Andrew Warner: Before we get started, have you seen articles like this on TechCrunch about companies that were launched by startups who joined the Founder Institute? Well, the Founder Institute is accepting applications right now and I want to encourage you to apply right now before it’s too late on FounderInstitute.com. The Founder Institute is a technology startup accelerator, an entrepreneur training program, that launches companies in 13 cities worldwide. What do you get if you’re in the Founder Institute? Training, mentorship, help getting investors, and just about everything else you need to get a startup launched properly. Go apply right now before it’s too late. FounderInstitute.com.
Do you remember Patrick Buckley, who I interviewed? He came up with an idea for an iPad case, then he built a store to sell it. In a few months, he generated about a million dollars in sales. Well, the platform he used is Shopify. If you have an idea to sell anything, set up a store on Shopify.com because Shopify stores are designed to increase sales. Plus, Shopify makes it easy to set up and manage your store. Shopify.com.
Do you remember when I interviewed Sarah Sutton Fell about how thousands of people pay for her job site? Look at the biggest point she made. She said she has a phone number on every page of her site because, well, and here’s a stat, 95% of the people who call end up buying. Most people, though, don’t even call, but seeing a real number increases their confidence in her and they buy. Try this. Go to Grasshopper.com and get a phone number that will make your company sound professional and see what it does to your business. Grasshopper.com.
Here’s the program.
Hi, everyone. I’m Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart. You know what we do here. I bring on entrepreneurs to talk about how they built their businesses, to learn what they leanred along the way from the successes, from the setbacks, especially the setbacks, so that you can take all those lessons, go out there, build an incredible company and do what today’s guest is doing, which is teach others what you learned. Today I have with me Ephren Taylor. NPR says he earned his first million by the time he was 16 years old and in this interview I want to find out how he did it. He later wrote a book called “Creating Success from the Inside Out” which was published by Wiley. I also want to find out about his upcoming book, “The Elite Entrepreneur.” Today, he runs two publicly-traded companies, City Capital Corp and Incoming, Inc. Welcome to Mixergy.
Ephren Taylor: Hey. Thanks a lot, Andrew.
Andrew: In my research on you, your age kept coming up. 16 years old, you were blowing people’s minds. I’m wondering, how old are you now?
Ephren: I’m 28 years old now, so it was a long, long time ago.
Andrew: It does help that you had that in your past, doesn’t it?
Ephren: I guess it kind of helps out a little bit. A lot of people were interested and fascinated about how did you do all this stuff when we were younger. Ft the time I was doing stuff at 12, making video games to the dot com company, et cetera. It helps out a little bit.
Andrew: Okay. Tell you what, my vision for this interview is to do it in a biographical format, so we’ll go back to the first company and build up to what you’re doing today. I know that you got a few stories about Incoming, Inc. and what you’re working on there. We’ll get to that, too. Why don’t we start with, was the first business Flame Software?
Ephren: The first “real business” was Flame Software, which is where I was making video games and selling them to my peers, whether 2-D games, 3-D games. I was in middle school at the time. It was self-taught as far as programming and development, graphic design. It ended up turning a hobby that evolved because of financial need into a real business. Later evolved that into what everybody else was doing at the time, developing websites and software, except I was doing it for the larger commercial companies. It worked out pretty good.
Andrew: How old were you at the time?
Ephren: I started off when I was 12. That was when we produced and sold our first video game. After that, I did a little bit of work for Microsoft on the Gex project. By the time I was in eighth grade, I was doing e-commerce sites and merchant transactions.
Andrew: I see. How were you getting customers who were paying you to build e-commerce sites?
Ephren: They came by word of mouth. It all started when we got a phone call at the house to build a credit card gateway, so we started doing that. Nobody knew how old I was, they just knew some of the programming. Because I had some referrals from other guys who were much older than me who were on the scene, it helped out a lot. A lot of the gigs they wouldn’t take on, didn’t pay enough, tens of thousands, I would get these smaller ones, a couple grand here. After a while, my parents started asking questions on where this money was coming from. It was an interesting experience. It really didn’t set in until I got much older of what I was doing at that particular time. It was just fast times in dot com rush.
Andrew: I also read an article about 10 years old that you got customers on chat boards, too. Right? Where you would go on to chat boards and you’d promote what you were working on and get customers that way?
Ephren: Yeah. Used whatever you could. We didn’t have TV or radio or anything like that happening, so it was all the Internet and it was all evolving. You hang out on AOL long enough, back when they used to charge for it, you can get a lot of things happening. I used to have this tag on my particular site. It was like “Powered by GPROG,” which stood for Game Programmer and it was my little alias on the web. People would call that and go from there.
Andrew: All right. What was the second big business? Sounds like [??]. Do you need to get that phone?
Ephren: Interrupting my office. Hold on.
Andrew: Go for it. Let’s do it on the interview. We’ll see what you’re talking about, see what businesses you’re working on right now.
Ephren: Actually, it’s my lawyer. Hold on.
Andrew: All right. Even better.
Ephren: Hey, Robert? Hey. I’m actually on a live broadcast interview. Can I give you a call back? They wanted me to actually talk to you while I was on the phone, but since you’re my lawyer, we’ll probably keep the client relations. [laughs] I’ll give you a call back in about 40, 45 minutes. All right. Thanks. Bye.
Andrew: All right.
Ephren: That was my attorney, Robert Bovarnick. Check him out if you ever need one. Great guy.
Andrew: What kind of trouble you up to?
Ephren: [laughs] A lot.
Andrew: Public companies get sued a lot. Are you getting sued?
Ephren: All day, every day. I say that as an entrepreneur. Any real entrepreneur’s been in business at the particular top of the chain it’s not necessarily getting sued, it’s suing somebody else. It’s like property retrieval, et cetera. Robert is pretty much our outside general counsel. He represents me on all my transactions. It doesn’t matter whether it’s a merger or acquisition. Him representing me personally, we have a couple guys that owe us money that need to pay up. [laughs]
He’s a Forbes columnist. He does a lot of cool stuff. He’s been with me for the last couple years and has really helped me as an entrepreneur. It’s jokingly that you say that, “Are you getting sued?” I wanted to write a book on when you get sued. Me and him are probably going to write it together. A lot of entrepreneurs just don’t know what to do when you have that disagreement.
Andrew: I feel like you haven’t really been in business until you’re sued. If you create a company and it starts to pull in a little bit of money, someone’s going to sue you or threaten to sue you and you need to call the lawyers. Do you remember the first time you were sued?
Ephren: Yes. [laughs]
Andrew: Tell me about it.
Ephren: Oh, man. First time we were sued, this was back, I did very well as far as in the dot com thing. Made a ton of money. I decide, as any entrepreneur, if you have that bug, you want to cross over to something else, and so I decided to get into real estate. It always seems that I show up when the boom is happening. Dot com boom, real estate boom, bam. Young kid coming out, little bit of money, everybody saw the green side as far as in that industry. Ended up buying a couple properties that you probably shouldn’t have bought and we ended up turning it around, but it ended up costing a lot of extra money. One of the contractors that we got fired. . . You know, they do that Google profile and they see that you got X, X, and X, it’s like a giant target that’s on you. “He’s got money. Let’s sue him!” Ended up getting a case for that.
I think the biggest one that really rattled me was I had bought out probably a tremendous amount of down-time property in the city. This non-profit organization was upset about it because it was a deal that was done between me and Bank of America. Everybody was wondering how did this kid come up with that much cash that quickly to do the deal. I think I closed it in less than a week. I became one of the largest land owners downtown. This non-profit got all upset at me and Bank of America and they sued me and Bank of America, which was their mistake. Since they sued Bank of America, Bank of America flew in four lawyers on a private jet. We’re sitting at court, court case lasted less than 30 minutes, dismissed. It’s like whoa.
