Business Breakdown Duel & The Story of Nike's Sonny Vaccaro

Shaan's Free Workshop --> http://bit.ly/3INb6EV Episode 461: Shaan Puri (@ShaanVP) and Sam Parr (@TheSamParr) engage in a business breakdown duel where they dive deep into some interesting businesses. Vote for the winner of the duel in the comments. Plus, the story of Nike's Sonny Vaccaro. Want to see more MFM? Subscribe to the MFM YouTube channel here. Check Out Shaan's Stuff: * Power Writing Course * Daily Newsletter Check Out Sam's Stuff: * Hampton * Ideation Bootcamp * Copy That ----- Show Notes: (00:32) - Biz Breakdown Duel (01:30) - Petex (19:05) - T-shirt company (21:40) - Hims (41:15) - Zuck does The Murph (52:20) - Sonny Vaccaro story ------ Links: * Petex * Andrew Lynch - Net Income * Sacra * Hims * Do you love MFM and want to see Sam and Shaan's smiling faces? Subscribe to our Youtube channel. ------ Past guests on My First Million include Rob Dyrdek, Hasan Minhaj, Balaji Srinivasan, Jake Paul, Dr. Andrew Huberman, Gary Vee, Lance Armstrong, Sophia Amoruso, Ariel Helwani, Ramit Sethi, Stanley Druckenmiller, Peter Diamandis, Dharmesh Shah, Brian Halligan, Marc Lore, Jason Calacanis, Andrew Wilkinson, Julian Shapiro, Kat Cole, Codie Sanchez, Nader Al-Naji, Steph Smith, Trung Phan, Nick Huber, Anthony Pompliano, Ben Askren, Ramon Van Meer, Brianne Kimmel, Andrew Gazdecki, Scott Belsky, Moiz Ali, Dan Held, Elaine Zelby, Michael Saylor, Ryan Begelman, Jack Butcher, Reed Duchscher, Tai Lopez, Harley Finkelstein, Alexa von Tobel, Noah Kagan, Nick Bare, Greg Isenberg, James Altucher, Randy Hetrick and more. ----- Additional episodes you might enjoy: • #224 Rob Dyrdek - How Tracking Every Second of His Life Took Rob Drydek from 0 to $405M in Exits • #209 Gary Vaynerchuk - Why NFTS Are the Future • #178 Balaji Srinivasan - Balaji on How to Fix the Media, Cloud Cities & Crypto * #169 - How One Man Started 5, Billion Dollar Companies, Dan Gilbert's Empire, & Talking With Warren Buffett • ​​​​#218 - Why You Should Take a Think Week Like Bill Gates • Dave Portnoy vs The World, Extreme Body Monitoring, The Future of Apparel Retail, "How Much is Anthony Pompliano Worth?", and More • How Mr Beast Got 100M Views in Less Than 4 Days, The $25M Chrome Extension, and More

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

• 0:00Sam Parr?

  I'm gonna blow your mind. Ready? So Scotland, you know Scotland, you've heard of that country Scotland, right? You've heard of that place?

• 0:06Shaan Puri?

  Familiar.

• 0:07Sam Parr?

  Land of kilts and sheeps, but also-

• 0:10Shaan Puri?

  Redheads, but okay.

• 0:11Sam Parr?

  And redheads, but it's also home to one of the coolest SaaS businesses that I've ever heard of. So it's called Petroleum Exports. They, it's known as Pet Tax.

• 0:30Shaan Puri?

  Let's jump in. We got a bunch of stuff today.

• 0:32Sam Parr?

  We're gonna do what's called a business breakdown duel. Sean and I-

• 0:37Shaan Puri?

  An old western duel.

• 0:39Sam Parr?

  Is that a western duel, I guess? Is, uh, we both did a business breakdown and we didn't know that the other one was gonna do it. And so now we're gonna compare. I'm gonna go first, which gives you the advantage because the person who goes last always usually wins in rad battles. Cause that's, it's always like when you, you know, like when I do, you know, when they do the applause, they're like, person A, person B, and person B always wins.

• 1:06Shaan Puri?

  I get to hear you say your thing and then I can make fun of what you said?

• 1:09Sam Parr?

  Yeah. So anyway, you're gonna, you get the advantage, but that's okay. So I'll go first. Okay. But before I go first, I've got to give a shout out to Andrew Lynch from Net Income. It's a Substack. It's where I, I found, uh, this particular business and I'm, and I'm stealing, uh, a lot of his numbers, but I'm gonna blow your mind. Ready? So Scotland, you know Scotland, you've heard of that country Scotland, right? You've heard of that place?

• 1:34Shaan Puri?

  Familiar.

• 1:35Sam Parr?

  Land of kilts and sheeps, but also I think there's sheeps there. I don't actually know. That's how little I know about Scotland, but also-

• 1:43Shaan Puri?

  Redheads, but okay.

• 1:44Sam Parr?

  And redheads, but it's also home to one of the coolest SaaS businesses that I've ever heard of. So it's called Petroleum Exports. They, it's known as, uh, Pet Tax, Pad Tax. It's a challenging name, I know. And it's a highly technical specialist software crucial for oil and gas operations. You can go to P E T E X dot com to check it out. So pull that up, but Pet, Pet Tax. It's a highly technical specialist software. That's the backbone of some of the most important operations in the oil and gas industry. And it sounds boring and that's because it is. However- They last year, they made 78 million pounds in revenue, which is about a hundred million dollars USD.

• 2:26Sam Parr?

  And on that hundred million dollars in revenue, about 67 million of it was profit. And of that, of that profit, they basically took out all the money. So they paid a dividend of 41 million pounds, which is about 60 million dollars. And that was paid to the owner and it wasn't even retained to the company, which means for every dollar they took about 52 dollars went directly to the, or 52 cents went directly to the owner's pocket. Now, here's the cool part. None of this is rumors. This isn't hearsay. I'm not like telling you, I heard a story. Because in the UK, if you're a privately held company that hits a certain threshold in revenue, you have to submit your reports and you could just log in. It's called Companies House. You can just go there

• 3:09Sam Parr?

  and you could log in, you could see all this information. And so I went and looked at many, many, many years of their data. And I'm going to tell you a story about how this company came to be. So it was started by this guy named, we're gonna call him Abe. His name's Abe. His name, he's, he's a Muslim guy, very, very, very challenging, uh, first and last name. Can you see his name? Can you tell me how to pronounce that? Do you know how to pronounce that?

• 3:31Sam Parr?

  Abdul Hamid is the first name and the last name, but it's very challenging. There's a D and there's a J together. That's a very challenging.

• 3:38Shaan Puri?

  So you are calling him Abe or he goes by Abe?

• 3:40Sam Parr?

  I'm calling him Abe. His last name is, if you look at it.

• 3:43Shaan Puri?

  I haven't met many Muslim Abs, but uh.

• 3:46Sam Parr?

  We're gonna call him Abe. His last name has a D and a J next to each other. I don't even know how to pronounce that sound. So I'm sorry, Abe. He's a, it's a very challenging name to pronounce. So he started the company in 1990. It was based in Al, Al, Aberdeen, Scotland, which is basically like a hub for oil industry. It's kind of like similar to what Houston in America is. And the company originally served as a petroleum consultants for, and consultants to the petroleum industry as well as retailers. And they would create these mathematical models to help people in the, in the oil and gas industry manage their projects. And so today they've kind of pivoted from consulting to providing software. They only have 420.

• 4:29Sam Parr?

