134: Inside the Mind of Daven Michaels: The Outsourcing King

Today, we have my long-time friend Daven Michaels, a New York Times best-selling author, lifestyle entrepreneur, and founder of the outsourcing pioneer 123Employee.

Before Daven was dubbed the Outsourcing King, he started a business at the age of 15 and later dropped out of college to design clothes for music groups in the 1980s.

Inspired by his uncle, whom he considered one of the smartest men he ever knew, Daven built several businesses, including one that changed the way we do work and business today.

In this episode, Daven unpacks the profound lessons he learned from producing hit records to establishing a thriving outsourcing business.

He then shares the challenges and opportunities he faced in the outsourcing world, what business owners should outsource (or not), the benefits of living in Puerto Rico, and the importance of networking and mentorship for entrepreneurs who dream of going beyond a million.

Let’s get started!

Inspiring Quotes

• “If I could have no employees, that would be better.” – Brad Weimert
• “Outsource the things that are going to make you more money.” -Daven Michaels
• “Proximity is power.” –  Daven Michaels
• “People don’t buy needs. They buy wants.” –  Daven Michaels
• “One of the good rules of negotiation, specifically when you’re looking at the sale of a company or real estate, is if one party picks the number, the other picks the terms.”  – Brad Weimert
• “No matter what you want to do or are doing, there’s always somebody who has walked that path before you and probably done a better job. And if you can grab their coattails, they’ll drag you along the finish line much quicker.”  –  Daven Michaels

• Meet Daven Michaels 
• Success: luck or skills
• How to strike a great deal
• From music to television producer 
• Make something that people want, not need 
• Growing a business? Adopt this model
• What should you outsource (or not) to a VA?
• The impact of AI on jobs and humans 
• Why Puerto Rico is a haven for business owners
• The importance of networking and mentorship
• Keep up with Daven

Daven Michaels  00:00

Strategically I had a record label with the young lady by the name of Leila Steinberg that was really tapped into the hip hop scene. And Leila discovered Tupac. And when that happened that changed everything I had DJs I paid them almost nothing. They came for the promoters. Today DJ packages for festivals are you know 678 10 millions of dollars

Brad Weimert  00:18

You’re in music Hollywood production reality TV MTV now you’re starting a fucking virtual assistant staffing company,

Daven Michaels  00:26

Entrepreneurs are always trying to fill a need. People don’t buy needs they buy wants to know jobs or businesses are safe from Ai, customer service will evaporate VAs are going to be around by you’ll have one person to do the task of 10.

Brad Weimert  00:43

Congrats on getting beyond the million. What got you here won’t always get you there. This is a podcast for entrepreneurs who want to reach beyond their seven figure business and scale to eight, nine and even 10 figures. I’m Brad Weimer. And as the founder of easy pay direct, I have had the privilege to work with more than 30,000 businesses, allowing me to see the data behind what some of the most successful companies on the planet are doing differently. Join me each week because I dig in with experts in sales, marketing operations, technology and wealth building. And you’ll learn some of the specific tools, tactics and strategies that are working today. And those multimillion eight nine and 10 figure businesses. Life can get exciting beyond a million.

Brad Weimert  01:23

Daven Michaels It is awesome to see you here. I kind of wish I was there looking at your background in Puerto Rico, but I’ll settle for zoom for the time being

Daven Michaels  01:30

Yeah, not not fake. Yes, exactly.

Brad Weimert  01:33

It does actually look kind of fake. And I’ll give a shout out to Riverside because we’re not on Zoom, but remote. nonetheless. He liked Riverside, by the way of the options. I love it. And one of the things that I really respect about businesses that are established is when they’re consistently improving their product. And so like we were on Salesforce forever, and we moved to HubSpot, HubSpot, constant iteration, constantly rolling out new things,

Daven Michaels  02:01

And they just want you to keep to keep up with go high level, right?

Brad Weimert  02:05

Maybe Maybe, but the I mean, totally different scale with HubSpot, but certainly relative to Salesforce, it’s like, you gotta be kidding. You know, they’re just night and day. So Riverside is kind of like that, where they’ve integrated all these AI tools and editing tools on the back end to do things.

Brad Weimert  02:19

Off me and Riverside, Devon Michaels, we met a very long time ago. And I was when I was thinking about talking one, I just wanted to catch up with you.

Daven Michaels  02:30

You and I’ve been in the marketing space up, I want to I’m gonna say 15 years for me, I think it’s the same for you. Absolutely. And I have my core group of my very, very first teammates in this space. And you’re one of my oldest amigos let’s face it, you’re probably in love. It is a group of five.

Brad Weimert  02:46

Yeah, we met when you were just getting 123 employee going. And it took me many years to learn about your history before that. And so I want to get to 123 employee but what I found out years later, is that you had multiple crazy hit records that you had produced. And also like I’m talking names that everybody knew in that era, and still does in

Daven Michaels  03:13

my office, I don’t know if you can see the gold and platinum is on the wall there. Oh, yeah.

Brad Weimert  03:18

So yeah, let’s let’s let’s talk at the beginning. But before that, even though you are a massive EDM producer, electronic music events producer coordinator, I don’t know what you call it yourself. But give me give me some background on kind of how you dove into that because I want to get into business but like throwing large scale events is sort of business and sort of a kid that’s you know, wants to throw parties.

Daven Michaels  03:43

I’ve found for me the probably two biggest tools in my quiver, if you will, or my arsenal for business that I’ve drawn back on so many times time and time again, is doing events managing large groups of people. Oh, so this was run on top of zoom does it run on top of zoom? I don’t think so.

Brad Weimert  04:06

But this whole fucking AI thumbs and shit. I don’t like it.

