#325 - Craig Fuller - CEO @ FreightWaves - State of Global Freight, China's Impact, Onshoring, Strategy for Buying Media Companies

Chris Powers: If you're listening, uh, you can see how excited he got me on episode 212, which was exemplary. It was February or March of 2022, and I wanted to start there. You are amidst, I believe, criticism and scepticism from your industry. I have a note that people even got to a point where they said you were responsible for setting trucking rates.

I called a massive freight recession, and you were spot on. So, question one is, what were you seeing at the time that proved true? And was it more accurate than you thought? Now that you've seen it play out, what happened to what you thought would happen?

Craig Fuller: Yeah, it's nice of you to say that people disagreed with us because it was a lot of abuse.

So, the conspiracy was that we had decided to put this. The publication is now about a freight recession. We manipulated the market and ultimately caused the crash, which is incredibly interesting for an 800 billion market so fragmented as the trucking market that someone could think I have the power to do it.

I wish I had that kind of power, but I don't. So when we look at what we saw back in 2022, freight ways tracks call high-frequency data, which is message flows or orders between companies that ship things, companies like Walmart or Amazon or Best Buy and P and G, etcetera, and trucking companies that service those companies.

And so we look at the message flows and the volume of transactions between the shippers and carers community, and out of that, we conclude the market and see the physical goods economy. So We're tracking approximately 80 to 85 per cent of the material, what we call containerized goods, which are things that are, you know, mainly sold to consumers, but also includes parts of the industrial system.

It includes things that go into housing, auto, etc. And through that data, we can see the pulse of not only the U. S. Economy but also the global economy. We saw a severe downturn in goods shipments. The number of freight across the goods economy started in January 2022.

However, it picked up steam in March of 2022. And that's when we identified a freight recession that we believe was imminent. And it turned out to be correct. Bloomberg ended up in an article about six weeks after that after this was. In March of 2022, six weeks later, Walmart, Best Buy, and Amazon came out and said, wait, we have too much inventory.

And if you remember what, mid-year, last year, there was a conversation about them having too much inventory. We saw in the freight data that there was a slowdown in the volume of shipments, but we didn't know what was causing it. We suspected it was an inventory overhang. We needed to figure it out.

And now, when they came out with these reports, they were validating what we saw in the freight data. Bloomberg coined the freight waves recession, which I don't know if having a recession named after you is a compliment or a curse. But it's a badge of honour of sorts.

But we saw it in the data, and that's what we do: track the global supply chain. We look at the goods economy in real-time and see what's moving and what's not. We conclude that. 

Chris Powers: Okay, we're 18 months later. What are you seeing right now? And I'll quote you on something.

You said one of the great things about freight data is how broad and fragmented the market is and that supply chains are upstream. Our trucking and container data sets come from completely independent sources. Seeing a development in container and trucking data sets suggests something macro is happening.

That is what I see in container and trucking year-over-year volume comps in both data sets, both inflected in recent months, suggesting that inventories have burned off and the goods economy recovery may be on the way.

Craig Fuller: Yeah. So, this has been one of the Darkest and deepest freight recessions in history.

So, the last major freight recession was in 2019; the trucking industry has had the most significant number of bankruptcies since the Great Recession. It is far more meaningful and far more damaging and more prolonged than that freight recession has been; this is often in the industry, what industry professionals would say compared to the 2007 2008 great financial crisis feels like that.

And some have argued that it's worse. Industry professionals believe it's worse because of the time it's taking and the fact that we added so much capacity before the freight economy entered a recession this time. So it's just an over-served market, and we have way too many trucks relative to the amount of freight.

We also have too many warehouses, aeroplanes, ships, and all the capacity built up. It's just overbuilt versus demand. And so we have to put that in context, understand that when we're talking about volumes, which is what most macroeconomists are concerned about, they don't care about the number of trucks or warehouses at the end of the day.

What they care about is the broader economic story from a macro perspective. I don't care how many trucks are in the market. I care about what the goods economy looks like. And what's interesting about it is if you took it. With the COVID extremes 2020, Q4, 2020 and Q, and all of 21, and you remove those from the data sets, 2023 would be a robust freight economy.

It is also an excellent freight recession, and I'm contradicting myself, but it feels off from a freight market participant standpoint. Still, from a broader macroeconomic perspective, it is relatively easy. The market has held up well.

What we're seeing today, though, in the freight data, and I tweeted that, I believe, two weeks ago, where we're seeing a rebound in container movement and an increase in inflation in trucking data that suggests that The freight market, the goods economy is starting to reaccelerate. So, parts of the economy have been in a recessionary activity, even outside freight; housing has been in a recession for some time.

Auto did not experience that other parts of the excellent economy did. It looks like from what we can see and what we're saying is that a lot of those sort of Rolling recessions that everybody likes to describe them as are essentially over with, and the goods Part of the economy, the demand manufacturing, industrial, and consumer consumption is largely reaccelerating, which I think is a bullish thing for 2000.

Chris Powers: Okay. And, based on historical patterns, once you see that trend start. It's never like a blip on the radar. It's like a false positive. We will talk again, like usual, based on how these things play out. Once you see that reversal, you see that items start picking up.

Craig Fuller: When do we collect data from many different sources? Modes of traffic is a term of our industry, which means motor traffic is a ship. There's a railroad, there's a truck; it's a mode of traffic. And what we're seeing is across all modes. It is rail, this is truck, and this is ocean container—and air freight.

All of the modes are saying the very same thing, which is that the goods economy demand is reaccelerated. What happened is that consumers have not slowed down a ton if you look at consumer consumption data. There's been some softness and pockets of softness, and you know, throughout the last 24 months, we've seen specific categories have unusual, even food categories that remarkable consumer slowdown, which is not easy to explain. Many people have struggled to explain why consumers have impacted certain types. But when you pull it back, you understand that when you look at it.

We have so much inventory coming into 2022 that every major big box retailer and every retailer, and manufacturers for that, really everybody in the economy had dealt with this sort of whiplash of not having products and inventory, and raw materials, in supply during the Covid economy that they overreacted.

And this is what they call a bullwhip scenario. It's the classic bullet effect taught in academic classes and supply chain, which is the concept that companies tend to overcorrect when they get the demand signal. And they overcorrect. And that's what happened during the COVID economy: we had a combination of fiscal and monetary stimulus driving a ton of market.

And you had inventory shortages throughout the supply chain. So everybody, all these upstream suppliers, and you may have hundreds of upstream suppliers in the supply chain, are all ordering more to ensure they don't run out. And it's taken us a year and 18 months to burn off all that inventory.

And what we're saying is that inventory is essentially burned off. And the economy's reset back to a pre-COVID cycle. It's taken a long time to get there. And we're seeing a more normalized pattern that the economy's operating like it would in a pre-COVID environment.

So that's encouraging from a freight standpoint because that means that inventory and demand cycles will be far more predictable. And now it's just a question of how long it takes to burn off the excess trucking, warehouse, and ocean capacity, which is industry-specific.

