NYDLA
host: Thomas Capone
CD Baby sale to charity, parenting, personal values and success, living in New Zealand
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Transcript:
Tom
Derek Sivers. Welcome to an episode of Coffee in the Clouds. How are you?
Derek Sivers
Thanks, Tom. Great. It is an appropriate name for me because I’m in New Zealand and it’s 8:00 in the morning here. I just got in. So coffee in the clouds we are.
Tom
Very, very, very good. Well, you know, your calendar scheduler did this so you know, don’t blame me. Derek. I ask everybody this question okay. Who are you and what do you do. Well.
Derek Sivers
My name is Derek Sivers. I have been, in the past, a musician in New York City. I went from ten years or 15 years of being a full time musician into running a music distribution company that I started in my bedroom in Woodstock, New York, called CD Baby. And then that grew to be the largest seller of independent music online, with 200,000 musicians and a few million customers. And after doing that for ten years, I felt done. So I sold the company and became more of a writer, speaker, thinker, author kind of dude and started living all around the world. Since I spent the first 40 years of my life in the U.S, I figured I should spend the next 40 out. So I left America about 12 years ago. Since then, I’ve lived in Singapore, New Zealand, Oxford, England and covid sent me back to New Zealand. So here we are.
Tom
Very, very cool. When you look at your bio online, you know, one of the first things that jumps off the page and I just got to ask, you know, I mean, you sold your company for a significant amount of money. Okay at the time. And according to what it says on the internet, you gave that money away to charity. That’s what it says, right? What’s up? I mean, it’s hard to get past that. It’s like, just help us to understand. What was your mindset? How did that happen?
Derek Sivers
It took some soul searching. So first you got to understand, it’s not like I was broke. So CD Baby was a profitable company. I was the only owner. There were no investors, there were no debts. So I started this company in my bedroom in Woodstock, New York, with $500. That was the start up cost, right? And by the second month it was profitable. It had made back that 500 bucks and it was profitable every month since. So for ten years the company was making a lot of money. So I think I had like $4 million in the bank already at the time I chose to sell the company, so I’d already paid off my debts. I bought a house and I was all set. So I sold the company. Not for the money, but more of just like I felt done. I felt like I was painting a mural for ten years. And I finally put that lush brush stroke on and I went, “Yeah, that’s it. I’ve got nothing more to add. I’m good.” So I sold the company really for that reason, not for the money. But yeah, it was really nice timing. It was 2008, right before the global financial collapse of late 2008. And so we had this agreed upon price of $22 million. And, you know, like anybody would. I kind of went, “Whoa, Holy shit, $22 million. What the hell am I going to do with $22 million?”
Derek Sivers
Yeah. And to me, it seems like anything you could do with $22 million would be pretty foolish, you know. Like I don’t want to own a Ferrari. You couldn’t pay me to own a Ferrari. It’d be embarrassed as hell to drive a Ferrari down to K-Mart to pick up toilet paper, you know? So I didn’t want to buy anything expensive. So I spent many, many, many hours, actually, over a couple of months thinking about what am I going to do with $22 million. And I talked with friends about it and got a bunch of different opinions. And so when I came to the conclusion that I was just going to give it to charity. Because it feels like it should go to people who need it. Not some guy who can’t figure out what to do with it, you know? So luckily, my lawyer, who was like the company’s lawyer for just things in general, he had a background in tax law. And so when I mentioned that I was going to give to charity, he said, “Are you serious?” And I said, “Yeah, I’m serious.” He goes, “Are you really, really serious? Like, you will never change your mind about this ever.” And I said, “Yeah, I think so.” And he said, “Okay, because if you’re really serious, here’s what we can do.” And he had this brilliant thing.
Derek Sivers
He said. “Right now. Transfer your company into a charitable trust. And then it’ll be irreversibly gone forever. Even if the sale doesn’t go through, your company will no longer be owned by you. It will be owned by a charitable trust. And then when you sell the company for 22 million, that entire 22 million will go into the charitable trust and it will never touch your hands.” And he said, “The reason this is good is that if you were to sell the company personally, the IRS would take like $7 million off the top and so only $15 million would go to charity.” He said, “If you do it this way, the entire $22 million goes to charity.” I said, “Yes, that’s what I want. Let’s do it.” So that’s what we did, and I have no regrets. Also, the way it was set up was something that usually only old people do. It’s called a charitable remainder unitrust. I guess I’m old now, so maybe it’s appropriate. Which continues to pay me out like a little trickle for the rest of my life. So my only source of income now is that charitable trust. Even like if you see that I’m selling my books, for example, all of that money goes to charity too. None of that ever touches my hands. It just goes reinvested back into printing the next book and all the leftovers go to charity.
