Why Jake Paul Is Laughing His Way To The Bank

0:00This is why Jake Paul is laughing his way to the bank.

0:13so did you see how much money he made on that fight 40 million is that what they said 40 million i think was was his take maybe it was like 80 million all in or something including like everyone 20 they said 20 to mike uh-huh yeah but did you see that basically this is like the new form of WWE because WWE is scripted, right? There's this video out there where Mike has a clear shot at Jake and he pulls his punch because this is like a clear shot to like basically knock him out. But the way it was, it was, uh, the deal was structured was Mike Tyson. If you knock Jake Paul out in the first round, you get paid the least, right?

0:46So if, but if you go all eight rounds, that's where you get paid the most. So he pulled his punch and everyone was like up in to uproar. But my point is, Jake Paul was super smart for arranging this because Mike Tyson is kind of known as the greatest of all time in boxing, right? Or one of the greats. I would say Floyd Mayweather, Muhammad Ali. Sure, there's Pacquiao as well, right? But I think the fact that he put this together, he knew how to generate a ton of buzz around it, and he got paid a lot of money at the end of the day. And at the end of the day, nobody cares because it's entertainment.

1:18So I watched the fight. Did you watch it live? I did. And I genuinely believed after watching the Tyson videos of him training. Yeah. Oh, yeah. He's like so fast when he's training. I was like, did he get paid to lose? Yeah. Totally. I'm like, there's no way Tyson was boxing like that. And I'm not saying Tyson naturally would have won, but it just did not seem like himself. Like, I genuinely believe he got paid to throw the fight. I think the slap, the moment I saw the slap where he slapped Jake Paul the day before, I thought that was scripted too. I bet you it was. It was scripted because he didn't really react.

1:52It wasn't like a surprise or anything. right and jake paul really looks up to mike tyson yeah i think look i think jake paul is people can say what he wants about him i think he's a genius for doing this yes and tyson was struggling financially yeah and i'll i so i i've i've uh i've met jake paul once at a dinner right super nice guy super humble super nice guy super smart too super smart yeah yeah yeah jake paul is not what you see on it's he's a persona online it's just like how wrestlers are like hokogan the rock Undertaker. They're all personas. What do they call it? Kayfabe is when you have to keep in character.

2:27What is it called? Kayfabe. You didn't see the Mr. McMahon documentary? No. Oh, you still didn't watch it yet. You love business and you won't watch it. But it's a wrestling movie. It's not a movie. It's a six-part documentary about the business of Mr. McMahon. You should watch it. He bought his business from his dad and he made it into the... His dad didn't give it time for free? No. It was competitive with him as dad. And then his dad was alive as he started to see him make it bigger and bigger. So it was kind of contentious. So his dad was happy or no? Kind of. Towards the end of his life, he was like, I'm proud of you.

2:59I was about to say, as a father, shouldn't you be proud even at the beginning? Well, it's kind of rough when it's like the business that you started, your son buys it from you and then he beats the crap out of you. I would be happy. I'd be like, oh, good job. I'm doing better than my kids. I genuinely think you wouldn't care. No, I wouldn't care. I'd be happy. I do think some people would care. I would be disappointed if my kids did worse than me. I'd be happy if they did better than me. Yeah. That's what you want. That's the dream. Yes, because if they did worse than me, I would feel like I failed as a parent.

3:26But sometimes you're the provider as the man, and you don't want to be beaten by your son when you're still alive, especially from your own business. I would want to be beaten because it shows that I did a good job raising my children. I don't think you would care. I think some people would care. I generally don't think you would care. I don't think I'm also as competitive as most people. Oh, you're competitive in certain areas. But in business, yeah, I'm competitive. Yeah, you are. Yeah, you are. But with family, I'm not. No, of course not. Yeah. Yeah. So anyway, that's the Jake Paul fight. I mean, I thought it was great.

3:58I think he broke, I think he got 16 million views concurrently or something. Or it was the second biggest fight in Texas. Or maybe the first biggest fight in Texas. I think it was the biggest fight in Texas. And Netflix had streaming problems. I know this because I issued streaming problems with Netflix. Yeah. And I was a little irritated. Yeah. So I think it was the biggest fight in Texas at 16 million. The one before that was 10 million. So you got a lot of eyeballs. And then Netflix got a bunch more eyeballs at the end of the day. So he knows how to drive eyeballs. Nobody can take that away from him.

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4:52Dude, I mean, speaking of people that are doing it right, did you see that Dude Perfect raised$100 million? Dude Perfect raised$100 million? Dude Perfect, yeah. Where they make the trick shot and they try a thousand times until they make it one shot and just show the one they made. So it's that Dude Perfect is actually five people. So they raised$100 million. And the cool thing is who they raised it from. So they had a bunch of people saying, okay, one person's like, one firm is like, oh, you know, if we don't get our money out, like we should have, you know, liquidation preference, all these things.

