Avoid THESE Poor Habits Before You Burn Out | Rachel Hollis Interview

Think it really is a way to set your, you know, the last quarter of your life in a way that you really enjoy it. I drove myself into the ground with bad diet, bad sleep, bad habits of every kind. What the [ __ ] was I thinking?

So, I guess let's start with what you're working on because this project is really exciting and I loved hearing that it's something that's been in the works for a while. So tell us what's cooking.

You know, new television formats are very difficult to launch anytime, but particularly during a pandemic. But I've been working on this for a while because I think fundamentally it's a really interesting idea. The concept is, if you think about what's happened during the pandemic, we've got tens of thousands of cases, litigation primarily business litigation, stuck in the court system because during the pandemic there were no courts. They were taking care of very serious crimes, but not the ones that affect business.

Sixty-five percent of jobs in America are created by small business. Often these are family businesses that started, were successful, and they grew up. But anytime there's a conflict in a business like that, it can be devastating to the value inherent and also damage relationships with customers, employees, shareholders, you name it.

It's really important when you have litigation to try and settle it. What has happened through the court system is that arbitration has become a way for two litigants to settle and resolve their issues. All we're doing in Money Court is actually recording that, and people have actually agreed to allow me to actually be an arbitrator in their case and settle it for them.

In addition, I brought with me two fantastic co-hosts: Ada Pozzo, who's a former federal judge—sat on the bench for many years—and also Katie Fang, a trial attorney. It's a remarkable format because we deal with real cases, real litigation, people in turmoil, and it makes for very compelling television.

Was there something about that? Did it feel like a lot of pressure for you to make that decision, or do you feel like you have a good solid understanding of what feels fair and just?

You know, I do this every day. I've got over 34 companies in my portfolio, and every day there's drama. There's always litigation or some catastrophic news or some euphoric news. I'm used to it every day. I mean, every day something's happening, and very often I'll find myself in the middle of a really difficult dispute.

The key that people should understand is nobody makes money in litigation except the lawyers most of the time. So if you can actually solve it, get in the middle, and be trusted by both sides to find a resolution, that's a far better outcome for the business and the shareholders.

What I found so interesting in the journey of, you know, when we were casting the cases and the lawyers, et cetera, one person said, "You know, I'm going to agree to do this and let Mr. Wonderful decide for me. I don't like him that much, but I trust him." And I'm very happy with that outcome, actually.

Yeah, I mean, was there some part of you that there's like a little bit of validation in this? Oftentimes in legal disputes I feel like the law will sort of side in ways that don't necessarily always make sense to us as the entrepreneur, as the business owner. Like they'll sort of find legal loopholes to get something done.

So was there any part in this process where you got to sort of make something the way it should be instead of the way legally it would typically get resolved?

That was what was great about the format. Because yes, I had a federal judge and I had a trial attorney, and they really understood the law and the contract law and what the law says. But the final decision was always mine, and I said I'm going to decide for the business because the business sustains all the employees, all the shareholders, all the customers. You have to always solve for the business, not one individual over another, and that's sort of how I judge these cases.

I'm very proud that afterwards in the post-interviews that I got to see, these people abided by my decisions because they felt they were right. I think that comes from experience of having had to have done this every day for decades.

I think the format itself is going to do quite well because people see themselves in these cases. Even though they're gut-wrenching in some situations—a mother suing a daughter, siblings fighting—you know, family torn apart because of money they've seen it before in their own families. That's why I think it's very compelling. You're kind of realizing it can happen to anybody, and hopefully everybody learns from these outcomes.

Yeah, for sure. I'm curious, like you talk about, you just said you have 34 companies in your portfolio. Can you take me back to how did you make the transition from I own a business or I'm an entrepreneur, I'm doing this thing to I'm building a portfolio? I have, you know, I'm a holding company, I'm this bigger thing. Was that a conscious decision, or was it something that happened organically?

No, it happened organically. I've talked to many others that are in my situation that kind of do this and started looking at opportunities. I became an investor in multiple operators and used my experience to help them, and then the next thing I knew, some of those companies were successful and we sold them.

I just started, you know, repurposing this capital, and I don't need more money. I like to keep what I've got, obviously, and I make mistakes sometimes when I invest. But luckily, I'm fortunate that the majority of the times they're winners, and they generate more cash to do more investments with. So I'm sort of like an investor, you know, an advocate for CEOs.

Yeah, you said something that reminded me. Have you ever read the book Shoe Dog?

Yes, by Phil Knight. You know when he talks about it's sort of the worst day of his, um, he's being dramatic, but he talks about it's like the worst day of his life when he finally sells the business or when he finally retires because it's sort of like, what do I do now? You know, what do I do now that I've had all this success and I've done all these things?

