He Got Fired By His DAD… So He Built a $60M/yr Empire ft. Craig Fuller
Dying Hobby Magazines Turned Cash Machine - June 13, 2024 (10 months ago) • 56:02
Transcript:
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Sam Parr | Alright, my friends, today's episode is special for me, and it's going to be special for anyone out there who's a creator or who owns a media company. Let me explain.
I've got this friend named **Craig Fuller**. Craig runs a company called **FreightWaves**. It's a data business, but they also have a media arm, and it's a huge company. They've raised tens of millions in funding, and they make tens of millions in recurring revenue. It's a huge business!
However, on the side, he ended up buying a bunch of magazines, including **Flying Magazine** and a bunch of boating magazines. It's very weird of him to do that, and I wanted to do a podcast about it.
It turns out he's bought all of these niche magazines for a very small amount of money, and he's only about three years into the business. The company is doing around **$60 million** in revenue and **$12 million** in profit. It's his prediction that by **2030**, it's going to do **$1 billion** in revenue, which is insane!
That's someone's side project that they're doing. I wanted to learn all about it. I wanted to learn about the model he's using, where he's basically buying these magazines and then selling the audience different products and services. This includes things like building an airplane hangar and selling space in that hangar for **Flying Magazine**, and things like that.
So, if you have an audience, if you want to build an audience, or if you want to build a big business on top of that audience, this podcast is for you.
Alright, check it out!
Well, we're live. This is just how we get right into it. Love it! It's not often that someone's side hobby becomes almost cooler than their main thing, particularly given that your main thing is this massive hit.
So, you're Craig Fuller. You've got this thing called **FreightWaves**, which is a data business, but you also have a popular media arm. You display most of your financials online as if you're a publicly traded company, almost. I don't know what the revenue is, but it's somewhere in the high tens of millions in recurring revenue. And then you also have... you've raised what? **$90 million** for that?
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Craig Fuller | We raised $65 million in venture capital, but we also raised some debt on top of it. So, the total is about a little bit under $80 million or a little bit over $80 million. | |
Sam Parr |
And then your latest kind of side project, that is not really the size of most people's side projects, is Firecrown Media. You've bought dozens of magazines and you've parlayed that into... you've turned Flying Magazine into like a country club but for flying enthusiasts. So you've bought thousands of acres of land, you've built an airport, and now you're buying even more pieces of property and more stuff. And I think Firecrown does what, $50 million this year in revenue?
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Craig Fuller | There's a $60,000,000 run rate, so that's where we'll finish this year.
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Sam Parr | Golly, man! What I didn't realize is that trucking kind of runs through your family, right?
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Craig Fuller | Yeah, my father started what is now... or he sold the business last year, but it became the 5th largest trucking company in the U.S. My uncle started what is now the 8th largest trucking company in the U.S.
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Sam Parr | Were your uncle and father competitors?
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Craig Fuller | Oh yeah, yeah, they're pretty dire competitors.
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Sam Parr | But are they tight? Are they good family members?
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Craig Fuller | Nowadays, they're much better. You know, they do get along now, but there was a period of time where they just absolutely hated each other. | |
Sam Parr |
My family is in... My father's a produce broker, so I grew up with truckers. It's an interesting industry because the people who own the businesses can be pretty wealthy, but they're still rednecks. They're like blue-collar guys, but they're not necessarily always traditionally educated. They're still rough even if they're quite wealthy.
Was your dad like a blue-collar guy even though he ran this huge company?
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Craig Fuller | Yeah, I mean, he's a blue-collar guy. He looked presentable in a suit and he's talking to Wall Street investors. I mean, he certainly is presentable; he's not going to embarrass himself in front of folks.
But he is, you know, he's a finance guy. Ultimately, in trucking, you're operating a business that works with single-digit margins, you know, 1 to 3% margins. So, you've got to know how to operate that business. It's an owner-operator type business, and he certainly is an operator.
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Sam Parr | He eventually, I think, recently sold that business for **$800 million**.
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Craig Fuller | Yeah, he merged it into Knight Swift, which is the largest. It was the second largest trucking merger in history. The company did about $2.5 billion when it sold for $800 million. | |
Sam Parr | And you were working for him. I read that you started working for him at a young age. You kicked ass, but for some reason, you butted heads with the executive team and got fired, I think in your late twenties or early thirties.
Then you started, shockingly, which I can't believe, day trading. You were like, "I gotta build something." So at 36, I think, or 34, you were like, "I want to do almost like day trading but for freight stuff." Is that right?
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Craig Fuller | Yeah, I mean, I got fired twice. I got fired from my father's trucking company, U.S. Express, in 2005. It was actually my older brother, who became the CEO of U.S. Express, that had me fired in 2005. And then my...
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Sam Parr | Family's a bunch of assholes, man.
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Craig Fuller | Pretty much, but I love them. This is a family tradition: you fire up and go out to start your own business. They had a payments company, a fuel card company that they had incubated, which I took over and scaled up. Then we sold part of that to U.S. Bank. We were doing both fleet card processing and debit card processing, as well as payment processing for banks. | |
Sam Parr | What’s a fuel card? I know that truckers have them, but I don’t entirely know what they do or how they make money.
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Craig Fuller | When truckers want to buy fuel, you figure 200 gallons. If they're truly topping off their tank, they're going to fill up with, you know, $1,000 to $1,200 to $1,400.
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Sam Parr | Wow, okay. And what, they use some card? Do they get perks or something? What's the business?
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Craig Fuller | No, it's for fraud management. Because what will happen is, if you don't... I mean, think about it. You've got, you know, US Press had 9,000 truck drivers, and you're giving them all an expense account. Effectively, they're buying fuel, but they're also doing over-the-road maintenance.
So if they need tires or if their truck breaks down, you know, those things can be $10,000 to $20,000 in a breakdown situation, or it could be, you know, thousands of dollars in tires or fuel. A truck driver is responsible for probably $6,000 to $8,000 of expenses per month when you look at the total cost of expenses.