But, I ended up having to pay a lot of money. Ever since then, I’ve always had a lot of attorneys, a lot of lawyers, and what I’ll tell any entrepreneur who’s watching this interview right now is that, I’ll be totally honest with you, if you’re going to be successful, just like Andrew said, you’re going to get sued. It’s not a matter of if, it’s a matter of when. The best thing that you can do is have good attorneys around you that review every document that you sign. My philosophy is if you’re doing business with the right people, you’ll never need lawyers. If you’re doing business with the wrong people, that paper’s not going to do you any good anyway. That’s just the way it is.
Andrew: Yep. You know what, though? I found sometimes people just come out of nowhere and they sue. They think they have a relationship with you or maybe they have a marginal relationship with you, but it’s enough for them to sue. When I go to lawyers, one of the first things they’ll do is they’ll work me up. They’ll say, “This is much bigger than it usually is. I have never seen anything this big.” I don’t know why they do that. Maybe they want to pump up their fees or something.
Ephren: Yeah. My lawyer, the reason why I love Robert is because he’s the first attorney that I ever worked with who tries to avoid litigation at all costs. He wrote an article recently, came out in Forbes, about the cost of litigation, is it really worth it as a business decision. He’s changed my thinking about the emotions of it, who’s right, who’s wrong, to looking at it strictly as a business decision. Do we continue on with this case and pay $80,000 over 25 grand to the defendant? I’ll still win, but I’m still out $80,000. Or do we just settle it to make it go away?
People are on two sides of the fence, like, “Oh, you should never settle. Blah, blah, blah. It’s the principle of the matter.” I’m not about the principle. I’m about the money. My deal is I have a company. I protect it at all costs and the people around me. At the end of the day, we look at litigation as the cost of doing business and sometimes it can be an intimidation tactic and sometimes it can just be a total shakedown. We act like an insurance company now that I’ve gotten a lot larger to deal with that.
Andrew: All right. Let’s continue with the story. What was that next business?
Ephren: The next business was an online job search engine for high school and college students. That was one that, technically, I’m most famous for. We started with about $250. We ended up getting about 30,000 students because of some pretty crafty PR. We took what was perceived as our disadvantage and we crafted this story about high school students helping other kids find jobs and employment. The media loved it. With all that exposure, it saved us a ton of money on advertising. We had all these students pile on to the site and that gave us the power and ammunition to go out and get the employers.
Once we started getting the Fortune 500s, the Pizza Huts, the big chains like the Papa Johns, the Citigroups, Sprint, everybody else pretty much fell into. . . We even had the federal government as a client. We’re able to raise right under a million dollars in investment capital while I still was in high school. That got us more exposure, ended up getting us in textbooks. We were in the New York Times, the Boston Globe, Wall Street Journal, LA Times. We were this little outfit from Kansas. Did that for a couple years, left the company.
Andrew: Actually, let’s hold off on left the company. Let’s dig deeper into what you said so far. You built up this job site called Go Ferret Go.
Andrew: The idea was that companies can advertise for teenagers and hire teenagers. Right?
Ephren: Uh huh.
Andrew: Okay. You got the teenagers, now, this is what I read in Forbes Magazine, by spamming. Now, I want you to know on Mixergy, you can be as open as you want about whatever you did. The founder of Match.com said that he got his first customers through spam and other have, too. Is that accurate what Forbes said?
Ephren: It’s technically not spamming. Let me go back before spamming was there. What it was is that we went to the contact profiles for all the reporters that were on the Internet. They had their email addresses up there. We had a good story. So, we took our press release and we clicked on all the reporters, who at that time, before scraping, I’m probably getting too technical right now, was out there, we started clicking and send. The reporter got it. It was a direct email from us. We were two kids. It said, “Hey. It’s our thing.” Technically, it could have been spamming, but hey, that was the best 60 emails we ever sent and it worked.
We were in the newspaper probably like six weeks. You can’t run radio with $200. You can’t take out TV ads, Superbowl commercials like all these other dot coms. We did what we had to do. Even when we got our first client, as far as entrepreneur doing what you had to do, it was just interesting on how we got out of school in the middle of the school day to go and try to run this particular company. As an entrepreneur, you got to be resourceful. I’m not saying everybody go out spamming. It’s illegal now. You go to jail for that. If you have a contact and you can reach out to them, all they can really say is, “Don’t email me anymore.” If they do that, then don’t do it. We sent out a press release, people responded to it, and we got some great attention for it.
Andrew: You want to know something? PR companies, to this day, add me to their mailing list. I don’t ask for it. I don’t double opt in. It’s been years since this practice was considered spam. They still do it anyway. Okay. That’s how you got the students. How did you get the companies on board?
Ephren: We did everything. A lot of your watchers and readers can relate to this. We tried cold calling, doesn’t work at all. Cold call, unless there’s some type of relationship or you’re very good on the phone, granted we were kind of good on the phone, it kind of worked out. We started calling employers and then we tried giving our service away. That didn’t even work. They were just too busy. We learned by the person who makes the hiring decisions, especially the small businesses, they have to run the company, too.
We started coming up with creative, non-invasive ways to do it. One of the craftiest things I think we did was, it’s kind of like how they market cereal. They market cereal to the kid so that they nag you at the house, like, “Yeah, Mom, I want this.” I got two kids. They market everything to the kids. My kids are programmed now by the media, run to dad, ask him, “Dad, will you buy us this? Will you buy us that?” What we did was when we got Papa Johns, we came up with a deal that said, “Look. All these people who are in these positions have kids that go to these particular schools.” We convinced Papa Johns pizza to put our ads on top of all the pizza boxes. We got a lot of clients from the fact that the parents were ordering the pizza, see it come in, and we had this job about HR and placement that was targeted towards their kids and it piqued their curiosity. We got a lot of clients off of that. It even sparked a little rivalry there in the city with it. That was hot.
We also got clients just off the PR that we were getting, the constant media attention, and word of mouth really, really worked out for us. There’s a couple times where I even just straight up walked into people’s businesses and just asked them for their business from that versus a phone call. You’re driving by say a Wendy’s or a Papa Johns. Also, as high school students, we went to a lot of chamber functions, so we were always the oddball there. We were young kids and everybody, all these people were curious like, “What are you doing here?” We didn’t have to say anything because we looked different so they would ask us about. . . We had a chance to talk about our companies. They became so infatuated with the story they were like, “Oh! You got to meet this person. Oh! You need to meet this person.” It became this movement of let’s get behind our own to really help them take it. We had a lot of, what we call, the buzz terms now, crowd marketing, or source marketing, word of mouth, referral programs. We had all that but we didn’t technically call it that. It worked out great for us.
Andrew: I also read that you undercharged, that you charged only $38 for an ad at first before you realized how much you could get for a Help Wanted ad.
Ephren: Yeah. I guess we were thinking on high school students’ budgets and didn’t realize here it is, we’re giving this value service while the newspaper’s charging like $900 a day. Back then, classified advertising was big. People were still running ads in the newspaper. Monster.com was just on the scene. Dice.com. All those guys were in our sector. When we started looking at their prices and packages, we were like, “We’re way undercharging.” We were offering so much more. Not only we were doing the posting, but we were syndicating out our posting to other network sites. On top of that, we were doing live events around it so we were doing concerts, job fairs, we were paying other high school students to go recruit other students to come for the jobs. We had a lot of gorilla stuff that was going on. We were effective.
One of our clients, Pizza Hut, they had a 70-person call center and basically they had two of our competitors that were going away. It was still empty. When they signed on with us, I think we put about 30 some odd people into the seats because we had the market on lockdown. If you wanted to do anything at that time, for about an 18-month period, with high school students, in our city, you had to come through us.
Andrew: [laughs] You were bringing in pretty good money. Why raise funds? Why go after investors?
Ephren: Basically, the company was doing okay, but it still was two students. We had a chance to pretty much sell out to one of the major, I guess, dot com holding companies. I forgot, it started with an I or something. I wanted to take the money. Make no qualms about it, put me on record, till this day, I wish we would have taken the money. It was more money than I’ve ever seen in my life. It was a couple million bucks, everybody was getting paid, let’s go. But, no. You know what? The lawyers and the accountants said, “Look. If they’re willing to give you this much money now, why don’t you keep the company, raise some cash, and then sell it in a couple years for hundreds of millions of dollars?” Everybody had dollar signs in their eyes and I was like, “All right. Let’s go along for this.” College is coming up at this moment, so I figured all right. This is that once-in-a-lifetime opportunity.
