From Priceline to the Grammys: Jeff Hoffman on Business and Grit

Episode Transcript

Speaker 1 (00:00):
Man.

Speaker 2 (00:01):
I am excited. Today on the show, we have Jeff Hoffman,
who is Jeff Hofsman. Jeff Hoffman is an award winning
global entrepreneur, proven CEO, best Thing author, and we're going
to dive into this. You may not know Jeff off
the top of your head there, but you may know
some of the brands that he's been associated with, Priceline

(00:23):
dot Com, Booking dot com, you Bid, and a bunch more.
I'm excited to have him back. Jeff Hoffman, welcome back.

Speaker 1 (00:31):
Thank you Man. Excited to be here and and spend
some time with you.

Speaker 2 (00:35):
Absolutely, I'm excited to have you back and just get
like I said, get caught up. One of the things
that I want to talk about real quick is you've
added Emmy Award winning producer and Grammy Award winning producer.
Talk about this.

Speaker 1 (00:53):
You know, I spent I'm a software engineer by trade,
right right, So I spent all these years in the
tech industry, which is a very left brain logical in
tech and in software, et cetera. And I always wanted
to get a chance to understand the two things, Bert,
to understand the creative process a little deeper by participating

(01:17):
in it. But the other thing, honestly was I would
look at the entertainment industry and their ability to market
like it's the ultimate marketing machine. Yes, specifically, there was
a time where based on marketing, we me and my
friends were all talking about a movie coming out for weeks.

(01:38):
We went on Friday night opening, We waited in a
long line on the opening day and Friday we spent
all that money to go in and get all our
snacks and it took a few minutes for me to
realize the movie was horrible, and I was like, how
did they do this? How did they get me to
wait outside talk about it for weeks rush after work,
spend this money for a horrible product because of a

(02:00):
brilliant at marketing. So when I took a break from tech,
I was like, if I go spend time in sort
of music, film and television, I could one understand the
creative process better. How to creative people create because it's
it's there's some similarities, but it's different than what I
do in the business world. And then how is it

(02:22):
they're so good at marketing? So that's why I took
the fora into music, film and television, which we did
work in all.

Speaker 2 (02:29):
Of those, all right, So which album, TV show, movie, lord?
The names?

Speaker 1 (02:38):
So one more thing though, I had interesting because what
everybody said to me was, dude, you can't do entertainment, right,
you can't do music because you're a tech guy. The
part they miss is that our sort of fundamental theorem
was that business is business. It's the music business, right,

(03:02):
It's the business. And the reason there's a term called
starving artists, I think is because they they poo poo
the business side. We don't care about business, And I'm like,
that's why you're starving. Maybe if you merged business people
and artists creative people, that's the win, right, And so

(03:26):
that was kind of the approach we took. Let's apply
everything we know about building businesses entrepreneurship. The difference is
in one company, I still have finance. I have to
identify my customer. I have to build a product. The
difference is in one of these I have musicians and singers,
and the other ones I have coders and database analysts.

(03:48):
Right either way, I have domain experts creating a product,
and all of these I have to finance it. I
have to find the audience. I have to market to
the audience after service, how is it difference. So that
was our theory that you still have to just build
the right team around them. So we got involved in
in the you know, in tours and concerts, the business

(04:09):
side of the creative business. But we did produce one
album of our own, which was a jazz album, and
so that's a combination of the art and business, right,
everything from financing to studio space, to the musicians, to
engineers and mastering and sound editors, and then marketing. There's

(04:32):
all these business tasks. It's not just playing an instrument.
And so I was doing the business side of producing
this jazz album with a friend of mine who's a
saxophone player. He's doing the creative side of it. And
as crazy as it is, that jazz album, it's called
The Offense of the Drum. The jazz album got nominated

(04:53):
for Best Jazz Album and won the Grammy that year.
So we got all dressed up, went to the Grammys
and were able to come home with one for the
album we produced. Crazy fun experience.

Speaker 2 (05:03):
Man, that's outstanding, And you're right, Look, I think that
everybody soon you know, is most likely had that experience
where you waited outside and you know, you show up
and you go through all those machinations, and yeah, you're
let down by the movie. And but there's something fun

(05:28):
about that experience right there there, there is that is
part of the experience, is waiting and waiting for that,
the anticipation being there with your friends. If it's a
good movie, it's it makes the experience that much better.
And so I think that is just a fun thing
that for me personally, I've done that so many times

(05:50):
I could I kind of consider myself a movie buff.
But I've never stood outside waiting for the next Apple
phone to be released. A lot of people have done.
Talking about brilliant marketing, right yep, without a doubt.

Speaker 1 (06:04):
In fact, in fact, that example was one of the
ones I learned a lot from. The date occurred to me,
and I had the opportunity, since Steve Bosniaks a friend,
to get some first time and back in the day
John Scully when he took over from Steve jobs, so
I had a chance to get some first hand information

(06:25):
from the founders and you know, builders of Apple. But
the day I was trying to understand the brilliance of
their marketing and selling phones, and I got school what
I was told is we're not selling phones, We're selling
cool and we're selling fomo. And so if you look
at the early iPhone commercials, they basically said this, all

(06:47):
the cool kids have one. So kids weren't going to
their parents and saying the iPhone has more memory and
a faster, higher pixel camera and faster CPU. They were saying,
all the cool kids have an iPhone. I'm the only
kid at school without one. They were selling cool and
it was working. But that was a huge marketing lesson

(07:08):
for me. What are you really selling? Is what I
learned to ask, because that's a big piece of what
they were selling. And then the fomo concept wasn't called
fomo then, but they were pioneering it. You want to
you really want to be the only kid at school
or the only one at the office without it, without
an iPhone? And the answer for people was no, Right,

(07:29):
I want to feel like the one dorc without an iPhone.
So super. That's the kind of lesson that I was
went there to learn from creative people.

