Monday, February 21, 2022
Let’s talk equity. Let’s talk building businesses on the backs of your current business. Let’s talk reasons buy and don’t buy, stick with you for a while and then drop off.
Dan gives it all away without blinking an eye by showing you how to…
If you own a business, the strategies and lessons in this episode can make you very wealthy.
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Russell Brunson: Hey, welcome back to the Magnetic Marketing Podcast. Last week, we gave you guys the first part of Dan Kennedy's amazing presentation from 2012 at the Info Summit called money, money, money. We're talking about expansion, wealth, access to capital, leverage, sales of your company, exit strategies, and a whole bunch more. And today you're going to have a chance to hear the exciting conclusion, the second half of this presentation from Dan Kennedy himself.
Dan Kennedy: So shifting gears a little bit, I'll talk to you in the remaining time about a few lessons from my experience. And I will tell you that I have built, bought, sold. I have for a time owned 51% of a publicly traded company that was a turnaround project that was hemorrhaging money. I've sold a piece of it, kept a piece of it. I've gone through Chapter 11 reorganization, I've gone through Chapter 13, bankruptcy. I've gone through recapture of the assets after the bankruptcy immediately after the bankruptcy. I've done licensing, I've sold pieces instead of wholes. And I've been involved with a lot of clients who have both bought and sold. I have a client right now who just turned down $140 million from private equity buyers for his company, which is essentially an info marketing company that is only five years old. And it will get sold but differently than that particular offer was that came knocking on the door.
And of course the GKIC situation. Many people don't know it was never a secret. And I made a point of trying to make people understand it. I sold outright to Bill, I haven't had any equity for nine years. So I built the business and sold it to Bill, and we'll talk a little bit about why. But I haven't had any equity for nine years. Now, I have had what I call equity without equity, and we'll talk about that too. I've sold it and then I've helped facilitate the second sale. So I've knocked around this in a bunch of different directions in our industry. So the first thing I will tell you is that you can create equity from a business that it is difficult to create equity in by utilizing its assets to build a second business on its back.
And the second business on the back of the first and the third business on the back of the second, these are significant things to understand. And so one great example, Rory Fatt who many of you probably know or know of began as a client of mine, marketing stuff, two restaurants. The oldest, most basic info biz blueprint, generate leads, trade journal ads, direct mail, whatever, send sales letter, sell box of stuff. Hundred and one ways to market your restaurant. Then sell continuity, then sell to an event, then sell coaching. And so restaurant marketing systems probably peaked at about 6, 7,000 active members, restaurant owners. Two-thirds independent, one-third small chains franchises. Heavy bias to pizza because there's more of them than there is anything else.
In case you don't know by the way, the average American household eats pizza at least three times a week, which is why you can't saturate pizza. You could keep putting in more pizza joints and America consumes it. Pete Manning, you may have seen in the news, just bought a ton of pizza franchises in Colorado with magnificent timing immediately before Colorado legalized recreational marijuana. That's an example of a well timed acquisition because those places are worth more now the day after the election than they were the days before the election. So Rory built restaurant marketing systems, very successful company. But an info business that has its limitations, it has its limitations in terms of locked-in reoccurring revenue. So one issue in our businesses is what we call pain of disconnect. And so a lot of info businesses don't lend themselves to pain of disconnect. The niche businesses do more than a non niche businesses. It's more difficult for GKIC to figure it out than it is even for Craig Proctor or Rory Fatt to figure it out.
So the guys that have the greatest pain of disconnect in their business are the utility companies because even if you'll tolerate it, your spouse is a little grumpy about sitting in the dark with no air conditioning or heat. So they tend to get paid first and very few people opt out. So when everybody every month sits down and looks at their bills and looks at their credit card statement and they look for something to stop paying for, utilities are the last on the list. Second last on the list by the way is TV. So those two things pretty much are going to get paid because nobody likes to have them disconnected. That's a great business to be in. So info marketers try and figure out how to do that to the best that they can.
