac Mahon of Expert DOJO on Startups
Building startups or small tech companies is an equally exciting and challenging experience. While working towards your vision, you will get beaten up with different things every single day. You’ll have to calculate your every move to prevent any mistake. While success may seem far from reach at first, keep in mind that your mindset is where it starts.
This week, Brian Mac Mahon of Expert DOJO Startup Accelerator joins us to share the stories of his internationally successful startups. He also discusses how startup founders handle personal and industry crises. Brian also shares his wisdom and tips on how founders can navigate the complex world of startups.
Tune in to the episode to discover the challenges and beauty of small tech companies!
About Brian Mac Mahon
Brian Mac Mahon is a serial entrepreneur who owns multiple companies in over 40 countries. He is the founder and owner of Expert DOJO, Santa Monica's largest international early-stage startup accelerator.
Brian has established himself as the most active startup investor in Southern California. He invests in founders from every industry and background based only on their value proposition’s merit of execution.
You may connect with Brian on LinkedIn. Check out Expert DOJO on Instagram, LinkedIn, Facebook, and Twitter.
Here are three reasons why you should listen to the full episode:
Discover what traits Expert DOJO looks for in startup founders.
Find out how startups can leverage major crises.
Learn the success stories of the small tech companies Expert DOJO helps.
Resources
UNLU (India) — Personalized video messages from celebrities
ThankUCash (Nigeria) — Earn ThankUCash points when you spend at their merchant locations
Brien McMahon High School (No relation, but same pronunciation which I got wrong on the show — the high school I drive by all the time.)
Related Episodes
Episode 103 with Dave Rubin on launching Locals
Episode 63 with Bethany Crystal at Union Square Ventures
Episode 7 with Dennis Crowley on the founding of Foursquare
Episode Highlights
About Expert DOJO
Expert DOJO is an accelerator for early-stage startups.
They invest in the earliest-stage founders and work with them over the years until they grow. They get their vision, personal brand, and outreach.
Specifically, Expert DOJO works with international companies that other people left behind or miss.
They believe that some of the world's greatest companies are international, and geniuses are all over the world.
While female founders only get a small percentage of investment, the returns from them are way higher.
Traits They Look For in Founders
The founders must have a history of execution.
Executors are experts at predicting the probability of things happening in the future and mitigating against the worst possible cases.
The second important part of a startup is making sure that you build a monster version of your future path.
They also want to make sure the product fit is something the market needs. Brian said they’d rather be mathematicians than futurists.
Investing in Successful Small Tech Companies
Expert DOJO has had two companies from Africa and India and one from Egypt, Spain, Finland, and Argentina.
They normally bring 12 extremely international companies in the cohort.
The beautiful thing about startups is that there are no conflicts. It's just about trying to break through an impossible situation and create something incredible.
Listen to the full episode to learn more about Brian’s successful investments!
How Startups Can Leverage Crisis
Having a startup starts from a place of a crisis of not knowing what's coming next.
Expert DOJO didn't start as an accelerator. They just believed there was a problem within the early-stage startup, and they can do something about it.
To increase your chance of breaking through, know where your North Star is and understand the big problem you’re trying to solve.
Fundamentally, the flaw in America’s startups is that they favor related groups of privileged individuals.
Dealing with Moral Issues Facing Entrepreneurs
The second thing in making it through is looking deep enough at what needs to be built to reach your vision.
You're either going to commit to milestones that will be a hit or not.
You need to have a real belief in what you’re trying to achieve and where you want to go.
Try not to surround yourself with douchebags.
Choosing the People Around You
The problem with startups is that, initially, nobody would believe in you. But when you become successful, everyone wants a piece of you.
Find people you trust insanely and surround yourself with people who are better than you at every level.
Success leaves clues. You have to look deeper and do your research.
Finding a Silver Lining in the Pandemic
Being in the early stage means you're used to getting beaten up. Startups get punched in the face every single day.
The pandemic is the best time for startups to attack because huge competitions are trembling.
There are investors and customers who still need to have things. You just have to be smart during this period.
Do not run out of money. Adapt, overcome, and execute.
Listen to the full episode for Brian’s story about payroll and how founders can manage their own psychology!
Final Words
Early-stage startups give you the ability to do something that 99% of the world will never get to do. It involves taking your creativity as a gift and creating something the world has never seen before.
Most people are afraid of embracing the value you get from creativity. If you're going to die, what are you going to leave behind you?