Speaker 2 (07:39):
Right, And I want to illustrate this a little bit
further because I have we have five kids total, and
the babies or twin twin girls and for their sixteenth birthday,
we gave them some cheapy phones. In fact, I think
we bought them at Walmart, and they were super excited.

(08:00):
All right, we got phones that lasted maybe three days.
And then they came back and said, exactly what you said, Dad,
We are the only people in our school that don't
have iPhones.

Speaker 1 (08:14):
Yea.

Speaker 2 (08:16):
And I said, that's great. You guys can be different.
You don't want to be different, but here's and so
here's the thing that happened next is I said, well,
I'm not going to buy you iPhones. There are one
thousand dollars whatever, whatever. I'm just all right, you're going
to have to get a job and figure that out.

(08:38):
Oh and I take that back. There were fifteen, That's
what it was. And that's what they said, Dad, we're fifteen.
We can't get a job. I said, well you can.
You'll have to figure something out. I'll be glad to
help you. Maybe you guys can do some work around
the neighborhood and drum up some business because I had
done that before with my oldest son.

Speaker 1 (08:55):
And anyway, just.

Speaker 2 (08:57):
So happens that that we had a friend who had
just opened up a pet grooming facility. Okay, I needed
some week in help. And this to me was such
a great blessing because A the twins said, okay, we'll
work there. But it was a it was a disgusting job.
You know, they had to deal with animals, hair, you're

(09:19):
in feople mater all that. It was a disgusting hard work,
you know, a hard job, but they did it because
they wanted those iPhones.

Speaker 1 (09:29):
There it is and that is a great lesson for
all people, but especially for young people, the relationship between
wanting something and earning it, Yes, and we're working for it.
That happened to be quick side note though, Taquille O'Neil's
a good friend of mine, and Shaq has a funny
story of calling all his kids into the living room

(09:51):
for a family meeting and sitting down and said I've
announcement to make and the kids are all sitting there
and Shack said, I just want to make sure you
guys know I'm rich and you're not. And he said,
so you better get off the couch and go do something.
You're not rich. I am and so and not in
a mean way. Right, Jack was explaining to them, I
worked super hard to get where I am you're going

(10:15):
to have to create. You don't have to do something
in life. You can't just sit here. So I think
it's funny that he tells his kids that you're not rich,
just I am. I am, and he's try to do
it to inspire them to have values. But you know,
I had that Albert from college because I wanted to
go to a school that I couldn't afford. And when

(10:35):
I got there, I actually got told to go home.
They said you were not able to pay the full balance,
which is fine, I'm not mad at them. It's it's
like you can't go to a steakhouse order steak and
when they come back, say, I only have ten bucks,
But I really wanted a steak right work that way.
So the school said, even with aid and scholarships, you

(10:57):
have a balance, and you can't go to school here.
If you can't pay for it, you need to go home.
And I sat there the same thing you just talked about.
I said, I want this diploma really bad. I don't
want to go home. How do I solve this problem?
And I wound up starting a little company in the
basement of the university, which is how I funded the
balance of my education. And still graduated on time. So

(11:20):
it's an important lesson for everybody. Right when you want something,
make a plan, by the way, as you know, right
when you're out there doing that hard work outside sweating
as a kid, or whatever you're doing, or even for me,
when graduation day came and all the hours I put
in of all that work, victory is so much better. Yes,

(11:42):
when you have to fight hard for it, it means
so much more to you than when stuff is just
given to you and then it has no value.

Speaker 2 (11:49):
Oh, absolutely absolutely. And one of the things that has
happened here in America because we are so blessed yep,
is that finding hard jobs, getting kids to work hard
and to do hard things is getting harder to do.

Speaker 1 (12:07):
Yes, sure, you know, when you and I were growing up.

Speaker 2 (12:10):
Work ethic was constantly talked about. I remember in my
household growing up, my parents would talk about working hard
and working and work ethic and improving yourself to your
employer on a consistent basis. It was, you know, it
was at least I don't know, a conversation that we
would have probably fifteen or twenty times a year, and

(12:35):
that is been eroded. And so I think that a
lot of people again, parents that grew up working hard
want to somehow eliminate that for their kids, and I
think they're robbing their kids of the stuff. You're talking about,
that sweet, sweet taste of victory when you busted your butt.

(12:57):
And look what I done. I did it. I got
myself through school, I got my iPhone, I accomplished my goal.
That is something that stays with you the rest of
your life.

Speaker 1 (13:09):
You know, the perfect example of that was when the
Participation Trophy era hit, so I was particularly proud. I
picked my daughter up from softball the last after the
last game, they had a final meeting and they said,
a right, we're going to give out the awards, and

(13:31):
they gave every kid a trophy and we got in
the car and my daughter flung the trophy over her.
You know, it probably broke over her head into the back.
And I said, what's that about, And she said, participation Trophy.
She said there should be one trophy and MVP, and
it should go to Mary. My daughter said this, She said,

(13:53):
Mary practiced way more hours than all of us. She
was the best player, right, She would day late for
extra hitting practice, and she earned the MVP. No one
else should get a trophy. She outworked us, she out
practiced us, and she outperformed us. Why does anyone else
have a trophy? I was so proud of her, right
like stupid, But it is the softening of America in

(14:18):
a bad way.

Speaker 2 (14:19):
Absolutely.

Speaker 1 (14:20):
Absolutely, participation trophy teaches your kids you don't really have
to try and actually in life, if you really want
anything in life, you do have to try. Hard work
is will never not be important?

Speaker 2 (14:34):
Right?

Speaker 1 (14:35):
Agree on that? Yeah?

