Exploring the Future of Smartphones and Income Generation with Dan Novaes
54:02 Share

in that sense because at some point they're like wait you're buying all of this stuff from us how many uncles do you have how many do you have and why do they need so many leather jackets in brazil

And now, Escaping the Drift, the show designed to get you from where you are to where you want to be. I'm Jon Gafford, and I have a knack for getting extraordinary achievers to drop their secrets to help you on a path to greatness. So stop drifting along, escape the drift, and it's time to start right now. Back again for another podcast of Like It Says in the Opening, man, gets you from where you are to where you want to be. And today, people.

beamed through the interwebs live into the studio. I got a cat that has invented something pretty cool. It is a, and no, it's not going to be an infomercial if you're thinking that. That's not what we do. We do not take paid placement on this show. It's not how this works. I just generally thought this was pretty cool and I want to talk to the guy about it. So he is the CEO of a company called Mode Mobile where he has created a way. His goal in life, what he's trying to do is stop

the income disparity the wage gap by allowing you to take your cell phone and turn it into a tool that makes money so let's talk to them let's see let's see let's get the ins and outs of that business and learn all about them ladies and gentlemen welcome to the program this is dan devas dan how are you i'm good thank you for having me john appreciate it you're good welcome man so dude you entrepreneurship is not something that is new for you it's not something you just started this is something you you've been doing your whole life right

I've been doing businesses ever since I was in high school. So it's just kind of like in the DNA. And even before I knew the word entrepreneurship was, you know, I have these little tricks that I would do, I guess, as a kid, you know, to try and make a couple extra bucks, I guess. What did your parents do that would cause you to be born an entrepreneur? Tell me about you growing up. Yes. I mean, I grew up in.

My parents weren't necessarily entrepreneurs. They were like parents that did allow me to have, I think, a lot of freedom relative to my friends. Like I never had a curfew. I never had those type of kind of like rule sets. It was very like, you know, independence driven. So I think that was helpful. I think actually where the entrepreneurship really came was, you know, I grew up through two very different environments my whole life. I grew up in Southern Indiana and Sao Paulo, Brazil, where I was from originally. My family's from Brazil.

And the very different places. And I think the areas that I really started to really notice that difference as I was like in my early 20s,

teen years or going into sixth, seventh, eighth grade was that things in Brazil were actually way more expensive. Things that I cared about at least, like an Xbox or a car or whatever because of this insane import tax. And every time I'd go back to Brazil, my family would be like, oh, can you bring all of these electronics? I'm like, why? Sure.

And so, you know, you realize that and you're like, wow, like these are two places that as a kid you realize are, you know, to me they're different, but they're also the same. It's like just people that I'm dealing with. But then I thought, wow, there's like, I could sell this stuff here, make a profit, vice versa. I could take stuff here and sell it there. And that's how my first business has started. And, you know, by the time I was a senior in high school, I was doing a couple of million dollars a year in revenue, you know, from one of those businesses. Just simply arbitraging electronics from here to Brazil.

That's where it started in Brazil. So basically, you know, the thesis was like, I was like a eBay, at the time, a titanium power seller, which, you know, for me is like a big title, you know, back in the day. And where it all started was, you know, I had a part time job that I was working at Polo at the time I had just gotten a car. And my dad was like this, I'm not going to pay for all these extra things that you want in your car, you want a sound system, all that stuff, you need to get a job. And so I went, got a job at Polo, worked for a week.

got like a $70 paycheck. And I had this like aha moment when this like tour bus of, you know, foreigners came from, you know, they're coming from Japan, I believe, because there's a Toyota factory by my town. And they spent $40,000 on that day. I'm at that store. And it was just me and one other kid that was there. I'm thinking I'm going to get this great reward for like, you know, dealing with all this on a random Sunday. And I got a $5 like Arby's gift card. That was like my reward, you know, and I was super pumped. And then I got back and I was like,

really upset, you know? But at the time I had this 40% discount at the store and I was like, man, if I just gave them 20%, I could have made AK, you know? And then, you know, not that that would have worked exactly like that where I sold my discount to them, but that's where I had an aha moment. I was like, Oh, what do I, why don't I just buy some of these items and then I'll sell them on eBay. And so I walked around the entire store. I had a Palm trio at the time and it was like the smartphone of the time. And I was like, take a picture of it.

in a palm trio, 600 and P. And so I would like take the pictures, get the serial numbers. And then I cross reference found this jacket. And this one Jack leather jacket was like selling there at the store for 180 bucks at this factory and outlet and online. It was like three 80. I bought three on emergency credit card, kept the receipt, you know, my dad's emergency card. And by the next day I had sold all three, you know, and I made 680 bucks or something. And I was like,

what the hell just happened? I just made more money in this day that I had made the entire month of me working here times five, right? And so I think that that's where that started thinking. And then I was like, oh, why don't I sell these items in Brazil? It's worth even more there. And so over the course of the next five months, I made like 30 grand in profit just by reselling Polo stuff. Eventually had to leave that job, right? It's not a sustainable model in that sense. Because at some point they're like...

