Mike’s Story, From Yeti Knockoff to Building New Brands

What's up, Operators? Welcome back to another fantastic episode of The Operators Podcast. We have two of my favorite people on Earth. We have Matt. Matt, how are you?

Doing wonderful.

And we have Mike, the star of today's episode. Mike, how you feeling?

I'm good. I'm fired up. Let's get it.

Okay, so this episode started because I just wanted to know how my good friend Mike was going. Mike very publicly launched a new brand last year in Trevi, and we watched Trevi take over the aisles of Target and Walmart, and it took over Amazon listings. And I just kinda wanted to check in, but Mike recently, maybe by the time you're hearing this, 4 or 5 months before, announced the expansion of Simple Modern into Simple Ventures. So today we're gonna unpack what it takes to run multiple brands. We're gonna get Matt's opinion on that 'cause he's somebody who's running multiple brands right now, and We're gonna kind of talk about the, the future and, and why Mike thinks right now is the best time ever to be a builder, an operator, and a listener of this podcast. Are you guys ready to get into that?

I was legitimately fired up this morning getting ready to talk about this episode because I think it's incredibly relevant and I, I really don't think there's much content at all out there about this because we're gonna be getting into like when you've had some success and you have some capital to work with, what do you do with it? How do you think about it? Anyway, I'm, I'm glad you brought this topic up, Sean. I think it'll be great.

I think today's episode's gonna be fantastic. You're, you're fired up to record it. I'm fired up every single day when it comes to recording Operators Podcast episodes, guys. This is, this is my hobby. This is me on the field. I'm out here, I'm leaving it all. So, um, Mike, maybe you just summarize the journey of Simple Modern up until maybe 2024, and then, and then why you started thinking about new brands might be the way to go.

[Sponsor Content] Yeah, absolutely. So we started the company in the end of 2015. So last September was our 10-year anniversary. And when you're first getting— we were bootstrapped, so I put maybe a couple hundred thousand dollars into the company. And when you're first getting started, I mean, we had no capital. We were going up against these huge heavyweights. What I always tell people is like when you're at Thanksgiving and your uncle's like, hey, how's your Yeti knockoff thing doing? It's not a good sign about your chances of being successful, but we were really undercapitalized, but we had found a way to kind of get traction on Amazon and to, to make it work and start to grow the business. And we were able to get banks to give us some financing on our inventory. So we, we just kind of like on a shoestring budget, we were making it work very hand to mouth. Everything that came in went immediately back out using as much debt as we could, but then also you know, had a manufacturing partner who really believed in us and was extending credit in a whole number of ways, whether it was holding inventory on hand as finished goods or giving us really generous payment terms, things like that. So we grew and grew and grew and grew. We basically, like, I think the first year maybe we did $5 million in sales, which is pretty big for a first year. And then it was like double, double, double, double, double, you know, like all the way up to, um, almost $200 million in sales, uh, by 2004. So tons of growth and a lot of the way we are growing, but there's really not much money that can come out. You actually had a great post on this recently, Shawn, on Twitter where you just, you talked about like the expectations of how much capital can flow out of a successful business. And I think that this is one of the things from the outside that is so counterintuitive. You see somebody who's got a big business, a big brand, they're doing big sales numbers and you just think, man, there's gotta be so much money flowing out of that. And it's just the opposite. Opposite, that when you're growing, your working capital that you need to run the business keeps growing. And so it's all going back into the company. So that was our, really our situation, I would say, until about the last 1 to 2 years. And then we, it starts to tip. You start to get to the point where the business doesn't need more working capital and you start to have so much cash flows that the amount of cash the company is producing after taxes is way more than the company needs reinvested in it. And you have to start to kind of think about and make decisions about what are you going to do. So I took a pretty conservative approach. I basically said, well, the first thing we're going to do is we're just going to pay off all of our debt. Now there's a lot of different thought processes out there. If Jason was on here, he'd tell you, well, it's actually not optimal to not have debt in your business. And, you know, like this is the way that Wall Street thinks for a bunch of different reasons. But my thinking was, it's kind of like when, if you go to a casino and you're playing blackjack and you get up big, if you put a bunch of chips in your pocket, like what's the worst thing that can possibly happen, right? Like you're, you're gonna, you're gonna be okay. So I just said, we're gonna pay off all of our debt. We're gonna have cash in the business, and then we're gonna kind of go from there. And I would say really over about the past 6 months, that's where we've gotten to where now our balance sheet has almost 8 figures in cash. We have no debt, and obviously the business is profitable and it's producing. Not as profitable as it was a couple years ago thanks to the tariffs, but it's still very profitable. And so all of that builds up to a point where you start to ask the question of like, okay, we kind of won this game, but what happens next? And I think that that's the framing for this conversation is when you're fortunate enough to have capital that it's not obvious where it goes, what do you do with it? How do you invest that? How do you continue to earn a good return? And that all of that is the context that gave rise to us getting into Trevi and us and Simple Ventures and all the stuff we're gonna talk about today is that we had our initial flagship business got to such a financially healthy place. I wanna make two other points that'll, I think, help frame the conversation. One is that there's financial capital and then there's kind of intellectual, um, people capital. Human capital. And we are really fortunate that I think we have like an abundance of human capital. We've probably got 7, 8, 9 guys that really could be CEOs of a business. And so not only did we have excess financial capital, but we had some people that were really fired up about the idea of leading business units. You don't always have that. And so we, we wanted to do something with that. And then the final thing I'll say, I have made— I mean, you could just about fill the Grand Canyon with all the mistakes I've made. As an owner of businesses, a leader of businesses. But one of the more frustrating mistakes that I've made several times, and I'm trying to not continue to make, is putting too much capital towards something that does not need and does not want more capital. So with our drinkware business, we are now very scaled up. We're probably like, you know, the fourth biggest drinkware maker in the world. And there's a point where it's really tempting because you've got this really successful business where you say, hey, I, you know, I want to put more capital towards this. I want to grow this thing some more. But you just get to a point where it's like, it's not obvious how you can actually do that. And if I'm pushing more capital in, I'm going to be getting a much lower return on that capital, or I might even be getting a negative return on the capital. I might even make my business worse by trying to push more money into it. So anyway, all that's the context where it's like, hey, I've got I've got a good amount of human capital and financial capital. I don't want to try and push it into a business that doesn't need it. What do I do with it? Dealing with big box retailers means EDI connections, and that's often a trigger for needing an ERP system. We've been using EDI connections to Costco forever, and the only way that we've really solved that problem to make it seamless is through Fulfill. EDI adds complexity to everything you do, and Fulfill solves that complexity with their connections to their systems. You need Fulfill to move from being just a D2C brand brand to being a true multichannel brand, because big box retailers are going to require you to connect to their systems using EDI. Let me tell you, it's way easier if you do it with Fulfill.

Awesome, awesome framing on that last point about forcing capital into a business like you're stuffing a pig or whatever. People need to accept that sometimes being fourth is great, right? We have this natural human urge that like, oh, you have to be number one, you need to be the biggest, water bottle company on earth, right? You have to go in there and you have to destroy everyone else in drinkware. But you said it's not obvious how you do that. And the path to get there in this current moment would require lighting a billion dollars on fire, right? It's because like, that is like, you're competing with a trend-based system. So it's like, how, how do you make yourself become the next trend? I have no idea, right? You're competing with people who have huge scale. And this is why category is so important. You want to pick categories where you can be number 4 and have a multi-hundred million dollar business.

