So I was 21 back in, I guess call it, 2008 to 2011 timeframe. And I remember being a freshman, Robert, looking around and listening to my fifth year colleagues, because they mixed you in Virginia Tech as part of the program. And they were complaining that they couldn’t get jobs. And I’m going there and thinking there is no way I’m putting myself through five years of school at the number one ranked college for architecture, and then not getting an architecture job at the end of it. And potentially, with student debt as well.

And that’s when I was like, I gotta figure out how to sell something myself. And that’s what spurred kind of my first, I guess, kind of dabbling with real entrepreneurship outside of you know, selling candy bars and mowing lawns when I was younger.

Robert Leonard 2:32
You make a good point there. There’s so many people on social media or like you said, email signatures where they just put entrepreneur, but they’re not actually building any real businesses or anything like that. They just want the title.

Nathan Latka 2:44
It’s funny, because most people that actually have real business success, they actually don’t call themselves an entrepreneur. You never hear their introduction on stage be like, “Introducing entrepreneur like Warren Buffett. ” No. You know what I mean? So yeah, I kind of honestly, I fell into it. I mean, I started selling from my dorm room, $700 Facebook custom fan pages, and I pre-sold 100 of them at 700 bucks apiece.

So I had $70,000 in pre-sales in my Paypal account, and then quickly built that into a recurring kind of revenue business where people paid me $30 to $300 bucks a month, to drag and drop to their own Facebook pages. And then in 2011, in my dorm room, I got an ALI, a letter of intent, from a company called iContact, that basically offered to buy the company for six and a half million dollars.

And now I made a mistake i n walking away from that deal. But Robert, that’s that’s another story. I walked away from the deal. But I, at that point, had the business bug and I was onwards and upwards from there.

Robert Leonard 3:39
Yeah, that’s actually an interesting story. And I want to get to that, and we’ll touch on that a little bit later in the show. But a lot of people will hear your story there. And they’ll think that’s great. You know, that’s great for Nathan. But I can’t do that. I don’t have the money, or I don’t have the connections to start my own business. But your proof that it is possible with very limited capital and related skills, you start a software company, Heyo, and you were just 19 with only $100 in your account. You didn’t know how to code, yet you built a very successful business. What steps can an aspiring entrepreneur with little money take to get started?

Nathan Latka 4:13
Well, first off, I mean, I will tell you, anyone listening to this right now telling yourselves you ought to do it, you’ve already actually lost half the battle. I mean, the most successful people that I know spend my time and entrepreneurs will actually invest in, are the ones that actually are able to almost brainwash themselves that they can do the impossible. That actually is half the battle.

I mean, that is how you get employees to believe your vision. That is how other people come on board. That is by nature how you invent something new. You convince yourself that you can do something that’s never been done before. So anyone listening, that when you’re automatically thinking and making excuses, whether they’re legitimate or not, if someone might be listening right now that has a terminal illness, and you literally can’t do what I did physically.

Or you were born into a country that didn’t allow the privileges that I had being born as a white male in North America. So legitimate or not, you’ve got to become an expert at understanding how to convince yourself that you can do anything. And that really is the first big step.

The second step, I would say, Robert, the reason I was able to get this off the ground is because the highest form of leverage in the world that can be deployed the fastest is capital. And so I went straight for that in the form of sales, you can also go out and try and raise capital, I didn’t even know what that was back then. So I just knew how to sell. And so once I had the money in my bank, I could solve essentially a lot of my other problems using that capital as leverage.

Specifically, I was able to go tap the entrepreneurial *inaudible* at Virginia Tech and hire using my money and giving them equity in the company, a developer to start developing the tool. And so anyone listening right now, who is a business person who says, “I’ve got this brilliant idea, but I just can’t get a developer to work for me.”

Well, stop complaining. Go drive pre-sales and many developers want to work for you when they see you, when you have proven that you actually have market for your business. And you have done that and validate that by getting pre-sales.

Robert Leonard 6:02
Yeah, that’s an amazing idea. No one wants to go work for a company that has no traction or no proof of concept. So by getting those pre-sales, you instantly increase your credibility and want to attract more people. So I think that’s incredible. Now, you raised all that money before you even had a product. Did you have any doubts in your mind? Did you have any worries or concerns that it might not work out? And what would you do about that if if that arise?