Chris Powers: And real quick, before we go on that thread, there was another quote you said, or somebody said on Twitter, but it's like, the problem is that most recession indicators focus on the rate of change and ignore absolute levels to can you expand on that a little bit? Like, what does that mean?

Craig Fuller: Well, I think. What, you know, I didn't write that. So it's not. 

Chris Powers: I think it was somebody else, but you did retweet it. 

Craig Fuller: I think what the author's interpreting is that ultimately, the way economic data works and business financial performance works is we're constantly comparing to a previous period, and I think from the perspective of a recession by definition, it's funny because the White House and the National Bureau of economists changed the definition of a recession last year because we had two-quarters of economic contraction and they were like, no, that doesn't count like.

It should count, but it didn't under the Biden administration and economic theory. And look, if we take a very loose term of it, you could argue that we had so much excess during the Covid economy that, of course. You had to come down. We had this sugar high that we were dealing with during COVID, which was exaggerating these economic data and demand.

And, of course, we're going to come down from that. There's no way to grow and say. One quarter was like 18 per cent year-over-year growth at one point, and then they tried to do another compound. And that would have been pretty extreme. And so that's what the author was saying: ultimately, a recession is two-quarters of economic contraction if you look at the classic definition of it.

But it's hard to state that when you had a COVID economy, it was goosed up by all of this artificial stuff. 

Chris Powers: All right. You said we have a lot of excess capacity, usually during what I'd call a time of crisis: COVID, where supply chains were obliterated, and people were scrambling to figure out how to move goods around the world. My first question is. Are supply chains better now than they were pre-COVID? Like, did we learn how to be more efficient? And if that's the case, is that an argument that some of this capacity could take longer to fill up? We're just operating more efficiently than we were pre-COVID.

Craig Fuller: I don't think we've learned a whole lot. Like the word supply chain is now, everyone knows it, but they're tired of hearing about it. And if you look at it, we work with some of the world's foremost manufacturers and retailers or customers. There has been some attention and budgetary focus, and political momentum inside the corporation for the supply chain managers has gotten more budget allocated to them.

They've got more resources allocated to them, but those, in many ways, feel like a one-time game. I observed that we want a lot of short-term gains, but now it feels like we're back to where we were before supply chains were an afterthought. It's all fixed; we don't have to worry about it.

I can't; the word fixed and broken to a layperson means it arrives when they order something. And in that, if that is your definition of broken and improved, it is when you call something, you know when it will show up, and it arrives essentially. Except for a couple of small categories of specific industry issues, that is primarily fixed.

We don't have those issues; there are exceptions. Pharmaceuticals are a great example of that where specific categories of drugs because of, you know, Ozempic and the G. L. P. 1 drugs have their supply chain issues caused by consumer demand. I would argue that is a normal, like, you have those issues, and you have those issues before Covid, but that is not caused by sort of this extreme supply chain challenges, but you always have issues, and you're always going to have things that are quote, unquote broken.

That's what supply chains are. That's why my business exists: the world's always fixing these existing problems, and supply chains are constantly being disrupted. If that did not happen, I would not have a business. In terms of how a consumer would see it, or just the general definition, the answer is that most of it's primarily fixed.

And we're not going to experience a 2021-like issue any time. 

Chris Powers: Well, now that you said the word Ozempic, do you guys have any data that freight volumes had slowed down at Walmart, Amazon, and the big grocers at the same time that America's getting skinnier on Ozempic?

Craig Fuller: We have seen a slowdown in a big box. We saw a slowdown in big box retailers and specific food categories in this year's first and second quarters, even in the third quarter. Still, it would be an exaggeration to say that those are the GOP ones of the Olympic effect.

What has happened is a lot of us feel about the COVID-level stimulus. When you look at the amount of money, many programs continued to exist until this year, and snap payments ended in April. And you can look at Costco's data, and Tyson Foods came out.

Cargill came out and talked about a deterioration in their cells, and Kraft was also a company. We saw many food companies caught off guard by a decline in consumer consumption around the April time frame, around the first and second quarter reports, that caught them off guard.

Much of that was related to the government stimulus rolling off, and we still had the employee retention credit, which finally went away in the summer. You can still qualify for it, but for the most part, the amount of money the government funds to ERC programs has broadly rolled off.

And so we've seen levels of government stimulus that continue as the economy. I do get, you know, Ozempic stories. Interesting from a long-term standpoint. I've listened to a great podcast. I had an investor talk about the impact and pharmaceutical impact of what a neo-synthetic economy looks like.

It's a fascinating story. In 10 years, we will see 2 to 3 per cent less consumption of calories, which people have said across the US economy. Will that make a difference at the margin? Absolutely. But, you know, the freight market, this stuff will be incredibly gradual; it's not going to happen all at once.

And so it will play out. But I don't see anything in the data that's saying people have stopped buying calories, and so we do see slowdowns, but I would be hard-pressed to point it to assembly. 

Chris Powers: Okay, one of the things you got me is that I watched the episode we did 18 months ago.

This topic excited me in many ways; I'm returning to China now, and we'll tie it back to improving our supply chains. So, at the time, is shoring real? Are we going to depend on China? What's China's role in all this?

Yeah. Now, fast forward 18 months. I'll start with, like, what's the latest with China? A few weeks ago, their great dictator said he would get along with us. We cleaned out San Francisco for him. We rolled out the red carpet, and he gave this tremendous honeydew speech that all was good. What does the data show you? 

Craig Fuller: So Chris, one of the great things I get to do regarding supply chains is we often see the geopolitical story play out months or quarters or even years before it comes to public awareness because supply chains are the goods economy. It's the mainstream economy.

And so we go back to that episode. I did. It would have been April of 2022. We only did that episode because we discussed the Great Recession afterwards. So, what's interesting was at that moment. French shoring or North American reassuring was outside the public consciousness.

At that point, no one accepted that we would see this manufacturing renaissance or that the China story was still playing out when people believed that China was mainly eclipsing the United States and was inevitable. And that was a conversation that only folks involved in an intense geopolitical conversation.

Corners, deep finance and supply chains were having, which was the China story while still existing is changing. It's pivoting from this aggressively incredible growth story to this country starting to show its age. And we're seeing a middle-aged or late-stage empire that has primarily exhausted its ability.

To compete with the West and compete specifically with America, and that is what we see right now is that China has, through really reckless policies driven by its self-protection, combined with sort of deplorable economic policies and lack of freedom and lack of innovation, has put itself in a considerable difficulty as it relates to global manufacturing and global supply chains.

What she did last, and this after this took place actually after our episode, was she shut down the entire country, getting secondary lockdown, in the second quarter of last year that, you know, basically locked the whole country down. China thought the government was enormous, on some level, a lot down and rolling lockdowns throughout the COVID when we were coming back on. Our lockdowns were short-lived for many people who listen to your podcast; they may feel it needed to be shorter.

But relative to what happened in China, our lockdowns are relatively short-lived and frankly not enforced, and we look at what China did: they completely locked down their country. But they did send a loud, clear message to decision-makers in America and the West that they would put their ideology ahead of their economic interest.

