#148 with Jack Smith - How r/WallStreetBets is Beating Wall Street, Taboola's Billion-dollar Payday, and How Grayscale is Printing Money

Shaan Puri (@ShaanVP), Sam Parr (@theSamParr), and Jack Smith (@_jacksmith) discuss: - Balaji Srinivasan on why people will have to hide their real identities in the future - How Silkroad was actually a well-run company while co-workers remained anonymous (American Kingpin) - The crazy story of the founder of Silkroad ordering killings on his co-workers - Taboola's billion-dollar payday - Clubhouse just raised at $1B -- but are its best days behind it? - How Wall Street Bets is beating Wall Street - How Grayscale is printing money with GBTC - Why a VC firm (Andreessen Horowitz) is entering the media game Today's episode is brought to you by FOCUSAID. It’s the #1 and first nootropic drink in America that’s sold over 100m cans. For 30% off your first order, go to DrinkFocusAid.com. Check it out! 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.

• 0:25Shaan Puri?

  What's up? We got Jack here, Jack Smith. How are you, man? I'm good. How are you guys?

• 0:31Sam Parr?

  So, spoke at House of Khan where I met him years ago. Started this company called Vungle, which sold for like, what, $750 million? It was like an ad thing, which we're actually going to talk about today. Started Ship, which raised a lot of money, got a lot of hype, and what happened to that?

• 0:47Shaan Puri?

  Went to zero.

• 0:48Sam Parr?

  Went to zero. So you win some, you lose some, but you won a major one. The reason why you are here is because we want to talk about Taboola. At least I do for a second. But before we get into that, Sean, you invited me to this thing called Apex, right?

• 1:02Shaan Puri?

  That's right. And you did it all wrong.

• 1:04Sam Parr?

  Yeah.

• 1:05Shaan Puri?

  So, okay, we talked about it on the podcast. Apex is like a, supposed to be like a digital masquerade party. So you're supposed to show up, you pick a new name, that's your mask. Nobody knows who you really are. And then you come in and it's kind of like, it's a private group, but nobody has a real name. So you can kind of, the idea is you speak more freely. But of course, Sam first joins the thing like two weeks late, then he's like, "What's Apex?", as if we didn't talk about it.

• 1:31Sam Parr?

  No, I knew we talked about it, but I hadn't used it before.

• 1:34Shaan Puri?

  So he joins, and then he uses his real name, and then he goes on and says, "Hey, guys, it's Sam. What's up? I'd love to hear your feedback." Like it's a fucking Facebook group, which we already also have.

• 1:45Sam Parr?

  The reason I did it was I was browsing it, because I didn't bother to actually look, but I was looking now. There's only like 500 members. People were saying like nice stuff, that's great. Some people were saying really mean stuff. Is that crazy?

• 1:57Shaan Puri?

  Yeah, dude. That's what it's supposed to be. That's the juiciness of a pseudonymous platform, where you let them say what they want.

• 2:04Sam Parr?

  Someone said a thread, "Who do you like better, Sean or Sam?", and they just shit on both of us for like the stupidest stuff.

• 2:11Shaan Puri?

  Both of us, yeah.

• 2:13Sam Parr?

  It's okay getting negative feedback. They did like some mean stuff where I'm like, why does that even matter?

• 2:17Shaan Puri?

  But don't you just want to know what's actually in people's minds? Like, I love knowing what's actually in people's minds, even if it is like, it's some random point, or it's really mean. It's like, that's the stuff you never hear. Like, there's positive, there's compliments, there's constructive feedback, and then there's just the shit people really think about you. So this is the way to see the shit people really think about you.

• 2:37Sam Parr?

  Do I tell a story about using a pogo stick a lot?

• 2:41Shaan Puri?

  You did it once. I think it's because you have all these like random skills slash hobbies. And so each time it's a different one, it'll be like, I can dunk, I can skateboard, I can ride a pogo stick, I used to run track. Like, you always have like a thing like that. So that's what they were making fun of.

• 2:56Sam Parr?

  Someone made fun of me for like, he's like, I get it. You sell hot dogs and you're good at the pogo stick.

• 3:00Shaan Puri?