Wait, you're buying all of this stuff from us. How many uncles do you have? How many uncles do you have? And why do they need so many leather jackets in Brazil? And so it was excessive, but it was like the initial, I think, starting capital to get started. And then, and where I started really noticing why I moved into electronics, it was like at the time is like when Apple iPod was getting really big and all this stuff. And, you know, internationally, this isn't as much of a supply chain issue now, but back then, this is like,

almost 20 years ago, or probably 20 years ago, typically electronics would come out in America first. And then everywhere else, it was like three to six months later. So in addition to that arbitrage that already occurs based on currency arbitrage, there was also the delay. And so I could be the first person selling something and then basically sell it to the wealthiest people.

of that country. And then I saw that that would be true in the UK, Australia, you could buy electronics and then like, you know, unlock the phones, like smartphones, you could buy like bricked phones that people didn't pay their bills on Verizon and AT&T, Black Bear, or sorry, Verizon and Sprint at the time here, and you can make a couple hundred bucks. So that's kind of like how the business started. And I literally, you know, set up a warehouse in the UK, then I moved to Australia, I did the same thing. And I was like hiring like my taxi cab driver, you know, that I

like a guy, I lived in Australia for six months in college and I literally hired a cab driver that was just like a good guy. I met, we interviewed him and then, you know, that's how I was setting this stuff up. So, you know, that's where it all started. But then, you know, got into software after that. And there was a whole long story of how we did that. But, um, I think that's where the foundation of entrepreneurship went and kind of what was going through my head at the time was, you know, uh, that this was like, for me, you know, I didn't know, uh,

I didn't want to work a regular job, you know, and I really came to that realization, probably like my sophomore, junior year of college where it confirmed after like two internships that it just wasn't made for me, I guess.

Well, I like to say that all great entrepreneurs are chronically unemployable. So that's not a surprising part of that story whatsoever. To be great at this, you just can't be able to work for somebody else. It's part of how it works. So you said you were doing this and then you branched into software. You said it's a long story. Good news is we got time. So how did you make the, so that was the first pivot was into software? Honestly, dude, the way that happened, it was like,

I don't know. Oftentimes the worst things in your life are usually the best things for you, I guess. So at the time, you know, I had, I did a bunch of different businesses in college while running this company. You know, I had a screen printing business. I had started a college music websites before Spotify and you're getting about a million people a month listening to my music playlist. It wasn't making a ton of money though, but right around this time I was,

I remember I was sleeping, which was fine. My warehouse, I get an email from our worker there and the warehouse was robbed.

you know, I didn't have any insurance on it or anything. And, you know, this is, I didn't have credit or anything. So this is all my money. I mean, it wasn't all my money, but I'm saying it's probably like 70% of my money. And apparently like there was a FedEx guy that then, you know, uh, and then this warehouse got robbed in the UK and he was so apologetic, but really there was no recourse. Right. And, um,

I remember thinking to myself, man, I just like wiped out like 70% of everything I've ever worked for. Um, at the time I'm now living in Chicago, I'm 22 years old. I just have graduated. Um, and I was like, how do I prevent this from happening? I was like, what a hassle. Cause like, you know, the thing with electronics is you might do a lot of revenue, but your margins, like maybe 10%, you know, 10, 15%, you're not making a lot of money on the stuff. Um,

And so that was a huge hit to me. And so I was like, well, if I do software, not thinking about hackers, right. But I was just like, if I do software, that would not be possible. Right. And so at the time it was kind of like, um, the iPhone was starting to get really big app store was getting really big. We, a lot of the traffic that we were having on our site was on desktop. So I was like, oh, I should make an iPhone app. Um, and you know, I actually, uh, went on Fiverr. Uh, if you, you know, if you know the website where you can get anything for five bucks,

Sure. Um, found someone that had posted a listing that was like, Hey, I'll make an app for five bucks. Uh, so it sounds very promising, you know, definitely. Uh, but yeah, I hit him, hit him up and was like, Hey, this is what I want. And then he was like, you know, I can't make that for five bucks, but I'll make it for 85 bucks. I'm like, you know what? That's a great deal. Let's do it. Um, was like, you know, didn't really have any expectation for it. Six weeks later, you know, we're Skype friends at this point in time.

I get an app and the app actually works. Not the best app I've ever seen. I post them on the app store and we send it out to the audience. And I made like 10,000

10 grand right in like three days. I was like, this is insane. We're turn on investment. What was the functionality? What did it do? So initially it was supposed to play music as like a music streaming app, but he didn't know how to do that. So what it did is it preloaded 10 songs and then it was like, you know, that game that you would play on, you know, you're kind of like Microsoft where it's like, it's like a little puzzle and you got to clean up the puzzle. So it's like a picture that's all broken. It's like early PC days. Anyways,

That's all it did. And it had like, you know, 20 of the favorite songs of the songs that people liked. And it would just kind of like, you know, kind of like a stupid game that was in there. That was kind of like a hybrid of the music and game. Very simple. And, but honestly, you know, had made that 10 K very quickly and was every day making a couple hundred bucks. I'm like, dude, I'm making more money on this. And I did this with a guy from Fiverr who I turns out, you know, is my co-founder still to this day. It turns out it was a 17 year old kid.

in high school that was about to graduate high school in the UK. And, you know, he was on Fiverr because it was his first ever project. He had just learned to code, didn't really, you know, believe in his skills and just wanted to work on a project. And then I was like, hey, listen, like I just graduated. You're about to go to college. You know, why don't you take a gap year? Come move to Chicago. I was living in Chicago at the time. And I had this idea. We're going to create apps without coding for people. And he's,

He did it, like took a gap year and like came, his parents allowed him. And we then started this company. We proceeded to struggle for a year. Did not, it's not like that story of like, oh, and then everything happened and it was great. And by, you know, we started making a little bit of money towards the end, but at the end he was like, oh,

You know, I can't take another gap year and we're not making enough for me to be sustainable. So I'm willing to work on this part time, but I got to go back to college. Right. So after that year, that's what happened. Did you know it's funny? I'm sorry. Something funny about that particular story you just told, which is one of my best friends is the founder of a company called V Shred, which you probably seen all of your social media. And his partner in that business is an English kid that he met exactly the same way.

On Fiverr? No, I don't know if it was Fiverr, but no, he just met this kid in England that was gifted with ad buying. And he was a kid. And he was just like, why don't you move to America? Let's take a shot at this. There you go. And here we are now. They have a billion dollar company. So yeah, pretty impressive. But just literally the exact same story. So I guess if you're listening to this,

If you want to start a great business, you got to find a high school kid in England because this is the second time I've heard this story. It's literally the second time I've heard this. Okay, there we go. All right, keep going. Sorry. Yeah, no. So it was a crazy time. We became friends and then...

