How Dan Caldwell grew TapouT from nothing to $100,000,000 in revenue

Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart. Joining me today is a Mixergy fan named Dan Caldwell. He is the founder of TapouT, an iconic MMA clothing brand that he founded in–it was 2005, right?

Dan: No, 1997.

Andrew: 1997, oh. The website I could only find going back to 2005. You did sell it, though, in 2010, right?

Dan: Yeah. We did. It’s actually because if you check TapouT.com, we didn’t get TapouT.com until 2005. We started with InYaFace.com back when we didn’t know that that was a big deal.

Andrew: And you sold the business 2010. I want to find out how you built up the business and find out a little bit about your latest project, which is Lessons.biz. It’s a site that teaches other people how to create an apparel business based on what Dan and his cofounders have learned and you can obviously check it out at Lessons.biz.

This interview is sponsored by, well, today two different sponsors. Usually I’ve been doing only one. I’m experimenting with doing two. The first of them is Bench Accounting. If you don’t know how much revenue you made last month or last year or last quarter, it’s because your bookkeeping stinks and you should use Bench. They have a team of bookkeepers and proprietary software that will get your books in order. Go to Bench.co/Mixergy for a big discount.

And this interview is sponsored by Toptal. When you’re ready to move up from those cheap-ass freelance sites–yes, I think that’s part of their logo. If you look underneath it, it says, “Toptal: When you’re ready to move up from those cheap-ass freelance websites,” and you’re ready to go to the insanely great developers, go to Toptal.com/Mixergy. I’ll tell you more about them later.

Speaker: Wait, wait, wait–I’m the guy who sells ads for Mixergy. Andrew should have said that if you want him to personally introduce you to Toptal, contact him at Andrew@Mixergy.com. Okay. Back to the interview.

Andrew: First I’ve got to meet Dan. Dan, welcome.

Dan: Hey, what’s up, Andrew?

Andrew: Dude, you might be the most tattooed entrepreneur I’ve had here on Mixergy.

Dan: You think?

Andrew: I think so. You have your logo on the back of your head?

Dan: I do. Yeah. Right on the back of my neck.

Andrew: What’s the one that’s most meaningful to you?

Dan: I think first of all my kids’ names, of course. My partner got killed a few years ago and I have him up here. My business name, one of my sons up here somewhere.

Andrew: Do you have any you regret? I feel like I watch older interviews with me, including the one with Paul Graham–I love the content of the interview. The sweater I wore is such a goofy thing. I regret the sweater. Imagine if I had to get a tattoo. Do you regret any of the tattoos?

Dan: I wouldn’t say I regret any. There was one that I got–this one right here–when I got this one, I had a certain picture in my head of what it was supposed to look like and I remember I was flying out to Hawaii the next day–this was early on in our company, probably 1998 or 1999–I was flying out to Hawaii and I went to get this late night and I knew I was flying the next day. I had this picture in my mind what I wanted it to look like. I was telling my tattoo artist. He was doing it in his house. I was telling him what I wanted. It was nothing like what I wanted. In my head, it turned out what I think is terrible.

So, the next day I was so embarrassed. I was hiding it. I had to wrap it in plastic. It was hot in Hawaii, so I couldn’t really wear long sleeves. Everybody would ask me, “What is that?” I would cringe inside when they would ask me. It was horrible. I get goosebumps just thinking about it.

Andrew: And even to this day you just aren’t happy with it.

Dan: No. Actually to this day, it’s kind of that story. Now it’s just that story. Now I just tell that. It’s just a moment in my life.

Andrew: Meanwhile, you’re a business guy. You look like a rocker. But you’re the business guy who launched this company. At your height, where was the revenue?

Dan: Over $100 million.

Andrew: $100 million. What about profits? Any profits in t-shirt companies?

Dan: You know what? There are profits there, but we were spending a lot of money. So, we were making money. We were doing well, but we were spending a lot of money.

Andrew: Let me ask you this very rude question. But I’m an interviewer, so I think I get away with this stuff. When you looked at your bank accounts before you sold, did they all add up to at least $1 million or at that point were you still… like your personal ones.

Dan: No. Obviously. No, I was doing really well.

Andrew: Really? Do you remember the day when you hit that number?

Dan: When we hit $1 million…

Andrew: When you personally.

Dan: Oh, me personally?

Andrew: Yeah.

Dan: Yeah. I was in a private equity firm getting $1 million wired to my bank account.

Andrew: For what? Oh, this was when they–

Dan: Yeah. We sold 10 percent of the company in 2006, I believe. I got $1 million wired to my account. The next day I was in the Lamborghini dealership buying a Lamborghini. So stupid.

Andrew: Alright. Here’s another personal question. Did you have the best sex of your life after that? That night, did you just feel like you were on top of the world?

Dan: I don’t know about…

Andrew: You don’t remember that.

Dan: If sex was a Lamborghini…. That’s all I was thinking about that day.

Andrew: Here’s the thing about you, though. You were entrepreneurial. Even in school you were a DJ, right?

Dan: Right.

Andrew: Because you loved music or business or both?

Dan: No. I wasn’t the class president. I wasn’t… I was a very quiet, reserved kid who just heard–they did announcements in the morning. They would read off all the announcements. They were looking for a DJ because the school I went to, they couldn’t afford to have a DJ there. They were only looking pay like $80.

I heard it and I remember this group Randy and Andy and they used to DJ. They were probably more expensive. They couldn’t afford them. But all the girls would hang out at the front of the DJ booth and I was just thinking being this reserved kid, I was always a dreamer and I would picture myself in that position, standing up on stage and all those girls that I liked in junior high and having them coming up to the front. I said, “Man, I bet you we could do that.”

So, me and my friend went in the principal’s office and told them we wanted to do it. Next thing you know, we had the job. We told them we had the equipment. We told them we knew how to DJ. We didn’t know any of that.

Andrew: Did you get what you were after? Did the girls want you?

Dan: Yeah. It was crazy. It was that, exactly.

Andrew: You grew up, it sounds like, listening to Howard Stern the way I did, right?

Dan: Your questioning style?

Andrew: No, were you a fan of Howard Stern growing up?

Dan: No, not at all.

Andrew: It’s just something you discovered later on. When I was growing up, I remember that he would do this commercial. He always did on-air commercials. He did one for a bartending school. How would you sell a bartending school? I think you had to go to Boston from New York to get into this bartending school. He would say, “Look, who’s everyone talking to at the bar? They’re all talking to the bartender? When you’re going in, who’s talking to you? Nobody. How would you like to fix that? Well, I’ve got this school. If you go sign up…”

Dan: That’s perfect. That’s kind of what I was thinking in my head, exactly that.

Andrew: I see. So, I thought you were this Mr. Business Man trying to make money by DJing but instead it was a much more adolescent pursuit. You wanted to get girls. You wanted to not be as distant from everyone else. It doesn’t explain why you became a police officer before you launched the apparel business.

Dan: No, I think it was very entrepreneurial. Even though the girls thing was part of it, it was about starting this business. In fact, we were going to get paid for it and what seemed like a lot of money at that time, $100 or $80 for an hour’s worth of work. I thought that was a good trade off. I thought, “What if we built this business?”

Well, first after doing that, when we got really excited, we just borrowed all of our parent’s equipment. We had those woodgrain speakers and the turntables that were like four inches thick and had wood paneling around it. It was horrible, but it worked and we got it done. Then I thought, “We could keep doing this and make some money.” I always had small businesses growing up, little carnivals. I always built these small businesses.

I started a snow cone shop, even though I was bouncing at this club. So, about 19 years old, I started bouncing at this underage club. We saw that it was so hot in there because it was like a rave and these underage kids would come in there and they’d rave all night and they’d be sweating up a storm and they didn’t have any air conditioning. It was a big two-story wood warehouse. They didn’t have any air conditioning. We thought, “What if we open a snow cone shop, like one of those shaved ice places and started selling those?”

So, we negotiated with the owner and said, “You have a little booth over here. Can we open a snow cone shop there?” And he said, “Sure, but if we’re going to open a snow cone shop, I’m going to lose $1 for a Coke every time you sell a snow cone, so, why don’t you pay me $1 for every snow cone you sell?” I thought, “That’s good because I’m not going to have to pay rent and I knew there were good margins in there to make money off the snow cone even after paying him a $1. So, we opened up but then he got air conditioning and that kind of ruined that business.

But what happened was when I was in high school, I took this law enforcement class. I had lied about where I had lived so I could go to this more prestigious high school where all the kids with money went. I grew up in a really poor neighborhood and a really bad area. I wanted to go to that high school. The reason being is because they had an entrepreneurial class and they also had a law enforcement class. I didn’t even know about the law enforcement class. I went over there for the entrepreneurial class. I just end up having to take another elective as a senior.