I want to double-click on that and just reinforce the point you made, Sean, like doing this pod, being, this is, if Trevi gets there, and I think it's going to, it'll be my third, you know, 9-figure business that I've, I've helped build. And I've met so many entrepreneurs over the years and some of them have bigger businesses than me and some of them have smaller businesses than me. I've never felt outclassed in a conversation. Like, man, I just really can't hang with this person or the way they're thinking. But there have been plenty of people I've met that have much bigger businesses smarter than me, and I've met people that I thought were way smarter than me that had smaller businesses. And I've really come to respect that market is the number one variable to how big your business can get. And you have to respect that. And, and what you're saying has really become my mantra internally, that when you pick the right market, a big market, I mean, I, I want to go after big markets and big markets have lots of competitors. It's exceptionally unlikely you're going to come in first in a really big market. I told my team, a couple guys on the Ventures team this last week, I said, man, I wanna launch into markets where I can be 13th and still have a high 8-figure, 9-figure outcome. Like, man, that's awesome. You know?

I bring that up all the time, right? My phone case business, me and Matt are both in phone cases, right?

The number one.

Yeah. So like removing Apple, removing them as a phone case maker, number one's doing a billion, number two's doing a billion, number three's doing $800 million. It's like, it's like there's so, there's so much money to be captured there where if you can be 13th, Dude, 13th is doing $175 million a year in phone cases. I'm like, I gotta get to 13th. It's, and it's just way more achievable.

And this is a word where I think this is, in some ways this is a conversation about what do you do with money? How do you grow money? But you can never have that conversation without having a conversation about what are you trying to accomplish in life? And so like, why do we all do this? Why do we build businesses? What are we trying to do? And it's like, well, a lot of it is, it's like, I'm trying to earn enough money that I have the flexibility and freedom to do whatever I want. And hopefully I'm working on interesting problems and things like that. but like where you are in your market, I'm coming to understand more and more is like basically a vanity metric. Like it does not matter. First of all, nobody knows the market share numbers in drinkware except for like a very small number of people. Like they just know like, oh, here are the brands that are out there and you know, these are the 5 or 6 brands that are out there. But then also like, you know, what am I gonna put it on? Like Tim Stone, he was number 2 in his market. He got to number 1. It's like, who cares? You know, like at some point it's just like, is the business that you are building and running, is it providing high quality of life? And if so, all the rest of that stuff is just kind of vanity metrics and, you know, the year-over-year growth or the market positioning or whatever. So I think that it's healthy to kind of say, to take a kind of first principles approach of like, what am I trying to accomplish? And if I'm able to accomplish that financially and in terms of the way my life looks, who cares what, market positioning I need to be in to do that. Like that, that's pretty irrelevant.

Quick aside, in a very early episode, maybe 100 episodes ago, we talked about how having good competitors is actually an advantage. And I want to bring up the conversation you had with Stanley one time, or maybe it was Walmart or whatever. And they're like, you know, Stanley didn't want to be in Walmart with some new design. And then Walmart's like, hey, well, we're going to put a Zippo Modern. And they go, that's great. We love those guys. You should put Zippo Modern in here. They'd be perfect for you. And This is the advantage of having a large category with real competitors is that they don't actually try to kill you.

You know what I mean?

Like when you're, when you're knife fighting for, you know, a very, very small TAM, it feels zero sum and you will see people sabotage each other. But this, this large, large category, lots of large, like incumbents and competitors, they can actually end up being some of your best friends because it's like, look, they have a lot of shared experience with you.

So one of the reasons why that's true, there's, there's a couple reasons why it's true, Sean. In really big categories, there are a lot of different ways you can position your brand that other brands are like, yeah, that's great. There's people who wanna buy that. That's just not what we wanna do. So like Stanley wants to sell $45 tumblers. We don't wanna sell $45 tumblers. So they're like, that's fantastic. The Simple Modern wants to sell $25 to $30 tumblers. And that's a separate kind of person that is making buying decisions in a different way. And we're not really threatened by that because the market's really big and there's plenty of people that wanna buy $45 tumblers, just like there's plenty of people that wanna buy the $25 tumbler or whatever. Yeti's the same way. Like we, I guess, ostensibly were competitors with Yeti, but how much do we really go head to head with them? Not very often, you know, because in general they're trying to do a different thing. Interestingly, what you share in common with your competitors is a desire to keep other people outta your market. What damages the prospects of a market most are when new capital and new competitors flows in because it just makes it more competitive and it drives everybody's margins down. So you're kind of actually anybody that's already in the market, you're, you're kind of allies with them, and that what you want to do is make the market look unattractive to any new capital that would want to flow in. Because as long as the market's stable, you're all going to do okay and you're going to make money. The points where you might not make money is when new money flows in and it gets really competitive and attractive.

Mike, you're on this like capital allocation thing. Are you of a similar mind in your personal life? So like when you finally had cash, did you go after debt first? Like, do you have a mortgage on your house? And this is like—

Yeah, I don't, I don't have any personal debt.

Okay.

And so like Munger has a great quote where like, there's, there's two things that can ruin a man, you know, alcohol and debt. And, and I think that one of the quotes that I'll say with my team all the time is you can't go bankrupt if you don't have debt. So in the game that we're playing, there's really only one outcome, which is like you lose, and that's bankruptcy. And even in America, like, can you come back from bankruptcy? You can. but it's kind of like you're maimed financially, you know, it's like you've got like a peg leg basically financially, like the, because banks are, it's very long road back to getting people to lend you money when you've gone through a bankruptcy. So it's kind of the only rule is like, if you don't go bankrupt, you can always live to fight another day. And there's only one way you can go bankrupt. And that's with debt. And obviously nobody, I don't, most people don't take out debt that they ever think they might not be able to repay. Yet we know that people go bankrupt all the time because situations change. So I think that the other part about debt, whether it's personal debt or business debt, is that you start to have to contort yourself and manage your business or your personal life around it. And that is problematic. So you think about your personal balance sheet and the company balance sheet as like these are separate things. Like my company's in an LLC and if something really terrible happened, like somebody sued it and into bankruptcy, last year, we had a huge recall. It's like, well, their balance sheet and my balance sheet are separate, so I'm protected, right? But the longer you run a company, when you're the biggest shareholder, what you realize is that, that these two things are actually pretty tied together. My balance sheet and the company's balance sheet are really tied together. So an example of this is if I'm being pretty aggressive with debt personally, then I'm going to have needs from my company and expectations as a shareholder of what that company can produce that may or may not be consistent with what it can actually make. And this is the worst place to put management teams in where it's like, hey, you're making $20 million this year. And they're like, well, I don't think so. I think the business can make 15 or 12. And it's like, no, no, no, you're making 20 because I need you to make 20. You know, I talked to, I have a friend who, he works for Merrill Lynch and does wealth management and he has a bunch of friends in the wealth management space. And he was telling me just what a nightmare it can be to work with some of these people. And he gave one example. There was a guy in Florida who owned like a construction company or something. And the construction company had done well. It was like a $5 million EBITDA construction company, but this dude was just maxing out lifestyle. And so he literally had, you know, he had a yacht and he had a full-time captain of the yacht and he had, you know, like several homes or whatever. And so like this dude's CFO was constantly pulling his hair out because he was going to a CFO and he's like, hey, you got to hit this number. And the CFO is like, I don't know how I'm going to hit that number. And he's like, well, my, you know, the captain of my yacht needs to get paid this month. So you need to hit that number. And like in its worst form, when you have personal debt, it starts to make you a worse shareholder and a worse manager because you're making decisions at a company level that have nothing to do with the company and everything to do with your needs. And I think these are all the negative stereotypes in general about investors that aren't owner operators is that they'll have, you know, private equity's notorious for this. They'll have expectations of a business that aren't even consistent with what that business can do. It's like some Wharton graduate in, you know, sitting in a cubicle in the Northeast, punched some things into Excel and said, you should be able to hit this number when they're totally disconnected from the reality on the ground. So all that to say, there's downsides to running your finances and your company finances the way that I did in that I'm, I have less capital to invest. The thing about debt is it expands that snowball of capital you can invest. So if you're investing more capital, you can get a bigger nominal return. but it also really reduces my risk profile. And this is why I come back to on the show over and over again. What you're really trying to do is you're trying to maximize your quality of life. And I'll tell another story. So I have a friend, I won't tell the specific name, but I have a friend, he was building a company and he got really fixated on the idea that he wanted to sell his company for $80 million or more. Now, when he was building this company, he already had $20 million in the bank. So he had, he was basically already had won the game, but he's building this company on Amazon and he really, really, really wanted to sell it for $80 million. And so he was super aggressive, took on a bunch of debt, played really fast and loose with the rules in the Amazon marketplace. Um, and Amazon ended up turning off his account. Uh, he had to eat all of his inventory, almost went bankrupt in the process. Didn't, but almost did. And it was kinda like, what are you doing? You already had won the game and then you put yourself in a situation where you could lose a game that you already won chasing money that you didn't need. And so this is kind of my view of debt. It's like, I already have money, like I've already won the game. Why would I be trying to maximize return to such an extent that I could imperil, you know, what I've already built? So that's kind of been my view towards debt. There's a lot of other views out there, but now that I've gotten to the point where we're totally off debt, now there's just a bunch of cash that's flowing in every week and it needs a home. And I had to start really thinking about what am I going to do with it?

