He Got Fired By His DAD… So He Built a $60M/yr Empire
14 Jun 2024 (3 months ago)
Intro
- Craig Fuller runs a data business called FreightWaves with a media arm, generating tens of millions in recurring revenue.
- On the side, he bought several niche magazines, including flying magazines, for a small amount of money.
- Within three years, the magazine business, called Fir Crew Media, is making $60 million in revenue and $12 million in profit.
- Fuller predicts it will reach $1 billion in revenue by 2030.
Economics of long-haul trucking
- Trucking runs in Fuller's family. His father started the fifth largest trucking company in the US, and his uncle started the eighth largest.
- His family is in the produce business, and he grew up with truckers.
- The trucking industry has wealthy owners who are often rednecks and blue-collar workers, not necessarily traditionally educated.
Getting fired from the family business
- The speaker's father ran a trucking company.
- The speaker worked for his father's company from a young age and was successful.
- He had conflicts with the executive team and was fired in his late 20s or early 30s.
Fuel cards for truck drivers
- Truck drivers use fuel cards to buy fuel and for over-the-road maintenance.
- A truck driver is responsible for $6,000 to $8,000 of expenses per month.
- Fleet cards help manage fraud related to fuel spending and maintenance.
How FreightWaves hit $20M ARR in 2 years
- FreightWaves grew to $20 million in revenue within 2-3 years.
- The growth was due to:
- Venture capital investment in the logistics industry.
- Digitization of the supply chain.
- Strong relationships in the industry.
- The speaker's father refused to invest in FreightWaves because he believed the speaker would be a bad CEO.
- The speaker's father later became one of the largest investors in the company after it became successful.
- The speaker attributes his success to copywriting skills developed early in his career.
Acquiring FLYING for $3.5M
- Colin Morrison's article about magazines as trophy assets inspired the idea of buying a magazine.
- Flying magazine was chosen as a potential acquisition due to personal interest in aviation.
- The owners of Flying magazine were initially hesitant but eventually agreed to sell.
- Despite initial skepticism about the print magazine business model, the value and potential of the magazine's community and audience were recognized.
- The purchase was made using personal funds, a significant portion of available liquidity.
- After acquiring Flying magazine, the focus shifted to growing the business.
- The magazine's content and design were revamped to appeal to a broader audience.
- Digital platforms were utilized to expand reach and engagement.
- Strategic partnerships and collaborations were formed to enhance the magazine's offerings.
- The company expanded into related areas such as events, e-commerce, and video production.
- Through these efforts, the company grew from a $3.5 million acquisition to a $60 million per year business.
Opportunity: Depressed media properties
- Bought a media property that was generating about half a million dollars of EBITDA per year and had a revenue of about two and a half million.
- The total purchase price was about three and a half million dollars.
- Magazine journalists are different from digital-native journalists in that they do it for the love of the content and not for the money.
- Magazine journalists feel like the owners of the magazines don't love them and aren't willing to make investments in them.
- The magazine business model has collapsed in the last 10 years due to the internet.
- Rather than digitizing or evolving their business model, magazines started to cut costs, which diminished the value for the community and the audience.
- Bought the media property to liberate it from its inevitable decline.
- Upgraded the paper, quality, and investments in the editorial team.
- Increased the editorial team from three full-time employees to 30.
- Contributors submit articles once a month and are subject matter experts in their field.
- The media property had not made investments in front quality, online assets, or other digital improvements.
From losing $8 per subscriber to profitability in 1 year
- Raised the price of the magazine subscription from $8 to $30 per year.
- Lost subscribers initially, dropping from 108,000 to 32,000.
- Targeted "freeloaders" and focused on acquiring subscribers who genuinely cared about the content.
- Doubled subscription revenue within a year despite having fewer subscribers.
- Invested a total of $40 million in the business, including acquisitions.
- Did not raise outside capital, except for an early investment of $500,000 from two brothers.
- Reached $7.5 million in revenue with the business breaking even.
- Focused on growth rather than profitability during this stage.
- Hired a team to run day-to-day operations.
A media side hustle becomes a real estate main hustle
- The YouTuber started a media side hustle.
- In 2021, he bought 1,500 acres of land to build a media center connected to a runway.
- The plan was to create a video center to connect it to an airport, but none of the airports in the community were willing to cooperate.
- He decided to build his own headquarters and found a 1,500-acre piece of land priced at $3.65 million.
- The land reminded him of a resort in East Tennessee called Blackberry Farm, which inspired him to create a Flyin Community with a Runway and home sites that are connected to the runway.
Craig's tolerance for being leveraged
- Craig is willing to take on debt to invest in real estate.
- He believes that real estate is a relatively safe investment because he can always sell the land if the investment fails.
- Craig is not afraid to make risky investments, even if they are outside of his area of expertise.
- He believes that the potential rewards of these investments outweigh the risks.
- Craig recently invested $3.6 million in a real estate project.
- He borrowed the money from the bank.
- Craig is confident that the investment will be successful because he has a team of experts to help him manage it.
- He believes that real estate is a less risky investment than software or data businesses.