So, I saw this law enforcement class. I thought, “That seems pretty easy and that seems fun. Let’s try that.” It was taught by this female homicide detective who was the first female homicide detective in that large county in California. All she did was tell stories. We were only graded on listening to her stories.

I just thought it was the most interesting thing. She would talk about chasing people and car chases and murders. She was a homicide detective and she would just talk about all these murders. I thought, “How cool is that to do that for a living?” A lot of what being entrepreneur for me was not sitting behind a desk and doing paperwork and the job that I didn’t want to do. So, being a cop kind of fit in that framework. So, I thought, “I’m going to pursue this.”

So, I decided to be an explorer scout where you kind of get to ride with the police officers so I could check it out and understand it more. I loved it. I just thought, “I think I’ll do this.” And I chased it and I started putting myself through the academy and became a police officer.

Andrew: Is that something I could do now, be a scout as an adult or is it just for students?

Dan: It’s like under 19. I think we get to 19 you kind of time out.

Andrew: That must have been fun, actually, fun but also scary. But maybe, then again, I read that you lived in a neighborhood where there drive-by shootings, muggings, that kind of thing. So, was it less scary for you because of that?

Dan: You know, even growing up, even though we had all that stuff, I talk to my brother now lately and he’d be like, “We were fine. We didn’t live in a scary neighborhood.” He runs some of my businesses too and he’s an entrepreneur himself. We don’t really remember being scared. I was never scared, even though we were in shootouts in front of our house, my mom got mugged in front of our house, all of our cars got broken into.

We lived in that neighborhood. My friends had been jumped. We had been in fights in front of our front lawn. But I never was afraid. It was just kind of part of where you lived. I never was afraid to go outside. I wasn’t afraid to walk to the store. I was more afraid–I remember thinking about Freddy Krueger than somebody shooting at me. I never thought like that when we were out there. Even as a cop I wasn’t–it’s kind of like riding a rollercoaster. You have a little bit of a fear factor, but you’re not scared.

Andrew: What’s your story, the one that if you were leading a class you would tell that would fascinate the students from your days in law enforcement? Is there one that you can think of?

Dan: I wasn’t a detective. So, probably the one thing that I usually tell when I talk to people is just how I got fired and how that kind of changed my life.

Andrew: That was a bad day. What happened that got you fired?

Dan: Well, it’s hard to explain. For the first few years, the city was trying to save money on hiring law enforcement officers. So, they had hired me as a paid reserve. It was just a way to put me in a position where they didn’t have to give me benefits. So, I was working full-time as a police officer. Like any other police officer, I just wasn’t getting benefits. I was classified as this paid reserve.

At some point, like two years into it, they decided they were going to hire me full-time. So, I got hired full-time but I had to go through the training again because they had to go through the checklist and for legal reasons had to make sure that I had to go through all the regular training that a full-time peace officer goes through. I was going through the training again.

I had been a cop for two years. In that world where you’re on patrol, I was on my own. I was not a seasoned police officer, but I knew what I was doing. So, now I’m riding with a corporal who’s kind of telling me what to do and he didn’t have–he had more experience than me, but I just felt like I was being–I was young and immature is what it was. So, I got wrote up a few times because I cut corners.

Andrew: What’s a corner that you cut?

Dan: Just the way reports were filled out and how they were turned in. It’s kind of like when you drive and you go to take a driving course if you’ve been driving for five years. You’re not going to stay in the first lane when you make that right-hand turn. You’re going to coast out to the second lane.

It’s just things that you’re used to doing. I was used to being a police officer. I got comfortable and I was probably a little cocky. Honestly, the truth is you shouldn’t be a police officer at that age, 22, 23, 24 years old. Maybe for me personally, I just wasn’t mature enough to be a police officer at that age.

Andrew: What happened when you got fired? How did you react emotionally?

Dan: Well, I went up there and I was basically being fired by–I didn’t know I was being fired. I had actually just got into a shooting and I thought that I was being commended or going to be awarded some medal or something crazy because no one had really said anything. I had done something that was somewhat heroic, not really. But a captain had got hit by a car and I had gotten into a shootout with the guy who was trying to run him over–not shootout, he didn’t have a gun. I was shooting into the car trying to stop that guy from running him over.

So, a couple of months later when I got called into the chief’s office who was a new chief that I had never met before, I thought I was going in there to get a medal pinned on me.

Andrew: By the way, that’s a story you tell people. If you’re in front of students, the shootouts where you have to stop a car, that’s the one that will get their attention.

Dan: Well, that’s where it starts. It kind of starts with that. It leads into I think I’m going to get this medal and I go into the chief’s office and he basically fires me. I couldn’t believe he fired me, especially because this is all I ever wanted to do in life.

At that point, I was thinking, “I’m going to be a police officer for the rest of my life. That’s all I want to do.” I’m going to support my family like that. This is how I’m going to get my parents out of the ghetto. I just had high hopes for my career there. All of a sudden I’m being fired and that’s all being taken away from me. I wasn’t even prepared for it.

So, when I was walking back, kind of like my emotions overcame me and I was in the locker room kind of upset and physically upset and crying and just thinking my life was over. You couldn’t have told me different that my life wasn’t over. My life wasn’t over at that point. I was not going to get hired by another police department. I didn’t know what I was going to do for the rest of my life.

Andrew: And you had a baby?

Dan: I did. I had a baby on the way. I didn’t know what I was going to do. You have this daughter and you’re thinking about how you’re going to support a family. Really, I wanted to get my parents out of where they were. My mom, a little bit later, a lot later she got mugged. My dad and me and my brother got in a shootout with this guy and I’m thinking–

Andrew: You got in a shootout with a guy?

Dan: Yeah.

Andrew: Someone at your neighborhood is shooting at you guys and you have to pull out a gun?

Dan: Yeah, we ran in. I went in and grabbed all the guns, one for my dad and one for me and one for my brother. They were shooting at us.

Andrew: Where’d you grow up?

Dan: In San Bernardino, California. So, when I graduated, San Bernardino was the murder capital of the United States.

Andrew: So, some guy is coming in. Why would he shoot out your house? Who was this guy?

Dan: They were breaking into our car and he had shot through the window to break it. It was stupid. And they were going to just steal our battery. They were trying to pop the hood so that they could get inside the hood compartment and steal the battery.

Andrew: How do you get a name like Punkass. When someone is stealing the car and you have the guts to go get a gun, get your family, get them armed and go after this guy? Someone stealing my car–how did you get the name Punkass?

Dan: That came from in high school I was kind of a skater. So, I was skating with some of the bigger names in skateboarding at the time. I was a horrible skateboarder. But I was around those guys. Those guys would come out. So, we were the only 12-foot ramp. My best friend had the only 12-foot ramp in the area, anywhere in the Inland Empire.

So, a lot of these guys like Tony Magnusson and Eddie Elguera and some of these pro skateboarders would come out and skate our ramp. I don’t know exactly how I got it. It was just a nickname that stuck. They started calling me Punkass. I had it tattooed on my lip because I didn’t want my parents to see it.

Andrew: Was that your first one?

Dan: Yeah, first tattoo.

Andrew: Alright. I think at this point the name should have switched. Once you get a gun, I feel like everything changes, once you go out and get one. But things did end up turning around. Let me do a quick sponsorship message and then talk about what exactly happened because things got huge.

The sponsorship message is for Bench Accounting. Let me tell you about a guy named Patrick McKenzie, who I interviewed here on Mixergy. Every year, Patrick likes to do a blog post where he shows what his revenues and expenses are for the year so everyone can follow along. To put those numbers together, he was collaborating with a virtual assistant on bookkeeping and he says on his blog post that that just consumed an excessive amount of time.

You can imagine how much time it takes to track all the revenue that the guy was making with his website and all the different expenses. If you’re listening to me and you’re an entrepreneur, you’re probably having a headache doing that too.

Enter Bench, he says. This is a direct quote from his blog from December, 2012. This is how I found out about Bench before they were a sponsor. He goes, “Enter Bench. They’re basically bookkeeping as a service. When an actual honest to god human being bookkeeper manages your books for you using algorithms as a lever rather than a substitution for work and expertise.” So, the thing that turned it around for him was signing up with Bench and when he did, Bench gave him real people who manage his books and software that just helped those real people.

Alright. If you want some organization for your bookkeeping, go to Bench.co/Mixergy. The reason you want to do that is that our sales department, which is one guy named Sachit, has been pushing every single sponsor to give some kind of discount for our audience.

So, here’s the discount that Bench offered. They said if you go to Bench.co/Mixergy, you’re going to get 20 percent off the first six months, which is huge. I bet within a month, you’re going to see some order to your finances. You get to see where your money is going. You get to see where your money is coming in. You get to see how much you have to play with and you’ll be able to grow your company. Go to Bench.co/Mixergy.

Alright. Dan, what did you think of that, by the way? This is a new promotion. I’m seeing you smile. You have some kind of reaction to it.

