Are tariffs good or bad for founders?

MFM

For all my friends this is their only business this is literally their lifeline and so I find it very not cool is my official diagnosis super uncool by the orange guy

MFM

alright sean mahalo my first question is what's it feel like to be an extra on the set of white lotus

MFM

as long as I'm not the guy who dies I'm good alright so that's my that's my white lotus cape plan I I thought I'd be festive for you I mean hawaii

MFM

I think you look good

MFM

dude I was so as you know I don't leave my house and took the family on vacation so we're in hawaii and I texted ben I go dude I'm getting recognized left and right and he goes really that's awesome like how many times just ten eleven and I go no dude two left and right like it happened twice just now I had it text you right away this is amazing

MFM

where did you get recognized at the airport

MFM

dude someone voice recognized me I was like coming around the corner somewhere I'm talking to my kids and some guy just runs around the corner he goes hey are you are you sean I go did you just recognize my voice he goes yeah I listen to like I listen to the podcast a bunch

MFM

dude there's been so many times where like I've met someone and I'm like we should hang out and then they text me

MFM

you wanna get on this flight yeah do you want do you have a ticket

MFM

well I think if I'm like flying home and like someone's sitting near me I'm like do do you want to like be fred's and like get together sometimes and then they'll message me a week later I'm like what was I doing it's like going to the grocery store hungry like I'm just like making bad choices can we talk about tariffs really quick first of all I wanna let people know I don't know anything about this like I'm not like an economist which everyone is all of a sudden but I wanna know did you go to hawaii because you were sweating and you're like I need to find peace or or what

MFM

dude the last time I came to hawaii I don't know if you remember this was in 2023

MFM

wasn't it like some crypto thing like you crashed

MFM

I landed and the same day I landed crypto had the biggest crash like luna basically went broke and it brought down bitcoin with it and I basically landed and then lost a million dollars and then was just trying to hang out with my wife and just be like okay cool I'm just not gonna mention this like how expensive this vacation just got and the worst part was because I was on vacation I didn't have like any of my normal like computer hardware or anything that I could sell

MFM

your computer

MFM

I could do anything yeah like you know oh this cold storage is working out great so I was I was basically stuck and then to this time same thing went on vacation oh the s and p five hundred has had the worst like three day losses since like the bubonic plague and I was like oh great here we go again I'm not coming to hawaii anymore

MFM

when I've been going through this as everyone knows I'm I'm heavy on index and when I have been going through this my I've just I just don't look I just refuse to

MFM

don't look

MFM

I don't look I just I pretend it doesn't exist and I don't look although I did I I invested a little bit more than normally I do every month and I went a little bit heavier but I just didn't look I just I can't log in it it it makes me too anxious and it really ruins my day

MFM

yeah I well I asked a simple question am I gonna do anything is my plan do do I have some trade I'm trying to make right now is is there some some genius move am I just trying to panic sell no okay if not then there's really no. In even looking it's just gonna ruin my vacation so I I don't look but when I landed I there was something I had to look at which is these tariffs so not only did the stock market crash or maybe because of this the stock market has been crashing which is that donald trump has created a new holiday sam liberation day

MFM

yeah some happy libs

MFM

happy libs day

MFM

somebody was like maybe he meant liberation day in the sense of liberation like the buddhist think where we are being liberated of all of our possessions and we just aren't gonna own anything anymore

MFM

I don't have any material goods anymore thank you thank you so he came out and he has this giant poster board slam to every country that's basically like a slam board where he's like china you're getting tariffed you're getting tariffed everybody's getting tariffed and and then since then he so he came out with like a 50% or or whatever it was like a 35% + 20% tariff on china so it's like wow 54% that's it's gonna be crazy and then since then he added another 50% on top so now we're at one zero four and I suppose there's just no upper limit as to how hard how high this could go because this morning as of this morning china retaliated with its own escalating retaliate retaliation 80 something% tariff so we're in a trade war

MFM

and does that mean for you as an ecom owner when you buy $10,000 worth of goods from china if you do buy them from china that now you're be you're gonna pay $20,000

MFM

yes exactly

MFM

okay so it's as simple as that got it

MFM

it's it's as simple as that so basically and and the the reason to talk about this is not because I'm a tariff expert which I'm not but because I have an ecom store and I have a lot of friends at ecommerce as well and for all of them I mean this is like d day basically so most of us manufacture in china not because we're like oh I really wanna have the lowest cost goods from china that wasn't really the impetus in fact when I started our company we first looked at manufacturing in the us we were like oh that'd be great it'd be great to manufacture in the us it'd be a great story to tell to customers also maybe it will be faster lead times because we're not having to put every item on a boat and sail it across the sea so I called all the manufacturers I could find in the us and I was like hey like do you think you could do this and most of them were just like no and one guy in la was like oh yeah we could do this do you want it for double the price half the speed and half as good is that your sales pitch