Nathan Latka 6:27
Well, it didn’t matter. Because when people sent me the money via PayPal, I said, I need six months to deliver the product. And if I don’t deliver you the quality that I expect right that I want to give, and I’ll refund all your money, right? So they were expecting at the end of six months, either a great product or their money back.

That six months bought me the time to see how much I could sell to then determine if it was worth… give me time to go hire a developer to build these things. So it didn’t actually matter whether it would work out or not. You can’t lose by driving pre-sales.

Robert Leonard 7:00
So did you wait until the end of the six months before you hired a developer? So that in case you had to refund some money, you hadn’t already spent it on a developer? How did that work out?

Nathan Latka 7:09
You know, it’s a binary decision, right? So I was basically thinking, if I can’t drive, you know, $5,000 of sales of this thing, it’s pointless for me to go try and build it. Once we pass that it took me about two and a half months to get $70,000 in pre-sales. I then knew it was worth it, that 70 grand I want to keep so it was worth me going out and spending 5 or 10 grand to actually deliver and build the products. And so it was a… it was a binary decision. It wasn’t like I hired a developer, and then still potentially refund and stuff. Once I made those capital expenses expenditures, I was all in. I was building the business.

Robert Leonard 7:43
Awesome. Yeah, I completely agree that you got to be there all in, or you can’t have one foot in and one foot out, you have to be all in to really make it work.

Nathan Latka 7:51
I was still cheating a little bit. Because I had a safety net. I wasn’t actually all in. Because my parents were still saying Nathan stay in school if it doesn’t work out. Your safety net is your degree. And I’m going, you know what? I’m realizing if I really want to make the company take off, you have to actually cut your safety net, because then you have no choice. You either fail and you die. Because you have no safety net, right? Or you use that as a motivation to drive the success. And so I actually dropped out and cut off my safety nets. And that’s what helped me make sure this was a success.

Robert Leonard 8:20
eah, so you really, really had to be all in on that. And that’s what brought you to drop out. You knew that you wanted to be an entrepreneur once you got that bug. And you were pretty still early on, you were only a junior. What about for somebody who didn’t know so early on? What advice would you give to someone who didn’t realize they wanted to be an entrepreneur until maybe they were senior in college or even a few years into the corporate job?

Nathan Latka 8:41
I mean, everyone’s infatuated with the headlines coming out about like entrepreneurs. Everyone sees that Elon Musk and says, “I want to be an entrepreneur” That not once crosses my mind. All I think about is, is there a problem? Can I solve it? Can I sell it? And can I build something around it? And then how do I get the resources to actually do it? And so someone listening right now sitting in a corporate job, maybe you’re a millennial, you just graduated, you have some debt, and you’re working on a great job at Citibank. Great. Stay there.

What I would encourage you to do is always be increasing your optionality. And what I mean by that is, make sure whatever you’re making at Citibank or whatever your full-time job is, it can pay off, obviously, high-interest debt, right? So if your student loan debt is whatever, 15, 16, 18, 19, maybe higher percent APR or credit card debt, 20 or 25% APR, pay that, That’s of all all first.

But then try and keep a delta between what you’re making and what you’re spending on fixed expenses like gas, shelter, things like that. Keep it as big as you can and start saving. And once you get to the point where you’ve got like, 9 to 12 months of savings in your bank, meaning if you quit your job, you could survive with no extra income for 12 months. That 12 months is basically your time to go take a big risk and try and launch something new.

And so that’s what I would articulate to everyone, in terms of being an entrepreneur. If you really want to own your own company and being an entrepreneur, there’s nothing wrong with having a full-time job creating a cushion, and then going out into the world and looking for problems to launch in that 12 month period you bought yourself.

Robert Leonard 10:04
I agree completely with that. And I think that’s where a lot of people, millennials specifically, get in trouble with with entrepreneurship is they think that they that’s all they can do. If they have a corporate job, and they start building a business, they’re not a real entrepreneur. And I think that’s not necessarily the right way to go about it. Like you said, you have that cushion, and that can help you.

