Andrew: Hey there. Freedom fighters. My name is Andrew Warner. I’m a hostage in my own house. joining me is this great. An entrepreneur with a great story. Mike Black founded a company and then decided, you know what, I’m going to go start from scratch. I’m going to take $0 with me. I’m going to take none of my stuff with me.
I’m just going to go out on the streets essentially and start to rebuild myself and see if I could get to a million dollars. Now, usually when I get pitches like that, I think, great. Let’s talk when you hit a million dollars or half a million or something because you haven’t done anything. But Mike has done something he is before founding this he’s founded a few companies.
Most recently he is the founder of told media it’s a product development and custom software agency that provides dedicated teams of exceptional engineers. And so I want to find out about toll media. I want to find out about his previous company, which is parking B. which was kind of the Airbnb for parking spots always makes sense, but never really works out to have these types of parking businesses. and I want to hear the pain of why it didn’t work out. And we’ll find out about this new project, how it’s, what it’s like to go out, and start from scratch. We can do it. Thanks to two phenomenal sponsors. The first we’ll host your website, right? It’s called host Gator. And the second will help you hire phenomenal developers called top towel.
Mike. Good to have you here.
Mike: Yeah, Andrew. Thanks so much for having me. I appreciate it.
Andrew: How much money have you made so far starting from zero, getting to a million you’re
Mike: I want to say, like I have probably like six or 700 bucks. It’s underwhelming. Cause we’re on day 25. I think we’re on day 25. It’s very underwhelming.
Andrew: you’re making less than minimum wage.
Mike: way less than minimum wage, weight loss.
Andrew: Do you feel like a failure?
Mike: Totally. I’m truly disappointed, but what I’m excited about, because this whole project I’m doing it, I’m posting a lot on, on Instagram and stuff and people get to see, like, this is real.
Like I’m nothing, none of this is being staged. Like I’ve been struggling the last three weeks, for reals. It’s a, it’s tough out there, but it’s, it’s been so much fun.
Andrew: What’d you make the most money?
Mike: Flipping couches, which is interesting. Cause I made the most money the first three days of not having a place to live.
Andrew: What does it mean to flip the houses?
Mike: So a little bit about the project or you have everything $0 in my bank account. The only thing I had on day one was one pair of clothes and a cell phone with internet, nothing else. So I had to find a place to live that was kind of the first thing. And, I went on Craigslist and I saw stuff in the free section and I could sell and make money for selling, but I couldn’t go pick it up.
That was my problem. I didn’t have transportation. So by the second day, which the first thing I did get a place to stay the second day I realized I don’t need to go pick this thing up. I can be like the middleman list, something from the free section and then sell it to someone and handle the logistics.
so I think on the second day, the first thing I sold was a couch for a hundred bucks. It was in the free section of Craigslist. I listed it on Facebook marketplace, sold the couch, called the person. And I was like, Hey, I’m going to give you 50 bucks for your couch. This is what I’m doing, blah, blah, blah.
And she was like, okay. So she made 50 bucks. I made 50 bucks. She was like, you made my weekend. I was like, you have no idea. You have made my fricking year. Cause I made my first 50 bucks.
Andrew: Oh, wait. So then the person who was paying more, who’s paying a hundred bucks, paid it to you,
Mike: me without like, they Venmo me the a hundred dollars and then
Andrew: and then they got to go over and look at the, at the
Mike: Yeah, they didn’t even look at it. which weirdly enough, that happens. It was happening more often than not, but I got better at flipping, doing this model that I just kind of made up off of the fly being very desperate.
And now you would a lot differently. I tell the seller first and I’m going to sell their items. When I was first starting, I was so desperate. I would just list everything I could find. And then if I could sell something, I would call them, be like, Hey, is this still available? And then, um, Do like all the payment stuff, but most people will pay in person.
And then the person that they pay has to pay me and I’ve sold, at least 15 items at this point. And not one person is like, you know, screwed me over on that deal, I guess.
Andrew: This is not a good way to make money, though. It’s too slow. It’s it? Doesn’t scale, right.
Mike: Yes, and no. So, I mean, I’ll tell you why it’s maybe not a great way. The third day. Remember I don’t have a place to live. I have nothing but a cell
phone
Andrew: No, I didn’t. I didn’t actually pick up on that. I, I, we didn’t have a place to live.
Mike: no place to live. Like I started with literally nothing. So now I have a place to live. This is day 25. I’m sleeping in an RV park so on day one, I use a site called couch, surfing.co.
Andrew: doing Colby. They took you in.
Mike: During COVID and that was the, this was the problem. I was like, Oh, this won’t be that hard. I’ll be able to convince someone whatever.
And then like a big part of my game plan was I could probably use couch surfing, co everyone’s response was like, sorry, COVID sorry. COVID sorry. COVID and one individual was kind enough to say yes, and I actually even drove 20 minutes to come pick me up, which is just amazing.
Super amazing. Yeah. I don’t know if I would either, but, I’ve just been in his RV park and the first couple of days ago I had one pair of clothes.
So it was gross. Like I was, I was showering and putting the same clothes back on. for a couple of days, but the first, second day made 50 bucks. Third day, I made $250 in profit. So I sold about $500 in, I guess, revenue worth of stuff. I don’t count it as revenue because of like how the logistics played out, but, what I was able to do and why I think it’s a good model is like the second day of actually coming up with this idea, I was able to make $250 in profit.
The reason I don’t think it’s a good thing to do. At scale is because there’s a lot of issues with Facebook, with shadow banning. I ended up getting shadow banned because at first I was doing stuff in Austin, but then I was like, why do I just have to do Austin? I can do everywhere. And I started listening something new New York and Philly and Florida have sewing stuff in Portland.
And, um, I got shadow band. Now you could scale this by hiring delivery drivers. So like in Austin, for example, I have six delivery drivers now. So if I need a couch to be picked up and moved, I can just ping one of those guys charge a delivery fee. They could go pick up the item. They’ll, uh, we’ll deliver it.
And then I’ll probably make a little bit extra for that delivery fee as well. So, I do think it would be scalable if you write software to like pull ads off of Craigslist, I’m sure someone could figure it out. personally though, I don’t think I’m going to make a million dollars doing that.
Andrew: You know what I’ve been playing with an app called free up. Do you know that app? Wait, just hit play on my phone. I’m pulling it up to see how my thing is selling, trying to sell some stuff on there. Free up. There it is. Oh, for off. Excuse me, because
I’m going to interview your opera. What do you think of that platform?
Mike: So I haven’t used offer up to me. I’ve used it in the past. I haven’t used it too much though, just because I don’t think there’s as much traffic in my city. so I haven’t used it too much, but I again have used it in the past. I really love offer up a let go is also great. but Facebook marketplace by far gets the most traffic, like without a doubt.
That’s why
this model
works.
Andrew: Do you feel for some products, do you feel the pressure of having people look at you potentially. We failing in public. Does that keep you up at night? Does that keep you from functioning day to day?
Mike: Absolutely not. I love the fact that things, I mean, I hate it, but I also love the fact that things aren’t going well. Cause it’s, it’s real. These are the real struggles that people deal with and we’re just documenting it and going through the day to day. So, you know, if I don’t hit a million dollars in a year, then I only hit a million dollars in a year.
It’s not a big deal. I would love to hit a million dollars in a year to show people it’s possible. But if we don’t then we don’t
Andrew: How do you keep it from defining you? You said, you know what? Last year I did my seven marathons on seven continents interviews on, on every continent as I traveled. And there was a thing in the back of my head, just kept saying, if you don’t do this, you’re going to look like a failure. People will see that nothing’s working out for you.
