Episode Transcript
[00:00:00] Speaker A: Foreign welcome to the Victory Podcast.
[00:00:18] Speaker B: Hey victors. Welcome to this episode of the Victory show. If this is the first time you're joining us, I'm Travis Cody, best selling author, 16 books. And I've had the privilege of helping hundreds of business consultants, founders and entrepreneurs write and publish their own best selling books as well. And in that journey I've discovered a really fascinating pattern. Most businesses were hitting revenue plateaus, usually around a million dollars a year, and they struggle to break through it. So on this show I sit down with some of the world's most successful CEOs, founders, leaders and business owners to uncover the strategies they use to overcome those plateaus and scale their businesses to new heights so that you can model them and do the same thing for you. So get ready for some deep insights and actionable takeaways that you can implement in your life and your business starting today. But my guest today, Michael Beta, brings a true global perspective to business investment and innovation. With experience spanning China, Europe, Vietnam and more, he's worked at the highest levels of leadership. Twice as CEO, once as director. Get this from a company that started at 20 employees and two years later was 14. He's navigated the industries that shape economies and challenge conventional thinking. In China, he played a role in building the social credit score system. In Europe, he led a crypto adjacent fund of funds. And in Vietnam he worked on a complex cross border M and A deals. His ability to discover opportunities, challenge assumptions and approach problems with an objective analytical mindset has made him a force in the worlds of finance, strategy and emerging markets. So today we're going to dive in to his unique insights on global business, risk assessment and what it takes to thrive in an ever evolving industry globally. So Mike, thanks for being here. I appreciate it.
[00:01:48] Speaker A: Thank you, thank you for the introduction. Hopefully I can tell all of our listeners some of my failures. Right. You learn more from, from your failures than your successes. And I've, I've had more than my fair share of failures. Had a handful of great successes as well. You know, hopefully I can share some stories that, that everyone's going to find interesting. As Mr. Travis Cody mentioned, I was one of the only foreigners to work on the Chinese social credit system.
[00:02:16] Speaker B: So many questions for you. So many questions.
[00:02:18] Speaker A: Happy to answer them. The ones that I can. Right. You know, you never know who's sure listening.
[00:02:22] Speaker B: But yes, I still want to visit the China to the Great Wall of China. So no, no state secrets.
[00:02:27] Speaker A: Oh none that I can divulge. You know, none that I can divulge.
[00:02:30] Speaker B: So let's just. So. So Vietnam, Estonia, China, U.S. good old US of A.
[00:02:36] Speaker A: Good old US of A.
[00:02:37] Speaker B: Let's start. Let's start here and work our way to the East. So let's start with Estonia. Like, what. What's. And so here, where I'm going, like. Right. Because I think I'm working on a book called American Privilege, and my mindset is, is that most Americans are woefully ignorant of the way the rest of the world works.
[00:02:52] Speaker A: I'd agree with you. Right. It's.
[00:02:54] Speaker B: So I'm really curious about, you know, just your. Your experience in business in, in Estonia and Eastern Europe and then going to Asia and then Vietnam and China obviously are completely different cultures. So let's start with Estonia. What. What were some of the things that. What took you there? What business were you in?
[00:03:11] Speaker A: Sure. Yeah. Yeah, let's. Let's do it. So Estonia, for. For lack of a better word or phrase, I mean, it really fell into my lap and. And I fell in love with it. You know, if. If the world was the same place, I would still be living there. I lived in Tallinn. Great people, phenomenal food. The summers, you have a handful of days where the sun never sets because you're so far north. Right. And then in the winter, I did oversleep once and I missed the day because we only had about 30 minutes of sunlight that day. And unfortunately, I did miss.
So. No, Estonia was. Was great. I was 2020 right at the start of the pandemic. I was leaving China. I figured, you know, at that point, the world was. Was probably going to slow down for a little bit. Right. And I'd been in China for SARS, bird flu, swine flu, H1N1, and a couple other of the minor plagues. But, you know, Covid was. Was something that was taken a bit more seriously and had a little bit more widespread economic implications. You know, as.
[00:04:11] Speaker B: Sure.
[00:04:12] Speaker A: We're still seeing the ramification.
[00:04:13] Speaker B: Allegedly.
[00:04:14] Speaker A: Yeah. And so I figured, you know, it was probably a good time, take a step back. I was going to do my mba, and so I went to Berkeley, UC Berkeley. Go Bears. And. But a lot of things were digital. It really did not require a physical presence. And so I connected with a handful of other people. We could say high net worth or ultra high net worth, but really our.
Our idea, our goal was really to look at how private equity functioned. And I had five years of experience in private equity beforehand. They were predominantly venture capitalists.
And, and for those who are listening that don't know if you're Engaging in private equity, generally you're getting a better return than a public market. So public markets, the rule of thumb is 8% a year private equity 20, 22%. Right. And the, the downside is your money's locked up, it's not liquid, so you're, you're, you're frozen for, for a decade. Generally it's nine, nine plus two.