That put everybody on notice because, for years, supply chain professionals, organizations, and decision-makers did not accept that China would do something in its self-interest. That was not economically driven. In other words, they would never do anything to hurt a supply chain and manufacturing sector because doing so would hurt their economic viability and competitiveness.

And for years, that's how they operated. They were willing to make concessions. In the export market to products being exported, they were ready to make concessions that they wouldn't make for their people and even, in many ways, shape their policies to enable manufacturers to export goods because they needed Americans.

1. S. Dollars and other currencies to blow in so they could buy things like energy and food. That is no longer the case. They have notified every supply chain decision-maker that their ideology will supersede their economic and manufacturing well-being. And so because of that, we're now looking at every supply chain decision-maker around the world thinking about where to go to manufacture my products, have dependable government policies that will allow me to build these products, and have consistent availability.

Where can I relocate my factories? Where can I migrate my production? And it's apparent that you're going to go to the largest economy in the world, the United States. You have to consider how it serves the economy, and that's where the North American reshoring story plays out. And we're seeing that.

What's incredible about this is that it is an opportunity to see the reshaping of an economy, and we're living right in the middle of it. It is an entirely generational shift in how the global economy will work. And I am 44 years old. Chris, how old are you? So you're younger than I am.

And so you lived in a post-Cold War world. You probably came of age where you didn't know the Berlin Wall was mainly by the time you were aware of what this thing even existed. It was beyond it. I was old enough to remember it. And I remember I was not old enough to comprehend what happened post-Cold War.

Or at the time that the Berlin wall fell, but it's a profound time to go from a generation where You had these big blocks of countries that were effectively at War, like a cold war with one another. We had completely different economic and ideological systems, But we were significant world powers in many ways and balanced how the world worked. To none of that to having one superpower And these sort of emergence of these sort of secondary powers that arise. Now we're on that different generation of it.

And it's hard to comprehend that COVID changed everything. And what COVID did is it put everybody on notice. Supply chain decision-makers recognize that having single-source products in China was a problem, but it was always a problem for others. It was a problem that I didn't have to deal with.

Even when Donald Trump put his tariffs in effect, most people ignored that as a tax. They just looked at it and said, this is nothing more than a, you know, deafening, and some would say obnoxious president making his point, but at the end of the day, it's not going to matter. It's just noise.

That didn't move the needle in terms of reshoring, but what has moved the needle in terms of reshoring is China's inability to manage its own, and maybe it needs to be its ineptness. It could be their effectiveness of trying to control their people and as a by-product of that saying.

We don't care about parts of our supply, you know, manufacturing economy. And now we're in a whole new generation. And it's a profound time to be an American because we'll live through another American century. That's going to be the best century that we've ever had.

Chris Powers: This is why you started jacking me up on the last episode we started.

Craig Fuller: It's incredible, man. Look at the economy; it's weird because I'm probably called the most bearish guy in the freight market. Cause I'm just talking about the sort of bearish story that exists in freight. I'm also looking at it in terms of the optimism we have as Americans, looking at it strictly from a supply chain standpoint like we have everything we need to live.

We have; we produce 30 per cent more food than we consume. And yet, we still pay farmers not to grow food. If we decided to make as much food as possible, we could feed the entire world. We make more, have an ample energy supply, and find new pockets of energy and ways to exploit power.

And I'm not talking about alternative energy. I'm talking about petrochemicals and fossil fuels. And so we are blessed with such great geography and resources. And we have this vibrant economy that's built on innovation and entrepreneurship. You can't help but be excited about it. And that's why I am incredibly bullish on what will take place in the next decade.

And you have, I mean, the American flag says it all. We should be proud to be American simply because we deliver economic prosperity worldwide and to our people. And we are in charge of our destiny, which makes it super exciting. 

Chris Powers: I want to run through a wall again.

Craig Fuller: And like, I can be critical of every, there's a lot of things we do wrong, like, there's a lot of problems in America. Still, like, you have to be super jazzed and fortunate to live, and this isn't like, we are just so good, and I think that's what we have to remember is, like, all the problems we've got, we have so much right and so many opportunities.

Chris Powers: Anything that humans are involved in will have. Issues that come with it, despite all the good.

Craig Fuller: This is all a function of capitalism, and we've built the most excellent system to reward the innovators. And that's what China has effectively gotten wrong is, you know, it had a form or has a record of capital, but it also has a history of capitalism that you can do so well so that you don't gain so much wealth that you could overpower.

Or threaten the local governments and stuff. And really, our economy is different because the folks that have the power are the ones that create the wealth. Ultimately, that's the way our system works. And so you're rewarded by wealth creation, and it's not selfish wealth creation. Its wealth creation begets exponential wealth creation throughout our economy.

Chris Powers: Okay. If I said, today. Is there a data point or data points that prove that this reshoring renaissance is underway? Do you have something to say? In the last 18 months, X, Y, and Z have already happened, and I expect this to continue to grow.

Craig Fuller: Yeah, I mean, we've seen in terms of production of new manufacturing.

Here's the thing to remember: Manufacturing isn't, and supply chains are not a short-term issue. Like, it is not a fact that I can move a supply chain, build a factory, and build manufacturing. Within a year, see it in the data. It is a decade-long development. But we're seeing the number of new manufacturing and production facilities and investment into our economy growing by about 10 X over the last two years, three years pre-COVID to now.

And what's happening is we're seeing the early manifestations of new production here in the United States. Companies are now considering, unlike before, the United States as a competitive place to manufacture. But it's not just the U. S. It's our friends to the south in Mexico and Latin America.

The Americas are also going to win the biggest. If the biggest winner of the post-Cold War days were China going from being a backwater to an economic superpower, then the biggest winner in this generation would be Mexico. As the United States will win, but relative to just sort of Who is going to grow exponentially, Mexico, particularly the northern part of the country, is going to be a primary beneficiary of economic growth as companies move production away from China and Asia, they're going to locate a lot of that manufacturing in northern Mexico and even central Mexico, and that's going to create a lot of exciting opportunities.

One of the data points we look at is specific data. Looking at the market share of truck volume by origin location and trucks, we think of it as North America, specifically in the United States. So, the port of entry is like Laredo, Texas. Its pre-COVID was the largest port of entry. It lost it when we saw it is historically competed with like the port of LA and Long Beach, and what's happened is the port of L. A. and Long Beach, during COVID, had beat up Laredo, and now we've seen Laredo come back and Laredo in terms of market share has, has tripled. In terms of the amount of truck traffic that's going through the port of Laredo, compared to any other, in itself, it's tripled the amount of volume and the amount of market share it has, and it's been the fastest-growing market, in terms of U. S. truck traffic.

The other two exciting cities that have grown market share are Houston and Texas, which are petrochemical-related as much as anything. Still, they're also related to a port. Largely petrochemical, and then Detroit, Which is a function of the auto manufacturers, rethinking how they produce cars and moving towards EVs and newer, advanced, automated technology.