It’ll take credibility away from everything else you’re doing. And to some degree that really charged me, kept me continuing to make phone calls, to find a way to get to Antarctica on my schedule, you know, to be able to run a marathon. But. And another way, it also slowed me down. It made me feel less enjoyment from the year, from the process.
How do you keep it from defining you?
Mike: Yeah, that’s such a good question, Andrew. I, I, you know, it’s super weird. I’ve actually learned more about myself in this, doing this project than I’ve I’ve ever learned previously. And one of the things I learned is I’m. Absolutely not motivated whatsoever by what anyone else thinks. And I knew that going into this project, but it’s been to an extreme because there’s been times when I’m laying in bed at the RV trailer and I’m like, I have not made anything.
I’m disappointed in myself. I’m not far along, not even close to where I want to be right now. but none of that has motivated me to work. in terms of like, what other people think, I’ve been thinking about it like, Oh, like people are going to look at this and be like, Oh wow. He’s so far behind.
None of that whatsoever has motivated me to work harder. What’s motivated me to work harder is when I think about it. And I’m like, damn, in my perspective, this is pathetic that I’ve only made this much money so far. I need to do better, but like if people watching, you’re like, Hey, you’re a loser. You only made 600 bucks.
Cool. I’m a loser. Like it to me, it’s just other people’s opinions have just never mattered.
right now I’m working. Between 80 to a hundred hours a week, I could probably work a little bit more and sleep less.
so last night, I was at the, I was applying to a lot of jobs, which I just got my first job today.
So I’m so pumped or my
second job.
Andrew: you’re talking. I interrupted you. Cause it felt like what that, what is this guy talking about? You were so proud. You got a job on
Mike: Yeah, upwork.com. So, you know, I, I came in with, I think a little bit too much of an ego where I thought I was going to be able to close a client way quicker than I was actually able to do. and, was able to do it. I got to like the closing of like a couple of deals and I wasn’t able to close.
And so I didn’t apply to jobs on Upwork until like this week. And, I spent a lot of time last night, just applying to a lot of jobs. and I got my first job as an, virtual assistant at a law firm and it pays 25 bucks an hour. some so pumped cause like, all I need is a little less than a thousand hours month to be able to get by.
That’s it. So, Previous to that. I should say it was my second job previous to that. I got like a job on this site called shift smart and it pays $10 an hour to do like telemarketing. So I did, I did my first shift, I think yesterday it was like a four hour shift at 10 bucks an hour doing tele, like political surveying.
Andrew: I thought it would be sales where you can make more money. I thought it, and you could apply your sales and business, experience. I thought you would be starting a Shopify store or something. and my expectation was that your plan was to sell something online, but you’re not why not.
Mike: So I I’m going to, so like I could build a website really quick. and at first I was like, I’m just going to build a website, but one of the rules is that I can’t use any of my background to make money in like software development. Et cetera. And I felt like web design or like building a store, like that would be like too closely related, which sucks.
Cause that’s like such an easy job.
Andrew: No, nobody wants to watch you do work on Upwork. We want to see you build a site from scratch and fail at it and then figure out what works.
Mike: very true. So like right now, though, the best call for me is just like, make as much money as possible to pay the bills so I can focus on building a business. So right now I’m building a business, I’m in the process of building an eCommerce marketing company. So that’s kind of the start of building my eCommerce company.
So I will be building
an eCom company.
Andrew: that’s where you’re going to get to a million dollars, not by being somebody’s virtual assistant, but by building an eCommerce marketing company.
Mike: Yes. And the eCommerce marketing company, I’m not sure how much we’re going to be able to like scale it till, until we go build the e-comm company. I think that’s really, what’s going to get us to a million dollars. And my thought process was like, okay, I can’t really build an eCommerce company from scratch without capital.
So the first step is, well, why don’t we build an eCommerce marketing company so I can learn how to market. And e-comm company and have people in place already. And then when I go build the econ company, it’ll be a lot easier. So
Andrew: You want somebody who is selling something on Shopify, for example, to come to you and then you’ll buy ads for them
Mike: Exactly. Which is funny. I’ve never, I’ve never, never used Facebook. I’ve never, use Facebook ads ever. So I don’t know how to do it. I’ve never sold anything on Amazon, so I don’t know how to do that, But I’m just hiring for the technical, like I’m hiring someone that’s really good at running Facebook ads and I’m going to build a business around their portfolio.
So like AMI leveraging their portfolio, the work they’ve done to close new deals
Andrew: By the way for anyone who wants to go follow up on this and see how Mike is doing Mike black.co well-designed site, simple and links out to the YouTube vlog, where people can see you step by step, including just sitting out in the heat of Austin. That’s where you are, right.
Just suffering through, not getting any work.
And of course there’s a, there’s a blog there. There’s a set of rules where people can follow along and see how you’re doing. It’s interesting that that’s what you wanted me to talk about. You said, Hey Andrew, just tell people that they can follow me on my black.co. I thought you’d want me to tell them about told media you’re not doing direct promotion or told media?
I did though. Look at told media’s first site.
Interesting thing. There was, you were starting a new dev shop, right? And you said here’s one of our clients and one of our clients was parked.
Mike: Yeah. Yeah. Which was my company. Yeah.
Andrew: Yes. They’re saying, look, here’s the work that we’ve done, but really it might be for us, or in this case, you’re leveraging somebody else’s past work, as gifts to get credibility for yourself, to get new clients, which I get. I truthfully, if you’re getting on a call with someone, I can’t imagine you’re going to pretend that you did all this marketing yourself.
You get on a call and you say, I found the best agency. I will just work with you to get the best out of them. Right.
Mike: Yeah. Yes and no. So with, with that, that’s funny. So did you use like way back machine to check out the old
told site? That’s great. I love that. So, so yeah, when we started told media, I started told media myself, I’m the only owner of the business. I hired my co founders from my past business to work and told media and we had built a parking B.
We had built Mapa Phi, so we just put it in the portfolio. So we have good. Portfolio piece. If I were going to start a new business though, like an eCommerce marketing company, one thing I could do is I could start working for people for free or very low cost to start building portfolio. The other thing I could do, which is what I’m doing is going and getting someone that has a really good portfolio already.
It’s an expert leveraging their portfolio and then having them do all the fulfillment, which is exactly what, what, what I’m doing here. So. what I’m hoping is this individual ends up potentially being, we’ll say co-founder level material. I don’t know if that’ll end up being the case or not. And then like when you’re talking a business, there’s, there’s the business side.
There’s the technical side. I fall well into the business side.
Andrew: that person will be the co founder of this new business, even though they’re running their own.
Mike: Potentially. And honestly, like, after talking to him, I think I could scale up this business,
to a lot more.
Oh, yeah. I’ve been doing all the interviews. Like I’ve, I’ve gotten decently far along. Like I think by what it’s today, I don’t even know what today is like Wednesday or something by Friday.
I’m hoping to have the website finished and hopefully land a deal by like Monday or Tuesday.
Andrew: I want to come back. This is now we’re talking about very forward looking things, which admittedly, I’m not very good at. I want to know about how you got here and what actually worked and didn’t work for you over the years. But since a natural break in the conversation, let me talk about my first sponsor, which is HostGator.