So most now build done-for-you utilities into their businesses, websites. Proctor, we have recorded messages, we have websites. Michael Janzen has a [inaudible 00:07:07] property in casualty insurance, really has a dashboard business where the agent is using a whole dashboard every day. And it's not as bad as a utility disconnection, but it is close because it's mammothly inconvenient to run around and put those pieces together and you lose the licensed content that's in the utility. So that's the main approach that info marketers take. All of our other pain of disconnect, if it exists is either the emotional bonding between the individual or individuals who are the gurus and the followers. And they don't want to disconnect because they don't want to disconnect because they like the relationship and the fraternity with the other others who are part of the group. Now, that's even weaker pain of disconnect. It's fragile. I can really piss you off one time and you decide to disconnect even after five years together.
So that's pretty fragile, but it is there. So Rory created a second business on the back of restaurant marketing systems, which is called a royalty rewards. And royalty rewards is a very sophisticated, comprehensive done-for-them frequent flyer program. It was originally built just for restaurants, now other types of businesses use it as well. And so it's a rewards program, customer rewards program with all sorts of marketing built in. The monthly statement showing them how many points they have and how many points they are from their next reward, their website that they can go to and track their points and redeem their rewards, their birthday mailing, the spouse birthday mailing, the anniversary mailing, the seasonal promotions. Everything's done for them in royalty rewards.
Now, the paint of disconnect at royalty rewards is much higher than it is in a normal info marketing business because once John's restaurant has signed up all of you who are his customers to royalty rewards and issued you all your little card and you started to accumulate points and you started to work towards your next award. And you're getting all the cool stuff in the mail for him to now come to all of you and say, "Changed my mind. Throw your cards out, we're not going to do royalty rewards anymore." It's not impossible, but it's painful. It's even dangerous.
So for the most part, if you get them to import the data and you get them to issue the cards, you got them. The retention rate in that business, as you can conceptualize is much higher than the retention rate in restaurant marketing systems for a monthly newsletter, a monthly CD. Think our diamond program. So think if our diamond program connected through us to your end users and your end users were getting a bunch of cool stuff from us because you were a diamond member, much harder for you to unplug. So if you think about now reoccurring revenue, what's the key to equity and reoccurring revenue? Retention. That's the key to equity and reoccurring revenue, retention.
So in a pest control business, they're basically buying those companies. If you went to buy a pest control company tomorrow, you're basically going to buy it. And the guys who consolidate the independence at roughly one and a half times the reoccurring revenue stream plus the value of the trucks and the equipment. That's pretty much how you're going to buy it. You're only going to give and they're only going to get about one and a half times their reoccurring revenue number. Why? Because their retention's poor. People drop out if they don't see bugs, people drop out if they're having money trouble and they need to cut something. They're not cutting the utilities, they're not cutting the cable TV. They're not stopping buying pizza three times a week, but we will call up the pest control company and say, "Take me out because I haven't seen any bugs."
So there's all kinds of reasons people drop out. It's a pretty porous reoccurring revenue model. Somebody sends up Valpak coupon to do it cheaper, they're down at Home Depot. THey see a can of stuff and a plunger that they can buy and do it themselves on and on, and on, and on, and on. So the equity value of the reoccurring revenue is limited by how porous the retention is. If you look at a company like Royalty Rewards, the equity value is worth a whole lot more than one and a half time times reoccurring revenue because it's almost impossible for anybody to get out. So that's a second business entirely built on the back of the first.
All of the launch, all of the get traction, all of the initial customers, all of the initial accounts, all of the bugs out of the system, all happened at almost no expense because it was sold to customers restaurant marketing systems already had with media restaurant marketing systems was already paying to print, publish, distribute at meetings restaurant marketing systems was already putting on. Equity business built on the back of a business doesn't have so much equity. If you think about GKIC for a second and you understand Infusionsoft, Infusionsoft was built on the back of GKIC.
