From Design Agency To $419 Million Holding Company In 8 Years
Summary
TLDRIn this podcast episode, Jeremy, an early employee of Tiny, shares his experiences in building a business empire from $5 million to $500 million in equity by acquiring and scaling small cash-flowing businesses. The discussion delves into the early days of Tiny, the first deals, negotiation tactics, and the importance of trust and community in business. Jeremy also reflects on the lessons learned from successful and failed deals, emphasizing the value of due diligence and the art of creative deal-making.
Takeaways
- 🎙️ The host highly values Jeremy's insights, having pursued him for six months to appear on the podcast due to his impressive performance on a previous show.
- 💼 Jeremy was the first employee at Tiny, which transformed $5 million in starting capital into approximately $500 million in equity by acquiring and recycling small cash-flowing businesses over a decade.
- 🌱 Jeremy's early involvement with Tiny began informally, working alongside founder Andrew Wilkinson in a shared studio apartment that served as an office space.
- 💡 The concept of Tiny originated from the excess profits of Metalab, an agency that generated significant cash flow, which they decided to invest in buying other businesses.
- 🔑 Jeremy emphasizes the importance of having a concrete business idea or deal as a starting point, rather than abstractly planning a fund or holding company.
- 🤝 Trust and relationship building are critical in business acquisitions, especially when dealing with sellers emotionally attached to their businesses.
- 📈 The initial business model of Tiny was simple: use the free cash flow from an existing agency to bootstrap the acquisition of other businesses.
- 📊 Jeremy discusses the limitations of financial models and the importance of understanding the underlying business and market potential rather than relying solely on projections.
- 💰 He shares that Tiny often did not offer the highest price for businesses but won deals by offering other valuable elements like speed, trust, and a good working relationship.
- 🤔 Jeremy reflects on the importance of recognizing when not to pursue a deal due to red flags, even if the potential upside is attractive.
- 📧 He advocates for the effectiveness of cold emailing as an approach to networking and business development, provided one is prepared and capable when the opportunity arises.
Q & A
What was Jeremy's initial role at Tiny?
-Jeremy was the first employee at Tiny, and he was there before they even had a name, playing a crucial role in the early days of the company.
How did Tiny turn $5 million into $500 million?
-Tiny achieved this by buying small businesses that generated cash flow, recycling the profits, and growing their portfolio over a period of about 10 years.
What was Jeremy's background before joining Tiny?
-Jeremy had been working on another startup and shared the same studio apartment as Andrew Wilkinson, the founder of Tiny, which is how he got involved with the company.
What was the initial business model of Tiny?
-The initial business model involved using the excess profits from their agency, Metalab, to buy other businesses and grow their portfolio.
What was the first business that Tiny bought?
-The first business they bought was Dribbble, a social platform for designers, which turned out to be an amazing investment.
How did Tiny approach deal negotiations in the beginning?
-In the beginning, Tiny's approach was quite informal. They would use online resources like Legal Depot to draft LOIs (Letters of Intent) and were not afraid to make aggressive offers, learning as they went along.
What is Jeremy's view on the use of financial models in business valuation?
-Jeremy believes that while financial models can provide a sense of comfort, they often involve a lot of assumptions and can sometimes be misleading. He suggests focusing on more fundamental aspects of the business.
What was the worst deal Jeremy was involved in, and what was the main lesson learned from it?
-The worst deal involved a dishonest partner, and the main lesson learned was to trust instincts when something seems off, even if the deal appears to be very good.
What is Jeremy's advice for cold emailing potential contacts?
-Jeremy suggests that cold emailing can be very effective, especially for young people or students, but emphasizes the importance of being prepared and having something valuable to offer when the opportunity arises.
What was the most unique or weird deal that Jeremy recalls from his time at Tiny?
-One of the most unique deals involved buying a business unit from a Fortune 500 tech company that was being divested quickly, which they were able to acquire for almost no money down.
What is Jeremy's perspective on the importance of the 'soft' aspects of a deal?
-Jeremy believes that the 'soft' aspects such as trust, speed, and the ability to get a deal done are often more important than the price, especially when dealing with sellers who care about their business post-sale.
Outlines
🎙️ Podcast Introduction to Jeremy's Story
The host introduces Jeremy, the first employee of Tiny, a company that started with a $5 million investment and grew to a $500 million equity value by acquiring and scaling small cash-flowing businesses. Jeremy's experience at Tiny, which was initially known for its agency work, is highlighted, along with the host's anticipation of discussing Jeremy's journey from the company's early days, including the first deals and the strategies employed for success.
