Transcript of From $75 to a $1.2B Public Company: How Payam Zamani Built His Business Empire | Entrepreneurship | How We Profit | E10

Profitability to me is not optional. If you talk to my executives, they will tell you that I often don't know the revenue of their businesses, but I know their margins.

'Cause you don't care about the top line revenue.

I don't care about top line. I'm not running a publicly traded company. If you give me a business that has revenue, I'm able to make it profitable.

Payam Zamani is the founder and CEO of One Planet Group. He previously co-founded AutoWeb and took it public at a $1.2 billion valuation before turning Our biggest company is called BuyerLink.

BuyerLink is a $130 million a year business. 10% of all new cars sold in the US are sold through BuyerLink.

What is your guidance on customer acquisition costs?

In my business, uh, I don't wanna spend more than 50%, uh, on acquiring a customer. Often people come to me and they say that, you know what, if—

So how did you like first start One planet.

I got a call from my company, Reply.com. They said that, can you come back? We are dealing with a disaster and our bank loan is being called and the company will go away. And I decided I'm gonna buy the company. So I made an offer to the board that was bigger than anyone else's offer. Truth be told, I did not have the cash at that moment in time, but—

Payam, welcome to How We Profit.

Thank you for having me, Hala.

I'm so excited for this interview. And actually I'm thinking about this interview as like a hybrid regular YAP episode and a How We Profit episode because you are just so accomplished and you've actually achieved things that many entrepreneurs don't achieve in their whole lives. At 28, you had a company go public. It was valued at $1.2 billion, which is absolutely incredible. And now you've got a company, One Planet. which essentially buys and sells and invests in companies, which is just so cool. And a lot of us entrepreneurs, we're, we're newbies, you know, we probably, many of us listening haven't even exited a company yet, and maybe we want to have a holding company or a private equity company in the future. So I wanna kind of start with the basics. Does that sound good?

Absolutely. Let's do it.

Okay. So let's start with like private equity.

Mm-hmm.

What is private equity exactly?

I've got my own definition of it. And frankly, I don't even know what I'm running, if it is private equity. It's my company and I don't have any LPs. I don't have any outside investors.

Okay.

So I manage my own money. And like you said that we do own a few companies, but most companies that we own, we founded. So I have been the founder of those businesses.

Yeah.

But we have also invested in, I think, 45, 50 companies to date.

Really cool. So when I was researching you, it's kind of like a hybrid between a private equity company, a holding company, and an operating company.

It makes sense outta my chaos. That's, that's the truth. You know, I always tell people that if you look at One Planet logo, there's a, there's that pale blue dot, which is the Earth. But to me, my, my brain is full of dots and that one dot kind of forces me to focus a little bit.

Yeah.

Um, you know, recently I made a movie. Oh, cool. I, I wrote a book. And, you know, I operate a bunch of different businesses. So I live a bit of a chaotic life and I enjoy it. But I try to also remind myself, focus.

Yeah. So let's actually talk about your story because it's so powerful. It's very inspiring. And you actually, your world kind of started like very chaotically. Talk to us about how you grew up and how you ended up in America.

I was born in Iran. I was born in a Baha'i family. That's my religion. And then the revolution happened in 1979, and the new government did not think highly of a lot of people, including the Baha'is of Iran. And so the 1980s became very difficult. They killed a lot of Baha'is. They imprisoned a lot of Baha'is. And all of it just because different religion.

Yeah.

They were fanatics. They also expelled Baha'is from many schools. They, even today, 47 years later, Baha'is don't have the right to attend universities in Iran.

Wow!

So when I was 11, I was expelled from school in the most horrific way. They basically, the religious leader of the school got a mob of over 50 students to kick That was his plan, to get rid of me, to exterminate me.

Wow.

That was their plan. Luckily, I survived, but think of it as a march of death for 1 mile. Kids spitting on you, beating you, throwing rocks at you, kicking you. And, you know, I talk about there are 2 times in my life I did not think I'm gonna get out of that situation alive. That was the first one. I survived that, but I was never able to go back to that school. But you fast forward about 6 years later, my parents decided that it's time for me to leave the country.

Yeah.

And good law-abiding citizens, they had to find a smuggler to get me out of the country.

That's so crazy. And so your parents basically saved up to allow you and your brother to go to Pakistan, is that right?

That's right. My brother left first, a year before me, and then I left in 1980— They paid a smuggler, and it was a very— like, it's one of those journeys that you don't want anyone to ever go through. It leaves its mark on you forever.

Yeah.

The way you say goodbyes, the way that you're going through a desert that you don't know if you're going to survive. You have no idea where you're headed. And I was just a child at the time and by myself. no family member with me.

Oh, you weren't with your brother?

No, he had left the year before me. And so it was a very, you could call it terrifying experience. And it was the second time I thought I'm not gonna survive was during an incident that happened during that journey. But again, I look back and I feel that these difficult journeys in life, they end up defining who we become. And, you know—

Makes business really seem easy after all that.

A bad quarter is nothing.

Yeah.

So.

Okay, so how did you make your way to America? 'Cause that's really where you got your education, you started building businesses.

So in 1987, when I made it to Pakistan, After getting my, basically what is called temporary asylum from the United Nations, I found my way to the US Embassy in Islamabad. And I talk about this quite often, that that was a moment when for the first time I experienced human rights, that my life is worth something. The US treated me with respect. The embassy in fact hired a lawyer to make sense outta my case.

Wow.

To present it to the ambassador. That was done. And ultimately I received a residency and asylum from the US. And then a charity out of New York bought my ticket.

Hmm.

So I was able to make it to the US. And my brother and I, we ended up landing in the US together at the same time in June of 1988. And, you know, there are many headlines about this journey that I've done and many interviews I've done. And the headline is always, Uh, that we landed in the US with $75 in our pocket.

Hmm. I love that. So it reminds, so something, uh, we were talking earlier before this interview and I was telling you that like, I feel very like relatable to your story because of my father.

Mm-hmm.

And I remember my dad passed away, but when he was alive, he loved America.