So you have a lot of fraud that ends up happening. Fleet cards are there to manage the fraud, both on the fuel spend and also on the maintenance and stuff. | |
Sam Parr | Got it. I never knew what those did. Alright, cool. So you're growing this thing, whatever, it's working out fine. Then you get into FreightWaves, Freight Alley. That works out good. How long did it take to kind of get into the tens of millions in revenue?
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Craig Fuller | It's about a **$20,000,000** business in **2 to 3 years**, something like that.
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Sam Parr | How did it grow so fast?
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Craig Fuller | The formula, right? Timing was great. This was when a lot of venture capital investment was made into the space.
Then you also had this digitization that was taking place, where companies were trying to digitize the supply chain.
At the end of the day, I had relationships. It's funny because my dad didn't put any money in the company. He told me I'd be a bad CEO and refused to invest in the business. So, I had to go raise venture capital.
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Sam Parr | Dude, are you and your family close?
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Craig Fuller |
Oh yeah, my dad and I talk. He's now, like after he sold US Express, he's now one of my largest investors in FireCrown. He actually is my largest investor in FireCrown, so we're actually really tight.
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Sam Parr |
I've been following you for a while, and when I think of a good media CEO, you are one of the people that I think of. What attributes did you have that made him think that you would be a bad CEO?
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Craig Fuller | Yeah, well, I had run a payments business. He fired me in 2014 because it was a tech business. Technology businesses, while they generate a lot of margin as they scale, actually burn a lot of capital. You know, trucking is a cash flow business. He didn't understand that a tech business, as it would scale, would actually consume capital.
So, he got really mad and didn't want to raise any money. He fired me because he didn't think I could run a business that would be profitable, because that's not how technology companies typically work in their early phases.
What's funny about that business is that it's one of the most valuable assets in the family's portfolio now. It just got a $500,000,000 valuation last year. They sold some stock in September of last year, so it's done well. But I've been out of that business for many years. | |
Sam Parr | Alright, look. The question that Sean and I get asked constantly is, "What skill set did we develop early on in our careers that kind of changed our business career?"
And that's an easy answer: it's **copywriting**. We've talked about copywriting and how it's changed our lives constantly on this podcast. We give a ton of tips, a ton of techniques, and a ton of frameworks throughout all the episodes.
Well, we decided to aggregate all of that into one simple document. You can read all of it, see how we've learned copywriting, and check out the resources that we turn to on a daily basis. You can see the frameworks and techniques we use. It's in a simple document, and you can check it out in the link below.
Alright, now back to the show.
So, this is the main thing that I wanted to talk about. There's this blog that I love; it's called **Flash and Flames**. I'm pretty sure that maybe only 10,000 people a month read Flash and Flames. So, if you're listening to this and you're a fan of media businesses, this is my favorite blog on the internet.
It's written by this guy named **Colin Morrison**, and he's based in England. He wrote this article that I think was called, "Why Magazines Are the New Trophy Asset" or something like that. I read that, and you saw that article and you're like, "I'm gonna go out and buy magazines," is that right?
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Craig Fuller | Yeah, I mean, I was reading it and it was essentially about the trophy asset. He was using the example of Marc Benioff buying Time magazine and some others. It was really interesting because I thought, "You know, I could never buy Time magazine."
The two media businesses that I would own that would be trophy assets far beyond it would be Bloomberg as number one, and owning something of CNBC scale would also be another. Obviously, those are way outside my league, so they're not happening.
I was thinking to myself that I had just taken up aviation and started flying. I was reading Flying magazine and I was pretty uninspired. So, I thought it would be cool to own an aviation magazine, to own Flying magazine, because that would be my trophy. I'm a pilot, and that's sort of what I would like to do.
That inspired me to reach out to the owners of Flying magazine and ask if they would sell it. They said it's not for sale, but they're happy to talk to me. I made an offer, and they ended up selling it to me.
It started off as a side hustle. I didn't actually intend to do this; I thought print magazines were dead. Dinosaurs read print magazines, and I became very skeptical of the whole print magazine business model.
But when I bought it, I fell in love with not just the content and what you could do with it, but also the value that print brings to an audience. What I found is that these print magazines are completely undervalued. Nobody will touch them because they share the same philosophy that I had about them dying. Yet, they own these fantastically great communities and audiences that have been around for decades.
One of the takeaways is that as you get into the older populations that grew up with magazines, they still have these really important connections to the brands. We found that this is a really interesting opportunity. | |
Sam Parr | Were you liquid when you decided to buy it, or were you like, "If the price they want is in the millions, I'm going to have to go get money from someone else?" | |
Craig Fuller | No, I had enough money to pull that off.
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Sam Parr | With your money, do you keep a large percentage in the S&P 500? Is this just a fraction of it, or is this a meaningful amount?
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Craig Fuller | It was a... I mean, it was a meaningful amount relative to my liquidity. I mean, in terms of my total net worth, yeah, not significant. But I have a lot of paper worth, as a pincher-back founder tends to be. However, you don't have a lot of liquidity. So, relative to liquidity, yeah, it was a big number. | |
Sam Parr | Then what was the thinking? I'm going to have to buy this, and I'm going to have to spend some hours per week to make sure that it doesn't lose money.
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Craig Fuller | Well, it was profitable. I mean, it generated about half a million dollars of EBITDA a year as a standalone entity, with about $2.5 million in revenue. So, this is a small business.
We buy businesses at 3 to 5 times EBITDA; that's typically the number these things trade at. So, we're not talking about a huge... like this wasn't a huge capital outlay.
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Sam Parr | So it's like **$1.5 to $2,500,000** is what it's all.
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Craig Fuller | The total purchase price is about **$3.5 million** when you look at cash, some deferred expenses, and deferred payments. So it came out to about **$3.5 million**, which is **7 times 5**. You know, **$2.5 million** upfront and **$1 million** deferred. Yeah.
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Sam Parr | But then you gotta deal with journalists. A lot of times I hire journalists; they're a pain in the ass. When I think of all my potential side hobbies, I'm like, "I'd rather be a beekeeper than own a freaking magazine and deal with these employees." Or I'd rather go for walks or hikes. I don't know about this.
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Craig Fuller | Well, look, I mean, I had... you know, Freightways has 40, or if you look at total contributors that are journalists or contributors, they have 40 to 50. So, I knew what the... you know, I knew what the rodeo was gonna look like for running, you know, having teams of journalists work for you.