Pre-selling $28M units pre-construction
- Advertised in their own magazine to test the market.
- Focused on the amenities and experience rather than aviation.
- Received over 300 inquiries and signed contracts to reserve spots.
- Brought in experienced teams to handle development, zoning, environmental, and engineering issues.
- People signed contracts and put down deposits of $40,000 per acre ($20,000 per lot).
- Pre-sold a total of $28 million worth of properties.
- Some reservations were refunded due to delays in environmental and zoning approvals.
- Currently have about $15 million in total reservations.
Diversity, Asymmetrical risk, and generational security
- Sam Zien is a media entrepreneur who built a $60 million per year empire.
- He started by acquiring flying magazines and using a content-to-commerce business model.
- He did not initially raise money for his ventures and used bank debt and liquidated his portfolio to fund his investments.
- Sam believes in taking more shots on goal and has an asymmetric mindset towards risk.
- He is willing to accept the risk of losing investments because he knows he can recover and create enormous value if his investments succeed.
- Sam applies this philosophy to all his acquisitions, aiming for a 3x, 5x, or even 10x multiple on his investments.
Teams to diversify your time
- Diversifying risk through other projects enhances long-term returns, especially when using balance sheets to borrow money from banks at low costs.
- Hiring teams to run different aspects of the business allows the entrepreneur to focus on strategy and long-term business prospects.
- Delegating day-to-day functions to capable individuals frees up time to explore new deals and leverage the business further.
- The entrepreneur keeps most of their net worth in liquid assets as a safety net.
- Any additional liquidity from cash flows or selling companies is stored away as a nest egg.
- The entrepreneur uses a smaller sum of money to start new companies and live off their income.
- Selling companies is seen as an exit strategy, with the value of the business serving as a long-term nest egg.
Building a portfolio of hobby magazines
- Crown Media acquired a portfolio of hobby magazines, including boating, yachting, fishing, aviation, model trains, and astronomy titles.
- The company's strategy is to buy multiple titles together to achieve scale and reduce costs.
- Only 25% of the cost structure of a magazine is the editorial product, with the rest being infrastructure and operations.
- Crown Media's revenue comes from subscriptions and advertising, but the ultimate goal is to acquire the audience to offer other products or services.
Content to commerce playbook
- The key to acquiring customers profitably is to have a media arm that generates revenue through subscriptions and advertising.
- The company focuses on acquiring media businesses with loyal audiences, identifying opportunities for commerce within those audiences, and optimizing advertising based on intent data.
- Patience is key when investing in new businesses built on top of an audience.
- The business is a finance brokerage that focuses on e-commerce and other categories with potential for success.
- The company owns the largest NASA/space merch store online, catering to aviation and space enthusiasts.
- They have raised $40 million, primarily from the founder's father, and have invested most of it in acquisitions.
- The business is projected to generate $60 million in revenue this year with a profit margin of 20%, potentially reaching 30% in the future.
- The goal is to reach $1 billion in revenue by 2030 through both organic and inorganic growth, capitalizing on opportunities in the magazine publishing industry.
- The business model is a combination of private equity and venture capital, aiming for high returns through audience incubation.
The story of William Randolph Hearst
- William Randolph Hearst inherited the San Francisco Chronicle from his successful father.
- He transformed the newspaper into a successful business by creating "yellow journalism," a sensationalist style of reporting.
- Hearst expanded his media empire by acquiring numerous newspapers, magazines, and other media properties.
- The Hearst family became one of the wealthiest and most influential families in America, owning a vast real estate portfolio, including a multi-billion dollar building in New York City.
- Hearst Corporation, the family-owned business, has no debt and a large venture capital portfolio.
- Hearst Corporation owns a variety of media assets, including newspapers, magazines, and a sports network (ESPN).
- The company generates revenue through subscriptions, advertising, and other sources.
- Hearst's business model involves leveraging its audience base to offer products and services that complement its media content.
- The company has been successful in this approach, while others, like BuzzFeed, have struggled to monetize their audiences effectively.
- Hearst's success is attributed to its focus on acquiring established media properties with loyal audiences and then offering complementary products and services.
What's the chase?
- Works long hours, from 6 am to midnight, but doesn't consider it work.
- Enjoys the challenge and intellectual stimulation of media businesses.
- Not motivated by power, fame, sex, or drugs.
- Finds the chase, problem-solving, and learning about different things enjoyable.
- Spends more time on a $10,000 e-commerce business than any other, despite it only making $100,000 this year.
- Views it as a hobby and tinkering kind of thing.
The best thing to give a founder is an enemy
- Having an enemy can fuel motivation and drive success.
- The speaker was motivated by a media executive's comment that his newsletters would never make more than a million dollars a year.
- He also had a competitor who belittled him, which fueled his motivation to succeed.
- Rage and hatred can be harnessed as positive fuel for success.
- It's important to channel negative emotions into productive outlets.
- The speaker's father fired him, which motivated him to prove his worth and build a successful business.
- He faced doubts and skepticism from others when he started his business.
- The speaker's success was driven by his desire to prove his father wrong and show that he could achieve great things.