  Yeah, I thought that was hilarious.

• 3:02Sam Parr?

  Me too. That was a funny one. That was a, that was a good one. That was a good, uh, that was a good way to make fun of me. But people said some other-

• 3:08Speaker 02

  So what is this? This is an app? It's an app that's a group for the podcast listeners?

• 3:13Shaan Puri?

  I think this app can take off. So it's an app that I discovered called Apex that it lets you host this, these types of private masquerades, these private groups. I got invited into one that was super interesting. So then when I was telling that story, I was like, oh, well, we'll make one for this, this group, for listeners, and we'll put the, the link in there. And then it got hundreds of requests. And I was like, dude, I'm not going to go through and approve all these. Cause to get in the door, you have to link your, like, I made it where you have to show social ID, like, at the beginning. And then after that, you can't see who's who. But like, at the beginning, you could just make sure that they're not like bots or spam. The developer who made the app, he went, I was like, can you just auto accept all these people? And he just went and did that. So, so now there's like a few hundred people in the group.

• 3:53Speaker 02

  Did you guys see, um, you know, the Bellagi guy?

• 3:56Shaan Puri?

  Yeah.

• 3:57Speaker 02

  Yesterday, he tweeted, he's got a thesis that in 20 years, you won't know what most people actually look like. Because on the internet, everything will just be anonymous.

• 4:08Shaan Puri?

  I believe that. So first, I'm pretty sure in my, that first group that I got invited to, I'm pretty sure Bellagie's in there. You can kind of tell when people talk, because they say some ideas that really, you know, and he's such an original thinker that like, if he's saying it's either somebody just parroting what he says, or it's him. And I know he's- Friends with some of the people who who started the group. So I think that is him. But he's been saying this for a while. And actually, just yesterday, I went back and I watched maybe five different YouTube talks of his. Cause I went for a hike and I just put his YouTube talks on from back in 2013. He has two like big ideas. So one of them is what you're talking about, which is separating, you know, your real identity from your work identity. And your public social media identity. So he basically thinks the way that we treat like our social security number. That's how we're going to treat our real name and face.

• 4:53Shaan Puri?

  It's not going to be something you give out unless you have to, and you use that to like create accounts and those accounts have their own usernames. So when you go to work, you're not going to be Jack Smith with your face. You're going to be, maybe you're called like, you know, growth guy 33. And your growth guy 33, you work, you know, for some company. And when you show up on Zoom calls, you're not going to show your face. You're going to show like an avatar or something so that you can basically have a separate identity. And he called this five, six years ago, because he's like, he's like, social media is turning into a mob. And people are going to start getting, he didn't say the word canceled, but he was like describing cancel culture. He's like, you can just say something on Twitter and you could lose your job for it. That was your personal opinion and your free time on your social media.

• 5:35Shaan Puri?

  And that's affecting your career. He's like, so these things are all going to split. Your communications name is going to be one, your work identity is going to be another, and then your real thing is going to be like your social security number.

• 5:44Sam Parr?

  Do you remember last week or a few weeks ago, a few months ago, where we shared that Kevin Systrom, like selling

• 5:52Shaan Puri?

  Yep.

• 5:52Sam Parr?

  Instagram for a billion dollars, all being, not all, but a negotiated via text message, like messenger or something.

• 5:58Shaan Puri?

  Right. And then leaked. Yeah.

• 5:59Sam Parr?

  Yeah. Jack and I, I know do this with our friends and I guess what I'm getting is, do you? I don't know if you do this, Sean. I know me and Jack do this. Do you have friends who you rarely, or if ever have met, but you consider one of your closest friends and you only communicate via a texting version?

• 6:17Shaan Puri?

  Yes. I have people like that that I met on Twitter. Then I went to Twitter DMs. And then I went to like iMessage or Signal and you know, they've called me before and like, you know, I've hung out with them either zero times or one time in my whole life, which is weird, by the way, right? It's a weird thing.

• 6:31Sam Parr?

  So just to add to that.