And what we wanted to do was take that asset alpha of private equity and venture capital and that diversification that that allows and then combine it with cryptocurrency. And so what effectively we wanted to do was take a quite a large and broad private equity and venture capital, either small or middle market company portfolio. We ended up with 156 companies under our umbrella and then we tokenized that portfolio. So effectively that means you're, you're getting that estimated 20% return. But you could trade it, right? You can come in, you can leave. Right. You know, the downside, unlike some type of meme coin, it's not going to go up by 50% overnight. Right. So, so we lost that marketing angle of crypto. And then for institutional investors who were, let's say allergic to crypto at that time, you know, now it's a little bit more accepted. But you know, five years ago was.
[00:06:14] Speaker B: A different, a little weird.
[00:06:15] Speaker A: Yeah, we, we lost that. So marketing really was, was one of our toughest challenges as it didn't work for Instagram and it didn't work for TikTok. Right. Because nobody cared.
[00:06:27] Speaker B: Right, but exploded on X. Yeah, exactly right.
[00:06:30] Speaker A: It was phenomenal. I think I made one tweet, actually I did get a Twitter. I made one tweet.
It was the first time I'd engage with social media. But, but we used, we used word of mouth. Was, was really our, our strategy and that grew, grew quite well. So over two years we raised 10.6, 10.8 million US right around there.
Great team. And the reason why we chose Estonia was, was regulatory and I'd never been to the Baltics family, originally from Czechoslovakia, which no longer exists anymore. But, but, but that part of the world was, and especially Estonia was extraordinarily accepting of this type of technology, this crypto technology. And, and there were government systems in place that allowed you to, to register a business. Right. And you know, depending on what type of business you're in, you know, you can either work without the utilization of the government. A lot of medical marijuana industries are kind of forced into this with their engagement with traditional banking of how do medical systems work? You know, can they use credit cards, can they make deposits in a bank, can they invest money? Right. It's extraordinarily complicated when, when you don't have that government infrastructure in place. And Estonia did. And so it was the summer of 2020, I believe was, was the first time I went to Estonia, became an e resident, fell in love with it, really. Relatively young population, tech savvy population. If you look at it, you know, percentage wise of the number of tech centric unicorns that are coming out of Estonia. The whole country is a population of about five and a half million people. It's where Skype came from, you know, is their claim to fame. It's practically on their flag. And, and anyone, if you have business with the Estonian, tell them you use Skype, you know, and they'll, they'll love you for it. But so that was really just in terms of being on the right side of the governance and being able to utilize traditional routes of banking as we needed as a private equity company. That, that was extraordinarily helpful. And, and really for, for anywhere I've lived. Hong Kong, Singapore, China, Vietnam, all of these have come with tremendous culture shocks. Right. There's so many books I've got. You know, one of my favorite ones that I, I, I love to show people is Kiss Bow or Shake Hands that I keep here. And it's, and it's all about, it's not a small book, it's quite a tome. And, and, and it really is. The different mannerisms of business and the different ways that social interactions work are, are tremendously complex and they're tremendously varied. Knowing some of those little things are exceptionally helpful in business. And that's true if you're working in New York or San Francisco. Right.
You know, I, I don't think I wore a tie a day I was in San Francisco. I think people would look at me like I had two heads in New York. I slept in a 3P. You know, in a different environment.
[00:09:36] Speaker B: You didn't have the tie on. They're like, what's this guy? Must be from Berkeley.
[00:09:39] Speaker A: Exactly. Who, who, who let this guy in here? Exactly. Yeah.
[00:09:42] Speaker B: So let's say. So Estonia was fantastic because you had a government that supported industry, which is, you know, we, as entrepreneurs, we always love to hear. Absolutely. Let's talk a little bit about China. You were there. You started there because you finished your school, correct?
[00:09:55] Speaker A: Half and half that I did. I was going through college. 2008, global financial crisis. You know, I wanted to be one of those. I, I grew up Watching Wall street, right? You know, I, I wanted to be one of those people waving the papers. And that's not how the world works. It's not how the world worked then, it's not how it works now. But you know, I remember going into some, you know, one of these quasi investment banking internships and you know, when you're at that level, you know, you're a kid, you're going to fetch coffee. And the guy sitting next to me that was going to be interviewed before me, he worked for bear Stearns for 14 years. And I said, well, I'm not, I'm not getting this job. There's, there's no way I'm getting this job. And I was quite disheartened. I love America. I have nothing bad to say, but I was, I was disheartened about job prospects, disheartened about economic opportunities. And for China, they were hosting the Olympics in 2008. I'm not a big sports guy. I couldn't tell you three people that play football besides Travis Kelce, because everybody just constantly talks about him. But I am a big fan of the Olympics. I respect the history, I respect the tradition, I love the international appeal. And China was hosting the Olympics. So I had the opportunity to go, got to see Michael Phelps win a couple of his medals, which was quite exciting in the Aqua Dome.