5 Powerful Quotes from This Episode
“Virtually nobody has got day-by-day milestones, which lead to larger milestones, which become the centerpiece of their entire universe. After that, you have to be really — you have to really stick with what you believe.”
“There's easier ways to make money — trust me — than being an investor in a company where it takes 12 years to get a return back on any of the investments you're going to put into it. But I'm not here for that; I'm here to be part of a change.”
“Make your life subjective to make sure that your position is eliminated within four years.”
“This guy wants to be around you because you are a lunch ticket. If a shark is circling, it's because he's hungry.”
“If you have the option to be able to take something which is so precious and so incredible, which is your touch on the world, and you don't do it, then shame on you.”
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To expanding perspectives,
Max
Transcript
Max Sklar: You're listening to Local Maximum Episode 144.
Time to expand your perspective. Welcome to the Local Maximum. Now here’s your host, Max Sklar.
Max Sklar: Welcome, everyone. Welcome. You have reached another Local Maximum. Glad to have you with me today. So the election just happened. And as promised, this episode has nothing to do with the election. And I just want to tell whoever out there needs to hear this: time to get out of whatever spell you've been under. And time to get back to work and back to your life. And I think that today's guest will help us do this. That's right.
We're going to hear all about start-up companies today. We're going to hear about some really cool companies that are succeeding internationally. And we're going to focus specifically about how start-up founders can handle crisis. And there's been a lot of crisis this year. And I think that my guest today has really interesting perspective on that. Because we all face crises in our lives and I admire people who make lemonade from lemons, as the expression goes. So we're going to hear about that.
And finally, we're going to hear an impassioned argument for getting into start-ups. Maybe it's not for everyone, as you'll see, but a ton of us are interested in this, so let's get to it. Today's guest is an entrepreneur and investor, based out of Southern California and the owner of Expert DOJO, the largest international early stage start-up accelerator, Brian Mac Mahon. You've reached The Local Maximum, welcome to the show.
Brian Mac Mahon: Great to be here. Looking forward to it.
Max: I thought your name sounded familiar—and this is kind of silly to bring this up—but I thought your name sounded familiar. And I realized there's a high school that I drive by in Connecticut sometimes. But it's like Brien McMahon High School. So it's very…
Brian: It’s very [02:01 inaudible] though, the other twin, it’s outside of the family.
Max: Yes. So just to start, people might not know you. So just tell us a little bit briefly like what you do now. I'll go back to some things in history a little bit. But what is it that you do now at Expert DOJO? What are you guys all about?
Brian: So we're an accelerator for early stage start-ups. So what that means is that we invest checks of $50 to $100,000 into the very earliest stage founders. And then we work with those companies over a couple of years to help them go from the seeds in the ground that they are in the start-up space to becoming beautiful flowers, or plants, or whatever they end up becoming in the future. And that involves, making sure that we get their vision, their brand, their personal brand, or outreach. And all those fantastic things, right? And just really help them grow and build as a team.
Max: Yes, I mean, those places are always very interesting. A lot of people don't know this but I actually planned out some of the early stages of this podcast in 2017, where, for some reason, I was worried—well, not for some reason. Like I spent Monday mornings working from a kind of an NYU business accelerator called Future Labs. And I don't know the reason why I did that. I just wanted to find new ideas. I was like, I told my office Foursquare like, “Hey, let me go there in the mornings.” And they were like, “Great.” They thought that meant that I was leaving, I wasn't. But no, but I sort of talked to the entrepreneurs there and got so many cool ideas. And so I imagine you have something similar going on.
Brian: For sure. Listen, early stage start-up entrepreneurs, it’s the best. You've got all of these people, irrespective of how old they are, or where they come from, or what they look like. Now this great creative idea, which is destined to change the world in their minds. And they have a general outline roadmap of how to get there. But very general, right? They don't have a satnav, they have just an x at the beginning, and an x at the end.
And working at that ruse is the most beautiful part of the start-up journey. Actually, when you get there and you make money or you don't make money, it's kind of in many ways, just is the more disappointing part. The most beautiful part is all of the experiences you go through from the beginning to the end.
Max: Does your—does Expert DOJO have a theme of type of businesses that you work with generally? Or are they most tech companies? And can you give me some examples of coolest companies you work with?
Brian: For sure, yes. So we look for companies that other people kind of leave behind or miss. So we love international companies. Now that, especially in the US and there's not such a huge focus on international. But we believe that some of the greatest companies in the world are international. And we believe that like the way the universities did it here in the US for many years is the right way, which is you find your geniuses all over the world. You tell them that they don't need to make any money whatsoever. You bring him in and you make those people your superstars in the future.