MFM

yeah I know I thought that

MFM

was great like look I'm just being honest with you he's like because if you're comparing factors you're gonna find this he's like I was like how could it be half the speed you're there's no boat there's no sitting on a on a boat for a month and when he explained to us he was like number one all of the inputs to anything you're gonna make so even if we make it we're gonna import all the parts so we still have the parts on a boat for a long. Of time secondly we don't have the labor that's skilled at doing this third we don't have the machines he was like actually it's the machines not the labor that's the problem he's like basically when we kind of de industrialized all of the best machinery to do this work went to china there's only like so many machines that do this right now to get a new machine takes like a year and blah blah blah it costs a bunch of money and so we don't even have the machines and I was like okay so then dude

MFM

how does this guy answer the phone is he like f you this is derek you know what I mean like I don't want your business how are you

MFM

is there anything I cannot get for you

MFM

yeah like alright have a good day bye bye now go after yourself like is that just how that's just how they do they answer their phones honestly great

MFM

a great gig as far as I'm concerned like maybe he's like a retired guy

MFM

like my dad would like

MFM

to do that in retirement just turn people down all day

MFM

and so what are your friends thinking in the industry because it seems dude you guys just get beat up constantly you know what I mean yeah just get punched all the time

MFM

yeah it's like okay make america great again where's where's the great part what's happening where all we're doing is putting like all these small businesses out of business and raising the price on consumers right so here's what's happening so just to give you a scenario I have a friend who is doing really well with his business and the business has been growing and so prior to trump taking office he's you know he was growing the business trump takes office he says he's gonna have a tariff he says it's gonna be a 20% tariff so we're like okay mentally prepared for 20% tariff so he places an order now just to give you a sense like orders have like a forget about moving your manufacturing which is a multiyear process that may not even work by the way just like changing your like sourcing from one place to another is you know six months to a year to get it up to scale this guy you know basically he's operating on a four month lead time meaning from the day he knows he needs an or he needs an order he has to place it four months in advance so he placed it four months ago now four months ago is basically you know before trump even took office right so he placed that order and now as that order is he's got five containers out at sea about land

MFM

on the ship and they're like

MFM

yeah it's a % tariff now so he has to pay a million dollars in tariff he doesn't have a million dollars so he's like he's like dude I literally don't know what I'm gonna do I I don't have a million extra dollars lying around in my business that I could just pay this tariff I also have five containers I have thousands of units just sitting there they can't be rerouted I can't tell them to go back to china I can't I can't he's like what am I doing I'm gonna shut down my business like he's basically like totally screwed and so and this is common there's a lot of people are dealing with this hey let's take a quick break but instead of an ad I have a freebie for you it is my pitch deck template so if you're a founder and you're ever looking to raise money from investors the reality is most founders are pretty bad at telling their own story their decks are bad I've seen thousands of decks I can tell you that most decks don't do the business justice and so I actually made a template of what I use for my own companies I've given this out before in my newsletter thousands of people have downloaded it and I get emails all the time saying hey thanks for that template I used it I raised my round so it's a freebie if you wanna ever raise money from investors go grab it there's a link in the description below and it just tells you like slide by slide like put this here put this here put this here with little bit of commentary of why you're arranging the structure in that order I think it will raise your odds of successfully raising a funding round so go ahead and grab it it's my free pitch deck template

MFM

you and I have a mutual friend he said the same thing he was like he's like my container you know the price per container got screwed during a bunch of stuff in the last two or three years there were so many different things there was the panama canal or suez canal I forget whatever there was the

MFM

ship got stuck

MFM

yeah ship got stuck then there was this and there was that and then now he's like this thing he's like I don't have enough money to buy the goods that I have coming in because I placed the order like a month ago like all like it was like in transit it changed the price it's sort of the it's like when a parent's like you say another word five more minutes to time out oh there's five what what did you hear about yeah five more five more you just got yourself five more totally

MFM

in fact I'm gonna stop call start calling it tariffs with my kids I'm just gonna start using that lingo maybe maybe it'll be fun to be on the other side

MFM

of the tariff for once

MFM

and and there's a little bit of so now people are trying to find you know whether it's workarounds or you know try to figure out hey does this apply because it's kind of unclear even how this applies you know does it matter if I got my goods on the boat beforehand either way whether whether this shipment gets tariffed a million dollars or not. Is it's very hard to survive as a business when you're you operated let's say an e commerce business that has 10 to 15% profit margin if you're doing things right you know 20 if you're really kicking ass and you've been business have been in business for a long time and you have economies of scale and you have a large returning customer base but like 10 to 15% profit margins and then your cogs go up by 100% is not gonna work like they're gonna go broke and so the only alternative is you have to pass that to the customer so now you have to tell the customer hey what this means to the customer the math is if a normal let's say a unit of your thing cost a dollar and now it's gonna cost $2 well before you sold that $1 thing for let's say $3 or $4 let's just say $4 a four x market right so your cogs was 25% of the revenue