We got introduced to a couple investors. They plunked down a chunk of change and we went off to try to build this thing. Had a staff, 13 employees. It was rocking and rolling. It’s just like when you bring on investors, they also start bringing in their people and people with the gray hair, the experienced business people. The culture itself of the company, I think, ended up getting lost in that. It almost ended up not being fun anymore. It went from something that we were doing to help the other kids to actually being that business of X, that rigorous type of system. When you lose that culture, what made us unique, we lost that and we became like everybody else, which lost our unique selling position.
Andrew: What kind of revenues were you bringing in before you raised money?
Ephren: I would say we were doing a couple hundred thousand, really, before we raised money.
Ephren: Yeah. It was really nothing spectacular. When we actually went out to the particular groups, what everybody said was the fact that you guys are two high school students, you’ve gotten to this particular point where you could do that type of revenue and you have no infrastructure, no support, no ads, you’re building a website and designing it and the sales people. Everybody looked at us like, “Oh. All we got to do is throw some money,” and typical dot come model, “and rev this up. We’re going to make millions of dollars.”
Yeah, we did pretty well after we got the capital, got some advisors, got a sales force. We were doing relatively well. We set up a residual component, the whole nine yards. Got the company up to about three and a half million. As two students, we could only do so much. It’s like, you’re in high school, yeah, you’re making more than everybody else, but it’s like why? It’s hard. When you reflect back on those times of the opportunities that were had, but to change the process and the growth that I actually went through, the experiences that I have, I wouldn’t change that. I think it’s made me the entrepreneur that I am now, to have those experiences.
Andrew: Did you say that it was three and a half million in sales that you guys brought in at your height?
Ephren: No. That was our company valuation.
Andrew: That was when somebody offered to buy you out, that’s what they wanted to buy you out for?
Ephren: Yeah. That’s why I was like, “We should have taken the money!” [laughs]
Andrew: Back then, that was tiny.
Ephren: Yeah. I know. That’s the thing. That’s the whole debate. I was looking at it from the standpoint of we were two 16-year-old kids. We don’t know how to value a company, to do a proper valuation. You pay $30,000 for this valuation company to come in. You pay another 150 grand for this marketing logo focus groups, changing colors. There’s somebody nodding their head, went through the exact same thing we did. All these particular things, and then you have these valuations.
Back then, nobody knew how to value a dot com. Do you value it off revenue? Do you value it off of potential? If I would have had the company that we had back then, now, we would have been like Myspace. The valuation Myspace got for their users was way over what we had. I think we had like 1.34 million little kids or whatever. The thing is you literally did not know what you were sitting on at that particular time. That’s why you reflect back on it and you’re just like, “This is crazy. This is absolutely crazy.” If I knew then what I knew now, but hindsight’s 20/20.
Andrew: You know what? I had offers of $70 to $100 million for my company. I said, “No. Hotmail got $400 million. We’re making more money than Hotmail,” which wasn’t make any money at the time. “We got to hold off until we get $400, $450, whatever it was that they got, we should get at least that.” There’s no sense of it. You said you had 1.34 million kids. How did you get 1.34 million people? That’s not just word of mouth, that’s some clever, clever techniques there. It’s years since you’ve done it, so you can reveal.
Ephren: Yeah, yeah, yeah.
Andrew: What did you do?
Ephren: Back in the day, look, the average kid isn’t making video games in sixth grade. I’ll admit that I had a unique computer skillset. The ability to go out and make something go viral before all these words. That’s why I laugh, what all these sites are doing now, it’s funny to sit here as one of the old-school, original dot commers. It’s like, “Yo. Back in my day, you actually had to pay for hosting, get a box. . .” I developed software apps that were almost kind of intelligent, that would go out on the Internet, almost like a robot, scour, monitor particular chatrooms, forums and things like that. People that weren’t even in our geographic area. I would syndicate out our content.
For instance, we had a job, and I think that’s what pushed us over the edge, that paid $17 an hour to watch TV. What I did was I took that particular posting, created some syntax around it to have it almost, I don’t want to use the word virus, but it evolved on its own. It continued to repost itself everywhere, so everybody would see this listing and be like, “$17 an hour to watch TV?” Everyone and their mom was clicking it and they would register, and register, and register, and register.
Then we had an auto-upload program so if you had, you mentioned Hotmail, if you had an email thing, you could recommend all your particular friends and we had a little compensation thing if they actually became members. It just went viral out of that. Like I said, we didn’t know what we had. Then we hooked up, there was a couple other, I forget their names, a couple other dot coms that specialized in Like Industries with the high school students, the kids, and things like that, and we implemented those strategies. We were clocking it up there. I broke a couple servers. We maintained our server forum. I was just an IT junkie, so anything that was new, we were working it.
Andrew: Let me see if I understood this. This is really, this is great. This is clever. The ads that companies were posting on your website, you forwarded them or you posted them on message boards and wherever you could on the Internet. People would see them and say, “This is a great job. I want to apply for this job.” They’d come to your website and they couldn’t see the full job and apply. They’d have to hit a button, they’d register, and then they could see the job.
Andrew: That’s how you’d get them on your mailing list and, of course, once you have them on your mailing list, it’s golden.
Ephren: Yeah. Here’s the problem, Andrew. I wasn’t trained in direct-response marketing back then, so I didn’t know you were supposed to email this group with certain syntax and code. We never hired a copyrighter. Do you know who wrote the copy for the website? We did. The whole entire time at the company, even though I taught myself web sales copy.
Like I said, if I would’ve known then what I know now, this would be a whole lot different conversation. I had the ability to go out and grab it, but I was a techie, I didn’t know how to convert users into, especially students that were giving something for free, into money. Now companies have figured that out. If I would have had probably another year, we would have figured it out. It was a significant opportunity that was blown. It’s not as bad as the guy that got bought out of Apple for a couple thousand dollars, but it’s still sickening.
Andrew: I see. The revenue wasn’t coming in from the registration process, it was coming in from email that you were sending people, or actually coming in from the job listings that you sold.
Ephren: Yeah. Basically, employers would pay to post their listings. We had a couple different models. At first we had just one job posting, then we went by the corporate account. If you were a big enough corporation, you can have as many job postings as you want, you just pay us every month. That was a good residual, consistent method. We’re realizing that every time the job would fill, we’d have to go do it all over again. We were realizing that we couldn’t build a sustainable model off the small businesses, so we had to go after bigger corporations that had multiple sites.
Wendy’s corporate, where they have all these franchisees and we started signing up franchise groups versus one. We’re trying to multiply our efforts. Yeah. We had all these students but we didn’t know what to do with them. We didn’t build in the social networking components. That’s why I’m like, “Aw. I wish I could do it again.” Or where friends could recommend the job posting. It was viral because it was in the schools, but it just wasn’t there.
Andrew: I knew a guy at the time who had a similar process to yours, though it wasn’t as clever. What he was good at was monetizing, so as soon as somebody came and registered to see his job listings, the next thing they saw, before they even saw the job listings, was a “Register for Monster.com,” or “Register for HotJobs.com,” or something else. He would get paid a buck or two from those companies because they could afford to pay that much to get a new registered user. Man, those are the days.
Ephren: Yeah. Back in the day. You could have done anything. It could have been from the same IP address and they would have paid you.
Ephren: The things that were available back then. There was money flowing everywhere. There was one sister company that was up the hall from us, they got funded for like $10 million. We were always just kidding about, I was always hanging around the guys, but I think one of the things that also held us back was geographic location. We were in the midwest. There wasn’t a lot of dot com action happening. Not a lot of strategic partnerships or joint ventures that we could set up. If we would have been on the east coast, or on the west coast, it would have been a wrap. We would have probably grown, got rolled up and acquired, and I probably would have had $20, $30 million to the credit and gone from there. It was a good, fun project. It’s just that I was in Kansas. I won’t deny it. We were in Kansas. There wasn’t too much that we could do.