And that reminds me of a Mark Cuban quote I listened to and I think he might have said it on Shark Tank or another interview he did. But he said work a job that pays you as much as possible, but requires the least amount of work. And while you’re at that job, you can then use your free time to build your business on the side. And I think that’s a great, great way for entrepreneurs, like you said, to start building their business.

Nathan Latka 10:45
Yeah, what actually usually happens is people are lazy, and you start increasing your expenses with your income, and you never build a cushion. So then you get locked into that job. That’s actually what will happen in 99% of people listening to this podcast, the 1%, that escaped that rat race will live with the delta where their expenses are lower, they’re living less luxuriously, however, you’re buying future freedom by doing that.

Robert Leonard 11:09
If you’re working in a corporate job, and you’re not saving anything, that’s not helping you get towards building your business.

Nathan Latka 11:14
Exactly.

Robert Leonard 11:15
So many people think entrepreneurship is very risky. But in your book, you say the opposite is actually true. Because when you’re an entrepreneur, you’re generally not relying on just one source of income. When you’re in a corporate career, you’re fully invested in just that one source of income, your job. And if you were to lose that job, you’ve lost all of your income. Talk to us about the idea of why people shouldn’t focus on just one thing. And what people who don’t want to leave their job can do to better diversify their income.

Nathan Latka 11:40
There are many best-selling books out there. The one thing that say, focus on one thing, you can’t multitask, it’s dangerous. And these are like best-selling books. And so you would believe that this is the right thing to do. When you actually put this in our microscope and practice, you realize it’s actually very dangerous. And then you say why did that rule exist in the first place?

So here’s why these rules typically exist. People that accumulate wealth and power, they climb the ladder of success. The only way they lose that is if someone challenges them. So Robert, true or false? If you just did x, y, and z and you made 20 million bucks, do you ever want anyone else to know what x, y and z is? If you can keep making 20 million bucks following that same thing? Usually, no.

Usually, you’re not going to get an info course teaching someone how to do that because then you don’t make the 20 from going and doing XYZ. One of the rules they’ve sold the masses, to make sure that the masses can’t claim that success, is they say, “Do one thing.”

If you want to build wealth and really be a capitalist without any capital, you need to figure out actually how to do multiple things at once. And if you’re still not sold on this kind of idea, you know, Robert, I think you’re in Boston, right? Boston has a lot of bridges, right?

Robert Leonard 12:46
We do.

Nathan Latka 12:48
Okay. So if you and I are like driving up to one of these bridges, and there’s this big sign that says, “Robert and Nathan, warning! If winds are at least 20 miles per hour, there’s a chance this bridge might fall or fail. We’re going to go over that bridge, there’s a single point of failure if the winds are, you know, are up at two miles per hour.

So engineers build bridges with like nine points of failure, nine things that have to go wrong at the exact same time for that bridge to fail. And so the question is, why do in our lives, we build our lives around a single point of failure, a single paycheck, a single boss, right? A single job. You actually want multiple points of failure. And that’s why I argue aggressively for multitasking.

Robert Leonard 13:31
In your book, “How to Be a Capitalist Without Any Capital,” you recommend people copy their competitors, rather than come up with a revolutionary idea. But if you’ve ever watched Shark Tank, you’ve likely seen entrepreneurs get criticized by the Sharks for not having an innovative enough idea or having too many competitors, and then have that way of thinking and agreeing to do. What is different about your approach that the billionaire Sharks aren’t getting? And how can it be successful?

Nathan Latka 13:56
Lori Greiner has sold many products on QVC, right? Where her curling iron has one little microscopic thing different in the patent, than the 7000 other curling irons out there on the market. They use the same heating technology. 99% of product is exactly the same, it is a copy of all the competitors. But she has that 1% difference. Plus, and this is key, the distribution channel with QVC to push that product through. So the reason I say copy your competitors, because entrepreneurs when they start out with a new idea, many people will see something in their local towns and they’ll go, “Oh, I really like how that restaurant set up their menu, but I would change this one thing to make it better.”