He goes back to have his freshman year, freshman week, it's super fun, whatever. And he's like, but I'm down this one week to build this app. And I was like, listen, I have this other idea for an app. I think we can knock it out in one week. Let's try it out. And he's like, okay, I'm down. So we launched this app and it was basically Instagram had, I think had just gotten acquired by Facebook, right? It was like that billion dollar acquisition at the time, but it was still relatively small compared to what it is today.

This app was the first ever app that basically created Instagram as like an exchange system, meaning you could upload your photo and you could like someone's photo or you can follow them and you get a certain amount of coins for those actions. Or you can just buy coins. At the time, the way the algorithm worked on Instagram is the most likes, most follows gets to the popular page. Once you get to the popular page, you get a ton of organic reach. It doesn't work like that anymore. Yeah.

This app basically was the first time that you could do that without bots. And this app went out and the first day it came out, there was like four hours left in the day and every 24 hours the clock resets and it made like 700 bucks. I thought it was a glitch. I was like, someone came in here and probably went insane about that. The next day I see it rising through the charts like crazy.

you know, we're at like number four, you know, in the pay charts. And, uh, the next day it made like 12 grand. Right. And then the next day it made 20 grand. Right. And it was just organically growing, you know, had this really nice viral loop. Um, and then we were the 65th highest grossing app in the entire app store. And so every day we're making like $20,000 profit, you know, on this product. Um,

and it got to a point that I was like, look, I think you should drop out of school. Uh, we should, we should like keep building other apps. And he's like, listen, I can't get a visa because I don't have a college degree. Um, and so he's like, if we rate an investment, raise an investment round, um, you,

We can get a special visa called the O1A visa. It's like people of extraordinary ability. And so then I went out to go try and raise money and we were able to raise a million and a half dollars. We got Mark Cuban to become an advisor in the business as well at the time. And he dropped out of school and then we started this company. Three or four months into that app, Facebook tried to sue us. They were like, they sent us a cease and desist. They didn't actually sue us because we were using their private API. They didn't like what we were doing.

And so we kind of adjusted the way that that worked. But ultimately, you know, that's how we got started in software and then kind of ran a lot of different apps, you know, through the years. And, you know, that kind of led to, you know, what we do now with Mode is kind of all that learning, all those different businesses. And we sold a lot of the app studio and apps to other people along the way. But that's kind of like the story of those businesses.

you know, early twenties and, and, you know, the pivots along the way. All right. So, so for those folks that are listening, right. How many dogs did you have? I mean, did you guys just literally go on a streak of winners or did you, were there a couple of just dogs? I mean, the app builder was a dog and the entire thesis of that business. It's not that it was like that business. Some people made it work. Like I, I,

I just like wasn't built to be a founder. I think like that, because I was like, I've always been a mass consumer founder. I would say like every business I've ever operated has been like a B2C business focused on getting consumers in the door. That's like what I'm good at. That's what I like to do. Um, and so, uh,

So that didn't work. And then you have this consumer app and that did, and that provided the capital. Then we were like, oh, okay, let's make all these other apps. And we did these like celebrity apps. We were like the first ones to use, like we were going like Vine kids, you know, at the time Vine was big. So we were really ahead of a lot of trends.

And some of them made that money, but not to the scale of that first InstaLiker app. And that was actually a big life lesson, I would say, because if we just would have focused on some of the core value props that we were doing instead of wanting to aim for a billion dollar outcome instead of a several million or a figure. But I was so enamored with billion dollar outcome, billion dollar outcome.

And I just couldn't make it happen. And so eventually, though, it did lead to what became this business. So I would say probably like 20, dude. Like, honestly, this company has almost failed 20 different times. And even as early as a few years ago, like you're still dealing with those ups and downs because it's anything but easy. And then when you think something's going great,

Um, you know, in, in 2021, 2022, we had like an insane, even with mode, our current business, like an insane growth rate and everything's going because at the time we were making a ton of revenue off of like, you know, crypto companies and, uh, financial like neobanks that were super high valued and money's cheap. So everyone's go public. So they're spending a ton of money on marketing and that's how we make money is, you know, brands paying us effectively for marketing. And, uh,

In 2022, FTX happens, all this other stuff happens, Voyager goes bankrupt. That was one of our biggest clients. They own this millions of dollars. And suddenly my revenue goes away and my business almost like, you know, tanks. So that idea wasn't a dog, but it was also like the concept of what we were doing was working, but the market landscape changed. And, you know, the errors that I made was like revenue concentration. Like, oh, if 70% of your revenue is coming from like, you know, six or seven different people and then they're all in the same industry, something happens. It can completely take you down. That's a problem.

a hundred percent. And so you learn these things along the way of diversification and how to build a business so that you don't fail. And I think every year that you don't die effectively, the likelihood of your success like infinitely scales because you just get so much wiser, you know what I mean, of how you operate. Yeah. So what was the idea? Who came up with the idea for the current company, the current iteration of what you guys are doing? Yeah.

Yeah, with mode. So yeah, so this is how essentially it started. We had created a concept. So obviously we were in the app builder space. We kind of went from the start of the app kind of like boom, which was everyone wants an app to everyone's like, we don't need any more apps. Like honestly, if the restaurant down the street gets an app, like I'm going to have to freak out. You know what I mean? I don't want to download that app. And so then I was like, oh, okay, well,

we should build a kind of a super app that kind of brings all these services in one place and then we focused specifically on media at the time and so uh what ours specifically did was like we aggregated all the music services in one place so soundcloud spotify youtube all that stuff and uh it was this idea of like as multimedia all the super apps all those apps within it

ultimately didn't work. There was only one type of user using it. And this is actually how the idea started is that we asked these people, why are you using this product? And they all had one thing in common. They didn't pay for subscriptions. So they liked that it was free and that you can stream unlimited music. And at the time, the APIs of these services, so how we integrated, they didn't show ads in them. So it was like a weird hack to have an ad-free

app experience with a huge library. And obviously, they could change that at any minute. It was just unfortunate for us at the time. And then we asked them, why don't you pay? It's like, oh, because I'm budget conscious or whatever it might be. And they tend to have more time than they had money.

