Share This Episode

Roland Frasier: Structuring Creative Deals, “Thin Slicing” & Exiting Smart

My guest is a business maverick. He is none other than Roland Frasier. He is the Principal and Founder of the Traffic & Conversion Summit and the War Room Mastermind and one of the most creative, smart and high-level thinkers in business.

Not only is Roland smart, but he is a special individual to me helping me along my journey first as a client, a mentor and now a friend. I got to share with you that he gave me an incredible clarity during a tricky time in my life. I wouldn't even be here hosting the show and part of the WealthFit movement here without his help and guidance.

I want to give you a little preview of what's coming in this power-packed episode. We talk about the Richard Branson deal worth $1.5 million. We also discussed the formula for incredibly high-level thinking in business. We also talk about how to see and get ridiculous amounts of leverage in business, maximizing valuation and profitability with thin slicing and how to buy and control businesses no money down. Finally, how to exit businesses including how he and his team structured that Traffic & Conversion event sale. There are many nuggets in this episode so let's get to it.

Dustin
Roland, you're a teenager growing up in the ‘80s, the era of big hair, metal bands and ripped jeans. You were living it up on your own. You were a keyboard player in a band. While rocking out, one day you discover motivational cassettes in the back of your dad's car that eventually led you into real estate. Armed with anything is possible from these motivational cassettes, why did you first choose to get into real estate?
Roland
The thing that was in the back of my dad's car was Denis Waitley's Psychology of Winning. I had never heard anything about setting goals, realizing goals and all that stuff. I was like, "That's super cool." My father did real estate investing. He did entitlements where you would go and see what direction is the growth in a particular town. You would buy agricultural land out ahead of the growth a couple of years, get it rezoned for commercial and flip it for a good profit. That was my exposure to real estate.
I found a book by Robert Allen called Nothing Down. I was like, "That's cool. You can buy real estate with no money down. This is amazing." What's funny is looking at where interest rates are now. At the time, they were at 12%. He's like, "This one's 6% and this one's 8%.” I was like, "These deals are never going to come around again." It took them a long time, but they did. That's an interesting thing about the cyclicality of real estate, finance and everything. The idea of having real estate in your portfolio, I was exposed to through my dad and a lot of the people that he represented. He was a tax attorney. It seemed like a good place to go. My first thing to do was get my real estate license. When I was eighteen, I got my real estate license. I got into it and did all stuff since then.
Dustin
You took the money you saved up from the job you had at Skate World.
Roland
It’s Golden Skate World now.
Dustin
Were you a skateboard enthusiast?
Roland
I was a skateboard enthusiast, but back then skateboards were much different from the way they are now. That was a roller-skating rink.
Dustin
You take the money that you saved up from this job. It was $12,000. You parlayed it into $39,000 in your investment. You're young at this time. What makes you think like, "I’ve got to do this. I've got to place this investment versus save it up?"
Roland
I was completely enamored. I don't know why. For my entire life, before I even knew that they were called spreadsheets, columns of numbers that added up. This is an investment. These are the costs. These are the profits that you can make after the expense come out. On my Radio Shack TRS-80, I learned BASIC. I wrote a program that would calculate the returns that I could get if I did this stuff that Bob Allen wrote about in this amazing book. I had the goals from Denis Waitley, I had the real estate from Bob and the context of all the other experience I was like, "If I do this, I'll have $1 billion in several years." That motivates me.
Dustin
You went and got a degree in accounting so the spreadsheets make sense. How do you go from making these investments, having quick wins? You're saying, "I'm going to go get a degree." Was it ingrained from the parents that you had to go to school?
Roland
It was not ingrained that I had to go. My dad was an entrepreneurial attorney. He did lots of deals with people. I had a deal environment growing up. It wasn't required. He said, "The two skills that you could have that will help you forever in life, whether you practice them or not, is the ability to read a financial statement and knowing what the law is." He was a tax attorney. He was a CPA with a degree in accounting. He also had an LLM in Tax. You tend to follow in your parents' footsteps. I liked the look of the footsteps. I liked the deals that he was doing. I liked the opportunity that I saw. If you do that, you can achieve anything you want.
It struck me that if you know how money works, how financial statements work and what the law is, that's a powerful combination that you can use anywhere. Even though I never had an interest in practicing accounting, I felt like getting the degree. What else would I get? I could get a degree in finance. I could get a degree in marketing or something like that. Even though my father and mother were the only people in my family that got college degrees other than my grandfather. It was something that they wanted for me and I wanted for me. It made sense. Those were skills that would be good to have if you got to go anyway.
Dustin
In business, my experience has been sometimes you get into the business, you get into deals. It doesn't go the way that you want it to go. Some people lawyer up and you as a business owner coming from the other way, you don't know what your rights are, what is the scare tactic and all that. I think back to college, it was a blur. If I picked up a law degree or even a finance degree, how much better or it could have held you back.
Roland
You can get those skills, you can read books, especially now because things are much more available. Keith Cunningham's Keys to the Vault, a great book for anybody to read that doesn't understand financial statements. You can read that. You could buy a book on accounting and read it. I don't think knowing how to take statistical samples of debits to determine this is going to help you. There's a lot of accounting that's overkill if you're not going to be an accountant. It's nice to know but Accounting 101 and 102, the financial and managerial, are all you need. You can buy books on that or listen to an audiobook or watch videos.
