How Citadel Built a $62.3B Monster

0:00You know Citadel? Citadel is huge right? They're a large firm. Ken Griffin. They do all kinds of investing. right from what I know. So this one guy, he worked at Enron, this guy, John Arnold. So basically, the story with Ken Griffin is this. So he said, look, there's a fun Citadel story that demonstrates this approach, which Ken Griffin shared during his talk at some when Enron filed for bankruptcy. So he said, when Enron filed for bankruptcy, Ken Griffin, I chartered a Gulfstream jet, put 16 people on it to Houston. And all we did was interview people at Enron for several days to understand what worked, what didn't work, how they made money, how they ran the business, what the competitive advantages were.

0:44I hired the entire leadership of the quant research effort at Enron. UBS bought the business except for the research team. We've made 30 billion in commodities since then. UBS shut the business down. In this case, Ken saw that the quant research strategies and talent at Enron had staying power and others likely did not. UBS probably didn't do this work and it cost them. So this guy responds, This guy was one of their traders. He's like, can confirm. He's like, I was the head trader at Enron when it filed for bankruptcy. I received many calls from firms that were recruiting. I was busy trying to close out the trading book and wanted to take some time to decide my futures.

1:20But Citadel was by far the most aggressive. Other companies set up interviews with Enron's senior people. Citadel interviewed seemingly everyone in the trading operations. All function at all level. Let me speed this up a little bit. So Citadel's team called him twice. He declined to meet. He's like, it was apparent that their intent was to reverse engineer the business. So basically what happened was Ken was the third call. He said, hey, would you be down to talk to Ken? And then he was on the airport heading to Aspen. Ken was like, hey, I'm going to fly to Aspen. You want to meet tomorrow? And that's what it took.

1:55Ken flew to Aspen to meet me the next day. And then they had a great meeting. They offered him the job as the head gas trader. He said, I wanted to fully run an operation. I thought there would be more upside if I had my own fund. So I declined. But they still kept in touch to this day. And they built, they gained, what, 30 billion in commodities. He didn't take the job? He ended up starting his own fund. He did really well. Oh, cool. Yeah. So Ken started with a niche, Convert Arb, and built one of the most successful financial firms that he's ever tried. So my point of saying all this story here is that sometimes when you're serious about something.

2:34You don't do what other people are doing where they're waiting weeks. You just call and you get on the plane and you try to get the deal done that day. Yes. Yeah. I agree with this. I don't understand why people just take forever. Sometimes when we're doing M &A, we go through bankers because bankers represent some of the sellers. And there's a lot of these bankers that reach out to us. So one of these bankers that we're dealing with in Latin America is like, oh, I got a lot of these deals. You should check it out. I'm like, okay, sounds good. sends us deals to my head of M &A, my head of M &A, then sends it to my team.

3:06They give us some of the deals. One of the deals looks pretty good. Takes them weeks, then months to start getting back to us. And we started getting some of the numbers. And I was like, dude, this business just seems really terrible. Client concentration. I'm like, you're talking about, you know, one or two of their customers make up pretty much all of their revenue. I'm like, what kind of businesses? I'm like, it took them this long to tell us this information. So there was another business that we already signed an NDA for. I literally just pick up the phone myself. And I'm like, Hey, I messaged him on LinkedIn.

3:39I'm like, Hey, this is my phone number. What's at me. I want to talk about buying your company. And that was it. Maybe what's at me, talk to them. I got all the numbers in a week and a half and it would have taken their banker probably a few months to get it. And I got it in the format that I wanted it. and I'm like cool we're gonna have someone meet you guys up in uh somewhere in Latin America I don't know exactly where I think Mexico um in the next I think seven or ten days um because our head of latim is going down there he's based out of Miami and then I was like cool after that goes through and we start crunching all the numbers and everything like that I'm like I want you guys to fly to Los Angeles and we'll meet you and I'll fly in the rest of my team into Los Angeles like cool.

