#38 - Truth about ad agencies with Brendan Gahan + Brainstorming with Daniel Gross

The Hustle's My First Million presents: Million Dollar Brainstorm is back. Host Shaan Puri (@ShaanVP) and The Hustle CEO Sam Parr (@theSamParr) sit down and discuss what side hustles, trends and big business ideas that's keeping them up at night. Long episode today! First half is with 8-figure ad agency founder Brendan Gahan to talk biz models, overhead and profitability. Then the second half is with Daniel Gross who sold his startup to Apple in his twenties and rolled that win into multiple unicorn investments. Enjoy! See acast.com/privacy for privacy and opt-out information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Sam Parr?

  And I'll tell you why I wanted you on. So with this podcast, we talk about a lot of people starting cool stuff. And there's like, three things or four things that like, every person who graduates college, what they're gonna start. And it's like a roommate matching app, which I did. It's like a way to like, buy and sell stuff from college kids. And then it's like, an agency. And interestingly, I've actually noticed that a lot of my friends who started companies and sold them, they're starting an agency, because agencies are interesting ways to make money while learning. And so what I wanted to know, I just wanted to ask you questions about the agency business. And I think you should.

• 0:37Shaan Puri?

  Yeah, and we had sort of, we had a debate a couple podcasts ago, we were talking about VaynerMedia. And it's like, sort of, is this a good business or bad business? And so one thing is like, obviously, it's not a shit business, in the sense that like, you know, they have happy customers, they've got people, they employ a bunch of people, they make a lot of revenue. But we, you know, we're sort of talking out our ass in terms of agency, like, is, you know, what does an agency business model look like, right? I know what a software company looks like. I know what a restaurant looks like, because I started one of those. I don't know what an ad agency business looks like. So, I don't know, talk us through, like, very simple, you start an agency, you know, even before, even maybe the one you sold, before the one you're currently at. What is that, what is like, the first level of success look like?

• 1:21Speaker 02

  Yeah, yeah. Yeah, all that in kind of like, the typical agency model. But I think that's a good place to start, for sure. So, when I started an agency, I actually didn't mean to set out and start an agency. I had joined a startup, and left that. But throughout my, like, entire career, I'd been like, the YouTube guy. I was always pushing, like, let's work with influencers, let's, you know, you've got to like, implement best practices on your YouTube channel. And this is starting back in like, 2006. So, when I left my job, and I thought I was going to consult and stuff, it was like, this was maybe seven,

• 2:06Speaker 02

  eight years ago. And it was like right at, like I totally caught the wave of when all of a sudden brands and ad agencies were paying attention to influencer marketing, they all needed this strategy and like I'd just been kinda hammering on that for years. So like, kinda out of the woodwork, like all my old agency friends and friends that had been at brands were hitting me up and they're like, "Hey, can you help us with this project? Can you help us with this project?" And so, pretty quickly, I just kinda realized there's a bigger opportunity than consulting. And so what I did was, like, I would take on these projects and hire on, you know, I hired on a few people over time and helped them with, really, two services.

• 2:49Speaker 02

  One is influencer marketing. So I, you know, work with them on like developing a strategy in terms of how to integrate the brand into YouTube channels. I do all the influencer identification, contracting, all that. And then, the other aspect of the business is basically implementing a lot of YouTube best practices for brand channels. You, brands spend a ton of time focusing on their Twitter, Facebook, you know, Instagram, but they don't really put a lot of time, other than the video itself, into their YouTube channels. So that was my model. Is that a good summary, by the way? Do you want me to go?

• 3:26Shaan Puri?

  Yeah.

• 3:27Speaker 02

  Alright, cool, cool.

• 3:28Shaan Puri?

  That, that makes sense. I'm curious, like, when you get a, you get your first client, like, with your other agency, how big was your first client? Were they a small startup? Or were they like an established company?

• 3:36Speaker 02

  So, pretty big companies right off the bat. Like, one of my first clients was like Mountain Dew and Pepsi, Uniqlo, and Heiser, Bush, and Bev.

• 3:47Shaan Puri?

  So, why are they going with you? Kinda like, new guy, new agency, there's a lot of other options?

• 3:53Speaker 02

  Yeah. I, I think because there weren't a lot of other options back then. Like, obviously there were social agencies, and you guys talked about Vayner and stuff. I carved out a nice white space for myself in the sense that, like, there weren't really that many people just solely focused on, for example, like YouTube optimization. So like, I got in with a lot of the brands on like a really small retainer, where like, that was like our, like, our entire role.

• 4:18Sam Parr?

  What type of retainer?

• 4:20Shaan Puri?

  Yeah, what's a small retainer?

• 4:21Speaker 02

  Oh, oh, like, this is when I was just getting started. So it was like, very, very small. It was like, you know, uh, you know, three to five grand for, for, for that service.

• 4:31Sam Parr?

  And how many clients could you have at one time? Five or six?

• 4:35Speaker 02

  Yeah, we probably had five or six going at one time on that part of the business. And then the other part was the influencer marketing part.

• 4:43Shaan Puri?

  And then if you fast forward to like, okay, agency is mature now, you sold the agency. Same, same types of clients, I assume, because you started sort of at the top of the food chain there. And what are these, what are these clients paying you on retainer by the, sort of by the end, by the time the agency is sort of mature?

• 5:00Speaker 02

  Um, oh, so before I sold it?

• 5:03Shaan Puri?

  Yeah, like what, if you started off with humble beginnings at 5K.

• 5:07Sam Parr?

  5K monthly.

• 5:08Speaker 02

  Oh, yeah, yeah.

• 5:09Shaan Puri?

  What does the mature look like? Is that 50? Is it 500? Like, what does an agency typically get from these type of big brands?

• 5:17Speaker 02

  Yeah, so I mean, the, the, the high end of the big brands is, you know, millions in, in retainer fees a year. And that's, you know, covering everything from, you know, they're doing strategy to the creative development, helping them plan production. You know, doing social media and community management. So, you know, I mean, there, there are agencies getting paid tens of millions of dollars by, you know, massive Fortune 500 brands. And that's, that's definitely like the top end. Obviously, I didn't get to that level. I sold my agency when we were still relatively small.

• 5:53Sam Parr?

  And so, uh, fast forward to now, you said, I mean, you don't even have to refer to your company. I don't care.

• 5:59Speaker 02

  Yeah, yeah, yeah.

• 6:00Sam Parr?

  A company that is a $50 million range, what are the economics like these, these businesses? I mean, with like a really profitable software company, you could have massive margins. Would that be the same for, um?

• 6:11Shaan Puri?

  Yeah, what's good margins, right? Like when I ran a restaurant, if you, if you could get to 20% margins, you're crushing it. 10%.

• 6:17Sam Parr?

  Like on net income?

• 6:18Shaan Puri?

  On, yeah, like net margin. But what would it, what would be good for an agency?

• 6:21Speaker 02

  Yeah, good for an agency is 15 to 25%. Like that's, that's all, that's generally accepted as like the goal.

• 6:28Sam Parr?

  Well, 25 is good. 15% but that doesn't sound bad. I mean, so then is that before and as these, let's say that you have partners in the business, is that where all of your guys' income or an owner's income come from is out of that 25% or is that before you calculate your net income?

• 6:48Speaker 02

  It varies depending on the agency. So I'll like sidestep like us specifically, but generally, you know, I know with like a lot of big agencies and so there's like two types of agencies. First off, there's like independent agencies and then there's agencies that are part of like a holding company.

• 7:10Sam Parr?

  Yeah, the big two or three, Omni.

• 7:13Speaker 02

  Yeah, the WP, yeah, all those, exactly. And so I would say generally is probably, you know, with a lot of the more independent agencies, it's going to be a combination of they, you know, get a salary and then out of that profit, get some sort of profit.

• 7:32Sam Parr?

  What would the safe cut on a hundred million dollar agency, 25 million dollars in income owned by one person, what do you think? Would that person take 5 million of that 25 million home?

• 7:43Speaker 02

  That's a good question. I actually wouldn't know that for sure, but I would imagine if I was making that much money and I was the sole owner, that's probably the way I would approach it.

• 7:55Shaan Puri?

  And are agencies trying to like, is the end game to be an agency or is it like, you know, agency and then as we get sort of these clients, we start to see opportunities and we start investing off the balance sheet or we start creating our own products or like, what do you think is the sort of end game for the smart people that are in this business?

• 8:12Speaker 02

  Yeah, that's a good question. There are more agencies now starting to like diversify and like develop products. I'm trying to remember, but there was one agency, I think out here in New York who recently got a bit of press and

• 8:28Sam Parr?

  Jen Lane did that.

• 8:29Speaker 02

  Yes, yes, that's who it was. And they did just that. They were doing so much work with D to C brands and were seeing so much success, they decided to develop their own products. And actually, we've got a mutual friend, I think, Tim, do you know Troy Offenoff?

• 8:46Sam Parr?

  Yeah, I do.

• 8:47Speaker 02

  Yeah, he's he's got an agency. They're just a couple of walks over. You know, they've got a nice agency mostly focused on D to C clients. They're about 20 people and they've actually acquired a couple of their the brands that they're working with.

• 9:03Sam Parr?

  That that's badass and that's what I I don't follow Gary Vaynerchuk too much, but I've heard that's what he's trying to do. And in my head, I'm like, that sounds good. What the hell you wait for? Do it.

• 9:11Shaan Puri?

  What he says is he's buy old IP that is like sort of low value now, but that carries.

• 9:17Sam Parr?

  I heard him say that. I'm like, just do it now. What do you what you got a thousand people? What do you?

• 9:21Shaan Puri?

  Brands from the 80s, buy that IP and then relaunch it as a, you know, brand refresh with movies and products and whatever.

• 9:27Speaker 02

  Yeah, it but you know, the thing that's interesting is like, there's almost like, uh, uh, you can almost break the agencies up and I mean, you could break it up a million ways, but I I kind of think you could bring it up into two kind of um, almost like generations and there's like the classic uh, traditional agency model where they want clients on retainer. They want to be focused on like the big brand kind of equity building work. And then there's like this, um, you know, over the last couple of years, you know, as people are focused more on D to C, it's relatively simple to kind of get a small shop shop up and running.

• 10:06Speaker 02

  You've got a lot of entrepreneurial minded people who maybe started out as, you know, they're just running, uh, you know, Facebook ads for brands. And so they understand a little bit more kind of like how to sell things. And so I I see more and more of of those type of folks um, focused on broadening and building IP, um, maybe getting into software and and expanding beyond the agency model. Because I mean, full transparency, the agency model is.

• 10:37Sam Parr?

  Yeah, I actually, I want to ask about that, which is. To me, this sounds like a cool business because you can kind of take whatever you're talented at and apply that to more people. That sounds cool, but there's a lot of downsides. Can you talk about the downsides?

• 10:53Speaker 02

  Yeah, I mean, so yeah, at its core, you're selling through people's time, you know, like the traditional model is you get a client on retainer and you basically assemble a team based on the client's needs and bill people out kind of based on an estimate of hours and incorporate kind of overhead and your profit margin into that. Now, what's challenging is what if the client has a lot to ask, there's rounds of revisions, like, and then also like, you know, oftentimes it's not like you're perfectly 100% having people sold through, like maybe you need somebody who is like 50% on an account and their skill set is perfect

• 11:37Speaker 02

  for that, but then you can't place them on another account. And so that balancing act of people is just fucking brutal. Like, there's no way around it. It's really hard, and especially if you scale up, because then you're trying to identify, like, it just becomes a giant puzzle of like how to place people and get their time sold through as efficiently as possible. And so that becomes really tough. It's a services business at the end of the day, so yeah, I mean, you haven't worked in the restaurant industry, you know, it's that's like, it's like, you know, you've got clients, they're people, you got to keep

• 12:17Speaker 02

  them happy, so it's a lot of late nights. Pitching and winning business is a huge, huge undertaking, you know, especially with the big brands, like they will go out and basically do, you know... RFPs with, you know, a handful of agencies and, you know, they'll whittle down from, you know, anywhere from five to 10, a handful that they like. You know, so maybe you're pitching against three to five other agencies for a retainer, which oftentimes you don't necessarily 100% know what that final cost is that they're willing to pay. And so you spend at times several months working

• 13:03Sam Parr?

  Got it.

• 13:03Speaker 02

  more often than not for free.

• 13:05Sam Parr?

  I have two questions.

• 13:06Speaker 02

  To try and win business.

• 13:07Sam Parr?

  The first one is then why, you know, so the, the profit here is in charge is to outs, you know, outsourcing your people, so paying them $25 an hour and billing them out at $50 an hour. Why are you guys in New York then? I mean, why aren't you in Toronto or St. Louis or Detroit?

• 13:25Speaker 02

  Um, that's a good question. I would say probably the simplest answer is the fact that all the brands are here. Um, and I

• 13:32Sam Parr?

  But do, but do

• 13:33Speaker 02

  Okay.

• 13:34Sam Parr?

  But you don't have to be there though, do you?

• 13:36Speaker 02

  You, you, the brands are here and so you definitely need people, like you need boots on the ground, absolutely. Um, the other thing is like this industry is super, like so much stuff just happens on the fly in the office. And so, um, it definitely helps having people all in one place. Um, and then the other thing is the talent. That said, I'm sure in there are agencies that have a distributed workforce. Um, there's not really, uh, any that are on a kind of like, I would say like a, a big significant scale. But I think eventually somebody's going to have to crack it because the overhead is really, really high.

• 14:19Speaker 02

  And, um, but the other thing I was going to say is that there are other avenues to generate profit. It's, you know, you can mark up media, you know, production and various services. But yeah, nine times, you know, out of 10, 80% of the time you're marking up staff.

• 14:34Sam Parr?

  And last question, and we've got to answer this in, uh, in a short amount of time because we're trying to keep this under a certain time. Um, you did YouTube in eight years ago. What's the, what's the niche that you think is going to expand the fastest now?

• 14:50Speaker 02

  I mean TikTok is the hot thing right now. TikTok and livestream gaming, which you know quite well.

• 14:57Sam Parr?

  TikTok and livestream gaming?

• 14:59Speaker 02

  Yeah, I mean Twitch, obviously Facebook gaming, but oh yeah, the influencer stuff was going back to 2006 even.

• 15:06Shaan Puri?

  Hold on, we have a slight debate here. Okay, so our next guest actually is joining us, he's in the seat, you can grab the mic.

• 15:12Sam Parr?

  Daniel can't hear him.

• 15:13Shaan Puri?

  He can't hear you, but you hopefully will be able to hear him, or I'll relay it. So you said you have the opposite view.

• 15:19Speaker 03

  This is like my experience on the internet, basically. I can't hear the people disagreeing with me.

• 15:23Shaan Puri?

  Right.

• 15:24Sam Parr?

  Wait Brendan, can you hear Daniel?

• 15:25Shaan Puri?

  Yeah, yeah, yeah, yeah.

• 15:26Sam Parr?

  Oh, he can hear you.

• 15:27Speaker 03

  Okay, Brendan?

• 15:29Shaan Puri?

  Yeah.

• 15:30Speaker 03

  Brendan?

• 15:31Shaan Puri?

  You're not gonna be able to hear him.

• 15:32Speaker 03

  Nice to meet you. In theory, I mean, I'm sure you're a wonderful person.

• 15:34Speaker 02

  Nice to meet you.

