Daniel Strauss — The Billionaire Mindset

- Once again, it is what's involved. It's so good to have you along with us. I've got an exciting guest on this particular episode and it's one, I'm not gonna lie, I've been trying to track him down for a while because I had the book thrust at me and said, "You're gonna change your life, you have to read the book." So I said, "Okay, I will read the book." And it came from a couple of companies and somebody that's actually, they've implemented some of the mindset secrets in this book. So who is he? He is Daniel Strauss. Hello, Daniel. - Hi, David. Thanks so much for the opportunity. - It's an absolute pleasure. I'm so looking forward to our chat together because hopefully you're going to be able to answer a lot of questions that I think a lot of people have. But before we get onto the book, and the book is called "The Billionaire Mindset." Okay, now already I'm going billionaire. I haven't even got my head around millionaire, but that's why you wrote the book, one of the reasons. So we're gonna talk about that. But tell me a little bit about Daniel because you didn't start off wealthy and you didn't wake up wealthy one day. You had what I would term a fairly normal upbringing. Talk to me about that.

- Thanks, David. Yes, I grew up in the small town called Camus in the Northern Cape. My dad is a farmer and I can remember I always just wanted opportunities. I always read about the children in the big schools who go on international trips and they do the athletics taught on tracks and stuff. And I mean, we read on gravel tracks. Then I studied industrial engineering at Stellenbosch University. Later on I did an MBA and somehow I just,

I wanted to know how the big guys do it. How is it possible that some people become billionaires and other people struggle to survive? So then I tried and I applied for jobs. Let's add all the traditional big companies in Stellenbosch. I couldn't find a job and then finally I was blessed to find a very wise man from Southeast Asia was willing to take me under his wing for four years, take me to various countries. And he actually opened my eyes about how investment is really done globally because South Africa is at least 20 years behind developed countries in my view, when it comes to early stage funding and how we grow businesses. - Okay, that's a very short and succinct intro, but I mean, you sort of had an entrepreneurial bent from quite early on in your life. I mean, you would sell chickens, I believe, or the eggs. Which one did you sell, chickens or eggs? Which came first? (laughing) - I had a little vegetable batch as well. So I would normally, I would actually do all the work myself, prepare the ground, put in the fertilizers. And then I would grow these vegetables and then I would sell them to the grocer in town. - And this is what I like about the book, Daniel, is that it's written in plain English and there's no, you talk about some fairly complex concepts but it's written in a way that the average Joe Soap like myself can understand.

And there's a lot of stories in the book. And that's what I love where you make, you know, you use different analogies. You know, the one part of the book you said to somebody, what would you rather be? A big fish in a small pond or a small fish in the sea. And, you know, that's very, very, 'cause I can understand that. But now you said you met this man and he became your mentor. How did you actually meet him? And did you just sort of say to him, listen, sorry, would you mind mentoring me? - So as I said, I was really at a time in my life, I was about 29 years old where I realized if I don't do it now, it'll probably never happen. So I was actively looking for a successful business person who could show me. 'Cause I, a lot of the young guys these days who really climbed the ladder fast is because of family ties. The dad introduces you to a billionaire and he takes you under his wing and he pops your uncle. So my dad was the youngest of nine children. He started farming when he was 19 years old. And I mean, he didn't have the networks. He couldn't introduce me to anyone. So I was actively looking. And then one day one of my friends from a quite a wealthy family in South Africa said that he's going to go pick his dad's business partner up from the airport if I wanted to come with him.

