786: Mitch Lowe | Lessons in Disruption Part One

786: Mitch Lowe | Lessons in Disruption Part One

[00:00:00] Jordan Harbinger: Special thanks to Peloton and special thanks to US Bank for sponsoring this episode of The Jordan Harbinger Show.

[00:00:05] Coming up next on The Jordan Harbinger Show.

[00:00:08] Mitch Lowe: You know, I was a nobody. I lived in Monaco. I had some nice friends, but you know, to meet Andy Warhol and Fred Hughes and Bob Colacello, who published the Interview Magazine, it happened because I overheard that they needed someone to drive them from one villa to another in Southern France, and I just put up my hand and said, I'll do it.

[00:00:35] Jordan Harbinger: Welcome to the show. I'm Jordan Harbinger. On The Jordan Harbinger Show, we decode the stories, secrets, and skills of the world's most fascinating people. We have in-depth conversations with scientists and entrepreneurs, spies and psychologists, even the occasional former cult member, mafia enforcer, rocket, or cold case homicide investigator. And each episode turns our guest's wisdom into practical advice that you can use to build a deeper understanding of how the world works and become a better thinker.

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[00:01:50] All right, now onto the show, a few months ago I saw a Redbox DVD rental machine outside of a 7-Eleven, and I just thought to myself, who uses these? Who's using these red vending machines to rent movies? And I wondered, what is the market for these? Who invented it? Who runs it? Well, it turns out that the person who invented this was also one of the founders of Netflix. He's also a really unusual and interesting guy, and I mean that in the most positive way possible, just a gem of a guy. We had a quick phone call and I quickly knew this was a podcast, not just a conversation over the phone. This episode is part business, part illegal currency smuggling operations slash getting deported for being a spy in the Middle East. Like I said, fascinating guy. Now here we go with Mitch Lowe.

[00:02:39] All right, so I realize who I'm talking to and I realize that this is a silly comment in light of where Netflix is now, et cetera. But your original idea for DVD by mail, it's a pretty terrible idea at first glance. Like at the time you came up with this idea, this was a very bad idea because we had Blockbuster Video on every corner, Family Video, whatever the other chains were. Who the hell wants to wait three, four days to get a scratched DVD in the mail for a movie that you might not feel like watching anymore if it even arrives at all? Right? So without pretending that you could have seen the future, what were you thinking at that point?

[00:03:15] Mitch Lowe: Well, I think most of us were just thinking about let's create something where we can get a paycheck.

[00:03:21] Jordan Harbinger: Okay.

[00:03:21] Mitch Lowe: You know, it wasn't till later that we were solving the big problem of late fees because that was a huge negative Before we even were mailing DVDs, our first idea was to create entertainment portal a Hollywood site that where you could get the gossip and the news, and then the DVD rental was kind of the side part.

[00:03:45] Jordan Harbinger: It was going to be like TMZ and then you went, "Nah, let's just make Netflix." Yeah, I think you pivoted correctly there.

[00:03:51] Mitch Lowe: Yeah. The idea still had a couple of merits and that is people didn't have a big selection in their average video store, even Blockbuster. They typically would carry 2,000, 3,000 titles. And we were all people who loved foreign movies, documentaries, even silent films. And so one of the kind of original benefits we thought of the kind of the second phase after the entertainment portal was to have an entire library of everything imaginable. You know, films from all over the world. And then second, of course, not having to go in and deal with all the issues in video. Those two ideas, you know, were basically the beginning.

[00:04:37] Jordan Harbinger: And your life is so wild and crazy, especially early on. This is what we talked about sort of on our calls prior to the show. And I think it really reinforces and explains how you became such a divergent thinker if that term fits and an executor of these quite at the time, especially unique ideas. It sounds like you had somewhat of an unstable childhood. You moved a lot. You sound like a bit of a planner, a bit of a schemer, always planning things out. Not schemer in a shady way, but just sort of like I was, just sort of, "What can I do to make some money? What can I do to do this? What if I do this a different way, backwards, upside down kind of thing?" Tell me about meeting Funky Sam.

[00:05:15] Mitch Lowe: I went to a small, kind of one of these new age high schools, and the idea was you were more in charge of your education than the school administration or the teachers. As part of that one year, half of the school went to Cuba to harvest sugar cane. Of course, in those days they had to go via Canada on a boat.

[00:05:37] Jordan Harbinger: You just went to do slave labor in Cuba for no reason with political prisoners or something in the cane fields. That's so weird, man.

[00:05:43] Mitch Lowe: Well, I got warned by a family member before I headed to Canada to not go.

[00:05:48] Jordan Harbinger: Yeah. Like they might keep you.

[00:05:50] Mitch Lowe: Right. So, I ended up going up to Canada and working at an underground newspaper as a kind of free intern. All those experiences made me understand is that I was in charge of what I did, of where I directed my energy, who I wanted to hang out with, where I wanted to go, and it just made the world like this gigantic adventure. You know, if you talk about a bucket list, I had a thousand places I wanted to go, a thousand people I wanted to meet. And that just started from there and became ingrained in me, not consciously. I'd never kind of thought about it in that way, but I think it just became part of who I was.

[00:06:37] Jordan Harbinger: I like that. I want my kid to learn that. You hear about these child-led education-type things, I think, I don't know. It sounds like back then they were even more fast and loose with potential liability. I'm trying to think what school is like, "Let's go to North Korea and Farm," or whatever for the summer.

[00:06:56] Mitch Lowe: Right.

[00:06:57] Jordan Harbinger: That should be fine. What could go wrong?

[00:06:58] Mitch Lowe: Yep.

[00:06:59] Jordan Harbinger: Although Cuba has nicer weather, maybe it's easier to get rescued by the military if you get thrown in the slammer.

[00:07:06] Mitch Lowe: It's closer. It's closer.

[00:07:08] Jordan Harbinger: Yeah, it's closer. Exactly. So this kind of, I guess again, divergent thinking or thinking for yourself or directing your own, writing your own destiny, writing your own ticket, that sort of started early. And this guy Funky Sam later on, this is sort of where the book begins, right? He gives you this weird, in air quotes, "opportunity."

[00:07:26] Mitch Lowe: Right. I could tell that he liked my mom more than just a friend. And having two teenage sons who have had a mom who's married a couple of times was single at the time, or at least, you know, not with someone, kind of put us in his way. You know, we were overly protective. So, you know, when I decided I needed to leave California, this was halfway through my senior year, all instigated by me seeing my girlfriend kissing another guy.

[00:07:57] Jordan Harbinger: Oof.

[00:07:58] Mitch Lowe: And I reacted angrily. He saw this great opportunity to move one of the kids out of the way by offering me this idea to become his European salesperson for his black light posters. And, you know, very typical of how I've been ever since then is I don't kind of weigh up the pros and cons. I've never taken out a legal pad and put the pros of doing this on one side. I just go, "That sounds interesting. Gets me out of here. Okay, I'll give it a try." Never thinking about, am I qualified? What could happen? You know, what's the worst that could happen? So yeah, I headed over on Icelandic Airways via the capital of Iceland, Reykjavík to Germany, crashed at my dad's house and went out with a roll of posters in an order form and started going to bookstores and places where they would sell posters and sold those posters.

[00:08:59] Jordan Harbinger: You just showed up in Europe and you're like, "Hey, I got posters. I got to sell." Was there any plan? I mean, are you standing on a street corner with a bunch of posters or are you going to music stores and you're like, "Hey, check this out. They're from America, they're really cool."

[00:09:11] Mitch Lowe: I can't remember who gave me this advice, but they said you should go to the big booksellers, go to places that are selling books and kind of things like posters. There really wasn't a big poster business going on in Germany, but the very first location I went into, which was in Frankfurt, Germany ordered what equals a hundred thousand dollars worth of posters, these black light posters.

[00:09:37] Jordan Harbinger: Wait, a hundred thousand dollars. How many posters is that? Because this is — what year is this?

[00:09:44] Mitch Lowe: March of 1970.

[00:09:46] Jordan Harbinger: Oh, wow. So this is $729,820 in today's money. So this is three-quarters of a million dollars worth of posters. You don't have a box of posters. You have, you said before, was this like a shipping container full of posters?

[00:10:00] Mitch Lowe: My job was to go out and get orders that then the company would ship—

[00:10:05] Jordan Harbinger: I see.

[00:10:05] Mitch Lowe: —to the buyer.

[00:10:06] Jordan Harbinger: Oh, you didn't bring them all with you. That makes more sense. Shows you what I know about importing things.