And so to start your own thing, you should just go replicate that exact restaurant. And when you replicate them exactly, then add that one twist that you would have improved. Most people won’t do that, because they’ll be worried about what their friends think, by the perceived notion that they are copying the neighboring restaurant.

And so my point is, I want everyone to give themselves total and complete permission to rip off exactly copy competitors. Because you’re essentially taking advantage of mistakes they’ve already paid to learn. You’re saving yourself time, energy, and money. And then you’re going to say it’s unethical, Nathan, but here’s the trick, and then add your own twist that makes it better. And so I think that that is a much smarter way, Robert, to build a business.

I’ve done this with all my companies. I’ve never invented anything new. And I know your audience is very smart, but I’m willing to bet none of them have $10 billion and are going to put someone on Mars and invent the brand new idea. They should all for their first couple ideas, copy and out-execute.

Robert Leonard 15:34
Yeah, I agree completely, especially if you’re starting with not too much capital. Why invest in research and development? Why try and find out if the products are going to work? Why do all the market testing, things like that? You already have somebody that’s done that. Use what they’ve done and execute better. And like you said, some people might feel it’s unethical, but really, a business is a competition, and you’re in that to compete with the other company, and you’re going to just try, do it better, and make a small change to do it better.

Nathan Latka 15:59
And by the way, rich people do this. Facebook, via Instagram, rips off every Snapchat feature, like exactly rips it off. You don’t see Mark Zuckerberg’s friends going, “Oh, you know, you just made another billion dollars doing that. But man, you’re a bad guy for copying Snapchat.” No, he’s trying to kill Snapchat. So most people that use this excuse of like not getting started because they think their idea is too close to someone else’s, it’s exactly that, it’s an excuse. You could have confidence in your ability, but have confidence in your ability to out-distribute your competitors. And that’s actually where I think most advantages are today, Roberts. Actually in the distribution channels, not the products themselves.

Robert Leonard 16:37
Going back to Facebook, Facebook wasn’t the first social network. There’s MySpace, you know, and they probably weren’t even the first and look at what Facebook did and look where mySpace is today. So arguably, one of your most controversial ideas is about goal setting. You believe goal setting is keeping people broke. Well, numerous other successful people have touted how important having goals are. How are goals keeping people broke and what should they do differently?

Nathan Latka 17:01
These people that sell the idea on setting goals are generally people that first, are not very wealthy themselves. And they have an info product about how to like hit some goal, whatever it is, and they want to perpetuate this idea to sell their product. Here’s the issue with goals, they, by nature, have start and an end date, right? If you are thinking right now, I want to start saving up because my goal is to buy the car, buy the house or buy the watch,. Then when you hit that goal, you then have to reset and hop on to another goal. So first off, we’re assuming that society has the ambition to do that, which is a big assumption, by the way.

The second thing is, is you’re not actually creating any underlying long term value that will consistently add value to your life without you putting more time and energy into it. So what I tell people to do is, instead of focusing on the vacation, or the watch, or the house, I call it the golden egg, you actually want to focus on the golden goose, right, and make the goose healthier. Make sure the goose is working out every day, make sure you’re feeding the goose the best protein bars money can buy.

Because if you do that, the goose will produce more golden eggs faster without even thinking about it. And so the idea here is to create systems that layer on top of each other to keep generating this output. And before you know it, you build great systems, and you’re gonna have a new million dollar house basically created for you every single week, if your systems are creating that much kind of economic value.

And that’s where actually compound interest starts coming into in terms of Warren Buffett, and now he thinks about compound interest. Before you know it, your goose is promoting and producing so much economic value, you don’t even know how to reinvest it all. It’s coming out so aggressively. So systems, not goals.

Robert Leonard 18:36
How does someone stay on track then if they don’t have goals? How do they know what they’re reaching for if they don’t have a goal to reach towards every day?

Nathan Latka 18:45
Well, first off, we are forced into a lot of goals. Colleges in a very… they forced you, Robert, you know freshman year they’re saying commit to a major, pick a major. I don’t know what the heck we want to do as freshmen in college for the rest of our lives. That’s ridiculous. And the idea that we’re going to do that same thing the rest of our lives anyway, is like slim to none. In fact, the likelihood that anyone listening right now is doing, in their first year out of college, what they studied to do is probably slim to none. Very rarely is there a direct correlation between college and real life.

