#5 - The First Viral Website: "Hot or Not"

James Hong (@jhong) is the creator of Hot or Not? He sits down to tell us how the silly website went from 42 friends, to 2 million page views per day within a week. I love his philosophy of running it like an "internet laundromat" - collecting nickels & quarters from the machine (up to $20,000 per night!) Great guy, great energy, checkout the episode. - shaan (@shaanvp on twitter) 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.

• 0:00Speaker 00

  Basically, I had nothing to do. I was just going out drinking with my friends all the time, like almost like five days a week. We had the system sending us stats like at noon and at midnight, $10,000, $15,000, on a good day, like 20 something thousand dollars.

• 0:33Shaan Puri?

  Okay.

• 0:36Shaan Puri?

  And is it recording? Okay.

• 0:40Shaan Puri?

  Okay, so what is this? So something that entertains me. And so I wanted to create a podcast, which was first and foremost, just an excuse to hang out with people who I haven't been able to hang out with as much. So one way is to say, hey, let's go grab a coffee. And the other way is to say, what if we recorded this? So that other people could be a fly on the wall and hear stories or chatter about random stuffs. And I'm not trying to do it educationally. So for me, it's stories. So stories is the part where so the podcast is called My First Million. And the reason I picked that is because the audience that listens to this, they are, you know, entrepreneurs already or wantrepreneurs kind of thinking about, hey, you know, it'd be, that's the dream. I'd love to sort of quit my job and start a business someday.

• 1:20Speaker 00

  Yeah.

• 1:20Shaan Puri?

  And I remember for me, and I think this applies to many people, which is the idea of a million bucks is like a magic number, even today, when everyone's a billionaire, still, if you're a thousandaire, a million bucks sounds like all the money.

• 1:33Speaker 00

  Totally understand.

• 1:34Shaan Puri?

  And so

• 1:35Speaker 00

  In fact, when I made my first million, I put it all in one account and I went to the ATM.

• 1:40Shaan Puri?

  Just to look at it?

• 1:41Speaker 00

  And I withdrew money, so I would have a slip of paper that said I had a million dollars.

• 1:46Shaan Puri?

  You framed that? What'd you do with the slip?

• 1:48Speaker 00

  Yeah. Well, you know, the funny thing is like, then we had all these jokes, because I had these ATM slips with a million dollars on it. And we were just joking around, like, man, we should like, keep these in our wallet. And then like, when you give a girl your phone number, she's like, oh, uh,

• 2:01Shaan Puri?

  Casually?

• 2:02Speaker 00

  Yeah, like, let me, let me write it down. Let me write, this is before everyone had phones. It's like, oh, let me write it down on a slip of paper. I have one.

• 2:09Speaker 00

  Never actually did it, but it was a funny, it was a funny idea. And actually, it turned out, I remember like, then I was, I was searching, Googling the idea. And like, there were companies, I remember that sold fake ATM slips online.

• 2:21Shaan Puri?

  Oh, wow.

• 2:22Speaker 00

  So it wasn't the first thing about that.

• 2:23Shaan Puri?

  So you weren't the first guy thinking about doing this.

• 2:25Speaker 00

  It's a whole new industry.

• 2:28Shaan Puri?

  Yeah, so basically, it's called My First Million. I'm talking to you about how they made a million bucks in all different ways. So, some people are tech entrepreneurs who started a business. Some people made a million bucks selling mushrooms and they're mushroom farmers. Someone's, they did crypto, CBD, you know, all the different types of things, real estate. And so, I want to tell stories so that the listeners basically hear, man, first, there's a million ways to success. You don't have to follow a particular track.

• 2:52Speaker 00

  Right.

• 2:53Shaan Puri?

  And B, just a little bit of inspiration and entertainment about how, you know, these stories tend to be really interesting. They kind of come out of nowhere. It wasn't a perfect plan. It wasn't a straight line. It usually has ups and downs. And so, I want to tell those stories.

• 3:07Speaker 00

  You know, like in Harvard Business School, they have these HBS cases.

• 3:10Shaan Puri?

  Right.

• 3:11Speaker 00

  And everything, everything in those cases is like, oh, you know, Sean was looking out the window at the Charles River, thinking about what was, what he was gonna do for his company. And the solution is always, they give you all this data. And then at the end, like, it's like, oh, he did this and this and this and this and this. And then he did that and that and that and that. It's like, oh, look like how, like, everything's like, the solution was like a neat package.

• 3:30Shaan Puri?

  Right.

• 3:31Speaker 00

  And in reality, you're like, you know, like, the guy wasn't, you know, he was not sleeping. And like, he probably did 20 million things before he did what he actually ended up doing, or she, whatever. But, you know, it's funny because like, it's always like that, but it's, reality is never like that. You know what I mean? So, it's nice.

• 3:46Shaan Puri?

  And so, I'll give the brief intro. So, we have James Hong on the show. Entrepreneur, started famously a company called Hot or Not. One of the first tremendously viral products before viral was really even a thing, I would say. And now, angel investor, all-around good guy. I'm excited to be talking to you. Last time I talked to you was like, five years ago.

• 4:07Speaker 00

  Yeah, a long time ago.

• 4:08Shaan Puri?

  So, it's good to reconnect. And so, I always start with, you know, not kind of how'd you do it? But, a different sort of question, which is really, did you always want to make a million bucks? Like, when you were growing up, did you want to be rich? Was that a goal of yours?

• 4:24Speaker 00

  Not necessarily, I wasn't really like, oh, I have to be rich. My mom tells me that I drew, I kind of remember this, in third grade, I drew her a picture of my house. And I just remember it was on the waterfront and it had like two helicopter landing pads. And so, maybe, maybe I did, but by the time I grew up, by the time I went through college, I was, uh, I wasn't really like, I need to be rich. Uh, but I did want to do something, you know what I mean? Like, uh, I didn't want to be bored. The thing I learned at my first job, which was at Hewlett Packard. I remember this when the web first came out and, uh, I was doing basically sales support for a technical product. And I created a website because I was tired of all these people calling me with the same questions.

• 5:07Speaker 00

  I basically eliminated my job and the job of two other people, my coworkers. We all got deployed onto other things. But I remember thinking like, they gave me a bonus of like, you know, they raised, they gave me a raise of like five grand or something like that. And I'm like, I just eliminated like, you know, three jobs that was probably like, you know, back then, like a couple hundred grand or something like that. And I got five grand. And I just remember thinking like, I'll never make as much money as the value I deliver in a company. Because a company, a big company at least, has to kind of pay people based on kind of like the median value that any given person at the company will provide.

• 5:42Shaan Puri?

  Right.

• 5:42Speaker 00

  I think that's kind of the one thing that's changed a little bit like at Google and at Facebook. Is that they're now willing to be like, oh wow, like you created like hundreds of millions of dollars in value. Then maybe they don't, maybe they still don't give you a couple hundred million, but they'll be like, we'll give you 10 million.

• 5:55Shaan Puri?

  Right.

• 5:55Speaker 00

  So at least, maybe, maybe it's not that different today, except that things operate at a higher scale and that they're able to because the margin is so high. But in any case, I was like, you know, screw that. Like, I'm gonna go work for myself because then I can actually extract, you know, what I actually created.

• 6:12Shaan Puri?

