For all my friends, this is their only business.
This is literally their lifeline.
And so, I find it very not cool, is my official diagnosis.
Super uncool by the orange guy.
All right, Sean, mahalo.
My first question is, what's it feel like to be an extra on the set of White Lotus?
As long as I'm not the guy who dies I'm good.
All right. So that's my White Lotus game plan.
I thought I'd be festive for you.
I think you look good.
Dude, I was, as you know I don't leave my house, and took the family on vacation so we're in and I texted Ben, I go, dude, I'm getting recognized left and right.
And he goes, really, that's awesome.
Like how many times?
Like 10, 11? And I go, no dude, two left and right.
I happened twice, just out of, that takes you right away.
This is amazing. Where did you get recognized at the airport?
Dude, someone voice recognized me.
I was like coming around the corner somewhere, I'm talking to my kids and some guy just runs around the corner.
He goes, hey, are you Sean?
I go, did you just recognize my voice?
He goes, yeah, listen to the podcast a bunch. Dude, there's been so many times where like I've met someone and I'm like, we should hang out.
And then they text me.
You wanna get on this flight?
Do you have a ticket?
Well, I think if I'm like flying home and like someone's sitting near me, I'm like, do you want to like be friends and like get together sometimes?
And then they'll message me a week later, I'm like, what was I doing?
It's like going to the grocery store hungry.
Like, I'm just like making bad choices.
... can we talk about tariffs really quick?
First of all, I want to let people know, I don't know anything about this.
Like, I'm not, like, an economist, which everyone is all of a sudden.
But I want to know, did you go to Hawaii because you were sweating and you were like, I need to find peace or what?
Dude, the last time I came to Hawaii, I don't if you remember this, was in 2022.
Wasn't it like some crypto thing?
Like you crashed. I landed and the same day I landed crypto had the biggest crash like Luna basically went broke and it brought down Bitcoin with it And I basically landed it and then lost a million dollars And it was just trying to hang out with my wife and just be like okay cool I'm just not gonna mention this like how expensive this vacation has gotten the worst part was because I was on vacation I didn't have like any of my normal like computer hardware or anything.
I couldn't sell. I couldn't do anything.
Oh, this cold storage is working out great.
So I was, I was basically stuck and then this time same thing.
Wind out of vacation.
Oh, the S &P 500 is at the worst like three -day losses since like the bubonic plague.
And I was like, oh great.
Here we go again. I'm not coming to Hawaii anymore.
When I've been going through this as everyone knows I'm heavy on index. And when I have been going through this, I just don't look.
I just, I don't look.
I just, I pretend it doesn't exist, and I don't look.
Although I did, I invested a little bit more than normally I do every month and I went a little bit heavier, but I just didn't look.
I just can't log in.
It makes me too anxious and really ruins my day.
Yeah, well I asked the simple question, am I going to do anything?
Is my plan, do I have some trade I'm trying to make right now?
Is there some genius move?
Am I just trying to panic sell?
No, okay. If not, then there's really no point in even looking.
it's just gonna ruin my vacation.
So I don't look, but when I landed, there was something I had to look at, which is these tariffs.
So not only did the stock market crash, or maybe because of this, the stock market has been crashing, which is that Donald Trump has created a new holiday, Sam, Liberation Day.
Happy Libs. Happy Lib Day.
Somebody was like, maybe he meant Liberation Day in the sense of liberation, like the Buddhist think, where we are being liberated of all of our possessions and we just aren't going to own anything anymore.
I don't have any material goods anymore.
Thank you. Thank you.
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So he came out and he has this giant poster board. Slam to every country.
That's basically like his slam board where he's like, China, you're getting tariffed, you're getting tariffed.
Everybody's getting tariffed.
And then since then, he, so he came out with like a 50 % or whatever, it was like a 35%, plus a 20 % tariff on China.
was, wow, 54%, that's going to be crazy.
And then since then, he added another 50 % on top.
So now we're at 104.
And I suppose there's just no upper limit as to how high this could go.
Because as of this morning, China retaliated with its own, escalating retaliation, 80 -something percent tariff.
So we're in a trade war.
And does that mean for you as an ecom owner when you buy $10 ,000 that now you're going to pay $20 ,000?
Yes, exactly. So it's as simple as that.
Got it. It's as simple as that.
So basically, and the reason to talk about this is not because I'm a terrific expert, which I'm not, but because I have an e -comm store and I have a lot of friends at e -commerce as well.
And for all of them, I mean, this is like D -Day basically.
So most of us manufacture in China, not because we're like, oh, I really wanna have the lowest cost goods from China.
That wasn't really the impetus.
In fact, when I started our company, we first looked at manufacturing in the US, we were like, oh, that'd be great.
It'd be great to manufacture in the US.
It'd be a great story to tell to customers.
Also maybe it will be faster lead times because we're not having to put every item on a boat and sail it across the sea.
So I called all the manufacturers I could find in the US and I was like, hey, like, do you think you could do this?
And most of them were just like, no. And one guy in LA was like, oh, yeah we could do this.