  Customers and their core product is composed of complex products which are complex features that with descriptions like a multi-phase network modeling and optimization and thorough dynamics, fluid characterization package. So pretty complicated stuff. So as I said, they started as a consulting business and they did have done 78 million pounds in revenue last year, which is around 100 million USD, 58 million USD in profit and 50 million in dividends, meaning the company doesn't require much capital X. So they made all this profit and most all of it, 58 million profit, 50 million came out of the business and went directly to the owner's pockets. And he's been doing this for years and years and years. Their biggest expense is employees. So because they're

• 5:14Sam Parr?

  based in the UK, they pay UK software engineer salaries, which are lower than the US, making their average all-in cost per each employee, of which they have 86 of them, only 101,000 pounds per year. So the, which means that they are doing 911 pounds, 911,000 pounds in revenue per employee. So nine X, nine X basically ROI per person that they hired. So yeah, this company absolutely kills it. And I want to tell you, when I was analyzing this company, and if you look up Andrew Lynch, his Substack, he does a really good job of explaining the technical details of the company. I want to explain some of the entrepreneurial

• 5:55Sam Parr?

  takeaways that I had. So if you go to the top link, Sean, in our doc, or at the beginning of the story, you'll see the Substack where you can, it's his, Andrew Lynch has a thing called net incomes. And that's where I discovered this. So I want to tell you some of my takeaways. Takeaway one, focus plus time. That's what this guy did. So everyone talks about focus, but what does focus means? You basically, in my opinion, need to focus enough to turn your idea into a machine. And then after that, I think you can deviate some attention away from that if you want, but the company needs focus and that focus took, takes time. So I went back and I looked at a lot of their revenue and so did Andrew. So if you scroll down, Sean, you'll see a graph of the revenue. And what you'll notice is that

• 6:37Sam Parr?

  it took them 15 years to get to 10 million dollars in revenue, 10 million pounds. I'm going to call it dollars, 10 million dollars in revenue. And I know a lot of people, I think maybe you have done this with one of your businesses got to close to 10 million in revenue in like 1.5 or one or two years, actually. And so 15 years, particularly in like the tech internet space. It feels horribly long, but I think that's okay. That's the right feeling. And so what I try to do, something I've been thinking about for a while is I ask myself, in 10 or 20 years, will I be happy if I started this today? And that's a really good quote, but that answer is incredibly murky more often than not. Sometimes it's like a, I think yes. It's a very murky thing.

• 7:20Sam Parr?

  And there's this famous story about Jeff Bezos when he started Amazon. He has this thing called the regret minimization framework where he says this story about he's like, "Well, even though I had this good job, I decided to start Amazon because in 80 years, when I'm 80 years old, will I be proud that I started it today?" The answer was yes, but in that same story, he also said that he thought at most, Amazon could make is $100 million a year. So it's not like he had the full picture. So it was like, yeah, I think this can work. And so I went and talked to Dharmesh, who's the founder, Dharmesh Shah, the founder of HubSpot. I also talked to Kip, who is the CMO, and Kip joined HubSpot in year five. I asked Kip, "How big do you think HubSpot could be?" When he joined, you know, how big did he think? So HubSpot today is worth $25 billion.

• 8:02Sam Parr?

  When I asked him, he said, "I thought it could hit $1 billion in valuation. It's a little bit of a stretch, but I thought we could do $1 billion in valuation." Meaning like, what's that, 80 million in revenue? I don't know how that... Something like that. And then I asked Dharmesh, I go, "How big do you think he could get?" He goes, "Really? I didn't have any idea, but I knew that all I wanted was 1,000 customers who would each pay $250." Which, by the way, this is only $3 million a year in revenue. And I thought that would be a pretty cool milestone. And so the reason isn't always, or the outcome isn't always clear of, is this worth it? Now, the reason this is important is because the biggest pain in business is not just failing, but it's failing slowly and spending like a decade working on something and wasting the most non-renewable resource there is, time.

• 8:48Sam Parr?

  Wasting that time and, I mean, it's significantly worse, I think, than losing millions of dollars a year and one or two years, I think, quitting. And so that's where the, it's kind of an art, it's a skill, it's an intuition, it's talent. That's where all this stuff comes into place. So tactically, what does this mean? Ben Franklin said, "A small leak will sink a great ship." Warren Buffett said, "So you find yourself in a chronically leaky boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks." So the point being, only work on shit as long as your boat ain't leaking. As long as you don't got any holes in that boat. But here's the thing, every early stage company, everything's leaky at first. So I went back to Dharmesh and back to Kip and I go, "Guys, tell me about this.

• 9:30Sam Parr?

  HubSpot right now, your guys' net revenue retention, I don't know what it is exactly, but I think it's like 105%, meaning for every dollar that someone spends at HubSpot now, the next year, they're going to spend a dollar and five cents." And he said, and Chip and Kip, they said a few things, so I'm going to mix it up a little bit, but, or I'm going to kind of interchange with what they said. But I believe it was Kip who said, "Our churn at first was terrible. It was beyond bad. At one point, we were losing 30% of customers on an annual basis." I then asked Dharmesh, I go, "Was your guys' churn really that bad?" He goes, "Yeah, it was definitely really bad. It took about five years in order to like get it to where it was a good place." And I said, "Well, what did you do to fix that?" And he said, "Our goal was not to make customers happy, it was to make happy customers,

• 10:16Sam Parr?

  meaning everything from our branding pitch, marketing, sales, service, everything should be thought out in a process where the outcome was a happy customer. And that meant it was everyone's job. Marketing needs to be reaching better fit customers who are less likely to churn. Sales needed not, sales shouldn't oversell and make sure that they only qualify that these customers will likely succeed, which helps reduce the churn. Products needs to make sure they don't just build new features, but build a feature that reduces churns. And they have to make these features, make sure these features get adopted. And churn is, churn reduction is a team sport. You also have to remember, there's a power law, which is 90% of stickiness will be driven by 10% of the product and company features, and not to add 100 features and instead just find ones that work and double down on those. So the point being, all ships are leaky at first,

• 11:01Sam Parr?

  but hopefully you can figure out a way to do it. And last but not least, my takeaway. $10 a month, it's rarely going to feed a bunch of hungry mouths. So our listeners, including you and I, sometimes I do this as well. I had a $25 a month product. A lot of times what we do is we look for arbitrages or we look for like small little hacks. That's neat. That's all cool. And every once in a while it gives you that dopamine hit. But this company, the reason I like it is, you know how much they charge per year? $300,000 a year for a license to their company. They only have 450 clients. And Andrew in his Substack article, he said something great. He goes, imagine you're running an oil rig that extracts hundreds of thousands

• 11:41Sam Parr?

  of barrels of oil per day. Brent crude is currently, crude is currently trading at $75 per barrel. So every 100 barrel is $75, $7500 in revenue. Your IT guy comes up to you and says, boss, Petax just raised their prices by 10%. I think we could save $3,000 annually. If we switch software providers to another thorough, dynamic, fluid characterization package instead. You tell them to piss off. Don't touch a thing. Just make sure nothing breaks. Amazingly, $3,000 is nothing in the grand scheme of a huge capital intense business. So they put their price up 10% and everyone moves on and goes on before because look, it helps them solve their business. So, or it helps them solve problems in their business. It makes their business better. So this is my breakdown of this company. I love it. I love this company.

• 12:26Sam Parr?

  I love these Scottish guys. Jonathan's giving me a clap. What do you think about this one?

• 12:31Shaan Puri?

  Yeah, Jonathan, you like that one?

• 12:33Speaker 02

  Yeah, that was, you kind of touched it all. You got the opening story with impact and then the three big takeaways at the end. And that like Q and A with Kiff and Dar mesh was a nice touch.

• 12:43Shaan Puri?

  Yeah, that was a good touch. I like how you brought that in. The, um,

• 12:48Shaan Puri?

  there was a bit of a spelling and pronunciation challenge at the beginning, but you overcame that. And I'm proud of you for doing that.

• 12:55Sam Parr?

  You know what I say? So I went to speech class when I was a kid, by the way, and I always tell people, I just got a big tongue. My tongue's real thick. I got a thick tongue.

• 13:03Shaan Puri?

  Some people, I'm big tongued.

• 13:05Sam Parr?

  Yeah, I got, I got fat tongue, a fat, see, I gave it a fat tongue. It's like, it's like, it's like a snail in there. It's like a slug. I got a slug of a tongue. I got molasses in my mouth. I don't know what to say. It's hard for me to say some words sometimes.

• 13:18Shaan Puri?

  It's like the further away from St. Louis a person gets or a company gets, like the harder it is to explain them. That's interesting. You know, I guess two things on mine. Right now I bet there's opportunity to create like, Another pet X, basically, which is with machine learning and AI, you could go into these kind of like old school, big dollar type companies and be like, hey, look, we have the ability to process your data or to give you insights that's going to save you money of like 10% efficiency gain, 20% efficiency gains. And I bet that these opportunities have existed, but the more powerful ML and AI get, the more those opportunities open up.

• 14:01Shaan Puri?

  And the bottleneck is people who even understand what problems exist inside of, you know, some shale gas company or inside of ExxonMobil. And then being able to go sell into them. There was a guy who I met very early on when I was doing my startup. I didn't really know any other entrepreneurs, but there was one guy who also went to Duke. And I wonder what happened to him. I haven't kept in touch, but I think his name was Evan Anderson. And he was building a company that was selling to, it was called Osberg. Yeah, this is exactly right. Let's see what happened with this company. So we were selling to companies that were in Oklahoma. So I was like, whoa, you moved to Oklahoma? And he was like, yeah, this is where my customers are. And I was like, who's your customers?