Now, it is no longer dependent on GKIC and is less dependent on GKIC as a source of customers probably with each passing day, at least each passing year. The percentage of their new customers that come from us diminishes, the percentage of their new customers that come from other sources goes up, and that's good for Infusionsoft. However, early, early that company was totally built on the back of this company at very little expense to Infusionsoft because we used GKIC media, which GKIC was already producing media anyway. They came to GKIC events and GIC was already doing events anyway. They didn't have to fill any seats. We were already filling the seats for them. They got an endorsement, et cetera, et cetera.n Bill and I both founding stockholders in Infusionsoft.
So on the back of business number one, we built equity in business number two. Very valuable equity. Another way to build equity that you think about is the formats you use in an info marketing business. So Iron Tribe, who's here in the front row, titanium members of mine, Dr. Chris Tomshack at HealthSource, private client of mine, both are true, pure franchisors. And a franchise is just a different way of getting paid for the same stuff for the most part that's in a coaching plus program, that's in an area exclusive program. It's just a different way to get paid for it, and it has its pluses and minuses. It has its pros and cons.
The pros, number one, you get paid from day one on all the existing business. So at HealthSource, when we convert a chiropractic clinic that's already operating to a HealthSource chiropractic clinic, we don't just start getting continuity revenue, we get seven points on all the business they're already doing. That's a plus. Another plus is you can boss them around, which you really can't do in any other format. But the big plus is it's a better equity play. Now, you trade off some income because franchisees basically expect to get everything within the context of their franchise. It's not a zero sum game because these guys can tell you. But if you believe in the equity part of the business, there's probably more info marketers who should be franchisors than actually are.
So that's another way that you build. And now in many cases, so if you take HealthSource, second business on the back of the first, weight loss clinics within the chiropractic clinics. The third business on the back of the first and the second private label products distributed and sold through the franchisees. So soon build info product business to the consumer on the back of the franchisees. We have a gentleman, I don't know if he's here, he just joined titanium for next year. He's a brilliant marketer who owns pet stores. Is Steve in the room? He left, okay. So he's a brilliant marketer who owns pet stores, and he has a model I'm not going to describe to you. But it's an incredible model.
Most significantly however, he also has 400,000 customers for whom he has names, addresses, email relationship, he has a list. Well, there's all sorts of things. Now, on the info marketing side that can be sold to that list people want their dogs to behave better, people want their cats to speak French, people want their birds to dance, et cetera, et cetera. So you can build equity in a second business or a third business on the back of the first even if the first really is not a particularly good equity business. Maybe my biggest point of the day for you. particularly in our kinds of businesses, there can often to be more money for you after the sale than there is in the sale itself. And so I encourage you to think about after the sale income and opportunities how you keep a piece, what tale you create, what additional opportunities will be created after the fact.
Now, the first key to that is a capable buyer. So a lot of business owners miss all of this opportunity. And in info marketing, it's more important than it is in some other industries. Miss all this opportunity because they are so hot and bothered about selling their business. That pretty much anybody that can write the check, they're doing the deal. And that's shortsighted. A truly capable buyer, if you think through all this other stuff can be a really great asset to you after the sale. The best buyers are those. And it's one of the best reasons for somebody to buy is a good reason for you to buy something. The best buyers are willing and able to do things that the seller is not willing or not able to do.
So at the point in time, for example, that I sold to Bill, I sold my business to Bill for a handful of reasons. But one significant reason was it had pretty much hit a wall where it could not really grow any bigger because of things I was unwilling to do. Not unable to do, just unwilling to do. So for example, it needed employees. And at a certain point, it needs them, and I am not willing to have them. I have had them, I'm not willing to have them. There is not enough money ... Well, there's probably enough money. Generally speaking, it's a practical matter, there ain't enough money. I would rather have my testicles removed without anesthesia than manage even a handful of employees. I know how to do it, I've had 48, I've had 20 for a long period of time. I can do it, I just am not willing to do it.