So we were like, oh, well, what if we paid you to listen to music? Like, would you be interested in that? And then everyone was like, yes, very interested in that. So we just put up a landing page. I don't know if you used to use Robinhood when it first came out, but they had this like referral mechanism that, you know, you could jump the line into it and they get like literally millions of installs on that. So we just put up a landing page. I was like, hey, we'll pay you to listen to music. And we had like 250,000 people sign up in a matter of like, you know, weeks.

And so we're like, okay, there's something here for sure. And so we focused the entire business on paying you to listen to music. Problem is that music is like a horrible business and it's really hard to make money doing that. So then that's how we moved into like gaming. And then we moved into other types of activities that you would do on the phone.

And before we knew it, we're like, really what we're building is like an operating system on the phone, focused on everything you do that rewards you, right? And if you're earning money to play games, to shop, to stream music, read the news, charge your phone. And so then that's how the whole concept was formed around EarnPhone and rewarding you for everything you do on this device and the 40 hours that you spend on average on your smartphone. That's only going up. So when you say that you... When you say...

you get paid for everything. So who's writing the check for this? Like who's actually paying? Obviously it's advertising obviously, but is it the, is it individual advertisers or the people that actually own the services that are being used because they're making money on advertising? Yeah. So, so the, the, the way to kind of think about it is like,

There are direct advertisers that will work with us. I mean, every app, when you're advertised, there's always a goal, right? And for your podcast, it might be you, you want people to download your podcast. You want to wear that. So you're willing to spend money on that for brands. Same thing, right? So if it's a game like a, like a candy crush or something like that, they want you to play their game and basically create a habit playing that game. And over time, you'll either see a lot of ads and they'll monetize that way, or you'll buy stuff in the game. And so, you know,

they'll pay us a certain percentage, just like they would Facebook. The only difference is that we reward the user per minute they play Candy Crush for a period of like a week or something like that. Vice versa, if it's like Robinhood is like the client, which we work with, their goal is for you to deposit $5 into a trading account. And with that, they're willing to pay like 100 bucks, say. And so we'll take that 100 bucks and

And we say, hey, user, if you deposit $5 into a brokerage account, we'll give you an extra 50. Robinhood will give you $50 in free stock as well. So you get $100 for opening up your account here. So that's how you align value because we're taking a little bit of that. You're sharing a little bit with the user, and then you're aligning the value with the advertiser. So that's basically how the model works. Yeah, it's kind of a digital affiliate program is essentially what it is. Yeah, and I think what you'll see is reward models are becoming way more popular.

like in the know now, I'd say, I think they were like, when we started this business, these kind of like make money products or reward products were kind of like, you know, gimmicky, I think. And, you know, there's still like, um, advancements that are kind of happening. But if you just think about the amount of time that people are spending on, you know, these devices, I mean, your attention and data is effectively, you know, being utilized to make trillion dollar businesses. And so we're just kind of sharing that value back with the user. Um,

And just doing every facet of your life that you could possibly think of. So, I mean, you guys currently have like 45 million users or something crazy right now?

Yeah, we've had over 45 million people download and use our products from around the world. I mean, a good portion of that is also international, which is still kind of count as like a beta kind of program because it just shows the interest right at the end of the day, because, you know, in order for us to be really successful at what we're doing, you need to have the advertisers because the advertisers are essentially, you know, the ones that are kind of fit fill in bill, you know, for those users. But, you know, most of that is organic, you know, in that sense. Um,

We've had over 45 million people install, use this product. And now the business is starting to acquire other assets and companies because we're essentially in the business of...

sending you to use the new TikTok app or the new game or whatever. And now we see an opportunity of being like, well, there are the TikToks out there, but there's a ton of these utility apps that are like a little game or some photo filter app or whatever. And we can buy those apps, send users into those products. And then now we capture all of that lifetime value

along the way. So it's almost like the PE like roll up model as well. That's kind of been very profitable. And then, you know, we're finding good cash line businesses and, you know, we bring them into the mode umbrella. I have an interesting question based on what's going on in the world right now, because this could be, it could be part of the equation, which is this, and you would kind of know, are your international users worth the same to your investors as U.S.?

do they value them more or less international users versus your us-based users? Um, us users are, I mean, it's in the value of, uh, of kind of like lifetime value us is the highest. Um, and the reason being is just because, um,

Fundamentally, the ad markets here are just the most advanced. The income per capita is the highest in the United States. And so you generally see it correlate to each country. Now, here's the thing that's really interesting, though. In the US, right now, our focus is on Android because generally that's more of a budget conscious population. But in the US, the ratio is like 50-50. Whereas if you go to a country like Brazil or

India or South Africa, whatever, you're going to get like 99% penetration for Android. So we just have a lot more people in those countries. You know, if in worldwide, I think if you look, it's like, you know, 1.2 billion devices or so are iPhones and there's like 6 billion devices

of everything else right and so it's just like a lot more people are using android devices and so you know there's nice arbitrages to be made because some markets more efficient than others you know well the reason i asked that was because you know i've said on this program since the tariff war started that you know the us consumer is the

Best commodity on earth. If you look at big business, it's worth more than anything else on earth. Yes. Because the value of that. I was just curious if in your model with your advertisers, they said like, okay, if it's US, we'll pay more for it because the long-term value of that is higher. Or if it's international, we're going to be a little less because we know we're probably going to get a little less on that.