• 14:43Shaan Puri?

  And it was like all the oil and gas companies that that are in America. And what he was doing at that time was basically quote unquote, big data. Big data for oil and gas. And I was like, that's a great idea. I'm looking at it now. He's still there as CEO 14 years later. So I bet this company has been been pretty successful. And I was like, I would check in with him and be like, you know, what's the challenge? And at this time I'm working on a sushi restaurant chain. And he's like, you know, I'll spend six months just courting the right guy, the right suit at this, at this company. I gotta take him to, you know, a football game. I gotta invite his family over. We gotta get to know him. We gotta get him comfortable with this, you know, the software. But once I get, once I close that deal.

• 15:26Shaan Puri?

  These deals are going to be worth millions and millions of dollars over time. They're never going to rip us out once we get in. And so I'm curious how this company is doing today, but I know that, you know, 15 years ago, I was like, this is a great idea. And I just, I intuitively knew it because I was like, the same effort it's taking me to do this silly sushi restaurant thing. He's spending the same amount of time. He's just working for a much bigger prize with much more defensibility and a much clearer value where he's going into an industry that's like never had, you know, doesn't have this, this sort of software capability. He's like, I will sit here until I understand your problems and then I will build solutions for this. And I just love that approach.

• 16:09Shaan Puri?

  I think that's a like, if people are willing to kind of like eat shit and go outside of their like kind of comfort zone of problem areas, they understand there's pretty big opportunities.

• 16:19Sam Parr?

  Yeah, and it's cool. Did you see this graph from Andrew Lynch of this company's revenue?

• 16:24Shaan Puri?

  Yeah, I mean, this is like a perfect hockey stick, but over a long period of time.

• 16:28Sam Parr?

  Over a really long period of time.

• 16:29Shaan Puri?

  I mean, that's the thing you talked about, like this 15 years to get to 10 million. You know, respect for continuing and making it all work. That's not for me. What's the Mois quote?

• 16:41Shaan Puri?

  Why does everyone make fun of getting rich quick? It's the best way to get rich. And I'm going to tell you about a company in a second here that said in their first week, they did a million dollars of sales and never went less than that from their.

• 16:53Sam Parr?

  And you think that that's not true, correct?

• 16:55Shaan Puri?

  I think it's, I think it's a lie, but.

• 16:57Sam Parr?

  I love a good lie. I love a good lie. Tell me about this. Give me a good lie.

• 17:02Shaan Puri?

  People underestimate how much of startup stories are just lies. Okay, so here's my, here's my business breakdown. I see your duel and I raise you. In my head, by the way, we were doing an old fashioned Western duel, but now I decided it's American gladiators and you're laser and I'm blazer. And we're going at it on the joust.

• 17:20Sam Parr?

  That's so.

• 17:22Shaan Puri?

  This morning I was thinking about.

• 17:25Sam Parr?

  Who's lying out there?

• 17:26Shaan Puri?

  Who's lying? Men's problems. Slow, slow, slow, slow, slow, slow, slow, that way. Okay, so most people have heard.

• 17:33Sam Parr?

  Wait, you got a little, you got a little situation? Is that the issue? You got a little situation?

• 17:39Shaan Puri?

  No, no, no, no, that's not how we got. Actually, here's the, here's the actual train of thought. I was thinking about these T-shirt companies, a little segue here to tell you how my brain works. So I think about these T-shirt companies. I don't know if you've seen this, but basically in the last kind of like four years, there's been a bunch of companies start, started that succeeded, that did the most obvious thing. And I've seen this happen again and again, that there's these windows of time where big ideas are just hidden in plain sight. And so basically in the last four years, a bunch of companies have started that do such a simple thing. They just sell basic, plain men's T-shirts. And these were the big D to C ideas. So like anybody who wanted to do e-commerce or drop shipping or D to C, build a brand.

• 18:25Shaan Puri?

  The opportunity was sitting right in front of everybody. It was just men's T-shirts. So you have cuts, fresh, clean tees, true classic tees, built basics. All of these companies that in the last sort of four year window have built hundred million dollar plus companies. So some of them do about 50 million a year in sales. Some of them do a hundred or a hundred fifty million dollars a year in sales. So this, this kind of range, but to go in like a three year period to get to 150 million in sales, that's what true classic tees did, is just bananas, to be honest. And so I'll tell you the, the numbers for true classics. So year one, uh, let's see where they go. So they go, okay, year one, 15 million, year two, 90 million, year three, 150 million

• 19:10Shaan Puri?

  in top line revenue. And, um, and they did it all through Facebook ads, selling plain, you know, white, black, blue men's T-shirts. And that's the same thing, I think fresh clean tees is somewhere like 50 million, north of 50 million in revenue. Uh, I think cuts is over a hundred million.

• 19:29Shaan Puri?

  It's crazy that these companies all scaled so fast doing this such an obvious thing. Whereas there was no massive innovation. And so I was thinking about this, I was like, man, there's these windows of time. And then I thought about what are other windows that I've seen like this? And I stayed in the e-commerce world and I thought about, oh, back in 2017, both Roman and Hims launched doing basically the same thing. And they launched within like a couple of months of each other. Basically, people had the same idea at the same time and both of them became billion-dollar-plus companies doing the same thing. What they did was, you know, I guess the summary is they took advantage of a, what do you call it? An inflection.

• 20:08Sam Parr?

  Sam Lowes. Regulation inflection in this case. Well, this was. Regulation inflection.

• 20:13Shaan Puri?

  This was a regulatory inflection. And so what happened was there was proven market demand for drugs like Viagra or Propecia or Rogaine. And so hair loss or erectile dysfunction, there was a proven like business there. And they started like in the early 90s. And so by 2017, the patents expired for those. And when the patents expired.

• 20:34Sam Parr?

  Have you ever taken a Viagra or anything like that?

• 20:37Shaan Puri?

  Haven't, have you?

• 20:38Sam Parr?

  No, but if someone told me it's awesome, I would. But I've never.

• 20:43Shaan Puri?

  It's awesome. Go.

• 20:47Shaan Puri?

  So, so the patents expired and basically now there was like generic versions of these. And so what, and at the same time, there's another regulatory inflection, which was that telemedicine was becoming more and more things were getting opened up for telemedicine, meaning you could prescribe drugs without going to the doctor. So drugs without a doctor was a key kind of like just, you know, frame, framework for this type of business. And so they both launch and the Hims guy says, this guy Andrew Dudum, he goes, we launched and in our first week, we did a million dollars of sales and we've never done less than a million since then. I was like, wow, that is incredible. And it is true that him scaled really quickly.

• 21:27Sam Parr?

  So their revenue. A million a week. So he said they never did, he said they never did less than a million a week after launching?

• 21:33Shaan Puri?

  Yes.

• 21:34Sam Parr?

  Oh.

• 21:35Shaan Puri?

  Is that, and I was like, that's insane. I was thinking about that because I was like, I've launched many things. The first week is. You're talking about patching holes on a boat? That's how the first week is. It's like you don't even have inventory. You don't have, you don't have a million dollars of inventory. You don't have like to do a million dollars. How much are you spending in ads? Did you just blast like half a million dollars of ads in your first week? Facebook ads doesn't even let you ramp up that quickly. So I was a little bit suspicious of this and the revenue did ramp quickly. So they launched the very end of 2017, 2018, the full year. They did $27 million in revenue with $27 million in ad spend. So they spent 100% of revenue on ads. So they burned a bunch of money.

• 22:17Shaan Puri?

  2019, they did, they went from 27 million to 83 million and they spent 50 million on ads. 2020, they were forecasting about 140 million. And then I have the actuals. So look, check out this revenue growth. It's pretty insane. 2021, they did 270. 2022, they did 540. 2023, they're projecting to finish at 800 million in revenue. So this is a pretty crazy run in what? Six years to ramp up to 800 million in revenue. So they could get to a billion in revenue in seven years. Exactly. They're burning money this whole time, even now, even at 500 million last year. They only have 2% EBITDA margin and that's the adjusted EBITDA. The real, they actually burned 10 million, but the adjusted is that they, you know, they, they, they made a, a small 2% margin.

• 23:02Shaan Puri?