Dan: I wrote it down.

Andrew: You did? Why? You’ve got people. You’ve got family. Your brother is helping you at your company. Who’s doing your books?

Dan: Century City bookkeepers and accountants, but they’re expensive, man, really, really, really. I’m so blown away by how much I pay in taxes. Every year I get in an argument with them because I can’t believe I pay that much. I wish there was a better solution. Thank goodness you can write that off, but it’s ridiculous sometimes.

Andrew: The one thing that I don’t like is having a single bookkeeper. I don’t want one person with no oversight doing my books and then if that person decides to take some time off or gets flooded because it’s tax season, it’s all on me to catch up and why am I not understanding. I don’t want to understand. I want to pay you and I want to know that you’re going to get the job done with oversight. That’s one of the things that I like about at Bench. I’m glad you wrote down their name.

Dan: Yeah. I’m going to check it out.

Andrew: Where did the idea for t-shirts come from? You were looking around and you saw what?

Dan: What we saw was we were training–we saw the first UFC, me and my partner Charles and me saw the first UFC. We were good friends at the time. We both wanted to be police officers. This was before we wanted to be police officers. We saw the first UFC and this guy Royce Gracie comes in and he destroys like four dudes in one night. I’m figuring, “I’ve got to learn how to do that.” I’m like 5’7.” I’m not the biggest dude. I’m thinking, “I’ve got to learn how to do that.” A week later, we were training with the Gracies. We started training with Royce Gracie.

Andrew: Wow. They’re legends.

Dan: Yeah. And really, really nice guys too. You can’t believe how nice they are and then know also that they could kick your ass any time they wanted. It was just like, really, it’s just this crazy thought that you could be nice. I always thought that I had to be like I was tough. I wanted to be tough. I was kind of like puffing myself up for my own personal reasons because of those insecurities that you have as a kid. You’re trying to be tough and really realizing these guys are the nicest guys in the world and they would just kick your ass.

Andrew: And for the international audience, UFC is Ultimate Fighting Championship. It’s a mixed martial arts battle, kind of like wrestling. It feels like no rules. The first time I saw it, Dan, I was scared. I thought someone was going to die on stage. Didn’t they actually get pulled from Vegas, pulled from Atlantic City for a while there and then they came back in.

Dan: They were actually never there. They were only legal in like three states at that time. If it was early, early UFC, it would have been a Denver show. There were only like three states that it was even legal in. It never made it to Vegas until the Ferttitas bought it in 2001.

Andrew: And then it came back on as like a real sport. I thought it was huge. But what we’re learning from you is that at the time it wasn’t that big. It just gave the appearance of size. So, anyway, unlike me who’s watching it going, “One of these guys is going to die,” you’re watching it thinking, “I’ve got to try it.” You go in and you learn. How does that lead you to apparel?

Dan: We were training with the Gracies and we’d go into the studios. The place was like an hour and a half away. It was kind of a whole ordeal when we’d go down there. We’d go down there on a Saturday and we’d go train and we’d just stay down there all day and make take a private afterwards because we couldn’t go down there. We’d sometimes only train like once a week.

We’d go down there. Everybody was wearing these Gracie shirts. We had them. Everybody training there, they’d take off their gi and they’d have this Gracie shirt on. All they had were different colors. They didn’t have different kinds. It was all one kind. It was all just a circle with a triangle and two stick figures in the middle looking like they were about to do a judo throw.

I was thinking, “This is so basic and they’re selling so many shirts here. Everybody’s buying a shirt.” But yet, when you go to another training place like the Lion’s Den or the Shark Tank or the Machado’s or these other places that were popping up that you could train at and learn what was back then called no-holes-barred but now we call mixed martial arts, you could learn that style. You were supposed to wear their shirts. If you were in the Shark Tank, you had to wear a Shark Tank. If you were training with Lion’s Den, you’d wear a Lion’s Den shirt.

So, we were thinking, “What if we created a shirt that anybody could wear?” So, if you were training at the Machado’s, you could wear it at the Gracies. Wherever you were, it wasn’t specific to the place that you were training. It was more about like Nike. It was about the sport, about the overall sport. So, we just decided to come up with a logo and come up with a name and let’s go for it. Let’s try it out. Let’s go see what we can do.

Andrew: How did you come up with the logo?

Dan: Charles was more the logo graphics design guy. We sectioned off our duties, like he’s going to deal with design and logo and look and I’ll deal with the business side of it. So, we just got an artist. Neither of us were artists. Neither of us knew how to draw. We just found an artist and started coming up with something that was nice. He had always liked Batman and he’d always liked Kiss, so he had these different influences. We both liked Batman and Kiss, so it was these influences that we would talk out. That’s kind of where the logo, it’s kind of like a Batman logo in a way.

Andrew: Is that why he had makeup on?

Dan: Yeah.

Andrew: This is Charles Lewis Jr., your cofounder–because of his affection for Kiss?

Dan: Exactly. That’s exactly where it came from. We wanted to create these characters. We had these discussions about Daymond John and the FUBU. Back then, FUBU was really big. They were their own people. So, if you looked at their hang tag, the owners were actually on the hang tag wearing their clothes. If you didn’t know that, that FUBU actually meant For Us By Us and you didn’t know–that was kind of like an insight that you had as a customer or a fan of theirs.

So, we wanted to create that same thing, but maybe take it a step further and then combine the whole Kiss aspect. So, we each had these characters. We created these characters. Mine, if you ever saw, I had like a bandanna and of course all tattooed up and always wore black. We had another partner, “Scrape,” he was like 6’7″ and he’d wear this big afro. Even to this day most people still think it’s his real hair. He’d wear this crazy get up and be a little more flashy. Charles would wear the makeup and he was more militant.

Andrew: I saw the three of you. I’m trying to figure out which of my tabs here has that screenshot, has the photo of you. When I saw it, it just looked so cool because it felt like it was a thing, not a t-shirt company, but like a movement, just like WWE feels like something bigger than life, not like a bunch of guys in tights wrestling. It feels something bigger because of the attitude, because of the costumes. So, I get why it works. But I know at the time when you started, did it feel a little bit weird? Did it feel goofy that you guys were getting dressed up and you were questioning yourselves?

Dan: You would have to really get into character before you went into a show because when we first started doing it, people–not heckled, I wouldn’t say heckled because we had a lot of adrenaline too. We probably would have stepped up to anybody who said anything to our face.

There were some keyboard haters that we would run up against on different message boards. We would get a little bit of hate. People would yell stuff every once in a while. I remember we got into at the MGM. I got into it with this guy who tried to pull Scrape’s hair, tried to pull his wig off, just different things.

When we first started, people didn’t understand it. But eventually, we got our own TV show and people kind of understood who we were and what we were doing. It really became a big movement. Hundreds and hundreds of tattoos people would send us. Every single day I would get an email of a tattoo, somebody’s TapouT tattoo that they put on their body somewhere, sometimes two. I had this guy who’s got one on his stomach and on his neck. It was really crazy and exciting for us how far that went.

Andrew: Is it partly because you weren’t just doing it around your house or as you’re walking around to make sales calls, but it was because you went to the shows dressed up like that?

Dan: Yeah.

Andrew: What’s a show?

Dan: It’s embarrassing, you walk in there. It’s like a show. They had a lot of smaller events that would feed the UFC. That’s not where you would start as a fighter. It was still illegal in California. So, I got arrested at an event before because it was totally illegal to have a mixed martial arts event or back then a no-holes-barred event out in California until maybe 2003 or something like that, where it got legal.

Andrew: I see. So, you were going there to fight. That’s why the costumes–

Dan: No, we were going there to sell.

Andrew: To sell t-shirts.

Dan: We would setup our table. We’d put out our shirts and we would sell our goods right there at the event.

Andrew: How did you get permission to sell? What was your deal there?

Dan: We just setup a deal with the promoter, like $500 depending on how big the event was. It was just for him to bring in more money. I remember an event in like–there was an event in Huntington Beach where it was totally underground. You had to give a password to get in. You’d go up there and they had all the windows blocked off. You’d say, “I’m here for the show.” You would say, I can’t remember what the keyword was, but you’d give him the password and pay the $40 and you’d get into the event. We’d sell our clothes there. You’d hope the police didn’t raid it.

One time, actually, they had set it up. They got smart. It was the one in Compton, I believe. They thought, “We’re going to setup this event,” and when the police came, they told them they were filming a movie. So, we were like all extras and they had this whole movie set and these big cameras. They said, “No, we’re filming a movie.” They had to stop the event for a few minutes. The police left and they continued the fight.

Andrew: How much money could you make at one of those events selling t-shirts?

Dan: It depends on the event, how big it is. But typically, you wanted to make at least $500, but we’ve done as much as $6,000, $10,000 just on the event. But usually in the neighborhood of about $2,000-$3,000 is about average.