However, the auto sector has mainly done well in the last two years, much better than other parts of the manufacturing economy. 

Chris Powers: Okay, I want to ask a few more nuanced questions on different parts of our supply chain. I'd start with Panama. Somebody asked if the drought in the Panama Canal has impacted traffic severely. Are you seeing that? 

Craig Fuller: Of course, you know, there are now ships routing around, uh, down South America all the way south. You know, south of Argentina, we're seeing them go around to avoid the Panama Canal, but these are situational and dealing with supply chains. And having done it for years is always something that's being disrupted, you know, the Suez Canal blockage that happened two years ago would have been a non-story. Nobody would have known about it, or a few people would have cared had the supply chain not been so quote-unquote broken then, but we remembered it because it was a story of my God, one of the world's largest shipping channels blocked.

It was only blocked for about two weeks, and it certainly startled traffic, but it's a non-consequential thing. If the Panama Canal drought had happened two years ago, every news story would be about it because it would be more prominent. But the fact is that this is a detailed problem.

It is a challenge, but there are alternative ways to move traffic. If you're coming from Asia and going up the East Coast, you could drive that traffic through alternative sources. You could reroute traffic to the West Coast and through rail. So these things happen, and having something disruptive is a regular occurrence in my world.

But this is a short-term problem that is going to resolve itself. 

Chris Powers: Canadian Pacific and Kansas City Southern officially merge. How does that impact the rail line from Canada to Mexico? 

Craig Fuller: It's again that NAFTA, and I know we're going to call it NAFTA anymore or something, it doesn't have the cold name like NAFTA, but UMCSA, but the NAFTA story, this is what this is all about is that essentially, if you think about linking Mexico, Kansas City, Southern was that North-South traffic.

And when you link Mexico to the United States or Canada, they're playing on that North-South traffic. They're playing on the NAFTA story that started when I was in college and went to school at Baylor in Waco, Texas. And, you know, the NAFTA story was significant. It was a time in the nineties when everybody thought that Mexico would become the next superpower. Then China entered the WTO and moved away from Mexico, the momentum away from Mexico.

We're back to that. And this is, as one of the major rail lines in America, freight railroads in the Americas are essentially trying to create a continuous stream on a single owner from inland Mexico to Canada. It's an exciting time. It's just a function of the fact that.

We have the best freight infrastructure in the world. Canadian products are raw materials, so Canadians are good at producing raw materials. They do have good advanced manufacturing, particularly in auto. But really, their natural gift to supply chains is in raw material exploitation and production.

And you have the Mexicans, who have relatively cheap labour. And plenty of it to produce products. And then you have the Americas, which are, you know, the United States, which is just the consumer economy and the distribution centres unite those things. Suddenly, we have a much more vibrant economy, like the next.

As I said, the next a hundred years is going to be America's have, and here's, what's cool about it is like what Europe's doing is they have shot themselves in the foot because of lack of energy and we, and look, you can give the Biden administration a lot of heat, and I have—said that the energy policy coming into their administration needed to be revised. Biden said he wants to shut down the fossil fuel industry, but you got to give them a little bit of credit. 

Chris Powers: All right. I'll let you do it. 

Craig Fuller: I'll say this, and I know I'm probably going to get some hate mail about this, but over the last, call it, 18 to 24 months, as inflation rose, they have backed off a lot of their anti-fossil fuel messaging. And it was a messaging problem. Yes, they didn't approve permits and put some regulatory issues in it, but most of the problem was messaging.

On how they message the public and investors about fossil fuel exploitation, what they've realized, or at least had not attacked the fossil fuel industry, is that domestic production is the most environmental. It's the best for our economy, and they have former control of those, giving them much more control of our destiny and policy. You can also thank Putin in many ways for that. The fact that the Biden administration is so concerned about Russia's aggression and what's happening in Europe that they're willing to allow their environmental initiatives to step off in zero carbon is a big positive for American production.

We look at how much oil we're producing in America. Compared to what we were pre-COVID, it's astounding. 

Chris Powers: All right. We'll give him a check mark there. 

Craig Fuller: Or maybe the only guest you ever had that gave him a little shut out. And look, at the end of the day, they deserve a lot of heat for many of their policies.

And if it depends on what happens in the next election. Hopefully, this still needs to change. Hopefully, this orientation towards pro-fracking, pro-energy, and domestic sources will stay. The best thing that could happen is if the government ignores it. Like what the politicians do the politician thing and ignore this industry. We'd all be better off for it. 

Chris Powers: Yeah, I had a CEO of Dire President Diamond back on last week. And I just said, why do you all do such a lousy job marketing yourselves in general? And he just said, we have one of the only products in the world. We don't have to deal. The market doesn't care if they're buying shell barrels of oil; a diamondback barrel of oil is like there is no marketing in our pre-purchased barrels.

So, the idea of creating this narrative is outside the industry. I like your plan of just ignoring it. Just let it happen and forget it. 

Craig Fuller: We're better off than the government ignoring things. And that's how I mean, if you look at every major technology innovation and whether you're in the crypto or not, I'm not a crypto person.

But one of the reasons that crypto has thrived is that we've had some terrible actors and bad things in that world. But one of the reasons it's alive is that the government doesn't know how to regulate it, and that's what's allowed it to exist in many technological innovations throughout history.

It has occurred in the United States precisely because we allow things to happen before we regulate. And we have a system that encourages innovation versus discourages, as you see in Europe and many parts of the world. If you make a mistake and break a wall that doesn't exist in Europe and Asia, you can lose everything.

We put them in prison, whereas in the United States, For the most part, we allow technologies to increase. And some could say until it's too late. As you could argue, social media hasn't. Some social media have been harmful to some parts of society. Almost every category of any part of our economy could say that these things have adverse effects.

But essentially, we're such a booming economy because we allow these things to exist, and the government ignores them. And that's awesome. 

Chris Powers: Long government ignoring things. We'll put it in that category. 

Craig Fuller: Keep them out of our lives. 

Chris Powers: All right, last question, and then we will switch topics. It was the one you discussed: many bankruptcies have happened over the previous year, but the biggest was yellow. They had 30,000 employees. What happened there? And was that just a tidal wave that they could see in the distance coming? It seemed like it happened overnight, but what happened in that situation?

Craig Fuller: No, this is like a small shallow lake with a minimal tide that slowly crawls. It's like a glacier. This thing should have been dead 15 years ago. So, if you go back to the history of Yellow, this was a 30,000-ton truck operator, the fifth-largest LTL company in America. It is a large trucking operator with about 9% of the LTL trucking business market share, so it was a significant player.

Its problem was death if you will. Its inevitability was cast in the mid-2000s. Bill Zollers, the CEO at the time, wanted to consolidate all the significant unionized LTL providers. So he went out and merged all of the union LTL providers into this big mega-company called Yellow Roadway, and it nearly filed for bankruptcy four times before it did.

The first time was during the Great Financial Crisis because they acquired so much debt to acquire these companies, it would not streamline the operations. They ran them as separate entities. These three companies had come together but were run entirely differently with no release economies of scale out of that.

