About Indestructible Wealth: I’m Jack Gibson. I’m your wealth strategist and I’m here to help you make some money. The Indestructible Wealth Podcast is for young entrepreneurs who want to make, keep and grow wealth to enjoy now, and for years to come.
Episode #43- How to Buy Private Companies Strategically, with Special Guest Patch Baker
Podcast Episode Transcripts:
Disclaimer: Transcripts were generated automatically and may contain inaccuracies and errors.
Okay. All right, everybody. Welcome back to indestructible wealth. Sometimes they do solo episodes and you guys are probably getting tired of those by now because I’ve had a bunch of those in a row. I managed to track down a special guest for today’s episode patch baker with the Mobius company and you guys this is an incredible story.
You’re about to hear where he started and then where he’s at now. He has flipped over bought and repurposed and flipped over 105. Private businesses to this point. And by the time being that this is an evergreen podcast, by the time of you listen to this, I’m sure that number will be quite a bit higher, but he’s definitely a, he’s got the style that you guys are accustomed to with me.
So I think you guys are going to love what he has to say. So pat, thank you so much. First of all, for being on the show and for your expertise share willingness to share, and you got a man. All right. Cool. So pass, start us off, how did he get tell us a little bit about your background, whatever you want to share, man.
Yeah I was in the Marine Corps 14 and a half years. Did did a lot of really cool stuff there. However, when I got out, they taught me how to be a good Marine. They didn’t teach me how to be a good civilian. So fell on my face. After that I got into marketing and, built an agency.
It was, pretty successful at that. And then I got into the world of acquiring businesses and the whole, my Mo is basically acquire company, grow it, scale it, exit. That’s basically the gist of what I do. And I use my marketing company instead of having. A bunch of other clients. I just use my own companies as the client list.
So I have 49 now. And just keep acquiring them. We’re acquiring about four to five, a quarter or so. And just keep ramping that and we were talking a little bit before the show that, everything is on sale right now. This is two things that are happening in the marketplace. As far as business acquisition goes, is everybody wants to sell their company if they’re young, or if they’re old, everybody in the middle they’re trying to hang on and scale their business.
And those are the people that don’t even know that their business is for sale because to them it’s just become a job, they’re building a company, they might be a company owner, but it’s just the job. That’s their normal routine. Eventually, they’ll start thinking about selling it. About half the companies that I’ve acquired didn’t even know that they were on the.
But I will tell you, everything’s on sale right now and has been for definitely since 2020 COVID really kinda messed a bunch of people up and quite honestly, because there are some people that own businesses that should not be business owners they’re technicians.
But they use COVID as a big excuse on why things weren’t working now. I’m not saying it didn’t affect everybody. Obviously restaurants had a hard time, but there’s other restaurants that were like, Hey, we have curb up service. There were other companies that, figured out ways to be expanding when everybody else was contracting and how.
Started, this is a unique field. Like you’re the only person that I know that buys private businesses and repurposes. So when you get out of the military, I’m sure your thinking or your life at that point was like, man, what do I do now? I was trained how to be a killer. I was trained how to be successful in that, like in that line of work, so to speak.
And now I’m in the civilian world. I don’t know what to do with myself. I know other people that have come out of the military and it’s a very tough transition. What w what happened for you? Yeah, that, that’s exactly what happened. I fell on my face. I got fired from my first two jobs because I just didn’t know.
I didn’t know the language. I didn’t know. It’s funny. If you come straight out of high school or straight out of college and you go get a regular civilian job, there’s some leniency that happens because people can say, oh they’re right out of college or they’re young. So they’re willing to help you in my case though. I did not have that because I’m now 35 years old. Sure. Like you don’t get that exterior. That leniency. Yeah, exactly. For me I really had to adapt in a world that I didn’t know, common practices or principles. For example, I didn’t know what HR was now.
That seems like a really silly thing. But I joined the Marine Corps when I was 17 years old. I had never had HR. So like I D I didn’t know what punching a clock really meant. Like I thought for the longest time I thought punching a clock was like a euphemism for you don’t care about time. You work until the job is done.
Punch the clock, break. It don’t worry about time. That’s what I thought punch a clock meant. And I really did not know how to operate. And I did things like I said, yes, sir. No, sir. Yes. Ma’am no ma’am things that I thought were manners, which other people took offense to. And it didn’t make sense to me.
I was just, I was like a fish out of water. I did not understand the nuances of what everybody else says the real world when I was getting fired, by the way, at one of my, one of my jobs The HR lady said welcome to the real world as though overseas, actually fighting a war was not the real world.
That was all fake land, but so it’s just, it was weird and it was hard for me to understand where they were coming from, and it was hard for them to understand where I was coming from. And I failed. So I got into the entrepreneur world because I needed to build a system and a world that I could live within.
And that’s why all of my companies are based around the military process and the military systems that I grew up with. And that’s where I feel comfortable. And I feel like when we’re comfortable and we’re where You accustomed to how things are supposed to run. We are much more aggressive in growth and in scale, and we have a much better mindset and attitude on how we approach things makes us way more effective less busy being busy and more efficient being effective.
Those things really matter. You want to see somebody that’s down and out, just go to anybody that doesn’t like their job. And they suck at their job. Like even if they own the business, they still suck. They are not effective at growing the company. And because the barrier of entry. To being a CEO is nothing more than going down.