Speaker 2 (14:37):
No, absolutely. Jordan Peterson in his book that was it,
Twelve Rules for Life, there is a chapter in there
where he talks about raising children, and I tell everybody
that is a must read chapter if you want to
raise your kids, if you want to raise strong, independent children,
to must read chapter. And he talks about that that

(14:58):
if you don't send standards for your children, if you
don't teach them the work ethic and how to get
through hard things, if you make it so easy for
them eventually as they're going through school, those are the
kids that are that are labeled as weird. They they
have a tough time making friends, They tend to eat alone,

(15:19):
they're they're there. They turned out to be loaners and
and and they struggle in life. And so he says,
you can either be the coach for your kids and
teach them how to do hard things, or life will
teach them, and it's going to be so much harder.

Speaker 1 (15:39):
Absolutely true. They're going to learn the other way, which
is not a pleasant experience.

Speaker 2 (15:44):
Yes, absolutely, and and and anyway. So I don't know
how to get that back. I don't know how. I
think that the participat participation trophies need to be reduced, eliminated, deleted,
but I don't know how we do that because now everything,
everything is offensive to somebody and we can't be offending anybody.

Speaker 1 (16:08):
Yes, it's true. We evolved to this just really bad
state where you're not even allowed to have an opinion
anymore because you'll get canceled for offending somebody somewhere.

Speaker 2 (16:20):
Right, And you know, one of my one of the
funniest cancelation things that happened was with oh, what's the comedian?
Female comedian Roseanne Barr. So she got her, you know,
the the Roseanne Show came back for a second or
for that reboot, and she said and she made some
what I would you know that it could be offensive

(16:42):
remark about a politician, But it's Roseanne Barr. Yeah, I
mean that would be like that would be like making
Shack O'Neill feel bad because he's whatever, almost eight feet
tall or something. It's like, it's Roseanne Bar. This is
what she's known for.

Speaker 1 (16:59):
And that's right. That's why we watched her in the
first place, right.

Speaker 2 (17:04):
Because she's rude and crude and socially unacceptable. And now
you're going to take that away from her.

Speaker 1 (17:10):
And guess what the other thing is. If you don't
like it, don't watch her right. Canceling her right is
not really the foundation of this country. The foundation is
you know, live and let live right, freedom of speech.
If you don't like it, don't listen. But once, yeah,
I agree with you. It got so ridiculous now.

Speaker 2 (17:30):
And and to your point, if you don't like something,
don't buy it, don't watch it. You can vote with
your pocket book, you can vote with your eyeballs. That
has more power than anything else anyway. So you know,
like I said, there's no solution for the.

Speaker 1 (17:47):
Moment to say, unfortunately, we can't solve any of this.
Just agree on it.

Speaker 2 (17:53):
Absolutely all right, So let's talk about business. One of
the things I want to ask you is again, you've
been involved with New Humor is successful business startups as
well as you scaled several big, big, big brands. What
is the one lesson about success that took you the
longest to learn?

Speaker 1 (18:14):
I think that, well, I'm going to answer a different
question than you asked first. Which was the most important one?
I know because they all took me long to learn
and they all took the same long I think, through
a lot of trial and error. But the most important
one was the fact that real leaders don't create followers,

(18:40):
they create other leaders. So when you're a CEO, right
and again, I remember this a time. One time my
daughter says to me, are you the boss at work?
I said yeah, why and she said, but what do
you do? And I said, well, what do you think
I did? And she said, you just walk around and

(19:02):
tell other people what to do. And I sat there
and thought that if you ask the average person, what
does the boss do, that's what the boss does. That's
kind of what we're raised to believe. You're the boss,
go tell people what to do. And so, in fact,
true growth as a person, but definitely as a company.

(19:22):
You know, I have the one book scale and that
David and I wrote and page one basically says you
can't scale until you get out of the way. And
I get these people all the time that reach out
to me, and they tell me frequently they're like, Jeff,
I'm working longer than I ever have and harder than
I ever have, So why am I not growing faster?

(19:44):
And I'm like, dude, you're the problem, right, So that
lesson is that the job description is not you're the boss,
run the company. I sort of rewrote my own job
description later. The job description is to surround yourself with
people smarter than you to build the environment. It's bigger

(20:06):
than just physically the company. That's the culture and everything.
To build the environment where all the best people in
your industry all want to work for you and never
want to leave. So that's a servant that's an inverted pyramid.
That's a servant leadership model. I'm not the top of
the pyramid. I'm the bottom. If I if I build

(20:28):
a place that all the great people want to work
and then work really hard to make it make them
want to stay by taking care of them, then I'm
not in the way anymore. I'm surrounded by people smarter
than me. But you have to trust and empower them.
You have to let them grow their part of the business,
and you just have to let go. And a lot
of people tell me things like, you know, I can't

(20:51):
let go because and I know the reason. They don't
trust the people, right, And I'm like, okay, then that's
on you, not them. Why did you hire someone you
don't trust? Go back out there and don't come home
till you find someone you trust. So that's the rewritten
job description in the lesson is that a leader's job
is to spend a lot more time finding people smarter

(21:13):
than you, and then a big chunk of your time
not running the company, but building those leaders so you
can let go and let them have it. I had
a guy say, I said, why don't you let her
run the business? Quit micro managing her? And he said
because she might not do it the way I do it.
I said, you're absolutely right, she might do it way better,

(21:33):
right because she was raised in a whole different set
of circumstances than you, and she looks at the problem different.
So that was the big lesson that your real job
is to spend more time finding people smarter than you
taking care of them, and less time telling people what
to do.