And so we do—we do a similar type thing. We go searching in India, and Africa, and throughout Europe, and throughout Asia, and all of the other countries where we can find these phenomenal people doing incredible things. Female founders are another great trigger button for us. We love that. We know that. Female founders only get a tiny percentage of the investment that's out there. But we also know that the returns from female founders are way higher than from male founders. But just because of bias, and because of all of those other -ists that are out there, other folks don't quite notice that. So we actively look for these people.
We then bring them in. We create a bridge to America. We have our accelerator here in Santa Monica and then we look to create that whole global connection which ends up in Los Angeles, California.
Max: Yes, I want some specific examples. But before I pick up on something you said, like you find founders and people who might be left behind, might be overlooked by the current system. Are there any, like traits that you look in for a founder that are particularly interesting to you?
Brian: It's always execution. So you look, there's a number of things that help build a strong company. The first thing is the folks themselves. They should have a history of execution. And that doesn't mean that they have a history of starting companies before. But success leaves clues. And folks who constantly fail, there's always a great reason for it. And most of the time, it's not them. And most of the time, they'll say that they learn from it but many times they don't learn from it. And just a different thing will come up the next time. While executers are people who are experts at being able to predict the probability of things happening in the future and then mitigating against the worst possible case.
There are also people who are extremely conservative about the most important part of start-up, which is making sure you don't run out of money. And they’re extremely aggressive about the second most important part of start-up, which is making sure that you build this monster vision about what you're going to be able to do in the future. So we want to see that. They're the big rocks in the mountain.
Underneath that, we want to also make sure that the product fit itself is something that we believe the market needs. And then we would rather be mathematicians rather than futurists. So if we can then look and see, how do people interact with their product? And then how can we multiply that out to make sure that it can actually become a big enough company so that it's venture packable in the future?
Max: Yes, it's—well, one of the things that I picked up on what you said is predict the probabilities of what will happen because we're—here in The Local Maximum, we're all about predictions and probability. So one of the things we do is we make prediction but try not to be like, so such pundits about it. We try to go back and see, “Were we right? Were we wrong?” And hopefully get better.
And so maybe, okay—maybe now is a good time. Can you give us some examples of some of the companies that you've invested in? Maybe some of the ones that have done well, you might have heard, or ones that you just think are particularly interesting?
Brian: For sure. I thought you were just about to launch into a prediction for the election. But you know…
Max: Well, I don't know if this is going out before or after the election because we got a lot of content to squeeze in, in the next two weeks. It will be particularly embarrassing. Then if we come back and my predictions wrong.
Brian: Oh, predictions. There are other predictions out there which are based on logic. This one is not based on logic. So it's a hard one, right? But let me tell you a few companies. So in our last cohort, we had—our last cohort, we had one company from—two companies from Africa, one company from Egypt, one company from Spain, a company from Finland, a company from Argentina, two companies from India, company from Israel. And I think I mentioned Egypt, and there are one or two of the countries that I forgot in there as well.
So we normally bring in 12 companies in the cohort, but extremely international in nature. I'll tell you the other beautiful thing, about start-up in general, is there are no conflicts. There is no religion. There's no gender. There's no anything. There's just 12 people in an impossible situation, trying to break through, and create something incredible with the entire world. Trying to make sure that that doesn't happen. Right?
Max: Yes. Well, I’m interested to hear about the ones in Africa because I visited West Africa a few years ago. And I found that people are very, very interested in starting businesses and sometimes it's very tough. They have very different challenges than we have. So it is very interesting you…
Brian: They do and they find it very hard to get investment as well. It's not exactly open. So the one in Egypt, first of all, a great company. It's a marketplace that allows for top surgeons to be accessible to anybody in the world who wants access to those surgeons. The great thing about it launching in the MENA region is that you have low cost, great surgeons. So like even silly things, I say silly because obviously non-necessary, but like LASIK surgery. And if you did it in the US, it might be $10 or $15,000. But you can do it in Egypt with a top surgeon, who was educated in the US, on a machine which was made in the US, for 300 bucks. So why should we not have democracy to have access to health care?
So these guys, they came in the accelerator four months ago. They just started. They did $15,000 in the first couple of months. And last month, which is four months later, they did $150,000 in revenue, or this coming month. And we expect them to do about $300,000 in January, February. And then by the time we hit mid next year, they should be hitting at about $25-30 million evaluations. So we love those guys.