And, you don’t even need to get an LLC these days. You can just go down to your local city hall and get a business license and wallah. You’re a CEO. And that is unless you work for a big company, most CEOs are either solo preneurs, or they, just scraped by having an existence.
And that sucks. So you’re a military background really help you in terms of, so it hurts you temporarily, right? When you were trying to work for somebody else, but in terms of being in doing what you do and entrepreneurial. That it’s made sounds like those disciplines and those structures and all the systems really have made a difference.
For me, the hardest part about being a civilian coming directly out of the military is that in the military, every single thing that you could possibly want to do is an, a technical manual on the wall. If you want to learn how to drive a truck, it’s right there. If you want to learn how to, turn on a radio and talk to somebody else manuals right there.
If you want to know how to put on your uniform, there’s a manual, how to walk in formation. There’s a manual. There’s a manual for every single thing that you could possibly want to do in the military. Everything from tactics, techniques, procedures, strategies processes like every single thing.
Right there in a book. And by the way, you have a peer group around you where everybody is the same rank. Everybody should know about the same things. They you can follow the crowd and fit in. I’ve run a lot of miles. I have humped a lot of miles. I have swam a lot of laps. I have climbed over lots of walls and jumped out of perfectly good airplanes because I could just follow the crowd.
I didn’t want to be last. I tried to be first. I wasn’t always first, but then everybody was going the same way with the same mission, which brings me to the next point, which is every single thing that you do in the military. There’s a clearly defined mission. There’s clearly defined commander’s intent and there’s a clearly defined in-state.
You know how many entrepreneurs are out there, just swinging for the fences all day long and have no idea where they’re ultimately trying to go have never written it down on paper, because if you don’t write it down on paper or put it on a computer screen, if you can’t write it out, nobody else can follow it.
If you write it out, you can say, this is my plan. Refer back to this. Anytime you get lost in your day to day activities, just refer back to this and everybody’s pointing in the same direction, going the same place at the same time. Albert Einstein said, if you can’t explain it to a six year old, you don’t understand it enough yourself.
If you can write it down and you can put what’s in your brain because a lot of entrepreneurs they’re actually, they’re their brain smart in, in the high level stuff. Like they can say, this is my ultimate plan. They can speak to you intelligently for an hour about where they want to go. But as soon as they try to start writing it down, they get lost, which also means their team has lost.
So focus on writing that stuff down. This is where I want to go. This is the mission you’re going to set out on the mission to make five sales every week. Your commander’s intent is you’re going to use this email sequence. You’re going to use this method to reach out on LinkedIn. You’re going to use this script.
When you talk on the phone, you’re going to use this pitch deck. When you get them on a zoom call, this that’s all commander’s intent, how you want it to actually be done. And by the time you’re done in-state by the time you are done, you will have sold five widgets. This one. It’s clearly defined if in doubt, refer back.
Now the cool thing about that is you can implement that over and over and over and over for bunches of different people. You can bring on salespeople. Won’t one ramp the other. If everybody is having the same problem, then you adjust the system. The commander’s intent part. If nobody is having a problem, except for one that’s a him problem or her problem, and they need to be off the team.
It makes everything just black and white math problems. Sure. The most valuable skill as entrepreneurs be able to solve problems. But if you can’t clearly see the problem because nothing’s written down nothing, there’s no system, there’s no process one. Guy’s doing it one way. One, girl’s doing it another way.
One of them is successful. One of them is not, is that because of their system and process, is it because of their attitude? Is it because of their, some skill that they have or some leverage point that they’re using that the other one doesn’t have. You’ll never know. So if you’re not writing it down and qualifying some kind of known outcome system, there’s no way to adjust it.
Now, if you take that and directly correlate it to military systems and processes, there is a known outcome. If you do these steps in this order, the radio will turn on. If you do these steps in this order, You will be able to talk to somebody with that radio. That’s pretty simple, right? If you think about it, the military is the biggest corporation on the planet, but they also have a mission that cannot fail, meaning they have to be at a hundred percent readiness to go anywhere in the world at any time to face anybody for any reason all the time. And we sleep peacefully at night because we don’t have to think about some invading force, we don’t, it’s not even a thing that we think about.
Sure. But the military system is also set up with the understanding that people are going to do four years and leave. Two of those years, or typically training two of those years are actually productive work. So if that’s the case, How did they rotate people base the base and in and out of the military and still maintain a hundred percent readiness?
It’s because the systems and processes are there. And there’s some aspect of decentralized command because you can send a unit out from their normal location and they can still operate at a hundred percent. So that’s what I did. I built the system where most people were talking about working in their business or on their business.
So they’re either, it’s the whole E-Myth right. You’re working in it. You’re a technician you’re working on it, your manager, I think that’s all antiquated bullshit. I think there’s another level where it’s working above your business, where you have other people that are working on managing it, and you have other people that are working on in it.
And the cool thing about that is you become a consultant for your own company. Let me tell you another little secret that no consultant on the planet wants you to know. And it’s the way that consultants are most effective is they’re not stuck in the day to day. They don’t have an emotional tie to the COO the guy that’s super cool, but he sucks at his job because those are the people that keep their jobs forever.
Even though they suck they’re subpar performers, they, a consultant comes in and they’re like, okay, what are the sticking points? What are the rub points? What are the pain points? What are the areas of opportunity? The reason that they can see them is because they have no affinity to the process. So if you build a process that sucks and everybody’s sticking to it, because that’s the way it’s always been done.
