#152 with Trung Phan - Sam Talks About the Hubspot Deal & Ideas With Trung Phan

Sam Parr (@TheSamParr) and Trung Phan (@TrungTPhan) discuss: - How the HubSpot/The Hustle deal came about? - Why did Sam decide to sell? - What will be Sam's biggest purchase now that he's sold? - What will change with The Hustle and MFM going forward? - Trung brings some massive opportunities: financial engineering for good, improving the lives of prisoners and the big potential of paid Twitter Articles mentioned: - https://thehustle.co/he-was-facing-life-in-prison-now-hes-the-ceo-of-the-instagram-for-the-incarcerated/ - https://thehustle.co/how-one-man-went-from-a-life-prison-sentence-to-a-100k-engineering-job/ Thank you to Lemon.io for sponsoring today's episode! They are offering a 15% discount for the first 6 weeks of work for all MFM fans. Go to Lemon.io/mfm to claim the offer! Have you joined our private FB group yet? It's a page where people share each others million dollar ideas or what they're already working on: https://www.facebook.com/groups/ourfirstmillion. Editing thanks to Jonathan Gallegos (@jjonthan) 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.

• 0:21Sam Parr?

  All right, we're live, we're on.

• 0:23Speaker 01

  Okay, we're on, man.

• 0:25Sam Parr?

  Listeners, so Sean had a little work emergency, not like a real emergency, he just couldn't join the podcast today. So we have Trung.

• 0:35Speaker 01

  What up, man?

• 0:36Sam Parr?

  So Trung is a writer for The Hustle. He wrote for Trends. Now, he basically writes the daily email by himself to close to 2 million people a day. He is big on Twitter. What's your handle?

• 0:46Speaker 01

  Trung T. Fan.

• 0:48Sam Parr?

  So he's around. A lot of you guys hopefully know him, but he's been wanting to come on the podcast. Sean wasn't here.

• 0:53Speaker 01

  So I'm gonna be grilling Sam for everyone. And I just want to clarify, we do have some other hitters on the daily email. I mean, I did some heavy lifting in Q4 2020, but we got some hitters now. Jacob Cohen, I gotta give a shout out to the young one. He does great stuff. But yeah, I'm here for the listeners to ask Sam, when he was selling hot dogs in Missouri, if he ever thought he'd be selling a media company to a SaaS firm?

• 1:19Sam Parr?

  We have this group on this app called Apex. And it's like a private group where a bunch of my first million listeners are on this group and they anonymously say stuff. All of them make fun of me for talking about hot dogs too much. So I don't think I could talk about that anymore because they say I talk about it too much. So I don't know if you can go the hot dog route. But you know what we should do one day, Abreu? We should have Trung and his team come on and actually talk about how they write the daily email. I feel like a lot of people ask me that all the time. But it's way less sexy because it's basically Trung just locks himself in a room and does it. One time I talked to Trung at like 11 a.m., his time, and he was like outside with his kid at the playground. And I was like, "Trung, don't you gotta write the email?" He goes, "Dog, it's done. I did it already." He just took the day off. I was like, "All right."

• 2:02Sam Parr?

  We'll have to do that sometime. But yeah, the, our deal was announced, I think, last Wednesday. The company, The Hustle, has been sold to HubSpot. That includes this podcast. And we're gonna do a ton of cool stuff. I actually think we're having Kieran on, the guy who was like the champion of the deal at HubSpot. He's gonna be on this podcast tomorrow to talk about, from his perspective, why they did it. But today, we can talk a little bit about our company's perspective, and some things like that. Just so as everyone knows, and so Trung knows, because we got bought by a public company, we're definitely not allowed to talk about certain things, or to like, I'm gonna try my hardest not to make a joke, like, oh, you gotta go out and buy the stock, right? Because that's illegal. And I'm still learning all this, uh, as I go. I'm not as I go. I mean, I've learned a lot already, but it's definitely new to me. I have to make sure I don't do anything unethical or illegal on this podcast. So Trung, hopefully, uh, you'll be able to keep that in mind.

• 2:47Speaker 01

  Well, just for anybody that's wondering, the ticker is H U B S, so that, uh, is that gonna have to get bleeped out?

• 2:52Sam Parr?

  No, you're not. I don't think you're saying anything wrong. You're just saying the facts.

• 2:55Speaker 01

  That's a ticker. I mean, this one might have to get bleeped out, but I was telling Sam that, uh, of all the, uh, the hub companies that purchased, uh, The Hustle, I'm glad it was HubSpot. You guys can do the math on the other hub companies. What do you think, Abreu?

• 3:09Sam Parr?

  No idea what you're talking about, dude.

• 3:12Speaker 01

  There's a big one based in Montreal. We'll just leave it at that.

• 3:14Sam Parr?

  Well, so what do you want to talk about? What do you, what should we talk about with this deal?

• 3:17Speaker 01

  Well, why don't you tell the, why don't you tell the listeners? My, how, I mean, no one's heard from you other than that thread. Just tell them. Download on them right now. You're feeling.

• 3:23Sam Parr?

  Yeah, so we, um, a while back, so we've always had people wanting to buy us. A lot of media companies, and mostly all media co, or all BD companies and private equity firms. And I was never gonna sell to a private equity firm. Like, no, not a chance. Wasn't gonna be part of that. Media companies, I thought it was cool. So I went to like the offices of like, a lot of these cool New York publishers in Brooklyn, or some of the older ones that own lots of brands in Manhattan. I went to a lot of these companies, and they were lovely, nice people, but it was just not a culture fit. It was like, I remember I was like in this boardroom, or it felt like a boardroom. Like, you imagine like, boardroom in like, uh, just picture like an old white dude with a tie overlooking Central Park,

• 4:07Sam Parr?

  and me telling him, when I was 26 or 27, about like, this- Email where it's kind of funny because we could say the F word and we just do crazy stuff and yada, yada, yada. We once I wrote an article about doing a bunch of LSD like, and I'm like, this guy does not get it. Like, I'm just a line item to him and, and I didn't want to be part of that. I also felt that a lot of the media companies out there, they were dying. And they thought that buying us or buying a bunch of businesses like us would somehow save them. And I did not want to be part of that. So we never like trunk, name one media company that's doing great, like publishing media company who you'd want to own stock in. Are there any?

