Andrew: Before we get started, have you ever wanted to visit the land down under? Australia is a hotbed of innovation and has a thriving entrepreneurial community. And the heart of that community is Fishburners. Fishburners is a co-working space in Sydney, Australia, which is home to the single largest community of entrepreneurs and business people in Australia.
If you’re thinking of coming to Australia for a visit, or if you’d like to try working from Sydney, start your trip at fishburners.org. They have a range of membership options for all kinds of businesses and individuals. And they host regular events where you can connect with some of Australia’s most influential business people.
Next, do you need a single phone number that comes with multiple extensions so anyone in your company can be reached, no matter where they are? Even if they happen to be in Australia? Go to grasshopper.com. It’s the complete virtual phone system that entrepreneurs like me, love.
Next, do you need a lawyer that’s not the local guy who doesn’t really get startups, not the really expensive guys that want a piece of your business, someone who really understands the startup community and is there to help you? If you do, go to Scott Edward Walker, of Walker Corporate Law.
All right. Let’s get started. Hey there freedom fighters, I am Andrew Warner and I’m the founder of Mixergy, Home of the Ambitious Upstart. In one of the most popular interviews here on Home of the Ambitious Upstart, is with a guy who came on and told me how much fricking money he was making selling sparklers for weddings. There’s something about his personality and his story, the combination just killed with my audience. And apparently the interview must have gone really well for him because just a few days ago he emailed me and said, Andrew let’s do it again.
And that’s what we have for you today. Before the business that he talked about last time, before the sparklers business, Mark Lazarchic sold fireworks through a company called Renaissance Fireworks. Wait till you hear how he built it. And wait till you hear how getting ripped off helped him launch Otterology, an inventory management and planning application that you can use in conjunction with Square. Mark, welcome back.
Mark: How you doing, baby?
Andrew: Big intro for a big guy. Did you steal this idea from someone else, the fireworks idea?
Mark: Yes! I totally stole it from somebody else. [laughs]
Andrew: What did you see that got you to steal it?
Mark: I was working. I was a sales guy in a pool and hot tub store. And they [???] fireworks sales in Minnesota, so the owner let a fireworks company set up in our parking lot. And I like fireworks. So I was out there buying stuff almost every day and bringing it home. And I just was talking with the guys that were in there the entire time. And these guys gave me their blueprint for exactly how they did everything in their business. They told me how much money they were making and how easy it was. They lie. But they just went down this blueprint of how much money they were going to make, what they had to do and how they had to do it.
So I went inside and talked to the owner and said, “Hey, I want to do this next year.” And he was like, okay, sure. So then I literally took their whole blueprint and found out where their other locations were in the state and called up the people there, and took their sites from them. So they couldn’t come back to the state the next year.
Andrew: What did he explain to you that made it sound so easy? In a basic sense of the process, what was it?
Mark: It’s the conversation I always have with people. You only work two weeks a year. You make all this money. And the markups are great. People just come in and hand you money, hand over fist. What a great concept. Two weeks a year, make a ton of money? I was sold.
Andrew: And you just lease the place? And he told you where to buy the fireworks?
Mark: Yeah. Just told me. I actually buy from the company now.
Andrew: The same one that he has?
Mark: Yeah. Yeah. I can buy from the same company and everything now. But they just told me everything. And I had to go out and find people and whatnot. But I had a whole year. So I was signing leases before I even knew where I was going to find stuff and whatnot.
Andrew: Is this really a two weeks a year business?
Mark: Oh God, no. Realistically, it was six months out of the year. I could take a good solid six months off. But for two or three of those months you’re killing yourself.
Andrew: And basically it’s a table under a tent where you’re selling fireworks?
Mark: Yeah. You put up a big tent in the parking lot and then you set up a bunch of tables, and lay out fireworks and sell fireworks for two weeks.
Andrew: Alright. So you went back into the building. This guy had his tent and table in. You said, I want to be there next to you. They said, yes. You went and did it with a few other places. You still have a lease to pay for. How do you afford to pay these guys all the money that they need so that you could open up?
Mark: Well the best part was the first year I negotiated leases to say I’d pay you after the run, because I’d give you a cut of the money coming in.
Andrew: Oh. That’s brilliant. So you don’t even have to lay cash up front?
Mark: No. I didn’t lay cash up front the first year. I opened up with 20 grand my first year. Which is roughly, the first year, is probably a quarter of the money you need. But I just went around and told everybody… I just acted like I’d been doing this forever. And what I would do is I would ask for 60 day terms, because I was very familiar with terms. And everyone would say, no, we don’t do 60 day terms but we’ll give you 30. So I’d get 30 day terms with everybody on everything.
Andrew: And that’s essentially what you wanted.
Mark: Yeah. It’s exactly what I wanted.
Andrew: So you wanted 30. You asked for 60. You got the 30 that you wanted.
Mark: I asked for 60 and got my 30. [laugh]
Andrew: So $20,000. It doesn’t go to the leases because you’re going to pay for the leases out of the profits. Does it go to the fireworks? Did you have to pay for the fireworks up front?
Mark: No. I got my fireworks fronted to me, too.
Andrew: From where?
Mark: From a supplier in town.
Andrew: So you went to him and said, I will pay you 60 days. He said 30.
Mark: He said 30 and I said, okay cool, we’ll do that.
Andrew: Any fear, by the way, that the person listening to us is going to say, hey I’m going to do exactly what Mark just did. Maybe I won’t do it to him. I’m not going to compete with him, because this guy can kick my butt, but I will compete with a weaker player in my town.
Mark: Well, you know, I’ll give you a playbook on how to do it. I mean, if I could do it in every state I would but I can’t. But yeah, you don’t want to set up in my fucking town, that’s for sure. [laughs]
Andrew: [laughs] I’m going to find out from you, later on, how you compete. What would happen if someone came into your town?
Mark: Oh yeah.
Andrew: So, it didn’t go towards leases. Leases you paid after the fact. It didn’t go towards fireworks. Fireworks you paid after the fact. Where did the $20,000 go then?
Mark: There are all sorts of little nitty stuff you’ve got to pay for. You’ve got to pay for the decorations for the tent. And that costs money because you want the tent to look good. You can’t just put up a blank tent. You’ve got to decorate it. You’ve got to make it look festive and happy. And you’ve got to pay for all that shit. You’ve got to pay to have price cards done. We had to go buy cash registers for every location. You’ve got to buy lights for inside of the tent for night time. You’ve got to buy extension cords. You’ve got to get generators if they don’t have power. It’s all the little nitty stuff that you had to pay out all the money initially to get going.
Andrew: I’m writing a note here to ask you later on. I don’t want to say it right now. But how much revenue all this brings in. I don’t want to reveal it so that people can hang on and wait for it but I’m curious, at the end of all this work what kind of payoff can come from it. So now, it goes to all the little nitty stuff. Where do you get customers? Do you have to advertise when you have those tents? No.
Mark: No. Nothing. [???] tried everything for advertising and none of it works.
Andrew: What did you do the first year to get people in the door?
Mark: Nothing the first year because we had no idea what to do.
