You Can Now Buy Businesses Without Loans: A Smart Funding Method

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Hey, welcome to another episode of Making Billions, I'm your host, Ryan Miller, and today my dear friend Jeremy Ames. 

Jeremy is the co-founder and CEO of Guidant Financial, a leader in innovative business funding solutions. See, with over 20 years experience, Jeremy has helped over 30,000 individuals use the retirement funds to acquire and start businesses through programs just like 401 K financing, otherwise known as the ROBS. 

So what does this mean? Well, it just means that Jeremy understands how to fund the acquisition of businesses in such a creative way that this episode is bound to make you run for the exits and purchase your dream company with this creative funding method.

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[THE GUEST]: Jeremy Ames is the co-founder and CEO of guided financial a leader in innovative business funding solutions

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• 11:18 [Ad] Everyday AI: Your daily guide to grown with Generative AI
• 12:06 (Cont.) You Can Now Buy Businesses Without Loans: A Smart Funding Method

Transcript

Ryan Miller  

My name is Ryan Miller, and for the past 15 years, I've helped hundreds of people to raise millions of dollars for their funds and for their startups. If you're serious about raising money, launching your business or taking your life to the next level, this show will give you the answers so that you too can enjoy your pursuit of Making Billions. Let's get into it. 

Ryan Miller  

What if I told you that the money sitting in your retirement account could be the key to unlocking your business dreams, not in five years, not someday, right now. Imagine buying a golf course for less than the price of a house using money that most people think is untouchable, or turning an $8,500 TikTok experiment into a multi million dollar business empire. You see, most of us are told to save, invest wisely and wait, but what if waiting is the biggest risk of all? My next guest will teach you how he helps everyday people to break the traditional rule of business and funding and how retirement accounts aren't just nest eggs, they might just be launch pads. See, this isn't just another get rich quick scheme, this is a blueprint straight from entrepreneurs who've done it, who transformed impossible into inevitable. You ready to see how? Let's dive in. 

Ryan Miller  

Hey, welcome to another episode of Making Billions, I'm your host, Ryan Miller and today my dear friend Jeremy Ames. Jeremy is the co-founder and CEO of Guidant Financial a leader in innovative business funding solutions. See with over 20 years experience, Jeremy has helped over 30,000 individuals use the retirement funds to acquire and start businesses through programs just like 401 K financing, otherwise known as the ROBS. So what does this mean? Well, it just means that Jeremy understands how to fund the acquisition of businesses in such a creative way that this episode is bound to make you run for the exits and purchase your dream company with this creative funding method. So Jeremy, welcome to the show man. 

Jeremy Ames  

Hey, Ryan, it's great to be here. I'm actually stoked to be on your show. As you know, I love small business, and I love that you are building a community of people that are actively out there, raising billions of dollars to put into companies.

Ryan Miller  

Yeah, thank you and it's an honor to have you. And, yeah, as I jokingly say, without capital, it's just a bunch of smart guys having coffee over zoom, nothing really happens until somebody cuts a check somewhere. So it's truly an honor to have you, man. So walk me through a little bit. What is it that you do at Guidant? 

Jeremy Ames  

Yeah, I'll give you the big picture version of what we do. We help 15-1600 people a year buy companies or start companies using their retirement funds. And what I mean by that is we're creating a vehicle where their retirement account becomes a large shareholder in the business. And because we're structuring that way, it means they're not taking money out of their retirement, paying taxes and penalties. Instead, your retirement plan is becoming a shareholder and has an equity stake in the business in the long run, and then hopefully you're building that up and selling it for something significantly larger later on, and putting that money back into your retirement account, tax deferred or tax free, depending on what kind of funds started with.

Ryan Miller  

So how does that work when you're buying a small business using your retirement account?

Jeremy Ames  

Yeah, well, maybe we should talk about a couple things that have to be true for it to work with the structure. So one very common one that people are not used to when they're operating small businesses is it has to be a C corporation. A lot of small businesses like to be structured as S corps or LLCs, but C Corps are the only one that can have shareholders that aren't actual people, which is why, if somebody's raising venture capital, they typically have to be a C Corp as well, right, because they're going to have shareholders and owners that are non humans, essentially. So it's got to be a C Corp. You also got to make sure your retirement funds are eligible for rollover and I'll tell you the most common place that this happens if somebody calls us and says, hey, I want to use my retirement funds to buy a business. And we say, okay, where are those retirement funds? Well, they're at my current employer. Are you working there right now? Yeah, I still work here. I don't want to actually leave my job until I'm ready to buy a business. Well, the challenge with that is that most 401 K plans are written so you can't take your money out until 30 days after you are gone from the business and so sometimes that can be a hurdle for people. But if you've already rolled those funds out, if they're in an old IRA or an old 401 K that has been sitting somewhere else for a long time, as long as those are eligible to roll, then you can use them.