And we have another company over in Africa, which is ThankUCash. And ThankUCash is really if you think of the coupon system. And how when you—let's say you overhear you buy some gas in a gas station, maybe you get some points on top of your card in the gas station. But then you'll never use those points, they sit on some stupid card somewhere, and never get used. And it becomes this, the largest currency that the country has never used.
And so in Africa, what they've done is they've made the points instantaneously available. So you go to the gas, you fill the car up with gas in Africa, you immediately get a text to say, “Hey, Brian. You've just earned $1. Why don't you go into the shop, and spend that dollar, and buy yourself something nice?” And then what happens is, because it's tied directly into the POS system, they start measuring the spending of every single customer that's coming into their place. Including who went into the shop, how do you get them back in, maybe I don't—maybe I have to rush off that day. But then I come back and I do gas like three, four more times. And then it's like, “Dude, you've got five bucks. You crazy. Go into the shop, and buy something.” And then what happens when I go to the shop, I buy more things.
So this company are exploding. We invested in them three to four months ago, and they're just about to close out their $2 million raise. They have, I think, a million transactions they've just done this month. They're about to line up three or four month partnerships as well. And they are, I think, I’m actually going to make a prediction—I believe that within the next three to four years, they will have one month when they do a billion transactions on their web through their software. It's so powerful. So those guys. we’re super proud of ThankUCash. They're just doing an amazing job.
And we have another company in Africa actually Star News, which we just raised another $1.5 or $1.7 million. They just raised. And guys are amazing. So they connect influencers with local population, but they do it through cell phones. So because there's no apps in Africa, everything's done through the cell phones. And they now have over 5 million subscribers to their cell phones, only nine months after we invested in them. They'll do revenue this month of $3 to $400,000. Their round is fully subscribed. They're beasts. We've got great VCs behind them and they'll go forward as well.
And the thing is, a lot of people—I'll throw in one more just for fun because we're just there in India, while were talking through a great companies. And a company called UNLU in India. And I don't know if you've heard of Cameo over here, have you?
Max: No, I have not.
Brian: So Cameo are a platform, that in theory, what they were supposed to do was connect phenomenal influencers and personalities with ordinary people. And ordinary people could engage with them. So you could get Joe Pesci to wish you happy birthday.
Max: Oh, wait, I think I have heard of that. I think my cousin's got—who was that guy? The guy from Full House to wish someone a happy birthday.
Brian: That's what I'm saying.
Max: Bob Saget.
Brian: Bob Saget. Where else is Bob Saget gonna make 200 bucks for 30 seconds of work, right? So, and that's what their platform is all about. Now, what's the good thing about Cameo is they're a unicorn. They're a billion dollar company. And it's a very similar price. What's the bad thing? Their influencers are not that great. Like they have people who the first question you ask is, “Oh, that's awesome. Is he still alive?” But—so there are people like that on the platform.
So the guys in India said, “We can do better.” For number one, we're in India. Like India makes the rest of the world look like there are—there's no fanatical fans. They love their personalities. Number two, it's a billion people. And number three, you got great personalities—Bollywood all the way across the board. So these guys built up a monster list of incredible personalities, way better than anything that Cameo have like for like. And then month one they did 50 grand in cash, we oversubscribed their rams by 300%. Again, I think they'll do five times that revenue within three to four months periods. And I would bet money, I would put $5 on this podcast, they will be a unicorn within three years.
Max: Yes, that stuff’s really cool. And just to come back to that thought I had on ThankUCash. Given some of the stuff I've seen in, like the location in, from the location intelligence space, they work in Foursquare. It does not surprise me that they're doing well with that particular idea. So I love to hear about all these start-ups. Sorry.
Brian: Let me add one extra thing on ThankUCash. Because you can say to me, “And this is where start-up is so exciting, because it's a blank canvas.” Like people decide what tomorrow looks like. It's not that we're just saying, “Well, this is what it should be. Let's just get a better coupon.” So what ThankUCash did was they said, “Okay, now that we've done this, and we've got all these transactions, let's go further. Let's see if we can actually have these points become a currency, and have people earning points from other locations, and then other people, and then transferring the points.”
Like their objective is that money will pretty much become irrelevant because you can build up so many points that you can pay your rent on the points. You can buy your groceries on the points. You can get your Uber or Lyft on the points. You can make money by doing your own side Uber and Lyft type job and add those points onto it as well. And rather than saying, “Hey, I just want to earn money in a month and try and make it last.” You say, “How many points do I need to have a great month?”