Why don’t we use this for the HostGator ad one? And I asked you if somebody would have, start with nothing but a HostGator account, right? They just want to start a business. They say, this is the year I got to get started. Mike, give them advice. They have nothing HostGator account. How did they get started
Mike: Oh man. Well, if you got a HostGator account, you got hosting. So the next step is you got to get a website up, leverage that hosting.
Andrew: Super simple. WordPress hosting comes for free with a, with just about anything, but with HostGator, with one click, I installed WordPress on my HostGator account. So tell me about how, how you’re going about things in a way that will help them understand how they could get started.
I want to hear your, your thought process and then we’re gonna come back and find out about parking B and told media.
Mike: Yeah, let’s do it. Well, the first thing you gotta to do depends on where you’re starting. Right? If you have no money at all, you gotta make some money somehow. So you gotta hustle. You gotta figure out a way to make money. Maybe that’s flipping couches. Maybe that’s like doing jobs off task, rabbit, whatever
it is, you gotta make some money,
Andrew: a little bit more money than you.
They left with money. This leverage somebody else’s expertise,
Mike: Yeah.
Andrew: hustle.
Mike: Okay. So, if you’re a real hustler, yeah, go find someone, figure out what business you want to start. A service based business is a great business to get off the ground so you can start creating cashflow. so figure out what that business is that you want to start. If you don’t have experience doing whatever it is, Go on upwork.com.
Go on different sites. Find people that can fulfill the work for you, and you need to go close some deals. So you got to hit up. Now on the other side, you gotta hit up leads on upwork.com. Y’all going to Facebook groups, add value, add value, get people on calls, close those deals. So then whoever’s your technical person can fulfill that work.
Andrew: So the client work will come from Facebook groups where you’re going in and helping out and talking to people. And then the actual work gets done by somebody that you’ve interviewed from Upwork or from an agency that you found online who can do it. That’s the model. And you as the person who has a website, you’re the hustler, who’s getting business.
And in return, you’re getting paid a commission based on
Mike: Yeah. And there’s a different, there’s different ways to structure it. Right? Cause like the person you’re hiring, is essentially a contractor. So like, Let’s say, let’s say you’re building people, websites, you pay the contractor a thousand dollars. You sign a deal with the client for $2,000. You make a thousand, that’s one way to do it.
The other way to do it is to tell them like, Hey man, I’m trying to build a business out of this. If this works well, like I’d love to like, you know, talk about like potential partnerships, et cetera, down the line. but let’s do a commission structure where if I signed a $2,000 deal, I get 50%, you get 50% or I get 30%.
You get whatever’s fair. You know, you figure those things out, but. Those are the kind of the two ways to do it. I’d say the third way is if you’re doing it. Yeah. Hourly. So if this person charges you 50 bucks an hour, you build a client 80 bucks an hour and you make 30. So pick your poison when it comes to how you’re actually going to bill.
But it really depends on like what you’re actually offering as a service.
Andrew: And they’re like services that are direct really directly related to increasing people’s revenue or profits. Right. You know, another one that I’ve seen, it’s a that’s. Really good in recessions is the person who can cut your expenses.
Mike: Yes.
Andrew: Right?
Mike: yeah, I forget who it was. There’s a really cool, I want to say it’s called ProfitWell. Like four months ago, I was on like a, like a SAS webinar and the CEO, I think it was a ProfitWell was explaining like with data, how companies care more during non recessions about increasing revenue and doing more sessions in your marketing, you should be marketing that you can actually decrease expenses.
Andrew: Yeah, that makes sense. I’ve noticing some businesses now get off the ground, just doing nothing but decreasing expenses, negotiating with the credit card, not credit card companies, but negotiating with phone companies. I had no idea. You could do that negotiating with the internet companies, negotiating with SAS companies.
And you also, frankly. Yeah. If you’re paying law for SAS, for software. It’s awkward to go back to the people you’re paying and say, give me a lower price and then come back and have a good relationship with them when you need it. But if there’s just party whose whole job is to reduce, you know, your expenses, let them be the bad guy. Okay? Whatever these business ideas are. If you have an idea, you go to hostgator.com/mixergy. They’ll give you a super low rate, the lowest rate that they have. They’ll make it easy for you to install WordPress. I know I did it just a few days ago. And once you’re up and running with a basic theme basic site, it gives you credibility and allows you to go out right into the world and try to make sales and see if it works.
So if you want to get started, go to hostgator.com/mixergy. If you already have a site that’s up and running and you want to reduce your expenses, do what I did. I moved Mixergy my site over to hostgator.com/mixergy. It is the best way to reduce your expenses. Have a site and add credibility. By the way, Mike, that’s why so many advertisers love my ads because I’m not just reading.
I’m introducing the guests. when he comes sometimes the best part of the whole interview. Alright, let’s go back in time. Parking B what was the original idea for parking B?
Mike: Yeah. So I started parking B when I was in college. the original idea was just. Airbnb for parking people have parking spaces that they’re not using, that they can run out. And then, I went to Penn state, so I lived in state college during football weekends. There was all this like parking inventory that people like would pay a lot of money for.
But then there was like spaces that people owned. Did they get run out for a lot less, but like still make money. So, so that’s kind of what parking be was, when we first started. Well, we were doing, I threw up a WIC site and the first month of launching, we did $10,000 in revenue. now that was actually, yeah, the first, the very first month we did 10 grand in revenue.
this was with no developers. This was me using wix.com. And for those of you who don’t know, WEX is drag and drop, like website builder. And what I would do is, like. When people wanted to list a parking space, they would go on the website. They would click on the link to list space and they would just fill out a form.
I would get an email with all that information and then I’d have to take that information and make three pages out of it. So I’d have to add it to the listing page, add it to their own page and then create a payment page. Then when someone bought a parking space, I was using PayPal. I would have to go and meet up with the person who sold the space.
Give them a check, then I’d have to get their parking pass. I’d have to go meet up with the person who had bought the space, give them the parking pass. It was a lot of like craziness, but in each one of those, by the way, each sale would take me like a couple hours to do all that at work. But we did $10,000 in revenue in the first month in validated like, okay, this is something people might want.
Yeah. So. And this, by the way, is we’re going to get into some mistakes here. When we first started, we were doing longterm parking. So we were doing summer parking specifically. so when people were, I guess studying at school over the summer at Penn state, they needed parking and we were able to like leverage the people that I have left and we did 10 K over that, that first summer. I’m trying to remember how we went about doing it. We did it, we left, I think it was like almost all through Facebook groups.
Andrew: I just went in and said, we’ve got parking spots if you need it for the summer. Got it. That makes sense.
Mike: And Craigslist. Yeah, we are doing Facebook groups in Craigslist, and then we were doing like some outbound stuff, like hitting up like, landlords and stuff that owned like frat houses and different types of property. cause the bigger apartment complex is didn’t want to touch anything like this. so that’s where we got what we call in the parking world inventory.
That’s where we got our inventory was from a lot of like, landlords that had a couple of properties.
Andrew: Probably no wonder you’ve got the confidence to just set out on your own and start from scratch. If you’re just building a quick website and you get to $10,000 within a matter of days. You have this belief based on something before this, did you have as a kid, some kind of business that in your mind, you go back to, when you say I did that, I can do, I can do anything.
Like for me, it was shoveling. Snow was one of those businesses. If I can go door to door and get people to pay me money, to shovel snow for them, I could go door to door and do something, you know, to get myself going.
Mike: I started my first business at 16, but I’m going to answer no, because I failed over and over again for years. My first business at 16 ended with Bose headphones, sending me a letter saying if I continue to sell Bose headphones, I can serve up the 10 years in prison and up to a $2 million fine.