Do you want it for double the price, half the speed, and half as good?
I was like, is that your sales pitch?
He's like, look I'm just being honest with you.
He's like, cause if you're comparing factors, you're gonna find this.
I was like, how could it be half the speed?
There's no boat. There's no sitting on a boat for a month.
It would explain to us.
He was like, number one, all of the inputs to anything you're gonna make.
So even if we make it, we're gonna import all the parts.
So we still have the parts on a boat for a long period of time.
Secondly, we don't have the labor that's skilled at doing this.
Third, we don't have the machines.
He was like, actually, it's the machines, not the labor that's the problem.
He's like, basically when we kind of de -industrialized, all of the best machinery to do this work went to China.
There's only so many machines that do this right now.
To get a new machine takes like a year and blah blah blah, cost a bunch of money.
And so, we don't even have the machines.
And I was like, okay.
So then we. Dude, how does this guy answer the phone?
Is he like f you this is Derek?
You know what I mean?
Like I don't want your business.
How are you? All right And so what are your friends thinking in the industry?
Because it seems, dude, you guys just get beat up constantly.
You know what I mean?
Just get punched all the time.
Yeah, it's like, okay, Make America Great Again.
Where's the great part of what's happening?
Well, all we're doing is building, like, all these small businesses out of business and raising the price on consumers, right?
So here's, what's happening.
So just to give you a scenario.
I have a friend who is doing really well with this business and the business has been growing.
and so prior to Trump taking office, he's you know, he's growing the business.
Trump takes office, he says he's gonna have a tariff, he says it's gonna be a 20 % tariff.
So we're like okay, mentally prepared for a 20 % tariff.
So he places an order, now just to give you a sense, like orders have like a...
Forget about moving your manufacturing, which is a multi -year process that may not even work by the way.
Just like changing your, like sourcing from one place to another is, you know, six months to a year to get it up to scale.
Well, this guy, he's operating on a four month lead time, meaning from the day he knows he needs an order, he has to place it four months in advance.
So he placed it four months ago.
Now four months ago is basically before Trump even took office, right?
So he placed that order.
And now as that order is, he's got five containers out at sea about to land - It's like on the ship, and they're like...
Yeah, it's 100 % tariff now.
So he has to pay a million dollars in tariff.
He doesn't have a million dollars.
So he's like, look, he's like, dude, I literally don't know what I'm going to do.
I don't have a million extra dollars lying around in my business that I could just pay this tariff.
I also have five containers.
I have thousands of units just sitting there.
They can't be rerouted.
I can't tell them to go back to China.
I can't, I can't, he's like, what do I do?
Shut down my business?
He's basically like totally screwed. And so, and this is common. There's a lot of people are dealing with this.
You and I have a mutual friend he said the same thing.
He was like he's like my container You know the price per container got screwed during a bunch of stuff in the last two or three years There was so many different things.
There was the Panama Canal or well Suez Canal.
I forget whatever there is The ship got stuck yeah a ship got stuck.
Then there is this and there's that now.
He's like this thing He's like I don't have enough money to buy the Goods that I have coming in because I placed the order like a month ago like alt like it was like in transit It changed the price It's sort of it's like what a parent is like oh you say no to word five more minutes the time out oh there's five what what did you yeah five more five more you just got yourself five more totally in fact i'm gonna start calling it tariffs with my kids i'm just gonna start using that lingo maybe maybe it'll be fun to be on the other side of the tariff for once and there's a little bit of so now people
trying to find you know whether it's workarounds or you know trying to figure out hey does this It's kind of unclear even how this applies, does it matter if I got my goods on the boat beforehand?
Either way, whether this shipment gets tariffed a million dollars or not.
Point is, it's very hard to survive as a business when you're you operate it, let's say an e -commerce business that has 10 to 15 % profit margin.
If you're doing things right.
20, if you're really kicking ass and you've been in business for a long time and you have economies of scale and you have a large returning customer base, but like 10 to 15 % profit margins and then your COGS go up by 100%, is not gonna work.
Like they're gonna go broke.
And so the only alternative is, you have to pass that to the customer.
So now you have to tell the customer, hey, what this means to the customer, the math is, if a normal, let's say a unit of your thing costs a dollar, and now it's gonna cost $2.
Well before you sold that $1 thing for let's say $3 or $4, this is a $4 or 4x market, right?
So your cogs was 25 % of your marketing.
Forex is, I would imagine is very normal, yeah.
A standard markup, let's say.
And that sounds like greedy.
Oh, you're already marketing a forex. Well, no, because you have to pay for marketing and advertising and your staff and the fulfillment and all this other stuff.
You end up with a 10%, 15 % profit margin by the end of it, which is like restaurant territory.
And so, you know, we're not some fat cats over here in the e -comm land.
Go look at e -comm, you'll just see a bunch of tired, scraggly fools who like are just playing the wrong game.
And so you, you take that dollar item, now it's $2.
Well that means you have to raise the price instead of being, instead of a big four originally.
Now you got to raise it to five to make up for that, right?
So you're, all your goods are going to go up by 25 to 30%.