Max: Yes, it almost sounds like a currency exchange. Not a currency exchange, but like a new form of cash, essentially.
Brian: Yes, absolutely.
Max: All right. So okay, so the topic I want to cover today is how start-ups can leverage crises. And there are times when it feels like to me, I'm sure I'm not the only one, that times a lot of people—they feel like they're kind of just moving from crisis to crisis. It becomes very difficult to see the opportunity in that. So we'll get started with some generalities, how do you turn this around?
Brian: So what happens is this: if you have a start-up and you're going out, you start from a place of crisis. And that place of crisis is, “I don't know what this looks like at the end.” That's your place. You don't believe that you're in crisis at that moment. You believe you're in this phenomenal place because you've got your T-shirt, you've got your CEO title, you've got your website done. Everything feels great. But you are starting in a place of crisis because you have absolutely no idea what's going to come next. And then as soon as that happens, you then go to the next place.
And look, Expert DOJO, we started off as an accelerator. We were no different. We didn't start as an accelerator. We started off just believing that there was a problem within early stage start-up, and that too many start-ups were failing. And then from that moment, we thought, “Okay, well, let's just open up a place on top of the mall and study start-ups. Let's see where that goes.” And then we opened up a place on Amazon. We noticed that there were certain problems that start-ups were continually encountering, which was forcing them to fail. Everything from having trouble raising money, to building terrible brands, to not even thinking about building a brand, to their focus on growing their company being nothing more than just Facebook ads. Just and then finally, just building mediocre products.
So when we saw that we thought, “Oh, we can do something about that.” And then we started to provide mentoring, and support, and introductions to help them grow. And then we then said, “Okay, fine. Now that we've hit this, well, what do we do next to try and make sure that help?” And what happens is, within start-up, we don't really see them as crises. We see them as iterations of our product, as our product begins to grow and begins to get stronger. And then after that, we thought, “Okay, great. Now we're going to provide a venture studio,” because people are asking us to get more engaged, and then we invested, and then we came to where we are right now.
And look, I can tell you, for many times, from our iteration of the start to all the way to where it is today. Many times, we will have had months where we had no idea how we were even going to pay our rent. Never mind how we were actually going to iterate to the next place that we were going to go to, which we didn't even know what that looked like at that precise moment. And start-ups are exactly the same.
So the only two things that you can really do to make sure that you have a chance of making it through is, number one: just know where your North Star is. Really understand what is the big problem you're trying to solve. For us, the big problem was very clear. We know that fundamentally, start-up in America is flawed right now. It favors very specific, privileged group of individuals who happen to be related to a very specific, privileged group of people who used to go to the same school. That's it. That's the way it works. And that means that the other 300 odd million people will never be able to build a huge start-up. And worse than that, the probability is they will be unfairly competing from the other people's perspective with companies that have been given hundreds of millions of dollars of cash.
So, my North Star at the time was, we just want to help build a better system. We want to get our kids more educated in school. We want to make sure that more founders have the opportunity to be able to build great companies. And we want to make sure that the success rates are higher than the current failure rate of 98%. So when you have that North Star and you're kind of going in that direction, it’s much simpler because then you're like, “Okay, great. I don't know if today was a good day on its own. But I know that today got me one step closer to my North Star.”
Max: Yes, yes. So I actually got a question in. I sent out to my audience that you're gonna be on the show. A question from Ben Geboe, he’s actually been a guest on the show. And I know he's starting to get involved in some start-ups. He asks, “How do you deal with morale issues facing entrepreneurs? There are a lot of ups and downs. And do you have any anecdotes?”
Brian: So, I think, I believe the lack of a North Star for many people is a big problem. If you don't know where you're going to, it's very, very hard to actually make it there. Many people just look at a problem, and look at a solution, and say, “Oh, we've got a solution to a problem. Let's just get that out to the market and that's going to be okay.” That's not a North Star. That's not a huge vision. That's not a big, hairy, audacious goal to go for. That's number one. Number two: very few people, even if they do do that, and many times they think they do that, but they haven't looked deep enough to what needs to be built.
Max: I want an example of that because that's interesting. ‘Cuz I feel like, “Alright, I have my north star to this, and then it might not work so…”
Brian: Elon Musk is a great example of someone who does it right. Like Elon Musk, if you look at his perspectives for what he's actually building right now, Elon Musk will say—if you go to Elon Musk, and you say, “Hey, I'm thinking of investing in SpaceX, Elon. Can you send me your projections?” Elon would say, “Are you friggin’ crazy? We're going to Mars. We’re going to leave the planet because it's going to be destroyed. And you want me to send you P&L accounts, revenue statements? Look, put the damn money in, and let us get our rocket off to Mars because that's where that north star is.”