  Yeah, most people don't see that. So if you're at a company... And this is not because companies are evil. This is really just the standard way you have to operate. You can't, if somebody's 10 times more productive, 10 times better than their peers, you can't pay them 10 times as much usually.

• 6:26Speaker 00

  Yeah, that's exactly the point. People make straight up more money at these big companies than they would being fairly successful as an entrepreneur, you know, hitting a double or hitting a triple even, you know, so.

• 6:37Shaan Puri?

  And that's because the scale of these companies is absurd now.

• 6:40Speaker 00

  Yeah, because the scale and the margin. The margin is high.

• 6:43Shaan Puri?

  Right.

• 6:43Speaker 00

  That's really the difference, so.

• 6:45Shaan Puri?

  And so you were, was this straight out of college that you were at Hewlett Packard?

• 6:48Speaker 00

  Uh, that was straight out of college. So I was like, forget it. Uh, because in the meantime, you know, the funny thing that happened is this is 90, I got out of college in 95.

• 6:56Shaan Puri?

  And where'd you go to school?

• 6:57Speaker 00

  I went to Berkeley.

• 6:57Shaan Puri?

  Okay.

• 6:58Speaker 00

  Uh, and did engineering, electrical engineering, computer science degree. And the funny thing is like, you know, in 94, I remember summer of 94, that's when Mosaic came out, the first web browser. You know, coming out of Berkeley, everyone who got good grades went to grad school or, you know, at worst got a, got the good jobs, which the good job was like going to Intel or HP or whatever.

• 7:18Shaan Puri?

  Right.

• 7:18Speaker 00

  And I went to HP. And meanwhile, our friends who were not as strong students, uh, who couldn't get into grad, a good grad school, who couldn't get a job at HP, they ended up taking jobs at, uh, other places that we'd never heard of, like eBay and Yahoo or whatever. So like around 96 or 97, maybe 96, whenever Yahoo went public, all these friends got rich and that's kind of like when you realize that like, oh, like.

• 7:45Shaan Puri?

  What game should I be playing?

• 7:47Speaker 00

  Exactly, right?

• 7:47Shaan Puri?

  Did I win? Because I feel like I lost.

• 7:49Speaker 00

  When you're, when you're at a, you know, when you come straight out of school, you're still thinking, oh, whoever gets the best grades, whoever works the hardest, blah, blah, blah.

• 7:55Shaan Puri?

  Right.

• 7:56Speaker 00

  Deserves the, you know, the big prize. And then you're like, wait, what just happened? And that's kind of like when reality hits, like, you know what, like, life is not, I mean, there's a lot of things in life that, um, determine how you end up doing. And I mean, a lot of it's luck. A lot of it's just circumstance or whatever. And so, anyway, I realized, I was like, I'm not going to get rich at HP and. Not only that, I didn't get the value of like the jobs I destroyed that I got.

• 8:23Shaan Puri?

  Made more efficient.

• 8:23Speaker 00

  Yeah, exactly. And so around that time, I was like, okay, screw this. Like, at that point, I was like, I'm out of here. And then I was like, well, I was either gonna go to business school, because back then, everyone thought business school was a path. And actually, to some degree, it kind of was, because back then, to start anything, you needed to raise venture money. And it was easier to raise venture money if you had either a lot of experience on the engineering side, or, you know, like, it was MBA VCs funding other MBAs, right? So it was kind of seen as a path back then to get an MBA, to become an entrepreneur. And today, you don't have to do that, mainly because the cost is so much lower of starting up, right? Like, you know, like.

• 9:03Shaan Puri?

  Back then, what did you need to start a business?

• 9:04Speaker 00

  Well, back then, it was like, oh, to start any company, well, first of all, certainly, you needed a Sun machine, right? You need a box from Sun to run the web server. And, you know, that might be like half a million bucks or something. I mean, like, just to get started, costs a lot of money. Plus, there weren't as many tools, right?

• 9:20Shaan Puri?

  The kit was expensive. If you want to buy the box to play.

• 9:23Speaker 00

  Just to put up a website with like, you know, like, with a database on it, like, people thought you have to have a million bucks at least, right? And so, nobody has a million bucks lying around.

• 9:32Shaan Puri?

  And today, what do you need for that?

• 9:34Speaker 00

  Nothing, I mean.

• 9:34Shaan Puri?

  Five hours and?

• 9:36Speaker 00

  I mean, like, you get a free box, you know, free instance from Amazon, whatever. It's like, it's nothing. It's virtually free. Actually, when we started Hot or Not, when it first started taking off, it was built on a PC I got for free from E-Trade, I think, for opening an account with 500 bucks in it. It was like the dingiest machine had no memory or anything, but it could run as a server, not very well, but it got us online, right? And the first thing we thought was like, we need to get a Sun machine, like, when things took off. And so, we got a Sun machine. We were leasing through Rackspace, I think, at the time. I remember distinctly, like, hanging out in front of some restaurant in Palo Alto, and Larry Page saying, oh, yeah, you should buy from Rackable, which was a one-u rack-mount system company.

• 10:17Speaker 00

  And it turned out that like my neighbor, two doors down, was the guy who, he was like number 20 at Google and he was like, he was like the, remember they used to say there, we have a neurosurgeon on staff?

• 10:26Shaan Puri?

  Yes.

• 10:26Speaker 00

  That was him. And he was in charge of scaling all their data center ops. And so he was handing, he was like, yeah, guys, you should get.

• 10:32Shaan Puri?

  And this is kind of an untold story about Google's, you know, one of the reasons why they were able to win and scale so crazy.

• 10:37Speaker 00

  Oh, yeah, absolutely.

• 10:38Shaan Puri?

  People don't talk too much about this, which is, they were using commodity, cheap hardware.

• 10:42Speaker 00

  Yeah.

• 10:42Shaan Puri?

  And instead of these expensive specialized systems that were harder to scale.

• 10:46Speaker 00

  Right. Because the robustness of a system with a thousand machines was much better than one sunbox, you know, especially centralizing all your problems, you know, single points of failure.

• 10:54Shaan Puri?

  Right.

• 10:55Speaker 00

  You know, one single box.

• 10:56Shaan Puri?

  And you saw them and that was like your Roger Bannister four-minute mile where you're like, oh, we can do it with that too.

• 11:03Speaker 00

  Yeah.

• 11:03Shaan Puri?

  If they're doing it.

• 11:04Speaker 00

  Basically. And it was cheaper. I mean, like, we didn't have money. So I was in debt from business school and my partner was a PhD grad student. So we didn't have money. I was, we were negative net worth. So. Hot or not, kind of was like Tinder in, you know, 2000, right? It was, it was a website where people would submit their picture and other people would rate them on a scale of one to 10 on how hot they were. And this was kind of in the day when everyone was scared to post their photo online. Like, if you posted your photo online, it was behind a password-protected page that, you know, was for Shutterfly or OPhoto back in the day. So the concept of posting a photo for other people to see, that you didn't have full control over who could see it, was completely foreign at the time.

• 11:44Shaan Puri?

  Forget about the rating. That was obviously controversial.

• 11:46Speaker 00

  Yeah, forget about the rating. Yeah. Actually, the rating actually, as an idea, came slightly second. It was originally about voyeurism. I was addicted to reality TV back then.

