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Welcome to Founder 2 Founder, the ultimate podcast for entrepreneurs who refuse to settle for ordinary. Hosted by Sardor Umrdinov, founder and CEO of Home Alliance - a $100+ million tech-enabled home services platform operating nationwide.
From bootstrapping his first business to building a horizontally and vertically integrated empire, Sardor brings you raw, unfiltered conversations with successful entrepreneurs, industry leaders, and game-changers who've turned their visions into multi-million dollar realities.
Each episode dives deep into the real stories behind business success - the failures, pivots, breakthroughs, and strategies that actually work. Whether you're scaling your first startup, planning an exit, or looking to acquire your next business, you'll get actionable insights from founders who've been there and done that.
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"Partnerships are everything. Success is not a solo journey." - Sardor Umrdinov
Welcome to Founders to Founder podcast. A podcast where entrepreneurs talk openly about building companies, making mistakes, raising capital, and playing the long game in the business. I'm Sardor Merinov, and my guest today is someone who has been more startup than almost anyone I know. Rick Citron has been participating law in California since 1971. Over more than five decades, he has helped launch over 2,000 companies, working with the founders throughout the some of the most critical moments in their journey. From forming a company and structuring equity to raising a capital and navigating complex business conflicts.
Uh Rick, can you tell me the most unusual founder conflict you have ever seen and the most surprising startup success stories? Was founded by my brother building reusable rocket ships in 1993. The technology was available and uh we started a company to build reusable rocket ships. Uh we raised uh $3 million from one investor and went out to raise more money and got stuck. Uh my brother was doing it. He had done a prior company called SpaceHab which was a research laboratory that fit in the cargo bay of the space shuttle. He started from scratch his idea raised $240 million for it went public flew in the space shuttle 18 times. First commercial vehicle to go into space that wasn't government funded in the cargo bay of the space shuttle. And because of that reputation, he was able to start this rocket ship company. But he met with investors and um investors kind of laughed at him. He wanted to put tourists in the cargo bay, the space shuttle like business is doing now. That well that's what led the space have which was a research laboratory also a supply chain for the mirror space station international space station. But when he started the reusable rocket ship company, he said, "I want space tourism." And everybody continued to laugh at him. So I said, "Please don't talk about space tourism. Talk about satellites. There going to be thousands of satellites in Earth orbit." It's 35 years ago. We knew that. So he started talking about satellites. And we started raising money. We built a management team. And uh one day um we're building prototypes in the Mojave Desert. And we would take groups of 20 people out to see our prototypes so they would get excited and invest with us. And one day we had about 20 people out there. I knew them all. I invited them. And there was this one little old man following us around. And I said to my brother, I know everybody here except that that that guy. And I said, who's that? He said, you don't know who that is. I said, no. He said, that's George Miller. I said, okay. He said, you remember Apollo? I said, come on. He was the head of Apollo. He put man on the moon. So I said, 'What's he doing here? We raised $3 million for a little tiny startup. He said, 'Go ask him.' So I walked over. I shook his hand. I said, "Hi, George. I'm Rick Citron." He said, "I know who you are. You're Bob's brother." I said, "What are you doing here?" He said, "There are 300 companies that have handed me paperwork to build reusable rocket ships." And which is the secret to getting to space because it's 70% of the cost of launching of of putting something in space is the launch. the seven minutes to orbit. And he said, "If you can reuse them, the cost will go to a fraction of that." And and uh he said, "You're the only one that's actually putting hammer to metal, everybody else's paper." And he joined our team. We gave him 10% of the company. We raised $680 million. 600. We almost flew in 1998. We ran out of money. We knew we'd run out. We needed a billion dollars. We had the balance of that money available to us uh four times. It was actually we paperwork is in place to raise that money and it fell through all four times and so we went broke. You have raised 680 million. We raised and spent $680 million. 64. We had a rocket ship 75% built a reusable rocket ship in 1998. 