Yeah, it's for sure like that. And, you know, even countries like Canada, UK, Australia, it's still like 80% of what you get in the U S generally. Um, you know, it, it follows that pattern, you know, as I'm sure. So you've gotten some, you've gotten some joint partnerships or some deals done with some big box brands. I mean, some big companies, I mean, that's my and Walmart and those things. How did you get those deals done? Yeah.

Man, honestly, it was every which way, I think, is the right answer here. Because it was not something I had...

I guess taking a step back, the thesis behind this was we started out as a software company and we're still a software company. I think one of the misconceptions that we're a hardware company, I think the main idea behind the phone was literally that when it came to that conclusion that what we're doing is effectively an Erno bus. And what I wanted to test out is if someone bought a phone,

that's value proposition was like, Hey, you're going to get paid to use your phone. Would that change the earning habit of some, right? And also, uh, the time you first open up a device, there's all these new apps that you install, right? And each time that that happens, um, advertisers have to pay for that, right? So as opposed to when someone downloads our app and you already have Facebook on there, there's no way I can monetize that action. Right. And so that was like the thesis behind why we launched our phone. And, um,

We launched the first one. I literally-- we only made 5,000 devices. And we just launched them to our own users. And we sold out of it. We didn't have it in any stores. I know nothing. And it's not like-- we just tried to do it in the most scrappy way possible. We then did the second device. I was like, OK, this one we want to get into stores. And the main reason why we wanted to do that

is just to also show that the model is possible because you know, our vision as a business is actually not to be, it's, it's more to be like Roku. If you're familiar with Roku, what Roku was able to do in 2015, like they had like seven attempts to go public and it failed every time. And then in 2015, they like really hit it and what they did, uh, differently. And you know, now they're 10 billion plus business. Um,

is effectively they license their software to TV makers like TCL, Panasonic, et cetera, and they get access to that distribution. So let the people that are great at manufacturing distribution, and then they do a rev share on your streaming habits and things of that nature. And so that's what we wanted to do. The problem is that anytime I went to a big carrier or phone bank or

It was just such an out of box model that people just didn't believe it was possible. And when they see it's an app, they're just going, "Eh, I don't really want to do that." Just put it in the app store. Yeah. And then they were just like, it just didn't have any credibility. So we're like, "Oh, we're going to launch it into the stores like Walmart, Best Buy, show the data, show it's possible." And that was the whole thesis. It wasn't to get a ton of distribution because

you know, of those 45 million, we're talking about tens of thousands of devices. We're talking about tens of millions of installs, right? And so the play there was just to show, hey, look, this cohort of user, this is what happens when you have an earned phone. This is what happens even with like our device, which is definitely not as good as like a Samsung device from our device, because I haven't been in manufacturing for like 30 years, you know what I mean? But you can show that people are interested in it. And that's really the future of mode. You know, it's really kind of this idea

where we're going to see things like an AT&T or phone or a Samsung or phone or a Motorola or phone or in other countries where, you know, there's there's phone makers that you've never even heard of here in America, like Oppo or Vivo that are literally like insanely like tens of billions of dollars business. But they're the market leaders in India or they're the market leaders in Africa. And so that allows us to license that to those people. They then launch our phones in their own country. And that allows us to really kind of take over that model and be basically the creators of

of that urban phone idea, just very similar to how Roku did for smart TV. What prohibits Apple from slitting your throat? Well, I mean, Apple is, you know, they're not really, it's, it's kind of a different core market, I guess. Cause you know, people that have iPhones, like,

they're not as budget-conscious. I mean, if you're spending your entire month's rent, a flagship device right now is like 2Gs, right? It's like, "Okay, cool. Yeah, you use this product for the entire year, you'll be able to pay for your iPhone and that stuff." And obviously, it's a good market. Don't get me wrong, we have solutions that we're thinking about actually of what we want to launch for iPhone in that category, but it just wasn't our focus area. And even on the Android side, I think that the general idea is like,

To build this business and to do it in the way that we've done it, it's very complex. It's not an easy business model to actually operate in because you're effectively creating money out of thin air. But I think the way that we also went about it was like, I don't see other reward products or survey apps or whatever as like,

competitors. My goal as a business is like, how do I create the most value for you through earnings and savings and value? And because those people want our users, they're going to pay money to us that allows us to increase awards. And if you can earn from their product, great. You should definitely do that. And so that's kind of like how the thesis of the business operates.

and why we kind of see that other companies want to work with us as opposed to like compete. Many people have tried to do this model. It's just not very easy to make actually work. - Well, speaking of which, I mean, dude, you've run up a giant business. Let's go back a little bit and talk about how you scaled. Let's talk about operationally scaling. How many people do you have now? How many employees do you have now?

Yeah. Team members, we have a little over like 60, 65 or so employees. We have a lot, a lot of more part-time people as well. Like, you know, we're very, we're fully remote model. So, you know, after COVID we decided to fully operate in that way. And so, you know,

we operate super lean. You know what I mean? I think that that's the one thing that you learn, you know, from those hardships along the way is how to make like some of our OKRs internally is like revenue per team member. You know what I mean? So we have goals, you know, like what is the revenue per team member? And then if it starts getting out of whack,

then you have to either create more revenue or be like, hey, look, are we being as efficient as we possibly need to be? But yeah, I mean, that's kind of how we think about it. What's more important in your business model is, I always call it offense and defense, right? Because you need, like, offensive money would be generating new relationships and generating new revenue channels. And then defense would be the developers that are making sure your clients get a great experience or constantly improving. What is your mix on offense to defense on your spend?

Yeah, I mean, people spend my highest cost as an engineer and product because...

Fundamentally, we have certain business models that are... The way to think about mode is we actually have three different divisions in our business. We have a media division, a mobile division, which is our core business. And then we have this money division, which is some of the stuff we're doing within the financial services space. And some of those divisions are way more profitable than others because they're almost like being able to use the resources. I'll give you an example.

when we were trying to find new revenue outlets and after that whole thing, debacle in 2022 that we had, that we had to kind of really pivot the business and find new revenues. We realized, Hey, you know, we have like 45 million emails that people, uh, you know, came into our service. And what do we know about this? Do you like to earn and save? Okay. Let's create some newsletters to do, to basically tell them about earnings and savings.