Mm-hmm.

He'd always be like, this is the best country in the world. America is the best. Like he was so proud to be American because for him, He was able to make all his dreams come true by living in America. And he really, really appreciated the freedom, the freedom to build businesses, to be successful. And, you know, there's not much oppression. It's like everybody is equal in America.

Yeah. I mean, clearly we have our problems in the US.

We have our problems, of course, but—

But I think— and also, I would also say, and American dream is an invitation. It's not a guarantee. The, the, the US is a platform that was built over 250 years, at times unjustly.

Yeah.

But it was built over 250 years, and this foundation is what we entrepreneurs take advantage of to build. And I think that's also important because we need to keep in mind that it's not just me building or you building. Many people sacrificed for this foundation.

Yep.

That we are able to take advantage of and build our businesses, and we need to be grateful for that.

I totally agree. So let's talk about how you put yourself through college. Mm-hmm. Because I think this is really inspirational. A lot of people who are listening right now, I think everybody's coming from all walks of life. Some of us are successful entrepreneurs, some of us are just starting out, and a lot of us are starting from zero.

Yeah.

We don't have wealthy parents. We, we feel like we're, we're behind a lot of our peers because of that. Talk to us about your journey of putting yourself through school and how you kind of like built your wealth initially.

Yeah. So, uh, I had one year of high school left when I came to the US. And, um, so let's get past that.

Yeah.

And then I went to, uh, UC Davis.

Mm-hmm.

And, um, uh, I painted homes and, and I, uh, and that was actually a great experience for me because, um, the idea was to paint homes, but I wanted to run a business.

Yeah.

So I would hire other students to paint homes.

Yeah.

And I was the, manager giving estimates and doing the, you know, getting the jobs booked and so on. So, I did paint homes, but I had 3 job sites going on at the same time at any given time during the summer.

That's great.

And the idea was to make as much money as I could so I could pay for my college years. And that was the primary way that I was able to pay for school. But also, I think that, you know, it's interesting when I think back to those days, School wasn't doing it for me. It wasn't exactly getting me all excited and joyful, but I felt that, you know what, as a Baha'i in Iran, I would not have had the right to go to university.

Yeah.

I have to finish college. So that was something that I wasn't willing to negotiate with myself. I went to college, but you think back, I studied environmental toxicology. I'm not doing anything with it, but it did give me the discipline, I guess, the commitment and the background. that allowed me to do other things.

And then was AutoWeb the first like real company that, well, I guess the paint company was a real company, but it was auto, like how did you start AutoWeb?

Yeah, so in 1994 when I graduated from Davis, my brother also graduated from university and he got a job at Microsoft. And one day he called me and he said that, I wanna buy Honda. Honda doesn't own a website, doesn't have honda.com. What do you think about building a website for cars? Now, up to that point, I was 24 or 23. I owned 16 different cars. I loved cars, cheap cars, but I would buy and sell cars. And I thought that if there's a way for me to get even with car dealers, I'm in. I would love to do that. But I didn't know anything about the internet. So he became the technologist, and I was a sales and marketing guy.

Hmm.

So we founded that business in November of 1994. And if you think about back then, there were only 5,000 domains that were registered total. There was no Google. Yahoo had just started.

Wow, that's so early.

It was just early on. I mean, to sign up somebody for our program, we had to first define, describe what is the internet because they had never been online.

That's crazy.

So really early days.

Really early days, and then you ended up going public at 28 years old. That must have been incredible. Like, what happened there? Like, when did AutoWeb— at some point you guys got like kicked out basically of leadership, right?

Yeah. So it was not easy for us to build that business. Neither me or my brother, we had not gone to Ivy League schools, we had not gone to Stanford. And Silicon Valley, especially back then, was very much about legacy in a sense. Are you a Harvard grad? Are you a Stanford grad? And are you white?

Yeah.

And there were many other factors that really played a role in Silicon Valley. But I always say this, in the US, there are bumps along the way, but the road is never blocked. So just find your way through it. Don't let those things define you. And don't become a victim of them. To raise money, we had to go to Fort Lee, New Jersey. Now, we were based in Silicon Valley, but we had to go to Fort Lee, New Jersey to raise money.

There's more brown people in Fort Lee.

Oh, yeah, probably. And then ultimately, for the third round, we raised money from Technology Crossover Ventures, DCV, in Palo Alto. But it took a while for us to get them interested in investing in us. We built the business, but we did not raise a whole lot of money because we couldn't, which was a good thing. Meant we held on to a lot more ownership. We were forced to hold on to a lot more ownership.

Yeah.

So we took the company public in March of 1999, but we— I was a CEO until January of that year, and the board was insistent that we bring somebody from the outside. We did, unfortunately, great guy, but just that wasn't his passion. Just because the company was going public, it did not mean it was no longer startup. And a startup requires, I think, the soul of the founder. And so many wrong decisions were made, which, you know, you look back, you know, you wish that that wasn't the case.

And you ended up buying the company back like 30 years later, right?

4 years ago, the company had a change of hands. challenging few quarters, and the company had a going concern issued by the auditors. And so I made an offer, and I bought the company and took it private. So it definitely was a sweet moment to be able to buy the company back. And the company had accumulated $350 million in losses over all these years. We made the company profitable in one month.

I'm gonna ask you about that. We're gonna talk all about turnarounds and how to turn around companies, but let's focus on One Planet. How does One Planet, like, like really break it down for us. Like, what do you do in this company? How do you guys make money?

Yeah, so One Planet itself, uh, is really a holding company. So One Planet, uh, does not, uh, you know, it does not have much of a P&L.

Okay.

But the companies within, uh, uh, One Planet, have operations. Our biggest company is called BuyerLink.

Okay.

And BuyerLink, actually, AutoWeb is also owned by BuyerLink. And BuyerLink is a $130 million a year business, very profitable. And it is basically a significant company that really impacts a lot of things, but you probably have never heard of. It's the largest generator of consumer demand for new cars in the US. 10% of all new cars sold in the US are sold through BuyerLink.