So that's inflationary, right?
So if you thought, you know, inflation was bad before the price of eggs and all this stuff, well wait till Christmas season comes and nobody could buy a toy because all the toys are made in China, right?
There's this things, all the shirts made in China, all the toys are made in China.
And if they're not made in China, they're made in Vietnam, which also got tariffed.
And so it's like, there's a few countries that make all the stuff.
And this plan really doesn't make a lot of sense to me.
Now maybe I'm just being sensitive cause I have a business in this space.
This is your lifeline.
Yeah, so less so for me, cause I have a lot of businesses, but for all my friends, this is their only business.
This is literally their lifeline.
And so I find it very not cool, is my official diagnosis.
super uncool by the orange guy I think you need to create like a Sean's homie private chat lobby and you guys could spend literally thousands dollars to lobby the government to change their opinion dude I'm gonna go to the lobby of this hotel to see if I can get someone to change their mind is that what lobby means?
I just tell me the long way I'm doing it.
And you'll declare bankruptcy down there by yelling it and declaring it?
Exactly. By the way, I don't know if you've read Molson who, I don't know if you know Molson, Molson Hart.
He wrote a great post on X that I think is worth reading, and it's basically called the America Underestimates the Difficulty of Bringing Manufacturing Back.
And he gives 14 reasons about why even if he took the generous side of this policy and And you're like, Oh, you know what?
Short -term pain for long -term gain, right?
Cause I think we could all agree there's short -term pain, right?
The business owners have short -term pain.
The consumers are gonna have their prices raised short -term pain.
The factories on the other side have short -term pain.
The stock market is crashing, that's short -term pain.
The 401ks are going down.
So that part's pretty unambiguous.
The short -term pain, the question is, is there even long -term gain?
And he wrote a post that basically outlines like, you know, very thoughtfully like why there's some problems with this.
And he's basically like, you know, one argument after another, it's sort of like, not only does moving a manufacturing plant back to America take a long time, like by the time somebody, by the time a business owner who today is gonna get hit by these tariffs, assuming they could somehow survive, spend millions of extra dollars opening up manufacturing in the United States which it's not gonna happen.
And it's a multi -year period before they get it all online.
and then they magically find the labor to do this, because we don't really even train people in America to do this type of work anymore.
There's going to be a new president, and you don't even know what this tariff situation is going to be.
By then, it might be a total fool's errand to do it by then.
So nobody's really going to be able to make that move.
Most likely, what's actually going to happen is he's like, we tried to do this in Trump's first term, and all we did was make Vietnam great again.
Basically, the manufacturer just shifts to one of the other low cost Asian countries that has lower tariffs is what's going to actually happen.
There's not going to like magically bring jobs back.
Oh, and by the way, you don't want to sit there and knit t -shirts either.
Like this is not a job you want.
These are jobs China doesn't even want.
Yeah. Dave Chappelle was like, I want to wear Jordans.
I don't want to make them shits.
Exactly, perfectly said.
Like, there's these memes going around of like, you know, it'll be like Chamath at a sewing machine trying to make a shirt.
It's so true. It's like, is this what you think is going to happen?
Is this America being great again?
I'm not sure. And so, you know, political stuff aside, I think that the, the terror situation is really crazy right now.
As a business owner, it is very, very tricky how to navigate this.
Amongst your friend group, is it going to put anyone out of business or is it just going to destroy their margins?
Like, is this like a complete, huge risk or is it like you've just made my life more challenging?
It's going to for sure put some people out of business because you had to, it's like I'm selling my friend with the stuff already at sea or he's trying to scale their business.
They might not be able to sell their product for an extra, let's say there were a hundred dollar product before and now there are a hundred and forty dollar product in order to maintain, you know, still some profit.
And so on one hand, demand is going to go down, right?
I'm going to have less customers because I had to raise my price.
My costs went up, my cash flow that I had in the business went down and maybe down to a point where I needed to borrow money in order to just pay the tariff bills that I have of stuff that are already in flight.
It's a very, very tricky situation.
Alright, let's take a quick break because as you know, we are on the HubSpot Podcast Network, but we're not the only ones.
There's other podcasts on this network, too, and maybe you liked them.
Maybe you should check them out.
One of them that I want to draw your attention to is called Nudge by Phil Agnew, And whether you're a marketer or a salesperson and you're looking for the small changes you could make, the new habits you could do, the small decisions you could make that will make a big difference, that's what that podcast is all about.
Check it out, it's called Nudge and you can get it wherever you get your podcasts.
You know, what we did in our business was I was like, okay, here's how you deal with situations like this.
You have to create like an immediate SWAT team and let's open up a Google Doc.
Let's make six bullet points.
It's like, what are the six levers we could pull?
Okay, so pricing, we're going to have to create some sort of tariff surcharge, and we think it could be in this range that'll offset some, but not all, of the amount because we can't pass 100 % of it to the customer.
It'll kill demand, and so we're going to pass, you know, a few bucks to the customer this way.
The next thing we could do, we're trying to source for another country.