Andrew: All right. So you had the playbook that the guy gave you the previous year. You are executing it well by not putting money up front. And how much money did you make?
Mark: I made $127.
Mark: And everything was paid for. I worked my ass off all year, seven days a week, and I made $127.
Andrew: Where does the time go then? It seems like it’s easy. You find out where his tents were. You call him up. You make this deal. You find out where he bought his fireworks. You call him up and make the deal. Buy tents. Rent tables or buy tables. Not that tough. I do it for parties sometimes. Where do the months and months… Where does that time go?
Mark: The problem was that he only had two locations in town. So I took his two locations and I went and found my own six locations that I’m going to go kill it at. And I didn’t know what the fuck I was doing. So I assumed everyone would just come to me. You know? I’m selling fireworks. Everyone will find me. They’ll see me. Nope. Not so much.
Andrew: But what about the time that it takes to put this together? Was it a lot more to lease the places than I would imagine, and that’s where the time went?
Mark: Oh, hell yeah. I mean I’m working my job five days a week, and we averaged 55 hours a week at the sales job because they didn’t have to pay us hourly. So they just work us like cattle. And I would schedule all of my appointments, with lease people and anyone else, on my lunch breaks.
Andrew: I see.
Mark: And I would go out to my car, change my shirt, put on a different shirt and change into more business clothes. And show up and do all of my things on my days off or during my lunch break. And you’ve got to plan everything, you know? You’ve got to figure out what goes to what location? What products should go there? So you have to hope to God you’re right. You’ve got to organize deliveries. You’ve got to hire people for it. A lot of planning goes into it.
Andrew: And all that and it didn’t work out.
Andrew: What happened? Where did you get the $20,000 to build it?
Mark: From a co-worker.
Andrew: How’s a co-worker give you $20,000?
Mark: I was, literally, I had started everything. I was going forward with it. And I had no idea where I was going to get the money to do anything. But I wasn’t going to, you know, I wasn’t going to let money get in the way. And I was just talking about it at work. And one of my co-workers said to me, he goes, well how much are you looking for? I said, 20 grand. He goes, what are you looking at paying someone back. I said, I could pay someone $30,000. Because I figured I was going to make all the money in the world, you know, so ten grand doesn’t mean anything. And he’s like, well what kind of business plan do you have? I’m like, oh I’ve laid out everything. And he said, well why don’t you come by and show me and the wife. I’ve got $20,000.
And it just dawned on me as he was saying that. That’s right. He owned his own business for years. His wife had a great six-figure job. You know, she was a VP of some company and traveled all around the world. And he just worked because he was bored. And so I put together the business… I didn’t have the business plan when he talked to me about this. So I put together you know, here’s what it’s going to cost, here’s what we’re going to do, here’s what we’re going to bring in, here’s how we’re going to do it. Brought it over. Pitched to him. And he said, all right I’ll give you $20,000.
Andrew: All this didn’t work. Before I ask the next question that I was planning to ask, I’ve got to ask you this: What’s the point of it all, Mark? You had a job. You could have earned a nice salary and been safe. What’s the best part of… You clearly made it with the sparkler business, with [???ology], with this. What’s the best part? What’s it all about?
Mark: When I work for someone else, they control my income. They control my life. They control my time. And if they suck at what they do, it drives you fucking crazy.
Andrew: But how do you have control over your time? I feel like sometimes I have full control over my time and then it pisses me off even more because I don’t know where my time goes. I feel like I’m sometimes a slave to every customer and viewer of Mixergy.
Mark: I literally… I wrote a blog a couple of months ago saying, I wish to God I had a 9-5 job some days. Some days I wish to God I could punch in, go home and not think about my job at all.
Andrew: To have somebody to give me guidance so that I could learn and go in a direction that is clear, or screw up and then I can go in my head, what an idiot. Despite those days, there are benefits. I’m skipping ahead just for a moment here. What’s the best part for you of having made it.
Mark: Fuck. I can spend time with my family when I want. Here’s something. I don’t think I’ve ever told you. Did I ever tell you about my daughter having leukemia?
Andrew: You did at dinner. And I wasn’t sure I could talk about it. So you tell me.
Mark: I’m an open book.
Andrew: We’ll get back to the business but tell me. Tell us what happened.
Mark: Here’s the best part about owning my own business. When I was… It was four years ago and it was right in the beginning of June. Both my daughter and I were sick. And I went up to the clinic and got tested and they found out I had strep throat. So I basically said, hey give me the medicine for my daughter. She’s got the exact same thing I do. So we come home. I’m taking Penicillin and she’s taking Penicillin. I’m getting better. She’s getting worse.
So, June 5th we bring her up to the clinic again. She had already been brought up once before me, and they had sent her home. We bring her up there and the clinic basically says, you need to bring her to the emergency room right now. We bring her down there and they say she has double pneumonia in her lungs, we’re going to have to keep her over. Two days later they tell us that she has leukemia. And we’re like oh, well, this is really fucking bad, because I know that’s not a good thing to get. And we went through all sorts of shit one night. And before that happened, I promised her that I would never leave her alone in the hospital no matter what. Because she was really freaked out. She was seven at the time. Really freaked out about it.
So now all of a sudden, I’m in the hospital and they’re like, yeah you’re going to be here for a couple of weeks. Well, if I got a job, I can’t stay in the hospital. I’ve got to go and do the job, you know? The job doesn’t give a shit that I’ve got problems at home. Over the course of the next year, we spent six months in the hospital. And I never once, wasn’t in the hospital with her. Because I owned my own business, I could work from there. I could do everything from there. And we were in a ward with parents that would go to work and you know, come home. Kids were there by themselves all day long. And, by the way, my daughter’s fine. She had a bone marrow transplant from her brother. And she’s completely fine. Not a scratch in the fender now.
They took her off the cancer watch list and everything after three years. And they made her the cover girl on the Minnesota Children’s Hospital brochure. Which, just to show you what kind of an asshole I am, I walked into the doctor and I said, “Look, you made her the cover girl on your magazine, if you let her die, you guys are going to look like assholes.”
Andrew: Now, they’re on the hook.
Mark: Exactly. What are you going to do now, suckers? Yeah, so being able to take time off when I need to take time off, or being able to…I mean, there’s days when you come into work when you don’t want to come into work, but there’s other days where you just go, “I’m not going to work today. I’m going to go in my garden.” Like, I garden. That’s what I do. And I’m just going to play in my garden all day long. And I can do that because I know what’s going on everywhere and I can afford the time.
Andrew: I’m surprised Mr. Fireworks gardens.
Mark: That’s what I do to relax is I garden, man. It’s really weird. I do shit nobody would expect for relaxation.
Andrew: Alright, so let’s go back then to the store. First year didn’t work out. Why didn’t you say, “This is not what I thought it would be? I’m going to go back to my job or I’m going to find another business to start.” What was it about this that made you want to go back to it?
Mark: At first, I did. It was fucking devastating. I was going to quit my job. And the worst part is that everyone there knew I was going to quit my job afterwards. And then I had to go walking back in there. And literally the Saturday morning meeting after July Fourth my phone rang in the meeting. And it was an old phone that I’d made the ring into a firework going off sound. And it went off and the sales manager looked up and said, “Oh, you’ve still got that fucking pipe dream going?”