Interesting.

And BuyerLink's businesses, websites. We also own assets like usedcars.com. We own autoweb.com. We own contractors.com. We own california.com. We own a lot of assets, but all of these assets are designed to generate consumer demand for different verticals that they're sold in, I would say, the digital format that the buyer of that consumer demand can monetize. Sometimes that's a lead, sometimes that's a click, sometimes that's a call. But all of the traffic that we generate, all the consumer demand that we generate is sold in a perfectly matched way to an end advertiser who never had to learn anything about online marketing.

Okay.

GM is a big client, you know, Nissan, Kia, Hyundai, all the, like, for example, carmakers are our partners. We send the OEMs in the country about 1 million car buyer leads on a monthly basis that really fuels their internet sales departments.

Interesting. So how did you like first start One Planet? Like, where did it all start? How did you, I guess like you, you got some money from your like going public or like how did it all start? And then how did you like keep building on top of it where eventually it was a holding company?

It's actually a bit less interesting than that. I wish that was the case. What happened was until about 2014, I was running a company called Reply.com.

Okay.

And I had raised VC money, and Reply.com pretty much did what BuyerLink does.

Okay.

But then in 2014, I personally, as an entrepreneur, hit a bit of a roadblock. I decided that I'm kind of like tired of this game. And the game I'm talking about was dealing with 5 VCs on my board and trying to grow a company all the time, regardless of if that company should grow at that moment in time or not, because sometimes unnatural growth leaves carnage behind. But that's the name of the game. If you have a VC-backed company, you have to keep growing.

Yeah.

So I went to my board and I said that I'm done. I'm quitting. They said, you're the founder, you're the chairman, you're the largest shareholder. I said, yeah, but I can no longer do this. So I recommended that they make the CMO the CEO, and I left. And I remember that was July 16th, 2014. My wife and I, 2 daughters, we got in the car and we just went on a road trip. It was the best time of my life.

I love that, yeah.

To just completely, like, not have the worry of that business at that moment in time. During that time, I went to a conference. It was a Baha'i-inspired conference. And I saw this woman give a speech who runs an organization called Tahrir Justice Center that deals with women who are seeking legal representation because of the difficult situation they're in. And I thought, I turned to my wife and I said, you know what? I'm jealous that her daily life is service.

Yeah.

I wish that was my life. Then I thought, who says that Nonprofits should be for betterment of the world. For-profits should be for greed. Why can't we combine the two? And I'm not talking about social impact.

Yes.

Because a lot of bad businesses, they put the banner social impact. They go like, OK, I'll see. The reason we are not that profitable is because social impact business. Anyhow, at about that time, I got a call from my company, Reply.com. They said that, can you come back? We are dealing with a disaster. And our bank loan is being called. And the company will go away. I went back with the idea of spending 3 months to sell the company and move on. During one of those meetings, there was a Chinese buyer who was interested from China. And I stopped showing much interest in that conversation because he was a bottom feeder.

Hmm.

And I decided, I'm going to buy the company. I'm going to buy the company. This will be the beginning of the platform I want to build. that will be what I thought in my mind, spiritual capitalism.

Yeah.

And so I made an offer to the board that was bigger than anyone else's offer. Truth be told, I did not have the cash at that moment in time, but we owed a lot of money to our lender, and the lender was in a tough position to be able to get paid, get their money paid back. I told them that if you finance me to buy the company, I will make sure you get all your money back. They trusted me. Our lender who wanted to foreclose on the business funded me to buy the company from the investors. And I was able to get back in there, build that company, and build One Planet.

Nice. So that was basically the foundation.

Sorry, very long answer.

No, so basically you bought back that company.

Yeah.

And then through the profits of that company, you were able to start buying other companies.

That's right.

Like acquiring.

So I'm big on profits. I feel like building for the future that at some point I'll sell the company. Overwhelming majority of startups never get to that point. I want to win today.

Yeah.

So if there's a tomorrow that I can win tomorrow also, that's awesome, but I want to win today. So as a result, profitability to me is not optional. And in fact, if you talk to my executives, they will tell you that I often don't know the revenue of their businesses, But I know their margins because—

Because you don't care about the top line revenue.

I don't care about top line. I'm not running a publicly traded company. I only care. And even if I was running a publicly traded company, which I did till 7 months ago, I do care still about the margins because even then, public companies should ultimately be judged based on their cash flow. But yeah, that's what matters to me the most. And to me, if you give me a business that has revenue, I'm able to make it profitable. Yeah. Because if you are not committed and married to the revenue of a company, yeah, you are able to manage a business in a manner that can generate cash flow.

I feel like this is a perfect transition to just talk about turning around companies. So essentially what you do at One Planet is, do you buy a portion of companies or you buy the, all of the company? I just wanna start there.

So BuyerLink being our biggest business, we fully own it. I own it. I don't have any outside shareholders, so I own that business.

Okay.

But there are businesses that we don't own fully. Like an example would be about a year and a half ago, we agreed to turn around a company called Inspirato. Inspirato, a publicly traded company, was dealing with a disastrous situation. They were a few days from bankruptcy. So in that case, we bought about half the company.

Got it. Okay, so you buy whole companies, you buy, and your goal is to optimize those companies, make them better, make them more profitable. And grow your stake in that company. That's your goal as a holding company, correct?

Grow my stake or just make my, the value of my stake, not necessarily the percent ownership.

The value of your stake. Yeah.

That's right.

Okay.

And, and of course you cannot, you know, to make a business profitable, you need to have a dual strategy. One is immediately get to a point that you're cash flow positive. But that by itself is not enough. You need to have a, plan for growth? What's your vision? So you need to also have a roadmap for building that business to a point that you can grow.

Yeah. And do you have portions of your business that you share across all the companies? Like, is marketing shared across all the companies or like AI deployment shared across the companies?