And that was at 16. Then my, my second business was, I started doing SEO consulting so that. That kind of went okay. I had one client, I made like 400 bucks a month. That was kind of cool with it. 17. And then I started as SEO software company. my senior year in high school, I ran that for two and a half years.
I dropped out of. College for a year and a half. Cause I went to college for a semester, dropped out from your app, that company failed miserably, miserably. I did everything wrong. Like anything you could possibly do wrong with like, assuming that people want certain things and not doing customer discovery and everything went wrong with that.
so that company failed. So that was failure. Number two, went back to college. And then, I have like some businesses I tried and stuff, but like was taking classes and stuff to make my parents happy. And then parking B happened, which is another failure. And then after that, sorry, Mapa Phi, which is another failure.
So the answer to that is no, there’s nothing that caused,
like the confidence comes from knowing that this is a long game. Like I know that each of those failures was building more and more and more and more of a skillset.
Andrew: Why, why didn’t, you know, how you know, what each of those failures is me being stupid. I’m not real good at this. I should be doing something else.
Mike: Yeah. So, I mean, because I think I learned from the stupidity because I was stupid. I was eight years old and stupid. Like, that’s why I could have approached things much better. but as I made those mistakes again, I learned a lot. I learned a lot more about how do I actually purchase the next time? How do I do this next time?
And you build that skill set, but I just love doing it so much that like, through all those failures, it was just like, Again, knew it was a long game. And just like starting my first business, I knew that this was what I was gonna be doing for the rest of my life. So.
Andrew: The creative aspect of it where you get to make something up and then go into the world and see it happen.
Mike: Yeah, I think that’s part of it. I love doing that. I mean, I love sales. I love, I love everything that goes along with, with building a business, even the sucky stuff. Like I just really, I just enjoy it, man. I just, I really enjoy creating value for someone else out of nothing.
Yeah, so this you’re going to laugh when you hear this. So, you can probably imagine, what may have got me in trouble. So the first business I started, I was, I was 16 years old working at a restaurant. working super hard, long hours. I think that was like the first legal age that you could actually start working.
So like, that’s what I started doing. And my dad owns a small accounting practice. It’s just him. My mom works for him. He has one employee. And I would work super hard and then come home and see the checks on his desk and how much money he was making. And I would see my paychecks for the amount of work that I spent versus his day with a client and, or, sorry, let me rephrase hour or two with a client.
So it clicked that like your, your time has a set value to it. And I was like, it’s 16. I was Googling like how to make money as a kid. Like what businesses I could start. Cause I can’t be a CPA. and. that just led me to eBay. So then I just started consuming content, consuming content learning as much as I could about eBay.
I bought some courses and I started dropshipping and I was making like very small margins. Like I made like five bucks here, 10 bucks here, whatever. And then I took a course. It says, you need to focus on one product, like one product, that’s it, you to focus in and really build around that product. So I went on, It wasn’t Alibaba.
I think it was called like trade King or something like that. It was similar. and I found a supplier that had Bose headphones when I was doing my research and I was like, Oh my God, like, these are, they were $15 a piece with shipping for a hundred. And I was like, Oh my God. Like, I can’t believe how cheap these are.
in Walmart they’re a hundred bucks a pair. Walmart must have like these $85 an hour margins. That’s where my head was at. It. It it’s 16. So I reached out and was like, Hey, like, These aren’t fake, blah, blah, blah. They sent me a sample and they promise they were the bows wholesaler or whatever. Send me a sample is the same exact thing in the store.
Like the box was the same. The manual was exactly the same. The product was exactly. Everything was the same. And I was like, wow, this is so crazy. I ordered the hundred listed on eBay. And I started making legitimately anywhere from 200 to $400 a day in profit. I was selling it for $65 a piece. and again like $45 profit margin, we’ll call it 40 after eBay fees.
And I was like, Oh my God, I can’t believe this. Like, this is actually working. I’m going to like do this for the rest of my life. Like, this is great. After like the third or fourth day, my listing went down and I was like, What is going on, where I had no messages about it. And I checked my email, I have this urgent, which I still have this email, by the way, it’s just says urgent bows attorney.
I open it. it says like some about like counterfeit headphones and all this stuff. And I like read through it and it says I could send, spend up to 10 years in prison, all this stuff. And I was like, Oh my God, I cannot believe. And again, this sounds so stupid, but I was 16 years old. Had no idea. They’re a counterfeit.
Like this person promised me they were, they were the, the wholesaler for bows. And, um, so I, I refunded everyone. I felt super bad. I refunded everyone, their money refunded, every single
person. I mean, I, I, had $1,500. I invested in buying them. So I just use whatever money I had to refund everyone.
so when I was 16, I worked at a retirement home, serving at the retirement home. So it was literally everything I had, everything I had made, I put into this. and that was my first learning experiences, entrepreneur,
Andrew: All right. And then parking B was starting to take off $10,000 within how many, how many weeks for eight,
Mike: four weeks.
Andrew: four weeks. Great. That’s a good start. What happened next?
Mike: Yes. So next, it was like, okay, well this, this works. Let’s, let’s figure out how to build more momentum and more momentum and let’s put a development team together. So, during all of that, while I was in school, I think while I was a student I raised, or I won like $60,000 in total of grants, just doing like business plan competitions, Consulting competitions.
And for parking B, I think I did like 32 grand. So on top of that $10,000, which like a small amount of that was profit, like $1,500, $2,000 of profit. Then we had like 30 grand that we like pitched got from like pitching. So we took that hire developers, which were all like, Students and stuff. So I had a small co-founding team.
We had a couple of developers on our cofounder team, and then we had a bunch of interns. So I worked with Penn state to, offer my internship as a three credit class. And we had like 15 interns. so we got like the best talent and everyone at Penn state went in to work with, with our team, because like, Airbnb for parking sounded so cool and stuff.
So we were able to get really good devs, I guess, for like student level talent. we built the mobile app. We built the real web app. and I think the first app we built was in Swift. So it was on iOS. And then I think we rebuilt it in react native for both iOS and Android. so that’s what we did next.
We, we build everything and then we started marketing it. So we had like a brand ambassador program. We got a bunch of brand ambassadors from Penn state to like market our R a well we were doing, and we started short term parking, but it led to so many headaches.
Andrew: So the longterm parking was, you need parking spot for the summer. I’ll get it for you. And then on the other side, you’re going to be away for the summer. Might as well make some money from your parking spot. If it’s not going to be used. Right.
Mike: Exactly. And like, honestly, like, my level of business acumen was, was not high enough at that, that period of time to realize, just do like longterm, just work, just stick with that. Don’t do the Airbnb stuff, the short term stuff. If I go back, that’s what I would definitely do differently is just do longterm.
Andrew: It does make sense, because
Francisco.
give it a second. There. I’m back. Right. Yeah. I was saying that it made a lot of sense to do this, but the reason you lost me is because I was saying earlier, I’m a hostage in, in my own house. Here’s the deal. Kids went back to school. Life was good. Then there was a covert outbreak at their school.
Mike: crazy.
Andrew: we were away on vacation for 10 days out, out of state. Little place, middle of a middle of nowhere, Oregon. It was fantastic. We come back, schools shut down. Everybody needs to be tested. We took our kid, took ourselves, got ourselves tested and we don’t have COVID thankfully, but now the kids are home.