  And so super capital intensive, they raised like 200 something million dollars before going public. And then in going public, another 200, 300 million dollars went into the business, I think. And so it's taken them a lot of capital to get here. So I would say three things. Amazing story, just in general, like props to them for pulling this off. Like they, they built this out of an incubator. I ran an incubator for six years and couldn't get one thing to even 10 million in revenue. And they, this was like a big hit that came out of a, a incubator, which is very, very rare. Ro, Roman, which is now rebranded Ro, also came out of an incubator at the same time. So the two biggest incubator hits were sort of the, these two companies that did the same thing essentially. One did it for hair. So I think, uh, Hymns did it for hair,

• 23:47Shaan Puri?

  hair loss, and Ro did it for ED, and then they both just added the other product as they went. Um, so impressive in that way. The revenue growth impressive. The ad spend and the money burned incredible. I now question, is this even a good business? So like, they basically showed that their, their CAC, so their cost to acquire customers, uh, is really high. Like their cost to acquire customers is basically, what do I have it here? It's like a hundred plus dollars to acquire a customer. Let me grab it. Um, I think it's like a hundred fifty dollars on average to, to acquire a customer. The lowest it's been is like a hundred dollars to acquire a customer. And, um, they basically think, they think

• 24:28Shaan Puri?

  they three X their money in three years, which is actually not very good for Ecom. Like my Ecom business, which is nowhere near the scale of this, is way more efficient than this. Like they're trying to pay back essentially, you know, a little over a year. Uh, we try to pay back in, in two months. And so like, you know, it's amazing what just pure aggression, uh, they approached this business with. They were just like, yeah, we're gonna scale this thing and we're gonna pour a bunch of money in. We're gonna burn a bunch of money, but we're gonna ramp up and like, we're gonna try to thread the needle to get this business to work when it's at the billions in, in, in scale. And, um, they kind of pulled it off because they went public with VS pack and they got liquid before the business really worked.

• 25:11Sam Parr?

  This week I had to chop down a tree at my farm and I didn't have an axe. So I just used a sledgehammer instead. And so my wife was like, oh, you, you, you chop down that tree. I was like, I, I kind of smashed it down and, uh, I just sludged hammer, hammered it down. And that's kind of what these guys did. They just kind of sledgehammered their way into, into the market.

• 25:31Shaan Puri?

  Have you seen this guy that's on TikTok that just chops the tree and all like, it gets like a million views and it's all, there's like hundreds of thousands of women commenting like,

• 25:41Shaan Puri?

  Like just like gasp like I need him. Is he hot shirtless? No, is he shirtless and hot? He's shirtless and he just chops this tree perfectly like it's like it takes him like 10 strokes to crack down this giant tree. Is that like an innuendo for sex or something? Literally like I'm watching this thing and I'm like, I don't even know why I'm watching this. This is like just from a purely objective level, this is very attractive. I'm just gonna say this, this is very attractive. He just wears like suspenders. He looks like a lumberjack, but he's like GQ'd out. So he's, he's like a groomed lumberjack. That's super like with a CrossFit body that chops down trees instead of going to the gym.

• 26:24Shaan Puri?

  Since he's incredible. So, um, you're kind of like that. You're like that, but like, you know? Not.

• 26:32Shaan Puri?

  I'm like, I'm like store brand that. Yeah, you're like in the, in the, in the zip code of that.

• 26:42Shaan Puri?

  So that's basically what these guys said. They got to brute force their way, but why don't you think this is a good business? Well, I think that the, I mean, just the amount of capital it took to, to get to this business value. So it's worth 1.8 billion on paper.

• 26:56Shaan Puri?

  And they've taken 500 million to get here. So like, if you just zoom out, it's like we three and a half X store money. Like that's not the most impressive thing. But like, when you frame it the other way, which is like, we're going to hit a billion dollars in sales and we've done this in seven years and like, you know, we've built the largest telemedicine health company for men and women. And you could frame it one way or you could just kind of look at it the other. It's like, well, here's a business where if I have to pay $150 to acquire a customer and give him, takes two years to pay it back. If, if that, we'll see how it all projects out. It's super sensitive to like, you know, they, they pour so much money into marketing and what if, you know, Facebook costs change? Like, you know, how's that going to affect them? Like, there's all these factors. I'm not saying it's a bad business, but. Like compared to that FedEx company that does a hundred million in sales and dividends

• 27:41Shaan Puri?

  out 50 million to the owner, I know which business I would want to own, right? Uh, the business that didn't need a SPAC to succeed is the business I would want to own. The one that's divvying out like a mega yacht every year to this guy, like that's sick. And it has like, you know, one one millionth of the notoriety of a brand like it.

• 28:01Sam Parr?

  So what did you say about the, uh, yeah, tell me the other interesting things.

• 28:04Shaan Puri?

  So other cool things. So I think, so there's some notable things for the research. I want to put these on the screen. So I put the, put the images on screen on YouTube. If you're listening to the podcast, just pause, go to YouTube because you gotta see these. So if you go back through their history, uh, first take a look at this thing I have on page. What is this page like three or something of this, the P and L, do you see this P and L?

• 28:25Shaan Puri?

  This was in their S one to go public.

• 28:29Shaan Puri?

  It's literally, it just says revenue 27 gross profit, eight adjusted EBITDA minus 68. That's the P and L they shared in their investor presentation. I was like, what kind of kindergarten level of detail is this? What kind of prey on P and L are you doing? Like this is fucking ridiculous. And I was like, this is why SPACs, this is why SPACs went to shit. Cause it's like half the P and L is just projections, which you can't do if you go public the traditional way. But in SPACs, you can do these like forward looking projections. And that's how all these guys got away with it. It's like, we got a shitty business now, but like five years from now, we are crushing. And that's like, you know, they, they were able to tell that story. Whereas you can't make forward looking statements in the traditional way of going public.

• 29:12Shaan Puri?

  And then I was like, this is some absolute basic beginner looking thing. I, I was just stunned at this. This is like on the SEC website. That's a, that's an embarrassment. Uh, all right. Second thing, you can go to their website and you could find in the web archive, their landing page from the beginning. So check this out. This was their first landing page. This is like the month that they launched. It just said, guy, against staggering odds, two things happen. One, the universe, two, you.

• 29:39Shaan Puri?

  You let's walk at our full height, honor our forebears, have a smile and for God's sakes, floss. Shop now. And then it just goes, it scrolls down and it just says sex. This is, this is simple. You need erections when you want them and not when it's convenient for your penis. And there's an eggplant emoji. It says shop sex. And there was another one for hair. Like that was like the same was like, she needs to run her fingers through your hair a lot. And then it just says our bestsellers. And there's just a very basic bottle that says finasteride. And that's like the, the generic name for propisha or like, you know, for, for like the hair, uh, male pattern baldness, like drug or whatever. And they were just selling it for $28. And then there was, they only had two SKUs, finasteride

• 30:20Shaan Puri?

  and vitamins, not even like vitamin C. This is, hey, but here's some vitamins. It's incredible to go see. I love, love, love looking at successful businesses, early landing pages, just to see like, how did they get their business out the door? One thing that's interesting is from the beginning, they actually had a pretty strong like branding and brand identity. So if you go do this with like Snapchat or Uber, the first websites are just absolutely fugly. Like, uh, I have this blog post on the internet that's called like, user search Chomperie, uh, early startup landing pages, medium. Um, 10, okay. It's called 10 throwback startup homepages.

• 30:58Sam Parr?

  When did you write that article?

• 31:01Shaan Puri?

  I wrote this in 2015. So this was-

• 31:03Sam Parr?

  What month? What month?

• 31:05Shaan Puri?

  June.

• 31:06Sam Parr?

  Oh, you beat me. On October 12th, 2015, I wrote an article that said, proof that your favorite startup started out awful. And it's a list of 10 landing pages.

• 31:15Shaan Puri?

  Yeah, you caught me. I think we knew each other then. So, uh, you can go look at Airbnbs. It's like literally plain black and white. And it just says, forget hotels, stay with a local.

• 31:26Sam Parr?

  Uber.

• 31:26Shaan Puri?

  It looks like a, you know, janky thing. Everyone's private driver, but it looks like a old school car service. Snapchat, it's got one of these like yellow bubbles. That's like the like- Buy now, you know, like, you know, half buy two, get one. And it just says free download inside and it says introducing Snapchat real time picture chatting for iPhone. And it's two girls in their like bikinis. And it just says seven seconds on the screen and like, you know, a self destructing photo. So you can see what early startup landing pages look like. What's interesting that was unique in the him's case is that they actually had their branding from day one, which I think was a smart move by them. And they specifically branded it the opposite colors as every other male wellness products. Every other male wellness product is essentially blue.

• 32:10Shaan Puri?