Okay, it looks like, you know, maybe it's Mexico or India or one of the lower tariff countries.
Okay. You're working on that.
You over here, you're gonna work on, you know, figuring out how we're going to lower our cost. Because you're gonna have to go negotiate with the factory, ask them to share some of the burden with you.
You're gonna have to look up the, talk to the lawyers and see what's going on with the stuff that's already in flight.
Hey, we're gonna have to bring down the purchase orders because we have to be way more conservative.
Hey, you're gonna have to go secure more debt because we're gonna need a line of credit to make sure we can withstand the storm here.
And so we created this plan.
I was like, we're meeting every day, these five people, like the five core people in the company, whatever other priorities you had, they're gone, this is your priority now, we're gonna meet every day and we're gonna work on this plan for the next, you know, end number of days until this plan is executed.
And I think it's gonna take that level of intensity.
I think a mistake I made in the past is when things like this happen, and you sort of take a little bit of a wait and see approach I think that could be very, every day that you don't act could be very costly as a business owner.
And so I think one of the key things to do And like in our business, we have a CEO, we have a full exec team but when I heard how they were planning to approach us, it was like, yeah, this is like really important.
Just like these other four really important things we have. And I go, no, no, no. You need to like have a public, you know, PSA that is the most important thing you could do.
We're gonna meet every morning.
There's a name for this team and this is the most important thing we're doing and this is your top priority.
You need to cut off some other shit, right?
Like I think just raising the level of intensity is very key in a situation like this or people will go out of business.
So you gotta go snorkeling?
Yeah, and it's so funny, I'm on the call talking about how we have to, like, raise the intensity, and there's literally just like, Aloha, there's like calming Hawaiian music behind me, and clearly palm trees, and I'm like, Guys, guys, this is life or death.
And I go down a water slide on the Google Meet, I Didn't plan at this right You stop like mid talk to like get your drink that has the umbrella on it And you're like looking for the straw with your mouth That's awesome well that sucks is there a world where Is there any time you know how like what are they what are they?
What did George is this lecture is there anything?
I could do no no I met with the guy the other day and I thought, I was like, why do you want to, I never take phone calls with people, but he wanted to talk and I thought he was going to end the conversation with like, look, like, you know, I've loved watching you get big and be on the pod and you know, is there anything I can do?
And I thought he was just like, could do to help.
And he said, is there anything I could do to be a guest on the podcast?
I was like, wait, what?
I thought you were gonna ask me how you could help me.
And then he just ended it with, is there anything I could do to be on your podcast and to have you promote me?
Uh... I was like, no. There's nothing that you could do.
Wow. Hell of an ask though.
It was a bold ask. Do you want to talk about something more fun?
Please. All right. Let's talk about something more fun.
I think this is actually gonna be really fun.
I'm gonna try and take your mind away from, um, the fact that the company that you've decades trying to build...
I'm going to try and take your mind off of that, four decades you've spent building this company not going to vanish.
Never send Sam to like the cancer ward. In a bedside manner.
We don't have a lot of time left, so let's get to it.
You don't have a lot of time left, so let's hurry up and get to it.
All right, but I did, I read something interesting that I, when I read it, I was shocked by it.
And the reason I read this thing was because my company Hampton, it's basically like an events company.
We host hundreds of events a year.
And so I'm trying to learn how other like event -based businesses operate.
And I found one that I totally didn't realize how amazing it was, and I just forgot about it.
Have you ever heard of the medieval times?
Generally. Yeah, yeah, sure.
No, the restaurant series like the restaurant franchise have no you've never heard. Oh my god, you are gonna love this Okay, is it like rainforest cafe but for like more?
Oh There's like basically it looks like a small castle like the Excalibur Hotel in Vegas and then inside There's like people on horses jousting dude.
I always thought this was just like a joke I thought this was a joke in like 90s movies like for where people were going for dinner.
I didn't realize it was a real thing.
So let me tell you this story.
So, Medieval Times, it's basically dinner theater, and so they do a two -hour show where you go with you, your wife, and your two kids, and you spend something like $80 a head, and you see people host a Medieval show.
There's, like, 200 actors, and they, like, do jousting.
They do, like, some type of theater stuff.
It's almost like Cirque du Soleil, but it's Medieval stuff.
And it's like WWF or something, like wrestling like it's all like acting.
I did not realize how big this was.
So let me tell you the story.
So the guy who started it his name was Jose.
He was a Spanish guy.
He had a small restaurant in Spain where he would like have like medieval circus performers like doing juggling and just really small stuff inside of a barbecue joint in Spain.
In the 80s for some reason he decides to move to America and he's like I want to create what I did in Spain which was a really small thing.
I'm going to do it in America." And he convinces a couple bankers to invest $8 million into his first restaurant.
And that first restaurant was in Florida.
And he creates what is now Medieval Times.
And he creates this thing where the idea is we're going to host something like 20 to 40 shows per month.
I'm going to hire 200 actors.
