Entrepreneurial strategies and lessons learned by Rob Dyrdek

From: myfirstmillionpod
Rob Dyrdek, a former professional skateboarder, has transformed into a prolific entrepreneur and investor, significantly increasing his wealth in recent years by applying a multi-dimensional approach to business and life [00:00:08]. His wealth creation has largely occurred in the last few years, escalating from an estimated $15 -$ 20 million in 2016 to nearly $350 million in 2023 [00:00:25]. He considers his 2016 net worth as “broke” in the context of his current goal of becoming a billionaire [00:00:28].

Financial Journey and Investment Philosophy

Dyrdek’s financial growth accelerated significantly between 2018 and 2022 [00:48:28]. He manages his investments through his family office, deploying capital into real estate and ventures where he maintains significant control or leverage [00:35:31].

His investment philosophy has evolved:

From quantity to quality [00:26:47]: Initially, he aimed to build 50-70 companies and sell 25-35 for $50 -$ 150 million each, making $20 -$ 30 million per deal [00:26:04]. After selling a company for $200 mi ll i o nan d rece i v in g$ 150 million, his goal shifted to focusing on fewer, larger deals that yield $50 -$ 200 million per deal [00:26:21].
Multi-dimensional opportunity assessment [00:39:05]: He always looked at media and marketing multi-dimensionally, seeking various ways to monetize rights [00:39:09]. This thinking now extends to business, where he identifies opportunities from multiple angles to maximize value and underwrite risk [00:39:49].

Entrepreneurial Ventures and Lessons Learned

Momentous Protein: A Case Study in Persistence and Dilution

Dyrdek co-founded Momentous protein with Matt Wan in 2016, with a vision for “the Ferrari of supplements” [00:09:56].

Initial Challenges: The company struggled for years, selling nothing due to its high price, which was 35% above competitors [00:11:32]. Matt, an 18-year-old prodigy who forewent Harvard to build the company, lacked understanding of company operations [00:12:07]. Dyrdek initially invested $300,000 for a 30% stake [00:13:39].
Struggles and Advice: Sales were only a few million annually, with continuous losses [00:13:20]. Board meetings were “painful” due to no revenue growth and burning capital [00:13:57]. Dyrdek advised Matt to sell or merge, feeling he had given “bad uncle” advice by encouraging him to skip Harvard [00:14:54].
The Turning Point: The business merged with Amped and then “exploded overnight” after securing a promotion deal with Andrew Huberman [00:15:55]. Sales grew “like 20 times,” transforming the company [00:16:06]. Huberman’s authenticity and deep scientific credibility provided the perfect match for the product’s quality, something traditional advertising and athlete endorsements couldn’t achieve [00:16:42].
Lessons Learned: Despite the eventual success, Dyrdek’s stake was diluted to about 4% [00:17:14]. He calls this his “perfect story” because it highlights the honesty of venture creation, where an investment might yield a significant return (2.5x his initial $300 k, p o t e n t ia ll y mi ll i o n s), b u t f a ll ss h or t o f t h e " v e n t u recre a t i o n g am e " g o a l o f m u c h l a r g ere x i t s (l ik e$ 100 million for his 20% stake) [00:17:34]. He states, “Would I start a supplement brand with an 18 year old ever again? I would not” [00:26:57]. This story illustrates the long, often painful, path to success and the importance of finding the right market fit and leverage [00:18:20].

Jolie (Filtered Shower Water): A Model for Success

In contrast, Dyrdek highlights his investment in Jolie, a filtered shower water company, as an example of a well-executed venture [00:27:05].

Strategic Approach: He was approached by a seasoned CEO with experience in Direct-to-Consumer (DTC) footwear [00:27:13]. The concept addressed an overlooked “cornerstone of beauty” – filtering shower water [00:27:42].
Business Model: Jolie offered a hardware product with recurring revenue from filter replacements [00:28:12]. While the market for filtered shower heads was tiny (under $1 billion), it represented pure white space [00:29:00]. High friction to remove the shower head would lead to low churn on subscriptions [00:30:01].
Launch and Growth: Jolie launched by showing potential customers water contaminants based on their zip code, a data-driven customer acquisition strategy used for months before product launch [00:31:41]. Pre-orders were strong, and first-quarter churn was exceptionally low at 1.2% [00:32:21]. The company grew from $4 mi ll i o nin s a l es in ye a ro n e t o n e a r l y$ 40 million in year two [00:31:41].
Valuation: The business achieved a valuation of over $200 mi ll i o nin 1.5 ye a rs d u e t o i t s u ni q u e " e x t r a or d ina ryH a r d w a res u b scr i pt i o n ser v i ce " m o d e l, w hi c hi sr a re < a c l a ss = " y t - t im es t am p " d a t a - t = "00 : 33 : 09" > [00 : 33 : 09] < / a > . I tw a s b u i ltw i t h o n l y t h ree p eo pl e, w a s p ro f i t ab l e, an d n e v er n ee d e d t or ai se a dd i t i o na l c a p i t a l < a c l a ss = " y t - t im es t am p " d a t a - t = "00 : 33 : 20" > [00 : 33 : 20] < / a > . Dyr d e kin v es t e d$ 800,000 in this venture [00:33:30].