• 11:55Shaan Puri?

  What were you watching?

• 11:56Speaker 00

  Still am. Back then, you know, I used to watch a lot of like Jerry Springer, Ricky Lake, all that kind of stuff. The best part of that, those days was I actually ended up going on some of those shows.

• 12:06Shaan Puri?

  You were on Springer?

• 12:07Speaker 00

  Yeah. I was on like Ricky Lake, I think, or one of, yeah, maybe, one of those.

• 12:11Shaan Puri?

  As a guest or as an audience?

• 12:13Speaker 00

  Sally Jesse Raphael or something like that. Yeah, no, as a, I was a guest judge. They, they had people come out like, they had, the themes would be like, my friend thinks she's hot and she's really not. And then like, they would come out and talk about it and then I would come at the end.

• 12:23Shaan Puri?

  Amazing.

• 12:24Speaker 00

  Tell them their score. So anyway, like uh.

• 12:28Shaan Puri?

  So where did that idea come from? Post your photo online and then you said you added later.

• 12:32Speaker 00

  Yeah, yeah, so so then we, yeah, the rating was like just kind of an add on like, oh, it'd be cool to have a mechanism where like the audience could give data back.

• 12:40Shaan Puri?

  Right.

• 12:41Speaker 00

  And make it, uh, there was this whole, what they called the two-way web at the time. It was like conver- the web is about conversations, right? And so it was like, uh, the concept that the audience could actually give response back was new.

• 12:51Shaan Puri?

  So you you you liked people watching.

• 12:53Speaker 00

  Right.

• 12:53Shaan Puri?

  But that's still like, still, where did the lightning bolt strike?

• 12:56Speaker 00

  You know, actually, there's, there's a backstory to all of this, which is that, um, in the late nineties, there was this guy called the Turkish Stud. I don't know if you know about.

• 13:03Shaan Puri?

  I've never heard this.

• 13:03Speaker 00

  The guy, actually, I think Borat was based on him. I, I think the guy who does Borat denies it, but it's so clear. There was this guy in Turkey who had a, um, a webpage with pictures of him, like playing ping pong or whatever. And somebody, no one, I don't think to this day, anyone knows who did it, but someone took those pictures and made another webpage that was a fake webpage. And it was like, uh, he was, he called himself the Turkish Stud. And he's like, who wants to come to my country? I can invite you, come have sex. You know, like, it was Borat, basically, like, oh, come for sexy time.

• 13:35Shaan Puri?

  Right.

• 13:36Speaker 00

  And, uh, and, and, and it blew up. There was this company called Etor that kind of like, um, jumped on it and brought, Etor was like, it was kind of like, uh, the equivalent then of Stumble Upon, I think. And, um, would people, I don't know if people remember Stumble.

• 13:50Shaan Puri?

  Which is the equivalent of.

• 13:52Speaker 00

  Yeah, which is the equivalent of, uh, whatever, like.

• 13:53Shaan Puri?

  Reddit, maybe, today.

• 13:54Speaker 00

  It's basically like.

• 13:55Shaan Puri?

  Place you go to find cool stuff.

• 13:56Speaker 00

  Random, random things on the web, because back then, there wasn't that much on the web, right? So this company, Etor, made a big deal out of this guy and he ended up on Letterman and whatever, you know, like, and within a month, he had like, you know, a million page views or something like that, right? And we just, my, my, my friend and I just thought it was funny, my co-founder, Jim Young, he and I just thought it was hilarious because there are all these companies back in those days that were raising tons of money, throwing lavish parties and stuff like that.

• 14:23Shaan Puri?

  Couldn't get a tenth of the page views.

• 14:24Speaker 00

  Couldn't get any page views. And, and, and, you know, this was when like Steve Dursen was starting to talk about viral marketing with Hotmail and we're like, this is so fucking awesome because this, it was just irony, right? It's like this guy is like, he didn't even do it. Someone did it to him and he ended up like on Letterman and getting all these hits that all these other people were dying for. We just thought it was funny. And so we kind of had in the back of our mind, like, someday, I want to do, I want to build a Turkish stud.

• 14:48Shaan Puri?

  Yeah.

• 14:48Speaker 00

  Right? So it wasn't even about money. It was about, I want to do something that goes viral.

• 14:52Shaan Puri?

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• 15:32Speaker 00

  And I was obsessed with this guy. Like, I had, I remember I had like, I had him as my screensaver, like, him playing ping pong. And so, so when we were talking about the, just various ideas one time, this voyeurism and whatever came up, and then, and then like, oh, you know, then you could rate them or whatever, like, hey, this could, this could be our Turkish stud, right? And so, actually, when we built it, you know, like, Jim was a grad student, I was working at a friend's company at the time. We were just killing a lot of time and we were ready to set up in this house to do a startup. So, anyway, Jim just disappeared in his room and like, three or four days later, he came out, he's like, okay, it's done. You know? Today, you could build it in like, literally like, 20 minutes. Right? But back then, like, you had to do a lot of extra stuff, right?

• 16:17Speaker 00

  And so, he came out, he's like, it's done, and then...

• 16:20Shaan Puri?

  And it let you upload a photo?

• 16:22Speaker 00

  Yeah.

• 16:22Shaan Puri?

  And click through other people's photos?

• 16:23Speaker 00

  Yeah, basically. And then I tested it that weekend. Um, I was just playing with it. My dad came into the room.

• 16:28Shaan Puri?

  What do you mean by you tested it? What are you testing?

• 16:30Speaker 00

  I was just looking at it. He sent me a link, I didn't look at it for a couple of days. Then I started looking at it a couple of days later, when I was at home on the weekend. My dad was looking over my shoulder, he kind of walks in the room, he's like, oh, what are you doing? You know, and like, I was supposed to be like, working and...

• 16:43Shaan Puri?

  Doing normal things.

• 16:44Speaker 00

  By this point, actually, no, I had quit my job. I'm sorry. So, I was unemployed. So, I, now I remember, I was, I was supposed to be looking for a job, probably. So, I lied and said, ah, this is just something Jim's doing. And so he, my dad starts playing with it and then I see him, he's the first person I ever saw get addicted to rating.

• 17:02Shaan Puri?

  Swipe, click, click, which is swipe, swipe, swipe.

• 17:05Speaker 00

  Yeah, and we just had like, I had just taken photos from like site personals to like seed it.

• 17:08Shaan Puri?

  Yeah.

• 17:09Speaker 00

  Um, and so he was like, oh, she's hot. She's, oh, I'm like, oh my god, like, this is my dad. He's like sixty year old Asian engineer who's supposed to be asexual, except, you know, the three times he had sex with my mom.

• 17:19Shaan Puri?

  Which was, you know, immaculate conception.

• 17:21Speaker 00

  Exactly, practically. So I was like, holy crap, like, this is pretty interesting. Uh, so then we launched it like a couple of days, like that Monday, I remember, Monday or Tuesday, I think it was Monday. Uh, and I just, we launched it by sending it, I sent an email, I put myself in the gym on the site and then I sent a link to our pictures and sent it to a bunch of our friends. And it was like, I remember it was like, uh, it was forty two people, which I counted it later, but, you know, cause forty two is a magic number, right?

• 17:49Shaan Puri?