1998 $680 million burn. Well, people, a lot of smart people, they didn't invest in our company because the stock was going to be worth a lot like SpaceX. They invested because they wanted their satellites to go up. So, we had very powerful people who said, "I want to control space." It's you know, recently I met a gentleman uh and he was talking about Elon Musk. his direction and misdirection and uh misdirection is occupy Mars like like he knows correct we're not going to have enough space in earth for the human has to go and explore the space like it's a misdirection the redirection is actually satellites because if you would come and say satellites everyone will basically vote about the burning and so much like people will not give money but because you have so big of a vision and mission to Mars. Well, talk about Elon Musk in 200 I remember you met him right in 2004. Yeah. When our company was in bankruptcy, this is 10 years later. Still trying to get it off the ground. I took Musk out to dinner. I spent an evening with him trying to convince him to buy our company. And what he said, he was very smart. He was in his early 30s at the time. He and very thoughtfully he said, "I want to build everything myself. Your rocket ship is built by 18 subcontractors and one prime contractor each part. I want to build it in one place." And I had talked to our engineers about doing that because I knew that's what he wanted to do. And they said it'll take him 10 years to do it. Our rocket ship would fly in 18 months. And I told him that. He said, "I got to try." And it took him 10 years. But look, he's doing two or three launches a week now. So I think he even went to Russia to Kazakhstan Biken or like they they laugh at him that he would he never will be able to like put rockets together. He's one very smart dude and he's done some incredible stuff. Aside from the politics, we all kind of have strange politics. Uh he's done some incredible stuff. Yeah, I think when you're playing the game on that level like you get involved in policy, you like it or not, you're going to be part of it. like it's hard to stay away. Yeah, I'm a Tesla guy. I love Teslas. Batteries are the next big play and he's taking that marketplace over and these satellites. I I just can't believe they're getting permission to launch thousands and thousands of satellites. Yeah. I when we thought there would be thousands up there, we didn't think it would be 20,000 and it will be. Yeah. I think he's the first one who became a trillionaire, right? I think he already did. Yep. Number
one thing, what kills a deal normally? Not disclosing important information. I see deals all the time where there's important information which isn't disclosed up front and it comes out later. My philosophy is the opposite. All the information on the table in the first week. Mhm. And if the if if the other side likes what's going on, great. If they don't, you don't have to worry about spending hundreds of thousands of dollars in accountants time and attorneys time and your staff's time trying to put a deal together that isn't going to happen. And we do have deals that don't happen. I like to take a deal from day one. A new deal just came in. I made a list of the 15 things I need to evaluate. I will then boil down to the five or six things that I think could make or break the deal. Go over it with my client. And when he's out there, this particular client's searching for a buyer. when he goes to a buyer, he's going to take those five or six points, say, "Boom, boom, boom, boom. This is what I want to know up front. Are we aligned?" And if they say, "Yes, we are," then we start the negotiating process. A very special way of making these deals. Some people like Lois, letters of intent. Some people like, memorand of understanding. What about before I owe interest of right there is a before one before LOI. A letter of interest a letter of interest can be but usually starts with an LOI. I don't believe in that because you can go for months on an LOI without having your deal terms locked in. And then when you lock in the deal terms, they may not be the ones you want. So, I instead start from the other side when I can, which is often I'll say, "Here's the purchase price we want on this sale. Here are the terms that we want on this sale. Here's how much liability we're willing to assume on this sale. Here are the key pieces of the puzzle that we're concerned about. Is it an asset sale or is it a stock sale?" Difference in price can be 15 or 20%. So, it's not just the price you're asking, it's how the transaction is put together. and you you find those key points and see if you're in alignment on them before you start. And then you can actually do what I call a binding term sheet. You literally instead of a letter that hey, we'd like to do this. When we do it, this is what it will be. Here are the contingencies that could make the deal not happen. And then then you're facing it up front. There are a whole series of new rules that the California State Bar came out with this last year pertaining to fee splitting and disclosing it to clients. There's full disclosure requirements now. Very full disclosure. Yeah. Because I'm seeing the industry is growing so much so big. Like who does a lead genen on the MVA motorcycle vehicle accident and personal injury one? It kind of flabbergasts me that all these billboards say and and on the buses you see all these ads. Yeah. and they're making money off or they wouldn't do it. Yeah. Yeah. Interesting. But it's it's one thing to pay somebody a fee to do something. It's another thing to share your fee which you can't do. Correct. And I think this is similar on the investment banking also like on brokerage. Yeah. Licensing. Licensing. Licenses are anytime you go to do something like that, find an attorney who knows what he's doing on the kind of license that you need because they have the answers are real. They're black and white. You just have to know what they are.
