Express files for bankruptcy, plans to close nearly 100 stores as investor group looks to save the brand, and Mark Zuckerberg's personal brand transformation

0:00Neil and I have an agency owners group called the agency owners association. All you have to do just go to marketing school.io agency. Once again, it's marketingschool.io slash agency to learn more. And now back to the show. It's funny. You have a topic here on Express. You know, the funny story I used, I applied for a job at Express and then in college, my friends all had edibles the night before. And then, so basically I didn't make it to my job interview. And then when you have edibles, you're like lagging. And so I was lagging for like 24 hours. I was trying to drive to the interview, but I didn't make it.

0:32But go on with the story. What do you mean by edibles? like edible like weed brownies I didn't want to eat it and then like you know first time eating it and then like my world you never had edibles right? no have you played like first person shooters where you're like lagging and like you know the bullets aren't like you know your weapons not firing and then like everything's slow I played Monopoly oh my god anyway the point is when your world is like there's like a five millisecond lag time to everything it's annoying so when you smoke weed there's a five second mils lag in everything in the world.

1:06If you do too much and you have a bad trip or whatever, that's what happens. See, this is why I don't do drugs or alcohol. It makes life easier. First of all, we were like 20 years old. And I don't like weed, by the way. But anyway, go on with the express story. You know what's funny? I haven't seen you do weed or even drink alcohol in a long time. I don't like alcohol. You don't drink alcohol either. Yeah, I stopped a long time ago. Why? Let's tell everyone the reason. Let's go ahead. The real reason? Yeah. The real reason is I'm allergic. Me too. Yeah. But like I had really bad reactions after COVID.

1:39After COVID. Yeah, after COVID. Not getting COVID, but something happened during the time of COVID where I never drank. Even before that, I would drink, but not really drink. It would be like more like I'll get one drink in a business meeting and I'll sip on the whole drink over three hours and I may finish it. It's not enjoyable. Yeah. So I was never getting drunk anyways. Yeah. But the problem that I ended up having is during COVID, never cared for alcohol. stop drinking it when you're in a lockdown year plus in a home I think it was a year plus I don't know how long the COVID lockdowns were but it was long enough basically like two years and then all of a sudden things started opening up drank my first sip of alcohol like a year and a half or two years later and one little tiny teeny sip like you wouldn't even notice a glass going down much within five minutes I had a headache like it was a hangover and then I just didn't drink anymore I got a headache tried it a few more times Doesn't matter what kind of alcohol I drank.

2:32I just had a massive headache. So then I'm like, all right, cool. Don't need to drink this anymore. I'm good. I'm done with it. Exactly. It's for me, I turn red when I drink it, right? So that automatically means you're allergic. And that's not good because if you turn red from that, I mean, they can cause cancer later. Like everything causes cancer, right? But that's what it is. But anyway, talk about this Express story. Yeah. So Express file chapter 11 bankruptcy. see um investor group called whp global is going to acquire most of the assets i'm assuming including the brand name and stuff like that uh they also own i didn't know this bonobos up west and a few others no i didn't know that uh and 95 express stores and all up west stores will close so they're closing quite a bit of stores and i forgot what the what these guys paid for it i think i Probably something like 30 million bucks or something.

3:23So nothing. But yeah, dude. Last spring, Express acquired Bonobos operating assets and related liabilities for$25 million from Walmart. Oh, so Bonobos used to be like, I used to buy stuff from there. And it turns out it didn't work out. For Walmart. And I'm guessing it didn't work out for Express either. But dude, these guys, no joke, paid pennies on the dollar. Look at this. Express, bankruptcy. Weren't they public before? let's see. Oh, they got a commitment of$35 million. So that's what it costs to buy that massive brand. It would take more than$35 million to build up those brands from scratch.

