Dan Martell - August 17, 2020


Biggest Mistakes I Made in My 20’s


Episode Stats


Length

16 minutes

Words per minute

185.28851

Word count

3,011

Sentence count

182

Harmful content

Toxicity

4

sentences flagged


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

In this episode, Dan Martell shares the 5 biggest mistakes he made in his 20s, and why they cost him a lot of money. He also shares the lessons he learned from these mistakes and why he didn t make them again.

Transcript

Transcript generated with Whisper (turbo).
Toxicity classifications generated with s-nlp/roberta_toxicity_classifier .
00:00:00.000 Hey there, Dan Martell here,
00:00:01.260 serial entrepreneur, investor, and creator of SaaS Academy.
00:00:03.820 In this video, I'm gonna share with you
00:00:05.620 the most vulnerable, real, talk about the numbers,
00:00:09.960 talk about the situations.
00:00:11.320 I speak all over the world
00:00:12.440 in front of thousands of entrepreneurs every year,
00:00:14.500 and I always get typically the first question
00:00:16.780 when we get into Q&A,
00:00:17.980 which is what are some of the mistakes
00:00:20.160 you've made along the way?
00:00:21.860 There's so many that I had to break them down
00:00:24.440 into decades to really like concentrate my focus.
00:00:28.500 So right now I'm gonna do what I learned in my 20s
00:00:31.300 or the biggest mistakes and the lessons learned from those
00:00:33.400 to really give you as much as I can.
00:00:35.760 Be sure to stay at the end
00:00:36.520 because I'm gonna share with you how to get access
00:00:37.920 to a training I created for my clients
00:00:40.360 called Silicon Valley Secrets.
00:00:42.380 I got the privilege of spending five years
00:00:45.780 in San Francisco learning what makes
00:00:48.480 the fastest companies grow.
00:00:50.700 And I shared that in that training.
00:00:52.120 We'll do that at the end.
00:00:52.740 But before, let's get into biggest mistakes in my 20s.
00:00:57.940 Now, before I get into the five biggest mistakes I made in my 20s,
00:01:12.880 I wanna share with you what I looked like at 20 and where I ended up at 30.
00:01:16.780 At 20 years old, I was literally trying different business ideas.
00:01:21.520 I was involved in a startup.
00:01:23.460 I was working full-time at the only job I've ever had.
00:01:26.300 I worked there for nine months called OAO Technologies,
00:01:28.740 making about 60 grand a year,
00:01:30.760 working for free at this startup.
00:01:32.800 It was 99, 2000 timeframe.
00:01:35.220 So I was in the thick of the dot-com boom.
00:01:39.020 And I was aimlessly trying to find something.
00:01:42.140 I was a software developer.
00:01:44.100 And pretty much I just kept on this journey
00:01:46.620 of just like building stuff on the side,
00:01:49.580 working for a startup, talking to my friends,
00:01:52.380 but like doing things, but with no strategy,
00:01:55.860 no focus, no aim. And over the years, I started consulting. I got a job. 2001 happened, 9-11
00:02:06.460 happened. I moved out west. Literally, it was a longer story. But I went from aimlessly trying
00:02:13.480 to figure out what I wanted to do in my life to, by the time I was 30, I was a multi-millionaire.
00:02:17.840 I had sold my third company. So the first two were complete failures. My third company was
00:02:22.640 Spheric Technologies, exited that when I was 28 and moved to San Francisco and started Flowtown
00:02:27.720 at 29. So pretty much in a decade, I transformed my life. And there's this great quote that I've
00:02:34.620 heard from different people. I don't know who's the source of the quote. That is people overestimate
00:02:39.080 what they can get done in a year and they underestimate what they can accomplish in a
00:02:43.340 decade. And this is just real perspective from my experience. These are the five biggest,
00:02:49.220 most expensive mistakes I've made in my life in my 20s.
00:02:52.480 Number one, slow to build team.
00:02:54.860 Here's what I mean by that.
00:02:56.820 And when I look at most of the mistakes I made,
00:03:00.640 they were all people related.
00:03:02.120 So slow to build team is for many years,
00:03:04.680 from 17 all the way till I was 24,