Jeremy Ames  

Another thing to point out for people is there really are two ways to invest in businesses using retirement funds. The first way, you may be familiar with Ryan, by nature of what you do in the venture capital and PE realms, called a self directed IRA. If you want to just invest as an angel investor in a business, you're not going to have anything to do with other than the fact that you're going to give them some money and have an equity stake, you can use what's called a self directed IRA. And your IRA can essentially buy stock or warrants or convertible notes or whatever it is that they're going to do for the capital structure, you can do that with a self directed IRA. You can't use a self directed IRA to invest in a business you're actively going to be operating and or working in. And that's why you would use the ROBS program of 401 K financing. So you got to work for the business, because only employees of the business can actually get access to this way of investing into the stock of the business. And because you got to work for the business, one of the things to just make clear to people is, when your retirement account becomes an owner of a business, your business is not your piggy bank that you can just take money in and out of whenever you want. You now have this third party shareholder that you have to treat just like you would if you had some other shareholder that was not you. And so if you end up distributing funds to shareholders, you got to do it pro rata. Your compensation needs to be not higher than fair market rate, right? So if you're running a $5 million business paying yourself 400 grand, probably makes a ton of sense. But if you're running a $500,000 one franchise unit where you're essentially the general manager, then it's probably not going to make sense for you to pay yourself $400,000. It's going to be hard to find somebody that can establish that that's fair market value. 

Ryan Miller  

So I have a question for you. Then, does this work for any type of business? Are there some that are exempt or some that you can't invest in? Or how does that work? 

Jeremy Ames  

Yeah, well, it's got to be a legitimate business, so can't just be a random hobby, but the only real restrictions have to do with two things. One is it has to be federally legal, so when people call us up and say, hey, I want to start a cannabis business, we can't do it. We've had people call us up and say, I want to buy a brothel, we say, we can't help you. The second is, the business can't be what's defined as the investment of capital. So for example, you run a VC or PE fund, right, that is a business that is the investment of capital, just like it would be if it was a factoring business that's essentially buying receivables and selling those. So it's got to be an operating business that's not the investment of capital. The other thing to keep in mind is that when you're purchasing the business assets, they have to be purchased at fair market value. Now, in most transactions, that's a non issue, right, you're buying a business from a third party. That is the definition of third market, fair market value, right? Two people unrelated, coming together and agreeing on a price. But let's say you're buying it from your father, or you're rolling in some assets into this business that you own separately. Now you're talking about a different animal, where we've got to bring some complexity around valuing those assets, because you can't sit on both sides of the table like we have to make sure that the 401k is getting a good deal.

Ryan Miller  

Okay, so when it comes to it, I'm sure you see people with a whole bunch, Peter Thiel level, I don't know if it's that big, but and then people with a small amount. Is there, say, a rule of thumb that you have seen that you know, what's that number that any less it doesn't make sense anymore it's probably a good fit. Is there a number that kind of defines that, that threshold? 

Jeremy Ames  

Yeah, there's no legal number. But if you're asking me, my rule of thumb is, if you have less than $100,000 it's going to be hard for it to pencil when you factor in some administrative complexity, the cost up front to set up the transactional pieces, and then the fact that there's ongoing administration. I mean, once you have this specialized 401 k plan, it has to file a tax return every year, just like your business does. And that's one of the things, for example, that we do at Guidant, right? We file 8500 tax returns every year that are these form, 5500s for these 401 K plans that involves a bunch of complexity. Like, hey, you have to value the business of the stock every year, because you have to be able to report on what's there, and you have to do discrimination testing to make sure that it's not failing to provide equal benefits across employees based on what the regulations are. And then you got to do essential bookkeeping and reconciliations and you think of its almost a separate entity, money in, money out. It's got all balance at the end of the day, it's accountable. 

Ryan Miller  

And what about so those are the criteria. So people listening might understand if they're a fit for something like that and and reach out to you or whoever's a good fit for them, but you've helped over 30,000 people, man, so do you have any are there any people clients, that would be okay with you talking, or you can scrub the name? But I would love to just hear some of these stories where you can illustrate, maybe in the real world, examples of what it's like going through this process and the outcomes that can possibly wait for people on the other side? 

Jeremy Ames  

Yeah, I'll tell you a couple stories of recent ones. I have a podcast, so I interview clients all the time. 

Ryan Miller  

What's it called? 

Jeremy Ames  

It's called, Create The Life You Want. 

Ryan Miller  

There you go. Alright, Create The Life You Want. 