Mike, that's awesome. Getting us to where we are. You know, you said, what am I going to put on my tombstone? Like, hey, number 2 in water bottles. Like, right. You can't take much to the grave, but you definitely can't take your market share to the grave. Let's talk about the success of Trevi. So that was the first brand you expanded into. You know, you gave us the recap from basically 2015 to 2024, you end up paying off all your debt. You're in this cash-flowing position. You have a bunch of awesome intellectual talent. You have people who could be CEOs at any company on earth, right? And they are like, okay, let's give these people more opportunities. How does Trevi come to be?

[Sponsor Content] If you're scaling an e-commerce brand today, ads alone aren't enough. AfterSell focuses on the one moment that every brand already owns: after checkout. And turns the post-purchase moment into more profit. Monetize every order with post-purchase offers and thank you page experiences without disrupting checkout or hurting conversion. Enterprise-grade tech used by Gap, Ticketmaster, Macy's, and Target, now driving results for brands like True Classic, HexClad, Ridge, and Jones Road. I would know. This is the reason I ended up buying 3 pans from HexClad instead of 2. AfterSell has already generated over $1 billion in additional revenue for e-commerce brands, revenue that doesn't require more traffic, or higher CAC. So check out AfterSell and tell them that the operator sent you.

Right before I jump in, and I want to make a point about, um, human capital. When you are able to amass really elite human capital, it's a little bit different than financial capital because it can walk, right? If you can't provide a great opportunity for it, then it can go and pursue that opportunity somewhere else. Now, fortunately, I don't feel a lot of that risk with the human capital, the elite human capital that we've amassed. But you do feel a little bit of like, you know, if I have $1 million in my bank account and I don't know where to invest it, I can just leave it there and it's not going to get up and walk off. But people don't work that way. If you have somebody who's amazing who really wants to be a CEO and doesn't see a path to that in your organization, then somebody is going to offer that to them or they're going to go start a company or whatever. So we, we had several of these people that were excited about opportunities, and I was very excited about the electrolyte space, it was, you know, it's been very trendy. It feels like everybody in the world has launched an electrolyte brand. And we on this podcast, I've detailed a lot of my thinking of like, hey, why was this a category that we felt like we were positioned to win in? It checks a lot of the boxes we're talking about. Really big market, really big market. Like Amazon last year, over $2 billion in sales on electrolytes just on Amazon. So like very big market and very big on a channel that I really, you know, know how to do this with, how to launch brands on, and natural kind of connections to our brand. So we launched into it in December of '24, I guess, and we're kind of at like 13 or 14 months in. And I think that's been about the amount of time to fully understand retention, lifetime user values, market positioning, and where we need to position the brand in order to win. So I'll be excited to talk about that. I can share some, uh, an update and details there. But in general, the point that I would make about this capital, like I was more or less faced with this kind of fork in the road where it's like, do you just start putting everything in the S&P 500? And the, there's two reasons why I went the putting it in companies like Trevi route. One is that the market's really expensive right now, like really expensive based on historical conditions. And so you've gotta believe that PE ratios and things like that are just going to go to levels that we've never seen before, or that GDP is going to grow at 10 to 20% or some kind of insane level for those valuations to really work out for you and earn a good return. The other thing is, and we've talked about this a lot, is that, man, new products, new companies, they're asymmetric. You can fund a new company with $1 million or $2 million, and then in 2 or 3 years it can be making $5 million in EBITDA or $10 million in EBITDA, and it's basically impossible to get that kind of return on capital in the public markets unless you're like Warren Buffett or something, certainly with those kind of numbers. So the reason why starting new companies is it's like, man, if you are an operator and you really can do this, then it's almost impossible for there to be another place you can stick your money that's gonna be able to provide those type of returns. So that was the thought process that we, that, that caused us to, to put a couple million dollars towards Trebi.

[Sponsor Content] Every SaaS company says they are AI-powered, but very few can explain what it actually does for the revenue of my brand. This is why Postscript's approach stood out to us. They don't just build AI for demos or buzzwords, they built it to drive real incremental revenue. Postscript's AI called Shopper, it shows up inside of SMS at moments with real buyer intent when shoppers are likely asking questions, hesitating, maybe even about to drop off. Shopper can answer product questions instantly, answer questions about fit, availability, recommendations, order issues— the kinds of stuff that people usually bounce for. This means more conversions, higher AOV, less lost demand. So you are driving more revenue and doing it more efficiently. Check out Shopper from Postscript. We use it at Pelo, which is why I am telling you to check it out.

Yeah, Mike, and you know, maybe a little over a year ago I did a tweet saying that you should buy Micron stock. It was at like $80 or whatever, and not financial advice, but I was like, you know, it's so obvious where the puck is going. Data centers need memory. There's only one US maker of memory and they're priced at $80 a share right now. They're $300, $400, whatever. If you put $100 grand of that, you probably have $500 grand today, which is an awesome return. That's the best possible return you could ever make in the public market. Like that is a once in a 3-year trade or whatever. And you could put $100 grand into a new brand and it could be worth $2 million in the same period. It's like, it's like just the, the value of you, you hands-on doing the work, you can get like just returns you can't get anywhere else.

I tell people, one of the stories I tell people is that I bought some Bitcoin in 2014. It's actually funny, my brother almost, I don't know if I've told this story, but my brother, back when we were running Quibbins and he was making just crazy money, he wanted to buy $1 million in Bitcoin in 2011. And the only reason he didn't is he was having issues with Mt. Gox, which was the only place you could buy it, and he ended up not buying it. And we've looked back on that and it's been like, man, that would've been like billions of dollars today. But, um, he's also like, yeah, but Mt. Gox got hacked, so I probably wouldn't have any of it. And he's like, okay. But we were paying attention to Bitcoin and I bought some Bitcoin in like 2014 for like $50 a Bitcoin, right? And I held it. And then in 2016 when the company was just getting started, and like I said, we were very hand-to-mouth, we needed every dollar we could get, I sold all of that Bitcoin in early 2016 to put the money in inventory for Simple Modern. And it's like, you know, I don't know what Bitcoin's gone since then. It's gone like, you know, whatever, 1,000x or 100x or whatever. But what I tell people is that ironically, I put it in the one asset class that might have outperformed Bitcoin during that period because it's like, it's still, that's how asymmetric companies can be when they really work. You know, it's like, it's almost like there's nothing on earth even Bitcoin in its heyday that can hit the kind of asymmetric returns that you can when you put your money in a business that's scaling. And also, like, you know, Shawn, go back to the Micron example. It's like, how much Micron would you feel comfortable buying, right? And it's like, like you said, maybe $100,000. But I'm talking about a world where I've got to invest potentially $10 to $20 million a year. And so am I willing to buy $10 million in Micron stock? No, that would be insane. And so, with companies, you feel comfortable. It's not just you can get the bigger rate of return, it's that it's easier to invest really large amounts of capital. And that's another advantage.