Rick, let's talk about one of the most critical issues for the founders. The most common mistake when splitting equity, do you think the 50/50 split is good or it creates problems? It's really important for the founders to have a written agreement between them as soon as they can. That written agreement should say how's the equity divided up? How much money are we each putting in? How much time are we each putting in? What role are roles are we going to play? What titles are we going to have? How do we make decisions on bringing in more partners? How do we bring make decisions on bringing more money? There about a dozen items that you put in a two-page agreement together. And I have clients who I tell that to and they don't do it. And months later when the company started to do well, they have fights because people's expectations are different. Yeah. and they haven't expressed them well enough. A story, a sad story. One of my clients who I've done many businesses with started a new company uh technology company for auto parts. Really, I would go into detail. It was phenomenal idea, but uh and he's a good guy. And he brought in a a programmer and he brought in a marketing guy and he brought in a guy to help him with money. and he brought in a guy to run the day-to-day business part-time working at night, not paying anybody, but saying, "We're all going to get some equity in the company." We formed a corporation for it. And um they started building the software. And a month into it, I said to my clients, "Do you have your founders agreement yet?" He said, "No, we'll have it soon." Two months, three months, four months, 10 months later, he finally calls me. We're getting together Saturday. We're going to do the agreement that I know I've been promising you for 10 months. called me up on Monday morning. He said, "Fell apart." I said, "What do you mean?" He said, "Well, I wanted to give my programmer I wanted to give my marketing guy three points. I wanted to give my uh my money guy a point. I wanted to give my operations guy a point. And the programmer I'm going to give five points to because he's so important. He's done such a good job for us." When you go into IPO, you can do a A and B series, right? You can do two series. You can do A series and you can do B series. That's one of the ways to do one of them is like uh voting and other one that you cannot write. They just did one like that today. Mark Zukenberg and who else did it? I think the Google's Sergey Brin other one did it. I think they they learned it from I think I don't remember who they learned from. You always want to give away as little as you possibly can. There's some things that are easy to give away. Some things can be very painful to give away. I've had clients who created a preferred class of stock that gave away so much that they lost even though they didn't think they did, they lost control of their company. What options do you have if let's say co-founder uh stop bringing value and the co-founder has a large part of the equity but it doesn't bring any value anymore. You have to negotiate with them to get them out of the company. I yesterday I had a client who has two founders in his company who've added no value. Yeah. and he called me up and said, "I negotiated for them to give their stock back for nothing." Now, that doesn't often happen, but my client was, "We drew the documents today to get them signed right away." But if somebody isn't performing, you got to let them know. That's why you set the expectations in a founders agreement. What about on employees? Uh do uh you use we use Phantom stocks, we have stock options or you can do ESO, right? ESOP normally comes later stage. The simplest thing to do is to give somebody a stock option. Uhhuh. Because there are no tax consequences on stock options or phantom. No consequence no tax consequences to stock option until it's exercised. Okay. Until exercise. So if you give somebody stock, there are all kinds of tax things you have to worry about. When it's founder stock when you first start and no value has been set, not a problem. You file what's called an 83b election with the IRS. Once a company has value and you start handing out stock, you got a real problem because the people who get that stock have to pay income taxes on its value. Yeah. Without even receiving any cash, they have to pay tax. That's right. When people bring me a founders agreement and they say, "This guy's going to own 10% of the company, but we're going to start with 2%. And then he's going to get 2% when he does this and 2% when he does this." I say, "Give him the 10%." Now the stock comes back if he doesn't accomplish his goals which are clearly defined. That person's getting founder stock at the founders's price petting a share rather than five years from now when he would otherwise get the extra 2% when the company's worth millions of dollars. He's got to pay income taxes when he gets that stock. So I like handing out all the stock people are supposed to get upfront with with vesting schedule saying that we can take stock back if you don't do it. That's the best way to do it tax- wise. Now, some people like don't want people to have voting rights. They don't want them to have any rights until the company sells. Then we'll do phantom stock. It's a complex process. If somebody has to stay with you, normally they lose everything. So, it's not as as much of a um an incentive for them, but sometimes when a company is older and very valuable, uh you can't just give them stock. And when you do issue stock options, there are rules about their their exercise price. It's got to be at a certain value. And if you want them to get it for free, you just say, "Listen, I'm giving you phantom stock. When we sell the company, I've got one I'm working on right now. We just closed. 