Andrew: Something that you said earlier that I wrote down to come back to you about. You said we were in high school, we were making more money than anybody else. In high school, hardly anyone has money. Here you have a little bit of cash, probably a ton, actually, compared to adults at the time. What did you do with it? How did you enjoy it?
Ephren: I get asked that question every time I speak. It doesn’t matter whether I’m here in America or internationally, kids or adults will always ask the question, “What did you do with the money?” I don’t have any glitzy answers. I didn’t move out and get a house. I lived at home with my parents. We got the basement finished so I got to live down there and it had a kitchen, my own little bedroom, so life was good there. Didn’t go out and get any cars. I drove a 1999 Honda Civic EX. It was brand new, though. It was new, but I was watching way too much Fast and the Furious, that’s what I was going to do with it. My parents were having the reins, so they weren’t letting me go crazy with it.
I would say most of my money got spent on new computers, laptops, and servers at the house. Back then, they cost real money. I had a T1 line running into my bedroom. That was a chunk of change every month. I spent my money on tech and really getting myself a lot more education. I sent myself to get all the Microsoft certification, so I paid for all that. It was just a lot I really put into my knowledge and my training and reinvested into the company. I wasn’t a splurger, still am not to this day. People ask me, I live in New York City, I don’t ride around in all the cars. My entertainment friends do. I just ride with them for free. The thing is it’s not about how much you can make, it’s how much you hold on to.
Andrew: Also, how much you get in the first place. I think a lot of people see that you made your first million by the time you were 16. They imagine that you had a million dollars that you took out of the company, you put in your pocket, and you walked home with and maybe even that you went out at night with in your pocket and were able to buy what you want.
If I understand this right, you made your first million because the business was worth over a million dollars and your share in the business was worth more than a million dollars and when the business’s value went down, so did you net worth. It was tied directly to that.
Ephren: Yeah. Fortunately, I had to first find a couple other companies.
Andrew: Oh, you did? Okay.
Ephren: Yeah. In that whole industry, whether it was paper money, real money, real cash, granted there was real money coming through, but at the end of the day, you are exactly right. It wasn’t in high school, I’m just going to take a million dollars and go blow it. Can you imagine your investors seeing you pull a million dollars out of the company after they just put in? It’s not going to happen. Shoot, matter of fact, I think the first thing that happened was I got a pay cut into the company.
When investors come in, it’s this whole conservative thing like we got to be on our best behavior for the new investors, we got to be fiscally responsible. I’m thinking in my head, “Look. We built this company in the first place.” I was like, “Why do we got to go down just because somebody else showed up? Now we got more people we got to share the company with.” It’s this whole thing, so I made a covenant with myself that the next time I’m ever sitting in a room around a table with investors, I would know what warrants were, I would know what options were, I would know what the guaranteed payable you can write into an LLC agreement is, what a unit and stock is. I mean, I didn’t know, I was just excited that somebody was writing us a big check to put into our company and was going to lead us to the promise land, but I didn’t fully comprehend what was happening, that you wake up one day and you don’t make the decisions anymore. That’s a problem.
Andrew: Dan Blank in the audience is saying, “This is great advice,” about your last comment. I see Andy in the audience says, “Love the energy.” Someone else, I think it might be Dan Blank, who said, “This is the first time that somebody has smiled so much on a Mixergy interview.” The reason is most people are so afraid to be on camera because most entrepreneurs are hardly on camear ever. Believe me, I was nervous when I did it. You, I see, have been on camera a lot. You were on Donny Deutsch. What are some shows that you were on?
Ephren: Which one I haven’t been on? Good Morning America, Donny Deutsch’s show, I have my own TV show, I’m a co-anchor for Fox Business now, shoot, 20/20, what else nationally?
Andrew: What do you pay per month for PR to get on all these shows?
Ephren: Well, at first I didn’t. People just found out about the story and it just went from there. As far as PR per month now, it’s a lot. It’s not so much for the shows, it’s just for our clients, just covering the events that I’m at. I will tell you the most expensive part is the Incoming side. Now we’re doing this investment banking, we’re doing this merger, so all the things they have planned for it is ridiculous, per se. A lot does go in the PR. It’s an effective marketing tool. I think, right now, at one of our companies we’re spending probably almost a quarter million to $300,000 a month just on marketing.
Andrew: Wow. Which company are you spending that much on marketing?
Ephren: City Capital.
Andrew: Oh, okay. That’s because it’s a pubicly-traded company and it’s got the kind of market cap that needs people to go out there and keep the stock in the news. [laughs]
Ephren: Yeah. As far as individuals, as far as me, I really don’t spend that much on PR. Here’s what I do. Here’s my strategies to anybody’s listening.
Andrew: Hit me.
Ephren: As an entrepreneur, I hang out on Facebook a lot, a lot more than I need to mentioning here before I get a letter from a shareholder, Twitter, social media. I used to have a blog. We took it down and that probably was one of the worst thing I ever could do. You would be surprised at how many people were mad that I took down my blog. Now there’s a tech team working on throwing my blog back up and I got to go back to maintaining. I just was lazy. I would update my blog like every two weeks, but thousands of people were reading every post that I would put up there.
PR-wise, I have an agent that works for me, so that helps out a lot. It’s not often that an entrepreneur actually has an agent that does your TV deals, your book deals. He did my first book deal. He handles all my speaking appearances, endorsement deals, et cetera. I have a publicist that works for me. She does all my PR appearances. Really, because we get so many inquiries every day, it’s just that I can’t handle it, so it’s really screening which ones to do, which ones not to do, how my brand is portrayed.
One of the things we were talking about earlier, as you get larger as far as the brand, you as an individual entrepreneur, you’re your brand. When you go to your next company is how is that looked upon versus your last deal? One of the struggles for me is is that I’ve always been seen as teenage kid entrepreneur. Nobody ever talks about, “Oh, what has he done for the last 16 years? Where has he been?” Every event, I got, “Tell us about when you were 12.” Okay, let me tell that story.
Andrew: That’s part of your bio. I don’t think I saw, and all the bios are written by you or your people, I don’t think I saw one that didn’t include a reference to how you were a wunderkind or at 16 or at least some of the old media hits. It sounds like it’s starting to be a little bit of a problem and you need to change your message. Why? Why does it hurt to have that message out there still?
Ephren: You know what? We had a very, very deep conversation with our team on it. I’ve been jumping up and down with it for years, but a very wise advisor of mine, a mentor to me, sat me down and said, “Look. Your story inspires millions to go out and do and try and proceed. You are the epitome of the ‘American Dream’ especially as an African-American male. You don’t exist.” It finally clicked for me as like, “Yeah. I do represent. I’m married. I have a wife, two kids.” Something that in the media, that image is really not portrayed.
I would say February of this year, I came to realization to leave it alone and to really start jumping up and down about the conversation because it is meaningful to people. I still get letters, personally or email, from people, from parents that say, “Hey. My teenager did this.” I got a letter from a guy in Norway recently who quit his job, went and started his own cooking line of products because he saw a YouTube video of CNBC. Flipped me out.
The guy whose book I read when I was a kid, Andre Lamothe, he hit me up on LinkedIn. He was like, “Man, my friends have been telling me about your story for years and now I finally get to email you.” It’s like finally we connect 12 years later because of his book. He was asking me did I still have the book and I said, “Yes. It’s in two pieces at my mom’s house.” It’s actually split in half because I read it so much. We got it in the Ephren Taylor museum or something. I got to send it out to him so he can autograph it for me.
It’s things like that with that story that as an entrepreneur, I just realized that I have to leave it alone because it is powerful. A lot of times we get caught up in our own egos or manifestations that this is what I’m doing now, but when you do something that’s relevant, sometimes even you don’t realize what it is that you did or the impact that it has on people.