Daven Michaels  04:12

So I’m doing advanced and MLM and I have a little bit of background MLM MLM is just it shows you you know how to manage and inspire people to lead. But my story was really the school of hard knocks. I had very little education. I started my first business so I graduated high school 16 started my first business at 15 did not graduate high school because I was particularly intelligent. It was because I was driven and I hated high school. I doubled up on my work, got out early, did a little bit of college, my business took off and I dropped out of college and that was that but my very first business I was designing clothing for music groups in the early 80s. And my bands had nothing going on they were all playing their garage. And an incredible thing happened MTV came on the air changed the face of music changed my life. So I was working with these bands had nothing going on with 10 months, most had record deals. Within a year. They’re selling millions of albums and I rode that wave and it was a wild ride. And it just put that in perspective. I mean, I would go on tour with these bands and my biggest fan had 800 People in concert with a year we went 820 505,000 10,000 25,000 50,000 stadiums a year, we had a band called Zod. That was our first band. Have you ever heard of Zod? No, no, because that didn’t happen. So so we we really formed this company because we had a band with a record deal. We’re like, oh my gosh, they have a record deals and you close like, we’re friends with them. Let’s go, you know, and so many entrepreneurs always chasing opportunity, right? This was an opportunity. We had no opportunities. We were just dumb kids, as Zot had a record deal. Let’s go Zott tank, nothing ever happened. You know, there was nothing happened, even though they had a record deal. But then MTV hit and then all of our band started at record deals, which was insane. And and so that’s how it happened. So we were designing the costumes, designing the clothes.

Brad Weimert  06:03

So how did you connect with the other bands? So you mentioned they weren’t like MTV was the catalyst. How did you know?

Daven Michaels  06:09

That? Okay, so the first thing was the Thompson twins. So they were in, they had a big band. They were in the UK, they put out three albums. They didn’t have a lot of success. So they all split and then three of the group three of the members, Joe, Tom and Alana. They decided to start a new version of the Thompson twins, three of them, and they a little hit in the UK called lies and then pulled me now came out, which became an anthem, of course, you know, hold me now it was such a monster hit that was like the catalyst and then people started to hear things. When I opened my showroom on Melrose, the night before we opened, we had a huge fashion show like huge fanfare, we had press paparazzi celebrities. Next day, we opened for business, we had no customers, day to no customers, a three crickets day for customers, but no sales. And right around day four, my life began to flash before my eyes because I took everything I could beg, borrow, or steal and invested in opening the store. I mean, it was brick and mortar, there was no Internet back then. And if I failed, it was gonna take me a decade to pay back that debt, which was over half my life at the time. So it’s pretty frightening. So I at that point, I made the executive decision to start staying open late, not like 678 but 1112 midnight, because there was a restaurant slash bar next door to me. And I was just praying, someone would get some drinks in them and come in and buy something from me. So right around day five, it’s like 11 o’clock at night. Somebody comes in and buy something from me. So thank the gods, right. So that was step one. Day two, I went to run some errands, my manager and then we go like I had kept a couple of people in the in the showroom. And I went to run some errands and I’m driving down the street. And I see Jack Nicholson in a limo, you see celebs all the time on Melrose. So I go do my thing. And then I get back to the office and it was like, Oh, my God. And Jack Nicholson had been there and and he was going to the Purple Reign tour, he was sitting in the purple circle, and he bought clothes for all his friends bought out like half the store. And that was kind of Jack was like the catalyst that was the beginning. And, and then you know, word of mouth and foot traffic on Melrose. And we grew business.

Brad Weimert  08:15

And how did I mean did that just naturally through kind of being in the right place connect you to the other bands?

Daven Michaels  08:24

Yeah, right place, right time, right location, networking connections. You know, it was a small little incestuous group back then it was just getting going. It was crazy. There were things that I loved and didn’t like about the business. Like, I was in retail clothing before that. And I thought that was going to be my life. And so my Uncle Mo who is the smartest man I ever knew told me I need to start a business. And I just did whatever he said without question because he was so brilliant. And he changed the trajectory of my life. So now I had a business, but I’m still waiting on people. You know, I was waiting on celebrities. Most were quite nice. But I didn’t want to wait on people. I went on my own because I want people to wait on me. You know, I was like, you know, clipping their clothes, you know, picking up their clothes, and I want to do that. So but I enjoyed it. I enjoyed the perks. I enjoyed traveling with him and going backstage and meeting celebs and having a lot of fun. And that was cool, but I want something else. So we sold that business and started a telecommunications company. humble beginnings. Very humble beginnings didn’t have that much really. But, you know, five years later, we’re in 60 cities across the US I sold to a public company. I was in the pager business, you know pagers, right. You and I are old enough to know pagers if you’re young and one pager, yeah, everybody had a pager? Pagers were the cell phones of the day, they were pre created cell phones, and everybody had a pager so you communicate with people and code. Oh, like I like to let people know as me or Yeah, yeah. So

Brad Weimert  09:55

1. So for the people that never use pagers. If you get a text from somebody, it comes from a number that, you know, when you get a page, you would page somebody, and then you would leave your codes, they would know it was you and you would page them the number that they could call back. And you go to a cell phone and call them back. But the code was