What was different, though, with magazines is that these are different from sort of younger, digital-native journalists or journalists that have been sort of working in newsrooms. Magazine journalists don't do it because they make a lot of money; they do it because they love the content.
There's also a sense of defeatism that has existed across all publishers. I've seen this in the multitude of acquisitions I've done, where the editorial teams feel like the owners of the magazines don't love them and aren't willing to make investments in them. They almost look at you... and I hate to use this term... as almost liberators of their business. Because in some ways, they love the content, they love the subject matter, and they have the relationships. They tend to be sort of micro-celebrities in their own communities.
So, these are the old-school influencers, if you will, and yet they get no love from corporates. What's happened is the whole magazine business model has collapsed in the last 10 years because the way that magazines made money in the past, the internet has destroyed that business model. Rather than digitizing their business model or evolving their business model, they just started to cut costs. That was the way they sort of fend off the inevitable. And the problem is at some... | |
Craig Fuller | The value that the community and the audience receive is diminished. These things create a sort of death circle.
What we do is come in and buy them. In some ways, we liberate them from this inevitable decline, and they feel really encouraged by that. We upgrade the paper, improve the quality, and make investments in the editorial team. For example, Flying's editorial team went from 3 folks when we bought it to 30.
So, you have 3 primary full-time employees, and then you have contributors submitting articles that go into the magazine. This is very different from the world you and I come from in digital media, where you actually have a full-time staff writing content on a daily basis.
In this case, contributors are writing a piece once a month. It may be an airline pilot, a flight instructor, or someone who really knows the jet market or the turbine market. You want subject matter expertise, and typically, writing is not their primary job. They do it as a sort of side hustle to make a little bit of money.
That's why these businesses have operated as they have. However, they have also not made investments in print quality, online assets, or any of that stuff. | |
Sam Parr | How much revenue did you generate in the first year of owning it? Revenue and profit?
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Craig Fuller | In 2022, I think we were about $7,000,000 in revenue. Six and a half, $7,000,000, something like that.
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Sam Parr | Oh, so you like...
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Craig Fuller |
Aggressively grew it, yeah. How? Because we invested in... So, a couple of things we did:
1. We invested in the magazine
2. We raised the price
The magazine was losing $7. So, the magazine was taking $8 per subscription, but it cost them $15 [to produce].
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Sam Parr | It cost a month. | |
Craig Fuller |
$8 a year was the net revenue. I know you're... you look... Yeah, for folks that are listening, but your face is exactly what mine was. They were generating on average $8 in revenue per subscriber per year, and it cost them $15 to fill that subscriber. They were losing, and have since - as far back as our data went, since 2006 - losing $7 per subscriber. And I say, "Wait..."
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Sam Parr | So, *Flying Magazine* costs $8 a year to subscribe to.
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Craig Fuller | The average yield across the whole subscriber base is that the magazine generated $8 on average per subscriber.
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Sam Parr | And when you say "yield," that's not revenue; it's the hard cost.
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Craig Fuller |
That is the revenue. That's the top line number. Oh, that's stupid. You got... They were losing, Sam. They were losing $7 per magazine, per subscriber, per year.
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Sam Parr | Yeah, so, like a flying magazine subscriber is definitely going to pay $50 a year or whatever.
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Craig Fuller | You would think, right? That was my reaction to it. Essentially, our communications to the staff, or to the sales team, were basically: "You're going to raise the rates of advertising sales because we want to go to people who..."
So, on the ad sales, we raised the cost of ads. But we also told subscribers, "Look, if somebody's not willing to spend $30 or $40 a year, then they don't really care about the content."
I mean, think about this: to buy an airplane, you're going to spend, you know, a minimum of $50,000. That's for an old aircraft. Most of the folks are buying, you know, a quarter of a million to a million-dollar aircraft. Some of our audience is buying $75 to $100 million airplanes.
So, you have a natural audience that is going to spend a lot of money because they care about the hobby or they care about their careers or whatever it is. If they're not willing to spend $30 or $40, they're also not going to buy advertising.
Because what happened is, in the old days...
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Sam Parr | Wait, and how many subscribers? | |
Craig Fuller | So, when we bought that, it was about **108,000** subscribers.
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Sam Parr | That's pretty great.
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Craig Fuller | We actually, when we raised the price, we raised it to $30 initially. It actually went down to 32,000 subscribers.
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Sam Parr | No shit.
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Craig Fuller | We bled it out, but that's okay. We wanted to do that; we wanted to get rid of the freeloaders. They were essentially targeted for advertising purposes.
You may remember this from when you were younger: your school would have a fundraiser, and you would bring home a form for your parents to sign, like "buy a magazine" they didn't care about. There were a lot of subscriptions like that, where the people who were actually subscribing didn't care about the content.
I basically said, "I don't want any of them. I want people who actually care about the content." We were very successful in doing that.
We saw subscriptions grow substantially in terms of actual full paid subscriptions and subscription dollars. We basically doubled the subscription revenue over the course of a year, yet still had like a third of the subscribers. We went down to 32,000, and we're now about 45,000. We've grown since then.
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Sam Parr | Are you able to manage this growth off the cash flows of the business, or did you have to put more capital in?
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Craig Fuller | I put more capital in than I wanted to. I could have run it tighter, but I didn't want to.
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Sam Parr | How much did you put in?
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Craig Fuller | You know, look, we totally invested about **$40,000,000** in the business. But that's not flying; that's all the acquisitions we've done and everything we've acquired. | |
Sam Parr | At this, in the store, you've not raised outside capital.
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Craig Fuller | No, no, I didn't raise. I actually had half a million dollars from two brothers who were early investors in FreightWaves. They bought in and got 15% of the business for $500,000. | |
Sam Parr | So, you grow it to 7.5... in how much profit?
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Craig Fuller | The business was about breakeven at $7,500,000 because we were not optimizing for profitability; we were optimizing for growth. | |
Sam Parr | Who'd you hire to run it?
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Craig Fuller | So, I was doing a lot more day-to-day, and I recruited a team to come in to run the day-to-day operations.