Guess what? It’s still socks, but a consultant can come in and be like, Hey, you know what, if you tighten up this thing and you tighten up this thing and we tweak this thing a little bit and adjust this thing a little bit and change this, and we’re going to add this and the system, all of a sudden becomes 80% more effective.
Is it the fact that, should the entrepreneur or the CEO be pissed off that this guy came in and changed everything up and, really want to stick to the old plan because it’s egos, attached to that old plan that he spent his, a lot of time and effort and energy on. Or should he just be thankful that he’s got a new system that has 80% more effective?
It’s the ladder, right? Cause he goes, I have no business and business. It’s okay to have a healthy bit of confidence and it’s okay to be cocky a little bit. If you are the best in the world at something or among the best in the world, it’s okay to be a little cocky on that. But you can’t be attached to things that are becoming antiquated.
And unfortunately, because the most successful business books were designed on companies that were built in the, seventies, eighties, nineties, early two thousands, they’re the most successful. And I’m not saying that none of the books are valuable, but I think that they teach systems that are way outdated because we have this cool thing called day.
I can be all things to all people with the power of the internet and automations and all that kind of stuff. And I can break that down very serious. Very simply. Let’s say I have a Facebook ad. That is a video that goes to a landing page that gets people to sign up for an appointment. That could be a dentist or it could be a chiropractor or it could be a gym or it can be a roofer or it could be a plumber, right?
It could be all kinds of things. If I figure out how to get it to work for dentists, I can go out and say, Hey, I’m one of the best dentistry marketers in the world. I can go do another video. This is I’m the best chiropractor appointment, setter and marketer in the world. I can make sure that the dentist never sees the chiropractor video and the chiropractor never sees the video because I can exclude audiences. So that means now I can be the world’s best at one thing. And the world’s best at another thing simultaneously. That means that can be all things to all people. There’s no reason to niche down because niching down is one of the most overused, misunderstood areas.
When people are trying to focus on their business, it is absolutely nuts to me that people are still talking about niching down. The riches are in the niches. That’s bullshit. Who had a lot of riches in the niches, blockbuster, where they go on toys, R us, where are they all worse? Like the Roanoke is five.
Maybe the list goes but. I’ll tell you what they had their market nailed. They were the Walmart before Walmart, right? They were insanely popular. It was, you actually said, it’s kinda like a Coke, you go to the south and you’re like, Hey, you want a Coke? Yeah.
What kind? I’ll take a Sprite. Things go call sodas. Everything’s Coke. But that’s how wars used to be. Woolworths was like, Hey I’m going to Woolworths. You need anything? Yeah. Where are you going? I’m actually going to wars or I’m going to, farm bureau. But that was the store.
That’s what that meant to most people. And, but they niche down. They also went out of business, Sears niche down, they went out of business. So it’s like niching down. Is what happened, what should be happening on a process, not on a business, right? You should be creating verticals and business. You niche down a sales process to sell this person on this thing, but there’s 85 different ones of those in a business vertical.
And that’s what I did. I started building audience verticals and business verticals. People ask me all the time, oh, what niche are you buying businesses in? I’m not, I’m buying businesses that I can grow and scale that ultimately feed an ecosystem that serve an audience. So tell me what kind of businesses have, what kind of businesses have you done?
Is it a 105? Are they all 105 different kinds of businesses or there’s? I have two coffee companies. I have two print companies. They serve different audiences, but it’s still the same audience group. So like in one coffee company, we’re a little bit lighter. We’re a little bit it’s just it’s the yoga moms and the, middle America, non blue collar.
And then another one is super blue collar, super veterans, super Patriot the same, the systems and processes are the same in both companies, but they serve very different audience groups. I’ve got a wooden flag company. I’ve got a steel flag company. I’ve got a CPA firm, I’ve got SAS software, I’ve got websites that are, driving online calculators and got national professional fishing league.
Like there’s all kinds of different ways that you can approach the market. But one thing that I’ve found out early was if you could build the audience group and then you just serve another product to that audience group. You’ve got an unfair advantage because what’s happening is I’m not going out and building all cold audience.
I’m just serving a new product to my existing audience. And they say, yes, then I go build the thing or I go acquire the thing. So it’s much faster, but yeah. Yeah. So let’s say let’s say I’m selling patriotic wooden flats. All right big customizable wooden flags, hang on the wall. So if that works, then I might want to do military wall art.com, which I own.
And we added in canvases to if that works, I have a coffee company that’s specifically targeted to veterans. If they bought a canvas or they bought a patriotic flag, and then I served them a coffee that is based around patriotic ideas, the chances of them buying it is astronomically higher because I’ve already qualified the audience one.
Does that make sense? Like it’s pretty easy and I’m not going out to start up a brand new pixel and a brand new audience group to sell coffee. I’m going to start it out and to test it on the. Within a group that I already own. That means my marketing cost in the very beginning to get this thing to go is really small compared to somebody that’s starting from scratch.
W what do you pay for the businesses? What’s the range that you’re buying a man? Is it based on the earning power of that? So a multiple of their earnings, for example. So they will start following me. If the company is earning a hundred thousand net, are you buying it for three X, multiple, so 300,000, or what does it look like?
Yeah, I’m sure it’s totally, it sounds like it in for zero money down and sometimes I’m raising money and, sometimes I’m using my fund. There’s all kinds of ways that they work and they’re all different. If you going out to acquire a $20 million company, it’s different than a million dollar EBITDA company.