• 6:32Speaker 02

  Like, um, as you were saying that Bellaji called this six years ago or whatever. Well, actually, I had read this book last summer that it was written in nineteen eighty one. And it basically describes this concept where this is like, pretty much even before the internet and stuff. It's called True Names. And basically, the concept is that your most valuable thing, even beyond your social security number, is your true name. And then these people live, they basically spend all their life in virtual reality. And their friends, they have no actual idea who they are. And even though they're friends, like, if they wanna get real power over someone, it's when they find out what their actual name and identity is. And these guys then are like, because they're like so powerful and stuff.

• 7:15Speaker 02

  And then so it's pretty interesting that, yeah, even like thirty years ago, this guy was predicting this.

• 7:20Shaan Puri?

  Do you guys think this is, because Balaji, he's a futurist, right? So first of all, everything he says, I think of him like somebody who literally is a time traveler. Like, he comes back in time and he says something to me and I'm like, okay, even if I don't understand this, this is just what the future is. I just don't know if it's five years, ten years, twenty five years from now.

• 7:39Sam Parr?

  He's crazy, not necessarily a bad way, but I think he predicts a lot of stuff and he's definitely right sometimes. But those types of people are probably wrong more than right.

• 7:49Shaan Puri?

  Sure, sure. I'm not saying he's right all the time. That's not what I mean to say. I mean, the things he says, they sound so foreign to today. Because there, he focuses on the future and like, kinda like the deep future and the radical future, not like small incremental changes. But like, what would the big shifts be? And there's one school of thought, which is like, you're never wrong, you're just early. For a lot of these predictions, like your guy who wrote this book in nineteen eighty one, right? Like, you're wrong until you're right for a lot of these big ideas. Uh, like the idea of Bitcoin, this universal currency, that's actually been around for a while. And then it was wrong until it starts to become right.

• 8:22Sam Parr?

  I believe in it. Did you guys read the book American Kingpin, the one about the Silk Road?

• 8:26Shaan Puri?

  I haven't read it, but I've, yeah, I'm familiar with it.

• 8:27Sam Parr?

  It's awesome. So you should read it. It's awesome. It's so fun. But anyway, Silk Road was a multi-billion dollar enterprise. All of his employees, obviously because they couldn't reveal who they are, they were only like identified by like usernames. And they had no idea who they were and they paid each other. And I was reading about it. It was a pretty harmonious work, like, it was like a good work environment and it was only username based. And people got paid and they had meetings. It was incredibly fascinating. So yeah, I buy into it.

• 8:54Shaan Puri?

  Did I tell you about the conversation I had with one of the early developers of the Silk Road? One of those guys?

• 8:59Sam Parr?

  No, what?

• 9:00Shaan Puri?

  He listens to the pod and he reached out and he's, uh, he's like, hey, this is who I am. Confirmed his identity and he's like, I was, you know, one of these people. If you Google my username, you'll see all these articles about me. He's like, I just, you know? And so I can't say too much, but like I talked to this guy for a while. Fascinating guy. And I can't say too much, but basically he was a fan of the podcast. Okay. So I'll tell you something crazy and I gotta ask him what I can say. We might have to just delete this.

• 9:33Sam Parr?

  Wow.

• 9:33Shaan Puri?

  If we cut it out, just know if you're coming back in right now in the recording, we just talked about some crazy shit that we had to cut out. Sorry.

• 9:39Sam Parr?

  Here's what I want to talk about. This is not that interesting on the surface, but I figure Jack could give us some intel. Perspective. So Taboola, you Sean, you told me you don't find it to be that fascinating. Neither do I, to be honest. I think that it's kind of like a shitty, not shitty. I wouldn't enjoy working there, but basically it's like those small square thumbnail ads at the bottom of a CNN article. And it says like, uh, 80 year old still looks like he's 50. Here's how. And you click and it goes to an article that explains why this supplement is great. And then a small percentage of people buy it. The company just filed to go, oh no, they did a SPAC, which is, uh, obviously all the rage, but they released some numbers.

• 10:21Sam Parr?