15% of the company was phantom stock for two shareholders." But some people thinks say the phantom stocks are not real. Phantom stock is real, but you have to fulfill the terms. One of which is you have to be there when the company sells. Yeah. Yeah. So if the company takes years to sell and you leave before then you've lost your stock. Now the downside to stock options and phantom stock is you pay ordinary income taxes on the stock versus capital gains and that the difference in rates 15 16 17% in taxes. It's a lot of money. So you'd rather have stock than have stock options or phantom stock. But the tax consequences can be prohibitive especially if you have a company that already has a valuation. ESOPs are normally done later stage, right? Yeah. An ESOP is really for the benefit of the owners. And I think you should have like 2.5 million in IBITa. Like your value of the company has to be something because to build a ESOP it's going to cost like half a million or million dollars, right? To here's the issue on an ESOP. It's expensive to put one in place. Yeah. And my experience of them, I don't deal in public companies, but my experience of them is there are other ways to do it that are easier. What are those companies? Well, if you have an hour, I could go through I've got the list on my computer. The No, I can give you one. Broadcom is just sold for $37 billion a couple years ago. They started in my office. I didn't do it. They did it. I don't take any credit, but I get to see these companies. It's really fun. One one of my You can see the patterns, right? Yeah. I don't do the patent work. Somebody else does. You can see the pattern, right? See the pattern? Yes. I can see what it takes for somebody to be a CEO on a company that's growing at massive speed. Yeah. And I can, you know, if when you've been around, you get to watch the ones that work and the ones that don't work. Sometimes companies are growing too fast and the management can't keep up with it and they need to replace it and bring in new people. But that even applies to a startup company. You know, the investors look at the management team and they say, "Are these guys good enough to get the product to the market and maybe to a million dollars in sales and if they think they are and then they say, okay, how far have they gotten? What's the value of the company today?" And then they say, "Okay, where's the money coming from after our money has gone in?" Because it's going to take more money. You know, the the average startup company uh in a technology arena is going to need a million dollars to get to product. They need another million to get to market and then they need another five million to roll it out. I've watched them. They go through they go through a preede round where their friends and family and fools invest with them and then they go through a seed round which is what everybody talks about and then they run out of money. They go to a postse round and then they finally get to what's called series A. Yeah. And once you get to series A, you're in a different marketplace and and you've accomplished enough where the big bucks start rolling in. Yeah. fun to watch that on the M&A of the law firms. So uh do you know any uh rollups are happening in the law firm industry and what sub industry I mean subcategory of law industry I guess right because they also there are different types of the law right yeah there are like a hundred basic areas of law people don't realize that they think oh there's a PI attorney and there's a criminal attorney and there's a business attorney there's a state planning attorney you know they can name five or six it's more like a hundred you cannot just buy a law firm without having a bar license correct like yeah No, no. To to be a lawyer and earn fees off a law firm, you have to be a law firm. Correct. Now, there are ways that accountants and CPAs participate in the equity and the and the payouts. There are fancy ways to do it. There in the medical profession, you have to have a license to charge for medical fees, but there are ways that people set up companies to service the medical profession, and they can make money off of that. And that that's how they do it in the legal profession as well. So normally normally law firms they join another bigger law firms and like do the role role in equity and all that and continue running. That's what normally happens. I'll tell you what's going on right now cuz it's different from years ago. In the old days um a big law firm with a hundred people or more would say we need to have a specialty that's coming up for this client. And they would look for a law firm that has that specialty and buy them and add them to the firm. That was a good reason to do that. Nowadays, what's happening is these big law firms are breaking up and the the specialty division of the law firm is creating their own firm and that started happening maybe 25 years ago where instead of being with the big firm because you wanted the reputation uh and the power of the big firm uh and you still need those big firms for these big companies. I mean when a company goes IPO, a big company goes IPO, there are 200 attorneys working on that project, it's not a little firm's job. They can't do it. There are a lot of niche practices within those firms where they can break out and do their own thing. It started I saw it starting in the in the uh estate planning arena. the in the 80s and 90s there were some cases that came down where big firms had done estate planning work and liability followed when somebody died and they got scared and so all of the estate planning divisions of these big firms broke off on their own. That was the first time I'd really seen that. And you see it all the time now where a group of people break off from a big firm and start their own and they're able to attract clients because technology allows them to accomplish a lot. And now with AI, you're going to see even more of that. You you can have a small firm of four or five people that can handle a major transaction that beforehand you needed 30 or 40 