Speaker 2 (21:51):
Absolutely, I love that. I love that that leaders don't
create followers, they create leaders. That's really what you want.
A good leader, A really good leader is constantly looking
at how they can subdue their ego. Is one of

(22:11):
my beliefs, right, because the ego is the enemy. We've
heard this over and over again. And anytime you find
an arrogant, conceited leader, you're either going to find a
small company or a company on the verge of failing. Yeah,
and you know, you look at Blockbusters from me is
a great example of arrogance, right, that they were too

(22:32):
big to fail. Netflix has nothing on us and what
happened well, Blockbuster disappeared.

Speaker 1 (22:42):
Yeah, I ironically those are both people I know personally
that you know Mark Randolph, that the Netflix founders, as
well as Wayne Husanga back when he built Blockbusters. So
I got to hear from the inside exactly what you're
talking about. In fact, it caused me to I once
did a TEDx talk that we did live from the

(23:04):
New York Stock Exchange. It was the first one ever
done on Wall Street, and I started my talk by saying,
I'm going to tell you the three most dangerous words
in business and I wrote on the board we're doing fine.
And I said, that's literally the three most dangerous words
in business because that was Blockbuster and many other that

(23:26):
was Kodak and so many companies. In a way, this
is going to sound weird, but in a way a
little bit of that as even IBM. I was talking
on a college campus recently and something came up where
I said, IBM and college kids today, these nineteen eighteen
and nineteen year old said what is that is that?
I I said, wait what And they said, we don't

(23:49):
know that company. They have actually never encountered IBM in
their lives. They only know Google and Facebook and you know,
et cetera, et cetera. They've never worked with any IBM product,
technology anything. And so yeah, the these the people that
say we're doing fine have literally closed their you know,

(24:10):
closed their minds to innovation.

Speaker 2 (24:14):
There is a movie, Uh, it's not a business movie.
It's a world world World War Z with Brad Yeah.
So one of my favorite parts of that movie is
he gets to Israel because at this point in the movie,
Israel is you know, they had built these giant walls
around the city and they're like the they're doing the

(24:37):
best out of everybody else and meeting with some of
the with one of the leaders, and he says, everybody
got the same memo, the same email about this virus,
but you're the you know, you're the only people that
did anything about it. How did you know? How did
that happen? And he talks about the tenth man theory,
and the tenth man theory is if everybody is in

(25:00):
is consensus that we're fine or that we don't need anything,
then the tenth man his job is to do the
opposite of what everybody is is an ingredience with and
they and so in this situation, everybody agreed that hey,
we're not going to be affected by this, and then
his job was to say, Okay, we are going to

(25:21):
be affected. What do we need to do? And so
they erected these giant walls. And I thought, man, that
has to be a standing operating procedure, an sop for companies,
because every day there's a blockbuster that's going to happen
or Kodak where we're fine, we're one hundred years old,

(25:41):
we're stable, we're not going to go any place, and
we're gone. And so.

Speaker 1 (25:48):
We always did and I did this with all my companies.
We did our own version of that now that you
bring it up, but mine was worst case in nowt
scenarios and what we'd do. So I would bring my
team in and everything's running smoothly, and I would ask
them questions like, what if the room was sitting in

(26:09):
caught on fire and all those servers burned, Right, the
odds of that happening really low. So no one's ever
discussed what if our building catches fire? Right, no buildings
caught fire in this area in fifty years or something
would be the answer people would get. And I'd say,
that's great, but what if it did? And they'd say,
I don't know. I said, come back when you know,
And so they would come back and say, well, we'd

(26:31):
have to have a rollover server farm. And then I
was like, how do we do that? And they came
back and said that's too expensive, And then we discovered
I asked them to go research it. There's companies, of course,
that are disaster recovery firms that already have a server farm.
You basically just make a copy of all of your
operating software, send it to them, and you don't need

(26:54):
to have a rollover server farm. They do, so if
your place burns, you literally flip a switch and you're
still alive. We had never done that, but you know
what came shortly thereafter giant hurricane warnings and people were
boarding up windows. I said, well, it ain't a fire,
but our whole entire server room's in danger. So we

(27:15):
would do these worst case scenarios and we would do rollbacks.
I'd just say, just so I can hear it, what
would you do if this thing happened? What are all
the things that could happen? And it just helps you
sleep a little better at night when we've thought, even
though the odds of that happening are probably never the
mental process of just asking the question was always helpful

(27:38):
for us, so we always had. And then there's the
lesser version. It's not the whole server farm goes down.
It's just that we release a new version of the
product and it just doesn't work right. I said, if
Monday morning the profit stops working, do you guys know
how to do a rollback to Friday's version? Do we
know how to do that? And they're like, we've never

(27:59):
actually we had to roll back because it's always worked,
And I said, the moment that something doesn't work is
not the time. I want you to start figuring out
how to do a rollback right now in case it
ever happens. And of course one day it.

Speaker 2 (28:11):
Does, sure, you know. And this is something that is
hard for humans to what's word I'm looking for to
put into the matrix of things to do because nobody
thought nine to eleven would happen. Yeah, of course nobody
even expected COVID, right, And I hope they talk about

(28:37):
COVID or something worse will happen again. And I'm hoping
one of the lessons we learn is we don't need
to shut down our economy.

Speaker 1 (28:45):
We need to keep it going.

Speaker 2 (28:46):
But bottom line is, it's one of those human nature
characteristics that when things are going good, things are always
going to be good, you know, And when things are
going bad, they're always going to be going bad, and
we forget that. It's it is this up and down
roller coaster. We're going to have a high high and
we're going to have a low low, and how are

(29:06):
we preparing for both because they both need to be
talked about.

Speaker 1 (29:10):
Yeah, I agree with you, by the way, what you
were saying that with the with both sides of that
the high as well. I've actually seen businesses that were
basically crushed by success. Yes, because they're actually one of
my favorite stories. And it was a while ago, so
it depends on the age of who's listening to us now.

