- Hey there, Dan Martell here, serial entrepreneur,
investor, and creator of SaaS Academy.
In this video, I'm gonna share with you the most vulnerable,
real, talk about the numbers, talk about the situations.
I speak all over the world in front of 1,000s
of entrepreneurs every year, and I always get,
typically the first question when we get
into Q and A which is what are some
of the mistakes you've made along the way?
There's so many that I had to break them down into decades
to really concentrate my focus.
So right now, I'm gonna do what I learned in my 20s,
or the biggest mistakes and the lessons learned from those
to really give you as much as I can.
Be sure to stay to stay to the end 'cause I'm gonna share
with you how to get access to a training I created
for my clients called Silicon Valley Secrets.
I got the privilege of spending five years
in San Francisco learning what makes the fastest
companies grow and I share that in that training.
We'll do that at the end, but before,
let's get into biggest mistakes in my 20s.
(upbeat music)
Now, before I get into the five biggest mistakes I made
in my 20s, I want to share with you what I looked like at 20
and where I ended up at 30.
At 20 years old, I was literally
trying different business ideas.
I was involved in a startup.
I was working full-time and the only job I've ever had.
I worked there for nine months called OAO Technologies,
making about 60,000 a year,
working for free at this startup.
It was 99, 2000 timeframe,
so I was in the thick of the dot-com boom,
and I was aimlessly trying to find something.
I was a software developer, and pretty much I just kept
on this journey of just building stuff on the side,
working for a startup, talking to my friends,
but like doing things, but with no strategy, no focus,
no aim, and over the years, I started consulting.
I got a job, and 2001 happened, 9/11 happened,
I moved out West, literally.
You know, it was a longer story,
but I went from aimlessly trying to figure out
what I wanted to do in my life to by the time I was 30,
I was a multimillionaire,
I had sold my third company.
So the first two were complete failures.
My third company was Spheric Technologies,
exited that when I was 28 and moved to San Francisco,
and started Flowtown at 29.
So pretty much in a decade, I transformed my life,
and there's this great quote that I've heard
from different people, I don't who the source of the quote
that is, people overestimate what they can get done
in a year and they underestimate what they can accomplish
in a decade, and this is just real perspective
from my experience.
These are the five biggest, most expensive mistakes
I've made in my life in my 20s.
Number one, slow to build team.
Here's what I mean by that, and when I look at most
of the mistakes I made, they were all people-related.
So slow to build team is for many years, from 17 all the way
til I was 24, I was a lone developer.
I was doing things by myself.
I would join people on their journey,
so this like tech startup in the dot-com bubble
that I joined, it's called I Think Interactive,
it wasn't my vision.
I think I got like three or 4% of the company.
Never ended up getting that percent.
Longer story there, but what I realised is now
when I start a company, day one I'm hiring.
I'm building the team.
I'm way above revenue, and even if it's just convincing
one other person to join me on that journey, it's just,
I really think what I've learned is having other people
I'm committed to, having folks that complement my weaknesses
is just such an invaluable thing to have as part
of building a team, and for me it cost me
probably $10,000,000 and when I look at the opportunity cost
of waiting too long, until I was 24, so 20 to 24,
it's four years, I could've built Spherical a lot sooner,
I could've hired people, I could've took the risk,
I could've convinced cofounders to start the business,
but it probably meant $10,000,000 in opportunity cost
in a 10-year period by not building advisors
and people around me.
I was just way too slow to build the team.
Number two, hire and ignore.
So now all of a sudden, I'm 25, 26, I've hired some people,
but I finally feel like I need to hire a big gun,
somebody who's been there before.
I've got Procter & Gamble as a customer,
and I hired this guy to essentially run
the technical leadership of this big project, and the reason
why it was a big mistake is because Procter & Gamble
actually allowed us to not only build the technology
for them, so they paid us,
but we retain the intellectual property.
It was customer financing at its best.
We'll pay you to build this thing for us
and we're okay if you own the intellectual property
and go sell it to other people,
and I was so busy just trying to grow the business.
We grew 150% year-over-year, so that was cool,
but I hired somebody that was senior to me,
had been doing this for 15 years.
I was 26, 25, 26 at the time, I felt young, inexperienced.
I just felt like he'll be able to do this better than me,
so send him over there.
Four months into it, I get a call
from the lead at P and G and they're like,
this person you sent over is embarrassing you.
They're not following up on anything.
They're creating conflict amongst our team,
and unfortunately, they're just not gonna be able
to stick around.