Andrew: Alright. You wanted to be both online and events, no stores, no nothing. Before you and I got setup for this interview, you said, “I’m not a technical guy.” You told me to do this and do that, I tried. But really, I just followed the instructions to get connected to you. As a non-technical guy who was the business side of the partnership, how did you setup a website? How did you get yourselves online? How did you sell?

Dan: Well, in 1998 when we first went online, we knew that this dotcom thing was–I don’t know when the dotcom bust actually happened.

Andrew: Around 2000, late 2000.

Dan: It kind of wasn’t in our consciousness. We were just pushing. We were kind of a dotcom company in away because we were providing this service. When we first jumped on, we had an internet site. We didn’t have commerce. We just had a phone number and you would have an 800-number. I would forward that number–it rang my house and then I forward that number to my cell phone and I had to keep ordering forms in my back pocket. So, when I was at work or wherever I was, I would take an order on the spot.

Andrew: And you would write it down?

Dan: Yeah, I’d write it down and then go home and enter it and put the order together and send out the order.

Andrew: Wow.

Dan: That was before we had commerce. Even after commerce, we knew people at that time, people didn’t trust the internet yet. They weren’t willing to put–a section of the users in that space weren’t willing to put their credit card in the internet. So, we set it up so you didn’t have to. We just wanted to create this 24 hour ordering, you could call any time of the day and then I had an answering service too.

So, if I got tired and I knew–I was working two jobs at the time. I would just forward the phone number. It was forwarded from the house to my cell phone. But let’s say I was jumping on a plane to fly out somewhere to go cell. I would forward my cell phone to the answering service. You pay $2 or $3 a minute for them to take your order. They would go online. They were really just doing what the customer would be doing, but they would just go on our website and take the order over the phone from the customer and–

Andrew: And type it in.

Dan: But we had 24-hour ordering back in 1998. It was good for us. It worked well.

Andrew: How did people find you online at the time?

Dan: So, starting in 1998, we started sponsoring fighters in the UFC. We kind of considered ourselves the first people to do these huge logos on t-shirts. So, before, back when we were creating t-shirts, most t-shirts just had a simple small logo here on the pocket. And we knew that we were paying all this money to sponsor fighters in the UFC and they were going to be walking in. Well, nobody is going to see this little tiny logo here. So, we started printing these huge logos on the front of the shirt. Before that, no one had done that. No one was printing big logos on t-shirts.

Andrew: Well, Everlast was doing it for boxing?

Dan: No, not on the front. Nobody would do it on the front. They did it on the back, but they would do a little tiny logo up here. So, you had a big back logo and a small front logo.

Andrew: And who’s going to see the back?

Dan: Right. So, over that next seven years or something, they stopped doing back logos all together and everything became on the front. We felt like we contributed to that a little bit. We started putting this huge TapouT logo and we put the InYaFace.com. This was before we actually had TapouT.com. So, we put InYaFace.com across the front. Hopefully people saw it when they were watching the UFC and they would write it down or something. And we had a little tiny ad in Blackbelt Magazine. So, those were the two ways that they could find us.

Andrew: You told our producer that you would start getting calls from all over the world. People from Japan would start dialing in to get the shirts.

Dan: Yeah. It was so crazy. In the middle of the night, I would get a phone call because sometimes I was too cheap to forward the phone to the answering service, so I would turn up the phone really loud and I’d just put it next to my bed and if it rang, I would jump up and try to take the order.

There were a couple times where people told me, “Yeah, I called yesterday and somebody answered the phone and they sounded like they were asleep.” And I was like, “Really? You must have got the wrong number.” But it was me. I was just so dead from working two jobs that I guess I answered the phone and didn’t know it and I hung up them. But I would take the order at night.

Andrew: Was it InYourFace.com or InYourFaceApparel.com?

Dan: It’s InYaFace.com.

Andrew: InYaFace.com. I’m trying to go to Archive.org to see what it used to look like.

Dan: InYaFace. It’s funny. It’s a joke.

Andrew: Oh, let’s see, 1999. I’m going to click over. If you can see flash animation–great, I can. Let’s enter the site. I like how for a long time, all the navigation had chokeholds over it.

Dan: Oh yeah.

Andrew: This was even back when you switched over to Tapout.com.

Dan: Yeah, the choke was our logo at the time. So, eventually we came up with this other logo right here. But that was kind of our swoosh. So, we had this choke logo until we had this whole lawsuit with it.

Andrew: What’s the lawsuit?

Dan: The guy who drew it, back then we didn’t have signed paperwork. You just did it. Once you start making money, everybody comes out of the woodwork and starts suing you. It was ridiculous. So, we just said rather than fight this guy in court, we’ll change it. There you go. Now what?

Andrew: I’m now looking at a page from around 2000 it says about TapouT. “Exciting. Cocky. Brilliant. That’s what’s being said about TapouT clothing, the biggest name in no-holes-barred fighting,” now called mixed martial arts. There’s always a lot of attitude in your about pages. I’ve gone through it for years and now I can see what InYaFace looked like, it’s still there.

Dan: Yeah.

Andrew: At what point does it start to make–actually, before we even get into that, what did it cost to sponsor a fighter? I heard this. This was shocking to me.

Dan: Well, at that time, I was paying fighters as low as $300 to fight in the UFC and sometimes as much as maybe $1,000 just depending on who they were.

Andrew: Because they’re in the ring, it feels like it’s just huge and more expensive and more dramatic. I interviewed the founder of HeadBlade, the razor that you use to shave your head, he did that too. He started sponsoring UFC fighters. He told me the prices. It wasn’t nearly what I thought it would be. I don’t remember the numbers, but it was peanuts compared to other sponsorships.

Dan: At that level, especially at that time, they weren’t getting paid a lot. So, an extra $500 or $1,000 really means a lot to them. It’s the difference between actually making some money–there’s no way you’re doing it, at that time, a lot of those guys just built the sport for the guys that are doing it today. Even today’s guys, unless you’re in the top ten, you’re not making enough money to live. If you are not working, it’s a struggle, for sure.

Andrew: Alright. And then you start to turn things around and go from a business where you’re selling t-shirts by yourselves at events and taking your own calls to one that’s really growing and becoming a multimillion dollar operation. Let me take a quick sponsorship break and we’ll talk about how you grew it.

The sponsor is Toptal. As I said earlier, when you’re ready to go up from those cheapo freelance websites where you get developers who maybe don’t follow-up, maybe they tell you that they sent you the work but they don’t, maybe they sent it to you but they sent it to five other people, who knows? When you’re ready to upgrade, go to Toptal.com/Mixergy.

Dan, is there like a development project that you wish you would do, that if you had your ideal developer, is there one that you would do that you would jump on right now?

Dan: Yes.

Andrew: What is it?

Dan: I can’t tell you.

Andrew: Not describing it in detail, just broad strokes.

Dan: It’s a social media app that I think hasn’t been touched. I really looked at the space and I don’t see anybody doing it. I tried to find somebody who was doing this idea. Me and my girlfriend were just talking over coffee one day and we said, “Nobody is doing this. We should do this app.” It’s just time right now. I’m going to do it. It’s coming.

Andrew: Time really is the issue. A lot of people who are listening to me have full developer teams, some have none. Even the guys who have full developer teams, the developers don’t have enough time to work on new ideas.

So, they go to Toptal and they hire one of their developers either part-time or maybe temporary full-time or maybe even long-term full-time and they get a real developer who’s part of the team. They work through Toptal. Toptal vets them. Toptal makes sure they’re a perfect cultural fit. Every company, every cultural fit has their own quirks. Their prices are reasonable.

Where they really excel is in the insane quality of their developers. I had dinner at my house with entrepreneurs, two of them before they started their businesses said they tried to work with Toptal as developers and Toptal turned them both down. One worked for a company that I interviewed here, one of the best funded companies in Silicon Valley. He was one of their top engineers. Toptal just said, “No, you’re not a good fit.” It was kind of embarrassing, but that shows what Toptal is about. They want to get the highest quality people.

We’ve worked with them at Mixergy. High quality people, super responsive–they can’t disappear. There’s a company managing them. It’s Toptal. If you want to work with Toptal, I urge you to go to Toptal.com/Mixergy. That’s Toptal.com/Mixergy. You can just call them up and say, “Here’s my project.” They will talk to you like real human beings. Forget going to a website and going to some freelance website’s search engine and hiring someone you’ve never heard of. They’ll talk to you like a real human being.

In fact, I will personally introduce you to Scott Ritter, the guy over there who’s managing talent at Toptal. Shoot me an email. It looks like they created an email address for me, Andrew@Toptal.com and I’ll personally introduce you to Scott. But if you’d rather just go directly go to the website, go to Toptal.com/Mixergy.