  Yeah, of course.

• 17:50Speaker 00

  But, uh, anyway, so I sent it out and like, uh, it just immediately took off. And I think by the end, that was at two o'clock in the afternoon and by the end of the day, we had had like thirty something thousand IP addresses in our logs. Just, you know, unique. And so that's probably, you know, back then, a lot of people went through proxies or like AOL and a lot of these dial-ups use proxies. So it was probably like, you know, a hundred thousand people or more. And, uh, we're like, holy shit, like, that was crazy.

• 18:16Shaan Puri?

  So people were just sending it to their friends?

• 18:17Speaker 00

  Yeah, people were just sending it and like within an hour, we had, you know, had like twenty or thirty submissions. And so I was like, okay, we can take off the fake photos now because like, you know, that was, cause it was so slow because it was running on that one machine. I think like one, like after you voted, it would, um, it would take you to the next page view where it would tell you the score of that person and then show you someone else to rate. And that, the turnover of that page was about twenty seconds. Like, people were doing it and like clicking away to like going to their other browser window, doing whatever and then coming back. But people, it was amazing, like people were just doing it. And, um, so we're like, holy shit, like this is nuts, like, um, it just took off like crazy. And, um, so by the end of the week, I think we were doing like a couple of million pages a day.

• 19:02Shaan Puri?

  And this is all still running on a laptop or at this point you start scaling it?

• 19:04Speaker 00

  No, I'll get to that, but yeah, yeah, like there was, there were all these crazy stories about how we scaled it, but like. It got to two million a day and then like within two months like we were in People Magazine. I think like we were one of the top twenty most trafficked websites on the web at that time.

• 19:18Shaan Puri?

  You had your Turkish stud.

• 19:20Speaker 00

  Yeah, we had, we beat the Turkish stud, right?

• 19:22Shaan Puri?

  He has you as his screensaver.

• 19:24Speaker 00

  You know, the funniest thing about that is that it turns out that the Turkish stud got popular because he first hit the scene because there was this woman at salon.com salon was like an online magazine back then that was pretty popular. There's this woman who is a writer named Janelle Brown and she wrote about the Turkish stud. She made the Turkish stud happen really because I think that's how Etor and everyone else found out about them. Well, my friend was called me up like the first day that we were running it. He's like, hey, I got a friend who works at salon.com named Janelle. Can you talk to her? I'm like, okay, you know, like we'll talk to her, but like we have to remain anonymous. Because we didn't know if we were gonna like get in trouble or you know, like people were gonna be offended by this or whatever. And so he's like, okay, she said she'll talk to you anonymously.

• 20:05Speaker 00

  And then so I did, I was talking to this woman, Janelle, and she was interviewing me and she's clicking on the site while she's doing it and then she's like, and we didn't have that many photos on the site at the time. So she hit mine. But there's no way for her to know that, but she's like, wait a minute, is this James Honk? I'm like, uh, yeah.

• 20:26Shaan Puri?

  How did she put two and two together? How did she put a phone call?

• 20:28Speaker 00

  Because Janelle Brown was the very first person I met in college. She, her door literally faced my door in the dorms at Berkeley. So I was like, she's like, James, it's Janelle Brown. I was like, hold, because at that point I just knew her, his friend Janelle. So I was like, oh my God, like Janelle, like, please don't tell anyone I'm doing this. So she's like, okay, okay, no problem. You know, I said you would be anonymous and I'll respect that, right?

• 20:54Shaan Puri?

  Wow.

• 20:54Speaker 00

  So, so she did, actually, but the traffic actually got so bad that first day that I called her. Saying, "Hey, Janelle," like... Don't run it. Yes. I was like, "Can you please not run it?" Because like, remember, like, we were running on a server that was at a time when, we were hosting the photos and it was a thousand dollars a megabit per second. So I figured like, at the end of that day or whatever, I was like, "Man, this thing's gonna cost like, the run rate was like, you know, fifty thousand dollars a month and it was doubling every like, whatever hours." And, and so the, the trick with bandwidth pricing, like, no one knows this anymore because everyone just goes to AWS and gets charged on throughput. But back in the day, like, when you, when you pay for bandwidth,

• 21:35Speaker 00

  most carriers will give you, will bill you at the ninety-fifth percentile of your usage. Which means you have five percent of, you can spike to infinity and you're fine, right? So that basically is a day and a half on the, you know, in thirty days, right? So, we had basically a day and a half of forty thousand, uh, to do as much as we want, but we were approaching that day and a half. We're like, "Holy shit, this is gonna be forty thousand dollars a month" or whatever. Like, we were, actually, we almost shut it down. Yeah. And, uh, so I, I told Janelle, I'm like, or asked Janelle, like, "Can you not run this?" She's like, "I would love to help you, but it's a slow news day." So, so, you know, like, now I understand how journalists work, you know, like, she, they're, you know, they're on a daily, like, they gotta put out something every day or whatever.

• 22:20Speaker 00

  And so I was like, "Oh shit." So, our solution was to, that night, we moved it to Berkeley. Because like I said, my partner was a grad student at Berkeley, so we like... So you used the university resources. I remember we drove to Berkeley at like, three in the morning. And, uh, we went to his grad student office and we set up the box. We, you know, hid it under his desk. We stacked books in front of the box. Like, it was just like this lone wire coming out from under his desk. That's costing the university fifty thousand a month. Yeah, gonna cost the university. And doubling, like, like I said, it was, it was doubling like, every like, four hours. Anyway, we turned the server, the site was down for a couple hours.

• 23:00Speaker 00

  We turned it back on and like, we looked at the logs, lot, you know, we tailed the log and it's like, boom, boom, boom, boom, boom, boom, boom, boom, boom, boom, boom, boom, boom. Right? So, like, we're like, "Holy shit," like, we, because we weren't sure if it was gonna die once we turned it off for a couple hours or whatever, right? Anyway, so... I remember that was at like 5:30 in the morning. We got it finally back up and then we like drove home and like crashed. And then Jim got like a call from his advisor at like nine or something. Apparently like the IT guy at Berkeley like spit his coffee out when he saw the logs or whatever the, you know, the NOC management tools and followed the wire, must have followed the wire. It's like, what the hell is this? Luckily he didn't turn the box off.

• 23:42Speaker 00

  You know, actually I remember we taped, I took like a box of thumbtacks and took half the box and put it over the power switch and taped it. So like maybe that was a signal to them not to turn this box off. But anyway, luckily Jim's advisor was a, he was the dean of engineering at Berkeley. And he was also one of the co-founders of like Cadence and Synopsys. He was like a father of that and he was also a venture partner at Mayfield Venture Partners. So he was like a very entrepreneurial guy, right? And so he's like, okay, look.

• 24:12Shaan Puri?

  This wasn't a problem. This was an opportunity to him.

• 24:14Speaker 00

  Yes, he, well, in his wisdom, he saw this is an amazing thing. He's like, okay, look, I will buy you a couple of days, like, but you gotta, you gotta figure something out.

• 24:24Shaan Puri?

  Yeah.