• 4:43Speaker 01

  No, well, I mean, I think you've talked about this before, but like, I mean, what the ones that raised major venture like four or five years ago, like the Vices, Budsees, the Voxes, just like those business models aren't gonna be able to last in 2020 and beyond. They're all tons of ventured, tons of growth expectations that there's never gonna be able to meet. So to answer your question, no.

• 5:01Sam Parr?

  And then like, is there any public company that is a like a traditional acquirer of us that you'd want to own stock in?

• 5:09Speaker 01

  Have you ever spoken to the Times?

• 5:10Sam Parr?

  New York Times?

• 5:11Speaker 01

  Yeah.

• 5:11Sam Parr?

  Not in this capacity. You're right. So that's one. I would want to own New York Times stock, but there's not many.

• 5:16Speaker 01

  No, there isn't. I mean, the other one is, I mean, it's a private company and it's at this point, it's a kind of nonprofit is whatever Steve Jobs' widow is doing, Lorraine Powell Jobs.

• 5:25Sam Parr?

  I've talked to them, but not in this regard. Do you believe that those companies can like three, four, five, six, seven X their?

• 5:33Speaker 01

  Oh, on the valuations, impossible. I mean, what's Vice? It was at its peak. It's a $5 billion company. It's insane.

• 5:38Sam Parr?

  Yeah. So when we met with these companies or just like thought about these companies selling to them, it destroyed me. I also think that a lot of media companies, particularly in New York scene, and I like, I make fun of New York. I love a lot of these people. A lot of them are my friends, but you know, just like in Silicon Valley, there's negative stereotypes. The New York media scene has these negative stereotypes. And in my head, it's the same people revolving doors at company, building the same shit. And most of it is horrible. They all say, oh, let's go to video. Let's do this. Let's do that. Now they're all saying, let's go to newsletters. It's like, dog, that was six years too late. But they're all saying the same stuff. And I didn't want to be part of that. And so in my head, I always thought, you know, who should buy us? We work. I thought we work should buy us like when they before we found out that they weren't that great. And then I thought, um, LinkedIn should buy us.

• 6:23Sam Parr?

  And then I started thinking, oh, what about like a Salesforce or like companies like this? And then last fall, HubSpot reached out to me. And I was like, oh, my God, this is finally happening. One of you companies that I that I always thought should buy us is showing interest. And so that was quite interesting. And then they just kind of explained their plan and it made a ton of sense. And I was like, all right, this is great. We got to keep talking.

• 6:46Speaker 01

  Why don't you explain just like briefly before Karen gives a full download? I mean, top level, what is the value prop for them?

• 6:52Sam Parr?

  Yeah, so basically the hustle, our vision from day one, here's been our vision from day one. We said that we wanted to build up this really large email list. And we're going to do it for like these, this entrepreneurial business minded person. We're going to make profits early on, which we did with advertising. We had about an eight figure advertising business. And then as we grow, we're going to use those profits to launch more stuff that we could sell directly to them. And our first thing was trends, which was a massive hit. I think it's a massive hit, but and then eventually it was like, all right, that's working. Let's launch another, let's launch another. And then it was like, all right, we're making all this profit. Let's invest in some of these cool companies that are trends members or hustle readers are making. That was kind of the long term goal. And HubSpot came to us and they go, yeah, we want to do this thing. And they basically described what I described.

• 7:35Sam Parr?

  They're like, we have these products, but a lot of media companies who have these great audiences, they haven't made like the really high margin stuff. And we could partner with them and kind of have a one plus one equals three type of thing. And so that's what they said to us. And I go, well, we are already going to do this. Maybe it is a good idea to partner so we can just get to it right away. So the idea with HubSpot is like, they have like 90,000 customers or something like that. And a lot of their customers, I think, are not a lot, but some portion of their customers are small to medium sized businesses. Well, the hustle has like a million and a half, almost two million of those people. And then we have tens of thousands of trends members and they're all that person. And so they're like, well, if you could get us like two or 3,000 new customers, we're talking like, you just gave us like a 3% bump in our customer base.

• 8:21Sam Parr?

  That's awesome. And so like, we don't need to sell that much stuff eventually. I mean, the way that we're going to look at this is just brand awareness can be like, get the brand well known. But this allows us to buy the best or hire the best writers, the best creators. I mean, the life that Trung is going to have, starting, I guess, today, whenever we that starts, is going to be probably better than everyone who works at the New York Times.

• 8:41Speaker 01

  I mean, I like some of those Twitter followings, but I to your point, I get it. I actually wanted to add something that I afford you something that Ross Simmons wrote from Foundation. I know you know Ross, he's a trends member. He did a quantitative back check on what you just said about the the audience that were that the HubSpot was getting with the hustle. So he looked at the the most frequently used words in the bios of HubSpot followers marketers, digital marketing, SEO. And then he looked at the most followed, the most used terms in the bios of hustle followers, co-founder, product, growth, strategy, data, completely different subset, right? But also somebody that HubSpot was going after. I mean, there's literally numbers put behind this that they found a very yin yang kind of acquisition here.

• 9:24Sam Parr?

  Yeah, it was great. And then here's what's something funny. As we were talking, the founders were like, kind of stalking us a little like, I could see Dar Mesh was like, friending me on Facebook and following me. Brian was doing the same thing. They were just wanting to check in and make sure we are legit. And I know Dar Mesh, I don't know him well, but we run in the same circle. I've never met Brian up until recently. And I saw Brian join trends. He must have bought it with just his company credit card and he was trying to fly under the radar. And I saw that shit. And I immediately

• 9:52Speaker 01

  You put him on.

• 9:53Sam Parr?

  I went to the group and I said, hey, everyone, Brian Halligan from HubSpot just joined the group. And he got like, 300 replies in like, an hour.

• 10:02Speaker 01

  That was hilarious.