  And they were like, no, we'll go all neutral color scheme, lowercase, like lowercase font for the, for the brand name. And we're going to make it subtle because there's a stigma and a taboo around this. It's not something you want to brag about. We don't want bold. We want like, we want to be able to give you this package in a discreet way. And you know, and I know, and that's all who needs to know. And I thought that was like a smart thing for them to get right from day one.

• 32:33Sam Parr?

  All their models are like, it's usually like a cool looking black dude or like a racially ambiguous guy. It's like some, it's like, oh, I, I can see myself in you. I'm a young, cool guy with like, I wear like cool jeans as well.

• 32:44Shaan Puri?

  Were your parents all of the Power Rangers? Why are you all telling us what happened here?

• 32:50Sam Parr?

  It's usually like a, like a pretty racially ambiguous, good looking guy with nice teeth.

• 32:55Shaan Puri?

  Yeah, the teeth are on point.

• 32:56Sam Parr?

  Versus like Viagra is always like Brett Favre looking guy.

• 33:01Shaan Puri?

  And then this was one of their early, um, early ads. So it's just, uh, it just says get hard or get your money back. And it's just a guy holding a tiny pill. Um, and it's

• 33:11Sam Parr?

  And what ethnicity is that guy?

• 33:14Shaan Puri?

  Oh dude, his hand is like a gradient in Photoshop. It's like all, all colors are easy here. Uh, so it says eggplant emoji rise to the occasion for less. So one thing that they did really well was they figured out, how do you advertise on Facebook with a taboo product? So they would do stuff like they would show a picture of a cactus that was limp. And then another, and it would be like with him, so you don't have this problem. So like, how do you, and so they were very clever, clever with their marketing. They also did stuff where they would create ad inventory. So they would go to like stadiums and they'd be like, all right, a bunch of guys who are in our demographic are at the stadium. We could either spend like $400,000 to get on the Jumbotron and along with like, you know, BMW and a bunch of other big brands.

• 33:59Shaan Puri?

  Or they went to the stadium facility manager and they were like, hey, how much for the urinal space? They're like, what? They're like, yeah, we want to put a little ad on the urinal and we'll give you guys like, you know, X price to be in every urinal. And they're like, yeah, dude, we got like 30 seconds of guys focus time while they're touching their thing. Like, you know, looking at our ad, this is actually kind of perfect. And so they would create new ad inventory that didn't even exist before, just trying to figure out, how do we spend a hundred million dollars in a way? That's going to be as efficient as possible. So they're, you know, really just like very, they're like a very advanced marketing agency, essentially.

• 34:32Sam Parr?

  And another thing that they did, and I did a big breakdown on this one time was, so if you Google Viagra alternative or cheap Viagra or buy Viagra online. They show up number one and what they did was they actually sponsored a ton of Twitch people. And somehow that like got their links out there and they like, they got tons and tons of backlinks really early on. So hims.com ranked quite high. So they were able to get like, it was, I think if you, I think it's Viagra alternative might be like their word. I forget which, it's one of those pages and that's where they got most of the revenue early on.

• 35:07Shaan Puri?

  Oh, wow, that's interesting. You know, there's another cool thing. I'll put this graphic on the screen. It's this graphic from, have you ever read Sakura, by the way? I don't even know if that's how you say it.

• 35:16Sam Parr?

  Yeah, yeah, yeah, the, like the research thing. I like it.

• 35:18Shaan Puri?

  Yeah, they're pretty cool. Uh, I don't think people know about them, but they put out like really good research.

• 35:23Sam Parr?

  S A C R A.

• 35:25Shaan Puri?

  Yeah, so they had done a thing and they had this great graphic, which was basically, they were like telemedicine was like this like trend, like this, like, there's a lot of opportunity in telemedicine right now. And they just showed this picture of like a guy and a girl. And it's a diagram and basically it's like, you could look from like head to toe, literally from head to toe. And you just go down the body, you're like, okay, hair, there's hymns, there's keeps, there's Roman. Okay, then you go down to like eyes and it's like, there's prescription contact. Hubble, um, you know, it was, it was a D to C startup doing prescription contacts through a phone app instead of going to the doctor. Then you go to their bicep. It's like TRT. Uh, there's a bunch of TRT companies like Hone Health and others. And then you're like, and then you go to, uh, you know, their abs. It's

• 36:09Shaan Puri?

  like weight loss. You go to the crotch. It's like, here's the, the erectile dysfunction. Then you go down to the toes. It's like, here's toe fungus. Then he's got a little pet next to him. It's like, hey, here's pop. It's, it's insurance for your pet. So you have like, instead of going to the vet for everything, you can use pop. And, um, and so it's like, uh, and then they do the same thing for women. And you could just literally see like, if you've seen those diagrams that were like, there was a big opportunity to unbundle Craigslist and they took Craigslist homepage and they showed out every little section of Craigslist became its own billion dollar startup. They did the same thing to your body. Every part of your body became a billion dollar startup essentially from one D to C wellness company and, uh, or multiple in some, in some areas. So from skincare.

• 36:52Sam Parr?

  And all of their logos look exactly the same.

• 36:56Shaan Puri?

  Lowercase font, pastel colors.

• 37:00Sam Parr?

  Hims. I think it's.

• 37:02Shaan Puri?

  By the way, what, what, one other little observation, a lot of these D to C successes came from a certain type of founder, not all of them, but many from MBA founders, like founders who went to like business schools, which is funny because like in the startup world, business schools kind of like are an easy punching bag because you're like punching up at the institution. It's easy to make fun of them. Like, bro, you don't learn business in school. You learn business by doing business. And that's how I feel, to be honest with you. So I'm like, that's true. But there is something interesting that a lot of D to C companies, Blue Apron, Birchbox, Stitch Fix, Warby Parker, um, Rent the Runway, Hello, uh, HelloFresh. Um, and then this, you know, this guy who did, uh, uh, Hims, he went to Wharton as well. So it's

• 37:45Shaan Puri?

  like, a lot of these big, I think there was something about the type of person who would do well in business school and the types of things you learn in business school where you're like, do this market landscape. You like figure out the opportunities. You're like, okay, good. I just need to be like, good at marketing and then good at operations in order to like, like put cash in here and get thing out. It's not like very software based. It's not in a, you don't have to be the, the innovator who's like, you know, the one inventor of something. Um, I think it landed itself to that type of entrepreneur, which I thought I found pretty interesting, too.

• 38:16Sam Parr?

  Well, here's what our listeners need to do. They need to either, probably in the YouTube comments, they need to let us know. I actually want them to know who won the duel. I actually want them to, I want to know if they think his is a good business, but also who won the duel. So you'll have to vote by saying our names.

• 38:34Speaker 02

  We'll include a Spotify poll as well. So you can just vote in the app.

• 38:39Sam Parr?

  And we'll do a Spotify poll as well. Some guy in the YouTube channel said, um, um, who's this blonde host? And why is he so annoying? So just for the record, the blonde annoying guy? That's what someone said in the comment. The, the blonde annoying guy, that was Sam. I went first and Sean is the brown, less annoying guy. He went second for him. So let us know who's the winner here of the, of this duel. Um, I'm very eager to hear, uh, what people are going to say. I know which one I would rather own, but I think they're both quite interesting.

• 39:10Shaan Puri?

  For sure, for sure.

• 39:13Shaan Puri?

  You saw this post by Mark Zuckerberg that he did the Murph?

• 39:18Sam Parr?

  I tweeted out the picture of it and it got like five million views. It kind of took off. And I don't know. So do you know what the Murph is?

• 39:27Shaan Puri?

  I had never heard of the Murph until I saw this. And then I was like, I must do the Murph.

• 39:32Sam Parr?

  It's named after Lieutenant Murphy. I believe context clues leads me to believe that he died, uh, in the military and, uh, his favorite workout, I believe it's one mile run, 300 squats, 100 pushups and 100 pullups and then a one mile run, all while wearing a 20 pound weighted vest. Is that the workout?

• 39:56Shaan Puri?

  That's exactly right. Run a mile, 100 pullups, 200 pushups, 300 squats, run another mile while we, while wearing a 20 pound vest. And, uh, Zuck basically takes a like bro gym shot. I gotta use the BlackBerry for this. He's got the phone down here. Not smiling, got the mouth open, just.

• 40:18Shaan Puri?

  And just snaps it with himself drenched in sweat and he's like, just did the Murph.

• 40:24Shaan Puri?

  He's like, me and my daughters did. He's got a picture of his daughters doing like pushups. And he goes, I, this year I got it done in 39 minutes and 58 seconds. And I was like, I read that and I was like, hmm, that sounds like really fast. If he had just said, I did a hundred pullups today, I would have been like, man, what a day. Fantastic. Forget, forget all the rest. I was already impressed by a hundred pullups. To say he got that done in weighted pullups. To say he got that done in 39 minutes. I was like, that sounds ridiculously fast. And sure enough, all the comments were like, that's an insane time for the Murph. Have you ever done this workout?