Here’s the offer that they gave us. Let’s see… Mixergy listeners get 80 free Toptal developer hours when you pay for 80 in addition to the no-risk trial period of up to two weeks. Think about that, a trial period of two weeks with a developer and they’re going to give you 80 free hours of Toptal developer work. That’s amazing. Think about it, 80 free hours. Alright. Go to Top–like top of the heap–Toptal–Tal as in talent–Toptal.com/Mixergy.

Dan, I noticed you wrote that one down too.

Dan: I did. I’ll check these out. I love new companies. Hopefully someone is fixing a problem when they start a new company. There are so many out there you haven’t heard of. I love to just check new ones out and see if it’s a fit for me.

Andrew: I do feel like Toptal outside of the development world is not very well known, even though they got money by Andreessen Horowitz. That’s a huge, huge venture capital firm.

Dan: Yeah.

Andrew: Alright. So, selling t-shirts over the phone is not what’s going to get you to a company that eventually reached, as we’ll see, tens of millions of dollars in sales. What was the thing that let you really take off? What did you do?

Dan: Well, I think the first event was obviously the UFC being purchased by some billionaires out of Las Vegas. They put some rules behind it. They brought it into Vegas. They got it legalized in California. That really started changing the landscape of the overall sport, which were attached to. And then they created this show called “Ultimate Fighter.” We became a part of that show. The UFC really worked with us too. We didn’t have the money to keep up with them. They knew we were this real guerilla marketing force that everybody related to and everybody knew.

Andrew: Why? Why wouldn’t they just go solicit one of the major companies and say, “Let’s bring in Under Armour. Let’s bring in Nike. Let’s have them create something.” Why work with you, Dan?

Dan: I think they would have if they could have at the time. But the sport still had this stigma. It was just coming out of the dark ages where it had pretty much hardly any rules. I just don’t think anybody would have jumped on board. We were one of those companies that were willing to do it. We were already in the space. We had grown with the sport at that time. So, as much as the sport was growing, we were growing too. And it allowed us to just be–in a lot of ways, we were in the right place at the right time. We just kept growing with the sport.

Andrew: So, they come out. The show comes out. You get your logos on the mat, which means that people see you throughout the fight. You get your logos on the flag banners. What’s a flag banner?

Dan: What they did that we had never anticipated was they had brought–you know how when you’re watching a sports show sometimes, it says, “This has been brought to you by TapouT, our friends at InYaFace.com.” And they’d put it on the screen. They did that twice during the event.

This was their highest watched event in the history of the UFC. There were some 10 million people watching it at one point, watching what is still one of the top ten fights in the UFC ever in the history of the UFC, Stephan Bonnar versus Forrest Griffin. So, you have our logos on the mat, you’re saying, “This is brought to you by TapouT.”

It literally shut down our website. My web developer called me in the middle of the night. He’s on the East Coast. It was probably 10:00 our time, so it may have been 1:00 in the morning his time. I don’t know if he’s got some emergency setup or something is going on or maybe he was just up late, but our website crashed in the middle of the night because we were getting so many orders. He said at one point we were getting 3,000 orders an hour. It was insane. We were coming from doing maybe 10 orders a day. Now we’re doing 3,000 orders an hour.

Andrew: That was a huge turnaround.

Dan: It was huge for us.

Andrew: Were you working a full-time job up until then?

Dan: At that time, no. I had already quit my job.

Andrew: What was the deal that allowed you to get so much promotion from UFC?

Dan: I think they wanted to let the core customer know that they were listening to them and that this company, who had been built and forged in this core space on the underground forums that were a part of the sport since–everybody says from the beginning, even though it wasn’t until 1998–they just thought it would be a good move and show that it wasn’t like this big corporate company coming in to take their sport by working with us to be a part of it.

Andrew: I see. So, you were giving them credibility just as much as they were giving you credibility.

Dan: Yeah.

Andrew: The guy in Japan who was buying your t-shirt because he’s such a big fan of UFC now sees you on the mat and not Nike and he feels like, “This is my sport. Now look at how they’re all growing. People now are getting to see the shirt that I bought and where it comes from. They’re going to see my sport.” How much money? Was it like the ice cream cones where every time you sold an ice cream cone back at the rave days you had to pay? Did you have to pay them per shirt?

Dan: No. At the beginning, there were a couple times–the very first time we had logos on the mat, the UFC just gave it to us. They didn’t even tell us. We got to the event center. I remember Lorenzo Fortitta, the billionaire who owned the Station Casinos and Green Valley Ranch and Red Rock in Vegas and Gordon Biersch Beer Company. They’re the billionaires that bought the company.

I remember him taking us into the event center before the show, maybe a couple of days before the show or a day before the show and he walked us in there. We were standing in the seats and we pointed down and we’re like, “Are those our logos on the mat? Oh my gosh.” The feeling that came over us–we had fighters walk in, in the event, but we had never felt like we were a part of the event. To have our logos on the mat–they just gave it to us pretty much. It was the first time we met with them and worked with them.

Andrew: Lorenzo Fortitta according to Forbes magazine is worth $1.5 billion. He’s not in the business of giving things away in order to become a billionaire. Do you feel he was also trying to showcase for other sponsors what their ads could look like on the map or was he just trying to cultivate you, have you grow with them so you guys would work together?

Dan: You know, Lorenzo was a fan of the sport too. So, he actually got into the sport because he was training in the sport. He was working with one of the top guys in Vegas and he still trains today. So, he’s a fairly young dude. I just think that he loved the sport. That’s why they bought it.

It was a lot of work for them to turn that company around. I think he really loved working with us, loved us, loved what we had brought to the sport. He hadn’t known us personally. So, all he had ever seen was all these fighters walking in with TapouT clothing. So, I think he was probably partially a fan too.

Andrew: I see.

Dan: I think it was a good business move. It was a good move personally for them and then a way for them to cultivate us as a company and make money from us in the future, which we did. We eventually paid full shebang. We were taking out ads on Spike. We were spending millions and millions of dollars with them.

Andrew: I see. You get all this influx of sales, though, and you credit card processor, instead of being happy, is feeling what?

Dan: So, after that reality show, they had the finale and they put our logos on the mat. At that time, we traded out clothing. It may have been some cash. But it was like a trade of clothing that they could sell at the event and they put our logos on the mat for that trade. We didn’t know that they were going to put our logos on the show itself. So, when they did that and it crashed our site, all we could do was capture the credit card service. So, we couldn’t actually process the credit card.

This is my web guy telling me this, “I can’t process the credit card. But we can capture the credit card information and then you’re going to have manually enter every single one of them down the road.” I was like, “Okay, whatever you’ve got to do but we can’t lose the sale.”

I felt horrible. I didn’t want us to actually get shut down or lose a sale or something. So, I said, “Let’s do that.” So, we just captured all the credit card info and then we started manually entering all the ones we could even though thousands of them went through at the time. We still had to manually enter a bunch.

And then like a week later, my credit card service calls me and says, “I know you guys just did like $300,000 last week and you’re not qualified to do that. You’re qualified to do $25,000 or $50,000 a month. So, we’re going to keep all your money, just so you know.” I couldn’t understand why–this is what every business wants to do. This is what we’re trying to do, build our companies, make more money. We make more money. You guys make more money. Why are you doing this to us?

They were afraid that we were doings something illegal and they didn’t know what we were doing and that people might get a bunch of charge backs and we wouldn’t have the money to pay them. What they didn’t understand is I need the money to go make the goods to sell these people.

Andrew: Oh, they do understand it. They just don’t care.

Dan: Yeah.

Andrew: They’ve got to.

Dan: I lost–after two weeks of talking to them, I literally lost it. I could not–

Andrew: What did you do? How did you react to that?

Dan: I threw every piece of furniture in the office out in the parking lot. I would just grab a chair and I’d walk out and I would throw it as far as I could and I watch the legs break off and I had never fallen into a situation I couldn’t figure a way out of. This was just…

Andrew: I heard you punched a tree.

Dan: I punched everything. I punched a tree. I cried. I sat down on a curb and just thought our business was over. I thought the success crippled us.

Andrew: “We finally got here and now it’s being taken away.”

Dan: Right.

Andrew: And so how do you resolve something like that?

Dan: I know I made a bunch of calls. I had called the guy who early on was going to invest in us. He gave us some money and then backed out at the last minute and we had to pay it back. So, I called him and he turned us down and I had no clue. I was trying to tell him like, “This is success. This is a good problem for us to be having. You’re at the right place at the right time.”

I know before, he sat us down with his bookkeeper and said, “I don’t see how you guys will ever make it. There’s no way. You guys don’t have a good business plan.” But this time I’m coming to him with sales, people trying to buy our stuff. He still just didn’t believe in it and he’s just too skeptical.

So, I called my partner and I was just telling him, “Bro, I don’t know how to get out of this. There’s no way. I’ve done everything I could. I talked to the credit card companies. I tried to get them to funnel us just a few dollars to get our product made.” They gave us like $10,000, which wouldn’t even put a dent in the problem.