I actually—funny on that same topic—I had a conversation with a company today who came in and they said, “Look, we're looking for investment. We want to raise a couple hundred thousand dollars. What we do is we help mineral companies distinguish between the different type of minerals through using a very sophisticated software.” And we looked at it, one company was on board and they had no other companies coming through. I thought, “It’s a great idea. It's really good.”
But then I look and I'm like, “Aahh, there's only like 5,000 or 10,000 mineral companies. What can you build this to like $2-3-4 million dollars a year? I mean, it's a great company. But it's not a great venture-backable company. Wanna give me bigger? I need more than this. If you're going to go for it.” And the guy's like, “Well, we can expand into this. Or expand into oil and gas.” “Okay, but it's not perfect. Now you're reaching.” And the guy's like, “Well, what do you want me to do? You want me to tell you that we're going to—we're going to mine? We're going to help people that are mining in space, be able to mine better?” I'm like, “Yes, actually, tell me about that”. And he said, “But I've been told not to talk about that because…” But I said, “But that's your huge, audacious, hairy goal.”
And if your huge, audacious, hairy goal is just to work with a bunch of mineral companies, they're just going to be able to have a better software that happens to be better today. Could you get burnt out in the future? Yes, probably. But you are never getting burned out. If your big, hairy, audacious goal is in five, 10, 15, 20 years-time to be the software of choice, whenever anybody is going to go to Mars and decide between which minerals are going to be mined or not, like that's a life mission. So number one, you got to do that.
And number two, you got a milestone. People don't milestone. People are lazy. They're like, “YeS, man. Here's my projections. We're gonna grow by 400,000 million, gazillion percent in year two. It's going to happen”. So there's no milestone, and that goes, “I want to know what you're going to do in the next two hours. I want to know what outreach you're going to do. I want to know how many prospects you're going to have. I want to know how many customers you've got. And then I want to know what the hell you're going to do when that fails. And then I want to know, why are you in front of your email and not on your phone calling people?” Like either we're going to commit to milestones that are going to be hit that are going to help us achieve an objective, or we are not. And virtually nobody has got day-by-day milestones, which lead to larger milestones, which become the centerpiece of their entire universe.
After that, you have to be really—you have to really stick with what you believe. So for me, I believe in the mission of the DOJO. There's plenty of times over the last five or six years, where if my only objective was making a little bit of cash, then I probably would have walked away. Because what the hell? There's easier ways to make money, trust me, than being an investor in a company where it takes 12 years to get a return back on any of the investments you're going to put into it.
But I'm not here for that. I'm here to be part of a change. Like, I want to be Linda McCartney taking photos of the Beatles, and The Rolling Stones, and the greatest bands on the planet, while one of the greatest movements on earth is taking place. So you have to have that real belief in what you're trying to achieve and where you want to go to. And then look, the final thing I'm going to say is, try not to surround yourself with douchebags.
Max: Oh, yes. I struggled with that one in my career for many years. I think I've got it right now.
Brian: The problem is the start-up space, what happens is at the beginning, everybody will tell you you're going to fail. And the good people will give you absolutely no time to succeed because they do not believe. And then the moment that everybody believes, then you will get every advisor, consultants, helper, latch your honor, and person that you do not want around you to suddenly be part of your team. And you will build the worst team on the planet. So find people that you trust insanely.
Find people who execute without question, and successfully proven it in the past. And surround yourself with people who are better than you at every single level. Make your life subjective to make sure that your position is eliminated within four years.
Max: Hmm, yes, I've seen that before, where people become successful and then all of a sudden, everyone wants a piece of them. And it's—I could imagine it's a very tough situation because you need some people to help. But it's—everyone's there saying, “Pick me, pick me.” And I think if I were in that situation, it would be very difficult to—it would stress me out. Like who to go with?
Brian: Yes. But yes. But you can tell. Like, again, success leaves clues. Also, the success of other people leave clues. So those same people who were advisors, trust me on the face of it, if people don't do research, everybody looks amazing. I know, one investor, and if you look at his profile on LinkedIn, I would say he's the number six biggest investors in the US. Yes, but most of his investments are a thousand dollars because he wants to look like the number six investor in the US, according to Forbes.