He spent a year training these guys, how to swordfight, how to joust, how to like be like legit actors and he's like we're gonna serve you turkey legs and other medieval food like whatever like the stereotype like stereotypical medieval food is and we're gonna create this dinner experience and that's what he launches in 1983.
well fast forward almost 40 years now or 40 plus years his son has taken it over and they were recently sued because a bunch of their performers tried to unionize and apparently they were preventing them from unionizing.
So there was a ton of articles written about this company.
And a lot of people were talking about their financials.
They're enormous. So this company does...
It's estimated around 2 to 2 .5 million people a year coming to the restaurants, and they make something like $150 to $200 million a year in 10 locations hosting these dinner theater shows.
It's amazing. I had no idea this was this big.
And since 1983 they've hosted close to 80 million people at these events have you ever been to one of these no so there's 10 locations then I haven't lived in any of the places Dallas Myrtle Beach Scottsdale like places that I've you know haven't really lived in so I've never been to one have you no I've never been to one say the numbers again so how big is this a tech just on 10 10 locations On 10 locations, during the union lawsuit and things like that, reporters were doing back of the envelope math, and they were like, we think the company does between $150 and $200 million a year in revenue.
And there's 10 locations and each location host something like it, depending on how popular it is, but the lowest one does something like 20 performances a month, all the way up to 60 performances a month.
So two a day for 30 days.
It's insane how much demand there is.
And it was estimated that it was around 2 million people a year attending.
And on their official website, they say something like 80, I think they say 76 million people have ever attended a medieval times restaurant for one of their performances.
Is that insane? So, you have 10 to $20 million per location.
And they might be making one to $2 million dollars of profit per location, something like that, that's my guess.
Or more. So the way it works is, it's not a normal restaurant.
And so you don't order the food, it's all pre -selected.
And so it's like an assembly line.
At the same time, all 1000 guests get the exact same food.
So like, there's a lot of like, maybe, potentially significantly more efficiencies than a normal restaurant, because there's not like, a whole menu of stuff to do.
And get this, their performances, They only change the performances every five to seven years so they spend a lot of time like making the performance and then everyone else just goes and Learns it and they perfect it over the course of five to seven years So they don't even change it that often and it takes like 200 performers for every show Yeah, it's pretty rough for You know night performers right because you have like to step down between Game of Thrones and the medieval times restaurant Like the second place It was pretty rough.
Night's gotta do what night's gotta do.
So this is hilarious because you were like looking this up as an analog for Hampton.
Are you thinking about getting in the turkey leg business?
What's going on? Well, the way that we are going to grow is through launching cities and I'm trying to study how launches work.
Do you have general managers of each city, of each region?
I'm just trying to understand the logistics of it.
and I'm looking at a variety of unrelated, but still in the event space just to figure out how do they do it?
How do people do it?
And so I'm just looking at a ton of different ways.
And I was just curious about, for some reason I came across these guys and I started thinking about it.
I'm like, Oh, they're at 10 locations.
Are they franchises?
How do they work? And it just caught my eye and I was shocked at how big they were.
Can I tell you a goofy story that's kind of similar to what you just described?
So I've been writing this book like on the side.
I'm not sure if I'm gonna actually publish it or not like but I kind of got I went down a rabbit hole I got interested in it and it was It was around how?
Creativity works. So how people how to be more how to be a more creative person and ultimately like make hits So like where do the hits come from?
What's the title? Bad art bad.
Are okay. Yeah, so it's like because there's one of the key like obvious Sounds obvious in hindsight But like when you go look at the creative process of the world's most successful creative people You would think a lot the ones who make the hits the things that we all love the high quality stuff they just nail quality and if you Listen any of their interviews you watch the process.
They don't give two shits about quality Directly what they do is they focus on quantity and their belief is basically the quantity is the only way to get to quality so they're they play a volume game and like we produce a lot of bad art and That's where the one or two things that are real gold come from if you just sit down and try to make gold it doesn't work.
You actually end up not creating at all.
And so one of the things I've been looking at is like how, some of the big breakthroughs came from doing what you're talking about which is like you learn from an adjacent space.
So you go and you, you know, the Wright brothers who ended up creating the first airplane - Dude, George, I read their book and they're amazing, but George Mack summarized their book amazingly in his high agency blog post. Yeah, yeah, exactly.
So they, they were not funded.
They had no education.
They had no team, they had no specialty, no experience doing this, no nothing.
And meanwhile, there was a guy over there funded by the Smithsonian, had $2 million in funding, had tons of engineers and scientists on his team, had all the press and the fanfare, it was clear that he was going to be the win.
He was the favorite.
So how did the underdog win?
Why did the underdog have the creative breakthrough?
And one of the reasons why is the two brothers, the Wright brothers, they owned a bike shop.
And so they, because they had no money, they did like 200 prototypes in the time that the other guy did too.
And their 200 prototypes were basically like, they weren't even, it didn't even look like planes.
They were just testing like individual parts of a plane.
Like they'd make a glider or a wing and then they would make the wheels and they would try to find different ways to test these things out.
And even Kitty Hawk, even the selection of where to go, they were like, thought from first principles, like where should we launch this thing?