He said, “Remember that guy we were working with, why don’t you call that guy?” We were doing this little side deal where we were providing some clothes for this guy’s infomercial. He was in the infomercial business. He had made hundreds of millions of dollars in the disco era back in the 70s. He had produced guys like Phil Collins and Diana Ross.

Andrew: Who is the guy?

Dan: His name is Marc Kreiner.

Andrew: I’m a big fan of infomercials and I don’t know him.

Dan: Yeah. He was behind the scenes, so he wasn’t in front of the camera. He owned this infomercial business. So, he was doing like a Girls Gone Wild type one and he had the workout-type one and he had a food one and all these different infomercials that he put online. One of them was a fighting one. So, he had all these fighting videos and he wanted to include a skull cap with it. So, we were doing some business with him.

So, I called him and I told him–we knew he did a lot of credit card processing because that’s how he processes all his business. I poured my heart out to him and told him exactly what was going on. He understood. He said, “I’ve been there. I understand what you’re going for.” He said, “Listen, I’ll call them. I’ll sign for you guys. You’ll get $500,000 worth of credit and then we’ll move you over to my credit card guy and we’ll get a kickback too.”

Andrew: So, he got the money. There’s a kickback, which is good on him. But he signed for your debt.

Dan: Yeah.

Andrew: Not debt, but signed–I guess there wasn’t a huge risk there. The big risk is that you can’t fulfill your orders and customers start to ask for their money back and then that has to come back out of his pocket.

Dan: Yeah. It would come out of somebody’s pocket. We had to figure it out. He just knew when we went into his office that first time and the passion we had behind our business. We were throwing out big ideas that we were going to eventually do, we’re going to have our own show, TV show and “The Ultimate Fighter” was coming out and all these different things were happening.

“We’re going to be huge. We want to be a part of your company. We’ll put out these skull caps.” We gave him the skull caps for free, but we wanted to include a catalog with it and we wanted to include a way to get a hold of us and we wanted to make sure we were represented on the commercial. So, he did all that for us. We just always had these big dreams and he saw that in us and he saw the tenacity and thought, “Hey, man, these guys,” I think he just believed in us.

Andrew: You eventually did get that TV show that you told him about. You told our producer at Mixergy that that was maybe your biggest day together when you heard that you and Charles, your cofounder, were going to get a TV show together.

Dan: Yeah. I think probably the day I remember most about our business obviously besides the tragedy of my partner being killed was us, we were halfway through filming our TV show and we were coming out on what is now like NBC Sports but back then it was called Versus and we were at the Hard Rock. We were showing right after one of the WC events, which was a company bought by the UFC, which was like where all the lighter weights would fight. So, they had this WC event at the Hard Rock.

Right after the show, we went into the bar and they put our show on all the televisions in the bar. I remember sitting in there watching our show for the first time, the very first episode. The little teaser thing comes out first, the opening, we couldn’t believe it. It was like even if you had no money, just to know that you had your own TV show.

Andrew: How did you make that happen? That helped escalate the brand. It helped humanize it. It helped grow sales.

Dan: It originally started because when we saw their show, we thought there were a lot of holes in their format. We liked the idea that it was set in this house and they kept all these people in the house. We felt like there wasn’t enough backstory, especially back then at that time. Now they do a lot of backstory with the fighters. But back then, they didn’t do so much backstory.

So, you didn’t really know who these guys were as much. We thought, “What if we created a show where that’s all we did was focus on one fighter and you go back to where they grew up and you talk to their coaches and you meet their parents and you find out how these fighters got to be where they were.”

I think that’s what really made the sport big. The Fortittas knew or Dana White knew that they had to give some backstory on these fighters. That’s why “The Ultimate Fighter” was born. We thought we wanted to take it one step further and really go back into their neighborhood and see who they were and then follow them to this fight and then eventually they would fight and we would decide if we were going to sponsor them or not.

That was just a dream of ours and we started talking to the producers of “The Ultimate Fighter” show and they liked the idea and eventually we put together a deal and the rest is history.

Andrew: What did you do to show that you were a showman, that you personally were a showman? It’s not just about the idea. You needed to look good on camera. You needed to pull this off. How did you show them that you could do it?

Dan: They already knew that when we walked into an event, we signed more autographs than a lot of the fighters. We would go into an event. Nothing against fighters because the fighters were the lifeblood. That’s what helped grow our company too. The fighters are the lifeblood of our company.

But when we’d go into an event, everybody–we had been in all of our ads for years, for the past seven years, we had been in every single one of our ads. It was us doing these crazy things. We had created videos. We had our own videos, like if you purchased over $100, you got this free video.

Andrew: I see. So, by then they knew you were a showman because you had already done it. What’s the craziest thing that you did just to get attention or the most effective thing that you did for getting attention?

Dan: Attention? Just walking out, we had makeup on. There was nobody else walking into an event with makeup on and a bandana on. One of the things we used to do was we’d go to Magic and we knew Magic as the clothing convention show. We were sponsoring Kimbo Slice at the time. We wanted to create this big, “Who are these guys?” This was actually before Kimbo, our first year doing Magic.

We wanted to create this crazy, “Who are these dudes? Where’d these guys come from?” So, we hired this camera crew to follow us around and film everything and bodyguards. We hired bodyguards and we hired a camera crew. We went in and did Magic. Everywhere we went, we had an entourage of like 30 people going and people are wondering, “Who are these guys?” And they’re following us around. It just created this, “Who are these guys,” type message.

Andrew: Next time I go to a conference, I should just go onto a Craigslist and just hire bodyguards to follow me around, right? If you have four guys just walking around looking at everyone suspiciously, people have to wonder, “Who’s the fifth guy who’s being guarded so tightly?”

Dan: It’s crazy what that does.

Andrew: So, how would you guys come up with this? I talked to Alexis Ohanian, the founder of Reddit. Every time he comes out, he and I, I did an interview with him on stage at an event. I said, “You didn’t just walk out. You walked out here wearing a shirt that you knew would get a reaction from the audience. What do you do?” He says, “I smoke dope the night before and I just think creatively, what can I do to stand out?” How did you guys come up with your look, with your ideas for getting attention?

Dan: Well, we were always just trying to shock people. I think we created this part of the website that was what we call our band area, where we sold shirts. We were like the guys willing to do what nobody else was willing to do. So, while everyone else was trying to be somewhat politically correct, we would just… I remember some girl, this was early on.

We had to change as we got into stores. But when we were on the web, we could do whatever we wanted. This girl had sent a picture to us of her lying on the bed naked on her hands and knees and laying on top of one of our shirts. She had taken a picture from behind where you couldn’t see her face and sent it to us. So, we took it and made it into a t-shirt using TapouT logos to cover up all the special spaces. We threw it up online and started selling it. It became one of our top-selling shirts.

We had shirts like “Represent MoFo,” we just had all these crazy things that we would do that nobody else was willing to do, wearing the makeup, wearing the clothes, walking into a place like we did, making the types of clothing we did and the types of shirts that we did. We just wanted to do it bigger.

We kind of felt like we had to create this mouse in front of the flashlight because early on, we weren’t making a lot of money but everybody thought we were huge because we were on television. We’re on this “Ultimate Fighter” show. We’re on all the UFC Pay-Per-View shows. These guys are walking in with these big old logos. We’ve got three fighters in the show. I’ve barely got a pot to piss in. I’m living in an condo. I’ve got two kids and I can barely pay my rent.

So, we had to create this kind of mystique that these guys were huge. Nowadays that’s not such a big deal because I think people can relate to smaller companies that are working hard to build what they have. But back then, it was like you’re competing with all these big companies. You were only online.

People wanted to know that you’re actually successful, that you’re actually making headway because their choice was, “Do we buy Nike or do we buy you guys?” If you guys are nowhere near Nike, why would we get behind you because we don’t even know if you’re going to send us our shirt.

Andrew: This was before the Lamborghini. You were driving a $1,000 van at the time.

Dan: Yeah. I always wanted to have a van. In hindsight, now all I want to do is be out of an office and not have an office or anything. I’d rather work out of my house or from a Starbucks or something. But back then, in my mind what success was, was having this huge warehouse with your logo on the side and having these vans and RVs and selling trailers, driving around with your big logo on it. That was always something I wanted.

I remember buying our first $1,000 van. I drove to Reno Valley. It was this white, beat up van. It had this huge dent in the side where you couldn’t even open the sliding door to get in. But I bought it for $1,000. It was a 1986 Ford with a big block engine in it. It was the baddest van. It was so sick.

It sounded like scary driving down the road because it was so loud and it had no muffler on it. It was so loud. We took it to a place. It cost me like $1,000 to get it painted and fixed up and all the dents taken out of it. We put big TapouT logos on it and these steel black rims on it. It looked scary. It looked kind of like “The A-Team” van.

