They’re Lying To You About Getting RICH! Here’s How He Built A $1B Company! | Blake Johnson

Blake Johnson said Bite was his fifth self-founded, self-financed company and sold for a little over $1 billion. He said the company was built and sold in roughly three and a half years, with the transaction technically occurring on December 31, 2020.

Johnson argues Bite’s rapid success was really the product of about 15 years of accumulated entrepreneurial experience. He had founded and sold four companies before Bite and said each venture carried forward lessons from tens of thousands of correct decisions and far more mistakes.

His fourth company sold for $97 million, but it was not his first major financial success. Johnson corrected the hosts by saying his third company had already produced a “life-changing” exit; his first two exits were smaller.

Currency, the company immediately before Bite, was an equipment-leasing finance business. It was one of the ventures through which Johnson developed the operating and acquisition playbook he later applied to Bite.

Johnson said he was already working on companies six, seven and eight. He expected the sixth venture potentially to conclude within months and acknowledged that he had once intended to stop before reaching an eighth company.

Johnson grew up on a cattle ranch in a small California community close to the Mexican border that he described as having extremely high unemployment. He said the local culture involved constant bargaining, bartering and negotiation, which made him comfortable negotiating from an early age.

His early work included a feedlot job that required waking at 3:05 a.m. to begin work at 4:00 a.m. Long days in intense summer heat helped create a strong desire to find another path.

Trips to Palm Springs and San Diego exposed Johnson to lifestyles dramatically different from the environment where he grew up. He said those glimpses convinced him that another kind of life was possible and increasingly made him determined to leave his hometown.

A grade-school principal played an important role in changing Johnson’s trajectory by encouraging him to attend boarding school. The principal was sending his own daughter to a California boarding school and suggested Johnson interview there as well.

Johnson was admitted and travelled roughly seven hours by Greyhound to attend the boarding school. He described the contrast between ranch and manual work in Wranglers and suddenly wearing a blazer, tie and school patch as an important early exposure to another world.

Johnson graduated college in the late 1990s and spent about five years in his first professional job, working in sales. He became highly successful there and accumulated both money and savings before considering graduate school.

He said he gained an enormous sales advantage by privately arranging for the company receptionist to route all inbound sales calls to him. In exchange, she received a continuing cut of his commissions; Johnson said the arrangement moved him from roughly 150th in the company to number one within months.

Johnson originally intended to leave his sales career for graduate school, but a Citibank contact instead asked him to consult for a small Los Angeles company. That consulting assignment became his accidental entry into business ownership around 2005.

When that company’s CEO repeatedly tried to hire him full time, Johnson demanded 50% of the company largely because he expected the demand to be rejected. The CEO returned a few days later and accepted, causing Johnson to abandon graduate school and become an owner.

Johnson said that first business grew from roughly $5 million in revenue to about a $180 million run rate within 18 months. His sales ability helped drive extraordinary top-line growth, but he later concluded that he understood far less about actually operating a business than he believed at the time.

The first company’s apparent success concealed weak economics. Johnson described it as looking like a Ferrari powered by “two sick mice in a hamster wheel”: revenues were surging during the strong 2006–07 economy, but the company was spending heavily and producing little real profit.

The 2008 financial crisis turned Johnson’s first ownership experience into what he called the real education of his career. Business deteriorated sharply, his partner effectively left him to handle the crisis alone, and the company came close to bankruptcy.

At the low point Johnson said he had only $7,000 left while facing a $43,000 payroll two weeks later. He generated $62,000 during those two weeks, bringing available cash to about $69,000; after payroll, roughly $26,000 remained.

That near-collapse convinced Johnson to build companies explicitly for eventual acquisition. His working thesis became that, given enough time, companies ultimately either get acquired or disappear, so he began designing businesses around characteristics future buyers would want.

Johnson said he has never raised outside investment capital, although he unsuccessfully tried during the 2008 crisis. Surviving without it reinforced his belief that scalable companies could be built and exited through disciplined self-funding.