Andrew: What was the book?
Andrew: What was the book?
Ephren: Oh, “How to Make Your Own Video Game in 21 Days.” [laughs]
Andrew: Oh, get out!
Ephren: Yeah. It was sitting on a shelf and it was like this aura, this light was just beaming on it. There’s a whole bunch of other books that came after that because I had to teach myself programming, assembling, and coding. I took the things that I learned from that book and was able to apply it to making games. He’s a developer, I think, over at EA or something like that now. I got an iPhone app that’s out now, so I evolved in my gaming side. It’s interesting how things can change from the time that you’re a little kid to now, being almost 30.
Andrew: I actually saw a Vibe blogger, a blogger for Vibe Magazine, who basically said, “Look. If he can do it. You can do it. Stay off the streets, don’t commit any crimes. Get on his path because that’s the future for you.” I understand how people are using you as an example to live up to.
Ephren: Yeah. It’s a lot of pressure.
Ephren: Especially now.
Andrew: How? Can you describe that? How? Why? Tell us.
Ephren: As people can see, obviously, by the video, I’m black. Now you have the first African American President that’s in office in the White House. Many people may or may not know, I spoke at the Democratic National Convention when he was getting the nomination. As far as those of us that are almost, sad to say, few and far between that are those positive role models, and be put on that particular pedestal, you got the Vibe guys, BET did a Black History salute to me, Tom Joyner’s show, every major black media person has done the Ephren Taylor Black History moment shoutout, because I did make a couple of historical leaps forward in the African American Community.
Now you even have the rapper commentators saying, they did a comparison of Rick Ross’ new song that’s out “Blowin’ Money Fast.” They’re like, “Oh, Rick should have been rapping about this.” There’s this whole conversation that broke out on BET about this guy and what we did. It becomes a lot of pressure because what, I guess, you naturally represent of being that example is not necessarily something that you ask for. You’re thrown into it. When you have the historical civil rights leaders and the NAACPs and the Urban Leagues and things like that putting you out there, it’s like, “I’m out of here. Now what?” Then you’re also pressured in from that conversation of “It’s your responsibility. It’s up to you now. You have to lead these kids.”
I was at one particular mega church, it has 25,000 members, and I’m getting up to speak and do the Sunday message, actually, and Martin Luther King’s daugther is sitting behind me. The minister of the congregation gets up before I get up and says, “This is the new Moses of economics for us as a people.” He used a comparison to King and to me and I was like, “Just great.” It was the 40 year anniversary of Dr. King being assasinated and Jewish Biblical times, without going too much into it, is a change in generation, change in particular leadership. They’re equating that to this new generation of leaders like myself, the Jeff Johnsons, the Omars, and things like that are coming out.
You have all this pressure that’s coming out, it’s like now I got to go out and do something else, I can’t just live in a shadow. I moved to New York so I could be anonymous but now you can’t even walk down the street. Guys are like, “I saw you on Donny Deutsch!” Or, my team shows [??] like, “Hey! I saw your book.” I was at the train station yesterday and these two women stopped me and were like, “We know you!” I’m just trying to exchange an Amtrak ticket and now I got to have a conversation about business entrepreneur and somebody wanted to send me a business link.
Andrew: Is the issue also, as an entrepreneur, you have a lot of ups and downs? People imagine it’s all either a straight up or a straight down, but it’s more like a sound wave, up and down, getting towards where it needs to go. When you’re going through the down period, is that where the pressure is?
Ephren: The down period sucks. For entrepreneurs, I think we commonly joke that it’s either feast or famine. It’s one or the other, there is no in between for an entrepreneur. It’s either feasting because of a great harvest or it’s total disaster or famine.
Andrew: Can you desribe a famine, a tough period?
Ephren: Yeah. I talk a lot about it in my next book, shamless plug, “Elite Entrepreneur,” out in November.
Andrew: Let me repeat that, make sure people heard it. “Elite Entrepreneur” is the name of the book that’s coming out.
Ephren: Yeah. I talk a lot about the dark side of entrepreneurship. The failures, when you got that next round of financing that’s supposed to be there and then your financer goes bankrupt, ends up getting the bailout, things like that. It causes a chain reaction that you can be the entrepreneur that was extremely successful in one or two ventures and then you have that failure. It becomes discouraging. Everybody forgets what you did in the past. Everybody’s mad at you.
Andrew: Let’s talk about a specific situation. What happened with Go Ferret Go, the company we talked about? It dissolved, right?
Ephren: Uh huh. I ended up buying the assets back, so I still own it now.
Andrew: Oh, you do?
Ephren: I left probably about a year before the dissolution. I went on and started another company that I did end up selling back to In Touch Consulting. It was an IT consulting firm. It was boring. We did software development for insurance and pharmaceutical companies. They had deep pockets, were willing to pay, boom. I did CRM software development, et cetera. I had about 35 guys who worked for me. It was pretty good.
Andrew: When you had to leave Go Ferret Go, it wasn’t on great terms because the company didn’t go the direction you wanted it to. What did that feel like?
Ephren: As far as leaving Go Ferret Go, it wasn’t we had beef and animosity. It was just that they were going this one direction and I think we really came to bumping heads or terms with I was always still connected to, per se, the urban market and really about one of the things in our community is don’t forget where you come from, just because you have this money, you still have to go back and get other people.
I was spending a lot of time in urban schools trying to work with kids who were disadvantaged because, to be honest, the high school I went to was nice. The high school my wife went to, not so nice. I was working a lot of times in those schools and I got called into the office one day and basically chewed out because I was spending so much time in an urban environment and I should be spending my time on X, X, and X. I was like, “That’s not why I really founded this company. It has a bigger purpose than this.” That’s the beginning of the social responsibility kickback I got.
Any little hot-headed immature and not thinking clearly, I just walked and handed my shares not really realizing that maybe I should have just got bought out. Basically said forget it, I’ll just start another company anyway. That’s why I went and did my thing. I had a couple help, raised the investment capital very quickly and was up and running. Three months later, hey, my company’s bigger than yours. If I could go back and do it again, I would have done it differently, probably left in different terms or what not.
As far as the difficult period, obviously it did go that direction. I saw it happening that when you lose the culture or the passion or the heart of that particular company, it can get interesting. It went that direction. There was a couple competitors that came out that had a lot more money than we had but they were all run by these gray-haired guys. They all went down first. I think when Go Ferret Go lost its passion and its [??], it became a downward spiral. I swept back around a couple years later, bought the assets of it, and just held on to them from there. I went through a sabbatical period, just hanging out, got married, went and bought the big house type of deal. I had the kids.
Andrew: You were in a situation where Go Ferret Go, you handed back the shares, you built another company, that other company ended up outdoing Go Ferret Go and that’s the company that did well? The company that we’re talking about here, is that the In Touch Consulting company?
Ephren: No. That’s who we sold it back to. It was called In Touch Communications. We ended up taking their name into the parent company. Basically, we just did high-end software private development. Did a couple million dollars for these guys. It’s insurance and pharmaceutical so I can’t really, I really don’t talk about it much because it’s like yo, if you can’t make money selling to insurance and pharmaceutical companies, you probably should hang it up. It was during a time when everybody was getting a nice piece, but I got burnt out.
I think the important message is that being that young, 80 hours a week, it comes a question when you start asking yourself, and I went through this whole period, when we were talking about the dark side, when you start asking yourself, “Is it even worth it? Why am I doing this?” To be honest, it came so easy to me that I just sat back and figured why don’t I just take a break, because I can always do this again. I have a skillset that can go with it. Got a chance, cashed out, still got my little royalties or what not. Went back to normal life, finally got a girlfriend, got cool, I guess. Then went from there.
My wife, once we were married, she said, “You’ve done all these particular things in your past. . .” It’s the whole pressure thing again. She’s like, “What are you going to do that’s going to be significant? Everything that you’ve done for yourself,” she was very direct with it, “has been for you, not for other people. What are you going to do now for people who didn’t have the opportunities that you had, who didn’t have the chances that you had, and what are you going to do to pretty much give back?” It was that call to action like yo, you got to do something.