(29:31):
But it was E Toys. E Toys was a really
good idea and it saved people because it had something
that the toy store didn't besides the convenience of using
the Internet and going to the toy store. On E Toys.
So here, let's say it's a thirty two year old dude.
He goes to the store to buy a present for

(29:52):
his five year old niece who lives in Milwaukee. This
thirty two year old guy has no idea what a
five year old girl he's single, right, what toys they like?
But and if he goes in the store, who knows
who's working that day? It might be a high school kid,
right right? They have no data in their head. E
Toys had this data of every purchase everywhere, So you

(30:16):
could say to E Toys, I have a five year
old niece in Milwaukee, it's her birthday, what should I
get her? And it knows what five year old girls
in the Midwest are buying and what's popular and how
they're rating, how the families rated it, so it would
tell you. So what happened was they never really planned
for success. They never asked the question, what if everybody

(30:36):
starts using this? And so that's what happened. When Christmas came,
the demand was massive. People ordered all these toys for
Christmas and they couldn't deliver because they overwhelmed their infrastructure
and people's Christmas presence came in January and they all
started suing the company, and the company went under from
the way to the lawsuits. So success can kill you

(31:00):
too if you have not actually discussed how you're going
to handle it and plan for it. That was one
of my favorite examples of that. They were so successful
they died and people are like, wait, what.

Speaker 2 (31:13):
Well you know, I tell you, uh, And I want
to get your take on this.

Speaker 1 (31:17):
Guy.

Speaker 2 (31:17):
I love the by the way, I love the the
E toys. Example, are you familiar with quibi or quiba?

Speaker 1 (31:27):
Yeah?

Speaker 2 (31:27):
Okay, So for for you guys who don't know what
quibi is, qu qu b I I believe anyway, that's right. Uh,
it's it's it was short for quick bites and Quick
Bites was going to be a h a subscription video
or streaming subscription program, but it was going to be

(31:49):
geared towards UH, the phone user. UH, people who only
had a few minutes of of the attention span.

Speaker 1 (31:58):
And and UH.

Speaker 2 (32:00):
And it was they raised two billion dollars. The people
involved was what's her name? She was the CEO of
HP and and then you had Katzenberger, who is the
CEO at one point of Disney. So you had operators

(32:21):
with tons of experience, they had tons of money, and
they went belly up in six months. And was the
thing that impressed me the most, Jeff, was they spent
a billion dollars in six months and they decided, we're
gonna shut the business down. It's not working the way
we thought, and we're gonna give a billion dollars back
to our investors and just call it quit. I was

(32:43):
impressed with that, but I also thought, man, you raised
all this money, you have all this experience. It seemed
like they gave up pretty quickly that they weren't committed
to the business. They were just trying to jump on
the the streaming or the popularity of streaming, and hey,

(33:03):
it didn't work. The way we wanted to, let's just
close it down. It just reminded me that, hey, you
can have a bunch of money, you can have great experience,
great managers, but it takes more than that.

Speaker 1 (33:17):
It takes a lot more than that. Especially you know
in cases like that of product market fit, right, do
you really have a product that enough people want and
they're actually willing to pay enough to make this a business.
You'd be amazed at how many times I have to
tell people that's great, but it's not a business, right
because they say, people love what we're doing. That's right,

(33:39):
But how much are they willing to pay you? And
how much is it costing you? Because you don't have
a business, you just have a fun thing to do.
I tell people a lot, congrats you actually have a hobby.
Hobbies are things you spend money on to do. Businesses
are things other people give you money you do for them,
and a lot of people don't have that value equation

(34:00):
really makes it a business.

Speaker 2 (34:03):
All right, So let me ask you this again. You
had tons of experience, you worked with some of the
biggest leaders. What's a common mistake that you see entrepreneurs
making over and over again?

Speaker 1 (34:16):
Okay, yeah, well, again, there's numerous but the one that
popped in my mind right away is this. It's being
blinded by your own brilliance, meaning that believing that your
opinion matters. So I'm going to give you the example
out of my own failure. Okay, we were building a
product and at the time, the core customer was a

(34:38):
stay at home mom. Here is the problem. I am, not,
in fact a stay at home mom, never have been.
And even the people that worked for me that were women,
guess what they worked for me, so by definition that
they are not a stay at home mom, they are
a working mom. So what happened was we sat in
our room and we discussed how to build a product

(35:02):
or stay at home moms, and then we released it
and no stay at home mom's body anything. This was
a company that we had that failed. And the lesson was,
you know what I wound up doing, But I wound
up I'm making this cardboard cut out named Amy and

(35:22):
Amy life size. Amy had an apron on. She had
like the phone in you know, holding it with an
old hands, a baby in one hand, a vacuum cleaner
in the other hand, and she was trying to stir
spaghetti sauce at the same time, and that was Amy,
and people would we put them in our office and
in our conference room, and people would come up to

(35:44):
me and they'd be like, hey, boss, I got an idea.
And I would point the cutout and I'd say, why
don't you explain it to Amy? And they'd look at
this frazzled stay at home mom, right, and they would say,
she'd never understand this. And I would say, then I'm
not interested. If you can't explain it to Amy, it's
not going to work anyway, so go do something else.

(36:05):
I see that all the time. People are not the customer,
and yet they're telling me what they're going to like
and why they're going to do it, And so that
process of customer discovery for me, I always tell them
it needs to be more. It needs to be customer intimacy.
Customer discovery is a survey. Customer intimacy is actually going

(36:27):
and spending a day in the life of those customers
without them knowing that you're building a company. People say,
I talk to customers all the time, right, You survey them,
and they know you're trying to sell them something. If
I sell insurance and I'm wearing a shirt and a
hat that says Jeff's Insurance. And I walk up to
you and say, ask you some questions. What do you
think happening? You're immediately in defense mode because I'm trying

(36:49):
to sell something. So what we used to do and
even in the price line days when we were building
the consumer product, I went to grocery stores multiple time
in genes, not in my work clothes, and just talk
to moms about they came about, about their purchasing habits
and how they you know, how they do what they do.