Andrew: I remember that van. And then you did it. You said you hit $100 million in sales at the height?

Dan: Yeah, over $100 million in sales.

Andrew: Why did you sell?

Dan: Well, in 2009, my partner got killed in a car accident. It just became not fun anymore. When I was in it, I was entrenched in it. Me and my other partner, Scrape–I loved the fighters. I loved the fans. That was the part that was fun. But when you create this business with somebody–me and Charles would go sit in a Carl’s Jr. and talk for 12 hours. We’d get there at 11:00 and we would close the place down just sitting in this booth talking about ideas and where we saw the company going and some new plan and where we going to travel and, “Where are we going this week?”

He didn’t have a driver’s license. We didn’t have hardly any money. I’d scrape together enough money to go–I’d never been on a plan until I was 26 years old, so I had never been anywhere. My first flight was flying to Hawaii to go sell at an event. I had never been outside San Bernardino.

So, going to these events, we’d make our money to be able to survive and keep the business going. So, sitting at Carl’s Jr. was just the best time of my life. I remember that stuff, those conversations more clearly than some of the big things that we did, like even being on the TV show and filming and things like that.

You have your best friend, sharing that time with him and creating those ideas with him and then watching it come together, that was what building the business was about for me. Then when he passed away, it just wasn’t the same. It just wasn’t the same. It had grown big. I’m sure you’ve talked to entrepreneurs or you know as an entrepreneur that somehow when a business gets so big and it kind of feels like it’s beyond you. It’s almost like your son who’s 19 years old and it’s time for him to go to college. It was just time for it to go somewhere.

Andrew: I’m a little afraid to ask you about Charles’ death. It just seems too personal, even now five years later. But when April, our producer, asked you what didn’t we think to ask you or prepare you for, you said, “I think I’d like to talk about his passing.” So, let me ask you this. The day that it happened–he was killed by a drunk driver?

Dan: Yeah.

Andrew: Do you remember getting the call?

Dan: Yes. I remember I was in an LA Fitness. It was probably like 8:00 in the morning or 8:30 in the morning. And I was in an LA Fitness working out. I got a text from somebody, he’s a manager in the MMA space. He had said that, “Do one of you guys drive a red Ferrari?” And I said, “Yeah, Charles does.” And he goes, “Have you talked to him today?” And I said, “No. What’s going on?” And he said that he had heard that that red Ferrari, the owner of TapouT had been in an accident and he was killed last night.

I started texting people. I got texts from another guy who’s a good friend of mind and a fighter who lives in Huntington Beach because that’s where Charles lived. Charles lived in Huntington Beach. He said that he had heard that Charles had been in a really bad car accident last night and he had actually driven by the car accident. I said, “Let’s go.” I took off. I was with my girlfriend at the time. We ran and jumped in the car and drove straight to the office.

I just kind of setup a headquarters where I called the coroner’s office and the police department in Irvine and I was trying to get more information. I was online. Things were starting to trickle out at that time. I was getting a lot of messages. I was talking to my partner, Scrape, who was up in San Luis Obispo for some reason. I can’t remember why.

He started driving down. He said he got pulled over twice driving down because he was driving like 100 miles an hour out of control and passing people on the right. I was like, “Dude, you’ve got to slow down, man. You can’t drive like that. It’s not going to do anything for you. We’re on the phone. I’ll keep you updated.” That was it, man.

The next thing I know, I get a hold of the coroner and he says, “I really can’t tell you. You’re not family.” I said, “Listen man, this is my best friend.” I get all choked up and crazy.” I said, “That’s my best friend of 20 years, man. Please, give me something.” And he goes, “Well, I could tell you that I think it was Charles and I think he is deceased.”

Andrew: Wow.

Dan: So, that was the starting of a nightmare after that.

Andrew: What was your personal nightmare with that?

Dan: It was just he didn’t have any will in place. He didn’t have–if I tell anybody anything, please go get something in place for your family. He didn’t have any of that in place. It really made it really difficult for his family and for just everybody. It was just a really hard situation to deal with. Not only that, the fact that the company was having to deal with it and it was 2009. We were going through a depression and all the things with the company were kind of–

Andrew: Were you personally going through a depression after that?

Dan: You know, kind of like right now, I felt fine, but then I’d think of one thing and I would just be a mess for a second. So, I was just trying to battle not being in that place. I knew the company had to keep moving forward. We were getting interviews and calls and people were coming in trying to get–we had security out at the front gates because news cameras were trying to get in the front. Everybody wanted an interview.

There were all kinds of MMA websites that wanted interviews. There were just a lot of people coming at us and having to deal with his funeral. It was just a lot to deal with all at once and not something I wanted to deal with at the time, especially with the business being a little bit depressed with all the sales and things.

Andrew: Is part of the reason you had to sell because his family had to pay taxes on his share of the business?

Dan: That didn’t become an issue at the time, but what was an issue was that we had a large loan out from a private equity group who had come calling in 2008. So, we had to come up with like $12 million in a matter of a few months to pay off these guys.

Andrew: Because the covenants on the agreement said that if you hit these numbers, then you have to pay back the loan?

Dan: No. They went into–well, I guess it turned out that there was a problem with the guy who was running the fund. He was spending a lot of that money personally. So, when the depression happened, this kind of Ponzi scheme collapsed within itself. They were having to collect money from all the people that they had loans out to. We had a revolver with them. So, they were calling in their loan. We had to come up with it in like three months.

We weren’t in the business of keeping that much cash around. A lot of it was based on our inventory and receivables and things coming in. I knew we could come up with it, but it was just a lot of pressure, that going down at the same time with this whole stuff with Charles going down. It was just a big mess. Not fun. I got into business to have fun. I got into business to be excited and create stuff. It was just not a fun time, not a fun time at all. I was trying to keep a smile on my face. We’re doing interviews and trying to keep upbeat. But the truth is we were just crying inside.

Andrew: Yeah. I kind of saw some interviews from then and I couldn’t tell. Maybe now with this perspective it would be different. You sold to Authentic Brands. Actually, this MMAJunkie.com website says that the time of the sale, 2009, your sales were $200 million nearly.

Dan: Yeah. North of $100 million.

Andrew: I didn’t even get into the whole WWE sponsorship that you guys got that’s now right on the homepage. Let me just ask this question about the sale. When you guys are such integral parts of the brands reputation, how do you sell a company like that when your customer base knows you? I’m seeing them. They’re talking about you on MMA sites like you’re the hero, you’re the celebrity.

Dan: Well, the whole idea was the we weren’t going to leave the company. So, we were still going to be a part of the company. So, I’m still the president of the company and we were going to continue that relationship. That wasn’t going to change a lot, but it was going to take a lot of the responsibility off my shoulders and they were going to uproot and move the company to New York. Their whole team was going to deal with the day to day.

I first thought I was going to have an office, but I soon realized they were going to close down that office. It was kind of a shellshock because I wasn’t ready for that. I ran into a little bit of a depression for that reason because I had built this huge company. I had a 100-seat movie theater inside the office. We had millions of dollars in these offices. This company just decided to close them down.

I thought, “What am I going to do? I’m going to work out of my house? That doesn’t make any sense. I need an office. I need an office to go to.” But in hindsight, that was probably the best thing that ever happened because I like not going to an office now. I like how that frees me up.

Andrew: But Dan, I’m going to TapouT.com. Your personality is no longer on the site. I don’t see your face on the site anywhere. The URL goes to SportsToday. It’s not TapouT.Shop.SportsToday.Dept.aspx–the heart of who you guys are is gone from it.

Dan: Well, those are issues that you deal with, with the company. I also didn’t want to be the face of the company anymore because it was us three. We had built this company. If it wasn’t that anymore, I didn’t want to be this front guy without our partner. That was who we built this with. It’s kind of like without him, it’s not the same. It wasn’t the same thing anymore. It wasn’t we lose a Beatle and we get a new Beatle. That didn’t work out. That wasn’t what I wanted to do.

Andrew: Now I’m on Lessons.biz. Anyone who wants to see a photo of what you guys looked like as you were doing it, that’s where it was. I knew there was a tab open but I couldn’t figure out which tab it was. It’s the Lessons.biz tab. And on the bottom, you look like a professional that could probably do my taxes. You’re a business man on the bottom. But on the top in the video, I see what you three look like at the height, when you guys were really drawing attention and the best thing anyone could do is hit play first and look at that first screenshot and that will give you an image of what you guys were doing.

Dan: That’s so crazy.

Andrew: Why this? I understand you have a lot to teach. Why create Lessons.biz as a follow-up business?

Dan: Throughout the years, I had so many people coming at us about starting their own clothing company. So many people had questions. You give them just enough information to get themselves in trouble because you don’t have the time.