Andrew: What’d you decide to do for that?
Ephren: First it started out small. My father decided to plan a church, so did the little ministry thing for a second. Ended up started doing housing, taking ex-offenders and teaching them how to rebuild homes. One of the things that we always see come through, you go to jail, you get a convinction, nobody’s going to hire you, nobody’s even going to deal with you. Since I had a little bit of that employment background, this non-profit agency called me and said, “Can you help teach these ex-offenders what you know?” I started spending a lot of time with them. I did a computer class, getting paid by the state to teach class. It was great. I taught a high school class for a semester, entrepreneurship. That was a lot of fun. It was kind of awkward.
Andrew: How were you supporting yourself as you were doing this? Is this from the company that you sold that you got the royalties from you said? That’s where. . .
Andrew: So you had enough money that you could then take time off and go do good work?
Ephren: Yeah. Technically, the entrepreneurial dream. The first house I bought had six bedrooms, five and a half baths. I wasn’t doing too bad.
Andrew: All this just from selling to insurance companies? I got to sell to insurance companies.
Ephren: Yeah. I’ll tell anybody, if you can get an insurance company as a client, recession or no recession, they always have money. Pharmaceutical companies too, that’s legalized drug dealers of the world.
Ephren: One of the clients that we had, I developed a software package and this is one of the other reasons why I got out of it is that, one day, keep in mind I’m 18 years old, and I think when I left I was about 19, but what is it like when you build a software application and you watch 40 people get laid off because of what you built? We were automating departments that basically made people’s jobs obsolete. You’re walking into this insurance company and you see the whole floor being let go six months later because you replaced these people’s jobs or you developed a pretty good software app. Yeah, the company’s happy but now I got on my conscience, there’s 40 people that don’t have a job because of what I just built. That wears on you after a while. I guess I’m a little bit different.
When I was working with these guys, they’re telling me about these stories like, “Man, I can’t pay my child support. I want to do right, but nobody wil hire me.” I came up with this crazy idea that said, “How about we teach ex-offenders how to start their own companies?” I started teaching them computer repairs, server management, et cetera, and helping them to actually get jobs. Then I took other ex-offenders and trained them what I knew so they could be able to teach a class. We ended up getting a state contract with the state of Missouri to do it. It hit me like, “Wow. I can actually do good and get paid at the same time.” I started building on models that could do the whole social entrepreneurship thing. How can we do good and still get paid?
Then we looked at real estate. It was a booming market. It was okay. I was telling people, “Look. Dot coms, I can make money any day. Why do real estate?” We started taking real estate, training these ex-offenders, helping them put the houses back together. The first house we had, I think we bought it for $5,000. It was a disaster; it was a project house. Hole in the roof, shaky on the foundation. We put the house back together. It was about eight guys overall, they were able to work on it. It was like Extreme Home Makeover in this neighborhood. We put this house back together and then we sold it for like $20,000. It doesn’t seem like a lot of money, but I found out like two years later, it was a single mom that actually got inside the house, she was able to get it because we sold it so low. She got financed on it and it worked out.
Then we did it again and again, before you know it, you got about 90 guys in the field, it gets pretty large. That was my first taste of social entrepreneurship, what can happen when you get admission. It helped take me out of that darkness period of what am I going to do next, what is the meaning of life, what is my purpose here on earth, that whole phase everybody goes through. I had my mid-life crisis early. After that, it was all downhill from there.
Andrew: That’s great. Okay. So then two publicly-traded companies you’re running, I said at the beginning of this interview. One of them is City Capital Corp, the other is Incoming, Inc. City Capital Corp was the first one, right?
Andrew: What does City Capital Corp do?
Ephren: What we do is we make video games. Full circle, huh?
Andrew: Uh huh.
Ephren: [laughs] Ours is a little bit different. They pay out money. If you’ve ever been inside a casino, our software looks very similar to slot machine software except that we re-engineered software that you would normally see in a slot machine and we use it for marketing promotions. It was a very crafty play.
For instance, let’s say, you ever played the Sprite win a thousand dollar game, look under the cap. We automated that process, a sweepstakes. Everybody hates when they go to the restaurant, you got to dial the 1-800 number, put in the pin number, take a survey. First of all, nobody ever does that. We made it automated at the particular restaurant, bar, nightclub, wherever, where you can play our particular games and it tells you if you won the sweepstakes contest or not. It was really sweepstakes management software, but we put it in a gaming interface.
What our interface does is it gets the consumer engaged. I’m tracking their information; I know what you just purchased. I know when you purchased it. I know what times you come back in the store, so the value’s in the data. We manufacture the software and sell it to either individual business owners, companies and things like that and we earn royalties off it based on the increase of sales.
For instance, we have an install at a grocery store and it increased sales of potato chips by 250% because people were trying to win the money. We get a royalty based off of that, based on the sales. We keep placing machines all over the place. We’re in Virginia now. We’re just now expanding into Massachusetts. We’re in about nine states. Things are going pretty well over there.
Andrew: Sweepstakes Income is the name of that business, right?
Andrew: Sweepstakes Income. I actually saw one of the videos for it. It’s got lines in it like “Rake in a fortune while you sleep” as you’re selling people on the opportunity to make money with this. Even better, this opportunity is now being open to you. You can grab your own sweepstakes machine inside one of our stores where we can take care of all of the work for you from placement security and filling the stores with customers plus 20% of all profits go to charity.
Andrew: That’s the way I saw it promoted online.
Andrew: SweepstakesIncome.com if people want to see it.
Ephren: Yeah. That’s one of our sites. We got a couple affiliates that are out there. There’s people that market our software. The cool piece is that going back to if I knew then what I know now, the amount of marketing things I’ve learned from mentors and things like that, from various products, informercials, et cetera, is that you do that compelling sales copy. My old job is really to get people to call in, find out about the opportunity and take advantage of it.
Since we launched it, it accelerated quite quickly, moreso than what I expected. I would definitely tell this to any entrepreneur that’s watching this video now, put as much time as you plan for worst case scenarios or failure into planning for being successful. Entrepreneur’s worst nightmare is being too successful too quickly. That will kill you faster than any little setback that you’re going to encounter. I hit that a couple of times. The software thing is cool. It’s taking the country by storm. We got a couple celebrity clients now that are coming. We just did [??] Heart’s restaurant; our stuff is in there. We got all of the. . . Rolling on to the BMG restaurant group which is one of the largest bar and restaurant owners in the southeast.
Andrew: This is a new business from what I saw. I don’t know enough about publicly-traded companies to. . . Well, here’s what I’ve got. I see growth profit, it’s negative $400,000 last year, so a loss of $400,000. Operating income negative $5 million. What does all of this mean? The stock is trading at five cents a share. Cash on hand, $182,000. Market cap 4.8.
Andrew: What’s going on? What’s going on there?
Ephren: As far as the thing with City Capital, the first thing is, with the particular finance, I got to be very careful with what I say on this video.
Ephren: I do not want to get an SEC letter. There is a six month lag time from the documents that you look at. When I first particular came into the company, when I first accepted a job, it was in dire shape. I had high amounts of particular leverage in debt, unpaid taxes that were particularly there, employee issues, the whole nine yards.
When we file our particular numbers for this year, people are going to notice, let me be careful on how I say this, if you look at the particular publicly disclosed things that are out there now, as far as on our leases, not the particular filings, people will notice there is a significant increase in revenue that has come into the particular company. I’m very pleased about where the company is today knowing what I know financially about the company, increase of assets, liquidating things that weren’t performing when I first came in. Stock price, that I don’t particularly control. Hopefully it will change one day. We did have a lot of one-time charge offs last year that I was not happy about. We had a couple debt write downs that we had that were there. Anything that we issue as far as stock, compensation, buyouts, et cetera, are going to be charged to us financially. It may not have necessarily been cash that was actually spent, but it was actually stock that was charged based on our accounting method.