• 10:03Sam Parr?

  And I told all my friends, I go, hey, comment on this for me, will you? There was reasons like, and people were saying like, oh, HubSpot rocks. I use HubSpot, yada, yada, yada. That's so cool. You're here. And I was hoping that in his head, he would feel like, oh, this is perfect.

• 10:16Speaker 01

  Well, I mean, clearly something worked.

• 10:19Sam Parr?

  Yeah, that's what I was hoping for. But anyway, so that's kind of how it came to be.

• 10:24Speaker 01

  Let's just, let's add this. This was, I mean, I don't think you noted this, but it was completely unsolicited that the the cold approach you got over the fall.

• 10:32Sam Parr?

  Yeah, yeah, it was just a cold email.

• 10:35Speaker 01

  They must have saw your lecture.

• 10:36Sam Parr?

  Yeah, and I was not intending to sell at all. I was never going to sell. There was a few reasons that the when I decided to sell, I had just recovered from a really bad illness. I was in a weird state and I was like, you know, like, if there's like a horrible emergency, like, it'd be nice to have this like a win under my belt. And I was just like, really sick. And I just recovered from Lyme disease, where I'd spent a ton of time in the hospital. And I was like, you know what? Let's just guarantee a win and keep building it. And I think that could be fun. And that's kind of like where I was when they called. But it was just a cold email.

• 11:06Speaker 01

  Have you in the last week, like mentally changed at all? Or, I mean, you've been telling me, yeah, it's not really just more of the same, but like, be honest, Eric, anything, anything changed. You were in a gray shirt on Friday. It's black today, man. Like, something's going on.

• 11:19Sam Parr?

  Are you asking like if I bought something?

• 11:21Speaker 01

  No, just in general, man, like you can't tell me that nothing mentally has not changed.

• 11:26Sam Parr?

  I don't know how most people are in this situation, but my like, I don't know how to put this in a non-douchey way, but like I had a fair bit of money before this. I had enough money that my that I was on like the high, one of the hierarchy of needs where I was like, I didn't need to worry about stuff. The thing that I've changed is that's changes, just the fact that like I proved to myself that I could start something and end it. And that is the thing that has changed. The money doesn't really matter because I already live a nice life. I already owned a nice home. I have cars and I've got, and I don't really buy fancy stuff. So there's, I mean, I'm not wearing a watch.

• 12:00Speaker 01

  You're a gym guy. You spend all your money on fitness.

• 12:02Sam Parr?

  I spent all my money on fitness and that's not that much money. You know, I've, I built a gym for five grand. I'm gonna buy a rowing machine. That's $2,000. That's like what I'll buy. Because I normally would try to get them to give it to me for free, but now I'll buy it. But um, no, I think the biggest relief is that I started something and it ended. And also the second biggest relief is that I don't have to worry about the stuff that I used to have to worry about. So during this process, we're gonna hire a CEO. And don't say his name, by the way, because Trung, because we haven't denounced who, we never actually said who the guy's name was and I don't want to call him out. He was awesome. I loved him and we almost did it. And then when this thing happened, I had to fill him in. I'm like, hey, man, I think we're gonna do this thing. So anyway.

• 12:46Sam Parr?

  The reason I was gonna hire a CEO is I hate doing stuff like managing payroll, negotiating with people about raises, checking in with people to make sure that like just traditional managing stuff. I hate it. I hated it so much to the point where there were some days where I'm like, I'm not going to work. I don't want to do this. I called in sick every once in a while because I'm like, I've got eight meetings. I can't do it like.

• 13:07Speaker 01

  Was Lyme disease one of the times you called in sick for six weeks? Was that a fake one?

• 13:11Sam Parr?

  That was a real one. My face didn't work. I was looking like this. No, I hated that. You know, someone tweeted something, you tweeted something Trung today. Where you like talked about MBAs and someone said founders found, managers manage. And that's the truth. And when I was managing stuff, I was horrible at it and I hated it. It felt like it sucked the life out of me. And so I'm so thankful that I don't have to do the type of managing of like worrying about like looking at balance sheets and things like that and making decisions. I can, I'm so bad at it and I hate it.

• 13:39Speaker 01

  Well, actually. Now that you mentioned a tweet, I think it's pretty funny to talk about because the content of the tweet was basically like, look at all the big thing, M companies, whatever, like Facebook, Apple, Amazon, Microsoft, Google. They're all run by MBAs now. I didn't even realize Satya at Microsoft was an MBA until I Googled it and it made the tweet way more fire. So, no, managers manage, founders found, and like if you're Larry Page and Sergey Brin and you're worth like eighty billion or whatever they're worth, you just wanna go off somewhere and do peyote, right? Like, they don't give a shit.

• 14:08Sam Parr?

  No, like, that's not where I was. You know what I wanted to do? I wanted to be locked in a room. I wanted no one to talk to me and I wanted to make.

• 14:14Speaker 01

  Right, right, right.

• 14:15Sam Parr?

  I wanted to create stuff.

• 14:16Speaker 01

  Yeah, that's what I was creating. Like, they're doing peyote and like trying to do crazy like moonshot stuff, right?

• 14:21Sam Parr?

  I wanted to make stuff. So like when we launched Trends, it was me, and I'm not like bragging here, but I'm just telling the story. It was me who made, literally designed the page, ran the paid marketing to it to get a little bit of traffic, called the customers to figure out, what did you like about that? What did you not like about? And I did that for about fifty thousand dollars with the customers and then we decided to launch it. And I kinda helped people figure out the vision and then I gave it to other people like Trung and Steph who are way better than me at it. And then they made it awesome. And I just wanted to only do that all the time.

• 14:49Speaker 01

  You're a starter guy. You're, you like starting stuff.

• 14:51Sam Parr?

  Yes, I cannot run stuff. I love starting. I mean, I can run stuff, but I like starting.

• 14:56Speaker 01

  How comparable would you say like you want the Portnoy rule where you just get to be on Twitter ten hours a day? He's creating, he's creating all day, man. That's all he's doing. He's, he's creating.