4:20Just get it done yourself. I'm like, time is of essence. I'm just tired of all the bureaucracy and people trying to slow things down. If you want something done, just go and get it done. And this is why people like Ken from Citadel or Elon own jets. Some people own jets so they can post pictures online and be like, look at this cool plane that I have and all these vacations I can take. A lot of these business guys have jets like even Warren Buffett because when there's a problem, they can just hop on whenever they want, fly there, fix things, and then come back and go after the next thing to tackle.

4:51Nothing beats in person. Like as much as I like, as much as most people like hiding in their home, um, most introverts, I'm an introvert. Neil's an extrovert. Actually. I think I'm an introvert. No, no, no. You're on the thing. You're maximized on extrovert. Really? Yeah. I'm introvert, but, but people think I'm, people think I'm extroverted. Dude, I think we're the opposite. You go to functions and stuff. I just want to stay home all the time. No. Okay. But when you're there, you're actually very outgoing. Like I prefer to just hide when i'm at events i just talk to you or someone i know and no one else no you do trust me okay when we go out to eat and stuff you're very outgoing with like the waiter and like everybody right in general you're asking like yeah i'm not like that so yeah so i'm i'm an extrovert introvert you're just an extrovert yeah plus the way you handle the phone and you call people immediately yeah i tried to do that before i'm just like yeah i'm just like i like texting them so my form is just texting them and then call once they're active then i call them he just don't give a crap.

5:45You just call them. Yeah, I don't care what they're doing. Pick up the phone. We're stopping this right now. Yeah. By the way, I don't know if we talked about this, but this actually goes in well with this guy, Darkesh Patel, another Patel. He talks a lot about AI. He interviewed like Mark Zuckerberg and all these AI people, right? I think he's interviewed Jensen Huang as well. So his argument in the future, and you tell me if you like this, imagine if you can make a thousand copies of Neil Patel. You like that? yeah i love this you look and not only that but do i have to pick neil patel or can i pick someone better someone better okay but just imagine it's 1 000 neil patels right so 1 000 neil patels not only that you know how tesla has the full self-driving where they train on every tesla they look at the road now all thousand of you wherever you are in the world they're all merged together everything you see over there you see over here so it's all merged together not only that, you can scale to 10 ,000 versions of you.

6:37So you're making copies of yourself, you're merging them, and you can scale them based on how much you can pay for compute. That is the future firm that we're building. Imagine if you're Google, for example, you have a Sundar, right? Imagine you have a thousand Sundars. They're all working on big deals. They're all working on the biggest things. And let's say they have to deal with government contracts over here. They have to deal with someone trying to put them out of business here. That is the world that we're going into. And that's only constrained by the amount of compute that you have. I love that model, but I don't want a thousand of me.

7:07I'd rather replace, I would take more of me. I don't know if I need a thousand, but call it like 20, 30. And I would rather go have a few hundred of some better talented people in each area that I'm weak at. Yeah. Same for me, but I'm just saying that's the world we're going into. Right. And so when I've said, I, I kind of do this with my team. I'm like, guys, I'm going to inspire you every week. I'm also going to scare the crap out of you every week. Right. I'm going to be that father that scares you and inspires you. and this is the world that we're going into. It's going to be smaller headcount and we're going to be paying a lot more for compute and we're going to be doing a lot more.

7:41I shared this graph. Cursor got to, I think, 200 million in less than 12 months and then Bolt.new, 20 million ARR in two months or whatever. Mid-journey, 200 million ARR, I think, took about 18 months or something like that. And mid-journey, self-funded. Most people don't know that. Yeah. So I think we're going to see a lot more of these small team, big businesses. Speaking of grifts, what is this agency that lied about scaling a client to a hundred million? Okay. So this one I thought was interesting. So this, this little ad over here, this guy, Noah Curon. So you can see our strategy helped launch this startup.