00:03:08.060 I was a lone developer.
00:03:09.760 I was doing things by myself.
00:03:11.560 I would join people on their journey.
00:03:14.740 So this like tech startup in the dot-com bubble
00:03:17.080 that I joined, it's called I Think Interactive.
00:03:19.220 Um, it wasn't my vision. I think I got like three or 4% of the company never ended up getting that
00:03:24.920 percent longer story there. But what I realized as like now, when I started a company day one,
00:03:31.180 I'm hiring, I'm building the team. I'm way above revenue. And even if it's just convincing one
00:03:38.140 other person to join me on that journey, it's just, I really think what I've learned is having
00:03:42.700 other people I'm committed to having folks that compliment my weaknesses is just such an
00:03:48.600 invaluable thing to have as part of building a team.
00:03:52.560 And for me, it cost me probably $10 million.
00:03:54.960 And when I look at the opportunity costs
00:03:57.240 of like waiting too long until I was 24,
00:03:59.420 so 20 to 24 is four years,
00:04:01.000 I could have built Spheric a lot sooner.
00:04:02.620 I could have hired people.
00:04:03.640 I could have took the risk.
00:04:04.700 I could have convinced co-founders to start the business,
00:04:06.960 but it probably meant $10 million in opportunity costs
00:04:10.820 in a 10-year period by not building advisors
00:04:15.100 and people around me.
00:04:16.300 I was just way too slow to build the team.
00:04:18.260 Number two, hire and ignore.
00:04:20.720 So now all of a sudden, you know, I'm 25, 26.
00:04:24.280 I've hired some people,
00:04:25.580 but I finally feel like I need to hire a big gun.
00:04:28.560 Somebody's been there before.
00:04:29.580 I've got Procter & Gamble as a customer.
00:04:31.820 And I hired this guy to essentially run the technical leadership of this big project.
00:04:36.540 And the reason why it was a big mistake
00:04:39.260 is because Procter & Gamble actually allowed us
00:04:41.800 to not only build the technology for them,
00:04:44.420 so they paid us,
00:04:45.400 but we retain the intellectual property.
00:04:47.800 It was customer financing at his best.
00:04:50.320 We'll pay you to build this thing for us
00:04:52.580 and we're okay if you own the intellectual property
00:04:54.580 and go sell it to other people.
00:04:56.040 And I was so busy just trying to grow the business.
00:04:58.580 We grew 150% year over year.
00:05:00.680 So that was cool but I hired somebody that was senior to me,
00:05:04.200 had been doing this for 15 years.
00:05:06.400 I was 26, 25, 26 at the time.
00:05:08.800 I felt young, inexperienced.
00:05:10.480 I just felt like he'll be able to do this better than me.
00:05:12.880 So sent him over there, four months into it,
00:05:16.220 I get a call from the lead at P&G and they're like,
00:05:18.860 this person you sent over is embarrassing you.
00:05:22.900 They're not following up on anything.
00:05:25.040 They're creating conflict amongst our team.
00:05:27.640 And unfortunately they're just not gonna be able
00:05:29.620 to stick around.
00:05:30.460 That mistake, you know, on paper cost me probably
00:05:34.340 a quarter million dollars cause I lost the opportunity
00:05:36.920 and I had to pay for a salary, somebody that I quit
00:05:38.800 and they wanted, you know, a six figure salary.
00:05:42.540 And I mean, it was, it was a cluster.
00:05:44.900 And the biggest lesson I learned was don't hire and ignore,
00:05:48.580 don't hire and delegate, don't give away and never verify
00:05:54.020 because that's what I didn't do.
00:05:55.260 I thought this person's doing well,
00:05:56.900 I don't need to pay attention, I'm gonna go focus over here.
00:05:59.400 And if I would have just built at least a weekly touch point,
00:06:02.760 15 minutes with the customer and or that lead,
00:06:06.320 I would have discovered the problem in near real time
00:06:08.840 and it wouldn't have gotten so bad.
00:06:09.980 So I don't make that mistake anymore.
00:06:12.000 When I hire somebody, I'm checking in,
00:06:14.060 I'm spot checking, I'm checking their work.
00:06:16.120 I'm making sure that they know that I'm paying attention