He is not categorically opposed to fundraising, but said that if a founder does raise capital, the amount should be large enough to permit meaningful failure and iteration. His concern is that modest external funding can provide runway without providing enough resources to fundamentally change the company’s odds.

Johnson believes using outside investors’ money can weaken spending discipline because the consequences feel less personal than spending one’s own capital. He also said fear of losing another person’s money is personally uncomfortable for him, whereas he can tolerate risking his own.

He described bootstrapping as operating without a safety net. When every dollar spent may prevent another bill from being paid, he believes founders become much more sensitive to costs, trade-offs and operational details.

The hosts contrasted Johnson’s approach with entrepreneur Mark Lore’s advice to raise as much capital as possible. The hosts cited Lore’s multibillion-dollar Jet.com sale to Walmart and his Diapers.com sale to Amazon while setting up that disagreement over capital strategy.

Johnson reduces businesses to a small group of measurable fundamentals: revenue, cost of goods, customer-acquisition cost, overhead and infrastructure. His basic rule is that a company must eventually generate more money than it spends.

A very large addressable market is one of Johnson’s first requirements when evaluating a new company. He wants products with what he calls a “universal yes”—needs that can be presented to ordinary people almost anywhere and receive an immediately understandable positive response.

His examples of a universal demand included straighter and whiter teeth, easier access to money and looking better in clothing. He deliberately avoids highly narrow products whose potential customer pool is inherently small.

Johnson considers customer-acquisition cost the most important and difficult variable in the business equation. The key question is how much must be spent to reach someone who both wants the product and has the ability to purchase it.

He said marketing methods constantly change by industry, but the fundamental business questions remain simple enough that he can assess a company through roughly ten core questions. He repeatedly warned against turning straightforward business economics into complicated intellectual “rabbit holes.”

Bite reportedly expanded from roughly 100 employees to around 500 during the pandemic. Johnson said that growth worked because the company prepared operational capacity to match changes in customer acquisition rather than treating marketing growth in isolation.

Johnson compares rapid company growth to keeping an aircraft balanced. Marketing and efficient customer acquisition provide the thrust, while supply chain, personnel, sales, customer service and accounting must remain balanced or one weak function can destabilize the entire company.

He specifically warned that functions such as accounting or supply chain can destroy a company even when its product and marketing are working. Rapid demand therefore requires executives to anticipate which operational constraint will break next.

Before the pandemic, Johnson said Bite repeatedly modeled what it would do if customer-acquisition costs rose sharply. His contingency plan included drastic staffing cuts if necessary to preserve the company.

Instead, customer-acquisition costs began falling after the COVID shutdowns in March 2020. Johnson partly attributed this to consumers spending large amounts of time on Zoom and becoming more conscious of their teeth and appearance.

Johnson said Bite had already run operational “fire drills” for both positive and negative scenarios. When demand accelerated, management already had plans for additional customer-service personnel, sales hiring and expanded manufacturing capacity.

He contrasted Bite’s preparation with SmileDirect and Candid, saying he believed their operating behavior showed they were poorly prepared for disruption. He described himself as watching competitors closely and treating their actions as information about how the market was developing.

During Los Angeles business shutdowns, Bite found a way to continue operating by combining its existing medical-related production with manufacturing for first responders. Johnson said the company began 3D-printing actual medical equipment, which helped legitimize keeping its facilities open and employees working.

The original idea for Bite came from a dinner on December 7, 2015, with a friend who was a USC orthodontics professor. The friend was going through a divorce and told Johnson that technological changes threatened not only his marriage but potentially his orthodontic business.

The orthodontist explained that software was becoming capable of predicting tooth movement extremely well and that invisible aligners could outperform conventional brackets and wires for many adults. He also told Johnson that an important Invisalign patent was expected to expire roughly 18 months later.

The possibility of treating orthodontic patients remotely was what turned the conversation into a business idea for Johnson. After hearing that technology could potentially serve patients without requiring them to leave home, he called his father from an Uber and announced that he was getting into orthodontics.