8:24Our strategy helped launch Vessi from a startup to a hundred million in annual revenue. Yeah. Is Vessi a shoe company? Shoe Company, yeah. So this is an agency guy claiming that it shot up to$100 million in revenue, right? 6X lifetime ROAS, 263 % improvement, right? And the founder of the company, he's like, these agency claims are getting out of hand. Rule of thumb, always divide by two. In this case, though, divide by zero. And then the founder reaches out to him. He's like, hey, man. Oh, the founder of Vesti reaches out to this Noah guy. Okay, are you following? The agency guy. So the founder says, hey, long time, man.

9:00Been seeing the ad. You've been running with Vessi and getting too many people sending it over because the claims are way too wild. Can you turn it off? And then the agency guy says, hey, man, can you tell me what claims are off and we can get those corrected if they aren't? And then the Vessi founder is like, could you just take down all the ads using our name and referencing us? We don't want any of these marketing materials out there. And then the agency founder, Noah, he's like, Tony, that's not really fair. Part of our terms and conditions is the ability for us to share our success stories.

9:28I have verified all the info in the case study is correct. I'm happy to work with you if there's something you don't like, right? And then so this founder over here of Vessi just starts going off. And then I think this guy starts to respond. He's just like, dude, just take it off, right? I think if you're the agency in this case, you should just take it off. I don't know why agency founders try to keep these case studies up when it's clear that the CEO of the other company has a problem. Your client has a problem. Just take it off. You know, I went through the same thing, right? Personally. For what?

10:00I hired an agency in Canada. I don't know when this was. It's called like seven, eight years ago. And they were helping you out with some technical SEO issue. And they were supposed to help with the implementation and all this kind of stuff. And I didn't have the time. I already knew how to do it myself. And they helped a little bit. It wasn't working out well. I just had, my dev just ended up doing most of the work. And didn't pay him much at all. When I say much at all, like, I don't know what the dollar amount was, a few thousand bucks, 10 grand max, or something small like that. And we pretty much didn't need a help.

10:36It wasn't working out. And over time, our traffic went up. I think it was like 30-ish percent from SEO, using the stuff that I hired them for, but I already knew that stuff. and I was trying to get them to just help implement it. So then they had a case study running on their website, how they helped me and NP Digital grow our traffic by 30%. And I was like, dude, take this off. This is not anywhere near the truth. They're like, well, we disagree with you, yada, yada, yada. And I'm like, dude, I have emails of me not being happy. I'm like, this is just silly. And then they wouldn't remove it. I was like, sounds good.

11:06I'm like, and they were just telling people like, we're the ones who drive a new all this traffic. I'm like, oh my God. So I was like, all right, you don't want to listen? They're like, nope, you know, we did everything. That's fine. You signed a contract. And I was like, dude, all right, fine. You want to deal with it this way? I'm just being really nice. I have lawyers on staff. And so I don't have to pay legal bills, right? Although technically we also use outside firms as well. So we always have legal bills, but you combine both of them. You know, I can just, I probably spend more on legal.

11:41I don't know how much we spend on legal. By the way, this is the stuff that riles Neil of. Neil will spend time on this. Yeah, and we spend millions a year on legal, right? Just globally, internal and external costs. I was like, you know what? Screw this shit. Screw this guy. I'm not dealing with this shit. And we just started sending him legal notices. And we're like, we will take you to court. F off. You're not being nice. We're really kind. And yeah, all of a sudden, they kindly removed it. And I was like, oh, yeah, now you want to play ball. either do it now or you're just going to get your acid you have to have some type of you should feel some shame when this is happening, just take it off these people don't feel shame by the way, Nick Shackelford, remember Nick Shackelford?

12:29he actually contributed, he's like, I was about to dust off our old Vessi case studies and then the founder of Vessi was like, you never needed to because you guys crushed it and just let the work do the talking that's when you just did good work and post it but don't do it when you clearly didn't do it because that's a grift. That's why people hate agencies. This is one of the reasons. But I've also had the opposite happen to me as well. So we used to do the marketing for TechCrunch back in the day when Michael Arrington and Heather Horde used to run it. And we grew their traffic like crazy from search, had screenshots of the analytics, okay?