Mike, was there something that almost like stopped you from going this route?

I've been in the game long enough that I've taken plenty of Ls and that's the one thing that makes you, you just, you realize that like you're going to have some stuff that doesn't go your way. And I think that one of the biggest things you wrestle with, that I wrestle with, I don't know if you guys feel this, but like everybody wrestles with insecurity and like, have I just gotten lucky? You know, am I, am, is my, am I gonna, am I gonna find out I'm not really as good at this as I think I'm, I am. Am I gonna let people down? Like, should I just play it safe? And I, I think the more money you get, the easier it becomes to just kind of say like, I should just play it safe. I should put this in T-bills or whatever, and I should just kind of like, you know, drink Mai Tais and laugh. But I'm really not that type of personality. So yeah, I mean, I think, I think there's always this kind of, can I do it again? But I think that's also part of the fun part is setting yourself up with a new challenge. Like, I love the idea of what if I woke up tomorrow and Simple Modern was gone and I had to start from zero? Like, that's not a scary idea to me. That'd be a fun idea. So Even though there's some self-doubt involved, I, I think that, uh, the challenge of it was really attractive.

Was the cap table supportive? I mean, you're, you're the majority shareholder, but are you, I mean, you're, you're not alone.

Yeah, that's, that's actually one of the big kind of challenges is if you're going to continue to do things, do you do it within your company structure or do you start new entities? Um, and there's pros and cons to both. One of the cons to doing it within whatever you've already built is that functionally the majority shareholder can just drag everybody else along. And whether, you know, whether they want to or not, like their capital's getting invested. But the opposite of that's true also, that if I broke out and was like, hey guys, I'm starting an electrolyte brand and I own 100% of it, people can't really stop me. But there would be bad feelings about it, especially if it was successful. And I think that this is the problem. It's like if it's unsuccessful, then everybody's gonna be like, why'd you do that in a company? Why'd you use my capital? If it's successful and then everybody's like, why didn't you let me be a part of it? You know, so like it, this gets back to like, what outcomes do you expect? But I have great relationships with my other shareholders. They're basically all guys that have operated the business with me and, and they were excited about the opportunity as well. So, uh, we wanted to keep it in. We have an ESOP. Uh, so there was also this piece of like, hey, if this is really successful, this is an opportunity to really add to the net worth of the people that work at the company. So we ended up keeping it in, but we created it as a separate company under Simple Modern because I felt really, really strongly that we did not want this to just be another product expansion or we wouldn't maximize the opportunity. We needed some single-threaded leadership on it. And I think that that's proven out to be absolutely true, that if it had just been another product line, I think we would have probably not seen it as being as big a potential as it can be because it took us longer to crack this nut. And so like, you know, for you, Sean, like when you guys launch a new product, if that thing doesn't pop in the first 3 or 4 months, then it's kinda like, hey, onto the next one. But when you start a new company, it's kinda like, this is the product, you know, like either we make this work or this company, this business unit shutting down. And so I think that that was helpful. The other thing that's helpful about pulling something out from a, if you're going to do something new, is that the biggest danger I've learned comes with capital and how much you invest in something. And when something is fully nested within a company, it's easy for that thing to basically become a resource suck, but it's not as obvious because it's hidden within the P&L. When it has its own P&L that's broken out, if it's losing $2 million, it's right there. They're in red ink. If it's nested within your larger organization, it could still look like, well, the larger organization's doing great and we're making money and things are fine, even if you have an unhealthy business unit that's kind of being subsidized or that's hidden within it. So we, we split it out. I think that was good from a leadership perspective and also to be able to understand from like a, from a financial perspective how it was doing.

It makes sense to do it as separate companies that are, you almost entirely owned by Simple Modern, except for you want to create cap space for the leader, I assume.

Yeah, you want to create some upside. And whether you do that with equity or equity-like instruments, I think is something that you can look at. Because, you know, ultimately, if you said to somebody who's going to lead a business unit, hey, you can get 5 or 10% equity, or you can kind of get the financial upside of what it would be like to own 5 or 10% equity, Usually I think what you'll find is they're kind of indifferent. They just want, they want the upside. And so with our larger structure, that's more how we've done it is kind of like, hey, we're going to create this type of upside. So the structure that we did with Trevi was, hey, this is how much capital we're investing. Here's the return we expect to see on the capital. Once you exceed that return, that expected return on capital, if you hit this number, you get this amount of payout to management. If you hit this number, you get this other, you know, this bigger amount of payout. And so they're basically incentivized to hit the return that we want to hit on the capital and then to really maximize the return they're getting on that capital. And as that return goes up, they, they really benefit and they make a lot of money as a management team.

Are you comfortable saying if Trevi's going well?

Yeah, yeah, yeah. So Trevi is, I think this year it will grow about 500% year over year is what I would guess. And I would guess it ends the year somewhere between $20 and $30 million in revenue, if I'm right. So I, I would say that's good. Um, for, for us, like, uh, I think Corbin and I both would like to see it, um, grow even faster, but like, I think that's, that's a really solid place to be. Uh, if we're, if we're ending, I guess this would be 24 months in, if 24 months in you're at between $20 and $30 million in revenue and you're growing at that rate, I think that's really good and profitable, I should add. Um, it's, it's turning into profit, um, right around, right around the beginning of April for us. The biggest challenge, I think, to hearken back to another episode that we had where we had Chad from Groove, which is obviously one of like the home run success stories. He really hammered on this 3x CAC to LTV kind of calculation where you say, hey, if my LTV is 100, I do not want to pay more than $33 on my customer acquisition cost, for example. And early on we were just not hitting that with Trevi. And part of that's, it's a super competitive market. We already mentioned you want to be in really big markets, but you know what really big markets are? They're super competitive. And so it takes a while to figure out how are we going to hit that.

[Sponsor Content] What's up operators? Welcome to the Richpanel ad read. Richpanel has been a sponsor for over 12 months. I've been a paying customer for over 12 months, and guess what? I just renewed to pay again for another year. We have cut our SaaS bill in half and automation dropped our cost per ticket by 70%. Our CSAT has also improved from 88%, which is still really good, to 96%. Best in class, all powered by Richpanel. I told them last year, hey, you guys need to do the same thing with returns, and now Richpanel has a returns portal. It's built to cut down your tickets and convert more refunds into exchanges. They do the heavy lifting— data import, self-service, retention flows, team training, all of it— and it'll be live in 2 weeks. If you want to save 30% guaranteed on help desk and now returns, Book a demo.