Like, oh, maybe we should launch it from this spot where we're going to the best way and et cetera.
So they weren't tied to anything that was like, they were not tied to anything.
Everything was first principles thinking.
Similarly, I don't know if you've heard the story about the Yankees bats.
Have you seen this?
You'll have to enlighten me, but basically the bats are heavier in the area where the ball mostly hits, is that right?
Yeah, the story, I mean, take the physics of it aside.
The story is just kind of interesting because here you have baseball, this game that's been around for, I don't know, hundred plus years or whatever and then you know just kind of in a bit of a high agency way the yankees were like hey can we just make a better bat like within the rules of the bat like you know we're not gonna make a heavier bat we're not gonna cheat and they hired this mit guy to think about it he was like oh yeah you could just like move more of the barrel to this one sweet spot and if you hit that it's gonna go way further way harder and you you'll have less misses less near misses
because you're gonna have the thicker part of the bat right there and you'll have more barrels and sure enough the Yankees start the season off with like way more home runs than anybody else this year.
I don't know anything about baseball but is it statistically significant or do they just have ballers on their team this year?
Is it like it is the bat?
I think it's the bat but I don't know if it's statistically significant.
I can't I don't know if he could say that because it was like they started talking about this when it when they jumped out to a big lead in home runs, like 14 home runs already and it was like nobody else was even close.
So we'll see. You know, we'll see if this lands.
But the important part, cause like who gives a shit about baseball.
The important part was dude if baseball, that's like a hundred year old sport that like you know people spend, the team spends hundreds of millions of dollars a year trying to like find any edge they can.
If there's still like an edge like this to be found, it just proves how like so much of the world is like unoptimized and underthought about.
And like, if you actually just took a lot of focus and intensity to any one problem.
As you don't assume that people have already figured it out, that's, you know, one of the key things you need to have a breakthrough.
And so like the way you're talking about studying these other models, I think it's so important to do that.
I remember when we did our restaurant, this was my first startup, but we did pretty much everything wrong.
Like every, now that I look back, I'm like, oh my God, so embarrassing.
Every, like the way we did our business plan, we wrote a 300 page business plan.
It's like dude, nowadays, I write one page, if that.
We literally printed it out in a binder, we were so proud of it.
And we thought that that was like a mark of our brilliance when actually it was just a mark of our stupidity.
Our marketing, you know, I used to just go door -to -door knocking on doors trying to sell sushi like an idiot.
Like I didn't know anything about Facebook ads or Google ads, I didn't know anything about anything.
But one smart thing we did was we were like we were a delivery only restaurant.
So today they call that Cloud Kitchens back then that didn't exist. Door -to -door sushi I think is the worst idea I've ever heard. Yeah, exactly.
Right? But I was like, oh let's try it.
Actually by the way.
Who doesn't want to eat this at ten thirty when it's ninety to five degrees in Dallas?
No what we did I did was I went door to door, I went floor to floor really.
I went into a skyscraper.
I just went into the elevator, pushed the button one, two, three, four, get out and I just talked to the office manager of each floor and if I could get her to cater the lunch it was like getting fifty orders and it actually worked pretty well.
So that was kind of like a bit of an example of this of ignorance is bliss.
So the the other thing that we did was we looked at delivery.
So traditional food delivery, you were talking about city to city expansion.
We looked at how all the small, the big restaurant chains did the delivery.
And what they did was they would basically have a delivery driver at the restaurant, kind of waiting and waiting for a batch of orders.
So you would order, but they wouldn't just take your one order.
They wait until there's like five or six orders to go, because if I leave then I'm with one order, that's inefficient.
So they would first wait for five or six orders.
Then they would drive out, they'd go one place at a time, trying to deliver these things.
And then they would drive back.
And what I was so confused about, I was like, how is this restaurant that's one mile away?
Why does delivery take 40 minutes?
It just didn't make any sense.
Like the route is like two minutes.
So like, how is it possible that it takes 40 minutes for the order?
And so I watched them and I studied them and we had our buddy, Dan, become one of them.
And it was like, Dan, you work for Noodles and Company now, you gotta figure this out.
And then you were doing the deal move before Dio did it.
You had a - Yeah, we sent it to Spy.
And all he came back with was just like, Dude, don't eat the food and noodles.
He was like, there's so much salt.
And we're like, but what about the delivery?
He's like, Oh, I didn't even get delivery.
I gotta sign Soup, so I could make a tomato soup.
He's like, so much salt in this soup, it's insane.
So, but we figured out a breakthrough.
The breakthrough was basically, we realized that it was the slowest part of the delivery was not the drive.
It was the driver doing that last, kind of not even last mile, like the last 200 feet to your door.
So like finding the exact house or department and then you go there and you knock and you wait and then they come out and then whatever.
That was the way the slow part was.
And so what we did was in downtown Denver, we created something called the drop zone.
So in between a whole bunch of skyscrapers, we just had one guy stand there.
He was our delivery guy on the ground and then the driver just kept going back and forth, dropping off orders to him nonstop.