🚀 The Genesis of Tiny and Its Initial Deals
Jeremy shares the origins of Tiny, which began as an agency with excess profits that were reinvested into buying businesses. He describes the process of learning to negotiate and structure deals without formal experience, using online resources and a trial-and-error approach. The importance of trust in acquisitions, especially when dealing with community-based businesses, is emphasized, along with the story of Tiny's first major acquisition, Dribbble, which turned out to be an incredibly successful investment.
📊 Reflections on Financial Modeling and Deal Evaluation
Jeremy discusses the limitations of financial modeling in business acquisitions, using the example of Facebook's IPO and the inaccuracies of long-term growth predictions. He suggests that a more qualitative approach, considering the potential for growth and the uniqueness of the business, can be more valuable than complex quantitative analysis. The conversation also touches on the importance of being able to execute a deal at a 'no-brainer' price, rather than overpaying based on assumptions.
🤝 Chris's Superpower and the Dynamics of Tiny's Partnership
The host inquires about Chris's role and strengths within Tiny, highlighting the complementary nature of the partnership between Andrew, Chris, and Jeremy. The unique structure of Tiny is discussed, where partners could pursue individual ventures while sharing a common platform. This dynamic is credited with preventing Tiny from becoming a 'prison' of shared interests and allowing for diverse investment strategies.
💡 Negotiation Strategies and Lessons Learned
Jeremy shares insights into negotiation tactics, emphasizing the importance of silence and patience in reaching agreements. He recounts experiences where aggressive, low offers were surprisingly accepted, and how the perception of support from a team can influence a seller's willingness to negotiate. The discussion also covers the value of presenting a united front and reframing negotiations as a collaborative problem-solving process.
💌 The Power of Cold Outreach and Asymmetrical Trades
Jeremy discusses the effectiveness of cold emailing as a means to establish connections and opportunities that may seem disproportionate to the effort involved. He encourages the practice, especially for younger individuals, and stresses the importance of being prepared and valuable when the opportunity arises. The conversation highlights the scarcity of talent and the universal interest in meeting genuinely interesting and talented people.
📉 Tales of Deals: The Best, Worst, and Most Unique
Jeremy recounts his experiences with various deals at Tiny, including the best deal with Dribbble, a worst deal involving dishonesty, and a uniquely profitable deal involving the acquisition of a business unit from a Fortune 500 company. He shares the lessons learned from these deals, such as the importance of due diligence and the ability to act quickly in certain situations.
💰 Creative Deal-making and the Art of Buying for Free
The final paragraph discusses a creative deal where Tiny acquired a business for effectively no money down, leveraging a domain name that held significant value. Jeremy explains how understanding the unique needs of sellers and being able to close deals quickly can lead to extraordinary outcomes, such as acquiring profitable businesses at minimal cost.
Mindmap
Keywords
💡Podcast
💡Tiny
💡Equity
💡Cash Flow
💡Negotiation Tactics
💡Bootstrapping
💡Dribbble
💡Deal Sourcing
💡Discounted Cash Flow (DCF)
💡Community Business
💡Cold Email
Highlights
Jeremy Gon, the first employee at Tiny, shares his experience of turning $5 million into $500 million by buying and recycling small cash-flowing businesses.
Tiny's initial strategy was to use excess profits from their agency to invest in businesses, leading to significant growth over a decade.
Jeremy discusses the early days of Tiny, before it even had a name, and the challenges of being a young first employee.
The importance of having a concrete business idea or deal as a starting point for building a company or investment strategy.
Jeremy's experience with Dribbble as a significant investment and the process of identifying and acquiring successful businesses.
The approach to underwriting deals and the reliance on day-one levers to improve businesses immediately post-acquisition.
Jeremy's skepticism about the value of complex financial models and the preference for simpler, more intuitive assessments.
The concept of 'price as due diligence' and the strategy of offering fair deals to win over sellers who care about their business's future.
Negotiation tactics learned at Tiny, including the power of silence and presenting offers without immediately justifying them.
Jeremy's worst deal experience, highlighting the dangers of ignoring red flags due to greed or perceived good deals.
The importance of character and trust in business deals, and the consequences of working with dishonest partners.
Jeremy's insights on the power of cold emailing as an effective method for networking and opportunity generation.
The story of Mealime, a successful acquisition by Tiny, demonstrating the value of investing in well-crafted apps with a clear user benefit.
The unique deal where Tiny acquired a business unit from a Fortune 500 company for virtually no cost, showcasing creative deal-making.
Jeremy's perspective on the importance of having a 'release valve' in partnerships to prevent business from becoming a 'prison'.
The strategy of focusing on what is most important to the seller in negotiations, rather than just the financial aspects of the deal.