The business law, all the stuff that they teach you about torts, criminal law and things like that, that's overkill. What happens is that a lot of accounting people get distracted into a degree, into a career as an accountant. A lot of attorneys get distracted into a career as an attorney, which I did too for several years. That might be better used as a straight-out entrepreneur doing deals. Now, I’ve got lots of experience because as an attorney, my practice was business, tax and stuff. I did lots of deals. That gave me a good catalog of experience to draw on. I wouldn't say you missed out on anything by not doing that because unless you're going to practice one of those things, it's way overkill.
Dustin
I thought I'm in school and I don't remember anything. Having a law background would be interesting. I want to pick at that a little bit. You were doing infomercial deals or contracts around that time when you were practicing law?
Roland
Tony Robbins was a client of ours. Tony was doing deals with Guthy-Renker. We did all of the work on the Personal Power infomercials, which there were multiple of. The contracts with Guthy-Renker and we talked to Bill and Greg about how they raised money, how they did these infomercial deals and how many were successful. They said, "Typically in the industry, it's one in ten. For us, it's more like one in five." We said, "What if we executive produce the infomercials? We raise money. You run them. We'll put it in syndication." This is all stuff I learned back from when I was doing the real estate deals. The ones that are successful, they more than pay for the ones that aren't. We did fourteen infomercials with those guys.
Dustin
You're in practicing law. What is that impetus to get you out of that distraction into what you're doing now as an entrepreneur or a deal maker? What was that turning point where you woke up?
Roland
Law was interesting to me because I like stories. I was a weird kid that liked the weird problems and math class. Law is a story puzzle. You have an issue. You have rules that you learn and apply. You analyze those and you come to a conclusion, IRAC: Issue, Rule, Analysis and Conclusion. That's how you approach any legal problem. I liked that in law school. I liked that for about five years of practicing and then everything was the same. I had been through at that point after about a few years. That's the Rosenbloom case or that's the such and such file, then it becomes formulaic and the puzzle solving goes away. Tax and securities were interesting because it was always creative. There was an ability to apply. In practice itself, it became boring.
I'd say about that time in, I started partnering up with clients and doing deals with them because I'd see opportunities and say, "You could do this and this. Why don't you pay me a legal fee? Why don't we do a deal and see what happens?" The first one of those I did as a 50/50 split on the upside from the things that I thought we could do. The legal fee would have been $200,000. I waved that and did a 50/50 split on the upside. It ended up being $1.8 million that we divided. I got $900,000 for about a year of not a lot of work on the side. I was like, "Maybe I do more of that."
Dustin
I want to pick your brain here because you're a genius at this. Where do you think that comes from, that creative deal structuring? Does it come from those law cases? Does it come from tax? How are you able to come up with these creative deals?
Roland
One thing I learned from my father who is a master at looking out at all of the tax law. When I was growing up, he would literally read the Internal Revenue Code. He'd sit on the right side of the couch. He had taken one of the cushions off the side and put it on his lap. He'd open the Internal Revenue Code and he would read it for hours and hours. He can tell you anything. If you say Section 724, he can tell you exactly what that is, Section 162, Section 212 or whatever.
Dustin
Was he a savant to have that ability?
Roland
He's smart. His dad was a Baptist minister, my grandfather. I want to say it was seven or nine languages that he spoke. He read books in Latin and all these other languages. He was a recluse. He was an interesting guy and smart. My dad got some of that from him. I got some of that from them. What I did see was my father saying, "This says this." He would talk to me about this. I'm a kid. He's like, "The IRS says that this guy has a business and it's not a legit business." They're using Section 183. Section 183 says that a business has to make a profit in two out of five years or it's not a legitimate business. All the expenses after that are personal expenses.
They said that's not what it says it all. What it says is that it's a safe harbor. That if you do in fact make a profit in two out of five years, then you're guaranteed that it's a business. It doesn't say that if you only made it in one out of five that it's not. That stuff caused me to start looking at things differently and look at language. Going through law school also you learn to break things down. Probably the best thing would be the definition in criminal law, you say, "Burglary is defined as breaking and entering of the dwelling of another at night with the intent to commit a felony therein." That's what they teach you in law school. You say, "I'm going to analyze that." What I got from my prior experience and then going into law school was like, "I need to break that down." It has seven elements. It's breaking and entering of the dwelling of another at night with the intent to commit a felony therein. If any of those seven isn't present, then that crime isn't the case. Everything that I think about, I think about in terms of what are all the elements of whatever thing I'm going to look at.
I break down the sentence into one, two, three, four, five or whatever number of things there are. I look at each of those components and analyze those and say, "Is that going to move me towards that or against that?" When you do that, then you get to be creative because you're looking not just at the macro, you're looking at the micro. The challenge in a lot of law lately is that people specialize in code sections. A general understanding of the overarching picture is going to get you is not to be pigeonholed and say, "This only applies here. That's what this section is." I saw that over and over too when my father had a client meeting and I'd sit down with a client meeting. There would be all these other attorneys around the table. They would be like, "I'm a Section 212 attorney." He'd say, "If you take the intent of Section 724 and put that with this and this then you end up with this." He always won. He always convinced them. Even if they were like, "This is absolutely not going to work, no way." It would end up that it would. That exposure helped tremendously towards that creative approach. I saw that in him and I was like, "That's cool."