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Sam Parr | Okay, so we're at the end of '22, and I think around this time you actually were like, "Holy shit, I might have just hit on something interesting. I should go out and buy more and do this again." Or did you first come up with the crazy idea to buy all that land?
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Craig Fuller | So, I bought the land in 2021—about 1,500 acres. Originally, I didn't plan on being in real estate. What we actually wanted to do was go out and build a media center connected to a runway.
You know, if people are going to fly in airplanes, remember that at the end of the day, the content for flying is all about the airplane. People care less about the pilot; they care a lot about the airplane. This is no different than a car magazine where you go to look at the Lamborghini or the Ferrari. For the aviation audience, they want to see the newest aircraft being produced.
So, we wanted to create a video center connected to an airport. The problem was that none of the airports in the community—five regional community airports around Chattanooga—were willing to do anything. They said, "You know, basically, you have to go from the municipality, the state, and the FAA have to approve it in order to build a media center."
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Sam Parr | When you say "media center"...
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Craig Fuller | You mean, yeah, to take video. We wanted to have a hangar that had basically a video studio and photography studio where we could bring airplanes in. But you have to build that because there isn't one. There's a national hangar shortage across the country.
What happens is that municipalities, which own all these airports, don't want investment in private hangars for small aircraft; they want the big airplanes. There's just a problem of allocation.
So, we decided to go build our own headquarters. I was looking for land, about 50 acres, and I came across this piece of land that had 1,500 acres and was priced at $3,650,000. I drove up there, and it reminded me of this resort in East Tennessee called Blackberry Farm, which my wife absolutely loves. It's sort of back to farming and agriculture.
So, I show up there, and I'm like, "This looks and feels a lot like Blackberry Farm." That was sort of the original inspiration. We wanted to create a fly-in community with a runway and home sites that are connected to the runway, which had that Blackberry Farm-inspired experience.
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Sam Parr | How much did you pay for that?
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Craig Fuller | 3,600,000 did.
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Sam Parr | You pay it, or did you raise money?
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Craig Fuller |
No, I borrowed from the bank. I mean, real estate is one of those things that you can go borrow money for. So remember, I have a relatively high net worth, but I don't have liquidity.
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Sam Parr | This is why I'm asking these questions. Your net worth is significantly higher than mine because your business is bigger than mine. But I'm liquid, and even I’m scared to make some of these bets.
You don't seem to have that same fear. You seem to be way more offensive, and you seem way more... I mean, look, it's not like we're inventing electric cars or going to Mars. I don't want to grandize it or make it too grand, but you're outlaying a lot of cash on some really crazy ideas.
You're like, "I'm going to build an... I'm going to buy an old magazine, and I'm going to spend more of my money to build an aviation community." That's really weird, and that's really ballsy.
Why? What do you think you have? What's that gene inside of you that makes you think these wacky things are going to work?
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Craig Fuller |
Because the data, like my experience, suggests that it will. But you know, it's taking more shots on goal. Like, yeah, I got $3.5 million in an investment for a real estate project, but if it goes to zero, I still own 3.5 acres of land, right? At the end of the day...
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Sam Parr | But that's a huge project to get into because... do you know?
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Craig Fuller |
Anything about real estate? No, but you can bring in teams to run those things, which we have. So like, Sam, it's a matter of scaling businesses and hiring teams to run these things. Yeah, it's risk, but...
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Sam Parr | Yeah, I agree with you. This is just outside your expertise, and you've made it your expertise very quickly.
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Craig Fuller |
Yeah, I mean... media was outside my expertise. Running a data business was outside my expertise. But real estate is actually, frankly, I wouldn't say it's easier. It's a different playbook that frankly can be learned.
It's not as if, you know, building a SaaS business or building a data business. There's a very small number of sort of models to follow. There are very few companies that you can sort of model your business on.
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Sam Parr | The risk is lower for that, though. The risk is lower for software.
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Craig Fuller | I disagree. I think real estate is so much less risky because you actually have financial assets at the end of the day. | |
Sam Parr |
That's true. The difference, though, is when I can start a software or internet or data company with significantly less money than it costs to purchase a meaningful piece of property.
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Craig Fuller |
But I own the land. Remember that land? 1,500 acres at $24,100 an acre has value. You can sell that land for something else. You can partition it out, you know? If you looked at what an acre would go for in that community... $50,000 to $60,000 if it was subdivided. It just wasn't.
So we knew the land had some underlying value, but we didn't know there would be any demand for plots. We advertised it in January 2022. We actually took out ads in our own magazine to test the market.
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Sam Parr | What did you say in the ad?
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Craig Fuller | You know, it was written as if it was directed to my wife. Effectively, my wife was the target audience, which is your Blackberry Farm audience.
We wrote a story about building a resort, and we didn't focus on the aviation, which is really what you would expect us to focus on. Instead, we focused on the amenities around the experience that we're going to build. We shaped and visioned it, and we didn't expect to get a lot of response.
However, we had over 300 inbound inquiries on that one ad we took out in our own magazine. We were able to get people to sign contracts to basically reserve their spot, and we knew then we had a winner.
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Sam Parr | Did you make a joke about the fact that you're new to this, or were you more professional? But you're like, "No." | |
Craig Fuller | I mean, I didn't make a joke about it. But we were very transparent about the fact that this was...
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Sam Parr | A new joke... but being lighthearted, you're like, "Who knows what's gonna happen?"
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Craig Fuller | I mean, ultimately, Sam, it's about... we recruited people that actually had experience in doing the development and master planning for the community.
There are groups that take on a lot of the burden to do the work needed to build these things. It's not as if I'm handling it all myself.
Fifteen hundred acres is a huge project. You're not going to do that yourself; you're going to want teams to deal with zoning issues, environmental issues, and engineering issues.
Yeah, we brought in airport planning consultants and development consultants. So, it's not as if I'm doing all this work myself. I have a whole team.
You asked who's running these projects? I have a team that's managing all the different pieces of it.
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Sam Parr | And they... people wrote in and they basically said, "If you're able to build this, count me in for buying an $800,000 home on that property."