I'm like, okay, cool. So I went there and I met this guy and we just clicked. So I was working as a private equity analyst at the time. So I had a better of an understanding of how these investments worked in private companies but he just opened my mind. - Now you talk about opening your mind and I want to get into that in a little while. But what brought you to the stage of you felt confident

you'd learned enough, you were experienced enough to write a book? - That is a very good question. Especially if your publisher decides to put the word billionaire in the title. So it's actually a mindset book that also deals with certain financial concepts. But I felt that I just had to get to a point where I had the experience to have these types of interviews without having to fake it till you make it. I wanted to be real, be able to talk about real experiences after investing. So we've invested in about 50 companies now all across various industries, different countries. And we've also had some successful exits because that's a difficult part. It's very easy to make an investment in a private company but the real challenge comes with the exit. And yeah, so I have a few investments, a few exits. And I think I've probably made every mistake that anyone could. So now I'm happy, I can easily stand in front of you and say, okay, I can speak about this. - Now, this is for me, what is fascinating 'cause you talk about mindset. And you do mention in the book that this mentor took you overseas and took you to a couple of seminars, et cetera, et cetera. And you say in the book that some people might consider a bit esoteric.

Now, if you say to a lot of people, where does esoteric fit into business? They would say the two do not make good bedfellows. But mindset is somewhat esoteric, isn't it? - Definitely, especially if you get to methods of opening your mind to new possibilities and to let go of your preconceived ideas 'cause so many of us were raised in a certain way in South Africa and we have all these preconceived ideas and those are actually the things that hold us back from growing our businesses exponentially. - And that is so true because I come from a family which we could sort of quite safely say, I guess we're at the lower end of middle class, didn't grow up with a lot. And I used to all the time get told, money doesn't grow on trees, David, the Wattses always have to suffer. Nothing comes easy to us. And sometimes, and I've seen it in my life previously, you kind of rise to the level of your own mediocrity. And this is where the mindset side of it comes in because it is so difficult to change. Now, from what I've read in the book, your story is fairly similar. Now, how did you go about this? - So I'll just tell you a little bit of a story of our own experience regarding these mindsets and then I'll answer your question.

So I've also got to meet a guy in Singapore who specializes in something they call unresolved childhood issues. And what happened is we invested in a company and almost every time that this company reaches a million rand turnover per month, the entrepreneurs sell sabotages. Now how does he do that? He either stays away from the office for extended periods of time. He starts fighting with his employees or he starts fighting with everyone around him. And then the business falls back below a million rand a month. And then he wakes up again and then he starts doing everything right again. And I couldn't understand this. So I actually took him to Singapore to go and see this guy. And this guy worked with him and when he resolved, let's call the trauma, some traumatic experiences that he had when he was younger, he gave himself the permission to succeed. And only once he gave himself the permission to succeed, as you say, the words is always struggle. I do not agree with that. Nobody has to struggle. You can overcome that. And then suddenly the business started doing much, much better. And in a similar way, I started by attending a three day course in Southeast Asia, where essentially context is given about the society that we're living in and the rules of the society as it is now.

So the rules change from time to time, certain written rules and certain unwritten rules. And once I had clarity about how these rules work, I was ready to really start my journey towards creating wealth. - Okay, let's get into the other part of the question in just a little bit. My special guest is Danil Strauss. And by the way, if you're gonna be looking for the book, it's spelled Daniel. So Daniel Strauss, the billionaire mindset. When we come back, we'll be chatting to Daniel some more and finding out a little bit more about the book and about his story. This is what's involved back in a bit. And we're back with my special guest, Danil Strauss, author of the billionaire mindset. So we talk about, just before the break here, Danil, we're talking about this whole mindset thing. And you said that you'd gotten to the stage where you'd gotten your mindset sorted out. But are there markers of people who are successful? Because if I think about it, and you mentioned this in the book as well, that there's a couple of people who are super, super wealthy, you use them as examples. And if they lost everything today, tomorrow they'd be back at it. And within a very short time, they would be successful again.

Yes, I always say that some people think it's not the big that eats the small, it's the fast that eats the slow. But my mentor said to me, well, that's old news already. In the future, it will be the knowing that eats the unknowing. So there's certain concepts that you need to understand in business. And these concepts, they remove the constraints that we place upon ourselves. And as soon as you know how to remove certain constraints that other people see as impossible to overcome, and you can overcome these one or two or three constraints, then suddenly there's nothing that can stop you.

