Why did David Hauser sell Grasshopper for $170M?

How did David Hauser manage to sell Grasshopper for such an enormous sum without any hoopla and turn his focus to nut butter?

David Hauser is the Founder of Grasshopper, which is a virtual phone company and author of Unstoppable.

David sold Grasshopper back in 2015 for $170 and decided to completely switch direction from running an SaaS company to creating nut butter with his company SuperFat.

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David Hauser

David Hauser

Grasshopper

David Hauser is the Founder of Grasshopper, which is a virtual phone company and author of Unstoppable.

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Full Interview Transcript

Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy where I interview entrepreneurs about how they built their businesses. Joining me is one of my favorite entrepreneurs. This is a guy who I reluctantly interviewed, I’ll be honest with you. Years ago, there’s some publisher who said, “Andrew, you should get to know this company.” And I go, “Really?” But I don’t want to talk to David Hauser. He’s like the tech guy. Give me Siamak. He’s the CEO. The CEO is going to understand stuff. Fine, let’s do it. And then I started doing research. I realized, wait a minute, Grasshopper, one phone number for company. And when somebody dials it, it goes to the right cell phone of the person who should be taking the call.

And, yes, people can like punch in one for sales, one for customer service, and so on. And it was doing an incredible revenue and get this, profit at a time when most businesses were just completely foregoing profits. And I just said, “Great, I can’t wait to do this interview.” And I did the interview with Siamak. And frankly, Siamak is kind of reserved. At least he wasn’t in the interview. Maybe it was just getting started or something. But I fell in love with company. I got to know the co-founder, David Hauser, who you’re going to meet here today. I get to watch this company grow. I get to watch them do phenomenal things like create viral videos. Who the F can create a viral video? Usually people say, “I want to create a viral video.”

They did it. They manufactured it. It went viral on TechCrunch, on Mashable, on all these different platforms. And then I got to know the founder a little bit. He became a sponsor. I use their phone service. It turns out if you have a phone number on your website, nobody in tech calls a phone number. People feel reassured. It’s like, “Great. I actually liked this company because I could call them if I ever do.” I never use the phone app. That’s where people think I never use a phone app, but it’s nice if I could. So it was helpful for us as customers. It was helpful for me as an advertiser to get to know them. And it was exciting to see this entrepreneurial business, like really this bootstrapped hustler operation grow and to get to know the founder behind it, David Hauser, who you’re going to meet here today.

And then I heard they sold with a whisper. There was no celebration, no excitement, no, “Hurray for us. We did it.” It was almost like, “We sold.” And I didn’t get to find out why. How did it happen? For how much? And then, David, because he and I knew each other said, “Andrew, I’m starting this thing. It’s Airbag. I’m going to be making investments in other companies.” I thought, “Great.” And he asked me for some introductions. And frankly, I didn’t make any.

And then I got an email from somebody saying, “David wrote a book.” Great. How did you create this business? I can’t wait to read the book. No, the book is not about that. It’s not about how Grasshopper became this enormous company that sold for a ton. And we’ll talk about how much. It’s about how apparently David was fat. He used to drink Slim Fast. The stuff that was geared towards housewives. He used to feel like disappointed about himself for doing it. And then he lost the weight, got healthier, and people apparently have been badgering him about how he did it. And he wrote a book about it.

The book is called “Unstoppable.” It’s about how to optimize your life, body, and mind. And Airbag is still around, but that’s not his focused. His focus today is about nut butter. Nut butter. Went from SaaS to nut butter. I’m going to find out why he’s now running a company called SuperFat, which creates nut butter. Apparently Tim Ferriss loves it, which means that it’s healthy.

All right. We’re going to find out all that thanks to two phenomenal sponsors. David, this is the way I used to promote you, except I was kind of a little hesitant at the time because I wasn’t a great sponsor pitch. I did great, but not as good as I am now. Two sponsors. The first, phenomenal hiring company, even David has used it, it’s called Toptal. The second, if you’re looking to send out email campaigns, you’ve got to get to know ActiveCampaign. And I’ll tell you all about them later.

David, good to have you here.

David: Thanks for having me, Andrew, and I love the introduction.

Andrew: Thanks. Let’s go directly to the money. How much did you sell for?

David: Yeah, so I think you noted like we don’t really talk about this a lot. But it was $175 million plus some other stuff after that. And, you know, we kept that relatively quiet. And I think there was maybe one or two news articles about it because, a), that the number doesn’t really matter. That wasn’t . . . obviously it’s important number, right, but I think what’s really interesting for us is that the reason it didn’t get coverage is because we’ve always been a bootstrapped company and it was just never cool, right? Like, you see the stuff on TechCrunch when someone sells for like 5 million bucks, and it’s like, “Oh, my God, the greatest success ever returned no money to investors and founders make nothing.” But let’s talk about it, right? So it’s been different.

Andrew: It is big. But it’s more than that. From what I understand you also said, “You know what? It’s not good for our business to talk about it. Let’s not disappoint our customers or confuse them by making them believe that they’re going to have a diff or scaring them into thinking their service will change. And why did Citrix . . . that’s the company that bought you guys, they’re the guys behind GoToMeeting. Why do they need the agita of us bragging? Let’s just do it right and not get the pats on the back. Am I right? That was your thinking.

David: Yeah. And obviously we were keeping the brand too. So there was that continuity of just allowing it to continue as is both from a customer and vendor perspective. But also just from a business perspective to remove any distraction.

Andrew: You sold for how much did you say?

David: $175 million.

Andrew: $175 million. Oh, my notes show $165. It was $175 cash or was it . . . how much of that was cash?

David: All cash.

Andrew: All cash plus a little bit of stock worth $8.6 million what I’ve got in my notes?

David: Yeah, there was some additional stuff for . . .

Andrew: If you vested?

David: . . . executive team to stay around. But that did not include me and my co-founders, he and I. We did not stick around.

Andrew: How long do you stick around?

David: Zero days. Like literally sold, next day we left. This is interesting one. And it’s actually an emotional problem because, you know, we had this identity of being the Grasshopper guys and me personally like that’s . . . everyone knew me that way. Family, friends, all the way through business. For us, Citrix realized, as we showed them the business that our executive team was running the business from a day-to-day perspective, which meant that we didn’t need to be there. So it was actually a benefit that they didn’t have to find a title in some high paid position to put two entrepreneurs into. They’ve made 50 plus acquisitions, right? So like this is perfect. Like you guys just go away.

Andrew: But I feel like, from your point of view, you wanted to go away for a reason. Why?

David: I didn’t want to go away at all. We didn’t even want to sell the business. It was a more than a year process of them kind of keep bugging us about selling it. And I started to like rethink like how . . . because people always ask me like, “Why did you sell?” And I think the best example or the best reason is I had near perfect information about the business, right? Like if anyone did. Like, “I’m in it for 12 years. I should know more than anyone about it.” And if someone is willing to pay me far more than what I would pay for it today, that’s something that has to be considered. That’s the qualifier before all the other things, right, like how they treat the team and, you know, the brand and whatever else. But like the answer that question was, yeah, they were paying far more than I would have paid for it.

Andrew: And they came to you initially because of a promotional partnership that they wanted to do with you? What was that?

David: I think that’s how like they approached it. I don’t know if that was a real reason or not. I think first, to some extent, they wanted to learn and see could they cross sell our products and could they cross sell their product? And we kind of just said, “No, we’re not doing that.” We said no to a lot of stuff. And, you know, a year later or more than a year later, the business was sold.

Andrew: Why do you think they wanted to buy it?

David: So I think there was a few reasons. One is looking at their portfolio of products. They were a little bit later stage. So our core customer was one to five, maybe even one to three employee companies. Their customer GoToMeeting and GoToMyPC was more like 10 plus. So they wanted to go a little bit kind of smaller down market so they could get customers earlier in their life cycle and sell them. And then two, they had a very weak offering in phone and telecom. And it’s one of those things that a small business has to have when you start to look at the stack of things you have to have. So those two reasons I think came together as the reason to look at something like Grasshopper.