Jeremy Ames  

Yeah, we interview clients, and so I get to hear a lot of their stories. So I'll tell you a couple of recent ones that I thought were really fun. One is a client, his name is Andre. Look so Andre worked for ESPN, I think he was in technology or marketing, one of those things. He never actually intended to be a business owner. This is one of the things I love about him. So he's at dinner one day with his wife, and he gets a text from his brother, and it's a link to a Craigslist listing, and his brother says, you want to buy a golf course? So he clicks on this thing, and it goes to this Craigslist listing where he sees this 100 year old golf course in Coos Bay, Oregon. And what shocked him was the price that was listed for this golf course was less than the homes that he was looking at in West Seattle. His wife were shopping for a home at the time, so he was super intrigued. So he started doing some research. He ended up going down there a few weeks later. He had some well, an old buddy from college whose parents lived down there, and so he scheduled some time to go down there and meet with the seller and visit the golf course. He was blown away, this thing's like 120 acres. It's beautiful in Coos Bay, Oregon, at least when you go in July and August and it's not raining, is gorgeous. So he goes and visits this golf course, he falls in love with it, and then he goes to dinner with these parents of his old college roommate, and they tell him all about the sort of details of what's happened with this golf course. It used to be owned by all the members of the community, and it was like a key piece of how the community came together, and then it was sold off to a private owner, and the community sort of dissipated, and it had kind of been on a downward trend since then. And so he's looking at this golf course and thinking, not only does this feel like, smoking deal and a really interesting thing that aligns with my passion for sports, but it feels like it's really undervalued right now from the standpoint of, there's a way to reconnect the community and sort of bring the vibrancy back to this. So he ended up buying this thing within 60 days, like it was just a frantic for him and he lives in Tacoma, Washington. This thing's in Coos Bay organ and his big challenges he was thinking with his wife was, hey, how are we going to manage this thing? We don't want to pull the kids out of school before the end of the school year. So what they decided to do is they said, okay, for the first year, Andre, you're just going to go commute down there. You'll go two or three weeks every month, and then as a family, we'll go down there over the summer, and we'll spend the whole summer there and work out, and then we'll figure out from there, if it's something where we're going to pick up the family and move. Well, they decided not to move ever because they love their school that their kids are in. So it's now down to the point five or six years later, where Andre goes down there one week a month, where he goes down there and spends time with the team, and then each summer, he goes down there with his family, and they have, what one of the things that that was cool, they have this little, I don't know, 100 year old home that's on this golf course, that was part of the whole deal. And one of the projects he's working on this year is he's remodeling this thing, because what he's going to do when the kids get out of school is that he and his wife are going to move down there and actually live on the golf course. So that was pretty cool. So he's more than doubled the revenue and the profit of this thing, and now it hosts community events and the you know, there's a lot more members and people that are engaged in it. So it's been a cool story.

Ryan Miller  

Man, that's incredible. How fun is that to get a golf course cheaper than a house you want to buy? So it sounds like it was just the right place, right time, 

Jeremy Ames  

Yeah. 

Ryan Miller  

Good family members knows what you're about, sent you some stuff. 

Jeremy Ames  

Craigslist, that's the lesson. 

Ryan Miller  

Craigslist, who knew man, I know. So first I've heard of someone buying a business off Craigslist, but anything can happen. But what we're talking about is financing, but also, like this tip toes into small business, but that could be, arguably, venture capital, private equity. But really we're talking about are discovering funding mechanisms. But let me ask, because I know there's a lot of people that could relate to this. You ever have someone who has maybe tried a few things, it didn't work? They're reasonably smart, come and see you and the ROBS program, or whatever it is that you're if there's other things in addition to that that kind of turn that fate around. Because I know there's some people that love this industry, maybe they've tried, a few tried their hand and maybe didn't work out as good as they'd hoped, anything like that. Maybe walk me through how that works?

Jeremy Ames  

Yeah, I have a great client, example of a guy who fumbled a couple times and then ended up finding a path forward. What I love about his story is he tried everything, there's really three Ave really three avenues that you can pursue business ownership. When it comes to small business, right, you can start a brand new company. You could buy a franchise and build out that, or you could buy an existing business. So this guy, James, James Kellis, he was a software engineer, really good one. He worked for some of the big companies in Silicon Valley. And I think the last time I the last place he worked before he bought this last business was LinkedIn. And he had actually tried the, I mean, he was in Silicon Valley, so he had tried the startup thing a couple of times, right where, in between software engineer gigs, he and a couple buddies are like, Hey, we're going to build something. It's going to be amazing and they get together and they build this product. And what he told me that they learned, that he learned about himself through the through two failed startups, was that he was really great at building product, he loved that part, but he was not a sales guy. He was not the one who was going to make it pretty on the front end and then find the people that were going to buy it. So, you know, they went to the Iowa cornfield and they built out their Field of Dreams, but nobody came and so, but he was still drawn by this idea of creating this other income, this wealth, you know, path out of, you know the software engineer grind. And so in 2007 he decided to invest in a barber franchise, like a hair cutting franchise that did both men's and women's and I believe he bought two units. And he opened the first one in 2007 he opened the second one at the beginning of 2008 and Ryan, I know you know this well, there were a few things that happened in 2008 that maybe weren't ideal financially. So his deal fell apart pretty quickly. One of his businesses basically went out of business, he had to close it because it was bleeding cash. The other one, he ended up selling for pennies on the dollar. There was still some value there, but he had to get out. And so at the end of the day, he ended up with nothing and you know, during this time, he actually got laid off from his job at LinkedIn, right? We're in the Great Recession, they say, see ya. And so he's trying to figure out what to do next and he really enjoyed, like, he made some progress when he was in this barber business. He really enjoyed the autonomy, he enjoyed building it. He's like, I want to do this again, but I've learned I need to have something where I don't have to sort of invent it from scratch and sell people. And then from his second failure, he's like, okay, I gotta find a business that is recession proof. And what I love about James's story is he took his software engineer brain and said okay, how am I going to solve this problem with my software engineer brain? So he started pulling data online, pulling SBA default data. He pulls all this data that's publicly available about default rates for SBA loans by industry code, and then he goes through each industry code, and he's sort of doing this mental analysis. Which of these things, if money were tight for me, what I still need to spend money on? And he landed on too near the very top for default rates, in terms of very low default rates, and it was auto repair shops and home repair businesses. And so then again, he's got a software engineer brain on. He sits down with his wife and he says, let's look at a map and let's figure out all the places. Us in the US that we'd be willing to move to, and I want to say they pick like 10 or 12 MSAs that they would be willing to move to. So then he builds this algorithm that starts pulling information off the internet, and says, in these 10 to 12 MSAs, I want you to find all of the auto repair businesses and all of the home repair businesses, drop them into a spreadsheet, pull in the Google reviews and some other information about them and then he started to use some fill use some filters. His investment thesis was, I'm going to find a recession proof business with really good Google reviews, but where it's really under represented when it comes to, you know, digital marketing and the use of technology. And ended up finding an auto repair shop actually in his town. He told me that the first time he walked into it, it was just dirty, just gross. And he's looking at this thing, and he sees just beauty everywhere, because he's like, this business is doing well, and it is disgusting, even just cleaning it up to make it available to more people. And then he put his marketing brain to work in terms of using technology, and started driving more better customers in the door. Cleaned it up, and today, the thing runs mostly without him. He just hired a manager recently, he's looking at a second shop that he's going to open.