• 24:25Speaker 00

  And so we did, so we ended up calling Rackspace, which at that time was a rinky dink, very small company still relatively, but they were the leaders in managed hosting at the time. And I just happened to know, you know, I looked at their about us page and their VP of Biz Dev went to Stanford Law School around the same time as a guy named Josh Becker went to law school at Stanford. So Josh put me in touch with him and then I was like, hey, listen, you know, like we don't have any money, but I think we're a good poster child for you guys because that's their whole shtick is like, you don't have to have money upfront. You can, they can scale you up today because they have machines ready to go. You know, like, because back then, if you wanted to buy machines, even if we had the money,

• 25:10Speaker 00

  it would take

• 25:11Shaan Puri?

  Time.

• 25:11Speaker 00

  A month.

• 25:11Shaan Puri?

  Right.

• 25:12Speaker 00

  To get the machines and to rack them up and all that kind of stuff. So

• 25:16Shaan Puri?

  So you said this is the best marketing money you can buy.

• 25:17Speaker 00

  This is perfect. So they're like, okay, put a logo of RackSpace above the fold. Uh, we love what you're doing. We love the growth. Uh, and I basically said, look, I'm getting a ton of inbound inquiries about press. Like, I will mention you guys everywhere I can.

• 25:31Shaan Puri?

  Mm-hmm.

• 25:32Speaker 00

  And so they're like, perfect, let's do it. And to the, I mean, they didn't even, we didn't even know how big, how many machines we were gonna end up taking, and they didn't care. They're like, look, just when you need new machines, tell us. And we ended up calling them every night saying we need more machines, right? And they were like, yes, let's do it. Like, and we're like, we hadn't even worked out the terms.

• 25:50Shaan Puri?

  Full deal, yeah.

• 25:51Speaker 00

  Yeah, like, there was no paperwork at this point.

• 25:53Shaan Puri?

  Things moved, well, sometimes things move too fast.

• 25:54Speaker 00

  Well, yeah. And this is how the web really was back in the day. Like, everyone just kind of helped each other, you know, like, you know, I think eBay hosted Yahoo, or maybe it was the other way around, but anyway, you know, or maybe it was Netscape hosted eBay. Anyway, everyone used to help everyone. And so, yeah, so they're like, yeah, don't worry about it. Like, just get big and then we'll figure it out later. That's what we did. And, and so it grew and grew and

• 26:15Shaan Puri?

  What did the traffic get to kind of at its peak?

• 26:17Speaker 00

  Gosh, let me, it's been so long ago. Like, I think we were doing about maybe like fifteen million, ten to fifteen million pages a day. And you have to remember, like, today, like, that might not seem as big, but at the time, it was, it was hard for things to grow as fast as they do, because there was no social media. So like, when things got passed around, they were passed around by email or, you know, it wasn't as easy as just clicking a button.

• 26:41Shaan Puri?

  Mm-hmm.

• 26:41Speaker 00

  Which, you know, and, you know, any bit of friction reduction can increase the liquidity of any system by like ten X, right? So like, things did just did not grow that fast back then. And it just, I mean, like, today, like, it would have probably been like insane. Anyway, it was insane by those days' standards. And like I said, in, within two months, I think Net Nielsen or whatever had us as like, we were bigger than ESPN, you know? And it was just like two guys, like, in their underwear, like, in their living room, like, coding, right, or whatever. And, uh, yeah, so anyway, we cut that deal with them. And, but we still had the problem of like, they gave us, when we finally worked out the numbers, they're like, okay, you can have a year. They gave us a half a year of free hosting, and then a quarter of like,

• 27:24Speaker 00

  Fifty percent off and then a quarter of twenty-five percent off and then we and then in a year we would have to start paying so but that was more than generous right that was just amazing but we did know that like and at that point in time like we're like okay we made our Turkish stud we want this thing to keep going but Jim needed to get back to his dissertation and I needed to go back to finding a job or whatever we didn't think that there was any business model in this in fact we stuck ads on the site when it first started and I remember we were going through like twenty-four seven media or something some some ad network back in the day that was pretty big the CPM at that time was point two five cents CPM which means for every thousand page use we got point two five cents you know today it's like dollars right and so it basically wasn't enough it was barely

• 28:08Speaker 00

  enough like it wasn't going to cover anything right so we still needed to figure out how to like make this thing last so the first thing we did was that's when we stopped hosting photos and we started sending people to Yahoo and saying hey just send us the URL of the photo on Yahoo and let Yahoo basically pay for this right

• 28:23Shaan Puri?

  And that cut the bill by what?

• 28:25Speaker 00

  Uh well I mean that that killed almost all of the bill right now we just have to pay for the machines but basically all of the cost was basically all of that fifty thousand in doubling was bandwidth for the pictures right and you know the funny thing is a month or two after we did that Yahoo shut off all ability for anyone to host to to use pictures that were hosted by them but somehow we got whitelisted and and like two years later I was speaking at Berkeley and I I met a guy who worked on GeoCities

• 28:57Shaan Puri?

  He was your angel insider?

• 28:58Speaker 00

  Yeah basically and I was like hey listen I don't want to you know look a gift horse in the mouth I'm kind of nervous to ask you but why why are you doing this for us and they're like oh yeah you know like we love hot or not we just didn't want to be the guys who killed it so like I said people used to help people out it was really cool and but anyway we knew we had to get off of them so the first thing we did was we cut a deal with Ofoto you know people were starting to get digital cameras at the time and they were Willing to pay a bounty, you know, a dollar for every user that has a digital camera. So what we did is we said, hey, if you don't have a digital camera, which most people at the time didn't, go to GeoCities and Yahoo will host it for free. But if you have a digital camera, please go to Ofoto and they would pay us a dollar, basically.

• 29:42Speaker 00

  And they even paid us 25 grand upfront. Again, really just to help us out, you know, there's, there's a guy I knew named Mitch Brown who worked there who did BD. And at the time, the company was run by this guy, James Joakim, who, uh, he was CEO of Ofoto. He's now running Obvious Ventures with Evan Williams. Anyways, Emin, James, awesome people. James loved it too, so they were really just doing it as a favor to help us out. They didn't, they didn't really know us, right? But that's how the web was.

• 30:09Shaan Puri?

  And so, did it ever become a business or what ended up happening?

• 30:13Speaker 00

  So we realized it had to make money because we needed to hire somebody to run the thing. Because clearly like we weren't gonna run it. We were gonna go back to getting a real job or going back to finishing Jim's PhD. And so, but you know, like the ads were started, you know, slowly the ads started making more money. It wasn't enough to pay for the bills. That's why we added the dating side of it. So we were the first ones to do like the concept of what you'd call double opt-in dating. Like if you, if you say you're interested in someone, then they can say they're interested in you too. You know, like what Tinder is today, they have swipe. We invented the, to my knowledge, we invented the JavaScript auto submit radio button. Because back then, you remember, you had to hit submit every time you clicked a button. So Hot or Not was the first one that, uh, yeah, it was two clicks.

• 30:58Speaker 00

  So we made it one click. We'd never seen it before, so we think we invented it, but you never know, someone probably did it. But like, but we had to figure out how to do it on our own and...

• 31:05Shaan Puri?

  But that's amazing because now there's no rejection. It's like if we got connected, it's because we both said we think each other are hot.