Tom
Okay, so that’s a good I mean, I’m just so glad I asked this question now because it’s like, oh man, I feel so much better to hear you explain it. And now it’s even better. You know, now I’m even more impressed.
Derek Sivers
But I think I started out where I did to explain that. It’s like I’m not trying to be a super good guy. I’m not altruistic like I live a comfortable life. It’s just that I think I have this sense of like, what’s enough? So it’s like I said, I already had like $4 million in the bank when I sold the company. That’s enough for anybody. Like $4 million is plenty for the rest of your life. You know, I don’t live this ostentatious life. I just live a pretty simple life. So that’s enough.
Tom
Okay. I follow you, I read the blogs, you know, I stay in touch as I can, I get your emails and such. How would your best friend describe you right now? How would somebody close to you describe you right now?
Derek Sivers
Weird. Thoughtful. Introspective. What rash? I think if you can turn the rash into a positive thing, my friends are surprised that I’ll have an idea and I’ll just jump on it and do something about it that week, you know, like a big one. I think I want to go to India. You know, a week later, I’m in India. So let’s see. Unconventional. That’s fun, nobody’s ever asked me that. What would my best friend say? Yeah, I think that’s that might be it.
Tom
So, you know, the vibe I get from reading your stuff, everything. I mean, you seem to be like a family guy, right? You seem to--.
Derek Sivers
I’m just really into my kid. My kid and I. He’s 11 now. We have a really special bond. We’re like best friends.
Tom
So I always find that cool. I always find that really impressive and noteworthy. You know, when someone figures out the importance of that bond and such, did you always know, even before you had a kid that was going to be a big chapter?
Derek Sivers
No, I honestly didn’t want a kid. I was really upset when-- basically his mother and I were only together for like a year, and she got pregnant and I was like, “No, no, no, no, no. We agreed no kids.” She’s like, “Well oops.” And so no, I was upset. I didn’t want kids. I really liked my free nomadic life. But then he was born and he’s just the coolest kid. And we have so much fun together.
Tom
So he’s 11 now? 11?
Derek Sivers
Yeah, yeah.
Tom
Is he a mini me?
Derek Sivers
In some ways. That’s funny. Yeah, nobody’s asked that. Yeah, he’s a lot like me in many ways. Maybe just because we spend so much time together. And we always have since he was born, we spend, reliably, like 30 or 40 hours a week. Just one on one. Just me and him hanging out. So it’s a lot of time together.
Tom
So over the last many years I don’t know how many books you’ve written, but it’s more than one.
Derek Sivers
Four.
Tom
Yeah. Four. Okay. You’ve got Ted talks, you travel, you do so many eclectic things. Like, how are you doing with your bucket list? You know.
Derek Sivers
You know, Tom, that’s funny about 13 years ago, I wrote down my bucket list. And have you done it?
Tom
I have not. I mentally have one, but I’ve never. I’ve never. No.
Derek Sivers
Okay. Come on, Tom, you asked the question. You should do it. So I wrote down my bucket list and I looked at all these things, and, dude, so many of them could be done in, like, a week. You know, if you look at things on your list that were like, go to this place, have this experience. I look at this list and it’s like, okay, well, that’d take two days. All right. I could just book that flight and go. And you realize that if you wanted to focus on your bucket list, as long as you could afford some airfare, then you could be done in, like, two months. And so then what? It’s like, “Oh, I just finished my bucket list.” Okay. Now what? So except for maybe the longer ones that were like, learn to speak Mandarin Chinese, I was like, “Oh, that would be interesting.” So but even then you have to set a level, even if just in your head about how badly you want this. Like, to me, being fluent in another language, any language is always like fourth priority underneath a few other things I want more. So that’s why I’ve never done it. Because those top three things always kind of edge that one out. Sorry. Now I forgot your original question because it’s--.
Tom
My question was, how are you doing with your bucket list, was the question right?