• 15:04Sam Parr?

  Yeah, but his creating is different than my creating. His creating is like performance art. I don't wanna do that, that's for sure.

• 15:10Speaker 01

  You want, you wanna keep making cool products like, oh, whatever.

• 15:13Sam Parr?

  Yeah.

• 15:14Speaker 01

  The community, keyword for the community.

• 15:17Sam Parr?

  Yeah, I don't care if my name's on it. It's just fun to tinker and that's just what I wanted to do more of. So, yeah, the deal happened. It was cool. A lot of fear, a lot of, uh, excitement. It's just a lot of Bix feelings, right?

• 15:28Speaker 01

  HubSpot, by the way, is like a twenty billion dollar company. Like, it, it, sometimes you have to check these things to realize it, how big these software companies are.

• 15:36Sam Parr?

  Yeah, and it was badass. I've spent a little time with the CEO. The CEO came to our meeting today. That was cool, right? He's just like a normal guy, I guess. He's just really successful.

• 15:45Speaker 01

  MIT dudes. I lived in Boston for five years. I lived in Cambridge. MIT and Harvard. I'll tell you about living in Cambridge. What's interesting about the area? You'll never hear, actually, no, you live in San Francisco. Those two places, San Francisco and Cambridge in the States, where you'll walk around the street and just hear overhearing stuff, it'll be like the craziest kind of random talk you'll hear. Somebody will be curing some random disease or launching some kind of program in the Middle East which will save the region. Like, these are the type of conversations that go on when you're just walking around. I mean, you know that.

• 16:17Sam Parr?

  Yeah. And so Abreu had a question, and he wants to know, what's gonna change going forward? Is the pod gonna be shit now? No. So, over the last three months when I've been working on this deal, I unfortunately have kind of left Abreu and Sean hanging a little bit. I haven't been, people were criticizing the podcast. They're like, "Man, you guys aren't focused enough, and you're not preparing enough." Well, I'm sorry. It's because there was 90-hour work weeks for this deal. So, no, I think actually the podcast is gonna be even better, because we're gonna hire some people to help make it even better. We're gonna get more distribution, because we're gonna spread it across our channels a little bit more than before. We're gonna spread it on HubSpot channels. We're gonna have some more money and budget to make it great. And then, maybe we'll do it more often. I'm not sure yet. But, we're also gonna be releasing a ton more podcasts. Maybe Trung's gonna have his own podcast.

• 17:02Sam Parr?

  Maybe some other writer who we find is gonna have their own podcasts. And so, we're gonna actually have more. In terms of changing on the consumer's point of view for the hustle or for the pod, nothing. I don't think anything is gonna be changed, except we're gonna do more of it. And maybe you'll see a HubSpot logo on some stuff.

• 17:19Speaker 01

  It's gonna be more of the same. That's how I, when people ask me, like, I got a lot of congratulations. I'm sure you got like a multiple of a thousand. But they're like, "Hey, man, how's this changed for you?" I'm like, "Honestly, nothing really. Just, I still gotta work on those five emails a week." And honestly, at the end of the day, nothing really changes for the content side.

• 17:35Sam Parr?

  Well, we're gonna hire more people, so right now, like, we didn't-

• 17:38Speaker 01

  We'll hire more people, but I mean, like, the job's still the same, right?

• 17:40Sam Parr?

  Yeah, like, some great writers cost hundreds of thousands of dollars, and like, we could never afford that. Now, we can, and hopefully, we can go, or, you know.

• 17:47Speaker 01

  All right, send those, send those applications in.

• 17:50Sam Parr?

  Yeah, I don't want to give any applicant a false sense that they're going to get hundreds of thousands of dollars. I just mean like, we're working at a tech company now. It's a lot different than a 30 person media company. And that's interesting. Another thing is, I think a lot of these media companies, because they're reliant on advertising, I think they're so screwed. And they're not screwed, like they're necessarily going to die, but they're screwed in that it's a horrible place to work.

• 18:14Speaker 01

  Yeah, it's high, high pressure and you gotta deliver, like you said, these numbers. But you know what, you've been, I mean, you've been a very even keel person about it because you run an advertising based business, but you also have a subscription based business. So I think, I mean, when you kind of opine on it, I'm like, oh, you know what? I'm going to kind of take sound word on this because you've seen both sides of it. I've seen you on Twitter, arguing both sides, right? Like, you're very honest about it.

• 18:38Sam Parr?

  Look, it's not bad. It helped us get us to where we had to go. But if we wanted to be, it would be really hard to become. I'm not saying advertising is bad to have. I'm saying it's great if it's part of your mix. But like, if we had Bonobo, one time we had Bonobos as an advertiser, and there was a shooting that we covered. And Bonobos was like, hey, like, we can't be running next to this, like, Nazi who just killed this. There was something like a shooting in New York where a guy shot, like a, what's a Jewish church?

• 19:07Speaker 01

  Synagogue.

• 19:08Sam Parr?

  Synagogue. Or something like that. And some brand, I don't remember if it was Bonobos, but they were like, you know, we don't want to advertise. So it was like, fuck, we just lost 30 grand that day.

• 19:17Speaker 01

  Absolutely. It changed, well, like you said, you could sell, the backend's real good now, it's the software, man.

• 19:29Sam Parr?

  Alright, so we just got done talking to the deal, about the deal. We're actually going to talk about it more tomorrow, or I guess in two days, whenever these go live with Kieran from HubSpot. So we're going to talk about that a little bit more in detail, but just wanted to give you a little bit preview on what happened with the deal. Now, let's get back into it with the old stuff. And we're going to have Trung tell us some interesting ideas that he's looking at. Trung is the writer of The Hustle, a writer at The Hustle. Let's do it.

• 19:55Speaker 01

  So why don't we throw some ideas out there?

• 19:57Sam Parr?

  Alright, I didn't prepare anything, did you?

• 19:58Speaker 01

  I did. Well, it's because I've been writing so much the last couple of weeks. I got some ideas here. So I actually want to ask you a very specific one. When you hear the word financial engineering, what do you think?

