Shared Chat
Rob Dyrdek's $10M mistake

Rob Dyrdek's $10 million mistake was acquiring a skateboarding business called Alien Workshop. Dyrdek acquired the company for $4 million but later realized that the business had terrible margins and burned cash, leading to a toxic culture and no revenue growth . Dyrdek learned from this experience and now focuses on building businesses that have a multidimensional approach and can create ROI . He invests in various ventures, including adaptogenic topicals, water filter systems, beauty products, and more . Dyrdek also leverages his success in television to underwrite and invest in other ventures, such as a sports property partnership with Dana White and the Fertitta family .

(someone): As someone who sold their production company for $200 million and who had an offer on the table that fell apart for $400 million recently, it is the worst business that you could ever get in in your life. And I'll explain to you why. It is a shoot what you kill game. And the distributors control all of the money. So like in your, you have a hit show and you have this flourishing production company, and then the show gets canceled and your company's worth zero. And then the problem with shows is they don't pick them up for long periods of time. I have a five-year, 1,680-episode order of television. It is unprecedented in all of production. It does not exist. But why is it hard for me to turn around and sell that? Because it's one single show. And it's so expensive because it's made the production company so profitable. But let's just say that didn't push you away. A production company is built like this. You You've got to build the infrastructure that allows you to have your camera equipment, your finishing equipment, your licensing for your music. You've got to basically then go and give a budget to a network who's going to give you 500 grand for an episode, and now you have got to figure out how to pull 20 to 30% of that in margin, right? So it gets incredibly difficult to do. And the only way that you can do that is look at all of the different ways that you can scrape margin out of that budget by owning vertically integrated. So a lot of times there'll be people that have
(someone): I got my first blood panel and started optimizing into my blood work in 2012. So for me, where a big transition was in 2015, around the same time, I had made the decision that I was in the best shape of my life, but my body was always achy. And I had made this decision that I started having a doctor come to my house five days a week and all I wanted to do was build a perfectly structured physical system. and there was no timeline to it. And really what it led to is triangulating a ton of different therapies, but in the process allowed me to learn every muscle in my body, how the fascia system works, what are my neurological deficiencies, what are all of the things that I need to retrain in my overall system internally as it relates to leaky gut and blood-brain barrier, all of these sort of things that lead to inflammation, that lead to heart disease and all these different things that reduce your quality and length of life, I had been doing over a decade. So now, the way I approach it is so sophisticated because I know every single aspect of my entire function holistically of my body, my mind, my time, my energy. So it's a different level. So what happened when I got to this scale of success? I refer to it as peak top. It's the same psychological chaos that happens to a drug addict at rock bottom, where you finally make a shift in you, where you can't be a drug addict anymore and something shifts in you mentally. It happened to me on the other side. where you started getting more and more disciplined and healthy that you all of a sudden were like, why would I ever not just be extraordinarily healthy for the rest of my life? And what happened from that point?
(someone): an adaptogen plant-based bar and drink mix and coffee mix line this year that's been really successful. We looked at the $3 billion in market share between Uggs, Crocs, and Birkenstocks and created what we consider the more the the sleeker, ugly, ugly shoe, the pretty ugly shoe, and Luso cloud that we launched this year, that's that are last year that that really has ridden this wave of sort of comfort, this comfort wave and casual wave in the comfort world that we think is going to be on track to do really be really big to for because to me at the end of the day, like what's happening in a market is important. and it's going to be where you live and die. You're too early or in the case of Ultracast, I launched this company that was a live 360 a live 360 and VR video platform that put 360 videos all over the world and where you could jump on your phone and travel all over the world and be in different bars and clubs and all these different things like right on the conversions of live Instagram and and live content and live streaming and sort of VR coming in together. And then what happened to VR? Like, just died. Right. And it's like, I was like, and what did it end up being like the new 3d TV? Right. And so 360 video became like the new, like the 3d TV. Right. And so even though I built, I got it right on the wave, and like, it was super innovative with an amazing CEO who wants to company went out of business built and took a company public in like nine months. But I'm that fails, right?