And we talk about this a lot. I teach at Roland Frazier’s epic group and he talks a lot about acquiring companies. I am a student of his and this is not a pitch for him, but he just helped me understand new ways of doing it. And then I came on as an instructor for him, and then over time, I’ve morphed it a little bit more like things that fit better with me and things that fit better with my team.
Again, it’s still always trying to refine and adjust the system and the process to bring those things in compared to what you want at the end. So like some of the companies that I was doing before, I’m not doing those anymore because it I’ve better defined where I want to go. So the commander’s intent changed in the middle, the mission is still acquire companies, but the end state has changed.
So what I do in the middle and how I acquire them as different the companies, are you acquiring with your own funds versus how much have you partnering up or bringing in investor funds to buy? I’ve, self-funded pretty much everything, but I do partner a lot. So I have over two dozen partners now.
And some companies, like I acquired them and then we started something together after that we’ve accepted and used the money to start other things or acquired other things. So it’s a. It’s all over the map. And I’m not stuck doing one thing. Like I can literally adjust as I go as my level hits, as a level up.
Again, I’m not going to niche down. I’m not going to put myself in this in the coin. It’s not even putting yourself in a box. It’s putting yourself in the corner of a box saying, Hey, I’m only going to do this one thing. And I’m only going to do, I’m only going to, I’m going to do one thing and do a really you’ve really messed up your ability to grow exponentially.
When you do that. Okay. So lots of questions for myself. Like how do I. How do you, how do I do this myself? If I wanted to go out and add to my portfolio, let’s say I’ve got crypto, got stocks, I’ve got passive income, real estate. I’ve got my baseline, whole life dividends or bonds. My, my buckets of different risk tiers.
Where do you consider the private businesses in terms of the risk buckets and how do I go do it? Can I do it passively? You can do it passively by getting into a fund. That’s the easiest way to do it. And you learn a bunch by doing that cause somebody else to get into a fund. Do you have a fund?
Yeah, I have a fun. I have the Hebrew investment group. And we’re we launched the hero fund on nine 11 and not 11:00 AM. Nine 11 changed my life and the hero fond, I hope changes a lot of other people’s lives. For the better. Is that for accredited investors or. Yeah, all the ones that you want to be in are for accredited investors.
There, there are some out there that are so we typically launched 5 0 6 BS, so I don’t want to get too technical here. But follow six bees basically are accredited investors that we have some kind of relationship with prior to a person coming into a fund. There are a lot of crowdfunding things out there that I don’t like the crowdfunding model.
Just make sure you guys understood where the difference of what patches, talking about patch my I want to talk about your fund, but my what I’ve philosophy, what I’ve been telling my guys, number one, invest into yourself to increase your own earning power so that you get to earning power up first.
That’s the best investment you’ll ever make. And then you can get into these accredited investment type opportunities where. Bigger returns safer. And unfortunately the way the law is structured with accredited investments, that they are generally better returns and they are generally safer. But yet they’re trying to protect the, the newer earners, right?
That the lower earners, so to speak from protect them from themselves, from making a bad decision, when all reality, it’s, they’re not really helping anything. They’re preventing them from doing these better investments. Those laws are jacked up. It was the Rockefellers and, the people back in the day that said, oh no, you, if you don’t have money, you can’t invest money.
And they got these laws on the books that they really do hurt people. And it’s the single biggest reason for the wealth gap. Everybody thinks it’s entrepreneurship. It’s not. The single biggest reason is because you can’t get high return stuff. If you don’t already have money. How do you make money if you don’t have money in those deals, but there are other ways, you can go with some of the reggaes and some of the other things that can help you do that.
And most of the time, the seed round from that was done by a credit and investors that have massive portfolios that know it’s a good deal. And then you just got to follow them around. If there’s no accredited investors in something, don’t do it. Especially if you don’t know what you’re doing, but I know people that have stocks, they have no idea how the stock market even works.
Like they zero idea, but somebody told them to buy Amazon and Tesla and they did. Yep. Okay, great. That’s a great investment. Even if you don’t know what you’re doing. Tesla, Amazon great stocks to have somebody that actually knew about the stock market told them though. And that’s the same thing that I feel about some of these investments is if you don’t know, go hire somebody that does know or follow along in the footsteps of somebody, something that started out as a 5 0 6 and then moved to a reggae because, in order to start it, you had to have a bunch of people that understood what this thing was doing to make money, come in on the seed round or the eight round or whatever.
So I’ve done that myself. I’m in, I have investments in companies. I’d literally have no idea what they do, but the people that were in first, I know them. I know they have a lot of money. They put a lot of money in. That’s good enough for me in a lot. And most cases, what are your thoughts on for people that are not accredited yet?
Should that be a super hyper-focus for them to get their income up into that bracket so that they can participate in investments like this? So I have a different strategy than what most people believe. Let’s hear it. So I say if you own a business cap yourself at $70,000 on salary, but with salary yeah.
For tax purposes, for sure. Do not take, if you could make one 50, don’t take one 50. You’re paying FICA, Medicare security on all that, but you don’t need to have, you don’t have to do that. I’m not a tax professional. I am not an attorney. This is my disclaimer. This is just one guy talking to another consider scuttlebutt until you talk to your local professionals.