Dustin
I remember when we were getting to know each other about several years ago. I remember you walk into the room and you're in this motorcycle jacket. I'm thinking, "Who is this guy?" We got to know each other a little bit there. You were on the radar. The next thing I remember you were running these online masterminds for marketers for the local market. I'm like, “He's moving around." Finally, you were on the radar. Roland is now a partner with Ryan and Perry over at DigitalMarketer. Did you know where you were going or did you follow the path?
Roland
I'm a believer in the flow. If you put yourself in the path of opportunity, then the opportunity will flow all around you. Some of it is going to stick. That deal was one that I decided in advance that I wanted to be in business with those guys. I said, "How can I get in business with Ryan and Perry? I'd done this before. I need to get to know them. How can I get to know them?" I'm not going to get to know them by going to all their stuff and then running up to the stage after and saying, "Mr. Deiss, can I talk to you?" It's better to be a peer. To be a peer, I look for the channel of access.
They had a paid channel of access called War Room, which is their mastermind. If you were in the War Room, you had to pay $20,000. You had access to them because you would meet with them three times a year for two days at that point. I said, "I'm going to join that. I'm going to get their attention. I'm going to be business partners with them." I joined it. I said, "How can I get their attention?" There are twenty people in it at the time. We have 200 now. I said, "You've got this thing called Wicked Smart." That's what they said. They said, "We do this thing called Wicked Smart." You put your entry in and then everybody votes and whoever's a thing is the smartest wins and gets a prize, which most of the time you didn't ever get. We do get the prizes now.
I said, "I've got to win that because then I'll get their attention." I racked my brain for things, tried things, experimented with stuff and came up with three things. I went into the meeting. When the time came at the end of the meeting, after the two days to vote, I submitted three things. The three things I thought had a chance, which is a good strategy by the way. Some people might not like one, some people might like the other, but if you submit more than one, which there was no rule against, then you have a three times better chance. If three people think that smart, two people think the other thing is smart then you got six votes.
I did that and I won. Perry came over, who I didn't know and said, "We're going to go out to dinner. I want you to sit here and we're going to talk." I was like, "That's cool." For the next few years as a member of the War Room, I didn't need anything. I had businesses. I did marketing. I did a product launch and everything. I didn't ask for anything. I did have my accounting, legal, all business skill and experience. I was good at SEO. I helped people with all those things. I help those guys with their business. When the opportunity came because the CEO didn't work out that had some options, Ryan said, "Would you be interested in becoming a partner?" I said, "Absolutely." We cut a deal here in San Diego. I remember sitting at the cafe negotiating with Ryan on the deal. He's like, "This is what we wanted." I was like, "We’ll make it happen." That was how that came about.
Dustin
You knew early on you're going to partner with these guys, but you played the long-term it seemed like. You said, "I'm going to put myself in this environment.” You put yourself in the path of opportunity, impress but you didn't go for the ask. You waited for it to come. Give us some advice on that. I feel on such a short-term, I want to jump on the opportunity. Talk about the approach or the art of letting it marinade.
Roland
I'll tell you two deals that came to fruition. One is with Sam Khorramian and Oliver Graf at Big Block Realty. One is with Tom Wilkerson who runs a business called CertifyMe, which is OSHA compliance. I met Tom at another event that I was attending, WhichTestWon, which is now called BEHAVE. I was sitting in the back row as I'm prone to do it at events. This guy was sitting next to me. I started talking to him. I said, "What do you do?" He told me what he did. He asked me and I said, "I do this." He ended up signing up for War Room. That was several years ago. I told him at the second time that he came, "Your business is awesome. If there's ever an opportunity to work together, I would like to do that." He said, "No, I'm good. I want to keep it small on this and that." Until several years later, on February 24th one day before Traffic & Conversion started, we had dinner. He said, "I'm ready to go expand the business. I want to grow it to $50 million and you can help. Do you want to do this?" Now we're business partners. My intention was I would love to be partners. If we can't ever be partners, I would love to help you in any way I can.
That's it. No hidden agenda or anything like that. Sam and Oliver several years ago, we met. After I saw what they were doing and everything, I said, "If there's ever an opportunity to work together, I'd have to do that." Along the way, again War Room members, I would love to help. I helped them through getting a partner out of their business that wasn't doing that great for them. They said, "We think we're ready." We're signing a deal and I'll put investment and ownership in that company. What I saw from practicing law is you never want to push anybody into a deal. You never want to allow anybody to do a deal that they don't think is completely fair and that they're excited about. If you do those things, you're likely to have a good long-term partnership. If you push too fast, somebody maybe is going to have some resentment. That can result in bad things down the road. All of my deals are intended to be forever. If they're not for some reason because we sell or something like that, that's okay. My relationships with everybody are, "I'll help you. I don't want anything in return other than to help you. I know that putting that out there will come back a hundredfold and it only always has.”
Dustin
We're here because of that. Thanks for sharing that because for me in the past walk of life where I've come from that was always that close and got the sale. If they leave the room, I'm recovering. I can tell you sitting on the other side of that now, it is a much better approach. I don't want to knock the people I was with before but you find fascinating people, better people and it's a better way to live life.