Production Companies: A “Worst Business”

Dyrdek, who sold his production company for $200 million, describes it as “the worst business that you could ever get in in your life” [01:21:14].

Shoot-What-You-Kill: Production is a “shoot-what-you-kill” game where distributors control all the money [01:21:22]. A hit show getting canceled can render the company worthless [01:21:32].
Challenges: Shows are rarely picked up for long periods, making sustained value creation difficult [01:21:42]. Production companies must build extensive infrastructure (camera, finishing, music licensing) and then extract a slim 20-30% margin from a network’s budget [01:22:13].
Vertical Integration: Success often comes from vertical integration, owning post-production, finishing, and music divisions to increase margins [01:23:15].
Valuation and Risk: Companies trade on EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) at 5-6 times [01:24:03]. Buyers often seek partnerships or earn-outs to incentivize long-term creative output and mitigate the risk of a show’s cancellation [01:24:13]. The key is in aggregating creative minds and having multiple shows to offset potential failures [01:24:46]. Distributors like Netflix and Paramount remain the gatekeepers [01:25:47].

Real Estate: Cash Flow and Long-Term Growth

Dyrdek’s real estate strategy focuses on “cash flowing assets,” particularly multi-family units [00:42:08].

Tax-Free Cash Flow: He aims for 5-6% tax-free cash flow and 7-10% equity growth over the long term [00:43:08]. He uses 1031 exchanges to reinvest profits from sales, achieving 35-42% IRRs (Internal Rate of Return) on some buildings [00:43:34].
Liquidity Management: He keeps significant liquid dollars in high-yield funds (blended 10% return) and money markets (5%), which provide cash for expenses without growth [00:43:50]. This “modern cash flow portfolio” underwrites his living expenses and family office operations [00:44:23].
Passive Income: He distinguishes true passive income (giving money to an operator who returns cash) from active management (like owning a rental property with ongoing maintenance) [00:46:16]. He focuses on evaluating “world-class” operators to deploy capital with minimal personal time investment [00:46:42].

”Forever Estates”: A Lesson in Personal Investment

Dyrdek shares a story of a “dumb” investment decision from 2015 [00:50:46].

The “Dumb” Decision: In 2015, with $12 mi ll i o n c a s h, h e b o ug h t a " h e a v e n - se n t "4 - a cre pl o t o f l an d in B e v er l yH i ll s f or$ 10 million cash to build a “forever home” [00:51:43]. He characterizes this as putting money “straight into a liability,” incurring $200,000/year in carrying costs and ongoing architectural fees for eight years without building [00:56:31].
Evolving Vision: While he initially considered himself “dumb as dirt” in business in 2013 [00:51:12], this investment has evolved into a long-term vision. He plans to pay cash to build the $20 million house and then pay rent to a trust, creating an endowment for the home to remain self-operational and in his family for generations [00:54:55]. This shift came from maturing, having kids, and reaching a “generational level of wealth” [00:55:25]. The delay allowed his vision to evolve, ensuring the final design truly aligns with his long-term goals [00:57:57].

Overall Approach to Life and Business

Dyrdek’s entrepreneurial journey is intertwined with his philosophy of “human optimization” [00:03:04].

Time Optimization: He works approximately 40 hours per week managing his family office, venture portfolio, television shows, and podcast, attributing this efficiency to time optimization [00:40:47]. He evaluates opportunities based on post-tax earnings per hour [00:44:41], aiming for a “million in hours” value for his time [00:45:26].
Holistic Growth: He believes in continuous assessment and adjustment to lead towards a better future experience [00:08:20]. His success isn’t just in business but in all aspects of his existence: health, relationships, time, and energy [00:57:39].
Health and Longevity: He has focused on health optimization since 2012, undergoing blood panels and developing a “perfectly structured physical system” [00:59:49]. He has achieved a state of consistent 100% discipline in daily habits (5 AM wake-up, gym, meditation, clean eating, no alcohol/sugar/snacks) for over nine months [01:01:51]. His qualitative life metrics (life, work, health satisfaction) are at their highest [01:02:33]. He aspires to live 114 years and 54 days with a high quality of life [01:03:37]. The 80/20 of his health success is avoiding alcohol and sugar, intermittent fasting, and eating lean protein and vegetables [01:03:45].
Self-Awareness and Continuous Improvement: He aims to reach a state of never getting angry or having negative thoughts, always being harmonious and balanced [01:10:44]. While he still feels triggers (e.g., getting angry when expectations are mismanaged, craving pizza and wine when stuck on deep work), he has learned to control acting on them [01:07:27]. His ultimate goal is to be proof that true happiness and harmonious existence are possible and to create tools and services to help others achieve it [01:11:08].

Future Investments

Dyrdek currently isn’t investing in new ventures outside of his existing portfolio (real estate and businesses he creates) [01:17:33]. However, he is interested in trends related to biofeedback, health customization, and anything that helps optimize overall health and well-being [01:17:52]. He anticipates the evolution of glucose monitors into devices that measure dopamine and cortisol, providing real-time insights into one’s emotional state, which he believes will significantly impact the world [01:18:19]. His ultimate goal is to create an “existence management system” software to help people manage all aspects of their lives for higher energy, purposeful present moments, and a consistent state of joy leading to true happiness [01:18:41].

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