Lessons From Failure with Ultracast CEO Dmitry Kozko

It’s far too easy to fall into the trap of only bouncing your ideas off of people you know will either agree with you or be supportive no matter what. This is great for short-term confidence but potentially detrimental to achieving long-term success by building a sustainable business. The more feedback you get from all types of people, the better you can hone in on the true value proposition of your product, and thus understand who your customer will eventually be. Rob implores you to get as much feedback as possible in the IDEA stage before you spend a dime, micro-failing over and over until your idea is undeniable. And then never stop getting feedback through every subsequent stage. This doesn’t mean that you need to please everyone, but commonalities will emerge that will give you crucial insight into how to evolve next. On this episode, we once again welcome two fantastic entrepreneurs from the UCLA Anderson Venture Accelerator program

Rob didn’t go to college. In fact, he dropped out of high school and became a professional skateboarder. While his journey to entrepreneurship is a unique one, so is yours. The simple fact is, the more knowledge you have, the fewer mistakes you make, and the clearer your path to success. While there is no substitute for experience, education can bridge gaps and accelerate proactive learnings. Without formal schooling, it’s on you to educate yourself in all facets of business—seek out answers, ask the right questions, and learn what you don’t know as fast as possible. No matter your level of education when you begin your first company, it’s still going to be trial by fire to some extent.

The best CEOs are obsessed with building a holistic vision of their company. While many can alleviate pain points by hiring the right people and empowering them, there is no substitute for understanding every aspect of your business. When something goes wrong and you are forced to learn something from a mistake, that is valuable, but it is also reactive. If you put in the energy to identify your weaknesses and learn those parts of the business proactively, you have a better chance of avoiding those missteps to begin with and accelerating your path toward success.

Rob views building a company through the Machine Method much like starting a new relationship. Going through the Discovery phase, doing your Diligence on the person to see if the effort is worthwhile, Building a meaningful foundation before Launching into exclusivity, then… time to Scale. It’s so tempting to get overly excited by that first prototype, seeing your product on the shelf, positive initial customer feedback, and really any other part of the journey of building a business. Each step is so taxing, and each step feels like a journey unto itself. However, Rob would implore you to wait until finding the all important Product Market Fit before popping the Champagne. Only then do you have a real business.

Rob talks to three entrepreneurs on this episode about their businesses and answers their questions about business and life.

Machine Method Phase: DISCOVERY

Rob is a creative guy, he’s a passionate guy, and numbers used to make him fall asleep. Presented with a spreadsheet, he would literally nod off. He sought to hire people to “deal” with that part of his businesses, but then realized something crucial: No one is going to care about your business like you are. So he got to work learning the financial side of business, and now financial models make him giddy and he’s been far more successful as a result.

We’ve also got three aspiring Do-Or-Diers that sent in pitch videos. Rob provides some clarity in directing one company to focus their boundless energy. He talks to another about really getting back into the numbers to make his business model work. And works with one to excel in a consumable market.

Machine Method Phase: DISCOVERY

It should be no surprise that investors are putting money into your company in order to realize a return. While your passion and creativity is what got you here, those alone are not going to get you to the next level. You need to tell a clear financial story to your potential investors about how your company will generate them a return. By all means, infuse that story with passion and creativity, but be realistic and concise about the path to liquidity first and foremost.

In the second part of the episode, Rob talks with three aspiring Do-Or-Diers that sent in pitch videos and gives them advice to bolster their entrepreneurial endeavors. In a surprise twist, he has an offer for one of them.

Machine Method Phase: BUILD

Rob calls it a “shotgun venture creation wedding,” and that couldn’t be more fitting for his newest Dyrdek Machine venture, Jolie with former Greats founder Ryan Babenzein. Ryan had started and sold companies and found himself consulting, but he grew tired of giving his energy and ideas to other people and longed to work for himself once again. One day he found his skin was dry and bought a water filter for his shower that changed everything. Research revealed all of the harmful chemicals that are in municipal (tap) water are harmful to your skin and hair, but shower water filters have never been thought of as a crucial part of any beauty routine. Enter Jolie (named after Ryan’s wife, but also means “pretty” in French), a beauty company that will change the way you think of your shower. Rob and Ryan talked only a few times over Zoom before Rob jumped in on the deal, and this podcast is the first time the two newly minted partners have ever met in person.

Machine Method Phase: SCALE

It was bestselling author and podcaster, Lewis Howes who first introduced Bill Glaser to Rob, catalyzing a partnership that would grow into a $100million venture just five years later. It is this focus of being a “super-connector” that has Lewis invested in two Dyrdek Machine companies, Outstanding Foods, and Mindright.

Rob touts Billy G as the best CEO in his portfolio, so when Outstanding Foods’ second truly innovative product, Take Out, caused customer confusion due to its branding, Bill was quick to rebrand and introduce Outstanding Puffs to positive consumer and buyer feedback.

With big-name investors like Marcus Lemonis, Joe and Nick Jonas, Travis Barker, and Lewis Howes to name a few, Mindright had a successful launch in early 2021 and is on an amazing growth trajectory. Now it’s time to expand the product line. Since Bernie is a tireless R&D machine himself, he’s sending Rob new prototype products every other week, which all taste amazing (except that energy shot). So, to help them narrow it down, Rob sent out a survey to the Machinist community and they picked their favorites. Will it be the protein powder Rob has refused to try until this episode? Will it be the dreaded energy shot, a brain boost, an energy mix, popped chips, or… sausage? At the end of this episode, after much debate, the answer will be revealed.