Johnson’s approach is to identify an opportunity first and then recruit the expertise he lacks. In Bite’s case, that meant bringing orthodontic expertise into the business rather than assuming he personally needed to become the technical expert.

Scott Cohen, Johnson’s best friend and best man at his wedding, joined Bite roughly six to eight months into the venture. Johnson described Cohen as a strong marketing thinker whose different temperament, discipline and approach complemented his own.

Johnson and Cohen had considerable professional history before Bite. Cohen had consulted for Currency, the two had known each other for years, attended UVA and had previously held equity interests in each other’s businesses.

Cohen effectively volunteered to join the orthodontics venture after asking Johnson what he planned to do next. Johnson admitted the prospect of entering business with his best friend initially frightened him, but said the partnership ultimately worked substantially better than he expected.

Despite his success with Cohen, Johnson generally advises against doing business with close friends or family. He believes affection and familiarity can prevent founders from judging another person’s abilities with the objectivity required in a professional organization.

Johnson argues that business roles require distinct skill sets, just as positions on a professional sports team do. A person who performs exceptionally in one position may fail badly when moved into another, even if management sees promotion as a reward.

He acknowledged personally making the mistake of promoting excellent individual performers into roles for which they were not suited. The hosts used the example of a great salesperson being promoted into sales management even though closing and managing are fundamentally different skills.

Personal relationships make those personnel mistakes harder to correct. Johnson said historical familiarity can enable inappropriate behavior and make people hesitant to remove someone because they fear damaging the friendship.

He said a separate situation he had dealt with the previous night illustrated that problem: an old relationship had created excessive comfort and was enabling bad behavior. His default recommendation is therefore to keep close personal relationships and business separate when possible.

Johnson deliberately overlaps companies rather than taking long breaks after exits. He usually begins the next venture about a year before he expects the current company to sell because he fears that stepping off the entrepreneurial “treadmill” would make it difficult to regain momentum.

Johnson said he was approaching his 50th birthday in October and believes his own processing speed and ability to sustain his previous work pace have declined. He emphasized that his desire and ambition remain, but said he personally notices a difference in how quickly he can operate.

He generalized from older male friends that he had watched through their 40s and 50s, saying some seemed to lose part of their earlier business intensity in their 50s. The point was presented as his personal observation, not as a demonstrated rule about aging.

One host connected Johnson’s observation to advice he said he had recently heard from Jesse Itzler. According to the host, Itzler told people in their mid-20s to treat roughly the next 25 years as a particularly important period for intense professional execution.

Johnson said he increasingly relies on and promotes younger people as his own pace changes. He suggested that business discussions pay less attention to how male professional performance changes with age than to other forms of aging.

Johnson does not wait for a single perfect business idea; he continually investigates several possibilities. By the time he commits to a venture, he said it is often one of roughly six competing ideas he has been evaluating.

His current ventures included a competitor to the Oura Ring, which he referred to as Alter. Johnson traced the idea to October 11, 2019, when he was on a beach in Mexico thinking through possible opportunities, and said he hoped the venture would reach a conclusion during the year discussed.

If he had not pursued the Oura Ring competitor, Johnson said he likely would have entered hearing aids. He had been thinking about that market for roughly six years and viewed it as unusually attractive because demand continually renews as populations age.

Johnson likes hearing aids precisely because he considers them a relatively boring, under-innovated product. He cited global need, relatively simple technology, low return problems compared with size-dependent products and limited innovation as appealing economics.

His search process is driven by continual curiosity and conversations rather than waiting for inspiration. The discussion connected this with investor Mike Sherbakov’s argument that curiosity is an important entrepreneurial and investing trait.

Johnson also argues that founders should not solve every hypothetical future problem before starting. He prefers choosing a credible direction, moving forward and trusting that capable people and resources can be brought in as real problems appear.

Large established competitors do not automatically discourage Johnson; he often prefers markets containing one to three major incumbents. Those companies have already spent heavily teaching consumers what the category is and why they should care.