attorneys to be on it. how the lead genen world works on the law industry like call Jacob those ones some of the like in home services you can actually like do the paper call paper lead you can buy the ca like you can buy the job or something in law industry or like MBA motorcycle vehicle accidents and I think personal injury lawyers like some do the advertising or they do the paper lead or cases like how that is normally or California probably has a little different law than other states. Yeah, every state has their own bar association rules. It was actually illegal to advertise as a lawyer until 1978. One of my clients started a firm, Jacobe Meyers. He was the third partner in that firm. He left them. But that firm was sued by the state bar to take their licenses away from them because they were advertising. And it was tested and went through the courts. They said lawyers can't advertise. It's got to be legitimate advertising. You can't advertising fake things. But there was no advertising before 1978 in the law profession. Advertising can dramatically impact your practice. So if some small lawyer wins a big case and gets a million-doll fee, he all of a sudden has all this money that he can use to advertise to bring in a lot more work and hire more attorneys. And that's I think that's part of what you're seeing happening with all these advertising. Correct. I remember one of my buddies was a u a personal injury uh lawyer back in the 80s and advertising was now just legal and so he tested advertising on television and uh it was so funny he he spent $10,000 a month on advertising and it just wasn't paying off. And one day during a break in the commercial, his son was watching him do the commercial and his son came and sat on his lap during the break. And the the producer said, "Leave him on your lap." Well, for the commercial and the son spoke Spanish. My client does his pitch, which he's been doing for five months and not going that well. And all of a sudden, the kid at the end of the commercial says, "Come to my dad in Spanish. Come to my dad. He's really good." Photo right off the hook. So one little tiny thing can have a dramatic impact on any business and particularly in the law practice. But can the personal injury lawyers uh uh or motorcycle vehicle can they buy leads or not? You're not allowed to pay fees based upon what you earn in all of these professions, medical, dental, uh legal. So you can pay somebody to do marketing for you, but you can't pay them a percentage of the cases. That's illegal. But what about can you pay them for the contact information that somebody needs? No. No, you can. You just can't. You You've got to pay a fee. A flat fee. Flat fee. Not the percentage. You can't give a percentage of the fees that you earn as a lawyer. Got it. Got it. It's a similar sharing legal fees. You can't do that. It's similar to brokers when you can pay set fee but you cannot really you can charge set fee but you cannot really charge a percentage unless you have a broker license right like FINRA license have you participate in uh a rollup deal when the industry kind of similar companies gets together like HVAC roll up I don't know like maybe e-commerce rollup when they merger companies together as a one hold co and actually sell it to the private equity whatever exit did you participate on rollup like in the either joining in or on the hold side which I've had clients who do rollups they'll buy up their competitors uh and it's a good thing to do I had one client who had a $15 million company in the aerospace industry couldn't sell it had two competitors he sat down with the two competitors bought them both put them into one entity 45 million got top dollar and because they were together uh there are industries right now where the big roll-ups going on. You know, this whole AI industry, there's all going to conglomerate. There are four 500 AI programs out now. It's going to be four companies in five years, maybe less, that will have that whole marketplace. I remember the roll up in the um um bandwidth business way back when uh you had telephone lines and to get onto the internet and people would put a little little knocks in the local neighborhoods and somebody would have 20 neighborhoods because he went door todo to sell them and then he would sell his 20 to somebody else who had 500. I had one client who bought up a whole bunch of them and and went public with his company. But the um uh when somebody goes to buy you um it's an interesting game to play because how much will they pay and there there's a rule of thumb if they have a PTE ratio. They know what their the big company knows what their PTE ratio is. If they can buy you for a lower number on your based on your EBID multiplier, uh they're going to make the profit the day the deal closes. Correct. I had one happen last month. They bought my client's company and resold their company with my client's company and doubled their money. Yeah. And buying my client's company and uh so that's a something that a seller needs to think through. Uh what's the best price I can get for my company? Who is a buyer, right? Not just like individual buyer. the strategic buyer or roll up buyers actually the better because they're going to be pay the premium. That's right. Because they're getting a premium. Now, the fun part is in in my industry, in my business, um, as an entrepreneur, I've had 14 clients who invented things that became successful companies that you use every day. I counted them. I kept the list. Yeah. Okay. Rick, if someone starts a company with almost no money today, what the first three legal steps they should take? First thing is protect your IP. Do it yourself without an attorney, but protect it even if you don't have money. The second step is surround yourself with good people. Build a team. Very few people can be successful without having a team around them. And you can't afford to pay them. So, you give them ownership in the