We did another episode, you did, with, uh, Jordan from Instant Hydration, and they've kind of solved for that in a very different way than we did. They've solved for it with exceptional meta advertising. So really what you have to do as an entrepreneur is you kind of have to say, well, what are the numbers I have to hit to really scale this thing? And how's everybody else in the market positioned? And where's the white space? And so that, that process I think took us about a year to really understand like, okay, for us to make this work, here's what the path is. But I think— I mean, I don't know. I think I feel comfortable saying this. I think the company can do in '27, I think it can do about $10 million in EBITDA. And so I think it can be very profitable and I think it can be a great addition to our portfolio of brands. But also like we probably set between $2 and $3 million on fire to get to that point. So like there, it's an exceptionally competitive market. I think if I didn't have a lot of capital, I would feel like I was showing up to a knife fight with a water gun because you've got obviously like Liquid IV and Element and companies like that. But another thing that people shouldn't forget is it's like, it's funny, this is kind of like a trick question I've done with people. Sean, who do you think has the biggest marketing budget in the electrolyte category?

Oh, I'm going to say Costco, Walmart.

You say Costco or Amazon, Walmart, one of those.

Okay. So you guys are thinking about distribution channels. What about on the brand side? Who do you think has the— what brand do you think has the biggest electrolyte marketing budget?

Yeah, I, and I would, I guess what I meant by Walmart is some knockoff Walmart brand. That's, that's what I think. It's like Great Value Electrolytes or whatever. Yeah, there you go.

Well, it's a really obvious answer and it's funny because it's like the way that we're conditioned to think in D2C world. It's Gatorade, you know, like the biggest marketing budget is Gatorade. They, they have, I mean, they spend, I don't even know, hundreds of millions of dollars. Like you can't even, the Thunder would love to partner with us, but they can't. They're in an exclusive agreement with Gatorade that they have with the entire NBA and they have them with the NFL and they have it with all these athletes and whatever. And so, uh, it's just a good reminder that it's like, it is a massive market that like we tend to think about all these, you know, digital first brands, but then it's like Powerade is probably way bigger than Liquid IV. And like, uh, you know, there's probably like, uh, there's a bunch of electrolyte brands that have kind of made their, their, their money en masse. So anyway, it's a huge market and, uh, it took us a while in this really huge market to understand, okay, how do we need to be positioned in order to be, in order to be really successful? But I think we found it. And so that's exciting.

[Sponsor Content] Longtime sponsor Northbeam is launching incrementality later this quarter. This means that you can now have the trifecta of marketing measurement all in one platform. That is multi-touch attribution, media mix modeling, and incrementality holdouts all inside of Northbeam. You can automate that lift testing end-to-end, unify results with your MTA and your MMM. This is a lot of letters, but if you know, you know, and you can start to cut what doesn't work and you can scale what works. And you can do this all with confidence. This is why this is such an incredible add to Northbeam. Northbeam's incrementality measures what results marketing is actually generating, not just what they're claiming.

Credit for.

As a CEO, that's like music to my ears. Sign up now and you can lock in 50% off unlimited tests for the year.

I think anybody would love to turn $3 million into a cash-flowing $10 million a year EBITDA business over 3 years. But what it takes is the upfront capital and the human capital to get that done. I got a couple more questions and then when I talk about the new brands you guys are going to launch before we get off of Gatorade, eventually you go to the RTD space, which stands for ready-to-drink for everybody. Right. So, you know, we're all in powders right now, right? That is where you get— it's cheap to make, cheap to ship. You mix it into water, you got good margins on it.

Perfect digital product. Perfect digital product.

And then I go to the sauna and they have RTD Element drinks, right? So Element just made this push right now. So is product expansion going to be part of that $10 million roadmap or like that's even further down the line? That's when you guys were doing $50 million EBITDA.

Yeah, you don't have to get out of powders, I think, to get to somewhere between $10 and $20 million in EBITDA. But like you said, inevitably, and this is where somebody like Gatorade is really helpful, like it really shows like ultimately what is the total portfolio that you want to build? It's ready to drink and there's a variety of different ways that can look. The ready to drink is a good example of it's a different skillset because it really only works if you have physical distribution. Like selling, you know, packs of ready to drink stuff on the internet is just not a very good business model because it's super inefficient. It's like all these brands that, ship food where they have to ship like 8 pounds of dry ice with it to get it to you. And so you end up paying, you know, it's like half of what you're buying is shipping and dry ice. So this would be a situation where our experience with Walmart in particular, I think, stands out where like, hey, if we could get to a scale where ready-to-drink could make sense, then Walmart would be a partner that we would try it with. Or maybe club, I don't know. But absolutely, Sean. And the ready-to-drink market is probably way bigger than powders. I don't know that for a fact, but that would be my guess.

Oh, for sure it is.

I would guess it's 10 times bigger, 20 times bigger.

But you're also, you know, going back to this size of market thing, it's like, well, if you are like 80th in ready-to-drink, you're just printing money, right? But also, like you're in the most shark-infested waters in the world. Those people will freaking kill you. Like, that is Coca-Cola. That is like the, the very, very serious operators that are at absolute global scale. And you know, the capital that I have is a flea bite compared to what they're working with. So you, you don't want to go into that unless you really know what you're doing and you really have exceptional product market fit.

Mike, when you started Trevi, were you guys expecting to light a couple million bucks on fire to figure it out? Or, or was that just sort of a, you know, oh shit, I guess we have to do this.

I could have and should have kept the burn lower in retrospect. That would be the, and, and I guess I would say two things. One is, um, I, I, I lit a good amount of money on fire, but in retrospect, I learned some things through that, that in my subsequent ventures, I'm going to be able to be more capital efficient. And so maybe I bought something with that money I let on fire. But also like, I think that there was a strategy that we saw early on and more or less it was the go really low on price, go really aggressive on price strategy that we saw. And we just were like hesitant to do it. I guess it's kind of like, I knew in the numbers, I saw some stuff in the numbers where I was like, I think this would work. But in some ways it feels like taking the going really aggressive on price strategy is somehow less than sometimes. Like it's like, especially in the kind of D2C community, it's like we're always trying to figure out how do you charge more for your product? So the idea of trying to figure out how you're gonna charge less, but we know that that's a really effective model. And you know, like I said, the biggest company's Gatorade and you know, they're selling stuff for whatever, 25 to 50 cents a serving. So, saw that as a path and what— and we tried to kind of— we were looking at what everybody else was charging and what they were looking at per serving. And we tried probably 6 or 9 months to do a kind of an in-between where it was like a value play on that, where we weren't charging what other people were charging, but we were still charging, you know, I don't know, $0.75, $0.80 a serving when most people were charging $1 or $1.25. And the more we looked at it, it's just like this is a treadmill that doesn't really go anywhere. But what if we got really aggressive and we're trying to charge 50 cents a serving or something like that? And when we did that, we realized that's actually how you get this LTV/CAC ratio in this category that nobody's really done that with Amazon. Nobody's gone the super aggressive route with a really high quality product. And that's how we can, we can really make this thing work for us. So it just took a little while and I think we were hesitant to kind of break glass on the strategy that was the right strategy. In retrospect, I don't know why I was so hesitant. I think maybe some of it is you feel like you're giving up margin and you're giving up the opportunity of bigger profits, but it's one of the more counterintuitive things about building a company is that everybody ends up at operating margins between 10 and 20%. You know, it's like Yeti might charge twice as much a cup as I do, but they still end up at the same operating margins, you know, in the same range. And so, the, the truism is if you're in electrolytes and you're charging $1.50 a serving, all that means is you're just spending a lot more in marketing convincing people to buy it, you know? And if you're charging 50 cents a serving, it means you just are spending a lot less having to convince people because it's that much more attractive. So what, what I would advise to people that are getting into a new category is even before you getting into it, kind of mapping out all of the competitors that are currently in the space, like, okay, if I was gonna draw a grid, what are the two main dimensions that people are using when they buy this, right? And then I would graph out a little 4-box grid and I would say like, okay, where are all the competitors positioning themselves on these 2 main purchasing factors? And where is there a place where there might be a good amount of customers but nobody's really positioned themselves? And if, if you can find that, then you've got a really good chance of being successful. But if you can't find that, it doesn't matter how big the market is. If, if there's no obvious whitespace, then it's going to be tough. So the one other thing here is it's not even just the market, it's a channel. So like I mentioned electrolytes, we are playing this extreme value play on Amazon and it's really working for us. But nobody had done that on Amazon. But if you go into Walmart, like you said, Shawn, like there's definitely extreme value. You know, Gatorade's a lot cheaper than anything on Amazon. And then you've got like the Sam's Choice or whatever electrolytes that are like a cent a stick somehow. but it's not that extreme, but you, you get, you know, it's like, how are you hitting those prices? So, um, that's, that's the way that I would think about it. What is the channel that you can launch in where you can hit the kind of customer acquisition, uh, numbers and prices that you need to hit? Um, and what's the kind of white space and the positioning that you can find where you can hit that? And if you can answer those things, then you've got a good shot.