Andrew: It is a natural fit. I was just talking to my dad today about how Zoom works and how businesses are using Zoom for meetings. And he said, “Well, why aren’t you calling me on Zoom?” I realized the one thing that Zoom doesn’t have is that ability to get and make phone calls. And that’s important, because it means that you always have to schedule these things and you can’t just spontaneously send out a call. It’s a key part of the offering.

David: Yeah, yeah, for sure. And we love Zoom, right? And we all use it, but it serves a certain purpose. And it’s very hard to replicate that from an inbound perspective of how customers expect to interact with you.

Andrew: Right, right. And you’re talking about all the other things, like inbound they want one phone number, they don’t want Andrew to have a phone number and Arie to have another and Marisela and all the other people on my team. I got it. What’s the one thing that you got to finally do for yourself after the sale?

David: It’s a great question. I think what really came most was time, right? So after being in the business for 12 years and working on it so intensely was time. And I actually found yoga for me and started going six days a week practicing and did a 200-hour teacher training. So like that was just time that I gave myself more than anything.

Andrew: Wow, not like a new house, not a new car, it was just time and yoga.

David: I have the same car that I had since 2011. Same car. We’ve moved locations, so we’re in a different house, but same type of house. Like none of those things really matter.

Andrew: You owned 90 . . . you and Siamak owned 90% of the business. Was it 45/45?

David: Yeah.

Andrew: It was. And then the other 90%, from what I read in your book was . . . now trying to remember the name of the book, “Unstoppable,” because you changed it. I have an earlier and earlier copy of it. What you said in “Unstoppable” was his dad and your employees owned the last 10%. Why did his dad own a percentage of the business?

David: He helped us out financing over the years, a few things that we needed to do, and it was the right thing to return that in terms of ownership.

Andrew: Was I right that Siamak is a little bit quieter than you?

David: Yeah, I think we’re very different people in every way. So he cares about design so much more than I do. And I learned so much from him about that design and brand and, you know, I think across the board. I think he is I don’t know necessarily quiet as much as kind of more formal than I am. So I’m a little more casual in my conversation with people. But like what’s been great is we’ve done everything together from Grasshopper on, and it’s been a great benefit to me to learn from him.

Andrew: He’s in SuperFat?

David: Yeah.

Andrew: Wow. How did you guys meet?

David: So we met in college through a mutual friend. We both went to Babson College. We didn’t know each other at all, but we were both playing in the same space and thinking about similar things. And someone said, “You guys should meet each other.” And we did like the worst possible thing, which is like, we’re like, “Okay, let’s do this together.” We had no formal agreement. Like there was no like anything. We were just like, “Okay, let’s try it.”

Andrew: And let’s try it meant what?

David: Grasshopper. We’re like . . .

Andrew: Which was called something else at the time.

David: Yeah, it was called GotVMail. So we were like, “Let’s just build this and let’s just sell it to customers and see what happens.”

Andrew: And who built the first version? This is before Twilio and all those other tools.

David: Yeah, so I built the original stuff plus one other person that helped me on an outsourced basis, like literally the cheapest outsourcer we could find. And we built the absolute least we had to, to make it function so we could go and sell it to people.

Andrew: Yeah. And I thought I remembered seeing it in the back of newspapers in New York, right? You guys used to advertise there?

David: Yeah, we did the little tiny ads in the back of “Entrepreneur Magazine” and like those little classified ads. And they actually drove customers.

Andrew: Yeah. And you are just so entrepreneurial. I never heard of Babson, or I didn’t realize how big Babson was until I found out about you guys. And then because I think I mentioned it after my interview with Siamak, other students from Babson had come into my office. They did a class here and I started to see how many other entrepreneurs. There’s an entrepreneurial thing going on there. What is it?

David: Yeah, I mean, when I decided to go to college, my mom pushed me to go. I was going to skip it and part of the internet boom just not go. And I decided the only school I wanted to go to is Babson, because it was one of the few schools that had a truly focused entrepreneurship program. So different than business and looking at categories outside like, “Yeah, of course, we talked about operations and marketing and how to read a balance sheet and things like that.” But class after class that is very focused on entrepreneurship, building actual business plans, going out and doing real things. And Babson is very unique in that way.

Andrew: I never heard of it when I was considering colleges. And that’s something that would have definitely driven me to Babson. I went to NYU because it was business oriented, but they didn’t respect entrepreneurship enough. One of my professors, the guy who taught real estate said, “Look, they don’t teach real estate to undergrads, they don’t teach entrepreneurship to undergrads. As you walk around, look at the buildings and tell me who the people who funded this. They’re real estate and entrepreneurs. And this is the way that the school treats our departments.” You are entrepreneurial, though, from an early age. I read that in your book in “Unstoppable.” What are some of the businesses you had growing up?

David: So I did everything like from selling jewelry before high school and like anything I could sell I tried to. I’d say the first real business that I actually like did was website design because early on in eighth grade I got access to like FileMaker Pro and some of these things on a Mac via school. And I started to like, say, “Okay, like this is really interesting. Like what could be built?” And this was the very start of the internet. So the first thing I built was for my father’s business website, and part of it was paying him back for the computer he helped me buy, because at that time, a Dell computer was like $4,000, right?

Andrew: Yeah. What did your dad do?

David: He ran an import/export customs folder and free folder business. His father ran it too at New York.

Andrew: Did you go work for him as a kid?

David: I didn’t. He did not want me in that business at all. He said it was a dying business, and I think he was right. I mean, FedEx and UPS have made that business tremendously hard.

Andrew: Yeah, my dad didn’t want me to go into his business either. But I kept nudging him until I could go work at least in the summers. And I liked watching him work. I like getting the sense of what it’s like to do that. Even little things like if in the middle of the day he didn’t feel good, he would go out and go buy a sports jacket somewhere in midtown Manhattan. And that was like, “All right, you get to do stuff like that when you’re an adult in a certain environment.” I didn’t know this about you until Andrea on my team put together a sheet for me on you. And apparently you’re listed as the co-founder of ReturnPath. Is that right?

David: Yeah, that’s correct. So that was before college.

Andrew: How are you co-founder of ReturnPath?

David: So my friend James had the original idea, and the name of the business was totally different. And the concept was really simple, which was people change their email addresses for a few reasons. One is they change jobs. They leave school, where they change at the time ISPs, right? Now, that’s a little bit different I think.

Andrew: Meaning you switched from AOL to EarthLink and you get a new email address because AOL won’t let you take your . . . yeah, that was the thing.

David: Exactly. Now it’s a little bit different. This is before Gmail, right? We corrected to find a new email address. So someone like E-Trade would say, “Here’s the old email address, give me the new email address.” Highly valuable. If they spent $500 to acquire a customer, they would fix an email address for $100. ReturnPath was born out of that, and James who I worked with in New York early on was looking at this. So I helped build the original prototype. And then the company raised money pretty early on, and then I went to college. So I have no day-to-day involvement after that.

Andrew: Did you still own equity in it? Were you still involved at all?

David: Yeah, I actually got a little bit of money out of it over the years, and I still own a tiny, tiny bit, like it’s been diluted down. But yeah, I still own some.

Andrew: Yeah, they’re I think the Foundry Group, and I think they were one of Union Square Ventures early investments.

David: Yeah, when it was Flatiron. So it was before Union Square Ventures.

Andrew: Okay. Yeah, I’m looking here Crunchbase, $126 million in funding over the years. And they’re still private?

David: Yeah, they’re still private. They’re doing well. They’re expanding every year. The team in place, I think, is great. And, surprisingly, I think they’re growing at a faster clip than I expected when I look at their numbers.