MFM

is is I would imagine is very normal

MFM

yeah a standard markup let's say and that that sounds like greedy oh you're already marking it at four x well no because you have to pay for marketing and advertising and your staff and the fulfillment and all all this other stuff you end up with a 1010% fifteen % profit margin by the end of it which is like restaurant territory and so you know it's not some we're not some fat cats over here in the ecom land like you know probably like ecom you just see a bunch of tired scraggly fools who like are just playing the wrong game and so you you take that dollar item now it's $2 well that that means you have to raise the price instead of being instead of a big four originally now you gotta raise it to 5 to make up for that right so your all your goods are gonna go up by 25 to 30% so that's inflationary right so if you thought you know inflation was bad before the price of eggs and all this stuff well wait till christmas season comes and nobody could buy a toy because all the toys are made in china right like this just brings all the shirts are made in china all the toys are made in china and if they're not made in china they're made in vietnam which also got tariffed and so it's like you know there's a few countries that make all the stuff and this plan really doesn't make a lot of sense to me now maybe I'm just being sensitive because I have a business in the basement your lifeline yeah yeah so well less so for me because I have a lot of businesses but for peep for all of my friends this is their only business this is literally their lifeline and so I find it very not cool is my official diagnosis super uncool by the orange guy

MFM

I think you you need to create like a sean's homie private chat lobby and you guys could spend literally thousands of dollars to lobby the government to change their opinion

MFM

dude I'm gonna go to the lobby of this hotel and just see if I can get someone to change their mind is that what lobby is

MFM

I'm just the one lobbying I'm doing you don't declare bankruptcy down there by yelling it and declaring it

MFM

and so by the way I don't know if you've read moulson who I don't know if you know moulson moulson hart he wrote a great post on x that I think is worth reading and his space is called the america underestimates the difficulty of bringing manufacturing back and he gives 14 reasons about like why even if you took the generous side of this like policy and you're like oh you know what short term pain for long term gain right because I think we can all agree there's short term pain right the business owners have short term pain the consumers who are gonna have their prices raise short term pain the factories on the other side have short term pain the stock market is crashing that's short term pain the four zero one ks's are going down so that part's pretty unambiguous the short term pain the question is is there even long term gain and he wrote a post that basically outlines like you know very you know thoughtfully why there's some problems with this and he's basically like you know one one argument after another it's sort of like not only does moving a manufacturing plant back to america take a long time like by the time somebody by the time a business owner who today is gonna hit by these tariffs assuming they could somehow survive spend millions of extra dollars opening up manufacturing in the united states which is not gonna happen and there's a multi year.

MFM

Before they get it all online and then they magically find the labor to do this because we don't really even train people in america to do this type of work anymore there's gonna be a new president and like you don't even know what this tariff situation is gonna be but then it might be a totally a total fool's errand to do it by then so nobody's really gonna be able to make that move most likely what's actually gonna happen is like he's like you know we tried to do this in trump's first term and all we did was make vietnam great again like basically this manufacturer just shifts to one of the other low cost asian countries that has lower tariffs is what's gonna actually happen there's not gonna like magically bring jobs back oh and by the way you don't wanna sit there and knit t shirts either like this is not a job you want like these are jobs china doesn't even want

MFM

yeah dave chappelle do you want it dave chappelle was like I wanna wear jordans I don't wanna make them shits exactly

MFM

perfectly said like there's these memes going around of like you know it'll be like chamath like at a like a sewing machine trying to make it sure it's so true it's like is this what you think is gonna happen is this america being great again I'm not sure and so you know political stuff aside I think that the the tariff situation is really crazy right now and as a business owner it is very very tricky how to navigate this

MFM

amongst your friend group is it gonna put anyone out of business or is it just going to destroy their margins like is this like complete huge risk or is it like you've just made my life more challenging