- You see, I've heard once, and I can't remember who said it, or I read it once, is success leaves clues. Is this something in your journey that you found? Is there a system that separates those who can rise stratospherically to the others, like myself and my little business? - Yes, definitely. As I said, I was privileged to have an in-depth conversation with probably the most well-known billionaire in South Africa. And as we spoke, I realized that he truly practices

unconstrained thinking. And that doesn't stem from his existing wealth or the backing that he has. It's literally from knowing that you do not need capital to build a massive business. You can go and raise that capital, and he knows exactly how to do it. Because why is it that a certain small group of people, every time they get involved in a company in South Africa, it's listed on the stock exchange within three to seven years. But another group of people, they get involved in businesses, they file. It's because the one group knows the rules of the game, and they stick to it and they just keep on doing the same thing according to the rules and their businesses grow. And I think we can all list these people. And then other people come and they judge them. Instead of trying to understand how they're doing it and why they are able to have success after success after success, they judge them. So what I say is if someone built one business, they were extremely successful, and they want to come and give me advice. I am a little bit wary because luck does play a big role. But if someone got five or six or 10 businesses that they grew tenfold within the last 10 years, then I will listen to that person.

- Yeah, that makes sense. I mean, I certainly would like to meet a couple of those and have a chat to them on this show, but purely for selfish reasons. But Danil, one of the things in your book that you talk about, and I've battled with this concept, 'cause I think I'm stuck in what you call thinking above the line. And what you do when you think below the line and what you do when you think above the line. I don't want to give away too much of the book because you've got to read it. You will not understand all of the concepts until you read the book. So we're going to tell you where to get that in just a little bit. But talk to me about this concept of above the line thinking and below the line thinking. 'Cause I've got a bit of a, well, I've got a radio background which necessitates advertising and marketing. So immediately I'm thinking in the marketing space, but that's not right from your context. - Yeah, so I specifically said that any other leads say to my knowledge that you link to above the line or below the line, please forget about it. This is a new above the line. So it's almost like a tree. So a tree needs to have very strong roots in order to survive, but it also needs leaves.

And what I see as the roots of the tree is what we call level one and level two thinking. So without getting too technical, I'm just going to run through it quickly. On level one, an entrepreneur thinks about products and services, short-term and intermittent revenue. Then as they move up in their thinking, they move to level two. Then they start thinking of how can they create systems around these products and services? They start thinking medium term and how to generate recurring revenue. And then we get to above the line. And that is how do you turn these systems, products and services into a financial instrument that an investor would be willing to acquire? They start thinking long-term and they start thinking about how shareholder value is created. So in listed companies, people are talking about capital allocation and how to create shareholder value all the time. But for some reason, our entrepreneurs in South Africa are talking about tax avoidance all the time. Now, I mean, those are two completely different mindsets. - Yeah, yeah. Sorry, I'm quiet there because I'm thinking, as soon as you sort of went tax avoidance, I was like, yeah, I get that. Why must we pay the government?

But this is, somebody said to me the one day, it says, if you're having to pay a lot of tax, it must mean you're making a lot of money. Is that kind of some of that differentiation? Differentiation, sure. In thinking. - I think the big thinking is, how often have you thought about how much your company is worth, David, and how shareholder value is actually created in that company? If you look at it from the outside, would you invest in this company? If not, why not? But you are actually invested in it. You own 100% of your own company. So then I'll ask, from a shareholder perspective, would you prefer a company that shows no profit in order to avoid taxes, or would you prefer to have a company that is as profitable as possible, obviously within a sustainable framework, to add as much shareholder value as possible? Which one would you choose as a shareholder? - Well, yeah, as a shareholder, I'm looking at profits. - Exactly, and that's a mindset shift that needs to happen if you want to really grow a significant growth enterprise that will live long after you're not here anymore. - Okay, right. We are chatting to Danil Strauss. He is the author. His first book is called "The Billionaire Mindset," something you need to go out and get, okay?