But I say take only the mountain that you need to live and live comfortably, live, run as many things as you can through your businesses. First. As expenses as you can, legally, ethically, morally, financially irresponsible. But don’t take more than like $70,000. Even if you live in California or New York city, don’t take more than $70,000.
If you are married and you have kids, maybe you push that to 90, but don’t go above that. The next pay raise that you should get is when you can pay yourself two 50, don’t get in that a hundred to 200 mark because it is just tax on tax. You cannot get away from it. So if you can stay at that, let’s say you’re married.
You have a kid. If you could stay at that 90 until you get to the two 50 and become accredited investor. You will love me forever by doing that. The other thing is I wish somebody told me about SPVs before I got started in business, because this is the special purpose vehicles new companies designed to hold different assets would be taxed at different rates.
My, this is a sad truth and us specifically, and US-based education. I did not know anything about money until I had money was already paying way too many taxes. What we’ve all been told is pay your taxes or you go to prison. No, that’s not actually true. I was scared to death the first time that I have had to file taxes after I got out of the military, because the military always did my taxes for me.
It was super easy. They printed out your all of your paperwork. You walk into H and R block, you pay the 49 bucks or whatever it is, and they do your tax. That’s all I had ever known. So when I got out and had to pay taxes on my own, I was like, ah, I don’t know what to do.
And I did the same thing. I’d always done, went to H and R block. Then I started making money still going to H and R block because I didn’t know any better until somebody was like, you paid how much in taxes? Oh, hell no, go to this guy. And I did. And then all of a sudden it was like, oh, the tax code, like this much of it is what you have to pay the rest of the book.
The other, 18,000 pages is all the ways that you don’t need to pay taxes. And people think that’s a bad thing. When you pay less taxes, people think that somehow you’re dodging, you’re not dodging your responsibility to the country or to taxes or to your fellow Patriots. That’s not a Dodge that is not a negative thing.
It is a positive thing because the more money that you can hold, the more money that you can make and the more money that you can hold, it’s actually better for the economy. Then you paying more in taxes, which is a concept that just blows people’s minds. If a person has money, I want you to think about Warren buffet and his.
His wife gave away tons of money to charities. He made tons of money and what he said, and he’s go Google this, or look it up on YouTube. He’s talked about it numerous times. She was really good at giving away money in a way that it actually had the impact that they wanted for that money. He was terrible at it, but he was good at making money.
And the more impact that she had with the money that she gave away and actually, got things done for the betterment and the good of people, the more money he was driven to me. He’s giving away, a ton of his money. Now he’s always said, look, I was really good at making money. She was really good at creating impact and change in the world for the good from it.
So that being said, it’s the same with taxes. People that know how to make money, spend that money in a way in the inside of the economy that is better for the overall growth of the economy than somebody that pays too much taxes. And the government spends that money. Sure. The same is also true. If you don’t have a lot of money, if you don’t know, if you don’t have a lot of money, it’s because you don’t know how to make a lot of money, you paying the government is better than you being able to keep more money because you spend it in the wrong areas of economy.
Entreprenuers the successful one. They hire lots of people. I wrote an article that got a lot of negative and positive feedback on it. And that’s how, you wrote a good article. It’s called building a businesses, just as hard as combat. We want to be polarizing. I don’t think that we do, but we really do.
That’s how it was called building a businesses, just as hard as combat. And what I did was I made the correlation between in war lives are on the line and in business livelihoods are on the line. And I believe that if more entrepreneurs took the livelihoods of the people that worked for them and put that on a higher pedestal, Less companies would go bankrupt.
Unfortunately, I had to breakdown so many barriers of this bullshit that people have told them in their education. Doesn’t tell anybody about money. And I talked to this lady about a month ago, I talked to her and she said, you know what? This all sounds great. I’d like to go talk to my mom. Now, this lady is 30 years old, 30 in her, early thirties.
She said, I like to go talk to my mom. I was like, great. What does your mom do? For work. Yeah for work. What does your mom do? Oh, she’s a stay at, she’s been a stay at home. Mom. My dad worked for a big company and she’s been okay. So let me just get this straight. You’re talking to a business guy that just gave you a business opportunity, right?
You’ve been in business for two years. You don’t know anything about business. You don’t know anything about marketing. You don’t know anything about sales, but your product is good. And I’m saying, I’m going to bring in 30 people to help you grow this business. And you want to go talk to the one person in your life that has no business experience.
Not to throw her mom under the bus, but this is exactly what’s going to happen. And this is exactly what did happen. Mom has this inherent need this yearning as a mother to keep her children safe protection safe me. Take the safest road possible. Don’t give up anything that you have so far, don’t give up 50% equity in your company so that you can get 30 people at no cost to you to come in and grow your business.
Don’t do that. Keep up. That’s what she had to do is give up. So she gets the equity at 50% equity in our company. And I was like a shark. It’s almost like a shark tank deal. No, it’s nothing like a shark tank. I’m not a fan of that. In terms of there, people are coming to those guys, they’re saying, okay, you give me, I’ll give you equity in my business. You give me a cash infusion. So you were bringing in 30 people to help her grow the business. And she wanted to talk to somebody who had no business experience whatsoever. Exactly. Yeah. And she backed out of the deal of course. Three weeks later, which was like two weeks ago I acquired another company doing exactly what she was doing.