MFM

it's gonna for sure put some people out of business because you had to like it's like I saw my my friend with the stuff already at sea or who's trying to scale their business they might not be able to sell their product for an extra let's say there were a hundred dollar product before and now they're a hundred $40 product in order to maintain you know still some profit so on one hand demand is gonna go down right I'm gonna have less customers because I had to raise my price my cost went up my cash flow that I had in the business went down and maybe down to a. Where I'm needing to borrow money in order to just pay the tariff bills that I have of stuff that I've already in flight it's a very very tricky situation you know what we did in our business was I was like okay here's how you deal with situations like this you have to create like a immediate swat team and let's open up a Google doc let's make six bullet points it's like what are the six levers we could pull okay so pricing we're gonna have to create some sort of tariff surcharge and we think it could be in this range that'll offset some but not all of the amount because we can't pass a % of it to the customer it'll kill demand and so we're gonna pass you know a few bucks to the customer this way the next thing we could do we're trying to source from another country okay it looks like you know maybe it's mexico or it's india or it's one of these lower tariff countries okay you're you're working on that you over here you're gonna work on you know figuring out how we're going to lower our cost because you're gonna have to go negotiate with the factory ask them to share some of the burden with you you're gonna have to look up the talk to the lawyers and see what's going on with the stuff that's already in flight hey we're gonna have to bring down the purchase orders because we have to be way more conservative hey you're gonna have to go secure more debt because we're gonna need a line of credit to make sure we can withstand the the storm here and so we created this plan I was like we're meeting every day these five people like the five core people in the company whatever other priorities you had they're gone this is your priority now we're gonna meet every day and we're gonna work on this plan for the next you know n number of days until this plan is executed and I think it's gonna take that level of of intensity I think a mistake I made in the past is when things like this happen you sort of take a little bit of a wait and see approach I think that could be very every day that you don't act could be very costly as a business owner and so I think one of the key things to do and like in our business we have a ceo we have a full exec team but when I heard how they were planning to approach us it was like yeah this is like really important just like these other four really important things we have and I go no no no you need to like have a public you know psa that this is the most important thing you could do we're we're gonna wait every morning there was a there's a name for this team and this this is the most important thing we're doing and this is your top priority you need to cut off some other shit right like I think just raising the level of intensity is very key in a situation like this or people will go out of business

MFM

so you gotta go snorkelin'

MFM

yeah and as this is so crazy I'm on the call talking about how we have to like you know raise the intensity and there's literally just like aloha there's like this is like calming like hawaiian music behind me and like clearly like palm trees and I'm like guys guys this is life or death and I like I like I go down a waterslide on the Google meet I didn't plan it this way alright

MFM

you you stop like mid talk to like get your drink that has the umbrella on it and you're like looking for the straw with your mouth that's awesome well that sucks is there a world where is there any type you know how like what do they what do what do george is

MFM

this like a is there anything I could do no it's no there's nothing you can do

MFM

dude I I met with a guy the other day and I thought I was like why do you wanna I never take phone calls with people but he wanted to talk and I thought he was gonna end the conversation with like look like you know I've loved watching you get big and be on the pod and you know is there anything I can do and I thought he was just like could do to help and he said is there anything I could do to be a guest on the podcast and I was like wait what I thought you were gonna ask me how you could help me and then he just ended it with is there anything I could do to be on your podcast and to have you promote me I was like no there's nothing that you could do

MFM

wow hell of an accident

MFM

yeah it was a bold ask do you wanna talk about something more fun

MFM

please

MFM

alright let's talk about something more fun I think this is actually gonna be really fun I'm gonna try and take your mind away from the fact that the company that you've spent decades trying to build which are I'm gonna try and take you take your mind off of that it just you know four decades you spent building this company not

MFM

gonna vanish never never send sam to like the cancer ward fuck it the bedside banner

MFM

we don't have time much we don't have a lot of time left so let's get to it sorry I meant you don't have a lot of time left so let's hurry up and get to it alright but I did I did I read something interesting that I when I read it I was shocked by it and the reason I read this thing was because my company hampton it's basically like an events company we host hundreds of events a year and so I'm trying to learn how other like event based businesses operate and I found one that I totally didn't realize how amazing it was and I just forgot about it have you ever heard of the medieval times

MFM

generally yeah yeah sure

MFM

no the restaurant series like the restaurant franchise no you've never heard oh my god you are gonna love this okay

MFM

goog is it like raid forest cafe but for like

MFM

more

MFM

oh there's like basically it looks like a small castle like the excalibur hotel in vegas and then inside there's like people on horses jousting