So my point here is when people are thinking about, like what to do each morning, it shouldn’t be like, how do I, you know, go to my nine to five, save up some extra money to buy that Rolex watch in six months. It should be what systems can I build today in my free time so that I can free up more of my time in the future and still create economic value.

And so the beautiful thing about building systems is you can actually feel them growing daily. Versus goals which happen like once a year when you hit them. And so this will look like your calendar having more free time on it. Right, you’re freeing up your time. This will look like you figuring out unique ways to turn $1 into $1.16, over 12 months, with the 16% return there via systems you’re building. Maybe it’s real estate or investing or friend who you are backing. And so the goal should be I guess, system-oriented instead of kind of consumer, you know, hunks of depreciation that on the form of a car or those kinds of products.

Robert Leonard 20:10
Absolutely. The systems help perpetuate…go forward and indefinitely,they help you build bigger businesses, build a bigger income, things like that. Whereas like you said, the goals, they have an end date. And once you’re done, you feel a sense of accomplishment, and then you’re not as hungry. You’re not as motivated to continue on.

Nathan Latka 20:29
The best goals, by the way, are almost the ones that are unachievable, because then you’ll always have that as motivation. And you will always have that as you carry your whole life to work towards.

Robert Leonard 20:36
Another hack you believe will help entrepreneurs find successful business ideas is to sell access to gold miners, that is sell products and services to other people or companies involved in popular industries or trends rather than participating in that market directly. How can entrepreneurs find these types of ideas? And if it results in a business-to-business model, which isn’t as common as the business-to-consumer model, how does an entrepreneur approach that differently?

Nathan Latka 21:00
So first off the way you find these is you read news headlines every day. Like, what’s hot in the news right now? I don’t know, cannabis or blockchain, right? Or some one of these things. You might be seduced to going after and building your own blockchain or cannabis company. But that’s actually very risky. But what certain is some form of cannabis will exist over a long period of time.

So building something like Flowtown, or Flowhub, which are accounting services, that support cannabis companies is actually a less risky, higher probability of success model to build around than the actual popular things. So the smart thing to do is sell the pickaxe, the tool that the gold miners need to have success.

Robert Leonard 21:40
And we saw that recently with crypto and Bitcoin. When people were buying and investing in Bitcoin, they were taking on a lot of risk while there was people who were mining those Bitcoins, and they were essentially selling those axe the gold miners. They weren’t actually participating in the high risk activity of investing in Bitcoin, but they were still benefiting from the trend.

Nathan Latka 22:01
I think the biggest pickaxe to the blockchain industry right now is Coinbase. Coinbase is not inventing their own token or anything. They’re just helping everyone manage the hot trend, and they’re taking little management fees, right? That is genius. Go back to 1983. That same version was Mr. Levi. You know, mining in the gold mines and is going “Oh my god, this is risky. I’m bleeding. I’m sweating. I’m in the gold mines. I’m never finding gold.” But every gold miner there is wearing these jean things. I’m going to create Levi jeans. Now today, no one’s still digging for gold in California with their hands in pickaxes. But everyone still wears jeans. That was the smarter business model.

So people should think about not getting into the trend today, but instead, selling into the trend. So don’t launch your own version of a fidget spin on Amazon, instead, launch a software that helps people sell more on Amazon, that supports the trend.

Robert Leonard 22:49
And I really like that comparison to Coinbase because it touches on one of your other points is copying your competitors. Coinbase is essentially a broker. So they’re essentially copying a discount broker model, while also selling pickaxes to gold miners. So they’re, they’re hitting on a few different things. And obviously, they’re having great success. Going back to Heyo now, it was once valued over $10 million, like you said, and you received an offer for more than $6 million to sell the company. But you decided not to take it. Talk to us through that thought process.