  And so they do about a billion dollars in revenue, 350 million of which they actually get to keep. So they pay out a billion dollars to the publishers and they get to keep 35% of that. So they have $35 million in revenue, 100 and something million dollars in EBITDA. So these are crazy profitable businesses only valued at two and a half billion dollars, I think, so not valued like crazy high yet. The reason why it interests me is Vungle. I don't know. I'll let Jack say if he wants to say any numbers. Uh, was like, kinda like that too. And then Sean, you're, uh, what's his name? Um, Furcon, one of Sean's best buds who's been on the podcast, started a company that's probably even bigger than Vungle and Taboola combined. These are crazy fascinating to me because like, they kinda seem like,

• 11:06Sam Parr?

  um, these ad tech businesses, they kinda seem like magical a little bit. Like, it's hard to, very hard to make.

• 11:12Speaker 02

  Magical money printers. Yeah, Jack, what do you think? Well, I don't know if it's necessarily hard to make, but what makes you think that it's hard to make.

• 11:19Sam Parr?

  So I guess we talk about a lot of basic ideas. We talk a lot about direct to consumer stuff. So like, Jim Shark, or something that just does a slightly better marketing. We don't talk too much about software. We talk about, uh, collectibles. Like, it's mostly like hard goods. I just think that there's something a little mystical about an ad network because A, like ads is online is one of the biggest industries there is. B, it's like always in the background, but we kind of, it's kind of forgotten. And C, some big players control it. It's just, I don't know. You don't agree with me that it's a little bit like mythical? Like, no, you know what I mean? Like, there's some mysterious bit about it that a lot of people who aren't insiders have no idea how it works.

• 11:58Speaker 02

  I think it is quite unique in terms of it's one industry where it's very easy to make sizable revenue, right? Vungle, there was a number of other companies started around the same time, which also got to hundreds of millions in revenue. So advertising, I think, is a way that you can make, uh, sizable amounts of revenue. It was actually harder to raise venture capital funding for it though, because like venture investors are like, oh, I hate advertising and for whatever various reasons.

• 12:30Sam Parr?

  Tell the story really quick about how you actually got, came up with this idea for, for Vungle.

• 12:36Speaker 02

  Well, basically, we were starting, we were working on a different idea, which was really shitty idea. It was basically an app store where every app would have a video showing what it did, instead of just screenshots. So it was cross-platform app store. And then the idea that this was not really going anywhere. And we were at this incubator called AngelPad, and there was basically just about four or six weeks till demo day. So we just had to come up with a business idea. And so in the space of two weeks, we basically just prototyped, uh, six different business ideas. I created fake landing pages for each one. And just tried to sell them. The main takeaway that I had from this incubator is that the guy told us, hey,

• 13:20Speaker 02

  I want you to go and call twenty of your prospective customers. So for us, that was app developers. And he said, don't pitch them, like, don't try and sell your idea. Just ask them, what is your biggest challenges in your day to day life? And so we called these guys and they were like, hey, we're engineers. We know how to build an app, build a game, but we don't know how to get users for this. So then we were like, okay, let's try out like six different ideas. So one of them was like, how to get reviews, like get on app review sites and stuff. And we tried selling it for like, we were like, hey, look, this is normally going to cost a hundred and fifty dollars. We'll give it to you for like twenty dollars. And people told us like, oh yeah, love this idea. It's great. I'll sign up as soon as I get home. We've got like zero sales, like people were just telling us the idea is great.

• 14:05Speaker 02

  They didn't actually want to sign up. Tried out all these different ideas and then actually serendipitously went into a meeting with an investor. And we wanted to record the meeting. So we were like, hey, is it okay if we just record this? Opened this like sound recorder app and it started like auto playing on full volume, like some video for Coke. Like we're trying to close a lot about the fuck. But then we actually just thought like, hey, wait a minute. What if we had videos like this, but like advertising other games and other apps instead of like Coke stuff? And so we went to those prospective customers who said, hey, what if you could have like a movie trailer for your app or game? Shown inside of other apps or games, like fifteen seconds. People were like, oh, I love this. I want to be your first customer.