So you just have to look deeper. Most people are lazy. They don't go deeper. They're just so happy with what they've seen. And they go, “Oh, my God, this is great. This guy wants to be around.” This guy wants to be around you because you are a lunch ticket. If a shark is circling it's because he's hungry.
Max: Yes. So one obvious type of crisis that I could see is, this pandemic this year, which kind of came out of nowhere for many people. There are others this year too, and maybe there's some businesses that were like, in the right place, at the right time. And we're like, “Oh, this is great. This is…” But I could imagine there are others who thought, “Wow, this is going to be a headwind. Everything my business is about is going to be impossible to do this year.” Whether it's about meeting up, or I don't know, whatever. So how do you, if things like that do come up from time to time, how do you try to find a silver lining in that?
Brian: What happens is, look, we're in the early stage start-up space. And the early stage start-up space means that we are—we're used to getting beaten up. Like this is like the Mike Tyson quote, “Everybody's got a plan until somebody punches them in the face.” And start-ups get punched in the face every single day.
So a pandemic is really tough for somebody who's got a really nice steady living, and they've got a big beautiful house, and their family's awesome, and they got their private school, and the cars are in the driveway. Like pandemic is really tough for these people because they're used to a very certain standard. Start-ups are used to sleeping in their car. So at the very early stages, our biggest problem is the folks we have to compete against. Like I'm saying, think about the audacity of it. Like I'm saying, I intend to dethrone Uber, or Lyft, or Amazon, or whoever else it is that I'm fighting against. It's an impossibility, right? Until there's a pandemic. And suddenly, the Ubers, the Lyfts, the big companies, suddenly their foosball tables all disappear. Their staff loyalty all disappears. They fire all their people. Suddenly, they're not advertising as much. Their lunch budgets suddenly disappear.
So it's the best time to attack. Castle gates are open, competition is trembling. They do not have loyalty inside their ranks. If ever you are going to go for the throat, and be the one punching in the face, this is the time to do it. And that's what we say to our start-ups. There's money to be raised. There's investors out there. There's customers who still need to have things. It's not like the toilet roll industry went away when the pandemic came. You just got to make sure you're smart during this period, that the number one rule of entrepreneurship that I mentioned earlier on, is that you do not run out of money. Adapt, overcome, and then execute.
Max: And I love the positivity in that statement. It's like, “Oh, this now sounds not so bad”. So I wanted to ask, I have another question. This is—I put you on the spot a little bit, but like, what would you say is like the worst crisis you faced in business? Or in the business you've helped? Like, how did you deal with that?
Brian: Ah, I felt like I could list a hundred. I could list one every day, like literally every day. Every single day, somebody move 70 companies we've invested in.
Max: Okay, are there any crises that give you like PTSD, or like, “Oh, that was a particularly hard punch that day.”
Brian: So I got one founder, two weeks ago, they couldn't afford to pay their payroll. I actually, I'll tell you a really positive story on payroll. One of my founders said to me, “This pandemic has been fantastic because I was going to have to tell my entire—all of my employees, that I couldn't afford to pay their payroll this month.” And actually, the conversation was much easier because everybody else was telling their employees that they couldn't afford to pay their payroll this month, or we couldn't afford to pay before the pandemic came. It just meant that we were in really good company with other people.
So we have at least four to five times a month, one of my founders will run out of money. They will not have enough money to be able to pay for the things that they need to pay for afterwards. And I've had deals where we've had deal memos, done with follow on investments, which they've absolutely fallen through. And one time in our side, which felt terrible for me, we were just about to invest in a company, and we'd sent out a term sheet, and we had to take the term sheet back. And it was only once we ever did it. But I suddenly realized after sending it out that it was a really dumb idea, to make the investment that we were going to make. And it made me much more consequential to that in the future.
And then we just have like, loads every single—the founders. I had a founder two weeks ago, where his partner just as they were about to raise a million dollars, his partner said, “I'm going to leave your company and if you don't give me 10% of the company, I'm going to tell the investors that I'm leaving, and as soon as I tell them, they won't give you a million dollars.”
Max: That’s a little bit of a hold up there.
Brian: Everything—partner breakups, people getting sick, parents getting cancer, can't afford to pay payroll, like this is it.
Max: A lot of those that you mentioned are just things that happen in life. Similar thing. Everyone's had some of that stuff happened to them.