• 15:35Speaker 03

  I was just curious to get your take, and I won't hear your answer. But do you not, I mean, the US military just banned TikTok for its soldiers, and it does indeed seem, of course, that a lot of American software can't make it into China. Would you not take the view then, that TikTok would at some point get banned? You know, if it's banned for the military, maybe that kind of expands over time. And if that is the case, how would it become kind of more popular? Wouldn't it just be relegated to China? Or do you think that somehow the trade war doesn't shift from, how would you say, from atoms to bits? Yeah.

• 16:07Speaker 02

  Yeah, I mean, I think that's, I actually just read the stealth war, which is all about that, I'm trying to remember the office name, but I mean, if that's gonna happen, then it's obviously gone, but there are alternatives, like right now, like Triller is another one that's blowing up. I think that format, even if TikTok was to disappear, is going to continue. You know, there's, yeah, in addition to Triller, there's also Firework, which is an even smaller one, but.

• 16:35Shaan Puri?

  If TikTok got banned, everyone in America would move to the next closest thing to Vine. Yeah, Lasso.

• 16:40Speaker 02

  Yeah, I don't think Lasso, but probably Triller.

• 16:44Shaan Puri?

  Gotcha.

• 16:45Sam Parr?

  Cool. Well, Vernon, thank you for the time. I'll holler at you after this. Awesome. This was a perfect segment. I really appreciate it.

• 16:51Shaan Puri?

  We're gonna call this segment, "We Call You and You Tell Us All Your Numbers for Business."

• 16:54Sam Parr?

  Yeah.

• 16:55Shaan Puri?

  And thank you for being the first of that segment, because people like hearing, "What does the income statement look like for these types of businesses?" So, appreciate the time, Vernon.

• 17:04Sam Parr?

  Alright, for sure. Thanks. Thank you, man. And I'll holler at you separately. Thanks. Alright, cool, cool. Peace, man.

• 17:10Shaan Puri?

  Okay, I think we're still set up to just go, right?

• 17:12Sam Parr?

  Can we just go? Hey dude, I'm Sam.

• 17:15Speaker 03

  And it's me, Sam.

• 17:16Sam Parr?

  Hey.

• 17:16Shaan Puri?

  Yeah, we've actually never really met either. I'm Sean.

• 17:18Speaker 03

  Hey, nice to meet you.

• 17:19Sam Parr?

  Oh, you guys haven't met?

• 17:20Speaker 03

  No, we're internet friends. But now we're real-world friends.

• 17:22Sam Parr?

  I am not internet friends with you, but I know you. We're not friends because you and I have never interacted, but I share your stuff.

• 17:30Speaker 03

  Well, now we get to be friends. It's great.

• 17:32Shaan Puri?

  Okay, so for those who don't know, we need you to basically brag for two minutes. So like, brag for two minutes so people want to listen to you is kind of the shtick.

• 17:40Sam Parr?

  And welcome to our ghetto studio.

• 17:41Shaan Puri?

  And then we'll explain what the hell this room is and what we do.

• 17:46Speaker 03

  Okay, so a bit about myself. So hi, my name is Daniel. I hope you're already listening to this at 2X. I'm gonna talk as quickly as possible as you missed this boring introduction. But I'm originally from Jerusalem, Israel. Came out to Silicon Valley when I was, I think, 18 or 19. Started a search engine called Q, which is kind of a machine-learned-powered search for kind of all your personal data. So you could search Slack, Gmail, Salesforce, Dropbox, Evernote, Basecamp, all in one place. Got acquired by Apple in 2013. Ended up kind of running search and machine learning across the company, across iOS, iOS 10, a bunch of other, launched and unlaunched Apple platforms. A lot of our product basically turned into and bled into Spotlight Search.

• 18:28Speaker 03

  So that's kind of what we powered in addition to a bunch of other machine learning things. Left Apple in 2017, was a partner at Y Combinator for about a year and a half. Ended up funding, you know, I don't know, dozens, maybe even hundreds of companies through that. And then, obviously, started angel investing along the way as well. Individually, I'm an angel investor in a bunch of different companies from, you know, Cruise, to Coinbase, to Uber, to Instacart, Gusto, a bunch of others, Figma. And, kind of...

• 19:02Speaker 03

  I think, most interestingly, in last year, I started a company called Pioneer, which is kind of like part YC. It's weird, I guess, merger, mesh of my careers. It's part search engine and part YC in the sense that we try to scout the internet for promising people around the world, working on kind of interesting stuff. And we spot them using psychometrics, a little bit of machine learning, a bunch of different things. And once we find them, if they seem good, we create a company for them on the spot and then fund them on the spot and then try to kind of push them over the edge. See, it's kind of my view that one of the main constrictions on societal growth and also as well as kind of the number of interesting startups we see every year is self-editing.

• 19:46Speaker 03

  A lot of people that have this shower thought that they don't ever pursue. And Pioneer is very much meant to be a kind of a platform where people can kind of experiment with their ideas and hopefully a sucking engine, if you will. I would say like a black hole force for good, where we can kind of pull people into our orbit and really almost radicalize them into starting their company. Because I think the world could stand to have many more startups and many fewer kind of large companies. It's really a sad place where we are today, where when you think of it, like, there are basically five large tech companies. And then even in the startup world, there's like three good deals a year. There's three good deals a year. Why shouldn't there be 20 or 30? Why shouldn't there be kind of an hour per lago of startups, many more people working on other things? And so, you know,

• 20:30Speaker 03

  a lot of people think of accelerators. I really hope Pioneer is a generator, a thing that creates founders that otherwise wouldn't have been. So, anyway, that's a bit about me and- How old are you? Yeah. I am still hanging on to my twenties, but towards the end. I'm 28 years old. Wow. Badass.

• 20:49Shaan Puri?

  I discovered Pioneer, I think I tweeted at you maybe a few months ago, because on one of my internet rabbit holes, I went to Pioneer and-

• 20:59Speaker 03

  How many other browser tabs did you have open?

• 21:01Shaan Puri?

  Like 65 of them. Actually Pioneer caused me to open like 65 because it's like, meet the pioneers. And then it's like, here's a list of 18-year-olds. And each 18-year-old will be like, I'm launching, you know, palm-sized satellites. I'm creating a microwave that makes things cold.

• 21:16Speaker 03

  On Pioneer, they were saying that?

• 21:18Shaan Puri?

  Yeah, on Pioneer. It's all the ideas are like-

• 21:20Speaker 03

  Some of the people we funded, yeah.

• 21:21Shaan Puri?

  Sort of more on the, you know, sort of crazy sci-fi, I felt like. That's the vibe I got.

• 21:25Speaker 03

  Super interesting, yeah. I mean, it's- Gosh, I do think it's important to stress that we try to have a mix. I mean, I think that one of the lies that Silicon Valley is very good at spreading is that, you know, everyone's working on large moonshots. And the reason that's a lie is because every one of the successful moonshots often starts as a small, fairly stupid project, right? Even SpaceX, good God, SpaceX, the most moonshot, literal moonshot-y company that exists today. People forget, but it started as this thing called the Green Mars Oasis Project.

• 22:04Shaan Puri?

  Send a plant into space.

• 22:05Speaker 03

  Send a plant and put it on Mars, do everything using Russian rockets, be as lazy as possible.

• 22:10Sam Parr?

  Well, that's a huge project.

• 22:11Speaker 03

  But it sounds like a Hollywood stunt, man. Shut the company down afterwards.

• 22:15Shaan Puri?

  Compared to like self-landing rockets.

• 22:17Speaker 03

  Compared to the largest private space company in the world.

• 22:20Sam Parr?

  Yeah, I mean, it was basically like a rich guy's practical joke or a rich guy's project.

• 22:24Speaker 03

  It sounds like the type of thing.

• 22:25Sam Parr?

  Like building a home gym in your house.

• 22:26Speaker 03

  If we lived in LA and, you know, we had hundreds of millions of dollars, it sounds like the type of thing, you know, you shoot around with a couple of friends over beers. But of course, Google was a Stanford University project called Backrub. There's wonderful interviews of Mark Zuckerberg from, I think, 2005, '06, whatever, saying, "There's no reason Facebook should expand beyond Harvard."

• 22:47Shaan Puri?

  This is a great interview. He's sitting on a couch in basketball shorts with a red solo cup and he's doing an interview and the guy's like, "Okay, you're in whatever ex-college is now, what's next? High schools, you know, anybody?" And he's just like, "Why does it have to be more? Like, it could just be a cool thing for colleges." I think sometimes if you try to do too much, it makes it less cool. And then like now he's giving internet to people so that they can use Facebook, like expanding beyond what you.

• 23:10Speaker 03

  Totally. I mean, arguably the most, given the fact that they own Instagram and WhatsApp, the most important company in the world. And so people look at that and they think, well, like if you look at the fully formed species, you're like, well, we're of a different genotype. I mean, there's no way I can do what Elon is doing. But if you realize where all these people got started and you kind of look at the early variants of what they do. It's kind of silly, almost. And if you look at the old homepages of all these websites, I mean, it looks like a joke. Go ahead, sorry.

• 23:39Shaan Puri?

  So what's something that you personally invested in? So like, I like the story about Facebook and SpaceX, but what's a company you invested in that today is seen as big, but you remember how humble the beginnings were? So like, what's something that's big today that you remember how sort of small it was?

• 23:55Speaker 03

  The funniest example I have of this is a company called Notion. And Notion is kind of a next generation Confluence or Wiki. It's used by a lot of the companies in here in Silicon Valley.

• 24:09Sam Parr?

  I'm a user. That's not how I describe it. I describe it as like Asana, but better and a little bit different.

• 24:14Speaker 03

  Well, I'm actually, yeah, I'm certain Ivan, the founder, would shoot me for my description and very much endorse yours.

• 24:21Sam Parr?

  I'm a user. I'm not affiliated.

• 24:22Shaan Puri?

  This is the website of our podcast. It's just a Notion doc.

• 24:25Speaker 03

  Oh, okay.

• 24:26Shaan Puri?

  That our domain points to. And it's just a Notion doc. That's it.

• 24:30Speaker 03

  So, I mean, Notion's kind of a funny one. Ivan and I, many, many years ago, briefly worked together, which is how I got to know him originally. And we kind of kept in touch over the years. And he mentioned he was kind of working on this thing. And, you know, you can envision the initial pitch as it comes through as like, we kind of went our separate ways. He was kind of always very interested in the kind of cognitive kind of enhancing software, you know, hyper productivity, that kind of thing. And for me, that stuff is super interesting, but kind of in kind of a weekend way, you know, during the weekday, I'm much more interested in figuring out how to like, make something that will produce

• 25:13Speaker 03

  revenue, hopefully be successful that way. And so we kind of kept in touch. And he mentioned he'd started to work on this. And, you know, Ivan is the type of person who is very brilliant, but very focused on making the perfect thing correctly. And in the back of my mind, I was thinking, well, there's no way, like, it'll just take forever. And, I mean, it did take him a couple of years to kind of, how would you say, 40 years in the desert of kind of, you know, wandering to Israel. But, you know, he got there, four instead of 40, maybe. But it was definitely one of those things when I was started, I was like, I'm not quite sure this is going to work. In similar vein... I remember talking to Kyle Vogt, to Kyle Vogt, who two days ago unveiled to the world Cruise's private.

• 25:51Sam Parr?

  So Kyle's the guy who started, well, before that, co-founded Twitch, which they sold to for a billion dollars.

• 25:58Speaker 03

  Co-founded Twitch.

• 25:59Sam Parr?

  Now did Cruise, which I think was another billion dollar self-driving car company.

• 26:02Speaker 03

  It got acquired, I believe, by GM for a billion dollars, a billion dollars after 18 months or so. And I remember.

• 26:09Sam Parr?

  He also bought the most expensive home in San Francisco, which made the news pretty funny.

• 26:13Speaker 03

  Yeah, well, sure. But anyway, the point is, I remember him kind of fundraising, and it was not an obvious thing back then. This is before the autonomy hype. He, I think, in many ways, created the autonomy hype with the acquisition. And here's a guy who, like, previously worked on software, Twitch wasn't super popular yet. He'd like done, in MIT, he was a safe cracker. That was his hardware experience. Who's pitching you on him building self-driving cars? And bear in mind, again, this is 2013. This is like before all the hype.

• 26:50Speaker 03

  And, you know, I very much believe that it would be an obvious market of the future. I remember that quote from Henry Ford of, you know, once the car was envisioned, it just had to exist. And I think that is the same thing is true for self-driving cars. Like, once that concept leaves the drawing board and enters reality, mankind will create it.

• 27:07Sam Parr?

  So what are you saying, that you weren't sure that you should bet on him?

• 27:09Speaker 03

  I think the question was, is one of those, it's very interesting situations where you kind of have a lot of emotional belief in the founder. The market is very unclear. And so, you know, at what point does the investor decide to kind of make the bet on hard science, on an unclear, capex-intensive, you know, area, because they believe in the person? And I think this is one of those things where you can afford to do this kind of stuff if there's a path forward, if you really believe in the person, and notably, if the price is low. Where I probably would not do this is, you know, if you told me, oh, you know, I'm raising, and the valuation's a billion dollars. You know, obviously, it'd be very different if I was Andreessen Horowitz, had a giant fund. But for me, the angel investor, at that point, I don't think that's.

• 27:50Sam Parr?

  So you were an angel in that one?

• 27:52Speaker 03

  Yes. But it was one of those situations where super tenuous, super unclear. I actually think all good investments at the beginning are super unclear. A lot of the great YC darlings almost didn't get into YC. Airbnb was super on the fence.

• 28:11Speaker 03

  I mean, even Stripe didn't properly do. I see there's no actual batch they participated in. And this is the truth about the world, I think, is a lot of the stuff that is great always starts humble and small. Then, of course, their media teams get together and retrofit the whole narrative and they'll tell you that, oh, Jeff Bezos was always into books as a kid. But it's very unclear at the beginning whether something's going to turn into something.

• 28:33Sam Parr?

  Let's fill him in on kind of who we are and what we're doing. And then I've got a few questions.

• 28:38Shaan Puri?

  Yeah, let's do it.

• 28:39Sam Parr?

  So you want to go first, Sean?

• 28:41Shaan Puri?

  Yeah, so we, so I started this podcast when I was selling the company and I got really bored. And I was like, you know, it would be fun if we do exactly what we're doing right now. I was like, if I just take the interesting people that are all around me, some, you know, some I know, I'll start with them. And then a whole bunch of other people who I just have like one degree away that I could reach out to. And let's shoot the shit together. Maybe they'll tell their story. Maybe we'll just talk about whatever the future looks like. I don't know. It'll be fun for me. I don't know if anyone will listen. Partner up with Sam because he's already got a bunch of people listening. He's got a million people on his list who want to listen to him tell about the news. And we said, hey, let's do this together. You know, let's partner up on this. So we started this podcast and it's grown pretty quickly. But we started this, normally it was like the traditional interview style. Hey, tell me what you did. How did you start? How'd

• 29:22Shaan Puri?

  you get your first 100 customers? Real tactical stuff. We just started coming to this office here, which is outside of the normal studio we do, the interviews in. And we started shooting the shit and we call it million dollar brainstorm, where basically we just say, hey, here's something that's kind of interesting. You ever noticed this? Here's a problem I saw. And, you know, they're actually pretty half baked ideas. They're, you know, the name is sort of goofy. They're not million dollar ideas. They're like zero dollar ideas. But we, but we're having a lot of fun with it. And this is actually what listeners like way more than the interviews. And so they're sort of, what I thought would be fun is take people out there who, take people who like to look into the future, people who are on the edge and observing new things, have them join us as guests because A, we're going to run out of ideas pretty quickly. And B, it's just more fun.

• 30:05Sam Parr?

  No, you won't. I feel like if you're one of those people that have ideas, you do not run out of them.