00:06:18.380 as my little boy Noah does.
00:06:19.880 He does this to me and then because I do it to him
00:06:22.960 all the time, I'm looking, I see you doing that thing, right?
00:06:27.320 It's just a really important thing for any leader
00:06:30.020 to let their team know that that's gonna be part
00:06:32.520 of delegation so that they know to do their best work.
00:06:37.200 Number three, being everyone's friend.
00:06:40.020 When you're in your 20s and you're hiring other people,
00:06:42.420 The first set of people that I hired
00:06:45.260 when I was building Spheric were 22, 23.
00:06:48.360 I was 24.
00:06:50.000 And I wanted to be their friend.
00:06:51.780 I wanted to have fun.
00:06:52.780 I wanted to build cool stuff.
00:06:54.080 I wanted to make sure that we had the revenue
00:06:55.880 to support building a bigger team
00:06:57.200 because my mission was actually to create a company
00:07:00.340 where I enjoyed going to work.
00:07:02.400 My mistake was that instead of being the example
00:07:06.860 of what I'm asking them to do,
00:07:09.280 especially with customers, I was way too loose.
00:07:12.000 I was way too placeful.
00:07:13.320 I was way too, I couldn't hold them accountable.
00:07:17.000 I didn't hold them accountable.
00:07:18.560 And it was 100% a reflection of just how I was
00:07:21.400 that showed up in my team.
00:07:23.420 And that backfired me big time.
00:07:27.120 I ended up hiring somebody that on site with a customer,
00:07:31.500 they chatted about the weekend,
00:07:34.980 literally the excursion they were having over the weekend,
00:07:37.360 which involved drugs, involved a strip club,
00:07:39.500 involved getting incredibly drunk. 0.98
00:07:43.340 And oh, on top of it, talking crap about the client, 0.99
00:07:47.520 the customer, our customer, talking crap about them. 0.98
00:07:51.300 They got picked up by the security team. 0.87
00:07:53.420 It literally almost cost me my company.
00:07:55.960 And when I look at that mistake,
00:07:58.280 like literally company killing mistake,
00:08:00.240 it's because I was trying to be friendly with anybody
00:08:03.000 so I wouldn't reprimand anybody's behavior.
00:08:05.740 And I couldn't reprimand their behavior
00:08:07.540 because I was probably just as guilty of doing that
00:08:10.060 or being playful or not being as serious
00:08:13.220 as I probably should be for the type of clients,
00:08:15.600 Fortune 500 companies that we were working with
00:08:17.320 and the type of work we were doing.
00:08:19.860 We were touching their core infrastructure pieces
00:08:22.800 and a bunch of 20 year olds
00:08:24.940 and we were acting like immature, spoiled,
00:08:28.820 entitled technology people.
00:08:31.080 And that reset my whole perspective,
00:08:34.380 changed my approach, changed my leadership.
00:08:36.740 I wore a suit and tie every day to work from that point on.
00:08:40.840 I wanted to just put the suit on, wear my,
00:08:45.520 you know, that was my, you know, alter ego.
00:08:49.640 Todd Herman, shout out to you.
00:08:51.080 He wrote an incredible book called The Alter Ego Effect.
00:08:53.380 That was my suit and cape, you know,
00:08:56.680 and it allowed me to know that when I was in that,
00:08:59.400 I was there representing what I wish
00:09:02.060 everybody would represent to customers
00:09:03.800 and I had to lead by example.
00:09:05.680 Number four, selling too early.
00:09:08.140 This is a funny one for me to admit
00:09:09.800 because I sold my company Spheric in May of 2008.
00:09:14.760 And even though I'm saying today, I sold too early
00:09:18.340 because I would have taken a different approach.
00:09:20.420 Knowing what I know today,
00:09:22.060 instead of selling the company, I would have hired a CEO.
00:09:24.620 That being said, the world crashed in September and October
00:09:28.380 and the company that acquired us
00:09:30.140 had to lay off 60% of the staff.
00:09:32.240 So had I brought in an external CEO, kept the company, had them run it, I still would have went through all of that.
00:09:40.640 But here's why I say that because today with perspective, I would make a different decision because, you know, as the world resets and has incredible downturns in the economy and like all that stuff, I realize at the bottom is the best place to build up.