Andrew: So Noah Kagan came on here and he talked about he was booted out of Facebook. And by the way, he then asked me to change the headline to deemphasize his being fired from Facebook. I think at the time, he didn’t feel good about that. And then he realized . . . well, he wrote a blog post and that just took off. Did you ever feel like internal pain about losing out on that opportunity?

David: I mean, I think at some point when I was young, but I quickly realized that, a), the right decision was going to go to college. So there was a decision between like continue this or go to college. The right decision was going to college. Could I’ve gotten more money out of it? Sure. But I think ultimately, it taught me a lot about how I didn’t want to necessarily raise money for Grasshopper when we were starting it.

Andrew: Because? What did you see happen there?

David: I saw just kind of the decisions made and like making acquisitions early on, trying to grow faster than needed, not focusing on profit and bottom line, but focusing on just top line. Those things kind of just didn’t resonate with me.

Andrew: All right, let me talk about my first sponsor, and then we’re going to come back in and talk about . . . I’d love to find out about how it was a Harvard Business School graduate who started a company that you were fascinated by and what you did with him. We’ll talk a little bit about your weight and we’ll keep going from there.

The first sponsor is a company called Toptal. I told you about them. I always check in with my guests, because sometimes they invest in competitors of my sponsors. And I say, “Okay, I’m not going to make it awkward. I’ll pick a different sponsor.” But you said, “Actually, we’ve used Toptal.” How did you use Toptal and why?

David: Yeah, so we’ve used them for development talent. We’ve looked at them for some other things, but just supplement teams on an ongoing basis when we need a full time resource for, say, three months.

Andrew: Where?

David: So we use this at PackageFox, which was a company in the logistics space that we ultimately sold, not for a lot of money. And then a few other internal projects where we just wanted someone for two to five months, six months maybe to supplement a team.

Andrew: And it’s a project that stands on its own, that you bring somebody in or a team of people from Toptal to do?

David: We’ve always used them for supplemental. So adding to our team where we need additional help.

Andrew: And you’ll go through a couple of people at a time when you need that?

David: Yeah.

Andrew: Why that instead of placing ads or asking friends for introductions?

David: Pre-vetted better talent, right? So I could have done that like on any other website or marketplace, and spent a tremendous amount of time dealing with a lot of garbage.

Andrew: Yeah, that is the big advantage of them. And one of the things that Hiten Shah told me when I interviewed him was he said he loved the matcher. So I’m going to give a link to people. It’s created by a Mixergy fan, so they’re giving us a great offer. On that link, you’re going to see a button. As soon as you press that button, what you’re initiating guys is a call with a matcher at Toptal. They’ll understand what you’re looking for. They’ll help you find the right person, just like David and his team found. They will get you on calls with them. If you like them, you could get started often within a day or two.

And if you don’t, nothing lost. Here’s the link where you’re going to get 80 hours of Toptal developer credit when you’ve paid for your first 80 hours, in addition to a no risk trial period, even David. If David would have signed up with them and said, “You know what? This actually is not good. It’s not as good as Andrew talks about,” they wouldn’t charge him and what they would actually do is pay the developers because they want to treat their people right. So if you want to do it, all you have to do is go to toptal.com/mixergy. That’s top as in top of your head. Tal as in talent. Toptal.com/mixergy.

David: Man, I should’ve used that link. We didn’t get any free hours.

Andrew: You didn’t? No? I said to Hiten, “You’re doing well, you probably don’t care.” He goes, “Are you kidding me? I do care.” And then he told me about not just he cares, his wife is somebody who cares about that. Do you still care about spending money on stuff? Like if you go to Philz and they charge $4.50 for a cup of coffee, do you go, “This is not right for me”? How do you think about money now?

David: I think I have a problem with that. I probably think about it too much. I was talking to someone recently and they were like, “Why would you fly on Spirit Airlines?” And I’m like, “Well, because the flight was like $22. And even after I paid for the bag in the seat, it was still like at least half as much as Delta,” or whoever, right?

Andrew: Why? Why don’t you treat yourself? Why don’t you say, “You know what? I am worth it. I’m going to get a first class ticket, and I’ll justify it by who knows who I’ll sit next to and I should enjoy my ride?” Why don’t you do that?

David: I don’t think it’s important in life. What I’ve learned from my girlfriend, who we have three kids together, she’s really taught me that like experiences over things. And like that’s where we’ll spend money, right? So going and doing something with the kids or as a couple or family like we’ll pay a tremendous amount for that experience. But the other pieces are just not important. Like the things you buy along the way or how you got there, right? It’s the experience that you had that you can remember and enjoy.

Andrew: Like what? What’s a good experience that you find worthwhile?

David: Yeah. So I think for the kids, like they love, for example, Disneyland, right? And like, you can go to Disneyland and you can pay the crazy price or you can do the private tour. And the private tour is far more expensive and it’s like unjustifiable, like the amount of money. But the experience you have is just tremendously different. The kids talk about it years later.

Andrew: I get that. You’re right. I would rather have that, and I wouldn’t mind being in a Spirit. No, actually Spirit Airline a little scares me. Southwest let’s say because that’s a place where they nickel and dime you for everything. Did you have to take a quarter with you to pay for the toilet?

David: Well, I mean, worse than Spirit is Allegiant and the other one. But yes, Spirit, like it was okay. It’s a three-hour flight. It wasn’t bad and it was half the price of everyone else.

Andrew: Is it inappropriate for me to ask you why aren’t you marrying this woman?

David: That’s a fair question. So I’ve actually talked about this before. First, both of us have been married before. So I don’t think it’s as important socially. One, like we both looked at this as if it’s not broken, why go and fix it with some other thing? And we’re in a long-term, committed relationship. There’s nothing changing about that. I think kids are far more of a commitment than marriage. And I think she is now pushed for . . . we’re still together party as a celebration, which I’m fine with. Like I get that, like have all of our friends together. Like that’s awesome. That’s an experience.

Andrew: I get that. There was this comic on Howard Stern who was with his girlfriend for 20 years. And I remember Howard asking him, “Why aren’t you getting married?” And then they finally said, “Okay, you know what, Howard? We’re not only going to get married, but we’ll do it on your show.” It was a big to-do. A year later, they broke up. It’s like, “What? Why screw it up if it’s working?” I get it.

And then, by the way, it could have been that they had issues and they thought this could solve it and it didn’t. So I’m not saying marriage necessarily led to it, but I get the point of why are we screwing up something that works. Who’s this person who was a Harvard Business grad who you are intrigued by when you were in high school?

David: Yeah. So James was a good friend of mine that I met in a really random way. He started a social network for Ivy League schools because he went to Harvard. This is way before Facebook. So it was called The Square. And he ran another business that I found that was in the affiliate marketing space super early on. I think was even before kind of the idea of affiliates. He was kind of revenue share partners or whatever they called it. I liked the concept. And I literally reached out and said, “I love what you’re doing. I’d love to work on this.” And we had a phone call. He said, “Okay, let’s talk.” I went into the office and he had no idea that I was in high school, because I had a relatively deep voice, I guess, and on the phone I sounded older. I showed up in the office and he’s like, “Oh, my God, like I didn’t know you were 17.”

Andrew: And so then what did you do?

David: So I started working on that and really learning like both from a business perspective. But that’s when I started digging into programming and saying, like, “I can build these things.” Like I had no idea how to write HTML, or at the time, he was using ColdFusion or whatever. I’m like, “I think I can figure it out.” And I just started digging in and having people around to bounce questions off of was pretty cool. And then being . . . his office was like 55 Broad Street in New York, which was like the little kind of internet, Silicon Valley area of New York by Wall Street. And it was just awesome being in that building. Like there were companies that would like move from floor to floor as they doubled and tripled in size in like a three-month period. It was an interesting time.