Roland
Maybe not better but a better fit at the time for where you are and where they are. You'll find that you outgrow people. I don't mean that in a negative way. Maybe instead of outgrow I should day, “You'll find that you grow in different directions at different speeds.” Something that was a fit for you a few years ago might not be a fit for you now. As you saw, in that situation too you and I talked. I helped you with some thoughts about making that transition. We talked about the possibility of doing some stuff together. We didn't immediately. You never know what the future holds. You've been generous in helping me and vice versa. That's what makes a cool relationship. If you do that enough, you have to think about the sowing the seeds thing. You're investing in your relationships and your network definitely determines your net worth. The more people in your network that are happy to say good things about you, introduce you to other people and potentially work with you, the greater the opportunities you'll always have.
Dustin
I wouldn't be here if it weren't for you because you gave me the confidence to make that tough decision for me leaving the thing I founded, my baby essentially. You gave me clarity. I wouldn't be here, we wouldn't be doing this interview because I'd be somewhere else.
Roland
We talked about the value there too because of the value of going forward and acquiring something that maybe you didn't have that much value because of the difference between income, businesses, wealth, assets and things like that, which is cool because this is the WealthFit.
Dustin
This is the lesson I am to be learning thinking longer term. This is fitting and sharing that with others is powerful. That's why I'm thrilled to be here. At Founders Club, you invited me to come to Vegas with Frank Kern. You had an event there. It was amazing. You opened my eyes to leverage. I tried to put myself in the situation to be better in the long-term. Thinking about how you look at leverage. How can we as entrepreneurs, even investors, everyday people be better at looking at every activity we do with leverage?
Roland
Part of it is looking at it like I look at a sentence. Break it down into every single element of the business and say, "How can I apply leverage to every single thing?" It's thin slicing every profit center in your business especially the three things I focus on are how I can turn this into recurring revenue instead of one-time sales? If it's recurring and dependable, I can not only have something that I can build on. I can also get a multiple of revenue typically versus a multiple of profit, which is a big deal.
The second thing is where are the opportunities within this business, in this thin slice profit center that I can turn expense centers into profit centers, which might be more openings to have for lead magnets and things like that? I know we did that with Tucker Max's business with Scribe. He had editors, cover designers and all these people that were cost centers. I said, "If you make those services available to everybody on an ala carte basis also, it was fourteen new funnels.” Fourteen new entry points into your funnel for writing books for people by providing these services that only would be valuable to people who want to write a book.
I like to look at especially for leverage and it only always reveals opportunities to say, "Who is not a competitor who has my clients that I want now?" Maybe in a different business that is complementary to mine. Going through that, when we have people come into the War Room Mastermind, I do a 45-minute onboard and I ask for three people like that. In every single case and these are companies who are doing $100 million all the way down to $4 million or $5 million. Only in every case are there three to nine huge opportunities that they'd never thought of. How can I not have to go and get one or two clients? How can I get 10,000 clients? That's the thinking that lets you leapfrog ahead big.
Dustin
One of the strategies you shared at that event is that you can acquire businesses no money down. This sounds a little crazy at first. When you explained it, it is powerful. Everyone should know that this is a possibility. Will you break this down? How is this possible?
Roland
I started thinking about you can buy real estate with nothing down because I learned about that from Bob Allen back in the ‘80s and it worked. When I do talk like at EO or YPO or those things, I'll say, "Who here has ever bought real estate for no money down?" Two or three hands will always go up. In a real estate crowd, maybe half the audience. I say, "The funny thing is the exact same things that you can use to buy real estate for no money down applies to business. How did you guys feel the first time you did that? Was that like, ‘I can't believe I can buy this for nothing down?’” Everybody's like, "Yeah." It's the same feeling when you do that with the business the first time. I say that there are seven reasons to buy a business.
You buy it to get media that you have access to an audience that you can then sell to. You can buy it to get a team. You can buy it to get a product or a service that either you're buying from somebody else or that they're buying from you. You can get it to compress the supply chain, meaning you're buying distribution, either manufacturers, creators or whatever down to actual distribution channels. You can buy it for IP, for Intellectual Property. You can buy a competitor as well. That's the obvious one. The other six that are around that are good ways to expand your business dramatically. If you could have more media with a better team, additional products and services to sell, more people to sell them too on the distribution and more people to create good products at a lower cost through supply and get more IP. God forbid, you buy your competitors too.
How do I do that? What am I buying? The reason I break it down into those seven categories is I don't want people to think they have to buy a company. Media can be a YouTube channel, an Instagram account or a Facebook Group. It could be a company, but it could be a slice of a company that has media. It could even not be a company. It could be somebody's side project that they view as a job. They started it. They've built up 50,000, 60,000 or 200,000 members. When you negotiate, you can buy those usually shockingly inexpensively. Some people want a ton of money but some people don't.