[00:10:11] Mitch Lowe: And of course, I would arrange payment. I would get a check for a down payment, a kind of a goodwill type of advance, then pass the order back to Funky Sam back in Sausalito, California. You know, the reason this was such a big hit is, of course, San Francisco, you know, this was the '60s had just been over all the music, all the hip new stuff for rock and roll was coming out of San Francisco or London. And black light posters were something people in Germany had seen and heard about but had no access to.

[00:10:47] Jordan Harbinger: I see.

[00:10:47] Mitch Lowe: So these were just a gigantic hit. The store was a chain of stores and I can't remember the average price, but there was 20 or 30 different posters, different themes from one, that was kind of a yoga pose and it actually was Funky Sam with a woman sitting on his lap. Another was all the Disney characters in lewd positions. You could see the little feet of the seven dwarfs sticking out from under Snow White's dress.

[00:11:20] Jordan Harbinger: Yikes. That's very cool. In Europe though, that's like not a big deal. In America, you could be canceled for that back then, I would imagine.

[00:11:27] Mitch Lowe: Shortly after the company went bankrupt because they were sued by Disney.

[00:11:31] Jordan Harbinger: Into oblivion. Yeah.

[00:11:32] Mitch Lowe: Yeah.

[00:11:33] Jordan Harbinger: I assume then these were really easy to sell and you were making money hand over fist.

[00:11:37] Mitch Lowe: Well, I had done a couple of sales before the company went into bankruptcy. I mean, it was just a few months after I got there, and so I only walked away with about $20,000, which was the commission they had given me as a result of these sales. Not paying me the full amount until the full transaction was completed, which never happened.

[00:12:01] Jordan Harbinger: But bear in mind, $20,000, 1970, that's $146,000 in today's money. So that's more money than anybody your age has ever seen in their entire life anywhere.

[00:12:11] Mitch Lowe: I was flushed with cash.

[00:12:13] Jordan Harbinger: Yeah.

[00:12:13] Mitch Lowe: I bought a car. I eventually bought a motorcycle. I traveled all over the place.

[00:12:19] Jordan Harbinger: Yeah. That's incredible. So tell me about going around Europe. I mean, you're just at this point, rich, probably not worried about a job for the next several months slash not thinking about ever working at this point. I mean, if you're that age and you have that much money, you're probably halfway to retirement in your mind.

[00:12:36] Mitch Lowe: Not in my mind. You know, it is true. I didn't think about, you know, I need to make a lot more money, but I never thought about it as I have enough to retire.

[00:12:46] Jordan Harbinger: Mm-hmm.

[00:12:47] Mitch Lowe: I tried that years later to retire and it just doesn't work for me. And I think I'm one of those people that suffers from that characteristic where you're always trying to prove, mostly I'm trying to prove to my parents that I'm better than I thought they thought I was.

[00:13:06] Jordan Harbinger: The hole that can never be filled, right?

[00:13:09] Mitch Lowe: Right.

[00:13:09] Jordan Harbinger: Wow.

[00:13:09] Mitch Lowe: Especially when they pass away.

[00:13:11] Jordan Harbinger: Yeah. Yeah. Like they can't even say, "Hey man, we're proud of you. Knock it off already and relax. Take a breath." Yeah. It's like you're just envisioning them at the time where they thought, "What? This loser sits in his room and smokes pot all day. He is never going to amount to anything." That's just the tape that's on replay right in your head.

[00:13:25] Mitch Lowe: What was fascinating about that time is, you know, this is of course you've got five countries in Yugoslavia crossing every border, has a different currency and there was starting to be a few places around Europe where kind of hippies and beatniks were hanging out. One of them was Positano, which now, of course, is for the very rich.

[00:13:48] Jordan Harbinger: Yeah.

[00:13:48] Mitch Lowe: And so that's where I headed first. And I would just kind of go from place to place like that and stay for a month. I would get odd jobs just so I got to meet people. I was a DJ in a disco in Positano and knew nothing about what I was doing, but I was the American who must know

[00:14:09] music.

[00:14:10] Mitch Lowe: I mean, it's so much different today. American music isn't considered like the only music. In those days, rock and roll from the US or from England was kind of the only thing young people listened to.

[00:14:23] Jordan Harbinger: When I lived in the former East Germany, and bear in mind, this was like my host father talking about the communist days, musicians weren't like, "Oh, let's check out some of this Russian stuff." It was just American music smuggled in on whatever they could get sewn into the seat of a car or something, right? You know, it was just absolutely, and you're copying doing whatever you can to copy, I don't know, tapes, I guess, or eight tracks. I don't even know how if they even could, maybe they had records only back then. I'm not sure. They just smuggled them in. I mean, this is like going to listen to the Pink Floyd concert as far as you could get towards the Berlin Wall next to a minefield, just so you could hear the music, you know, that kind of stuff.

[00:14:59] Mitch Lowe: Right.

[00:15:00] Jordan Harbinger: How did you end up in Israel? Because that's, you know, not part of Europe as many people probably know.

[00:15:06] Mitch Lowe: Yeah, well, the girl who I found kissing another guy, eventually she and I made up, and in fact, we're still great friends. She decided to come over and spend a couple of months with me in Europe during the summer when she got out of school.

[00:15:22] Jordan Harbinger: Once she found out I had $146,000 in 2022 cash, she changed her tune. I'm just kidding.

[00:15:28] Mitch Lowe: Yeah, I don't, I don't think that was it. But anyway, maybe it was.

[00:15:31] Jordan Harbinger: No, no, I'm just kidding.

[00:15:32] Mitch Lowe: So we traveled around and her family were big supporters of the Labor Party in Israel and her mother came to meet us in Switzerland and said, "I'll take you to Israel." So she did. And this friend of mine's mother was always trying to break us up. I was the dirty hippie that was probably never going to get a real job. They were a very traditional family. So, when we were in Israel, my girlfriend started kind of admiring the uniforms of the female military in Israel.

[00:16:08] Mitch Lowe: Mm-hmm.

[00:16:08] Jordan Harbinger: Saying, wow, you know, those uniforms are great. And she wanted to buy a uniform and take it back to the US with her. And I thought, you know, here we were Vietnam war protestors, and I thought, this is pretty wrong of you to admire just because it's a country you're associated with to admire war and admire these uniforms. So I told her, and I remember this as clear as day, saying, "If you really believe in Israel, you should stay and fight instead of just buying a token uniform." And her mother overheard that, and this was her opportunity, she said, "Well, how do you feel about it?" And I said, "Well, I'm going to show you what you do when you really care about something." Like within a day or two, I was on a bus to a kibbutz that guarded the border, where the Yarmuk River hits the Jordan. It's a kibbutz called Ashdot Yaakov Ichud.

[00:17:02] Jordan Harbinger: Wow. So you end up on a bus headed to a kibbutz. Did you know what you were into? I mean, these are farms that are on the border. They get shelled. People shoot at the people that are growing, I don't know, strawberries or whatever the hell they grow out there. Or they're making, I don't know, wooden benches and they're constantly under attack because they're kind of like in these, they're in borderlands, usually a kibbutz, right?

[00:17:26] Mitch Lowe: Oh, yeah. And this was a very hotly contested border. I had no idea. You know, I found in most things in life, if you think too much about where you're headed or where you're going, you probably would just stay home.

[00:17:40] Jordan Harbinger: Mm-hmm.

[00:17:40] Mitch Lowe: I had no idea how hard the work would be. And it probably was more dangerous than it felt. I mean, once you were there, yes, there was attacks in the area. Just before I got there, there was antivehicle mine attached to an irrigation ditch. You know, it's these old World War II mines that the Germans used to leave on vehicles. They'd leave in on the battlefield, and when the allies would get in the truck, they'd turn the wheel and it'd blow up.

[00:18:09] Jordan Harbinger: Oh, wow.

[00:18:10] Mitch Lowe: And the Fatah was using those to attach to the irrigation wheels on the Israeli kibbutz. And shortly before I got there, there was a father and a son killed on one of those. But generally, there was not a lot going on except across the border, on the Jordan side, there was a town called Maadi, once in a while there was scraping of the village there, scare out the farmers. One day, we were asked to get on a bulletproof tractor, a shielded tractor, and drag a sled over there, a cart to harvest all the Jordanians' grapefruit and bananas.

[00:18:50] Jordan Harbinger: You were harvesting someone else's bananas. That's confusing.

[00:18:54] Mitch Lowe: Yeah. So where we were, there's this river called the Yarmuk River. And just past us that Yarmuk River flows into the Jordan River. So we were just south of Galilee. On the north side was the Golden Heights, and then on the other side of the Golden Heights, Syria. But on the other side of the Yarmuk River was Jordan and little farm villages, and everybody in that area grew bananas and grapefruit and things like that. This piece of property had been purchased from Arabs as far back as 1920. So it had been in Zionist's hands for many, many years. And during this period of time, there was one time in particular where we, as the kibbutz volunteers were asked to hook up to the tractor. It was a John Deere, but bulletproof windows—

[00:19:49] Jordan Harbinger: Wow.

