Patrick is the author of The 10% Entrepreneur published by Penguin Portfolio in April 2016. In his book, he reveals how a part-time entrepreneur, he has build a diverse portfolio of investments in new ventures in the United States, Latin America, Europe, and Asia.
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Time Stamped Show Notes
(click the time stamp to jump directly to that point in the episode.)
- [01:15] – Patrick’s claim to fame is inventing the term ‘FOMO’
- [01:26] – Patrick realized after grad school that he’d never owned a business
- 01:58 – Wrote a book about his own and other people’s startup experiences
- [02:19] – John’s grandmother was Patrick’s economics teacher
- [02:57] – Patrick is currently investing capital in around 20 different companies
- [03:53] – Patrick also generates revenue through paid consulting wor
- [04:40] – You can trade skills for stock in businesses
- [05:26] – Small companies will often trade equity for value
- [06:07] – Hustle to get hold of sweat equity
- [06:55] – Worst Entrepreneurial Moment: In 2008 Patrick lost 90% of investments and realized that he’d been failing to be an entrepreneur
- [08:45] – Craziest moment of the AIG collapse
- [11:04] – Entrepreneurial AH-HA Moment: Getting a book deal after a story on how he invented FOMO – and realizing that content creation pays off
- [13:13] – Be generous with what you know, and share with everyone you can
- [13:19] – Biggest weakness? – “I find it hard to say no”
- [14:00] – When you say yes to something, you’re saying no to other opportunities
- [14:27] – Biggest strength? – “I’ve really worked at becoming a good communicator”
- [15:31] – What has Patrick most fired up today? “My book – The 10% Entrepreneur – is coming out. I interviewed people in 9 countries and I love that the book is being published in multiple languages”
- [18:14] – The Lightning Round
- What was holding you back from becoming an entrepreneur? – “I didn’t know any entrepreneurs”
- What’s the best piece of advice you’ve ever received? – “Believe it and live it”
- Share an internet resource, like Evernote, with Fire Nation – Backblaze
- If you could recommend one book to our listeners, what would it be and why? – The Entrepreneur’s Guide to Business Law
- Imagine you woke up tomorrow morning in a brand new world, identical to Earth, but you knew no one. You still have all the experiences and knowledge you currently have – your food and shelter taken cared of – but all you have is a laptop and $500. What would you do in the next 7 days? – “I’d start a micro-lending business and lend small capital sums to entrepreneurs starting up.”
- [22:57] – Parting guidance: “Always think like an owner”
- 23:02 – Connect with Patrick through his website and get a free chapter of his book!
Patrick McGinnis: I'm ready. Let's go.
John Lee Dumas: Patrick is the author of The 10% Entrepreneur. In his book he reveals how a part-time entrepreneur has built a diverse portfolio of investments of new ventures in the United States, Latin America, Europe, and Asia. Patrick, take a minute: fill in some gaps from that intro and give us a little glimpse of your personal life.
Patrick McGinnis: Sure. So the ironic thing is that when I was in grad school I actually invented the term of Fear Of Missing Out or FOMO. That's my little claim to fame and the irony of that is that I actually was missing out on a lot because after grad school I became an investor and I was investing in companies as a private equity investor and venture capitalist and all kinds of things like that, but I never actually was an owner of anything. I never actually started anything or invested in anything personally.
Once I got going on it I realized that I'd been missing out on that the whole time so over the last five years I've basically been working hard to build this portfolio and I've been lucky enough that I've been successful and people have started calling me up and saying; how do you do this? I want to do that too. So I wrote a book about how to do it and it was the whole experience of writing the book and interviewing people all over the world who were doing this. It got me pumped up about helping other people to do it as well.
John Lee Dumas: Well, I love your journey Patrick and I actually love when my childhood kind of intermingles with my current life. And as you and I were talking in the pre interview chat that I like to have – I mean this guy, Fire Nation was interviewed by my father for Georgetown, where he went and he had my grandmother as his home economics teacher and we have friends from different area codes from Maine as well that he knows – it's cool like when you have people from your past who have connections to people from your past and it just kind of intermingles in the future right now, or the present I should say.
And I think it's going to set up for quite the interview, but you know how I always start, Patrick and that's with the dollars because as entrepreneurs we're looking to build viable businesses and that's what you've been able to do. So let's kind of unlock that a little bit. How do you in 2016 generate revenue in your business?