• 41:00Sam Parr?

  I haven't, but the world record holder of the Murph is this guy named Hunter McIntyre, who's DM'd me on Twitter and Instagram, and I've talked to, because I, I like him a lot. Or I followed him and I feel like I like him.

• 41:11Shaan Puri?

  Is that what fit guys do? They just DM each other?

• 41:13Sam Parr?

  Yeah, yeah, yeah. It's like a club, you know, like once you can see the sixth app, you start following each other. Yeah.

• 41:19Shaan Puri?

  I'm one of us. Good to see you.

• 41:22Sam Parr?

  And he DM'd me, he listens to the pod. He's the world record holder. And I think his world record is like 34 minutes and Zuck's time was 39 minutes, which means he would have gotten like 10th or 15th place at, there's like a Murph Games or something like that.

• 41:38Shaan Puri?

  I mean, I had so many thoughts rush through my head when I saw this. First I saw 39 minutes and I thought, I've taken shits longer than that. Like that's, that's a crazy fast time. Then I thought, I don't think I could even do a Murph in an infinite amount of time. I don't think in my life I have done a total of two miles running, 100 pullups, 200 pushups and 300 air squats, like with a 20 pound vest. I have just never done it, period. So my time is currently 35 years. Then I thought.

• 42:08Shaan Puri?

  This mother, this guy has, he decided, yo, you know what? I'll just become one of the richest people in the world, one of the most powerful people in the world, and the, one of the fittest guys in the world. Like, he's basically-

• 42:20Sam Parr?

  And wholesome.

• 42:21Shaan Puri?

  Top point one percent wealth, top point one percent, you know, intelligence, top point one percent power. And now he's top point, top one point one percent Chad also. I am blown away.

• 42:33Sam Parr?

  All, all before the age of forty.

• 42:36Shaan Puri?

  Yeah, exactly. And he's got two kids or something like that. I'm like, I mean, David Goggins should go to sleep listening to Mark Zuckerberg videos for motivation. This guy's incredible. I went, I bought more stock and I bought a plain gray, you know, cookie cutter t-shirt in his honor. I was like, this is, I'm gonna retire this to the rafters of my office. I'm gonna put it, I'm gonna hang a gray shirt just to honor this man. He gets so much shit and man, he's really turned his like, public persona around. Like, do you remember he was, he was the biggest dork? Like, not just like, oh, when he was young, like,

• 43:15Shaan Puri?

  recently, he was the biggest dork. He tried to do something cool, like, he would, when he did that like hydrofoiling thing and he painted his face white like a geisha and like, it's like, man, this guy's like, and hit American five. It was just like, oh, man, like, you know what? Keep all your money. I don't want to be here. And now he's like, you know, just got off work, did a quick jujitsu tournament, came back, you know, fucking deleted Snapchat off the earth. I'm like, wow, this guy's just, this guy's making power moves all day. He's incredible. He's, he's a very inspirational dude.

• 43:50Sam Parr?

  He's done it scandal free. So Zuck is only thirty seven now, you know, probably fifth or sixth.

• 43:55Shaan Puri?

  Is he only thirty seven?

• 43:57Sam Parr?

  Something like that. I mean, he's still in his thirties. How old is he?

• 44:03Shaan Puri?

  Thirty nine.

• 44:04Sam Parr?

  Thirty nine. So only so he so basically he been married to the same woman been with her since college, has two kids, seems like his family life on the on the on paper seems awesome. There was a time when like the most scandalous thing that he did was he had a video where he talked about smoking meats and every year he sets, you remember that? Because every year he sets goals.

• 44:26Shaan Puri?

  No, no, that's not the scandalous thing. That was just like hilarious that he was a robot trying to be like, hello, humans, I am doing a barbecue with, I have flesh on a grill with fire. And it was like, bro, this is robots. The most scandalous thing he did was when he was in college and the the his aim messages got leaked. That was like, you know, a real wonderful day in my household as I like was like, hey, cancel Netflix. I have my entertainment for the week. I'm reading all of Mark Zuckerberg's aim messages for the next week.

• 44:55Sam Parr?

  And it wasn't even that big of a deal. What he said was pretty on par with an 18 year old, 19 year old person like.

• 45:01Shaan Puri?

  Well, maybe it was a little one part was a little bit like, oh, is this what we want? Like this guy's, this is the guy running Facebook where he was like, he's like, yeah, he was like, he's like, yeah, just tell me if you want anyone's like, you know, name, you know, date of birth, you know, address, whatever. He's like, these dumb fucks just is trust me. They just put everything in the in the system. And so.

• 45:21Sam Parr?

  That sounds like something a 19 year old kid who invented this stuff would say.

• 45:27Shaan Puri?

  Yeah, I would say that was the last time I was relatable with Mark Zuckerberg. Ever since then, he's created a gap. He's outpaced me from there.

• 45:37Sam Parr?

  Every year he sets these goals. One year it was he only wants to eat food that he killed or grew. And I think he did it. And then another year, he was like, I'm gonna learn Mandarin because I want Facebook to come to China. And I think his wife is Chinese. And he was like, I'm gonna learn Mandarin. And then he goes and he gives a talk. I think he does it, gives a talk to a Chinese university.

• 45:57Shaan Puri?

  He gave an interview. They go, he, they fly him out there. They're like, thank you so much, Mark Zuckerberg for coming. We are so happy to have you. And he's like, he's like, you know, Will Mitchell, and he just starts speaking Chinese and they're like, flown away.

• 46:09Sam Parr?

  It's like really great, man, where he's basically fluent. And so the guy kills it, man. He does great. And like when he did the E, so he got into E foiling, which is basically surfboarding without a wave. And he is doing it with an American flag and he has too much sunscreen on his face. That's my guy, a guy whose biggest like flaw is that he's goofy. He's not the kind of my guy. And then now that I

• 46:34Shaan Puri?

  Oh, you're, you're zagging the other way. You're saying, Zuck, bad move, unrelatable, too, too good, no vulnerability, no, no relatability now. He's no longer girl next door hot. Now he's just supermodel hot.

• 46:48Sam Parr?

  Zuck's the best, man. He just, he, you know, our friend Nikita Beer, uh, has this joke where he says something like, I would never, never, or I forget why he says this, but he says, never, ever, ever bet against Zuck. How he's just a complete killer and he is wrong sometimes, but not in the grand scheme. And this is further proof.

• 47:05Shaan Puri?

  Well, the funny thing is people will hate this segment because I think it's popular to really hate Mark Zuckerberg.

• 47:13Shaan Puri?

  Because they hate Facebook, I think, because they're like my data or like the Russians hacked the election. I'm even sure, I'm not even sure what the, what the exact reason is for hating Zuckerberg at this point. I just gotta say like, this is, I mean, he, he is inspiring in that he is excellent. And if you appreciate excellence, that is kind of inspiring. It's kind of like people who hate LeBron. It's like, okay, I get it. You don't have to like the guy, but, uh, I mean, you gotta respect, gotta put some respect on this guy's name.

• 47:43Sam Parr?

  LeBron doesn't do anything wrong either, by the way. But he complains sometimes.

• 47:47Shaan Puri?

  Yeah, exactly. Yeah, he switched teams when he was a free agent. Um, my real estate agent told me the story that she was driving by. She's like, that's Mark Zuckerberg's house in the, in the Mission, kind of like near Dolores Park type of area. And I was like, he lives here? And I was like, that's not like, I thought he lived in some private gated community. And she was like, well, I mean, he has like many houses, but this is one, this is one. And this is like his main one for a while. And she's like, and he made it private. I was like, what do you mean? I don't see any fence. And she's like, no, he bought the houses next door. Like he just bought all the houses in the area so that like, you know, whatever. And so he, he knocked on someone's door himself. So somebody opened the door and it was Mark Zuckerberg outside and he's like, hey, you know, I love this

• 48:31Shaan Puri?

  house and I, would you sell it to me? And they're like, no, I mean, it's not for sale. We, we love this house. We're so close to the park. You know, my commute's only seven miles. He's like, I'll give you $10 million. And they're like, okay, here's the keys. Basically, they bought the house for 10 million. It was probably a $2 million house. Uh, and the house next, like the houses nearby him, two and a half, $3 billion and he paid 10 and just got the house right away.

• 48:55Sam Parr?