Jeremy's advice on approaching negotiations as a collaborative problem-solving exercise, rather than a competitive battle.
Transcripts
all right I've been chasing this guest
today for six months begging him to come
on the podcast because I heard him on a
podcast last year and as much as this
breaks my heart to say it that was my
favorite business podcast of the year
and it wasn't even our own but he was so
good that I asked him to come on his
name is Jeremy gon he is um he was the
first employee at tiny which you've ever
listened to the podcast we've had Andrew
Wilkinson on many many times they
basically turned $5 million of starting
money into about $500 million of equity
just by buying businesses that cash flow
so they bought you know small businesses
that cash flowed kept recycling
recycling recycling over 10 years turned
into 500 million so I wanted to ask him
uh what was it like in the early days
what were those first deals like he was
there before they even had a name before
they were even called tiny so we asked
him about his best deals his worst deals
the weirdest deals he's ever done
negotiating T tactics he learned this
episode is amazing it's a 10 out of 10
for me um enjoy this episode with Jeremy
what's up Jeremy welcome to the show we
figure we've uh we've had your mentor on
enough times now Andrew he's probably
the the most popular guest on the show
uh enough of Andrew we got to go to his
Pro we got to go to the Young Gun who
was there from the beginning and uh and
have you on welcome to welcome to the
show man thanks for having me guys let's
put tiny into context because I think
maybe somebody listening to this doesn't
doesn't actually appreciate what we're
talking about tiny the simple story of
tiny is um they had a Services business
an agency and then they had excess
profits and I think you can correct me
if I'm wrong but I think the numbers
were something like they took five or
six million dollar of initial initial
equity and they put that into tiny and
we're like okay we're going to go try to
buy a business with this and they've
ended up turning five or six million of
initial startup Capital into roughly
A500 $600 million public company where
they own you know tiny owns maybe a
portfolio of 30 businesses or something
like that over over roughly uh 10ish
year yeah eighty year period so kind of
amazing in eight years turn $5 million
into $500 million like okay I'm I'm
doing round math here fuzzy fuzzy
numbers but first of all is that the is
that the right math is that roughly the
right story and um and then you know
walk us through the beginning days of
that because you were there at the very
beginning at 19 20 years old employee
kind of number one there uh walk us
through that yeah so I I knew Andrew
because when he was starting metalab and
I was working on another startup um we
shared the same studio apartment our
office was in a studio apartment and uh
he was in like the bedroom area and we
were in the the kitchen and we would
keep a keep a blowup mattress in case
the fire guy came around and we would
just say oh you know Andrew lives here
but just have a lot of friends over uh
you know working on stuff um and yeah I
mean effectively like metalab the store
the short version is metal lab you know
was throwing off a fair amount of free
cash flow I think it was in that range
of you know low Millions a year year and
the idea was just to go use that free
cash flow to buy buy a business and you
know um that's the thing with agencies
right like there's not a lot of
reinvestment so you got to do something
with the cash and if you're not going to
put in the S&P like that's too boring or
whatever then you got to figure out
something to do with it um and so that's
that's kind of what we did it's funny
like people a lot of people hold codes
and stuff are really popular now and
people you know a lot of people ask how
do I build tiny effectively and the
first step is like well you know
bootstrap a business that makes millions
of dollars of free cash flow and then
like get back to me the the rest is like
pretty easy and that's the first start
and you said it took eight years in
reality I think metalab uh the agency
that was already eight years older I
don't I don't know what it was but it
yeah that's right metalab was probably
15 16 years old now so it was a long a
long slug I mean Andrew just started
really young it was also one thing
that's really helpful is Andrew and
Chris and myself I mean we were all big
users and fans of dribble um and uh and
we Andrew really had that company in
mine for a long time which I think is
another really nice thing to have like
it's very good to start with a deal even
when like even when you're fundraising
or whatever to to actually have a
concrete thing that you want to go do
and use that as the jumping off point
for you know building whatever it is I
think it's always so much better to have
that than to kind of be like abstractly
Oh I'm gonna start a fund or I'm gonna
start a holding company or whatever um
and so it was like dribble is really
cool uh we would love to we would be the
right owners for that uh Andrew knew the
co-founders there and maybe we could buy
that and that would be a starting off
point and it's all very like real and
concrete versus the we're going to build
a holding company of Technology
businesses or something like that now
you're three guys who've never bought a
business before take me back to you're
sitting in the the kitchen or whatever
of your apartment sloff hangout Lounge
uh are you guys like hey can we like buy
like buying Businesses for Dummies like
how did you even figure out how to do it
and also if this was a good idea because
it's a big risk right I think you know
probably four five million bucks of
equity went into that deal that's like
kind of like that's a big deal that's
not like a couple hundred grand uh at
that stage so like what were those
conversations like at the beginning as
much as best as you can
remember yeah I mean it was you know
like