4:04Just mismanagement of the business. Yep. We're seeing a lot of that. Yeah, you're seeing a lot of that. I'm seeing a lot of it. It's the best time to buy. But you know what's crazy, dude? We're getting people coming to us being like, Neil, we'll do$5 million in revenue, one in profit. we want to sell to you for 10 to 20 million dollars i'm like who's going to give you 10 to 20 million dollars so walk us through how they're how they react when you when you say that so i i i first don't actually say it so usually typically someone comes to me and says like no you should check out our business it's amazing we do x y and z that you don't do usually have a business making a million in profit we don't look at or try to buy it but if someone's doing a million in profit and something we don't do and we know do really well with our customer base why would wouldn't we look at it, especially if they're doing an amazing job?

4:51So before we even get into valuation, we ask some questions, you know, questions like, what are you looking for from the business financially? Are you looking to stay on? We're not talking about what valuation we would pay. We're also asking questions like, how long have you been in business? How do you generate your leads? Do you have, you have a built out management team? Are you the CEO running it? Are you looking to stay on board? What's your client concentration? What's your churn rate? And you want them to stay. We want them to stay. We tend not to do deals where founders don't stay. That's a key lesson for everyone.

5:21Agencies are so driven by the founder and they add so much. You can't have them. They're like a star player. You would hope that they're a star player. If not, you shouldn't buy that agency. When we're looking at all these deals, like one of these deals, you have two clients that make up a bit more than 40 % of your revenue. Oh, you said your revenue is recurring. They said, no, we didn't say our revenue is recurring. We said it's - MRR. No, they said it's reoccurring, which means it's happening often. That was a misunderstanding on my end when I heard him on the phone. All right, that's fine.

5:55Reoccurring like the same clients pay you. How often? Well, this one company has paid us three times over the last seven years. That's not that reoccurring. How long do your projects last with them? Two to three months. I'm like, oh, that's not that helpful. So you can't predict out the next year. What are you looking for? We're really unique. We've been around for more than 20 years. What are you looking for? Oh, we want at least 10 to 12 million. That is very unique. Yeah. And I was like, no one's going to give you that. You're a slow growing business that's been around for 20 plus years. Oh, and by the way, you have high churn.

6:25You don't have a built out management team. And your profit of miraculously of million dollars isn't really a million dollars. You showed in your books, 200 and something thousand dollars. Oh, I'm running a lot of my personal expenses through the business. So you're running around$800 ,000 in personal expenses. After you take out your rent and car, how are you running all these expenses? You can't even have this person on your team because they have such high expectations for their costs. Too high expectations. It won't work out. There was another lady I met, amazing company. I wanted to buy it.

6:58And my team hit her up. She's like, oh, we're not ready to sell you. What are the numbers? Okay. I don't know the numbers yet, but I would buy the company. They're really good at data and analytics. So then I have my corp dev guy hit her up. and then I see her in Canada. And then I was like, hey, what's up? I'm like, you should talk to Alex. And then she's like, who's Alex? I'm like, oh, we bought Alex's company. She'll make more on the earn out than she would have done just from running the company on her own because of all our customer base and upselling and cross-selling, et cetera. And we have data and analytics, but they're way more built out because that's all they do.

7:34And then she's just like, Neil, did you guys not get the hint? I don't care for money. I don't want to sell to you. I was like, why not? She's like, we can just work together without you selling. I can still build it. I don't care for the money. And she's like, my team, we get, I think she said two months off every single year, something like that. I'm like, well, technically we have unlimited PTO. And she's like, I'm not interested in selling unless you give me$20 million cash and you let all our team members have like two months off. And the first thing that scratched my head was, I'm like, I thought you just said you don't care for the money.

8:09I don't care for the money, but I care for the money. Yeah, I don't care for the money, but you need to give me$20 million. By the way, the two months, it's very different than unlimited PTO. That's two months guaranteed versus unlimited. If they take two months, probably in trouble. You and I are thinking very similar on this. I don't think unlimited PTO is like two months. And a lot of the people in our companies, they just work remotely and they get their work done and we're really flexible with them. But you just said you don't care for the money. And on our earlier calls, when my team originally talked to you, I was like, oh, I can build it a little bit more, make a bit more money before I sell it.