[00:19:50] Mitch Lowe: —metal all around the cabin, take these sleds, which were on wheels across the bridge onto the Jordanian side, and with a few volunteers and harvest the farmers' grapefruits and bananas.

[00:20:03] Jordan Harbinger: And this is with the farmer's permission. You're not just like stealing their crops at this point, or are you?

[00:20:08] Mitch Lowe: I'm sure there was not permission given.

[00:20:11] Jordan Harbinger: Okay, so you're literally stealing these guys' fruit. Oh, no wonder they're pissed off at you. I mean, okay, people don't know what Zionist is. It's a term for essentially the Jewish people, settlers in Israel. So these are Jordanians, Syrians, Lebanese, Palestinians who are like, get off our damn land. And that conflict was going on, then just as it is now. And you're kind of the bad guy in this scenario if you're stealing someone's oranges. Right. Got it.

[00:20:38] Mitch Lowe: I think it was just indicative of the time. There's no computers available. From a personal standpoint, you crossed a border and no one, you know, all they had was your passport. There was no huge database. Things were done more in expediency or opportunity as opposed to, you know, having kind of the rule of law and the rule of governance.

[00:21:04] Jordan Harbinger: That sounds like the Middle East now. I don't even know if there's a difference. This is very much how things are run to seemingly run over there even now. There must have been so many attacks. I know you got asked to go into a bulletproof bunker, but don't they set landmines for you guys to step on and the crops? I mean, there's all kinds of stuff like that happening in kibbutzim, right?

[00:21:23] Mitch Lowe: You know, there was a time for, I guess about a month or two where I would, because I told them, "Hey, I spent all my summers on my grandparents' farm in Nebraska and I know how to operate these tractors." I was given the job of dragging a lead sled on the dirt farm roads every morning about 3:30 in the morning, just in case a landmine had been planted in the dirt road.

[00:21:48] Jordan Harbinger: Wow.

[00:21:49] Mitch Lowe: I never blew up one. But eventually, after about a month or so, the kibbutz said, "Wait a minute. Why are we doing this? Let's just pave the roads." So they ended up paving all the farm roads, so anything planted in it would be visible. But yeah, it was a time where there was a lot of back and forth. You know, there was always the belief that the Fatah, which was the Arab terrorists.

[00:22:14] Jordan Harbinger: These are militias.

[00:22:15] Mitch Lowe: Yeah, could cross the river or the children on our kibbutz, slept underground all the time, every night.

[00:22:23] Jordan Harbinger: Sure.

[00:22:23] Mitch Lowe: Just to stay safe.

[00:22:24] Jordan Harbinger: There must have been some greater lesson in here. I mean, these people who are doing this are very committed because, of course, what listeners are asking themselves right now is, "Why would anybody go on a farm where you can get shot? Farming is already hard, why are you going on a farm where you could step on or drive over a landmine? These are small groups of very committed people. Whether what they're committed to is right or not is a different hundred episodes of podcasting, right? So that must have sunk in a little bit.

[00:22:50] Mitch Lowe: There was a huge lesson and a huge curiosity that came from that, and that was, I came to admire so much the Israelis and the kibbutzniks, you know, for what they created out of nothing and how hard they worked and how committed they were. And I thought, what's going on on the other side of this border? How can these people be so committed to the destruction of these wonderful people? And what it made me want to do, which I did a few years later, is get to know the other side.

[00:23:25] And on the other side, I found just as wonderful people. People committed to great things and building great lives for their families and children. And it taught me this lesson that there are many, many times where there's two sides who hate and want to kill each other and are equally good people generally. But something comes out when you're competing against another culture that just brings out the evil and the awfulness that people generally aren't. And it just made me realize there's always two sides to everything. You can't say the Israelis are right or wrong, and you can't say the Palestinians especially are right or wrong. They've both been wronged and are both equally justified in what they're trying to do.

[00:24:18] Jordan Harbinger: You're listening to The Jordan Harbinger Show with our guest Mitch Lowe. We'll be right back.

[00:24:22] This episode is sponsored in part by Grammarly. There are a few tools that I use and I can't imagine how I survived before without it. Grammarly is one of them. I've used Grammarly for years, and it's like having someone over my shoulder gently reminding me of ways I can improve all of my written communication to be more clear, concise, professional. If you haven't tried it, you are missing out. One of Grammarly's awesome features is Grammarly's tone detector, which checks how your message comes across. So instead of saying, "I need that book by tomorrow or I won't have enough time to prepare for the interview." Grammarly will soften the message by suggesting something like, "Please let me know if you can share the book by tomorrow so I can meet the deadline to prepare for the interview." Grammarly really helps me reframe negative language to be more solution focused so that you or I can better communicate with your team coworkers and clients. And it saved my bacon a few times. I'll just put it that way. It's easy to implement because it runs — I wish it ran on my mouth when I talk to my wife. It's easy to implement because it runs in the background in everything that I write. Just install the plugin or browser extension and you're good to go. And Grammarly will underline incorrect words or grammar and show you what to replace it with and why. So you can actually learn if you simply hover over it.

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[00:27:09] Now, back to Mitch Lowe.

[00:27:13] That's a complicated lesson, I think, for people to absorb, right? Because humans are used to tribalizing, picking a side, and then making the other side completely wrong about everything. That's human nature, unfortunately, but that's how we align ourselves with groups and stay alive over thousands of years as a species. So it's pretty tough programming to undo. I assume at some point, did you want to see the other side at all? Did you want to go — were you tempted to like, I don't know, live in, maybe not Syria, although at that time it was probably safer than a lot of the other places in the Middle East?

[00:27:44] Mitch Lowe: Yeah, I absolutely did, and I did. I ended up setting up a shirt factory in Damascus. This is after I left Israel. I moved to Monte Carlo and had a beautiful, little apartment right on the hairpin turn of the Formula One Grand Prix. So I was everybody's favorite friend. During May, every year, I would go to Syria, and remember here, I'm always trying to figure out a way to make money, with very little in the way of experience.

[00:28:19] And one of the ideas that I had was, first I'm going to go to Lebanon and Egypt and Syria and Turkey, and try to understand what's going on the other side of this war. And I ended up becoming great friends with people in Damascus who were merchants. They saw a shirt I was wearing, which was a cowboy shirt with the embroidery, over the pockets and the pearl buttons.

[00:28:48] Jordan Harbinger: Oh yeah.

[00:28:49] Mitch Lowe: They said, "We could make those." And as we talked, I found out the only thing they lacked was a button installer. It's a little kind of either handheld or machine thing that puts that button in the shirt. So we started making these cowboy shirts. And I would sell them in Paris. I would sell them to high-end fashion stores. Everything was made in Damascus except for the piping, which was right under the embroidery. That had to be made in Beirut. I'd spend a month at a time in Damascus, in Beirut, and then eventually I became friends with a really great guy in Cairo.

[00:29:31] Jordan Harbinger: Wow.

[00:29:31] Mitch Lowe: So I spent a lot of time on the Arab side and got to know even Palestinians, people who at one point were in the militia and Fatah.

[00:29:43] Jordan Harbinger: Wow. This is really interesting. So you've got — is it a circuit where you're going through? I mean, I know you did a lot of travel through the Eastern Bloc as well. Why don't we—

[00:29:53] Mitch Lowe: Mm-hmm.

[00:29:53] Jordan Harbinger: Why don't we talk about that? Because I know you had your lucrative three-stop model of trade, so to speak.

[00:30:00] Mitch Lowe: Right. Yeah, so this kind of system I set up was to buy old Mercedes in Germany. I typically would go to Heidelberg and I'd buy a 230 SL or a 230 S, whichever one was available. My plan was to take it all the way to Damascus. So I knew that in Damascus they were paying a lot of money for these old Mercedes, they would put them in as taxi. So I would buy the car in Heidelberg. I would drive to either Vienna or Switzerland, and I would use American dollars to buy Romanian leu and get it for pennies on the dollar. Because in these days, the Eastern European currencies were artificially established. They weren't really well-traded currencies.

[00:30:54] Jordan Harbinger: Yeah, they weren't traded in the market, so they were inflated. Basically, the state said, "It's one leu to the dollar," but the market said actually, it's like 7,000 leu to the dollar. And so if you, I assume you're buying this leu on the black market at actual market rates, so you're loaded.