Derek Sivers
Okay, so asking those two questions back to back is interesting because as much as I love my son, definitely him, his existence and the fact that his mother hates traveling and I hate being away from him for too long. So you combine those things, and it means that, you know, a bucket list thing of like, live in China. Well, that’s not going to happen for a long time, if ever. So how am I doing on the bucket list? Honestly, I guess really well, 13 years ago, when I looked at that list, I just started doing some of the things that I had put on it. It’s like, well, I’ve never gone scuba diving. Let’s go. Okay, done that next, you know. So that’s a fun question. Yeah, I think I am kind of living my bucket life for the most part.
Tom
Yeah. I mean and that’s kind of like I think that’s the mission, right? I think that’s the master plan. Yeah. Right.
Derek Sivers
For any of us, your bucket list is maybe a compass showing you where you want to be. Right. And you should head the way of that compass.
Tom
So, you know, you are like the poster child for eclectic career, right? I mean, clown, musician, entrepreneur. You got a lot going on. When when were you. If not right this second, when were you the happiest? When were you doing what was your maximum bliss?
Derek Sivers
Okay. I’ve got a little story for that. But first, my background doesn’t feel that eclectic to me. Like from the age of 14 to 29, I was in pursuit of one thing, which was being a successful musician. And the gig in the circus. I say circus clown as a shorthand, but it really meant like I put on face paint, but I was like the ringleader, emcee of the circus, and I was the musician singing songs in between every act. So it actually was on my path to being a successful musician. It was great stage experience. And then, yes, I was a full time musician for ten years in New York City, just kind of playing on people’s records, touring, doing gigs, producing people’s records. I ran a little recording studio in Astoria, Queens. Yeah. I did that for 15 years. Right. So then the only real switch that happened to me was starting CD Baby, which was an accident, right. I was really just selling my own CD. And then friends asked if they could use my system and then, oops, I accidentally started a record store. So I did that for ten years. So yes, that was a switch where I was like, head down and focused on this one project that was there to help musicians, right? But even then, I wouldn’t say like I was an entrepreneur. It was really just-- I did my own music for 15 years, and then I helped other musicians for ten years, you know. So then after I left CD Baby, then yes, I made one last switch, which is like, now I’m writing tiny books.
Tom
So, you know, I might be wrong, but my prediction is a professional clown probably doesn’t make a lot of money. Right? Right, right right.
Tom
And then, you know, musicians, I mean, the catch phrase, starving artists. I mean, it’s usually, you know, if you’re lucky to be in the top percent, it’s like you make maybe a boatload of money, but most don’t. Right. So you didn’t go into a lot of things for money. I mean, the money was not your god, right. Money was not your drive. Okay. So when you were a successful entrepreneur, how did you grade yourself? Was it money or what? How did how did you know you were a successful entrepreneur if money was not the measuring stick.
Derek Sivers
That’s where the big bucks.
Derek Sivers
I was really following curiosity. It was like, let’s see what happens if I make this thing where musicians can contact the people that buy their music. Let’s see what happens if I make a thing where the customer can send a note to the musician whose music they just bought. Let’s see what happens if I book a tour of CD Baby musicians. Let’s see what happens if I get into digital distribution, sending MP3’s to Apple’s iTunes or whatever. So I think a lot of it was just done with this sense of experimentation. My definition of success is just achieving what you set out to do. It’s not a money measure. It’s not compared to anyone else. It’s really just an internal like I set out to do something and if I do that thing, then that’s a success. And I guess I am successful if I have done my thing that made that project a success. So yeah, everything I was doing, like, let’s see if I can get good at performing on stage and entertaining a crowd. Let’s see if I can move to New York City and make a living as a full time musician. I set out to do these things as a personal challenge. But yeah, money is always-- I see it as like the odometer on your car, that tells you how many miles you’ve been. It’s like, to me, money is like a side effect. If you find that the reason you’re driving a car is to make your odometer go up, well, then you’ve really lost the plot, you know? So to me, money should never be the point.
Tom
So how can mentor someone that seems to not understand that or not recognize that you know they shouldn’t be so wrapped up in counting the money, chasing the money that’s not maybe the best measuring stick. How would you coach somebody on that?