They had the unions would not let them restructure their contracts to bring consolidation. And so it got built out again by the Trump administration. There were a lot of questions about whether this was legit. Should it have been built out? You could argue no, but for some, the way you think about it, regardless of where you sit on the aisle, if you know somebody in Washington. They care about you politically; that's 1 of the great things about our system or 1 of the detriments of our system, is that you can get special privileges by doing so.

And when the federal government was giving out a lot of money. Yellow applied for a loan based on the fact that it considered itself and the Department of Defense considered it a critical operation that national security depended on. It was a joke. No one with a straight face could say that was the case, like the market reset, but someone had favour in Washington and could get this loan.

And so the U. S. Treasury lent. Yalo 700,000,000 to help it survive, and the problem is it burned through all that money. It was looking at a liquidity crisis earlier this year and finally got out of its misery. So the crazy part about this is it had about a billion and a half dollars of debt.

And we analyzed in July before it fell bankrupt about whether it was better off dead or alive in terms of value. So yesterday, they liquidated about 70 per cent of their real estate, and they recovered 1.88 billion just in that. What will happen out of this is that there will be about a billion to a billion-and-a-half-dollar surplus in liquidation above the debt.

And so there will be money left over for folks that bought the stock when it was going under, and some hedge funds took prominent positions. And so it was this weird deal as it was filing bankruptcy, the stock was rallying like a thousand per cent, and people are like, Oh, this is like GameStop.

It's like, no. There's someone who understands the balance sheet of the company and realizes that it's real estate. They last owned some of these industrial locations 70 years ago, like free zoning in Los Angeles, where some of their sites were worth hundreds of millions of dollars. You can't get, you know, this better than anybody.

It's tough to get industrial zoning in major us metros, particularly in places like California and New York that are anti-industry, and they happen to have some of that all predated it. So they benefited greatly, from just their age. And now, in liquidation, it will do better than before.

Chris Powers: So that would have been a Warren Buffett cigar butt opportunity or a cigarette, but whatever he called it.

Craig Fuller: Yeah. I wonder if it's the Warren Buffett play because it's not anymore. Well, yes, from the early days. In his earliest days. Yes, in his Gen One pre-Charlie Munger days.

That's the Warren Buffett play. It is more of a Soros Carlisle, like KKR kind of Citadel kind of restructuring where more barbarians at the gate are just trying to liquidate the business. 

Chris Powers: All right. We're switching topics. We're switching to media. You call yourself or the website, or I need help remembering where I found it, but freight-affiliated media.

And I'm going to ask you about your media strategy because I find it fascinating, but I'll start with the most straightforward question. What is your plan? 

Craig Fuller: Well, look, I have a playbook, which is, and I learned it. I'm not a media guy. You asked me ten years ago if I'd be in media; I would have laughed you out of a room because, like, I'm like, why would I do that? I had never published anything in my life.

I never had any experience running media companies. It wasn't something I learned on my list of things to do, but building Freightways, which accidentally got into media, was different from what we set out to be a media company. We set out to be a data company and provide companies with information.

And I read a friend who gave me Bloomberg's biography, Bloomberg by Bloomberg. I read it, and I was like, this is the playbook for our business, which is effective. This media business provides top and final to our data business, so our data business is called Sonar. Our media business is Freightways.com and Freightways Media. And by basically having this large media business that shapes how people think about topics and influences how they feel about things, we can influence their buying behaviour. We can control how they think about products. And we learned that we could use our own media business to sell our product, our data product, very effectively and efficiently.

And so it worked. As a side hustle, I decided to go by; I'm a pilot and decided Flying Magazine is a really a side hustle hobby. And it's completely separate from FreightWaves; I went to my board, and they're like, no, this doesn't fit the FreightWaves business, but you can do it if you want.

And they let me do it, and I started to try the same playbook: Hey, I have this media audience. Can I sell them things that they may want? We started doing real estate, so we bought 1500 acres in East Tennessee, paid 2 400 an acre, and are now selling lots at 600 000 an acre connected to a fly-in luxury resort in Tennessee that we will build.

We have yet to start construction, but we've sold about 15 million of real estate through that asset. Then, we bought two e-commerce companies and saw a 700 per cent growth in e-commerce. Once you own the audience, you're not renting an audience. They're Facebook and Google; if you own it, you can effectively drive efficient commerce.

And so one of the things that we've been doing, like our business, was when I bought flying was a two and a half million. Our company was tiny. Real estate is necessary for it to be on a run rate of about 40 million today. That's strictly the media side, and what is powerful about it is that You have this very efficient funnel because you own the audience.

You're not renting it. A lot of the problem is if you look at a lot of the venture-backed, DTC e-commerce companies and most venture-backed companies. The running joke in Silicon Valley is that venture capitalists work for two parties. They work for the media platforms Facebook and Google, and they work for the San Francisco real estate lenders.

That's probably not true anymore, but it's still true that as a venture-backed company, you are effectively paying Google and Facebook to acquire your audience. And that's a, so you're renting an audience. You don't own an audience. One of the things I discovered, and it's an excellent arbitrage at the day, is that you can build an audience organically as we did at Freightways, which is probably 85 per cent of supply chain traffic.

We're the world's most respected authority in supply chain news topics and data, and we've built this compelling business by shaping how people think about these topics. But I also learned you could do it with any media, and I'm doing that with flying, which we've now bought.

We're now the largest publisher in aviation. We also recently acquired in the marine and recreational marine, boating, yachting, sailing and fishing. So we're now the largest publisher in those categories, too. And what is powerful about it is that you can shape how people feel about these topics, and you can drive commerce.

So think about what pilots care about, you know, we've talked about real estate. They need hangar space and places to park their aeroplanes, but they also need finance. And so we bought about eight marketplaces that sell used aircraft, consolidated demand, and essentially built the car gurus, for lack of a better term, of aircraft.

Out of that, when people buy an aircraft, they want pricing intelligence and know what's going forward. That's one thing. They also want to finance the aircraft. They want to insure it. They want to have pre-inspections. By owning the media business and shaping how people think about things, you can effectively create your walled garden when somebody's interested in the topic.

And so that's the business model that I have discovered: this attractive arbitrage in content that drives commerce by using the content we create to go out, and you know, Google and Facebook have changed the way media works. It made that model largely unprofitable for many people, making it very difficult. I'm super excited that they have because what that means is I can buy these assets for a fraction of what they're worth and finance it through the cash flow in the media business.

But what I'm buying is the audience. And from those audiences, I can find other products and services to sell to that community. That's my model. That's the playbook. 

Chris Powers: If you're wondering, and you're listening to this, and you're wondering, Am I an entrepreneur? Here's one way to think about it.

Do you ever wake up and go, I'm going to buy a magazine as a side hobby and then turn it into an absolute empire? And if that is not going through your head.

Craig Fuller: Yes, anybody could do this. It is like, it's not that hard. Like you're talking about buying a business, two to five times EBITDA or business cash.