MFM

dude I always thought this was just like a joke I thought this was a joke in like nineties movies like for where people were going for dinner I didn't realize it was a real thing so let me tell you the story so medieval times it's basically dinner theater and so they do a two hour show where you go with you your wife and your two kids and you spend something like $80 ahead and you see people host a medieval show there's like 200 actors and they like do jousting they do like some type of theater stuff it's it's it's almost like cirque du soleil but it's medieval stuff and it's like it's like wwf or something like wrestling like it's all like acting I did not realize how big this was so let me tell you the story so the guy who started it his name was jose he was a spanish guy he had a small restaurant in spain where he would like have like medieval like circus performers like doing juggling and just really small stuff at inside of a barbecue joint in spain in the eighties for some reason he decides to move to america and he's like I wanna create what I did in spain which was a really small thing I'm gonna do it in america and he convinces a couple bankers to invest $8,000,000 into his first restaurant and that first restaurant was in florida and he creates what is now medieval times and he creates this thing where the idea is we're gonna host something like 20 to 40 shows per month I'm gonna hire 200 actors he spent a year training these guys how to sword fight how to joust how to like be like legit actors and he's like we're gonna serve you turkey legs and other medieval food like whatever like the stereotype like stereotypical medieval food is and we're gonna create this dinner experience and that's where he launches in 1983 well fast forward almost forty years now or forty + years his son has taken it over and they were recently sued because a bunch of their performers tried to unionize and apparently they were preventing them from unionizing and so there was a ton of articles written about this company and a lot of people were talking about their financials they're enormous so this company does so basically they have it's estimated around two to 2,500,000 people a year coming to the restaurants and they make something like a hundred and 50 to $200,000,000 a year in 10 locations hosting these dinner theater shows it's amazing I had no idea this was this big and since 1983 they've hosted close to 80,000,000 people at these events have you ever

MFM

been to one of these

MFM

no so there's 10 locations and I haven't lived in any of the places dallas myrtle beach scottsdale like places that I've you know haven't really lived in so I've never been to one have you

MFM

no I've never been to one say the numbers again so how big is this a 10 just on ten ten locations

MFM

on 10 locations during the union lawsuit and things like that reporters were doing back of the envelope math and they were like we think the company does between a hundred and 50 and $200,000,000 a year in revenue and there's 10 locations and each location host something like depending on the the how popular it is but the lowest one does something like 20 mill 20 performances a month all the way up to 60 performances a month so two a day for thirty days it's insane how much demand there is and it was estimated that it was around 2,000,000 people a year attending and on their official website they say something like 80 I think they say 76,000,000 people have ever attended a medieval times restaurant for one of their performances is that insane

MFM

so it's you know 10 to $20,000,000 per location and they might be making you know 1 to $2,000,000 of profit per location something like that so that's my guess

MFM

or more so the way it works is it's not a normal restaurant and so you don't order the food it's all preselected and so it's like it's like an assembly line at the same time all 1,000 guests get the exact same food so like there's a lot of like maybe potentially significantly more efficiencies than a normal restaurant because there's not like you know a whole menu of stuff to do and get this their performances they only change the performances every five to seven years so they spend a lot of time like making the performance and then everyone else just goes and learns it and they perfect it over the course of five to seven years so they don't even change it that often and it takes like 200 performers for every show

MFM

yeah it's pretty rough for you know night performers right because you have like the step down between game of thrones and the medieval times restaurant it's so vast like the second place is is is pretty rough out there

MFM

a knife's gotta do what a knife's gotta do

MFM

so this is hilarious because you were like you were like looking this up as an analog for hampton are you thinking about getting in the turkey leg business what's going on

MFM

well the way that we are gonna grow is through launching cities and I'm like you know trying to study like how launches work how do you have like general managers of each city of each region do you I'm just trying to understand like the logistics of it and I'm looking at a variety of unrelated but still in the event space just to figure out how do they do it how do people do it and so I'm just looking at a ton of different ways and I was just curious about for some reason I came across these guys and I started thinking about it I'm like oh they have 10 locations are they franchises how do they work and it just caught my eye and I was shocked at how big they were

MFM

dude can I tell you a a goofy story that's kind of similar to to what you just described so I've been writing this book like on the side I'm not sure if I'm I'm gonna actually publish it or not like but I kind of got I went down a rabbit hole I got interested in it and it was it was around how creativity works so how peep how to be more how to be a more creative person and ultimately like make hits so like where do the hits come from

MFM

what's the title

MFM

bad art

MFM

bad art okay

MFM

yeah so it's like a because there's one of the key like obvious sounds obvious in in hindsight but like when you go look at the creative process of the world's most successful creative people you would think oh wow the ones who make the hits the things that we all love the high quality stuff they just nail quality and if you listen to any of their interviews you watch their process they don't give two shits about quality directly what they do is they focus on quantity and their belief is basically that quantity is the only way to get to quality so they're they play a volume game and they're like we produce a lot of bad art and that's where the one or two things that are real gold come from if you just sit down and try to make gold it doesn't work you don't you actually end up not creating at all and so one of the things I've been looking at is like how some of the big breakthroughs came from doing what you're talking about which is like you learn from an adjacent space so you go and you you know the wright brothers who ended up creating the first airplane dude

MFM

george I I read their book and they're amazing but george mack summarized their book amazingly in his high agency blog post