Andrew: What a thing to say.
Mark: Dude, man. People are brutal. People are fucking brutal. I don’t care what anyone says you’re friends and family. Do not want you to succeed as much as you think they do? But, what?
Mark: Because then you’re more successful than them. No one wants to be around someone that’s more successful than them except for people that want to be more successful. I remember I sat down with my wife a couple of days afterwards and I just broke down in tears on my wife. And all I was saying was it was supposed to work. I was supposed to work. And so I went through like a couple of weeks of, “Jesus, I’m going to be fucking selling hot tubs for the rest of my life. And working for this asshole. Everyone knows I failed in here now and they all are just holding it over my head.” So what I did is I sat down and I looked at what did we do? What did we do wrong? I want to know what we did wrong.
And I just broke down and analyzed everything and I realized that, what was the number? It was 60 or 65 percent of all of our sales came from two of our peak locations. Which doesn’t make any sense mathematically. So I looked at those two and I said, “If we did those kind of sales at all eight locations, we would have done well. We wouldn’t have done what we were hoping to do, but we would have done well. So when I said, “Why did these two locations do well and the other six do shit?” The easy conclusion was that I picked the other six. But the harder conclusion was figuring out what it actually was.
Andrew: What was it?
Mark: It was that you need to be in a high traffic location. Lots of people. In a shopping location. People are already planning on spending money and they need to be going at a very slow rate of speed. Lots of stop lights. A parking lot with a lot of inner drives and whatnot. And all of my six others had none of that going.
Andrew: You know what? I never say I’m going to go and buy fireworks. But if it’s around the fourth of July and I’m driving somewhere with Olivia and I’m stuck in traffic. I can’t help it. I pull over and I at least go to look.
Mark: Yep. Exactly. And that’s what we, and at this state, it took me 10 years to realize, but that’s why we don’t advertise anymore. Nobody…
Andrew: The spot is the ad.
Mark: Yes, that’s where we’re going. It’s all about location. All about location.
Andrew: Before we hear how things worked out the second year, I’m curious about the way you think. What is it about the way you think that allowed you to not get sucked into that negative spiral of I’m never going to go anywhere. Entrepreneurship is a dream that entrepreneurs sell you to make you feel back about your life. And I don’t have what it takes, but other people do. And then before you know it, you’re spiraling into depression and inaction. What is it that snapped you out of that?
Mark: My motivations are, I think, a lot different than most entrepreneurs. Mine are usually anger.
Andrew: Anger. Good, tell me.
Mark: I have tattooed on my back are the words, “Anger is a Gift.”
Mark: Because you’ve got all these people making fun of you. They’re picking at, it’s bullies. It’s the bully mentality and I was bullied in school and I fucking hate bullies. Like to the point to where when I see a, you see these YouTube videos of a bully getting his ass kicked. I just cackle my ass off. I love it. I would love kids to take two by fours to bullies. I fucking hate bullies.
Andrew: What’s your bully situation?
Mark: What do you mean?
Andrew: What do you mean? What happened to you with a bully?
Mark: I was picked on all through middle school and high school and everything like that.
Andrew: For what? Why’d they pick on you?
Mark: I was small so I’m easy to pick on. I’m only 5’8″ right now, but I was a buck 40 in school. A skinny little kid. I was smarter than everyone else. Including all of you fucks. Just kidding.
Andrew: Hate them.
Mark: Yeah, I was smart, I was small, and I didn’t take shit from people. So, you know, you don’t take shit from a football player in high school that’s benching 300 pounds and they don’t want to look like an idiot to some little smart mouth kid. So they beat the hell out of you. I went to one of these suburban schools where the football players were gods. So it didn’t matter what they did. And they just created giant anger complex with me my entire life.
Andrew: So when you get into this situation, you say, “I’m not going to take it. I’m too pissed off to fall right now. I’m going to stand up and kick butt. Just like those people on YouTube that beat up their bullies.”
Mark: Yep, exactly.
Andrew: It’s just an instinct. I push you and instinctively you want to push back. Life pushes you, and instinctively you just have to push back.
Mark: Push back, exactly.
Andrew: So then what happened the second year?
Mark: So second year, now I had a partner the first year. I had a partner with a guy I worked with and he, about a month or two after the season, when I started to figure out what we had done wrong, I figured out that we could make it work, I pulled him aside and I said, “Hey, we can make this work. I know how to do this.” And he was like, “No, we’re not fucking doing this again. I’m not going through that shit.” I was like, “Seriously, I know how to make this work.” And he wanted nothing to do with it.
So I was like, “Alright, fuck it. I’m going to do this.” And right around the same time, I hurt my back at work. So now all of a sudden, I hurt my back and it’s going through workman’s comp because it was at work. I’ve got a lawyer and he says, “Well, now you can’t go to work.” So now I’m not allowed to go to work, so now I’ve got plenty of free time. So I’m sitting around and I’m going nuts. And the other thing about workman’s comp people don’t realize is you don’t get paid your salary when you’re on workman’s comp. You get paid a percentage of your salary.
Well, so now the bills are starting to stack up a little bit and I’m sitting at home and I’m in pain every day which is making me even more angry than I am which is surprising. And I’m going through everything. I’m trying to figure it out. And I talked to the guy that financed me the year before and he was like, “No, I don’t think I want to. You barely scraped by. I don’t want to give you another 20 grand to go fuck off and lose it.”
So I’m still going forward. I’m signing leases. I’m ordering product. I’m doing everything. I don’t give shit. I’ll find the money. And around about April, it was right around April, my lawyer calls me up and I’d been allowed to go back to work for a couple of months but we’re still behind in the bills like crazy. My lawyer calls me up and he says, “Okay, they’re willing to give you a settlement. And when it’s all said and done, you’ll have 25 thousand dollars.”
Mark: So I’m doing the math and I’m going, “Okay, I need about 20 grand to get the fireworks off ground. Now, I’m at home and we’re about five grand behind in bills. So I come home to my wife and this is end of April, coming up on May, something like that. I tell my wife, I say, “Here’s the deal. They’re willing to give us a settlement, but I have to quit my job because the insurance company will no longer carry them with me on the policy. And if I quit my job, I’ve signed a no compete saying I won’t compete in that field for three years. Same field I’ve been in for 12 years.”
Andrew: Selling hot tubs?
Mark: Yes. And I’ve looked at the want ads before and I don’t qualify for a fucking job out there. “So here’s the deal. I’m going to put 20 grand into Renaissance Fireworks. I’ll take five grand, we’ll pay down all of our bills through the month of June. At the end of June, we are dead broke. No savings. No 401K. No anything. I don’t have a job and I can’t get a job in any of the fields that I’m actually trained in. What do you think?” And my wife, I shit you not, says to me, “We own a camper. We’ll never be homeless.”
Mark: Yeah. And then she said, “If you don’t do this, then you’re going to hate yourself for the rest of your life.”
Andrew: Did you have your son and daughter at the time?
Mark: We had one. We had one daughter at the time. Fuck, was she pregnant at the time? She may have even been pregnant at the time.