anything there's generally one way that
you can categorize sellers it's people
who care about what happens to the
business after they sell it and people
who don't and um certainly for people
who care it's a lot about it's this huge
trust exercise of you know are you going
to screw up my baby like in their case
they've been working on it for a really
long time their names were very attached
to it there was a big community
community businesses are really
difficult you know the community can
really turn on you fast um and so yeah
there's that whole piece and then
mechanically yeah it was literally like
I don't think we even had a book we just
looked it up online like I would
literally go on legal Depot and like get
a Loi off there and edit it and you know
for the first few deals like you know I
was 1920 and Andrew would be like can
you go get a Loi for this and I didn't
know what that was we just go download
one and write it up and it's interesting
because one thing that we didn't like
this is an example of just the benefit
of not having a lot of experience
typically when you do an Loi it's pretty
far along in the process um and we would
just fire them out because we read them
and in an Loi the only thing that's
binding usually is the exclusivity and
nothing else not the price or anything
else and so we thought okay like this is
a totally non-binding thing so let's
just like Chuck it out there it's nice
to have something on a piece of paper
it's kind of like a term sheet um
although even term sheets like um
socially are more binding and we didn't
realize that oh in private equity and
Loi is like a pretty sturdy commitment
or whatever and you know that was for
better and For Worse on one hand it let
us move really fast on the other hand we
learned quite quickly that okay you're
not supposed to go back on like what you
Chang in an Loi and that kind of stuff
and we and and so there's all those
little things where just not being
familiar with the process really kind of
let us move fast it let us be friendlier
and that was the whole point like we had
both had these kind of bad experiences
with uh with with Buyers um and we
thought you know there's got to be like
a better service to be done there
basically I had a handyman come over
yesterday and he comes to my front door
and he's like show me what you need done
whatever and I said great that's what I
need done and he goes here before we
start I need you to do something and he
pulls out a notebook and he wrotes and
he writes my rate is $50 one hour per
one hour and he hands it to me he goes
sign this for me and I just I go okay
cool I'm
aware that
he's like that way spits in his hand
shakes it he's like this is no official
and I was like I I appreciate I appr
appreciate your style that's that that
was like the tiny
Loi hey real quick you know one of the
cool Parts about what we're doing is
that people have reached out and told me
that they've built actual million-dollar
businesses made their first million off
an idea they heard on the show that is
crazy that's wild that's why we want to
do the show and we want to see more of
that one of the questions we get asked
over and over again is is there some
kind of idea database spreadsheet where
we list out all the different business
ideas that we've talked about well the
answer is finally yes to find Folks at
HubSpot have dug through the archive and
pulled out 50 plus business ideas and
put them into a business idea database
it's totally free you can click the link
in the description below and get the
database for you all right now back to
the show so at the time was dribble like
an Obviously good business because it
turned out to be an amazing investment
probably like a I don't know what is it
like a 50x on your money there right
like it's yeah more than that more than
a 50x amazing
what did you guys like try to underwrite
the deal were you like in Excel like
dragging some like you know 10% growth
like dragging it over 20 columns like
how did you guys what did the deal look
like and what what did you expect again
it was it was pretty obvious that it was
a great business and I think Andrews
told this story before but there was
some immediate day one levers around
like a big part of the business was
advertising and we could find better
advertising providers and things like
that so there was levers you could pull
on day one that were going to improve
the business um but yeah it just felt
like this big opportunity it was a top
10,000 website it had millions of active
users it was very important you know
when it launched like I think I bought
my dribble invite on eBay or something
like that it was really hot for a while
and it it was just this kind of like
cool thing that didn't really exist you
know there's not a lot of independent
social networks that have millions of
users um and you know we we we
negotiated a pretty fair deal I think
like you know the other Buffet line is
price is my due diligence and that helps
a lot but no never thought we never
thought any of the deals could be you
know 50 plus X's um we were always just
like you know can we make 20 or 30% cash
per year from this business and that
would be great and anything after that
is just kind of kind of upside um you
know I I think and and yeah regarding
models you know Andrew used to make me
do discounted cash flows because it was
kind of like the thing that you felt
investors ought to do and then at some
point I was like here is your stry but
I'm just making up all the assumptions
in this spreadsheet and I think it was
like so many of these things are just
like um comfort blankets or whatever you
just like it makes you it's this big
scary thing that you're doing and it
makes you feel better that you have it
so you can look at it and be like yeah
like we've modeled this out you know but
it's like it's [ __ ] you're just
you're just making it up you also had a
great quote you were like uh you you
said something to me you go the more
quantitative analysis so the more
numbers number numerical analysis you're