Ryan Miller  

Okay, so he's done very well, it sounds like and so he saw you, you helped him with the financing package. He acquires the business, all meets the criteria that you stated earlier, that was super helpful, by the way. It sounds like you got to have a decent amount, 100k plus. That's, you know, not a legal thing. Just your experience probably says it's, you can make more things happen with 100k plus. So that implies that maybe people who are a little bit further along in their career, we talk about the silver tsunami, where all of these people are selling their business. But there's another phenomenon with that is some of them are dropping out of the corporate world and buying businesses. That silver tsunami is going both ways, maybe not in the same degree. Does this work like I'm assuming this works for people later in their career as well.

Jeremy Ames  

Well, I'll tell you, 85% of the 30,000 people that we have helped have been 40 years or older when they start. So it's absolutely true that you can start a business, and maybe some of the clients that I love the best are the ones who use it as a non retirement, retirement. So is it okay if I tell you a couple stories of,

Ryan Miller  

Sure. 

Jeremy Ames  

that I really love, one is this woman named Jan Morris. She was an attorney, and at 60 years old, she got laid off, and she went to the state unemployment and she filled out a bunch of things, and they she told me she got this letter back one day that basically said you are unemployable. And she looked at this and she's like, well, fine, I guess I'll start a business. And she was intrigued by the idea of distilling her own liquor. She'd never done it before, but her, you know, son, was into distilling meat or something like that, so she thought it'd be fun to learn and she was really just thinking of this as a hobby. So she was going to build this hobby business that she was going to operate. Well, fast forward, this woman now is in her 70s, and she runs this distillery with her husband that's right at the entrance to Olympic National Park, and they have all these cool, unique distillations that they do. She's created this community event that happens once, once a year that's called fjord fest. It's this old tradition where, I don't know, 100 years ago, some guy put a whiskey barrel in a boat and then rode it out past a certain boundary and then back in to avoid some import taxes or something. But anyway, she's created a whole community festival around this. She's now invested in a couple of different buildings that have really built out this downtown area of Hoodsport, in fact, she just recently opened an art gallery. It's kind of her side passion, but she loves to do watercolors and teach watercolors, and so she's built this community center now where she has this art gallery and is teaching water color classes. So you know, she's making money, and she's having fun, and she's doing it with her husband, and she's in her 70s, and I find it incredibly inspiring. Rather than just, hey, I'm gonna check out and go sit on a beach while I get old and my hips don't work anymore. 

Ryan Miller  

So I'm, let's say I am. I'm looking at buying a business, maybe it's my first one or second one, reasonably new, if not completely new, to this game. But you know, the me being in the hypothetical sense, you know, no business, maybe I had a good career. Just never really owned one, I pick it out. Why would you use, say, this funding method versus traditional funding? 

Jeremy Ames  

Well, I mean, there's depends on what you mean by traditional funding. 

Ryan Miller  

Great question. So why would someone use this funding method, method versus a traditional, what I call quadruple F, friends, family, fools and followers, right? A silly term like hitting up people, you know, kind of the usual where most people start on the, in their career. Do you, I'm assuming you find this superior, but I'm just curious, you know, how does that? How do these two stack together? 

Jeremy Ames  

Yeah, well, superior depends, right? It depends on your situation and the business and what you're trying to do. So I don't know that my judgment would be that it was superior, it's just different. I can tell you what I hear from clients that I talk with about why they use it. One is, some people just don't like to ask their friends and family for money. In fact, I just talked to somebody yesterday who was apologetically asking me to contribute to her, raise, raise money to feed hungry people for this run that she was going to do. She just hated that idea of asking people for money, so that's part of it. Other clients I hear, just want their autonomy, they don't want they spent most of their career feeling like they are beholden to someone else's priorities and needs and anxieties and wants. And I think one of the big draws here is, hey, I can be in control of my time and my priorities and what I care about. No one else is going to have a say in what I do, because it's just me.