It's blown my mind and I get to read and see a lot of books. When we come back, I'll be talking about our different roles that we have in a company. Like, for example, our company, what's digital, is small. There's two of us. And how do we think about growing that? And as Danil mentioned now about being a shareholder, more when we come back. This is what's involved. So good to have you along with us. And we're back with my special guest, Danil Strauss. He is also of "The Billionaire Mindset." So just before the break, we were talking about thinking like a shareholder. But now, let's take a business like mine, Danil. I am sort of chief cook, bottle washer. I am CEO. I am designer. I am director. I am founder. How do we get past all of this? Because those are all different hats that we're expected to wear. - Yeah, so easiest normally to start with, how do you decide how big your own salary should be? If you are a shareholder, a director, the CEO, the manager, and the employee, how do you decide that?

- Yeah, you see, the whole concept of salary at this stage is fairly foreign to a lot of us that are running small businesses in this country. - Because, sorry, carry on. - As a shareholder, you want the salary to be as low as possible so that you can have as much profit as possible. As the CEO, you want to have it as high as possible so you can have a better lifestyle. But as a director, whose fiduciary duty is to act in the best interest of the company, they want the salary to be market related in order to ensure that the maximum shareholder value is created while compensating the CEO adequately to ensure that they don't think about money all the time, but that they can actually focus on doing their job, which is building and growing the company. - Okay, I'm just thinking now, because I know, and through my interactions with my listener, that there are people that have got company's massiles maybe a little bit bigger, and it's been this blood sweat and tears all of the time, and you're so busy working in the business that you don't really get a chance to step back. And you talk about financing as the way to start growing a business. But most of us, and I include myself, our only recourse has been to go capping hand to the bank and say, "Please, sir, will you give me some money "at a ridiculous interest rate?" And you hope that they do.

And then they just look at your books and your balance sheet and they go, "There's no way you're a good risk, have a nice day." What do we do? How do we go about this? - So I think firstly, you will need the unconstrained thinking to decide how can I grow my company tenfold or a hundredfold in order to have a compelling narrative

to tell shareholders that would make it worth investing in this company at a proper valuation. So now, most of us start thinking in a constrained space. Our biggest constraint is normally the capital available to build our businesses. So now, because we don't have capital, we don't think of how we're going to create recurring revenue and we don't think of how we can massively scale our current offerings. So now, suddenly, let's say you decide, I'm going to go and think completely unconstrained now, I'm going to build a billion dollar company. Then you start thinking, how will I change my service offerings that are probably not scalable at this moment in time? How will I change these products? And how will I ensure that they are still highly profitable, even if they scale? And once you start thinking in that way, you can start approaching high growth investors like venture capitalists or angels, or even like crowdfunding to really start growing your business. But before we've made the mindset shift from building a lifestyle business to building a growth enterprise, you won't be attractive to either banks or to other investors. - So, it's a change of thinking, but you have to then have grown your business to a certain level.

Now, something that we haven't spoken about is that you are the one S in- - Sorry, David, can I just stop you there? Apologies. No, so you don't have to grow to a certain level before you approach funders. - Okay. - You just have to have the vision to build it extremely big. Let me just give you some context. We invested in an idea in, what was it? December, 2019, it was just an idea, but it was a wonderful entrepreneur who we knew and trusted. So we invested in the company at a $1.75 million valuation. I mean, which is quite a high valuation for an idea, especially in South African terms. Now, 15 months later, the company is valued at $22 million. They're employing, I think, 20 or 25 people. They are growing rapidly, massively. They're really doing well, and the guy is 27 years old. - Wow. - So what I'm trying to say is that guy had the unconstrained thinking to raise funding, to build a solution to a real world problem that lots of people are willing to pay for, and then to scale it massively. - Okay, so this is the kind of thing that in your other part of your life that you guys do. I mean, you've got an investment company. So what would you look for? If somebody's got a business now, what are the kind of things that investment companies like yourselves would look at?