company. their partners and just do that very thoughtfully. The third step, and I tell everybody this, form a Ccorporation because then you have something to show people. You've got a basis of something even before you have a product. You can add stock out to your people. Uh and also you start qualifying for um limited liability, which is important, and something called QSBS, qualified small business stock. If you jump through the hoops, you don't pay federal capital gains taxes when you sell your stock. So, and that has a time period that you start to run as early as you can. What kind of money they should be putting on site or they have to allocate for legal work when they're starting. You know, our average client in the first year will spend5 to $10,000. That doesn't include patents. We don't do patent work. That is like to really put up good startup. You set up you set up a corporation, your relationships with the parties, your primary agreements that you need, uh legal protections in between. I've had clients come in to me, they spend $100,000 and they still don't have a corporation and attorney's fees. It's crazy. I mean, you just don't need to get that deeply into it. Keep it simple. A new client who just came in, they have like five entities and they don't even have a product yet. I said, "What are you doing?" They said, "Well, this is good for tax reasons." I say, "Worry about taxes when you're making money." But they had to spend a lot of money on attorney's fees to create these entities before they even get started, which is not the right way to do it. Yeah, it's not Yeah, I agree. You should not go too far to to put it properly. Otherwise, it's going to be messy. You want to clean it up as soon as you can afford to. Correct. So, I tell clients when they say, "I can't afford to file for trademarks." Do it yourself. it cost $300 per category and just get the trademark in and then you have an attorney clean it up when you can afford to. Um, same thing for patents. It's harder to do a provisional patent, but you could find a student in college who's an engineer who will help you write a patent and for a couple hundred dollars maybe and look on the internet run your AI program. Then there later you can actually come and do the like kitchen cleaning, right? Like to get everything organized. If you did something wrong, then you can correct it. Well, some of the law schools have programs where they have uh students who will assist you and that's a a good thing is you can research that. It's not hard. Oh, yeah. It's interesting. I get entrepreneurs who come into me all the time who have students at USC and UCLA law school who are helping them a little bit along the way.
Rick, over your career, you have interacted with remark remarkable over your career, you have interacted with remarkable entrepreneurs, including conversations with people like Elon Musk, you just mentioned, and Jeff Bezos. Can you tell me what's really separates truly extraordinary founders from everybody else? You're going to have failures, period. no matter how good you are. My best clients have had failures. And the issue is to work your way through them. Find solutions every place you can. I mean, Musk stayed up day and night getting his factory running and he was sleeping at the factory for weeks to get He's driven. These entrepreneurs are really driven uh to a point where your life is consumed by entrepreneurism, by making success for your business. I'm not sure that's the best way to run a life. Um, you know, everybody should have balance. Uh, and we, each of us has our own balance, what works for us and what doesn't. Uh, for me, being with my kids and doing sports with them. I coach 40 sports teams over a 10-year period. That was my life. It it was not my law practice or any given client. Although I worked very hard in my law practice and I had a lot of wonderful clients and it it and that balance is really important. I've had a lot of very successful entrepreneurs who look back at their life and wish they had done some things differently and the biggest thing is more time with the family. It's always more time with the family because some people say I wish I had traveled more. Some people wish I had uh you know taken a different path in my career. But the the common denominator was time with family which is really a a big part of life. Very big part of life. Definitely. Yeah. No, I think we are kind of blessed working from home. You get to spend your time with family a lot. That's right. Yeah. You wake up, your child, kids come to you and all of it. During my meetings, like I'm sitting in my meeting with the entire organization and my son comes in and just gets up on my neck. Well, he's just next to you and sits next to me and plays a Pac-Man. Sure. Sure. And he actually comes and says everybody hi and everybody like next to you. So my our boss boss came. It's the best best moments. But I sometimes I have to close my door if I'm going to some important meetings. But even in that time kind of I feel bad like my son knocks doors he wants to get in and like he calls me. Yeah. Still I think I'm one of the blessed who get gets to spend a lot of time with kids because I don't think a lot of people do that because they still have to go to work right travel to work or spend work a lot on the time. But when you are working from home, I think and growing your kids next to it's one of the best things. One of the benefits of working from home is more time with your family for sure. And that will have an impact over time now because a lot more people are going to be working from home. Right. during the covid I was one of them like was like telling everybody we're going to go to work from office because I was afraid how the productivity is going to be be from work because you have no idea what people are doing if they're sitting in pajamas or like if they actually working or not or they're just collecting checks right I was