• 14:48Speaker 02

  Put me down for like five thousand dollars, ten thousand dollars ad spend. As soon as you're ready to launch, I want to be the first customer. So they were throwing money at us. So then we knew that, all right, this is a good idea. But actually, when we told the guy running the incubator that we had come up with this idea, he was quite early on at Google and stuff. Basically, he said to us like, I just went on a whiteboard and I was like, yeah, it's kind of in the past week, kind of this is what I, how I think mobile advertising and advertising works. Like you kind of have games that want to get users and these other games will want to get paid. So we can show ads in there. The guy basically stood up and he just like slams his hands on the table, he's like,

• 15:29Speaker 02

  You guys don't have a clue about advertising. You just looked this up on Google in like the past week. There's people at Google and Facebook ads who have like 10 years experience in this. And you think that you can disrupt this because you just Googled this like five minutes ago. And so actually, I remember one day just like being in the toilet and then just like late at night because we stayed late.

• 15:50Shaan Puri?

  As a figure of speech, or you were literally taking a shit?

• 15:52Speaker 02

  Okay. Actually, like at 1am in this shared office space, everyone else had gone home and I'm just by myself. And I'm thinking like, we did what you told us to do. We went and spoke to the customers and asked what their pain point is. He was trying to push us to a different business idea. And so we, we actually just like had to basically stand up to him. And then we said, hey, listen, I know you really want us to go in this direction. If you do this idea, you're not going to get a single dime of funding. This idea sucks and you have no experience in it. You don't know what you're doing. And we said, listen, we really do value your advice, but we followed what you said and we think there's a pain point here. So we're going to go with this. And then he, we kind of make fun of him like a few years later about that. But actually, at the time as well,

• 16:35Speaker 02

  he introduced us to another company in the space. And I remember we were meeting with the founders. We'd just come up with the idea and the founder's like, oh yeah. So, um, yeah. Okay. So what, what technology are you using to power this? Are you using like RTMS or like the Fiverr? And we're like, I have no idea what you're talking about. But actually, it gave us a refreshing perspective because we could just think about things from the needs of those app developers.

• 17:00Sam Parr?

  And, and when it, and when fast forward to a couple of years, when it sold, how big was it?

• 17:04Speaker 02

  When it sold, I don't know the exact numbers, but hundreds of millions in, as you described at Taboola, like gross income. And then you pay out, let's say like 40% of whatever of the money goes to the publishers. And so you keep 60%. So in the hundreds of millions of revenue.

• 17:22Shaan Puri?

  There's a tweet I put out the other day. That's like one of these fortune cookie tweets, but I think it's true, which is if you, if you want to know how something works, you ask experts. If you want to know how something is gonna work, you ask a beginner, basically, right? So, so the idea is that experts can describe how things already work, but they're not great at describing how things could work or should work in the future. And that's where the beginner's mind really helps.

• 17:45Sam Parr?

  So one thing I've been thinking about, so Taboola works because they go at the bottom of. Who knows, hundreds of thousands of websites, they must get like a billion impressions a month. I don't know what it is, but it's a lot. One thing that you and I had always discussed was, we were like, we should create a tabula for email. And there is something almost like that, live intent. I think it's pretty shitty, but with the rise of email, I wouldn't call it the rise of email, but it's, it's popular right now. What's holding someone back from making this work for email, you think? Lack of impressions or what?

• 18:15Speaker 02

  Email's obviously been around a long time. Maybe if I was to look for opportunities, I maybe wouldn't be looking at email. You could often maybe look at like more emergent platforms like Clubhouse, for example. There's no monetization around that, right? Because email, it's just been around a long time, I guess, but that doesn't rule it out. Maybe one of the bits is that email obviously is an open protocol, but it's somewhat closed in terms of the only tracking that you have is if someone views an image and stuff, and then the kind of trend is to like block those things, you know, like, hey, app like blocks all the track, open tracking and blocks like images and stuff. So that's like one limitation, but yeah, you could do it.

• 18:59Speaker 02

  I guess the main bit was size of email newsletters and how many can you sign up? And probably the impressions it's going to generate is still a lot smaller than Taboola can, because Taboola has the whole internet as a target market. And you guys had mobile apps, which was new and gonna be huge. Because the thing is like, most new email newsletters, their numbers that they report are probably kind of fake, right? I mean, like I have 10 million subscribers, how many of them actually read it?

• 19:26Sam Parr?