I remember coming out of Target one time with my kids. This was when my kids were smaller. I’m coming out and this shady-looking dude comes walking up to me. I’m thinking, “He’s going to come ask me for money or something.” So, I’m walking up to my car. I’m pushing the cart. He goes, “Man, aren’t you that guy from TapouT. Man, I have this clothing company.” He starts talking to me and we talked for 30 minutes out in the parking lot.

I’m like, “I can’t tell him anything in 30 minutes that’s going to change his life or change the way he runs his business,” maybe some little pieces or little things I did or things you can do better. But it’s the overall picture that will really change the landscape of your business. If you change one thing and that’s good and that helps. But the clothing business is so hard and it’s so competitive that if you’re not doing all these things.

We were lucky to skate through and be able to keep our business afloat. It’s such a competitive business. If we weren’t riding that wave of the UFC, there’s no way on this earth we would have made it. It was way too competitive, way too hard to manage receivables and just a really hard business to be in.

But I figured, “How could we create something where you can stay in touch with somebody and put all the plans down that they can come back and look at?” I was talking to a friend of mine who we had taught this t-shirt class at one point through Learning Annex–I don’t know if you remember.

Andrew: I remember Learning Annex. They’re not around anymore?

Dan: I don’t know.

Andrew: I don’t see them.

Dan: Not the way the used to be. They used to have these books everywhere and you would see them everywhere you went. You could get them and find classes. It was such a cool business. I really wish somebody would bring that back. I’ve even though about bringing that back. We taught a class about how to start your own t-shirt company, me and Andrea Lake because she had success in the t-shirt business too.

We just thought, “What if we created this how-to build your t-shirt company business so when they ask us a question, we could actually give them a place to go?” That’s kind of how Lessons.biz was born. That’s what’s brought us right now–it’s probably one of the more exciting things I’m doing, that and a podcast with my girlfriend.

Andrew: It looks like it’s really early days though with Lessons.biz. Right now, if I click the buy now button, do you know where it goes?

Dan: Buy now?

Andrew: Yeah, on the page.

Dan: No.

Andrew: I said, “After this whole thing he had with the previous credit card processor, who is he using today?” I’ll tell you who you’re using today. You’re using PayPal. You’re not even using PayPal’s integration. It’s directly sending people to PayPal. They PayPal you from PayPal.com’s website. That’s why it feels like it’s early days. But I told you before we started, I got carried away watching that intro video. I thought it was just going to be at the top, a video telling us why we should be–actually, before I continue with what I’m excited about with eh video. I saw something happen with your eyes as I said you were going to PayPal. How did you feel about that?

Dan: I was confused about TapouT or Lessons.biz.

Andrew: Lessons.biz. I wanted to see because of what happened to you at TapouT when things are growing, which credit card processor are you using today.

Dan: No. We’re going back to a credit card processor. It’s really early in the business.

Andrew: You don’t even have a credit card processor.

Dan: We don’t have it yet. We’re just starting it right now.

Andrew: Alright. But the video at the top is so good. That’s Andrea? Andrea Lake?

Dan: Yeah.

Andrew: She is fantastic in it because she’s actually teaching things like, “Where do you get your first t-shirt? How do you keep costs low?” She’s really teaching this. It will be completely boring and uninteresting to anyone who has no interest in being in business or is not interested in the t-shirt business. Btu anyone who’s in the t-shirt business will probably want to replay that video. Its’ so good.

Alright. I think that’s everything I’ve got. Let me ask you this to close it out. You’ve heard a bunch of my interviews, now that you’re on the other side of the interview, watching me fire away questions, watching me not interrupt someone else. You said you liked hearing me interrupt people before. Now that I’ve interrupted you, now that I’ve asked you these questions, how do you feel about it?

Dan: You were kind of easy on me. I’ve seen you get on some of these guys. I just love your interview style. Sometimes I listen to–I don’t feel like I’m getting their cookie cutter answers that they always give everybody. That’s why I think I’ve always liked Joe Rogan’s style, even though I don’t listen to Stern on a regular basis, I still understand his style in the interviews that I have heard of him and I liken that to your style and how you interview some people. I’ve listened to some of your early–I loved your Airbnb interview, the one that’s early on, I think in like 2010 or something. It’s a really good interview. But I can tell how much better you’ve gotten now.

Andrew: What should I have given you a harder time about? I’m trying to think of where I could have pushed a little bit further.

Dan: You know what? It’s mostly when you found that people were hiding something. Maybe you we retrying to pull it out of them.

Andrew: That’s the thing. I don’t think you were hiding. You were willing to tear up here.

Dan: I never think I’m ever going to get like that. If you tell me I’m going to jump in an interview and not get like that, I totally believe I can get through an interview fine without having those problems. When I talk about my kids or I talk about my kids’ future or I talk about my best friend 20 years who I built this company with and spent every waking moment trying to build something and make it happen and realizing dreams that you weren’t sure about but ultimately came true and then have that all kind of taken away, just emotions/

Andrew: Except for Charles, is your life perfect right now? I don’t know who you’re married to now, but I’ve seen all the women that you were with before. Did you hire them on Craigslist along with the bouncers that were following you at conferences?

Dan: Don’t say all those women.

Andrew: Maybe it’s just the same woman who just knows how to look great so many different ways. It seems like your life is perfect. Is there a big challenge right now?

Dan: I think kids are a challenge. I’m not with their mom and having the kids away from you, building a business–

Andrew: Did she take a big piece of your company, of your exit?

Dan: No.

Andrew: How did you avoid that?

Dan: We were never married. We’re like great friends. I totally take care of her. I think one of the best things I ever got to do was buy them a house and built a huge backyard for them with a pool. They have everything they want without trying to spoil them. I don’t want to spoil them. I want them to have this entrepreneurial mindset. I started a yogurt shop for my daughter. She’s 16 years old and she learns how business is ran. I want to stay grounded. I really feel like I’m happy. I’m super happy. There are always challenges. Life is a challenge.

Andrew: The biggest one is kids or is there something else other than kids? Don’t hold back.

Dan: When you create a new business, that’s a challenge. It’s not just easy. I always feel confident. That’s the difference. I think once you have a success, you feel like, “I can do anything. I feel like I can fly.” Every time I jump into a business, I always start it with the mindset that, “I’m going to make this business work.” I’ve had to close businesses. I’ve had problems.

Andrew: Now is that working on your head, like, “I’m not that infallible.”

Dan: Not really. I know why it didn’t happen. The businesses that I have closed were for one reason or another and I knew exactly what those reasons were. The businesses that I’ve started now, I’m excited about every single one of them. They’re a struggle. None of them are layups. Nothing is a layup. This is a hard atmosphere, working in business, starting your own companies. There are a lot of people out there who want what you have. It’s a hard thing to deal with. Are you willing to stay up later than that person? I don’t think I went to bed until 5:00 in the morning last night.

Andrew: Working on what?

Dan: I was working on the podcast thing and I was bought microphone for your interview, so I was trying to decided what microphone to buy.

Andrew: Which microphone are you using right now?

Dan: It’s called a Blue.

Andrew: Blue is the brand. Am I using a Blue?

Dan: It’s this one.

Andrew: Oh, that one. Tap that mic. Yeah, you’re not plugged in with that mic.

Dan: I told you. Let me see. Oh am I not? Oh man. I thought I was.

Andrew: No.

Dan: Oh boy. Well, see I bought this mic.

Andrew: Are you on a Mac?

Dan: What’s that?

Andrew: Are you on a Mac?

Dan: I am on a Mac.

Andrew: Alright. After this interview is over I’ll show you how to turn on that mic on a Mac. And then I’ll give you the levels on it.

Dan: I turned it on earlier and I thought it would stay on. But I guess that didn’t work out right. I was hoping to use a good microphone for you.

Andrew: Sorry?

Dan: I was studying this program me and my girlfriend put together that we’re going to work with some up and coming entrepreneurs. She has a good following on Periscope, this new Periscope.

Andrew: She’s got a following on Periscope?

Dan: She’s huge.

Andrew: How do I find her on Periscope? I’d like to see who’s breaking out on Periscope.

Dan: SpicyLilPepper.

Andrew: SpicyLilPepper. Oh, I see, as soon as I start typing it in. So, that’s her Twitter account. I’ll go find her on Periscope. There’s no way you’ve got problems. I see what she looks like. I will help you if you like with your mic. I love your style. If I can help you with your interviews, with your podcast, with anything, let me know. I should actually end this interview because we’ve now gone like 30 minutes over time because I just had such a good time.

I could have sold two extra sponsorships for this. Instead I sold just the two. If you guys heard them before, I’ll give you the URLs again if you didn’t get a chance to write them down. It’s Bench.co/Mixergy if you want all of your books taken care of. And if you need to hire a developer who’s like top-notch, go to Toptal.com/Mixergy. Of course, if you like this interview, subscribe to the podcast and rate it on iTunes. Thank you, Dan, for being her. Thank you all for being a part of Mixergy. Bye, everyone.