Andrew: You know, I’ve got to remember this attitude. So Zoom was going to go public, the founder, because he was going to go public backed out of doing an interview with me. I still use the software. I do these interviews with the software. I emailed him and I said, “I know you guys are going to go public. That’s probably why you didn’t do the interview with me. Can I get in on the IPO as a customer?” And I was very proud of it. And he said, “Actually . . . ” I won’t say what he said because it’s his business. But then I went to this VC friend of mine, and I said, “Look what I’m doing because I’m excited about this company going public.”

And he goes, “Andrew, you don’t deserve to get that. You don’t deserve to do that.” And because I respected him, I backed off. It’s one of the things that I’m upset with myself for backing off because I listened to him because I respected him instead of listening to the voice, which is, “Look at what you did. You had no right to be in this dude’s office,” especially if you didn’t even know what you . . . you didn’t even know it. You figured you could learn it. How many times in these interviews do I see entrepreneurs asking for stuff they don’t deserve? Because what’s the worst thing that can happen? That’s who we are. We respect each other for being able to do it. Big mistake. Would you agree or disagree?

David: Yeah, I think for sure asking for what you want and what you believe in. And if you can stand behind that statement, it’s not just because I want it, but because of A, B, C, and D. I think it’s a tremendously strong statement. I have a whole separate problem with the whole IPOs system and structure.

Andrew: What is your problem with it?

David: My problem is it is far outweighed to people that have far too much money. Like if you go back in time and look, like, a) we’ve now delayed IPOs longer and longer, which, again, allows more value to be captured in private markets, which most people don’t have access to. And so I don’t think that’s fair. But two, like Zoom, huge bounce, even from their opening price on day one. And the people that have access to that are the people that have already captured all of the private returns too.

Andrew: Right, yes.

David: It’s not a balanced way to do it. And I think from a long-term perspective, it doesn’t get the buy-in that Apple and Google get, where people held that for a long time, for long periods. I don’t think that happens anymore.

Andrew: You know what? I’ve heard stuff about that too, that now it’s people are telling me in private conversations so I won’t get into it. But you’re right. It’s even worse than we thought. They do get the benefit to levels that you don’t realize. Okay, I get pitched to do interviews a lot. You just would need to tweet or something and I would say, “Yeah, absolutely. I’m jumping on it.” But I’ve got to say freaking guy. I don’t know who this guy is. Jonathan Barshop who I guess you hired him to set you up with interviews. Freaking guy did a great job pitching you.

David: I’m glad because he got paid a lot. Not a lot but he gets paid a reasonable amount.

Andrew: He’s good. Most of these people don’t know jack. There’s one from a major company that cc’d all of the people that she was messaging, all. Like I could see everyone at like Bloomberg. It was just so bad. This guy like, “Andrew, here, I’m a supporter of your podcast. Here’s a thing I did. Here’s stuff that you know about.” Like what kind of time are you putting into this? Of course, I’m going to read this, even if I didn’t know you, I would be into this.

I feel like you’re good at hiring people and you’re good at managing them. I’d love to know what you did at Grasshopper that allowed you to bring in good people and create a process for them to be so good that a day after you sell, you can walk away and your acquirer feels like “Okay, we didn’t get just dumped this crappy company that won’t run without the founders. We can trust that it’s going to continue.” Talk about what you do there.

David: Yeah, the two most powerful things, one, core values and core purpose. And people talk about that all the time. But, I mean, actually putting in place and putting it into processes. So that means in hiring and firing, rewards and recognition, even discipline, both publicly and internally in the business, so start on the front end, right and look at hiring and say before I even start screening someone for skill set, I screen for core values, and I asked them, “Here are five core values. Give me stories about how you live this in your life or in your in your business life.” And real stories, not like, “I believe I do this.” Like, “On this day I did this. I helped a person. I went above and beyond because of whatever.” I think that’s the one most powerful.

Andrew: So what are your core values? I’ve gotten good at creating better anyway, not to a level where I’m even happy with it. What were your core values?

David: So at Grasshopper, it was go above and beyond, always entrepreneurial, radically passionate, and your team. It’s spelled out GARY. Each one of those had a sentence that went underneath it. And that as a standalone, they’re okay. They’re not that powerful. But when you start putting them into process and putting them into the business, they become very powerful. When a customer service agent, who’s usually the furthest from the founder or CEO, has to make a decision and they’re running it through this filter of the core values or brand promise and saying like, “In the interface, I got to enter why I gave a refund and tie it back to a core value,” like that’s the power of these things.

So the example I like to give is someone would, you know, mess up printing their phone number on a business card. Not our fault, not their fault, just a mistake. And they’re like, “It cost me $150.” They’re asking for a refund. They’ve paid us like $25. In many cases we would give them $150 more than they paid us because it was the right thing to do. We’re entrepreneurs ourselves. We know what it feels like to make that mistake when you’re first starting out.

Andrew: Yeah, you know what? I had a listener say that they were upset with Grasshopper and they wouldn’t give them refund.” They go, “For $10?” Of course, they would. You’re doing something wrong, but I’m not going to disagree with you. I just PayPal the person 10 bucks. But it was just like fly by the seat of my pants. What you’re doing is tying it back to a core value that you can then share with everyone else and reinforce, “This is what we’re about.”

David: Yeah, and make that a conscious decision that someone makes. And there’s so many examples of this. Like how you integrate it. But the key is creating stories around it. And we created a program called “I-Caught” where the idea is to catch people doing good things, but you’re catching people, you know, living the core values with a story. And we gave away . . . at the end of the year, we gave the biggest “I-Caught” winner a $10,000 prize every year.

Andrew: GARY as in Gary Busey, right?

David: Yeah.

Andrew: I didn’t know it. I’m looking at a 2008 article over 10 years ago to see like is this a new thing that they did afterwards and retrofit back because everyone cares about culture? No, 2008, this was back when you guys were GotVMail and you actually had a mascot called Gary.

David: Yeah, there’s little mascot. There was like a little guy. We also named the Grasshopper Gary. But as part of this promotion, we hired Gary Busey to record a bunch of videos.

Andrew: Oh, wow.

David: He is crazy. Yeah.

Andrew: In person. Like what was going on with him?

David: Siamak went to the recording that day. I saw a lot of the outtakes. I mean, none of it was scripted. Like absolutely. He refused to script anything. He was like literally given, okay, name of the company is GotVMail. They have this thing called Gary. You’re going to talk about some values. And like that was it. And the videos are still around. I think they’re on YouTube still.

Andrew: I’m going to find them. Is it important that your team is entrepreneurial? Like our core value, even though we serve entrepreneurs, being entrepreneurial and serving entrepreneurial is not part of our core values. I wonder if we should because I thought that the reason that Grasshopper was elevated beyond a business tool, beyond a phone thing, which, frankly, let’s be honest, it’s kind of a boring officey thing. It was elevated beyond because you guys were championing entrepreneurship. And he happened to have this software that was built for entrepreneurs. Should we be thinking that? Should we be adding entrepreneur to our core values?

David: I think we want employees that act entrepreneurially, which is different than being an entrepreneurially. So when you think about acting entrepreneurially, that means making the right decisions about cost versus benefit. So it doesn’t mean finding the cheapest thing, but it does mean making decisions that make sense when you start weighing those options, thinking about how we can creatively solve problems. Like those are the things that I think are encompassed in that, which to me is very different than being an entrepreneur. Being an entrepreneur is actually not usually the type of employee you want. They’re out on the own. They want to do it their way. Like there’s a lot of kind of potential problems there. So there’s a small differentiation, but I think it’s important.

Andrew: Oh, I see the video now. It’s him. He does look like he looks a little professorial. He’s sitting there in a chair and he’s talking and, yeah, I feel like that’s the most cleaned up I’ve ever seen him. This is great.

David: This is also 10 years ago. So now we’ve seen what he’s now which is, I think . . .

Andrew: Go inside the mind of Gary Busey. Here Gary talks about his famous “Buseyisms,” elephants and the benefit of GotVMail. And the first response, the first big comment is, “A goddamn national treasure that man.” Let’s talk about . . . I want to get into the book, but let’s cover two things. The current business and then Airbag. Airbag seemed like you were . . . I feel like you had this vision of entrepreneurship. You had some hits. You had some flops like Chargify, definite hit?

