SaaS Interviews with CEOs, Startups, Founders
638: Alternative Investment Ideas, His Book Deal Included 10% Royalty, $100k Advance from Entrepreneur Patrick McGinnis
23 Apr 2017
Chapter 1: What inspired Patrick McGinnis to become a 10% entrepreneur?
This is The Top, where I interview entrepreneurs who are number one or number two in their industry in terms of revenue or customer base. You'll learn how much revenue they're making, what their marketing funnel looks like, and how many customers they have. I'm now at $20,000 per top. Five and six million. He is hell-bent on global domination.
Chapter 2: How did Patrick transition from Wall Street to entrepreneurship?
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Chapter 3: What lessons did Patrick learn from his first investment experience?
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Good morning, everybody. Nathan Latke here. Our guest this morning is Patrick McGinnis. He's the author of The 10% Entrepreneur, which focuses on living your startup dream without quitting your day job. Just published by Penguin Portfolio. He's also credited with coining the term fear of missing out.
Chapter 4: How did Patrick decide to invest in Ipsy and what was the outcome?
He's a graduate of Harvard Business School, living in New York City. Patrick, are you ready to take us to the top? I'm ready. Let's go. Very good. So obviously you've got a book you're working on, but usually a book is just something extra added onto what you're already doing.
So kind of give us the one or two sentences, what you do, what you do kind of full time and how you generate revenue and wealth for yourself. And then we'll jump into more of the book.
Yeah, so I'm a Wall Street refugee. I was a victim of the 2008 financial crisis.
Chapter 5: What insights does Patrick share about angel investing?
I was working at AIG at the time. I did not cause it, though. And that convinced me, basically, I never wanted to rely on corporate America again. So I started my own advisory firm. It's basically, you know, consulting work that pays the bills. But on the side, to build real wealth, I built up a portfolio of over 20 investments in startups and real estate and even a theater production in London.
And over the last five years, that's what I've been focusing on to really build that business. And this is Dirigo Investors? No, Dirigo is my advisory firm. This is all on the side, Patrick.
Chapter 6: Why did Patrick choose to publish his book with a traditional publisher?
Got it, got it. Okay, so these are things you're doing on the side. Okay, paint, color one of those in for us. Tell us about one of those investments. Sure.
So, the first thing I ever did when I started building what I call my 10%, a good friend of mine called me, a former colleague, and asked me to work on a startup with him that was working with YouTube celebs to promote branded video using their fan bases.
and so i started you know working with him for free i got some stock in his company which company was this it was called real influence and uh i made a bunch of intros and we sold thanks to the intros i made we sold about three or four hundred thousand dollars worth of work um but the company never really took off so i sold my shares back i got a couple thousand dollars i didn't become a millionaire out of that became a thousand air but my buddy went on to the upside you didn't just get your money back
More than that, I learned how to sell. I'd never sold anything. And I sat in front of somebody and sold something that was a PowerPoint.
Chapter 7: What challenges did Patrick face while launching his book?
Right.
And Patrick, how old were you when this was all happening?
33.
So AIG 33 going into this kind of social media branding space made some money. Then what?
And then we, you know, we all moved on with our lives. And my friend called me a year later, said, would you like to invest in my startup? It's called Ipsy, and Ipsy has gone on to raise over $100 million. You know, I invested when it had no customers. Last report, obviously confidential now, but it was at over 150,000, sorry, over a million customers.
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Chapter 8: How does Patrick balance his day job with his entrepreneurial ventures?
And so it's a company that basically is one of the stars of, you know, the whole e-commerce space. And I was one of the first investors. So obviously a huge, huge win for me.
Was this the same guy that was doing the branding, the social media stuff? Yeah, same guy. Ah, got it. And guys, just, you know, Ipsy is basically, I believe, this is going off memory here, but it's basically like curated products, subscription basis, 10 bucks a month, beauty, focus, and they're killing it. Is that about right, Patrick?
Yeah, absolutely. It's basically the co-founder is Michelle Phan, who right now has 8 million subscribers and nearly a billion video views. So it's a huge... It's a huge win because all of the marketing is done through YouTube, Michelle and other celebrities that are affiliated with the company.
Did Michelle and your friend's CEO meet via that first business as a social media influencer?
They met through his work. He worked at Funny or Die as well. And they met kind of the whole video space because he was quickly emerging as a video kind of maven. And, you know, he took me along and taught me everything I know about the space. And so when he came to me with Ipsy, I understood that when he was trying to build from sort of day zero because I worked with him before.
And so it was a really kind of a no brainer for me, even though it was kind of I'd never made an investment before. So what'd he say? Basically, he said, I found this woman. We're going to partner to build this business around the beauty space. And we had looked at some of these beauty influencers.
In fact, one of the pitches I got us when we were working on this company, Real Influence, that we had worked in the year before was with the Lauder organization. So I had a good friend who worked at Lauder, Estee Lauder. We met with the head of digital. And basically, she was like, we don't even know how to think about beauty. YouTube right now.
And within a year, they had spent all kinds of money building a channel. So it was clear to me that we were at the right place at the right time. And the fact that Michelle had a huge customer base meant that there was no acquisition cost for the customers.
We I a lot of my listeners are exited entrepreneurs, venture capitalists, people with disposable income looking to make investments. So what was the actual like? What did what did he come to you and actually offer? I mean, was it, hey, Patrick, here by 10 percent of the company for 200 grand. I mean, what was it specifically?
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