Patrick McGinnis: So, my problem was never the revenue piece. I was working in a big corporate environment and when I left and started my own company I had a bunch of clients that I took with me. So I always had like the money coming in to pay my life and be able to afford to pay the rent and vacation and food and all that stuff. What worried me – where I was focused was; how do I build long-term value? How do I own something that's basically going to accumulate in wealth in time? And so what I've done over the last five years is invest both my capital and my time: 10 percent of both and basically taking stakes in lots of different companies.
And so I build up this portfolio of 20 investments – 21 actually – in everything from a tech company to real estate deals to I actually invested recently in a West End theater production in London. All of these things are managed by other people. I'm part of the team. I invest and I help them to grow, but I have other people whose hard work is helping the value of all those investments increase.
And so I have my steady-Eddie consulting business. I work with the World Bank. I work with an investment firm and they pay me on retainer and I have that kind of comfort, but I have all the upside that I wouldn't have otherwise with being an owner in lots of different types of ventures.
John Lee Dumas: So, a lot of our listeners Patrick are bootstrapping entrepreneurs, people that are really looking to be frugal and watching every penny as it comes in and investing it all back into their business. So, the thing that's probably going through their mind right now is; I don't have money to “invest” in something and where would I even start? Like what would you say Patrick, to Fire Nation? Again, the majority of people that are listening, they are really looking to build a viable business that generates revenue. What would you say to them if they're looking to maybe explore some things that you've had success with in life?
Patrick McGinnis: Yeah, absolutely – well this is something that everybody can do and what's so exciting is I wanted to find lots of stories of people from all over the place doing all kinds of things who didn't necessarily have money to invest. It's great if you have the money and if you do then maybe later on down the line you'll be able to consider investing and becoming an angel investor or something like that.
But when you're getting started there's lots of things that you can contribute to business that aren't money but that are worth stock, that you can trade for stock. Whether that's coming up with a marketing plan, whether that's helping out with a website, whether that's coming up with a logo, whether that is coming up with key hires or introductions or clients; anything that you can do that will help a small company to become more successful is worth something.
One thing that we always forget is that small companies – they don't have a lot of cash necessarily to pay out to people but they have equity – and so you can trade your skills, your talents, and your relationships in exchange for equity. So for example there are great stories out there of people who have come up with a marketing plan and given an hour or two a month to get a couple of percentage points of a company. Over time as that grows that can be worth hundreds of thousands or depending on the case even millions of dollars.
And so if you do that over and over again – it's not about time; it's about taking what you're good at and giving it to other people in exchange for a little ownership stake in their company.
John Lee Dumas: Fire Nation I love this because there's one thing that we all have and that's the ability to hustle – sweat equity – we can do this, so if you identify opportunities, like go hat-in-hand, say; hey I will work for you for free or I will do X or Y or I will exchange services for you to make it happen because guess what? A lot of businesses and a lot of companies, they're bootstrapping themselves so they would happily exchange services because they don't have the cash on hand. They don't have that revenue coming in the door yet, so they need to keep expenses low and sometimes the only equity some companies have is the actual equity in their company.
So, think about that, be inventive and make sure that word hustle is always at the forefront of your vocabulary. Now Patrick, I do want to share because you graduated from Georgetown in 1998 and you've been all over the world since then. You've done a lot of things in business since then. You've been an employee, you've been an entrepreneur, you've been a mix of both – what is your worst entrepreneurial moment to date? And Patrick, really take us to that moment in time and tell us that story.
Patrick McGinnis: Well, the moment that I want to key in on is the moment where I actually figured out that I had been failing to be an entrepreneur and that's the day that – in 2008 I was working at a private equity firm that was a division of AIG – I had been very successful. I had been promoted steadily, moving up the trail and getting more ownership in our funds, getting those bonuses every year and then in 2008 AIG blew up and my fund blew up. My stock in the company fell by 97 percent and I realized I had never diversified myself and I had never, ever found a way to build anything outside of what I was doing day to day.