I am not willing to manage online media. We were at a point where we needed to be in online media. I happen to know how to do it, I know more than I let on. I work with private clients a lot who use online media. But personally, I don't want anything to do it. And I don't want to have to be dealing with reputation management and who said what to who on Facebook today or dealing with the people who are the employees who are dealing with that. I was at a wall where I either had to be willing to do a bunch of stuff I didn't want to do, which to me defeats the whole purpose of owning a business in the first place or I was better off finding somebody who was capable and willing to do that. Bill was capable, he actually likes managing employees and he has a higher tolerance for pain than I do. Perfect.
Capable? Of course. I created him, so he was a capable business person in retail. He became an info marketer in his own niche because of me, by me. Learned the business as a niche info marketer, perfectly capable now of running a bigger, broader version of that same business. BGS marketing in fact became part of GKIC. So that's why I sold. Now, because of that fact and the way I structured my deal, the after sale money to me has been roughly 14 times the sale money to me. Now, understand I intended that to be. I didn't know for sure that was going to happen, but that was my wager, that was my strategic plan. And that's why I didn't take the first person to come along who I could have sold the company to. I was careful about who I sold the company to. So it's important to think about, and we'll talk detail. It's important to think about what can happen for you with a buyer that you sell to who in effect also becomes a partner after the fact.
You can almost view it as getting paid to create another business with a partner. That's a very different way to think about this. The other thing that links with this is how do businesses become more valuable? One smarter, better people, people willing to do things you weren't willing to do, that increases value. Synergy if businesses get put together is also important. One and one can become five either by synergistic cost cutting or synergistic cross marketing or synergistic capabilities. It's probably my most important point of the day. To get there, understand, whoops, I just lost ... I have set up an auction and mice can dance with elephants on my monitor just, which is okay guys, but I don't want it on the screen just for the record.
So somebody's PowerPoints presentation is invading my [ALMO 00:23:37] presentation. Well, don't take it away from the screen. Now you got it on the monitor, but you don't have it on the screen. There we go. We have it in both places, congratulations. You know more than your buyer. And no matter how much due diligence they do, you know more than your buyer because our businesses are fundamentally weird. So unless you are selling to someone really, really knowledgeable about our businesses from inside our world, which for the most part you won't because for the most part that really means you're going to finance 100% of the sale because you're going to out to a smaller fish than you are.
Not that there's not times you might not want to do that, but in almost every case, you know more than your buyer. Now, this is also important to remember by the way if you're a buyer. So you know more than your buyer. That means you could anticipate needs and opportunities that will be created by the business going forward that do not exist now that can be kept outside your contract so that you can optionally participate in them after the fact or you can even create them and bring them to the table in order to cash in after the fact. This is why, I'll give you a couple of examples, but this is why you want to labor and think long and hard over bike road details of your contract.
Same thing exists by the way with a regular author-publisher contract. Everybody puts a standard contract, oh, it's just boiler plate, great. It may be boiler plate for everybody else, but it ain't going to be boiler plate for this kid. So you want to think long and hard over the micro specifics of the contract thinking about what's going to happen going forward. What do I know they don't know? What opportunities are going to evolve and emerge that don't need to be part of this deal? So for example, post sale to Bill, I'll just name three of the things that happened. One is we created additional newsletters. Marketing to the affluent occurred after the sale, wasn't part of the sale. Info letter occurred after the sale, actually it was kept out of the sale. It was a separate business. It was then bought by GKIC after GKIC bought everything else two years later. Marketing to the affluent was started from scratch 50-50. 50% Bill, 50% because Dan because wasn't in the original deal.
And after the fact I said, "You really should have stable newsletters." Which by the way, we could have more. Membership's large enough, there could be a whole professional practice as newsletter. Marketing to the affluent was kind of obvious. Right now there could be a [inaudible 00:27:15] newsletter on the back of the book. So I said, "Hey, you want to do this? Let's do it. I'm in if you're in." But separate deal in full letter, separate deal. Third thing, JV events. So when a business was sold to Bill, Superconference, summit, appearances all dealt with as part of that contract. Not dealt with what if there's a Dan only seminar on a specialized topic. Not in the contract. He didn't ask for it, I didn't volunteer it. I was thinking about it, I didn't volunteer it.