And this sped up deliveries like crazy and suddenly our delivery times were like 15 minutes, 16 minutes, 18 minutes and we were just crushing everybody on delivery.
And like the restaurant failed but the learning of like you can't really take for granted that like everything's just figured out and if you just do the first principles thinking of like you watch, you look for the slowest part then you think okay what can we do even if it sounds a little weird that we're gonna have a, we're just gonna put a dude there at the bottom and he's gonna stand there holding the orders.
The delivery guy is just a stationary dude, but that would eliminate all of the lag of the driver having to wait for that last, you know, to do all those last mile deliveries.
That was the key for us.
New York City founders, if you've listened to my First Million before, you know I've got this company called Hampton.
And Hampton is a community for founders and CEOs.
A lot of the stories and ideas that I get for this podcast, I actually got it from people who I met in Hampton.
We have this big community of a thousand -plus people it's amazing but the main part is this eight person core group that becomes your Board of Advisors for your life and for your business and it's life -changing.
Now to the folks in New York City.
I'm building a in real life core group in New York City and so if you meet one of the following criteria, your business either does 3 million in revenue or you've raised 3 million in funding or you've started and sold a company for at least 10 million dollars then you are eligible to apply.
So go to joinhampton .com and apply, I'm going to be reviewing all of the applications myself.
So put that you heard about this on MFM, so I know to give you a little extra love.
Now back to the show.
I found when doing this there's a few hard parts, like just doing the exercise, the hard part one is knowing what things to question and what things to accept.
For example, let's say you're creating Tesla and you're like well an electric battery that probably can ago long enough.
If I look at the math behind it.
But they didn't change the shape of the wheel.
That's a very obvious one.
But when you're running a company, it's very hard to decide what to question and what not to question.
It's also incredibly challenging to get yourself into that mindset of first principles thinking and more challenging to convince your staff or your co -workers, whatever, to just come with an open mind and actually get on board and being open -minded to trying this exercise.
I found that to be hard. What's hard about it, and then how did you try to tackle that?
For example, just like the people saying like, well, it has to be this way for these reasons.
And it's like, you have to say to them, I know, but just like I know you think that, but just try to get beyond that just for a few minutes and let's just have a conversation where it doesn't happen that way.
What would happen? There's this book called The Six Ways of Thinking for Design.
I forget exactly. Do you know I'm talking about that book?
No, I haven't read that.
basically it's like an exercise where there's six different colored hats and you're like, all right, your green hat, when you put your green hat on, that means you're just thinking of profit.
When you put your red hat on, that means you're going to come and be very pessimistic and poke holes and everything.
Your black hat means you're open minded.
And so it's this way of saying, right now, I'm going to put this hat on, which means I'm going to by default, I'm not going to hate on anything because a lot of people default to this is why you can't do it to, I'm going to figure out all the reasons why this could work.
Yes, yeah. And so you do that?
You tried that? Yeah, and it helps, but it's still, I guess what I'm saying is...
Like, no I didn't have any hats.
No, it helps, but they're still like, it's still a challenge to get into that mindset, at least for me, and also to convey that to teammates.
Having an open mind and questioning everything is actually way harder to do than it sounds, you know what I mean?
Yeah, yeah. I feel that people like it.
So, once you give people permission to do it, that they actually get excited about it.
You're right that you have to sort of like frame it the right way.
If you just go into a meeting and you're hoping expectation is that people are gonna be like open -minded and creative and come up with a novel solution.
It's like not gonna happen at all.
Like you have to either tell a story at the beginning that gets them in the mindset, so I've done that before.
Which is basically the Yankee bat thing.
I mean, that was pretty good.
Yeah like it'll be one like that or it'll be like I remember at the back of the day I watched this thing on YouTube that was like really inspiring to me.
I don't know if you've ever seen it.
It's the IDEO grocery cart challenge.
So IDEO was just this design thinking lab, this group.
So companies go and pay them lots of money to come up with like novel innovative solutions and designs.
So I think 60 Minutes or somebody went to them, some TV show and they were like, hey, we wanna understand how you guys think.
And so we have a challenge for you guys as part of the show.
And they were like, we want you to redesign, reimagine the grocery cart in a day, you have 24 hours, 48 hours to do this.
And so they break up into two teams and they show their process of how they do it, right?
And so like, there's like a process of like fact gathering so they first, they go get a grocery cart, right?
Or they go watch it in a grocery store, they wanna see how the customer uses it, they don't wanna take anything for granted.
So they're like, oh, like certain set of customers actually use this as like a kid babysitter, it's like, the kid sits inside it, they need a thing to play and that's like a key part of this, like if you lost the kid seat, And you would lose that mom as a customer.
Other people are loading up and they need the two racks.
So you're seeing how people use it.
Then they were like, cool and you state those observations.
They put them on index cards, you start throwing them on the wall.
And the guy sets the tone.
He's like, we're in the diverge phase.
And basically he draws this little cone, I don't know if you've ever seen it, it's like a tone going out.
And he's basically like during the diverge phase, it's like, whatever, a predetermined set of time.
Our team knows how to do this, which is when you're super crazy wacky ideas, is free play, what if mode.