  Dude, that person who sold their house to him would be the best dinner guest. Imagine that story.

• 49:00Shaan Puri?

  We would like to have you on air. If that's you, we would like to have you come tell that story. Cause uh, obviously I'm reenacting what I was told by a real estate agent. I don't know if that's a, that's true or that's bullshit. Um, so yeah, Zuck, amazing.

• 49:13Sam Parr?

  Let's uh, wrap, wrap up with this last thing, this Nike thing.

• 49:17Shaan Puri?

  Did you watch this movie, uh, Air?

• 49:19Sam Parr?

  Yeah, I did. I thought it was awesome.

• 49:22Shaan Puri?

  It was pretty sweet, right? Like, uh, not the best movie, but like a, just a solid base hit on a, on a Thursday night, a Friday night. You know, you just need something that's, I don't want to sit here and browse Netflix for the perfect thing. All right. I'm just going to go on. I think it's on Amazon. And I'm just going to go watch Air and like this, just watch the story of how Nike signed Michael Jordan.

• 49:43Sam Parr?

  They made Phil Knight look like a doofus.

• 49:46Shaan Puri?

  Yeah, why did they do that? I didn't understand that. They uh, well, he does like appearance wise, look like a doofus, but they also made him act like a doofus.

• 49:54Sam Parr?

  Yeah, which I don't think he was like that. When I read Shoe Dog, I didn't get that idea. Uh, he, he, he, he's more, I think, uh, they made him look like

• 50:01Shaan Puri?

  When he wrote his own memoir, he made himself sound cool?

• 50:04Sam Parr?

  Well, I've read a lot, I've read a lot about him. He, he, they, they just kind of made him look like a, like a, like a ditzy person.

• 50:10Shaan Puri?

  Like an idiot. Yeah, he's not an idiot. Um, but the guy they featured, so a couple of things. So, so first, uh, anything stand out from the movie, Air, but then I have, I want to go deep on this guy, Sonny Vaccaro, because I think he's actually more interesting.

• 50:22Sam Parr?

  Who, was that the main character? I don't even remember his name.

• 50:24Shaan Puri?

  That's the, that's the main character. So that's

• 50:26Sam Parr?

  That's Matt Damon?

• 50:27Shaan Puri?

  Matt Damon in the movie. But, um, you know, in, in Nike, in the Air movie, I thought one, one interesting thing I didn't know was they're, they're talking about, just do it, which is the, just do it's the slogan that, you know, everybody knows is the Nike kind of like iconic slogan. And they were talking about like, at the time, even people internally were like, just do it. Like we got, they got that from the ad agency Wyden Kennedy. And they're like, I don't know. What, what does that, what does that mean? Do you like it? I was like, I don't know. It's okay. I guess. And they weren't like, yes, this is, this is going to be this like marketing masterpiece. And they go, what, what does that even mean? And they go, dude, it's from an inmate on death row who was about to be assassinated, about to be executed. And they were like, any last words? And he goes, just do it.

• 51:08Shaan Puri?

  And so that became the Nike slogan, which is, uh, honestly kind of genius.

• 51:15Shaan Puri?

  So I want to talk about this guy, Sonny Vaccaro, because he's kind of a gangster that I've seen for many, many years in the basketball scene. And the movie was about him and he, this guy's pretty fascinating. So what, uh, in the movie, he's famous because he's working at Nike. At the time Nike is the last player. It's just a running shoe company and they're the smaller shoe company. Adidas is this global brand that's crushing it. They own most of the sneaker market.

• 51:42Sam Parr?

  I believe it's pronounced Adidas.

• 51:44Shaan Puri?

  Yeah, Adidas. Which has its own interesting story. Then Reebok is like number two and Nike is like a distant three, but they were doing like 27 million a year in sales through their running shoe. So good, but not like nowhere near the kind of top tier of shoe companies. And so Sonny meets Phil Knight and he's like, hey, I got an idea for a basketball shoe. I want to create like a basketball division. Like you guys are all running shoes, we should create basketball shoes. And he's like, okay, like come on in and you got this little basketball department. Like go ahead, try to make it work. And the movie is all about like one breakthrough thing he did, which was they had a tiny budget and in the 1984 draft,

• 52:25Shaan Puri?

  they decided to sponsor Michael Jordan and Michael Jordan was not interested in Nike. He was going to go with, I think Adidas or somebody like that. And he was known as a, as a hot prospect. He's like the number three pick and they were like, well, we still want, and Sonny was convinced we need Michael Jordan. And so the movie is about them trying to go get Michael Jordan on board. And what ended up what they, what the pitch was, was basically they put their entire budget on one guy instead of spreading it across multiple players. He relentlessly pursued Jordan and like met his mom and like, just like drove out there to North Carolina to meet them and try to build a relationship.

• 53:00Sam Parr?

  And then they didn't even show Jordan's face in the movie, which actually was pretty cool. It was basically the whole relationship was how do I impress his mom? Cause I know his mom will have my back.

• 53:08Shaan Puri?

  She's making the decisions. And so they were like, well, um, we're going to pitch him on his own signature shoe from day one and we're going to name it after him. So it'll be the Air Jordan, it'll be a whole product line named after him. And he ended up negotiating a royalty on every pair of Jordan sold. And that's how Michael Jordan became a billionaire, not through basketball, but through his shoes. So that's the movie part. Okay, cool. This guy Sonny actually did a bunch of other interesting things that I thought were pretty cool. So as a marketer, I just respect this guy's hustle. So here's some of the things he did to make Nike win. He created, so he was like, all right, we gotta create like a, like a kid's strategy. It's like, how do we get them while they're young? And so he created a high school all American game.

• 53:51Shaan Puri?

  So he was like, he called it the, uh, the dapper Dan round ball classic. He goes throughout the country. He's like, I'm inviting you to participate. You're going to compete against, you know, the, the 12 best players. Whatever 20 best players in the country. You're invited to come do this thing in Pittsburgh or Philadelphia or some shit like that. And it was like, uh, and so he flies them out there and he puts this thing together. Now he's got the players. So then he goes and tells all the college coaches, hey, if you're scouting, you need to come to this round ball class. You can see all the best high school players at once. And so then college coaches start coming. So now players are like, oh, if I want to get seen by college coaches, I gotta get to the high school All American game. So he just like created through brute force, like a conference essentially

• 54:34Shaan Puri?

  that would bring together the kind of the core supply and demand. And then he could find at that age, the best young players. And so he, that's how he found Kobe Bryant. That's how he found LeBron James. They were part of his high school All American things and his camp. So the second thing he does, he created a summer camp for only the best players called ABCD. And he branched, this is when he was with Adidas. So this guy worked for Nike, then he worked for Adidas, then he worked for Reebok. So he just, this guy was just a hired assassin that went from company to company and would just try to get them to win in their market using whatever advantages they had. And so when Nike needed something, he was like, all right, you need to get them all the young. We're gonna do this camp, but also what we're gonna do is we need to get college players wearing our stuff. They all wear Adidas and uh, cause it's the most popular brand.

• 55:17Shaan Puri?

  So that's just what they choose by default or they choose Converse. And so he's like, you know, why don't we, um, you can't pay college athletes, but nobody said anything about coaches. And so he just started, he would go to the coaches and he'd be like, hey, I'm gonna give you 10 grand and here's 26 pairs of shoes. Give them out, oh, they happen to be the sizes of like most of your guys. They don't have to wear them. You get the 10 grand either way, but we sure do hope you would, uh, you know, you would go ahead and, uh, and, um, you know, encourage them to wear these shoes. And so he went to Jim Bayheim and he went to like, you know, all the top college coaches and he basically bribed them. And it was like in this gray area where it was allowed. And in one year, he just traveled like he would just fly city to city. He would go to the campus, he would make the coach an offer. And at the time they were buying this equipment for their program.

• 56:02Shaan Puri?

  They're like, our kids need equipment, so we gotta buy this, this stuff. So he turned a cost into revenue for them and gave them free stuff. And sure enough, all of them started, started wearing Nikes for free. So all of a sudden now Nike is being worn by all the best college players and it's on TV. And in one year, he just did a land grab across the country before the other companies could, could react. He got all of them. And I thought this was just like a genius, uh, genius strategy. He started, then he started trying to do things in high school.

• 56:28Sam Parr?

  How far you can go with brute force?

• 56:31Shaan Puri?

  This was a sledgehammer.

• 56:33Sam Parr?

  This was a sledgehammer and you can get pretty far with a sledgehammer.

• 56:37Shaan Puri?