Derek Sivers
Actually I wouldn’t. So. No. Tom, here’s my major point is, you’re asking me what I did? Yeah. And so I’ll tell you what I did. But I never, ever, ever think that what I did is what anyone else should do. So I don’t think my way is right. I think that everybody has to pay attention to their own internal desires of what makes you happy versus what makes you exhausted. To me, those are the the opposites. It’s like what excites you and what drains you. Those are the two opposites. So you have to pay attention to what excites you and what drains you, and you have to be honest about it. So if you find that like getting famous excites you, then you should just go for that unashamed and pursue that. But if you find that making money really excites you, then don’t let any of your starving artist friends call you greedy. Just go for the money. If that’s what you’ve found excites you, then that’s what you should do. And same goes with anything. If putting your name on buildings excites you, then that’s what you should be doing. If helping other people, even to your own detriment. If that excites you more, then that’s what you should be doing. So I think we all just need to pay attention to what drives us, because you should stay in a state of feeling excited to wake up in the morning and do your thing. Doesn’t matter what anybody else says on a podcast, you should do what’s best for you.
Tom
Okay, I mean, I’ll rephrase it because I hear what you’re saying and I get it. However, you know, you wrote books and you give advice and you have opinions and you have insights, which I think at their heart are designed to help people to figure out their way or to help them to process, you know, things like, I’ll probably screw it up. But one of the things I believe you said in the past was like, if it’s not a hell yes, right. It’s got to be a no. Something like, you know, to that effect. I’m like, man, that sticks with me. That just from the first time I was like, there’s something to keep in your back pocket, right. I mean, if you can’t say hell yes, well then go to no, right. I mean, yeah, right. Life short. Right? Right. Life short. So I guess I’m trying to understand, well, you wouldn’t tell anybody what to do, but you kind of do.
Derek Sivers
Well, and I kind of just did. Sorry. I’m just saying. Okay, so there’s a difference here, and I’m glad you brought this up. I’m not saying be like me. I’m saying you should, like I advise you, right, to look inward and notice your own values of what excites you and what drains you. So don’t just do what somebody on social media is doing because they’re getting a lot of clicks. Right. And you think that you will get a lot of clicks if you do what they do. Unless if for some reason pursuing clicks is what just excites you for some reason, gets you up in the morning, is to like trying to think of what you can do to get the most clicks today. And if that’s driving you every day and making you bounce out of bed, well then maybe that’s what you should be doing right now until seven years from now, when you realize that you’re bored of that and that doesn’t excite you anymore. And then you should notice that when you start to feel drained by the idea of doing the thing you’ve been doing, then you need to look inward and see, well, what excites me now, because maybe it’s like my big switch. From 15 years of being a professional musician, right. Everything was about me, me, me, me, me. Like from the age of 14 to 29, all I cared about was my music. In these speakers it was me singing my thoughts into a microphone, getting my music coming out of these speakers to the world. That’s all I cared about. And then suddenly at 29, when I accidentally started CD baby. I noticed that doing my music on stage didn’t excite me anymore. Now helping other musicians excited me more. So luckily I paid attention to that internal compass and just threw myself completely into helping musicians. Yeah, so maybe you’re right. The advice I’m giving to everybody is to pay attention to your own internal compass of what’s exciting you, and that’s what you should be doing.
Tom
Well, I think there’s something deep here in that. Like there’s there’s another mentor, if you will, like Jim Rohn. He passed away sadly, but he’s been, you know, Jim Rohn, you pretty famous guy. Right. And he used to say things like success leaves clues, okay. Or find out what the successful people are doing and go do that, or find out what the poor people are doing. And it’s like, don’t do that. So to me, you’re like a successful, happy person. You look happy. You got a twinkle in your eye. It’s like it’s immediate. It’s like, well, this guy is doing something right. I mean look at him. You know, look at his face. It makes somebody go, “Well what’s he doing?” You know, I’ll have what he’s having. That’s kind of the feel that comes across. My question buried in there is, was it always that way or did you have a light bulb moment. Did you have a moment of of clarity where you went, “You know what I think? I think I’ve got this thing figured out now.”