David: Yeah.

Andrew: Right.

David: For sure.

Andrew: PopSurvey the founder of Baremetrics. He was on here. He doesn’t consider it a hit. He talks about the mistakes that he made there. What do you think of the mistakes that he made at PopSurvey? This was a survey app that looked beautiful.

David: Yeah, I think we relied too much on design and assuming that people cared about that. I think the target market didn’t necessarily care as much as we did. And then, two, not understanding how mature parts of the market were in terms of pricing and functionality, where I think this is the issue of freemium. Once you’ve gotten to a certain size, take, for example, MailChimp, they can do freemium far better than any startup. So it becomes actually a barrier to entry.

Andrew: What do you mean? Why could they do better? Why can bigger companies do freemium better?

David: Because they have a base of customers where they can now support this freemium model far easier, and we’ve made this mistake at Chargify. The freemium brings in some of the worst customers, the highest noise level, and obviously, they’re free. So like there’s a lot of problems there. When you were a large organization and you say you have $10, or $20, or $30 million of annual recurring revenue, you can drown some of that noise out and the infrastructure is near free at that point. As a startup, if that’s equating to 50% of your customers, that’s no longer free.

Andrew: Got it. Okay. All right. So you’ve learned a lot. And then I felt like, “Wow, what a great guy to go out there and invest in companies because he knows what’s working. He’s . . . ” Like you’re coming at it from the point of view of a guy who has to be profitable and think in terms of like . . . well, everything that goes into the entrepreneurial core value of Grasshopper, you’re bringing to your investment. What happened at Airbag? Why aren’t you active there?

David: Yeah, so looking at from the portfolio, I’ve made a probably about 80 plus investments. As a portfolio, it’s broken even. So not great financial performance.

Andrew: Wait, why do you mean broken even? Isn’t it too early for you to know? It hasn’t been that long?

David: I mean, it’s over a 10-year period I made 80 investments.

Andrew: Oh, I thought this was something brand new. Okay.

David: So I reframed it in my mind away from a financial reward and said, “You know it, can I learn from it? Can I make connections from it? And can I do something interesting?” And I think accomplishing those goals is far better. Like without raising a large enough fund or dedicating enough money, I don’t think it makes sense from an angel perspective as it used to. So I’ve pull back on that.

Andrew: Because?

David: Because the angel round has been shifted out. The angel round became the A round. There’s a lot of funding dynamics there. By the end of the day, what I found personally is I don’t identify with people that are on this funding track, which is why I changed. I don’t invest in any company that’s doing under a million dollars AI and it’s on that path for raising more money, right? I would prefer I never get my money back because they never sell and they never raise again, then beyond that train.

Andrew: And get money back from . . . would you want to get money back as . . .

David: I do. Obviously I do.

Andrew: I mean not money back. Would you want to get dividends? Would you want to get a share profits? Is that what you’re thinking?

David: Yeah. So we’ve looked at structures like that. I’m pretty close with Bryce at Indie.vc., at Tyler at Earnest Capital. And I think some of these new structures are very interesting. That’s too early to know. Like I don’t know if these makes sense or not yet.

Andrew: Yeah. Bryce did a great podcast somewhere. I can’t remember where. Where he talked about how his model works and why it’s . . .

David: I listened to that one. It was pretty recent, like, last few months.

Andrew: Yeah. It’s one of the Recode podcasts, maybe the one with Peter Kafka, which felt a little bit out of place for him to be there or with . . . I feel like it was Recode but I could be wrong. It was great. It was it was really helpful. Okay, so I can understand. By the way, you’ve one of the best domains and the sparsest homepages. It always has been. I thought maybe if I went to the Internet Archive right now I’d find like, “Here’s our portfolio.” No, why don’t even list your portfolio?

David: Because it’s not an active thing where we’re trying to build that out, right? Like these are very specific companies that usually come to us or come through our network. We are not actively going out and doing any of that. And in the last 24 months, I really decided that where I’m going to get outsized returns is businesses I can control and make decisions in. So that’s where I’m putting my time and money.

Andrew: All right. So SuperFat. Why SuperFat?

David: So I’ve been eating a ketogenic diet for a long time. So . . .

Andrew: What is ketogenic? Yeah, I’m sorry.

David: High fat, low carb. Right. It is a growing trend that everyone likes to talk about right now. I think in the long run, it doesn’t really matter all that much. I do believe that the trend of reducing sugar and refined carbohydrates is here to stay. But that’s my personal belief. So I’ve been eating like that for a long time. The struggle I’ve always had is I travel quite a bit. I’m out and about, like having a to-go thing that’s easy to consume is very difficult. Like my options were avocados, eggs, maybe sometimes a handful of nuts or cheese. Most of those require refrigeration. Very difficult. So I wanted to create a product for myself. I got involved with Mike who previously worked with me at Grasshopper running our customer acquisition retention.

Andrew: I know Mike, what’s Mike’s last name?

David: Morris.

Andrew: Yeah, I know him. Not very well. But okay. So this is what he decided he was going to do. And you partnered up with him?

David: Yes. So we had the genius idea. Let’s go from recurring revenue with no inventory to non-recurring revenue with inventory nightmares, right?

Andrew: Yeah. And have you brought . . . Well, let’s see the connection just pause. Tell you what, while we’re waiting, actually, no, I’m going to pause it and wait for the connection to return. He’s got some kind of weather issue going on. That might be what’s going on with our connection here today. Let’s take a moment. I’ll pause it. And then there we go back. So yeah, why do that? Why not get into SaaS and say, “I believe in this, I’m going to buy this, I’ll be your best customer, but I’ll stick with software as a service, thank you?

David: Because my belief is our food system is broken. I looked at technology solutions for how do we make mass change within communities, right. And as I looked at it deeper, and we actually built some software that did tracking and analytics and a bunch of stuff. I realized very quickly the real way to make changes within our food system. And to do that, you got to be producing food. So I put money behind this and said, “I believe in this.”

Andrew: So I interviewed Morgan Newman. He made that spicy honey, what is called? Bees Knees, I think.

David: Yeah.

Andrew: And he told me a lot of what he did within the interview, and even afterwards, all the techniques that he was bringing from being a software entrepreneur to selling things physical products, and even swear me to secrecy, but I get that it was private. I feel like you’re bringing some of that here. I’d love to understand what are some of the things that you learned as a guy who knows online marketing, and you brought to SuperFat?

David: Yeah, it’s a great question. We thought about this a lot recently. And I think it’s actually to some extent a competitive advantage, where we’re taking the models that we understand and renaming them, right. So when you look at SaaS retention, I think that translates directly into reorder value and some of the other metrics that you might look at from a consumer product standpoint. But the actual models are built the same way, which is, if I can retain a customer for a year, I know their lifetime value. I know what CAC I can spend. Like I can back into all these things, right? And it means I can aggressively spend. They’re other people not even tracking this. Like they don’t even know where to start to track it. So I think using those models has been tremendously helpful for us.

Andrew: And so what’s an example of how you used it to grow?

David: Yeah, so obviously, everyone uses Facebook and Instagram and things like that. But we’re measuring these things on lifetime value and customers that are just different metrics than what a typical consumer brand looks at.

Andrew: Because you know your lifetime value of a customer better than others, you can spend more than the initial order where others would limit it to the initial order. And what do you use to keep track of that?

David: Google Analytics, I mean, I am the simplest, like I love data. And I’ve tried all sorts of complex attribution models and fancy software. I stick to the most simple stuff.

Andrew: Really? Google Analytics will let you know customer lifetime value?

David: Well, I mean, we calculate in our models and then input it. It doesn’t calculate it for you, but you can use . . . the analytics do all the work.