• 30:09Shaan Puri?

  Yeah.

• 30:09Sam Parr?

  Well, you just see them every single day.

• 30:10Shaan Puri?

  Yeah.

• 30:11Sam Parr?

  Like, man, that restaurant concept, add it with this.

• 30:13Speaker 03

  Okay, so here's kind of an interesting thing at a meta level. What do you guys think of, is it possible to give someone a startup idea? Or does it really have to?

• 30:23Shaan Puri?

  Does the person really have to feel like it's their own?

• 30:26Sam Parr?

  No, it is possible to give ideas and I'll tell you, I'll give you my reasoning. So, so, so the hustle, we have millions of people who sign up, we give them news. And then we also have trends where we just explore different stuff and we charge a premium. It's like the hustle but more in-depth, like Harvard Business Review. It's like this, it's a cool thing, I'll show you later. And in doing that, I've met all types of cool people. Me and Sean have a circle of friends that are very badass, but they're different badass than your badass. You are friends with these guys who-

• 30:53Shaan Puri?

  You're Silicon Valley badass?

• 30:54Sam Parr?

  Yeah.

• 30:55Shaan Puri?

  I would call this like Austin badass.

• 30:56Sam Parr?

  Yeah, and so we have loads of friends that have started and sold companies in the 1 million to 100 million dollar range. Very successful, but nearly all of them bootstrapped.

• 31:06Shaan Puri?

  Yeah.

• 31:07Sam Parr?

  And what they do constantly, and I do as well, I've bought and sold companies with these guys or on my own, is they're businessmen or businesswomen and they seek opportunity, they make the products better

• 31:20Shaan Puri?

  Yeah.

• 31:20Sam Parr?

  by either buying or selling other companies, and then they can sell the businesses.

• 31:23Shaan Puri?

  Yeah.

• 31:24Sam Parr?

  And for many of them, they don't give a shit about the product. I mean, they do, it's not like they're scam artists, they like building things.

• 31:31Shaan Puri?

  Product agnostic.

• 31:32Sam Parr?

  And they're totally product agnostic. And so if you want to build a nine-figure company this way, it works, for sure.

• 31:39Shaan Puri?

  I see. So the other way I'd put it is, we talked about this last time during, we did a live show and a whole bunch of people showed up. And one guy was like, you know, do you have to be passionate about the idea? Or somebody said something like that, somebody else raised their hand and said, you should absolutely be solving a problem that you're passionate about. That's the way to do companies. Right. And we disagreed and he was like shocked that his, you know, why would this person say no? That seems like an unpopular thing to disagree with. And we, what we said was, the top of the hierarchy is, you're solving a real problem, you're very passionate about it, it scratches a personal itch. That is best-case scenario.

• 32:12Sam Parr?

  That's the Gartner quadrant where you're winning all things, but you're telling me-

• 32:16Shaan Puri?

  The success bar is lower than that.

• 32:18Sam Parr?

  But if you want to make a lot of money and have fun doing it, you don't necessarily have to have that. You can, and that may, will maybe be better, but you don't have to.

• 32:26Shaan Puri?

  And last thing I would say is, when we say these ideas, we don't, I don't think the people listening to this even expect to take that idea and go do it. It just gets, trains their- ...to constantly seek out ideas.

• 32:35Speaker 03

  Yeah.

• 32:35Shaan Puri?

  And that's the real value of it. That's why I even like doing it because now all week I'm just jotting down ideas. I'm training my brain because I know every Thursday I gotta come with something good. So all the other days I'm like.

• 32:46Speaker 03

  Okay, so here's something that I've been thinking about on the whole jotting things down. So I, like you guys, I actually view it, it's funny, I view this as somewhat of a problem and a disease. I have this text file of ideas I've been maintaining, I think for 20 years now. It's probably megabytes in size. And for me, it's an important outlet. Otherwise, I literally cannot stop thinking about whatever that thing is. And it's actually a little bit more acceptable now in my profession. But, you know, I still run Pioneer, I have like things I need to do. I, you know, I have tasks, I can't start off, you know, just thinking about some of this random idea that I should add. So I write it down. But here's what I'm wondering on writing things down in general.

• 33:29Speaker 03

  Okay, here's my contrarian, Silicon Valley contrarian view. Is writing down a terrible idea? Because I find the moment I write down an idea, it exits the rock Tumblr in my brain. And I get peace, which is the great thing, but I stop thinking about it.

• 33:44Sam Parr?

  No, I don't think it's a problem. And my opinion is because.

• 33:47Speaker 03

  Like, shouldn't you just keep it in your head? Keep it jumbling around?

• 33:50Sam Parr?

  I think you should research it because, and I think that you should research it. So, okay, so there's two types of people, those who like you're, that actually will do shit and those who won't. Right?

• 33:59Speaker 03

  Right, right.

• 34:01Sam Parr?

  Right. I mean, like, there's people who just take action and there's those who just talk.

• 34:04Speaker 03

  What's going on with the talkers? Are they too extroverted?

• 34:08Sam Parr?

  No.

• 34:08Speaker 03

  Or are they just talking?

• 34:10Sam Parr?

  Well, because they're afraid.

• 34:11Speaker 03

  They're afraid.

• 34:12Sam Parr?

  I think they're afraid, or they don't really want it, or they think it's cool to do this, but they don't want it, they don't actually like it. But my opinion is like, look, like, I think most cool ideas are successful things. They're probably not that original. They're probably, if you wanted to, you'd be like, "Oh, well, I stole that feature from that, that from that."

• 34:30Speaker 03

  iPhone wasn't the first phone.

• 34:32Sam Parr?

  Right.

• 34:32Speaker 03

  Facebook was not the first social network.

• 34:34Sam Parr?

  Yeah, you just steal a bunch of cool parts and you can package it in a really interesting, creative, unique way.

• 34:39Speaker 03

  Yep.

• 34:39Sam Parr?

  And so what I think is good is to actually write those down. And you can even do a little bit of research, knowing that you're not going to execute on any of them. But what you do is you start seeing interesting patterns and best practices and...

• 34:51Shaan Puri?

  It sounds like for you, when you write it down, you're assuming the creative process stops at that point.

• 34:56Speaker 03

  I find, once I write the... I have this for posts, for posts I'd like to write as well. Once I write the thing down, it, going back to it, yeah, it becomes like a dread task almost.

• 35:08Shaan Puri?

  This is like when, so we both like the UFC a lot. We like, you know, fighting. And there's this old wives' tale that they tell the fighters, which is, don't have sex leading up to a fight. And they're basically like, "No, you need that pent up, you know, sort of testosterone aggression." There's no real science to this.

• 35:22Sam Parr?

  Yeah, it's bullshit.

• 35:23Shaan Puri?

  But they, but the fighters follow it and they sort of feel like, "Okay, if you have sex, if you get that release, you won't have that same sort of hunger, that same tension built up." It sounds like it's basically that, like, you know, blue balls for the brain, essentially.

• 35:35Speaker 03

  To some extent, yeah, I guess. Yeah, I don't know. It's been something on my mind. Actually, I think I will do a post about this. And so I haven't written it down. But, you know, I grew up, I am not today, but I grew up as an Orthodox Jew. And in Orthodox Judaism, there's a very interesting concept of the oral kind of Torah and kind of Mosaic Code is much larger than the Bible. And for many years, that was not written down by like sheer law. And then at some point, they decided to write it down. And there are a bunch of reasons that are given as to why they didn't write it down. Some obvious ones, like they just wanted to keep it private from the Christians, whatever. But there's some kind of counterintuitive ones there. One being that...

• 36:20Speaker 03

  Effectively, things are much more plastic and malleable when you keep them in your head or when you just discuss them. And writing has this kind of calcifying effect to it, where you put it down. One thing I was actually talking about to a founder recently of a fairly large, multi-thousand-person company, and they were trying to figure out, you know, the typical thing you're trying to figure out at that company, that size, is culture and values. And, you know, I always send people who go through this process, the link to Enron's culture and values. Enron, for those who don't know, is, used to be the largest, one of the largest companies in the United States, a little in the larger energy companies, turned out to be a giant fraud and, you know, put thousands of people out of business. But of course, they had wonderful values they wrote on a piece of paper. I think it's like, you know, excellence and integrity and honesty. None of that matters, but I also wonder in general

• 37:04Speaker 03

  with values, whether that whole thing, that whole process of writing it down doesn't work, because again, I think, I think writing's strength is its weakness, which is it really calcifies things. It instills things. And sometimes you want things to be a bit more malleable.

• 37:17Sam Parr?

  Can I, um, I want to ask you a couple of questions. What, so what is your, you took time away from, when did you quit working at YC full-time?

• 37:27Speaker 03

  I quit YC about a year and a half.

• 37:30Sam Parr?

  What is your day job now?

• 37:32Speaker 03

  It's kind of split. I mean, the major, a lot of my time is spent on Pioneer.

• 37:36Sam Parr?

  Who runs it? Me. Who works on it?

• 37:38Speaker 03

  It's about four, well, six other people, actually.

• 37:41Sam Parr?

  So you're the boss, but you're hands-off?

• 37:43Speaker 03

  Yeah. Yeah.

• 37:45Shaan Puri?

  Well, it sounds like you're hands-on, or you're not hands-on?

• 37:47Speaker 03

  Uh, both. I don't know. You should ask.

• 37:48Sam Parr?

  You jump in and out?

• 37:49Speaker 03

  Yeah, you should really ask them.

• 37:51Sam Parr?

  Okay. Is it, does it make revenue, or do you fund it yourself?

• 37:55Speaker 03

  We have a bunch, well, it means, it's partially funded by me, with two other investors, Stripe and Marc Andreessen individually. It's a venture capital shop fundamentally. I mean, it's powered kind of by software, not by people. So if you ask if it makes revenue, no, but, you know, Pioneer holds equity positions in companies that have since gotten.

• 38:16Sam Parr?

  So you have a fund?

• 38:17Speaker 03

  Basically, it's a, it's a small fund, on paper, I guess. It has markups, but you know.

• 38:21Shaan Puri?

  As a business, it looks more like an accelerator than, than other things.

• 38:24Speaker 03

  A generator, please, but yes, yeah, yeah, yeah.

• 38:26Sam Parr?

  So, have you, how much money have you angel invested on your own? Can you reveal that?

• 38:32Speaker 03

  Oh, I mean, in aggregate, large, large number.

• 38:39Sam Parr?

  South of 10 million?

• 38:40Speaker 03

  Yeah. Like much, significantly south of it.

• 38:44Sam Parr?

  Seven figures?

• 38:46Speaker 03

  A decent chunk of change.

• 38:48Sam Parr?

  Has it returned?

• 38:49Speaker 03

  I've had some returns, yeah.

• 38:51Sam Parr?

  Has it returned all of it? Nor, or have you had a positive ROI across all?

• 38:56Speaker 03

  Uh.

• 38:58Speaker 03

  I have invested more than it has returned, if that's what you're asking.

• 39:02Sam Parr?

  That was a really inefficient way of being asking, sorry. What's your average check size?

• 39:06Speaker 03

  Um, it depends. Um.

• 39:11Speaker 03

  It depends. Like, so I should, I should really classify two things. I mean, if I'm kind of investing for me, for myself, it's, it's fairly varied. It's anywhere from, uh, you know, uh, $20,000 to a million dollars. Um, or if the company is really large, tens of millions of dollars. But, uh, Pioneers investments, very interestingly, are much, are significantly smaller, but significantly larger.

• 39:32Sam Parr?

  Wait, did you just say your investments are tens of millions? I think that's what you said. I don't know if that's what you meant, though.

• 39:36Speaker 03

  Yeah, yeah, yeah. But I, I very rarely will do those. So those will be very, very small.

• 39:41Sam Parr?

  But before you, do you get, catch what I'm saying?

• 39:43Shaan Puri?

  Yeah, basically, earlier you said my total aggregate angel investing under 10 million.

• 39:48Speaker 03

  No, I didn't, I didn't say under. I didn't say under.

• 39:51Shaan Puri?

  Okay. I thought you said south, that's what you meant, like, under 10 million.

• 39:57Speaker 03

  I, I've invested north of $10 million, just, uh, ju- ju- just to clarify.

• 40:01Shaan Puri?

  Yeah.

• 40:01Speaker 03

  Um, but, um.

• 40:03Shaan Puri?

  You were saying Pioneer is different than that, in that it takes a small, puts smaller bets in, but takes a larger percentage because it's early?

• 40:09Speaker 03

  Yeah, I mean, I, I think it'd be quite useful to clarify this. I, I tend to do personally, angel invest, uh, fairly rarely. Um, we'll do a fairly small number of deals of people that I happen to, you know, know or, or not know, but really believe kind of in the company and want to help. The majority of kind of the outbound investments that I'll end up doing are through Pioneer, um, which are very small in size, you know, tens of thousands of dollars, but much larger by total volume. So Pioneer, last year, invested in about 90 people.

• 40:40Sam Parr?

  So, so the reason I'm asking this is I'm just trying to understand the structure of angel investing as a business.

• 40:45Speaker 03

  Yes.

• 40:46Sam Parr?

  I've had a few, I've done a few deals, Sean's done a few deals. I'm up, but.

• 40:52Sam Parr?

  Hopefully it will be up a lot. We'll see if it works.

• 40:56Speaker 03

  Yeah, that hopefully is the important bit.

• 40:57Sam Parr?

  Hopefully is the very important bit. Basically, I did one deal and the earnings, I just put all that back into different ones. And so what I want to know is how

• 41:06Speaker 03

  Did you roll that over with QSBS?

• 41:09Sam Parr?

  No, no, because it was under five years. Yeah. And so what I want to know is angel investing as a business, how that works for you. And I imagine you get deal flow that's phenomenal, given YC connections and things like that. But that's what I'm getting at.

• 41:26Speaker 03

  Yeah, I mean, I think as a as a angel investor, I'm probably, look, I'm probably not as efficient as I could be because of really two things. One, you know, pioneer and two, I'm a bit of an introvert. And so for me, it's actually much more satisfying to do a small number of deals a year where I have the opportunity to work really closely with the team to have fairly significant ownership in the organization as opposed to kind of doing, you know, every single deal that comes out, you know, through my inbox and chasing things around Silicon

• 42:06Speaker 03

  Valley. Even though that latter format would probably or maybe be better, depending on who you ask. You know, for me, it's much more satisfying to kind of work closer with a with a small

• 42:18Sam Parr?

  Who's the best angel investor you know?

• 42:20Speaker 03

  There are a bunch. This is like asking what's the best movie you've seen. It's hard. But if you ask me what's a good movie

• 42:26Sam Parr?

  Rather, who's someone you look up to?

• 42:27Speaker 03

  There are a bunch of, I would say, look, in my view,

• 42:34Speaker 03

  an investor I look up to, just not necessarily just because of his legendary picking ability, his ability to kind of be helpful to companies on boards, but more importantly, it's just someone super interesting. I can't quite figure out in an interesting way is Mike Moritz, who is one of the preeminent partners at Sequoia Capital. I find a very interesting and in many ways kind of endearing person, who's obviously has his fair share of, you know, of correct bets, be it Yahoo, Stripe, Google.

• 43:09Speaker 03

  And Cisco, I believe, a bunch of others. In the angel investing world, I think there's a lot of good people. I mean, I think Y Combinator is probably the most durable animal you can kind of look to, and I think it's probably the most interesting thing in the sense that it is a platform, and it seems to produce returns regardless of the partners that are there. And that's quite interesting. No one's really managed to do something like that. I think Eliot Gill is quite good. He's top of mind, just also because I happen to sit

• 43:41Shaan Puri?