not sure but later once we start actually putting systems together to be able to tell what they're doing yes and OKRs KPRs and productivity and results like I actually like to keep the people like remotely now and they're much more productive instead of actually putting them in one office actually we solve our organization structure problem you you remember you saw my orc structure that organization structure actually we still have it virtually now like and people follow their uh command lines they know who they report to they have their own KPIs and they're much more productive and I I don't want to take away that and and they can travel and I tell them like go travel as much you can work from whatever you on you don't have to sit in one place just let us know that you're traveling at this day so we know that if the internet connection so we know that what is happening that we're not going to be looking for you right but I want them to travel as much they can they traveling and sometimes in Hawaii sometimes in Europe sometimes in like Aspen like all over right it's it's now a kind of a work environment completely changed having internet access and a portable computer you can do business anywhere in the world now And I believe you are traveling a lot now, right? Like you told me travel a lot. A lot. You're putting like four travels a year now already. We we did I've done 12 trips in the last 14 months. 12 trips. And we still have our 7:30 a.m. morning meetings in my office, most of which I attend remotely. Yeah. Yeah. And I remember when I was younger, I would go to Africa for 4 months, call in once a week on Friday to see how things were going. And you know, the law practice struggled while I was gone, but I wanted to travel. Now I've with the with your cell phone in your pocket, if there's an emergency, you get a message right away and you can react to it when you have time. It's a whole different world than it was 50 years ago. Yeah. With your phone, I think now you can even install like claw bots and AI agents like they can do your work as well. That's right. You're much more productive now. Like Yeah. Yeah. You're curious enough. You want to implement those things. You want to learn then. Yes. Some people they don't want to do anything about it. You know, there's so much good technology out there now available for everybody and inexpensive. Yeah. You know, in the old days, you had to have money to buy a computer. You can now buy a fabulous Apple computer for $499. Yeah. It's it's just a whole new world out there. It's growing that fast. It's getting like it's improving so fast. I got introduced months ago for uh wipe coding. I never really code before. I was able to finish in one month on MVP on early stage whatever tools what we use for the internal comp teams. Whatever I couldn't do it for 10 years, I was able to do in one months. Like I went from using zero tokens to almost like I'm spending like $6,000 in tokens now because it gives me results, right? Like the value of that what I'm building is it's it's limitless for now. And the growth of if you really look at that hockey stick of delta how that thing is actually the lovable is one of the products we use it went from zero to hund00 million Mr. in four months they became $10 billion company in four months that's integrating so fast and I had to let go uh my product team uh my junior developers and the QA and designers because AI does better job than do they couldn't adapt fast enough because when I asked for the interview the product team do you use this tool they couldn't tell me yes because they should be more advanced than I do on those tools because I'm like ex a plumber or technician, right? Like I should not be knowing what I know. They should be in IT world. They have to know that more than I do. That's right. And my goal now for the company, we spend about like half a million dollar on payroll now a months. I want to actually shrink that payroll to 250,000 a month, 50%. or not even shrink it. I want to get token utilization and software utilization be 50% of my company spend like maybe we're gonna keep that on 500,000 a month but I want to spend another 500,000 like approximately on token utilization because it means you're getting productivity usage right I want to have 50/50 eventually maybe we're going to get like 80% on tok utilization and 20% on payroll that is going to be I think the most productive things you can get and you will get there just how long will it take? Yeah, I think it was how fast it's growing. I think we're going to get there. Knowledge base and accomplishments. I'm on the UCLA medical board and they had a meeting last year with three very prominent AI founders and uh one of them was a doctor. In the next 10 years, we will do a hundred years worth of research in medicine. Mhm. All the things we thought it would take a hundred years years to solve will be solved in 10 because of AI. I can imagine. Yeah. Because they will have cures for all these things that we worry about today in a very short period of time. Yeah. Because if you connect all that data, I'm not sure if the 23 andMe has API connection. I would love to connect that to Apple Health's and other sensors. Right. If you connect all of them in one place and you can really know your like body yourself what works what doesn't work right the start of understanding medicine is defining proteins they just started defining you know line code what a protein is uh in the 80s and they they did some small number of proteins over a 10-year period I don't remember 10 or 20,000 proteins and then all of a sudden the computers got so did for the next 10 years they did 40 or 50,000 proteins. In the last two years they've done 200 million proteins defined in the last two years because of AI. Once you know what those are then you can start saying okay let's take them apart and figure out how they work. Yeah. Which is what they're doing for medical discoveries.