(someone): And the only way that you can do that is look at all of the different ways that you can scrape margin out of that budget by owning vertically integrated. So a lot of times there'll be people that have You know television shows and they just get paid an executive producer fee right so they will make a lot of money like jeff tremaine who is one of the executive producers on my show. You know makes millions off of ridiculousness doesn't just office executive producer fee nothing. Where we rolled in our executive producer fees, then built out the entire post and finishing in music division to push our margins up to be able to create a sellable asset. Then we had multiple shows and then the call it the long-term sustainability of ridiculousness created the value that allowed us to sell it right and so even if you you launch and a production company and you have love is blind and it's a hit show you're not making that much money off of that show you are now coping to stack shows and then end up pulling off of that margin that you get to split, right? And then you trade on EBITDA, right? So when you sell the business, you're trading at like six times EBITDA, five, six times EBITDA. And then a lot of times now, they won't even buy you outright. They will partner with you, incentivize your long-term turnout because they don't want to just like pay you you know, five times, six times your EBITDA, and then all of a sudden, like, the show goes away, right? And you were the creative force behind getting new shows, right? So it's a lot more, like, complex.
(someone): You know what I mean? Because all of these different things occurred that allowed me to go from zero year that allowed the trajectory of the growth and the EBITDA and the company to scale based off of ridiculousness, having a second resurgence, and me being able to negotiate the value of the company based off of now understanding the production, the unit economics of what the network would need. These unpredictable things that in the beginning, but I set it where I would build it and sell it in three years and then took it to market, went back to those bankers three years later. Here's the numbers. Let's take it out and see if see who would be interested. Now, as fate would have it, the group that acquired it was the same group that offered me the 360 deal that said I had no value in 2013. When they acquired it, part of the acquisition, I made them also acquire my professional skateboarding league as part of the roll-up that they created. It was a very poetic justice and beautiful 360 moment as it relates to they as the single private equity group that drove me to reevaluate and really push myself to design my life. And then they come around and also provide the opportunity that sets me up for the future. Instead of owning half of me for the rest of my life, they acquired the only two assets I kept from that era.
Shaan Puri: And you don't know this Rob, but Sam is kind of a nut like you. He, I think at the age of, he showed me the spreadsheet and he's like, I made this, I think it was 23, 24 maybe.
(someone): And then with my cash, money markets are giving you 5% right now, close to 5%. And then I keep a significant amount of liquid dollars in sort of Nuveen high yield funds. that kick off around a blended 10% that aren't going to grow, but you get cash for your cash. You're making so much cash off of your cash. Then you're making so much cash, tax depreciated cash off of your real estate portfolio. I look at that, I call it the modern cashflow portfolio, where it's just that cash is underwriting the expense of my life and the family office. Right. And so I don't even like when I have these big exits and when all the money I get made from TV, I look at all of it through the lens of how much am I actually making post tax per hour. So, okay, it seems like I'm making a lot of shooting television so efficiently, but, and how much time I actually work on the Dyrdek machine and the actual venture side of the business, when you look at long-term capital gains versus ordinary income, but boy, when you look at the amount of time I spend on that cash flowing portfolio in real estate, it's a couple hours a year.
Shaan Puri: What do you have as a dollar per hour goal? What is good for you? What is bad for you? If I do something that saves me $100, I go return a blender to the store. That wasn't a saving of $100, it was a loss.
(someone): I'm looking at a million an hour as the goal. That's your goal.
Sam Parr: Or you're a part owner?
(someone): No, I acquired it for $4 million and then I gave it back to the original founders free and clear on top of buying a bunker in Ohio so they could run the company out of it and gave that to them free and clear. That was the worst mistake I've ever done in my life was acquire a skateboarding business. Um, look, I, you know, I did it more, they were acquired by Burton. And I, I every advisor around me was like, this company does not make money, it has terrible margins, like it burns cash, like this is a terrible investment. I didn't care. I didn't understand business well enough. I just wanted it for the story. The hometown kid buys back, you know, the alien workshop that he sat in the room and help choose the name and create the brand when he was 16 years old. And finds great success and comes back and acquires the business. And when I acquired it, I felt like I acquired a hornet's nest. And I learned so much about the operational side of business and culture and the dynamics of what I'd consider a toxic culture. And I just realized that my passion was to create, build and create an ROI, an IRR. for the stuff that I created. And that's that doesn't align with skateboarding very much, right? Like they're really like misery loves company. Let's all be broke. Let's all barely survive. Let's all like keep everything starving artist syndrome.