MFM

yeah yeah yeah exactly so they you know they were they were not funded they had no education they had no team they had no no specialty no experience doing this no nothing and like meanwhile there was a guy over there funded by the smithsonian had $2,000,000 in funding had tons of engineers and scientists on his team had all the press and the fanfare it was clear that he was gonna be the win he was the favorite so how did the underdog win why did the underdog have the creative breakthrough and like one of the reasons why is the two brothers the wright brothers they owned a bike shop and so they they because they had no money they did like 200 prototypes in the time that the other guy did two and their 200 prototypes were basically like they they weren't even didn't even look like planes they were just testing like individual parts of a plane like they'd make a glider or a wing and then they would make the wheels and they would try to find different ways to test these things out and even kitty hawk even the selection of where to go they were like thought from first principles like where should we launch this thing like oh maybe we should launch it from this spot where we're gonna have the best way in that etcetera right so they they weren't like tied to anything that was like there was they were not tied to anything everything was first principles thinking and so similarly I don't know if you've heard the story about the the yankees bats have you seen this

MFM

you'll have to enlighten me but basically the bats are heavier in the area where the ball mostly hits is that right

MFM

yeah like the story I mean take the physics of it aside like the story is just kind of interesting because here you have baseball this game that's been around for like I don't know hundred + years or whatever and then you know just kind of in a a bit of a high agency way the yankees were like hey can we just make a better bat like within the rules of the bat like you know we're not gonna make a heavier bat we're not gonna cheat and they hired this mit guy to think about it and he was like oh yeah you could just like move more of the barrel to this one sweet spot and if you hit that it's gonna go way further way harder and you you'll have less misses less near misses because you're gonna have the thicker part of the bat right there and you'll have more barrels and sure enough the yankees start the season off with like way more home runs than anybody else this year

MFM

I don't know anything about baseball but is it statistically significant or do they just have ballers on their team this year is it like it is the bat

MFM

I think it's the bat but I don't know if it's statistically significant I can't I don't know if you could say that right because it was like they started talking about this when it when they like jumped out to a big lead in home runs like 14 home runs already it was like nobody else is even close so we'll see you know we'll see if this this lands but the important part because like who gives a shit about baseball the important part was like dude if if baseball this like hundred year old sport that like you know people spend the team spend hundreds of millions of dollars a year trying to like find any edge they can if there's still like an edge like this to be found it just proves how like so much of the world is like unoptimized and underthought about and like if you actually just took a lot of focus and intensity to any one problem and you don't assume that people have already figured it out that's you know one of the key things you need to have a breakthrough and so like the way you're talking about studying these other models I think it's so important to do that I remember when we did our our our restaurant this is my first start up but we did pretty much everything wrong like every now that I look back I'm like oh my god so embarrassing every like the way we did our business plan we wrote a 300 page business plan it's like dude now nowadays I write one page if not if that we literally printed it out in a binder we were so proud of it and we thought that that was like oh you know mark of our brilliance when actually it was just a mark of our stupidity our marketing you know I used to just go door to door knocking on doors trying to sell sushi like an idiot like I didn't know anything about facebook ads or Google ads I didn't know anything about anything but one smart thing we did was we were like we were a delivery only restaurant so today they call that cloud kitchens back then that didn't exist

MFM

door to door sushi I think is the worst idea I've ever heard yeah right

MFM

but I was like oh let's try it actually by the way

MFM

who doesn't wanna eat this at 10:30 and when it's 95 degrees in

MFM

dallas no what we did and I did was I went door to door I went floor to floor really I went into a skyscraper I went I just went in the elevator I pushed a button one two three four I'd get out and I would just talk to the office manager of each floor and if I could get her to cater the lunch it was like getting 50 orders and it's actually it actually worked pretty well so that was kind of like a bit of a bit of example of this of ignorance is bliss so the the other thing that we did was we looked at delivery so traditional food delivery like you were talking about city to city expansion we looked at how all the all the big restaurant chains did the delivery and what they did was they would basically have a delivery driver at the restaurant kind of waiting and waiting for a batch of orders so you would order but they wouldn't just take your one order they wait till there's like five or six orders to go right because if I leave then with one order that's inefficient so they would first wait for five or six orders then they would drive out they'd go one place at a time trying to deliver these things and then they would drive back and what I was so confused about I was like how is this restaurant that's one mile away why does delivery take forty minutes it just didn't make any sense like the route is like two minutes so like how how is it possible that it takes forty minutes for the order and so I watched them and I studied them and we had our buddy dan become one of them and it was like dan you're you work for noodles and company now you gotta figure this out

MFM

when you were doing the deal move before deal did it you had a yeah

MFM

we sent to the we sent to the spy yeah yeah and all we came back with was just like dude don't eat the food and noodles there's so much salt