And this is three weeks. This is three weeks later. She’s saying, I, I thought about it. Maybe I should go ahead and do this. And I’m like, nah, I thought about it too. And because of the, your mindset, you’re not a good fit for us. So I passed on the deal the second time around, I feel sorry for her because like most people, they care too much about what other people think they have no business having an opinion in the first place.
I’m not saying you can’t have opinions. I’m just saying, would you let me ask you this? Would you spend a couple of thousand dollars on an attorney to help you litigate in the courtroom and then walk in the courtroom and tell him how to litigate? No, you don’t do that, it doesn’t make any sense to them for a reason, they have a specialized skills that you harm for their skills, for their assets, for their knowledge, for their network.
There, there is a lot to be said for the entrepreneur spirit, when it’s wielded correctly, it can change your life. It can change your family’s lives. I’ve paid off, college and bought cars and paid off houses and done all kinds of cool stuff that I never would have been able to do.
If I didn’t become an entrepreneur. On the other hand, though, from the military, I understood one of the coolest things I ever got to do was I was on a general Madison’s personal security D. And because of that, I was able to be in rooms that I never would have been in before. And this guy always seemed to have every answer, but as I was around him more and I got the opportunity to see him in action more.
And I’ve seen him everything from talking to a bunch of Marines and corpsman at the battalion aid station where we had just lost Marines and sailors. I’ve seen him with tears in his eyes, talk to people and I’ve seen him when he’s absolutely just pissed off ready to locate close with and destroy the enemy by use of fire maneuver.
Like I’ve seen him in both realms and the thing that I really took for him and it changed my leadership. It changed my life as a whole and how I approach problems and scenarios. And regular business and in life is every time we were at the table, he always had, his supply guy there and his Intel guy there and his calm guy there and his motor transport guy there, he had all these experts around him and somebody would come in with a problem and he would look to his left and his right.
And he would say, okay, what do you think? What do you think, what you think when you think it wasn’t that it was a democracy, it was not a democracy. He was gaining more Intel about available resources, assets, when, where, what, who, how, why all that stuff. Then he came up with the plan. Sometimes that was, he walked away.
And when I came up with a plan, sometimes it was, he made a decision right then. But when everybody walked out of the room, everybody knew what we were going to be doing. And it made me as an entrepreneur understand that I don’t need to have all the answers. I need to be able to find experts that have the answers and then listen to them when they talk that does not make it a democracy.
I’m still going to take in information. And I might go against what that person said, but at least I’m making an informed decision, right? That’s the same way that marketing happens. We start out with the hypothesis. This is an educated guess. Based off of my past experience, my knowledge, my know-how, I’m going to guess at what is going to resonate with the audience.
Then I’m going to get data back and I make changes. Those changes are now based. In fact, based off of data. Does that mean that data is always good? No, you can have skewed data. So it’s data is a thing for you to think about. And adjust as necessary, but that does not necessarily mean that you have to follow the data because maybe the data bucket is messed up.
Maybe you need to start over. Maybe you need to try it again or twist something, adjust something, tweak, whatever. So it just taught me to think bigger and think more broadly about all of my ideas. Don’t have to be the end. All. Maybe my idea is just the beginning seed that then gets more people involved and the idea gets tweaked and a much, much bigger thing is born than what I started with in the beginning entrepreneurs.
Aren’t doing that most of the time and the ones that are, you can tell cause their bank account reflects it. Yeah. So tell me about patch. I got three questions before we go and we’re. We’ve got to move along for time purposes, but really want to dive into what is your fun look like? Like how does it how does it work?
How do we get involved as an accredited investor return returns? I know you can’t certainly can’t not asking you to go there, but what do you see happening historically and anticipated whatnot? Yeah the hero fund basically what we do is we go out and we acquire companies that have a good product or service, but also Maybe they’re missing something marketing or maybe they don’t have the business skills or the sales experience, or maybe they need a piece of IP or technology that they don’t have, or maybe they suck at building teams or they literally are not doing something right, but it’s not the product or services fault.
That’s what we’re going after now. I have to be careful here because again, I do have a 5 0 6 B, so I can’t openly talk about a whole lot of stuff. But what I’ll tell you is these types of funds. Just across the map, you can Google this. This is not something that I’m saying just for me.
But these types of funds typically grow very quickly and exit very quickly. Unless they’re going to be sold off to some big conglomerate or VC or something like that. So you’ll see basically two types type number one is they just want to build the portfolio. They don’t really care about how long it is.
If you look like a that’s the Berkshire Hathaway model, right? Berkshire Hathaway model is buy stuff, hang on to it. Long-term take the ride. That’s, Coca Cola Geico, like that’s where those things come from. It’s the long play. He is a fairly famous. For his exit of bank America recently that was huge move, but what did he do?
He went back and he took that money and he bought back Berkshire Hathaway stock. I think I haven’t looked at it today, but it’s over $400,000 for a single stock of his, so he’s doing it. He’s doing it in this long-term build big companies hang on for the ride for a decade or two or six and then get out.
But the get out on that is billions and hundreds of billions of dollars. Whereas then there’s another way, which is take a bunch of smaller things and you group them all together in a single holding and then. The goal for the person that started the fund is not to actually exit those things.
It’s to build that portfolio so big that somebody wants to spend a hundred billion dollars on a conglomerate of, 900 companies. 900 companies at, some are 20 million, some are at a hundred million. It’s a big mixture. And then there’s the third kind of hybrid way.