It's a numbers game like dating. You have to ask a lot of folks if they're interested, a few of them are going to say yes. It comes down to you've agreed, I'm going to buy this thing and you're going to buy it for a certain amount of money. I'd never let, whether I can afford it or not, enter into the equation until we've agreed that they'll sell it for this number and I feel like that's a fair number. It's the lowest number that I'll get. Then it's the Law of Price and Terms, which isn't the law that I know of but I decided to create it. That says you can get any price if the terms are good enough.
I always ask, "What do you need the money for? What are you going to do with the money when you get it?" Typically, they have no plan or they have a plan that doesn't require 100% of the money that they're getting. At that point, you've immediately identified how much you have to come up with. Now, I know there's an amount they need and there's a whole bunch of ways to do that. I can say, "You want more than I think the business is worth. If the business generates that much over some period of time, then we'll agree that I'll pay you that amount." That's called an earn-out. That's one way to do it. You can say, "How about if you carry it back? What are you going to do with the money? I don't know. I'm going to have it to retire on. What are you going to be able to invest it at? Right now maybe 2%, 5%. I'll give you 7%. How about that? You carry it back."
I'll go and say, "What are the other assets in the business that are leverageable? Can I do an asset-based lending deal where I say, "I can factor your purchase orders or your accounts receivable? You've got this land that's worth this much that doesn't have any debt on it. We'll leverage that." The business can provide the money for the down payment through the assets of the business. I'll go and do self-liquidating payment deals and that's where I say, "We're going to buy this interest in the company." You're combining that and you're saying, "You're going to finance that over this period of time. I'm going to have my interest now and the company will cover the payment over time."
You'll have non-competitive partner deals. You can go out and say, "You guys are interested in these customers too. You do microblading and we do women's hair replacement." How about if this audience needs both of those things? How about if I make the deal happen and you come in with let's say $1 million that I had to buy it for and had to come up with 20%? I need $200,000. I go and I'm the hair replacement. I go to the microblading people. I say, "How about for $200,000, I give you the opportunity to have access to this list? I'll give you 20% of the company." It's an 80/20 deal, but I got 80% of this company for $1 million for free so I made $800,000 of unrealized nontaxable income until you sell it. There's a ton of ways. It's all of those creative ways at looking at that, which are most of those are real estate based. "I'll give you $100,000 for this house. We carry it back. Can I pay you when I sell it? Can I have an option? It's super creative.
Dustin
The big takeaway I get at the beginning was asking the questions, asking what you are going to do with that money. That gives you leverage points. It gives you clarity. It gives them clarity. You open up the whole world.
Roland
You talk to every seller. If there are four sellers, you want to talk to all of them because some of them will want to hold out for more than others will. Let's say it's four people, if you could scoop up three of them at a valuation that's 50% less than what the one wants because the one has an unrealistic expectation. You've effectively bought control of the company. You have 75% of the company for 50% of the ask. Then 25% can either come on board. They can be diluted later. If you're adding new things in. You take care of them and you treat them fairly but they don't have to be on board. You don't have to own even 51% of a company to have control of it depending on how widely dispersed the ownership is.
There are lots of ways to do that. Ownership of stock is like ownership in real estate. Fee simple in real estate is called the full bundle of rights. That includes riparian rights, like water rights, mineral rights, air rights, land rights, lease rights, easement rights, all that goes into this thing called fee simple. In a company, you have stock but stock can be split off into rights too. Stock can be split off into a life interest. It can be a profit participation interest. It can be a rights deal. It could be a proxy deal. You could buy the proxy right to vote the stock. For somebody else, they still own the stock. You've got voting control of the company. There are a million things you can do. You have to think. It's all to me thin slicing. You thin slice your profit centers. You thin slice the equity chunks. You look at every single aspect and say, "Where can I get leverage?"
Dustin
This is powerful. This is right in line with it. I want to talk about this. You put together a deal with
Roland
He has a fee that you have to donate to his charity, Virgin Unite, if you'd like for him to come out and speak. He decides if it fits their brand and everything. We found out what the fee was, which was about double what we thought it was. Joe Polish had helped us because Joe has had a long-term relationship with Richard and helped raise a ton of money. I asked Joe if he could help with the intro. I said, "What's it cost?" He said, "It costs this much." I was like, "We can handle that." I talked to Richard's people. They said, "It's not that. That was several years ago." I was like, "That makes it hard." It was saying, "Do we have a budget?" Our partner gave us a budget for about half of the total that it was going to cost, about 40%. I said, "That's what I have to work with and that's the down payment that I have to come up with on his fee." I'm going to do that. Figure out how we can have it pay for itself? We raised close to $500,000. We had him agree to do a VIP meet and greet that we sold for $15,000 apiece. We put all the money towards his fees. 100% of what came in went to his charity. That covered that. Having him help sell through a couple of different extrapolations, but ultimately it sold an extra $1 million, $1.2 million worth of tickets.
We know that it did that because not only did we have pacing from what we normally do at that period of time. It's called a featured speaker. If it was you, we have your picture that's big and underneath it's Ryan Deiss, Perry Belcher, Richard Lindner and whoever else was there. Richard came in at the last minute. It was a few weeks before the event and I had been working on this for months. Everybody had already sent out. We'd already sent out those featured speaker graphics. They had already sent them out to their audiences. They wouldn't do anymore. When we sent them the new ones that had their big picture and underneath Richard Branson, they're all sharing the stage with Richard Branson. They all mailed again. We sold a bunch more tickets. It was fun. That's been a model that we've tried for a long time is how we can have the speakers pay for themselves? We have one with Gary Vee that's coming up. It’s the same thing. It's a significant fee to have Gary appear, but it will cost us nothing because of the way we do that.