And so I realized that in the failure to be an entrepreneur actually I had to do something differently going forward. That for me was a really tough experience because you come from Maine like I do and it's a simple place and we don't have lots of family wealth to fall back on. If I fail I'm going to be living in my parent's basement in Sanford, Maine. They have cable and they have a half bathroom down there, but that's kind of it. I don't have something to fall back on. I had to kind of make my way in the city on my own so all of a sudden all of this hard work, all of this stock, everything that I had disappeared overnight and I realized that the system wasn't what I thought it was.
I thought it was this meritocracy and all my hard work would pay off. And that day something in my head broke, like something in my brain shifted and I realized I've got to do something where I build something that's for me, that I can own going forward. I didn't know how I was going to do that yet, but I knew that putting my faith blindly into the “corporate lifestyle” wasn't for me any longer.
John Lee Dumas: What was the craziest moment of the AIG collapse? I mean I know there was a lot, but what was a crazy moment that you think would be an interesting insight for Fire Nation of a behemoth collapsing?
Patrick McGinnis: Well, it was amazing because I was in this very cushy job where we would travel around the world and stay in nice hotels and all this sort of stuff. And so I was in Istanbul in the Park Hyatt, which is a gorgeous hotel. They'd upgraded me and I had a steam room in my room actually which was great I guess –
John Lee Dumas: Oh, all the taxpayers are loving hearing this. Continue, please.
Patrick McGinnis: Well, it was an upgrade so it was a very reasonable room, but that was the day that they decided that we're not going to pay our bonuses. I understand that. I get how that works.
John Lee Dumas: Now, you don't have to give us an exact number, but about how much could a bonus be if you were at a similar place in your career?
Patrick McGinnis: At that point in your career you were looking anywhere from $300,000 to $500,000.
John Lee Dumas: So this is a chunk of change. Now what percentage of your overall salary is that about?
Patrick McGinnis: Probably about around half or so, so it's meaningful and you're expecting to get that, right? And so I was sitting in my room and I got that memo and people were really upset about it and I just remember looking at the mini-bar and saying like; I'm going to drink every Coke in that mini-bar because at least I'll get part of my bonus out of the mini-bar. Which is really terrible actually, but the thing is that I understood the outrage but for me – you know we had people outside our building with signs and they told us we couldn't carry anything with a logo on it. And it really baffled me because there were people in the company who had done terrible things that caused the blow-up of the company.
I get all that, but our division had nothing to do with it. So you just sort of felt like; I've done everything right. I wasn't the guy who took millions of dollars out and ended up losing all this money. No, no, no – we were building long-term portfolios that were actually great, but it didn't matter. When you're on the decks of the Titanic it doesn't matter what your resume says. You still go down with the ship.
John Lee Dumas: That is a great analogy Fire Nation. The Titanic – wow. So, let's do a little bit of a shift, Patrick because you've had a lot of what I call Ah-ha moments; epiphanies throughout the years. What would you say is one of your greatest that you want to share with Fire Nation? Tell us that story.
Patrick McGinnis: About a year and a half ago – it was June of 2014 and I'm in Boston for my business school reunion – and I get an email from a reporter and he says; I've traced the origin of FOMO back to you. And I guess I knew I was involved, but I hadn't really thought about it, right? And so he wrote this article about me and all of my friends and it went out and it got viral. I had been struggling. I had this book proposal that had been rejected by 33 publishers and I was getting used to rejection and it was frustrating because I understood; I'm a first-time writer, but we were rejected over and over and over again.
We had learned and we had made the proposal but it was still – we weren't breaking through. And the minute that article came out I got a meeting with Penguin and two weeks later I had a book deal. The insight, the Ah-Ha moment which I think – and you do this so well, John – is creating content and putting it out into the world: things that help people, things that are insightful, things that are original and different. It can take you to places that you never – you just don't know what will happen years down the line.
So, if you're starting a business or you're starting something go out there. Share your insights with the world. Create content because it can do so many wonderful things not just in terms of helping you later on down the line but also you just don't know who it's going to touch; who's going to read it; and who's going to learn from you.
John Lee Dumas: There's a lot that I want to focus in on there, but that last part is so powerful Fire Nation. If you're willing to create free, valuable, and consistent content it will touch people. It will grow an audience for you that you can then reach out to and say; what is it you're struggling with? They can tell you their problems, their pain points, their obstacles and then you can turn around and create solutions for them to bridge that gap in the form of a product, a service, a community. It's so important and so impactful in so many ways if you are just willing to from the very onset create that value.