One quick, quick aside, uh, one reason why it probably costs $2 to $3 million to, to launch this and get to where you are is that good factories in this space just have high MOEs. Keys. So like, like your initial bite at the apple is just so much higher if you want to go through that factory, um, just for the audience. The second thing is you said you have good skills at wholesale out of Amazon, and that's where you're tackling these. Now you're launching new brands. Are you going to try to learn D2C marketing, Facebook ads to make those new brands work, or are you just going to lean on your core competencies, Amazon wholesale?

So There, there is one that we're doing that I think will be more of a D2C play, um, but I've, I've wrestled with this some, and in general, I think the wisdom here and the research says when you're really good, you know, or elite at something, instead of saying, hey, what are some other areas where I'm not as gifted and I need to get better there, like learning how to lean in and really maximize the advantage in places that you're elite is the best way to play the and I'm increasingly like, that's probably the answer for me. Now, I, like I said, I've got some other people that are really gifted that want to run brands, and increasingly my role is going to be I'm an advisor to all of these CEOs and these people leading brands. Like, I've kind of gone out there, I've got my scalps on the wall. I don't feel the need, like, I've got to be the first guy through the wall on these brands and like where I'm like, um, leading. And I, I like the idea of like more like, hey, I want to work on interesting things with people, really high-character people that I enjoy but I'm also okay with letting them kind of lead the charge. So maybe there'll be some of that, but in general, I think Amazon's freaking huge. Their advantage is only growing and I'm really good at Amazon. And so like, I'm most of the things we're looking at, I'm going to start with this question of, can I leverage the advantage that I have with Amazon and wholesale? Do I, do I see a really clear path? Because the reality is probably that I could spend the rest of my career doing that and not run out of opportunities. But I also do like learning new things, so we'll try. Well, there's one that I haven't announced yet that Ventures, the very first thing that Ventures is doing, they've already got the product in route and it's pretty interesting. It's a really big category. It's kind of a twist on a really big category that's gaining steam. And the, I think it's got an interesting opportunity and we're working with some friends of the show on the marketing side of it and it'll be more of a D2C play. So we'll see.

That's awesome, man. Okay, so now let's talk about the setup of ventures. What we covered is that, you know, Simple Modern has climbed the mountain and is super successful, is spitting off cash, probably too much cash for it to eat. You have a bunch of great leaders and you want to give them opportunities. You want to let them go run, be their own boss, be their own CEO, but inside of your guys' framework, you have a track record of doing it now with Trevin. Right? And you've, you've learned from that and now it's like, okay, now it's time for Simple Ventures. We're gonna spread out. This is gonna be a formalized process. We're gonna do this a couple times. What, what is the, the timeline for it? Is it one a year? Is it two a year? Is it, is it, do you, have you identified the categories you wanna go after or is it still looking for the best opportunity?

So I think this year, I think we will launch three new businesses, uh, is my guess. The, uh, So interestingly, I mentioned this in chat, but this is the first time I publicly said it, but I think the listeners of the pod are going to hear more about this. We've got a really exceptional software engineer who is on the very forefront of the AI stuff, and we had him start working on an internal tool last year. And what he's built it into is so exceptional that we're probably just going to turn it into a company. Like, I think it could very easily be a tool that becomes a part of any e-commerce operator's stack. I'm kind of in awe of this thing that he's built and what's possible. And as an aside, I have thought a lot about the SaaS space and how AI is going to impact it. And I don't think I'm in this, hey, SaaS is going to zero. I think I'm starting to be in the other side where it's like, we're just going to use way more software. But that's a different topic for a different episode. So we are going to do something in the kind of software side. But in the venture side right now, there's at least 2 things that we will launch this year and maybe 3. The biggest question is I've got 2 guys there, Brian Porter, who's my co-founder with Simple Modern, and Lee Graves, who was basically ran our operations with Simple Modern. So those guys are exceptionally capable. And I think that the big question is that I'm asking them is, do you guys want to be launchers of brands where we hand it off to other capable leaders when we prove the concept? Or do you want to take one of these and run it yourself? And I don't think we fully answered that yet. So we need to kind of figure that out to understand how many we want to launch. But this year, at least, at least 2, probably 3 in simple ventures, and then probably also a software thing. So that would grow our portfolio to like potentially as many as 6 things by the end of '26, which is quite a bit. And my expectation, by the way, would be launching companies, you're— I think you can get better at it. I think the more capitalized you are and the more experience you are— you have, the better chance you have. But I would still view it as there's probably more than a 50% chance that anything we start is not an asset we want to hang on to, that it's either something that you close or you sell off, and that the minority of these are things that we end up holding as kind of continuing parts of the portfolio. But you mentioned this earlier, Shawn, like obviously Simple Modern's in this, it doesn't need capital, it's spitting off capital. Trevi could easily be in that place in the next 6 to 9 months where it doesn't need capital, it's spitting off capital. And so if you can get the snowball going, then it's pretty easy to see how you could really quickly have really large amounts of capital that you have to play with and you can invest. And like my big dream, I guess I would say, is I want to be in what's going on with technology. I want to buy freaking robots. I want to have 100 Optimus robots, you know, working on stuff. I want to like get involved in the bigger game that I think's unfolding. So I love selling people physical products. I think that's going to be a great place to be even in a world where technology's going absolutely ham. But dude, I want to be a part of this kind of bigger, like shaping the world stuff. And to do that, the ante for that table, is tens and hundreds of millions. And so like, I need to get businesses that are producing enough capital where I can really be a part of the bigger game that's going on.

People always talk about, you know, companies have like a 1% success rate, right?

That's not actually true.

Yeah. Well, what I was gonna say is like, that's restaurants and that's venture capital stuff.

It's like TikTok dropshippers. Yeah.

I think if you have the, the experience, if you have the capital and you're trying to do consumer, it's like, look, it's, it's probably a 50% success rate. You could, and even if it's not a success, it's, you have something, right? Like you can make the—

yeah, most of the time, Sean, it's really about what's the rate of return on that capital. It's not about like, are you going to go bankrupt? Are you going to lose all your money? It's just like, yeah, you could put a couple million dollars here and earn a 5% return per year. Is that worth it? And so like, I think that's more of kind of like what you find yourself in practically. If you, if you are smart about it and you pick a category, you know, wisely, then probably your worst case scenario isn't that you lose all your money. It's just that you're like, well, this thing's kind of limping along. I've got a couple million dollars in here and it's producing $150K in EBITDA. And like, that's, I should just have the money in the market or in bonds or something if I'm going to earn that kind of return. Like, this is way too much headache for the amount of return that I'm getting. So that's the more likely problem. And I think that that's where like opportunity cost becomes the bigger issue. Like the real risk isn't like loss of capital. It's just the opportunity cost of that capital could be better used somewhere else.