“Never go into business with your friends,” is what Rob and Taylor both believe and both ignored when throwing all governing rules to the wind at the height of the pandemic and starting their sock brand, InStitches, together. Taylor happened to have the world’s most advanced, eco-friendly textile factory in China, and the guys had so much respect for one another as entrepreneurs, it was a no-brainer. And while the first iteration of Boosocki was generating $30k a month pretty much out of the gate, it was when they decided to pivot hard into whitespace with the sock card that the vision really became clear.

Rob met Jon Buscemi during their days at DC Shoes and formed an instant connection. But it would take over a decade for the two visionaries to finally build a company together. Although Rob tried to get in early on the Buscemi brand, even attempting to trade a $35,000 Rolex for equity, the rocket ship left without him. Fast forward to 2018, the timing was finally right to start building the comfort footwear brand that would become Lusso Cloud. Revered by celebrities like Oprah and Leonardo DiCaprio, Lusso Cloud creates the most comfortable, versatile footwear on the market. Inspired by a luxury hotel slipper worn by Justin Bieber on the streets of New York, Lusso Cloud launched in 2020 to a market ripe for disruption in the comfort space.

He had no experience, but he built an insane team of scientists and pro sports trainers to launch the perfect supplement company. Matt began thinking about a better supplement brand in high school. Fortunately, his father was both a VC and part-owner of the San Francisco 49ers, which gave Matt a unique business POV for a teenager, as well as access to some of the best trainers in the world. Rob invested in the company and helped build an amazing brand, but Matt was wavering on whether to attend Harvard or continue running the company. Matt installed a CEO and went to Cambridge, but two months later found himself back at the helm for good. At 22, he’s still learning as he goes, but having mentors like Rob has helped him continue to push toward success.

He wanted a new way to travel the world, but one of the biggest companies in the world had other plans. Ryan wanted to create a unique travel app that let you enter dates and an amount of money, and it returned all of your options globally. Rob was enamored with the idea and quickly signed on, but a call from a Fortune 10 company changed everything, making the pivot to enterprise travel too good to pass up. But now the entire board was out of their depth, so they needed to bring on capital partners who knew the enterprise travel and SaaS industries. That smart money led to even smarter money, and eventually to an exit, even in the darkest days of the pandemic. All money is green, but not all of it has the same value.

Rob wanted scale, but Christopher King’s vision to create bespoke pieces of functional art for global icons and beyond prevailed. Rob wanted to lease a penthouse in Beverly Hills. Such a place manifested, and the previous tenant was Mr. King. A story of friendship, destiny, and a new luxury brand ensued. The push and pull within CCCXXXIII (333) saw Christopher’s obsession with detail, exclusivity, quality, and experience go head to head with Rob’s ambition and a grand vision. What they learned was that the business model must align with the obvious strengths of the brand.

From skateboarding events company to SVOD, SLS more than doubled its valuation overnight. Brian is now the President & COO of The Dyrdek Machine, but it all started with a business plan in the Rob & Big kitchen. SLS was Rob’s vision to take skateboarding into the realm of mainstream sports, but he needed someone to write the business plan and operate it. He and Brian teamed up, brought on capital partners through trial by fire, and eventually expanded the events business into SVOD. The evolution into media took the valuation from a 1.5x revenue multiple to a 6x revenue multiple and led to an acquisition.

One scientific breakthrough, two companies, zero products, and $300 Million. It all began at a party where Rob’s father-in-law cut a rug like he never had before. The reason: chewable vodka he’d been given by the host. Fascinated, Rob invested in Josh and two companies anchored by the same microencapsulation IP. They attacked multiple product verticals, but before the amazing brands they created could launch, both companies were acquired for nearly $300 million. With game-changing IP, sometimes making a product isn’t always the best move.

They were chasing revenue, but it was a pivot to pride that changed the fate of Saint Midas. Emilio bought costume jewelry on Alibaba, set up a site, ran Facebook ads, and pulled in $300k in a month. This caught Rob’s attention, thinking, what if they could use this method and create a strong brand behind it. But by the time they got to market, the market had changed drastically. After several pivots, it was looking like The Machine’s first loss. But when they asked the question, “will I be proud if this fails?” everything changed. Saint Midas was born, intentional jewelry both were proud of, and now they split sizable dividend checks.

The last-minute pivot set Outstanding Foods on its $100 million path. Bill had all the experience in the world, but none of it was in food. When he partnered with a top vegan chef to create the pigless bacon chip and create a new snack category, he ran into massive co-packer issues right before launch. With products already in stores, he and Rob had to pull off an unprecedented 11th-hour pivot to save the company. They did, in record time, and the experience added the “pre-pivot” to the Machine Method. Oh, and the company is now worth $100M.

The recent launch of Mindright was a success, but without extensive market testing, it may not have been. Rob and Bernie knew exactly how to market Mindright’s mood-enhancing, feel-good blend of nootropic superfood ingredients. Then the test market told them they were absolutely, unquestionably wrong. This is about the importance of validating our assumptions, rather than assuming we’re right, and being willing to evolve our instincts to create something even more profound.

The story behind Superjacket, the TV production company that Rob and Shane built and sold. Shane first entered Rob’s orbit as a story editor on Rob & Big. Together, they formed Superjacket, which went on to produce all of Rob’s MTV shows. Superjacket was created with a 3-year timeline to sell, which, with a lot of hard work and a little magic, succeeded right on schedule. Before they even started the company, they leveraged their unique advantages, agreed on a clear goal, mapped every action to that goal, and the goal was realized.

A step-by-step guide through the Machine Method, systematically fusing art, science, and magic to create amazing companies. Rob flies solo, taking us on a journey through everything we need to know about Dyrdek Machine, the Machine Method, the Machine Core Elements, the Machine Principles, Do-or-Dier leadership qualities, and how it all comes together to build amazing businesses and achieve success.