(someone): And then the group that bought thrill one, I invested 10 million with them to buy me and then did a separate deal as it relates to having a bigger stake in the production company that I sold and my league and the overall sports property. Because I knew during that transaction, I knew I was going to negotiate for a bigger television deal. So I basically leveraged my ability to go and get a lot of value for the company. So I got all this equity back. They just paid me close to 200 million. So I used 10 of it to invest in buying me so that I could turn around and hopefully make another, not nearly as much, but hopefully another 100 to 150 off of it a couple of years down the line.
Sam Parr: And when you say we, is that like Dyrdek family office or is that... Right. You don't have a fund, right? Yeah. It's just your family office.
(someone): It's just my money. Yeah. No, this is all my money. And I just run it like a family office. And I just look at that as where I would deploy venture capital, right? So if I just deploy capital into real estate and ventures that I have much more control over and or I have a higher leverage or position. But it was amazing. Think about this. In the closing of the deal, it was the most money I made in one shot, right? And the most, like, I had invested in one shot in a venture.
(someone): In the closing of the deal, it was the most money I made in one shot, right? And the most, like, I had invested in one shot in a venture. So with the, like, here on my, you know, closing that deal and the Zoom call, it was the most I made and the most I invested in one shot. one one here here with you know whatever like I whatever my like final check off on was it but again what are the stakes of it it's whatever you know what I mean I look at it as it's fun and like I'm underwriting the business because I went and signed a massive television deal so I'm underwriting that entire roll up and it's amazing partners it's Dana White and the the Fertitta family who own the UFC so it's like even being close to them and knowing them for so long just makes the joy of even partnering with them fun and exciting. And I dedicate very little time to it, right? I still help sort of adding the vision and how to continue to evolve it and grow it, but I continue to shoot television. at an even much higher scale. Like now I'm shooting 336 episodes a year up from 252. That's still at 4% of my time. That's, you know, essentially five hours a day, four times a month for 10 months, right? Like is essentially what it is. But it's underwritten the entire rollup. It is, you know, a billion dollar television deal over a seven year period with the production and everything involved. I get all my talent money. but then I'm also leveraged into the roll up in the production company again to sell it again.
Sam Parr: Even if you aren't going to do it, but you wish you had more time and it's just kind of on the side and you're like, this interests me. I think someone should pounce on this opportunity. Maybe I will, maybe I won't, but I'm interested.
(someone): For clarity purposes here now, now I have a business that builds businesses, right? So I build, you know, five to six businesses a year, right? And although I've, you know, I've kind of like really pushed into all the builds I'm doing at the end of the year here are all in the beauty industry. adaptogenic topicals, water filter system, salt reel opportunity and sort of in the beauty space of like how important like water is and how many chemicals there are and when you shower but then you go and spend all this money on your hair. and makeup and skincare, but you wash yourself and chlorine. So found a real opportunity to develop a real innovative sort of shower purification system and water filter system for beauty. And, you know, really looking at superfoods and plant-based sustainable beauty products is a big opportunity. And in that sort of space, you know, we launched a nootropic footwear or nootropic an adaptogen plant-based bar and drink mix and coffee mix line this year that's been really successful. We looked at the $3 billion in market share between Uggs, Crocs, and Birkenstocks and created what we consider the more
(someone): You know, I think it's a, it's that experience and it's that like continually looking at every deal multidimensional, right? And I think like the gift that I actually had early on is I used to look at media and marketing multidimensional. Right so like in the early days i would you know be able to look at like a television show and how are all these ways that i can monetize right like how do i own the rights of media and then i can sell that to different people like i always looked at opportunity multi dimensionally but i didn't understand how to build and create value in business. So I never looked at business multidimensional. And I just think I'm at once I taught myself really how to look at business holistically and how to create and build businesses to sell, creating value that then I began to look at, you know, how can I see all of the opportunity in these different angles in order to create the most value for myself and a lot of times underwrite risk. You know what I mean? Like if I didn't know I was going to go and sign that mega television deal, I wouldn't have put into 10 million. But I but then I said, well, what if I go and sign this deal? How much additional equity will you give me for my 10 million? Right. Then they're like, oh, if you go and get that deal, then we'll give you 12 extra percent. You know what I mean? Like then it's like I just literally overnight made my 10 million worth like 60 million and underwritten it off of a deal that I'm going and making hundreds of millions of dollars to just do.