Nathan Latka 23:18
This was not like a sexy like analysis or anything. This is literally… my ego is huge. I thought it was worth more at the time. Okay, putting everyone in perspective, I was 21 years old, sitting my dorm room, cold $700,000 a year in revenue, with a $6.5 million all cash upfront acquisition offer in front of me. I thought it was worth more than I was. I mean, some of them will tell me, Nathan, I got rich by selling too early.

And see, I waited, I waited and waited. And because of that I didn’t get really rich, I got a little rich, but not like really rich. And so yeah, I passed a $6.5 million offer. You see my tax returns from two years later, in 2013, where the company was only doing that about $939,000 a month in sales. Sorry, a year in sales. I was at that point, 23 or 24 years old, and ended up flash selling the company for about $300,000 at $1.7 million in the bank because we had$ 1.5 saved plus $300 from the sale.

So the way I actually built wealth in Heyo, it was actually the salary and the 40 jobs I created as a 21 year old at Virginia Tech. But I learned a ton going through that process about wealth creation.

Robert Leonard 24:24
Now, do you think that was a bad decision because of the process you used to come to that decision? Or do you think it was because of the outcome, because any duke talks about how you can have a good process for coming up with a decision. And if the outcome is bad, that doesn’t mean you made a bad decision. It just means that the outcome was bad. If you hadn’t sold and the company and it went on to grow and was worth 20 million and doubled, you would have made a good decision. But you still followed the same process. So do you think it was the process that you used to make that decision? Or do you think it was because of the outcome that it was a bad decision?

Nathan Latka 24:56
The reason history and history classes exist is because you study historical decision making patterns, you then have to study their decision making patterns to understand how it influenced the outcome. Decoupling the two and saying no matter what decisions you made, the outcome validates whether they were good or bad decisions, I think, kind of misses the trees in the forest.

One of the things I could have done is guaranteed my outcome by taking the six and a half million dollar acquisition offer and chose not to. That was a guaranteed yes it would have happened versus uncertainty in the future where I don’t know what happened. So that’s the reason that I *inaudible that one decision making point. Now you’re right. If we ended up selling the company for 200 million bucks, I’d say “Oh, yeah, it was the right decision not to sell for 6.5 million bucks.”

Look, hindsight is 2020. And what I would tell you is looking back and analyzing that thing, the even based on growth rate at the time, I mean, we were getting like eight, I mean, that was like a 15 X on our revenues. If I did a little research at multiples, what other companies were doing, I’d realized that was a great multiple that I should have taken. It just I had an ego and I didn’t want to take it. And so I guess I would consider that a mistake.

Robert Leonard 26:01
Now fast forwarding one of your current businesses, the lack of SAS database where you talked about in your podcast, you take that data and put it into a database, and then so that it has a very interesting history and a strategy for implementation that I think our audience and potential entrepreneurs can learn a lot from. Before it became the aesthetic online database that it is today, it was just a spreadsheet file. This allows you to test the product prior to investing heavily in the venture, sort of like you did with your Facebook pages, and you’re able to get some sales before you really invest in it heavily. Talk to us about the strategy and how an entrepreneur can implement a similar strategy with their business ideas.

Nathan Latka 26:39
You’re always looking for the quickest way to get to market, right, that also cost you the least amount of money before you have to spend a lot of time learning some new skill. Right? And so I was, you know, the podcast was doing relatively well. I was asking the same set of questions like, what’s your company worth today? The valuation? How much do you pay yourself? What’s your revenue? How many customers? I’d ask them in different orders in different ways.

But I realized if I wrote a piece of code that analyze the voice data, and auto-generated this database, basically an Excel file, I could email private equity firms, VC firms, and other SAS CEOs who wanted benchmarking data, and see if they were willing to pay for this Excel sheet, which is basically free for me to create. I was just taking it from podcast episodes.

And so when we pre-sold, oh, gosh, I forget how many it was, but we were selling them $500, $1000, $5000 bucks a pop. I’m going wow, people are willing to pay for this Excel sheet? I could spruce it up a little bit and launch it as an online database, in getlatka.com, and convince people like investment bankers, private equity firms to pay for access for deal flow. And so that’s where we are today, we’re doing an incredible amount of revenue, selling hundreds and hundreds of millions of dollars worth of deal flow into those four entities I just described.