Jeremy Ames  

I think other clients is a very common one, I hear really want to avoid debt when they start a business, because that's maybe the more traditional route that people will go is like an SBA loan. You know, with an SBA loan, what happens is, you take down an SBA loan, and you've got an immediate cash payment that's got to be made every single month on the business that gives some people hives. And you know, in addition, most SBA loans, they're going to lean whatever assets you have, especially your home. For example, they're going to try and lean that as part of the process. And some people are just uncomfortable with that, they're like, why would I do that when I have this money that I can use? And then you have other clients who like to use them in conjunction, because they're looking to level up the size of business that they can buy. I gave you that example earlier. If you're coming from a job where you're making three or $400,000 a year, I can tell you what's getting going to get in the way of you pursuing your dreams of business ownership. It's going to be, hey, can I go without a paycheck for a year or two if I'm starting something new? And the way you get around that is you buy an existing business that's big enough to afford you. So you go out and buy a $4 or $5 million business where you can be the CEO, and you can walk into a paycheck that keeps your lifestyle roughly equivalent without putting some undue or extra burden on the business. 

Ryan Miller  

Wow, brilliant. So autonomy, you get a little bit of an autonomy. You don't have to worry about debt, if, if that is something, some people worry about it, some people are okay with it. And then it can also supplement, not replace, but just supplement other funding sources, so it could be an add on as well. So, I love that man.

Jeremy Ames  

I had one client I just talked to the other day. His intention was to do it with no debt, but as he was building out his location, the costs were higher than he was expecting. And so at the last minute, he said, Oh man, I need to make sure I leave enough cash and reserves. And so he went out and got a 50 or $60,000 loan on the equipment that he was buying to be in his location. 

Ryan Miller  

It's probably working capital or something, just to kick it off. Yeah. So as we route in third base, Jeremy, I'm curious. Before I let you go, you've been doing this a while, man, maybe share with us some unfair advantages, just from all of your experience. For those who are listening, maybe two or three things that you can share that really help people to really grasp this, and anything else you think is important in this industry.

Jeremy Ames  

I think of it from the lens of what's going to help people who want to start a buy business? So I'll answer it from that perspective. One is many years ago, I started a company because I had this great idea. I built a field of dreams, I think we spent four to $500,000 building this thing out, beautiful website, really great team, awesome co-founders, and it never did anything and in hindsight, one of the things that taught me is that our assumptions aren't always right. What we think would be cool to build doesn't necessarily mean that someone's going to want to come in and write us a check for it. And so one of the big lessons I've learned, personally and painfully, is it makes sense to test before you invest. And maybe I'll tell you a couple stories of people I know who have done this in a way that I admire. So we have a client, Spiro Edgos , he used to work for IBM, and he just got tired of traveling. He had kids at home. He wanted to spend more time around them in Florida. And so he decided, hey, I'm gonna go, I'm gonna go start or buy a business. And he's looking around trying to figure out, what am I going to do? And his wife, one day says, hey, honey, you're not doing anything right now so that you're not working, why don't you go outside and clean her nasty garbage bins out. I don't know about you, Ryan, but those garbage bins I have, we've been in this house for almost six years. They've never been cleaned out, nobody wants to do that job. And Spiro did not want to do this job either, so he got on the internet instead of just cleaning it out, which probably would take him less time. He gets on the internet and starts searching for Bin cleaning, garbage bin cleaning. And he actually finds the guy. He finds this guy in southern Florida who has taken and modified these flatbed trucks to be like a mobile car wash for garbage bins. He's thinking, brilliant. So he calls this guy and he says, come do my garbage bins. Guy says, where are you located? He tells him. He says, I'm not driving 90 minutes to do your garbage bins for 15, you know, 15 bucks, but I'd be happy to sell you a truck if you want to set up something up there. And so this is in the back of Spiro's mind, he's thinking, am I the only one who doesn't want to do this? And Spiro had a daughter at the time that was in Girl Scouts, so he channeled his inner Girl Scout dad, and he grabbed a clipboard, and he walked to his local grocery store, and he just started costing people as they came out, talking to him about this idea. And what he pitched to these people was, hey, if you write me a check for the first three months now, I'm going to give you a good discount and if I don't end up moving forward and starting this business, I'll just refund your money. And he got something like 60 people to sign up that day when he was at the grocery store, and that was enough for him to go, all right, I'm in. And so then he called us, and we retirement funds and he bought his first truck. I want to say it's like $100,000 to buy one of these trucks and then have it modified to have this garbage bin. But today, he has three trucks. I think he has an entire city of 7000 people that he services with. It's like a $3 or $4 million business that he's built over the years. 