• 20:08Sam Parr?

  Bernie Madoff.

• 20:09Speaker 01

  Okay, so you think financial engineering, it's a negative connotation.

• 20:12Sam Parr?

  When I think financial engineering, I think of a thief.

• 20:15Speaker 01

  Okay, I think that characterization is pretty much out there. A lot of financial engineering happened in oh eight with the mortgage backed securities. Goldman was involved in a deal where they put a mortgage backed security bond together and they basically bet against it. This is actually one of the most famous financial engineers, which is a lot of fuckery involved, probably have to bleep that out. But when Greek tried to join the EU, you have to hit certain debt numbers. And Goldman basically said, listen, we can do some kind of financial instrument for you, which will make it look like you have a lot less debt than you do. Goldman made like seven hundred million dollars on this deal. And they basically lied to get the Greek government and Greece into the EU.

• 20:56Speaker 01

  And that basically led to the European financial crisis, right? So to your point, financial engineering, very negative.

• 21:02Sam Parr?

  Okay, but where are you going with this?

• 21:03Speaker 01

  There's a very positive story I just wrote about it, and it involves a professor at the school of our co-founders now of the company we work for, HubSpot, MIT. His name's Andrew Lo. Andrew Lo created a new financing mechanism for the biotech industry, which has now led to a company that's worth over eight billion dollars. And essentially what he did was he put financial engineering to the biotech industry. Because you know, for example, what do you know about the drug creation process? It's expensive.

• 21:33Sam Parr?

  It's expensive and it's hard and it fails a lot.

• 21:35Speaker 01

  Exactly. It's a lottery, right? So you'll spend two hundred million dollars for a chance, a five percent chance at getting a blockbuster drug might be worth twenty billion dollars. So Andrew Lo, about a decade ago, this professor lost six people very close to him, including his mother, to cancer over the span of four years. And this like made him to reassess his life and like look at his field and be like, what can I use my expertise with? He's like, he's like a godfather in the industry, a whole generation of quants were taught by him. And he's like, I'm gonna look at biotech to figure out what the issue is. And you're probably familiar with this term. Do you know the term of, you know, the value of death and funding? Some industries are unfundable, right? Like a solar reached the value of death like a decade ago. It's just very difficult to fund these like long shot things with long off payoffs.

• 22:20Speaker 01

  He goes, I'm gonna find a way to make biotech funding more viable. So he went and said, what if we got a hundred and fifty startups to get two hundred million dollars each? And that's a thirty billion dollar fund. And he ran the numbers and said, if on this fund, there is a ninety percent chance that you'll be able to get five blockbuster drugs out of it. So the key being this, though, each startup has to go after a different disease, be completely uncorrelated. And he ran the numbers and he's like, this now can make financial sense for an investor.

• 22:52Sam Parr?

  So explain this again. What do you do?

• 22:54Speaker 01

  You bundle, you you pool risk together. So instead of you fund a hundred and fifty startups attacking a hundred and fifty diseases.

• 23:02Sam Parr?

  But isn't that what a biotech VC firm would do anyway?

• 23:05Speaker 01

  No, he, the the thing is this, you have to specifically go after different diseases.

• 23:09Sam Parr?

  But wouldn't a fund, and wouldn't any smart fund already do this?

• 23:13Speaker 01

  No, but this is the thing is like the the the industry just hasn't been doing it. Like this is what he discovered.

• 23:19Sam Parr?

  And how's it going?

• 23:20Speaker 01

  One, one of his students took his model. And he went out, raised money from K K R, raised money from Sequoia. It's a public company now, it's worth almost nine billion dollars. They have twenty drugs in the pipeline and four of them are in phase three. So they literally applied his model and they're curing rare diseases and rare cancers.

• 23:37Sam Parr?

  Is that his name, Loeb? Andrew Loeb?

• 23:39Speaker 01

  Andrew Loeb.

• 23:40Sam Parr?

  So he's like the fund manager?

• 23:41Speaker 01

  No, he, the the company's not a fund. It's just a biotech firm that treats his model like this. They have a centralized research, centralized operations. Each new drug that they create, they spin, spin it off as subsidiary.

• 23:54Sam Parr?

  So where's the opportunity here?

• 23:56Speaker 01

  Basically, he created this funding model where you can attract money from conservative investors that wouldn't put it into biotech, which is otherwise way too risky. Cause he's saying it's actually de-risked by doing with this model. So to your point, you would think that it has been done, but it hasn't. And he created kind of this situation and went out, was a champion for it. And now he can go old guard money and potentially pension insurance money into this type of system. Before it just be vent- venture VC kind of biotech risky money. But now he's gonna pour all this other money into it and with his proven up model. The company's called Bridge BioPharma.

• 24:30Sam Parr?

  Bridge BioPharma?

• 24:31Speaker 01

  Yeah, check them out. So. To answer your question, there seems to be a little bit, a minutia of confusion here. You're like, aren't they already doing this? I think that the, my rebuttal, that is, the amount of money needed isn't going into it because it's still too risky. Let's say a biotech fund is like a hundred mil. Andrew Lowe's like, no, no, we need tens of billions of dollars. And he's out here championing this model. It's like, you gotta think bigger. You can't just diversify across ten startups looking at ten different diseases. He's like, I want a hundred fifty startups looking at a hundred fifty diseases. And looking at my model, I can guarantee the probability of three blockbuster drugs, which is probably worth fifty to sixty billion over a lifetime, is like ninety plus percent. So he's de-risking for a conservative investor.

• 25:14Speaker 01

  If you're an insurance company, you can actually look at this now and be like, you know what? This is viable, whereas before you would not.

• 25:20Sam Parr?

  So we had, um, we had Jason Calcanis on here a few days ago. He might be worth a hundred, two hundred million dollars, I'm not sure. I mean, he's, he's up there because he's invested in Robinhood, Calm, Uber, all these great things. And he says that that's his strategy with angel investing is like a little bit of a shotgun approach. I don't think he said this explicitly, but if you look at his track record, it appears as though, he's like, I meet with tons of people and I invest in a ton of stuff. It has worked for him. I mean, it seems like a pretty common model for high-risk investing. It's just quantity over quality because it's too hard to tell the quality early on.