  I got a different question for you.

• 43:42Speaker 03

  Fairly closely to him in an office.

• 43:44Shaan Puri?

  So in the brainstorm vein, you posted this thing, which is why I reached out to you.

• 43:49Speaker 03

  Yes.

• 43:49Shaan Puri?

  2020 themes.

• 43:50Speaker 03

  Yes.

• 43:51Sam Parr?

  Oh, I read that.

• 43:52Shaan Puri?

  And your blog is good. So shout out, what's your blog? What's the website?

• 43:56Speaker 03

  It's dcgross.com.

• 43:59Shaan Puri?

  dcgross.com. Okay, so you have a bunch of good blogs. This was one of them, where you had a bunch of themes, and I want to hop around a couple of them, and let's just chat about them.

• 44:09Speaker 03

  Sure.

• 44:10Shaan Puri?

  So one that you had there was "Say Yes to No Code."

• 44:14Speaker 03

  Yeah.

• 44:15Shaan Puri?

  That was a theme. And we had, on the podcast, the founder of Webflow came on, and we've been talking a little bit about No Code. But I thought one of the examples you talked about, which most, called, you know, the average people don't know too much about, is the UI path, right?

• 44:28Speaker 03

  Yes.

• 44:29Shaan Puri?

  So UI path, talk about what is UI path, and what is that, sort of, what is RPA? It's a branch of No Code that's not consumer-facing in the same way as Webflow and Zapier and other things that we talk often about. So talk about those.

• 44:41Sam Parr?

  The whole No Code thing is a circle jerk right now. I can't tell if it's real legit or a circle jerk.

• 44:45Speaker 03

  I called, yeah, I, well, I didn't use those creative words, but yeah, I made it very clear that it's overhyped, which is, I believe, my view. I still, now, I still think there's more to be done there, but you have to be fairly careful when you're picking in an overhyped market, because one of the things I tried to flag, unfortunately, I put this at the end of the post, and given, you know, if I had my own attention span, I wouldn't make it to the end of my own post. But one thing I tried to say at the end is I think one of the most important things for the asset allocator to realize is selection pressure. And one of the great things about underrated markets is you get free selection pressure there in the sense that if you're working on it, you're already interesting by virtue of the fact that you're working on it.

• 45:27Speaker 03

  And if you're working on a hunt market, you get the opposite effect. One of the coolest things about Pioneer is no one really knows about it. And so if you manage to make your way to a goddamn website of a company that doesn't even own the .com, it's pioneer.app for Christ's sake, and you apply and you play, like, you're interesting through that effect alone. And as Pioneer becomes more successful, selection will get harder. Counterintuitively, right? Selection's really hard for Harvard because it's the preeminent brand. It used to be amazing. Harvard used to be really weird. What, you're gonna go to the New World? You're gonna leave Oxford? Let me get this straight. You're gonna leave Oxford and you're gonna sail to the New World and go to this weird-ass thing? Same thing for Princeton, Stanford, and Yale. And so, selection pressure's the most important thing.

• 46:12Speaker 03

  The RPA scene, and we'll tie this into your point now. The RPA scene and the NoCode scene used to have great selection pressure even 18 months ago because no one knew what it was. And RPA stands for? Robotic Process Automation. And now, of course, everyone's talking about it. We're about to talk about it on this podcast. So you gotta be careful. Once the club becomes popular, I very much wanna leave. I'm very much looking for the next club that no one's in right now. That being said, we should still talk about it, too. RPO, robotic process automation, is a similar concept to NoCode, but as you flagged, it's a little bit more enterprise-facing. And the darling of this world is a company called UiPath, which is a European company funded by Sequoia and a bunch of others. And what they do, and a bunch of others do, is...

• 46:55Shaan Puri?

  It's like a $7 billion company in where, like, Ukraine or something?

• 47:00Speaker 03

  I don't think it's Ukraine. We're insulting them now, but it's, let's just say it's in Europe. Let's focus on continents here. We're in America after all. We don't know where the rest of the world is. And what it does is, the idea is this. The idea is basically macros. I don't know if you've ever used that on your computer. So, you know, you can kind of, let's imagine there's a task you do repetitively at, you know, your large company. So, you're going through LinkedIn and you're copying the name from LinkedIn and you're pasting the name into the, you know, a Google spreadsheet. So what they're gonna do is they're gonna write some, a macro that will basically watch what you're doing... And then at some point, just do it itself automatically. And that is much easier than writing software that does it. I mean, it's basically click record, click play.

• 47:43Speaker 03

  So the pitch sounds pretty compelling, pretty interesting, right? Like, we've all done this in like in music, where you have kind of loops and they're made, you know, by just watching you play and then playing it back. And so doing that with software is interesting. Okay, so the twist is this. The twist is that the macros are really brittle. They're really brittle in the sense that they don't really understand what you're doing. Like, if I watched you do something on a computer and then you said, "Just copy me." There's so much I'm able to do because I've used computers in the past. I understand what LinkedIn is, it's a website. And so like if the name of the person that I'm copying is a little bit different on that webpage, I'll like figure it out. The computer, most RPAs, fairly brittle, won't figure that out.

• 48:24Speaker 03

  Now, UiPath's workaround for this is they have a lot of engineers do kind of the last mile, if that makes sense. So it's kind of mostly recorded and learned by the computer. And then an engineer kind of comes in and makes it a little bit more...

• 48:35Sam Parr?

  A quality check.

• 48:36Speaker 03

  Quality check, make it a little bit smarter, a little bit of code dressing around the main dish to make sure the steak's not too bland, if that makes sense. Now, UiPath can afford to do this because their deal is so big and the margin is so big, they can afford to pay an engineer to kind of take it the last mile. There's a bunch of little teams and startups in Silicon Valley here trying to do UiPath, but not brittle. Okay, so instead of having an engineer go the last mile, we're going to get some fancy machine learning to do it. And I actually think there's a lot of interesting things you can do that aren't being done today. We won't go into the details, but like that's, so that's kind of an interesting avenue. But the thing to realize about UiPath, the thing to realize about UiPath that I feel like a lot of people miss in enterprise startups is the innovation here

• 49:21Speaker 03

  is not the software. The innovation is the sales machinery and the sales channel. And a lot of people, for every sales company, a common meme amongst founders is to look at it and say, "Dude..." Dude, the software is awful. We're gonna make better software. And you forget Salesforce, the software is just as good as it needs to be. And the reason Salesforce is awful is because the innovation of that company is in its sales team. It is not in the quality. Salesforce is a database for Christ's sake. And so you've got to be mindful of that. So Uipath does a lot of channel sales successfully. And that's one of the reasons why they got big. I don't think it's because of this like-

• 49:59Sam Parr?

  Well, what's the path? I mean, what's the-

• 50:01Shaan Puri?

  Did they really innovate or they just did it well?

• 50:03Speaker 03

  They did it first-ish. They did it well enough.

• 50:07Sam Parr?

  And what's their sales system?

• 50:10Speaker 03

  They have a sales team, but they, for the most part, do a lot of channel sales. They do a lot of reseller sales through a lot of other folks.

• 50:17Sam Parr?

  So then why did you say, say yes to no code? Well, it sounds like you're hating on it mostly.

• 50:22Speaker 03

  I'm not hating on it.

• 50:24Sam Parr?

  Or you're just not that into it?

• 50:26Speaker 03

  I think it will continue to be a fairly strong meme. Yeah, as far as I'm concerned. I think it's somewhat comical how hot it's gotten. I mean, it's literally in, through Pioneer, through my inbox. There's like, you know, a dozen companies or teams a month working on some type of no-codey thing. Now, I wouldn't become a bear on that because I do think Chris Dixon made this point about cryptocurrency in 2012. You cannot ignore a market if there's a lot of smart humans working on it. You cannot laugh at it. Like something will emerge. There's just too many, there's too much IQ working on this problem. So I'm sure there are more stuff will emerge there. I think that world is infinitely vast.

• 51:09Speaker 03

  You know, I believe Deloitte does $43 billion of revenue every single year. That's not their valuation. That's what they do in revenue. And like 12 billion of that is in software consulting.

• 51:24Speaker 03

  All of that can be eaten away by software that is kind of like no-code style software or RPA style software. So the market is giant and it's quite possible. You know how Marc Andreessen said software is eating the world in, I think, 2007? We may kind of continue to see software eat away at the fringes of the world through things like no-code.

• 51:44Shaan Puri?

  Right. And just to clarify, the themes that when you wrote this post, you're saying- What's going to continue to emerge? What are we going to see a lot of? That doesn't necessarily mean there's good investment opportunities or entrepreneurial opportunities because maybe that window was in the previous 18 months or 24 months where that was hottest. And now the popularity will surge.

• 52:03Speaker 03

  Yeah.

• 52:04Shaan Puri?

  But the opportunity window might be smaller than the popularity.

• 52:08Speaker 03

  I think that's right. I mean, I really wrote the post as an observer, hopefully sitting maybe not front or on the court, but you know, somewhere hopefully where I could still see the sweat on the players' faces. And I'm just trying to give people a sense of what's going on here. And you're very correct. Not all of them correlate, I think, to Ripeira's investment. You know, another one I spoke about that I think is super interesting, but I think it may be hard for a startup today to succeed in is radar. There's a lot of interesting radar companies and there's a lot of interesting radar technology that the large companies are working on. Project Soli from Google allows you to effectively manipulate your iPhone with micro gestures from even across the room just by sensing the position, say, that your hand is in by using radar.

• 52:52Speaker 03

  This company is called Zendar, which is building a better version of LiDAR for self-driving cars, one that can see through snow, which traditional LiDAR can't. That being said, you know, from an investment standpoint, well, you got to ask yourself kind of a question of like, that's capital intensive, the use cases aren't that clear. And mainly the thing that's changed is the regulatory environment around various areas of spectrum has changed over the years.

• 53:14Sam Parr?

  When someone's working on that, so like, a lot of the companies that we've started, it's like, I can spin this up in a weekend and see if it's interesting or not. With these companies that you're describing, how on earth does someone even spot that that's a problem?

• 53:28Speaker 03

  Right.

• 53:29Sam Parr?

  That sounds really hard, right?

• 53:31Speaker 03

  And that's kind of interesting.

• 53:32Sam Parr?

  Because most people don't even know it exists, let alone that there's an opportunity.

• 53:35Speaker 03

  Right. And that is, you know, kind of, to me, one of the most kind of meta-interesting things of... You kind, I feel like if you're trying to figure out what company to start, it is very interesting to find some type of community where you could be at the real frontier of a thing. And so, for example, the two guys that started the radar company were previously working on radar. So they were sitting at the front of the radar game at Zendar. So they're very aware of what's going on. If you're sitting at like, how would you say, in the club or in the chatroom of Python, just Python, that's what you got. There's a lot of people there.

• 54:19Speaker 03

  And so you really want to find some type of pocket of the world where you can be at the real edge, where there are very few people there. And I think actually, a lot of enterprise software is like this. Sometimes you'll meet these guys where they'll go, they start one enterprise company, they like sell it to Cisco, and then there's literally like, over the course of their career, three or four of these spinouts where they leave and then they start the same thing and it gets re-equipped.

• 54:42Speaker 03

  And so, what's going on here? Okay, so one traditional answer is like, great man theory. The guy maybe just has an IQ that I don't have, sad. Okay, I don't really believe that. I think what's going on here is very few people are aware of the problems, and so very few people build the software. I actually encourage, a lot of people shoot me emails and they're like, what should I do?

• 55:04Speaker 03

  I think a very...

• 55:06Shaan Puri?

  Look around.

• 55:08Speaker 03

  Well, it's kind of look around at a meta level of, get yourself into a place where you can be looking around where there are few people looking around. So what does that mean in practice? You may want to go work at a large enterprise company and just observe what's broken there. And then you could literally leave after six months and start a company to fix the number one broken thing. And you'll have observed it and it kind of, at an experiential painful level, where you'd be like, wow, it's really broken. I'll give you an example.

• 55:33Speaker 03

  I'll give an example, so...

• 55:35Shaan Puri?

  Sean's actually doing this.

• 55:37Speaker 03

  Yeah, okay.

• 55:37Shaan Puri?

  So we just got acquired, so Twitch is now like about 2,000 people. So that's, I don't know, 100 times bigger than any other company I've ever worked for. I've only run my own companies and the max we got to was like 20 something.

• 55:48Speaker 03

  Yep.

• 55:48Shaan Puri?

  And so I sat there and I told the team on the first day, because they're, you know, they just went in with the mindset of like, okay, we're here to fit in, do a job. I told them, I said, you know, you're going to get several valuable things out of this experience. In my opinion, the most valuable thing that can happen in this experience is you sit at this company for a year, and you observe. And I said, "We're gonna make a list, and we're gonna share this list." It's called import-export.

• 56:10Speaker 03

  Yes.

• 56:11Shaan Puri?

  Import: what are things that we see problems where we would buy the solution within this company? We would import a solution to this, if somebody could solve this problem. Export: what's some hacky thing that we built internally to solve our own problem? That we're not productizing and packaging for the thousand other companies that are gonna experience a similar thing? So we have this import-export list. I'm basically the only one adding to it.

• 56:31Speaker 03

  I've asked so long for you to give me that.

• 56:32Shaan Puri?

  Yeah, I haven't given it out to anybody yet, but that's my mindset around it, which sounds similar to the advice you're giving somebody.

• 56:38Speaker 03

  I think you're gonna discover a lot of interesting business. I'll give you an example. It's so funny you mention that. I had something fairly similar at Apple for me, which is I had this folder of manager scripts. And all the manager scripts I wrote are ultimately really good companies that should exist. So here's one very simple one. Broadly speaking, all internal HR software is awful. And as a manager, I just wanted this very simple thing. I ended up writing a software which is, "I just wanted to know, for everyone in my org, I wanna know, what are their important financial milestones?" Apple, 100,000-person company, there's no software that could tell me this, which is, "I wanna know, like, when is most of your stock gonna cliff?" Because you would get these refresher grants every single year at Apple,

• 57:23Speaker 03

  and they themselves are on four-to-six-month milestones. And so, every single employee has secretly done this math, where they're like, "Oh, January 12th is when most of the money is coming in. And so, like, I'm going to quit January 13th."

• 57:36Shaan Puri?

  And so, who wants to know that?

• 57:38Speaker 03

  Every manager wants to know, like, "When are the troops leaving?"

• 57:42Shaan Puri?

  Got it.

• 57:43Speaker 03

  Especially with software engineers in San Francisco, who are constantly, you know, looking over their shoulder to extend to another job, which is another terrible cultural affect. But, given the fact, what you want is a piece of software that just gives you this data of like, "Here is when you need to be checking in with people, because if they're financially motivated, here's when they're gonna leave." No one really does that. Yeah, and there's a lot of this stuff. Performance review software. We literally had to write our own performance review software at my startup, and then subsequently at Apple, because all the internal stuff is bad. And okay, another fairly classic one, stack ranking, performance reviewing. This doesn't exist at large companies and people will never build it internally because they don't like stack ranking.

• 58:27Speaker 03

  Because it inherently pushes some people to the top, some people to the bottom. But it's the best way to figure out who's the best performer. But again, I was never exposed to this stuff before I worked at a large company.

• 58:37Sam Parr?

  So you have a list like Sean does?

• 58:40Speaker 03

  I have a general startup idea list.

• 58:44Sam Parr?

  You should share that.

• 58:46Shaan Puri?

  Do you do that like request for startups sort of meme?