Brian: Well, everybody—when you're in a job, and it's nice, and you’re surrounded by hellos, stuff happens in your job, and you're like, “Oh, I want to take like a week or weeks PTO, or I need to get over such and such as such.” You're protected. When stuff like this happens in start-up, you don't sleep. Like you don't sleep. You cry. And that's the difference. There's nothing behind you. There is no fluffy pillows. There is no cushion. There's probably not even anyone to talk to. Especially if you're a solo founder. You just got to go home, and you got to sit there, and you got to tough it out. Are you going to be smarter? And you got to find great people that you can confide in. But really the book stops with you. And that's where the differences would start-up.
Max: Yes, well, it sounds like founders could use some like—you're managing your own psychology very important.
Brian: Yes, the most important thing, actually, your mindset is where it starts. You go to bed early, you get sleep. You get strong, you eat healthily. You make sure that you're in a position. If you're going to train for anything, especially a sprint marathon like start-up, you got to make sure you're in your fittest peak condition from your mind, to your body, to how you're actually the people that you surround yourself with.
Max: Yes, all right. Well, we're sort of coming to the end. First of all, make sure that you know, on your site, you get us all the links of stuff we talked to today, because all of that will go on the website, localmaxradio.com. And so I just want to end like, do you have any last thoughts? Where should people go for more information? And are there any other companies that you want to talk about? Because I like hearing about those.
Brian: So here's where I will leave everyone like—we've had dozens of companies and all of them have got phenomenal stories. We've got stories from female entrepreneurs who have broken through impossible odds, all the way through to immigrant entrepreneurs who've done the same thing. But I want to leave it just everybody with a bigger point. Early stage start-up, is gives you the ability to do something that 99% of the world will never get to do. And that is to take this incredible creativity that you were given as a gift. Whether you're a God-fearing person,you believe it came from God, or whether you believe it came from the universe. You have it. And that gift is that you can go out, and create something that the world has never seen before.
And you have a choice, right? Choice number A: behind this window, is that you can take the safe option. You can just be pleased that you made it to death, right? And you work for someone else, and you help them with their dreams, and you did the stuff. Now I'm not talking about the values that you get from family, or the values that you get from the thing. I'm talking, specifically, the value you get from creativity. And most people are afraid to embrace that. They sit in a safe, comfortable position of saying, “I just want to be able to make it.” And I say, “Make it where the only thing that's guaranteed is, we're all going to die.” And if you're gonna die, what are you gonna leave behind you? And if you have the option to be able to take something, which is so precious, and so incredible, which is your touch on the world, and you don't do it, then shame on you.
So entrepreneurship is awesome. Building a business is one of the greatest things you can do. Don't go into it thinking if you do decide to go into and do it, it's going to be an easy thing to do because it's not an easy thing to do. It will be the hardest thing you've done in your entire life. But it will be something that you'll look back on and say, “That was something that needs to be done.” So go and get your asset abed, start a company, and build something awesome.
Max: Damn, that's a pretty good pitch. Brian, thank you so much for coming on the show. I really value our conversation today. And I know that those of you listening out there are very happy to listen to it. So thank you so much, Brian, for coming on.
Brian: My pleasure.
Max: All right, that was awesome. Just like I promised, I have more fascinating discussions in the can. So today was start-ups. And the next couple weeks we are turning to philosophy, and then to mathematics. We're always expanding our minds here in The Local Maximum. I think next week, I want to replay my summary of the philosophy of Bayesian Probability, which I have presented throughout the course of this podcast. For those of you who know—those are a lot of those are fun shows when I do those Bayesian Probability show episodes.
But recently, I presented at a tech conference, PYMCON, and I kind of did a summary of everything I've learned the last few years on Local Maximum and that subject. So that was very fascinating. And the week after, we are going to talk to the amazing mathematician, Tai-Danae Bradley. And we're going to talk about topology, and category theory, and even quantum probability in machine learning. And I know some of you don't know what that is, if you don't know what that is, we're gonna—I'm going to tell you what it is. It's going to be mind-expanding stuff. If you do know what that is, you're already on board. I'm pretty sure. But this is some real—as I said, mind-expanding stuff that you're gonna want to listen to with a really great guest. So look out for that next couple weeks.
And yes, always, always moving forward to hidden Local Maximum. Have a great week, everyone.
That's the show. Remember to check out the website at localmaxradio.com. If you want to contact me to host or ask a question that I can answer on the show, send an email to mailto:localmaxradio@gmail.com. The show is available on iTunes, SoundCloud, Stitcher, and more. If you want to keep up, remember to subscribe to The Local Maximum on one of these platforms, and follow my Twitter account @maxsklar. Have a great week.