[00:31:08] Mitch Lowe: Yeah, yeah. I got stacks and stacks of money, and then I drive into the country, into Romania, in particular, and then basically go from house to house on these hillsides in the Transylvanian area. There was a little town called Vatra Dornei, became friends with a school teacher there named [Partenia], and he would take me from house to house and we would negotiate to purchase the women's dowry items, which primarily were the silk embroidered blouse, absolutely gorgeous blouses with thousands of hours of work on them. Plus, these vests that had fox fur trim on them, beaded belts, and I would buy those for almost nothing. I would pay, you know, with my exchange, I would pay maybe $20 or $30 for these beautiful blouses, and I just typically would buy eight to $10,000 worth of these items and then hide it in the car. From there, I would drive down to Athens. and ship it all back to the US or ship it to Monaco, depending on where I wanted to sell it.

[00:32:21] Jordan Harbinger: I'm just going to pause you for a second. So, $10,000 in 1970's money is $73,000. And this is in a communist country where that amount of money is what somebody probably, maybe makes in a lifetime of work.

[00:32:37] Mitch Lowe: Oh, easily.

[00:32:38] Jordan Harbinger: Yeah.

[00:32:38] Mitch Lowe: And on top of that, there was hardly any cash in those communities. Everything was government funded. They really had no cash available. So, yeah, it was so much money and the reason they did this is they really had no available cash to be able to buy things that they needed. Everything was a barter society. They would grow vegetables and fruits and make hay or they would work, you know, darning clothes or something. So this was huge, a huge benefit for them.

[00:33:14] Jordan Harbinger: This is the equivalent of if you live in the middle of a rural place in, let's say the United States, and you for some reason you're not making any actual cash. There's no Walmart, there's nothing near you, and some guy comes by and says, "Hey, 30 people or 50 people, I'm going to give you a million dollars. and you can then take this to the city and buy all the things that you maybe don't even know exist that would make your life easier." And you're going to take that deal, even if you have to sell the suit you got married in or the thing you're making for someone, right? You're just going to go to work.

[00:33:46] Mitch Lowe: Exactly right. I mean, people were so happy. They would greet us at their door, they would invite us in, they would give us all their specialties that they had saved up for the winter. You know, we would always celebrate at the end with this homemade plum brandy that they all kind of made. It was amazing. And of course, you know, we got in trouble a couple of times and—

[00:34:11] Jordan Harbinger: I was going to say, how is the government? They want these people to be poor and dependent on the government. They don't want them to go, "Actually, we're rich and we don't have to take your sh*t anymore." That's not what communist authoritarian regimes want.

[00:34:22] Mitch Lowe: No. While we got caught at the border one time, we had all the blouse is stuffed underneath the seat of the backseat of the car. And these border guards would typically be looking for guns and cameras and things like that. And I remember one time, leaving the country and the border guard pressed on the back seats and realized it was harder than it should be.

[00:34:46] Jordan Harbinger: Mm-hmm.

[00:34:47] Mitch Lowe: And you should have seen the look in his eyes. He goes, "I've busted someone." And he flipped up the seat and all these silk blouses fell out. And the disappointment—

[00:34:56] Jordan Harbinger: Yeah.

[00:34:57] Mitch Lowe: —on his face. Like, what in the world are you doing? But we did get caught by the police actually in the process of buying clothes up in the mountains.

[00:35:06] Jordan Harbinger: Oh wow.

[00:35:07] Mitch Lowe: It was quite an experience that taught me, well, forced me to learn how to be calm in the face of what could be a life-changing, horrible experience.

[00:35:20] Jordan Harbinger: And oh yeah, Romanian prison in 1970. Hard pass. No, thank you.

[00:35:24] Mitch Lowe: Yeah. They came to this little house where we had just been finishing a transaction. We had just gotten there. So the car was filled with all this cash and you know, the biggest bill cost me three dollars in those days. So, you know, we had hundreds and hundreds of bills hidden in the car. But if you looked, you would find them.

[00:35:47] Jordan Harbinger: The largest Romanian currency note was worth three bucks, but you had stacks and stacks of that. Okay. Those kind of bills. Got it.

[00:35:52] Mitch Lowe: Yeah. So they had their own police car. They said, "Okay, we're going to follow you to the main town," which was this one, Vatra Dornei. "Then, we're going to go into the station, we're going to search your car and we're going to deal with this."

[00:36:05] Jordan Harbinger: Oh man.

[00:36:05] Mitch Lowe: So as we're driving, I had my former wife bag up all the money in a plastic bag, a black plastic bag, which we carried a lot of because we would put the blouses in those. As we're driving, it was a windy, kind of mountain road. I knew the road pretty well, so I said, "Okay, get ready to throw it out the window as far as you can."

[00:36:27] Jordan Harbinger: Oh my gosh.

[00:36:28] Mitch Lowe: And I sped up around a turn, got out of sight of the car following me and had her throw it into the woods. And so when we got to the police station, they just had a few, you know, it wasn't very much money. I ended up giving the officer a camera and $300 in American money to let it go away.

[00:36:50] Jordan Harbinger: Right.

[00:36:50] Mitch Lowe: But they stamped our passports persona non grata.

[00:36:54] Jordan Harbinger: So to clarify, persona non grata means you are not allowed to come back to this country. It's a stamp that says you are banned. It happens to my friend, worked for the CIA in Egypt, and now he can never go back to Egypt because he's in their computer as persona non grata. It's called you getting PNG'd. I'm actually surprised they bothered to do this because that officer got a massive payout of probably like four months or six months of his salary from you for doing literally nothing but harassing you. I'm surprised he didn't say, "Come back anytime. Just stop here first and drop off a couple of hundred dollars and we're good. I'll drive you to the border next time."

[00:37:28] Mitch Lowe: I think in this case, he probably kept all that money to himself.

[00:37:32] Jordan Harbinger: I'm sure he did.

[00:37:33] Mitch Lowe: And couldn't look like he was giving me a favor, especially since they hadn't found anything.

[00:37:39] Jordan Harbinger: Gotcha.

[00:37:40] Mitch Lowe: But I'm just guessing. But we went back to go get the money and we stopped by the side of the road where I knew it was. And about 20 yards in front of us were about six workmen working on the road. And this amount of money, like you were saying, would've set any one of those people up for life with enough money to live and never have to work again. But we did get the money and we did not only smuggle it out of Romania, but eventually, we changed our passports. And you know, remember this is pre-computer, so the persona non grata went away with the old passports, which we destroyed. So now, We not only smuggled it out, but we smuggled it back in. And lo and behold, we went to my friend [Partenia]. He had been beaten up—

[00:38:33] Jordan Harbinger: Oh, no.

[00:38:33] Mitch Lowe: —by the police after this whole event.

[00:38:35] Jordan Harbinger: That doesn't surprise me at all. I mean, authoritarian regimes are kind of famous for having crappy police that abuse people.

[00:38:42] Mitch Lowe: Yeah.

[00:38:42] Jordan Harbinger: That's what they do. Actually, that's their job in an authoritarian regime. It's to abuse the citizenry. That's really kind of all they typically do is enforce state policies against civilian population. There's not a whole lot of, let me help you settle this dispute. This is such an interesting story. So you're smuggling the blouses and the money in and out. But what do you do with the blouses? You said you were selling the cowboy shirts in Paris. Where are the blouses going?

[00:39:06] Mitch Lowe: Yeah, mostly the blouses are selling on Rodeo Drive in Beverly Hills.

[00:39:11] Jordan Harbinger: Wow.

[00:39:11] Mitch Lowe: There was a store called Jax, J-A-X and they would buy every single one I could get them. And they were being sold to the Hollywood stars in the area of $300, $400, $500 a piece.

[00:39:25] Jordan Harbinger: What was the price of one of these that was being sold for 500 bucks at, on Rodeo Drive?

[00:39:30] Mitch Lowe: On average, my cost was maybe $20—

[00:39:34] Jordan Harbinger: Wow.

[00:39:34] Mitch Lowe: —you know, in that vicinity.

[00:39:35] Jordan Harbinger: Solid markup. Yeah. That's really incredible.

[00:39:38] Mitch Lowe: Yeah.

[00:39:38] Jordan Harbinger: Was that the only close call you had? I cannot imagine you only had one close call on the time that you were doing this, because this is the Eastern Bloc, right? I mean, this is the Iron Curtain.

[00:39:47] Mitch Lowe: You know, there was little things here and there, but the only other time that was very memorable was when we were smuggling the money back. We were in Greece, we went to the consulate, we got a new passport. We were leaving Greece, and in those days when you entered any of the European countries, they stamped in your passport the car you entered with because there was such high sales taxes on cars. If you entered the country and sold it, they wanted to make sure you paid the sales tax. You couldn't just sell it for cash.

[00:40:22] Jordan Harbinger: Got it.