And it was one of these things that my perception of China, I'd say, or even the Eastern Hemisphere was completely misaligned with reality. That, that going there and being there. I was there for about two weeks and it gave me this perspective, it was really the defining moment of my global perspective that, you know, I, I don't know, I don't know what I assumed. I assumed Communism and Big Brother and you know, people watching you and it wasn't like that. Whether or not it's like that now, it's not for me to say, it's not my position in life to opine on those things. But I found the people were lovely, the food was great. I mean, there was no, the streets were clean. And most importantly for me at that time, the economy was going through the roof. And so I did half of my college in the us, half of my college in China, Beijing BLCU ended up being a guest lecturer there for a bit. So, you know, if anybody's looking to go to China and study, I'd strongly recommend Beijing Language and Culture University. Phenomenal program. And I was working in private equity, New York based shop, but they were focused on China, Chinese middle market and you know, I started off as, as, as anyone else does, as, as an analyst, right. Associate, right? You, you fetch coffee, you crunch excels, you read a lot of reports. You do slide four on the presentation. And I did that for about half a decade and I actually loved it. I love research. You know, I'd say that's, that's a passion, personal passion. And so from there we were investing into a deal I championed and helped underwrite was a company called Huaxia Finance. H U A X I A X I still wear.
And so at that time, their goal was to take what we look at as credit in terms of consumer credit. Visa, MasterCard, American Express, right, that, that piece of plastic that gives you a revolving line of credit. That concept did not particularly exist in China. And, and for many reasons, it's really just not how the banking system was set up. It, it's just not how lending worked. And their idea was to take this model of Americanized credit, you know, the FICO system, and then implement it in China. I am, by far. It is. My largest fascination in life is, is philosophical aspects of credit. And so I decided to move from the private equity company and I came on board the Chinese company. I was a director, youngest founding member by 19 years. So, you know, still a kid, didn't, didn't escape being called the kid for, for another couple of years. And that was, was astronomical growth. I mean, really just something that was.
[00:13:55] Speaker B: 20 employees and within three years you were 14,000.
[00:13:59] Speaker A: Yep. Just, I mean, just untowards growth.
[00:14:01] Speaker B: I mean, how does a company even from a management perspective, how do you even deal with that level of growth?
[00:14:08] Speaker A: You don't sleep, you know, you don't sleep. We're, we were six, seven days a week, you know, 10, 12 hours a day, you know, and we had, I'd say, you know, there's kind of two things that, that really drove. It was in, in some ways and, and it's in an. In opinion, and I don't like to focus on opinions, but some people have a negative view of credit. Whereas if we really look at what a credit card does or what credit allows somebody to do, is it allows you to acquire something that you want or that you need and then repay it in a timeframe, which is appropriate. Right? And I say appropriate because, you know, if you came to me and you said, hey, I want $10 million, and I looked at your financials and I said, well, there's, I can't give you $10 million. And you know, well, maybe I could. I don't Know your personal finances, maybe I could give you more, but you don't want to have some oppressive credit repayment term or else you have bankruptcy and then you lose money. So really you want to responsibly lend money in a, in a reasonable way, using a logical formulation, in a manner that, that makes rational sense. And to do that for the first time in China, where you didn't have the FICO score, you didn't have 60 years of mathematical computation to, to guide you was something that we had to build from scratch. And so what helped us was we gave people what they wanted, right? We gave people the opportunity to get education or go on vacation or buy an engagement ring or purchase a car or, you know, home furniture, I mean, washing machines, dryers, you know, things like this that we take for granted was something that, you know, if you're in an environment where credit does not exist, you might have to save up for three years to buy a washing machine. Was that really an appropriate way to spend your time? Well, probably not. If you can pay 10 bucks a month for two years, well, no, that's a far more appropriate economic advantage.
So we had a population that really wanted what we had to sell, right? What we had to sell was money, but we had a population that wanted what we had to sell. And we had a founding team. And this is where I think a lot of companies worked in private equity, I've worked in venture capital, I've worked with founders that if you don't have all the founders aligned to the same, not just the abc, but what's going to happen in the next six months? Where do we want the business in a year, in two years, in five years, in a decade? Really? What is that long term goal? Because if you focus on next week, you're probably going to accomplish next week. You're going to create other problems that make next week take next month. But you know, if you're focused on what you're going to do in a year from now, you might accomplish that in a year and a half. And if you focus on what you want to do in five years from now, you might accomplish that in two years. And, and a lot of people don't look at business scaling in that manner. You do really have to balance that, that opportunity cost of short term engagement and long term opportunities. And I'd say, you know, our founding team was exceptionally aligned. I mean, we of course had some screening matches in boardrooms, probably only, only three or four a day, but really we, we were aligned in our long term vision. And we had a product that, that people wanted, and I think that led to its own reward.
[00:17:36] Speaker B: So what are some of the misperceptions that the west has about China's social credit score?
[00:17:40] Speaker A: Sure. So it's one of these two that my claim to fame, let's say, is. Is working on the social credit score. And realistically, I did this unknowingly for probably five years. And the story is, one of my favorite Chinese stories is, you know, we're working on credit. We're working on, you know, just, it's a loan, you repay it back on a monthly basis. Phenomenal. What information can you use?
You know, in America, you're, you're limited to certain qualifications or classifications of information in China, culturally, there's not as much of that feeling of data privacy, you know, in America. For, for example, Cambridge Analytica, to talk about something that happened eight years ago to be topical. But that was something that really outraged people of how Facebook was working with Cambridge and Analytica for the processing of data in China. That was, that was standard. People didn't, you know, they didn't understand what the outrage was. That, you know, of course a business is going to use my personal information. Of course a business is going to look at my messaging or contacts or browser history or what have you. So when you have that cultural mentality that, yes, business, you know, data and information is. Is available and it can be utilized, you're able to use that information. You know, if I, if I said the same thing in the west and said, well, I want to look at your text message, your browser history, I want to.