Derek Sivers
Let’s go back to the Jim Rohn part of that question. Is I think that the early like, what’s his name? Napoleon Hill. Think and Grow rich. Jim Rohn. A lot of the early self-help authors used money as a general thing that we can just assume that most people want, especially the fact that, like Napoleon Hill was writing during the Great Depression, right? So it was safe to assume that everybody wants money. And so it just became an easy thing to focus on. But what’s amazing to me is if you look at a book like Think and Grow Rich or anything Jim Rohn was preaching. You can apply that to say, being great at chess or ballet or being a great poet or whatever you want to do. It was about being great. So when you say success leaves clues and do what other people are doing, you can take that exactly and use it for pole vaulting, if that’s what you want to be, the best pole vaulter. You can say, “Okay, what were the great pole vaulters doing?” Right. So it never had to be about money. Even if they talked about money because they’re writing a book for millions. Right. So I think because at the age of 14 music got into my soul and just was like, “Ooh, this is what I want. I want this so badly.” I was so into music.
Derek Sivers
It was everything for me. And so it’s like, I really, really, really want to be a great musician. I don’t even care if it turns into money. I want to be a great songwriter, producer, guitarist, singer, like all that stuff. And so that drove me for 15 years of my life was just like maniacally like every day, 7 a.m. to midnight. All I was doing was that one thing, you know? So then the twinkle in my eye, I don’t know. So I think that pursuing what you love gives you that that joy. If you’re every day excited to wake up, to dive back into what you’re doing and you’re in that state of flow where you’re doing something that’s not too hard but not too easy, where you’re constantly challenging yourself. Yeah that’s a way to live. That’s a great way to be. And so I guess I still, having felt that for 15 years pursuing music. I think I just kind of learned how to be in that zone, how to arrange my life so that I was doing things that were exciting me every day.
Tom
I used to say to myself, many times like, “Wow, what would it be like if Jim Rohn was your father?” Or, “What would it be like if Zig Ziglar was your father?” Or you know, someone like that? Now I’m going, you know, you got a son. It’s like I can’t interview him, you know? But I’m just wondering. It’s like, wow, you know, you’ve got an 11 year old son that you spend a tremendous amount of time with. So you’re definitely influencing and kids absorb, right. They’re sponges, you know, I mean, he won’t hear this interview. He won’t hear it. He won’t know. What are you observing? What are you feeling? What’s the dad’s zone saying these days?
Derek Sivers
He’s definitely not me. I tried so many times to get him into music, and he’s just not into it. Had no interest in music. He’s really into making weapons, but, like, really into it. Like, we ended up going to a blacksmith metal forge here in New Zealand that lets you come in for the day. You pick up a $100 just for a one on one session with this blacksmithing tools for the day. So my son was so into this thing about taking this molten metal, you know, holding a bar of iron in the furnace and hammering it into a knife eventually, and then carving the handle. And that was like one of his greatest joys was to be at the the blacksmiths shop. He’s very, very, very expressive. He talks full of confidence to anyone. He’s not intimidated by adults. Yeah. He’s such a different nature than I was as a kid. He’s a complete extrovert. As a kid, I always wanted to just be alone in my room, doing my thing. Like, that’s how I learned to program computers, and that’s how I learned to get great at guitar. But he just never wants to be alone for a minute. He’s just a little extrovert that just always wants to be with other people. So yeah, I think that’s like the big thing I’ve noticed so far is that you can’t make your kid into you, that everybody has their own path, whether it’s in their DNA or whatever. His own values.
Tom
Here’s here’s a pivot for you okay. You obviously can live anywhere that you choose to live. You choose to live in New Zealand in 60 seconds or less. Why do you live in New Zealand?
Derek Sivers
Actually, I can’t choose anywhere because I want to be with my kid who has a mom who doesn’t like to travel. So yeah, it’s only partially up to me. So last month I went to India. First time really traveling since Covid, and I went to India and I liked it so much I didn’t want to come back. Bangalore, India feels like the new San Francisco. It is so creative. There are so many interesting people moving there from all around India because that’s where everything’s happening. It’s like the creative hub. The weather’s great. So many smart, interesting people. So much ambition, so much optimism. I just wanted to cancel my return flight home and just stay. It’s so exciting there and so dirt cheap. So I thought, “God, I just want to be here right now.” But then I wouldn’t be with my kid and I love my kid. So back to Wellington, New Zealand. I go, really just to be with my kid. He’s the only reason I’m here. That said, New Zealand’s a great country for all the reasons you can imagine. It’s like a little nature paradise in the middle of the Pacific Ocean with a really good government. It’s like really well run. It’s a nice thing for me as an American to actually be really proud of paying my taxes. You know, Americans often do things to try to lower their taxes as much as possible, because there is this feeling that our taxes are just going to drop bombs on Iraq. You know. But here in New Zealand, you feel we’re only like 4 million people here. 5 million? Yeah, 5 million tops. And you really feel the tax dollars at work here. So I noticed that it’s an interesting test to yourself. I was asking like, where would I be proud to pay my taxes? And so New Zealand is that answer to me. This is the place that most feels like home.