So Patrick, that's my big takeaway from your Ah-Ha moment. What do you, in just one sentence want to make sure Fire Nation gets from your story?
Patrick McGinnis: I would say be generous with the things you know and share them with everybody you can.
John Lee Dumas: What's your biggest weakness as an entrepreneur?
Patrick McGinnis: My biggest challenge – and I'm working on this – is I'm bad at saying no and I think a lot of us who are there building things and sharing things and trying to change the world around us, we want to be involved with other people. We get excited about other people's ideas and we want to be engaged and we want to be helpful, but there are only so many hours in the day. And so for the fairness of the people you're working with and to yourself and your family and everybody around you, you've got to be very rigorous about how you spend your time.
I have really focused on that this year but it's an area that I would say still needs improvement.
John Lee Dumas: All you have is time, Fire Nation and when you say yes to something that could be okay but just realize, just know for a fact that you are saying no to everything else. So if you're willing to say no to everything else for that yes then by all means jump in and do it. But if you're kind of like; eh, I don't know. Maybe I'll say yes. If you say yes to somebody that's wishy-washy you're saying no to all the awesomeness that you could be saying yes to down the line. So, really weigh those decisions.
Now, flipping it Patrick: what's your biggest strength?
Patrick McGinnis: The thing that gets me most excited about everything I do is communication. I've really worked on being a good communicator, whether that's in written form or I speak four languages. I do work all over the world and I've invested the time to actually try to be a communicator – not just in English, but in other languages – and as a result I've felt like I've had unique insights and I'm able to connect with people. And I also at the same time really try to listen.
That combination has made it so that I've been learning from everybody around me for the last five to ten years and to me that gives me not only insights that I wouldn't have but it gives me the strength of knowing and the confidence of knowing that it's something that I'm good at and that I want to do.
John Lee Dumas: Fire Nation, do you know what's kind of funny about listening? People actually start talking and you might have the opportunity to learn from them, to learn – again going back to what they're struggling with or what they're succeeding with so you can emulate their successes and you can maybe create solutions for their struggles. Listen – it all starts from there.
Now Patrick, what is the one thing that has you most fired up today?
Patrick McGinnis: The thing that's got me fired up right now is my book The 10% Entrepreneur is coming out in April of 2016, so right now and the part that really gets me excited, other than the fact that finally after all of this hard work it's going to be out in the world and it's going to help people and I'll be able to hear what people think and how they're interacting with it, but I'm excited that it's going to be in a bunch of foreign languages. It's going to go to the four corners of the earth. When I wrote the book the number one thing that I kept in mind was I want everybody on this earth – I don't care where you live – to be able to pick this up and find somebody that you can relate to.
And so I interviewed people in nine countries on four continents and so knowing that it's going to be in Chinese and Japanese and Spanish and Thai; just to me that gets me really fired up.
John Lee Dumas: I love that, and Fire Nation it's going to go back to the core. Like, what speaks to you as an entrepreneur? What's that voice, that message, that mission that you want to get out? Now, The 10% Entrepreneur as this is May when the interview goes live, is available so go check it out. And I want to say we have a lot of awesomeness coming, so Fire Nation don't go anywhere because the lightning round is right around the corner. We're going to take a quick minute to thank our sponsors.
Patrick, are you prepared for the lightning round?
Patrick McGinnis: I'm definitely prepared.
John Lee Dumas: What was holding you back from becoming an entrepreneur?
Patrick McGinnis: I didn't know many people who were entrepreneurs growing up in small-town Maine. I knew people had small businesses, but I didn't see people that were building things necessarily. A lot of our families worked for companies or the government so I didn't really see it and it took me having to work with entrepreneurs and meeting entrepreneurs and learning from them to get the confidence to take that risk.
John Lee Dumas: Maine is the way life should be, but it's not the entrepreneurial way of life so you're definitely going to have to go outside of the state for that. Now, what is the best advice you've ever received?
Patrick McGinnis: I was on this bus trip in Columbia. It was supposed to be 10 hours. We were going from Bogota to the coast. It took 30 hours. We were stopped by the military. We were searched at gunpoint. The toilet broke. Things were running down the aisles. We were stopped by protesters who broke the bus. A lot of things happened, and this was in college. We couldn't start the bus up again. It was broken and they said; you have to get off the bus and push. And I was walking down the aisle and I said; no lo proquer which means I can't believe it. And this woman looked at me and she said; creer lo divalo which means believe it and live it.