Dustin
Do you think it's critical in the larger event business to have some draw cards, celebrity or name?
Roland
It makes a huge difference. I know that it was Perry Belcher's idea in 2013. I was a partner in 2013, but I had just come on. I didn't have much impact on it. The one thing I did get to do because I had celebrity contacts from infomercial days. I could get celebrities. He's like, "You’ve got to do it. We’ve got to do it." He met some resistance. Ultimately, we decided we'll have somebody. We inventoried who we could get within the budget that we had. William Shatner came up. People were like, "He has nothing to do with marketing or anything." It was like, "He's cool," and it lends credibility to the event. I definitely think that it does.
Since then marketing events have gotten crazy. INBOUND has a $4 million speaker budget. For us, we're still until 2018, four guys that own this event. That's literally out of our pockets. We can't justify that. We're not a giant company like those guys are. We always had to be creative to get them. It makes a huge difference and it elevated the event and ultimately made it grow from the roughly 900 and some people that were there when I was there in 2013 to the 10,000 that will be there in 2020 at the convention center in San Diego. That content production value and celebrity had a lot to do with that.
Dustin
Let’s talk about one more deal. It's the Traffic & Conversion Summit deal. You put together a deal where you sold the event or the partners sold the event to Clarion Events. I investigated a little bit further, but you didn't sell a whole business. You sold a domain, a list, a trademark, anything else that was part of that?
Roland
The trademark, the URL and the attendee list.
Dustin
How did you structure the deal this way because there's still a lot of leverage you get from this event?
Roland
It was everyone. It was the team that was Ryan, Perry, Rich and the team that all helped make this come together. Structurally, I've always believed that it's a thin slice. In your structure, if you thin slice your structure that you have each profit center in a separate entity, you have the ability to have those entities have contractual relationships with each other that caused them to do the things they do. One thing that's an advantage while you're operating is it allows you to make each of those a profit center and you get to see how efficiently they're working.
If you've got sponsorship as a separate company and you see that the cost of generating sponsors is greater than the revenue that sponsorship is generating, that probably needs to be looked at. We had sponsorship separate from media, which was DigitalMarketer, which was separate from the high bottom of the funnel which was War Room. It’s separate from the management logistics, which is Boost Events. We had all of those companies separate. When they came in and looked at it, they buy events. They don't care about those other things as long as the event is still going to operate and it's got revenue. It's going to have expenses and it's going to have a profit.
Those items they bought, it wasn't a stupid deal for them. It absolutely was exactly what they wanted but not more. That's the lesson is that you should structure so that you can sell exactly what somebody who's buying is likely to want to need but not any more than that. I got the idea for doing things that way from where I live, where most of the people are retired in the neighborhood I live in. They're like, "It's adorable. You still work." They say, "Tell me what you do." I'll tell them. They're like, "It's interesting. I'm tired of playing golf. I'm tired of traveling. I want to be in business again.” Once an entrepreneur, is always an entrepreneur. These guys have exited and all that fun stuff.
What I got from that is that if you sell the platform, it's hard to get back in business because you lose your momentum. You have to start from square one. You have to start from scratch. If you can keep the platform and you can keep the momentum but sell off the assets that are the result of the momentum, it's a goose and egg thing. You sell the eggs, but you keep the gooses that lay them. That's how we've got everything structured. We're able to carve out the things they wanted. We had no staff left, but we did contracts with all of the entities. We already had contracts internally. The reason the deal took several months to close instead of a few is that we had a bunch of contracts that had to be negotiated between the logistical support company, the marketing company, the media company and the sponsorship company.
Then we make that sale but we continued to support the event. We have the contracts. Everybody's happy. They got what they wanted. They’ve got a great deal because we sold one year earlier than I would have liked. It was a big win for them. It was a win for all of us. We got chips off the table plus this new wonderful partner who has experience going into all these other markets, which we're now going into. The value of the company, we sold 80%. We kept one-fifth of the company. If the company gets 5X bigger than it would have otherwise, we will literally have been in exactly the same place as owning 100% of it, but I think it's going to do way more than that.
Because we have all these other companies that are supported by that, the branding for DigitalMarketer, War Room, Boost Events, our sponsorship company, etc. all of that is accelerated by the capital that these guys put in. Going to a New York show, a Singapore, a Hong Kong, Russia, Amsterdam and all these other places that the show is growing to, that all happens with no extra money out of pocket for us. It would have been on the back of T&C, which was owned by a parent that owned all those companies if we were doing it on our own. We didn't have either the skills or the resources to do it the way they can do it and not with the speed that they can do it.