Chris Powers: Yes, how do you value a media business?

Craig Fuller: It is two to five times EBITDA. That's my rule. I follow and listen. 

Chris Powers: Okay, what's two, and what's five? What does a two look like? And what does a five look like?

Craig Fuller: it's subjective, but let's speak frankly about it. I mean, it's largely subjective, but you're talking about on the higher end on a five, you're talking about a high-quality, profitable brand that has stability, you're looking for a stable audience, you're looking for a high-quality asset that's in the sort of upper end of it.

So when we bought the Marine portfolio, that would be considered a high-end brand. It was the largest. Boating Magazine, Yachting Magazine, and Sailing World have existed for a hundred years. And they're highly, highly regarded. When I bought flying, I paid five times.

You know, as I generated half a million dollars of EBITDA, I paid twice, Two and a half million. It's subjective, but the higher quality businesses are trading at five times, the lower quality businesses trade lower and that threshold. And so, but it's emotional. It's, I can sell.

So, when I'm looking at these businesses, I'm looking, yes, I'm looking at the financials, but I'm going to ask myself, what can I sell these people? Can I understand the market well enough? I've never spent time in the marine industry, but I grew up around boats and understand enough about that audience.

Knowing what products are available is very similar to the aviation audience. When you're buying a boat, you're going to finance it. When you're buying a boat, boaters are very enthusiastically committed to their boating hobby. If they're into fishing, they're diehard, you know, more people fish than golf.

Twice as many people fish than golf each year. And it comes across all socio-demographics. I mean, you have people who are, who barely can make it, who are fishing. You know, and maybe for them, it's dinner. And then you have super high billionaires that, you know, have the most incredible fishing yacht you can get doing offshore fishing, but they're all doing the activity.

And what makes these things interesting is that you have an audience that wants something and cares about their industry. When I look at it, I ask myself, do I have something this audience will buy that I can acquire or build? I can serve this audience that is not dependent upon Media monetization now. Ultimately, it's dependent upon my driving success in the media business. But if I do that successfully and I can create growth in media, then I can take all of that capital and deploy it back into growing the audience, which I can then monetize in some other mechanism.

Chris Powers: Okay. So, two to five times, you go by Flying magazine, which I'm assuming, I'm sorry to say, I have yet to read it, but I will one day if this podcast is successful enough. I'm going to be an avid subscriber.

Craig Fuller: By the way, we're giving away an aeroplane for subscribers.

Chris Powers: Well, perfect. Sign me up right now.

Craig Fuller: And win an iconic aeroplane. 

Chris Powers: But you say I'm going to pay you two and a half million for the magazine, Which I'm assuming was a hard copy and a digital copy.

Craig Fuller: They had a digital website and a Physical magazine. 

Chris Powers: And then you said I need to look at your Proto or your profile and your customers, who are probably, you know, very affluent folks interested in aviation.

Craig Fuller: It is a media kit. Media companies should know their audience, and you can make some, like, I've done this long enough to know. And most people, anyone who studies media or audiences, could figure out who the audience is. And if you don't know it, let's say you're looking at an asset you're trying to acquire, and you need to learn more about the audience.

Media companies, anyone that's been around, should be able to tell you who their audience is. If they don't know it, and you don't know it, then you probably shouldn't be; this is not the right business for you if you can't figure out who the audience is based on the content profile. But you're essentially underwriting the audience; you decide what products this business community needs.

If you think about aviation, these are typically high net worth, and disposable aviation is an expensive hobby or a lucrative career. Either one of those two things, that's our audience. If it's a costly hobby, they have a lot of disposable income to stay in the air because they will be in the mood for a while if they spend the money.

And if it's a career for them, they're doing well. And our goal is to find services to provide that audience. 

Chris Powers: All right, so you buy the deal, you accept the flying magazine, what, and then you say, okay, these people need to finance, these aeroplanes are your goal to buy financing, an aircraft finance business, or are you just going to spin up one from scratch and.

Does the media business always stay separate, just driving traffic to these entities? Are you growing it all in a one-dimensional organization? That's not too nuanced of a question.

Craig Fuller: Actually, separate companies because eventually you'll get to the point where you'll want a different management team. Our finance business has a diverse management team that runs the finance business.

It has its P and L, its incorporation because, at some point, we hope. It becomes a hundred-million-dollar business and can be spun off, sold, or publicized at some point. It can be big enough to be on its own. The truth is that FreightWaves, our data business, is now big enough that it doesn't need FreightWaves media to serve as its media arm.

It is big enough to be sold or spun off completely and separated as its entity. So we create separate entrepreneurial management teams that can drive success; when it comes to buying the finance business, it's always opportunistic when I buy things.

I've been an entrepreneur and a founder, and I cold-started FreightWaves. I raised outside venture capital. Starting a business is a very long journey. I'm entrepreneurial, but I like to get a head start. One of the things I have done is when we bought the finance business, we found it on a deal listing site.

Frankly, I know the stuff that I want to do. These are the categories I would love to go to. I can certainly go cold start them, but cold starting is a. There's a lot of work involved in that, but we find this, financing aircraft financing business, on a deal listing website on a business listing website and the founder.

And I see this a lot in aviation, where someone is a pilot or likes aeroplanes and starts a business to serve it, and for whatever reason, that business doesn't scale. The founder may need to learn how to do that. There may be something holding back real growth from it. And so we can buy these things pretty cheaply. And from that, we can scale them up because we know how to do that. You're going to, I mean, you got to pay. On those businesses, you're spending a couple of times as well. 

Chris Powers: You said it was a good versus a bad business. You don't mind, and maybe not a bad company or just not as mature as a business. You have no problem buying something for two times EBITDA, putting some people on it that can clean it up and make it better. You have that playbook.

Craig Fuller: I'm a founder. I like problems. I wouldn't say I like successful businesses because successful businesses that you pay premium dollars for are not my like as a founder entrepreneur, which is what I am at the end of the day. I'm not an M and A guy. I'm an entrepreneur. I want to find something cheap enough that I can fix it.

And now I'm paying a premium for that business. But there's something about it that I can fix. And one of the things I get excited about is when I find problems in it because I, like, when I go through and do diligence, I'm like, I remember when we looked at the Marine portfolio, and we're paying, you know, we're paying five X on this business. And this is a colossal business, the largest acquisition we've ever done. And I remember going through diligence and thinking, I hope they still need to fix this problem. Like I bought this business, I purchased flying from them previously. So I knew where all the issues would be on the Marine side.

The marine side is ten times the size of flying. So this is a more significant, much bigger business and chat. And I hope they still need to fix the problems. Cause if the company is doing this well now, and it had all of the issues that flying had, I know exactly where all the bodies are buried. I can fix these things.

I hope they still need to fix these things. And sure enough, they hadn't set one of them. And like, and management, if management weren't here right in front of me, they know, like I told them this, like, I'm so happy that you guys didn't fix this stuff because I know where to get additional growth and additional cost synergies.