• 31:11Speaker 00

  Right, because our whole thing was you have a highly liquid marketplace. There is no rejection because you don't even remember everyone you said yes to. And the other thing that it did was it protected the woman who like, you know, like, because basically we saw Match.com and all these guys is basically pimps, right? Like, oh, look at my, look at my, you know, all these, you know, women or men that you, you might think are hot. Like, oh, you wanna talk to him, you know, like, oh, you gotta give me $20, you gotta pay, right? And, and what that did is that, that what that ended up doing is like, that led to lots of men paying and flooding women with messages. And we're like, the women just look at their photo and go, no. And then that guy just like got basically ripped off. And the women got, you know, the signal to noise was too low for the women.

• 31:55Speaker 00

  And so we thought that was just kind of an inefficient thing, right? And so we thought, you know, doing it, basically it was speed dating. And doing it a speed dating, bringing speed dating online was a good idea. And so that's what we did. And that actually, so we turned that on. We turned on charging for it. So the way it worked was like one of the two people, once you matched, had to be a paid member. So it was equivalent of, look, a guy smiles at a girl in a bar, she smiles back. At the end of the day, someone's got to buy drinks, right? And it's usually not the girl. And that's how we had a payment model. So all of a sudden, like, as soon as we turned that on, I think it was, like, within a month, it was, like, by the end of that year, we were at like a half a million dollar run rate,

• 32:38Speaker 00

  which was enough to like hire someone and pay the cost or whatever. I mean, like, actually, at that point, the cost was zero because we had the free hosting or whatever. But even, you know, if you have any, if you can find any model that can convert even a small percentage of, I think we were converting, actually, we were converting, like, 5% of our users were paid, including the women. And then by the end of it, we had optimized it to like 20% of people who joined paid, right?

• 33:03Shaan Puri?

  Awesome.

• 33:03Speaker 00

  It was enough to pay for everything. And then, you know, it doesn't matter, if you have scale, if you can even have any model that makes enough money, if you are a lean operation, you can definitely pay your salaries and have like a lifestyle business if you want, right? And so that's what we had. Basically, we were doing half a million and it just kept growing, like, organically. And so all we had to do, at that point, we were basically like, we were the modern day equivalent of people who ran a laundromat. Like, we just have to keep these machines running and, you know, we have to install new machines to support. And, you know, like, we have to, like, but we're just collecting quarters. And, uh, yeah, so that, so we kind of stumbled upon, it wasn't, you know, like, it sounds much more intentional than it was. It was like, uh, we kind of stumbled into having a very profitable business.

• 33:48Shaan Puri?

  And then you decide to sell the company at some point?

• 33:50Speaker 00

  Well, yeah, so we ran it for eight years. Around year three or year four, we finally started, we hired people. So what happened is we ran it for three years or so out of the house, just the two of us. And at that point, we were doing like three to four million in revenue. Almost all of it was profit. My co-founder started riding motorcycles. And at some point, I was like, hey, you know, like, if you, if something happens to you, that's probably not good for Hot or Not. You know, like, and, and also, like, frankly, he was tired and I was tired. Not to be a buzzkill, but... Well, I mean, like, we were also like, look, I mean, at that point, we were running like, he, he was running ops on like a hundred machines. You know, he was having to go to the data center all the time. Running the ops probably got tiresome.

• 34:33Speaker 00

  He automated it as much as he could, so he wouldn't have to go in that often. But at some point in time, we brought in a friend of his from high school, Greg Lynn, and we brought in Don Polak, who did customer service. Because at that, by that point, I was doing a lot of the customer service emails and stuff like that. And so we brought her in, and so we basically had now a company. We had employees. And then we started hiring more people and more people. Not that many, but we hired a few more people. And then it kind of became like, we, we had responsibility. We had employees and we had to, you know, we always have to manage people to some degree. And that wasn't really either of our thing. And so we both kind of flamed out on, on it. We're just not very operational people, either of us.

• 35:17Speaker 00

  Or it's, I wouldn't say we're not operational, it's not the part we enjoy. And so the more people we hired, kind of like, the more of a drag it became. And yeah, we both got tired, probably year four, year five, I would say. Then I took a break and Jim took over. And then Jim left and I took over. And then at some point, we're just like, let's just, we're just gonna sell this thing. It was right before the 2008 crash. So it was a good timing in that sense, but we probably let it go for a lot less than it was worth, just because it was a downturn. Right. Because at that point in time, it was doing like six million in earnings. But both of us, frankly, were so tired of it. And, you know, our good friends had just started, uh, Jim's really close with Steve Chen at the time, from YouTube, and we watched them go from zero to 1.6 billion in like, how long? You know, like a year. Yeah.

• 36:02Speaker 00

  And we didn't really see Hot or Not getting to that scale that quickly, ever.

• 36:09Speaker 00

  Arguably, you know, you see what happened with Tinder and maybe that's true. Although it's not clear Hot or Not would become Tinder because Hot or Not had the rating part, which made it grow, but could also hold it back from being pure play dating. But in any case, we were just like, screw it, you know, like, we both just wanted to do anything else. At that point, when I had left, I had started this thing with Al Lieb. He was a co-founder of Evite called Save My Ass, which would send your girlfriend or wife flowers on a regular but semi-random basis. It was one of the first subscription commerce. It was one of the first subscription commerce things we'd ever, I'd ever seen. But then I had to go back to Hot or Not, so I stopped working on it. Al started ClearSlide, which took off, so he had to, so we ended up shutting it down just because, it was actually doing decently well, like, the scale was, but anyway, neither of us could deal with it.

• 36:52Speaker 00

  So, yeah, we ended up selling the company mainly because we were just tired of it and wanted something else to work on.

• 36:58Shaan Puri?

  And so how did, again, because you make your first mill and you made it basically during that, while you were collecting quarters, like you said. You're running the laundromat.

• 37:07Speaker 00

  Dude, that was an awesome period of time because I was like, I was still in my late twenties. We had the system sending us stats like at noon and at midnight. And that was mainly so we would know like how the system's doing, if it had problems or not, you know, how many matches were made per hour, blah, blah, blah, or up to that point in time. But it also had how much money we had made up to that time for that day. And so at noon and at midnight, I would basically get this thing saying, "Oh, today you made $10,000, $15,000, on a good day, like $20-something thousand dollars." And, you know, I would have to divvy it up, figure out my portion, but I was like, holy shit.

• 37:45Shaan Puri?

  Right, this is magic.

• 37:46Speaker 00

  Yeah, it's funny, it's like, I had a bunch of my friends always knew like when we, because basically I had nothing to do. I was just going out drinking with my friends all the time, like, almost like five days a week. And at midnight, it would be like, I remember like, I think it was my friend Philip Kaplan. I just remember him like, "You buying?"

• 38:02Shaan Puri?

  Yeah.

• 38:02Speaker 00

  Right, because like, because he saw me pull out my phone at midnight and I'm like, "I'm buying, yeah." But it's funny, like, yeah, back in those days, like, no one was making money on the web. This was like the, like, the dark period, right? I mean, I used to like go out drinking with Philip all the time, Evan Williams from, you know, at that time, he was doing Blogger. He was like, you know, I met Evan because I'd sent him a message saying, hey, like, he was about to practically shut down Blogger. It was just him by himself at that point. And I was like, hey, you know, we had all this excess bandwidth at this point. So I was like, hey, if you want free photo hosting, happy to help you out, right? So that's how I met him and that's that we became good friends. And so like, I remember I would pick up Evan from his apartment in Noian like, you know, like, he didn't have much money at that point in time. So I was like, I was like, I was the baller, right?