- Yes, so I actually have a list of questions here that I would normally ask entrepreneurs. So I don't want to bore the listeners, but if I was an entrepreneur and listening to this, I would have liked to hear what types of questions should I be able to answer and invest if I want them to invest in my company. Is it fine if I go through these questions quickly? - No, absolutely. I think this is vital. I'm glad we got to this point. - Awesome. So normally the first question that we want the entrepreneurs to answer is, what is the problem? How did you identify the problem? How big is the problem? And how did you measure this? And who has this problem? So what happens is in an emerging market, there are a lot of problems, but all problems don't necessarily have a good business model because the people who have these problems don't necessarily have money to pay you to solve their problem. I have so many, let's call them consultants, who want to provide services to startups and SMEs, but by their very nature, these startups and SMEs don't necessarily have the money to pay them for their services. So despite the fact that they are solving a massive problem, they're adding massive value, they're not getting enough money for that.

So then, sorry. - No, I'm with you. - Awesome. Then we go and we say, do you have the ability to solve the problem? And can you prove this? So can you prove your ability to solve the problem? Then why can you solve the problem better than other people? Then who will help you to solve the problem? Who's your team, the team that will help you? So what are the next steps, the milestones? So if you have absolute clarity on your milestones as you go along your journey, then investors would be willing to fund you to reach every milestone. Because with every milestone, the value of your company is higher because you're getting closer to the big cash flows, almost like when you do prospecting for mining. Then how much time do you need to reach these milestones? How much money do you need to reach these milestones? And how will the investment be allocated to reach your milestones? So how will you allocate this capital? Then how will you make money? So what is your business model? Why does your business model make sense? Is your business model scalable? Now scalable we get to working capital cycles, we get to systems, we get to market size, all of those things. Then you need to provide a cashflow projection for the next three years.

And I found that for South African entrepreneurs, this is extremely difficult because they used to talking to their accountants who specialize in telling them exactly what happened in the past. But now you have to tell me what you think is going to happen in the future based on your milestones, customers, the business model, all of those things. Then what is the valuation at which you are raising funding? How did you calculate this valuation? And what does your current company structure look like? So if you as an entrepreneur, for instance, only have 3% left of your own company by the time you come to me for funding, you're not properly incentivized. So we have to make sure that the structure is correct. And then who are your current shareholders and how much capital have you raised till date? So normally after those 19 questions have been answered, we're in a very good position to say yes or no, we want to move forward with the due diligence process. So if we say yes, it only means yes, we want to do due diligence on the company. And then we obviously delve deeper into the nuts and bolts. - Fantastic, well, I think that is very helpful. The other thing again, you've got to get the book because it is so well written and I must compliment you on that, Daniel.

The book is written in very easy to understand terms. One of the things though, and I want to talk about this when we come back as we wrap up this interview that you talk about throughout the book is the power and the need for mentors and mentorship. So when we come back, I'm going to be chatting to you about that as we wrap it up. There's my special guest that I have with me, Danil Strauss, he is the author of "The Billionaire Mindset". Absolutely brilliant book. We'll tell you where you can get that as well. When we come back, this is what's involved. And we're back with my special guest, author of "The Billionaire Mindset", Danil Strauss. Some mentorship, Danil, talk to me about that because you credit a lot of your success to the mentors in your life. Yes, I would normally say, so a lot of people come to me and say, how do I find a mentor? And I say, identify someone who has already reached a significant level of success in the industry or the thing in which you would really like to reach a lot of success. So find someone who's already successful in the specific area where you also want to be successful. And then make sure that the person has a similar personality type to you. I often say that, let's say Warren Buffett may not be the ideal mentor for Elon Musk because the one is extremely innovative where the other one is extremely patient, for instance.

So make sure that you find someone who has similar to you in those aspects, but who have already reached a significant success. - Okay, now this is where a lot of times people also get a bit confused between, 'cause these days, just about everybody and their dog is a life coach or a spiritual coach or a business coach. Are coaches and mentors different things? - Yes, in my view, they are very different. I actually have mentors and a coach. So I see value in all of them. But to me, a mentor is really someone, they don't tell you what to do. They ask you the right questions to get your thinking. And then if you ask them, okay, so where can I find more information? They can normally direct you to either someone to speak to or they can direct you to a book to read, or they will actually show you what they have done already. So mentors, it's almost an art where you,