• 58:48Speaker 03

  Yeah, we have also a little bit of that on Pioneer's website. We've put up a bunch of like fairly tractable, simple, I could do this in a weekend style.

• 58:56Shaan Puri?

  And I saw your face just now when he said you should share that. You were like, internally you didn't want to.

• 59:01Speaker 03

  No, no, no, I'm happy to. Like, so I'm trying to figure out, no, I would, I'm trying to figure out how to convince myself to have your view that like you can actually give people startup ideas. And maybe I'm talking to the wrong people, but I've generally found that it's, well, it's more hard than not.

• 59:17Sam Parr?

  Well, but my point is though that you have people who will and will not. The wills are, it's just very few people. But the will nots, they could still apply that across other things that they're doing.

• 59:28Speaker 03

  Totally.

• 59:29Sam Parr?

  Or you could like be like.

• 59:31Shaan Puri?

  So at Twitch, they have this phrase, it's like, what do creators care about? And really this is what do people care about? Which is Emmet discovered early on, he's like money, fame and love. And actually it's sort of the same meme that Dave McClure once said, people want to get paid, they want to get made, want to get laid. It's sort of the same thing, just repackaged. And so, and so, and there's a specific order for Twitch where it works, which is like you first want to grow your, you first want to grow your audience. And then you want to make money so you can do this sustainably. And then that all starts to feel shallow if you don't feel the love from your community. And so, and he discovered a fourth one from the founder of Vine, I think he told him. He's like, there is a fourth one, which is inspiration. And Emmet was like, ah, that's very true because anytime one creator sees another creator doing something interesting,

• 1:00:16Shaan Puri?

  or they hear about an opportunity, it just gets them that motivation to just continue on because these are always long journeys. I think Silicon Valley does a good job of inspiration because we tell stories through the media. Sometimes this creates skewed versions of reality, but there's a reason that exists. It's because A, it's interesting and B, people take a lot of inspiration from it. And what I view when you share an idea that I, it's not so literal that you're trying to get somebody to do this exact idea. It's trying to get people to see the, see the types of problems you see. Use these as sort of starting points and then riff on it and end up wherever they will end up. And so I would think about it that way rather than saying, am I going to give this person an idea? And are they really going to go be able to do anything with this specific idea?

• 1:01:00Speaker 03

  Yeah, I, I think that makes a lot of sense. And, and I think that's right. I mean, I think maybe the best outcome is someone finds there some adjacency to the idea that you give them. And so, you know, maybe this HR performance thing, you know, you don't end up precisely building that. But you build some other related piece of, I don't know, HR.

• 1:01:17Shaan Puri?

  You said something earlier, you go, you can't ignore, you know, sort of the Chris Dixon. What the nerds are doing on the weekend is where the trends are going. You said, you said something like, if there's a lot of IQ at a problem, something's going to happen. What problem doesn't have enough IQ on it in your opinion? Give us, give us some things where you think IQ should go.

• 1:01:35Speaker 03

  Well, okay, so I mean, one broad area is kind of the one we spoke about, which is, I do think that,

• 1:01:43Speaker 03

  like the, the, the kind of 20, 30 year old person who's kind of maybe even technical really wants to do a thing is just not exposed to enough enterprise life. So there's a lot of unmet enterprise needs. So I'll give you another fairly simple example. If you're a sales team, really anywhere, you were trying to figure out the org chart of the company you were trying to sell to. There's one company called the org that tries to do this.

• 1:02:06Shaan Puri?

  I tried to do this, I had the same problem when we were trying to sell.

• 1:02:09Sam Parr?

  There's org and we actually, we pay for software that does this, but it's all industry specific.

• 1:02:16Speaker 03

  It's industry specific and it's like a weird sneaker net style thing. And like, I think, I think someone could really knock it out of the park here and build something that over time maybe even becomes the next LinkedIn. Just org chart as a service.

• 1:02:27Sam Parr?

  And the information does something like that. It's only executives.

• 1:02:32Shaan Puri?

  It needs to be UGC, right? It needs to be where it's like a wiki.

• 1:02:35Speaker 03

  I know. You want to even think of it as a little bit of a deeper level, which is what is the incentive for the employee at the company to just kind of anonymously update their own profile, much like they do on LinkedIn? And so I think if you could figure that out.

• 1:02:46Shaan Puri?

  This is a great idea.

• 1:02:47Speaker 03

  If you could figure that out, the line of.

• 1:02:48Sam Parr?

  That's cool.

• 1:02:49Speaker 03

  You may build the next big social network.

• 1:02:51Sam Parr?

  We use Media Radar and we pay them thousands of dollars and it's only people at ad agencies.

• 1:02:55Shaan Puri?

  It's the same playbook as LinkedIn, right? Which was, let's put your resume online. Certainly you want that so that you can get jobs. Oh, what happens when everybody's put their resume here? We can create the network of people on here and make this, you know, sort of the professional network.

• 1:03:07Speaker 03

  Totally. And so like, that's a thing.

• 1:03:12Speaker 03

  Another one that I think is super tractable, I don't know how mixed money is, are you guys familiar with SciHub?

• 1:03:18Shaan Puri?

  What's it called? Science Hub?

• 1:03:20Speaker 03

  Science Hub is a very interesting thing. It is Napster for research papers. Okay, so it is used by a small number of very smart, potentially very high net worth people, but a small number. So you can kind of think of the TAM math here, of the total addressable market math here, is much similar to like Gulfstream Jets as opposed to Priuses. Small number of people, potentially very high ping. And basically, if you work at a university and want to access kind of a research paper, then your university pays for it. If not, you're basically you're screwed. And so SciHub is Napster for this. It's a terrible website, like the domain is in Taiwan or somewhere. It's not really hosted well.

• 1:04:03Speaker 03

  If you were to build a better alternative for SciHub that had all the research papers, I don't know about the legality of it. I certainly think it would be moral. That would be a separate issue. I think you could, you would basically have the highest kind of intellectual under management website on the planet. Like, you would have hedge fund managers, you know, kind of leading scientists all using your website. And you'd have to get clever on how you'd monetize them, but boy, I like, I think that's a, if you want to become the star of the internet, the people that matter, that'd be the number one thing to build.

• 1:04:36Sam Parr?

  There's a company that was doing something similar. They were actually on Inc's 500 fastest growing companies by revenue. I'll have to remember what it was later.

• 1:04:43Speaker 03

  This would be a little bit of a weird project because it's not going to be legal, because SciHub itself is not legal. But again, I think things that are at the intersection of morally acceptable and illegal are often quite interesting.

• 1:04:57Speaker 03

  You know, that's always an area where, of course, crypto has, you know, some space to shine. Um, let's see, what else?

• 1:05:04Shaan Puri?

  If we're playing the game of you're the asset allocator of IQ. You're just shuffling IQ around to different areas where you're like, we need some IQ over here.

• 1:05:12Speaker 03

  Um, yeah, totally. I mean, there's another thing, uh, which is, I think, a pet, um, pet peeve amongst a lot of us, um, uh, which is just like better Goodreads. Uh, Goodreads is this company that was doing quite well until Amazon acquired it and folded it into Kindle. It's been awful since, but inherently the experience of kind of reading material online today is very single player. And should be significantly more multiplayer. I mean, every time I highlight something or you highlight something on your Kindle, it should be shared kind of automatically into a group and we should be able to talk about it. And I think this thing executed properly, again, would be a social network for the erudite. So like, I don't think you would get a billion people, but you could probably get 100 million people

• 1:05:54Speaker 03

  that you could charge like, I don't know, a hundred bucks a month from. Um, so you'd end up in the same revenue math. Or you'd end up actually with an audience base that you could sell incredibly high-end ads to, like, like the same way Town and Country does. Um, but again, you could literally do that in a weekend. You know, Mozilla owns this thing called Pocket, um, which like-

• 1:06:15Sam Parr?

  Oh, they bought Pocket?

• 1:06:17Speaker 03

  They bought Pocket.

• 1:06:17Sam Parr?

  What did they pay for it?

• 1:06:18Speaker 03

  I don't know.

• 1:06:18Sam Parr?

  A lot.

• 1:06:19Speaker 03

  But it's like-

• 1:06:19Sam Parr?

  No shit, really?

• 1:06:20Speaker 03

  Just make a better Pocket, for Christ's sake. It's not that hard. Uh, and Pocket is not that good.

• 1:06:25Sam Parr?

  I think you, I don't agree with you on that because there's, those types of businesses work really well. They've worked so far really well in Japan and in China. So Smart News, uh, things like Pocket. I see. So there's this thing called Smart News in Japan. Have you heard of them? Um, they're, they either are valued or are public at a billion dollars. Um, there's, uh, uh, three or four more. But anyway, in America, we've tried to do that three or four different times. Not once, I don't think, has it made a good business. Maybe they've sold for a lot of money, but it's not made high revenue and profit. That doesn't, of course, that doesn't mean it can't be done, but-

• 1:07:05Speaker 03

  I think there's a class of products in...

• 1:07:09Speaker 03

  You guys familiar with Superhuman?

• 1:07:10Shaan Puri?

  Yep.

• 1:07:11Speaker 03

  Superhuman is this email client and it's like 20 bucks a month for an email client. Like, quick reminder, Gmail's free.

• 1:07:17Sam Parr?

  Do you use it?

• 1:07:18Speaker 03

  No, but for separate reasons. It is used by a lot of people. I don't think they're profitable, but they're definitely doing quite well. And I think to me, that is kind of a model here, going back to our Gulfstream.

• 1:07:31Sam Parr?

  Luxury software.

• 1:07:32Speaker 03

  Luxury software is a great way of putting it. And I think no one's executed a pocket on that thing, so...

• 1:07:38Sam Parr?

  That's cool.

• 1:07:38Speaker 03

  Super high-end, super fast, charge a thousand bucks a month. And you're not gonna get a lot of users, but you're gonna get a few super high-paying.

• 1:07:45Sam Parr?

  I think the high-end businesses are better than...

• 1:07:48Speaker 03

  Certainly easier.

• 1:07:49Sam Parr?

  I'd rather have less customers who charge, or I charge more than a lot of customers who charge little. But that's like, not what most people tend to do, it seems.

• 1:07:57Speaker 03

  I think that's right. Another thing on the spirit of high-end is I think better software for people to interface with their admins. Withon, I think, should exist in the world. So like today, really, you're... I actually think this, again, really easy to do. This is basically a messaging app that's really durable, really stable. And the main difference, you may ask, why is it different than WhatsApp? It's because the only person on the messaging app is your admin.

• 1:08:19Sam Parr?

  Right.

• 1:08:20Speaker 03

  It's like, you call it the bat phone, whatever you want. But basically, I think messaging goes through these ebb and flows of saturation and desaturation. And right now, everything is incredibly oversaturated. And messaging in many ways is kind of becoming the next social networks or these private groups. And so it's really hard to keep track of everything. And so, you know, you get messaged six different times, six different channels. But if you just had one app where it literally is the only way to reach you, I think that alone you could charge people for.

• 1:08:44Sam Parr?

  That's a cool idea.

• 1:08:45Shaan Puri?

  You would only see that if you're at a big company, probably, right? Like, I didn't have an EA till I left Twitch. I wasn't gonna have one at my startup.

• 1:08:51Sam Parr?

  You have one now?

• 1:08:52Shaan Puri?

  Yeah.

• 1:08:52Sam Parr?

  Awesome or not awesome?

• 1:08:54Shaan Puri?

  Well, it's great. Like, it's a free perk, right? Which is awesome. And like, I told you, I hired my chief of staff now, so like, I need the bat phone for him. We have a Slack, which is just me and him. But that's like, five layers I have to do to just get to my conversation with him, which is slow.

• 1:09:09Speaker 03

  Yeah.

• 1:09:09Shaan Puri?

  And also doesn't have any of the features that we would... Want for that use case, I guess.

• 1:09:14Speaker 03

  I think now I'm just really brainstorming.

• 1:09:17Sam Parr?

  Keep going.

• 1:09:18Speaker 03

  Into deep space. There's a lot of online forums that are still quite active. I'm talking things like Flyer Talk or there's a similar one for running let'srun.com.

• 1:09:30Sam Parr?

  I'm a huge let's run guy. Been on the front page four times.

• 1:09:33Speaker 03

  There you go. Okay, so, okay, so this will be contextual.

• 1:09:36Sam Parr?

  Bulletin, it's.

• 1:09:38Shaan Puri?

  V Bulletin.

• 1:09:39Speaker 03

  Software that was literally built when, you know, we were still.

• 1:09:42Sam Parr?

  I was gonna ask you if you're a runner. You look like one.

• 1:09:44Speaker 03

  I, yes, very much I'm a runner, but the like V Bulletin. V Bulletin is like the Blink 182 of software.

• 1:09:52Sam Parr?

  It's awesome. Like, let's run of all the new forums, that one that was launched in maybe early 2000. I think it's still the best.

• 1:10:00Shaan Puri?

  Well, the software is the best or the community is the best.

• 1:10:02Speaker 03

  The community is amazing. Please don't tell me the software is good. It's a, it's, have you tried using it on your phone?

• 1:10:06Shaan Puri?

  Yeah, if you use it on your phone, it sucks.

• 1:10:08Sam Parr?

  Yes, but when it allows you to post without signing up.

• 1:10:11Speaker 03

  Yeah, it's very much. No.

• 1:10:13Shaan Puri?

  Old, old school internet.

• 1:10:14Sam Parr?

  Yeah, and I think that's like, wait, I love that.

• 1:10:18Speaker 03

  Anyway, what I would build is I would literally build a app that all it did was it was a professional scraper of V Bulletin. So you get really good at scraping all that stuff and then you turn all those things into like a wonderful, beautiful mobile app.

• 1:10:29Shaan Puri?

  And. Ah, it's just a client, a reader client.

• 1:10:31Speaker 03

  A reader client for all this.

• 1:10:32Shaan Puri?

  Oh, that's really smart. That's really smart.

• 1:10:34Speaker 03

  And I think if you did this correctly, you could start building the next Reddit.

• 1:10:37Shaan Puri?

  Yeah, cuz it's not owned by like a company that's just gonna shut off your client.

• 1:10:43Speaker 03

  Yeah, it's owned by the let's run. I don't even know who the let's run guy is.

• 1:10:47Sam Parr?

  Wojo, Weldon Johnson.

• 1:10:48Shaan Puri?

  I only, I have one forum that I used to go to. It's like a basketball one called the Colly and this Coliseum. And they basically, they switched off V Bulletin to some other also really bad one. And I remember over, I've never seen a community do this. Literally overnight, someone was like, you know what? We're tired of this. Mobile app sucks and this thing always crashes during big games. I'm making a new one. Come over here, everybody. And literally overnight, everybody deserted that first place, went to the second place and they sort of referred to the old one like the hamsters are still running the wheel, trying to keep that other one still up.

• 1:11:19Speaker 03

  Okay, so that's very interesting and that should remind us of a point that I think should inspire anyone who's thinking of building stuff. Everyone forgets, everyone forgets that this exponential social network growth cuts both ways.

• 1:11:29Shaan Puri?

  Yeah, the decay.

• 1:11:31Speaker 03

  The decay. And, and I don't know how you guys think about this at Twitch, but like, I actually think. These whole network effects, the concept of network effects is super overrated. I think if you build a better experience, people will just swim there immediately.

• 1:11:43Sam Parr?

  But yeah, I agree with you, but that just proves they're strong network effects.

• 1:11:48Shaan Puri?

  No, no, I see. You're saying, you're saying if you build something better, people will swim there immediately? I totally disagree with that one, but I do agree that if you do the voodoo magic

• 1:11:56Speaker 03

  Yes.