8:45And you know what she doesn't realize is talented entrepreneur, great at the product, struggles with closing tons of revenue based on what we can just estimate from headcount and logos and stuff like that. A dangerous thing in business is believing, and I had more conversation with it, but believing that you know everything and you can just get whatever you want done and you can do everything on your own and you're doing an amazing job. There's always two sides to the story. And I'll give you a great example of this. There's agencies we know and mutual friends that we know that sold for crazy high multiples, like 18, 19 X.

9:21And some of the buyers of these companies paid half a billion dollars. And then they bought on another two,$300 million worth of businesses and combined them, made them bigger and bigger. And then some of these guys now do 70, 80 million a year in profit, not revenue profit. That's a lot of money, but their growth has flined out and they're not growing anymore. And some of them are shrinking a little bit. And I can say, wow, these guys are idiots. They don't know how to run it, dude. They're doing 70, 80,$90 million a year in profit. They did something right. And they know something instead of looking at something like, oh, I know everything that I'm doing.

9:55Well, what can I learn from them? That's made them successful and grow this fast, even though they're flat now, but what did they do to get that growth? that I have not been doing. And when you start thinking like that, you'll get more growth. There's something to learn from everyone. Exactly. And you and I have always had that belief. Even from fools. Yes. Even from a flight attendant, even from a taxi driver. I'm not saying flight attendants are fools. No, no, no, no. I'm not saying flight attendants are fools, but I'm saying they don't even have to be in your profession and you can learn something from them.

10:26Like people look down on taxi drivers. What's wrong with it? It's an honest day's living. and they hear so much stuff in their car, they pick up a lot of stuff and they can actually teach you a lot about life. You want a good interview question? What? I stole this from Chamath Palihafatiya. We started trying it, right? And so here's the interview question. So Neil, what's something you're an expert at? So it could be like playing the French horn or poker. But not business related, correct? Anything. Okay, I believe I'm an expert at marketing. Okay, tell me how do you become an expert in marketing?

11:00You become an expert in marketing by doing it for a long, long time and having hours of trial and error, failing tons of time and figuring out how to fix all the problems that you created by doing things the wrong way. That's the best answer I got this week. Why? Because now I have a lot of threads I can go, tell me about the experiments you failed in, tell me about these things. There's a logical progression in terms of how you're communicating this. And that shows you can communicate clearly. And you're giving me a lot of threads to pull on to continue the conversation. I tried this yesterday on someone, right?

11:32They made it to me. We hadn't deployed this question yet. And so usually when they get to me, I just try to brainstorm with them. I just want to see how they think on their feet. So they got to me and then I was like, oh, so tell me what you're good at. I'm really good at English. I was like, oh, interesting. So you're a good writer. She's like, yeah, I'm a great writer. So how do you become a great writer? It's like, well, I went to college for journalism and English and the answer stopped. and I was like, so like, how do you become a great writer? It's like, well, like I said, I went to college for journalism and English and I learned the AP, like this and that, the MLA formats and all this shit.

12:07And then I was like, fuck. And so at that point, I was just like, I got to end the interview. But this is a chamasbust. He's like, this question shows how people think critically. So now we have that question in the very first part of the HR. And when they get to me now, I'll just ask them questions about marketing. Like, hey, like, show me what you do with my website or like stuff like that. Yeah. We had a gentleman who worked with us, uh, for a long time. His name was David Shapiro. He eventually went client side and David Shapiro. And, uh, you know, he gave me a call before he left and we talked and I always told him like, Hey, appreciate everything you've done for us.

12:44Uh, you know, you ever need anything from me for that company or anything. I'm not talking about like income wise, but like just need any free help. Hit me up. And he's like, do you remember my first interview with you? And I was like, yeah, I remember it. And he's worked with us for a very long time. And back when he started, links are still important, but they were much more important in the algorithm. And it was the leading factor that everyone was saying that, you know, improves rankings. So he's just like, yeah, I gave him a really random example. My interview question with him is, you know, and keep in mind, other people on the team already interviewed him at this point.

13:20My interview example is like, you got this website, you're in the life insurance space. You're ranking on page two. You're at the top of page two. You've already done everything for optimizing click rates, code, et cetera. The thing you lack is links. No one wants to link out to life insurance. You can't buy it. You can't break Google's policies in terms of service. How would you go about building links for this site? And he answered on the spot and it was a really good answer. And then I was like, cool, you're hired. That was it. Did you, okay, that question, did you ask it consistently or did you come up with it on the spot?