doing about a business the more you're
commoditized in your analysis what does
that what does that mean unack that one
yeah my my favorite anecdote here is in
the Facebook IPO Barkley's put out this
research report where you know they say
what they think the business is going to
be worth and um the way they do that is
through a discounted cash flow and and a
part of that calculation is like what is
the terminal growth what is this thing
going to grow out forever and they put
it at 3% which is what most companies
are and so that got them to a $200
billion do valuation now the next 10
years it grew 30% a year and it's A2
trillion dollar company and it's just an
example of like you know you do all this
modeling and this research report and
you're just so off like you you're an
order of magnitude off and so like what
was the point of doing any of that it
would have been better to think really
hard about how actually how much can
Facebook grow like just kind of this
first principal stuff right of what
percentage of the planet could use this
like a lot more basic um and yeah that's
a lot of the quantitative stuff also a
lot of the quantum stuff is totally
commodified right so people like know
how to do this you can learn how to do
this in school and therefore maybe it's
like a useful table Stakes thing but
you're not going to get any Edge that
way because everyone can do it and where
the edge is in quantitive stuff is you
know in the two sigmas and Jane streets
and the MIT phds and you're not going to
be doing that either and so you're not
going to like do a better model on a
company than than the next guy and
somehow get some Edge there so then when
you're looking at a deal when you're
trying to for like a small bootstrap
business a business doing anywhere from
a million to 30 million in
Revenue what are you looking at to spot
the opportunity if it's not the if it I
mean are you how much do the financials
and the the cash flow statements
actually even factor into that or you
just thinking I can make this bigger I
mean what what part of the numbers
actually matter to
you yeah it's pretty basic right it's
like okay let's you know let's make up
numbers it's doing $5 million a year of
Revenue a million dollars of earnings
and you think okay on day one I could
you know raise the prices by 30% I could
um reduce headamp I could launch this
new product
whatever uh would you pay you know would
you pay a million dollars for that yeah
of course would you pay $3 million yeah
probably and then you you can just kind
of go and I think where modeling gets
important is when you're like at the
very edge of that you're like would you
pay $10 million for that and then it's
like well a lot of things would have to
go right maybe or whatever but there's
some number there where it's like yeah
you know i' pay $3 million for business
making a million dollars and so then the
trick becomes okay can you get the
business for $3 million and that's where
it's like you know tiny was in a lot of
bids with other other folks and I don't
think we were ever the highest actual
price but we often won deals because we
could offer other things so that comes
back to like why you on the deal you
know it's because like the very common
thing that would happen is we'd get
pretty far with the seller and then
they'd say Hey you know we like you guys
but we've got this offer for 25% more so
we're going to go take it and you know
very often be like great like go explore
that and then turns out that offer was
not as real as you thought or it was six
months of whatever uh there's more debt
or they didn't have the financing and
then you actually figure out that oh
there there is like other things in the
deal that are important like the ability
to get it done the ability to be honest
to be trustworthy to do things fast like
all those other soft things um and so
it's more
like are you able to get a price that's
really a no-brainer at least that's how
I look at it versus I really think I'm
smarter than everyone else and I can pay
slightly more I mean that works for
people people do do that but it's just
like a totally different game I'm always
fascinated by the people Behind These
businesses what can I learn you know
tiny is a great business but it was
created by people it was created by
Andrew by Chris by you and I'm like what
do how do they think about things what
do they know about what they're doing
what worked for them what are their
ultimately what are their superpowers
and I asked you what's Chris's
superpower because forget Andrew
everybody knows Andrew he's popular he's
out there he talks he's got a big
following almost nobody knows Chris I
had dinner with Chris and I was like I
[ __ ] love this guy this guy's he's
dynamic he's really engaging he asks
great questions and so I've only known
him for a couple hours of my life you've
known him for a lot longer than that
what is Chris's superpower that that he
brought to
Tiny I mean Chris's superpower is just
being able to Andrew is so high pace and
so high energy that Chris is just able
to modulate that and kind of be the
sober second thought you know we're not
going to do this or that's way too much
or or whatever um you know a very
interesting piece of the tiny
partnership um at least at the beginning
that I thought was really quite unique
and interesting is that you know Chris
and Andrew had tiny as this vehicle that
they would share together but then they
could also do things on their own you
know Investments businesses and that
actually like I don't even know if it
was intentional but that provides this
great release valve of okay like all the
time you know Andrew would come up with
some you know cocky motion about some
restaurant or whatever and he would just
say I'm going to go do that on my own
and Chris could have the same thing like
Chris was great at investing in public
equities and he could go do that on his
own and I um I know that doesn't
directly answer about Chris's superpower
but it is this like interesting
structure I think one thing that can