[00:19:09] Speaker B: You're applying for credit. I want to make sure you're not. Your Google search doesn't say bankruptcy attorneys.
[00:19:14] Speaker A: Exactly. I want to, I want to look at your Fitbit and make sure you're not drinking six nights a week. You know, people would be outraged. Right. And maybe they should, maybe they shouldn't, I avoid that conversation like the plague. But what I will say is there's a difference in terms of reactions.
[00:19:29] Speaker B: It's a cultural thing again. Right?
[00:19:30] Speaker A: It's a cultural.
[00:19:31] Speaker B: Again, like, this is a hot topic, and I probably should bring it up just because of the hates. I'm going to get with it. But it's like guns, sure. Guns is a uniquely American culture thing. People here are like, what in the heck is the deal? And if you're American, you go somewhere else and like, nobody has any guns. I don't understand.
[00:19:46] Speaker A: Right. Yeah. And that was, I mean, in China, there was, you know, it's Extremely safe. There was no, you know, I, I had my fair share of little run ins as anybody. I mean, pickpocketing is sure is a thing in developing countries and is in Europe as well, you know.
[00:20:01] Speaker B: Hey, what, what is it? They were saying like the pick, the number one pickpocketing place in the world is Rome. It is right outside the Vatican.
[00:20:08] Speaker A: Yeah, yeah, yeah. And, and yeah. And so you have these problems, right? But in terms of violent aggressive crime, let's say it's, it's, it's just not, it's not a consider.
You know, in, in America there's a higher necessity to have a firearm than there would be in a country where, well, there are no firearms around for a thousand miles. You don't need one. I'm not saying.
[00:20:32] Speaker B: A few years ago my one, my mom's bucket list trips was she wanted to go to Egypt. So I took my mom to.
[00:20:37] Speaker A: I'd love to go.
[00:20:38] Speaker B: So I took my mom to Egypt and I was laughing because, you know, she's in her 70s and all her friends were like, oh my gosh, it's so scary and it's dangerous and whatever. And I love it because my mom was all, did you watch the news yesterday? Because Egypt is looking at our TV going like, don't ever go to Chicago because everybody's dying in the streets there.
[00:20:55] Speaker A: Oh no, stay away from Oakland. You know, and so it's just like.
[00:20:59] Speaker B: Like the fact that Egypt's looking at Chicago going like that place is crazy. No, everybody has a gun and we're like, oh, don't go to Egypt.
[00:21:06] Speaker A: It's true. It's that, it's, it's perception. Perspective. It's drastically different.
[00:21:11] Speaker B: So how, how did leadership, like the business leadership style in China work?
First off, is the structure the same where you have like a CEO and then like, you know, VPs and then like managers? Or is it different?
[00:21:22] Speaker A: You do in that regards? You do, I would say somebody's listening.
[00:21:25] Speaker B: To show going like, Travis, you idiot. How do you not know Business is business everywhere you go?
[00:21:30] Speaker A: No, it's, it's. They occasionally use different titles. I mean the. One of the ones that they'll. In America you'll have a director higher than a vice president. In organizations. In China, it's vice presidents higher than the director.
[00:21:43] Speaker B: Always exceptions.
[00:21:45] Speaker A: Just one terminology piece. What I will say though is China and, and I, I worked, I've been to Japan a dozen times. I've worked with Japanese countries company. I've never worked in Japan itself for a Japanese company, but China Very much the same in what people's perception of that rigid totem pole structure that, you.
[00:22:12] Speaker B: Know, you don't go around your manager to talk to somebody.
[00:22:15] Speaker A: Never. I mean, that would be not only insulting, it would be, you know, cause for, I don't know, corrective action or even termination. And, you know, in the same manner that, you know, there were people that worked for me, there were people that worked for other directors in the company, I would never go to one of their people that messed up and say, you know, you made a mistake. I would go to their, I would go to my equal and talk to him and then he would convey that information. And that's slightly different. In the US where you have, you know, like the biggest joke, right, is kind of this like open office, beanbag chair. We've got a campus, you know, we want this.
[00:22:55] Speaker B: Everyone's equal, My job is equal.
[00:22:57] Speaker A: Matrix environment.
China was not like that. I mean, that was, you know, you do not talk to the CEO. You do not talk to your boss's boss unless they ask you a direct question. You don't bother them. You know, you can say hello, you can nod, but questions, no work, no, your problems are your problems. They are not their problems and don't ever make it their problems. So that was, that was considerably different.
[00:23:23] Speaker B: Was how was that hard for you to adjust to?
[00:23:26] Speaker A: Absolutely, terribly so.
[00:23:28] Speaker B: But you got a little leeway because they're like, there's the Americans.
[00:23:30] Speaker A: I mean, you just, you, you pretend like you don't speak the language. I mean, Putin does this probably better than any person. He uses the translator when he speaks English. His English is better than Emily Posts, right? You know, he's, he's, he's a linguist. But there was also, you know, one of the ones that I always found funny in China and I never mastered was you have a circular table. The CEO will sit opposite the door of wherever you're at. If you're at a restaurant, there's a circular table. The CEO sits opposite of the door. To his left would sit the other business CEO that you're meeting with. Then to the left of that secondary CEO would be our CEO's right hand man. To the right of our CEO is their CEO's right hand man.