I’m home helping them and being more cautious. And I can, Hey, all I, I thought I’d be okay using this old Chromebook to record with you today, but it’s
I know, you know what I, I’m just trying to figure out where are we going to end up? Do we stay here in San Francisco? Do we leave San Francisco? We’ve been looking at places outside of San Francisco, but dude, everyone’s looking for spaces outside of San Francisco.
Yeah. Which makes me think that maybe we should stay in San Francisco.
I like the way that you’re doing over here, but if we do, then I need to find a way set myself up better than, than I am right now. I talked to this guy, who’s got a new startup, which will put, basically little offices in people’s backyards.
Mike: I’ve seen those. They’re like tiny homes, but they’re like these tiny offices.
Andrew: Right. And he’ll have to get a guy with a crane to go put it over my house, which is a two
story place here into my backyard. And I don’t know how much, how feasible that is. And do we stay in San Francisco? This whole thing is just driving me bonkers. Yeah, but you know what I mean, kind of using this as an opportunity to find new ways to do things, to shake things up.
It’s kind of like when I was running, when I lived in New York, I had this beautiful path going down first Avenue, everything was super clear. You know, you’d have to stop for lights, but that’s the way it is. And I get to experience all of the city going from uptown to Midtown, to downtown, to, you know, to zero street, which is how stun.
And then you go a little bit further and turn around. Anyway, one day there was construction crew over there and I was so pissed. I couldn’t run. I started yelling at the construction crew, which is what you do in New York. And the guy goes, he called me a name and he goes, just go over there and go, what do you mean?
Go over there? Turns out. There was a little path that if you go past, you get out onto the edge of the city and suddenly there’s no cross street, you’re on looking at the Hudson river, you’re going and looking at the FDR drive. You just get to experience the whole city in new way. It changed my life for the better, and it wouldn’t have happened except this construction that was going on.
I want COVID to be the same thing for me to shake things up and make me see things in a way that I hadn’t seen before to make me reconsider the basics.
Mike: I think that’s, what’s interesting now, like I think a lot of people are rethinking a lot of things. Like maybe remote does work. Maybe we don’t need an office.
Andrew: I think those are basics. I want to know what in a more fundamental way is going to be shaken up about my life from this. We’ll see. I don’t want it to end. I don’t want to end up back where I was before. I want it to be an earth shaking
without
Mike: to get something out of this terribleness?
Andrew: And I know that’s an awful thing to say your while to feel comfortable saying it, I should have felt comfortable saying it in the first day.
Do you feel comfortable saying that I want to get something out of this?
Mike: I mean, I look on the bright side. Yeah. It’d be nice to get something out of it. I totally get it.
Andrew: yeah. All right. Let’s come back away from me back to you. So. Why did you, I get why you change. You said, look, Airbnb means it’s a sexier model. It allows me to make money on an ongoing basis. As I keep getting to, to find more properties, I don’t have to look for people who need longterm sales or longterm rentals.
Mike: Yeah, I don’t think it was like, Oh, this is sexier. Cause it was all about like building a good business. I just didn’t see it. Cause like the idea was always, let’s do Airbnb for parking and I just didn’t see that maybe longterm parking is a better model. because that’s what I had originally thought about.
And that’s what we were going to do. And then yeah, like we, we went with like the short term and there was just so many headaches, like way more headaches than you can imagine. So like people, one of the biggest problems we ran into this is going to sound crazy, but people would rent their space out on parking.
Maybe someone would buy the space they’d park in the space, the person who rented out would tow the car. And then, because we weren’t partnered with the towing company, that person got towed in like. They’d call us and be like my coat, my car got fricking towed. So doing the right thing, we would pay for those and then call the person and be like, why did you do this?
And I’m like, Oh, I forgot that I listed on parking B. Like it was crazy. I don’t know if we just like, didn’t the push notes weren’t working or what, but that happened on like two or three occasions. so like from a business model perspective. Yeah. It’s a total mess. There’s like too many, I guess we’ll call it like.
Customers that we have to get in front of the first, we have to spend money in ads, getting in front of the person, running a space. Then we have to spend money on ads for someone to rent the space out. Then we had to partner with the local government because there’s legal stuff involved. And then we need to partner with the towing companies.
So they have like our database and don’t tell people. So if you want to go into a new city, you have to set all of that. And then someone selling a parking space for maybe 25 bucks. So if you’re. From our side, we’re taking a 20%, so we’re barely making anything on the sale and we have to deal with all this logistical craziness.
so it’s not a very profitable business. I think it’s a type of business. We had to raise a lot of capital and potentially, maybe exit, but I don’t even know. I know there’s like there’s one company that’s been able to like raise capital. They’ve only raised capital. I believe from crowd funding. It’s called just park.
Most other companies haven’t been successful doing this. there’s been company, a lot of people come up with this idea. It’s just not very feasible.
Andrew: No, there’s a company in Amsterdam called park B that raised 5 million euros a few years ago.
Mike: They’re not doing this. Yeah. I know. Park B park park beat. A lot of people would message us cause they were trying to talk to park B and they’re I think they’re, yeah. I don’t know where they are, but it was a lot of times it wasn’t English that the messages were, were coming in as I think it was like German or
Andrew: private car parks, monetize underutilized spaces by making them bookable to the public. So it’s for more like parking lots that have extra space and they can rent it out. Versus you, you’re working with individual owners
of one or two spots. Am I right?
Mike: Exactly. And like, just saying that out loud, like you can see like why that’s not a great business model. cause we’re like, again, we call it inventory. You want to get as much inventory as possible with the least amount of effort. so like for w w and we knew that we knew that, like we were trying to work with like apartment complexes and stuff, which again, not a great idea.
cause that the sales cycle and things like that is really high and no one was actually injured. Like they don’t care about their parking revenue. They care about their apartment revenue. So I’m trained to so many logistical issues and, craziness. But again, if I could, I would do that all over. I would focus on longterm parking.
Andrew: right. At what point did you realize this isn’t working and what’d you shift into.
Mike: So I don’t, so I don’t think there was like, I can’t remember a point that I like actually was like, this isn’t working. but what ended up kind of happening was we ended up starting a new company, was a SAS business called . That was a software company for parking departments to geo-fence their parking.
And then they geo-fence all that we integrate with any types of like parking software slash hardware. They’re using to display on a mobile app for them, what parking’s available in their city. And we signed a contract and going into that, we were like, we want to do this because. In the contracts, we will put that we own the data.
So like any data we get from signing us, a SAS, client parking B owns that and we can list it on our, on our app. So w what we realized was like, we can become like the best parking data company in the areas that we’re in. If we can execute this well, So we’ll have everything. So that was kind of like where we wanted to go.
And then as we got more and more into, into like working with governments, municipality, municipalities, and doing the parking meter stuff, we realized it was just such an unprofitable business. and parking was not the industry that we wanted to be in because it was more of a downward turn than an upward growth, industry.
we just decided this is just not the right. This is not the right product, this isn’t the right industry because of, Companies really because of self driving vehicles, but like companies like Uber, like you should see as fun as it sounds. I’ve gone to a couple parking trade shows, there’s trade shows for everything.
so I’ve gone to a couple of car parking trade shows, and these people were so scared of self driving cars, but they would like put this front on about the industry that it’s not going to get affected, but all of their, their conversations and like their presentations were like, Uber is screwing up our industry.
And then, but, but self driving cars won’t do that. It’s very obvious. That’s what’s going to happen. I thought it might happen sooner than later. I think it’s, it’s taking more time cause of like government regulation, et
Andrew: I agree about the aye. Aye. Aye. I agree that self driving cars are taking longer than we expected. You know, what’s happening faster than I expected is I’m going down Valencia street. That’s where I run. And during COVID I take pictures, how the city is changing. And so I saw initially how stores were closing.