really go wrong in Partnerships is if
it's like you're dedicating your whole
life to this thing and everything you do
is going to be be through it it can
really turn into this prison if you
don't share the same taste as as your
co-founder and so having this like
release valve and being aware of that is
is really nice people normally pick
Partners who are like them right but
they but Andrew and Chris are not like
that you know I guess is that a what
what did you learn from that yeah I mean
I would also say like Andrew is really
good at sales and kind of creating this
new vision and then Chris is really good
at being kind of the negotiator and
actually like getting a good deal and
structuring it well and everything um
you know there's all kinds of things
about about negotiation like one thing
that would be like structurally another
interesting thing is you know I would I
would be kind of the the front guy on a
lot of deals and would come back to them
and they would kind of be quarterbacking
it and what was nice is like I would
throw it an offer that I thought was
really aggressive and it was kind of the
most that I could like emotionally
stomach aggressively High aggressively
high low you know really low really low
and so this is I I want to be clear this
was back like in the early days when we
had no money and we were really trying
to like be Scrappy um tiny is not really
like this anymore but and then I would
say okay like I've really got this down
uh you know and then they would just
look at me and because they' never talk
to the the the seller and just say I
think you can do like 25% Le at less and
like sometimes I feel like I want to
throw up you know talk through that when
you have to present a [ __ ] offer to
someone I I imagine some a lot of times
maybe not a lot 10 15% of times they're
like
okay yeah more than that and actually
what's even rarer is at least I I always
have this fear that they're just going
to lose it you know like dare face and
that almost never happens it happens
sometimes but it almost never happens
and another nice Dynamic there is you
can always say well hey like I'm on your
side like I you know it's the old uh car
salesman gamut of like my manager's
killing me it's the same exact setup
right um and that's that's super helpful
and you know uh Chris shared all kinds
of tricks with me like um one great one
is it's always best to just kind of when
you float an offer to just not say
anything else people will immediately
start negotiating against themselves and
so one trick that you can use if you're
on I guess it probably doesn't work on
Zoom but um if you're on just a call is
you can like say your offer and then hit
mute and then you can like be like you
can start saying oh you know whatever
but they'll just hear the science
silence and um that's a big thing as
well because oftentimes you just need to
let it float and sit out there but it's
like too uncomfortable for you to
actually do that dude I've got this
friend who works in the CIA and I was
talking to him uh and he has to
negotiate with people you know basically
his job is to convince people to become
spies so if he goes to the Middle East
he has to convince a guy who's loyal to
some country in the Middle East to be
commit treason and when he like goes to
these negotiations his tactic because he
said the same thing he goes I say what I
want and what I want to happen and then
I shut up and uh I we we his other
cooworker was there and he was like
who's not uh who's not part of that he's
like dude they do this to me all the
time just at work I'll notice they say
something and I just want to fill the
silence and I want to keep talking and
it because makes me uncomfortable and I
end up just talking talking talking and
they sit back not saying a thing and
they always get their way yeah totally I
mean one one very cynical way of looking
at negotiation um is that it's just who
can bear to be uncomfortable longer um
and and like that's certainly true you
can do that in a retail setting you know
Sean does that all the time Sean I think
we when he negotiates the king of the
awkward silence yeah he's the he's very
comfortable I have a condo on Awkward
Island
yeah he's he's the mayor of of that area
where he's just very comfortable being
uncomfortable in a conversation Jeremy
you told me something else that Chris
taught you that is less about kind of
the the kind of the gamesmanship I think
when we when we think about
negotiation we often think about the
gamesmanship what do I say and I think
you already said one interesting thing
is which is a lot of times is what you
don't say it's to stop talking and let
them talk but another piece you had
mentioned to me was like it's not you
vers them can you explain that like how
taught you it's not you vers them the
the way that I like to frame it the more
kind of mature the way that you can
really do I think for your entire life
and not kind of get you know be known as
this like bastard who's just Relentless
to NE negotiate against it's kind of I
love this idea of in a traditional
negotiation you're sitting across the
table from one another and the way that
I really like to reframe it is um you're
both sitting on the same side and what's
on the other side of the table is the
problem and the problem can be you want
50 million for the business I want to
pay 20 but it's still this like okay
this is a problem let's work together to
figure this out and it's this very
subtle thing but it makes a huge
difference and that's I think that's how
you start to unearth okay maybe like
it's actually not it's cash and
something else that's more important for
you why do you want 50 what is it that's
50 but so important and why can I feel
like I only can pay 20 or whatever and
that works really well I use that every
day you can use it in like a
relationship problems and everything of
kind of like making the problem other
and then putting it out there and being
like let's work together on solving this
thing and there's just something so much