Andrew: Wow, I would have thought you’d have something sophisticated that was going to blow my mind. All right, let me blow your mind then. You know, ActiveCampaign?

David: I do?

Andrew: You do. I’m going to tell you a little bit more about ActiveCampaign right now. They’re one of the original guys who were doing email marketing. Unlike other email marketing software that started back when they did, they kept . . . what are you drinking? What is that thing?

David: Water.

Andrew: Is that just water? Oh, wow.

David: It just says Texas on it I think?

Andrew: All right. We’re going to get into it like your health because I’m fascinated by you. I’m also fascinated why you want adults to drink . . . like, eat out of pouches the way my kids do.

David: My kids do it too but . . .

Andrew: All right. We’ll talk about that. Yeah, I do feel like my kids are eating better than I am, because they do eat these types of things. They eat nut butter, sun butter. I never heard of sun butter before I had kids.

All right, real quick, ActiveCampaign decided they were going to keep updating. If you guys at SuperFat, had ActiveCampaign on your site, here’s what you’d be able to do. There is a different type of customer who’s going to buy the macadamia almond, I’m guessing than somebody who’s going to buy the protein version of SuperFat than somebody who’s going to buy the Nitro coffee, right? The natural coffee person might be like, “I got to get things done fast. Give me something that will give me a lot of caffeine and let me get through my day fast.”

The person who might be eating protein maybe is working out more, right? Imagine if you said I’m going to use ActiveCampaign. And I’m not going to have people fill out forms when they join my email newsletter. What I’m going to do instead is just put a single line of code on my site. And if somebody keeps hitting up the Nitro coffee and reading articles about Nitro coffee on my site, I might tell them how this is a better alternative to coffee. And it will actually power them through their day with more energy without the crash. And you start to send them email marketing that talks to them like that. If they’re into protein, maybe you talk about your weight gain, your muscle gains. Maybe you talk to them about how protein is an important part. But meat protein is inferior to plant protein and so on.

And you start to talk to them differently without having them tell you explicitly what they’re about. That’s the kind of thing that ActiveCampaign does. Email marketing that’s smart. And you can do automation, so they get the first messages. All that stuff that we already know. And they hate for me to talk about just email marketing, because they’ll do text messaging and all the other stuff too.

If you’re interested into them, they will give you a free trial, so you can just experiment with them. Maybe one day, you decide what you’re going to do is open up for yourself a MTC Plus Probiotic nut butter out of your SuperFat pack because they do have these variety packs and you sip one of those while you’re looking at ActiveCampaign and trying it out for free.

You realize it’s actually really good. You sign up and pay. The second month is free if you use my URL and they’ll give you two free coaching calls and make sure you get the most out of it. And if you started out with a different email marketing software, they will migrate you for free. Here’s the URL, activecampaign.com/mixergy. Active, be active. ActiveCampaign.com/mixergy. I’m telling you the ads have gotten way better since you guys were sponsors.

David: I’ll tell you though, I will have to say we did lots of sponsorships. We do all sorts of things. And you guys performed far better than anyone else. So the ads might have gotten better. But I mean, super engaged audience like I mean, that’s why we always supported what you were doing.

Andrew: Thanks. Yeah, and you guys were really good sponsors to have because I really do put my name on it. People will stop me in the street and say, “Hey, let’s talk and are you going to do a Toptal commercial in the middle so you can identify it?” And if the company’s not good, it sucks.

Let’s talk about your health. I thought you were always a super, like healthy person. You did the Boston Marathon.

David: Yeah, I did Boston Marathon. I did a half Iron Man. All sorts of endurance sports. I did everything I was told to do from a conventional perspective. I went and did cardio at the gym, I lifted weights, and I struggled with my weight and my health for years. For as long as I can really remember.

Andrew: When? What’s an example of you? I’ve seen you in person because you and I would bump into each other at conferences. You never looked heavy to me. What’s an example of a time when you were heavy?

David: Yeah, I mean, I think there are a lot of examples. One that stands out in my mind, which was just the most frustrating was after putting in tremendous hours at the gym and running outside and biking and swimming, getting ready for Half Iron Man. Like, you know, 10, 15, 20 hours a week, hundreds of hours and get at the race like putting on the spandex shorts and being like, “Oh my god, like I’m fat. Like there’s like fat coming over the edge of the shorts. Like, something’s not right here.” And the amount of time I’ve invested in is just so frustrating and very demoralizing.

Andrew: Why do you think that even though you were training for a half Iron Man, by the way, for anyone who doesn’t know, we’re talking about a mile swim, 50 plus mile bike ride and 12.1 . . . no 13.1 mile run?

David: 13 mile run.

Andrew: That’s a lot of exercise.

David: The seven hours.

Andrew: Yeah. The 13 mile run alone will burn off 1,300 calories roughly, right? So and training for it. Well, why do you think you still have even after burning off all those calories?

David: I think I was looking at like the wrong things, right? I was counting calories and doing that, it’s just very difficult when you’re consuming as much carbs as I was consuming. So I could be off by 100 calories and start gaining weight very quickly. Even though I was burning thousands, right? There’s no mechanism in the body. Also, the body is not made to consume carbs like we do today. That’s why I switched to a high fat diet. And there’s a lot we can talk about the biological reasons that makes sense. But ultimately, it made sense because it worked. And that’s what I found most powerful.

Andrew: You were drinking Slim Fast. I laughed earlier in the interview about that. Slim Fast is those shakes that they used to, really daytime TV shows, used to have ads for them. Why were you drinking Slim Fast?

David: I was in college. It seems like an easy thing to do. And when I first found results, like I don’t do anything halfway. So I’m like let me try this for a week. I’m like, “Okay, I lost a few pounds.” Let me go all in on this two a day one, only one meal. So replacing two meals with it. Like I did it for three months like and it was relatively cheap. It’s not the cheapest thing in the world. But it was relatively cheap.

Andrew: Relative to a meal, right?

David: Yeah, relative to a meal. I guess it’s more expensive than ramen.

Andrew: Why didn’t that work? Why didn’t you stick with it then?

David: So actually, the biggest problem was I always felt hungry. Like my life was consumed with like things about the next meal. Getting hungry all the time. So now it’s just this fight of like, how strong can I be? And didn’t want that.

Andrew: I kind of had that with Soylent. It was a hot thing. I said, “Okay, I don’t like eating, I’ll just do Soylent.” And I was walking around with backpacks full of Soylent. Like I’d go to Napa to go work or actually it was Berkeley. And I’d sit at a coffee shop with that and just didn’t feel right to me. And so you said I’m going to start to focus on this and what’s the big like before and after for you where people started noticing it and asking you about it?

David: So I classify these in my mind is like these magical moments, right? And the one for food was I’ve always felt hungry, right? Like I could consume a tremendous amount. I eat very fast. My mom always told me not to. But the magical moment came probably about two years ago now. I was in my office and I always brought lunch with me, because I’m very specified about what I want to eat whatever. And at the end of the day, I went downstairs and I had forgotten to eat lunch with a busy day. And it’s happened before but I would think about it, right? I’d be on a phone call thinking “Oh, I haven’t eaten, I’m hungry.” I will do less that day, go home, and I’m like, “Oh, wow, I didn’t eat lunch and I didn’t feel hungry.” And that was just a change in my life that had never happened before. And there’s been other moments like that in each of these areas.

Andrew: Give me another example. And so what that taught you was Look, “I don’t have to eat. There’s something else going on with food.” Is that right? Am I picking up the right message?

David: I don’t have to eat. And if I eat the right things, my body is not hungry. Like I’m not just craving food all the time.

Andrew: Like what? What’s the right thing that would keep you from eating, from being hungry?

David: More fat. Eating more fat. Plain and simple.

Andrew: Eating, you know what? I’ve been more into carbs. And I tell myself that if I eat more carbs, carbs like bread, bagels, pasta, even rice. I tell myself, “I’m a runner, I need more carbs. And I’m an energetic person, like full on high energy. Carbs are going to help me do this. What would I lose this energy if I switched to fats? Aren’t they going to slow me down?