Yes. So if you look at the businesses, Inspirato, I sold that back in February, which is Unlike us, I feel like I'm a farmer kind of entrepreneur. I'm not a buccaneer. I like to build and keep. But that was a special situation and we had to sell it. But the businesses that we have under One Planet that we own, we typically share back office. And actually, AI is a great example that we share that technology we share that allows us to shift and balance resources as resources are needed within one of the organizations. And that's very helpful. keeps our cost down.

So let's say you acquire a portion of a company, or let's say a whole company. Are you often laying off the HR team, laying off the finance team, laying off the marketing team because you're going to take all that in-house?

Yeah.

Is that typically what happens?

That's actually very interesting. I have— it goes back to my spiritual beliefs. I think that a business has to be stable. profitable, number one, because the employees of that business should be able to count on that business for the long term, for their livelihood. So the idea of laying off is something that I really have a major problem with.

Great, I love that you feel that way.

And so this doesn't mean that the business should remain, in a sense, should have bloated, expense structure when he can no longer afford it because that company cannot remain in existence for its employees anyways. But with that in mind, we try very hard to not ever have layoffs. In the case of Inspirato, when we invested in that company and I was going to also act as a CEO for a period of time, I told them in advance that I will not join unless a few things are done.

Mm-hmm.

And I almost did not care how they would get there, but I wanted to make sure that their expenses have already been reduced to a specific amount before I would get there. I got there at the beginning of August of 2014. And even though the company was going through very difficult days for a year and a half, we no longer had any layoffs. Uh, during that period. The challenge with layoffs is that you'll also end up losing a lot of good people.

Yes.

Uh, who decide that this is no longer a stable environment for me.

Mm-hmm. And also when you have a growing company, like for example, with my company, I have 55 employees all over the world. And if for some reason we need to like downsize one part of the company, there's usually always a place where I can put good employees somewhere else. Yeah. And they can just learn something else and kind of thrive in like some sort of lateral move or some sort of promotion. So what are you doing when you're acquiring a company and there's, let's say, duplicate roles that you don't need? What are you exactly doing?

Yeah, typically over time, you're able to address that. So I'll give you an example. Right now, we have a few hundred employees, but we know that AI is making us a lot more effective and efficient. So we have a goal. The goal is that our employee base will be down by about 10%. in the next 12 months, but that will not happen through layoffs. People leave the company on their own. That's just how it is.

Yep.

And that's a target. Now, if we are off that target, if it turns out that we're off by 7, we're down by 7%, not 10%, that's okay. It's not set in stone. And if you're down by 12%, it is what it is, but you can give yourself that as a target. but not as, as something that you have to get to now. Now, if your sustainability and your existence relies on you reducing your costs today, well, you have to do what you have to do. Otherwise, the company will go bankrupt for all employees.

Yeah.

And that is not, there's no benevolence in that. Hmm.

I actually had a recent conversation. Do you know who Gary Vee is?

Yes.

So, I just sat down with him last week and we were talking about headcount and AI and like, there's lots of discussions around, a lot of companies are doing these mass layoffs because of AI. And Gary had, like, a really great analogy. He thinks of his employees as armies and AI as just better weapons.

Hmm.

And so he is like, so if my competitor has 1,000 employees and I have 1,000 employees, and, you know, I cut my employees down to 500 with better weapons, but they keep 1,000 employees with the better weapons, who's gonna win? The 1,000 employees that also have the better weapons.

Hmm.

So he doesn't think of it as, like, he, he needs to cut headcount. He more thinks of it as, it's just my employees have better weapons, and we're just going to keep growing the way that we are. So—

There's truth to that.

Yeah.

But also, I think that the challenge can be that where those weapons come to play, maybe in different departments.

Yeah, that's true.

So what do you do then? I mean, it is a bit more complicated in reality.

Yeah.

But yeah, I mean, at some level, There's something interesting that Elon Musk said recently. He said that you think about an economy and we think about per capita, what's the size of an economy? Well, if we have a lot of robots and AI agents, well, then you can have an unlimited economy, the size of an economy. And you can also think of it from a business perspective. If a business, let's say if my goal was to have $1 million of revenue per employee, now if I have I don't know, 200 AI agents also, then my revenue can grow much more rapidly without needing to grow the employee base at the same pace. And I think that is— that will be more often the case than laying off.

Yeah.

That you will grow.

You're able to scale, but not headcount.

You slow down your hiring.

Yes.

So we will see that and what that will do to the future jobs, I really don't know. But my guess is that there will be a bit of a pressure, at least in the short run, on jobs for recent grads.

Totally, because they just don't have the experience that they need.

That's right.

Totally. Okay, I want to go into a little game that I'm calling like turnaround quickfire.

All right.

And since you've got so much experience turning around companies and making them more profitable and increasing your stake in them, I'm gonna just rattle off some categories and you tell me like, what are the first things that you look for in terms of something that's bad practice? What is good practice? And like how you suggest to like improve things. So people and leadership.

So I have a tendency and a commitment to promote people who are one layer below the executive team to executive roles. I think that they're the people who are on their way up.

Yep.

They are doing things for the first time. They're by far more likely to wanna prove themselves. They're gonna work hard, and I probably cannot afford them 10 years from now. So, I love putting those people in leadership roles. Without mentioning names, there was a gentleman, I recently made him in charge of one of my business units, a sizable business unit. He's 28 years old. If he hears this, he'll know who I'm talking about. And he's doing a phenomenal job.

Nice.

He's never been an executive before. Now he runs a business, he's doing a phenomenal job, but that's what I look for.

And what happens to the existing leadership team when you do that?

Yeah, often existing leadership team, when I buy a business or they've been with me for 10 years, 15 years, or been with a company for that long, they have packages and they're able to get that package and move on. Sometimes they wanna move on, or sometimes I wait till they move on and then I promote from within and have new talent take over those roles.

How do you evaluate, like, let's say there's leadership executives that want to stay, how do you evaluate who stays and who goes?

You know, I rarely ask people to leave. So, but you know, so like, you know, this gentleman who took on that role, the person who had the role before, chose to live on her own. But the way that decision is made is pretty easy. These days, if you are an executive and you are not choosing to embrace AI, it is very hard to know how I'm going to be able to work with you because it's kind of like being around 30 years ago and saying that the internet is not for me.