• 38:47Speaker 00

  So, yeah, so like, you know, how times have changed.

• 38:50Shaan Puri?

  This one's on you, right Evan?

• 38:53Speaker 00

  Yeah, yeah, yeah, basically. But, I mean, like, anyway, like, those were really the days because the people who were still around, no one knew that we were gonna make money at the time. And like, we were in the, we were one of the few people who were making money. Most of the people were having a hard time. But, you know, like, a lot of like, really famous names were still, like, after the dot com crash happened, all like, the MBAs kind of disappeared. And the only people who were stuck around were like, the people who were just like, passionate about it. So many people that are like, huge today, were just hanging out back then. And it's like, you know, because people were always like, oh, how do you know all these people? It's such as, you know, Silicon Valley, there are so many people, you know, running around, like, how do you know all these people? It's like, dude, like, there were like, 10 of us back then, we used to hang out.

• 39:36Shaan Puri?

  Right, very simple.

• 39:37Speaker 00

  Yeah.

• 39:38Shaan Puri?

  And so, so you're kind of amazing in that you've been here so long, you built one of the kind of staple named products that everybody remembers fondly. And since then-

• 39:50Speaker 00

  Well, everyone over the age of X.

• 39:52Shaan Puri?

  Yeah, if you don't know, that's like the litmus test. It's like, were you really around, or are you just, you know?

• 39:57Speaker 00

  Right, if I was single, I'd be like, ah, no, I probably can't date you.

• 39:59Shaan Puri?

  Yeah, exactly. And so, since then, you've transitioned to being an angel investor. Do you, I mean, how do you think about stuff now? Do you think about getting back on the horse and starting a new thing? Do you love investing and that's what you want to do?

• 40:13Speaker 00

  Yeah, you know, like, so I got, I mean, I was never an angel investor, I just invested in my friends, right? And so, like, people, and you know, like I said, people back then, we all, everyone helped everyone. So like, we would invest in friends- You know, you like you would invest in people you didn't even they didn't even know what they were gonna do yet. Right. And like, it was pretty cool like like.

• 40:32Shaan Puri?

  And what were the results of that? Because you know, some people would say, invest in your friends, that's crazy. This is crazy.

• 40:37Speaker 00

  No, actually, you know what?

• 40:38Shaan Puri?

  It seems to do really well.

• 40:39Speaker 00

  I mean, it probably depends on how well you pick your friends, right? Like, I stupidly passed on a lot of friends where I'm like, I don't see it or whatever. And now in retrospect, it's like, I passed on Uber, I passed, you know, I passed on like all these things where like, I mean, literally, I would be like a billionaire.

• 40:54Shaan Puri?

  Right.

• 40:54Speaker 00

  Post tax.

• 40:55Shaan Puri?

  If you just, if you just.

• 40:56Speaker 00

  If I just invested in the people that I actually liked, you know, but I think it depends on how you pick your friends. Like, all of the people that I enjoy talking to and being friends with tend to be like really smart and really quirky, too.

• 41:06Shaan Puri?

  Like creative.

• 41:07Speaker 00

  Like people, yeah, like smart creatives or whatever that, like, like people who are like a little crazy, but really smart and can pull stuff off. Right. And so those people tend to do well. And so, I mean, yeah, I mean, I've definitely done pretty well. I think, I mean, actually, I've never really compared to other people, but I think I've done pretty well with my angel investing. But, you know, like, I mainly just invest in my friends and I don't really see myself as an investor. And it's actually, in reality, being an angel investor is basically my cover for not working. Because I'm basically mostly just hanging out at home with my kids, you know, like I'm Mr. Mom driving. I'm like my kid's chauffeur, basically, taking them to school, taking them to swimming or whatever. But, but.

• 41:48Shaan Puri?

  I think about that a lot. And the other person, the person who introduced us, Michael Birch, he's another person who I feel kind of got out of the rat race.

• 41:54Speaker 00

  Yeah.

• 41:55Shaan Puri?

  He definitely does things, does lots of interesting projects, but he's not just saying, okay, you know, he sold Bebo for 850 million. Next one's gotta be a billion, right? He's not just endlessly in the rat race.

• 42:05Speaker 00

  I'm not gonna, I'm not gonna criticize anyone if they choose to be in the rat race and that's what they want, that's what they want. I'm all about, everyone has to figure out what makes them happy. And the only, the only advice I have to people really about this is, look, you only have to make yourself happy. Don't try to make other people happy. Live your life for yourself, but be honest with yourself about what makes you happy. Because like, society wants to tell you, oh, you should want to make a ton of money. Or you should wanna like not make a ton of money and go meditate or whatever.

• 42:34Shaan Puri?

  Right.

• 42:34Speaker 00

  And I'm just saying, you know, whatever is right for you is right for you. You gotta be honest with yourself. But if you can be honest with yourself, go do whatever you wanna do. Like, I have friends who have to be billionaires and like, look, that's not my thing. But if that's what makes them happy, go do it.

• 42:48Shaan Puri?

  Right.

• 42:48Speaker 00

  Right? But for me, like, you know, like, I always thought I would do something else again, but then I had kids and then like, you know, like how that that can be like all encompassing. And, you know, like for me, I just realized like, you know, I built an app that was like a YouTube for kids before YouTube kids came out. I was like, I just wanna learn to code again and I made an iPhone app. And my son at some point was like, and I'm a shitty coder, so I wasn't very efficient. I was always like coding until four in the morning, but the bus still comes at seven thirty, so I was getting no sleep. And I was always grumpy and I'm like, it doesn't matter if it's a hobby, I'm always thinking about it, right? And basically at some point, my son was like, Daddy, when are you gonna play with us again? And I was like, oh shit.

• 43:26Shaan Puri?

  Right, that got to me.

• 43:27Speaker 00

  So, well, I mean, like, at that point, it's a choice and I'm like, okay, fuck it, I can't do this. Like, I am so obsessive about anything I build that like the dad that I wanted to be, I wasn't able to be it. And so to me, I was like-

• 43:39Shaan Puri?

  What's the recipe for you now? What's the recipe that makes you happy?

• 43:41Speaker 00

  Listen, look, it's not to say that I don't love the idea of starting a company and look, and it's not for the money, it's for the adrenaline rush, right? Like, it's basically like gambling. Like, this thing's likely to fail, it might succeed, it might win big if it, you know. So it is like gambling in a way, but like we're, and so it's a huge adrenaline rush when you start a company. Uh, and the highs, that's why the highs are high and the lows are low. It's like being an entrepreneur is like volunteering to be bipolar, basically, right? And so, you know, like, but I had to decide and I said, well, okay, screw it, I'm not willing to sacrifice these things. So the next best thing is like I can just angel invest more. And so that's kind of what I've done. And, you know, like I, I think I've been pretty successful at it.

• 44:24Speaker 00

  Not as successful as if I just invested in my friends. That's kind of like my new strategy is like, okay, if I have a friend- Yeah, like I have a friend who just pinged me the other day and I'm like, you know what? I don't even need to know.

• 44:35Shaan Puri?