That is what I’m on, which is the combination of the Berkshire model and then the Virgin model. So the Virgin model is a little bit different in that you’re building an ecosystem, richard Branson knew if he could get people to the Virgin islands, he make a lot of money because he had the hotels and the restaurants and the bars and all that stuff.
So how do you get more people there while you buy a failing airline company? You call it Virgin airlines and you run $69 flights down there. How do you get more people to buy the flights, you by failing travel agency and you give people bonuses for selling more people to the Virgin islands. How do you get people to stay there longer?
You bought a failing telecom company, you call it Virgin mobile, and you put in the best wifi and the best cell phone service so that people will not just stay two days. Cause they can’t talk to the outside world. Now they’re staying a week because they have internet and phone and they’ll, they can stay connected.
So that is this ecosystem where. Every single acquisition is building towards that. Even things as small as buying a failing print company. And now you print all of your brochures, your travel brochures, all of your menus, all of your flight materials. That is how you reduce the cost. And that’s what I’m doing.
So for example, I bought the print companies because I wanted to have an unfair advantage in the marketplace and the way that I can do that as instead of using these big print houses, I now have my own and I’m printing at cost. That gives me an unfair advantage. That means my profitability is way, way higher.
It’s also a way for me to sell a company, but then have residual income because they keep using my printing services after they’ve already bought the company, because it’s the cheapest place that they can get them. So it’s like this. Blend of the buy-in hold on. Certain things like printing, like website design, like marketing things that I’m going to use in every other company.
And then applying those to the Virgin model where every single thing is serving each other and using the same audience group and using the same emails and using the same pixels and using the same category of tronches of people that we’ve set up over the years. So what’s the buy-in.
Do you have incremental levels or is it, how much does an investor need to bring to the table to get into the fund? So there, depending on what phase we’re in it can be everything. Millions of dollars all the way down to tens of thousands. I’m a little low hesitant to talk too much about it, because again, it is the segment of fund that I run is not open to the general public.
So I just gotta be careful about that. Okay. There, there are ways for people that don’t have a tremendous amount of money to get into funds, you need to do a little research, go and Google, check, check out some things. But you’re probably, if you’re that low, you’re probably going to be looking for somebody that, that has a fun.
You establish a relationship with somebody that has a fund or you go to what they call a reg a that is basically open to the public. And there’s special sec filings that you have to have. Yeah. I’ve done a podcast for the reg regulation. A-plus deals. You guys it’s called the pre IPO. It’s labeled a pre IPO something or other, I dunno, it’s a few episodes, like episode 30 something.
Yeah. Yeah. Okay, so then that’s fantastic. Okay. Other question I have why not start a business from scratch? What’s the advantage? And I think, you already talked about this, but building a business from scratch right. Versus buying an existing business that already has customers advantage is pretty obvious.
You’ve got a in clientele. They’ve got already got cashflow. They’ve got revenue. What do you see as the, anything else? Maybe not picking up on that’s, why I’ve built and sold five companies from scratch. It is way harder to do that because you have to do a lot of testing where you don’t even know you have to do a lot of building and a lot of hours before you even know if the market’s going to respond to it, it’s either going to be a waste or it’s going to grow.
It may grow, but not fast enough to keep up with whatever your lifestyle is or whatever your requirements are. But I also believe that people typically humans typically they fall to the lowest level of necessity whenever possible, just as human nature. Right? Example. If you go out, if you say in your mind, Hey, I need to make $2,500 a month to live.
You will naturally gravitate and find a business and find a job that makes 2,500 bucks a month. If you say my minimum is $5,000 a month, somehow doing the same amount of work, you find a job that pays you $5,000 a month. Why can’t you say my minimum standard is a million dollars a month. It’s the same work, right?
I’m make a lot more than a lot of people that work more hours than me. Why is that? I’m not necessarily smarter, but my efforts are in a different spot. So if you change your effort to go to places that are already doing something in the market, you skip the whole testing phase. And that doesn’t necessarily mean that you have to have money out of pocket.
There’s all kinds of other ways that you can acquire companies that don’t necessarily mean that you have to have money cash right now to get into a company. So if I have my pick, I will tell you, it is way harder to start a business. You got to come up with the logo, the name, the initial offerings, like the LLC paperwork.
You have to do a bunch of stuff that is just necessary to just get the thing online first. I just, I’ve gone through this for seven months with indestructible wealth. It was, it’s insane. How many little setup details are there? Just to get you into a spot where you can potentially make money.
I’m selling gone I’m seven months in and last night was the first sale that I’ve made and. I’m in a different position. I don’t have to make the money in the business to be able to sustain it, but however, I want every individual LLC, to be able to be profitable and on its own two feet, I don’t want to, I don’t want to take money from another profitable business to keep floating one along.
If you don’t have a funding source from another business, from your savings account, from small sales that you made in test markets, through beta applications, with a minimum viable product, if you don’t have that, Just say you have a hobby and that’s okay. No problem. I did a whole article about it called second shift.
It’s on patch, baker.com. About how, if you’re going to bootstrap one together, I’ll tell you exactly how to do it. I’d tell you, go get three of your friends. Go get a day job that pays the bills. So you’re not living paycheck to paycheck and then eat frigging ramen noodles. Don’t go out. Don’t go to the bar.
Don’t drink. Don’t drive your car 10 feet that you don’t absolutely positively have to keep your gas bill down. Don’t have cable work. You need the internet. You need a good computer. You need to be networking your ass off. That shit is how you get the funds together from your day job. To build that next thing.