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Craig Fuller | Something like that. That's the lot. So, it's $600,000. The homes are probably between $2,000,000 to $3,000,000.
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Sam Parr | And did they sign? What did they give to you that the bank took as...? | |
Craig Fuller | They signed a contract and put down a deposit of $40,000 per acre on a $600,000 map purchase price. | |
Sam Parr | And you did.
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Craig Fuller | 1,000 per lot
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Sam Parr | And was it like you basically pre-sold, was it like $15,000,000 worth of these properties?
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Craig Fuller | Yeah, we actually had up to about **$28,000,000** in total bookings. That's total reservation deposits.
We thought we were going to get through this process for environmental approval and zoning approval quicker. We actually thought we'd break ground by the end of **2022**.
So, we added some churn out. We've refunded their money because these are refundable deposits. It's not as if they're giving you money that you get to hold on to. It's no different than if you put a deposit on an airplane or a car. These are fully refundable.
But we're about **$15,000,000** in total reservations right now.
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Sam Parr | So this project alone is awesome, but then it gets even crazier. I'm just fascinated by you because I view you a little bit as a peer. We're both media nerds, but the way that we're different is that you're doing great with risk. You're taking more risks, I think, but it’s all working out.
This is where it gets interesting: you're like, "Alright, this thing worked for Flying Magazine. What happens if I go out and get more of these titles and do this whole content-to-commerce thing?" Did you raise money for that?
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Craig Fuller | Not initially. I have not raised any funds. My father invested when he sold his trucking business last year, so he's my only outside investor. Other than the initial round, everything was done by myself. I was just using bank debt, frankly, borrowing money from banks and liquidating my portfolio. I felt like I would rather invest in myself than invest in the S&P.
I think the difference between Sam and me isn't necessarily that I'm willing to take more risk; I'm also willing to take more shots on goal. I just think fundamentally, the asymmetric mindset that I have is that I may lose. Let's say the real estate project went to $0. I'm going to lose $3.5 million. That sucks, but you know what? My dad cut me off; my dad fired me in 2014. I had basically no job, nothing. I was, for all intents and purposes, on my own at rock bottom. I had to figure it out. I've done that before, and so I'm not afraid of losing it all. I know that I can get it back.
We've applied that rule to everything that we've done. We make acquisitions under the philosophy that it's asymmetric risk. Let's say that we buy a business or a magazine and we spend $500,000 or $1 million. If it goes to $0, if we're completely wrong about our thesis and the thing is just a dog, well then we write off that $500,000 or $1 million investment. But if we're right and we get a 3x, 5x, or 10x multiple on that business, that creates an enormous amount of value for us.
That's how we've approached our acquisitions, and I'm willing to take bank debt because bank debt is frankly pretty cheap. | |
Sam Parr | By the way, I think about money differently than you, and I think it's cool to hear your perspective because I think I should do it more.
The way that I think about it, as an entrepreneur of private companies, is that if most of my money—if most of my net worth—is illiquid, any liquidity that I get, whether it's annual cash flows or from selling, I take all that money and I stock it away in a safe place. It's like, if all else goes to shit, I have that, and it's enough forever.
So that's how I view it. Whatever amount of money I have, I stick it away and I'm like, "That doesn't exist, basically." I'm going to use a very much smaller sum to start more companies, and I'll try to live off of my income from those companies. If they sell, great. If they don't, hey, I still have this other thing that I have.
What you're doing is different from me, and I like what you're doing because I think it's bolder and probably a bit more fun if it works. You're like, "Even though I've got this other private company that is doing quite well, so it's not going to go out to nothing, I have some liquidity. I'm going to pile that liquidity into more interesting but potentially risky things."
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Craig Fuller |
Well, I like Freightways at some point. It will sell... like it will sell, it will be an exit. That, to me, is the nest egg for my long-term [future]. I know it's going to sell - who knows what it sells for - but there is value, fundamental tangible value in the business. So for me...
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Sam Parr | And it's big enough that it's slightly derisked or very derisked.
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Craig Fuller | I mean, it's totally derisked, and there's a lot of value in that business. I have a salary; it's not as if I'm not taken care of by the board.
For me, I have that asset. Everything else will set my family up for, you know, at least a generation. My kids would be able to go to college, buy a house, and so forth. So, I'm not worried about my ability to survive if everything else falls down.
But I do think diversifying my risk through all these other projects actually enhances my long-term returns, particularly if I'm using my balance sheet to borrow money from the bank at, frankly, a relatively low cost.
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Sam Parr | What about diversifying your time? That's probably it.
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Craig Fuller |
Well, that's what teams do for you, right? Like, you hire people to run it. For example, Preston Holland, who I think you know, we brought Preston in to initially run Flying. He's now running a finance business that we've got that is doing aircraft financing. We brought in a team to run... We have Reese that's running our real estate project. So again, I fired myself from almost every functional role I had at FreightWaves. It's like, "Oh God..."
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Sam Parr | Are you the chairman or CEO of FreightWaves?
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Craig Fuller | I'm the CEO, but for the day-to-day functions inside the business, I have Spencer Piland, who is my CFO and COO. He is running most of the day-to-day decisions. I'm working on strategy and thinking about the long-term prognosis of the business so I can run and do deals, and look at additional ways to leverage this business without getting caught up in the individual minutiae of running a business.
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Sam Parr | So, how many titles has Firecrown acquired at this point?
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Craig Fuller | We're about 54, I think is the number.
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Sam Parr | Did you buy them in batches? Like, you bought... | |
Craig Fuller | We do, you typically... I mean, publishers in the magazine business find it hard to get scale with one title. This is because there's a finite audience that will care about that content.
So typically, a publisher... and here's the thing about magazines: only 25% of the content, 20%, or even 5% of the operations of that business actually add value to a customer. You have audience development, magazine production, and layout. A customer doesn't experience that; they only see about 25% of the cost structure, which is the editorial product and the photography.
So, you need a lot of infrastructure to run a successful magazine or, frankly, a media business operation. I think, you know, the media side of magazines is actually...
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Sam Parr |
It was insane. Basically, the hustle... We could have... I mean, we were at about 2,000,000 subscribers when I sold. Now, I don't know what it's at. Let's say 3 or 3.5 [million].