• 1:11:57Shaan Puri?

  to get to the tipping point where the decay begins.

• 1:12:00Speaker 03

  Yeah.

• 1:12:01Shaan Puri?

  Uh, I've seen, like, we've seen the mass migration happen a couple of times, right? Dig to Reddit sort of thing.

• 1:12:06Speaker 03

  Wow.

• 1:12:06Shaan Puri?

  Um, that was like one of them, but they're, they're very, very rare, uh, when they happen. And that's why, but I believe that people are building better software solutions. Like right, right now I'm at Twitch and I shouldn't say this, but like there's competing products that I think have cleaner interfaces, load faster, and you know, if you just compare feature to feature, uh, better products.

• 1:12:25Speaker 03

  You're right. Like you, you have to be in a club that is also getting bad and there has to be a better club available. Maybe it's a composite function. Um, but, uh, but here's, so here's the interesting thing. I think, um, well, hopefully this doesn't happen to Twitch. I am, and this was kind of in the post we were talking about earlier. Uh, I think, um, we can have a guaranteed bet that all of the giants, all the large companies, that their software will get worse over time. It must get worse over time as, as, as durable as like Newton's law, uh, as durable as gravity. These guys must produce more revenue quarter after quarter after quarter. And so I don't know if you saw someone actually posted this the other day, amazing graphic

• 1:13:08Speaker 03

  of how Google has changed its ads over time from like at the extreme when they got founded. It's very clear.

• 1:13:14Sam Parr?

  Nothing, yeah.

• 1:13:15Speaker 03

  Today you literally cannot.

• 1:13:16Shaan Puri?

  The first page is like.

• 1:13:18Speaker 03

  You cannot tell. Try buying something on Amazon. Try buying like an electronic product on Amazon. It is like stepping into a flea market in the middle of Shenzhen. You have no clue what you're buying, resellers, fake products, real products. Why do they do this? They do this because in the short term it creates more revenue. In the long term, it creates this kind of weird sense of like, fuck dissatisfaction.

• 1:13:38Shaan Puri?

  Right.

• 1:13:38Speaker 03

  And I think.

• 1:13:39Sam Parr?

  I don't, I like, I don't follow Amazon reviews.

• 1:13:43Shaan Puri?

  You don't trust Amazon reviews.

• 1:13:44Sam Parr?

  It used to be like. Amazon reviews was life. Now it's

• 1:13:49Shaan Puri?

  Well, the Google search thing is interesting, right? Because you could see how much, what percent of the screen is an ad? Over time, it starts with 0%, goes to 10%, and now it's basically like 80% of the results you'll see on a, like without scrolling, are going to be an ad, you know, from Google, which is crazy.

• 1:14:05Speaker 03

  You could go back, of course, to 1992 and you can read the memo written by Larry Page and Sergey Brin about how our advertising models are at odds with the customer, I'm almost quoting verbatim, "are at odds with the customer experience in search engines." But of course, these guys are checked out and now their own company is headed in that same exact direction. So here's another tractable idea on this very concept. Super simple to do, build the wirecutter for one specific domain.

• 1:14:36Sam Parr?

  I've talked about this constantly on this podcast.

• 1:14:39Shaan Puri?

  What do you mean by this? Go on.

• 1:14:41Speaker 03

  Well, like, Amazon reviews are bad. And what are reviews? In a sense, it's you, how would you say? Sequestering your thinking on a particular topic to another brand, where you say like, okay, this brand is

• 1:14:54Sam Parr?

  Trusted.

• 1:14:54Speaker 03

  Is trusted. And so like, I don't have to think, I will just trust that brand. So you need to recreate that. And you could potentially recreate that in many different ways. But I think the simplest way is you focus on nailing it really in one particular domain. Maybe one way to bootstrap this is you can get kind of celebrity endorsements, because that's really what celebrities are, right? They're known brands that people appreciate and

• 1:15:15Sam Parr?

  No, these are bootstrapable companies.

• 1:15:17Speaker 03

  So maybe you don't even need them.

• 1:15:18Sam Parr?

  Wirecutter was bootstrapped. They sold way too early. They sold for 30 million. They should have sold for 200 million.

• 1:15:23Shaan Puri?

  So a lot of people try to do Wirecutter for business software.

• 1:15:26Sam Parr?

  That's what I've talked about forever.

• 1:15:27Shaan Puri?

  What email provider should I use?

• 1:15:29Sam Parr?

  Yeah.

• 1:15:29Shaan Puri?

  Chat client should we use? What HR software should we use?

• 1:15:32Sam Parr?

  Well, if you go to like bestCRM.com, it's people who only talk about, or I bet you there's, if you type it in, I bet you there's pipedrive versus salesforce.com.

• 1:15:40Shaan Puri?

  Right.

• 1:15:40Sam Parr?

  And I bet you that can make a million dollars a year.

• 1:15:42Shaan Puri?

  Yeah, people try to SEO game that, you know.

• 1:15:44Sam Parr?

  Yeah.

• 1:15:44Shaan Puri?

  Ex-alternatives.

• 1:15:45Sam Parr?

  So the problem is two problems. One, you should never, or you could have in the past. I think it's scary to rely on Google now. And two, you have to look at who your affiliate is. If your affiliate is Amazon, Amazon could just say, "All right, we're not giving, we're not going to give..." Amazon gives 4% affiliates to Wirecutter. They would say, "All right, we're done with this program." And you lost.

• 1:16:07Speaker 03

  Yeah, I would, I would actually propose with a little bit of ambition that the person doing this tries to do without Amazon, you just try to sell the products yourself. And that's why I think it's super helpful to focus on vertical and the topic of running. Like, I think if you focused on sneakers, which by the way.

• 1:16:23Sam Parr?

  I totally agree.

• 1:16:24Speaker 03

  You have tremendous margin in sneakers, holy shit.

• 1:16:26Sam Parr?

  But if you Google like best cycling equipment or best running shoes.

• 1:16:29Speaker 03

  DC Rainmaker.

• 1:16:30Sam Parr?

  It's, it's so, it's so.

• 1:16:32Speaker 03

  DC Rainmaker.

• 1:16:33Shaan Puri?

  Answer.

• 1:16:34Sam Parr?

  Oh, I know, I read him. He's great, but he's good for like Garmin.

• 1:16:37Speaker 03

  In Paris, just uttering away.

• 1:16:39Sam Parr?

  But he's just a blogger and it's, it's a horrible site and I love it.

• 1:16:43Speaker 03

  And it's, I'm, yeah, I'm sure the bank account's not horrible.

• 1:16:46Sam Parr?

  I totally agree. And what I would do is.

• 1:16:48Shaan Puri?

  Basically, Joe Rogan needs to launch this. Joe, somebody who's like an Oprah level, Oprah level character.

• 1:16:54Speaker 03

  With the Chaga supplements. And yeah.

• 1:16:57Sam Parr?

  No, I, I think that there, that's interesting. I've never thought about shipping it out, though. That's kinda, that's a, sounds like a pain in the ass, but it could be worth it.

• 1:17:04Speaker 03

  Yeah, you know, at the end of the day, like, life's an adventure and you have to do some of the pain in the ass stuff if you, I think if you want to like take some of these guys down. And I think the trick, the reason why you want to focus on verticals, I think it's quite important as quickly as possible, if you're doing a company in any related area to this, to do what Amazon did very effectively, just to get, to become a destination and to get out of Google search results. I mean, we forget, before Prime, before Prime, Amazon had this giant existential threat, which is, I think 60 to 80% of its traffic came from Google. And this is what killed Yelp at the end of the day, because at some point, Google was like, oh, we're integrating to Maps and just promote Maps to over Yelp. And then, you know, Jeremy Stopman went to Congress to complain, but that never works. It didn't work for him. Amazon did something much better, right? Where they became a destination.

• 1:17:47Speaker 03

  Now, when you buy something, you go to amazon.com and then you search there.

• 1:17:50Sam Parr?

  Oh, Amazon's like, I think the fourth largest search engine now.

• 1:17:53Speaker 03

  So, so I think you must pick a vertical, because it is easier to become, in the consumer's mind, a destination, if you're a particular vertical. Like, I associate this, this is the app that I go to to get sneakers. This is the app that I go to to get, I wouldn't even say electronics, too big, to get like cables and dongles. Cablesandongles.com. And then I think you can become the destination. And if you picked a small. Vertical, you can also handle all the shipping. There are companies like Shippo, which will take care of the logistics for you. It'll be hard to compete on the two day thing with Prime, but maybe over time.

• 1:18:24Shaan Puri?

  Here's, here's a different angle at this. What we talked about earlier about luxury software. So sometimes when I want something, I just want to know what is the actual best? What is the best that money can buy? And like, what are the top three of like?

• 1:18:36Sam Parr?

  That's what Wirecutter does.

• 1:18:37Shaan Puri?

  Money can buy. And so, you know, whether it's socks or anything else, you basically just start to curate. So it's not necessarily a vertical of products. But it's a vertical of like buying habits.

• 1:18:47Speaker 03

  Literally top three dot com.

• 1:18:48Shaan Puri?

  What's that?

• 1:18:49Speaker 03

  It's like a top three dot com.

• 1:18:50Shaan Puri?

  Right, top three, exactly. What are the top three? And we go to extraordinary lengths to identify, test and sort of, and ensure that these are the top three at any given time.

• 1:18:59Speaker 03

  Michelin ratings, but for products, yeah, that's, that's interesting. And to extend on the Wirecutter point, the funny thing is, you know, you have to go to the bottom actually to get the best, best thing. Cause they actually focused on value.

• 1:19:13Shaan Puri?

  Right.

• 1:19:14Sam Parr?

  Well, they have a budget pick, a best for most people pick and a upgrade pick.

• 1:19:19Shaan Puri?

  Right.

• 1:19:19Speaker 03

  I, I remember I was buying an air filter and I was like, you know what? Like it's the air that I'm breathing at now.

• 1:19:25Shaan Puri?

  I'm willing to pay.

• 1:19:26Sam Parr?

  Well, I did this with a mattress. I was like, I don't want an eight hundred dollar mattress. Like what's like the fanciest one I could ever get? And will that actually make me sleep an hour extra?

• 1:19:34Speaker 03

  By the way, I mean, yeah, I mean, if, if that math is true, you should invest half your earnings in that. Cause like, you know, compound over time, it's like just the, the drug everyone forgets to take. So, so yeah, top three is interesting because yeah, it'd also attract like, you know, the, the best customers. The extreme variant of this topic, if you really want the craziest version of this is I think there's a, if you really shoot for super high end.

• 1:20:00Speaker 03

  I think you can take down all the traditional blogs on, that are covering like the latest on private aviation, the latest on like crazy homes. I don't think those guys are at the top of their game.

• 1:20:11Shaan Puri?

  Right.

• 1:20:12Speaker 03

  And I think you'd probably build an alternative. Again, you're going to get like 10,000 visitors a month, but I'd imagine a good market.

• 1:20:18Sam Parr?

  So there's this company I've brought up before, it's called Informa. It has a market cap of 10 or 15 billion dollars, three or four billion a year in revenue. And they own roughly a hundred brands and it's all high end. So it's, um, like they own like, I could be wrong, but the idea is right, like Monaco Yacht Week.

• 1:20:36Shaan Puri?

  Right.

• 1:20:37Sam Parr?

  And they own like, um, they own a magazine that probably reaches only 10,000 people a month. And it's up for people who are buying hundreds of semi trucks. And so they update you on manufacturers and things like that.

• 1:20:51Shaan Puri?

  I think so at HustleCon, one guy, uh, I think his name's Eric Ryan or something, the founder of.

• 1:20:56Sam Parr?

  HustleCon is the big event we we host.

• 1:20:58Shaan Puri?

  Yeah, conference. So, so he, he had this talk that I thought was the best talk there. And he said something at the beginning, it's like, yeah, he created method soap and like, you know, one in the soap category. Then he created all the vitamins, they won in the vitamin category. Now he's doing well, he's going to win in the Band-Aid category. And it's like, okay, what's the formula here? Is it just like walk down the aisle and pick one of Target? And he said, yeah, pretty much, you know, you know, he's like, I look for a sea of sameness. And he said, every time I see a sea of sameness in the, in the, in the aisle, I start to do it. And he goes, the second thing is then I have to pair that with what's the culture shift? Where's the culture going that these brands that succeeded 50 years ago when the culture was different? That they don't understand. So for method, it was, um, hey, the culture shift is now when we pick up a product, we don't look at the branding. We turn around and read the ingredients.

• 1:21:42Shaan Puri?

  And hey, look, all these soap brands, uh, they, you can't recognize one ingredient because they're toxic chemicals that we use to clean our house. So we should have, you know, chemical, you know, we should have cleaning products with chemicals you understand and trust. Uh, for all the on vitamins, it was like the culture shift is around, you know, getting these benefits around like, you know, I don't take biotin. I want thicker hair, uh, you know, I don't do this, I want better sleep. Uh, you know, personal wellness as personal fitness, basically. And, uh, so, so he started talking about this and I like this concept. And I see this with like, when you talk about taking down the incumbents. So the way I look at this was Snapchat was probably the last big, let's say, threat to one of the big companies. Most recent big threat to one of the companies because A, they wouldn't sell to Facebook.

• 1:22:26Shaan Puri?

  And B, um, they took them on at social and succeeded. And what I think they did was they recognized that the pendulum had swung where Facebook was everything's public. You're connected to everybody and everything's permanent. Uh, we, we save all your photos forever and your posts forever. And Snapchat just went and zagged, uh, you know, they, they zigzagged where it was like. How about private? How about photos that delete and they're not permanent? And because the culture is going this way where when everything's online, you sort of want to be, you know, not everything wants to be sort of public and plastered everywhere. And so I think an important thing when you look at this is like, where's the culture going? So when you said this about luxury brands, what I was thinking was I couldn't give less of a fuck about

• 1:23:07Shaan Puri?

  yachts or private planes or anything. So what is luxury for somebody who's gonna be, who's 25 and getting wealthy? And over the next 10 years, they're not gonna buy fancy watches, maybe they want, what are the luxury experiences? Right, like I think Fire Festival was closer to what people actually want. Supreme shit. Well, Supreme on scarcity, right? That's still like, I think, sort of part of the old world of like, it's a physical, material good that's scarce. Now, they did some things differently, but I'm curious what like, we know our generation cares more about experiences than material goods than any generation in the past. So what is a luxury experience, right? We've talked about Museum of Ice Cream and all this other stuff.

• 1:23:49Shaan Puri?

  What are these luxury experiences? What's super luxury? I'm very curious about ideas around that. That seems like a fun company to run.

• 1:23:56Speaker 03

  Yeah, yeah, yeah. Yeah, I mean, I think there's a, I mean, in many ways, the real kind of rent seeker in this world is my own company, is Apple. I mean, I think ultimate luxury is being, you know, having the AirPods Pro 2, whatever, when it comes out. And I mean, I think Apple will do well to price discriminate even more. They should have some crazy AirPods variant that's like a thousand dollars.

• 1:24:20Shaan Puri?

  Right.

• 1:24:20Speaker 03

  And it's not quite gold trim, not tacky, but it looks cool in some way. The watch is a beautiful kind of exploitation of this. And so that's probably the millennial luxury.

• 1:24:35Shaan Puri?