  Then then he did another thing. He sued the NCAA. So he went to this guy, Ed O'Bannon, and he was like, hey, we should sue the NCAA. They're using your name, your face, your likeness to market the tournament and all this stuff, and you're getting nothing from it. And now college players can get paid through this NIL rule, this name and likeness thing. And it's because he won the case with that lawsuit against the NCAA. That was like, you know, it happened. The lawsuit happened last, I don't know, five years or so, and then the rule came into effect like a year ago or something. And so, um, so I thought that was awesome. There were some great quotes about him. Some guy goes, uh, when Sonny dies, he's gonna sneak his way into heaven.

• 57:20Shaan Puri?

  And, uh, and when he gets there, the first thing he's gonna do is he's gonna look for a 6'9" kid to make a deal with, like, he's like, and the other thing they said is there's only one man on earth who could tell you who the best sixth grade basketball player in the country is, and it's Sonny Vaccaro. And I just love that this guy just like owned his niche and just absolutely like went balls to the wall and really built like, I don't know, tens of billions of value at least inside of Nike, plus Adidas, plus Reebok with these athletes. And he would have also gotten, so he signed Jordan. He signed, he, he got, he poached Kobe away from Adidas. And then he would have got LeBron too, when he was at Adidas and LeBron was ready to sign. He goes, we need to offer him 10 million a year for 10 years, a hundred million dollar contract to this 18 year old kid.

• 58:04Shaan Puri?

  And LeBron's ready to sign. And then Adidas gave him the 10 million, but they changed the structure last minute. They got a little cold feet and they're like, well, we don't know if this kid's gonna work out. Why don't we make it part of an incentive base? And so they offered him 7 million guaranteed and 3 million a year of incentives. And LeBron turned it down, ends up going with Nike, never looked back. And like, just a huge blunder, like basically this guy's whole life, he was fighting bureaucracy inside companies. And then doing like black market and gray hat shit in the like, you know, in the streets. And every NBA player is like, no Sonny, their parents know Sonny, because this guy was just working the streets and like. There are certain companies that have had this Tinder kind of had this with um what's her name the Whitney Wolf who started Bumble. She was kind of doing this from college campus to

• 58:48Shaan Puri?

  college campus, like going into the sorority houses and the frat houses and just brute force onboarding all the guys and girls in one campus so that Tinder was useful and then throwing parties and doing stuff like that. And like you need these people. These are like game changing people for your company. I remember when Coinbase went public, Brian Armstrong did this long thread. He did something you never see somebody do, which was company goes public, they usually just say generic stuff. He actually talked about like what led Coinbase to be successful and he called out one guy by name that wasn't his co-founder, wasn't his main investor. It was just an employee and this guy Dan Romero. And he's like, and you know, basically special thanks to Dan Romero,

• 59:29Shaan Puri?

  who like, just kind of like brute force built our relationships with banks. And he basically got them their relationships with banking partners and like, I think maybe some stuff overseas. And it was just kind of like one of those things like, dude, I don't know how we're gonna do this. I don't know. Dan, that's your mission. Send him on a mission to go do that. And Dan basically joined Coinbase Coinbase as an employee, ended up making like a hundred million dollars plus through this process. And I knew this guy. I met him in college. He was in my class.

• 59:57Sam Parr?

  Didn't he, didn't you like used to make fun of him and call him a dweeb?

• 1:00:01Shaan Puri?

  I didn't make fun of him, but in my head I did. He was, we took a class called computers. Again, I was going through campus looking for the easiest sounding classes. I took getting rich. That was one class. I took another class called computers. And in computers, they were talking about like, that's like a 12 person class.

• 1:00:16Sam Parr?

  It's computers?

• 1:00:17Shaan Puri?

  And they were just talking about like the internet and like internet. I remember like they talk about net neutrality a ton. And I was like, I don't know what the hell these guys are talking about. Like, I couldn't give less of a shit about this. And there was one guy that every class had like, strong opinions, was super informed. I was like, man, who is this like, teacher's pet? That's just like, is he trying to impress him? I was like, no, I don't even think he's trying to impress him. I think he actually is just nerdy about this stuff. He just listens, motherfucker, just loves the internet. This guy like wants to make out with the internet. I just remember sitting in the back of class, like, I was like, thank you for talking so much, Dan Romero, because I don't have to say a word in this class. And um. It's sort of like, you know, Revenge of the Nerds in a way. It's like jokes on you.

• 1:00:57Shaan Puri?

  Like this guy's passion and enthusiasm about the internet and technology is what led him early into crypto. Was led him to pick Coinbase and ended up, you know, like his passion for that led him to be a key person there. This guy made hundreds of millions, hundreds of millions of dollars, probably is retired and uh, and got to do what he loved the whole time. And so like, you know, I, I used to make fun of people who were like, you know, overly enthusiastic and now I preach that you need like enthusiasm is massively underrated and more people.

• 1:01:23Sam Parr?

  Dude, he's got a super handsome headshot now on LinkedIn. Dan Romero does.

• 1:01:28Shaan Puri?

  You can afford a whole, you know, glow up if you, uh, if you get that Coinbase IPO and early Bitcoin money.

• 1:01:35Sam Parr?

  He's got great hair. This guy's definitely takes him. So he's a good looking guy.

• 1:01:40Shaan Puri?

  Power him's user.

• 1:01:42Sam Parr?

  And he just bought a 13 million dollars worth of, a 13 million dollar property in Venice and another one in Park City. Dan won.

• 1:01:49Shaan Puri?

  Yeah, Dan won for sure.

• 1:01:51Sam Parr?

  And you could tell that he's ripped too. This guy's definitely has abs. Dan won.

• 1:01:58Sam Parr?

  Good job, Dan. I'm just like, you just Google him and see his face. You know, this guy's fit.

• 1:02:07Sam Parr?

  I should DM him.

• 1:02:12Shaan Puri?

  I'll be adding to the group chat. Say no more. I've seen enough to pick.

• 1:02:17Sam Parr?

  Yeah, you could tell by his jawline. This guy's got one of those like Vs that goes down as those like junk.

• 1:02:22Shaan Puri?

  No, no NFTs. Uh, just lift up your shirt six inches. I'll tell you.

• 1:02:29Shaan Puri?

  You qualify.

• 1:02:30Sam Parr?

  So, um, dude, this guy's sunny. It sounds awesome. I, I did see the movie and they made him look like a guy who could just put up with a whole lot of pain. That's what they made him look like. Um, they made him look like a guy who like, he would just get shit on constantly and he always pulled through. That's what they made him look like. Uh, and they also made him look exhausted and terribly unhealthy, which is the price to pay.

• 1:02:55Shaan Puri?

  Kind of true. Yeah.

• 1:02:57Sam Parr?

  They made him look horrible. And if you look at photos of him, granted, he's like, looks like he's, he was born in 1938, I think. So like, you know, you are what you are at that point, but like, he, he, he definitely looks like he smoked a lot of cigarettes.

• 1:03:11Shaan Puri?

  Nineteen thirty-eight? That sounds very old, is that?

• 1:03:14Sam Parr?

  I looked him up on Wikipedia. I think it's thirty-eight.

• 1:03:17Shaan Puri?

  Thirty-nine? Wow, yeah. He's eighty-three? Wow.

• 1:03:20Sam Parr?

  Sunny. Yeah, so he, you know, he's alive and so that's good enough.

• 1:03:26Shaan Puri?

  The guy's name is actually John Paul Vincent Vaccaro. Quote, "Sunny." God damn, I, like, you have to have a nickname that everybody in your town knows you by. That's like, to me, that's like one of the great honors of life. It's like, yeah, his name's Sean, but everybody called him Sunny. Whole life, everybody called him Sunny. It's like, that's just like such a cool, I wish I had a calling card like that.

• 1:03:53Sam Parr?

  That's an Italian thing. That's like, I feel like all the, there's always a Sunny in the mafia movies that I watch.

• 1:03:57Shaan Puri?

  Yeah, he operates like a mobster for sure.

• 1:04:00Sam Parr?

  I like this. This is a good find. I saw that movie and I thought, I don't want that guy's job. It sounded like an exhausting, exhausted existence. It sounded very challenging, but I did like the movie. They made him, they made Phil Knight look a little goofy, which I'm a big Phil Knight fan, so it kind of hurt my feelings. But, uh, no, I thought it was a good movie and this is a good find.

• 1:04:23Shaan Puri?

  All right, that's it.

• 1:04:25Sam Parr?

  That's the pod. Let us know who won this, the duel, the annoying blond-haired guy who went first or the less annoying brown guy who went second? That's the pod.