Basically, [we had] 3 people on edit[orial] if we were selling ads. So when I ran the company:
- 3 people on editorial
- 37 people selling ads and managing ads and making it grow
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Craig Fuller | Yeah, and those three people bring all the value.
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Sam Parr | It's crazy, right?
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Craig Fuller | It's, I mean, it's just how these media businesses work. You have a couple of people that are upfront, and the rest of it is infrastructure.
So what you typically see when we buy a magazine is that we're buying a portfolio. We're not just buying one title, but 3 or 4 titles that come along with it.
We've done maybe 2, maybe 20 different acquisitions that have made up that portfolio. Some of them have been really big. We bought Bonnier, which is like the largest publisher in Sweden—the sort of Rupert Murdoch family of Sweden. They owned a bunch of boating titles, which we bought last fall.
We now own Boating, Yachting, Selling World, Fish, Saltwater Sportsman, and really this large ring title in aviation. We bought a number of aviation titles through various portfolios.
Then we just recently bought model trains, a bunch of railroad titles, and astronomy titles. So bringing that all together puts us with the whole portfolio.
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Sam Parr | Just whatever 12-year-old Craig is into: boats, planes, and RC trades.
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Craig Fuller | So, it's almost like my 5-year-old's dream. I mean, think about it: it's boats, it's airplanes, it's trains, and it's space. It's pretty cool for, you know, a 5-year-old boy. It's pretty magical.
But what we're buying are these audiences that love the content. They're enthusiasts. By owning the magazine, which we finance through the P&L of the magazine itself—subscriptions and advertising—we make money in media. Ultimately, we're buying the audience itself to offer some other product or service to them. | |
Sam Parr |
Yeah, so let's walk through this playbook:
1. The playbook is to acquire customers profitably. You do this by:
- Having a media arm that's its own business, or
- Having a media company that is its own business and makes a profit via subscriptions and advertising
2. Step 2 is to make sure the audience... I imagine you'll have to correct me. It's... you're doing something in your head like, "Will they spend a lot of money on something?" Is that right?
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Craig Fuller | Yeah, essentially, if they're enthusiastic about a category and that category is big, then the answer is pretty much yes.
The thing to remember about magazines, particularly those that are decades old, is that these publications have survived. Take the great neo magazines that are over 100 years old; they've endured multiple wars, pandemics, and the Great Depression. The audience truly cares about the content enough to subscribe.
If these magazines have survived the internet age and multiple phases of it, they're going to be around for many, many years. Essentially, we're buying them because they care deeply about the content, and ultimately, they can buy another product or service.
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Sam Parr | And then, is step 3 to raise prices and sell ads better? Or do you think about that?
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Craig Fuller |
Well, I don't think we look at it in the same way. We treat these... we have a media business which runs the media operation, and then as we go find commerce. So let's say aircraft finance - we find essentially an executive, a CEO if you will, that can run that business through its own P&L that's separate from the media business.
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Sam Parr |
But in order to finance that... You see, these people wouldn't be selling you these businesses if they were kicking ass. But you've been able to make them kick ass a lot better, so you must be doing something on the media side that they didn't do. What are those things?
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Craig Fuller | Yeah, I mean, effectively, you're fixing a lot of the cost structure and looking at it in terms of the spending opportunity of that audience. You're creating data that can really look at data from the perspective of intent for someone who wants to buy a product.
So, if you're reading *Flying Magazine*, you're either a pilot, an aspiring pilot, an aircraft owner, or somebody who wants to own an airplane. This is the forefront. I mean, there are people who read *Flying* because they like airplanes, but that's a small piece of the audience.
We know each of those categories is going to spend some money in each of their outcomes. For example, a student pilot is going to take flying lessons, which is going to cost him $10,000. If he's going to be a career pilot, he's going to make $15,000,000 over the course of his career. There’s a lot of opportunity to help him along his journey.
If they're an aircraft buyer or prospective buyer, they're going to buy an airplane. They're also going to buy insurance and finance that. They will have a lot of expenses to own that aircraft throughout their life.
These are the journeys that we have, and that's ultimately what we're doing. We're optimizing the magazine and the advertisers based on intent, not based on the fact that this is just a number.
What we've explained to the owners and the advertisers is, "Wouldn't you rather reach the 100 people that are going to buy your airplane versus the 100,000 people where 99% of those people are never going to buy any of your products?"
That's what we need to do: actually get into that intent data. We do that through digital. Print is just one aspect of what we do, but it's driving intent data to actually be able to demonstrate to them that there's value to that customer.
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Sam Parr | That was a very good pitch. When you hire these guys to create... I guess airplane financing means you help people get loans to buy a plane.
Then, I think you have a classified section for people selling planes. Now you have the real estate one. I don't know what you've done with the other titles or how you've adapted the same content to a commerce type of play, but I want to hear more about what those are.
When you're hiring people to build these businesses on top of an audience, how much do you decide to invest in them until they are able to make a profit?
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Craig Fuller |
You know, we have a... we're pretty patient. I mean, it depends on the business itself. If it's growing and it's against KPIs, then we'll continue to support it. You know, every business is different.
Obviously, the real estate business has... we haven't broken ground yet, so that is going to take many years to sort of generate a profit. It has its own sort of journey.
The finance business is a finance brokerage business, and it should generate profitability much quicker than some of the other projects. You know, we buy e-commerce businesses. We've now owned 6 e-commerce businesses.
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Sam Parr | What are you selling?
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Craig Fuller |
We own the largest NASA or the largest space merch store on the internet called **The Space Store**. It's like collectibles for aviation nerds and space nerds - the Venn diagram for both of them is pretty tight. So if you want a model of a rocket or a patch from one of the missions, we can sell that, whether it's SpaceX or NASA.
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Sam Parr | And so, what are some of the things you’re going to do with boating? Are you going to build a harbor?
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Craig Fuller |
No, I don't think we'll do real estate because I think real estate's a... The arbitrage in aviation is that you're taking a piece of land that has beauty. It's a beautiful piece of land, but it's not next to a body of water to build a lakefront home. So essentially, what you're doing is you're taking this land and you're arbitraging because the runway itself is the arbitrage.