Andrew: Cash on hand, $182,000 is all that was left in the back at the end of ’09?
Ephren: Yeah, basically.
Andrew: Does that freak you out as guy running a company that it’s a publicly-traded company with less than a quarter million. . . It doesn’t? You’re cool?
Andrew: You got to handle it because you’re the guy in charge?
Ephren: Yeah. It’s my hedge fund that’s funding it.
Andrew: It’s your what? I’m sorry.
Ephren: It’s my hedge fund that’s funding it.
Ephren: At any time, if you look at particularly Incoming, when we roll into that particular one, we have 25. . .
Andrew: Let me say this about it. Here’s the other thing. I’ll just get this stock information out of the way so we can talk about the business behind it. Timothy Sykes. Do you know this guy Timothy Sykes?
Andrew: All right. What do you know about him? He nailed me about a past interview, but he saw it after I did the interview and he nailed me on it. He said, “Andrew, you didn’t bring up this, this, and that.” This time he saw that I was interviewing you, he brought up this, this, and that beforehand.
He goes, “Look. They have $4,000 on cash,” which is actually a little bit, he’s over-estimating it. It’s like $3,800. “Down from $100,000 last year. They probably have to pump their stock to do financing and survive. They’ve lost $101,000 in the first six months of 2010. Their auditor says, ‘These factors raise substantial doubt about the company. That the company will be able to continue is an ongoing concern.'” He has a bunch of other things. He also says, “They have an agreement that they’ve talked about that’s actually for October 8th, 2010.” He says, “Look. October 8th, 2010 didn’t even happen. How did they even have that on the books?” I’ve got a whole lot in there. Why such a big loss at the business?
Ephren: Yeah. Let’s go back to Timothy for a second.
Andrew: Okay. Hit me. What do you have about. . .
Ephren: Timothy I actually like. Timothy, if you’re watching this, I still like you. I think Timothy does tremendous amounts of work. He does excellent due diligence on particular things. I’m a subscriber to his blog. By the way, Timothy, I’m a subscriber.
Andrew: A paid subscriber?
Ephren: Yeah. I track his blog all the time because I’m always interested in what’s happening in my particular industry. Who’s doing what, who’s promoting. Timothy and I operate in a very different world than most people are used to as far as when we talk about NASDAQ, NYSE. I deal in a particular sector where it’s smaller, publicly-traded companies, not a big NYSE.
I saw the blast that Timothy had on you critisizing for it. It’s Timothy. Timothy Sykes is a good guy, great personality. You either love him or hate him. I like what he particularly does. Now, my deal is that you don’t lump everybody into the same category. I do operate in a world where some guys manipulate, where they hype, where they pump, and things like that. If you look at City Capital’s track record, we’ve never run a pump campaign, ever. All our stuff is legitimate news.
Andrew: He’s referring to, I think you said earlier, hundreds of thousands of dollars going to PR and that’s the kind of thing that he considers pumping. PR for publicly-traded company that doesn’t have much cash on the books is pumping in his mind.
Ephren: Yeah. How do you spend $200,000 a month, or $300,000 a month in advertising?
Andrew: How do you?
Ephren: That’s why I said it’s a little bit different than what it is now. I’ll have to send him the next report when I get the increase in revenues and be like, “Hey. You got to swallow it and eat it.” If you look at the particular track record, I’ve been increasing revenues every years. I’ve been reducing the particular debt amount. I’ve been doing the particular financing. If he looks where it’s coming from, it’s coming from yours truly.
My deal is City Capital is a philanthropic and a public project of mine, great supporters, great team, great staff. What makes us a little bit different than everybody else is that when you deal with the Timothy Sykes, and I challenge anybody to take a look at it, we have real offices, physical offices, with real particular employees. Anybody can walk in any day and time into our facilities and our offices. Most of the companies, matter fact, I would say 99.99% of the companies that Timothy covers have one particular executive, one particular company that serves in all the particular capacities. They do not have a real office. They do not have a substantial business. They do not have any particular revenues and they probably don’t have any money.
With that being said, I’m physically located in eight different states. I have over 65 employees. I move millions of dollars per year in revenue that we do. We’re a little bit different than that particular category that’s actually there, which is cool. Like I said, I’m still a subscriber to Timothy, no harm, no foul. As you see, I’m not shying away from the questions either. I don’t mind difficult questions because as a public company, one of the things is that everything that you do is wide out in the open.
Andrew: What does the money go to? I just want to ask that question then I’ll get back into Timothy Sykes personally. I’ll say things about him. Where does the PR money go at a publicly-traded company that has a few hundred thousand on the books in cash?
Ephren: Yeah. As far as PR company, the PR that we have is spent on me personally. That’s me paying for it.
Andrew: Oh, hundreds of thousands of dollars going to. . .
Ephren: Oh, you’re talking about the marketing?
Ephren: Oh, yeah. That’s what we’ve been doing recently. That’s the lag time on the filings that I’m telling you about that isn’t disclosed yet, which I’m very excited about that coming out. The thing with the national campaign is really was to market and push our product. When we went over to the new model sweepstakes, which is recent, from actually last year, in 2009 when we actually started promoting that particular product, like I said, it caught on fantastically. It was a couple releases out, you look at the average numbers we’re doing per machine, the sales numbers and things like that, is doing particularly well. We had to put it out there because of what we’re doing. It goes towards radio. We run 60,000 radio commercials a month.
Andrew: Those aren’t to talk about the stock, they’re not to talk about the company, they’re to talk about Sweepstakes Income?
Ephren: Yeah. I’m a little too high profile to do the stock thing. [laughs]
Andrew: Timothy Sykes, for people who don’t know, he’s a guy who I interviewed over here because he was a successful blogger. I interviewed him a couple of times. The second time he talked about how he sells all his CDs, how he gets people to sign up for membership. Did I hear you say you pay him for membership?
Ephren: No. I don’t pay him. I’m on the free side.
Andrew: You’re on the free side. Okay. All right. I thought maybe you were paying him. I said, “That’d be kind of interesting because he’s a bulldog.” It’d be interesting if he was a bulldog towards all these publicly-traded companies and the CEOs of those companies were the ones who paying for the monthly subscription and that’s how he was doing well. I thought, “Wow. That’d be an interesting model right there.” But no, that’s not what’s going on. You’re just keeping an eye on him on the free side.
Ephren: I’m a subscriber. I know all the guys who are doing the promotions. I know a lot about that world that he’s talking about. He is right. 90% of the time, it’s going to do what he says it’s going to do. That’s what I always try to tell people but nobody ever listens to me. I was like, when I came into the public company, what happens on NASDAQ, he covers a couple of those too, is that what we perceive on what happens in the financial markets on the front side, as the general population, is not how it really happens on the back end. As an entrepreneur that’s been there, done that, and seen it, it’s a little bit different.
As far as me as executive, my job as CEO is to lead the company to where it needs to be. Increasing its assets, increasing the sales, and building something that is a good long-term investment, but not let me use that catch phrase because when Ephren Taylor talks long term, he talks about it with an exit strategy, not like, “Oh, eventually our stocks are going to go up and be reflective of the market.” No. Screw all that. We’re going to build a real solid company with sales employees and that’s out there and that’s what we’ve been doing. Has it been easy? No. I am in the middle of an economic recession of historical proportions. But, to have increased in sales in the middle of a recession to do a couple hundred percent sales increase over. . . Look at our numbers last year, I tell anybody, look at them. Yeah. Now make an investment based on what we did last year to what we’ve been able to do now. I think the new management team that we have, what we’ve been able to accomplish has been remarkable compared to where we were last year.
Andrew: When’d you sign on with City Capital Corp? ’06?
Ephren: I came in at interim in 2006, officially got my capacity in late fall of ’07, and have been pretty much going at it ever since. Robert’s been, working with him on getting rid of the bad guys.