(someone): And I got 30% of the business. Okay. Okay, so now, man, raised so much capital any which way but loose. Now I'm on the board, I'm in board meetings. I'll tell you what, nothing is painful as board meeting after board meeting when there's no revenue growth and you're just burning capital trying to figure out how you're going to tell a story to raise more capital to keep the dream alive. That went on for a significant amount of time. We got incredibly diluted. And then the it was just like, hey, man, you've got to make a decision here on what your life looks like. Forget about this company. Forget about this investment. You forego going to Harvard. to build this company. So you essentially like stepped away from this big education, which always like in the beginning, I was like, this kid's too smart to go to school while he should just go start a company. He doesn't need to go to school. As I have kids and I'm older, like 70 years later, I'm like, man, I was like the bad uncle by advising him to not go to Harvard. And I'll do this company with you, gassed him up, right? Like I think he should have went to Harvard in hindsight.
(someone): And you were the creative force behind getting new shows, right? So it's a lot more, like, complex. And when you think about, like, the big dogs doing it, they're looking at it more from, they're buying the creative minds that are making the new content all the time. So when you, if they believe long-term in content, They're just, and when you look at that aggregate, you can have a couple of them slip and have a couple heroes in there. And when you see all those together, you can bet that that thing's going to generate a ton of cash because the industry itself is built around being incredibly lean. and then being profitable because they're only worth their profitability and then they can accordion. You got a big show and all this staff and the show goes away, boom, you bring it all the way back down because you put so many people under the show itself. So that's where the bigger vision is for them to look at. And is there an opportunity for creatives and people in the space In this day, yes, because Endeavor's doing it, Churnin's doing it, a lot of people are doing it, but it's extraordinarily difficult, and the gatekeepers are the distributors, the Netflix, the Paramount, the, you know, you can attempt to create your own platform and distribute it yourself, YouTube, digitally, whatever it is, but it's expensive and difficult to build audiences, and then you're really looking at, those distributors as the gatekeepers to the quality of the asset that you're creating and whether or not someone will make it to decide that you're worth the purchase. All of that incredibly difficult in my opinion to make happen.
Shaan Puri: Perfect answer.
(someone): And I'll do this company with you, gassed him up, right? Like I think he should have went to Harvard in hindsight. But again, diluted all the way down, he went out and found Amped, the business that Jeff was running at the time that I actually, man, I looked at in 2015 and almost did a deal to own half of PR Lotion and the Amped product because of how much I believed in the IP of what they developed because it was built through this biopharma group that I was doing deals with back in 15. in my early days of hustling. And they merged. And in that merger, then they did a deal. Now they're joint companies that the whole company becomes momentous. And then they lock in that humor bin deal. And then the business exploded overnight. Overnight. Wow.
Sam Parr: We all want to feel better and be happier and have more freedom, and there are endless resources at our fingertips, but wading through a sea of self-help books and podcasts and workshops takes more time than you've got. So you have to check out Self Helpful with Kevin Miller. Kevin is a pro athlete, peak performance expert, published author, and personal development guide. He invites today's most important influencers and changemakers to grapple with their own wisdom and stories in authentic, relatable conversations about self-improvement and what drives them. From personal fulfillment and work-life balance to spirituality, relationships, motivation, each four-part series distills the guest's greatest wisdom and methodologies into practical steps that anyone can integrate into their life. Tune into Self Helpful with Kevin Miller to elevate your personal experience and improve the way you show up for others.
Unknown error occured.