Mike, are you still structurally keeping everything the same? So like these are single-threaded organizations with single-threaded leaders. You know, they, I'm assuming they interface with like common things like finance, right? Like centralized.

Yes. So, okay. So we have shared services. This was something we talked about before the pod. Right now we're still nailing down what are shared services, but in general, accounting is a really obvious shared service. I think logistics is another, you know, logistics warehousing is another fairly obvious shared service. HR could be and kind of has been another shared service. And then I think there's some other places where we're looking where it's like, maybe. So as an example, I think you guys are familiar with some of his work, Chris Gans. Yeah, we've worked with Chris. So Chris Gans on our team, he worked worked at PepsiCo. Amazing designer, especially when it comes to branding and packaging. He's actually done some work for 9Ops, and, uh, Chris works with the Trevi team, for example. But it's kind of like, well, we needed him to kind of really understand how we were going to position that brand and the packaging or whatever. So could we use Chris on some of these other projects? Like Simple Ventures has pulled Chris in, and he's made the packaging for some of their new things that they're bringing to market, and he's just great at it. So like, could you have somebody in packaging that's kind of a shared service where like they're just like an absolute subject matter expert on that? Maybe. We'll see. Right now he's nested under Trevi, but he's so gifted that we're kind of borrowing him in other places, which kind of implies to me that maybe that could be a shared service. So I think that there's more than just, uh, kind of like— oh, legal was another one as a shared service that we, we've got across. Us. So there, there may end up being more than that, but I will tell you that my biggest conviction is that organizations are just going to be a lot smaller going forward. I, I think that the future that AI is going to enable is that you're going to have a lot more companies and that they're going to be smaller companies. And that as a result, with all these new things we're starting, I'm trying to start them as single-person things or, you know, at most teams of 2 or 3. Uh, because, and, and, you know, like with Trevi, for example, I was talking with Corbin, we think we could probably scale it to $100 million in revenue with 5 employees potentially. And some of this is the decisions you make around channels and different types of complexity. But I think with the technology, I, I would be, the way that I'm approaching starting new businesses and the way I encourage other people to think about it is that you should just be building businesses differently where you're thinking like, how How big can we get with as few people as possible? Because that's probably the way that the future looks. And obviously it increases your speed, your agility, and your likelihood of being able to earn a return. The less overhead you have to apply to make that thing work.

Yeah, I was at a dinner last night, Mike, with maybe like 11 other founders here locally, and one of the guys asked everybody to kind of go around the table and just say like, you know, a year from now, if we're sitting here, what are we celebrating? And the only thing that came to mind for me was, uh, I want to 10x the size of my team without adding any more humans.

Well, and, and one of the things, Matt, I, I want to say on this is that like, I love all the people that work for us. And so I am not trying to use AI to get rid of humans. And so I agree. I'm trying to say, how do I empower the people on my team to run businesses? And how do I multiply the number of businesses and spread the number of people I have out across more more kind of money-making vectors. And that, that's kind of my answer is like, I want to take my human capital and I think I can go a lot further and I just want to spread it out across more business units.

[Sponsor Content] Sean here to tell you about Serris Analytics and Serris Pulse. Ridge is profitable every single day and we've taken that super seriously since we built this business. We track contribution margin by day. We look at the SKUs we sell every single day and we have to do this manually up until Serris Analytics came along. Same app. We take all of our SKU-level data, we build it into the data warehouse. Everything that goes into making a true P&L, I get on a day-to-day basis. Serris Pulse gives you clarity so your COO and your CFO and your CMO start speaking the same language. Contribution margin shifts teams away from hoping profits survive the season to managing them in real time. Book a walkthrough with the Serris Pulse team today. Click the link in the description. And thank you, Serris, for bringing you this show.

It sounds like you were already on the path of like the simple ventures, like Portco. And then my, my experience with you is that the AI thing has just sort of been an accelerant to say, like, it's almost like giving you extra permission to keep pushing on this. Uh, and I know in some of our, our group chats, I can see like many people are thinking along these lines, right? It's like the productivity gains in small business, like SMBs, which is what we all are. Are, right? Relatively speaking, those gains seem to be getting bigger and bigger right now, and the velocity is like pretty remarkable. So it, it, this to me, I don't know, Sean, where you sit on this, but like the portfolio approach seems to be the obvious place that I think a lot of us are going to wind up.

It's really, really hard to grow a brand to a billion dollars. It's like, uh, you know, hash cloud's on the way, comfort's on the way, but like it's really, really hard to cross that threshold. It just takes a lot of time. It takes a lot of focus. There's a lot energy. But at a certain point, it's like there are these other opportunities that pop up, and we're all very good at taking a brand from 0 to 10 or 0 to 50 or 0 to 100 even. Um, but like there's that chasm between somewhere like 200 to, to a billion. It's just, it's very, very hard to get across that. Um, so yeah, look, Ridge launched a brand. I think we're gonna launch more brands. I think, you know, Matt, you're— we'll do one of these for you. You're a multi-brand owner. I think all of or as entrepreneurs are gonna be doing more and more things. And I kind of want, you know, as you put a bow on it, Mike the human is a leading operator on The Operators Podcast. He has that whole business unit. He is the CEO, chairman in chief of Simple Modern, the multi-hundred million dollar water bottle company. He is now running, you know, as an advisor or key insight into Trevi, but also he sees what's coming with AI. He sees what's coming with his expertise and it's like, it's a great time to be in physical goods. He's gonna spend up 3, 4 of those in the next 18 months. And he's gonna become a SaaS bro. He's a SaaS software coming down the pipeline. But all—

SaaS bro.

All of that is so that he can build robots in space. That is what Mike's all about right now. That's the next game, dude. Optimus robots in space.

It's, you know, you, you will write about this a lot, Sean, but like, we are in the most amazing time in human history and there is nothing more exciting creating, then that I might have a small seat at that table and get to influence that and be a part of that. And like, man, that'd be awesome. It'd be awesome if I translated the skills I have clicking on my keyboard into like being a part of this like larger, like transformative moment in human history. And so it's like, again, it's first principles thinking, right? It's like, that's what I want to do. I want to be a part of like the really crazy stuff that's going on. And it's fun. And I think, you know, like I will almost for sure come back in a year and I'll have a list of things I should have done this differently. I did this wrong, did this wrong. I really would emphasize that like the only thing that'll make this work, if it works, is that I have elite human capital that I can entrust with things. If you don't have that, like even for me, it is my weeks right now are crazy. You know, like I have so many different kind of direct reports and one-on-one situations and context switching that I have to to do. I would not recommend this for most people. And if you're going to do it, you absolutely have to have leaders where it's like literally if they couldn't talk to you for a month, they could do it and they could operate independently and autonomously. Because otherwise I just don't think, I don't think the risk reward is worth it. I think it's too overwhelming. But the fact that I've got really, really capable people around me, whether it's with operators or with any of the Simple Modern stuff makes it easier. And I'm really enjoying it. It's exciting. It's like, it's a great time to launch a brand. I think that in general, like physical stuff is not going to get disrupted. People are still going to be drinking electrolytes, you know, like that's not going away even if the AI becomes like super sentient, you know, and changes all kinds of other stuff and people are still going to need to drink out of water bottles. Like all that stuff's going to change. So I'm still really bullish on physical goods and I think we're in a great time to be building companies. I will say like my one observation, Matt, to what you were saying is that I think in the D2C space, my biggest critique is that people are thinking too small, that it's like almost all the AI stuff is how do we make ads more automated? How do we make more ads? And it's like, yes, I get it. And that is a big part of it, but that's also thinking pretty small about technology and what it's capable of doing. And what I'm trying to do right now is rewire my brain about what's possible. So the way that I, I think smart people work is smart people basically create goals and then they map out what are my limitations and what are the constraints, and then they kind of goal seek to where they want, like, how do I get to where I want to get? And what I think AI is doing is it's taking a bunch of constraints constraints that we've grown up our entire life and thought, well, these are constraints I have to work around. And now all of a sudden they're not constraints. And so you just have to, like, it's actually really difficult to reprogram your brain and make it realize, hey, a bunch of the things that you would've just assumed were impossible or that you had to work around, you no longer have to work around because the technology's making it possible for you to think differently. And, and so that's a big part of what I'm trying to do right now is just rewire that brain.