It's not the hustle, but sort of that activity that so many of us have partaken in as entrepreneurs for so long. Like, how do you let it go? So I love and I'm fascinated by people like you who kind of take it and then help others come up in that way.

Yeah, I've been—you know, money does not buy you happiness, but it makes being miserable a lot easier. That's what I like to say.

That's real. That's super real. So as you look to the future, is that still a big part? The investment piece is still a big part of what you want to do? Are you kind of leaning in this new direction with, um, you know, judge, jury, and all the things like you're doing on the show?

There's an emergence of social media, and media can now affect market capitalization, stock prices, and we've seen it happen with the meme stocks and what's happened with, you know, Tesla and what's happened with Reddit and Robinhood and all these things.

What I found is the fact that I have millions of followers can really affect the outcome of a business. You know, people approach me all the time saying, "Look, can we pay you some stock options so that you'll promote our business?" I say no, I'm not going to do that.

But if I like your business, I'll buy a third of it and I'll become a founding partner and I'll help you blow it up. People can smell BS a mile away on social media. I don't care what venture capitalists pay and what valuation they pay.

I don't care about any of that. I sit down with the entrepreneur and say, "Look, I don't care what your last round was at. Here's what I'm willing to pay you to buy a third or whatever it's going to be." After that, I'll participate in every financing we do. I'm going to change your world.

Nobody can do what I can do for you, and you know, there are no venture capital guys that have millions of followers. They don’t; I do. I understand the difference.

Why do you think you've been so successful? Have you ever summed it up in your mind of, you know, here are these guiding principles that have led me to this place?

I think it's something my mother taught me when I was 14, and I never thought of it at that time, but it affected me years later. She said to me once, "If you always tell the truth, you'll never have to remember what you said." I think maybe not everybody likes you, but they respect you.

I think maybe that's, you know, I don't—I find that, you know, people on social media, even the ones that don't like me, follow me. You know, harass me saying, "I hate the way you said that," or "you did this," but they're still following me. I mean, why?

When you are investing in companies, are you looking for specific types of companies, or have you sort of invested across the board? It's a pretty broad portfolio.

I have a really broad portfolio. I mean, it's almost in every sector in almost every state. I've got technology companies that do wireless power transmission. I've got insecticides. I've got commercial kitchens that make cupcakes.

You know, I've got DeFi and cryptocurrency deals and all kinds of stuff. What I find is the outcomes are unknown. I mean, they're just serendipitous in some ways. So the portfolio itself is constantly generating cash because everybody knows I'm a royalty guy or I'm a debt guy or whatever it is.

But I also do equity deals. And then once, you know, every—like even yesterday, I got a phone call from one of my companies. They just got offered a huge premium to be, you know, acquired, and they're asking me, you know, "Do I want to sell my position?"

I said, "Well, let my guys look at the deal." I mean, you know, I generally want to return my capital and put it back to work again, so that's going to be a really successful outcome, and I would have never guessed it two years ago. You just don't know. That's my point.

So, if you're working with someone and let's say we have a ton of small business owners who listen to this podcast, let's say you're walking—in they're lucky enough, they get a day with you or maybe it's an hour because your schedule isn't safe—they get some time with you.

You're walking in to look at a company. What are those elements that you look at if you're trying to advise someone and sort of help them to grow that bottom line or expand reach? What are the hard and fast things? Like, you always look at these things in a new business.

Well, here's a fact that is kind of interesting. I've been doing this for such a long time, but over the last 13 years, 75% of my returns have come from companies run by women. When we went back and looked at the data from these outcomes—remember, when you're investing privately, it's return of capital that's most important, not unrealized capital.

You've got to get your principal back. Women-led companies are very good at mitigating risk. When we looked at quarterly sales objectives over a five-year period in the first study and then over seven in the second, we found that the companies run by men hit their targets in terms of revenue about 65% of the time.

But the average growth rate was the target was 30% annually, which is very good, but they only hit it 65% of the time. Then we looked at the women-led companies. They hit their targets 95% of the time—almost 195—but their growth on average over that seven-year study was only 15%. They're half that of the men.

The reason it works and why we've adopted it as our new philosophy is when you set targets that your team reaches 95% of the time, the culture in the company changes. It becomes very sticky. People don't leave.

The person running accounting or sales or logistics or compliance in a business can be very disruptive when those people leave for whatever reason. But when a team is humming and it's working and hitting its targets, you have no disruption and cash flows are much higher.

So I'm a little biased now when you ask me what do I look for. I look for a woman running a company—that's what I prefer to invest in. I don't want to be sexist. I don't want to start gender warfare, but I'd give money to a goat if I get a return, but I prefer to invest in women.