• 25:53Speaker 01

  Yeah, absolutely. I, I think the thing I really want to emphasize here is that the low to no correlation. I think that is really what, because if you're looking at like, for example, the biggest killer in the United States is probably heart disease. If you're just trying to attack heart disease in different parts of it, they probably have the same underlying causes. So that model wouldn't work, right? You have to be very specifically, you're searching for diseases and maybe single, uh, gene mutations that are completely uncorrelated. Listen, I'm probably completely chopping up Andrew Lowe's, uh, paper here, but I thought it was super interesting because financial engineering gets such a bad reputation as when I asked you what your first instinct is to that word.

• 26:33Sam Parr?

  All right, what else you got, idea guy?

• 26:35Speaker 01

  So the other thing we wrote, and I think you saw this, you retweeted it, but I know you retweet a lot of my stuff without reading it, which I do appreciate. Marcus Bullock, the CEO and founder, former inmate, turned CEO of what they call...

• 26:50Sam Parr?

  Yeah, that's a crazy business. Let's talk about that.

• 26:52Speaker 01

  Yeah, so do you remember, you read the story?

• 26:55Sam Parr?

  Yeah, yeah, yeah, yeah. So basically, there's like a sob story along with it. I say that just, I don't mean that disrespectfully, but like, there was like, it was like a sad story. I think, if I remember correctly, he screwed up, got locked up, and at 15, I imagine, like, he did what he did, and so he just spent some time in jail, and they make a collect call, went to the point of, he almost like bankrupted his mother, right?

• 27:15Speaker 01

  His mom had to move from an apartment into a studio just to be able to afford to communicate with him.

• 27:21Sam Parr?

  Yeah, and what did he get locked up for?

• 27:23Speaker 01

  Arm carjacking.

• 27:24Sam Parr?

  Got it.

• 27:24Speaker 01

  And this happened six years, about six, seven years after the 1989 Central Park rape case. Remember, the jogger was raped by five, well, the jogger was raped by five minority youths was what they were charged with, but it turned out to be not true at all. But in the aftermath of that, the start of that case, every state in the United States basically said, "We're gonna start trying youths as adults." So he got totally fucked.

• 27:49Sam Parr?

  Bankrupt his mom, not bankrupt his mom, but depleted her funds. She had to completely change her lifestyle, just to talk on the phone with him once a week, however long it was. How much did it cost to make a collect call? Like, $12 a minute?

• 28:00Speaker 01

  $18 for 15 minutes.

• 28:02Sam Parr?

  18 for 15?

• 28:03Speaker 01

  Yeah, insane.

• 28:05Sam Parr?

  Yeah, and that was in the 90s, right? So a lot of money.

• 28:08Speaker 01

  A lot of money, and it's because the telephone system for prison system in America is run by basically two private equity-backed telecom companies.

• 28:17Sam Parr?

  Okay, and what is, what did he create?

• 28:19Speaker 01

  He created something that, he just looked around, he's like, "Everybody's using their phone for social media." Prisoners obviously don't have access to Twitter and Facebook, but what if I could create something that would be similar from the family side, and you can kind of still communicate with them? So it's very simple, you open an app on your phone, it's called Flikshop, F-L-I-K-S-H-O-P, and you basically do whatever you do with Twitter or Facebook. You click on an image and you send it, but instead of sending an image between phones, you are sending it to Flikshop, and they're gonna write a postcard for you with the image and the text. And what's amazing about the story is the hustle involved for him to get into like over twenty seven hundred prison systems in America. He was like meeting these wardens and administrators

• 29:02Speaker 01

  like in person, trying to convince them that they should allow Flickshop. And for the administrators of these prisons, it actually makes a lot of sense. They want to reduce recidivism inmates that go out and commit crimes again. But one way to do that is just keep them mentally healthy, right? Let them communicate with their family. Let them know there's job opportunities. A lot of corporations use Flickshop to send job opportunities and ideas. And the other thing that's a benefit to the prisons is Flickshop is a known vendor quantity. So you're not going to be getting ketamine laced into these postcards.

• 29:34Sam Parr?

  What? And how big's the business now?

• 29:35Speaker 01

  Uh, I don't, I haven't gone through the full numbers. I know he's sent, I think he's sent maybe hundreds of thousands of millions of postcards already. And I'm look, just looking at the landscape, I know that there are kind of these like on-demand, I think Fluttershop or something. I don't know if that's right, Fluttershop.

• 29:50Sam Parr?

  Interesting industry. Can, let me tell you a story real quick. So about two years ago, one of our investors and now a mentor and great friend of mine, his name's Chris Redlitz. Chris like helped start Reebok and then he was the first investor in Wish. He's been around. He's, he's very successful, real low key though. But about fifteen years ago, someone asked him to go volunteer at a prison to talk to them about technology. And he was like, what? I don't want to do this. What am I doing? And then he gets there and he does the presentation and he's like, I'm going to dedicate my life to this. He starts this thing called the Last Mile. And I went and volunteered at it. And basically I went there. He took me out to San Quentin. And this guy, he's met, I think he's met with like the Clintons and the Trumps.

• 30:34Sam Parr?

  He's met with, like on both sides of the aisle, they all support this program. And it's this in-depth program and it teaches inmates WordPress, basically, like relatively simple things, but it allows them to get jobs. Some of them have gotten jobs at Slack. He teaches them like front-end stuff, I think, a lot of WordPress, a lot of just basic web building stuff so they can get gigs. And I went out to this prison. And I'm a big crime guy. Like, I love like crime. I love like prison TV shows and like cops and all that stuff. And so like, I knew what San Quentin was because, you know, that's like, oh, you're going to San Quentin. That was like the, uh, you know, that's a big deal. And I was just walking around the yard. We go up there, we show up, we walk around these yards. And imagine just exactly what San Quentin is. It's like all dirt.

• 31:17Sam Parr?