And I have always from that day on, whenever things get a little sticky that's what I fall back on; believe it and live it. You have to live in the moment. You have to take what you're given and you have to make the best of it.
John Lee Dumas: I like how you used the word sticky there; whenever things get a little sticky –
Patrick McGinnis: Literally.
John Lee Dumas: Believe it and live it, Fire Nation. I mean just think about that. What else is a better reaction than just embracing the moment – whether it's horrendous or amazing – and just saying; hey, I'm going to live this moment and not escape reality. Now, can you share Patrick an Internet resource like an Evernotes with Fire Nation?
Patrick McGinnis: Absolutely – so, last year I left my laptop in the Miami Airport lounge and when I landed in New York I realized I didn't have it and I had my book on there. And I freaked out but I was able to pull up the Backblaze app on my phone and I could check and make sure that all my files were there. So, I did get the laptop back but I knew that no matter whatever happened everything was there and that was a moment when I was sort of amazed at the quality of their service. They're amazing.
John Lee Dumas: If you could recommend one book for our listeners, Patrick to join The 10% Entrepreneur, which is available Fire Nation, what would that book be and why?
Patrick McGinnis: The most substantive guide I've ever found for entrepreneurs that I just love is a book called The Entrepreneur's Guide to Business Law. It's by a woman named Constance Bagley. She was my professor in grad school and it's great because no matter what problem you come up with or that you confront as an entrepreneur you can find the answer in that book. I keep it on my bedside table.
John Lee Dumas: Is The 10% Entrepreneur going to be available in the audio form?
Patrick McGinnis: Absolutely. It comes out in April as well, so you can get it in digital, in traditional paperback, and in audio form.
John Lee Dumas: Amazing – Fire Nation I know you love audio, so I teamed up with Audible and if you haven't already you can get an amazing book for free at eofirebook.com. Maybe it's The 10% Entrepreneur – who knows? Patrick, this is the last question of the lightning round but it's a doozy. Imagine you woke up tomorrow morning in a brand new world identical to earth but you knew no one. You still have all the experience and knowledge you currently have. Your food and shelter are taken care of, but all you have is a laptop and $500. What would you do in the next seven days?
Patrick McGinnis: Okay. I love this question. So there are three criteria for me about what I'd do. The first thing is I've got to do well, so I have to be able to make a living. The second is I have to do good. I want to make an impact on the place that I've landed. And the third is I want to build long-term value, equity value in something I could sell and so I was thinking like – I've actually seen this situation. If you go to Africa people are building businesses on that kind of money every year. People live a life where $500 is their annual income.
So what I would do is start a micro lending business, lending to small entrepreneurs, getting a little equity in their company like in The 10% Entrepreneur and build a bank that's micro lending and also has some little equity stakes that over time will grow to become incredibly valuable.
John Lee Dumas: Fire Nation, we're going to end on fire with a parting piece of guidance from Patrick, the best way that we can connect with Patrick, and then we'll say goodbye. So Patrick, what's the parting piece of guidance?
Patrick McGinnis: No matter what you do always think like an owner.
John Lee Dumas: And the best way that we can connect with you?
Patrick McGinnis: PatrickMcGinnis.com – Patrick and then M-C-G-I-N-N-I-S, and if you go to my site, PatrickMcGinnis.com/fire, I've got a free chapter of my book and I've got a diagnostic that will help you figure out the best way for you to become a 10 percent entrepreneur.
John Lee Dumas: Love it – and Fire Nation, you are the average of the five people you spend the most time with. You've been hanging out with PM and JLD today, so keep up the hoot and head over to eofire.com. Just simply type Patrick in the search bar and his show notes page will pop up with everything that we've been talking about today. Of course, get The 10% Entrepreneur and put it in your pocket and read it and if you go to PatrickMcGinnis.com/fire, you're going to get the first chapter or a chapter for free along with some other awesomeness so head on over there and take some action. And I want to thank you, Patrick for sharing your journey with Fire Nation today.
For that, we salute you and we'll catch you on the flip side.
Patrick McGinnis: Thanks a lot. This has been awesome.
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