Daven Michaels  10:14

Did that because cell phones were so expensive is 50 cents a minute, you’re doing that save some money. So this was all pre cell phone, cell phones were coming out in a couple of years, I knew that I had to sell the company. Now the consensus within my industry was that cell phones will come out and more pagers would get sold. And initially that’s exactly what happened. But then I knew that eventually the bottom would fall out from the pricing model in cell phones and then pagers would evaporate. So I two years. First thing I did, we recorded by a public company. I remember they flew me out Santa Barbara way, a great meeting. They made me a cash offer. That was nice, but it wasn’t enough money to make me leave the business even though the clock was ticking. So I hired the number one business broker in my space that then was hired. And I said, Listen, find a suitor. And so he was working on it. There have been so much consolidation in the industry. So public companies were just buying up companies buying, there weren’t many companies left, they’d all consolidated. There were two potentially good targets to be buyers in mind. They’re both public companies, but small on the public scale, of course, big on a private level, but their their public. First guy was a crook. I just couldn’t do business with him. I knew that the other guy was a guy by the name of hell, everybody loved hell. We all want to be like how we grew up. He was like older 6070s. And I knew he was the perfect guy to buy my company and hire and worked on him for a year. Nothing really he was he really didn’t have an interest in one day out of the blue. He calls me, hell calls me says Daven and he said, Do you want to do this deal? Or what? And I’m like, Yeah, I want to do the deal. Is a great meet me at the windshields donuts, around the corner from my office tomorrow, like, okay, he loves donuts, so men in my windows, and I told him what my number was. And he said, You’re not gonna get that? I said, No, I think you will give that to me. I said, I’d say well, I’ll make it easy for you. Give me Give me some money. I’ll take a note. Give me stock in your company. And he was like, well, that I could do because it was primarily a paper paper deal for him. Right. And so in 45 minutes, we hammered out the deal with a company that took me six years to build on an on a windshields napkin. And the deal was done. So why they do the deal? Well, there had been so much consolidation, Hell, and this other guy, Robert, were the only two players on the block that hadn’t gotten swallowed up yet. And I felt like if all of a sudden he wanted to do the deal, and he didn’t want to do it for a year, I figured something was that I figured he was gonna get bought out. And it was it was a worthwhile gamble. I got some cash on the front end, I had the note, I had stock, the stock was the risk. And as a parting gift, how old 42 classic cars. So he also gave me a couple of classic cars give me a 1950 a pink Cadillac, and a 1965 Mustang with Pony interior, interior (I love it) and and then I went off on my honeymoon with my ex wife and the lawyers did their thing. And the deal was done. And I remember I went to pick up the first check from hell. And I was so excited because hell’s going to be my new BFF. We’re in bed together with partners. You know, we can hang out. But that wasn’t meant to be. So Hal had just gotten married to I think it like his sixth wife. She’s gorgeous. And he was ecstatic because she had even more money than Hal had and Hal had a lot of money. So I remember I walked him out to the parking lot hell gets into his 1959 bright red Cadillac Eldorado convertible top down. And he literally they didn’t have bucket seats, at least like bench seats. I remember his girl gets in and nudges up to him, and he puts his arm around or any drives off into the sunset. And I just remember thinking to myself, that guy is the coolest guy ever. Year year goes by happens company gets bought out. My stock triples in that moment in time changed my life. But what really changed my life was Hal’s wife had a little stomach pain. Three months later, she was dead from pancreatic cancer. And it was the summertime Newport Beach and Hal I started hanging out. He called me in the morning, what do you do nothing. We go to the gym and then we’d have breakfast at lunch and hang out at the pool. Then we go the Yacht Club at night and pick up pick up chicks. And, and we were the oddest couple. I’m in my 20s and he’s like 70s But nobody cared. Everybody loved Hal young and old because he had these amazing stories. He was so colorful. And that was one life lesson right there is that you know, in our society, not necessarily in Asian culture, but in our society. When you get old you get invisible, right? Nobody wants to hang out with you anymore. Unless you’re super rich. And everybody wants to hang out with you right because you’re Interesting, right? And you’re and you’re probably relevant, right? You’re probably doing stuff. And everybody loves Hal, probably loved him more than love me. So. So that was great. But also Hal at a young age showed me what he was doing. He showed me how to he did reverses. So he showed me how to take a company, reverse it into a public shell take it public, and that was back when it was not as heavily regulated as it is today. And so that was invaluable and valuable to me.

Brad Weimert  15:32

Well, a couple things jumped out there from you. One, from the beginning time in place of the costume store, costume wardrobe entire store, that’s still relevant today. And not necessarily in the same way. But you need to be where people are. And that makes a world of difference.

Daven Michaels  15:53

For sure. Like being at events or what have you. Like, I totally agree with you. I think there’s there’s a couple of things here. One is proximity is power. Right? Absolutely. Right. So for sure. Also, you know, if you ask an entrepreneur about their luck, they’ll most of them will take credit for it. Right? They’ll say, Well, luck has been prepared to seize opportunity, right? I knew what I was having. And that is true. Absolutely. But also, I will say if you’ve had some success in your life, you’ve definitely been blessed with some good luck. I was certainly in the right place at the right time. You know, did I have something to do with it? Yes. But did I know what I was doing? No. And And did I have some luck? Absolutely. And I’m very grateful for that. Look, for part two, that is mentorship, right? Hal was one of my earliest mentors. And I’ve had so many astounding mentors over the time, no matter what you want to do or aspire to do or are doing. There’s always somebody that has walked that path before you and probably done a better job, right? And if you can grab them and kind of grab their their coattails, if you will, they’ll drag you along the finish line much quicker. Yeah,

Brad Weimert  16:56

I love that.

Brad Weimert  16:57

One of the things that I want to dig into a little bit is the structure of the deal. So you mentioned you had a number and how laughter you? And you said no, no, no, I think you will do this. And one of the I think one of the good rules of negotiation, specifically when you’re looking at the sale of a company or real estate, or really a lot of things is if one party picks the number, the other picks the terms?

Daven Michaels  17:19

Exactly. So in a deal. It’s either price or terms, right. So if you can’t get your price, he gets your terms and can’t get your terms. He gets your price if you’re a good negotiator.

Brad Weimert  17:31

Yeah. So tell me a little bit about the details. So you mentioned you got some lump of cash upfront, and you got less cash upfront because you got equity in his company, not equity, but stock in his company. So you banked on that being valuable in the future. What What was the note component of that sale?

Daven Michaels  17:48

Yeah, so I took I took a smaller note than I should have. It’s been a long time. I don’t recall that. I want to say it was probably 20 or 30%. I took more stock than I probably should have. I was young, I could take the risk but even then that’s not an excuse. It was just my my lack of acumen, you know, my lack of understanding of valuing valuing a company, I didn’t even understand I took the stock, I even understand how to value a company.

Brad Weimert  18:12

And the note was basically him paying you some remainder of the cash value over time.

Daven Michaels  18:18

Yeah, exactly. I think we did. I think it was like a few year notes. I think there was a short or an out as well. So the long time it was decades ago. And some stuff. Awesome. Cars, a couple of cars.

Brad Weimert  18:32

Yeah. Well, that’s the other thing that I would encourage anybody to do when negotiating is throw random shit in the deal. Yeah, totally. It’s amazing. It’s amazing. Like people are just like, Yeah, fuck it. Sure.

Daven Michaels  18:43

We were totally like, Oh, yes. And Bitcoin. Throw that in? Oh, yeah, I could do that. Sure. Yeah, absolutely. You know, what may have a lot of value for you may have less value or you no intrinsic value to somebody. Yeah.

Brad Weimert  18:59

There’s also one of the things that I’ve done on several real estate deals is asked for classy as we will Ultra, which is like two grand a bottle. And, you know, in the scheme of, you know, several 100,000 Or a million million dollar deals. That’d be fun cares about two grand. Yeah. 2%. And so people laugh it off. Yeah, for me, it’s fun. And like, I don’t max, you might want to spend two grand tequila,

Daven Michaels  19:22

right? You wouldn’t buy it for yourself, but it’s a gift. It’s perfect.

Brad Weimert  19:26

I might, but I probably should’ve so Yeah, exactly. Yeah, exactly.