[00:40:23] Mitch Lowe: So we had to exit Greece with our old passports and enter Bulgarian Romania with the new passport that didn't have the persona non grata in. So when we got the border area between Greece and Bulgarian, those days was about, had to be a couple of miles wide on the road. So you were driving for five or six minutes on a road in a forest.

[00:40:49] Jordan Harbinger: To clarify, this is no man's land. So you're leaving Greece, there's a forest with literally nothing in it. Probably some landmines or fence in the forest somewhere.

[00:40:57] Mitch Lowe: Right.

[00:40:57] Jordan Harbinger: And then you end up at another checkpoint that says, "Why the hell are you here? What are you doing?" Because nobody enters the Eastern Bloc.

[00:41:04] Mitch Lowe: Right. But before we entered Bulgaria, I wanted to get rid of the old passport—

[00:41:11] Jordan Harbinger: That had the stamp persona — yeah.

[00:41:13] Mitch Lowe: So we stopped on the side of the road in the no man's land to destroy them. And I learned just how hard that is. We ended up just burying them there. And then got to the immigration part, the customs for Bulgaria. And we're in our car. The Bulgarian officer comes up to the window and I handed my passports. He looks at me and says, "Ah, Mr. Lowe, we've been waiting for you."

[00:41:39] Jordan Harbinger: Terrifying.

[00:41:40] Mitch Lowe: Yeah, and my stomach just — but what I hadn't seen is he had already looked at the passport and saw my name, and what he really wanted was a book in English.

[00:41:52] Jordan Harbinger: Oh.

[00:41:52] Mitch Lowe: He saw that I was nervous and upset and he said, "No, no, no. Relax. I want to learn English. I wonder if you have a book in English." And my former wife was reading an Agatha Christie and I grabbed it from her and gave it to him. And that was all he wanted. So we went on our merry way.

[00:42:12] Jordan Harbinger: He didn't see you try to burn and/or bury your passports with what I assume is your bare hands in the middle of the forest down the road.

[00:42:19] Mitch Lowe: No.

[00:42:20] Jordan Harbinger: No.

[00:42:20] Mitch Lowe: Apparently no cameras existed.

[00:42:23] Jordan Harbinger: Right, sure. No, that makes sense. You're so lucky that you didn't go to prison for this—

[00:42:28] Mitch Lowe: Yes.

[00:42:28] Jordan Harbinger: —at any time. Wow.

[00:42:30] Mitch Lowe: Well, there's lots of stories like that in the book. Lots of different—

[00:42:33] Jordan Harbinger: Yeah.

[00:42:33] Mitch Lowe: —adventures and stories. And in the book, what I'm trying to do at the end of each one is talk about, okay, what did I learn? How does that help me in my business career or in life, in general? And so there's lots of different events like that.

[00:42:50] Jordan Harbinger: Yeah. I mean, what did you learn from doing this? Obviously, look, the arbitrage opportunity is pretty obvious, right? Moving a blouse from one place where it's not that valuable by trading currency, that's also super valuable, and bringing it back to a place where a currency is abundant, but the item is impossible to find. Okay, fine. But what else did you learn from this? I mean, it's just such an amazing cultural experience.

[00:43:09] Mitch Lowe: You know, there was all the attributes of calmness, all the attributes of not panicking and keeping your head in a situation where if you panicked, you would just make the situation worse. Also, the respect for other cultures, other backgrounds, other people. You know, not only showing that respect, but really trying to learn like where they coming from, what has made them the way they are, what's the historical background, what kind of environment do they live in. If you take the time to listen and understand other people, you can create, you know, amazing relationships in a kind of a better understanding of why people operate the way they do. All these experiences ingrained that in me.

[00:43:59] Jordan Harbinger: It seems like you were adept at making some super high profile and powerful friends, especially in the book, you talk about France. You're meeting all these, I can't remember who they were, but it's kind of like these old money, well-connected type folks. How did that happen? And is that skill, or is that luck?

[00:44:15] Mitch Lowe: I would say it's at least half or more luck.

[00:44:18] Jordan Harbinger: Okay.

[00:44:18] Mitch Lowe: You know, just being in the right place at the right time, but at the same time being open, being available to do things that, you know, if you thought about too much you wouldn't do. So, you know, in Southern France, I became friends with Andy Warhol and Fred Hughes, his manager, and Nicky Weymouth whose father published some of the big papers like the London Times and others.

[00:44:45] Jordan Harbinger: This is like knowing Banksy and Rupert Murdoch and just meeting them at a party.

[00:44:49] Mitch Lowe: Some of these things only happened because — you know, I was a nobody. I lived in Monaco. I had some nice friends, but you know, to meet Andy Warhol and Fred Hughes and Bob Colacello, who published the Interview Magazine. It happened because I overheard that they needed someone to drive them from one villa to another in Southern France. And I just put up my hand and said, "I'll do it."

[00:45:16] Jordan Harbinger: Huh.

[00:45:16] Mitch Lowe: And as a result, I got to be friends with them. Hung out with them. Became, definitely not an equal, I was like 18, 19 years old, but got to interact with them. And then, met this woman who I talk about in the book called Tamara de Lempicka, who is, you know, one of the most famous Cubas painters. And so, you know, a lot of these things happened because I was willing to do things. I mean, I lived in Monaco. Maybe driving people around might have been a lowly thing to do, but you know, I was always willing to pay my dues and do things to get to know people and get experiences like that.

[00:45:55] Jordan Harbinger: I can't remember who this was. Buddy of mine said something like, I can't remember if it was Tony Robbins or something, he would figure out where he was going and he would say, this is years ago, I don't think he rolls this way anymore. But he'd go, "I'll pick Tony Robbins up at the airport at whatever time he need and I'll drive him to the hotel and I've got a nice car and it's going to be clean and all that." And I think, Tony Robbins probably wasn't who he is now. And he said, "Sure, why not?"

[00:46:19] Mitch Lowe: Yep.

[00:46:19] Jordan Harbinger: "I'll take a free ride from somebody who knows the town in their car." Now he's got his own jet, so probably he doesn't do this anymore. But yeah, it's the kind of thing where you just, you'd make that opportunity for yourself deliberately, and then it turns out to be something that is very valuable to somebody else at that time.

[00:46:35] I heard you ended up with a Warhol, a painting or a drawing or something along those lines.

[00:46:40] Mitch Lowe: Yeah, a print, a lithograph. And, yeah, unfortunately, I lost it. It was actually autographed by Andy, "To Mitch from Andy," which he hardly ever did. It was the Marilyn Monroe lithograph. The reason he gave it to me and autographed it, which he hardly ever did, was because I went with them to all these villas with very wealthy people where Fred Hughes would sell them a custom Marilyn Monroe, like lithograph, of them personally.

[00:47:15] Jordan Harbinger: Oh, I see.

[00:47:16] Mitch Lowe: So it was $25,000 apiece.

[00:47:18] Jordan Harbinger: Wow.

[00:47:19] Mitch Lowe: If you got two, it was 35,000. And we would go from villa to villa and Andy would take a photo and then Fred would put it on a slide and put it against a frame and a — what's a blank painting?

[00:47:35] Jordan Harbinger: Canvas.

[00:47:35] Mitch Lowe: Canvas, thank you.

[00:47:36] Jordan Harbinger: Yeah.

[00:47:36] Mitch Lowe: Canvas. And then, Andy would come in and paint, you know, put paint over it and I would basically take them from place to place. I would do all those things to help them. But then when I was leaving, my house, moving back to the US leaving my apartment in Monte Carlo, I had had this argument with my girlfriend who was taking over the rent in the place, and I totally forgot about this, was in a roll under the bed.

[00:48:05] Jordan Harbinger: Oh no.

[00:48:06] Mitch Lowe: And so occasionally, I'll look at auctions and look at various sales of Warhol lithographs. I still have never seen it out there on the market.

[00:48:19] Jordan Harbinger: This is The Jordan Harbinger Show with our guest Mitch Lowe. We'll be right back.

[00:48:23] This episode is sponsored in part by ZipRecruiter. You might be hearing about all these major tech layoffs from big companies, but this is actually, in my opinion, a good thing. Scott Galloway, who's been on this show, he explained it really well. Large companies who can pay out the nos. They're now laying off good qualified workers. So now smaller companies can actually afford to hire people because the market is flooded with quality talent. So there's this over lining here. Several industries are heading for a hiring boom this spring, including e-commerce, healthcare, and surprisingly hospitality. It's one of the areas with the most growth, and not only does this industry need to hire for service positions, but also managerial positions and back office operations positions. If you need to hire qualified candidates ASAP, you need ZipRecruiter, and right now you can try it for free at ziprecruiter.com/jordan. Use ZipRecruiter matching technology to find qualified candidates and send they a personal invite so they're much more likely to apply. ZipRecruiter also offers attention-grabbing labels that speak to job flexibility like work remote, training provided, and more.