And you work two shifts. So you work your nine to five, you get off, you drive home, grab a small bite to eat six o’clock. You go back to work and you work until 2:00 AM. Cause you need to get eight hours in that business. And guess what you’re doing on the weekends, you’re working 12 hour days on this bootstrapping business.
And if you did that, you know what would happen? You wouldn’t drag it out for you. I guarantee you Jack yourself, if you would go for indestructible wealth and you were to put in 60 hours a week plus work a day job, you’d figure out a way that seven months would not be seven months. It would either be three months or it would be on the keeper kill system.
And 90 days it either makes money or I’m not doing this shit anymore. I’m not going to drag this thing out for 10 years for months. And that was during golf season. And so I really would rather have played golf than put in 60 hours in my office. So when seven months I could have done it in three.
You’re absolutely right. So if you do that, what you’ll see is you get traction much faster because then you have to, if you put the livelihoods of the people that work ahead of your own, what happens is you start, they start building the business and you start reaping the rewards. And that happens way faster.
I watch a company and it’s on the keeper kill it’s 90 days. It’s either making money or it’s not 90 days. That’s for everybody that’s working on it. You got 90 days to pull this off. If it doesn’t work, pull and plug. The cool thing about that is I’m not working. I know so many people that have agencies that they’ve been scraping along for four years and they’re like, yeah, I just got to build this business.
What are you doing tomorrow that you haven’t done yet? Because obviously four years in a business that’s not generating income. So last question patch, what you said on LinkedIn, you made a post just a couple days ago. It just hit me really like a ton of bricks. What did you say and what was the let’s talk about the I know there was a comment to that you also made in response to mine.
Yeah. Yeah. That’s good. I think the one that you’re referring to is the one where I said my most valuable content is the L gets the least engagement. It gets the least engagement. And I thought to myself, when I read it, I’m like, yeah, like I get specific tax strategies. I’ll give specific investment opportunities.
I’ll talk about the next trillion dollar trends that I think are going to be huge. And it’s like crickets. But then when I get some more generic advice or bland advice, I’m like freaking blows up, I get 40,000 views. So the stuff that I’m excited about that I think a really good. Make a difference and moving the needle as somebody’s financial life, it’s they don’t really respond.
And then the ones that I’m like a lukewarm, I’ll just throw this out. Cause I don’t have anything else today. Boom explodes. So it sounds like you’re seeing the same thing. So if you want a bunch of followers on Instagram or LinkedIn or Facebook or whatever, if you want a bunch of followers all you have to do is just speak in the clouds.
Hey, you’re wonderful. Believe in yourself. Great. You’ve got. The hundreds of likes on that. You might even get some shares. If you want to say, generic things like invest in you, it’s the best investment you’ll ever make. Yeah. You’ll get them. You’ll get, I got a hundred thousand on that.
Instagram, real Onyx. Almost exactly what you’re just saying. And when I put it out there, I’m like, oh, this is not going anywhere. And he got tons of trolls though. I had people cuss me out. Cause they’re like, they wanted to take their thousand, put it into crypto and go to, a million with it.
That was the problem, I think. Yeah. So the other thing though, is when I talk about exactly how to acquire a company or exactly where entrepreneurs are failing or exactly why teams aren’t working out or any of those kinds of things, there’s this weird thing that happens where. Entrepreneurs do not want to say that they have a deficiency in any level, because if they do and they interact with the post, other people are going to look at them in a different light.
This is the crazy thing I said in the post. There’s tons of shit that I don’t know most of the time when I walk on stage, everybody looks at me and they’re like, that dude knows what’s going on, follow him. But if they comment on a post patch, I could really use some help on this. Can you give me more detail?
They’re almost, they feel like they’re admitting to the world that they have a deficiency in something. That’s where you learn. Like I literally hire experts all the time and say, I don’t know shit about shit when it comes to this topic. Can you help me? These are specifically the things that I don’t know.
Awesome. All right, so we’re out of time, but we could, obviously we could keep going in this conversation for hours pads, tell us listeners, how do they follow you? How do they get ahold of you? You’ve got a podcast coming out soon. You got a really slick, cool website you’re on LinkedIn. Like what are you, what do you want to tell them about the only place that you can actually talk to me as a person is LinkedIn everything else, no matter where you go, Instagram, Facebook, YouTube, Google, whatever.
It’s going to be somebody else. Or an automation. LinkedIn is the place to talk to me. And then Patrick baker.com. Has tons of stuff about my story and lots of really good articles on there that are, they’re hard hitting and in your face. And if you read them with an open mind going in, I think you’d be surprised at how impactful they can be to help you get to the next level in business.
My audience likes in your face type talks. I think they’ll be just fine. And then your podcast that’s coming out. What’s it called? And when’s it launching? Yeah. You letting the cat out of the bag. We’re sorry. We’re holding. We’re holding that one back. It’s going to be launched in January though.
Stay tuned. It’ll be on. It’ll be all over the place once you, once it comes up. Scratch that. I didn’t ask that question. All right. Cool. Thanks so much for all your wisdom and all your experience. Amazing success that you’ve had. This isn’t completely like transformational podcast on how to look at acquiring businesses.
I loved it. I loved it. So thank you. Thanks for having me. I appreciate it. You got it. All right guys. Indestructable wealth out. Have a great day.