Yeah.

I'm like, well, I don't know what to do. So that's a must. And I've had that situation recently that there are some people who just have a bit of a negative reaction that they don't want to have anything to do with AI.

OK, this one's a big one. So customer and revenue quality.

So I fundamentally believe that if you treat everybody— and by that, I mean everybody, your employees, if you have shareholders, your shareholders, your customers, even your competitors— as noble creations, spiritual beings, that you're not going to take advantage of, you're not just looking at them as tokens of economic value, but you're looking at them as other spiritual beings that, like you, are having this experience, this life as we know it. If you treat them in that manner, the chances are your business will also prosper, because the chances are the way you treat them, few businesses are treating them in that manner. If you look at our business, BuyerLink being our biggest business, Yeah. We almost— if you look at the large accounts that account for 95% of our revenue, we almost have no ever non-zero cancellations. And I think that's because of the way that our team chooses to treat them.

Yeah.

Even with competition, we have a thing we say at my company, if our success relies on someone else's demise, We're gonna get outta that business.

Yes. It's treat your customers right. You said something at the beginning of our conversation that you don't care about top line.

I don't.

So, and how are you evaluating like what product lines to keep or services to keep versus which ones to cut?

Yeah. Propensity for profitability. How likely is it that that business will become profitable and will sustain its profit margins? You know, businesses can be under pressure, but can, can that be resolved?

Yeah.

Some businesses can't.

Do you have any examples of a business where you were able to kind of shift the focus in terms of what they should focus on for revenue and that helped the profitability?

Yeah, I mean, I'll give you an example. When I bought AutoWeb, AutoWeb has 17% margin. And when I talk about margin in my business, I really talk about revenue minus TAC, traffic acquisition costs, so cost of marketing. And 70%, so the company would spend $100 on online marketing, would have $17 in margins. The rest of my businesses, they had north of 55% in margins.

Oh, wow.

And so the first rule is that stop chasing dollars.

Yeah.

Chase profits. And so cut anything that is not profitable source of, consumer demand, cut those, say no to advertisers who are not willing to pay you enough. That's okay. And build a business that has significant enough margin that if the market sneezes, you're not out of business. And those are, I think, really important principles for a company to keep in mind. So now you fast forward today, Although App has north of 50% margin. And it's because we follow those practices. When initially you follow those practices, revenue goes down, but over time revenue does come back up, naturally comes back up because your advertisers, they see that, oh, the volume you're giving me has gone down. They bid up, they get access to more volume, and it takes care of itself. If you've ever read the book by Gordon Bethune, who used to be the CEO of Continental Airlines, he says something beautiful.

Mm-hmm.

They asked him, they said that, how did you make Continental Airlines profitable so quickly? He said it was easy. Airlines, they have many routes. They fly to cities, uh, with a plane full, they make money. They fly to cities where the plane is always half empty, they lose money. I stopped flying to cities where we lost money. We became profitable. It was as simple as that.

Yeah. I feel like a lot of entrepreneurs, you start out with one service and then you sell another thing and another thing and another thing. And then eventually you're just looking at how much revenue is coming in and you're not realizing that there's one service that takes a bunch of people, you're actually losing money Or there's one client who got a big discount.

Yeah.

You're actually losing money. So it's really smart for people who have like lots of things that they're selling, lots of clients to go client by client. Yeah. Service by service and really break down like how much do the tools cost? How much do the employees cost? And what is really your profit margin per business unit or per service?

That's right. Yeah, that's right. Uh, so one of the things that's a must for me, um, is that any business I run, By 10:00 AM every morning, I want to have a report that gives me the financials for the day before for that specific business, basically includes revenue, margins, bottom line for that business, not profits, basically just margins, compares that to the last 3 days, same day last week, same day last month, and compares the pace for this month to prior months for the last 13 months. And those reports cannot be automated, meaning that I want to receive a report that the business, that the executive in charge put together and sent it to me by 10:00 AM every morning. The reason for that is when people start putting those reports together, they pay a lot more attention because things stand out. Oh my God.

Yeah.

I missed these 3 things. And I've seen that when they do that, the business starts improving almost immediately. So when I buy a business, that's the first thing I do. I want a daily report.

I love that.

And that daily report changes everything.

And are you also, are you looking at the whole business as a whole, or are you looking at the different product lines or services also so that you can recommend how to optimize them?

So I look at every business in that manner, and then there's one person in charge to aggregate them all and send it to me before noon every day. And, you know, we have a, we have an office in Armenia. So they start working earlier given the time difference. So I start getting reports when I wake up in the morning, they start coming in. And I love that because that allows me to very quickly, just on my phone, take a look at the report and see how we're doing. And they also know that if yesterday was really good, they need to say why. And what are they doing to sustain it? If yesterday was really bad, Why? And what are they doing to fix it?

Since you own all the companies, or at least have a stake in all of them, if some company's doing like really, really well and one company has a lot of potential, do you ever like take money from one company and fund the other company, or do you keep them all separate?

I mean, when they're owned by One Planet, then absolutely. I mean, we, we, we, we do that all the time.

Yeah.

I mean, because again, we don't have any outside shareholders, so, so the money that, that is made by these businesses, you know, can be shared to not just invest back, invest back in the businesses that we own, but could also invest in other startups, which we do that also.

So does the executive teams on the companies that you own also have equity or no?

They do have what I call distribution rights that if the company is sold while they are, or goes public, while they are a part of the business, they get that portion. And they also, we also profit share. So executives often don't control the profits or the EBITDA of the business, but they control the contribution margin of their own business. So they get a percentage of the contribution margin that they earn.

Okay, how about pricing and product mix? Do you ever look at like how companies are pricing Their services and products, or do you not get into that detail at all?

I don't get into that. I feel like, you know, the pricing is a maximum a buyer is willing to pay.

Mm-hmm.

Uh, so negotiate, uh, and the best you can and don't try to, uh, take every dollar out of it. Let them be happy.