Andrew: Wait. Let’s talk about what Incoming, Inc. is. Incoming, Inc., What’s that business?
Ephren: Incoming, Inc. is really a holding company, but it’s specializing in energy. One of our greatest acquisitions, which I’m extremely excited about, is North American Bio Energy, it’s based out of North Carolina. We’re buying probably one of the largest biofuel plants in the state of North Carolina. I’m building a partnership with the president of the Petroleum Marketers Association, Sam Bell. Great guy, look him up, big time guy.
If you look at Petroleum Marketers Association, Flying J, 7-Eleven, every major gas company is a member of that organization. Sam Bell, himself, long-term Exxon guy, was one of the largest oil jobbers in the state of South Carolina. I’ve sat on his board of Verde Biofuels, which is one of the largest biofuel distributors in the country. One of the big things I’ve been jumping up and down about for years is bio[??] biofuel. It’s kind of lost steam, came back because of the BP oil spill.
We’re buying this plant in North Carolina. There’s also another one that we’re looking at buying internationally in Brazil. We’re just strategically buying plants and their particular assets and really just utilizing our network that we have there. Obviously, from my political connections and guys that are there to really build a cool company. The whole management team, we’re all under 30. Well, now with Sam coming aboard, not so much now under 30 that’s there, but after the merger, I’ll be one of the largest African American biofuel producers in the country. Probably the largest. Definitely in the state of North Carolina, I will be the largest that’s there. I’ve very excited about it.
Octis [SP] Equity, we just got a nice little private equity deal with them for about $25 million, definitive agreements are done, signed. I’m excited about it. Timothy, check that out, follow that one for a change.
It’s really about, as we’re talking about having this candid discussion about entrepreneurship, that you can go from getting beat up at one particular deal to being resurrected on the next deal and still being able. . . It hink what separates the elite entrepreneurs and ones that I talk about in my next book is that they have this extreme resilience to be able to overcome massive amounts of obstacles. Every entrepreneur has gone through what we call the cash crunch or the difficult period and to be able to step out as a leader onto the streets, beat the streets, do what you need to do and turn the company around, that’s what needs to happen. Some people just get up, just walk away, file bankruptcy and go for it. My deal is that I refuse to lose, ever.
Andrew: One of the things that I admire about you is even though, you’re saying compare your results this year with last year, last year the results weren’t very good, you’re still out there speaking as an entrepreneur, speaking as a successful entrepreneur and you have to keep projecting that, don’t you? It builds up the brand which will eventually build up the business in the future.
Ephren: No. If you come to some of my speeches, or if you look at my Facebook profile and just follow that, I’m known for being the ridiculously candid entrepreneur.
Andrew: You will talk about if things are going to the crapper, you will say, “This is a horrible year. I’m not doing very well”?
Ephren: Yaeh. As a matter of fact, if you look at my Facebook profile today, I said, “Beat down Monday.” [laughs] I talk about all these things of one, I think that’s why a lot of people like me is because I’ll tell them, “Look. This is the good stuff that happens.” When I start off speaking to kids about entrepreneurship, there may be a couple videos about it on the Internet, I go right into like, “Yo. This is the dark side. This is what you’re willing to put up. Your house, all your finances. When your friends turn on you, you will get sued.” Like we were talking about earlier. “This is how much it’s going to cost you.” I tell people about these things as full disclosure that, “Look. Yeah, I was a successful entrepreneur but I’ve also had my failures.”
Everybody always wants to get in the news and talk about success, success, success, success, success, but nobody ever wants to mention what happens when you fail. When the crap hits the fan and it’s all over the place, nobody ever wants to talk about that. My deal is yeah, the crap will hit the fan and here’s what happens and here’s the mistakes that I made. Those are some of my next blog posts on yo, Ephren screwed up, here’s what I did, don’t do what I did.
Andrew: Wait. What’s a big screw up you think other people need to learn from?
Ephren: Oh, man. What do you want to start from?
Andrew: [laughs] The biggest one, the one that’s most painful and most educational.
Ephren: I think one of the hardest lessons that I’ve gone through lately as an entrepreneur is that I’m a big-hearted, very trusting person. I’m one of those individuals that give you the benefit of the doubt immediately upfront. It’s always been that since I was the guy out front, it’s like, “All right. Let’s put Ephren’s name on it. We got this nice, lovable, cuddly little kid. Let’s do this whole thing.” When you have the wrong people around you, it can end pretty disastrous. We see it a lot of times with celebrities, actors, things like that.
Andrew: When did somebody do that? First of all, I have seen that. The Sweepstakes Income video that I saw, I saw a handful of them. They all include you as a kid on the ocver of some magazine, as a 16 year old and that’s why I had to ask how old you are now because online, you’re a perpetual 16 year old. When are you talking about that it went sour?
Ephren: Man, shoot. I had one real estate deal. Oh, man. I went on the hook for somebody for the tune of about 800 grand. Buddy of mine, put him into the securities business, put him into the finanicial business, paid for all of this licenses and things like that. They did a particular deal, I guaranteed it for them being one of the most high network guys. Deal goes sour but at the end of the day, everybody looks at who’s the most high-profile person? I was even sitting in a room one time when I was like, “Hey. How come you’re not going after the guy that actually originated the debt?” The lawyer flat out said, “We would, but you’re the one that actually has the money, is actually worth spending the money on.”
You eventually reconcile that particular stuff, but I’m beginning to realize, as an older individual, that not everybody has your particular best interests at heart. Am I going to walk around saying, “Everybody’s out to get Ephren”? No. Am I going to take the cop out route and say, “Oh, it’s my age”? No. I own up to my own. . . I’m an adult now. I caution entrepreneurs to always be weary of the partners that you take on. When we just did this deal with Incoming, we did full background checks, criminal investigations, the whole nine yards because it’s institutional money that’s on the hook, too. You have to be weary of that. Entrepreneur failures, it’s just a part of the entrepreneur career. You can’t win every single game and you will lose for that. Make sure you got to protect yourself.
Andrew: Let’s end on a high note. What’s the best part of all this work?
Ephren: Man, I would say the best part right now of all this work.
Andrew: Don’t give me the charity. We’re going to assume the best part is the charity. . .
Ephren: No, I wasn’t even going to say that. [laughs]
Andrew: Yeah. Give me one of the more fun things.
Ephren: Man, you know what? Andrew, I would say the best part of all of this is that at the end of the day, despite tough interviews, great interviews, taking the hits and things like that, I’m a big boy, is that when you come home, you still realize that even when I come to my little Facebook and I put in this is what I went through today and happened to me, there is this massive crowd of people that say, “That’s okay. Keep inspiring us. The fact that you’re actually down and that you actually took this hit and you got back up. That’s what keeps us motivated.” I think that is the biggest thing for me is that even though you get knocked down, it’s just about hwo you get back up.
Anybody that is a high flyer or higher profile guy or really aggressive, yeah, your leadership is going to be challenged, your character is going to be challenged, you will be talked about, but a mentor of mine always said, “If you’re not doing anything worth talking about, then nobody’s going to talk about you.” Obviously, I’m doing something. What’s good for me is really being able to inspire other people, keep them going, and really sealing my place in history as somebody that can go out there. I’m happy about that.
Andrew: All right. Great place to end it. Ephren Taylor, the upcoming book is called “The Elite Entrepreneur.” The website is. . . Where can people see you?
Ephren: Oh, they can go to Amazon.com and pre-order it.
Andrew: Your personal blog? I’ve got a list of website here that I can give out here. What’s a good place for people to connect with you personally?
Ephren: Yeah. Corporations all own those. If you want to catch me, the real Ephren Taylor, personally, not some corporation that’s licensing my name, you can catch me on Facebook.com/Ephren.
Andrew: Oh, wow. Facebook.com/Ephren. E-P-H-R-E-N.
Ephren: That’s correct.
Andrew: Awesome. Thank you for doing the interview. It’s great to meet you.
Ephren: No problem.
Andrew: Cool. Thank you all for watching.
Ephren: No problem.