00:09:57.460 So I started in 2004, so crashed in 2001,
00:10:00.620 started Spheric in 2004,
00:10:02.000 and I built it up and sold it in 2008 at the hype.
00:10:04.920 Perfect, sounds like I'm a genius.
00:10:06.840 I'm not, pure luck.
00:10:08.840 But the, and here's the big reason,
00:10:11.780 is the cashflow from that business,
00:10:14.700 it was an incredibly profitable business,
00:10:17.080 hence why we got acquired in the multiples
00:10:19.020 and the technology and the focus we were in in the market.
00:10:21.860 I probably should, I definitely should have hired a CEO,
00:10:25.420 kept the business, run it.
00:10:26.520 If we had to downsize, we do that.
00:10:28.720 And then make another go, 2009, 10, 11, 12.
00:10:32.460 And I probably lost about 4X the potential value
00:10:37.440 of keeping the business as an asset
00:10:40.180 because it was producing positive cashflow
00:10:42.260 better than I could get in the market.
00:10:44.240 And I've learned this since reading Simple Numbers.
00:10:46.860 Greg Crabtree, who's now my CFO,
00:10:49.180 so he does all my financial modeling.
00:10:50.700 He wrote the entrepreneurial book for financials
00:10:53.080 called Simple Numbers.
00:10:54.540 And in there, he talks about, you know,
00:10:57.040 if I sell the business for whatever,
00:10:59.000 if you sell a business for $50 million
00:11:00.280 and, you know, you take that $50 million,
00:11:03.340 you put it in the market
00:11:03.960 and you're only generating 6%, 10%.
00:11:06.360 But if you kept the business, hired a CEO,
00:11:09.420 paid them a half million dollars a year,
00:11:10.940 but it generates 20% profit on that level of volume
00:11:16.840 and you know the business and there's,
00:11:19.640 yes, there's always market risk.
00:11:21.160 It would have just been a better opportunity
00:11:23.400 to keep it, hire the CEO.
00:11:25.380 And that's what I do today.
00:11:26.840 But I didn't know that then.
00:11:28.680 Yes, it was an expensive mistake.
00:11:30.800 And it gives you perspective if you're in that position.
00:11:32.900 If you have an agency and you're building a SaaS business,
00:11:35.120 it might make sense to hire a CEO,
00:11:37.420 not make any profit anymore.
00:11:39.380 So you're not allowed to take
00:11:40.320 that quarter million dollar a year salary
00:11:42.280 because you're going to do the SaaS thing.
00:11:44.360 So maybe you got to take a 60K salary
00:11:45.920 to go do the SaaS thing.
00:11:47.280 But this will grow if you bring in the right talent.
00:11:50.120 And over the next five to 10 years,
00:11:52.000 it'll be an incredibly valuable asset.
00:11:55.480 Number five, investing to save.
00:11:57.780 What I mean by this is I invested as an angel investor
00:12:01.060 since I was 26.
00:12:02.040 26 years old, had a few hundred thousand dollars
00:12:04.260 in the bank account.
00:12:05.340 I wanted, because the company finally started
00:12:07.440 making some profit, and I wanted to start investing.
00:12:11.420 And, you know, initially I gave my brother some money
00:12:13.540 and that worked out really well.
00:12:14.720 And then I just thought,
00:12:15.680 hey, maybe I know how to pick entrepreneurs.
00:12:17.500 I see all these people starting companies
00:12:19.040 and I wanna support them.
00:12:20.840 and I literally found companies
00:12:23.860 that I think had potential
00:12:25.160 and I knew that if I was involved,
00:12:26.940 they would be successful
00:12:27.800 but the mistake was is
00:12:29.540 I only invested because I thought
00:12:31.660 I could save them from themselves.
00:12:33.520 I thought if I brought my perspective,
00:12:35.560 my approach,
00:12:36.800 that that would be the catalyst
00:12:38.780 for this thing to be big and successful.
00:12:41.860 What I've learned since then
00:12:43.160 because I probably lost a million dollars.
00:12:45.380 I invested a million dollars of my own money
00:12:47.720 into different businesses,
00:12:49.600 Made the mistake of investing 500,000 in this company
00:12:53.000 and 100,000 in that company and 50,000 in this person.