Then I saw them boarded up and I took photos of that. Then I saw black lives matter. And so the more boarding came up and then I saw something interesting happen just the other week. A lot of restaurants are now taking over the street, not just the sidewalk and putting seats out, but taking over the street and put out better about six feet apart from each other.
And then they have waiters go around with face masks on to serve as the people who are sitting at the restaurants and. I think this is fricking brilliant because there are fewer cars out on the road because of COVID frankly, there were fewer cars out before because of Uber. Imagine the Lindsay street, this main street.
Why are we, why are we putting everyone inside in California? Imagine if after COVID this stays and you see people sitting out at restaurants on the street, I saw there was a clothing store that had racks of clothing available for sale.
Nope, you can now suddenly get a sense of people. Get a sense of the environment and forget the parking spots.
We don’t need those parking spots here. If you really need to get around here, get a bike, get one of the scooters,
get an
Uber. Right? I feel like I hope these restaurants that are starting to do this year in San Francisco. I hope they just hold on to that. They start fighting the city and saying, no, you cannot have this back.
I see some of them. Or taking a buckets and putting concrete into it and then putting sticks in and others are starting to actually hire people to build these wooden structures in the parking spots. Lone screw you city. We’re just taking this over. Go find parking spot somewhere else. It’s great for business.
Great for people. Great for the environment. Great for everything.
Mike: so interesting. So people away, like
Andrew: No. there there’s so many other streets to drive through there. You don’t, I don’t see. I maybe they’re pissed. I can’t see them cause they’re not driving through the area. and it has an extended to the whole city and it has an extended through the whole day, but they’re starting to slowly take on the sidewalks.
Then they took on parking spots. Now they’re taking on basically the middle of the street and then the city, uh, the restaurants have volunteers out to say to anyone who’s walking by, please put a mask on. And keep on walking. Don’t just stand around here. And so you see, I forgot to put my mask on cause I was running and I shifted from this place that was sparsely populated to Valencia street.
A guy goes, please put on your mask. I put on my mask and I just kept moving through and I saw people. It’s a great experience by the way. Let me take a moment. Talk about my a S actually, when we close out map, if I, I see on your LinkedIn profile that magnifies to listed as an ongoing business, are you still running Happify?
Mike: No, that’s just an error. I’m not still running. Mapa Phi we haven’t, we haven’t done anything with that. And man, like probably two, two years,
two or three years.
Andrew: did you make money off of this business that you were using to live day to day? You did.
Mike: no, so, so, so, I lived through debt, which is not a smart thing to do actually very unsmart thing to do. what I’m about to explain. So when we were working on, slash parking B. Like I said, we had raised like $32,000 from just like winning, not raise, but like we won, I will say like pitch competitions and got grant money, whatever.
So we use that to like fund the business, et cetera. I was living off of less than 10 grand a year. Like my, my living expenses. I got down to as low as possible sharing rooms, doing all that stuff. Like not going out, just working. And then, once I kind of ran through that, I started putting my cofounders living expenses.
Well things like rent on my personal credit card. It got, it, got to the point where like, we were like, so screwed with like paying rent that I would Venmo my co founder and I would link my, my credit cards would come off my credit card. So I’d Venmo my cofounder with my credit card and then he would send me the money back.
So I had cash to pay for the rent.
and.
Andrew: Dude,
Mike: I mean, I didn’t, I didn’t feel like a loser. I was just like, I’m going to do anything possible to keep this business alive, which is a terrible idea. I do not use credit cards, the chemo business alive, because that came to bite me in the ass. Pretty hard.
So here, so we started told media, so we wanted to bootstrap.
So we started told me we start doing projects for people, et cetera. First couple of projects went okay. Like they were like 600, our website here, $1,500 website here. Then we signed like a $12,000 a project. Then we signed a $30,000 project and that’s where I got really screwed. So it was like a $32,000 project.
we should have billed like 150,000. We under projected it really bad. we worked on it for three and a half months. we were supposed to be billing at a hundred an hour. we didn’t do a good job, so. Halfway through. I was like, well, like we’re just going to refund this person, give them all the code and design work and everything for free.
And that’d be that. And at that point I was paying for an office space. I had people that I was paying and that put me with the map of find parking, be debt in total, like 50 grand in debt. So in total, I think $32,000 were on credit cards and $20,000 was like, just like loans. so it was,
it was crazy.
Oh yeah.
I got out of debt in six months, but it was craziness.
Andrew: Dude, but you finally made it here. We told you the media, you have a hit. And now you’re saying to your team, sorry, I’m going. I live in an RV park for a little bit while I try to redo everything.
Alright. My second sponsor is a company called top town. Great place for hiring developers. People are gonna get a big deal if they use top.com/mixergy. Let me ask you, Mike,
Mike: Yeah. So, I mean, I’ve talked to Toptal, there they hire, I know they have really high level talent developers, so like they hire the best. I’ve actually interviewed people that have worked at top doll and I was. Unbelievably impressed with the level of talent. so I think their business model, they do a really good job of vetting that top talent.
So you don’t have to spend all the time doing that. especially if you’re like trying to build something real quick and you’re like, I need someone. Awesome.
a great choice for that.
Andrew: I was just talking to an entrepreneur recently. Build up a company finally have a hate. It’s finally working. They say, why are you doing top towel develop I’m at work on the side. He says, I’m not, I go, I see it on your LinkedIn profile. Why are you doing it? He goes, yeah. If I show on my LinkedIn profile, that I’m a top seller developer, other developers take me seriously.
And then they work with me and the same goes to my co founder. I said, so you guys are not doing any more work for top down. He goes, truthfully, we’re still in there. Just see if we, if we needed to get work, we could through them, but we’re not with them. We’re just signaling to the developers. We want to work with that.
We are at their level or higher and getting people to work with them. That is what the top towel credibility is
Right. They’re so good. And the reason that they’re good at data is because they put tests in the way, because they have to say, I don’t know that I would call it an arrogance. If I was a better wordsmith, I’d come up with a synonym.
That’s better than that. They have this thing that is you have to fire to be a developer within their platform. Same thing. Truthfully goes for companies that hire you. Can’t just be anybody and say, I want to hire a developer and I I’m going to pay money. Get the developers from top down, they’ve turned people away who don’t have much going on, but if you do have something going on and you want the best of that’s developer and you want them in a way that lets you hire an, a flexible, and flexible way.
Go to dot com slash Mixergy, because when you do, they’ll give you 80 hours of developer credit when you pay for your first 80 hours, in addition to a no risk trial period of up to two weeks. So that’s towel top is on top of your head, Callas and talent, top T a l.com/m I N E R G Y. To get that deal, Do you hit my, my three-year-old yelling mic. Sometimes I’ve been listening to podcasts and I hear a lot of sirens and I hear birds on the podcast mic. And, when I do tech support or customer service calls, I hear fricking roosters on the mic.
Mike: That’s crazy. They’re screwing up, crisp.ai,
software on. Have you heard of it? It’s amazing.
so I got lucky because I got in to Chris with the AppSumo deal. I don’t know how long ago, but, that’s how I found out about them. And what Chris does they use AI to block out all background noise, not you talking.
I literally took a blender and ran it next to my mic while I was on a team call it.
Andrew: And are you dialing into crisp and then crisp dolls into zoom?