the best mentors that I have, they just ask the right questions because the questions that they have make me think about what am I actually busy with? Am I on the right path here? And that's very, very valuable to me. - And I notice again, and you mentioned this in the book, that you have several mentors and that you meet with them or chat with them fairly regularly. So we're not gonna go out and just look for one. I think one is the place to start, but ideally, to have more than one? - Yes, and for a very long time, I only had one mentor. But the thing is a lot of people think that you have to get a mentor to see what you can get from them. What I normally try to do is I do research about the person that I want to approach, and then I try to find out what is really important to them at this stage in their life. And then I try to unlock value for them as well. - It must be a mutualistic relationship. You shouldn't be an energy vampire, 'cause some people off, you've spoken to them for often how you feel so drained, you wanna go to sleep. Whereas other people, you just feed off of each other's energy and you actually have, yeah, you energize each other. - Yeah, I know exactly what you're talking about.

I've experienced that a couple of times already. Danil, thank you for taking the time out and having a chat to us. Before I let you go though, what's next in terms of Danil Strauss and your life? Are we gonna get a second book? What plans have you got? - Thank you, David. So after my first book did quite well, I think it was the number one South African book in March and April, terms of sales. My publisher actually offered me another contract and we're already busy with the next book. At the moment, I'm very focused on making investments. There's a lot of opportunity and capital in the market at the moment. We're raising co-investments for our companies. We're adding value to our companies. Actually right after this, I have a call where we introduced one of our portfolio companies to significant possible customer for them. Yeah, I'm in a good place. I want to continue what I do. I want to continue to learn and I wanna do it well and I want to add value to as many people as possible. - I think this is the important part as well because I've sensed both in the book and in chatting to you that you like me are very passionate about South Africa. I mean, technically you could live wherever in the world that you wanted to, but you believe in South Africa.

Do you believe the same way that I do that the spirit of entrepreneurship and growing businesses here in South Africa is gonna be one of the answers to South Africa's problems? - Yes, I think to the unemployment problem, that is the only answer. And I think that is definitely one of the biggest problems that we have at the moment. And to be very honest, if we don't start embracing equity financing for our small, medium companies, if we continue trying to build them with debt, we will just not be fast enough. So raising equity funding is like accelerating the growth. You will probably have the same result over a 10 year period if you use debt. But with capital that you raise in terms of equity, you can have that result in one year or two years. And so if we want to accelerate the economical growth in South Africa, we need a critical amount of people to understand and embrace equity funding. And I cannot say that enough. - Okay. And lastly, one piece of advice that you would give entrepreneurs out there or aspiring entrepreneurs, what would your one piece of advice be? - Make sure that you are solving a problem for someone who has the ability to pay you for solving their problem. Because if you're not solving a problem for someone, you won't be an entrepreneur for long.

- Wonderful stuff. The book is called "The Billionaire Mindset" by Daniel Strauss. As I said earlier, Daniel Strauss is the way you will find it. Available in most good bookstores, available I think on Amazon as well, hey? On Kindle. - Yes, so in all the good bookstores, it's on Amazon. And I also have it on Audible now as an audio book. - Which just by the way, I've been listening to. Nice to see a familiar name that is the narrator of the book. And I think that... - I actually think he has one of the best voice over voices in the country. That's why I used him. - Yeah, no wonderful stuff in it. It's great to see. And there's so much more I wanna speak to you about, you know what I mean? Just about some of the businesses that you got involved in, the music side of it, what else you like. I might have to have you back on the show. So, you know, as soon as the book's done, I'm sure I'll reach out again. But it wraps it up. He says, putting his false teeth back in, wraps it up for this edition of "What's Involved." My special guest has been Daniel Strauss. Daniel, thank you so much for your time. And we wish you all the very best. - Thanks so much, David, looking forward. - There we go.

As I said, Daniel's trust. Get the book. It's brilliant, okay? I know I said there's a lot of good books out there and there are, but this one spoke to me. So do yourself a favor. It's available, all good bookstores on all of the platforms. The Audible version is great as well. If you're driving up and down, you can give it a listen as well. Wraps it up. And to each and every one of you, look after yourselves, Take care, and thank you for listening.