If I had been asked, we would've had to talk about it. We didn't have to talk about it. Post sale, 50-50. Hey, we could do this program, and we could sell it, and here's what the revenue would be. Don't matter to me if we do it or not, you want to do it? Yeah, I want to do it. Great, 50-50. Substantial money in those events. There are more, I'm only giving you three examples. Now. I believe you play fair but you play to win. No one's going to look out for you more than they're going to look out for them, by the way, nor should they. So this is not bad behavior, this is just smart behavior.
And amongst items that matter, there's one more not on this list I'm going to talk about. So one is retained rights, what rights does everybody get? So for example, I don't know, by the way, if Betty knows it or the board knows it. But Bill had it, so it passed to you. GKIC has the rights to the Dan Kennedy funeral seminar. And I volunteered it. I said, "This thing will do a million easy with the shortest marketing cycle of any seminar you've ever put on," because you can only keep the thing on ice for so long before the smell will keep people out of the room. But you guys got the rights. So you have the use of the body for five days and you have the rights to run the memorial seminar where everybody comes weeping and buys a ton of shit. That's the deal. So there's the issue of ...
And I am quite sure had I died in the past nine years you would've come to a Dan Kennedy death seminar. Some of you'll remember we did, a client of mine, we did the Corey Rudl wedding reception seminar. I don't know if you remember this or not, but Corey's bride wasn't all that thrilled with the idea. But I think it did about $3 million in business. So we did a seminar with the wedding and with the wedding reception, and it was really the fake wedding and the fake wedding reception. And then they went and had another wedding and a wedding reception somewhere else. But all 2,000 of their best friends who paid got to come to the wedding reception and the seminar and buy a ton of stuff. And he didn't have to die at the time in order to make that happen. So retained rights, what rights do they get? What rights do you keep? Name, likeness, story, certain pieces of content. Reversal of rights, should be an S on that, typographical error.
So what happens if they let a product die? What happens if something goes out of print in author-publisher contracts? This is very important, the reversal of rights. It's important in these deals too, access to the platform. All of our businesses, the equities in the lists, you have now turned it over. Do you retain any rights to it, to use it for noncompeting purposes, to use it for JVs, to parcel it to somebody? Do you have any rights at all to the platform? Are you guaranteed promotion for something outside of the deal that you do anyway? So my contract specified books as a carve out and a certain amount of promotion for books on the platform. So that's important.
And now the last one, which I just mentioned is carve outs. Our lawyer friends in the room will explain to you as the day goes on undoubtedly a big part of a purchase or a sale is non-compete. And where everybody buyer starts, which is where you should start if you are a buyer is with the broadest, most restrictive, most ludicrous non-compete agreement on the planet. Non-competition defined as breathing, walking, chewing gum, pretty much anything. Where you wind up is an entirely different matter. Now, again, playing fair, any buyer and if you're on the buyer side of the equation, if you're doing an acquisition, not only do you want to start way over there from a negotiation standpoint and because often people aren't very bright and will say yes to it.
And you are certainly entitled to protecting the thing you are buying from unreasonable and unfair competition from the person from whom you bought it from. The tricky part of all that is foresight, is seeing not only what is but, gee, what it's going to be two years from now, three years from now, five years from now. From the seller standpoint, the way to think about non-competes is what you specifically carve out. Because the easiest way to avoid disagreement, prenup is everything. It is infinitely easier to do a detailed prenup than a detailed postnup when everybody is annoyed with each other. So the more detail, the better.
So when I did my deal with bill and when Bill and when Bill and I did this deal because I had equity without equity, which I think I'm still going to mention, I am. My carve out list is long, it's very specific. Here are all the things I'm doing now that could arguably ... See, a lot of what I do and a lot of what you would do perhaps is both competitive and helpful. It's our arguably treading in the same territory, but it also promotes and drives people to GKIC. But my carve out list is long, very specific, clients, types of clients, types of activity, et cetera. So we never have the disagreement about is this thing competition, it actually doesn't matter because this thing was specifically defined as something that I am either doing, intent or might do or intend to do.