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[00:50:43] This episode is also sponsored in part by Congressional Dish podcast. Do you want to know what's really going on in Congress? No matter what political party you belong to, Congressional Dish podcast is for you. Because facts are facts and that's hard to come by in media nowadays. It seems like all of our information comes from polarized, corrupt, and deceitful sources that twist facts that are only report on events slash information that will persuade viewers to think or vote a certain way, or they only report on this giant newsworthy stuff. But there are a lot of important issues going on in Congress that aren't being shared in the news. Congressional Dish podcast is about government, not politics, hosted by Jennifer Briney. She will fill you in on the must-know information about what our representatives do after the elections and how their actions can and will affect our day-to-day lives. She aims to find out what Congress is doing with our. She does a lot of research and always includes her sources In the show notes. Check out episode 266, Contriving January 6th to hear the most important January 6th committee testimony about Donald Trump's attempt to remain president. Focusing on the Trump team's actions that led up to January 6th as opposed to focusing on the riot and all the other associated drama. Subscribe and listen to Congressional Dish wherever you get your podcasts.

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[00:52:13] Now, for the rest of part one with Mitch Lowe.

[00:52:17] Warhol was charging $25,000 in 1970's money. This is $182,000 in today's money. So your autographed item was worth for sure, much more than that I would imagine, much, much more than that.

[00:52:30] Mitch Lowe: Well, yeah.

[00:52:31] Jordan Harbinger: Expensive breakup.

[00:52:33] Mitch Lowe: I expect that. And you know, I became aware of one of the most important lessons in life as a result of that is I found myself thinking and caring more about what I lost as opposed to being grateful for what I had.

[00:52:50] Jordan Harbinger: Mm-hmm.

[00:52:50] Mitch Lowe: And I've found this several times in my life where I'm focused on what I didn't get or what I got cheated out of or what I lost. And it's so stupid because we should be thinking about how lucky we are for what we do have, family and health and you know, the good things.

[00:53:10] Jordan Harbinger: I feel seen because I spend so much time going, "Oh, if I'd done this differently or what if I'd done this earlier, I would be doing this, I'd be at X level right now?" And my wife is like, "What are you doing? Our kids are healthy. Both of our sets of parents are alive. They're here right now visiting us. You got a full house, everybody's happy. You're sitting here being like, 'Why isn't my YouTube bigger?' I mean, it's so dumb."

[00:53:32] Mitch Lowe: Yeah.

[00:53:32] Jordan Harbinger: It's a dumb way to live.

[00:53:33] Mitch Lowe: It's hard to get over, but it's—

[00:53:35] Jordan Harbinger: It is.

[00:53:36] Mitch Lowe: —it is absolutely true.

[00:53:37] Jordan Harbinger: Tell me about getting deported from Egypt. Sounds like you're almost like Forrest Gumping through history here with, you're just sort of touching these little people, places, and events.

[00:53:47] Mitch Lowe: Yeah, so in this whole kind of three-legged tour from Romania to Damascus, the third stop was Cairo. And in Cairo I would go to the market, which was, is called the [Khan el-Khalili] market. And in the market, I became friends with this group of craftsmen that made applique tents. They were mostly used for big parties, like 20-foot by 15-foot canvases with sewn-on arabesque designs. So they'd look like the inside of mosques when you looked up at the ceiling, but they were material, they were—

[00:54:26] Jordan Harbinger: I see.

[00:54:26] Mitch Lowe: —hands sewn on.

[00:54:27] Jordan Harbinger: Is it like an awning type of thing?

[00:54:30] Mitch Lowe: Exactly, it's awnings and then, but with side panels. So they would essentially make a big, party room with the walls and the ceiling made from this canvas applique.

[00:54:42] Jordan Harbinger: I'm imagining like a yurt type of thing. Is it like that?

[00:54:45] Mitch Lowe: Well, it was cube. It was like a cube.

[00:54:47] Jordan Harbinger: Ah, okay.

[00:54:48] Mitch Lowe: So four sides and a top, and then carpet is thrown on the ground. So I became friends with these guys and I thought I could sell these to restaurants, especially in the San Francisco area, in Sausalito, and sell them as party tents as well. So we became friends and then one day, one of their customers came in and his name was Nasr Salem. We became friends. His father was the mayor of a suburb of Cairo called Heliopolis, very wealthy suburb. Nasr was an amateur photographer, and one of my best friends in Monaco was a professional photographer. His name was Claude Vaccarezza. And so, Claude and I one time went to Egypt. We were hanging out with Nasr, and he said, "Why don't we go out into the desert and we'll take some beautiful desert photos?" I had a big telephoto lens. Nasr did, and so did Claude.

[00:55:48] And we were driving on the southeast side of Cairo, not a hundred miles, but maybe 80 miles south. And we looked ahead of us and we saw along the ground dust, you know, like a whole train of dust. And we started looking through our telephoto lenses and thank God we didn't take a photo, but we saw trucks carrying pontoons heading east. And within a minute or two, we got surrounded by military police, just came out of nowhere, grabbed our cameras, took us to their base. This is pre-digital, so they said, "We're going to develop this film and if there's any photos, you're going to be in big trouble. And of course, thank God Nasr was with us with political clout because he was able to call his father, and his father got involved. And when they developed the film, thank God there was nothing on it. and so they said, "Okay, you and Claude are leaving the country right now. We're taking you to your hotel—

[00:56:52] Jordan Harbinger: Oh wow.

[00:56:53] Mitch Lowe: —which was the Hilton Hotel in Cairo. We packed up all our stuff and they took us straight to the airport and put us on the first flight out of there, which was a Middle East Airlines flight to, of all places, Damascus, which is not the place you wanted to be heading. What was more funny is Claude had bought, I think it was a six-foot tall hookah pipe that fortunately came into two pieces and was like three feet tall, wrapped up in paper. And so he had to carry that on the flight as well.

[00:57:25] Jordan Harbinger: Why did they deport you to Syria? That's just so — or they just said whatever the first flight is, because we don't want to sit at the airport.

[00:57:32] Mitch Lowe: Whatever the first flight is you're getting on it.

[00:57:34] Jordan Harbinger: Oh my gosh.

[00:57:35] Mitch Lowe: And lo and behold, the following day, those pontoon bridges made the surprise attack on Israel, crossing the Suez.

[00:57:43] Jordan Harbinger: No wonder they didn't want you taking photos.

[00:57:44] Mitch Lowe: Right. While we're in Damascus, the war is starting and the airports are getting bombed. And the news, especially being on the Arab side, I remember the headline was Barlev Line Smashed. Barlev was the general that set up a kind of concrete wall along Sinai to protect, because remember Israel controlled Sinai in those days. The Barlev Line was what Israel always thought would stop the Arabs, the Egyptians from invading through Sinai. So the headlines on the Arab side were Barlev Line Smashed Tel Aviv in three days and—

[00:58:24] Jordan Harbinger: Mm-hmm.

[00:58:25] Mitch Lowe: —that was the environment we spent the next week. Of course, the whole thing changed, I believe, it was Moshe Dayan or another general went behind, kind of snuck around the Egyptian lines and came at them from behind and cut their supply lines.

[00:58:44] Jordan Harbinger: So this is the beginning of the Yom Kippur—

[00:58:46] Mitch Lowe: Mm-hmm.

[00:58:46] Jordan Harbinger: —War?

[00:58:47] Mitch Lowe: Yeah.

[00:58:47] Jordan Harbinger: Also, some people call it the Ramadan War, 1973. And this was a coalition of Arab states led by Egypt and Syria all attacked Israel at the same time. And Israel pushed them all back in kind of these surprise maneuvers. So I would not have wanted to be in either of those places at that time. I mean, that must have been very scare. Were you scared at all or are you still so naive that you're just not paying attention to anything?

[00:59:12] Mitch Lowe: Yeah, I was very nervous at that base while they're developing the film, because I didn't know what the next step was. And when we got to Damascus, remember I had a lot of friends there but we had to get out of Syria. It was not a safe place—

[00:59:27] Jordan Harbinger: Yeah.

[00:59:27] Mitch Lowe: —for us to be. And Claude's father worked for the Red Cross, but we had to get to Beirut for him to be able to help us.

[00:59:36] Jordan Harbinger: Even less safe than Syria.

[00:59:38] Mitch Lowe: Well, it became less safe, especially during the Civil War that started shortly after that in Lebanon. But we had to pay a Syrian, a taxi driver to sneak us across the border, going up all these little mountain roads over the Baalbek mountains between, you know, it's not a long distance. It's maybe a hundred miles between Damascus and Beirut. But to get there, we had to go way north and over these dirt roads and got us to Beirut.