Brad Weimert  19:32

So okay, that that particular business I didn’t even know about where does music production fit into this thing?

Daven Michaels  19:40

While I had that company. I had a dear friend of mine Beach, who were still friends. Friends decades later, DJ and I would go on the weekends up to La we were involved in the underground dance scene back then. That was the beginning of rave culture, free rave culture. And so we were involved in that we would go to the parties. These were small fledgling little parties. there’d be 500 people out on a weekend super underground break ins warehouse party. And beat said he was DJing. He said, look with my connections Dev, and your business acumen and some few bucks. He said, I think we could take this to the next level. And I was like, I’m in I was I was bored. We were still running the company, but but I was born and so be was breaking up with his girlfriend, he moved into my office, as we had shower in the office, pretty big offices, and started about 12 kids that worked for me. And nights, we would begin, we began the planning of what we thought was gonna be the biggest party in LA history. That was that was our goal, by of course, you know, some very, very smart planning and, and really some great business strategy, and some insanely insane luck, a twist of fate that happened one evening, we became the biggest electronic music event producers in the US, not just LA but the US in overnight in one evening, in one evening, and, and that really changed the trajectory of our lives.

Brad Weimert  21:10

Well, okay, so a lot of festivals today are on the backbone of the music industry collapsing, meaning that you went from selling records and albums, to selling singles. And so for artists to monetize today, there’s a totally different music scene. But what you’re talking about predates a lot of that, which is EDM underground festivals late at night, kind of ravey. So what was the general business model here? And what was like, what, who were the acts? What was the How did you construct that from a financial perspective and promotion perspective?

Daven Michaels  21:40

So the model was we charged $20 I think when I started, it was 15 and included unlimited alcohol, which was just beating him ever because everyone was doing everyone was doing drugs. Everyone’s doing drugs to the alcohol component didn’t matter. When I got married. I had 4200 People in my wedding, I charged $20 for people to come it was televised. But we were breaking into a big abandoned. Baker rebuild building was a bakery, industrial bakery building. We were breaking into it. So with somebody else. We didn’t know it. And so we outmaneuver them and got them out, but they’d been marketing it for months and months and months that it was going to be so we got their people and our people in overnight. Number one,

Brad Weimert  22:26

What was the hook man? What was the what was the CTA? Was it just being as party late at night? Or did you have a headline DJ or how did you get 15 to 20,000 people in event?

Daven Michaels  22:35

Excellent question. So this predated DJ culture. Okay, so essentially, back then I had DJs, I paid them almost nothing. They came for the promoters. Okay. So what had happened was it was all underground. So the promoters were all hiding. They didn’t want to put their name on anything I came along, said, You know what, I’m gonna legitimize this. And I’m going to put my name on the flyers. And I’m going to call myself Dab in the Mad Hatter, and I’m going to wear this big hat. And I had a whole brand, when everybody else was hiding. I was like, no, no, here I am. So they knew if it was a dab an event, it was going to be great.

Brad Weimert  23:09

Because you were breaking into a fucking bakery

Daven Michaels  23:11

Exactly where it was, it was illegal to the point where eventually it was legal. But in that transition times, it was very risky. I got in trouble. As the I got in trouble. So it was it was challenging. And so back then they came for the promoters, they, they look for quality events. So later what happens, I did that for years. And then as I began to segue out of the business, I still want to keep my fingers and so I was financing other other promoters, events. And I had a partner, his name was Dave de and and he was doing events in San Francisco. And we did an event there. And he was the first guy that said, Listen, we need to bring these DJs from the UK, because the UK was already already starting to blow up rave culture caught on in Europe 15 years before it did in the US. And so you had celebrities beginning to take shape in in the UK. So Dave was like, We need to bring over these DJs. Okay, he’s really just like Carl Cox, Paul Oakenfold. And he showed me the bill, he’s like, we’re happy to pay him 10k. And when I saw 10k, I was like, Are you kidding me? Like I was, we’re gonna pay a DJ 10 grand today, DJ packages for festivals or, you know, 678 10 million millions of dollars, anywhere from one to a million. I said, You’re nuts. He’s like, No, we have to do and I’m like, Okay, I mean, the the idea is, to me, it was preposterous, this idea of paying DJs exorbitant amounts of money, the idea of DJs being the star of the show, obviously, DJ culture took root and that’s that’s what we live in today. So I would have stayed in the business. I love that so much. But here’s what happened and the rest of the world has just began a steady ascent. In the US it would go like this, it would begin to like really take off and then it would die. And then take back off and it was dying and it kept hitting the ceiling for over a decade. I wasn’t willing to wait it out. Plus, I didn’t know that in a decade, it would eventually take off and might have never taken off in the US. So. So I bogey and I moved on to music. I wanted to be a rock star. And so I actually did my first album, I did a couple of albums. And it was cool because I could get distribution because I had a built in audience, I could throw my own concert and fill it up, right that nobody could do that. Which was weird at first because I would have concerts packed with people not not mouthing the words to my songs because I didn’t know him yet. That’s weird. It doesn’t exist, right? You go to a concert, it’s all your fans. They know the music, right? And then people started to ask me to write and produce. And I did that thinking I go back to being an artist, but that kind of took off. And then I had a record label with a young lady by the name of Leila Steinberg, Leila. And this was strategic because I wanted to get into pop and hip hop, and I was doing electronic, but I really felt felt that I could shine in that space. And it would, to me it was more challenging to dance music. And so strategically, I had a record label with the young lady by name of Leila Steinberg, that was really tapped into the hip hop scene, and Leila discovered Tupac. And when that happened, that changed everything. That was great. I had a great run in music, I would still be there today. But that shift happened that you’re talking about 50 million people were downloading free music Napster. And I saw the writing on the wall, I thought it was the end of the music business. And compared to what we were living in, it was the end of the music business. Because if you had a hit song, you put it on an album and you charge $18 for it. Whether the rest of the album was good or not. Now then it went to singles and went to digital. Well, people were downloading for free. So I was like, Well, how are we gonna make money doing this? Somehow, an innovative company, got people to start paying for music again, which was Apple boy talk about innovation to take somebody from free to pay. It’s unbelievable. I could never fathom that could have happened. But today pay people pay $10 for all you can eat. So you’re right, the money is no longer in the royalties anymore. Unless you’re like Taylor Swift. And even then it’s I mean, if it was back in the day, Taylor Swift she’d be making 20 times the money. So yes, now the model is merchandising, touring. And unless you’re, you know, in the top 1%, you’re not making money, EDM makes you may be taking into the top 3%. So but it’s different. Now, the the the playing field has been leveled, right? Anybody could be the next Gangnam Style, right? Or the next whatever. And the you the platform exists. And that’s YouTube. It’s there. You don’t have to have distribution. But it’s yeah, it’s a whole different model now. So anyway, so I started, I started I start producing Napster came out. We had a project that Tupac project two weeks before street date, it came out on Napster. And all hell broke loose. I mean, we were all being threatened by the by the record label in a lawsuit and it was bad. And what had happened was an intern, we went to lunch and an intern downloaded the master on an ad and, and put it up on Napster. And when that happened, I was like, oh, yeah, this is this is not good. And so I bounced, and I was like, I don’t know what to do, what am I gonna do, but I knew how to produce. And it was the beginning of reality television. I was like, Well, I can produce music. I wonder if I can produce television. So I hired a team.