And now that's a mid seven figure a year business for us with extremely high gross margin, because all we're doing is doing something that like literally would just be an afterthought as a business person. Like I wasn't even monetizing emails, you know, at that time. And then it's turned into something. So, you know, that's kind of like,

Obviously that business line, maybe they're way more offensive on like sales and kind of getting new advertisers in. But the core business, you have to invest in like research and development. You know, you're like, if I wanted to operate just for pure profits, you know,

only profits like we wouldn't need the amount of engineering and kind of product team that you have but you but now we're very disciplined on like okay how do we spend and and where do we want to make those investments and how long are we willing to wait before an investment comes in um uh return on a specific product area and i think the other thing too is like you know 2022

the way you operate your company in 2021, 2022 with like the soft banks of the world kind of funny and, you know, $200 million rounds. It was like growth at all costs. Yeah. Growth at all costs, IPO, whatever. And then all the growth investors were basically underwater. Whatever you do, don't try to profit. Just don't make money. Whatever you do, don't make it. Yeah. Yeah. Yeah. And now it's like the opposite. Yeah. And now it's the opposite. And I don't know, we had to change a lot of our, um,

Like even the payback cycle, like we used to wait like six to nine months before we even got breakeven. And now it's like 45 days or less, you know, that we wait to basically, you know, turn a profit on the acquisition costs of a user versus, you know, six to nine months. Well, I was going to say, because you've got to be at a place now where you're being approached at people that want to be part of what you're doing from an advertiser standpoint. Like you guys have got to be big enough now where, I mean, the inbound calls are probably greater than the outbound calls, I'm guessing.

Yeah, I mean, it's both. I mean, you're getting inbound calls for sure. But I think anytime that you're setting up a new business line, you still have to go. I mean, it's like attention, attention. There's like so much happening at all times. And I think that, you know, you need to be able to pierce those new channels. And also it creates competition too, you know, in that sense. So I think like for us, like,

We are getting approached a lot of like, you know, partnerships and inbound, but we're also looking at, you know, what are other ways that we can grow our business? And again, going back to this, that concept I mentioned to you, like that's something that wasn't even my brain, like a couple of years ago, which is like this idea of like, you know, I'm in the business of like the moment that that action occurs, our revenue kind of ends. Right. And, and that's fine, you know, but yeah,

If you could capture the lifetime value of someone through a product that you build that people like, so that could be a game, that could be a utility app, whatever. And that business in itself already has good cashflow. Then you're basically creating like this insane kind of roll-up strategy. And you're kind of sending your consumers into a new product. You're getting those consumers and you're creating a really strong network effect. And I think that's what you saw with Facebook and acquiring Instagram or acquiring WhatsApp. And not every acquisition needs to be a multi-billion dollar acquisition.

position, you know, where we've seen a lot of opportunity has been like, you know, there's just these random teams, man. Like we bought this product earlier here in January, had 150 million installs, you know, about 2 million daily active users and, you know, like nine or so million monthlies. And the app was like doing like $4 million, almost $4 million in EBITDA.

a year, right? Team of four, team of four people, right? And overseas, total cost, 15K a month. And I was just like,

as possible, you know, and then we vetted it. Like we went through the diligence, vetted it, we came up to a deal term. It was under three X EBITDA, like the purchase. And, you know, there's these opportunities out there, right? You just got to find them. And then now we're growing that product, double its revenues. You know, we kind of took all of our insights and now we're creating that network effect. And so it's basically kind of- Because you can introduce your users to that. I

And their users to us. And then also then you have more spaces for advertisers to kind of like, you know, do that. Then you take your know-how of like, you know, data analytics, user acquisition, all the things that we know how to do because the founders that are building these businesses, I mean, they've crushed it in some way. Like they found product market fit, but they may not be the most sophisticated in all these other areas, right? Just because you hit like, you know, gold once doesn't mean that it's going to come again. It's kind of like, you know, even thinking my story when I was 20,

22, right? 23 with my co-founder, we built some app that was literally spitting out five, 600 K a month and free cashflow. I got lucky, you know, it just, you just hit it like, you know, at that time. And so, um, and, and so I think that like, that's a really interesting opportunity. If you look, there's a company called, um,

Actually, you should check out this guy because I think you're a curious guy if you haven't heard of it, but there's Constellation Software. It's like the billionaire that no one's heard of. He looks like Gandalf. His name's Mark Landor. He has this huge Gandalf beard. There's only two interviews...

two interviews of his on the internet. And I tried to find all the content that this guy says, but basically he has built a $70 billion business. He raised $20 million once, that's all he's raised, and then built a $70 billion business that's publicly traded in Canada. And that's what's the most insane about it. But they acquire like a thousand companies a year and their business model is on VMS software, which essentially is called vertical market software. It's like

They make super neat, they acquire companies that make super niche software. It's like, you know, the, you make it from like tennis courts or tennis clubs in like Florida. And so there's not a ton of clients, but they're super profitable, but it's like one to $4 million businesses.

These guys go and acquire thousands of those a year. And they have been able to do that for the last 20 years. And that built a machine that just spits out so much cash. And it operates in a very decentralized fashion. And so that's the type of stuff that's like really kind of inspiring. Like when I see the future of mode going into, which is really like, you know, we have this great ecosystem of, of,

where we have users, they're incentivized to go try out new products. You have, on the other hand, a bunch of these small little apps that, you know, this is a great radio app, this is a great photo filter app, this is a great little game. And they're cashflow positive. You bring those things together and then essentially create the network effect and then you could create this monster, monster opportunity across multiple different verticals.