Yeah. Okay. This next one, I know that you have a really good case study for it. Uh, marketing and customer acquisition. So you actually started a company, I believe it was called Purple Tie.

Oh God, yes.

Talk to us about that company and unit economics and what went wrong.

So Purple Tie was a bad idea. In the late '90s, I had some, made some money from AutoWeb. So you can imagine I probably had bought a few nice suits, you know, spent money on a nicer wardrobe. And then the dry cleaners were really bugging me because they would often mess up the stuff that I would take to them. And at the same time, I'm really dating myself. I had heard Wayne Huizenga, who is the founder of AutoNation, he had also founded Blockbuster Video, which I don't think anyone who's watching or listening has heard of Blockbuster Video.

I'm sure they have.

But movie nights used to be Blockbuster Video. You go to Blockbuster Video and you rent a video. And until Blockbuster Video, there were mom-and-pops that owned the video shops. Blockbuster opened up one store every 8 hours for 8 years and ended up owning that market, became a huge multibillion-dollar business. So I saw Wayne Huizenga speak a few times during my AutoWeb days because he founded AutoNation, and AutoNation was a big client of ours and so on. And I thought, I love that story. And I'm like 28 years old. I feel like I got to my discharge by now. I took a company public.

Yeah.

I can keep doing this. So I decided I want to fix a dry cleaning business. And I started building this 100,000 square feet facilities for environmentally clean dry cleaning, high quality dry cleaning and laundry and so on. Massive, massive operation. And we built this spoken hub model to have our trucks connect to a neighborhood so we could pick up from your home, deliver to your office, and vice versa. Anyhow, we built that.

Yeah. You raised also, you raised like what, $13 million?

We raised a ton of money. I needed $400 million. Oh my God. I raised, and this is 1999.

Crazy.

I did not raise $400 million, but we raised, and I had made money from AutoWeb's IPO. I put my own money into that business. But anyhow, the bottom line is that ultimately 2001 came about and the dot-com crash happened and I could no longer raise more money. And we ended up shutting down that business. But what really caused that business, I think, to not prosper, number one, the dot-com crash. So we could not raise money.

Yeah.

So that was it. But number two, I think that the economies of scale for us did not exist. We introduced too many expense layers to the business. If I could do it all over again, not that I would, but if we could, Every dry cleaning shop uses their dry cleaning equipment only for a couple of hours a day. There's a lot of, in a sense, unused potential at existing facilities. So you need to put a service layer on top of it, but you can use the existing facilities and never invest in the infrastructure. So there is potentially something there.

Actually, I interviewed this other guy. He's the owner of Franzi, it's like a franchise platform. And his first business, he tried to do exactly what you're saying. He tried to work with laundromats, dry cleaners. Yeah. To do this like service, but the quality control was very difficult and he had to shut that business down too. So I was thinking like, damn, this is a very hard business, this mobile dry cleaning.

It's a very hard business. It's a very hard business. And also not just a difficult business, but also it's difficult on the health of those who operate. You know, the, the people who own dry cleaning shops, if you talk to them, usually they have kidney problems. Many of them lose a kidney.

Oh my God.

So it's, it's, it's not a fun business to be in.

Yeah. And how about the customer acquisition costs? If I remember correctly, it was very expensive to acquire customers for this dry cleaning business.

It's expensive. However, it is an annuity business. How often people change their dry cleaners? they usually switch when they move. And in this case, if moving did not mean you have to stop working with us because we were everywhere.

Yeah.

But so it is expensive to acquire, but I think that that can be made up for. I think the bigger issue is really the idea of building density, that if you have a service that relies on delivery on trucks on the road, you need to have a lot of density so the trucks are not driving half an hour from one drop-off to the next. If you have a neighborhood where you can do all your drop-offs, then the margins can be good.

So sticking on customer acquisition costs and things like that, BuyerLink is like a lead gen company. So how are you like, what is your guidance on how much to spend on customers and just any sort of guidance you have about customer acquisition Yeah, I mean, in my business, I don't want to spend more than 50% on acquiring a customer.

But if it's 50%, then to me, I don't have a marketing budget. Spend as much as you can, as long as you're able to maintain margin. Often people come to me and they say that, you know what, if I reduce the margin from 50% to 30%, I'm able to get access to more customers, and in aggregate, we'll end up with more margins. My answer is no. I want to hold on to margins that are significant enough that if the market sneezes, we don't catch a cold. We don't go out of business. So that's my rule. But every business has a different, you know, should have their own rule that what's the right margin for them. Clearly, if you're selling a car, you cannot spend half the value of that car, you know, in marketing. But, you know, you decide what is the amount that you're willing to spend. Yeah.

That's good advice. Okay, how about contracts, vendors, overhead? Where does bloat tend to hide in companies in this way?

You know, it's interesting, most companies that have been around for more than, I would say, 5 years, and they have had at least a few executives who are no longer there, the chances are that they have layers of expense that nobody knows about. And So I think that there's a bit of a cleaning that needs to happen every few years that you literally want to have someone— and I call that person the transformation officer— that goes through everything to make sure that everything you have, you need. There are no 2 different vendors that one of them could do the job of both. There is no preferred vendor that an executive who's no longer with you signed up. but nobody cares about, nobody really uses that solution anymore. I saw a lot of that when I took over Inspirato, that the company literally had tens of millions of dollars of accumulated expenses that were not having any impact on the business. And we cut $45 million within a couple of months.

Really interesting. And how about leases? Sometimes leases need to be cut, right?

Well, Inspirato, we had— Because one of the ways we made money was that we had all these luxury homes all over the place that we had leases, 10-year leases. And many of these homes did not have enough occupancy through our platform to ever make money. So getting rid of leases can be complicated because usually there's a contract associated with them. But leases can be very problematic because not only they make your P&L look very ugly, they make your balance sheet look very ugly.

Hmm. Okay, let's go through, um, I, I really wanna get to, um, spiritual capitalism. But first I wanna see if there's any other case studies that we need to go through. I feel like we actually went through, uh, most of them. I do wanna talk about, uh, RingPartner was an example of when you bought a capability.