Andrew: With your second?
Mark: With our second. Yeah, she was pregnant with our second at the time.
Andrew: So what about that? Does that freak you out? That you could just be out in the camper with two kids?
Mark: Two kids. What are you going to do? You know, I don’t want to fucking be stuck in that soul sucking job working for this evil prick for the rest of my life. I just couldn’t take it anymore.
Andrew: And she’s willing to take a risk on you with this?
Andrew: I don’t how to even express this, but I’ve seen entrepreneurs who are good friends of mine, who’ve wanted to be entrepreneurs forever, they finally start a business, and their wives are nervous. They can’t handle it. The business fails.
Andrew: Start a second business, their wives really freak out, and they want to be supportive, but they can’t. How did you know that your wife would be the kind of woman who would support you in situations like this?
Mark: My wife doesn’t give a shit about anything but us being together.
Andrew: That’s it?
Mark: Yeah, money means nothing to her. She grew up poor, so money means nothing to her. Us just being together and being happy, and she knew how miserable I was being in my job. One of the reasons why I wanted to start my own business always was that I didn’t get to spend any time with my family, worked 55 hours a week, an hour-and-a-half drive time. By the time I got home, I was tired and I’d fall asleep, so we never did anything. I wanted just to be done on my days off. So, yeah, I mean, we talked about it. If she isn’t on board, I don’t do it.
Andrew: It was important for me to marry someone like that, too, someone who didn’t care about money. As much as I care about money and business, I wanted someone who was the opposite, didn’t hate it, but just didn’t care about it, apathetic.
Mark: Exactly. Yeah, my wife, she still doesn’t care that much about money. I mean, I have to force her to buy clothes. She owns clothes that she’s had for 10 and 15 years. I’m like, ‘We have some money now. You can buy some clothes.’ But she spends the money on the kids, because she doesn’t want her kids growing up like she did, without any money.
Andrew: So, Mark, you made a bet on different locations, and what were you going to do to up the sales of the locations that were weaker? Did you do anything about them? Did you pump [sounds like] them up?
Mark: I changed the way we laid things out in the tents. I did a little bit better job of training people. We went with a buy one, get one frees instead of just . . . we did standard pricing. Here’s the big secret in the firework world: You’re not getting one for free. We’re doubling the price. That’s all we’re fucking doing, is doubling the price.
Andrew: Doubling the price and giving you one for free is better than reducing the price (?)?
Mark: The year before, we had the prices all cut in half, and nobody cared. All they said was, ‘Well, that place is buy one and get one free,’ and we said, ‘They’re twice as much.’ But no one comes to a fireworks tent to be educated on marketing.
Andrew: Okay. So then what about the locations? Did you start giving up some of the locations, pruning the ones that were weak, or looking for others that were like the strong two?
Mark: Yeah, I got rid of all six of the locations I picked, and all I did was focus on exactly what I did with those two locations.
Andrew: Oh, so you just went back to the two locations that the guy (?) copying had?
Mark: There’s only two (?) Yeah. Yeah.
Andrew: So basically you reproduced his model?
Mark: Yeah, I just (?) all of my locations and copied where they were in different locations.
Andrew: Did he come back pissed?
Mark: Oh, he called, yeah, he called. I got messages from the landlords. He called a week before the setup time, trying to get shit set up, and they were like, ‘No, sorry, we already signed with somebody else.’ I mean, he was pissed, but I don’t think he drove up here to yell at me.
Andrew: I see. Alright. So how’d you do that year roughly [sounds like]?
Mark: That year I more than doubled sales.
Andrew: More than doubled over the previous year when you had two?
Mark: Over the previous year. Yeah.
Andrew: Because of the way that you priced it, because you focused on the right two? I see. Okay.
Andrew: And then did you make a profit? What did you make, $200 this year instead of $100?
Mark: No, I made enough money to where I didn’t have to worry about working that much. I still worked some part-time gigs during the year and whatnot. I played poker, is what I did, to make extra money, but I made enough money so that I had bankroll going forward from that point.
Andrew: That’s it? So now you could live on this?
Andrew: You made a living on poker?
Mark: Yeah, I played poker professionally at one point in my life.
Mark: Yeah (?)
Andrew: Sorry. Tony Hsieh in his book, “Delivering Happiness,” talks about how he played poker for a while there, and that he learned a lot about business from playing poker.
Mark: Oh, yeah.
Andrew: What’s one [sounds like] lesson that you brought back?
Mark: I’m trying to write a book on what I learned from poker and applying it to business. A big thing with poker and business is, and this helped me with fireworks, you want to play poker when I’d make $10,000, but you’ve got to keep in mind you might lose eight grand next week, so you don’t get to go crazy and spend your money. It’s ups and downs and ups and downs and ups and downs. You’ve got to learn management. You’ve got to be disciplined. You’ve got to be insanely disciplined with your money.
Andrew: How do you stay disciplined when things are going against you and when you feel like you didn’t get a hand in hours, that you should bet, and you came here to bet?
Mark: It’s all averages. It weighs out over time. You get pissed real quick. You turn around and take a couple deep breaths. It happens.
Andrew: Smoke at the tables?
Mark: Not anymore.
Andrew: No. Does that bother you?
Mark: I started playing a lot of online for a while. I was actually getting paid by a site to play online for…
Andrew: Really? Why’d they pay you to play online?
Mark: Because in the poker rooms, if the game starts getting down to three or four players, they don’t want the game to break up so they pay people to go in and play in the short handed games. So me and about 150 other guys got paid to play short-handed games to keep the games going.
Andrew: But you’re still betting your own money?
Mark: Oh, yeah. You’re playing with your own money.
Andrew: But it reduces the risk.
Mark: Yeah, I just have to break even, and I make money. So I don’t even have to play that smart. I can play six games at one time and I just have to break even.
Andrew: Two locations. That doesn’t seem like enough for you. What do you do the following year?
Mark: No, no. I had eight total locations.
Andrew: Oh, the second year you had eight locations.
Mark: Yeah, six new locations.
Andrew: I see. Okay.
Andrew: Got you. I missed that part.
Mark: No, so I did eight again the following year. I just did all new six locations based on what I learned off of the previous year. The year after that I did 16 locations. Doubled it again because I want to keep it that simple.
Andrew: And this is a cash business only?
Mark: It’s about 50/50.
Andrew: And do you remember what it was like when the cash was just coming in like crazy?
Mark: I took pictures of it.
Andrew: You did?
Mark: Yep. The first time, fuck, I shouldn’t tell people this because they know my address, but I don’t bring the money to the house anymore so it’s no big deal. But we used to bring all the money to my house, and I got rid of doing that after a while. The first time I had $400,000 in cash in a pile.
Andrew: I see. Now I’m re-watching the Sopranos. Do not keep the money in the house. Someone will come.
Mark: Exactly. Do not keep the money in the house. We have security handle the money and everything like that.
Andrew: What did you do with the money when it was in the house? Did you throw it out on the bed and then roll around with it?
Mark: I did. I did.
Mark: I totally admit it. Yeah, I threw it on the bed and rolled around in it.