And so, for me, it's about whether or not you want to do the work. I like being a founder. Freightwaves is a very successful business. I can sit and do, which is enough to keep someone busy. And it's a super successful business that the data business will sell at some point. And it will be a considerable upside for our venture capital investors.

Because it's just a very successful business, that is boring to me. Not that I hate FreightWaves or the data business, but because it is much more about growing the existing business and adding products we will launch in three or six months, it's hard for a founder entrepreneur type to get overly excited.

Like I have done, I've hired management. I have a great management team at FreightWaves on the data side that is running the day-to-day of that business. It is so awesome that I don't have to do the work that they're doing because I'm not cut out to do it. I wouldn't be good at it. Anyway, I am a professional manager, but what I like is taking a problem. Buying a business at any level means you're optimizing that business.

You're either fixing problems that the previous administration didn't improve. You're making investments they didn't make, but you have this opportunity to build something. So, I like businesses with substantial audiences and audience characteristics in media, and then I have a playbook to fix those things and grow them.

It's not to say that the media is a throwaway product because I care deeply about growing these media businesses and making a profit. And I, you know, our model is basically to buy them, getting double their size. And I'm talking media-specific, not the adjacent double the media business.

Within two years, getting it to about a 50 per cent margin is the goal, and essentially, then we find adjacent products and what we saw with flying, so we bought flying magazine, and we've done 20. We've bought another 25 aviation brands after that, which are small; these are typically media businesses that can be small.

It could be a single website or a small magazine, but we found that this has been the surprising thing I've learned. It starts to dilute the audience. You believe the more properties you get and buy, the more you pull from the same audience or advertisers. That is the opposite.

It's easier to bundle things together, and you accelerate by cross-selling to the audiences you already own. So, these things have worked out well. So owning more of a category for us is more important. And one of the things we get asked is, are advertisers, like, are you going to raise the price and the advertising?

And I'm like, no, I want you to spend more. And how do we insist you pay more? 

Chris Powers: So, and you might say, Chris, shut up. You're asking way too many questions, but I might ask, how would you double the size of a media company? That's been around for 50 years already. What might be something that you do?

Craig Fuller: A lot of times, if you're talking print, a lot of times the companies have as print, if you think about the print business model, 20 years ago, print magazines were like the most lucrative business you could own. If you owned a core brand in print magazines, it's like owning a sexy piece of real estate because newspapers were also this way.

The internet destroyed that model. But what happened is the publishers ended up in a fight to sit, to be profitable rather than investing in the print magazine; they needed to have the dignity to go into digital. So, they could have made the right kinds of investments in digital, but what they did was they started to lower the quality of the magazine.

The paper stock, all of this stuff and their whole supply chain is messed up anyway. Selling through newsstands is a farce because they don't keep any profits. I looked at an Amazon contract, and 85% of the profits went to Amazon. Revenue went to Amazon like I have all the costs to fulfil it, and you get 85 per cent of the revenue.

What the hell is that? And you won't share the data with me. Like, what is that? That's nonsense. So essentially, when we look at this business. There are a lot of problems. So let's fix the core problems, you know, the flying we invested in print like we doubled the cost per issue or copy as we went to a super high in image, And we got rid of a lot of the junk advertising I fired 80 of the advertisers in the back of the book like I did Some pretty reckless things on the face of it because I wanted to create something that I thought would have lasting value So you're going to have to spend for us.

You should spend six months. What's negative? You deteriorate the business for some time as you fix it. And then that's when the magic starts to take place. Because once the audience believes that you're making investments in them, and you care about them and not your advertisers, but you care about the experience they have with it, mainly if it's a legacy audience that's been connected to this vehicle for 20, 30, 50, 100 years.

They get super stoked, and that's when you start to see the returns because they start to pay. You know, we took the subscription price on average from 8 dollars a year, flying to 40 dollars and what was crazy looking at the data every single month that the prior owner every single month in the history of the data, and I have about 2006 and gone through three different numbers.

They had lost money on subscriptions every single month. In other words, what they generated in subscription price versus what it cost to print and fulfil it was a lot. So, every subscriber they added hurt their business. Like unit economics 101 is just nuts. So I said, screw that. I'm not; I will not print another issue; I will lose money on another copy.

We made sure that we had a profit in what we did. Then, we go heavily into investing in digital experiences. We want a lot of content. We want to create; we want people, when they think about aviation, to come to our sites and learn about it, be inspired by it, and just be connected to their passion for aviation.

And from that, we can monetize. If I have a connected, engaged audience, I can figure out how to monetize it. And monetization can come through affiliate links. Many of these publishers don't do anything in affiliate, so they can tell you to go; they have these links. We do all these gear reviews, but we don't put a connection with an Amazon link at the bottom to help you buy it.

Like, why don't they do that? And, like, they don't like having built that infrastructure. And so all these little things are so obvious when you own them that you can fix, and that's the easy stuff to fix. That's the stuff I like finding that somebody has gotten wrong. That still needs to fix that because I can fix that instantly and get some instant, you know, within the first year, you know, a year and a half get wins, and then it's a mat.

The hard stuff is when you have to like. Make bigger speculative bets on new products. That's when it gets more complicated.

Chris Powers: And real quick. And it is like a function of time and a playbook. But you said I want to double the media business before going after the adjacent companies.

Craig Fuller: No, no, no. It's not that I want to two X the media business before it's, I'm going to get the media business. I'm going to double the size of the media business. And at the same time, I'm figuring out what to commercialize. I have a private equity playbook with an entrepreneur's mind, which is rare because most private equity guys are spreadsheet jockeys.

They need to learn how to do the whole venture start-up thing. But that's my strategy: use an underwriting model. I'm a spreadsheet jockey by all definitions. That's what most people here think of me, but I like it. Like that's what we do. We underwrite the business where a private equity firm would do it.

Then, we make all the execution playbooks the way an entrepreneur would.

Chris Powers: Damn. Another wall to run through. 

Craig Fuller: The great thing, Chris, is this is available to anybody. It is not a secret playbook; it's simple: find a hobby, something you love, or an industry you care deeply about to see the number one, number two, and number three media properties in that space.

Buy it; you can go down the market if you can. If you have to buy it and then operate the media business like a regular business, pay attention to unit economics, get the right kind of people to contribute content, execute that, and then figure out what your audience needs and cares about.

And it doesn't have to be finance. It doesn't have to be insurance or real estate. It could be some e-commerce play. There are so many things that you can do, but you don't have to be this sophisticated; you have a lot of capital to do it. 

Chris Powers: Would you pass on something like golf? Because it's such a big industry with so many dominant media platforms that you, like, if I said you had to get into golf, what would be your way to get into golf?

Craig Fuller: I would find them a formerly loved brand. That has fallen on hard times that everybody in the industry is like, Oh, that thing's going under. It's in bad shape. So, a sports illustrator is an excellent example of this. If I had unlimited resources, the best play I could make now would be to buy Sports Illustrated, which was sold to Anthem Group.