(37:11):
So spending time trying to spend a day in the
life of the person you thought was going to pay
you is really important if it's a B to B product.
One time I asked a VP of finance at a
company if I could send a couple software developers instead
of take your kids to work day, I wanted to
do take your engineer to workday. The engineers didn't want

(37:34):
to do it, and the customer didn't want to do it,
and I talked them all into it, and at the
end of the day it was unbelievable because my engineers
came back. All they did was follow her around all day,
just with notepads, not speaking. They went to all of
re meetings. They just did her day, and they came
back like, oh my god, we got some amazing ideas
for new features because we had no idea what she

(37:56):
actually does in the office. We only knew this one
thing that our piece of software does. But we're not
even addressing the most important issues because we would never
have known them because we don't work there. Right, that's
the biggest mistake. Quit being blinded by your own brilliance
and get out of the office. Go spend a day
wherever that end customer is and figure out what they

(38:20):
actually value and how they operate. Entrepreneurs don't do that
because they think their idea is perfect. Absolutely to people,
they tell me I did customer discovery, But what they
actually do is surveys in sales mode.

Speaker 2 (38:35):
Right absolutely, And to your point, you walk up to
any stranger and hey, can I answer a couple of questions?
Defenses go up.

Speaker 1 (38:43):
Yeah.

Speaker 2 (38:43):
Now, if you're worrying an insurance logo and stuff like that,
even that wall goes up even bigger and thicker or
whatever you want to call it, but it is it
is a a what do you call it? A powerful
data gathering tool to do the intimacy you're talking about,

(39:03):
that deep, deep dive, and sometimes that takes time and money,
which again a lot of entrepreneurs, because they are bright
blinded by their brilliants, they don't want to hear that.
They don't want to hear that will not work. You're
not serving the right customers.

Speaker 1 (39:20):
You're exactly right, And it's not usually money, it's time.
I was building the working on the airport chios. I
went a lot of days and just hung out at
the airport where people were checking in, and I said, man,
how long have you been here? Said? Do you travel
usually on Fridays? How long are the lines? You ever
missed a flight? How long do you think this line
should take? Just standing it in the airport with other people,

(39:42):
pretending to be a traveler for hours asking them questions.
If I send them a survey monkey, that's completely different
than when I'm just standing in the airport and they
just think I'm a fellow traveler. They will tell me
things they won't when they know you're selling something. But
it requires a lot of investment of time.

Speaker 2 (40:02):
Absolutely. One of the things that that we did for
a customer. Uh, again, this is an airport type customer
that we're trying to go for is we actually sent
people to the bars of the airports, because you know,
if you're sitting at a bar, you're you're, you're, you're tired,

(40:23):
you might have you may have already had a couple
of drinks, and you're loosed up, you're, you're, you're if
you're a lot of them are in social mode or
they just you know, they they're just trying to take
a break from their day. Gathering that information is massive,
it is such. It can absolutely make or break your business.

(40:44):
And again, it's a step that I think you're right.
A lot of entrepreneurs don't want to do. It takes time,
it takes money. They're afraid of the of the result. Also,
and you know, we had a customer that had already
spent like three hundred thousand dollars developing this software. And

(41:04):
the first thing we said is have you done any
kind of customer research?

Speaker 1 (41:10):
Oh?

Speaker 2 (41:10):
No, no, this is you know, I think this is
going to work because of this reason. That reason. So
we convinced him that, hey, we need to do customer research.
We need to find out if they're going to be
interested in this, and and we we gathered thousands and
thousands of data points where the customer said, no, this

(41:31):
is not something that we would want to do at all,
and the indid the individual company decided that, hey, with
all this data, we're going to stop doing what We're
going to do what we're doing because I think they
they were looking at spending another four or five hundred
thousand dollars. That data changed their mind and they pivoted
to something else. And again, most people, like you said,

(41:55):
they're they're blinded by their brilliance. They don't want to
hear that.

Speaker 1 (42:01):
They don't.

Speaker 2 (42:02):
They want to live it. They want to they want
to stay dumb.

Speaker 1 (42:05):
They want they don't. That's the danger because if they
hear it, they feel like I'm kind of responsible for
the information I just collected. And they you know, a
lot of times they just disagree, and I'm like, no, no,
the customer is wrong. And that's the case where the
customer is not wrong. And and they say that there's

(42:27):
a lot of times customers are wrong. For example, that
old the customer is always right. The part that's true
is the buyer is right in that uh, you know,
if they don't see value in your product and don't
want to pay for it. You got a problem, not them.
You can't just say no, all those people are wrong.
My product is worth this worth this much, okay, but

(42:50):
zero people are willing to pay. You quit blaming them
when the customer is wrong. I called my team together
once and said, we're firing a customer. But I fire
the customer because the way that he was treating my
account managers. I will never allow someone to talk to
my people that way. So I told him, unfortunately, we're

(43:11):
firing you. He's like, you can't. I said, we just did.
And he said, were you going to lose this revenue?
And I said, you're right, but I'm going to keep
my people. And I said it's going to hurt. I
will find I will lose this revenue and I'll have
to go get a customer to replace the money we
made for you. But I'm not going to let you
talk to my people that way. And he interesting thing

(43:32):
was after we fired and they came back a little later,
their company called said what happened? And I said, your
guy's are complete jerk to my employees and I'm not
going to put up with it. And they're like, uh,
we're moving him to a completely new job, and we'd
like to re up and we'll we'll renegotiate for a
higher price if you please take us back. So I

(43:54):
wound up winning in the end, like we'll pay you more.
I didn't even ask for that, they said, and we
moved him out. He doesn't work in this part of
the company anymore. But I had to fire somebody. The
customer is not always right, but the buyer is in
that part, right. You have to listen to the person
you thought was going to whip out their credit card.