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Sam Parr | Right, right. | |
Craig Fuller | That pilots want to be there. And so with boating, it's not as if I could arbitrage a lakefront property or an oceanfront property.
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Sam Parr | Because that's already awesome.
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Craig Fuller |
Exactly, and the market's already priced that in accordingly. So for us, we're looking at financing, we're looking at e-commerce, we're looking at other categories that we think we could be successful in. It probably won't be real estate, but it will be in other categories that we'll look at... commerce.
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Sam Parr | Yeah, I think you said you've raised **$40,000,000** for this whole thing.
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Craig Fuller | Yeah, I'd raised... I mean, my father funded and invested the money into... we haven't used outside capital, if you will, through the family office.
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Sam Parr | Of that $40, how much have you spent on acquisitions?
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Craig Fuller | No, that's been the predominance of the investment. It's been through M&A.
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Sam Parr | But you're going to do $60,000,000 in revenue this year. I think on the tweet you said 10 or 15% profit.
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Craig Fuller |
It's about... our profit in March was 18%, and we think we can sustain 20%. We think ultimately it sort of levels out around 30%.
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Sam Parr | So, you could do $60,000,000 in revenue. I think you said that means $12,000,000 in profit.
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Craig Fuller | Yeah, remember that's a run rate number. So that's not the full run rate, but yeah, $60,000,000 in revenue, a little bit over $60,000,000 with 20% margins.
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Sam Parr | And then, what do you think that would be worth?
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Craig Fuller | You know, if you look at sort of public comps, then you're probably talking 12 to 15 times earnings. It's probably what if it was public. Our goal is to get to $1,000,000,000. A guy had no plans to sell this business. I like having cash flow. Sam, I do appreciate cash flow, so it's not just taking risks. I actually love cash flow.
You know, it's funny. As a venture-backed founder, you're kind of jealous. I've heard this; you've talked about this on your podcast before. You get jealous of the cash flow guys. Yeah, the cash flow guys get jealous of the valuation in venture, and the venture guys—almost every founder that I know—are super jealous of the cash flow guys because, like, "Wait, we built this fantastically high-valued business, but we don't see any of that money go, you know, ultimately until exit."
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Sam Parr | But you have both at this. You have, so, $12,000,000 in profit. 10 times is $120,000,000, or no, sorry, you said 12 times 12. Yeah.
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Craig Fuller | I mean, you can look at it. If it was a private trade, probably 10 times is a fair number.
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Sam Parr | The business is worth $60,000,000, with a run rate of $12,000,000 profit. I don't know if it's trailing 12 months revenue or whatever, but it's roughly between $120,000,000 to $180,000,000.
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Craig Fuller | You that. | |
Sam Parr | That's what the business is worth. And you started this in 2022.
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Craig Fuller | 21 | |
Sam Parr | Yeah, that's awesome. Okay, and then you said, "I think this is gonna get to $1,000,000,000 in revenue by 2030." Is that right?
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Craig Fuller | You said "goal," and we can achieve that through both organic and inorganic growth.
I mean, here's the reality: there are 4,500 magazine publishers out there, and many of them have no exit strategy. A lot of these publishers are either owned by large corporations, which frankly want to divest their print products because public comps are challenging for them, or they are family-owned businesses that have been running for multiple generations, or perhaps they started 50 years ago. Whatever the case, they don't have an exit.
So, we can go find opportunities. For instance, we're currently working on a deal where it's a small business generating about $600,000 in revenue. When you take out all the owner expenses, it contributes about $600,000. We'll pay less than one times that for the business. There just aren't many buyers in this category.
Ultimately, you're buying the audience. That's really what it's all about. Yes, we own and generate profit, which is great, and cash flow is important, but ultimately, I like to say we're a private equity business that meets venture capital.
Venture capitalists want the asymmetric 100x return. We're going to incubate businesses that can potentially bring those high-level returns, but using the audience that we already own.
E-commerce is never going to hit that mark, but you have an aircraft finance business and a real estate project that very well could. We'll find other business models as we grow. | |
Sam Parr | You're basically building a Hearst-style company. So, have you read the biography of William Randolph Hearst?
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Craig Fuller | I have not.
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Sam Parr | You should, man. It's awesome! So, William Randolph Hearst, he had a successful father. His successful father was a miner, I think, or...
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Craig Fuller | like | |
Sam Parr | Gold... Gold! In a gambling bet, he won, I think, the San Francisco Chronicle. He goes to his son and says, "Well, William, you've got the Chronicle. Hopefully, you can make it into something. You've got a year to make it not lose money."
So, he does that by creating what's called **yellow journalism**, which is like clickbait of the late 1800s and early 1900s. He kicks ass and crushes it. He starts buying another thing, another thing, another thing. He starts buying all these titles and he's killing it.
This is like a cable business before cable, where it's recurring revenue, subscriptions, and massive margins. Then, they get so big that they do a bunch of things.
1. They invest in this new sports network called **ESPN**. So now Hearst owns something like 30%, 40%, or 50%—I forget the number—of ESPN. They've made a billion dollars off of that.
2. Then, they buy Finch Ratings, I think, which is a data business, which is exactly what you're in. They start buying all this stuff.
Hearst is owned by the family; it's one of the largest family-owned businesses in America. They own this massive building right in the heart of New York City. My in-laws live literally five blocks away. I'm in my wife's bedroom that she grew up in, and I can reach out the window and touch the Hearst building.
I remember that was funny because I almost sold my company to them while I was sleeping in that room when I was visiting New York City. Anyway, they own this massive building that I don't think they got a loan on. I think they own this multi-billion dollar building. They own a ranch in Wyoming or something like that. They own everything, and it's owned by this family. It's kind of sick, and it's been around for a hundred years. That's sort of what you're doing. | |
Craig Fuller | Hearst is amazing because it's $10,100,000,000 or $12,000,000,000 in revenue. No debt. That's what's pretty astounding about Hearst.
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Sam Parr | Not even on the real estate.
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Craig Fuller | They have no debt. They actually have a very large venture capital portfolio. They're an investor in Freightways, by the way, so that's one of... | |
Sam Parr | The reasons are all about them. I met... I forget who I met with there, but I learned a lot about them. They're like older guys. They wear suits, like from the Mad Men era, where they...