But see, like one of the things I always talk about too, one of my favorite things to do is when we are going to get a new vertical, I simply find the best people that I can find in that vertical. And then I direct all of our existing client base to that vertical. And then when I can become more than 50% of revenue, we become their partner is what we do. So you can now do the same thing and acquire, like you can say, hey, we'll push our people, your little product. And then if it's working, we can roll it, you can roll them up.

Yeah. I mean, that's essentially the, I mean, that's a publisher model. I mean, we're still experimenting with this and what this looks like for us, but you know, I think like a lot of, um, I mean,

anytime you have a channel, like a medium of like, uh, the ability to bring people in, you know, that's what creates that network effect opportunity, you know, and you look at guys like Tony Robbins, for example, you know, and I've done a lot of his, uh, stuff. It's like, you know, you can kind of see that he's selling you in some capacity, but I almost don't mind the way he's telling it to me. But it's like, uh, and if you do the core, it's like, you see like

all these different areas. And then he taps into all aspects of life. And each one of those was through a partnership and then he potentially acquires them. But that's how, you know, you have one guy who created one brand that then built a multi-billion dollar kind of empire, um, through all of these facets of, of kind of like, you know, what it takes to have a whole life, which is whole thing. I mean, I'm not saying that we're doing exactly, you know, his, but you can see that in many different places, um,

you know, being played out. And that's, I think, I think, I think you're seeing that all over the place. Cause that's like what Grant Cardone just did with Gary Brekka with the 10 X thing. A little messy. Apparently that's now working out, but, but it's the same idea. It's the same concept. So let me ask you this, let's change. Cause you got your people all over the place. You're remote. Obviously you guys have a high standard for what you expect out of your people. How do you, how do you hold that standard and create a company culture when everybody is scattered? What do you do? How do you manage that?

Yeah, I think that's a great question. I mean, I think like, you know, we have...

I mean, we've been doing it for like five years in a full remote, right? First, I think like, you know, one thing to say is like, I had a much easier time running a fully remote company than a hybrid company. Um, I think it's actually really difficult to run a hybrid company, uh, because some people have that in office culture and kind of those, that rapport and whatever, and other people that don't cause they're fully remote. And so when we decided to be fully remote, it was to really to embrace that and then create the best company we possibly could fully remote. Um, the things that we do specifically, uh,

around doing that, we brought in a chief people officer really early on. We had like 25 people and that person's one of her main jobs is literally to almost create an NPS internally. So we had anonymous reviews of how the company is doing. And then you have really strong core values around that. You've listened to the people's feedback, but also we have crazy transparency within our business. So even when things were going awry,

in our business or going well, we have a weekly act meeting, which is actually the acronym for all of our core values. And that's basically a 20 to 30 minute meeting. So people know exactly how the business is going in the various departments. And then we have an all hands meeting and it shows everything down to the financials and whether we're losing money, how much money you have in the bank. And so even in those difficult times that we had during those periods of like 2022, 2023, when things were kind of coming up again,

we only lost one team member, right? And we had to have a layoff that was like, you know, we had a hundred and something members at one time. We had to cut down to like 50, right? And that was difficult. We did two rounds of cuts. And typically in those times, you see a lot of like your best people leave. And fortunately, we only lost like one or so team member, you know, that we didn't, you know, make that decision to go. And the reason is like, I think of that kind of like transparent culture. And then just, you know, being able to,

you know, listen to people, see that they're in their voice matters. And also being able to just kind of see your, you know, internal, like how the, how the, you know, the saying goes, like the, I don't know how the, how the pudding's made or something. I don't know. I'm forgetting like the saying, you know what I'm talking about though. I'm forgetting right now. But anyways, like, so I think that that's kind of like how has been really helpful, but I think also just on more of the operational time or operational side of things,

we've been very focused on OKRs. And I was really, I'm not the most organized person because I'm much more of a visionary. Yeah. I think we have a lot more integrators that are way more operational than me, I guess, in that sense. But I think like one thing I really forced people

on myself to have the discipline in is to operate with an OKR like framework of how we operate our business. So, you know, departmental OKRs, ensuring that, you know, everyone's really aligned on what they're supposed to work on and then being able to kind of track those OKRs so that people know exactly what their goals are, ensuring that the managers get comped based on that. It's like, you know, everything aligns to that. And it literally took us like four years to do it. And it's so painful to do, to be honest, if you're not

wired in that way. But I think that that's been one of the most impactful, important things along with these other things that we've learned to create a good remote culture that allows for like, you know, you know, we have like a 90, 80, 90% satisfaction rate. And the average company is like 65% or something like that. It's awesome. That we use.

And I think that those are all things that add up to be able to build a great remote company. I mean, I would love to run a 1,000 person kind of remote company one day that fully operates, you know, autonomously, you know, in more of a decentralized fashion. And that's what I'm trying to move more and more towards as we think about our business. Well, I run a 600 person in-person company. So yeah, that's definitely, it would be what to do for sure. I have a question though. What is...

and this has got to be tough, man, as a founder that's making good business decisions. What is the temperature within your engineering departments with AI moving as fast as it is? Is there a little bit of fear? Cause there should, I don't know if you saw it. Um,

There was a post that was going around Facebook yesterday and damn it. I just forgot who wrote it, but it was, it's a CEO of a major corporation and he sent a letter out to all of his, all of his people. It was a CEO of fiber. You saw it where he's like, AI is coming for our job. It's coming for your job. It's coming for my job.