Robert Leonard 27:52
And you have an interesting pricing model for that. Talk to us a bit about how you price the access to that database.

Nathan Latka 27:59
Most data sets are only valuable when they’re exclusive. If everyone has the data, if everyone has perfect information, and they’re all acting rationally, they’re all rational actors, they all should do the same thing. So you want to actually reserve where you get data at, you know, access to it. And so what I’ve done is I price you know, anywhere from like 10 and 20 grand a month base for access to the data set.

And then one VC firm pays an extra two grand per month to block another VC firm. And that almost right as much revenue as what they’re paying themselves for the base fee. It’s being honest with yourself about like, what assets you have and then making sure your pricing aligns with it. A lot of people, they don’t have alignment between pricing and value.

By the way, some of the tech companies, Robert, and in the crash didn’t even have meaningful revenue, like much less profits. I mean, look at a company like Zoom that just IPO. Okay, when they went public and followed the Rest one, which was very recent here, they had over 350 million in top line revenue with about 15 million in free cash flow. So now positive EBITDA margins. And they did very well, they’ve got a great pop. Their CEO ironically thinks they’re overpriced.

But no, I mean, the SAS model does allow you to drive growth and still be responsible here in EBITDA margins. This is what someone called the E40 rule, which is a combination of your growth rate percentage, plus your free cash flow margin over the trailing 12 months. Anything above E40 in public SAS markets typically get pretty healthy multiples when they’re trading.

Robert Leonard 29:31
And you’ve had, you’re not just involved in SAS businesses, you’ve been in a lot of different business ventures and investments from startups, to buying existing companies, to real estate, and the stock market. If someone has saved a few thousand dollars, a millennial that’s maybe working a corporate job, and they have that to invest, what type of investment would you most recommend and why?

Nathan Latka 29:49
Whatever the direct correlation is to invest in yourself, right, whether it’s teaching yourself something new, lambda school, for example, is a great investment because you will learn something new that’s more marketable like Python. But in general, people that have a couple thousand bucks to spend on a new idea, just have the confidence in yourself to actually bet on yourself and invest in you. Don’t flush too much of it down the toilet, you know, on Facebook ads, or it just goes to Zuckerberg, right? Don’t spend too much of it, sending it to other people.

Robert Leonard 30:14
So would you recommend investing in yourself to learn a new skill over maybe putting that into starting a new business?

Nathan Latka 30:20
Well, you’re making the assumption that you need capital to start a new business, I’m arguing you don’t. Because of pre-sales, I’ve never launched a company that needed capital that wasn’t from pre-sales. I mean, so many people use capital as an excuse not to start a company. So I would just tell people resist the urge to spend that couple thousand you’ve saved on your new company, force yourself to drive pre-sales, which will validate your business idea,. If you can’t drive pre-sales, probably it’s not a good idea. It doesn’t matter if you have a couple thousand bucks to invest in it.

Robert Leonard 30:48
Yeah, that’s a great point, invest, maybe invest in yourself, to learn the skills that you need to do the pre-sales so that you don’t have to invest that money in the business. And then you have those skills forever to implement in future businesses. Nathan, you’ve provided a lot of great information here. Where can people learn more about you, your companies, and your book?

Nathan Latka 31:08
Yeah, look, first off, you know, I don’t want actually for you to pay for the book if you can’t afford it. I know a lot of people listening in my world are actually college students with a ton of debt, and they don’t have 27 bucks sitting around to buy the book. So there’s a massive free preview at capitalistbook.com. But you’ll see me talking about the book. I already have many times. I’ll do it more on on Fox, CNBC, and major outlets. But if you want to contact me personally, the best way is on Twitter, @NathanLatka.

Robert Leonard 31:34
And we’ll put a link to the website and your Twitter in the show notes so people can connect with you there. Nathan, thank you so much for your time today. Really appreciate you coming on the show.

Nathan Latka 31:44
Thanks for having me, Robert.

Robert Leonard 31:45
All right, guys. That’s all I have for this week’s episode of Millennial Investing. I’ll see you again next week.

Outro 31:52
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