13:52No, I came up with it on the spot. Okay. So what I learned, so it's over time, it has to be consistent. Then you have like, you know, apples to apples comparison. Because if we keep changing the question all the time, then how are we going to know how to compare? But that's a great question because that is very specific. And it sounds like he gave you a very specific answer. But this just goes to show, I don't know if this was with Airbnb or maybe another tech company. but once they got to the CEO, it wasn't even an interview. It's like, hey, let's brainstorm. Okay, here's the problem set over here, blah, blah, blah.

14:22And you just learn a lot more about the person and how they respond to adversity and how they think. And that's really important if you want to hire the best people. Yes, and when I did interview other people, I did ask them a similar question. It was about link building and how do you build links, but it wasn't like life insurance. I would just pick a random vertical. Dave's was life insurance. What I should have done is use the same exact example for everyone So I could have compared apples to apples, but already knew what was a good answer. Cause I know how to do it myself. And I was like, oh, this guy's spot on.

14:52Yeah. So our key takeaway for this one is if you're going to, if you're going to try to get the best people brainstorm with them. Dude, that's so true. You know, if I look at some of the best people I hired by the time I've gotten to the candidate, it's more so been talking about the problems we're facing and discussing how we can solve these problems and whether the potential solutions that they think about and not all of their ideas are good and not all of mine are good. And some of theirs are bad and some of mine are bad, but the people that you can actually work through to try to solve problems, like on an hour call or a zoom, those are the leaders that I tend to end up hiring.

15:26Yep. And by the way, if you're at the end, the good thing about Neil is he's not afraid to have tough conversations. Sometimes I've gotten better at it, but I tend to, you know, normal human beings, I'm not saying you're not normal, but typical human beings tend to shy away from tough conversations. And I actually believe that the altitude of an organization is really dependent on the number of tough conversations you're willing to have, because it's like a bunch of problems in an organization, right? Now we've changed it where, because at the end, after they've been through so many people, I feel bad, right?

15:53If I say no, I feel bad. You don't have that problem, right? But now I'm just a lot earlier in the process. And so when they get to me, I just cut it out, and then we move on a lot faster. So, yeah. Yeah, and I do think that is the correct approach, because it's like, if you're interviewing someone, you know it's not a right fit. Like I've told people on the interview, like, Hey, you got some great skills, love what you're doing. It's not what we're looking for. And I don't want to be that person who wastes your time. But if I do run into someone who is looking for someone like you as a good fit, can I pass your resume along?

16:25Like, Oh, I'll ask them that. Cause I don't want to send their resume. So what percent of people made it to you that you said no, or you said no 10%, 20%, maybe 10 to 20 max do you think if you're a little early in the process you would have said no more what do you mean there's a lot of no's before no you're saying that the people who come to me if i'm interviewing like there's an 80 90 chance we're hiring them yeah so they're already pretty sure right they're pretty sure yeah but do you think if you were earlier in the process you would reject more people of these people that i'm approving no we have a pretty good success rate of the people we hire that have worked out what's that success rate if i had to give it for executives i don't know too much about mid-level or low executives executives 90 plus percent that's great so 90 usual hires like let's let's just say normal hires you're lucky if you can bat 50 or 500.

17:30But executive hiring, there's just a lot more diligence that happens as well. And so you better make sure you get the right person because it's a huge bet too. Dude, we meet them in person. We fly to them or they fly to us. We do reference checks. We try to see who we know in our network. But the other thing that's helped us hire really good executives, we tend to hire people who have worked for competitors, who have gotten promoted multiple times. So you know that someone found them valuable. And we usually hire executives that someone on our team has worked with directly on the past that we trust and is producing really well for us because then they know what our culture is and if that person is going to be a good fit.