00:12:55.960 And it was never, this is what I learned
00:12:57.860 through one of my mentors, Naval Ravikant from AngelList.
00:13:00.420 I moved to San Francisco
00:13:01.340 and he totally changed my perspective on angel investing.
00:13:04.940 And the big thing was is you should invest in companies
00:13:08.680 where they'll be successful regardless
00:13:10.860 if you give them money.
00:13:11.880 I now invest, one of the deals I did recently, Pila,
00:13:15.180 They're a biopolymer for phone cases
00:13:20.120 and they make sunglasses, et cetera, Pila case.
00:13:23.120 And Matt and Brad did not need the money.
00:13:26.360 I literally, they're good friends of mine.
00:13:28.240 Brad arguably is one of my better buddies.
00:13:29.880 We do a ski trip every year together.
00:13:31.480 We've been doing it for five years, I think now.
00:13:34.300 And I begged to be in there.
00:13:35.780 I said, are you guys gonna raise money?
00:13:36.900 Let me invest, let me invest.
00:13:37.940 That is my new approach
00:13:39.900 that if you're thinking of investing,
00:13:41.660 do not give money to your cousin, your brother.
00:13:43.900 rule number one of investing that Warren Buffett talks about is don't lose the capital step one
00:13:49.300 do not lose your money I know you're like out traveling and you eat at a restaurant you're like
00:13:53.680 man we need a restaurant like this in my city don't do that invest in things that will make
00:13:59.820 money if you want to give somebody money as a philanthropist go ahead go be the entrepreneurial
00:14:05.600 philanthropist and invest in stuff that will never have high value potential of making money but if
00:14:10.740 you want to really do proper angel investing, the way I do it today is find the companies that don't
00:14:17.100 need your capital, work hard to get inside those deals, and add as much value as you can. But I
00:14:21.580 definitely made a ton of mistakes investing in probably, I think there were six or seven companies
00:14:27.400 until finally I got straight and I made some of the intercoms, the hootsuites, the Udemy's,
00:14:33.800 the unbounce investments that I did further on, you know, four or five years later in my 30s.
00:14:40.200 So those are the five mistakes.
00:14:43.620 So quick recap, in my 20s, I made a lot of mistakes,
00:14:47.340 cost me millions of dollars.
00:14:48.700 Number one was I was slow to build the team.
00:14:51.160 Number two, I'd hire and ignore the person's productivity.
00:14:54.920 Number three, being everyone's friend does not work.
00:14:58.320 You have to set the example.
00:14:59.640 Four, selling too early.
00:15:02.160 Should have hired a CEO to run the company
00:15:04.060 and hold that as an asset.
00:15:05.140 And number five, invest to save
00:15:08.120 instead of fighting your way into deals
00:15:10.980 that are gonna win regardless of your involvement.
00:15:13.620 As I mentioned at the beginning of this episode,
00:15:15.360 I wanna share with you an exclusive training
00:15:17.580 called Silicon Valley Secrets.
00:15:19.780 I spent five years in Silicon Valley
00:15:21.780 meeting with the top entrepreneurs,
00:15:24.500 the top growth hackers, the Sean Ellis's,
00:15:26.900 the Eric Reese's, the Drew from Dropbox,
00:15:30.080 the Brian and Joe at Airbnb,
00:15:31.980 understanding what made them different
00:15:34.880 and tick and grow.
00:15:36.440 Andy Johns, you've probably never heard of this person ever.
00:15:39.660 He's been responsible for the growth at Facebook, Twitter, LinkedIn, Wealthfront, etc.
00:15:44.200 I share all of that in this training.
00:15:46.260 Click the link below to watch that.
00:15:48.500 It is my gift to you.
00:15:51.040 I rarely share it.
00:15:53.420 So I wanted to make sure that I share that as we talk about my top biggest challenges.
00:15:57.560 And if you like this video, be sure to smash that like button, subscribe to my channel,
00:16:00.740 and click the notification bell so you get notified when new videos are published every week.
00:16:05.480 and as per usual, I wanna challenge you
00:16:07.760 to live a bigger life and a bigger business
00:16:09.720 and I'll see you next Monday.
00:16:11.180 Oh, ooh, all right.