David: No. So first, I would suggest that you have to test for yourself. The evidence says that no, it should actually increase brain activity. Your brain runs more on ketones, which are generated from fat than carbohydrates and glucose. There might be a shifting period in the middle there. But I found and a lot of other people do that. My energy level is much higher. And my less brain fog, more focus, more productivity, I’m eating a high fat diet. And so there’s also a separate question for performance like physical performance. And there’s some great books on this. Steve Phinney is kind of the preeminent person on this and he wrote a book, “Low Carb Performance,” which really digs deep into like the medical reasons that you can perform better on a low carb diet.

Andrew: I’m wondering as we talk about this, why are you doing this? Is this because of like superfat.com? Is this like this is part of your business? This is part of your mantra. I just saw you blink in a way that’s like that I could tell it’s a micro movement that says no, this is just actually disturbing me. Talk about why that disturbs you?

David: Yeah. I mean, this is genuinely something I care about probably to an extent it is not good, right? Like we have arguments inside the house about what the kids should or shouldn’t eat, which is a different issue. But I genuinely believe that our food system is broken. The things that we’ve been given as options are wrong. And what the government has told us is wrong. And I think the data is clear when you look at the increase in cardiovascular disease, the increase in diabetes and obesity, when we started listening to government in the 1950s, and ’60s with the health recommendations or dietary recommendations.

And I think it’s really sad, right. Like, people talk about the impact on our country in terms of dollars spent on healthcare, and like how do we fix the healthcare system? Well, how about let’s get rid of 50% of the problems in the healthcare system? That would be a far bigger impact than if we have a special plan named after a politician, right.

Andrew: And so this is you writing a book about a passion of yours, a way that you think the world needs to be. Because that’s the stage of your life that you’re in?

David: Yeah, so the book is really my giving back a framework that has allowed me to change my life. People always ask me like, “You lost weight?” And I’m like, “Yeah, I did lose weight.” That’s not what it’s about. Like I changed a lot in my life. I sleep far better. I obviously consume a very different diet. I exercise very differently than I used to. I’m much more gentle on my body. And I found that [inaudible 00:54:42] from that. The book is just a framework that allows anyone to test the things that they care about the most and come to their own conclusion.

Andrew: And the testing as a part of it. What was the name of the book before? Hang on. Don’t even tell me I got it at the top. It was “Evolve.” And my sense was the reason it was “Evolve” was it was partially you want to be better. But also, it was the book about like the evolution happens through tests. I’m kind of remembering there’s a part of your book where you talking about A/B testing being a key to your growth Grasshopper because you picked up on it before. It was a cool thing to do. Talk about that, the A/B testing on our bodies that we should be doing. What’s the connection there?

David: So I spent a lot of time at Grasshopper doing A/B testing. And I quickly realized I should be doing that in my life to improve my health and I wasn’t. I wasn’t even thinking about it that way. So one is changing mindset and thinking about it that way, and then doing the tests. But it’s interesting, you mentioned the name of the book like there’s lots of reasons why it was called “Evolve.” But we A/B tested that with Google AdWords and landing pages and “Unstoppable” performed 3X “Evolve.”

Andrew: I like the name “Unstoppable” way better. I actually feel more drawn to “Unstoppable” and “Evolve” almost feels like shaming and I’m going to make you into better than you think. I get it. I like the name “Evolve,” because it was connected to you. But I love the name “Unstoppable” because it makes me be intrigued. That’s what I want to be. It’s interesting, actually. You would A/B test the title, which I shouldn’t be shocked by. If you were to summarize the book in like a catchy message, what would that message be about? Is it just eat more fats, less sugar?

David: No, not at all, actually. So if I were to summarize it, I’d say, find an optimization mindset and find what works for you. And I think those are the keys, right? One is that we can optimize and we can do better. And I think there’s a small segment of the population that understands this, but the vast majority don’t. It’s not hard and find what works for you. High fat diet works for me. You may prefer to eat a vegan diet. I tried eating vegan for six months and there were benefits to it, right? It’s an easy thing to follow. There’s clear rules. It’s whatever. There were problems for it for me. So it comes down to how you feel. And I think if you combined optimization, how you feel, you get the best result.

Andrew: So one of the things that I remember Charles Duhigg telling me was he said that he used in the middle of the day, have a snack, a sugary snack. And what he would do is just walk away from his desk and have it and come back. And he said, “Well, I’ve got to break this habit, but let me understand what’s drawing me to it.” And so he said, “I just had some sugar to see if the sugar is what I needed. And then I took a walk and so on.” And I remember at the time going, come on, you didn’t have sugar. What you’re doing is like illustrating your point in a dramatic way.

But then I realized, actually, maybe I could see that. Maybe what he felt his body needed was sugar to keep going. And I could understand that. I want to know the heart of my habits before I try to change them. Do you have an example of something like that you did in your life that similarly maybe absurd sounding, but it is a real A/B test that would stick in my head and kind of break my brain for a little bit?

David: That’s a good question. I did a lot of things where I went to an extreme. So for me, extremes always works, right. So saying like I’m going to just stop eating all sugars, right. And just like literally cutting it all out. I’m trying to think of an example like that. I think the easiest one probably was sleep, where I started testing pillows and I bought five of them. And some are pretty expensive, like 100 bucks, right? But to me, it was the easiest thing I could test because a mattress is very difficult. And I want to optimize sleep. So I spent a week with each one. And I literally pulled them out. And I wrote down each morning how I felt. And like that to me was one of the clearest A/B tests.

Andrew: You know, the word sleep appears in your book. I know it appears a lot. So I just did a find, 223 times. Why is sleep so important?

David: Yeah, I think it’s one of the most important things that we ignore. And it’s probably one of the easiest things to fix interestingly enough. The problem is the things to do to fix it are difficult things, meaning like going to bed early, right? Like I now go to sleep between 9:30 p.m. and 10:00 closer to 9:30 p.m. People look at me like, “Oh, my God, that’s weird.” Right? It’s a quite an easy change, but it is a difficult thing to do. Same is true for the rest of the guidelines for sleep which is don’t eat within three hours. That means moving your eating window earlier, right? So that means 6:00 p.m. dinner if you’re going to bed at 9:30 p.m., right? That’s for some people that’s very hard. Waking up naturally without an alarm clock. Like again, it’s an easy concept. It’s very difficult to do.

Andrew: What do you do to wake up without an alarm clock?

David: Going to bed earlier, right. So you go to bed earlier, you just naturally wake up when the sun rises. So I’m up by 6:00 a.m. at the latest. The last time I had an alarm clock was when I had a 4:00 a.m. flight

Andrew: Yeah, I’m with you. That’s worked for me too. But to get there, I had to do a lot of work, a lot of trial and error. It was things like put my alarm in the kitchen so that I’d have to go and turn it off. It was maybe I need a shot of caffeine first thing, so I had a can of soda. And I had this like journal that I kept of all the different experiments. And the can of soda was helpful, but I never even cracked it open. It was fine. Yeah, I see here that you replaced your pillow, and you advocate for really good pillows. Spend $100 to $150 because you’re not going to replace it often anyway. Replace your mattress. What mattress do you sleep on now?

David: This is a difficult question. I have not found one that I love. So right now I’m on a Tuft 7 Needle Mint mattress. It’s okay. It’s not my favorite. When we moved recently, I spent two weeks sleeping on our guest bed, which is Layla mattress, really love that. But I’m also balancing that with I want to test out these cooling mattresses. So there’s a company that now that has the cooling built in. Or there’s ChiliPad that you know you can buy and put it under. So like I’m trying to juggle which one of those I do for my next test.

Andrew: And your girlfriend is okay with this?