It's mindboggling. Yeah. Rick, you are big Dodgers fan and we even went to Dodgers game together. you invited me like it was like one of the really interesting experience I ever seen. I didn't know being living in LA for 20 years. I didn't know that part that culture part of the LA and the question is do sports play do sports and places like stadiums play a big role in business culture of LA like crypto LA Lakers Dodgers right like what is your intake and I believe you have a yearly pass on that right you invite your clients in friends I believe and you you go there that often you told me I do go often I've seen season tickets. The Lakers and Dodgers impact of sports on our lives really showed through when CO started and they cancelled everything for months and it was truly a change in lifestyle for me and almost everybody I knew just that sports part and then they brought it back slowly and it got came back and it's bigger than it's ever been and you know people worried that people would be disenchanted with sports and they would go away because of co didn't happen. Now you're getting some really good business people involved in the sports team. So the Dodgers are making a fortune because they know how uh the Lakers are going to make a fortune because the Dodger management team is now the Laker management team. I expect my ticket prices to skyrocket this year for next year. But the um sports is just a part of our who we're made of. There are a lot of people in this country who live and die sports all the time and it's their their joy in life and that's wonderful that it can make people so happy and it happens to be a very big economic factor. Which one you are Dodgers? Not how often you go to Lakers or which one how often you go to Dodgers? The Dodgers have 81 home games. I I have uh 18 home games this year. I share them with other people. I can't go to 81 games and then the playoffs. there'll be more games. The Lakers are half as many and and I share that with a group of people. I have uh 10 Laker tickets. So, I go to the game, you know, during the season and every two or three weeks during How long you've been going there? 35 years. Years plus and more. I've been doing it since my kids were born. 40 years and I love it. Yeah, it was I was introduced to that and I was like, "Wow, this part of life of LA I didn't know." My kids grew up do big Dodger fans and Laker fans, but big Dodger fans. My my oldest son is he would go to every game if he could. I believe your your son is musician, right? Yes. Is a a doctorate from USC Thornton School and he's teaching at uh music musicians institute finishing his thesis. He's finished all the other work. I keep saying get that thesis. It's important. You didn't want him to go after law degrees? No. I wanted him to do what he wanted to do.
We are uh working with interns on our uh corporate M&A M&A team. We got like seven interns on corporate M&A on mergers acquisition like we are looking going over they're learning a lot and after six eight months or like a year of course they are finding uh investment banking or the place to go but they already have the resume they already have the experience how to go through the loss how to actually get the how to sign NDAs like they already have an experience being inside the deals right like they're getting really good good experience that's great Yeah. And it's I think those getting becoming an intern uh on like on the being inside the deal I think one of the best if I was younger myself I would first thing I would actually go to the M&A probably most startups fail because of what one person who's been around to kind of mentor them and help them uh so that when they come up with a crazy idea that could really hurt them they'll stop them and most of the people come into me with new ideas have really good ideas. Most of them when I was younger, if somebody didn't know what they were doing, I would tell them to do their homework. I'd tell them which homework to do. But today, they've done their homework. They a lot of them are educated. They've gone to business school. They uh they have parents who've owned their own businesses. Uh and entrepreneurism is here to stay. Uh but the smarter you are, the more you surround yourself with good people, the better chance you have for success. Yeah. No, definitely. No, I think today you mentioned a lot about the mentorship and about giving back. Yeah. Yeah. And you're doing it with these podcasts. Yeah. Yeah. Yeah. Definitely. This podcast is for that actually like to actually give back to the the new founders who are starting up, younger starters, younger rigs who wants to start up their own startups and founders actually they can learn by the mistakes of others not to do the mistakes, right? Like if I I wish I had this kind of podcast like when I was starting probably I would do less mistakes. Yeah. Always look you have to always look for the f for the mentors. And uh when people says like I cannot find the mentors no you're not looking probably you're not asking y for the mentors. When you are open to learn open for coaching the mentors will show up. Thank you Sar for the opportunity to be here today. It was really uh a wonderful afternoon. Thanks Rick. It was really a pleasure to having you. It was really uh eye opening and I'm sure a lot of founders a lot of uh startup founders and uh whoever listening and watching this podcast will enjoy they enjoyed it our conversation and I'm sure they got they learned a lot from your life journey and your all of your experience in the law and business. It's really unique combination what you have. Thank you. Thank you. Thank you for asking.