[00:24:14] Speaker B: It's like the protocols are like the protocols.
[00:24:17] Speaker A: And I would walk in and sit down in the wrong seat, you know, nine times out of six, right? And they would say, I cannot believe that you would sit in this chair. You need to be sitting in this, you know, 37 degree angle from the window. And if you don't, it's, it throws off the feng shui for the meeting and you're going to destroy this deal. And I joke, but, but it was true that at many times my secretary would come up and say, no, you're, you're supposed to be sitting in this seat over here. And so I just sat last. That was my way around. That was, I sat last. The open seat was my seat. I knew where to go.
[00:24:49] Speaker B: It's funny. So from a worker perspective, what's the difference in attitudes from a Chinese worker versus, you know, an Estonian worker or an American worker?
[00:24:57] Speaker A: You know, something in Europe that I'd say, you know, for China it was, it was certainly the extreme. I mean it really.
[00:25:03] Speaker B: Of course, that's why I'm asking all these questions.
[00:25:05] Speaker A: Oh Yeah, I mean, 60, 70 hours a week easily, right.
You know, is 8 to 5 Monday through Friday, generally Saturday. And then from 5pm to 9pm you're going to have client meetings. You're going to have something, right?
[00:25:20] Speaker B: I love how they schedule the client meetings after work. They're like, no, no, no. Work during work and then clients. But I'm working with a client on work. No, no, no. Clients are after.
[00:25:27] Speaker A: Absolutely no, you're going to do that later. You know, that doesn't take up work time, that takes up your time. So that, I mean, if you'd said, you know, if you counted those hours, you're working 80 hours a week, right. And, and it was standard. I mean, you know, people enjoyed it, made it, made the office environment more family esque, I would say, in some regard, even with the hierarchy, because you saw people at their best and worst, right? You saw people stressed out, you saw people that had, you know, they were, they were burnt out, they worked hard. I mean, they did, you know, 20 hour days, four days in a row, they were tired. And you're there to help them, right? You know, if you're there, if you're their equal, right. You're, you know, you're in the same bracket and then, you know, if the other equals are in the same bracket, they help each other out. So in many ways I found that different than the US where we have that I'm going to compete against you for this job just because there's, there's the energy to do so. Whereas China was very much, there's a mission, there is a task, there is an objective. We will work as a collective to accomplish that objective.
[00:26:35] Speaker B: Lone wolf stuff is frowned upon.
[00:26:37] Speaker A: You go against the flow, right? And whether or not that's a subsect of a communist mentality. I don't know. That's. It's for a philosopher to opine upon. But it certainly was something different working in Estonia. And I worked in Estonia. We had. Our CTO was in Slovenia, our CEO was in Germany. We had analysts in Mexico City, we had analysts in India. And we were all over the place for that company. I mean, it was, it was great. Physical office was in Estonia. I was, I was in the physical office. But, you know, we had digital workforce. And, you know, if there was one good thing that came out of the pandemic was people got comfortable with this setting that, you know, I can sit down, I can talk to you.
[00:27:21] Speaker B: You know, obviously before you'd be like, video call.
[00:27:24] Speaker A: It'd be bizarre. You know, obviously, I'd love to shake your hand, right?
[00:27:27] Speaker B: But 20, 23, I'm calling my mom and she's like, why aren't we doing Zoom? And I'm like, you didn't even know what Zoom was two years ago. Come on.
[00:27:32] Speaker A: Exactly, exactly. You know, it's. I just had a baby not too long ago, and, you know, we're video calling.
[00:27:38] Speaker B: You're looking very refreshed for someone who has a new baby, I gotta say.
[00:27:42] Speaker A: Thank you. I take a tremendous amount of vitamins and supplements. I'm one of those people. I'm a lunatic. I don't talk about it, but yeah, just a pile, an absolute pile of fills.
[00:27:54] Speaker B: This is a secret.
[00:27:55] Speaker A: It is. I, you know, whatever it takes, right? Do yoga, go run, running, whatever it takes. Feel good and you'll do well. And then for, for Europe, it really was that. It was more casual, it wasn't as demanding. And whether or not that was a result of the industry or just as a result of the culture, that the office was just, it was far more inviting that people would. If you want to take a, you want to take a two hour lunch and you'd need to go handle something, go handle it. I'll see it too. You know, come on back and you know what you have to do. I don't have to babysit you. You're gonna do your job, right? China, that very direct, very hierarchy. It's. I don't like micromanaging. I detest micromanaging. But China, that, that was expected. That, that was, you know, part of the job. It's part of the job, right? It's. I tell you A, I tell you B, I tell you C, and, And in Europe, it was, look, here's, here's where we Want to be. Here's our goal. Here's how we're going to get there. And.