Mm-hmm.

Help us understand when you decide to build something internally and when you just decide to acquire a company that just does it? And what's your decision-making around that?

I feel like I'm getting too old to build stuff new, so I like to acquire. I like to acquire because I love the way that young talent, young entrepreneurs think about the new tools, the new things that can be built. The vision that I could have had 30 years ago, I just don't have today. So as a result, buying companies is very— it can be very interesting. But there are also companies that we can buy that we can make them better because we have the infrastructure that they just don't have. We have the technology resources, we have online marketing capabilities that they see, or now AI that they simply may not have. So that could be another reason to buy a company. Now, having said that, I still am an entrepreneur. I like to build stuff. Right now we're building a new company called Quiet Remarkable.

Yes.

And Quiet Remarkable will be a luxury travel company. And I love that industry. I fell in love with it when I took over Inspirato, then I sold it and I felt that there's a better business model that we can employ.

Yeah, so now you're starting that business from scratch. Now that you've been a founder for so many, you were a founder previously, you've had these companies for so many years, what are some of the top things that you're gonna do differently with Quite Remarkable since you're building this one from scratch?

Now, of course, I come from a place of privilege.

Yes.

As an entrepreneur today, I'm not the same person who was you know, just eating potatoes and had nothing else back then. You know, I'm able to invest in, in my business. That makes life a lot easier. I have an infrastructure, I have a CFO, I've got a head of marketing, and I got a head of product from day one that they can help me navigate things. So I have the vision, but there are a lot of amazing people who are building that. And so, so I don't wanna compare me to the hard work of first-time entrepreneurs.

Yes.

They're fundamentally different. And they're putting their blood and sweat and everything into building those businesses. So I'm not that. And we need to really have a— I have a soft heart, a soft spot for that. But what I do differently is that, like I said, I really think about profitability from day one. I don't think about building to sell because I'm not building to sell. And so as a result, I'm not thinking about multiples. I'm not thinking about How do I build so VCs will fund? I don't care about that. I don't want funding. So that gives me a bit of a freedom to build, I think, in a better manner, in a more lasting manner. Like, I'll give you an example. We have decided that Kwai Remarkable, when it will launch, it will sign— we'll do marketing, we'll bring on board 100 travelers, then we'll stop all marketing. We'll make sure those 100 travelers will become fanatics about our business, will rave about the business. We fully take care of them. Once we know that we accomplished that, then we open up.

Hmm.

We'll keep doing that until we get to 1,000 travelers. We want to make sure we have 1,000 ambassadors out there because they love the business. Now, that will slow us down. That will slow down growth, but that will allow us to build a brand. that I think we'll be proud of.

That's really awesome. I feel like that's such a good strategy. Why don't we move on to spiritual capitalism? I know that's very important to you. So how would you define, uh, this philosophy?

Yeah. So, you know, living in the US and having my background as a refugee coming to this country because of religious persecution and so on, and finding the goodness that America had and let me in. I've thought often about the challenges also in the US, racism.

Yeah.

And to me, racism, for example, is probably the most challenging issue in America. You think about political issues in this country, the extremes of left and right. I call, you know, to me, there is like these alliances that they're designed for greed and for power. but they don't really help anybody. You look at Wall Street and how greed has been really, you know, it's the Milton Friedman version of capitalism that's all about maximization.

Yeah.

And accumulation of one's ability to consume more and more and more. And when enough is enough. Now I gotta be careful because when I talk about these things, extreme right, wants to call me a socialist, which I'm not. I'm a capitalist.

Yeah, obviously.

And then extreme left calls me a capitalist because I built a company, taken it public. It was a unicorn and so on. So I'm like, no, I'm just somebody who wants to show that it is possible to build good businesses, that the ripple effect leaves the world ever so slightly a better place. So the first thing is that, as I mentioned that earlier, looking at every human as a noble spiritual being, I'm not gonna look at you as a token of economic value. If I stop doing that, then the whole idea of greed at any cost, maximization of my wealth at any cost, kind of goes away because my relationship with the person sitting across from me is way beyond this physical experience that we're all having in this world. And I want to treat you differently. But I think that it is about the betterment of the world, that we all want to be an agent for that.

Yeah.

And I think when we employ the right practices in our businesses, the chances are that we'll be a lot more fulfilled, we'll be a lot more joyful. as we build our businesses.

You talked about how to treat our customers. What are the ways that you employ this with your employees?

Yeah, so our culture is very important to us, and there are a few values that we have that are non-negotiable. One is that our executives are expected to lead with love. And a lot of people have questions about the love part, that that's a very strong word. But I think that is actually a very important word. that we need to have. And when we say lead with love, it includes leading internally and externally with that. The other one is truthfulness. I find truthfulness to be a spiritual value and truthfulness at any cost and 100% truthful at all time. Imagine you are fighting a legal case. Truthfulness could cause you to lose that case. That's okay. Be truthful all the way.

Hmm.

Don't embellish things. So that is an important part of our business. No gossip ever in our business about anyone. We just don't want to have that. I think that the tongue can be a smoldering fire, and we want to be careful what we say and the ripple effect of that. We want to make sure that as a company, we are giving. We're giving sacrificially. So much that it affects our cash position so much that it affects our financial decisions for our company. And I think that automatically also puts a cap on how big a company can get. Who said that global domination for a business is a good thing for humanity? I don't necessarily believe that. I think that if I'm building a great business that's taking care of its community, its employees, its customers, who says that just because I can, I have to keep making it bigger and bigger and bigger till I have built a monopoly.

Yeah.

But I think that all of those things we do, as humanity does, because we have kind of lost our connection with what truly matters.

Yeah.

And I do believe that we all collectively need a bit of a spiritual transformation to realize that all of this will end at any moment. And what will remain is, how we feel about what we accomplished and how we left the world.

Yeah. Can you give us a concrete example of a way that you lost money in a business to actually do better for the employees or do better for the world? And then similarly, how doing better for your employees or your customers or society helped you gain profits?