We have multiple companies. There are six companies that will all increase dramatically in value that we own 100% of. In addition to 10X-ing, 20X-ing the 20% that we had left after exiting the other one and getting the cash that we didn't have to put back in the business. Plus it freed up several million dollars of working capital that we had to always have in T&C that we've now invested in other things. It's a giant win-win across the table. That's all from keeping the platform thin slice. It’s also because of having multiple companies there, the people who are directly responsible for the success of those subcompanies can be offered the ability to have equity. Investors can be offered the ability to invest in the units that they have a direct contribution to. Now, you can have multiple cap tables for staff and investors without giving an interest in the whole and ultimately diluting yourself when you don't need to. If you sell in the parent company, everything gets diluted but that money might only be going to this one thing. If you do it the way we're talking about, this one thing can sell equity or have incentive equity and the rest of it stays 100%.
Dustin
In 2013, you realized this. When you became a partner, you went to work knowing that this day would come. You started positioning.
Roland
I had done that and deals before that. That was how the approach was.
Dustin
Roland, it is no secret that you like to find things in life. I've been privy to sit at the table with you and partake in a glass of fine wine. You like fine food dining and also staying in nice places. You get some of these nice places to give you upgrades. Some of these room nights on the market are $10,000 a night?
Roland
It's $10,000, $15,000, $20,000.
Dustin
Yet you get some of these places to give it to you for free. What's the secret?
Roland
Usually, you don't get the giant room like that for free. There's a paid upgrade. You can get it for pennies on the dollar. You could get it for 80% off, 90% off, 95% off. When you think about 90% off on a $10,000 room, that's only $1,000 more, which might sound like a lot, but you're getting this ridiculous, giant, crazy, fun room. That's an experience especially when you're holding business meetings and things like that. You bring your people in there and that's a wow experience for them. You get to enjoy it. The first thing is ask when you're checking in, no matter where you are. Say, "Are there any upgrades available?" Frequently they will upgrade you a couple of categories, two, three categories of room for nothing because the rooms are available and that's their policy. It pays to be nice to the people if there's a sincere compliment you can give them that.
I always like to ask. Once they've said, "Yes, we can upgrade you to the three categories to the whiz-bang room." I'll say, "That's awesome. Thank you so much. What is your favorite room in the hotel?" They usually get pretty excited and they'll tell you all about it. I'm interested because they know from seeing all the rooms what the coolest rooms are, which might not necessarily even be the most expensive one. They're like, "This room is awesome because of this and this." Two things, one is I play the piano. I'll ask, "Does any have a piano in it?" They'll be like, "No, that one doesn't. Why?" I said, "When I'm on the road if I have the opportunity to play, I don't get to play a lot when I travel. It's awesome to be able to do that." Sometimes they'll say, "That's the Obsidian Suite. It's got a piano in it." I'm like, "What would it look like if I was able to get that room?" They're like, "Let me see." If they don't have one that has a piano, it's what your favorite room in the hotel is? They tell you and I say, "What would it look like?" Not, "What it going to cost me here? What's it going to take to get me into that?" They will frequently get excited about conspiring with me to get into the room that's their favorite cool room. They'll typically run in the back.
That's how you know you're doing well. They’ll run back to talk to the room’s manager. They'll come back and they'll say, "We can do it for X." What's funny is that you can completely haggle on this. They'll come back and say, "We can do it. It's $2,000 more a night." That's a lot. I thought if you had it available so you didn't lose the room revenue. There could be some extra stuff. “Do you think you could do it for $800?” “Let me see." It becomes the car dealership experience at that point, which I'm okay with. It'll typically take me 45 minutes at the front desk to go through that process. It's rare, only if the hotel was sold out do I not get some upgrade for free. Frequently, I'll get the nicest room in the hotel at 90% is average. If it was a $10,000 a night room, I could get it for $1,000.
Dustin
Roland, I appreciate you being on the show. What does the future look like? What are you most excited about?
Roland
I am excited about my four-year investment in Big Block Realty relationship and my six-year investment with Tom Wilkerson is getting to be realized in the form of being able to do business together. Big Block’s going to start franchising and grow like crazy. The Tom Wilkerson Company is going to grow like crazy. The Traffic & Conversion Summit in all of these international locations. That's exciting. I get to play a big role in that. DigitalMarketer is growing. We have new software. A company called Praxio, that's an LMS, Learning Management System. It's about everything. Life is fun and getting to hang out with cool people. The podcast Business Lunch is growing and that's exciting. It's all fun. I wouldn't do it if I didn't like it.
Dustin
You love wine. Is there a bottle of wine that eludes your grasp?
Roland
There is not a bottle of wine, but there is an allocation. To get the rare wines, you have to go on what's called Allocation, which is a mailing list where you have the privilege of being able to buy the wine. I'm on all of them except one. The wine is good. It's not worth what it goes for out in the world. It's called Screaming Eagle. There's another one that I haven't tried to get on that apparently is hard called Sine Qua Non that is in Sonoma. It's an amazing wine. I'm not on any of the French ones anymore because my wife is not a French wine fan. I'm a fan of the Domaine de la Romanee-Conti any Montrachet like Etienne Sauzet or Leflaive and those guys or DRC has probably the ultimate. In Napa, general amazing wines. Scarecrow is probably one of my favorites. Bond, Harlan, Checkerboard is also a little lesser known but great. Most of the stuff that we drank in Las Vegas when we were hanging in there.
Dustin
Roland, I appreciate it. Thank you big time for being on the show. For folks that want to keep tabs with you, check out the Business Lunch and check out T&C, where's the best place for someone to go?
Roland
For our event, which is a unique and amazing event, TrafficAndConversionSummit.com. For my take on things and my latest stuff as well as interviews, the podcast, Business Lunch on iTunes and everywhere and then RolandFrasier.com for me personally or DigitalMarketer.com for our DM stuff.
Dustin
Thanks for being on the show.
Roland
Thanks for having me.