  Right.

• 44:36Speaker 00

  Because we had a call scheduled and I brought in a friend and then I was like, hey, guys, I gotta go take my kids to swimming.

• 44:40Shaan Puri?

  But I'm in.

• 44:41Speaker 00

  But it doesn't matter, I'm in. You know, and the funny thing is like, that's what happened with Odeo and Twitter with Evan. I was like, hey, after Blogger got sold, because actually Blogger, before it got bought by Google, he was in trouble and Nick Denton and I were both like kind of talking to Evan about maybe we could invest in it just to basically to bail it out, yeah, keep it going. And ended up not happening because he ended up selling to Google for, you know, whatever million, you know, in 2002 or something like that, 2003. And so when that happened, I was like, Evan, I don't care what you're doing next, I'm in. Right? And basically, and then when he returned the money for Odeo, I was like, let me know when to put back into Twitter, you know, and then there's a whole long story, I ended up not.

• 45:25Shaan Puri?

  Oh, no.

• 45:26Speaker 00

  There's a whole long story about that, it's a tragedy, but it's fine because.

• 45:31Shaan Puri?

  We're gonna make another podcast, my lost million.

• 45:33Speaker 00

  I basically decided I wanted to choose friendships over money and that's how that ended up happening. That's a long story short, and I don't regret that, actually, so, but anyway, so.

• 45:45Shaan Puri?

  So, so the other, you know, we gotta wrap up, but the one question, so normally I have these like five questions I ask at the end.

• 45:51Speaker 00

  Sure.

• 45:51Shaan Puri?

  But there's one that I'm really curious about for you because I see you as this incredibly creative guy who has, very humble, not saying, you know it all and all that stuff. I'm just curious, if you were 21 today, if I basically, if I took all your money out of your bank account, but I gave you back years and I say you're 21 today, you know, how would you make your first million today? What would you be curious about? What would you be playing in? What spaces would you be playing in if you were back in the game at 21 today?

• 46:20Speaker 00

  Well, listen, I mean, I think you can, as you alluded to earlier, you can make money in any space. So, I'm not gonna speak about what space, I mean, you should, you should probably work in whatever space you're gonna obsess about and that can be, you know, like you said. What I mean, it could be anything. It doesn't have to be tech, but like whatever you're whatever you're obsessed about, that's probably a good place to start because it's the people who like know a product inside and out that kind of can take it to the next level and do something innovative or whatever that'll kind of get you attention to make money. So forget about advice for us. I'm just curious what you would do. But what I will say to someone who's 21 is this, after the crash happened, we actually got a buyout offer for like six million in 2000. It was for the four of us and it was vesting over five years. And it was very tempting. We thought about taking it, but then at the

• 47:04Speaker 00

  end of the day, we basically decided that was not enough money to sell out our youth. Because when you're young, you have no liabilities. Like you don't have a mortgage. All you have is time. Right. You're drinking five days a week. But the reality is, time is all any of us have. Even at my age, time is all I have. Right? Money is like a man-made concept, right? Like, I have my time. And I will never have time with no liabilities ever again, once I like get a family, or have a mortgage, or whatever. Like, so, and at this point, I was living a really cheap lifestyle. Like, it's also true of like lifestyle. Like, once you lease that car, it's hard to go backwards. Right. Right? So if you, I would say this, like, keep your life as frugal as possible. Don't, don't, you know, don't borrow money to live lavishly, you know, like, basically, live

• 47:49Speaker 00

  as frugally as you can. Team up with people, co-founders, who also can live that lifestyle with you, so you don't have to raise any money. Even though it's easy to raise money today, I would still probably start things without raising any money. Just, I mean, like, look, you gotta live. So maybe you gotta raise a little money to pay rent. You know, you don't have to be in Silicon Valley. You can be in a, you can be in an apartment in Houston, you know, paying 200 bucks a month rent, or whatever, or 500 dollars a month rent, you know, as long as the two of you, or three of you can live and, and build. And then just keep, keep building, until you come across something that has traction, and then go scale it. Right? And, look, Like I said, like, nothing is like an HBS case, like, the first, like, very few people I know

• 48:34Speaker 00

  have something hit on their first try. Nobody knows what's gonna happen. You just kinda like meander in whatever kinda seems to be sticking, you like go in that direction.

• 48:43Shaan Puri?

  And so it sounds like what you would do is, uh, you would keep your burn rate low.

• 48:47Speaker 00

  Yeah.

• 48:47Shaan Puri?

  You would live frugally, you'd get in a house with a couple of friends and you would bang out ideas that you were just curious about or interested in personally.

• 48:54Speaker 00

  I would, personally, like, if, you know, like, we, I had the benefit of, like, we were living in Jim's parents, they had like an investment house, and, uh, so we were, I was living there rent free. Uh, no, actually, no, I was paying him rent, actually, like, really nominal rent. And then when Hotter Night took off, I was like, dude, I'm not paying you rent anymore. He's like, okay. I'm like, this is gonna be big, like, I'm not paying you rent. Um, but, uh, to the extent you can, keep your rate, your burn low, and just keep building.

• 49:20Shaan Puri?

  The story, the, the lesson to me is not save money, the lesson is value the time. And make sure that you're spending every year of your life the way you wanna be spending it. And one of the ways to do that is to keep, you know, get that reserve capital so that you're not gonna go trade your hours for dollars endlessly.

• 49:39Speaker 00

  I'm, I'm probably an extreme example of this argument. Look, I have enough money where I don't have to work anymore, I don't have any fiscal constraints, but I'm still not able to do this. Because I got my kids and I'm choosing to do that instead, so, you know, like, so it's, money is not, not the only limiter out there, and so when you get older, you're going to, you only accumulate liabilities in life unless you're willing to like, you know, just abandon everything, which is, you know, like, not, you know.

• 50:04Shaan Puri?

  Different strategy.

• 50:05Speaker 00

  Well, yeah, I mean, like, like I said, people can do whatever they want for themselves, but, like, that's not my strategy, right? So, life is not easy for everyone, you know, equally, and so, like, everyone has their own challenges on that. But, like I said, if you can, if you can get a job at one of these companies, go work for a while, save that money, don't increase, don't live like you're making that money, and then go do it. And do it with a friend, because it's very, very mentally hard to do it alone.

• 50:31Shaan Puri?

  Wonderful. Well, James, it's been an awesome conversation, man. I really appreciate you

• 50:34Speaker 00

  Yeah.

• 50:35Shaan Puri?

  You coming out. It's great, great seeing you again, great talking to you again. And I think a lot of people are gonna both enjoy the story of Hot or Not. A lot of people won't even have ever heard of it before.

• 50:42Speaker 00

  Yeah.

• 50:43Shaan Puri?

  So this will be the first time they hear about it.

• 50:44Speaker 00

  People I can't date if I'm single.

• 50:45Shaan Puri?

  Exactly.

• 50:46Speaker 00

  That's like the line.

• 50:48Shaan Puri?

  And then, and then I think what you, what you said at the end here about, about valuing your time and, and making the choice that makes you happy and not playing by other people's playbook. I think that's a great, great message. So appreciate you coming on, man.

• 50:59Speaker 00

  Alright, thanks.

• 50:59Shaan Puri?

  Awesome.