[00:28:57] Speaker B: And so that was sort of fascinating mentality too, right? It's. It sort of reminded me when I left Hollywood and was working for a corporation, then won a direct response where everything, you know, becoming a freelancer, right, you were suddenly away from the hour to hour, and it was by project, Right? Right. So I would. You would come to me, Chad, I have a thing, and I would quote you a fee. I'm like, you don't care if I do that in an hour or six days. Do you just want the end result? Right? And so it's interesting to see that freelancer mentality starting to come into corporations now a little bit where it's like, we're gonna pay you for 40 hours a week, but, like, as long as you're getting your work done, like, who cares whether or not you're actually here? Like, here's your job. Get it done. Right. And so it's interesting that China was very much the. I mean, so did you. Did you notice then, was there the attitude with. With Chinese workers? Again, I'm generalizing, right. I get that there's a thing, but to the point where a lot of workers were like, I got my job, I need to do it. But if something variated from that, it's like, like, no, you've got to tell me what to do. They wouldn't, like, just go and do it on their own.
[00:29:52] Speaker A: I would say yes. Yeah. I mean, and again, you know, generalizing, but, like, let's look at the bell curve, right? And let's talk about the middle of the bell curve. Yeah, you're absolutely correct. You're. You're absolutely correct that it was. And these people were some of the smartest people, some of the most creative people, some of the most hardworking people. I mean, I keep in touch with these people on a regular basis. And, you know, I've seen them at their worst. They've seen me at my worst, but it was that I accomplished this. What's next, boss? And then, okay, you know, here's exactly what we're going to do next, and here's what we're going to do next, and here's what we're going to do next. And it took some getting used to because I came right from private equity, where we had eight people at the company, and they would tell me, look, you got to make this presentation.
And they'd give me no guidance, and I'd make a presentation, they'd Say, this is terrible, you need to redo it. Oh, okay, all right. You know, I redo it and add in some more graphs and you know, eventually after three or four iterations with zero guidance, I'd, I figured it out, you know, but that was drastically different than China where it very much was a over the shoulder aspect. And it, you know, I'd say a great example. And, and I love this example because it, at face value, when you first say it, it sounds controversial and it sounds offensive, but it's really a strength. And Chinese businesses are phenomenal at copying ideas and they're phenomenal at copying products. And I, I don't mean that in a negative way at all. I mean, we could say it in this way. If I painted the Mona Lisa and you copied the Mona Lisa down to the brushstroke, who did a greater work of art. Right. Because you were able to match every specific detail, whereas I put that paint, I put the brush across the canvas. Right. And, but you were able to match it. And I think, you know, for, you know, to give an actual topical example, we had Deepseek that just came out of China and they said, you know, whether or not it actually only costs $6 million build. I know McKinsey, I believe it was McKinsey just came out with a paper that said, well, it probably cost about 12 times that much, but still like.
[00:32:01] Speaker B: You know, one tenth of what OpenAI is running so far.
[00:32:04] Speaker A: Of course, of course. I mean, you know, regardless, it was, you know, China did build a model, a technological product that cost hundreds of millions of dollars in the US Was.
[00:32:17] Speaker B: Telling us this is where we're going. When they did that, that movie with called Paycheck with Ben Affleck.
[00:32:22] Speaker A: Yes.
[00:32:23] Speaker B: What did he do? They hired him and he was an engineer and he came in and he would take the thing apart and he would reverse engineer it and build a better version.
[00:32:28] Speaker A: Yep, yep, yep.
[00:32:29] Speaker B: To Hollywood was saying that was a John one Woo movie.
I just crossed, I just connected the dots. China's been telling us for 20 years the stars aligned.
[00:32:40] Speaker A: And, and, and yeah, and, and that's really how it worked in a lot of business was. And why China grew so fast. I mean you had Deng Xiaoping, right. Opened up China and then in 30 years China went from a third world country. Right? It was, it was a third world country. It's the world's second largest economy. And by many metrics on a day to day life in Shanghai, I would say it rivals the day to day life in many western cities. Right. In terms of comfort or convenience or crime or transportation or public services or utilities, education, what have you. And they did that by looking at what works and then saying, we don't need the waste. Right. And you also, fiscally speaking, you save the R and D costs. You're not. You're not dumping money into research. You're not trying to figure out something new. You see what works, and you. And you replicate that.
[00:33:34] Speaker B: Tony Robbins would call that modeling.
[00:33:36] Speaker A: Yes, exactly. Yes. And. And. And a lot of. A lot of Chinese businesses do that phenomenally well. They adapt it to the Chinese market. Obviously, it's gotta be. It's gotta be reskinned. It's gotta be different. But, you know, we said Amazon. You know, how long did Amazon take before it went from, you know, Bezos in his garage with his cardboard sign on the wall to being, you know, his $500 million mega yacht is now causing problems in some port in Italy? Right. It took a while, right? How long did it take Alibaba to start at nothing and then have a fleet of delivery drivers that. That numbered over 100,000 people on mopeds? About half a decade. Right?
[00:34:18] Speaker B: I remember a decade ago, I had a conversation with a couple of German brothers. They were very wealthy, and they were just talking that their whole business model was. They were tuned into the tech in us, and so they were like, it wasn't. It might have been an Amazon. They, like, looked at Amazon and they built basically Amazon, but in German. And. And then When Facebook launched YouTube, they've German. So then when Facebook's like, we're going to go into Germany, they're like, oh, somebody's already built it. Let's just buy them. And then they would sell the. So they were actually watching them going, we know they're coming here in three years. Let's hurry and build it. And then they'll just buy us. And they're worth a lot of money. When I had the conversation with them, like, Travis, we didn't ever do anything original. We just did what America was doing, but we made it in German. So when they came here, they're like, oh, we don't need to do all the translation. These guys have done it. And they said, yep, there you go.