  Like Uber and Postmates, I think are millennial luxuries where it's like, hyper convenience, like ludicrous convenience. There's a company called Puffs or Go Puffs, you know this company? They basically, it's a little mobile vending machine that rolls around college campuses and will bring you like, you know, Cheetos and Red Bulls and condoms or whatever. Awesome. And they're doing like, I think, I don't know the exact numbers, but I Saw at one point, you know, hundreds of millions of dollars in revenue on this very simple business, which is what if the vending machine in your college dorm? What if you didn't have to like go across the quad and then walk into that that building and get it? What if it just rolled up to your door?

• 1:25:08Sam Parr?

  That's awesome, dude. I was thinking about that at the airport last night. I was like, I don't want to walk all the way.

• 1:25:13Shaan Puri?

  I saw some investor was like, when I saw that the convenience store was literally like steps away and still this goddamn machine kept rolling up to a dorm. He's like, I knew that was like some weird phenomena that I didn't understand, but I needed to invest in.

• 1:25:25Speaker 03

  I've just on the Apple point, here's an idea. I have to, I've written down multiple times, I cannot get out of my head. I have to really just, I usually tell the team, it's the struggle. Sorry, y'all. I mean, it's my goal today. I have to stay focused, but boy, I think it'd be relatively easy and so much fun to build a new laptop, to build a new laptop. Actually, don't think it would be that hard. And I think you could fairly easily, if you focus on a niche here of kind of the innovator, creator, founder, developer, would have built in LTE, it would have like-

• 1:26:02Shaan Puri?

  LTE is a, so wireless, you don't need Wi-Fi?

• 1:26:05Speaker 03

  Built in, yeah, you don't need to, the tethering is all-

• 1:26:07Shaan Puri?

  That sucks.

• 1:26:08Speaker 03

  It has its own SIM chip inside. It has all the right cables. It's a little bit thicker because the battery will last all goddamn day. And it has some type of notable color. I think you'd build something where again, you won't find this, you know, in Mumbai, but you will find this in every single coffee shop in New York City, in San Francisco. And I think that would be quite fun to do.

• 1:26:31Shaan Puri?

  I like this idea. Yeah, that's a great one.

• 1:26:33Speaker 03

  I think it'd be, yeah, to your point about luxury, I think that that would be the real luxury. I think you build a really good operating system. This is where things get a little-

• 1:26:41Sam Parr?

  You would build the operating system and not just use Apple?

• 1:26:43Speaker 03

  Well, you wouldn't be able to-

• 1:26:44Shaan Puri?

  He would.

• 1:26:45Speaker 03

  I think you'd have to use Linux, but I think you could build something really fast where everything was just focused on autocomplete. And again, it would be the type of thing your mom's never going to use, but I think that's okay. I think we can totally discriminate and, you know, build the right software for the right person. The related thing to do is to, I think, to build a brand-new messaging app. And of course, the one point you may bring up is, we spoke about this a little bit with the admin messaging app, but it's directionally kind of the same idea. I think messaging apps are basically like bars. And so even if, like, the feature of one bar over the other bar is, like, the delta's nothing.

• 1:27:22Sam Parr?

  Irrelevant.

• 1:27:23Speaker 03

  They're both gonna serve you the Moscow Mule. But one bar just has a different community of people in it, a different vibe, a different feeling. And so, again, like, I actually think Slack's position is quite vulnerable. Like I mentioned, this stuff moves fairly quickly.

• 1:27:35Sam Parr?

  I hate Slack.

• 1:27:36Speaker 03

  There you go. Why do you hate it?

• 1:27:37Sam Parr?

  I hate it. Oh, my God, I don't have it on my phone. Did you hear when we were talking it was going off? I hate that noise.

• 1:27:43Shaan Puri?

  You hate the constant.

• 1:27:43Sam Parr?

  It's so annoying.

• 1:27:45Speaker 03

  Turn off the noise.

• 1:27:45Sam Parr?

  I have the no noise. It's made so many fights with me and my coworkers because I get reactive.

• 1:27:53Speaker 03

  I find it, so don't you, I don't know if you have this experience, sometimes I'll come by, I'll sit by a colleague's desk, and they have Slack on with the notifications and the dings on every single message.

• 1:28:03Sam Parr?

  Ah, it's horrible. And then I got Messenger up, and then I got texting. So I'm texting him, I'm writing to this other guy, and I'm, oh, fucking hate it. I hate Slack. I wanna get rid of it.

• 1:28:12Speaker 03

  Well, so, speaking to Counter Culture, that's, I don't think you're alone.

• 1:28:15Sam Parr?

  Email is, I think, better because you have to, you don't write like a, "Hey, you there?" Or like, "Are you awake? Like, let's talk." Like, you can't really do that in email, it's more thoughtful. I can't stand email, or Slack.

• 1:28:30Speaker 03

  I mean, that's very interesting. So, maybe we can envision...

• 1:28:34Shaan Puri?

  I don't have it on my... Thanks to this week's sponsor, Slack!

• 1:28:40Sam Parr?

  Even if it was, I wouldn't care. That's not what we do. But I, uh...

• 1:28:44Speaker 03

  That's real sponsorship, right?

• 1:28:46Sam Parr?

  I, uh, I'll, I could, we, I would endorse it because we've paid them a lot of money. I mean, and there is some cool stuff about it. But, um, I fucking hate Slack, and I don't wanna use it ever. I don't have it on my phone.

• 1:28:58Speaker 03

  I don't think you're alone, by the way. One lens on how to kind of do startup ideas is really just focus on the kind of, the availability cascade, if you guys are familiar with that, or the meme that's exciting. Like, I think if you, if... A simple way of thinking about this, maybe, or a better way of thinking about this is, what is a good stand-up comedy joke? Like, I think if you went up on stage and you said, "Who here hates Slack?" "Don't you hate it when Slack sends you the..." Everyone's laughing. And so there's something there. There's a lot of drive there.

• 1:29:28Shaan Puri?

  There's truth there, yeah.

• 1:29:29Speaker 03

  And I think you can light it up on fire. And so what would this be? So maybe the messaging app is called, like, Quiet. And, yeah, maybe you need to send things longer form. I don't know exactly what it is, but you can take advantage of that energy somehow.

• 1:29:42Sam Parr?

  I have a hard issue coming up with those product ideas. Those are, I think, are hugely challenging. Like, when I think of how they create Slack, I'm like, man, creating that from scratch is challenging. Whereas creating something else that's a slightly better version, like, we were talking about Sweet Greens earlier, and I was like, oh, I could totally see how to... That's so easy to make. Envisioning software from scratch is so challenging.

• 1:30:06Shaan Puri?

  Well, there's a difference, right? So we talk a lot on this podcast about two types, two types of businesses, but we use them interchangeably. There's businesses in the traditional sense, and then there's, like, startups, which end up trying to be hyper-growth, dominate their market. You know, the goal is monopoly, and the outcome is, like, multi-billion dollars, right? I would say that for you and your world, you're geared to... The YC world, it's all geared to focusing on these hyper-growth startups, as most of Silicon Valley should be, and it's very exciting. And then there's, like, you know, we have friends that go on Flippa and will buy a shitty FBA business and be like, "Oh, let me double the prices." And great, I turned a $1 million business into a $2 million business.

• 1:30:46Sam Parr?

  But they'll have, like, 10 of them.

• 1:30:47Shaan Puri?

  Yeah, and they'll do that five times and whatever. It's very... It's just two different worlds. I like them both.

• 1:30:52Sam Parr?

  I like them both, too.

• 1:30:53Shaan Puri?

  We gotta call them what they are.

• 1:30:54Sam Parr?

  He told... He said it took two or three or four years for Ivan, I think his name is, to make Notion. I'm like, fuck, I couldn't even imagine where to start.

• 1:31:01Speaker 03

  It's very different, yeah. I think that's a very good distinction. Really, the main thing going on here is, yeah, I think you put it very well. Startups are, once they work, just meant to grow at a much faster clip. You know, we talk about 5%, 10% week over week, non-stop relentless growth. Whereas traditional businesses... I mean, they may start that way, but they usually asymptote over time. And both are fine, right? And the thing the startup world needs to be careful of is venture funding is the incorrect financial instrument for most businesses. And I actually think there's a lot of founders that made the mistake of taking venture funding,

• 1:31:45Speaker 03

  where they would have been much happier off taking debt funding from a bank, owning much more of the business, and just leaving an amazing life that many founders would secretly wish they have, of just like, you know, I have a thing and it minced, you know, $10 million of free cash flow a year, and that's kind of it, and I own it, goodbye. Startups, you know, are a thing where owning 2% of it should be, you know, enough to never work again another day in your life, because it really has to achieve tectonic scale for it to work.

• 1:32:15Sam Parr?

  Did your search engine grow like that?

• 1:32:18Speaker 03

  In many ways, yeah, it did. We faced this interesting challenge, which is it's a very...

• 1:32:26Speaker 03

  The way we rented our startup, all of our... The entire search engine was hosted on AWS, on Amazon's cloud services. It became really expensive to run. And the way it runs on your iPhone today is it runs on your iPhone. So it's much more efficient, if that makes sense.

• 1:32:46Speaker 03

  So we came up with a terrible business model, we ended up selling, obviously. You know, I think we could have crafted the company in other ways and potentially taken it to greater heights, but yeah, I mean, it was my first rodeo, and so by no means did I know how to run a P and L properly. I'd imagine your audience was probably better than me at, you know, properly running a P and L, because I was very capable of taking all the venture money that we had and sending it directly to...

• 1:33:13Sam Parr?

  Amazon, right? A broker.

• 1:33:19Speaker 03

  I mean, yeah, the real, um, literal rent seekers, by the way, that are basically taking venture capital money uh, nonstop, uh, and not producing much societal value with it are, um, landowners in San Francisco. That's really where it's, uh, the, the.

• 1:33:34Sam Parr?

  What I, my bet is I'm buying multifamily units in fast-growing B, B, C and B cities like Nashville, things like that, because I think that remote work is gonna change everything.

• 1:33:45Speaker 03

  Yeah, remote work, that's an interesting one. Um, certainly, I, I mean, I think you went the other way because whether it's remote or whether it's other startup hubs, um, I don't think we'll be able to pop the blister of San Francisco. So it's clear that the pressure is gonna go elsewhere. Um, uh, I think it'll be interesting to see how many companies are successful.

• 1:34:06Shaan Puri?

  That's one of those, by the way, reverse network effects. If, uh, if the, if the tide shifts and people from here leave, but go to a single destination rather than dispersing.

• 1:34:15Speaker 03

  It, it, it'll happen quick and people forget, but like, it is very clear that the decade of 2009 to 2019 was the decade of San Francisco. Um, but like prior to that, it wasn't SF. All the cool kids were in Mountain View, all the cool kids were in Palo Alto. And what really happened is there was a point, a tipping point at about from 2000, I think actually 10 to 2012 maybe, where it all very quickly moved to SF, um, because Airbnb was here, Dropbox was here, and then Stripe moved here. And Zynga, later on, maybe Pinterest. Um, and because they, they all moved and they became unicorns, people just assumed, oh, okay, Mountain View pretty much gone back to SF.

• 1:34:58Speaker 03

  But it could tilt very easily again. It could tilt to like Redwood City, it could tilt to Austin, it could tilt to London.

• 1:35:04Shaan Puri?

  So if you were a city, what would you do?

• 1:35:05Speaker 03

  Right. It's, so that's, that's funny. I was gonna mention to you guys, the other podcast format that doesn't exist, I think that would be very interesting is in addition to brainstorming ideas, if you are the CEO of X, what do you do? So if you're Evan Spiegel, what do you do?

• 1:35:19Shaan Puri?

  Right.

• 1:35:20Speaker 03

  So you're asking, yeah, if you're the mayor of a city, what do you do?

• 1:35:22Sam Parr?

  Or we get Evan Spiegel and say, if you're the CEO of this company, that.

• 1:35:27Shaan Puri?

  Hey CEO of X, if you were your competitor CEO, what would you do?

• 1:35:30Speaker 03

  It's an interesting test question. So like, what do you do, by the way, if you're Mark Zuckerberg right now?

• 1:35:36Speaker 03

  What do you do?

• 1:35:37Sam Parr?

  Fucking retire, fail, like hide.

• 1:35:40Speaker 03

  Yeah, I mean, the guy is knee deep in a video game. He's not shutting it down right now. Anyway, to your point, so okay, so if you're the mayor, I think, let's, let's take the, the most difficult version of this question. Like, you're the mayor of a small town, literally nowhere, but you're a really good mayor. Cause London's kinda easy.

• 1:35:57Shaan Puri?

  Land or Wyoming?

• 1:35:58Speaker 03

  Yeah, exactly. What do you do? Um, so I think you need, I think the way this, so, so, so, you know, a lot of people will say, wow, you know, first you gotta bring in the money and then everything will follow. Wrong, in my opinion. Um, I think the money pretty much follow, venture capital money at least follows wherever the startups seem to be emerging from. Venture capitalists, they're like water. They'll take the shape of, exactly, of whatever cup they're, they're being molded against. Um, so you have to very quickly get to a point where you can say, oh, we are a startup hub. Look at X and Y and Z. So how are you gonna get X and Y and Z? Um, uh, in many ways, it's the strategy Andreessen Horowitz took. So Andreessen Horowitz is the largest newest venture capital firm to come out of Silicon

• 1:36:42Speaker 03

  Valley, really the only successful kind of mega launch in the last decade. And what they did is to get big quick. Um, the testosterone they took, the human growth hormone they took, is they did a call buy the brand strategy, where he went out of the gate and he put up on his website, um, you know, Skype and Facebook. I think they bought secondary in both companies, which is not too far from me saying, ah, welcome to my venture capital fund.

• 1:37:07Shaan Puri?

  I've invested.

• 1:37:07Speaker 03

  Apple, Google.

• 1:37:09Shaan Puri?

  Amazon.

• 1:37:10Speaker 03

  Yeah, exactly. Um, cause I own equity in those companies. Um, that I mentioned, I bought it last quarter, but, uh, nothing to see here. So I think if you're a city who try to do that, and so what you try to do is you try to, you call up, maybe Stripe is too big, but you know, Stripe three or four years ago, and you say, look, you guys will move.

• 1:37:27Shaan Puri?

  Hey, Airtable.

• 1:37:27Speaker 03

  You're gonna make your main engineering office here.

• 1:37:30Sam Parr?

  We had, I had people who recruited me and tried to do that. Bend, Oregon. They did the exact same thing. They flew me up for free and hosted me for five days.

• 1:37:36Shaan Puri?

  And the pitch is what? Okay.

• 1:37:38Speaker 03

  Okay, so you're gonna make, what you're gonna call your engineering capital here, I don't care if you have larger engineering offices elsewhere, we will, um... For go taxes for you for, I don't know, five years, whatever, forever. And housing for your employees and, I don't know, some, well, I think if you gave companies the ability to control and truly build a campus, especially those that have been dealing with the legendary California regulation kind of department and environment, and you tell them, "Look, we'll just work with you and move quick here," you'd be done. If you really want to light this on steroids, the really crazy thing to do would be to do some type of special economic zone. I mean, that's how nations think about this stuff. You set up

• 1:38:23Speaker 03

  a special economic zone, and you can actually do interesting stuff here. That's a little, like, a lot of this stuff is federally regulated, so like, if you wanted to make-

• 1:38:30Shaan Puri?

  So which means what? It's not a taxation thing. You're talking about you can, it's more like Zooms-

• 1:38:34Speaker 03

  You're left and right all day, you know, up and down in the air. Basically, the internet, you can think of the internet as the ultimate special economic zone, where you can do whatever the heck you want, pretty much, on the internet, but when the physical world is a little bit harder to do. So, for example, the airspace is heavily regulated. There's a lot of things in biology that are heavily regulated, a lot of things in chemistry that are heavily regulated. Now, we've kind of gone from, "What should the mayor of a city do?" to like, "What should Kyrgyzstan do?"