Tom
Very cool. Good answers. Well, listen, we’re coming up on time and I have a trick question for you. But you’re going to do great. You’re going to do great. Okay, so it’s like Derek, what did I not ask. Okay. What if you were going to ask and answer your own question. What would you do. What would you ask yourself?
Derek Sivers
Can I ask you, since we’re doing a curve ball at the end?
Tom
Go ahead.
Derek Sivers
I’m curious. Why do you do this? What’s your main drive for doing these great interviews? You’re really good at asking these wonderful questions, and I wonder what’s behind it for you.
Tom
You know what at this point in my life, I’m trying to pay it forward. I’m trying to teach, train coach, mentor. I’m trying to teach everything I know. And this medium, this video podcast medium reaches millions of people. So no pressure. It’s already over. So it’s too late now. But for this video. This interview. This is going to reach millions of people. I really enjoy this, and this is one of the few times that I don’t talk. Usually I’m the one talking, you know. So I actually really enjoy these video podcast interviews.
Derek Sivers
Well that’s cool. And do you put a lot of work into coming up with these questions, or was that just all off the top?
Tom
This is all zero script spontaneous. That’s pretty cool. All right. I got to say right. No, this is one take Tom.
Derek Sivers
Wow. You’re like a jazz musician improvising in the moment. It’s impressive. I’ve done a lot of these. And your questions were wonderfully surprising and deep. Like, really, really good questions. Thank you.
Tom
It’s a dance, you know, it’s it’s like you go, I go, you go, I go, you know, and that’s it. No script.
Derek Sivers
If you don’t mind. That was my that was my curveball.
Tom
That was it.
Derek Sivers
Question. I flipped it back at you, if you don’t mind, but--
Tom
That was it.
Derek Sivers
You’re super curious. I really admire what you’re doing, and I had been wondering what was behind it, so thank you.
Tom
Well, listen. Something that you didn’t know that hopefully you’re going to take in favor is that we’re going to make it obviously very easy for people to reach you to find your website to connect with you. But we will be gifting your books to our community. Okay. Now I can’t drop them from the sky. I can’t do that. But when they do purchase, we reimburse. So this is again, this is one of our ways to pay it forward, to give back, to support authors. You know, it’s not a CD Baby thing, but we’re doing what we can do to support the team. But so there you go.
Derek Sivers
You know what. I went self-published years ago. My first book was on Penguin. And for a lot of authors, that would be their dream to be signed to a publishing deal with Penguin. But even though I loved the people at Penguin, I didn’t like having a publishing deal where I didn’t own my own books, and I had to ask Penguin for copies of my own books. So for all my books now I’m self-published. I just print them myself, ship them from Asheville, North Carolina, and I go direct. And so this way all the money goes to charity like I described earlier. But yeah, anybody listening, I don’t care if you buy my books or not, but please introduce yourself. The reason I do these podcasts is not to sell books, but I really like the people that I meet. Right. So your listeners, if somebody listened all the way through to the end of this interview, that’s probably the kind of person I’d like to meet. So my favorite thing is when people send me an email and introduce themselves, you know, “Hey, my name is Dave. I’m whatever a luthier and upstate New York or whatever.” So I love meeting people by email. So anybody listening to this, go to my website, sive.rs and send me an email and say hello.
Tom
We’ll have the links. We’re going to make it super simple, and take it from me, I’ve been chasing Derek since 2016. I caught him.
Derek Sivers
Chasing my ass.
Tom
Okay, so I’m proof, I’m living proof. Good things come to those who wait. And here’s a good thing. Derek, you’re a good thing. You’re a good thing. Thank you.
Derek Sivers
Thank you. Thanks for having me.
Tom
This was another session of Coffee in the Clouds. Take care.