So your carve out list that you work on is very, very important. As a buyer if your seller is not astute at all about that, depending on how much use of and cooperation you want from the seller after the fact, you might actually want to be the generous person who raises the issue and helps create the carve out list. Because really everybody's better off with the micro definition than the disputes and disgruntlement and disappointment and unhappiness that can come from not having it. There are a lot of ways to get paid, obviously there's cash. And cash is very good, especially if you are selling to somebody who might not be able to pay you over time.
Cash at the moment in recent years has been a little less desirable because there's no really good place to put it to get any yield on it. So cash is a lot more attractive when the interest rate's 12% than when the interest rate's 0%. But cash, there are royalties. And often royalties in our world will be agreed to over and above a cash selling price. So it is a type of tail that you can create. Retained equity, of course. And they will all tell you, John will certainly tell you of deals where what I said, the after the sale money can be as good as the sale money by retaining a small minority share of equity itself, especially in situations where your buyer is a professional buyer, improver, and seller of businesses.
Bain Capital everybody is familiar with thanks to the recent debacle election. So retained equity even a tiny piece in something that the buyer is going to make bigger and is a professional at it and does it with the purpose of reselling it. There's a good argument for staying on the train with some of what you would otherwise just take cash for. There's what I call equity without equity and equity without liability. So that is simple agreements to be paid, percentage or agreed upon amount of money when certain things happen but you actually don't own any equity. So again, in this case, when I sold to Bill, one of the things I had was a percentage of a subsequent sale price. I didn't have any equity, I also didn't have any liability. From an emotional standpoint, I didn't have any ownership, which I'm going to talk about that for just a minute.
But I essentially had equity because when the company was sold, I got a percentage of the sale price. Bill retained some equity, I also have a percentage of the next sale if it ever occurs, a piece of his piece, I don't own any equity, but I do have a piece of the money. I call that equity without equity, fee for service. They'll tell you most deals lock you in for two or three or four years on an agreed upon amount of money, that's fine. But again, you want clear definition of what you're doing for that money. What you don't want is you're going to hang around for the next three years at half a million dollars a year and do whatever.
If you are a seller, that's not a deal you want. If you're a buyer, that may be a deal you want. If you're a seller, that's not a deal you want. You want a task list because you then want the opportunity perhaps for it to do additional things as fee for service. New opportunities, lots of ways to get paid there, marketing to the fluent letter, joint venture seminars. New ideas you bring to the table after you've been paid for the old ideas, new opportunities. You can get paid in stock, which I happen to consider particularly dangerous. And you can get paid in debt, which I happen to consider even more dangerous, but you certainly can. There's nothing wrong with creativity to get a good deal done rather than holding out for the perfect deal that never comes. On the other hand, you really should never, ever, ever make a bad deal just because you are devoted to the idea of selling by a particular point in time unless there is an enormous piece of duress like massive regulatory activity that is going to change the face of the business, that sort of thing.
One word about this because it concerns a lot of people in our industry about the personality-driven business. So the personality-driven business is the best way to build these businesses. Arguably, it builds the least best business, but it's the best way to build the business. There's ways to transition over time. However, personality businesses are not necessarily universally harder to sell. It makes them harder to sell to certain buyers, but it makes them more valuable to other buyers. It can add to the value to certain buyers if there is a strong personality that stays attached and is usable.
Essentially, they get a company and they get a celebrity that they don't have to go out and buy the celebrity. The celebrities are extremely valuable. Read Rick Cesari's book by now and take a look at the buyout deal to George Foreman on the George Foreman grill, in which incidentally he had no equity but for which he was paid $100 million for his royalty rights. The celebrity, the personality is not necessarily a liability only to some buyers while to other buyers it may be an asset.
Two last little thoughts. Most entrepreneurs who sell their companies are not really emotionally prepared for the aftermath. I have a client right now I'm working with, his name, some of you guys may know him, not you guys, Betty's guys. His name is Ted Oakley, really large wealth under management company, only deals with people who sell companies. So all his clients are somebody selling a company for 5 to $50 million. They suddenly have a whole bunch of money. And if they're not careful, they will go quickly from having a whole bunch of money to, again, having no money because people do a lot of stupid stuff right after they sell companies like jump into the next deal because they're suddenly without a place to go and a thing to do.