RELATED TRAINING

 in 

ENTREPRENEURSHIP

Product Branding

Product Branding

How To Create a Product Everyone Knows, Likes, Trusts … and Buys From

Rick Cesari

Watch Now
Credit Secrets for Entrepreneurs

Credit Secrets for Entrepreneurs

How To Use Business & Personal Credit To Launch Your Startup

Gerri Detweiler

Watch Now
podcast
Feeling Invincible, Marketing Martha Stewart & Dropping 76 Pounds!

Once Sayan Sarkar finally quit his full-time job, his side hustle business took off and generated 10x the amount of money he was making at his office job. He shares tips and tricks to how he was able to make this happen.

Feeling Invincible, Marketing Martha Stewart & Dropping 76 Pounds!

podcast
Born To Sell, Tripling Revenue & the Silver Tsunami

Are you investing in home care marketing? In this episode, The Hurricane explains why this industry is worth your hard-earned money.

Born To Sell, Tripling Revenue & the Silver Tsunami

podcast
Conquering Cancer, Making Movies & Selling Businesses

This Cancerpreneur didn’t let the bad news of illness get in the way of his entrepreneurial spirit and positive mindset.

Conquering Cancer, Making Movies & Selling Businesses

Free PR

Free PR

The Hustler's Guide To Capturing Media Attention & Getting Eyeballs on Your Brand

Nicole Dunn

Watch Now
article
How To Build Your Business Credit Score—To Get Business Loans & Low Interest Rates

Learn how to build your business credit score so you can get access to business loans with low interest rates.

How To Build Your Business Credit Score—To Get Business Loans & Low Interest Rates

Michelle Black

Read Now
podcast
Earth Day, The Sustainable Movement & Bionic Yarn

Our special Earth Day episode is with Tyson Toussant and Alex Tapia, founders of BIONIC, a sustainable and eco-friendly thread that is changing the fashion industry.

Earth Day, The Sustainable Movement & Bionic Yarn

article
Do You Have What It Takes To Be An Entrepreneur?

In her new book “Women with Money,” Jean Chatzky gives us the top 5 traits of successful entrepreneurs. [Excerpt]

Do You Have What It Takes To Be An Entrepreneur?

Jean Chatzky

Read Now
Idea To Income

Idea To Income

How To Start a Company and Turn Your Entrepreneurial Dreams into Reality

Didi Wong

Watch Now
podcast
Finding 'A' Players, 'Found Revenue' & Silicon Slopes

Tom Collins, CEO of C5 Consulting, talks about how to run a business - from finding the best people for your team to how to increase your revenue.

Finding 'A' Players, 'Found Revenue' & Silicon Slopes

podcast
From "One-Man Show" to a $160M Valuation

CEO of Maropost, Ross Paquette, shares valuable information on scaling a business from a one-man show to a multi-million dollar company.

From "One-Man Show" to a $160M Valuation

Advanced Amazon Sales Strategies

Advanced Amazon Sales Strategies

How To Get More Traffic, Optimize Your Listing, & Grow From a Simple Product Into a Successful Brand

Jason Boyce

Watch Now
Start Your Own Amazon Store

Start Your Own Amazon Store

How To Launch Your First Product on Amazon.com

Jason Boyce

Watch Now
podcast
Moneyball, Pitching 100 M.P.H. & Escaping The Canadian Government

Jill and Ron Wolforth are helping kids achieve their dreams by developing their skills with America's favorite pastime. However, their journey hasn't always been easy. Learn how they've grown from being uncomfortable.

Moneyball, Pitching 100 M.P.H. & Escaping The Canadian Government

podcast
Insights From A Quarter Billion Dollar Marketer

Lessons from a $250M marketer. Geoff Chadwick gives marketing insights learned from running big campaigns, building software, and more.

Insights From A Quarter Billion Dollar Marketer

Start Your Own AirBnb Business

Start Your Own AirBnb Business

How To Claim Your Share of the Fast-Growing Short-Term Rental Market

Mark Kappelman & Steven Eshkenazi

Watch Now
Start Your Own Online Education Business

Start Your Own Online Education Business

How to Become an Edu-preneur And Get Paid for Teaching What You Know

Robert Skrob

Watch Now
article
How to Get Free Money from the Government to Fund Your Startup

Who doesn't want cash from their favorite Uncle Sam? Here's how you can find grants and fund your business with free government money.

How to Get Free Money from the Government to Fund Your Startup

Ian Chandler

Read Now
article
How Much Do You REALLY Need to Start a Business? The Answer is Less Than You Think.

Think starting a business takes TONS of money? It doesn’t have to. Here’s how you can build your empire without breaking the bank.

How Much Do You REALLY Need to Start a Business? The Answer is Less Than You Think.

Jon Westenberg

Read Now
article
Bootstrap Your Startup & Kickstart Your Success

Launching a startup without investors may seem like a one-way ticket to failure—but it’s one of the best ways to kickstart your business.

Bootstrap Your Startup & Kickstart Your Success

Ian Chandler

Read Now
article
How to Find the Co-Founder Your Business Needs

Choosing the right cofounder can make or break your business. Find a cofounder that compliments your skill set and delivers skills that you lack.

How to Find the Co-Founder Your Business Needs

Nathan Wade

Read Now
article
Learn 5 Key Ways to Onboard Employees

Your employees are your most valuable asset. Protect your investment in them with an effective and efficient onboarding process.

Learn 5 Key Ways to Onboard Employees

Nathan Wade

Read Now
article
How to Lead Employees to Greatness: Your (Hormonal) Strategy for Success

Consider and stimulate (the right) hormones for your team. Embrace leadership tactics that foster healthy hormonal teams.

How to Lead Employees to Greatness: Your (Hormonal) Strategy for Success

Jill Huettich

Read Now