That's awesome, and I feel like it's something that's so important for the women who are listening to this to hear because I think a lot of times they don't put themselves out there. They don't try. They don't look for capital because it's just sort of this innate thing of, "Oh, I'm going to play small and I'm going to play it safe."

I like hearing that in some instances being a bit more cautious, like being cautious but hitting your goals as opposed to setting these astronomical, "We're going to aim at the moon," and getting there some of the time really is paying off for you guys.

Yeah, it is. It is. We've had a lot of empirical data. It's been so long, and we just know it intuitively. We kind of, you know, we meet various CEOs, we look for those attributes, risk mitigation, because you know things are going to happen.

You know, as I like to say in business, "[ __ ] happens," and you got to be—you got to be able to pivot. Nobody saw the pandemic coming, and that really changed America. We all jumped to the digital pivot, direct to consumer. All of that stuff that happened over the last year and a half has been really important in determining who is our winner and who's a loser in the portfolio.

How do you see that continuing to shift? Because I think obviously, I feel like in the beginning we pivoted once. Now it feels like we're pivoting once a quarter, and it's going to continue to change. The economy has been affected. I don't think we've seen anywhere near the fallout of that that we're going to.

Is there something that you're sort of looking at in the next, you know, 6-12 months that it's like you're feeling good, you're feeling like winter's coming? How are you feeling about where we're at?

We made the assumption in December that 15% of the staff would not return. They were primarily in the jobs of accounting, compliance, and logistics because they sit in cubicles at headquarters, and they've gotten used to working remotely and successfully.

From suburbs raising children or taking care of elderly parents, whatever it was. So we planned for this year, the first six months, to downsize our corporate headquarters by about 15%. But that's not the outcome; it's over 35% do not want to return—more than double. They're just saying, "We don't want to live that way anymore. I don't want to commute for an hour and a quarter into Chicago or New York or Miami or Detroit."

Whatever, they're willing to come in once a quarter, maybe once a month or something, but not often. I think that's a one permanent change in America. The other one that has really been profound is we've saved a lot of money as a result of reducing commercial real estate.

There's been so much direct consumer change in our product mix that there are many stores we're never opening again. We don't need them. We've got the customers back direct. The other thing is business travel and entertainment. That budget has been slightly cut in half. I don't think we're going to be doing that much anymore because we can do it on Zoom, and we're successful with it.

People say, "Oh, don't worry; it's going to come back." I don't think so. I think it's going to take a very long time. There are permanent changes in behavior, and I think you have to deal with them as a result of what I call Digital America 2.0.

You talked about—you know, at the beginning of our conversation you talked about this idea that at any given moment you can pick up your phone, and there could be a celebration to be had or a crisis to be had. You have so many different companies, and that's just what's going to happen. [ __ ] happens in business, right?

So how do you manage the stress of that? Do you feel like you're used to it at this point? You've been in it for so long, or are there things that you do to make sure that you're managing your, you know, adrenal fatigue or you're managing your cortisol? Like, what are you doing to make sure that you can maintain?

We get data weekly—tear sheets on revenue and free cash flow. Those are the only two numbers we need to look at because we've been in these businesses for years. It's like, it's the EKG of the business. Those are the two numbers you need to look at because they're private.

We don't care about stock price, revenue, and free cash flow because if something's happening on the top line, it's declining, we need to know that. If something's happening on the income statement, we need to know that because reduced cash flow.

But generally, we're able to manage with those two numbers. We generally speak to our companies once a quarter, although they call us for social media support all the time. You know, we enjoy a huge presence on network television, on cable, and social media on all of the things we do.

It's storytelling—that's what we're doing, and we're adding, reducing customer acquisition costs on these companies because that's the number one reason companies go out of business in America today. They're never able to get their customer acquisition costs below the lifetime value of the customer; they go bankrupt advertising—that's the problem.

So we try and avoid that with our companies, and we're pretty successful at it. And how are you then? Like, does it feel stressful for you to manage all these things, or are you just like, "This is my life. I've been in it for so long?"

Yeah, more the latter. This is my life. I've been in it for so long. Every day there's just catastrophe somewhere. I just dealt with it an hour ago, and another euphoric call, like the one I told you about on the takeout offer. That's the same day. It's sometimes in the same hour.

So I like—for me, it's sort of let's reduce that hypertension. You know, we're going to have the [ __ ] happens metric and we're going to have the euphoria. Neither of them can let you dissuade you that much. I can’t. I can’t let it stress me out. Sometimes I make money; sometimes I'll lose money—you just never know.

Yeah, how important is health? It looks like you're wearing a Whoop strap or some sort of—Is that what that is on your wrist?

Yeah, I'm wearing—I'm wearing a Whoop, and I'm also wearing, you know, an Oura.