And you don't judge the ideas during this phase.
You're just trying to riff as many ideas as you can.
And then we're going to switch modes, switch that.
And you're going to go to converge, where we basically ruthlessly narrowing down the set of possibilities of where we might go with this.
But we distinctly have two phases because you don't want, in the one phase, the one brave person to be courageous and throw out a half baked idea, and then somebody immediately, smart guy, slam them and be like, why that wouldn't work?
and now nobody wants to suggest ideas again for the rest of that hour.
So you have to like really explicitly be like, well what you're allowed to say during this hour is only yes and and then during this one it's a no but.
And then they end up with this redesign grocery cart where it's like it was basically like I don't know you get to look at the image of it online but it was like a thing that was designed for a new type of grocery cart.
And I thought about that, I was kind of inspired by that because hey I just thought wow what a cool job, these guys get to be creative for a living.
The top comment, this video is 15 years old, and it says the top comment is, they're still making us watches for school, by the way, in 2024.
I actually think there should be a Netflix show of this.
Like, you know, that we have Chopped, where they give them a random basket of ingredients, you got to make a meal out of it.
I would love to see like two teams that are like, you know, engineer designer types, and you basically give them like a challenge.
Like redesign the grocery cart, like redesign, make the inside of an elevator more entertaining and just see what they do.
Like I would find that super fascinating is like a TV show.
And I think it would inspire a lot of people to become like engineers or designers.
If you watch that the same way, like shark tank, although it's like totally like bogus in terms of like the entrepreneurship that they show it's super accessible.
And I guess people excited about the idea of entrepreneurship, this book sounds pretty great.
Bad art. It sounds like a pretty good idea.
It's a great book. I'm excited about it.
My only hesitation I had on it was like, I feel like I already got a ton of value out of it doing the like research and the prep, like of outlining like, oh, here's the big ideas and crystallizing them in my mind.
So you're going to be like Derek from L .A.
and you're going to just say F U reader, I don't care about you.
Do I need to go the extra mile of publishing it for other people to benefit?
I'm not sure that I care about that.
Like, I'm not going to, I'm not going to make any money off this.
I'm not trying to get famous off a book.
Why do I need to do that?
So I might publish it.
The other problem is like, I'm not sure how many other people nerd out about this idea of making great art, making great products, just insanely great things, and caring about wanting to learn the creative process.
Because what I figured out during the...
Well, that's obviously foolish.
What about that guy?
That's a foolish thought.
Yeah, yeah, yeah, you got me on the hook.
You got the compliments on the hook.
Because what about that Austin guy?
You know, artist...what was it called?
Great Artist Still.
Is that what it's called?
Do I want to just be that Austin guy?
You didn't even know it was the guy's last name.
I know the book cover.
Isn't it, like, what's it called?
Great Artist Still.
Yeah, I know that a lot of smart people whose books I read, they always say that that like we had Jack Karr on the podcast who wrote all these amazing fiction books I love and he talked about it.
Ryan Holiday talked about it.
Mark Manson, who I know you like, talked about that book.
Everyone likes that book.
Well, that's the thing.
It's a lot of authors.
I wrote this thing because I was studying how to do this because I wanted to write a book.
I didn't want to write the book about this, but that's just where I landed.
It's for sure super important for anybody who's like an author, screenwriter type of person.
It's just that's such a small percentage of population that I'm not sure it's worth the pain of publishing, but dude If Sahil bloom can convince everyone on Twitter to share his book you can too What he's hilarious about Sahil because I was great and Sahil such an achiever.
He brought the PE energy to totally He got to P .E.
He bought the Ivy League energy, right?
He like achieved his way into Stanford, achieved his way to being a good athlete, like a D1 athlete, achieved his way into private equity successfully, achieved his way into a six pack.
He just basically, he's like, all right, give me a target and like show me a ladder and I shall climb.
And it was like, when we were like, yo, you should Twitter, dude, your posts are kind of interesting.
I think you can do this.
He's like, cool, Monday through Friday, 6 a .m., Get up, cold plunge, write thread, publish thread, every day for the next nine hundred days straight.
And they did, they got like a billion followers, he achievered the shit out of Twitter too, it's amazing.
Yeah, and now you're gonna have to do the same with Bad Art.
As Elon once said when they asked him, are you afraid of failure?
He said, it is not in my nature.
That's how I feel about achievering.
It is not in my nature to do this.
Is that gonna be, that should be the reply to everything though.
As the great Elon Musk has once said, this is not in my nature.
Dude, how sick is that phrase?
How timeless and alpha is that phrase?
All right, is that it?
Are you going to go and enjoy the, enjoy the sand or do whatever you do?
Do you even leave your apartment when you're in Hawaii?
Yeah, dude, I'm in the ocean.
I'm at the beach, I got kids.
Do they want to do everything?
Are you going to wear a Tweedy Bridge shirt at the pool?
We're just doing it the same day, every day for six days straight.
Like it's the same day, but they love it so much that I can't help but love it too.
Alright, that's it.
That's the pod