Jeremy Ames  

Another story I'll tell you, this is a little younger entrepreneur, for those of your audience that are younger, this guy, when he got out of college, he got an internship with a company Kinder. So you know, if you're in the grocery store, you see like a Kinder Bueno bar. Well, he goes over to Germany to intern at Kinder and he's seeing this stuff everywhere, not just for kids toys, like full bottles of wine inside hollowed out chocolate, that kind of thing. And he's thinking. He's inspired by this. He's like, I gotta figure out how to bring something like this back to the States. And so when he comes back to the states, he's trying to figure out what's, what's a business that I could start. And he gets inspired one day because he sees a bath bomb. So, you know, bath bombs like, you know, the round thing you drop in your tub, it's got some soap and some nice, smelly things, I'm sure you're eating like that all the time, Ryan, rocking the bath bombs for the smooth skin. So Eric sees this bath bomb, and he thinks, what if I did this for hot chocolate? And he gets so excited about this that he goes to the grocery store, he buys some cheap chocolates, some marshmallows. He's like, I'm a couple of kind of called casts or something, right, that he could mold. And he's like, I'm gonna see if I can build one of these things. And so he builds this sort of rough prototype, and he's thinking, how am I gonna know if people really like this? And so he decides he's gonna make a video for TikTok, at the time TikTok was like, first blowing up, this was when this idea occurred to him. So he gets out his, you know, Mariah Carey playlist, I think he filmed it to, All I Want For Christmas Is You, which is the most overdone Christmas song of all time. And he's watched, he's playing with this warm cup of milk that he drops this Coco bomb in, and you see it dissolve, playing the music. And he drops us on TikTok, and he drops us on TikTok, and this thing just starts going crazy. All these people like, what is that? Where did you get it? And so he pulls it down after a few hours, because he's like, wait a second, I don't know what to do with these people now that I'm getting some interest. So he takes it down and over the weekend, he goes and sets up a two week free trial Shopify website, which you're going to love because you're from Canada. Shopify. 

Ryan Miller  

Yep. 

Jeremy Ames  

Good on Canada. So he goes and gets a two week free trial, sets this thing up with a merchant account, puts a few, you know, does a little design to create these four or five flavors that don't actually exist, puts them on a site and offers them for sale. And then he puts this video the next week back on TikTok. And then he goes to dinner. Can you hear ping on his phone? He looks down, the sale is like, what, this is great. Ping, another one. Pretty soon it's like, ping, ping, ping, ping, ping. And he is freaking out because he's like, I don't even know how I'm going to produce this stuff. So he goes and shuts down the website and realizes he sold like, $8,500 worth of cocoa bombs that he doesn't have and has no idea how he's going to make. So the next morning, he goes to visit his entrepreneurship professor, and he tells them this story, and his entrepreneurship professor is like, Eric, come on, this can't be real. And Eric says, Watch, he pulls up his phone and he turns the website back on. And ping, ping, ping, ping, he turns it off, and his entrepreneurship professor is like, this is amazing. I need to set you up with this attorney and this other person. He frantically called his mom, who called their local church and got their, got them to open their commercial kitchen for them to come in. They went to, like, the local Grab and Go store for restaurant supplies to buy all this stuff to produce this first $8,500 worth of merchandise. Well today, Eric runs a couple million dollar business that sells cocoa bombs, and that was expanding into other foods in the same idea, like last time I talked to him, he's creating this Berea bomb, which is like, it's like a seasoning bomb that you put in this meat to create this cool Mexican dish, which is part of his heritage. And maybe one of the things I love best about Eric's story is now he employs like, 20 people in Blackfoot, Idaho, which you're not going to know where that's at, because no one knows where that's at. It's tiny, so creating 20 jobs there is amazing.

Ryan Miller  

Awesome, man. So, so test before you invest, understand your market. Now there, there's this trifecta in startups or venture capital, and if you're anyone listening, you're familiar with a Venn diagram, and it's viability, desirability and feasibility, those three that you kind of have to know before you jump in. But one of those is more equal than the rest, and that one is desirability. So I remember many, many years ago just thinking about this and looking back at some large companies. So don't think you're only the those starting out on their first deal with a clipboard. Large companies don't get this right where that other guy, both these guys, did. So one, for example, you're gonna laugh, but you do you remember Google Glass? Oh yeah. And people were being called Glass holes, which I was like, I was surprised with these Ray Ban because they have the cameras that are right back after it again. I don't know if it was too it was more revolutionary than evolutionary. So it's just too big of a leap, I'm not sure. But was it feasible? Yeah, yeah. They had the resources, Google, like, build whatever they want. Was it, was it possible? Did they have the resources? Did they? Yeah, sure. They had everything they wanted, except for the main thing they needed, which was, is there a desire? And the answer is no. And so I think what those stories really illustrate is to say, can you, yes? Should you, I don't know, let me go ask people, do they desire it? Hey, if I built a truck or a cocoa bomb or whatever that is, what's a very simple test I can do? Now, I don't normally promote books, but I'm gonna promote one that I really like. It's called, The Right It, by Alberto Savoia. It's a yellow cover, at least the one that I have in my yellow section behind me. And that whole thing is about testing your market for desirability. Now he would call it different, he's probably a little more eloquent. He's a former innovation head at Google, and it's a wonderful thing about testing your product. I could not agree more with all of those stories, really smart guys. It's fun to have them as your client, but also that point is well received, and I think more people need to do it. So thank you for bringing that up, I really want to take time on that is to say, cool. Maybe you're educated, you know something, you're an engineer or a welder or whatever that is, you must test before you invest. Absolutely. I love it. Can you add anything to that?