Where's that, Mike? You know, the books like Good to Great, Great by Choice, you know, like all the seminal, I think it's Jim Collins, right? I've got a theory that I'm playing with right now that I think the idea that good is the enemy of great is no longer true. Like all things are good because the nominal cost of doing everything now is zero. Whereas the, or it's getting close to zero. Whereas the nominal cost before, like you used to have to trade to say like, I've got 10 things I could do. I need to I need to pick, I need to figure out what the one great one is because they all cost me something. I do think that we're at this place now where like taking shots, every shot is just getting cheaper and cheaper and cheaper to take. Probably the most expensive part Sean already hit on. It's like just the physical making of the things. Everything else in the production, the go-to-market is damn near zero or quickly getting there.

I think you're going to just see a collapse of costs and it's like, you know, if it's not product and if it's not advertising, everything will, will get very, very close to zero. But like, I mean, everything should just be cheaper. And then what you're going to see is orgs are just going to spend way more on product or way more on marketing.

Well, and we haven't, we haven't really talked about this on the, the pod, but one of the, I don't know, kind of things, one of the thought processes that's coming out of Silicon Valley is people are like, basically like, you better amass some capital now or you're going to be stuck in the underclass. Class, and that's pretty dystopian. But I think that there is some reality to, in a world where a bunch of things that used to be important value adds in a chain are going to zero, they're getting commoditized. The way that I would assume that works is that the things that don't get commoditized just explode in value, basically, if that makes sense. Like their importance explodes and Uh, so it's like, oh yeah, before it's like, if you've got a great brand designer, then that's like a huge value add. And it's like, well, you know, there's going to be pretty freaking awesome tools for that, you know, that they can in an afternoon, you can come up with some great stuff, especially somebody with, but, but you know what you still need, you still need judgment. And so maybe that judgment now becomes 10x, like it's, it's worth 10x the leverage on that judgment. Um, but the actual creation of the assets is, is easy, but the capital piece is in escapable, that like capital, you either have it or you don't. And in a world where a lot of things are getting commoditized, you want to have capital. And so I guess I would co-sign on the idea. I'm not saying you're going to be in the underclass or you're going to be, you know, stuck in this dystopian hellscape if you don't have capital. But like, I think in the world we're going into, like, I guess another way of saying it is, you know, the CEO of Anthropic's like, I think we're going to go into a period where we're hitting 10 to 20% GDP. Growth. I don't even know if that's possible, but like, if it is, you know what you want? You want freaking capital. You want capital because that means that your capital is going to be compounding at just an insane rate if the GDP is growing that rate. So anyway, like, a lot of this episode's about that.

Yeah, I guess, like, doesn't that make sense that it— that actually is true? Because isn't GDP mostly a measure of labor productivity? And if we detach productivity from labor, that the measure itself is going to look really weird, right?

Yeah.

I mean, it's mostly going to be a measure of productivity.

Hypothetically, it's possible. We've never seen anything like that growth rate in an economy of the scale of ours or as developed as ours. But also, like, the, the number on Q4, I think, was 5-point-something percent, which— that's like a China GDP growth rate. So, I mean, maybe.

I think Elon Musk talks about, um, in the future, money isn't a thing, and It's like the closest thing we have an example to is textiles. And it's like 100 years ago, maybe 200 years ago, like a shirt cost you a week's labor or whatever. And now if you work at McDonald's, you can go on Temu or Shein or whatever, you can get all the apparel you want in less than an hour's worth of work, right? And that is them shipping it, making it, the whole thing. And the value of that good because of technology, because open markets, because whatever, has just collapsed. Collapsed. And it's like, what if that happens to everything? So it's like, it's like, you know, I, I don't believe in like you need capital to escape the permanent underclass. What I'm saying is maybe, maybe everything just collapses in the same way textiles does where like the, the dollar you do have just goes so much further because labor is free now. That's what we're seeing.

Like you, yeah, the argument is that, that technology's gonna be really deflationary. And so to kind of try, try to tie a bow on this episode, I think I actually have a concept that really works with what we're talking about, which is why am I doing all this? You know, like the question that you end up, you make a certain amount of money and it's like, what am I doing here? The thing that I think I've gotten, I've gotten two really helpful gifts from making a lot of money. One is that you get there and you realize it's great, but it doesn't complete you. It doesn't make you whole. Whole. It doesn't make you happy. It can't fill some of the things that you might think it could fill. And you're freed from a lifetime of imagining or hoping or dreaming that it can make you whole in a way that it can't. So I think there's a lot of people who spend their whole life and they really think, if I just had a little bit more money, I'd be happy. If I just had a little bit more money, I'd be fulfilled. And I don't have that illusion. So that's really helpful. And I think the other thing that having a lot of money does is it really helps you to understand how valuable your time is and how thoughtful you should be about what you spend your time on. As we've been talking about this, we're obviously talking about more businesses. I mean, I've really spent a lot of time thinking about how should I be using my time? Do I want to be spending it building companies or whatever? I do think, Sean, to your point, I think that there's a future where work is going to be more optional for people. I think most of human history, it's like you have to work, right? If you want to not starve to death, you've got to get out in the field. And I think whether it's UBI or whatever else, I think we're going to live in a world over the coming decades where not only can you not work and get paid to not work, but also, and still have a high quality of living, but also there's going to be more and more people who don't really have anything to contribute with the level of our technology. And so thinking about all this, thinking about Simple Ventures, what it's made me realize is the way that I'm wired, I'm going to be one of the people that wants to work even if there's no financial gain from it. Even if you totally stripped out the financial piece, like I just need it as a person to have puzzles to work on. And I'm a builder and like when you're a builder, you build. And so part of the reason why I've done all this stuff is that I want to be able to work on interesting things. I want to build things. With people that I really enjoy. It's the reason why I still do the pod, because I get to show up and I get to spend time with you guys and I get to riff with you guys. And so like, I do think our fundamental relationship with work may change, but that's why I've structured the company the way that I have, is because I want to continue to build things whether or not I need the money. And I, and I really don't need the money anymore. I want to do it because it's part of who I am and the type of identity that I want to have. And ultimately, you should structure your company, you should structure your money, you should structure your investments in a way that's consistent with the type of person that you want to be.

Mike, that's a great way to end the episode. I love that. You are a rock star. You're a great human. We're happy to have you on The Operators Podcast. Like, we're happy to have all of our fantastic sponsors. Matt, any parting words?

No, man, let's end it. That was awesome, Mike. Thank you so much for sharing.

Yeah, great job, man. Yeah, great spending time with you guys. I want to—

Great questions. If you were looking for investors, I'd invest, brother. Keep crushing.

I do want to hear about the SaaS thing, Mike. I'm like, I'm dying.

Yeah, okay, so you guys gotta stay on. We're gonna discuss this.

Okay, we have to stay on. End the pod. God, now.