[01:00:09] Jordan Harbinger: That is not an adventure you want to have outside of your 20s.

[01:00:13] Mitch Lowe: No, especially once you have a family and commitments and—

[01:00:17] Jordan Harbinger: Hell, no.

[01:00:18] Mitch Lowe: —responsibilities.

[01:00:19] Jordan Harbinger: What are you learning from all the twists and turns at this point in your life?

[01:00:23] Mitch Lowe: Just how unpredictable things can be, how crazy the world is, how people are doing things to each other that just is in a way unimaginable despite finding all kinds of things wrong with these political ideas and so on. Just also at the same time, coming to respect the majority of the people in those countries and appreciating what they've developed and their history. It really became clear to me that there was no way to get for anything to be clear black and white. Everything was on a gray level and always depended on where you were coming from, who you were, and where you came from. Modified how you thought about things so much.]= On the very same subject that both people could be right but on the opposite side.

[01:01:18] Jordan Harbinger: That realization, especially from somebody in the 1970s, 1980s, I mean, that'll make you a divergent thinker. Even me traveling in the '90s was, I'd come back and I'd say something and people would look at me like I'm an alien because I'm not just taking their born in Michigan — you know, I was born in Michigan, the United States, most people I knew had never traveled. They had one perspective. It was kind of all the same. And I'd say, "Well actually when I was in Germany or Europe, whatever, we would do this," and I realized I was probably that guy for a while among my friends, like, "Okay, here he goes again." But I also just had so many different ideas and when I went to college, I remember professors and teaching assistants being like, "Hey, you know, you really do think about things in a different." And that was the first time that had been seen as good and not just purely annoying for everybody around me.

[01:02:01] Mitch Lowe: Right.

[01:02:01] Jordan Harbinger: I want to shift gears a little bit because you did start several movie-related companies and that's kind of what we were originally going to talk about. But I wanted to get your, not childhood, but young adult life in because it's so interesting, there's just so much there. That you became this movie fanatic and you started, for lack of a better word, pirating, copying a bunch of movies that you rented from some poor video chain near you, in California. And knowing that little throwaway factoid, it maybe doesn't have a lot of meaning. However, it sounds like you basically always wanted video on demand, even if you had to make it yourself, which I guess you ended up doing except later you ended up making it for everybody. And we just call it Netflix now.

[01:02:42] Mitch Lowe: Yeah. I always loved TV shows in particular. You know, my brother and I would come home from school. We were, you know, I'm thinking like third grade to eighth grade. Our parents were working. So we would just flick on the television and watch things like Get Smart and F-Troop, and I just was entranced and calmed by watching these stories. I don't know, it was just something I really, really always loved. And as I started thinking about it as a business, I realized that there was all these shortcomings which what you really wanted, which of course, leads to streaming, is you want to watch what you want to watch, when you want to watch it on whatever device you want to watch it on. You want that total freedom and what that results in is some of it is just mind-numbing relaxation, but a lot of it is opening your eyes to all these things I talk about culture, about all these different culture is to watch and get engrossed in a good story that's filled with lessons and filled with ideas that expand your thinking and hopefully, make you a more tolerant and understanding and educated person. Well, I never thought the technology would come as fast as it did. That was always kind of where I was headed.

[01:04:13] Jordan Harbinger: Later, you invest in this video store, you say It was the first of a string of terrible investments, which I think is really funny because, of course, we've kind of all been there. It's like the more you play, the more of terrible investments you end up making. Story of everybody's life in business. And the guy who ran it, well, it sounds like he had other hobbies that maybe distracted him from running the business.

[01:04:34] Mitch Lowe: This is all pre-computer.

[01:04:35] Jordan Harbinger: Mm-hmm.

[01:04:36] Mitch Lowe: So transactions are all on paper. It's a total cash business. No one's using credit cards. I think there was checks, but most of it was cash. And this particular store was doing incredible business, but there was four partners. They would take turns who was running the store on this day or that shift. And it turned out splitting the profits was never enough for at least one or maybe two of the partners. I never really knew how many of them were, but essentially they were siphoning off money for their own gain and eventually drove the store, which at the time was doing a half a million dollars a year in a thousand square feet.

[01:05:19] Jordan Harbinger: Wow.

[01:05:20] Mitch Lowe: And this is '82, so I'm sure it's at least more than a million dollars.

[01:05:26] Jordan Harbinger: Sure. I'm going to do that calculation right now. That's 1.5 million dollars—

[01:05:30] Mitch Lowe: Yeah.

[01:05:30] Jordan Harbinger: —in today's money. It's incredible.

[01:05:32] Mitch Lowe: Incredible. A thousand square feet was packed all the time. And of course, I was one of those customers, as you said, I would buy both blank tape and rent movies, and then I had two VCRs at home. I would make copies because I was selling the copies. I just wanted to be able to watch it when I wanted to watch it, as opposed to in that short one or two or three-day window before I had to return it. And in fact, years later, we threw all those cassettes away. Maybe I watched one or two of the hundreds I made.

[01:06:09] Jordan Harbinger: Yeah. That checks out. I burned hundreds of DVDs, so I'd have a movie library.

[01:06:15] Mitch Lowe: Yep.

[01:06:15] Jordan Harbinger: And then eventually I was just like, oh, some of these don't even work.

[01:06:18] Mitch Lowe: Right.

[01:06:19] Jordan Harbinger: And then it's like... Netflix comes out and I just like, ah, man. And then I trashed everything.

[01:06:24] Mitch Lowe: Yeah.

[01:06:24] Jordan Harbinger: The clunkiness of video rentals, the distrust of retail video rental from studios, and the artists don't want it. The studios think it's going to be a problem. It sounds like you learned a lot from this and saw how the sausage was made. And it sounds like Netflix and later Redbox largely an answer on how to clean up this gigantic tangled mess.

[01:06:45] Mitch Lowe: You know, in any kind of nascent business, there's always the, what kind of business terms do we make our product available, both from the movie creator, producer as well as the retailer and then, of course, it all filters down to the customer. You know, prior to the early eighties, the only people who had a movie library at home were the movie moguls, the big producers who made movies, and they might have it on a big projector or something like that. So how do we rent these things? How do we sell these? And rental was not what they wanted. They were concerned about copying which they were very right to feel.

[01:07:28] Jordan Harbinger: Mm-hmm.

[01:07:29] Mitch Lowe: They were worried about piracy, people copying and then selling those. They just had huge concerns about how do I protect this asset that my company has invested a lot into. And that is true whether you were a star who earned revenue in a revenue-shared deal or the studio that owned the content. So initially, they were angry about this law that we have in the US called First Sale. And First Sale is what generated the Sony case where Betamax was sued by the studios because the studios thought by making these VCRs available, you're essentially aiding in abetting copying of this valuable content. The studios only wanted sales, but the First Sale laws in the US say, unless there is an exception made, which there is for books and music and computer software and a few other things. The manufacturer, when they sell it, they are selling all the rights to do whatever you want with it, including rental for revenue.

[01:08:41] So for example, Hertz never had to pay Ford every time they rented a Ford car.

[01:08:47] Jordan Harbinger: Ah, okay, that makes sense.

[01:08:48] Mitch Lowe: Or you could buy brooms and turn around and rent them and never pay the manufacturer. Now, some industries like computer software and music and books got an exemption from Congress saying, "Okay, the First Sale exists, but you can't do it with music." Their argument was it's too easy to copy and then resell. It's too easy to kind of affect our business.

[01:09:14] Jordan Harbinger: Wait unitl you guys learn about the Internet.

[01:09:17] Mitch Lowe: So yeah, that was still years ahead. This was in the early '80s. So that whole era, especially the '80s, was, first of all, how much will customers pay for a box that can play a movie? First, there was a Beta machine put out by Sony, and then a VHS. Beta failed because the tapes were only one-hour long, even though it was higher quality.

[01:09:43] Jordan Harbinger: Mm-hmm.

[01:09:43] Mitch Lowe: VHS came out with a two-hour cassette and took over, even though Beta within months came out with a two-hour also but the writing was already on the wall. So they were working out formats. How much would people pay? What were the studios going to provide the content? There was all kinds of boycotts happening. Warner put out these movies in a blue box that you had to pay Warner every time you rented it. The video store, there was even companies that put out cassettes that had a little lock inside of them where they would only play 20 times and then the cassette would lock, and of course, everybody figured out how to unlock it.

[01:10:26] Jordan Harbinger: Yeah, you probably need like a paperclip to undo that. Yeah.

[01:10:29] Mitch Lowe: There was even a cassette that had some chemical inside of it that after a certain amount of play would destroy the tape.