better about that than the kind of like
I'm going to hit mute and stare at you
and like break you you know like well
see Jeremy the problem that we're trying
to solve is I want the money in your
bank account to be in my bank account uh
yeah exactly I want that I want that
Chase account to say 5
zero
yeah no it it is true though uh uh you
know one of the things my dad taught me
one of the best things my dad ever
taught me he's like when you go into a
negotiation it's not same thing it's not
us vers them he goes make a table of
your needs and your like basically your
needs and then your gives so like what
do you have to offer and then what do
you what do you need back and then what
do they have to offer what do you need
back and they're never like perfectly
symmetrical it's not like and so for
example some of the things they need are
very easy for me to give cost me nothing
or I'm totally comfortable giving that
and it's actually Their Fear or their
their big sticking point was something
that's not so hard for me to to to give
on or maybe I could go out of my way to
give more even than they're than they're
they're expecting in that area and in
this other area I need something and
then they they're happy to give it and
so that's usually the the better way to
do it my my favorite question is what
would need to be true so it's like okay
you want to sell your business for $100
million what would need to be true for
me to pay $100 million for it and you
can just lay it out like like what would
make this a no-brainer and you can do
that in any situation and you know
sometimes it's impossible but oftentimes
it's far more possible than you think
when everyone actually lays that out
because usually there's some sticking
point that you don't realize or or or
you know it's something that is kind of
outside of the scope of things you've
already talked about and I'm always
amazed by how much that works that works
like as I've been fundraising it works
there like what would need to be true
for you to be like oh it's easy for to
give you money or um you know uh for for
a trip like what would need to be true
for everyone to be excited about going
on this trip like it's just such a good
question and it it really sets that up
as like let's collaborate on this that
was my pickup line what's a guy like me
got to do to be with a girl like you and
then she was like do you have a
friend what's his
name you have this other thing on here
where you talk about how um what do you
say uh a cold email is the most
asymmetrical trade um and that you've
actually cold emailed a bunch of people
there's one guy in particular who you
listed that I want to ask you about but
uh it sounds like the cold email has
done well for you explain
more yeah I think um it's funny I've
been saying this a lot more like
publicly into groups and stuff um
and it's still like if everyone called
email the ARB would go away but I think
it's just too scary or whatever that
people don't do it it's still a huge
opportunity I will say like the the
addendum to that advice is you got to
have the goods when you show up for the
meeting or the call or whatever I think
like I think I don't know maybe it's
just like anecdotally because I talk
about this a lot I get a lot of cold
Outreach and you also like the second
part is you got to be really good when
you show when you show up um but if
you're good uh when you show up up like
it's just this incredible incredible
kind of hidden secret which is there's
always a scarcity of talent like no
matter who you are and you know how much
money you're worth or whatever there's a
scarcity of really awesome people um and
so everyone has an infinite appetite to
meet people who are interesting talented
have a unique view on things whatever
and if you can present that like you you
will really kind of go a long way and
and the downside I can't even remember
I'm sure I've sent hundreds that have
been responded to I've never got a bad
response it's usually just no response
and I don't even remember the
non-responses but the ones that I've got
responses from have been amazing you
know and so I think um I definitely
think more people should do it
especially if you're young or you're a
student that that alone can be enough of
a hook um that like most people will
meet with a student if they seem
switched on and and interested and yeah
I I'm still amazed that people people
don't do it but I've started to see
people do it and then they show up and
like they don't have anything to say or
they don't have questions for verett or
whatever and that can be really bad we
already know your first deal but that
was the first one but I want to know
first deal worst deal best deal weirdest
deal it's like the [ __ ] murder Mary
of uh what we did we did first deal
dribble which might also be best deal uh
what's what's the worst deal that comes
to mind what's the big mistake you made
the worst deal and name names and list
their email address and social media
handles yeah the the worst deal is
actually the one that I can say the
least of about which should indicate how
bad of a deal it was the abstract wor
yeah the the the worst one was just that
uh the person was dishonest and I should
have known and I didn't and I ignored it
for for greed reasons uh because I was
just thought this was such a good deal I
could look past these things when you
say I should have known I ignored it
what what are some things people could
look out for what what can I learn from
that yeah it was it was not this deal
but there was um a friend of mine uh who
buys some types of companies did a did a
deal where they flew in the uh the
founders to meet them in person and the
first night the founders wanted to know
where they could get drugs and you know
that is like in of itself is not a
strong signal but in that context in
that situation it's like kind of what
more do you need to know and it turned
out that they were doing a bunch of
stuff that they didn't disclose or
whatever it's always stuff like that
like someone who's really flashy is