Speaker 2 (44:15):
Absolutely. It's funny should say that because I changed it
a while back. Instead of the buyer is always right,
the market's always right.

Speaker 1 (44:24):
Yeah, that's great man. I'm going to have to quote
you on that, Okay. I always tell people markets make themselves. Yes,
you know, the markets know the answer. So that's actually
brilliant because the market is always right.

Speaker 2 (44:38):
Thank you. And you know what. So and the way
I learned this was you and I can come up
with the what we think is the best ad in
the world. Oh my gosh, this is going to help
us achieve X. This is a brilliant ad. Great creatives,
We're excited about it. We publish that ad and we
get crickets. The market is always right, nobody. If nobody

(45:00):
likes your ad, they're not going to click on it.
You're not going to create the goals that you wanted
to create, so stop, you know. And the great thing
about today is with digital you can test an ad
fairly quick and say, Okay, look this AD's not working.
We got to come up with something else. But that's
where that came from. The market is always right. The

(45:21):
market sets the price. It may it may not always.
You may not always see the trend because trends tend
to sneak in, I think, but the market is always right.

Speaker 1 (45:34):
Totally agree.

Speaker 2 (45:35):
All right, let me ask you this. Uh, you wrote
the book Scale, available on Amazon or wherever you buy
your favorite books. I'm going to put a link here
in the show notes, but I wanted to ask you this.
How do you know when it's time to scale and
when it's time to pause and reassess?

Speaker 1 (45:58):
I think in a way you and I just hit
that the market tells you. So I think you get
all those signals from the market. But the answer for me,
the term I always use is when you achieve sales
velocity early on sales are hard when you're introducing everything new,

(46:19):
and you measure you know that customer acquisition costs, which
includes time, how hard and how long and how expensive
to get the next customer. When you get a point
where you continue to refine your marketing materials, your sales process,
your messaging right, you refine the targets of who you're

(46:41):
actually trying to close sales with. Eventually you get to
the point where you achieve some sales velocity. You're like, wow,
we're on fire now. We're talking to the right people
with the right message at the right price and they're
saying yes fast. That takes a while to get there
early on, and you get to points where you're like,
we should just stop selling this to small business owners

(47:04):
making up an example they just can't afford it, or
schools will never have a budget. We're wasting our time.
You continue to refine this. So again, you refine your
messaging and you find your target for sales, You refine
your pricing, and then one day you hit this velocity
where you say, man, every time I go out, I
come back with three out of four yeses. That's when

(47:26):
you're ready to scale. And if you scale before that,
you spend a lot of money with a shotgun approach,
and you waste a lot of that money. So I
tell people, don't scale until you hit that velocity.

Speaker 2 (47:41):
Yeah, I like that. I think that's a great signal
that it's time to scale.

Speaker 1 (47:46):
All right.

Speaker 2 (47:46):
I want to ask you this because, again with your background,
you've done what I consider high profile startups. We see
companies that raise millions of dollars, but after years, and
I'm talking in years and sometimes even a decade, they're
still not profitable. How is it that they're still able

(48:08):
to attract more money more investors. This always surprises me.

Speaker 1 (48:16):
I'm going to over answer this, and I see, I know,
we just have a couple of minutes left. The market
is not rational. The market is emotional, so frequently we
see people react. In reality, the beginning of bitcoin was
that way. Bitcoin had absolutely no value to anybody in

(48:36):
the planet. The people. The price went up because they
were all buying it from each other because they were
afraid they were missing something. Right at the beginning, it
was totally worthless. So the only market that bitcoin had
was fomo. You better buy this before because it's gonna
be worth something. It's only worth something because you idiots
are all buying it. Now, that's not where we are

(48:57):
today with it. But I'm saying at the beginning, they
they a bunch of them got rich, and really at
the beginning of the Internet, a lot of people got
rich by the stupidity of the market. People were just
I remember there was a time in our early Priceline
days where this investor group I ran into. They're like, hey,
we want to send you guys, twenty million dollars. I

(49:18):
said for what. They said, for whatever, whatever you're doing.
I said, you don't even know what we're doing. Well,
you're doing the Internet, and we don't want to miss
the Internet, so can we send you twenty million dollars?
I said, well, we would all go to jail because
you can't just take money from people that don't even
know what you're building. And they're like, well, we know
it's the Internet, and the Internet's going to be something,
and everyone says, get in the Internet, so please take

(49:39):
the money. So there are moments in time where fomo
and emotionality far exceed rational thought and the market just
behaves stupidly. It behaves for all the wrong reasons, and
then that trend starts to trend and other people jump in,
and if you were to ask, why are you doing this?

(50:00):
I don't know, just because everyone around me is I
don't even know what they're doing, but I don't want
to miss it. So there's a lot of irrationality. And
there's a lot of those companies that have this short
meteoric rise and then fade, either die a flaming death
or slowly sink into the ocean, and you never hear
about them again. Sometimes you go back. I asked somebody

(50:23):
the other day. I actually don't know the answer to this.
I could be wrong, but I asked somebody the other day.
Whatever happened to Groupon? Is a random example. That was
all the rage. Everybody was talking about it. They had
got offers of huge amounts to buy the company. I've
never heard from him again. What happened to it? So
some of these things get a big emotional response and

(50:45):
a wave, and if they're not really sound business models
over the long term, they disappear.