That mistake, you know, on paper cost me probably $250,000
'cause I lost the opportunity and I had to pay for salary.
Suddenly the guy quit and he wanted a six figure salary
and I mean, it was a cluster, and the biggest lesson
I learned was don't hire and ignore.
Don't hire and delegate.
Don't give away and never verify
because that's what I didn't do.
I thought, this person's doing well.
I don't need to pay attention.
I'm gonna go focus over here, and if I would've just built
at least a weekly touchpoint, 15 minutes with the customer
and or that lead, I would've discovered the problem
in near real-time and it wouldn't have gotten so bad.
So I don't make that mistake anymore.
When I hire somebody, I'm checking in, I'm spot-checking,
I'm checking their work, I'm making sure that they know
that I'm paying attention.
As my little boy Noah does, he does this to me
because I do it to him all the time.
I'm looking.
I see you doing that thing, right?
It's just a really important thing for any leader
to let their team know that that's gonna be part
of delegation so that they know to do their best work.
Number three, being everyone's friend.
When you're in your 20s and you're hiring other people,
and the first set of people that I hired
when I was building Spherical were 22, 23.
I was 24, and I wanted to be their friend.
I wanted to have fun.
I wanted to build cool stuff.
I wanted to make sure that we had the revenue
to support building a bigger team
'cause my mission was actually to create a company
where I enjoyed going to work.
My mistake was that instead of being the example
of what I'm asking them to do, especially with customers,
I was way too loose.
I was way to playful.
I couldn't hold them accountable.
I didn't hold them accountable, and it was 100% a reflection
of just how I was that showed up in my team,
and that backfired me big time.
I ended up hiring somebody that on-site with a customer,
they chatted about the weekend, the literal,
the excursion they were having over the weekend
which involved drugs, it involved a strip club,
it involved getting incredibly drunk, and oh, on top of it,
talking crap about the client, the customer,
our customer, talking crap about them.
They got picked up by the security team.
It literally almost cost me my company, and when I look
at that mistake, like literally company-killing mistake,
it's because I was trying to be friendly with anybody
so I wouldn't reprimand anybody's behaviour,
and I couldn't reprimand their behaviour
'cause I was probably just as guilty of doing that
or being playful or not being as serious
as I probably should be for the type of clients,
Fortune 500 companies, that we were working with
and the type of work we were doing.
We were touching their core infrastructure pieces,
a bunch of 20-year-olds, and we were acting like immature,
spoiled, entitled technology people,
and that reset my whole perspective.
Changed my approach, changed my leadership.
I wore a suit and tie everyday to work from that point on.
I wanted to just put the suit on,
wear my, that was my alter ego.
Todd Herman, shout out to you.
He wrote an incredible book called "The Alter Ego Effect."
That was my suit and cape, you know?
And it allowed me to know that when I was in that,
I was there representing what I wish everybody
would represent to customers and I had to lead by example.
Number four, selling too early.
This is a funny one for me to admit
because I sold my company, Spheric, in May of 2008,
and even though I'm saying today I sold too early,
'cause I would've taken a different approach.
Knowing what I know today, instead of selling the company,
I would've hired a CEO.
That being said, the world crashed in September and October
and the company that acquired us had
to lay off 60% of the staff.
So had I brought in an external CEO, kept the company,
had them run it, I still would've went through all of that,
but here's why I say that 'cause today with perspective,
I would make a different decision
because as the world resets and has incredible downturns
in the economy and all that stuff,
I realised at the bottom is the best place to build up.
So I started in 2004, so crash of 2001,
started Spheric in 2004, and I built it up
and sold it in 2008 at the height.
Perfect, sounds like I'm a genius.
I'm not.
Pure luck, but the, and here's the big reason
is the cashflow from that business,
it was an incredibly profitable business,
hence why we got acquired in the multiples in the technology
and the focus we were in in the market.
I probably should've, I definitely should've hired a CEO,
kept the business, run it, if we had to downsize,
we'd do that, and then make another go, 2009, 10, 11, 12,
and I probably lost about four X the potential value
of keeping the business as an asset 'cause it was producing
positive cashflow better than I could get in the market,
and I've learned this since reading simple numbers.