13:02Had testimonials from Heather and Michael Arrington. Heather technically wrote it on Michael's behalf, but they both gave us authorization to use it. And literally the Google Analytics screenshots, eventually AOL bought the company. And at that time, we weren't working with them anymore. Some guy took over SEO and then started making all these claims that Neil didn't do crap. I've done it all. And he kept sending AOL's team after us to remove it. The first time around, AOL and us just agreed that like, hey, dude, here's the emails from Heather. And then eventually kept sending them. And then he started getting people in the SEO community riled up like, yeah, he didn't do anything.

13:37And then he's just like, look, we got him to remove it all. and I was like this is the dumbest crap I'm like I'm the one who drove the traffic and literally had quotes in an email from Michael Arrington and Heather Horde but he's just like nope Neil didn't do anything I did I'm like I'm talking about before they sold it to AOL and I even put in there because my first go-around with AOL I put pre-AOL acquisition like we had to put some disclaimers and stuff like that in there and then now AOL doesn't own I think they spun it off to of the company. But I was like, dude, I'm like, just chill. And over time, the brand started, it's still popular, but it's not as popular as it was before.

14:15Yeah. So then, then we didn't care to fight it out. We're just like, all right, we'll remove it. But sometimes it can go both ways. And yeah, in these two cases, I felt, you know, I was in the right, but there's probably other scenarios where people have dealt with me or you where they feel they're right. Yeah. Which happens if you've ever built a website, you know, how tough it can be to keep a strong design while ensuring site performance is fast. That's where Framer comes in, and it totally changes the game. Framer is the design-first, no-code website builder that lets anyone ship a production-ready site in minutes.

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16:26Sign up for your$1 per month trial and start selling today at shopify.com slash marketing school. Go to shopify.com slash marketing school, shopify.com slash marketing school. By the way, this, um, this will be maybe one or the second, the last one, but maybe we can end off with this one because we do spend some, I think we do try to be as healthy as we can. Um, and then we've gotten some questions around how do we optimize our health to make more money? Um, I look at Neil, for example, when we're in Brazil, um, I think we went to go eat at Outback Steakhouse in Brazil. And he ordered a chicken breast, no salt, no pepper, no this, no that, no cheese, no whatever.

17:08And I think we should spend some time talking about how we spend time to stay healthy so we can do better work. Mine's really simple. You probably have a much better health routine than I do. I typically work out five days a week. This week was only four because my trainer didn't have time for the fifth day. But I usually work out five days a week in the morning. usually i work out between sometime between four and five as a start time um so that way i'm done by six at the latest and yeah uh eat healthy eat clean i stopped intermittent fasting because i lose too much weight so i eat throughout the day i tend not to eat too many carbs no fried food tend not to eat too much dairy or anything like that and not really too much junk like cookies ice cream every once in a while i will and when i say once a while exactly once a week twice max but not for the whole day maybe like one meal uh one or two meals a week and i just eat really clean exercise walk 10 000 steps a day i usually sleep by around eight o 'clock at night oh and i try to be up by four at the latest yeah okay so i'll start with the wake up stuff and i'll try to give you guys some tactics here but the way we both look at this is you know neil's got kids i I don't have kids.

18:24But if you can't bring your healthiest version of yourself, you're not going to do good work for your family or your company. And so for me, I'll sleep around 8.45 or so, 8.45 p.m. And I'll generally wake up around, call it anywhere from 4.45 to 5.30. That's when I wake up. And then I do spend on – there's this app I have called The Way. Oh, Neil's going to fall asleep again. It's called The Way. And I had stopped meditating for a while. And I brought it back because I was listening to a Tim Ferriss podcast. I was like, this is the best meditation app I've seen. So I meditate 10 minutes a day.