  It's kinda overlooks water and there's these huge dudes, shirtless, lifting weights, mean looking dudes. And me and Chris walk in there and they part. They like get out of the way. It's like the Red Sea. For Chris. And they all go, hey, Chris, man, how are you? And he goes, like, what's up, Darren? Like, what's up? Like, he was God there because everyone knows if you get into his program, they have a zero percent, or they had a zero recidivism rate, meaning everyone over the last 10 years who went through their program, not one of them went back to prison.

• 31:48Speaker 01

  Do you know how many have gone through?

• 31:50Sam Parr?

  I think thousands, thousands, I think. Um, you could look it up. And so it was crazy. I was just walking around with these guys. I mean, these are, many of them are just.

• 31:58Speaker 01

  Dude, to be honest, were you scared? Like, you must have been extremely uncomfortable.

• 32:02Sam Parr?

  I was scared at first and then you start talking to him and it's like, I start talking to this guy. I'm like, hey, what did you do? He's like, I beat up a guy 20 years ago. He goes, I caught a guy cheating with my wife and I beat him up really bad and he almost died. He was like, I was just so angry and I just lost my temper and I flipped. And in my head, I'm like, yeah, I mean, you deserve to be here, but that was 20 years ago. You're doing better. So he was just a guy to me. He was wearing, um, you know, his, his inmate clothing, but besides that, he was just a nice, smart dude. And we were just talking about stuff. And, um, for the most part, it felt like normal guys who did bad stuff like years ago. And I don't want to generalize. I mean, obviously there's a lot of bad people there who deserve to be there, but it was crazy.

• 32:41Sam Parr?

  And so what he's working on now is they are, what he discovered was the same thing. It's really hard to communicate and very expensive to communicate. And it's hard to track people. And he said that, uh, like, I forget who it was exactly, but a lot of these private equity companies have like these prepaid cell phones or something like that. That, and they were gouging these, these families like crazy to use them. And so his new startup, I don't know if it's launched yet, but when you think about it, it makes sense, but it's crazy on the surface. He wants to give an iPhone to all the prisoners. Now, I don't know if this means like low security, high security. I don't know which prisoners exactly, but he wants to give an iPhone to all of them. They won't be able to use the internet, but it's a way to track them, to send them education stuff so they can learn how to prepare for work. A lot of really cool stuff. It's very fascinating. It's called The Last Mile and The Hustle. We actually did a great story on it.

• 33:27Sam Parr?

  Super interesting space and he says that this business, he goes, it's going to be massive. He goes, we're going to be as big as T-Mobile.

• 33:32Speaker 01

  He's looking at like a businessman, right? He's not looking at this. I mean, both parts. He's also looking at it.

• 33:36Sam Parr?

  Both. I mean, he runs a nonprofit that he raised money for and it just doesn't make any money. It's a, you know, they just pay, they cover their ass. But he's like, I want to make a business for this. And he's like, I want to come at it at the right direction. So it's like good for customers. It doesn't completely screw them. But if I make it for profit, that allows me to expand faster and reach more people. And it's a crazy, unique situation. This whole private prisons and that whole space, it is quite fascinating. It's really corrupt, but it's very interesting.

• 34:03Speaker 01

  Well, your friends at the Cicero Institute, you remember, remember your, the Cicero Institute? Yeah. So they sent us a bunch of stats about the prison industry. I mean, 2.2 million incarcerated. And what Marcus said was essentially, when you go to prison, your whole family goes to prison, right? So 2.2 million times what? Call it the average value, four or five people, maybe extended is 10. You're talking 20, 30 million people directly affected by the prison industrial complex, right? That's 10% of the US population. US expenditure, government and state and federal spent 81 billion on the prison system. So huge industry that needs a ton of change and I mean, you get the social good out of it. The long recidivism is huge.

• 34:46Sam Parr?

  Yeah. Super interesting space. We should actually do more research on this space and come back. If you want to learn about this, Google, uh, probably The Hustle. What were they Googled?

• 34:55Speaker 01

  The Hustle, The Last Mile. Zach wrote about it, right?

• 34:57Sam Parr?

  Well, Zach did The Last Mile. So Google The Hustle, The Last Mile. The Last Mile is three words, The Last Mile. And then for Trunk's story, Google, um, The Hustle and then what was it called? Flickshop?

• 35:07Speaker 01

  F L I K S H O P. I mean, we could probably throw these in a note, but yeah, this, and Marcus is crazy, is insane. Yeah, actually, the one part of the story that I just want to add before we jump into something else is I asked him, I'm like, in your, you know, your late teens, 16, 17, 18. And you're in prison, like, who are your mentors? Like, how did you become an entrepreneur? He literally said, he got hold of Jay-Z's album, his first album. And Jay-Z was rapping about these non-traditional paths to entrepreneurship. And he, the line that he said was from the song, You Don't Know, he goes, uh, "You can make forty off a brick, but one rhyme can beat that." So he's like, "Why be in the street hustling if there's these other paths that you could possibly use, right?" And, I mean, I'm sure Jay's influenced a lot more and inspired a lot more people.

• 35:51Sam Parr?

  And let's go to one more idea, but to wrap it up, what did that guy get from the article? Did he get a bunch of customers or anything?

• 35:56Speaker 01

  Well, I'll tell you, that one was, he wrote me and he said, "A, a state government reached out to him, and they wanted to put him in the flick shop and a lot of institutions." So, I mean, like, honestly, that was amazing, man, to get that message from him. He's like, and I'm like, and he wrote to me, he's like, "Trung, you know, this is amazing." I'm like, "Dude, like, what did I do? Like, this is your journey, man. Like, I didn't spend eight years in prison, right?"

• 36:15Sam Parr?

  You gotta be like, "Yeah, I helped you a ton, man. You got some equity or what?"

• 36:18Speaker 01

  Alright, man.

• 36:19Sam Parr?

  Alright, well, let's do one more.

• 36:20Speaker 01

  Alright, well, this one will be an easy one for you. I'm sure you got a million ideas on it. Tell me what you think about Twitter's subscription business.