almost always a bad sign um all these
little things and you know even like in
the casee of this deal I introduced the
person to a bunch of different uh
friends and and you know um experts and
they were all like this guy is really
something you know like you I don't
really know why you're dealing with this
person and it's it is funny how you just
get the blinders on when something is so
good and I think we've all all made that
mistake um and so yeah that that one it
just turned out that there was a bunch
of things that we didn't know about and
it went very badly and we lost all our
money it was a really small small check
fortunately that was like the one upside
but um that one was was pretty pretty
rough um what's the most unique or weird
deal the the best
one I mean it's kind of too early to
tell one one one that I really I really
really love is this company called meal
lime it's a um meal planning app that
tiny bought in 2018 meal planning made
easy so four four four and a half
million people it says on the website
use this app and what do you do use say
uh what ingredients you have and it
gives you like uh a bunch of recipes to
cook and lines them out for breakfast
lunch and dinner but it was just this
really awesome app and it was made by
this really amazing technical guy who
had just built this really great product
like I remember the the moment that sold
me is like they you know how the iPhone
turns off when you put it close to your
head um he realized that you could use
that sensor if your hands are dirty
while you're cooking you could wave your
hands over that sensor to like go to the
next part of the recipe or stuff all
just these little things and they have
these huge butterfly flexs like turns
out when you do that Apple thinks that's
really cool and then they feature you in
the App Store and like you there's all
these small details um and we bought
that business and it grew a lot we got
all of our money back in the first
couple of years and then this was the
only business tiny as um as sold to date
that uh we so we a ma two major grocery
retailers came along and I guess like in
a boardroom somewhere they had just
decided you know we need an app um and
so they both became interested and it
was kind of funny because um I you know
the company that I was at before tiny we
had sold the company to workday and it
was a pretty difficult um uh experience
and so I kind of viewed it as like my
chance to get another go at selling a
company to a public business and really
kind of it was going to be my turn to
like get a good deal and um and then we
sold it we sold it for you know a huge
Revenue multiple made a lot of money you
know up excess of 25 times of our money
and um and it's still today it's like if
you look up it's still used it's this
great thing I think the original team is
still there they were very happy with
the outcome um I just love that because
it was like it was this kind of perfect
little situation and this great little
almost like um like craft app like just
someone who cared a lot about making
great product and and I love those and
the weirdest deal it was basically this
company a big Fortune 500 tech company
bought a business and the business had
two business units and the big Fortune
500 only wanted one of those
units and um they basically had to
divest of it very quickly and so we were
able to buy it for it was doing $10
million of recurring revenue and it was
shrinking the business was shrinking
because it was built on top of another
platform that was becoming less popular
over time and um and we were basically
able to buy it for so little that we
borrowed all the money and then paid
back the loan in like three or four
months and so we basically got it for
free we were able to we bought this out
of the tiny fund and we we could write
this great update to our investors
saying hey uh you know we didn't call
any Capital but you now own this new
business we're going to do a
distribution soon and it was like small
dollars but it's cool to pay nothing for
a business um and then the interesting
part is like we also got a domain that's
probably worth a million or two million
dollars depending on how fast we wanted
to sell it and so it was kind of this
like fun little deal of like can you
actually do a business for can you buy a
company for no money down and um you
know it won't be a business it will not
be a 20 a and it's not going to grow for
10 years but we'll make many multiples
of our money on it um and it's fun like
in the actual fun statement that like
KPMG does they have to list the cost and
so the the accountants uh listed as like
a $36 cost basis which is I guess like
the actual money that went into the deal
and um those are cool like you can be
really really creative you don't have to
put a lot of money down how did they
find you or you them we in that case we
knew a board member um and it was the
situation where again we made a bid
there and they didn't like the bid and
they went and tried and shopped it
around and turns out like there's a very
limited set of buyers for that kind of
thing and especially ones who can do a
deal really really fast um and so it was
kind of this we understood why we had
the right to win this this deal we
understood that money was not the most
important thing here um and so we were
able to get it for this this great price
that's it for part one we actually kept
talking to Jeremy and it was so good
that we're going to turn it into a
two-parter the second part is actually
all about what he would do today so the
first part was kind of like how they how
they built tiny the deals the lessons
learned that was the past and now I
asked them basically if I was going to
do tiny today what would I do what deals
would you be looking at what businesses
do you think are great buys what
opportunities do you see and he tells us
the single best investment opportunity
he sees today in this next part uh enjoy
that's coming out tomorrow
[Music]
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