[01:10:36] Jordan Harbinger: Oh my gosh.

[01:10:37] Mitch Lowe: That even was the case with in the early days of DVD. A company put out a DVD that after a certain amount of plays the reader could not read. It basically turned the surface into an opaque, unreadable disc.

[01:10:53] Jordan Harbinger: Oh my gosh.

[01:10:54] Mitch Lowe: So it was just a period of learning and figuring out what are the right business relationships between all the parties.

[01:11:02] Jordan Harbinger: And why name the company Netflix, if you're mailing DVDs, originally? You would have to know that at some point the company's going to eventually deliver movies over the Internet, but you're barely in the DVD age itself.

[01:11:14] Mitch Lowe: Yeah, it was a collaborative thinking group that operated under Marc Randolph, who basically ran the store. So he ran the website and all those things. You know, we started out calling the company Kibble and that was kind of our stealth name. And the whole theory about stealth names is you want to name yourself something you would never use once you roll out.

[01:11:39] Jordan Harbinger: Right. Like a name that sounds like a dog food company, which is what that sounds like to me.

[01:11:44] Mitch Lowe: And I remember Marc used to say about the product, the dogs will eat.

[01:11:48] Jordan Harbinger: Mm-hmm.

[01:11:50] Mitch Lowe: So he played upon the Kibble. But then there was, I seem to remember a company that was hired who was a professional kind of company namer. They recommended Movies by Mail, which was more representative of what we actually did. Everybody thought, well, we don't know how or when, but we know eventually we're going to be either downloading or streaming content. You know, we didn't know when the studios would give us the rights. We didn't know when the broadband would be big enough, and we didn't know whether the studios would prefer downloading versus streaming because they each have their impact on piracy.

[01:12:30] Jordan Harbinger: Sure.

[01:12:31] Mitch Lowe: So Netflix came out of a small group that worked with Marc and just brainstormed, putting names on a chalkboard, and eventually came out with that. Some people say, and I'm a believer in this, that it came from a visit to Paris where the executives were meeting with the Louis Vuitton, the LVMH group to invest, and they overheard someone say flicks as a word for movies.

[01:13:01] Jordan Harbinger: Hmm.

[01:13:01] Mitch Lowe: And net came from Internet. And that's how I believe the name evolved. But it was really the group working with Marc, just brainstorming hundreds of different names and rejecting the Movies by Mail idea.

[01:13:17] Jordan Harbinger: How did you even know you could mail DVDs without them breaking? I've tried to do that before, mail CDs, mail DVDs, they always arrived scratched. They're cracked. That's not even counting mail getting lost, which happens all the time, especially back in the day.

[01:13:29] Mitch Lowe: Well, you know, when I first met Marc Randolph, when he had this idea of mailing movies, I'd say half of his questions to me, and remember, DVD now was only four months old in the market at the time, almost half of his questions were, do you think A DVD would break if we sent it through the mail? And of course, I had no idea at the time that first class mail rolled over a metal roller.

[01:13:55] Jordan Harbinger: Yeah, it gets freaking destroyed. Yeah.

[01:13:58] Mitch Lowe: Yeah. Literally wrapped around it. You know, in my normal way, I said, "Yeah, I think it could, I think it'll work. I think you could do it." Really not knowing, but I didn't know what I didn't know.

[01:14:10] Jordan Harbinger: Confidently incorrect.

[01:14:12] Mitch Lowe: Yeah, confidently incorrect. And my brother and I had a home delivery service that we were advising in the Central Valley at the time. So in the early days of Netflix, there was one room where we had all these experiments with replicating what the DVD went through at the US Post Office. We had a metal dow that was the same size as the US Post Office with weights holding the DVD down. Ultimately, the solution was incredibly interesting. Remember how in DVDs you usually had a silkscreen of the title and some legal stuff on one side of the disc?

[01:14:54] Jordan Harbinger: You mean just what's printed on the disc itself?

[01:14:57] Mitch Lowe: Yeah.

[01:14:57] Jordan Harbinger: Yeah.

[01:14:58] Mitch Lowe: That was silkscreened usually on there, but—

[01:15:00] Jordan Harbinger: Oh, okay.

[01:15:01] Mitch Lowe: —in all these experiments, the thing they learned was if it had that it was more likely to break and if you could buy enough copies and convince the studio not to put that artwork on one side of the disc itself, you could greatly improve its survivability in the US Post Office. And ultimately, that's what happened is the studios agreed for Netflix, not to put, not everyone, because some there wasn't enough copies purchased. But for all the big titles, ultimately they got the studios not to put the silkscreen on, and that dramatically improved the survivability.

[01:15:40] Jordan Harbinger: The amount of testing you have to do to figure that out and then scale it and then ask studios to make a product differently when they kind of maybe already hate you a little bit.

[01:15:49] Mitch Lowe: Right.

[01:15:50] Jordan Harbinger: What an uphill battle that had to be!

[01:15:52] Mitch Lowe: Netflix really established this culture of test and learn, test and learn, and really had amazingly smart because test and learn is a complex process. You have to have enough variability, you have to follow what you learn in each one, and then continue to support ongoing tests and I think whether it's the quality of the content or the content that was purchased, Netflix succeeded a lot because of that culture that was created there.

[01:16:27] Jordan Harbinger: If you're looking for another episode of The Jordan Harbinger Show to sink your teeth into, here's a trailer for another episode that I think you might enjoy.

[01:16:35] Kevin Systrom: I think I did it in a way that most people don't. I just wanted to work on my own. I wanted the chance to build something from scratch, quote-unquote, "my way." I didn't know it was going to be a startup. It was just me. I was futzing around with ideas. I just need space, a table, and my old laptop and a few ideas. It took more than a few to get to Instagram, but that was the way I did it back then.

[01:16:58] We think there's a reason why startups started by like 20-year-olds. You can go hard to 4:00 a.m. every single day or maybe even longer.

[01:17:06] Jordan Harbinger: Yeah.

[01:17:07] Kevin Systrom: You don't get sick. Like you don't really have kids. And that's part of the beautiful thing about entrepreneurship is that you can make a lot happen with a few people highly leveraged. And you know, if you stay healthy, everything goes well.

[01:17:19] Jordan Harbinger: Yeah.

[01:17:19] Kevin Systrom: We talked a lot about having like one-tap magic. All Instagram was like that hour and a half in Photoshop in 0.5 seconds at the beginning. Going down to what? Five milliseconds towards the end. Rarely does your plan A work out. So you have to be able to be quick to move to where the fire starts.

[01:17:38] Jordan Harbinger: Mm-hmm.

[01:17:39] Kevin Systrom: You can't will a lightning is what I'm saying. YouTube was a dating site. That's crazy.

[01:17:44] Jordan Harbinger: That's wild to think about now.

[01:17:45] Kevin Systrom: But you can go back and you can actually see in the Wayback Machine, like what it looked like way back in the day. And it's striking actually.

[01:17:53] I hope in startups this someday there will be this moment where retro's cool again, where like people are like, "We don't have an app. We're just on the web."

[01:18:02] Jordan Harbinger: For more from Kevin Systrom, including how to get honest feedback from others and when you should and should not listen to it, check out episode 335 right here on The Jordan Harbinger Show.

[01:18:14] All right. That's it for part one, part two coming out in a few days. Thanks to Mitch Lowe for doing it. All things Mitch will be on our website in the show notes at jordanharbinger.com. Remember to check out the ChatGPT OpenAI chatbot at jordanharbinger.com/ai. Transcripts in the show notes, videos on YouTube. Advertisers, deals, and discount codes, all at jordanharbinger.com. I've said it once, but I'll say it again. Please consider supporting those who support this show. I'm at @JordanHarbinger on both Twitter and Instagram, or just hit me on LinkedIn.

[01:18:42] I'm teaching you how to connect with great people and manage relationships using the same software, systems, and tiny habits that I use every single day. That's our Six-Minute Networking course, and that course is free over at jordanharbinger.com/course. Teaching you how to dig that well before you get thirsty, many of the guests on the show subscribe and contribute to the course. So come join us, you'll be in smart company.

[01:19:02] This show is created in association with PodcastOne. My team is Jen Harbinger, Jase Sanderson, Robert Fogerty, Millie Ocampo, Ian Baird, Josh Ballard, and Gabriel Mizrahi. Remember, we rise by lifting others. The fee for this show is that you share it with friends when you find something useful or interesting. If you know somebody who's interested in business, maybe a founder story like this, definitely share this episode with them. The greatest compliment you can give us is to share the show with those you care about. In the meantime, do your best to apply what you hear on the show, so you can live what you listen, and we'll see you next time.

[01:19:36] Special thanks to Peloton for sponsoring this episode of The Jordan Harbinger Show.