Andrew: Is it inappropriate for me to ask if you and your wife had sex on the money?
Mark: It’s not inappropriate at all to ask. And she said, “No. That’s just fucking weird.”
Andrew: Yeah, I don’t think Olivia would go for that either.
Mark: Except I totally wanted to. And then bring it to the bank and watch them count it.
Andrew: I did Google your name just to catch up on what you’re up to and one of the things that popped up in preparation for this interview was you on a bed naked with a doll in your lap. What is that?
Mark: A pig. Yeah. Oh my God, that’s right. That pig sure pops up on Google searches of me.
Mark: That’s a practical joke we did. A buddy of mine calls me up and he says, “I’m watching a friend’s house.” And it’s a mutual friend of ours. And he goes, “Are you willing to come over and pose naked with a stuffed pig in your crotch?” I’m like, “Fuck yeah. Why? I’m not even sure I need to know the why, but I’ll do it.” And he was like, and that picture is old and I’m fat in that picture, so I hate it now, but he took a picture of me naked with this pig in my crotch while laying on their bed. And then when they got back into town, it was their kids’ birthday. He gave them a duplicate stuffed pig for the kids’ birthday. And then six months later gave them a picture of me sitting on their bed naked with the pig in my crotch as a Christmas present in a frame.
Andrew: You know what? Let me try something. Let me see if this works here. Desktop. Damn it, I can’t show it. I was, save image as, come on, Mark. Let me see if I can show it to people in the interview. Try.
Mark: I look so fat in this picture. Don’t hold it against me.
Andrew: I don’t think that I can even show it. I’ll use the. . .
Mark: I can. Have I got it? I got it.
Andrew: Here, I got it. Like this.
Mark: There we go.
Andrew: This is on the core set up. Did that show?
Mark: Yep, that’s it.
Andrew: That’s it?
Andrew: That’s crazy, man. Alright.
Andrew: Alright, so how do you innovate? Or how do you grow the business from there?
Mark: I just keep looking for sites that are similar to the other ones.
Andrew: That’s it? The slow pace, a lot of traffic.
Andrew: What about this? When I first interviewed you, I did research because I didn’t really know you that well. I said, “What’s going on here?” And then I saw, “Aha, he’s not in the sparkler business. He is in the fireworks business. I got him. He is in that dirty business, and he’s hiding it from me.” Not that I think it’s dirty, but I hate when people try to hide stuff from me. Do people feel like this is like not a respectable thing to be in?
Mark: We’re treated worse than, I’d say we’re one step, either above or below sex shops in most people’s minds. You know, we sell explosives to children and cackle about the way they loose their fingers.
Andrew: You know what? I didn’t even think of that. What do you think of that?
Mark: Yeah. I tell them, “You’re a fucking retard.” Light fuse, get away. Easiest directions in the world. We have T-shirts printed up. And on the back we said, Renaissance Fireworks, still safer than public schools, and Renaissance Fireworks, assisting Darwinism since 2004.
Andrew: [laughs] And you ever had a friend or someone at a PTA meeting, or one of your kids’ parents, say anything to you?
Mark: No. No. They just gave me dirty looks for what I do. But at city council meetings I’d get reamed by people all the time, because you have to go before the city council to apply for permits and whatnot. And I got called, Hitler, at one of the city council meetings.
Mark: And I remember standing up and saying, did you just compare a guy selling sparklers to a man that killed 6 Million Jews? Was that really the comparison you wanted to make? And yeah, they go ape-shit crazy about it. There are always two or three people there. I’ve been kicked out of cities. They just look for ways to mix up the law so that I can’t set up.
Andrew: The city does this? After you lease it?
Mark: Oh yeah. Oh yeah. My favorite story is, I tried setting up in a city for two years. And they kept telling me, no, it’s against the rules. So I brought in this whole brochure. I put together packets for every city council member: the mayor, the city attorney. I went before them. I laid out these packets. Not one of them opened the fucking packet. I told them that their law was in violation of state law, that they were in violation of all the fireworks code ordinances by denying me permits, and everything like that. I get done talking and they basically said, fuck you.
And I talked to a buddy on the inside. And my buddy said, they know it’s going to cost you 50-grand in lawyer fees to sue them. So they don’t care. So, me being the guy that I am, I called up the ACLU. And the ACLU was like, oh no, they’re not allowed to do this. And they wrote this big long letter and sent it to the city saying, here’s the deal, he wants to set up three locations in your city this year, if you say no, he’s going to sue you every single year for the amount of money he would have made. And he’s going to win. And we’re going to represent him for free.
Mark: Yeah. And the day after they got it, the city calls me up and says, hey, we’re going to make some changes. Do you want to come down here and help guide us through this? And, I swear to God, I said, yeah I’ll come down there. Fuck you. And hung up the phone. Went down there the next day and sat in the most uncomfortable meeting you could possibly imagine.
Andrew: But you won.
Mark: Oh yeah! Oh yeah. I fight. I love fighting [laughs] It’s why my lawyer likes me so much. I don’t care about the money. I care about winning.
Andrew: What about recessions? Is this a recession-proof business where people are just always going to spend money on fireworks?
Mark: No. No. We got crushed by the recession. Our sales dropped 40% during the recession. I mean, you could just see it happen. The first year was 2006 or 2007 that our sales dropped. And that was the year that gas got up to like $4.25. It just shot up that summer. And we said, okay well you know, gas costs a lot more. People are spending more. Next year sales dropped again. Next year sales dropped again. They dropped all the way up until 2012. In 2012, sales came back. And then this year they came back again.
Andrew: So where are you now?
Mark: We’re almost back to where they were, before the recession.
Andrew: How much?
Mark: We’re within, let me do the math.
Andrew: Oh, no, I mean, hard numbers. How much revenue did you guys pull in 2013?
Mark: 2013, what did we do? 605 in sales? $605,000
Andrew: And how much of that is profit?
Mark: Fuck. I don’t even know. Maybe a buck and a half when it’s all said and done.
Mark: Yeah. I mean, our nut’s pretty high right now because we have a lot of other stuff running through it and whatnot.
Andrew: What do you mean?
Mark: I got a warehouse I got to pay for, you know? I’ve got warehouse. I’ve got trucking. I’ve got people that work year-round now for it. It’s too big to just hire people temporarily. So I have to pay a lot more than if you set up five sites out there.
Andrew: Can I tell you something, Mark? Because we had dinner together, it was awkward for me to ask you how much the revenues were.
Mark: Oh, I don’t mind.
Andrew: What did it feel like… You don’t mind?
Mark: No. I don’t mind.
Andrew: I think I said it at dinner but, whenever I get to know people personally, and then I interview them afterwards, I always feel like I’m invading their privacy by asking personal questions like that.
Mark: I have no privacy so…
Andrew: No. You’re open about it all.
Andrew: Sparkler business. Where’s the sparkler business revenue now?
Mark: We’re on page to almost do a million dollars this year in sparklers. It’s fucking ridiculous.
Andrew: And sparklers do better? And they’re all online. So it’s an easier business to run.
Mark: Yeah. It’s a much easier business. If I were smart, I’d sit at home and do nothing but pay someone to run my sparkler business and make 250,000 a year.