MFM

and we're

MFM

like but what about the delivery he's like oh I didn't even get delivery I gotta sign soup sign for making tomato soup he's like so much salt in this soup it's insane so but we we figured out a breakthrough the breakthrough was basically we realized that the it was at the slowest part of the delivery was not the drive it was the driver doing that last kind of not even last mile like the last 200 feet to your door so like finding the exact house or or apartment you go there and you knock and you wait and then they come out and then whatever that was the way the slow part was and so what we did was in downtown denver we created something called the drop zone so in between a whole bunch of skyscrapers we just had one guy stand there he he was our delivery guy on the ground and then the driver just kept going back and forth dropping off orders to him nonstop and this sped up delivery like crazy and suddenly our delivery times were like fifteen minutes sixteen minutes eighteen minutes and we were just crushing everybody on delivery and like the restaurant failed but the learning of like you can't really take for granted that like everything's just figured out and if you just do the first principles thinking of like you watch you look for the slowest part then you think okay what can we do even if it sounds a little weird that we're gonna have a we're just gonna put a dude there at the bottom and he's gonna stand there holding the orders the delivery guy is just a stationary dude but that would eliminate all of the lag of the driver having to wait for that last you know to do all those last mile deliveries that was the key for us

MFM

I found when doing this there's a few hard parts like just doing the exercise the hard part one is knowing what things to question and what things to accept for example let's say you're creating tesla and you're like well an electric battery that that probably can go long enough like if I look at this the math behind it but they didn't like change the shape of the wheel that's a very obvious one but when you're running a company it's very hard to decide what to question and what not to question it's also incredibly challenging to get yourself into that mindset of first principles thinking and more challenging to convince your staff or your coworkers whoever to just like come with like an open mind and and actually get on board and being open minded to trying this exercise I found that to be hard

MFM

what's hard about it and then how did you try to tackle that

MFM

for example just like the people saying like well it it has to be this way for these reasons and it's like you have to say to them I know but just like I know you think that but just try to get beyond that just for a few minutes and let's just have a conversation where it doesn't happen that way what would happen there's this book called the six ways of thinking for design I forget exactly do you know what I'm talking about in that book

MFM

no I haven't read that

MFM

basically it's like an exercise where there's six different colored hats and you're like alright your green hat when you put your green hat on that means you're just making a profit when you put your red hat on that means you're gonna come and be very pessimistic and poke poke holes in everything your black hat means you're open minded and so it's this way of saying right now I'm gonna put this hat on which means I'm going to by default I'm not gonna hate on anything because a lot of people default to this is why you can't do it to I'm gonna figure out all the reasons why this could work

MFM

yes yeah and so you did that you tried that

MFM

yeah and it helps but it's still I I guess what I'm saying is that like no I didn't have any hats no it it it helps but there's still like it's still a challenge to get into that mindset at least for me and also to like convey that to teammates it get having an open mind and questioning everything is actually way harder to do than it sounds you know what I mean

MFM

yeah yeah yeah yeah I I feel that people like it like so once you give people permission to do it they actually get excited about it you're right that you have to sort of like frame it the right way if you just go into a meeting and your hope and expectation is that people are gonna be like open minded and creative and come up with a novel solution it's like not gonna happen at all like you have to either tell a story at the beginning that gets them in the mindset I've so I've done that before

MFM

which is basically the the yankee bat thing I mean that was pretty good

MFM

yeah like it'll be one like that or it'll be like I remember back in the day I watched this thing on youtube that was like really inspiring to me I don't know if you ever seen it it's the ideo grocery cart challenge so ideo which is this design thinking lab this group so companies go and pay them lots of money to come up with like novel innovative solutions and designs so I think sixty minutes or somebody went to them some tv show and they were like hey we wanna understand how you guys think and so we have a challenge for you guys as part of the show and they were like we want you to redesign reimagine the grocery cart in a day you have twenty four hours forty eight hours to do this and so they break up into two teams and they show their process of how they do it right so like there's like a process of like fact gathering so they first they go get a grocery cart right or they go watch it in a grocery store they wanna see how the customer uses it they don't wanna take anything for granted so they're like oh like certain set of customers actually use this as like a kid babysitter it's like their kid sits inside it they need a thing to play and that's like a key part of this like if you lost the kid's seat you would lose that mom as a customer but other people are loading up and they need the two racks and then you know so you're seeing how people use it then they were like cool you and you state those observations they put them on index cards you start throwing them on the wall and the guy sets the tone he's like we're in the diverge phase and basically he draws this little cone I don't know if you've ever seen it it's like a like a tone going out and he's basically like during the diverge phase it's like whatever a predetermined set of time our team knows how to do this which is when you're super crazy wacky ideas free play what if mode and you don't judge the ideas during this phase you're just trying to riff off riff as many ideas you can and then we're gonna switch modes switch hats they're gonna go to converge where we're basically ruthlessly narrowing down the set of possibilities of where we might go with this but we we distinctly have two phases because you don't want in the one phase the one brave person to be courageous and to throw out a a half baked idea and then somebody immediately smart guy slam them and be like why that wouldn't work and now nobody wants to suggest ideas again for the rest of that hour so you have to like really explicitly do like what you're allowed to say during this hour is only you know yes ands and then during this one it's a no but