Brad Weimert  28:30

Those are not the same?

Daven Michaels  28:33

Well, they’re very similar, though they are similar. They really are. Are they similar? Well, I’ll explain. So as a producer, your responsibility so if I worked with the band, my ultimate responsibility is to create a commercially like an excellent, commercially viable product, and bring it in on time and on budget. That’s the top high level view of what a producer does. Now dropping into that, what did I do nuts and bolts? Well, I get one of a few things or all the above, you want to write as much as possible for a couple of reasons. One is it’s just super awesome and fun and creative. But also you the money’s in the royalties, right? You own the music, you have that money. So if it was an artist that, you know, didn’t wasn’t a musician, they weren’t a lyricist. They were just maybe a great singer. And they looked great. Then I could write the music. I could write the words, and I was responsible for the finished product. Okay. If they were let’s say they’re a rapper. Okay. 99.999% and they write their own you know, rhymes right? They they write the rap, but most of them didn’t do beats didn’t create the music. So I would write the music and I don’t 50% of the master fitness around the world. Lastly, sometimes I would work with prodigies, just people that were unbelievably talented, which is which is great, but but I it makes my life I’ve worked way, way easier and less challenging. They were great already. I just had to make them greater. And I didn’t do any of the writing it didn’t participate in the royalties, just the production points. So to answer your question, if you look at it from a high level that I’m just responsible for managing people getting the best product, bring it in time, and in cost. Same thing in television production is the exact same thing. Okay. And we’re talking about being a musician and stuff. Yes, of course, if I’m writing the music, yeah, that’s different than producing so. So reality TV, besides being just hot, everybody, like, oh, you you’ve trained dogs. Great. That’d be a great show. Let’s go. There, there were just so many things to produce, right, so many potential shows. And what reality television did was it brought down the cost of production tenfold. Now, it’s 100 fold. But but it brought it out tenfold. You didn’t have to have a soundstage, you didn’t have to have gaffers lighting, people, huge budgets, I mean, the list goes on and on staff team, it just everything was infinitely less expensive. Now, I didn’t know how to do it. So I hired a team probably close to 100 people both part time and full time. And unbeknownst to them, they all taught me how to produce television. So I hired the staff, and they taught me. And that was a great education. I never really had any hits in television, because I was only there for a few years when I started a sleepy little company called 123 employee that now has 1000s of employees all over the globe, which I’m sure will talk about you. But again, those tools like as you know, in my business video, I made a major commitment to video before video was even hot, as you know. And now I have millions of followers globally that watch my YouTube videos. And I’ve produced top notch video for a decade. I mean, it’s comparative. You looked at my, my videos a decade ago, they look like chicken Baron now. But for the for that time period, they were always top notch. And my production value was off the charts because I came from a production background. So it served me very well. And Michael drop into the next thing. So

Brad Weimert  32:08

Yeah, so why did you so like as a transition point here. We met probably in 2012 2013. And you had an I think at an event, and you were you had started 123? employee? What year did you start? 123? employee?

Daven Michaels  32:26

I think we started the early days of one through three, I think it was 09. Okay, just just after the meltdown. So

Brad Weimert  32:32

You started a 09. Why did you pick that? So first of all, huge departure from the creative background. Right? You’re in music, Hollywood production, then reality TV, MTV. Now you’re starting a fucking virtual assistant staffing company.

Daven Michaels  32:50

Yeah. Like that’s sexy and completely unrelated. Yeah.

Brad Weimert  32:53

Why? Why? Why? Like business at all relative to creation? And why specifically the VA market?

Daven Michaels  33:00

Yeah. So so that whole thing ties together, too. So what happened was, I had a friend who had a music publishing deal in Asia. And he was buried in it. He was very busy. And he asked me if I would come in on it with him to help. And I did. And so that put me on that side of the world a lot. And then I started learning about Yeah, I’d see these contact centers, like, serving us customers. And I was like, well, let’s just hire a small team to do some work in one of our businesses. I don’t remember what the business was, maybe it was some sort of sales business. And so we hired a team and started doing that. And you know, we muddled through it for quite some time, but then it got to became effective when then we might have had maybe 20 agents or something like that. And one day, I was like, you know, well, why don’t we look at offering this as a service? The big companies were already doing it, they were outsourcing to India, like American Express and what have you. But But entrepreneurs were not, not at all, not one bit. And I was like, I, I think there’s a need for this. You know, entrepreneurs are always trying to fill a need, filling a need. You don’t want to fill a need, people don’t buy needs, they buy wants, you want to fill a want. Okay, so anyway, so I had this idea. We started doing it very early, bumpy road technology had not met the expectation yet. It was challenging. I didn’t have a market because entrepreneurs needed outsourcing. They needed help in their business. They needed leverage. There’s never been a time when entrepreneurs have needed help. Right? You need a team you need help, you need leverage, but they didn’t want it because they didn’t know it exists because it really didn’t exist yet. So I we started this company and we’re just too early to mark and everybody’s always like, Oh, your first market good for you? No. I always say you can always tell the pioneers because they’re the ones with the arrows in the back. And that was us. So this was our experience. So we’re just getting going. We’re a US company doing business in the Philippines, outsourcing US jobs. Okay, so back then outsourcing was a dirty word. Now it’s a household term, there’s nothing that’s not normal about it. Back then we had haters, we will get calls three times a day. Fuck you fuck you, we’re gonna kill you, we’re gonna come burn your building down like really hairy shit. Okay, so. So that sucked. So early on, I realized that, hey, if we wanted to have a market, we’d have to carve one out for ourselves some way. And so we adopted an educational model, which is totally normal today, not normal at all back then, especially for an outsourcing company. And so I began writing books. My 10th book is in the bookstores. Now. I’m a New York Times best selling author, we sold millions of books. We started creating info products, I started speaking on stages, we started doing our events globally, Europe, Australia, US, New Zealand.