Andrew: So I say websites for renaissance.
Andrew: Does it sell online? Can you sell fireworks online?
Mark: No. You can’t sell them online. You can’t ship them, you can’t do anything with them.
Andrew: Legally you can’t sell them online.
Mark: Yes. Legally you can’t sell them online. That is why my website looks like it came out of 1998.
Andrew: It’s just not a business website, you’re holding it.
Mark: Yes. All it is is a … around July 4th we get some traffic in there and they look for the map to find out where we are.
Andrew: I see.
Mark: That’s all its for.
Andrew: So right not, I hate to say it. But right not there is someone who is listening to us who is saying I’m going to do this. It’s fairly easy. I know what to look for. I will start out small and have the time. Chances are that person is going to fail.
Mark: Because they are going to think it’s easy. [laughs]
Andrew: And when they think it’s easy what do you think they are going to overlook, you just told them where the land mines are. Its cities are going to give them hell.
Andrew: Maybe find places that have already been developed and accepted. It’s not going to be easy to find the right location. Maybe steal from someone else.
Andrew: What else is there?
Mark: You’re going to pay too much for the product. There not going to charge enough for the product. Our margins are ridiculous in fireworks, but they have to be. You can only sell them two weeks a year. So you can’t run target margins on this stuff. You go well I will just double my money. You are going to fucking sink. If you just double your money. People try it. They try it every year and fail. They will set up in stupid little locations because they can get a lease. In the beginning you were just getting what someone yes. You will end up setting up in some really dumb locations.
I used to set there with a clicker and count the number of cars that drove by places for hours to see if there was enough traffic going by a location. The other thing is that if you are in a state that allows fire work sales right now there are already people doing it. They have already gobbled up all the good locations. They already own the entire market for the most part. There are people that try to set up in Minnesota and fail. That because me and one other guy own the fucking state.
Andrew: How many locations do you have now?
Mark: I only had 30 this year.
Andrew: Thirty, wow.
Mark: I dropped it way back. I had 45 at the biggest. I dropped it way back only because I had my hands in so much other shit, that I am just focusing on the bigger locations.
Andrew: We are just going to hang out and this is a calmer interview than the first one. First one, it was pretty wild. Anyone who is listening to this. . .
Andrew: If you are listening this far you got to go back and get the first interview, it’s a killer.
Mark: [laughs] Was I wilder in the first one?
Andrew: Yea, But I don’t want us to try to be anything in this one.
Mark: I can take off my pants if that would help.
Andrew: Maybe your shirt so we can see the tattoo.
Mark: My anger is a gift tattoo.
Andrew: Let’s see what that looks like. Dude, that’s the kind of tattoo you have on you.
Mark: I have all sorts of tattoos, you see?
Andrew: That’s what that is. It’s [??]
Mark: Yea, strength and honor.
Andrew: Strength and honor.
Mark: And over here you have Tigger and Roo.
Mark: Two pennies, there’s my two pennies.
Andrew: I see it, and what’s the star?
Mark: The star is anger is a gift. It’s written inside of the red star.
Andrew: I see.
Mark: Plus one. The plus one is a former co-worker basically said to me if you’re going to do something do it plus one or don’t bother fucking doing it at all. Peace sign with guns, and all of my children’s names in elephants around my heart.
Andrew: How many do you have now, four?
Mark: Four. I gave a fifth elephant just in case, even though I got a vasectomy back in October. Which I was posting in Facebook while I was getting it done.
Andrew: The tattoo. You’re big on Facebook. I mean you’re not heavily active but you care. Where the rest of us don’t care that much.
Mark: I write a lot of shit on Facebook and try to put a lot of stuff out there.
Andrew: Do you get any business from it? You know our mutual friend Hot Lu the guy we interdicted. He is killing it with Facebook for his girlfriend.
Mark: Yes, Lu taught me how to do Facebook. My wedding sparkler site has 2,500 likes on it. [??]
Andrew: Does it lead to any business?
Mark: It leads to business all the time.
Andrew: It does.
Mark: There is no other sparkler site with over 1,000 likes on it that I have ever found. I never once mentioned my product on the site I just put pictures of wedding cakes and cute wedding pictures and stuff like that, blogs to. I posted a blog on how a bride could wear a garbage bag under her dress so she could pull up her dress to take a pee when she is getting married and not have to worry about anything.
Andrew: People do that.
Mark: The wedding sparkler site looks like it is written by a woman because everything is about helping brides and there weddings and stuff.
Andrew: Did anyone try to copy that business after the first interview as far (?)
Mark: There are other people out there that tried, but they’re going to suck at it, too (?)
Andrew: As a result of the interview?
Mark: No one called me and said they were trying to do it as a result of the interview, but other companies started up in the last year.
Andrew: There’s a recent interview, we won’t say his name out of respect, but he e-mailed me and said, ‘Andrew, I’m doing really well. Thanks for doing this interview. People connected with me afterwards. It was terrific. Can you remove it?’ I go, ‘Remove it?’ [sounds like]
Andrew: Yeah. ‘Someone else already copied me, and others are copying me. Can you remove the interview?’ And I said, ‘I love you, but I can’t remove the interview. I don’t (?)
Mark: No, (?) be a man and do it better, dude.
Andrew: They’re never going to do it better anyway, but, yeah, you’re right, the answer is not to remove the interview. The answer is to just do better at the job.
Mark: Exactly. No, there’s always going to be competition for what you’re doing. I mean, if anything’s making money, people jump all over it and want to do it.
Andrew: You should see how many people copy Mixergy, and I help them copy Mixergy by giving them the “How To Interview Your Heroes,” the course on Mixergy Premium.
Andrew: But most people don’t put in the kind of work that I do. They think it’s so easy. Andrew’s just hanging out with the guy, and then, what, he gets to have dinner with him. This is so easy. They never do the homework. The easy problem that most people have with interviews, I won’t get off on my own tangent, but here’s the big problem: They’re too lazy to do any research, any research at all, and so they come into the interview saying, ‘Hey, you know what? I’m just going to chat. The audience doesn’t know the answers to the questions anyway, so I’ll be like the audience. I’ll ask the questions.’
Andrew: And, of course, the problem with that is there’s no vetting of the guests and that gets crazy here. We keep pushing . . .
Andrew: . . . guests out the door. I’m sorry, I can’t interview everyone, and they don’t know where the stories are. I happen to know that there are legal issues, not because I discovered it on my own in this interview, it’s because you and Jeremy Weiss [SP] talked, and in the pre-interview . . .
Andrew: . . . you said there’s something that the audience is going to want to know (?)
Mark: Yep, exactly.
Andrew: That’s my own little personal rant.
Mark: Jeremy’s bad ass, by the way.
Andrew: Hey, you got ripped at your business, as I said at the top of the interview, and as a result, you launched this software company, Otterology, that I want to ask you about. But the first time someone rips you off, don’t you feel violated, don’t you feel like you can’t ever trust anyone again? That’s the way I would feel.
Mark: I got ripped off so many times, I just got used to it.
Andrew: Okay. Someone, what, they steal fireworks?
Mark: They steal cash.