19:00Diet-wise, I take like 50, 60 supplements a day. It's a lot of pills, yeah. But the way it comes from, I use this app called Function, and it tracks like 100 of my biomarkers, and then I adjust. And then also, we were both using a service called Everspan Life before, and they would do a blood draw maybe every four months or so. And then I would just track my, you know, we adjust the supplements based on those. and I do feel better in general and then I will work out in the morning I lift four times a week and then I'll do a zone 2 walk for about 30 minutes when I lift and that is like 3 miles per hour 12 % incline, whatever and then generally I'll do a really tough ride in the week called the Norwegian 4x4 so this is how you get a really high VO2 max so it's four minutes of hell and then you take a break and then four more of those and then I'll ride the other two days like on a Peloton on a peloton yeah um i'm not going to try to give too much detail here but i do i eat a lot of air one um i don't cook and so i either i eat a lot from the the hot bar it's like whole foods for example um and i'll only have like one cheap meal and usually it's with my parents i'll eat like some like fat chinese food or whatever yeah a lot of din thai feng a lot of din thai feng a lot of air one a lot of sweet green so when i'm in the office we eat sweet green or just other other salad place which i'm going to right after this um and then other than that oh i use an app called my body tutor, which I paid like 300 bucks a month for.

20:23And then every day I put in my workout, I put in my diet. And then the guy is like beating the accountability into me. I really don't need it at all. Cause he, all he tells me now is since the beginning, it's just like, good job. Good job. Good job. You're one of my top five clients. Good job. Good job. I'm like, they're like, what do I need you for? Right. Um, but the main benefit I got from that, um, when I first started in August, I was like one 50, I didn't need to lose weight, but I'm like one 30, I hover around 136 now or so. And it's because I limit my calories to 1900 a day. So it's really those things.

20:53I just do like a to-do list. So each day I'll put in there for my supplements, each one that I take, workout, walking. I put in there that I need to drink eight cups of water. So I take them all off and I don't go to sleep until they're done. Sometimes I miss them, but I usually can go like, most of my streaks are around like 15, 16, 17 days. And then I break it one day and then 15, 16, 17 days, I'm consistent. Here's where I'll end it. Do you think you sleep pretty well? Really well. Yeah. I don't think you have any issues with it. So I do the sauna and cold plunge at my place. My sleep is so much better with that.

21:29And then when I go to bed, I'm taking magnesium threonate. I'm taking apigenin. I'm taking L-theanine and I'm taking glycine. So that's my sleep stack for going to bed. And then I put sleep tape on. I've been doing that for like eight years now. And that's been the most helpful because I don't need to get up to pee at night. And I sleep throughout the whole night. Um, and then I have like a silk sleep mask. And so you're way better on the supplements to me. I only take multivitamin, fish oil and creatine. I don't take protein powder, any of that, just creatine for your mind. They say 10 grams.

22:01This is not medical advice by the way, but that's what I was told. Uh, uh, fish oil and then, uh, multivitamin. So That's it. Those are the real - Although I lack calories. I think I eat on average like 1 ,000 to 1 ,400 a day. It's okay. I don't think you want to be ripped or anything anyway. No. And I don't eat tons of protein. Yeah. Even though your trainer tells you you should. Yeah. I eat more of them all the time. Yeah. Every day. I eat the David bars. I'm like, yeah, whatever. The David bars are awesome because it's 28 grams of protein and 150 calories. So that's pretty good. But it's dairy though.

22:35If I eat protein bars, it's usually the Legion. Legion's great, but that's dairy too. Yeah, I'll eat dairy for things like that or yogurt, like I sign, Siggy's yogurt I eat every once in a while. But generally speaking, I don't consume tons of calories. I also don't weigh much at all. Yeah. So that's what it is, guys. If you guys have any other questions, let us know. And that being said, go to marketingschool.io slash agency if you want to grow your agency faster and we'll see you tomorrow.

23:07Thank you.