Speaker 2 (50:54):
Yeah, it's so funny you mentioned group On because that's
what I was thinking. Group On continues to raise money,
still out there. Uh, there's they They've yet to make
a profit. Another example is Lyft, and what do you
call what's the what's the other one besides lyft uhuber

(51:14):
you're talking about uber? Yeah, that that uh uber just
finally made a profit. It's been around, I think again
a decade and it's fine. I think it had its
first profitable quarter last quarter or last year and something
like that. And and I'm thinking, and I want to
get your take on this, is that, ultimately back to

(51:36):
what you're saying about the the emotional side, people aren't
necessarily buying the numbers. They're not. They're they're but they're
buying maybe the team. They're buying the team leader. They're
buying the vision. So okay, group on still hasn't made
a profit, but groupon is still doing this. I see
their vision, so I'm gonna invest some more. That's the

(51:57):
only thing I can think of is that people are
betting on the jockey, not the horse.

Speaker 1 (52:04):
Yes, but mostly they're not even doing that. Mostly they're
just doing it because someone else was. They see the frenzy.
Mostly it's feeding frenzies, and they're like, other people must
see something, they must know something. I don't. I see
other people doing it, so I'll just do it. I
really think that because I think if you ask the
average people give me your business assessment of their leadership,

(52:28):
they're like, I don't know. Everybody seems to be buying it,
so I'm buying it. I don't think there's enough of that,
which is how you got, for example, the we Work situation.
All these people invested in that because that guy painted
a brilliant picture. But if anybody, he himself said, no
one asked me any business questions. I don't know if
you remember sun Soft or whatever, they're called soft Bank

(52:53):
soft Bank.

Speaker 2 (52:53):
Yeah, yeah, they.

Speaker 1 (52:54):
Invested in it, and later they said we should have
asked them some questions about the business. I was like, what,
those are some of the smartest investors in the world.
And they admitted they bought in when everyone else did
and they didn't really ask to see a pro forma. Okay,
come on, So even at the highest levels, a lot
of people are just buying fomost so they don't miss

(53:16):
the next wave. Obviously that's improved some, but it's still
out there.

Speaker 2 (53:20):
Yeah, and soft Bank now owns we Work. Ye lack
of better terms, and I think if I'm mom mistaken,
So this is again, this is uh was brilliant on
the part of the CEO he had he had put
up for collateral, a bunch of of of the we
work stock took out like a huge loan against that stock.

(53:40):
He walks away with like five hundred million dollars or
whatever the loan amount is, hasn't paid any of it back.

Speaker 1 (53:47):
And it's a it's a crazy story for the Times,
A cautionary.

Speaker 2 (53:53):
Email story, it absolutely is.

Speaker 1 (53:55):
But he benefited from other people's I guess stupidity, certain diligence.

Speaker 2 (54:02):
Absolutely again, he painted what a great story or whatever.
All right, So let me ask you this because we
talked about data and investing, and how do you balance
the data driven decision making with let's say the gut instinct.

Speaker 1 (54:22):
Yeah, I think that you marry those. I think you're
right on because there's a lot of things that have
happened in the world that no data predicted and no
one saw it coming. So that is gut instinct, right,
And that is what you said, trusting leaders, trusting creative
visionary leaders that they're going to come up with something.

(54:42):
So I think it's a mix. You get grounded in
the data, but sometimes you roll the dice because you
believe in some visionaries ability to shape the future. So
for me, I always make sure to consider both and
by the way works in the other way. Right, the
data looks good, but something feels off to me, So

(55:05):
I trust that gut instinct both directions. Yes, when your
gut says I don't know, everybody seems to think. I've
had a couple of times in my life that everybody
wanted to do business with specific people and I just
told him I don't know some of my spidy sense, right,
whatever my gut, and they're like, Jeff, this person's extremely successful.

(55:27):
Everybody's lined up at their door. You're the only person
that thinks it's wrong. And there's two cases of that
where those people wound up in prison because the whole
thing was a fraud. So I've trusted my gut instinct
of not doing business with people that everybody else told me,
look how successful that person is, And it turned out
my gut was right. Something was off they were. In

(55:48):
the one case I'm thinking of, the dude was cooking
the books and lying about the business and now he's
in prison. Absolutely leave in about one minute. Okay, all right,
So my last question to you.

Speaker 2 (56:01):
I wanted to get this at this stage in your life,
what drives you, what gets you up, what gets you excited.

Speaker 1 (56:10):
One piece is the ripple effect helping people that I
know will use their success to make other people's lives better.
So a random example, I helped some young Jordanians I
was over in Jordan start a business. They had an idea.
We were sitting at a table eating one day they
asked for time with me. They had a business idea.

(56:32):
I helped them for year. For years, their issue was
a young Arab entrepreneur in their country, no one will
help you did a hard time getting startup funds, getting mentorship,
and so I made a deal with them, I'll help you,
but if you're successful, go fix that problem. What blew
me away was at they were successful, they sold their

(56:54):
company for millions of dollars. On day two, they started
writing checks to all the other young Arabs that had
a good idea but zero money. I was like, what
do you guys can keep a little of it, and
they're like, we're going to put most of it back
into the people that are like us. I love that, Yes,
helping people succeed, that we'll use their success to make

(57:16):
other people's lives better. That's probably the biggest driver. So
when I try to choose where I spend my time now,
I'm looking at are we spending time somewhere where we
might be able to have that ripple effect of helping
the right people become successful so that they'll pay that forward.

Speaker 2 (57:35):
I love it. I love it. We'll end on that note, Jeff,
thank you so much.

Speaker 1 (57:38):
If somebody appreciate the time you bad.

Speaker 2 (57:41):
If somebody wants to reach out to you. What's the
best best webs.

Speaker 1 (57:44):
So Instagram is speaker Jeff Hoffman. I'm on LinkedIn a lot.
I do have a website Jeffhoffman dot com.

Speaker 2 (57:52):
Great, I'm gonna put all these links in the show
note Jeff looking forward to all right, buddy, talk to
you