• 1:38:59Shaan Puri?

  Right.

• 1:38:59Speaker 03

  "What should a country do?" But if you had a special economic zone where you could do more experiments with CRISPR, you could fly weird planes, you could really advance the frontier there, and that would attract a lot of founders.

• 1:39:10Shaan Puri?

  Self-driving cars that don't work yet. Let's go. Bumper cars.

• 1:39:15Speaker 03

  Yeah, of course. You know, you read research about, you know, America and its kind of frontier, yeah, 1960s, 70s, and to some extent, the 80s, there was a lot of this kind of squash-buckling style of research. Literally, every single artificial sweetener that exists today has the same origin-discovery story, which would never happen in modern-day world, which is scientists working on some other drug, like, trying to develop something else-

• 1:39:41Sam Parr?

  Like, "Oh, it's sweet."

• 1:39:42Speaker 03

  "Oh, lick their finger, and it's like, 'Oh, that tastes good. That tastes sweet. That's interesting.'" And so, we have Aspartame, and so, we have sucralose, and saccharin. It's the same discovery story. And so, things used to be-

• 1:39:55Sam Parr?

  Same with LSD, I believe.

• 1:39:56Speaker 03

  Alfred Hoffman literally, like, drank it, like, a Diet Coke one day. The microwave itself, by the way, the microwave itself was a way to kind of heat up food. I'm forgetting the name of the guy, but he's basically walking around, chocolate bar in his front-

• 1:40:11Sam Parr?

  Yeah, melted.

• 1:40:12Speaker 03

  And it melted. By the way, always important to keep the chocolate bar in your front pocket. And it melted. By the way, you know what else was melting? His heart, probably. But this used to be the way we, you know, we ran research, where things were a little bit more kind of.

• 1:40:28Shaan Puri?

  Fast and loose.

• 1:40:29Speaker 03

  Yeah, fast and loose. And so I think if.

• 1:40:31Shaan Puri?

  So this is like for crypto, when crypto took off in Zug, Switzerland, whatever that is, I don't know, I've never been, but they were like, yeah, crypto, we love it.

• 1:40:39Sam Parr?

  And Iceland, I think.

• 1:40:40Shaan Puri?

  Right?

• 1:40:41Sam Parr?

  I think Iceland, too.

• 1:40:42Shaan Puri?

  Yeah, but I just remember like, where is the Ethereum Foundation? Zug. Where is this new ICO happening? Zug, why? Because like, free shelter for all of you crazy crypto kids. And like, you know, it brought innovation, because those were, that's, that's the edge that those people were on. And, you know, an incumbent did not want to take additional risk, but a challenger would take that risk.

• 1:41:03Speaker 03

  I think it's very interesting to apply the models that we think of, that we think of so clearly for like companies, but to cities and to countries. And, and, and they're not always the same, but there are some similarities there where, um, yeah, I mean, SF is basically an incumbent city. It's very risk averse, moving is slow. You know, kind of New York with all of its dynamism, somewhat similar. I was reading the other day, okay, I was reading the origins of HBO. Which started out as a company laying cable underneath Manhattan. And they're laying cable at, you want to guess the cost per mile?

• 1:41:39Sam Parr?

  I have no idea.

• 1:41:40Shaan Puri?

  I won't even have a range. I don't know.

• 1:41:42Speaker 03

  Okay, so they're.

• 1:41:42Sam Parr?

  Cost per mile? Millions?

• 1:41:45Speaker 03

  Okay, so he's laying cable at $300,000 per mile, which inflation adjusted is about $1.8 million per mile. If you tried to do this in Manhattan today, I guarantee you probably can't do it, but even if you could, it would literally be 50 million.

• 1:42:00Sam Parr?

  Well, Google bailed on it because they're like, even this is too expensive.

• 1:42:04Shaan Puri?

  Well, this was with Elon with the tunnels, right? He's like, look, the tunneling today costs, I don't know, whatever it was, $100 million a mile. That's ridiculous. There has to be a better way.

• 1:42:13Speaker 03

  Yeah, I find the most.

• 1:42:15Shaan Puri?

  Wait, what are you getting at?

• 1:42:17Speaker 03

  The thing I was getting at is, well, there's general kind of cost disease that everyone in the US, but like, that's in many ways, because it's kind of an incumbent city. People are risk averse. It's harder to change things once you set that.

• 1:42:31Shaan Puri?

  Got it.

• 1:42:31Speaker 03

  When Manhattan's kind of originally getting started, I mean, Chicago itself, the city, I believe late 19th century, literally the entire city was lifted three inches into the air so that they could build a sewage system and then like put back down again. Building by building, block by block by block. You cannot do that, I think, today in any modern city, but you can do that in the kind of early-stage Chicago. So cities in many ways are like startups. And you know, in early-stage startup, it's kind of hard to compete with on speed. They're moving quickly, they have no state, whatever. Large city, like a large organism, in many ways like a large human body, like you develop a lot of cells and it's just like harder to do new things.

• 1:43:11Shaan Puri?

  Right.

• 1:43:13Speaker 03

  So, yes, special economic zone, I think, would be the real tricky thing to do as a city. But I think going all the way back, pulling the stack all the way back, your idea of just buying property in other cities is quite good. And I think the related kind of interesting startup ideas, what is other? If you have the money to buy real estate, that's easy. If not, I think there's a lot of other kind of adjacent stuff you can be building within those cities to prepare for the, how would you say, San Francisco going from like the sole capital of startups to one of many.

• 1:43:47Speaker 03

  So.

• 1:43:49Shaan Puri?

  Dude, that was great. Daniel Gross for president?

• 1:43:51Speaker 03

  Yeah.

• 1:43:53Shaan Puri?

  For mayor.

• 1:43:53Speaker 03

  I think I could do it. I wasn't born here. Born in Israel. I'm a citizen, but I wasn't born here, so sad.

• 1:43:58Shaan Puri?

  So was this what you expected?

• 1:44:00Speaker 03

  Uh, yeah, yeah. I didn't realize.

• 1:44:06Speaker 03

  And I'm in fact happy that this was gonna have the shape of like very tractable startup ideas. That's very kind of inspiring to me. I think you stay in San Francisco for too much, you get stuck with... I spent a lot of time trying to tell people, you know, "Stop trying to do this like crazy, highfalutin, intellectually pleasing idea. Just build a goddamn website that does 10K MRR and call me afterwards."

• 1:44:34Sam Parr?

  Well, that's step one. The high-end stuff is like, "Cool, worry about that at step 15."

• 1:44:39Speaker 03

  Yeah. Or even, I actually think it's fine to have a big dream. It's just like, "What are you doing day one?"

• 1:44:45Sam Parr?

  Right, that's what I mean.

• 1:44:46Speaker 03

  Yeah, I think that's right. And I think the problem that a lot of people get caught in is, at the end of the day, like the interesting question, I think, for every single person that I at least ask myself in my head when I meet people is, "Look, who are you performing for? Who are you trying to please at the end of the day?" And the problem in SF, the strength of the culture is the weakness, which is that a lot of people are performing for kind of intellectual approval from the elders of the community. You know, "I want to be known as the person who's working on the space satellite thing." And a lot of those people get stuck in a black hole where they don't produce anything, which is of course the real way to get approval, but they kind of produce status

• 1:45:27Speaker 03

  in the form of Twitter likes and whatever. And the problem with status is that it's infinite. So it's very easy for me to give you a like. It costs me almost nothing. It's much harder for me to give you money. That's why I think at the end of the day, revenue is a much healthier thing to chase, because that's how you know you're creating something really useful for people. Chasing status, you don't really know if it's valuable or not. "Oh, good, you know, Paul Graham liked my tweet." That didn't cost him anything. Try to get Paul Graham to give you $100 for a thing you made.

• 1:45:55Shaan Puri?

  So what's your answer to that question? Who are you performing for?

• 1:45:59Speaker 03

  For me. You mean, I don't know. I think it kind of shifts. I mean...

• 1:46:03Shaan Puri?

  Early on, who did you perform for?

• 1:46:05Speaker 03

  Look, well, I'll tell you the... So although I grew up in Israel, you know, was kind of born online, a child of the internet, was reading a lot, and... I remember I came to Silicon Valley, I was 18 and I met, I had, I met Mark Zuckerberg for the first time, he came to speak somewhere. And I viscerally remember kind of minute by minute that entire evening because I felt like I was experiencing my entire brain reform itself because I had gone from Mark Zuckerberg, I mean, it's basically not human as far as I can tell from Israel, to, oh my God, this guy's sitting in a room and, oh my God, he's just okay.

• 1:46:50Speaker 03

  It's actually-

• 1:46:51Sam Parr?

  That's the greatest thing that's ever happened to me about moving to San Francisco. Same exact thing.

• 1:46:55Speaker 03

  And you think, you're human.

• 1:46:57Sam Parr?

  Yeah, I'm like, you're smart. You're not that much smarter.

• 1:47:01Speaker 03

  I do think you are too.

• 1:47:03Sam Parr?

  Yeah, you're like, you're smart, but it's like the same thing that when you grow up-

• 1:47:06Shaan Puri?

  The phrase is, don't meet your heroes because people say you'll be disappointed. I had the exact opposite reaction, which is absolutely meet your heroes. You'll realize that they're not superheroes.

• 1:47:14Sam Parr?

  It's why a lot of professional athletes come from one neighborhood, or why the four-minute mile, three guys broke it in a couple of months.

• 1:47:23Speaker 03

  Yeah, by the way, I'm forgetting the name, of Bannister, when he broke it, I don't, the story is amazing, he was literally like, had a bunch of work at university, ate lunch-

• 1:47:33Sam Parr?

  He only ran 35, 40 miles a week.

• 1:47:36Speaker 03

  And then was like, yeah, I'm gonna, I'll go take another stab at this, broke it, broke a four-minute mile, and then went back to class afterwards. Anyway, sir.

• 1:47:44Sam Parr?

  But you're, you're, yeah, yeah, I completely agree with that. I've met a lot, I've had a lot of my heroes actually invest in our company and I talk to them and sometimes they'll ask me for advice and I'm like-

• 1:47:54Speaker 03

  Yeah, wait a minute, you're Richard Branson, why are you talking to me?

• 1:47:57Sam Parr?

  I'm like, what are you, what are you, what are you doing?

• 1:48:00Shaan Puri?

  The best one is when you and the Pandora guy, you went to go get a haircut together.

• 1:48:05Sam Parr?

  Yeah.

• 1:48:06Shaan Puri?

  That was awesome.

• 1:48:07Sam Parr?

  Yeah.

• 1:48:08Shaan Puri?

  So I want you to finish the loop on this. The question I like, which is who are you performing for? So early on, you were performing for who and then what do you think's the right answer now? Like, something that people can, because I think everybody, if they answer that for themselves, the first answer is kind of the embarrassing one, which is, you know, some people perform for their parents, they crave their love, some people crave the love of their boss, their manager, their friend who's more successful, their mentor, whatever it is.

• 1:48:30Speaker 03

  I find-

• 1:48:31Shaan Puri?

  What's the answer?

• 1:48:32Speaker 03

  Yeah, what's happened for me is, it's kind of-

• 1:48:37Speaker 03

  I mean, it shifts over time. There's... My goal, my dream, for myself, is I really care little. In fact, I would prefer not to be known by the masses. I really struggle with, I mean, in all honesty, I'm, you know, I'm kind of walking on the way over here, psyching myself up, even for just a podcast like this, because I don't like the attention of the masses. But there are kind of a few people in my world that I think have been very successful, you know, Moritz, as we mentioned, is one of them, that I very much kind of look up to. And it's the way I benchmark myself as a human, in terms of like whether my career at least is going in the right place, is I think, you know, what would they think of kind of where I stand, where I am?

• 1:49:20Speaker 03

  But it's very much not the masses, very much, you know, the few. And I think it would do well for everyone to figure out who that is and to realize, okay, here's the most important thing, to realize that the correct way to... Like, you have to figure out what type of performer you are. If the way you're going to perform is through like tweeting or sending people ideas, like that's one thing. But I think the correct way to perform, and the reason I know this is when I think of people that I find interesting, what I find interesting about them is their career success. It's not that they wrote a really nice tweet, or that they sent me a joke, or a cute thing on WhatsApp, it's that they've made a successful thing. They're captains of a successful ship.

• 1:50:03Speaker 03

  And so, like, my performance, if you will, you know, is the work that I make, are the investments that I make, is pioneer. And so that, I use that as my north star, and that is, I think, the important part of the conversation. It's like, regardless of who you're performing for, your performance should hopefully be, you know, I think, in a thing that plays in the world of money. Again, because money is scarce, and so that's how you really know that the thing you're doing is useful, important, and interesting.

• 1:50:35Shaan Puri?

  More action, less captions, basically.

• 1:50:37Sam Parr?

  You just make that up?

• 1:50:38Shaan Puri?

  That's a Drake line.

• 1:50:39Speaker 03

  Yeah, okay.

• 1:50:40Shaan Puri?

  But.

• 1:50:40Sam Parr?

  Nice.

• 1:50:41Shaan Puri?

  If you didn't know that, you could attribute it to me. I recognized the greatness of that line and brought it up. I like that. Hey man, we're gonna wrap up because we went way over, but it was good. So I know you don't want the attention of everybody, but where do they follow you? Check out Pioneer if that sounds like something you're interested in.

• 1:50:57Speaker 03

  Yeah, okay, so I think the easiest top level like thing to find that will give you links to everything else is just on Twitter, Daniel Gross, and then Pioneer is pioneer.app. One day we'll buy the dot com.

• 1:51:10Sam Parr?

  Who owns it?

• 1:51:11Speaker 03

  The Japanese company?

• 1:51:13Sam Parr?

  Speakers?

• 1:51:13Speaker 03

  Yeah, the speaker guys. So it'll take a while.

• 1:51:15Shaan Puri?

  Got some ways to go.

• 1:51:17Speaker 03

  Exactly. Good, so it's a good goal. And then, yeah, I'm scattered on the internet. Everything's linkable. But I thank you so much for having me on. This was a lot of fun. I mean, for me, it was quite interesting. Maybe the listeners will experience this too. I felt like, it's always funny when podcasts start, there's like, I almost feel like it's the first few miles of a run when you're a little bit.

• 1:51:38Sam Parr?

  Yeah, you get into it after about 20 minutes.

• 1:51:39Speaker 03

  And I don't know what that is, that warming. But anyway, I felt like it happened, so.

• 1:51:43Sam Parr?

  Thank you.

• 1:51:44Shaan Puri?

  Yeah, there's a, I bet this dude, he gave me this great insight. He goes, there's two types of friends. There's friends that you consume with, and this is how most of your friendships are. You go watch movies together, you eat food together, you're just consuming stuff. And he's like, but the best friends I have, and this was true for me too, is the ones you create with. He's like, the simplest version of creation is just a conversation.

• 1:52:07Speaker 03

  Yes.

• 1:52:07Shaan Puri?

  Which is, you know, what this is essentially. But like people you start companies with, teams you're on where you create like a culture and, you know, you go and you play games, whatever. And those end up being the strongest and best friendships that you end up having. And so, so find friends that you create with, not just consume.

• 1:52:22Speaker 03

  I think that's wonderful advice. And I'm gonna hit.

• 1:52:27Shaan Puri?

  Yeah, we can end it.

• 1:52:27Sam Parr?

  We're gonna end it in a second, I think right now.