Johnson sees incumbent category education as an asset a new entrant can exploit. He cited Invisalign’s enormous spending to teach consumers about clear aligners as work Bite did not have to repeat from zero.

Once a large market and strong category awareness exist, Johnson focuses on whether his company can differentiate at the brand level. His analogy was drafting behind a semi-truck: the incumbent absorbs much of the resistance while the challenger can operate more efficiently behind it.

Johnson described successful marketing as the accumulation of hundreds of small tests rather than one breakthrough tactic. After choosing a broad model such as direct-to-consumer or B2B, his teams test channels with different costs and rhythms, identify promising ones and progressively refine them.

He compared early marketing experiments to placing multiple bets on a roulette table. The company does not need every channel to work; it needs to identify which channels produce promising economics and then become increasingly precise with those.

Johnson said his companies have become particularly strong at converting an acquired lead into a customer. He claimed their lead-conversion rates have reached roughly three times those of competitors across multiple industries.

Because competing companies often pay roughly similar market prices for clicks or leads, Johnson believes the major advantage can come after the lead has already been acquired. Better follow-up and customer handling can therefore produce profitability sooner without requiring unusually cheap advertising.

He considers poor lead handling one of the most widespread wastes in business. Once someone has explicitly shown interest, Johnson believes the company should actively guide that person through the buying process rather than allowing the prospect to disappear.

Johnson worries that enthusiasm around AI can distract companies from the basic job of actually closing customers. He used car dealerships as an example, saying he has struggled to get salespeople to return his calls despite the large amounts those businesses spend generating demand.

Johnson builds businesses around the requirements of future acquirers from the beginning rather than preparing for sale only when he wants an exit. Likely buyers include strategic acquirers, private-equity firms and, less commonly, family offices.

He says sophisticated buyers follow recognizable underwriting checklists when deciding whether a company is worth purchasing. Repeated exposure to those checklists allowed him to reverse-engineer businesses around attributes acquirers consistently value.

Johnson does not believe entrepreneurs should obsess over perfectly timing an exit. His rule is essentially “sell when you can, not when you want to”: build an attractive asset continuously so a transaction is possible when conditions permit.

An acquirer should still see substantial upside after buying the business. Johnson described this as leaving “meat on the bone”—the buyer needs to believe its capital, expertise and infrastructure can materially grow the company after acquisition.

He attributes his succession of exits less to lucky timing than to satisfying a finite acquisition checklist from day one. In his view, a company designed from inception around buyer requirements is far easier to sell than one retrofitted for an exit.

Johnson now tends to build senior teams from the top down and carries a significant core group from one venture into the next. He estimated that roughly 50% of a new company’s team may consist of people who worked with him previously.

Those repeat team members receive meaningful equity and, according to Johnson, have made substantial amounts of money through the companies they built together. Their economic participation helps make repeated ventures attractive rather than requiring him to rebuild an organization entirely from scratch.

Johnson distinguishes portable business expertise from industry-specific expertise. Accounting, legal work and consumer marketing transfer relatively well between industries; specialized orthodontics, software engineering and similar domain knowledge often require new recruitment.

One newer company was a technology-heavy fast-fashion venture. Johnson said it had become so dependent on technology that he viewed it as essentially a technology company whose product happened to be women’s clothing.

Johnson has two children: a 14-year-old son and a 17-year-old daughter. During the interview his daughter was having her wisdom teeth removed.

Asked for one principle to leave his children and younger people, Johnson emphasized breadth of perspective. He believes exposure to both hardship and privilege gives people context for their own lives and can contribute to happiness.

He argued that material comfort alone does not guarantee happiness. Johnson pointed to people raised with considerable privilege who remain unhappy and said a deeper understanding of different ways of living is more valuable than knowing only one environment.

Johnson said the personal quality by which he most wants to be remembered is keeping his word. If he commits to doing something, he said he follows through “come hell or high water,” even when he later realizes he should not have made the commitment in the first place.