[00:35:05] Speaker A: It's a brilliant model. It may not help the species progress, but it helps the species even out. So you do still need innovators. You need creatives, you need designers, you need somebody.
[00:35:18] Speaker B: You know, when I was in Hollywood, people used to ask me all the time, like, oh, aren't you afraid of people Stealing your ideas. Because then, you know, Hollywood's rampant for that.
Every time you turn around, there's another lawsuit. Somebody stole my idea. And, and I'm like, look, I had several of my ideas stolen and by big studios that went and did big movies on them and they like, are.
[00:35:34] Speaker A: You mad for Sharknado?
[00:35:36] Speaker B: Yes, I wish. No, dang it. That is the one good idea I didn't come up with. But it was, you know, my, my, my, my point was I'm like, yeah, it happened and it sucked. And at the same time, like, I'm an idea guy. So, like, you stole one idea and I've already got seven other ideas. And so in some ways I look at America as that way of like, like, okay, China took our thing. We've got so many people here innovating. We've already come up with 70 other things that, you know, you're not going to be able to keep up with it. You might take one or two, but yeah. And I think that for me, that seems to be kind of a superpower of American culture.
[00:36:06] Speaker A: It is. I could not agree with you more that it is. If, if you took, you know, and working in America, Vietnam, China, Europe, predominantly the Baltics, in Eastern Europe, and if you took a hundred young people that were graduating college and you said, would you consider starting a business? I guarantee you America would be the top of that list by, by, by double digit percentage points. I mean, it's, it's something that there is, whether it's cultural, whether it's a media push, whether it's, for lack of a better word, propaganda. The idea of innovation is a distinctly American concept and it's done very well. I mean, economically speaking, it's, it's, America leads the world in a tremendous amount of innov.
And not just, not just tech, right? Because everybody likes tech and says tech innovations, but, but, but machinery. Right. And of course, finance. Right. I could talk about finance all day and the financial innovations that, that America has really pioneered.
[00:37:07] Speaker B: Well, it's because we have a secret weapon that people don't realize, and that's called the infomercial. So we need people, that, we need people to innovate for new products for the infomercials.
[00:37:15] Speaker A: I can, I cannot buy any more of those Japanese knives they sell at 2am I have enough, I don't need any more of those things.
[00:37:22] Speaker B: All right, well, we got to wrap this up. I want to respect your time from, from your perspective this next five years, especially from like an American business standpoint. Where do you think the Big opportunities are.
[00:37:32] Speaker A: Sure, it's a good question. It'll, it'll take five minutes to answer that, I bet. Let's say, let's, let's break it down in this manner. For the next six months, things are going to be choppy, right? And you know, we're, we're, we're recording this in March. It's, it's going to be a rough summer. And, and there's probably no way around that. Now what we have seen, especially over the past two or three years and for people that want to start a business, this is phenomenal, is the level of what, what's called dry powder, right. The amount of money sitting around waiting to be deployed to a good idea is, is at its zenith.
[00:38:10] Speaker B: It's, it's at its, I love how you phrase that. The money sitting around waiting to be deployed.
[00:38:14] Speaker A: That's, that's it.
[00:38:15] Speaker B: And look, you know, people are like, what does that mean? Right now Warren Buffett is sitting on how much cash?
[00:38:19] Speaker A: Like $300 billion just topped 330 billion. Dol. Billion.
[00:38:24] Speaker B: He's like, there's no place to deploy it right now.
[00:38:26] Speaker A: And, and it's true. And, and for Warren Buffett's probably looking at the next Coca Cola. But, but the same thing for, for private equity, for venture capital. This is something that, you know, when I worked in, in venture capital, so much of my job was sitting around and hearing pitches from people. And most of the time, I mean, you know, 25 days out of a 30 day cycle, you, you are just bored out of your mind and you say, you know, it's never going to work. Right? You want to make clothing out of recycled plastic bottles. That's great. Do you have chemical patents? No. You know, you want to save the environment. I love it. That's great. It's important. But you know, if you don't know how to take a plastic bottle and turn it into a piece of thread, I don't know how this is going to work. Right? And I always say one of the best examples is when you come to somebody, if you're, if you're an entrepreneur and you want to pitch a business, pitch it in the most simplistic five year old manner that you could possibly think of. Because if you can sell it to somebody in 30 seconds, they'll buy it in six months, they'll buy it in a year, they'll buy it in five years, they'll buy it in 10 years. And if you aim for something where you say, look, we're a startup, we're going to put a man on the moon by the end of the decade. Well, it's a very lofty goal and I'm not sure if I believe you. But you know, if you say we, we've got a product and we think that there's a very niche audience for this, but it's an underserved market, nobody's looking at it. Worst case scenario is we get bought out by Walmart. I would throw cash at that opportunity yesterday that, you know, you say, well, I don't want to hear how you're going to grow the company, you know, from zero to a billion dollars. Right. How are you going to generate revenue or, or build users. Right. Because you know, there's different economic metrics if you want to build users in a, in a non profitable way and then, you know, convert those into lifetime value, different metrics. But if you say, look, I've, I've got a product, there's, there's a black hole, there's a void, there's a necessity and what we're going to do is going to fill that niche and it's going, this, this product, it's going to apply to 2% of people. Sure, fine, great. You say our plan in five years is to evolve this product and have it apply to 3% of people and 4% of people and 5% of people. It's a great idea and a lot of people and a lot of pitches, they fall short in this way of trying to make their idea sound very complex because then it's, it's not only the idea that I'm worried about. I'm worried about the founders, I'm worried.