So most entrepreneurs who sell their companies are not emotionally prepared for the aftermath. You need to be emotionally prepared for the aftermath. You have to understand that buyers have their own reasons for buying. Those include the fact they think they're smarter than you are. They probably are about some things, they probably are not about other things. However, you have to understand from the beginning who now gets to pick the color of the paint for the barn because you sold the barn. And your role now is when they come in and say, "We've decided to paint the barn purple with pink polka dots." If you are asked for your opinion, you're certainly entitled to give it. You may consider yourself morally responsible to engage in a discussion of all of the reasons you think painting the barn purple with pink polka dots ain't such a good idea.
If they then ignore you, your role is to be at the ribbon cutting ceremony smiling and applauding the purple barn with the pink polka dots. That's your role. And if you are not prepared for that role, you are unlikely to have a good post sale relationship and good post sale opportunities. One side issue to think about when you think about the mechanics of selling the business. The business has to be structurally and financially ready to be sold. You have to be ready to make the sale. One without the other is not particularly healthy.
So what is the purpose of creating equity? What is the purpose of building better value? What is the reason not to simply approach info marketing to make as much income as possible? Any which way income can be made as fast as income can be made, take the income out, put it somewhere else, create your equity elsewhere. Why do it in your business? And it's important to walk out of here thinking about the why not just the how. So one is that if you never sell by approaching it as an income plus equity business not just an income business, you build a stronger, less fragile, more sustainable business.
So a lot of people were making a lot of money with info marketing businesses, I see the clock, I'm a minute away, with info marketing businesses in 2005, 2006, and 2007 that had no equity. In 2009, they suddenly also had no income because they had really weak versions of a business. So one reason is that you wind up with something stronger and more valuable for yourself by going through the process. A second reason is that candidly, and I'm a high income guy, and I've been a high income guy for two decades. It's hard to get really rich on earned income, and it's about to get harder.
They're going to take more from us evil one percenters, the millionaires who earn over 200 to $50,000 a year. A confused concept if I have ever heard one. MasterCard wishes everybody they've issued a card to who makes 250K a year had a million dollars in net worth. Oh, how they wish. So it's about to get harder, but it's damnably difficult anyway for a variety of reasons. Most people aren't really good at it. They escalate their lifestyle with their income, they have family and spousal pressure to escalate their lifestyle with their income. So most people are not really good at living so far beneath their means that they can translate income into real wealth. It's not impossible. People do it, but it's difficult.
If you saw the net worth of many, many, many people who earn seven figures a year, you would be shocked at how low the net worths are. Now, they own a lot of depreciated assets. They own stuff, but not real net worth. So it's hard to get there by earned income alone. You almost always need to get there by the creation of equity somewhere. In a reality, you have two places you can create equity, in somebody else's business about which arguably you know less than you should know about your own or in your own business over which you know a lot. And you get to make the hiring and firing decisions. So Eisner leaves, I'm a Disney stockholder, Eisner leaves Disney, nobody called me and asked me my opinion about Bob Iger. I didn't get to have any play in that. Turns out it went very well, but it's not like I got a choice. In your own company, you got a choice.
Third, equity is the path to liberty. And back to the purpose of being in business. The purpose of being in business is to live life on your own terms. What other wealth really is there? So the purpose of being in business contrary to the government's idea is not actually to create and provide jobs, the purpose of being in business is not to be a healthcare provider. The purpose of being a business is not to employ people, the purpose of being a business is not to buy, own, and manage real estate. The purpose of being a business is to live your life the way you want to live your life. For that reason, you can't just have income, you need equity. Listen, you guys are in for a really good day with some very, very, very smart, some of them not particularly charismatic, but some very, very, very smart people. We all had a good time during the summit. I of course it's always a privilege to work for you folks. You're for a good day. Thank you all for being here.
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