Andrew: They just take it out?
Mark: Yeah, because we had no way of tracking inventory. Everything is in a tent, and you hope you’re getting the right amounts back and forth, but me and my partner were working 20-hour days for three weeks straight. We’re not thinking straight, and we’ve got to pay everyone right when it’s done. We had no accountability systems or anything in place, so you just give them money. I found out that one guy was stealing. I was paying him to work in the warehouse to help ship out stuff, and he would just take cases of fireworks, and he was stockpiling fireworks so he could open his own fireworks tent.
Andrew: That’s such a ballsy thing to do . . .
Andrew: . . . and the same time it’s kind of clever.
Mark: It takes some fucking (?) to pull that shit off, I tell you.
Andrew: So when you caught him, what do you do about that? Can you go and get the fireworks? Are the cops really going to go and bust him?
Mark: The cops won’t do anything, so you just show up there with a couple of really big guys and say, “Hey, we’re here to pick up our stuff.”
Andrew: That’s it?
Mark: Yeah, don’t even bother calling the police. They’re not going to do anything about it. You show up and tell him you caught him in his bullshit, and most people will back down. They’re fucking cowards if they’re stealing, so they’re not going to stand up to you.
Andrew: So what was the idea behind Otterology then? How’s that going to keep (?) ripping us off?
Mark: Well, I went around trying to figure out how to do inventory for my tents, because we’re mobile, we’re out in the middle of parking lots, and I went and met with all these inventory companies. They were giving me numbers like $50,000, $55,000, $60,000, and they wouldn’t even do all of my locations for that price. They would do two or three of them, and then the rest would be, “Well, here’s what went in, here’s what went out”‘ And I remember sitting with a guy, going, “Look, I figure I lost $28,000 in theft last year. You want to charge me $55,000 a year to tell me that I lost $28,000. That’s a net loss.” And he was like, “Yeah, but you’ll have information.” I went, “Fuck you. No, this is ridiculous.”
Andrew: Meaning information on what days did better so that you know what days in . . .
Andrew: . . . the future to sell more, hire more people?
Mark: And I already know that shit. It just takes me longer to get to it than an immediate result. So that’s when we hooked up with Square, because having an iPad in a tent and being able to do everything on one system saved us money, because we didn’t have to rent wireless credit card machines, we didn’t have to buy cash registers anymore. We could just do it all and rent iPads, so that was super cool, and then we saw, hey, there’s a CSV [sounds like] report that comes from Square.
So I literally went around to a bunch of nerds and just said, “‘Someone can turn this into inventory management, and, sure, this can’t be that tough to do.” And we picked a company. That company built us a system. We put it out for trial the first year, in 2011. And we literally sat around going, holy shit it’s working. I can’t believe it’s actually working.
Andrew: And it’s working for you.
Andrew: How is it to sell this? How is it to build it up, compared to fireworks, which is a pretty straightforward business. This is a lot harder isn’t it?
Mark: It’s way harder. A lot of the reasons it’s harder is, I don’t know how to write code. So I can’t build it myself. I have to constantly pay other people to do it. And then I have to make sure they’re actually building something right. And the only way you find out is if it breaks. And so we literally took almost two years to keep building on it, and building on it, and building on it.
One of the guys from Square flew up here after the first year, because we screwed up their metrics at Square by doing so well over July 4th. And he flew up here and I had dinner with him and I showed him what we had built. And I was like, are you guys ever going to do this? And he’s like, nope. No intentions. And he said, you need to drop everything else you’re doing and just focus on this.
Andrew: He didn’t want you doing fireworks, sparklers, nothing?
Mark: No. He said, just focus on this. And I’m like, no, I make a lot of money doing these other things. I’m not going to do this. So we spent the next year tweaking it, adjusting it. And we put it back into play again in 2012. And I literally just sat at home, in 2012 for fireworks season, and just watched everything happen. We were able to track everything.
Andrew: You could see real-time sales on this?
Mark: Oh yeah. We could see everything happening. It was so fucking great. And we could transfer product when people needed it. That was the biggest thing that came into play with our business, because it’s such a short window. If Site B is running out of product, Site A might have that product. So we don’t have to go buy more. So I lowered my overhead in 2012, dramatically. No one ran out of shit they needed, and I made more money.
Andrew: There’s something else that you said at this dinner.
Andrew: I never reveal people’s secrets. I get people to just open up. So, I’m going to type in Skype chat what you said. You tell me if you’re ready yet to talk about this.
Mark: Fuck. I’ll talk about anything. Let’s see what you got.
Mark: Oh. Are you talking about the list?
Mark: [laughs] Oh yeah, oh. We’re actually launching that this week.
Andrew: Alright. Then I don’t think you should say anything. We’ll save it for the next interview.
Mark: Alright. Cool. We’ll do that next. Yeah.
Andrew: I don’t think you should say anything. We’ll save it for the next interview.
Mark: Alright. Alright. Cool.
Andrew: What did you think of that dinner, by the way?
Mark: I had a fucking blast, man. For people that are wondering what Andrew’s talking about, there was a big Con going on out in San Francisco. And Andrew said, hey, are you going to be in town for this nerd convention. And I had no intentions of coming into town for the nerd convention. But I was like, I’d like to come hang out with you, man. I’ll totally fly out there. So I ended up setting up meetings for the entire time I was out there. So that worked out great anyways. And we flew out there and sat with a bunch of other guys that had been on the show and chatted with them. And I brought Hot Lou. So we got to hang out with Hot Lou. And then Noah showed up. That was cool.
Andrew: Noah Kagan. Yeah.
Mark: Yep. Yep. And we just hang out with a bunch of other guys and talk about what we all have to go through.
Andrew: I should do that again. It was all only people who I interviewed.
Mark: Yeah. No. I loved it. The only thing about it is, that’s one thing people wanting to get into being an entrepreneur might not know is that, I used to drive around in the low times and I’d look at every business and go look, they got their shit together. Look, they got trucks. They got, their lights are on. Everyone’s doing fucking great and I’m doing terrible. Sit around with a group of entrepreneurs and you’ll find out, no, everyone is not doing great. It’s ups and downs all the time. I mean, I personally financed my businesses. I’ve gone without many of times. You don’t just click a switch and suddenly you’re making bank and working 20 hours a week. There are tons of ups and downs.
Andrew: It’s amazing how people, who I think from the outside have it together?
Andrew: They don’t.
Andrew: And not all of them are willing to talk about it. And there was this one guy who was especially intimidating to me who, one of his people sat down and said, Andrew, don’t be intimidated, here’s what happens behind the scenes. And it was really reassuring.
Mark: Was it the guy from New York?
Andrew: I won’t say who it is.
Mark: Okay. The guy I hated?
Andrew: Because then you’ll know exactly who talked to me.
Mark: All right.
Andrew: I’ll save that for a future interview with him.
Mark: One guy you interviewed, I just couldn’t stand.
Andrew: Oh, tell me who.
Mark: It’s the, If You’re Not A Millionaire You’re A Poor Guy.
Andrew: Oh! Tim Sykes. No.
Mark: What a fucking douche bag.
Andrew: Really. Why? He was arrogant? He yelled.