Brad Weimert  35:55

Let me pause you there for a second because the today, you know, anybody that’s 25 to 35. Right now or younger, is hearing that and thinking well, yeah, no shit, that’s what you do. You create content, and it drives people to business. Yeah, anybody 35 and up remembers an era where this started, or maybe they’re not aware now somehow. But you know, the notion of get attention. And the rest will take care of itself is only very recently popularized at the time, investing a huge amount of time energy budget, to just produce content was a risk and a huge gamble. Distribution of client acquisition for you at the time when we’re talking 2009 10 11 12 13. How much of your energy went into content production? versus some other client acquisition model?

Daven Michaels  36:52

Yeah, I put. So I made a commitment to video back when there was no market for video. So I said, you know, I, I’m pretty sure this video thing is going to be huge, right? Kind of like this internet, I heard this internet of things gonna be here, right? So I thought this video thing would be huge. And so I think

Brad Weimert  37:08

I think the YouTube, the YouTube, the Google acquisition of YouTube was in 09, maybe. Yeah,

Daven Michaels  37:14

Yeah. And so then my commitment that I made was that I would take, I think, one day a month. So that was my original commitment one day a month. And I shoot lots of videos, lots of videos, videos, videos, videos, content videos, and we started aggregating them on YouTube and all the other channels. And so that was my commitment initially. But then, of course, there were the books, there were the info products, there were webinars, there were me speaking on stages, and speaking on others, and having our own stages, our own events. And we began educating our prospects and turning them into clients with, which is a methodology that we still use today. But I’ll in a minute, I’ll share the big payoff of that. So then, there were several tipping points in our business. One was adopting an educational model. Why? Well, first of all, it created a market for us. But the bigger distinction is back in the day that you’re talking about before the info marketing model, everybody marketing one to one, every market at once, when you ran an ad of sorts, whether they’re printed media, whatever it was, and that person called you or your sales team, and you sold them, okay? When we adopt this info marketing model, we went from speaking to, from marketing to one to marketing to many, if I wrote a book 10,000 to 100,000, people might read that book. But I did a webinar, we’d have hundreds of people on that webinar, if I spoke on a stage I’d have hundreds if not 1000s of people in the audience, if I did our own event, we’d have hundreds of people at our events by sold an info product, it’d be consumed by 100,000 people. And that, of course, blew out the business exponentially because every time I opened my mouth, it was too many. So we would make many sales as opposed to once that we do a webinar and the the shopping cart would go bing bing, bing bing, they you couldn’t do that one to one. So that was a major tipping point in our business. Next tipping point, was when Tim Ferriss book came out the Four Hour Workweek, because all of a sudden, we went from being villainized to now we’re the belle of the ball. Everybody wanted us on their stage. Everybody wanted to talk about it. Everyone wanted to do a webinar with us it was we it was the hot new thing. And we weren’t getting fuck you calls anymore. So we were able to go from defending ourselves to, you know, to sharing the message and educating so that was a tipping point one marketing one marketing made a tipping point to Tim Ferriss book Four Hour Workweek tipping point three, bring out my first C level which was visual as you know, the second big in my life. Why? Because we I think we were around employee 200 When we came on board, and I had a staff I had a team I have management I had a ton of ideas that I knew would move the needle in my business. But I didn’t have the bandwidth to do them. I was like, if I could just have another one of me, this would be big for my business. And.

Brad Weimert  40:13

Let me double click on that for a second, because you said you’re an employee 200. But for a lot of people, if they’re an employee 200, Holy shit, they should have done this way earlier than that. But your specific type of business, you were at 200 employees, a lot of them were virtual assistants in the Philippines. Right?

Daven Michaels  40:31

Yeah, they all worked out of our offices in the Philippines. But yeah, I wasn’t I wasn’t making the money of a 200 person company in the US, right. So right, I had to bite the bullet. There were times in the early days, lots of times that I paid my C suite more than I paid myself. Do

Brad Weimert  40:48

You know where you were in terms of revenue at that point, when you brought on Michelle?

Daven Michaels  40:53

Two and a half, three mil?

Brad Weimert  40:54

Okay. So that’s super helpful. Because, you know, for a lot of people that the headcount is always a slippery metric. Right? Like, yeah, a lot of people. I know, many entrepreneurs and many other business people that like, oh, how many people are in the company? And somehow it’s a judgment or a reflection on the company, and frequently in the wrong way. Like they think that more employees is better? Yeah. And my my general sentiment is, if I could have no employees, that would be better.

Daven Michaels  41:21

So and and yeah, I mean, I know, I see different models. So like, I know, a lot of people, they have tons of employees, and their profit margin is minimal. And they don’t make a lot of money. But they’re hanging on for that, that that major liquidity, right. And yes, which is totally understandable. And what may not be a super profitable, high growth company for you could be very profitable for private equity or somebody who purchased Yeah, right.

Brad Weimert  41:47

Yeah, of course. And it’s very specific on the model. And of course, if your business is offering VAs, that’s very headcount specific.

Daven Michaels  41:55

So totally.

Brad Weimert  41:56

So tell me about that part of it. Because I want to, I want to dig into kind of your life today, before we run out of time, but I do want to know, for, you know, it’s 24. There are tons of people that should, obviously AI is all the rave, but there’s a huge use case for outsource staff, and how to get things done. What should you outsource to a VA? And what should you not outsource to a VA?