David: Yeah, I mean, she doesn’t really like . . . I don’t know if she honestly doesn’t care. But it doesn’t affect her the same way, I guess. She’s also not thinking about it the same way as me from an optimization standpoint. And the mattress feels good.

Andrew: Yeah, that’s why just be disruptive. Yeah, that’s the way I am.

David: Yeah, she’s like, “Yeah, that’s fine.”

Andrew: I have the crappiest cheapest mattress that I could buy. And then because the founder of Tuft & Needle was a Mixergy fan, premium member for a long time. And he came on and did an interview here, even offered me a free mattress. But I said I don’t think I need that. I think I could get the mattress myself. It was an expensive thing to accept as a gift. My kids needed a mattress, I got one. It is actually really good. I get the difference between a bad cheap mattress that you get from the mattress store and a Tuft & Needle thing that’s super comfortable.

But you’re doing these tests a lot. The book goes on and on with all these different tests that you’re running through. And that’s what you’re recommending, test yourself. Don’t just accept that because your parents started your day with oatmeal or cereal, you should be starting a day with oatmeal or cereal. Just try it.

David: Find what works best for you, right? And like I’ve gone to an extreme. I get blood tests every quarter. And it’s like a mini blood like, I mean, it’s a full on blood donation. It’s like 50 vials, right? That’s not what I say most people should do, right? But I love data and I love doing the testing. So for me, it’s interesting, right?

Andrew: And then what do you do with these blood tests?

David: I’m looking at all sorts of biomarkers. For me, right now, the most important ones that I care about are inflammation. So, you know, hsCRP, fibrinogen, things like that, making sure that those are tremendously low and being driven down. Because that is more likely the cause of long-term disease than any of the other things you’ve worried about over the years like cholesterol or whatever else.

Andrew: I feel like a big part of this is that it speaks to our techie A/B testing mind that there was this article that said something about how Silicon Valley loves these types of diets because they’re very measurable and we love that. I get that. Let’s . . .

David: I think what they really love is the extremity of it, right?

Andrew: Yeah. I do too.

David: That’s what drew me to it. Is like, “You know what? Like this is so different. Maybe it’s right.”

Andrew: I feel like that’s exactly right. Noah Kagan told me go write down everything that you eat, use this app. I love that little bit of extra work. I’m going to this extreme. I can’t get excited about just eat a little bit less. That’s what it is. The same force that drove you to make Grasshopper into a huge company is the one that’s forcing you to just try all these different things to improve your health. And is there a business benefit at the end of this? I read I don’t know if it’s just promotional material or if there really is. What is the business benefit, if any, of doing all this?

David: So I don’t think there is one really. When I look at the total cost of doing this book, it will far outweigh the benefit I get . . .

Andrew: Oh, no. I mean of living this healthy. So if we can actually do this what’s the business benefit?

David: I think the business benefit and the immediate one is productivity. Like that’s what I’ve seen the most for me. I am far more productive in the second half of my day than I ever was before. And that’s because of all the things combined. But most importantly, when I speak to other entrepreneurs it is literally just the idea of taking care of yourself. And if you take care of yourself first, you’ll do better for your employees and your customers without question. And even if it’s the smallest thing, it’s the mindset. That’s it.

Andrew: All right. Here’s the big takeaway that I’ve got from this. I just got one. Usually I’ll have like a list of things. The big takeaway that my brain can’t stop thinking about is this SuperFat. I buy a pack of 10 of these. I keep in my office. I get hungry, I squeeze one of . . . these are like the . . . what do they call? The smoothie packs or something the kids have. That’s what it looks like, right?

David: Like the applesauce. Yeah.

Andrew: Yeah. Like the applesauce pack. So I unscrew the top, I squeeze it, I eat it. And because it’s got fat, I won’t be hungry for a little bit.

David: For a little bit? I mean, I can replace a whole meal and not eat for the rest of the day with this.

Andrew: How many calories in this? Let me see how many calories I’m about to take into my body. Let me see the calorie count.

David: In the 200s.

Andrew: In the 200s. Oh, that’s not bad. That’s like . . .

David: It’s same as an energy bar or anything else. Just there’s no sugar, right? So this is all good stuff.

Andrew: And look at this. If I hit like buy with Apple Pay, will it . . . oh, it’s probably going to ask for my phone. Oh, look, and I love it. This is what this freaking guy does. I hate having to type in my address into websites. It’s in my freaking Apple Pay. All right. I’m doing it right now. Wait, oh, confirm on my watch. Can you believe that? Even on my phone, I’m double tapping. This is unbelievable.

David: You’re killing me though because I had an argument earlier today with the team about this whole process of checkout. I’m like, “What percentage of people click on Apple Pay?” I’m like, “I can’t believe it’s that much.” And it’s a reasonable number.

Andrew: Because what am I going to do? Add to cart or Apple Pay. Of course I’m adding to Apple Pay. And there you go. How did it come to $43? Oh, shipping. Okay. Good. I did it. That was super easy. Usually you know what I was going to do? Is just get the understanding of this and then I was going to send a message to Andrea and say, “Andrea, can you please buy this?” And then when it came I forget why I got it and who sent it to me and it’s a gift or whatever. Oh, look at this. I think, I just charged it to Olivia and sent it to work. All right. Mine is for my health. I thought I hit the right Apple Pay card. It doesn’t matter. It’s coming to my office. That’s what matter. I love freaking Apple Pay for that.

David: Yeah. Yeah. I think it brings down a barrier, right? It just makes . . .

Andrew: Yeah. Your team was right. You were wrong on that I’m sorry to say it. But I guess the numbers are right. From my point of view I’m glad that they did it. I can’t wait. I’m going to be in the office . . . because I get hungry. I’m starving right now.

David: Yeah.

Andrew: All right. The book is called “Unstoppable.” The entrepreneur is David Hauser. He’s the founder of Grasshopper. That’s all I got to say. And is there a new . . . like now that there’s a new page name, it’s not going to be the other URL. What’s the new URL for this one. Is it . . .

David: Unstoppablebook.com.

Andrew: Uunstoppablebook.com. I was going to guess that.

David: We try to make the URL simple.

Andrew: You did. You got like the best URLs, grasshopper.com. You must have bought airbag.com for a good penny.

David: Then we got superfat.com like . . .

Andrew: Superfat.com. Yeah, you are good with the domains.

David: I fight with entrepreneurs about this all the time like you got to get the .com.

Andrew: Right. You know what I would fight with? Get a name that I could Google somehow. If I Google SuperFat, it came right up. Freaking Zoom. I type in Zoom because I want to know their stock price. You know how many different . . . do you know the day that Zoom went public? This other company, their stock shot up.

David: Zoom Technology.

Andrew: Yeah. Because like they could come up with a unique name. At least GoToMeeting, Citrix. You’ll search them, you’ll find them. SuperFat, “Unstoppable” book, David . . . no, no one is going to type in David Hauser. Too tough. Too tough. Forget Siamak, your partner here. All right. So I changed my name to Andrew Warner. Google me. It’s super easy. Shuki Khalili never came up. Never. Even in my transcript for this interview they’re going to get it wrong. I’m not going to correct them. Let it keep it the way it is.

All right, here it is. And the two sponsors who made this interview happen. If you need to hire developers, don’t listen to Andrew. Listen to David Hauser. He’s a way better entrepreneur it turns out than I am. You should listen to him. He’s used Toptal, you should too but take his advice. Use the URL that he should have used or who would have given him a benefit. Hit toptal.com/mixergy. If you need good email marketing and all the other marketing automation, go to activecampaign.com/mixergy.

And finally, if you like this interview I’m really digging Twitter again lately. Let me know on Twitter what you thought of this interview. Like it, hated it, whatever. I’ll love you either way. I take negative feedback really well. My Twitter handle is Andrew Warner. Let me know there. All right, David, congratulations on the freaking book. Thank you so much for being on here.

David: Thanks, Andrew.

Andrew: Bye-bye everyone.

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