I listen to—really tracking, yeah. No, it's really interesting because I'm in a group called the Longevity League, which was founded by the former CEO of Magna, a very big car parts company I own some stock in. He would hold these online seminars and invite guest speakers in that had various interesting research going on in longevity and cognitive health.

I'm into that, and one day I listened to a presentation by Richard Isaacson from Cornell, and he had just recently been published in various medical journals, including a long article in the Wall Street Journal, and his basic thesis—very simple—was that he can arrest dementia. Can't cure it, but he can arrest it with exercise, diet, and sleep.

I was just fascinated. You know, I just listened to him, and I just went, "Wow, I got to get into that guy's protocol." I mean, I want to try that, and I sat down with him in my home in Miami or his offices there by Zoom and went through a huge battery of cognitive testing and then a whole series of different tests that I agreed to and wanted to become part of the protocol.

That guy really changed my outlook in all of this stuff, all of it. He's monitoring all my diet, all of the fasting I do. I never used to think about diet. I'd say everything in moderation. When you eat well, it changes your life. It does.

I love asking this question because I think when I was earlier in my career, you know, 15, 16 years ago as a younger entrepreneur, I would run myself into the ground. Like, not eat all day or have a ton of espresso or not get enough sleep. You know, that was sort of the hustle that I was younger than too, but sort of thought that that was the way to, you know, achieve all the things.

I am wildly more productive, effective, focused, energized now that I understand how to take care of my health. Everybody that I know who's a high achiever, whether that's as an author, a speaker, an entrepreneur, whatever it is, everybody I know is focused on it and cares about it.

I always tend to ask because I think it's important, especially for younger entrepreneurs listening to this, who are working parents, who are trying to figure it all out. They'll pour everything out to the business, so they'll pour everything out to everyone else and not have anything left in the tank for them.

Really, if you own the company, the success of the company is very equated to how well you are—mindset, body, energy, spiritually. Like, are you okay? Because if you're okay, you can take care of the business, and if you're not, you're [ __ ].

Yeah, I totally agree with you, and I only wish that I had met him while I was an operator in business because I did exactly what you did. I drove myself into the ground with bad diet, bad sleep, bad habits of every kind. What the [ __ ] was I thinking?

It is really nice to have one less thing to think about, and I love food. Like, I love a beautiful meal with, like, multi-courses and you're celebrating with friends, and it's an experiential thing. But day in and day out, I'm just going through my workday.

I'm breaking my fast with a green smoothie. It's disgusting. Nobody wants to eat this. This is not—but it's so freaking good for me, and I feel such a difference in my life.

So I just wanted to touch on that because I do think I think everybody listening should try it. It only takes—it takes three weeks to adjust, and then all of a sudden, you're doing your body such a favor by bringing that insulin, that glucose down.

It's just—it's because you gotta think about it in the old days. People did not snack all day long on shitty food; they never did. And you're working out? People are working out of their house now, the kitchen's right there.

Yeah, it is a game changer, and I do think—I—when I started it last year, I think I started it maybe in COVID, and I'd heard about it forever, but I thought that's not for me, that's whatever.

I can't believe how much energy I have.

Yeah, I know, it's amazing. I cannot believe how much it changes it. It's fantastic, and I think it really is a way to set your, you know, the last quarter of your life in a way that you really enjoy it.

So you said something that sparked a thought for me. You talked about being in a group. It was, you know, about longevity, but I'm curious how much do you think that sort of our proximity to like-minded people or even people who are further along than us affects our success in life?

Do you have a group of friends or fellow entrepreneurs or like a mastermind or people in your life that elevate your way of thinking, and how important has that been?

Well, speaking of the Longevity League, we also had a guest speaker come in and talk about, you know, happiness in life, which I thought was a great topic.

What he concluded after much study, you know, academic study, is that relationships—long-term relationships, smaller groups—because you can't have friendships with 200 people, but if you have strong relationships with 20 to 25 people in your life, you tend to be happier long-term.

So, you know, I obviously, you know, have a lot of noise coming into my life through social media and everything else, and I spend my day doing television, all the rest of that stuff. I'm on TV four hours a day, sometimes five hours doing exactly what we're doing here because I'm supporting all my companies and my projects.

But, you know, my relationships stay constant. They're all around the world, and I go out of my way to stay in touch with those people because, you know, that is the baseline for what gives you a reason to exist, kind of thing.

You know, not just family, but also friendships that matter to me over time, and as they say, you can't make new old friends, and so you should really cherish your relationships with those if you've known for a long period of time.

The only way to do that is to make time for them. I recommend that for everybody because, you know, we're in a social media world now and just tweeting all day long or putting out posts on TikTok.

Well, I really believe in those platforms for supporting my businesses. That's not exactly, you know, staying in touch with your long-term friends.

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