MFM

and then they end up

MFM

with this redesigned grocery cart where it's like it was basically like I don't know you could look up the image of it online but it was like a a thing that was designed for a new type of grocery cart and yeah I thought about that I was kind of inspired by that because a I just thought wow what a cool job these guys get to be creative for a living

MFM

the the top this video is fifteen years old and it says the top comment is they're still making us watches for school by the way in 02/2024

MFM

yeah I I actually think there should be a netflix show of this like you know the way you have chopped where they give them a random basket of ingredients you gotta make a meal out of it I would love to see like two teams that are like you know engineer designer types and you basically give them like a challenge like redesign the grocery cart like redesign make make the inside of an elevator more entertaining and just see what they do like I I would find that super fascinating as like a tv show and I think it would inspire a lot of people to become like engineers or designers if you watch that the same way like shark tank although it's like totally like bogus in terms of like the entrepreneurship that they show it's super accessible and it gets people excited about the idea of entrepreneurship

MFM

this book sounds pretty great bad art it sound it sounds like a pretty good idea

MFM

it's a great book I'm excited about it my my the only only hesitation I had on it was like I feel like I already got a shit ton of value out of it doing the like research and the kind of the prep like of outlining like oh here's the big ideas and then crystallizing them in my mind

MFM

so you're gonna be like derek from la and you're gonna just say f you reader I don't care about you it's already exactly

MFM

do I need to go the extra mile of publishing it for other people to benefit I'm not sure that I care about that like I'm not gonna I'm I'm not gonna make any money off this I'm not trying to get famous off a book what do I why do I need to do that so I might publish it the other problem is like I'm not sure how many other people nerd out about this idea of making great art making making great products just insanely great things and caring about being the like wanting to learn the creative process because you know what I what I figured out is

MFM

that I mean that that's obviously foolish what about that guy like that's a foolish fucking fashion yeah yeah yeah you you you got you caught you caught me on the hook you got the compliments on the hook because what about that austin guy like you know artist what was it called

MFM

great artists steal is that what you do I wanna just be that austin guy you didn't even know it was the guy's last name

MFM

I know the book cover what's isn't it like what's it called

MFM

great artists steal

MFM

yeah like I know that a lot of smart people whose books I read they always say that that like we had jack carr on the podcast who wrote all these amazing fiction books I love and he talked about it ryan holiday talked about it mark manson who I know you like talked about that book everyone likes

MFM

that book that's the thing it's a lot of authors like I wrote this I wrote this thing because I was studying how to do this because I wanted to write a book I didn't wanna write the book about this but that that's just where I landed it's for sure super important for anybody who's like an author screenwriter type of person it's just that's such a small percentage of the population that I'm not sure it's worth the pain of of publishing but

MFM

dude if

MFM

I don't know if you if the comments on youtube persuade me enough but I'd like to be open to publishing this

MFM

if sahil bloom can convince everyone on twitter to share his book you can too

MFM

what he's what's hilarious about sahil because sahil's great and sahil's such a achiever

MFM

he brought the pe energy to to totally

MFM

he to author it he he brought the the the ivy league energy right he like p he like achievered his way into stanford achievered his way to being a good athlete like a like a d one athlete achievered his way into private equity successfully achievered his way into a six pack achievered like he just basically he's like alright jimmy a target and like show me show me a ladder and I shall climb and it was like when we were like yo you should twitter dude like your your posts are kinda interesting I think you do this he's like cool monday through friday 6am get up cold plunge write thread publish thread every day for the next nine hundred days straight and he did he got like a billion followers he achieved the shit out of twitter too it's amazing

MFM

yeah now you're gonna have to do the same with bad art

MFM

as elon once said when they asked him are you afraid of failure he said it is not in my nature that's how I feel about achieving it is not in my nature to do this

MFM

is that gonna be that should be the reply to everything though as the great elon musk has once said this is not in my nature

MFM

dude how sick is that phrase how how how like timeless and alpha is that phrase

MFM

alright is that it are you gonna go and enjoy the enjoy the sand or doing whatever you do do you even leave your apartment when you're in hawaii

MFM

yeah dude I'm in the ocean I'm in the I'm at the beach I got kids dude they wanna do everything

MFM

are you gonna wear tweety boots during

MFM

the pool day every day for six days straight like it's the same day but they love it so much that I I can't help but love it too

MFM

alright that's it that's the pod