[00:41:02] Speaker B: About complexity of it all.
[00:41:04] Speaker A: Are these people, the, the people that, that can handle this? I mean the best pitch I ever had, I was on a, well, it was an unauthorized version of Shark Tank in China, you know, not copyrighted by, by Shark Tank. I, I was a guest, I was, I had no involvement. I did not own this. But we had a series of people give pitches and, and the last person that came up there said I am the person responsible for those digital advertisements you see in elevators. So if you're in an elevator and there's the thing that's like a picture, it shows a Nike symbol or you know, somebody drinking a Fresca or whatever. It was him, it was his brother. His brother worked in construction. He would call New Developments all day long. I want to, I'm going to pay you to put this little TV screen in the elevator. His job was, he just called marketing companies and said, we're going to have a captive audience, right? You're not going to escape it. You're stuck in the elevator. We're going to have a captive audience. I think the average was like 85 seconds. But these people, they have nothing else to do other than hear your ad. And we asked him, we said, you know, what is, what's your overhead? Well, there is no overhead. You know, it's my brother's cell phone bill and my cell phone bill and, you know, and they had T shirts on and jeans, and his brother worked in construction and he, you know, they were both young, but, you know, he worked in marketing a couple years and said, you know, this is a niche. It's something we can do. The TVs cost 30 bucks. We pay the company in a world.
[00:42:30] Speaker B: Of, of, of diminishing attention to, to say, I've got somebody attention free in the, you know, Coke's going, no distractions.
[00:42:38] Speaker A: Right, right, right. And it's, that's, that's it. You're, you're.
[00:42:42] Speaker B: Yeah, that's pretty simple.
[00:42:43] Speaker A: And I pulled him aside. You know, it wasn't the, it wasn't like Shark Tank in the US where they're, they're bidding and doing this, this showmanship thing. But I pulled him aside afterwards. I said, you need to come to my office. I, I need to talk. I, I need to introduce you to people. This is. And, and we funded it. I, I said, you know, we have to be behind this because it's so, it's so straightforward. And, and, and he put it in such a simple manner that said, here's how many seconds people are watching, here's how much it costs.
[00:43:09] Speaker B: Like our, like, we kind of think, oh, if I'm, if I'm going to ask you for a million dollars, it better be complicated and complex because that's what you're looking for. So our brain is like, I gotta do the thing where if instead of I could just come in and be like, I do this thing, and this is how we do it, and this is our overhead.
[00:43:22] Speaker A: You give me a million dollars in a year, I'm gonna give you 1.3. Because I'm gonna do one thing better than 90% of people, or I'm going to do one thing more differently, more differently than 95% of people, and I'm going to fill a niche and I'm going to fill a void. And those were the best pitches I ever heard. It's not, you know, of course, people like graphs and they like charts and they like pictures.
Those things are secondary, right? Those things are secondary. It's, it's the nature of the idea and you know, be, be straightforward. Right. And so for, for people that are trying to start a business, you know, if public markets are going down, people are pulling money out, obviously they're going to be putting it somewhere. And if you have an idea that says, look, you know, we're, we're going to be very stable for a year, we're going to make no money, we, we might even lose some money in the next year.
And I say, well, I'm probably going to lose 20% in the S and P this year. I would like you to not lose my money for a year and potentially double it in three years. It's a far more attractive sell and that's as simple and straightforward as it has to be. Obviously you need to know your industry, but I think a lot of people over complicate things that are simple and they simplify things that are complicated and it's really that, that, that spectramatic reasoning that we need to narrow down on and, and be more efficient towards as, as entrepreneurs or as business people and as a society.
[00:44:56] Speaker B: I love it. Mike, this has been a fantastic conversation. Thanks so much for taking time out of your day. I really appreciate it.
[00:45:02] Speaker A: Thank you for having me. Thank you for having me. I'd love to continue our discussion.
[00:45:07] Speaker B: If somebody's listening to this and they're loving what you're doing, like, how does somebody get involved with what you're doing? Is link. Just connect with you on LinkedIn. Do you have some place that you kind of, of hang out online that people can find?
[00:45:17] Speaker A: No, no. Connect with me on LinkedIn. I'm, I'm not a social media guy. I, I do have LinkedIn. I'm, I'm fairly, I, I, I check LinkedIn every day. I'm, I guess, a prolific LinkedIn person. You know, Connect with me. Reach out. I like talking to people. I like helping people. I have nothing to sell. There's, there's nothing I'm selling anybody. I follow the trends, I try to guide when I can. And, and I abstain from most division. I, I try to be, and if you want unbiased, straightforward, either advice or a case study, I'm more than happy to share it. Reach out to me on LinkedIn. I'd be happy to help.
[00:45:59] Speaker B: Mike, thanks.
[00:45:59] Speaker A: My pleasure, My pleasure.