Yeah. Yeah. Well, I think even for that, I mean, honestly, I sent it to my co-founder. Yeah. Yeah. I posted it immediately. And that was like wise words from the CEO. And it was like a special place for us. I mean, I think that, I mean, their business in particular, if you think about like, uh,

And he wrote it in a really good way. It was something along the lines of like, you know, easy tasks, like what used to be easy tasks or like brainless tasks now, what used to be hard tasks. That goes away. Yeah. What used to be impossible. Is the new hard. Right. Is the new hard. And that was really well said, you know, but I think if you think about their business, right? Like what does that business thrive from? It's been like literally like stupid graphic design or not stupid, but like, you know, make a logo. You know what I mean? Easy stuff. Yeah. Like,

Like, dude, you can do that with, you know, chat. You know what I mean? So I think like it doesn't impact my business as much as I would say theirs, because that's like kind of their core thing. The way that we've been thinking about AI internally is like we need to, I've been really adamant about like every, all of our engineers should be using things like GitHub Copilot or whatever, because it basically makes like a,

you know, a one X engineer, like a 1.4 X engineer, or, um, and in some cases, if you're like a three X engineer, it could potentially make you a nine X engineer. It just depends how well you know how to use it and how much you care about it. And so that's all about efficiency. The other component of it is how to basically make sure your business is smarter. Um, you know, we're starting to invest a lot more on that internally with our own, uh, tools and, um,

internal sets and the way that we also think about like our broader core mission is around this concept of like universal basic income. And it's not that we're in favor of necessarily the government paying for that. It's like, you know, that's kind of like, what are tools that we can also provide to our consumers over time to allow them to earn additional income? Because now with AI, you could potentially create like

you know, royalty free music, for example, that other people can listen to and you could earn streaming on or, you know, products or whatever. And so how do we use this technology to enable earning and saving for our consumers in some capacity? That's how we're thinking about it into the future. Yeah. A buddy of mine, it's funny you talk about music, a buddy of mine just developed a brilliant AI platform. And essentially what it is, is the AI, a bunch of, he got together with a bunch of the top songwriters in Nashville because he's one of them.

and they all have AI bots of them. And you can go in the studio with them and write a song. And the cool thing about it is, is then that song can be used for anything licensed, but the songwriter gets credit for it, so gets royalties for it as a producer. So literally my buddy, they launched it up. I talked to him the next day. He's like, I wrote 800 songs yesterday.

And who knows? And yeah, it's really, it's really smart because he's like, yeah, my, my AI that knows my tones and how I like things and how I would mix things and how things would go. I wrote 800 songs. That's really interesting. It kind of reminds me actually of, um,

What's that number? There's a service, Masterclass. So Masterclass has like an AI that's like, you know, it's like part of their service now is like, hey, you get basically the Mark Cuban bot or the, you know, insert like professional Gordon Ramsay bot, whatever. And then now you kind of like

get fed from their brain, I guess. I think it's like super interesting. I have kids tell me my cooking is shit. I don't need Gordon Ramsay bot to get me. Yeah. Yeah. Well, I mean, they might get like, it might, it'll probably have to be also to be honest in his case. Yes. Haze my children. That's what I need to do. Gordon Ramsay. Haze my children. So what's the future, man? Where do you see this going?

What's on the horizon? Yeah. I mean, we're scaling, we're growing. I mean, this early part of this model has really been, of those last two years really has been around kind of diversification of revenue and expanding our services and reach. And I think we did a super successful Reg A Plus offering, which is kind of like a retail offering, allows investors to...

any retail investor to go through and invest in the business. And we got qualified by the ISE to do that. We brought in over 50,000 shareholders so far, and so have been able to raise nearly over actually $50 million just through crowdfunding over the last couple of years.

And so we see consumers really interested in, and many of these people are not our target market. They're much more wealthy individuals, but they see, they believe in the vision. So I think where the future is, we eventually want to take this business public. That's our North star and North focus, but where we're going as a business, we believe that the phone will be free.

We're the closest company to make the phone free. It's not an easy thing to do. So we're still a long way to fully delivering on that vision. But I think that whoever can unlock that, that creates a trillion dollar opportunity because that is the one thing that we do the most. I mean, there's 168 hours in a week

If you're sleeping eight hours, there's 112 left. And then if you check your phone and your screen time, people are spending anywhere from 40 to 50 hours a week. So one third to one half of your life is being spent on this device every single week, which is insane. And so I think that if you think about that, what's possible,

It's a really, really big opportunity. And, you know, I think that we're just scratching the surface of where our story will be here in the next few years to come. Yeah. All right. Well, if you want, if you want to, if they want, you want them to take a look at your reg D or get your app, or do you have a centralized place where they can find you?

Yeah, I mean, the best way to find information on the company is invest.mobile.com. You can also download our app and you can claim actually free shares. We're actually the first ever. I think we're actually the first ever company that's ever been qualified to allow people to use their points effectively.

to invest in the company if they wish. And so our goal is to be the first ever company with a million shareholders prior to going public into the markets. And so the idea is to build that ambassadorship and we're taking basically users, turn them into earners and earners now turn into owners. So those are two great places to go. You can download our product, get shares for free, no cost, or you can check out our site and invest.memobile.com and learn more, watch the content, and be a part of the community.

Well, dude, I love it, man. And thanks for joining us. If you're ever in Vegas, let me know, man. I got you covered, whatever you need. I'll hit you up. Yeah, I'll be there soon. I'll take you somewhere where you can lose some of that money you've got. Well, guys, wrapping up today, man, the one thing that I would say you should have taken out of that is if you want to be incredibly valuable, not just...

to yourself but to other businesses to what you're doing capture an audience and be able to move them around to different ecosystems there's a lot of value in that whether you're promoting a party in the nightclub or bringing a million users from one app to another because if you do it enough times and you do it right apparently you'll have enough money to walk around with a gandalf beard so that's it we'll see you next week

What's up, everybody? Thanks for joining us for another episode of Escaping the Drift. Hope you got a bunch out of it, or at least as much as I did out of it. Anyway, if you want to learn more about the show, you can always go over to escapingthedrift.com. You can join our mailing list. But do me a favor, if you wouldn't mind, throw up that five-star review, give us a share, do something, man. We're here for you. Hopefully, you'll be here for us. But anyway, in the meantime, we will see you at the next episode.