Daven Michaels  42:23

Sure. Now one thing I will say early in our evolution, we kept the VA business going, because we were just so known for it. But then we moved into contact center businesses, because we’d have much larger clients, you know, doing customer service and stuff, it was much easier to manage. The virtual assistant model from a virtual assistant company. It’s a terrible model, why it’s for us. So you’re telling me this terrible model like for you as a client, if you’re going to hire a virtual assistant, great if you if you’re good at managing people and you have a good VA or team VA is fantastic. But for us as a company, horrible model, why? Because every client has a different set of SOPs, every single one, there’s no standardization, right? Most entrepreneurs or solopreneurs, don’t know how to manage people and employees, their bad bosses, hiring virtual assistants, hiring a team overseas always a great thing to do for most many businesses, you can definitely cut the cost down, which is great. And you can also have people working in different time zones, which is cool. There’s there’s all kinds of arbitrage that you can do. If you’re going to outsource, you really have two options. You can hire a firm like 123 employee, that’s we do it all under our roof, or you can hire freelancers, there are pros and cons to both. You’ll pay less money to freelancers. Why? Because you have to we have to keep the lights on itself. We charge a fee as well. If you’re going to use a center. I believe and people some people will just beat me on this but I believe it’s always better to go with a managed facility. Why redundant power, redundant phone, redundant management management accountability, buildings that can withstand earthquakes and hurricanes. All of this are common occurrence. Brownouts are common in the Philippines. You lose your power, you lose your phone because it’s Voice over IP, you lose your internet. You want to have roosters clucking on all your customer service calls hire freelancer, everybody in the Philippines has a rooster as well as India or most of the other places you’re going to outsource to. Also, if you want to scale you can scale a virtual team working out of their houses. But it’s it’s tough. Whereas if they’re all under one roof, you have management that could do that for you. The idea is higher once and then have that person scale your team for you. So I believe in using a managed facility. What should you outsource? If you ask all the Guru’s they’ll say outsource your busy stuff. I call that BS busy stuff. Okay? They’ll all say you know there’s only one You’re in the business, outsource all the busy stuff so you can focus on, you know, the most important things in your business. I disagree. So there’s always the 1000 tasks you could do every day in your business, right. But only a small handful that they create bottom line results that you can see tangible impacts on your on your revenue. I call those IGA as income generating activities, outsource those, outsource all the IG A’s you can effectively why because if you’re starting to hire a virtual team, you know, you may have a small business and it’s always bottom line, right, you’re always keeping an eye on your bottom line and I made a money. So outsource the things are gonna make you more money, so then you don’t feel it. So do that, get all that stuff dialed in, and then go back and look at all of the minutia that’s on your plate that can be outsourced or delegated to somebody else and then attack that. So that’s, that’s my suggestion.

Brad Weimert  45:57

Outsource income generating activities, then outsource the BS, the busy stuff.

Daven Michaels  46:02

Also, you know, we’re now part of a big company. And one of the reasons why is I saw the writing on the wall. A lot of this is going to get outsourced to AI for sure it’s already happening, customer service will evaporate. I mean, it’ll go from 100% to 8%. Virtual assistant services little more specialized requires, you know, kind of at that human element. So the VAs are going to be around, but you’ll have one person to do the task of 10. You know, this is a classic example as just as technology eight, the paging business technology will absolutely eat customer service and eat into virtual assistants has, for the most part, almost no jobs or businesses are, are safe from Ai, ai will replace almost everything and my top line theory for anybody that gives a shit, which is probably nobody, I believe that AI will solve all the problems of the world, you know, food, cancer, etc. And then annihilate all of us. And I give it 10 years. So and if you if you want to know why I just give you the quicky quicky. First of all, you know, of course we know that AI can fix everything. But we also know that so much of AI is open source and so many people want to kill us kill everybody. And, and so you know the things are going to happen. And then who knows, they just may figure out hey, that makes more sense to not have actual human beings need those skills. Now know most people think it’d take 20 30 years, but you know how rapidly things move. And that grows, that grows exponentially on top of itself. And so you look at how quickly things are moving in this moment. I give it 10 years.

Brad Weimert  48:02

So you have a bag of cash and guns that you’re gonna run with when that time comes.

Daven Michaels  48:08

Exactly, yeah, yeah, exactly. The cool thing is I’m involved in a couple of things today to add my fingers a lot of things and I’m involved in some things that actually I can’t be replaced it which I think is really cool. I’ve thought about I’ve spent a lot of deep thought could I be replaced here could ever be replaced or now. So that’s kind of neat.

Brad Weimert  48:26

Like what?

Daven Michaels  48:27

So give an example. So this segues into where I am today, right so um, as you know, about six years ago, I moved to Puerto Rico, they Puerto Rico my home. And I’m not an accountant, nor do I profess to play when on television. But if you are a US residents, you resident you jump through the legal hoops, you make Puerto Rico your home your tax home and do what you have to do. For those people that do that, they receive 0% capital gains on their investments, for the most part 0% dividends 4% federal income tax on their business. As you can imagine, this is a huge, huge game changer. And it attracts a really interesting mix of people. Now having said that, there are almost 3 million people this unlike 2.8 million in Puerto Rico, there’s only about 5000 of us have what they call act 2022 or act 60 that take advantage of this. So it’s not a lot of people know about it. But anyways, it’s been a big game changer. And it’s really cool. So I moved to Puerto Rico for tax reasons.

Brad Weimert  49:32

But so I want you to tell me the rest of this but real quick for those that don’t know, you mentioned these things, we’ll link to them in the show notes but act 20 and act 22 were two separate acts one was a 4% corporate tax rate that was Act 20 Act 22 was the zero tax on dividends and capital gains. Those get rolled into x 60. Eventually. And you said there are 5000 we do credit card processing easy pay direct does in Puerto Rico. So we will work with the banks there. And the bankers referred to you all as the four percenters. So,

Daven Michaels  50:08

I hear I hear the four percenters, the one percenters. Yeah, exactly. And yeah, and it’s been great. What’s been an even bigger benefit is, as you can imagine, it attracts some pretty happy people. And, you know, when I moved to Puerto Rico, I might have known a couple of billionaires, if you ask them if they knew me, they probably wouldn’t remember, today, I’ve got 20 on speed dial, we go jet skiing together, you know, it’s, it’s neat, and it changes the way you think of things I don’t I think a business totally different today. I the deal flow is pretty awesome. And on top of that, the indigenous Puerto Rico, people, people who’ve grown up in Puerto Rico are some of the loveliest people on the planet. So it’s really, really neat.