Yeah. So, uh, I, I have, lost a lot over the years. Uh, the, the biggest loss I ever had was when I took AutoWeb public, when my brother and I, we took AutoWeb public. Um, I, on paper, I had made a few hundred million dollars and I ended up losing almost all of it.

Wow.

And, um, and if it wasn't for my faith, the chances are I would've felt that as a, seen that as a big loss.

Mm-hmm.

That would've probably affected my psyche. Maybe I would've been depressed.

Yeah.

I didn't feel that way ever at all. I felt like I was grateful because I was still better off than the situation I was at prior to it. Even though a lot of VCs would ask me, oh, how do you feel? Are you okay? I'm like, yes, I'm totally fine.

It's all good.

You're good, yeah. But I think that the key is, if you think about the businesses that we have built, even when they were suffering, my employees have always known that X percentage of our profits always go to our nonprofit causes. So we have a nonprofit called One Planet, One People at One Planet. And the primary focus of One Planet, One People are 2 things. One is education with the focus on education of girls and women all over the world.

Mm-hmm.

And the second is racial healing in the US. And so a portion of our profits every month goes to that foundation. And we spend it everywhere from Montgomery, Alabama on some of the efforts of Bryan Stevenson, like the building of the monument for, I think it's called Peace and Justice, as well as in The Gambia where we have afterschool education programs for girls that we support. And when I say these things, it's not just sending money. With The Gambian operation, Our employees go there. They spend time there. We kind of like adopt it. We want that to become part of who we are. We don't know how to do it. We don't know how to do anything in Africa, but someone is doing good work and we want to be a part of that.

Yeah.

And we are grateful it allows us to be a part of that because that brings a lot of meaning to our everyday jobs as well. But again, the employees knowing that, these causes matter and the company's willing to give sacrificially to these causes.

And so is it One Planet's employees and like One Planet's part of your profit goes to philanthropy or all the companies underneath you also are associated with your charity organization?

Yeah, so the businesses that we own, if I don't own something, I cannot control it.

Yeah.

But if we own them, they all collectively, when I say One Planet, I'm including them all.

Okay, okay.

But businesses that we invest in, we ask the founders if we're investing early on, so the business is still shaping, we ask the founders to sign a document called For the Betterment of the World. And this document basically communicates with them that we're investing in you, but we believe you have a love for humanity. And because of your love for humanity, there's certain things that we hope you will do, not because of contractual obligation, you're gonna do because you wanna leave a, a positive mark behind.

Mm-hmm.

And all of our founders need to sign that. Yeah. Otherwise we will not invest.

So as we close out this interview, what is the message that you wanna share with the thousands of entrepreneurs that are gonna be tuning into this episode in terms of how they should be building their companies?

Yeah. I mean, there are a few things I would say. One is that make sure that what you're doing is meaningful from day one. Don't wait till your business is successful and then you say, now I'm going to spend my weekends, go do good work in the world. Do it today.

Mm-hmm.

Because guess what? Overwhelming majority of businesses never have an exit, never have that big payday. So unless you make that part of your life today, a coherent part of your life, then you're waiting for some date in the future to have that joy and fulfillment. So that's number one. Number 2, the road is never blocked, ever. I don't care if you're an immigrant. I don't care if you're Black. I don't care if you're a woman. Whatever are the challenges that you're dealing with because the market has never been kind to you, none of that means that the road is blocked.

Mm-hmm.

Don't let those who have made life difficult for you to win find a way around it. There's always a way around it.

Especially here in America.

Absolutely. I mean, women, as you probably know, only 2% of the investment money in Silicon Valley goes to women. And actually, in our company, over half of our money is invested in women entrepreneurs because also women are great entrepreneurs. Anyhow, but that is a second thing that I highly, highly recommend to any entrepreneur. And the, the third one is think about profits, not exit.

Yeah.

The chances are if you're building a successful, profitable company, A, you'll always be in business. You'll be in charge of your own destiny. Mm-hmm. But you will also have an opportunity to exit if you choose to. So, you know, why not go down that path?

And the last question that I wanna ask you actually goes back to profit, 'cause this is how we profit. You mentioned earlier when you have a business, you want it to be profitable by day one.

Yeah.

Like profitable day one. So what are some of your principles or what are some of the things that we need to think about that you wanna leave us with in terms of how we can be more profitable? Yeah.

Now of course it takes a little bit, a little bit of time to get to profits.

Yeah.

But how you become profitable from day one should be part of your strategy, not something for the future.

Mm-hmm.

So I would never ever wanna invest in a company or build a business with the idea that has to keep raising money.

Mm-hmm.

I wanna know the path for profitability for that business from day one. So the number one that I will look at is how disciplined you are with your hiring. Because at the beginning, people cost is a big part of that.

Yeah.

And number 2, how you are basically signing up for resources and how frugal you are with the way that you're spending money. I like to invest in founders who are frugal and they just don't think that money will always be cheap. I can always raise money and that VCs will always love me somehow. And they'll gimme more cash.

Yeah. Well, Payam, this was such an awesome interview. I feel like we learned so much. Thank you so much for your time and your wisdom. Where can everybody learn more about you and everything that you do? I know that you also have a book if you wanna shout out your book.

Yeah. You can find me on all social media platforms, Payam Zamani. And my book is called Crossing the Desert: Embracing Life's Difficult Journeys. Message me. I, I, I, I typically respond. I may be late, uh, at times, but I do respond.

Amazing. Well, thank you so much.

Thank you.

And that, young improfiters, is how Payam and One Planet Group profit. Today's big lesson, don't just chase revenue, chase profitable growth. Know your margins, cut what's dragging down the business, and put your money where it can create the most value, both economically and for society. Because the goal isn't just to grow, it's to grow in a way that makes your business stronger and healthier. For yourself and your community. Thanks for listening to How We Profit, the Young and Profiting series where real entrepreneurs share real numbers, real margins, and the real story of how their businesses actually work. I'm Hala Taha, and I'll see you next time.