Mark: Exactly. He’s an arrogant cocksucker is what he is. And I don’t care if he hears this. To say a blanket statement like, if you’re not a millionaire you’re poor? Fuck that. Fuck that. There are so many people that could start a business, make 60 grand a year and have a very comfortable living, and enjoy their life, and spent time with their family. Fuck that. You don’t need to start a business to be a millionaire.
Andrew: I don’t think he even believes it. I think he’s riling people up to get them over to his site. And he ends up getting customers from it.
Mark: Right. And I hate that shit, to be honest…
Andrew: Because it works.
Mark: Yeah. Yeah. I hate telling people, oh you know, just work harder, be a millionaire. You don’t need to be a fucking millionaire. No one needs to be a millionaire.
Andrew: Are you a millionaire?
Mark: Yeah, but. [laughs]
Mark: I don’t know. I think I am.
Andrew: So now [???] can’t say, it’s because he’s poor.
Mark: Exactly. I think I am. I’m not sure. I just did a whole bank thing and by the end of it… Here, I’ll tell you, real pathetic. I paid myself, it was 2011, I paid myself $38,000 the entire year. And my accountant’s like, you had multi-million dollars in business, you can’t keep doing this. And I said, my bills are this much, why would I pay myself more than what I need? And she’s like, you need to start spending some more money on yourself. So I got a car payment and now I have a salary that’s just stupid to have. But I put my money into the businesses. And I put it into future stuff. Like, I own my retirement land already. You know, I didn’t have car payments. I had cars.
Andrew: What is it? They don’t allow you to take too small a salary because then what they’re worried you’re doing is taking money out as dividends, which are taxed differently, right? [SS] …conversation with you.
Mark: Yep. So now I’ve got to pay myself ridiculous salaries and act like I’m a big CEO-guy.
Andrew: I’d love to have a conversation about this, about what entrepreneurs do around taxes. Because there are a handful of entrepreneurs who [???] it’s not an issue because all they care about is capital gains. They don’t make any money. But the idea that they’re going to sell their business for a lot. And then they only pay what, 15% or so?
Mark: 15% on capital gains. That’s all.
Andrew: Right. So for them, this is not an issue. But there’s a small group of entrepreneurs who do do really well with their business. And it’s a profitable, they’re running profitable businesses. What do they do? I remember asking Noah Kagan once that. And he goes, I paid and I’m happy. I said, no, you’re playing a game of inches. You once told me how you increased your conversions by 1%. So, you’re telling me that it doesn’t matter that you saved taxes by 1%?
Mark: Kagan was happy? Oh, no. Why would you be happy? That’s… I’m never happy about paying my taxes. And it’s not that I’m a no-tax guy or anything like that. But you know, when I get a six-figure tax bill, that’s pretty fucking insane for a guy that paid himself $38,000, you know?
Andrew: Especially when they hit you every quarter you’re supposed to send… And you look, and you’re watching your pennies for everything. Can we negotiate that down? Can we negotiate that down? Everything looks good. And then you write that big check.
Mark: Yeah. And it’s this big thing where, I’ve always had the argument of, if I’m paying off… You know, if I’m paying $120,000, how many people could I have hired for that?
Mark: How many people could I give jobs for that? Why are you hitting me so hard with taxes? I mean it’s…
Andrew: And then the guys who aren’t making any money get to coast.
Mark: Yeah. It’s 35, 40%. And…
Andrew: But there are things that people do. I don’t yet know how to ask the right questions. I’m having scotch here at the office on a regular basis. I’m asking people in private. They’re telling me the problem is, I haven’t come up with anything that is, that works for more than just these individuals. Sometimes I’ll meet someone from Europe. Apparently European rules are all kinds of crazy. Everyone has their own solution. But I’ll keep talking in private and we’ll figure this out.
Mark: Yeah, most of the guys just form a C Corp and pay themselves dividends instead of paying salary. And that’s [???]. I have S Corps and LLCs and you know, you get raped in an S Corp and an LLC.
Andrew: It’s the same thing as getting taxed as an individual?
Andrew: All right. Well, the whole idea here behind [???] is I want to cover everything. I want to cover the failures of business. I want to cover the startup of business. I want to cover the set-backs. I want to cover the triumphs. I want to cover the jets that people bought. No one yet has told me about a jet, but I will find out about that. And I want to find out about the taxes and the sales and just keep understanding the whole process. Until then, what I’m going to say to you is two things.
First of all, you said earlier that it’s nice when you run your own business that you can go and do your own thing. Right after this call, I’m going to go and hang out with Olivia and take her out for drinks or whatever. That’s why I needed an extra few minutes. She just came into the office. I said, Olivia, I can’t put Mark off. We’re going to do this interview and then I’m going to go and celebrate with you. Something good happened to her at work.
Mark: Ooh, good for you!
Mark: Good for you!
Andrew: Yeah. It’s going to be really fun to do that. And the second thing is, Mark, thank you so much again for doing this interview. It’s been fantastic.
Mark: Oh, thank you man. You’ve done a lot for me so I really appreciate everything.
Andrew: I’ll say this to the audience. Find a way to say thank you to the guest. I make it so freaking easy for you by telling the guest, by training the guest to anticipate thank you notes from you and to anticipate that they’re going to be able to connect with good people in the audience. You are missing out if you don’t do this. Now Mark, I don’t want to do as much work as you’ve done. I’m not looking to toss more work at your lap, but you did get some emails from people. Can you give me an example of best person?
Mark: I got a ton. I didn’t realize how many people watched your show. I got emails, texts, phone calls. I told you I got a phone call 30 minutes before this interview from somebody asking for advice. It wasn’t my favorite. My favorite was a guy in Canada that texts me at two o’clock in the morning, and I sleep with my phone under my pillow. So I woke up to the text and responded to his text, and he responded back with “Oh wow, I thought you’d be asleep right now. I didn’t mean to wake you.” And I was like, “Not a worry, call me tomorrow or something, man. It’s cool, or I’ll answer right now with whatever you got.”
Andrew: See, I’m so uptight, Mark. That would piss me off. That guy would be dead to me.
Mark: See, I’m still at the point to where it’s like this cool level of fame for me where someone actually gives a shit what my opinion is. So I’m just like, “Fuck yes, somebody actually wants to know what I think. This is cool.”
Andrew: If you can find a way, please don’t do it at 2:00 a.m. . You’re not dead to me, you’re not dead to Mark. We all love you guys. That’s why I’m doing this interview, he’s doing this interview. But please, not two in the morning, but do find a way to connect and say thank you. It pays off. I’ll give you an example of what happened to me. A guy emailed me a while back. Just someone. He needed his boss to introduce him because he wanted to ask me a couple of questions. I responded.
Two days ago Tim Ferriss emailed me and said you should interview this guy. I said, “Alright, Tim, you get where I’m coming from. I’ll do this interview.” I go and do a search in my inbox for him. It’s the same guy who years ago emailed me. I always do that. When I search for the person’s name and the email is thank you or something nice, it really starts off the conversation well. So do that, guys. Mark, thank you for doing this interview. Olivia, I’m coming for you in a moment.