Jeremy Ames  

I'll give you another one that I think is interesting from someone I interviewed an entrepreneur that I admire. So this guy runs a 10 plus million dollar business, and all they do is find experts for private equity firms. So private equity firms have deals they're going to do. They don't have an in house expert that's really specialized in this, and his firm goes out and finds all the people that could be experts and vets him and figures out, hey, these are the two or three guys that you really want to talk to, gals you want to talk to. And so I wanted to interview him because I had this idea in the back of my mind, hey, I think one of the things we often suck at as small business owners or people that are considering small business is really thinking how we tap into people who know the things that we don't know. And so I wanted to pick his brain. So I got on and I asked him a little bit about his story, and said, hey can you just break down for me how your company thinks about doing this? And so he gave me his whole playbook. It was like he walked me through how they think about searching for to find the right kind of people that match the thing that they're looking for, so the gap. And then he showed me a little bit about how they think about the reach out, what they put in the messaging, what they put in the email to try and get someone to engage, and then how to run a great call, and then how to follow up after so those are sort of the four key steps. And then he spent a little time with me modifying of how you would think about doing that for somebody who's just an individual person or a small business owner. And one of the big things that he modified when we talked through it is he said, hey, man, he actually recommended not offering to pay somebody when you're reaching out. Because he said, hey, when money is involved, it shifts from a it shifts from an act of goodwill to a transaction and he's like, don't underestimate that one of the things that these experts love most is feeling valuable to someone else. And so he walked me through this script, and I got off the call with him, and I was so inspired that I thought to myself, I'm going to try it. 

Jeremy Ames  

So I'm in the process of writing a book, Ryan, so I went to my chapter outline, and I'm looking through it, and I'm thinking, okay, I have this section where I want to talk about how I think people could use the idea of a pre-mortem process. People in the technology world may be familiar with that use this pre-mortem process to make a smarter decision about a business you're looking to invest in. And I thought to myself, I have no idea where that came from, so I started Google searching who invented the pre-mortem. It turns out it's the psychologist and professor named Gary Klein. So I stalked Gary Klein for like 15 minutes, I find him on LinkedIn, I find his website. I go back to my buddy's sort of playbook about how to do a message, and I send a message to him on his website, and it DM through LinkedIn. Sure enough, three days later, I get an email directly from him. I'd be happy to get on a 30 minute zoom call with you. So we set it up, it happens in a couple weeks, and I go through the exact thing that he did for me of how to run a great call. And I'm actually going to walk you through what that run a great call piece is, because I thought it was awesome. 

Ryan Miller  

Ya let's hear it. 

Jeremy Ames  

Step one, to run a great call, he says, start with report. So this is where the stalking comes in, like mention a personal detail where they went to school, a shared interest, something they posted about recently that you enjoyed. He's like, take 60 to 90 seconds and just find a point of connection. Then he said, set the agenda, which is just tell them what you hope to learn and how you're going to structure the call really brief. Then number three is give them context, so explain what you're trying to do. So this is the goal of the thing you're trying to figure out to learn and what is important to you, and do it in less than two minutes. And he said this part super important, because if they have context for where their experience is going to align that shares with your insights and goals, you can get a lot of value in a short period of time. And then four, he said, you're going to ask thoughtful, structured questions, so you're actually going to have thought about these before. He says you're going to come up with three to five, right? And if you can focus on, you know, focus on one sort of lane of talking about something before you move to the next. So if you need to ask something about industry trends, do that before you shift to hey I have this operational question. And then he says, in the every call with a referral ask, and this is his exact quote, knowing a little bit about what I'm trying to do. Is there anyone else you think it'd be worth me talking to with, or who might be open to talking to me? And so I run this call with Gary, I run this whole script, and at the end, he goes, you know what? This was a really enjoyable conversation, I do have someone I think I should introduce you to. He's like, I'm gonna introduce you to Bryce Hoffman, the guy who wrote Red Teaming, and so while I have a call with Bryce Hoffman in like three weeks where I'm gonna go through and talk with him, and said to myself, this is brilliant, and I don't do this enough. I am very trying to figure out all this complex stuff on myself, and I don't ask myself the question, who knows way more about this than me? And how can I reach out to them and see if they'll share it with me?

Ryan Miller  

And it reminds me of a very great book I read, Who Not How.

Jeremy Ames  

It is a great book. It's the best book that should have been a blog post ever.

Ryan Miller  

Yeah, it's great advice, man. It really got me thinking in areas that I knew, but it provided structure to really execute on that. So, yeah, very seminal work man, that's that's incredible. So the perfect call, I've never heard that. It's absolutely perfect that goes into pitching investors. As we like to say, your opening move isn't the pitch, that's the pitch is your power move, your opening move is what you're talking about. It's just building rapport and getting to know people.

Jeremy Ames  

What's it to say? If you want money, ask for advice, if you want advice, ask for money. 

Ryan Miller  

Yeah, I've gotten a lot of advice in my early years, so I had to learn, but we're a little more refined now, so and so, so that's two. Do you have a third, some advice you can share?

Jeremy Ames  

I got one last one.

Ryan Miller  

Okay, let's hear it.