Daven Michaels  50:55

So to answer your question, one thing that I do that can’t be replaced by AI, so when I came here, I really become a big advocate for Puerto Rico. As you know, I love to build communities, a couple million people that kind of follow me and consume my stuff. And here in Puerto Rico, I started a little group. I started a little Cigar Club. Six years ago, when I first moved here after Hurricane Maria, we used to get six people that would show up to these parties in my house, because nobody was on the after Maria. But then, over time, I stripped out the cigar thing just made a kind of a social club, with the idea to bring Puerto Ricans, people who grew up in Puerto Rico, together with people like me, I call me Newer Ricans, right? To bring us together, for food for conversation for dialogue. Because from there anything is possible. If I say, Brad, let’s go grab a cocktail or Brad, let’s go grab a bite to eat. You’re not gonna say I don’t drink, I don’t eat. You’re gonna, you’re gonna go. And from there. As you know, all of our biggest deals have been from when we hang out, we’re doing things you and I have had some amazing experiences together, we traveled together. I created this to bring everyone together. When I first started, this group was 95%. Guys like me, okay. But my goal was I wanted to bring us all together. Fast forward. Six years later, we have over 1700 people in the San Juan Social Club. And it’s closing in on 5050. We’re at 60 40 60%. Guys, I’m a 40%. Puerto Ricans, and I do events once a month on the island, curated events at different locations just once a month. They’re free. I do them as a public service just to bring people together. And it’s been really, really great. Super fun. I just love doing it. I cannot. No AI is going to replace me there. It’ll help me but it won’t replace me. Okay. And then I announced last year, hey, we’re gonna do our first cruise. So this year, we had the first San Juan Social Club cruise and we had 238 People amazing downers on the cruise. Yep. It was great. It was on Virgin. And more than that, like it was our cruisers had a blast, but they did $110 million in deals between each other in a week. And how did that happen? I’ll tell you what the secret sauce was 75% of the people were people from Puerto Rico, amazing founders, executives, entrepreneurs, the other 25% were all my incredible friends that I’ve that I’ve met over the last decade from speaking in 51 countries guys exactly like you, Brad a lot of people that you know, okay. So it was the cross pollination that created this amazing result. What happened was, our people like you from all over the world, solid people in Puerto Rico were doing they got fired up. Our people in Puerto Rico saw what our people from all over the globe were doing, and they loved it. And boom, they started doing business and having a blast. So here we are. A year away from next year’s cruise, we set sail March 15 of 2025. We already have 400 people booked for next year. If I’m hanging out with a local Puerto Rican, they don’t have access to the benefits I have. They have some. So they don’t. So they can get 4% for their export business. My 4%, by the way, is only for export. So any businesses, I start on the island, I pay regular tax. But anything I do outside, I pay 4% federal income tax. If you’re Puerto Rican, you’re born here and what have you, you can you can do that. And unfortunately, Puerto Rico has not done a great job of marketing that. So there’s some Puerto Ricans that don’t think they have access to it. And as a result, there’s some resentment. They don’t have access to the investor credits, or the dividend credits, actually dividend credits. I’m not sure maybe they do. So if you’re hardworking Puerto Rican, and you’re paying a lot of taxes, there’s no way I can convince you that it’s fair that the rich guys are not. Right. That’s because it’s not fair. Okay. No, sure. But but I can show you that it’s working. And by the way, some of those benefits are available to them. Not all of them know that and there’s a lot of talk about making these just available to the Puerto Ricans, they absolutely should. I think they should not everybody does. That’s what I do. But guys, like me come over and start organizations to bring people together and give a lot of money to charity, and we make a difference. So my, my charity, my big one is momenti Boys and Girls Club. It’s a school here born out of the Boys and Girls Club. Last year, we gave the families of Amenti tune in 38 families, I think we give them Christmas, they couldn’t afford Christmas. And we bought 1000s, we did a toy drive 1000s of toys with kids in the 90s. So, you know, so we’re making a difference here for sure. I think, you know, some, some people who don’t understand, you know, think that we’re not, but you know, I see it, and we are and so and a lot of people think so and so for, for me, bringing people together, it allows people to, you know, connect and realize that people are people and collaborate and do good things. So it’s something that I love doing. And it makes me feel really good and helps a lot of people. A lot of people are really into it. And I’ll say this, this kind of cool real quick. I was at the gym the other day. And this young kid came up to me his name was Jonathan. I think he was like 25 He just got got out of the force of the Air Force raises it like that. And he came up he goes, Are you Daven Michaels? I go Yeah, he goes, Hey, I just want to let you know, I think it’s really awesome what you’re doing. He’s Puerto Rican. Because I think it’s really awesome. What you’re doing to bring Puerto Ricans together with with transplants because I think that’s so great. And I was like, boy, he made my day I was so psyched. So psyched and and really psyched. Because you don’t know really how you’re being perceived. Right? I that that’s my that was my goal to bring everyone together to to bridge the divide to get rid of tensions and get everybody really to love each other. But you don’t know if that’s translating. You don’t know if people get it. And that kid got it. He told the guy he’s like, I love what you’re doing. I was like, wow, okay, wow, this is great. So people are getting it. I get a lot of I get a lot of compliments. But but it’s it’s really cool.

Daven Michaels  51:12

It’s dope, man. Well, you know, relationships first kind of person for sure. Always have.

Brad Weimert  53:28

Well, Daven, you’ve had a wild ride and I’m looking forward to getting out there to enjoy a cocktail.

Daven Michaels  54:04

Come to cruise my man. Yeah, think about the cruise. Yeah, let’s,

Brad Weimert  57:16

Let’s talk about it. It’s, we’re long past due. But it’s great to get a little time to catch up and have our pseudo FaceTime right now. It’s great seeing you too, man. Where do you want to point people outside of the Puerto Rican Social Club? Or just that? Where do you want to direct people?

Daven Michaels  57:32

Sure. So um, if you want check out the you can check out the club but if you’re not in Puerto Rico, there’s really no point but you want to check out the cruise. It’s San Juan social cruise.com San Juan social Caruso calm. If you want to learn more about me I’m Devin Michaels on everything. Daven Michaels, so I spell it a little differently. So if you go to davenmichaels.com, we’re Instagram Davin Michaels.

Brad Weimert  57:58

Love it, Devin. Until next time, man.

Daven Michaels  58:00

Great seeing you my friend. Always a pleasure.

Brad Weimert  58:03

I hope you enjoyed the episode as much as I enjoyed doing it. I need your help. There are three places you can find beyond a million the podcast itself beyond a million.com which has some cool free resources including a free course and we finally launched the beyond a million YouTube channel. I would love it if you would go there and subscribe. And if you don’t want to, you still will probably enjoy seeing the visual content. Check it out. youtube.com forward slash at beyond a million