5:19They're like, okay, we don't want to deal with them. And then someone else is like, well, we just want to buy the whole thing. Okay. We don't want to deal with them. But the one investor that they wanted to deal with says, Hey, you tell us how much you want to sell. We'll buy whatever. But we just, the one thing we want to know, the only thing we want to know is that you guys are in this for the long haul. And they're like, that sounds good. Then they shook on the deal and they did it right. That's, I think how you should do business at the end of the day, because there's no politics being talked about.

5:44And it's just like a handshake deal like that. It's very simple. There's no like, Like, you know, oh, if this happens, then that happens. Like, that's just not cool, right? And I think it's great. Like, this is how creators should do it. They've been doing this for like 15 years or so. Again, Jersey Mike's, 53 years. This one, 15 years or so, right? And I think it's cool. I think they probably took some money off the table. I would guess they took maybe 30 to 50 million off the table. Yeah, maybe 10 million each. Yeah, so then that's pretty good for them after 15 years of working. That's a lot of money for anyone.

6:11I used to play, so when I didn't live in LA, I used to stay at the Beverly Wilshire. and a few of my guys from Brazil flew in. We were staying at the Beverly Wilshire and this was back in the day. Dude Perfect was more newer at the time, at least for us. And we were playing Dude Perfect like throughout the hotel. How do you play Dude Perfect? And in our hotel, you just try to do like crazy trick shots. You take like trash and it's like, okay, taking this wad of paper, bouncing it off this wall, hit the other wall and then in the trash can. And I remember one of the workers there, he was working on cleaning our room.

6:48I was like, dude, play with us. And he started playing with us too. I tipped him really well. And he was just really chill. And I was like, we're having a blast. But Dude Perfect is just so famous and popular. Dude, let's talk about the economics with this. Let's just make this up. Let's say$100 million comes from the firm. Maybe they put in $10 to$20 million of their own money. The rest of it might be debt. This is just a way to structure it. I was just thinking about this at a lunch. It can't be that much debt. How much do they do in profit? I don't know. I don't know. So, okay, fine. Let's just say maybe they put in 50 of their own money, and then 50 is debt, right?

7:23You think Dude Perfect does like 15-ish million in profit? I have no idea. But they said, I mean, look, if they get it to be worth like a couple billion dollars or something like that, right? At the end of the day, they put in 50 million of their own money, the firm, and they're going to get a huge multiple on that, right? So it just goes to show you that the way these deals are structured sometimes, it's like there's a lot of different ways to skin a cat. That's what I'm getting at. So I don't know if they're going to add debt because the investment is from... Who's the investment from? Dude Perfect announced$100 million investment.

7:55The firm could be a really big firm that just has the cash. That could be another way. Yeah, so according to Google, Dude Perfect did$25 million in 2022, up from$20 million in 2021. So let's call it right now they do at least$30 million in revenue. And let's say they do$15 million in profit. Yeah, I don't know. Because I don't think their costs are that high. I've been listening to podcasts. I'm only like 30 minutes into it right now. But I heard this billion-dollar valuation being tossed around. I don't think$15 million in – I think that's a high valuation for$15 million in profit. $100 million?

8:31No. I heard a billion-dollar valuation being tossed around. That's what I'm saying. $250 million valuation. Okay. 2024 revenue of$50 million. Okay, yeah, yeah, yeah. Highmount invested$100 million for 40 % ownership. That implies$250 valuation, which means I bet you$100 million went off the table and each of the five people, that's what it looks like. If you're selling 40%, usually, and I believe Highmount is a private equity firm, not a venture capital firm. Highmount Capital. If it's a private equity, chances are - They love that. Steward of Companies, we help flourish. It's a private investment focused on growth-oriented technology, blah, blah, blah.

9:13Invested over a billion. It looks like it's more like a private equity firm versus a venture capital firm. So my guess is the$100 million went off the table. It's not between five ways. The question is, how much debt do they use? Because PE typically is pretty smart with that. If they're doing$50 ,000, you're probably... No, zero debt. If the valuation is$250 ,000, they use zero debt. It's interesting because there's, when you look at like agency acquisitions, and this is not an agency acquisition, but debt is used quite a bit. It also depends on the firm as well. So let's just do basic math, okay?

9:49If they're doing 50 in revenue, and let's assume it's high margins because they have a warehouse in Texas or somewhere like that. I don't think the cost is high. I'll say they do 25 in profit. In this market, you're probably not going to add in more than three times that, so 75 million. If it was 250 valuation, they would have added 75 in debt and then uh 100 in uh what is it called uh uh the check is what they put in so you would have 100 out of 175 that means they would own 57 ownership so they would have been the majority of the majority owner and the dude perfect team would have got 175 million off the table.

10:29Just because they put$100 doesn't mean that they didn't get$175. Debt could have been added on as well. They're just saying Hyland invested$100 million, but with the$250 valuation, it could be they also added debt as well. There you go, guys. These are the economics behind a deal. By the way, we're not saying we're correct. There's a lot more stuff that we don't know, but that's probably how it's been structured. All right, guys. That is it for today. Please don't forget to rate, subscribe, go to marketingschool.io slash agency. I think the price right now is$199 or so. It's a seven day free trial.

11:02We're bumping it up to$399. So depending on when you listen to this, the price might already be at$399. So that being said, goodbye.