Greg Crabtree, who's now my CFO,
so he does all my financial modelling,
he wrote the entrepreneurial book for financials
called "Simple Numbers," and in there he talks about
if I sell the business for whatever, if you sell a business
for $50,000,000 and you take that $50,000,000,
you put it in the market, and you're only generating 6%,
10%, but if you kept the business, hired a CEO,
paid them $500,000 a year, but it generates 20% profit
on that level of volume and you know the business and yes,
there's always market risk, it would've just been a better
opportunity to keep it, hire the CEO,
and that's what I do today, but I didn't know that then.
Yes, it was an expensive mistake
and it gives you perspective if you're in that position.
If you have an agency and you're building a SaaS business,
it might make sense to hire a CEO,
not make any profit anymore, so you're not allowed
to take that $250,000 salary
'cause you're going to do the SaaS thing.
So maybe you've gotta take a 60,000 salary
and go do the SaaS thing, but this will grow if you bring
in the right talent and over the next five to 10 years,
it'll be an incredibly valuable asset.
Number five, investing to save.
What I mean by this is I invested
as an angel investor since I was 26.
26 years old, had a few $100,000 in the bank account.
I wanted, because the company finally started making
some profit, and I wanted to start investing, and you know,
initially I gave my brother some money
and that worked out really well, and then I just thought,
hey, maybe I know how to pick entrepreneurs.
I see all these people starting companies
and I want to support them, and I literally found companies
that I think had potential and I knew that
if I was involved, they would be successful,
but the mistake was is I only invested
because I thought I could save them from themselves.
I thought if I brought my perspective, my approach,
that that would be the catalyst
for this thing to be big and successful.
What I've learned since then,
'cause I've probably lost $1,000,000, I invested $1,000,000
of my own money into different businesses, made the mistake
of investing 500,000 in this company and 100,000
in that company and 50,000 in this person, and it was never,
this is what I learned through one
of my mentors, Naval Ravikant from AngelList.
I moved to San Francisco and he totally changed
my perspective on angel investing, and the big thing was
is you should invest in companies
where they'll be successful regardless
if you give them money.
I now invest, one of the deals I did recently, Pela,
they're a biopolymer for phone cases
and they make sunglasses, et cetera.
Pela Case, and Matt and Brad did not need the money.
I literally, they're good friends of mine.
Brad arguably is one of my better buddies.
We do a ski trip every year together.
We've been doing it for five years I think now,
and I begged to be in there.
I said, are you guys gonna raise money?
Let me invest, let me invest.
That is my new approach that if you're thinking
of investing do not give money to your cousin, your brother.
Rule number one of investing that Warren Buffet talks
about is don't lose the capital.
Step one, do not lose your money.
I know you're like out travelling
and you eat at a restaurant and you're like, man,
we need a restaurant like this in my city.
Don't do that.
Invest in things that will make money.
If you want to give somebody money
as a philanthropist, go ahead.
Go be the entrepreneurial philanthropist and invest in stuff
that will never have high value, potential of making money,
but if you want to really do proper angel investing,
the way I do it today is find the companies
that don't need your capital, work hard to get
inside those deals, and add as much value as you can,
but I definitely made a tonne of mistakes investing
in probably I think there were six or seven companies
until finally I got straight and I made some
of the Intercoms, the HootSuites, the Udemys,
the Unbounce investments that I did further on,
you know, four or five years later in my 30s.
So those are the five mistakes.
So quick recap, in my 20s I made a lot of mistakes,
cost me 1,000,000s of dollars.
Number one was I was slow to build the team.
Number two, I'd hire and ignore the person's productivity.
Number three, being everyone's friend does not work.
You have to set the example.
Four, selling too early.
I should've hired a CEO to run the company and hold that
as an asset, and number five, invest to save instead
of fighting your way into deals
that are gonna win regardless of your involvement.
As I mentioned at the beginning of this episode,
I want to share with you an exclusive training
called Silicon Valley Secrets.
I spent five years in Silicon Valley meeting
with the top entrepreneurs, the top growth hackers,
the Sean Ellises, the Eric Reeses, the Drew from Dropbox,
the Brian and Joe at Airbnb understanding
what made them different and tick and grow.
Andy Johns, you've probably never heard of this person ever.
He's been responsible for the growth of Facebook, Twitter,
LinkedIn, Wealthfront, et cetera.
I share all of that in this training.
Click the link below to watch that.
It is my gift to you.
I rarely share it, so I wanted to make sure that I share
that as we talk about my top biggest challenges,
and if you liked this video, be sure to smash
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when new videos are published every week, and as per usual,
I want to challenge you to live a bigger life
and a bigger business and I'll see you next Monday.
Oh, oh, all right.