18:04Almost all our executives, literally majority of them have come from referrals. This message is brought to you by Leveling Up Founders. And Leveling Up Founders is an invite only event for founders. It happens once a year, usually during August. And past attendees include people such as Ali Abdaal, Cody Sanchez, Neil Patel, Vanessa Lau, and the list goes on and on. And ultimately, it comes down to the quality of the group of the people. We tried to keep the group high caliber. That's why it's invite only. So if you are a founder at the top of your game, you can go to levelingup.com slash founders to learn more about it.

18:37And then you can apply. And we'll see you on the other side. All right, what's the next topic, Eric? When I first started my business, the overwhelm was real. I didn't have the tools to help me scale. If only I had Shopify from the start to handle all the behind the scenes work. Shopify is the platform behind millions of businesses globally from huge names like Mattel and Gymshark to the smallest brands just getting started. The best part about it, it has everything you could need. Say you're ready to launch your own design studio. Shopify has hundreds of templates to create a beautiful store that matches your brand style.

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20:55So Mark Zuckerberg has rebranded himself, basically, right? With the chain? I mean, he's got the chain. He's got the mustache now. He's got the llama. Like, he's riding a llama. He's, like, out there doing podcasts. He's riding a llama? Yeah, llama. That's their LLM. That's what it's called, Llama 3. No, no, I know that. A real llama. I think it was generated by AI. He's riding a colorful llama. And so his personal brand transformation, he's sharing a lot about features. He's out there a lot more now. He's doing jiu-jitsu, right? And I think it's interesting. We should talk about that. I think it's good because people, when you think about Elon, love him or hate him, Elon's very much the face of SpaceX.

21:32He's very much the face of Tesla. and he's very much the face of X, right? Even though there's multiple operators, CEOs or people helping with these companies. Now, Zuck is out there and I'm all for it. Like he's out there walking out there with MMA fighters. He's at the fights, right? He's, I like it. Okay, so I got to read this text from Mark Zuckerberg to Priscilla Chan. He posted this on threads a while ago. Mark says to his wife, did you see the octagon I put in the backyard? She responds with, yes, I saw it. Mark then says, it looks awesome. Her response, Mark. Then Mark responds with, we have plenty of yard space, exclamation mark.

22:15And then she responds with, I've been working on that grass for two years. That's when that first came out and he was promoting threads, right? Yeah. Yeah. Look, I think it's, I mean, what's your take on it? I think it's more and more people are going to do this because we're moving more into a world where brand is the thing that's going to stand the test of time because you have all these AI agents and all these AI, gen AI things being created. I like the new Mark Zuckerberg. Forget the chain and the style and whatever. Okay, first off, his haircut is way better. His old haircut looked like a bowl cut.

22:48It's not the same? No, it's a little curly. Yeah, but his old one was just more like a straight line and it was flat. It was more like, you know, like when I was a kid, they would do a bowl cut. Like my parents were like - Bowl cut's different. Bowl cut's like, you know, like a mushroom almost. no no but like what my parents would say because my dad used to cut my hair he's like i just put a bowl over your head and just cut a line and it'll be all even maybe my dad had it wrong yeah and uh you know but either way i like the new mark zuckerberg you see his personality the old ones seem more robotic and i'm not saying he's a robot but it was just really cold the new mark zuckerberg has like it's not personality but warm to it in which like you can more so relate like when he post that thing on like threads about his wife getting mad dude most guys can relate to that a girlfriend getting mad at you a spouse getting mad at you he's like we have tons of backyard space and zuck doesn't just own his house he owns all the neighboring houses in the community so you can pretty much combine all the yards it's not like he's struggling with yard space or anything like that but it just shows like it's much more relatable and i think you know like you're saying with ai that is the future it really does separate a brand it's why kylie cosmetics does well how is Kylie Cosmetics doing now?

23:59Not as well as it probably used to do from a growth perspective. Growth had died down. But the problem I would say with Kylie Cosmetics is when you think about that brand, Kylie Jenner just cranked it out, sold it, and you don't see the push going towards a brand like you used to. You see a ton of kiosks in the airports. It was a flip. It was a flip. I believe it too. And what's funny is I was at the kiosk the other day when I was at the airport. I was like, all right, let me order something from Kylie Cosmetics. For what? I was at the Las Vegas airport. Who are you ordering it for? It was dry.