And it's like they're using AI people to write sports content. It's a funny story because these AI generators are eliminating editorial people and using AI to generate. There's a story about volleyball. Volleyball can be tricky, especially if you don't have a ball.

It's like one of the articles that came out of AI, and they published this stuff. But, like, I would buy Sports Illustrated, and then I would find products and services that the sports audience cares about. It could be merch, it could be, you know, gambling, like, you could do a lot of stuff around that audience, and I think that's just going to be excellent.

But I'm not a golfer. I would need to learn more about the golf names if I had golf, but I would go. You could buy Goth Journal, a well-run publication with a passionate audience. So, I wouldn't suggest that's a distressed asset. But I would buy Goth Journal, or I would buy Goth Digest.

I don't know any of the metrics of these businesses, and that would be my audience. Like, you're a golf writer. 

Chris Powers: Yeah, and I picked golf because it's such a big industry with so much content and media already in it that I didn't know if there was a play.

Craig Fuller: What is a magazine in the golf industry? Like I said, I know very little golf.

Chris Powers: Golf Digest and golf are two of the largest. Golf Digest, you can go to any airport worldwide. I mean, any newsstand in the world that's carrying sports has.

Craig Fuller: So those will be my top two. I go to the top, go my way down and then I'll find like golf digest of Fort Worth, and that's who I would buy after I'd gone through the list.

But essentially, you're buying the great thing about golf. As a media executive, I'd argue that you have a lot of businesses where somebody who was a golfer, loved golf, decided to create a business out of it and could have been a better business person. They may have been a scratch golfer and a crappy business person.

That is an excellent thing for my model because you can pick up some outstanding businesses, like good products built by an emphatic founder who was meticulous about the product and couldn't figure out how to monetize it. And that is the perfect combination because you can pick these things up pretty cheap, and then it's a matter of scale, and you own the media brand.

Like you're influencing, if you own golf digest and married up with like some golf app, that's like a perfect app that nobody knows about, or perhaps it's a, you know, a club manufacturer or something that, nobody knows about sort of like an obscure club manufacturer or whatever you could, you could make a lot of money that way.

The whole thing is this audience, right? It's like you're buying the audience. That is your asset; you finance it through media—your media cash. 

Chris Powers: I fricking love it. The two brands I joke about wanting to buy are nostalgic from when we were kids. Remember, no fear shirts.

And then remember, like golf is life. The rest is just details. Or it'd be like flying is life. The rest is just details. I mean, these shirts were everywhere. I wonder if No Fear has a nostalgic audience. It doesn't have, like, as apparent of an adjacent businesses.

Craig Fuller: Like, what is no fit? Was it like off-roading or something?

Chris Powers: Yeah, it was just like shirts that teenagers wore, and it would say, like, it would just say it'd have some quote. And then it was just promoting, like, don't have fear. And especially in today's world, where everybody's scared of everything, especially our younger generations because they've grown up.

I was listening to the media like the world was ending. No fear would play well. Whoing to this, I don't know who owns the brand?.

Craig Fuller: It probably was a Steers brand. We will be disappointed to find out what created this brand. Like, Oh, that isn't so cool.

Chris Powers: I just wanted to ask you one more thing. I still need to get kids your age, but you did something extraordinary, and we'll bring it home on this. You said that you bought an e-commerce business with your son. How old is your son? 

Craig Fuller: So he's seventeen. 

Chris Powers: Okay. How did this happen? The story, and we'll bring it home.

Craig Fuller: So my son was lifeguarding at the pool and making 12 bucks an hour and spent the whole summer doing it and came to me at the end of the summer and said, Hey, dad, I'm tired of working for like, you don't make a lot of money, right? 12 bucks an hour is a lot of hard days, you know, even though he's lifeguarding, that isn't great pay.

And he's like, I want to make real money. And he's like, how do I start a business? So he began to come to me wanting to start a business, and we did some stuff. That wasn't successful, but it was a chance for him to understand it. I was going through it, and I do this on the weekends as I scout these listing sites and business listings.

I'm looking for stuff for flying. And I came across a tiny e-commerce site called Aero Swag that happened to sell custom products to pilots. And I was like, Hey, I would buy that for flying, but I will buy it so that he and I can learn it. So it's 10,000; the company had done 6,000, and this is a perfect example of a successful product print-on-demand product.

The founder is a pilot who loved aviation but, for whatever reason, had yet to scale the business and monetize it. I was like, I could do this because I can take my audience, my playbook and apply it into this e-commerce business, and I'll do it alongside my son. He'll help me build this business. That's what we've done.

You know, that business will do over 100,000 this year. We bought it in January. You'll do 100 000. It will; it's over 25 per cent margin business that will generate, you know, 25 000 to 30 000 of contribution profit if you will. And he gets a front-row seat to see how business is done. And yes, is it in some ways?

Because I own a media business, is it cheating? Absolutely, but that's what business is all about. It's about having networks and distribution. He's learning the power of what it means to own an audience, how to distribute products to them, how to design, how to price products, how to think about customer acquisition, how to think about lifetime value, and how to like all the stuff you would learn.

By doing it, he gets to see it firsthand and has some ownership in the outcome. And so it's been a great little experience. And, we've, you know, been, been driving it.

Chris Powers: Okay. So, what is one thing that he, or a few things, like what's his job? What would you know about the playbook, but what does he do?

Craig Fuller: Yeah, I mean, product pricing. So he's designing a lot of the images and the product, you know, how we market the product, the actual products themselves. He's learning. He's got a bit of the creative, being able to design the entire product. So he runs the product designs, creates them, figures out how to price them, markets them, and runs marketing campaigns. Het says excellent things about front-on-demand. Consider taking this as a broader conversation towards how easy it is to start a business in America. Shopify creates, so this is a Shopify-built store. Anybody can make, and they're handling, you know, the payments, the website, and all of that.

Super turnkey, you get a print demand; we use Printful, which does print-on-demand swag. So, this hat, and I have one of our cases I'm showing you here. It's a print-on-demand iPhone case with an aeroplane map. It's great because it's all super turnkey. So now he gets to figure out what products I want to offer and what designs I want to show this audience.

What do I want to charge the audience? How do I want to distribute it and market it? And those are the things that he gets to help experiment. He's done innovative things that I still need to explore around TikTok. He's using AI to write, so one of the things he was doing was using chat GPT to write the checkout, like descriptions of the products.

But, he's doing the stuff that, if it were his only business, he'd be doing the same thing. But it's such an incredible experience because he gets a firsthand account of the power of the audience. Now, he'll tell me that at some point, he wants to run my playbook on his own business without me involved.

And that's awesome. And that's what I want my son to do. So, at some point, he'll figure out what he loves. His passion is not aeroplanes; it's mine, but at some point, he'll be able to take this playbook and apply it to any industry. It could be golf. He's not a golfer, but he's into rock climbing.

That could be what he ends up doing. And he can take the same playbook and apply it there. And he's off to the races. 

Chris Powers: Craig, thank you for round two. Today was awesome. 

Craig Fuller: Chris, I appreciate it, man; thanks for having me.