Jeremy Ames  

I'm personally passionate about, because I'm kind of a nerd about this stuff. It's not going to be surprising to anyone. to say, hey, you should have a dashboard for your business. You should have a place where you're pulling in all the KPIs, your key performance, your indicators that are telling you where you're going, and your outcome based ones are showing you where you've been, you should have those in a dashboard. But I would tell people what was game changing for me was to create a personal dashboard. And I want to tell you why it was game changing for me. It was game changing for me, because just like in business, there are things that are important that are really hard to measure, and the only way you get better at measuring them is you try to start measuring them, and you figure out where they're wrong and where they don't work and what might work better. And that one's too much maintenance to track in this way, like it's game changing for a business. And anyone who's run a business for 10-20 years will tell you that's the key, like, if you know all the things that are important and you can watch it, and then you've got good people to own those things that you can ask questions of and you know it works. But I don't know many people have done it on the personal side and I will tell you it is transformational. I'll tell you about maybe I'll give you a couple examples of it. I have had an aura ring for like, seven years before I had a personal dashboard. My aura ring sleep scores looked like this, I think the low point for me was a 66 that was my average for an entire year. And I'm pretty sure that's not good. That's maybe not even a D plus. And so one of the years I was looking at this, I'm like, okay, I'm putting this on my personal score card, and I'm going to figure out how to make this work. But my goal was not, hey, I want to go get two hours more sleep a night. Because for me, it was like, I didn't want to give up all the other things that I was trying to do in my life. I wasn't going to give up working out, I wasn't going to give up having time to read, I wasn't going to give up time with my family. So I was like, okay, so how do I optimize this without giving up a lot of stuff and it led me to test a lot of different things. I tested supplements. Let me tell you, the thing that was most magical for me was finding a cooling mattress that alone, I would attribute three to four points average on my sleep score period, and I wouldn't have known that if I wasn't tracking it and therefore able to test it, because this is what you do in a business, right? You have your scorecard, and then you have these hypotheses about things that are going to improve the performance of the business. You go out and you test them, and you see what happens to your numbers, and if it makes your numbers better, like your NPS score, you go score, you go, oh, great, let's do more of that. If it makes it worse, you say, hey, let's do less of that. And if it does nothing, you say, let's stop pouring money into that and find something else that might potentially work. 

Ryan Miller  

Brilliant. Before we wrap everything up. Are there any final remarks? Anything else you could say before we shut her down?

Jeremy Ames  

I'll say one thing, and this is something I'm passionate about. I think a lot of people look at fear and they think that the choices that you have when fear shows up in your life are to fight, freeze or flee. And I will tell you, there's a fourth option, and it's follow. And I don't know if you've read Gavin de Becker's book, The Gift of Fear, it changed my perspective, because I've never understood the perspective of like my wife, for example, when she's walking down the street, I just don't think about it. I'm a six foot two guy that's almost 200 pounds like I don't worry about what might happen to me when I'm walking down the street at night or in a parking garage where no one's at my wife does, like for her, it sets off all sorts of fear signals, and I'd never appreciate it. So I read this book, but my biggest takeaway out of this book was the whole message from this guy is your fear is just a signal, but it doesn't actually tell you what that fear meets. And in this case, his point was, you need to listen to your intuition more when you have fear. And I thought to myself, well, if people listen to their intuition more when they had fear, they do nothing interesting, because everything that you're trying new, like starting a business or writing a book or any of these other things that you're doing for the first time are going to scare the crap out of you because you've never done it before. But his whole point is, but you can, you can follow that fear. You can dig into it and try to understand what is this fear telling me so in the case of, like, a business, is that fear coming from the fact that there are just things I don't know and that's giving me anxiety, awesome. If I have clarity on that, I can go, okay, these are the three things I don't know, I'm going to go see if I can find about is it revealing a legitimate risk, like, oh, this is something bad that could happen. Okay, are there options for what I can do about that, can I buy insurance, can I get a partner, whatever? Or is this something where it's, hey, I've got trauma from my past, and this is triggering it, because I'm feeling this fear, because this problem feels like the thing that I felt when I was 16, right? And that tells you, hey, I've got this thing that I've got to dig into and deal with or it's going to continue to hold me back. So that's my encouragement to people. It's like fear is part of the process. When you're doing something new, it's going to happen to every single one of us. And my encouragement to you is, don't freeze, don't fight, don't flee, follow it, dig into it, spend some time with it, and try and understand what's really happening there. What is it really telling you, because your intuition knows something valuable, your job is to go find what that is.

Ryan Miller  

Well, brilliantly said, man. So to summarize everything that we talked about, make sure you test before you invest. There's been some brilliant stories to really open up how important that is and how useful that is. The other thing is, find experts to guide you, sometimes, back to that earlier point, sometimes follow it is the way to go. If you're feeling a little nervous and you're afraid to jump in, but something inside of you really wants to do that, I mean, talk to your lawyers and accountants and everything. But if you feel that's right for you and you've talked to the right people, it's okay to bring people along and also have them as an advisor or a champion or whatever it is you want to call them. And then finally, create a personal dashboard and be careful of fear, use it to your advantage. You do these things, and you too will be well on your way in your pursuit of Making Billions.

Ryan Miller  

Wow, what a show, I hope you enjoyed this episode as much as I did. Now, if you haven't done so already, be sure to leave a comment and review on new ideas and guests you want me to bring on for future episodes, plus, why don't you head over to YouTube and see extra takes while you get to know our guests even better, and make sure to come back for our next episode, where we dive even deeper into the people, the process and the perspectives of both investors and founders. Until then, my friends, stay hungry, focus on your goals and keep grinding towards your dream of Making Billions.