Mike: on, on this computer, I actually have it. So, the way it works, it’s like it’s downloaded onto the computer and then when, wherever I’m using my mic, I can choose crisp. and then any background noise will be blocked out. I don’t do it on podcast, so I don’t have it right now on the podcast.
Just in case it might do anything weird. but I do it on every single call. If, when I used to use my Mac book, now it’s like against the rules cause of this project and not I’m use this Mac book other than like doing things like podcasts, interviews. but, But, yeah. So like, if you’re like working in a noisy environment, you’re working at home, you’re in a coworker.
That’s why I got it because our team was already distributed and I work out of a coworking space. Almost always have had space that we work. So, it’s great to like be on calls and like literally, like clients can’t hear anything around,
Andrew: Believe that you were able to get a blender to, to get excluded from the mic it’s
crisp with it. They’re not a sponsor or anything. I
don’t know that. With a K that’s what I was gonna say, chris.ai. I was Googling them earlier today, man. It just keeps coming up in conversations about how good it is.
Alright.
let’s go then, onto how you got your first customers had told media.
Mike: First customers, the early days, that was the, that was the fun days working out of a basement. So, Well, when we got our first customers, we were working out of a basement. I’m just totally grinding at the time we were still working on like and stuff. and we, I think we got our first customers from Thumbtack.
I don’t know if you’ve ever used them tack or not, but I remember we got, our first customer was a $600 website. and it was like, I can’t remember what we actually built, but we use Squarespace cause they were on Squarespace. We had to use that. Then our second customer was the WordPress site, another $600 client that was through Thumbtack.
Our next customer. We started increasing our prices. So then we got to like 700 bucks, 1200 bucks, and then I started testing other things. So. The next contract I got, this is going to sound crazy. I don’t know if you’ve heard of shaper, but shaper is like Tinder, but for networking now there’s like other really cool things like lunch club.ai.
I know Bumble has Bumble biz, but shaper, I don’t know if people still use it or not. I haven’t used it in quite some time, but, It’s again, Tinder for networking. I got three or four leads through shaper. We signed a $12,000 contract through shaper. We signed a couple like, like multi thousand dollar contracts to shaper.
So he got some of our first clients through there. and then the next contract I believe was, like through my network. So it was like, When I was at Penn state, there was something called a man. I can’t actually remember it. There was like an entrepreneurial, like we’ll call it like incubator there. and someone had introduced me to someone who wanted an app built.
We built them an app and the third contract was also the next country after that was through network. and then all the contracts after that were all through warm outreach. So back to the main question, that’s how we got our first contracts. And we were able to leverage portfolio our portfolio that we like built parking meter that we built Happify.
anything that anyone on our, our internal team had in their portfolio, we threw it, there.
Andrew: What’d you get the team,
Mike: so. Yeah. So, let me think. So my first co-founder for parking B, I met it’s something called three-day startup. at Penn state, it’s like for a weekend, all you do is build stuff and like you build a company. And, I went there and I was like, I pitched parking and I was like, Hey, raise your hand. If you’re a developer and everyone that raised their hand, I was like, you all need to join my team and, and have developed app developer.
In quotes joined my team. He had only been like coding in Swift for like a month or two. So, but like you told me, he’s an iOS developer and we’re, we’re really good friends now. and we’ve been great friends since we started working together, but he, he was my, my first developer. And then from there we had like an internship.
and I was like pitching to a lot of clubs that like, we have this awesome internship where you get to work with like a startup and, and code and do all this stuff. So we got a lot of people through that internship that we offered. and then my next co-founder. I wanted a really good engineer and he ended up interning with us, but I like talked to a bunch of friends in the entrepreneurial space at Penn state.
And they introduced me to someone named Sam, Sam who works with me today. it told media we’ve been working together for like man, like five years now or something. and, he joined our intern team and then he ended up becoming a cofounder cause he was just so awesome.
Andrew: And so it was you getting warm leads to people who became friends. How many of the people who are on your site now, by the way, are.
Mike: We have 16 or 17 full time now and then
like some part time.
so w last year we hit the seven figure, Mark it’s a little bit over a million dollars in revenue, which was like, I wasn’t as excited as I thought I’d be, once we hit the million dollars, like I thought that’d be like a cool number to hit and be like, it’d be like a milestone, but like, I really didn’t care.
I was like, I was underwhelmed by it. I was like, we could do 5 million if we really put the work in.
Andrew: You know, we went, when Mixergy hit a million dollars, we went to get ice cream.
Mike: Yeah. I don’t even think, I don’t even think I celebrated.
Andrew: like we needed to celebrate somehow to just recognize the progress. Otherwise it becomes kind of like a kid who grows and you don’t notice the growth, you just watching it every day,
but you get there.
Mike: Oh yeah. Yeah. We, I would say our net operating is like, It’s hard to know the exact, so the real net operating is probably like 30 plus percent, but there’s a lot of things I do to like, reduce that for tax purposes,
Andrew: Okay. So that means at least $250,000 in net profit.
Okay. Yep. Right. And then I know as a business owner expenses that are kind of business, kind of, not a really business because everything is business at
Mike: Oh, yeah, dude, you don’t even my dad’s an accountant, so I know every loophole. So like, so it’s like here, here’s one of the things I did. So, one of our, so like we have, we have the business told media and then we structured another entity in Columbia. And the entity in Columbia because we have an office in Columbia and Midean, the entity in Colombia is on a cruel basis.
We’re on cash basis. So at the end of the year, I sent about $50,000 to Columbia, to reduce our tax bill and that on a cruel basis, this company cash basis. So we were able to reduce our tax bill by like around $50,000, just by
doing that at the end of the year. Yeah. So our president of South America handles all that stuff.
but yes, the, the taxes in Columbia are actually kind of crazy, especially with like payroll taxes.
yeah. Yeah. We, we, so again, we have. Our president of operations for South America. He handles a lot of all the tax stuff there and
Andrew: who owns the company. You do got it. All right. You know what I noticed that bigger businesses obviously do that. They, they spread out and then they fund, or they, they funnel expenses wherever it makes most sense
Mike: I’m a tax nerd. I should start an accounting pro
Andrew: I would think. Give me more. Give me more. I feel like we entrepreneurs don’t talk enough about taxes.
we talk too much about funding and if you understand taxes, then if you’re, if you’re not funded, then you need to understand taxes because it makes
Mike: Huge difference. Okay. I have a really good, I have two really good things I want to share. The first is more fun or sorry. The second will be more fun. The first is realistic. If you’re listening, you need to do this. If you’re doing any type of project work. So. You if you’re making over $45,000 a year, I’d say, and again, I’m not a lawyer.
I’m not giving any legal advice right now. I’ll, I’ll, I’ll do it from my perspective. I would much rather be an S Corp than an LLC for tax purposes, because as an escorp, there is a. Law that says you have to pay yourself a quote unquote reasonable salary and that reasonable salary salary could be 20% of your income.
So for example, let’s just say I make a hundred thousand dollars in net profit, and that’s what I pay myself $20,000 of that. Is the quote unquote reasonable salary salary, which is my salary that I pay self employment tax on the other $80,000 is not subject to self employment tax. So if we’re an LLC, we will pay 15.3%, on that a hundred thousand dollars.
Now there’s some write offs with like the payroll stuff and whatnot, but let’s just make it easy and say 15 grand in self employment tax is an LLC making a hundred K is an S Corp using that, that loophole. We would instead pay $3,000 because our salary is 20%. So we’ll pay 15.3% of the $20,000, not of the additional 80,000.