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Craig Fuller | Oh yeah, you know. | |
Sam Parr | So, it would have been a bad fit, but that's what you're building, and it's awesome.
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Craig Fuller | Look, I think media businesses are underappreciated. I think what's happened is they... you know, Hearst during Hearst, they owned a bunch of newspapers as well.
But I think what we're seeing now is this: if you own a strong sort of thesis around a media asset, and you can build products that take that audience, that's ultimately the playbook.
It's like, we have these audiences; they love the content. They're subscribing and paying for a product, which is a print magazine or a digital experience. They're already the audience. We can offer them products and services that they naturally would buy anyway.
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Sam Parr | Yeah, that sounds like when you say that, I'm like, "Yeah, that's so obvious." But like, not everyone— a lot of people have tried this. A few have succeeded. Hodinkee, I think, is succeeding. There might be a couple of others.
But like, when BuzzFeed says they're gonna do it, it's shit. It never works out. I think it doesn't work out because they have like a committee deciding on these things. Whereas you could be a bit more of a kind of a monarch where you're like, "This is what we're gonna do. Go."
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Craig Fuller | I think BuzzFeed, along with a lot of other publishers, have sold out to programmatic advertising. They have relied upon the platforms, like Facebook, and the... | |
Sam Parr | No one really loves them too much. I mean, it's...
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Craig Fuller | What is BuzzFeed, anyways? It's like, yeah.
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Sam Parr | There’s like...
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Craig Fuller | No physical... I think the difference is that we're buying magazines and media properties that have been around for decades. The audience, like the people who talk about their father or their grandfather, you know, reading *Trains Magazine*, *Model Railroad*, or *Flying*—it has a lot of affinity to it.
Then, effectively, we just have to find services so we can make money in media, but we also have to find services that we can offer on top of that.
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Sam Parr | How many hours a week are you working?
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Craig Fuller | No, I don't doubt my hours.
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Sam Parr | You think you can have a normal 9 to 5, 40-hour week? No.
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Craig Fuller |
I mean, I do... When I wake up at 6 in the morning because my kids wake me up, till midnight I'm pretty much either with my kids or working on the businesses.
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Sam Parr | So, you're right.
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Craig Fuller | This doesn't work for me, man. To me, this isn't work; these are... this is a game in some ways. I mean, I... but you're...
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Sam Parr | You're still in grind mode. It's not like this is all awesome; you're not at the beach.
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Craig Fuller | I do it to myself too. I end up getting overwhelmed, but then I'm like, I have only myself to blame.
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Sam Parr | What's your goal? Do you want to be a billionaire? Do you just want to do cool stuff? Do you want to create something that lasts for a hundred years? What's it like?
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Craig Fuller | I mean, one of the reasons I like media businesses is because you're always learning something new. You get intellectually stimulated by a new challenge. It's a new audience, it's a new product. I don't know, to me, it's...
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Sam Parr | You don't want all the power, fame, sex, and drugs that come with owning spacemagazine.com.
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Craig Fuller | Trains Magazine is going to give me an enormous amount of power.
Yeah, or Model Rail Runner? No, it's not that at all. It's not even the wealth; it's more about the chase. It's the putting up the score in some ways of solving problems and learning about a different... I mean, we have a business that I paid $10,000 for. It's called ArrowSwag. It's an e-commerce business, and it will do $100,000 this year.
I spend more time on that business proportionally than any other one, just because I think it's cool. It's a print-on-demand t-shirt shop for pilots. I frankly should not be spending as much time as I do, but I enjoy it. To me, it's a hobby; it's a tinkering kind of thing.
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Sam Parr | I bet it feels awesome to make your dad regret firing you.
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Craig Fuller | It was fun proving that I could make it work, but I had a lot of doubters when we first started the business.
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Sam Parr | Yeah, look, behind most successful people is a girlfriend or boyfriend that broke up with them, or a father that... | |
Craig Fuller | That said, no. Yeah.
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Sam Parr | That made like one rude comment. In my case, it was a media executive who, half-hazardly and in passing, said, "Man, these newsletters will never make more than $1,000,000 a year." And I was like, "You motherfucker."
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Craig Fuller | And you thought about that every day, right?
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Sam Parr | Every day, I see this guy sitting in floor seats at the Knicks, and I'm like, "You son of a bitch."
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Craig Fuller | So, I would say the best thing to give a founder is an enemy.
At Freightways, I had a guy who was the CEO of our largest competitor, and he really pissed me off because he told me I couldn't compete against them. He said, "I like to see you try."
I woke up every day thinking about him, but he got fired. I tell you, the motivation wasn't as fun anymore because I needed him to be the guy. All of a sudden, the company became nice to me, and it was like, "No, I want you assholes! Please go back to being assholes," because I woke up slightly more motivated every day.
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Sam Parr | I was like that with the founders of Morning Brew. I was like, "I wanna kill you."
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Craig Fuller | I'm like...
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Sam Parr | If I see you in public, I want to like get in a fight. Now they're like my family to me; they're like my best friends.
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Craig Fuller | Well, you are hosting one of the podcasts on their platforms.
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Sam Parr | You know, people say, "Don't be hateful towards this person." In my head, I'm like, **rage is like the greatest fuel ever.** | |
Craig Fuller | Completely. | |
Sam Parr | I don't... you know, someone once told me, "If you got hate in your heart, let it out." I'm like, "No, I'm burying that deep. That ain't going nowhere. That's fuel. I need that."
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Craig Fuller | And Sam, you know, it's also good for the team because if they have the hatred of the enemy, then they will go much further and fight harder than if they don't. | |
Sam Parr | Yeah, I love that. It's sort of like a sport where, you know, once the whistle blows, anything goes. But once the game's over, it's like, "Alright, nothing but love, nothing but respect." But while we're in between those lines, we're getting after it.
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Craig Fuller | Yeah, exactly. | |
Sam Parr | And so, I think it's good. Dude, thanks for doing this. Yep, enjoyed it.
**Craig Fuller**, that's the pod.
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