• 36:26Sam Parr?

  Tell me about exactly what's going on. So, basically, Twitter bought this company called, is it Review? It's spelled like a really cute way, so I don't know.

• 36:34Speaker 01

  It was a newsletter business. I, I don't know if you saw them. Yesterday, Twitter said that they were gonna put subscription offerings, potentially, in this upcoming year. So, you can pay for the following things, it looks like, potentially. I don't wanna front-run a fake story here. You could pay for TweetDeck, which I don't use, but I've heard of really good things about. You can pay for a pro features, which is like more customization on your profile, and something about undoing sends, which doesn't really make a lot of sense to me, because I just delete tweets I don't like.

• 37:03Sam Parr?

  Yeah, but if you have a Twitter thread and you wanna delete number three of five.

• 37:06Speaker 01

  Okay, so that one I might actually pay for. And then the other one was tipping. You can tip accounts you like for extra content. I think that one's a no-brainer.

• 37:15Sam Parr?

  And they also bought a newsletter business.

• 37:17Speaker 01

  Yeah, Review.

• 37:18Sam Parr?

  Not a newsletter business, but a software that makes newsletters.

• 37:21Speaker 01

  Yeah.

• 37:21Sam Parr?

  And then Facebook say they're gonna do paid newsletters as well?

• 37:24Speaker 01

  Yeah, Facebook has a team doing paid newsletters, so, I mean, you're the guru here. Tell us what you think.

• 37:29Sam Parr?

  I'm happy we sold. That's a lot of competition. I think Twitter will work before Facebook works because Facebook's in the shitter right now. You know, a lot of the people who make paid content, I think, are on Twitter and trust Twitter far more than Facebook. I think that's amazing. I think I should go buy Twitter stock. I think it's awesome. I think that's a great, great, great idea. I think it's gonna be a massive, massive success.

• 37:49Speaker 01

  Yeah.

• 37:49Sam Parr?

  People are gonna rely on Twitter more, which is probably not good if you're a creator, but I think it's gonna make a lot of people millionaires. If there was some stock guru, like, and he was like, hey, I'm gonna tweet out like whatever I'm buying each day.

• 38:02Speaker 01

  Yeah, pay for the, tip me for the exclusive content.

• 38:05Sam Parr?

  Yeah, I mean, that's gonna be the biggest thing there is. So obviously, that's gonna be awesome. If Elon has a thing where he just, Elon would never do this because he doesn't want that money. But if he just is to say like, I'm gonna tell you my inside thoughts once a week or something. Yeah, it's gonna be the best. I think it's such a great idea.

• 38:18Speaker 01

  Actually, now that you mentioned that train of thought, the amount of sketchy insider stuff that could go on now is actually pretty insane. People that you know can move the market can just be like, alright, now you get the paid tipping to see me move the market beforehand. Whatever. I mean, I'm just putting it out there.

• 38:32Sam Parr?

  I think it's great. So we have trends. It's trends.co. You have to go to trends.co in order to buy it. There are some special stuff on Facebook where we can get people to purchase it in the content. If you're on your phone and you see trends.co, sometimes you can buy it right there in the app, and that's great. But trying to get new users, we post on Facebook and Twitter. The user has to click off, try to be sold on it, buy it, sign up. And each week, they're sent information in their email. And we know that removing a little bit of friction can increase the amount of users you get by two or three times. So you could have a 1% conversion rate, and if you change just a few things, you're gonna have a 3% or 4% conversion rate.

• 39:11Sam Parr?

  And if Twitter can make this, so my credit card is on file with them, and I'm just doing this like, oh, I want this, pop, pop, done, got it. It's gonna go through the roof. And I could tell you that the people who buy with Apple Pay convert at a much higher rate. Of course, people aren't always using Apple Pay on their computer, so we don't get that all the time. But I do know that having payments like that is gonna be a huge win and is gonna make it really easy. Also, I didn't know this, and this isn't like me joking. Do you know that there's like nudity on Twitter?

• 39:39Speaker 01

  I'm interested to know. I did not know that.

• 39:41Sam Parr?

  Yeah, you can get nudity on Twitter. I had no idea either. So the other day, someone told me. I'm like, wait.

• 39:45Speaker 01

  That would be the other help company we're talking about.

• 39:47Sam Parr?

  Yeah, it is. There's nudity on Twitter. I had no idea. I don't know if it's soft core or hardcore. I don't know what the deal is, but obviously we've seen OnlyFans take off.

• 39:55Speaker 01

  Dude, I didn't even think about that. Twitter literally might have just doubled its market cap based on this potential.

• 40:02Sam Parr?

  It's super interesting. I think that's a really smart, smart play. I don't think it's gonna work as well for Facebook. It's wise.

• 40:09Speaker 01

  I think the running joke, I'll probably leave it on last thought, is it took them this long to figure it out?

• 40:13Sam Parr?

  Yeah, the thing about Twitter is like, they don't innovate. I think if I was working at Twitter, or if I had power there, I would fire Jack Dorsey right away. Or I would say, you know, you're demoted to this thing and we're gonna put a new CEO in place. Cause they don't ever innovate or do anything new. So I think it's badass. What do you think?

• 40:27Speaker 01

  No, dude, I'm 100% on board. A little bit fair to them. I mean, they did have Vine. They just have a history of crushing things. Periscope, Vine. So, ah, I'm on board, man. I like that take.

• 40:38Sam Parr?

  Alright, so today's episode, a little, not entirely all over the place, a little new. Trung, this was your first, we're wrapping up, this is your first time on the podcast. Say your Twitter handle again. We need all the hate mail, but hopefully way more fan mail to go to you. So what's your Twitter handle?

• 40:54Speaker 01

  Alright, that's at Trung T Fan. That's T R U N G T P H A N.

• 41:01Sam Parr?

  Hopefully the people love it and you can keep coming back, but it's up to them.

• 41:05Speaker 01

  Yeah, that's fine, man.

• 41:06Sam Parr?

  Alright, thank you. We'll talk to you all soon.

• 41:08Speaker 01

  Yeah.