Gamestop buys FaZe for $17M (prev $725M); Better.com 97% down, Hopin sells for $15M after raising $1B; Hello Bello bankrupts

0:00Here's the deal right now. GameStop just bought FaZe Clan for$17 million, which was valued at$725 million. It actually went public like a year or two ago. Better.com, which is the one where you can get home mortgage. shortages, 97 % down. If you look at the stock and then, um, Neil, you can talk about this one. So hop in, they sold for$15 million and they're, they were, they previously raised$1 billion. How much did the founder take in secondary on that one? Neal? $140 million. Good for the founder. You ended up making up some, uh, cash, even though the business didn't work out props to you. Yep.

0:37And then another one, hello, bellow is one. It's a diaper company that was founded by two celebrities i don't know if you use it for your kids neil but these these people so hello bello this is interesting because um they oh it's two founders hyper company yep yep so the two founders have like 20 million social media followers combined and they actually hired an executive that helped found the honest company i believe which is jessica alba's company which went public which i don't believe is doing well right now either um but what ended up happening goes they launched the first year they did 80 million in revenue and then the second year i think they're on track for like 180 million or something like that um but you know their liabilities caught up to them and then they've basically you know fire sailing the thing right now so let's talk about how they still have a lot of revenue or they just have a lot of losses and i mean their liabilities are they're they're losing money i believe and their liabilities are like it says between 100 million and 500 million dollars so let's call it like 250 to 300 so yeah wow oh because they probably took on a lot of debt and stuff to generate revenue yeah this well i mean they took on debt because they had to build like a warehouse and stuff because they wanted to build their own products like they got ahead of their skis a little bit yeah and this is what eric and i talked about in one of our past episode uh where we talked about how to spend on marketing the right way it's just not marketing it's about growing the right way sometimes raising too much money or taking on too much debt could be a really bad thing and dude you know funny enough So I bank with a company called CIBC.

2:08It's a Canadian bank. And they're really good. Even if you're in the United States, they take you. They have a big U.S. branch. But it's a decent-sized bank. When I mean decent-sized, I think their market cap is like$40 billion or something like that, right? Either way, there's not that many companies that are worth$40-plus billion. So it's a legitimate business. And I deal with the division that deals with lending and debt. And they deal with a lot of private equity, although we're not private equity-backed. We're just a blue strap. And it was funny. I was talking to one of my guys there and he breaks down something interesting.

2:41Did you know in this time, because I see a lot of data, the non-private equity-backed companies are doing extremely well. And I said, why? What do you mean by that? He's like, the private equity-backed ones, they were fat. They were happy. They own a lot of debt and liabilities. Interest rates are high. So they're focusing on cutting costs and just paying down debt. And a lot of times, they don't grind it out as hard as the founder bootstrapped-owned companies. And he gave a great example. He's like, you just went to India. you went from the mumbai airport to the hotel spent three days 16 meetings back to backs i was only eating one meal a day because i was strapped for time and jet lagged as well and then from the hotel i went back to the airport and flew back saw nothing else when i was there and the point he was trying to make is he's like yeah founder led businesses when times get tough they start getting creative and they just grind it out and they do whatever it takes to succeed well a lot of these companies that were fat and happy they're accustomed to not doing any of that kind of grinding especially when it's needed yeah well here's a here's the saying that i like it's the founders if you're a founder you're a biological parent of the company and we've seen this maybe we'll make this for another episode but you and i have seen time and time again a lot of the people that have stepped out of the business or hired ceos they're back in including myself right and a lot of our mutual friends that we have and they're back to do the cleanup work.

4:10They're back to do the hard work. And sure, they might feel like a one out of 10 with the business right now, but at the end of the day, they know what they need to do to get there. And it's periods of this that a lot of founders thrive in because they thrive in chaos in some weird way, shape, or form. There's a lot to do. It's kind of exciting, right? The other thing we'll say too, as this might relate to you, is there will be fire sale prices. I mean, look at happen right look at phase clan phase clan was like one of the top clans out there when it came to gaming and it's like oh we're gonna explode into esports we're gonna be number one streaming right and fire 725 million to 17 million dollars right um what else what else is there the oh here's another thing i saw this on twitter the other day you know there there was a story shared about how um this guy was talking to two of his vc friends and then none of them one guy invested nothing in nothing this year.

5:05The other one invested in one company this year. So nobody's really deploying. And so the old incentive of like, hey, zero interest rate environment, let's just go raise a bunch of money. That is gone now. And as we said a couple episodes ago, discipline is back. And that's a good thing because if you're disciplined, you're going to be able to scoop up some things at fire sale prices. Dude, and right now we're seeing tons of stuff at fire sale. It's just, you got to be patient and you got to look for the right ones because just because some things at a fire sale doesn't mean it's worth buying.

5:32You know, I was talking to a company the other day. and they're willing to sell they want a transaction really fast and i'm like oh my god this is a good price but the amount of effort why do they want it so fast the amount of effort it's going to take my team to clean up this stuff opportunity cost is actually going to cost me way more money than if i didn't buy it at all so like keep this in mind if you are going to buy something there's always the seller always has the informational advantage and so if you feel anything's weird even a little off you should probably trust that gut yes and eric's done mna as well right and you've you've been on both sides you had some stuff work out for you and you've had some stuff really not work out and it was just a mess and it was funny like buyers are like complaining and stuff i'm like well a lot of things didn't work out the way that they ended up telling you and when you need fix when you need to get things fixed you had to get in there and fix it yourself and it's not like those people who sold the companies to you really helped you out with solving any of the problems that they knew existed.

6:31Yeah. We'll do maybe another episode on this, but, you know, take your time with it. Just understand that 80 to 90 % of these deals typically don't work out. Um, and you know, I thought I was better than the ratio, but, um, you know, sometimes you get humbled a little bit. So that is it for today. Please don't forget to rate, review, subscribe, and we will see you.