So instead of paying again, $15,000 in payroll and self employment tax, we only pay $3,000 in self employment tax. And now you have an additional. 12,000 to go build your business, hire people, contractors, whatever it is that money is for you. You’re not giving it to the government and you can, you know, use that to grow your business or do whatever you want with it.
The more fun. One is called again, people, people listening. I don’t know if you’re gonna leverage this or not. You might want to move after you hear this, but there’s a tax law called the F E E tax law. I forget what that stands for. It’s like foreign. I’m actually not going to try to figure it out, but FEI, fie, look it up.
F E I E tax law. And the way the rule works is that if you live outside of the U S for 365 days consecutively, The first hundred and $4,000 of income that you make are not subject to income tax. So let’s say you make a hundred, $4,000. You will pretty much pay nothing in taxes. There’s some rules around this though.
So the first rule is you can come back to the U S I believe for 30 days throughout that three 65. So you can come back, visit family, do whatever you need to do. the next rule is, Just lost my train of thought there. The next rule is that like the local tax. So you, when, when you’re paying taxes, you have local state federal tax, right?
So the local and state tax, you still have to pay. so if you live in an area or get residency in an area before leaving in a place like Austin, Texas, where there is no local and state tax, then you will actually not pay anything in taxes on the first hundred and $4,000. Now, if
Andrew: 5,009, $105,900. It seems like is the number. And it looks like it’s the foreign earned income exclusion.
Mike: That’s it, there we go. And by the way, it was a hundred, 4,000. Then last year, they up it every single year, I think for like inflation. So, so what you could do is, again, move to a state like Austin or a city, like Austin, not pay any taxes. If you make over a hundred, $4,000 in income, you just start at the lowest bracket.
So let’s say, let’s say I make. Let’s say I make $204,000 in income. I will pay the hundred thousand bracket. So I’ll start at zero and pay whatever taxes until I get up to a hundred K. So if you want to save like 40 grand in taxes or whatever, based off what you’re making, like that’s, that’s something really interesting to take,
Andrew: I was going to say, the other thing that I notice is people are just moving to Texas. They’re leaving California. If they have a profit going to Texas, you’re basically you’re reducing your expenses. And to move because you’re reducing your taxes too. Right? You don’t look at how much.
Like look at how far you’ve come look at. How much know look at how far the business has come. You finally have a hit dude. What are you doing? Taking a year and saying, Hey, go off and start from scratch and live in an RV park. Aren’t your people pit.
Mike: Yeah, man. So my, my people are, they work at, told me, or are excited about the project. so what ended up happening was, I always wanted to help other entrepreneurs, like like legitimately like on a Friday night
instead.
But no, I enjoy, I enjoy, I enjoy doing that. So, so
Andrew: Do you enjoy and your free time, but these people, they count on you now you’re going through a recession.
Mike: yes. Yes. So right now the client works good. Like we have clients right now. Everything’s good with, in terms of clients, client work, I have not replaced myself from a sales perspective though. So right now we’re hiring someone to handle all the, the actual growth in sales. but in my free time before doing this project, I’ve spent a lot of.
Almost all my free time, on, mentoring entrepreneurs, because I’ve gone through so much stuff through my career. That’s very avoidable that a lot of people go through. so I like to give back in that way. So I always wanted to like help other people that are, you know, figuring out their entrepreneurial journey, then covert hit.
And when covert hit, I saw what it did to close friends that run businesses and they don’t run businesses and like the depression and like true anxiety that it’s caused. some people that I know very closely, one individual specifically couldn’t even collect unemployment. and wasn’t just a really bad situation.
And like I was trying to offer advice, be helpful if I could. and what I realized is like someone like that person who couldn’t collect unemployment, Like his thought process after like talking to him was like, dude, like, this is easy for you to say. Easy for you to say, you run a business, that’s doing okay.
You have whatever many employees, et cetera. so I was like, you know what? This is the most perfect situation to like, like the best time, even though it’s also the worst time to like go and jump into something like this and be like, I’m giving up everything. And if you’re struggling right now, I want to do this together.
So like, The goal was to really inspire people that are going through hardship. Right? Yeah. And not just say like, Hey, watch me do this. Like, I know how to do everything. It’s like, look, I’m three weeks in right now. And I’m not where I want to be. Like, it’s like, let’s struggle together. The thing I do know, I’ll show you the things I’m learning, I’ll show you and, very possible, like there’s new opportunities right now.
So like, what I’ve realized is. Right now is actually one of the best times to reinvent yourself whether that’s being an entrepreneur, whether that’s making a career change, like a lot of people that I’ve talked to they’re at home collecting unemployment. And they’re like, do I really like my job? I always wanted to do this.
Well, why don’t you do that now is such a good time to do that. So, the goal is for people that want to start their business, it’s a great time to do it. I want to help you do that. I want to, I want us to get through this together. And again, I think, I just think there’s never going to be a better time than right now.
So I figured let’s do this. And I woke up on May 25th, came up with the idea may 26, committed to doing the idea. And then I actually saw you interviewed Sam Parr. I posted in his group in trends about this idea. And it kind of, it was one of the things like the second, first or second, most engaged post ever in the group.
And then Sam went in, tweeted it and it got a ton of response. And I was like, Holy shit. I need to hire people now and get a website up. And I was like, Oh my God, like, I really need to get going with this. And then from there, just like, I was like all in like had to go a hundred percent all in, not turn back and,
Andrew: Well, when I heard about it, I got excited about it. I said, this is the thing I need to talk about. I, I’ve got to talk about, stories that are much more present to people who are doing things that are much more daring, but I also want to know that it’s not somebody who just has a random idea that could give up on it next week.
And so. I’m excited that we were able to do this interview. Anyone wants to go and follow up and see how Mike has is doing. And he doesn’t go by the name, Mike, even in this project. So you’ll
Mike: you know what I do now? I do. I go by, so I had a bad experience with the whole Scott. I was going with Scott Black. I was so one of the first steps is reaching out to mentors and I was going to originally started cleaning business. I reached out to someone that run that ran a, or runs a seven figure cleaning business as Scott Black.
And he found out that my real name was Mike Black and thought I was like a scammer and it was a bad experience. And I was like, I don’t feel good about this. I don’t want to be Scott anymore. So I changed my name to Mike Scott, like the office, Michael Scott, because at least I can use my first name and a lot of people on Facebook anyway, like will like not use a real last name.
So
Andrew: Okay. All right. Well, I didn’t realize that on the site, but I have been following along and anyone who wants to go follow along, you know, his real name is Mike and it’s Mike black.co Mike black.co and whatever form of a follow along you want. He’s got, you got a podcast, right? I know. You’re great with YouTube.
You’ve got a crew that’s following you around. And you blog and the whole works. It’s on Mike black.co. Did I say.com before? no.co
Oh, I, I liked doco and and I want to thank today’s sponsors made this interview happen the first, if you’re building a website, if you have an idea and you want to just start to implement it, put it up and see how the momentum just builds.
Go to. Host gator.com/mixergy. And the second, when you’re ready to hire developers, really top of the line, top, top developers go to top talent.com. That’s top dot com. If you throw a slash Mixergy at the end, they’ll give you a great deal that nobody else is getting. So that’s dot com. Slash M I N E R G Y.
Top towel.com/mixergy. I am going to go deal with the three year old dude, stop screaming. I bet
Bye
Mike: Hey, Andrew was great talking to you, man. This was fun.