  So there's an equation for any ad business. It's, I'm just making this off the top of my head, but I would have to think about, but like value is equal to number of people multiplied by the quality of people. A 12 year old is not going to be the same as like a 60 year old high earning doctor. So quality times quantity times the amount of page views that you get per person. I mean, is that about right?

• 19:50Speaker 02

  Well, I mean, again, you can't say, you can't generalize that a 12 year old is not as valuable as a 60 year old surgeon, because actually like in games, that could be the most valuable user is a 12 year old with their mom's credit card buying FIFA game pack. Stuff, but basically the way we saw it is how can you make the most money for the publisher and that is by providing the most value for the advertiser.

• 20:14Sam Parr?

  Volume, you said? Value.

• 20:16Speaker 02

  Value.

• 20:16Sam Parr?

  Which is de- it's a low cost per click.

• 20:18Speaker 02

  No, no. So this is the thing, like Fungled did differently as well is it was one of the first ones, the first advertising places to ignore that. So how the industry was before, it was kind of done, as you're saying, like it was charged like TV ads, CPM, cost to people that watch this. And then when we thought about it, we were like, wait, this app doesn't care how many people see their ad. They just want users. And so we were one of the first to charge CPI, cost per install. So we were like, hey, it doesn't matter if like 10 people watch the video or like a hundred thousand, just pay us a dollar every time someone installs something. So I think you need to abstract, what does the advertiser actually want? They don't want clicks. They don't want impressions.

• 21:01Speaker 02

  If they're D to C, they want sales. They want revenue. That that's all they care about. The other stuff is layered on top. They're like false metrics that kind of abstract or they have to do calculations to compute their core metric.

• 21:17Sam Parr?

  Is there anywhere in the ad space that even remotely interests you now or are you completely over it?

• 21:22Speaker 02

  People also said to us when we started like, oh, how did you get interested in the ad industry? We were never interested in advertising. We were just solving a problem that we observed as the most compelling problem in the mobile app industry. We were interested in mobile apps. We launched 12 to 18 months after the iPhone App Store had launched. We've got perfect timing in a high growth market. I actually had read about iPhone apps in a Gartner report. People kind of shit on Gartner reports, but actually that's where I saw these trends like, hey, mobile apps, iPhone apps are exploding. And this was the biggest problem in that industry. So it's not that I find advertising interesting, or I'd be searching for an advertising business. I would be searching for what are

• 22:03Speaker 02

  the emerging industries and trends and what are the biggest problems in that? It might be that advertising is a big problem in that industry, but I wouldn't, you know, be searching for an advertising solution.

• 22:15Shaan Puri?

  What's the next mobile apps?

• 22:16Speaker 02

  I don't know, right? That's the challenge. It's like once in a decade.

• 22:19Shaan Puri?

  Yeah.

• 22:19Sam Parr?

  You mentioned Clubhouse. I guess we haven't talked about it too much. Sean and I, I think, actually, this could be a good story. So our friend, my, I don't know how Sean, you got looped into him, but Narendra is, there's this guy named Narendra, who's a friend of mine. He listens to the podcast and thus became friends with Sean and he has us on a group thread and he texted me a link to Clubhouse. I think I was like user like 400 and I like logged in and I was like, this is so stupid. I hate this. It's just a bunch of Silicon Valley people. It's so lame. Narendra, this is dumb. And he kept telling Sean and I, no, this is cool. It's gonna be a thing. And like anytime controversial, something, he goes, look, guys, log in, like, listen to what these guys, I was like, oh, my God, I don't want to be part of this. This is so dumb. Well, he kind of called it.

• 23:01Shaan Puri?

  Well, there's news, right? So they just raised money at a billion dollar valuation, probably less than a year since like launching their test flight. So that's kind of amazing. Sam, do you still think it's stupid or you have revised your opinion?

• 23:14Sam Parr?

  Well, obviously, I'm, I'm wrong.

• 23:16Shaan Puri?

  No, no, for you, to you, is it, do you like it now or do you not use it?

• 23:19Sam Parr?

  I don't like it.

• 23:20Shaan Puri?

  Jack, do you like it?

• 23:20Sam Parr?

  I don't use it. I thought no one would like it and objectively, I'm wrong.

• 23:24Shaan Puri?

  I knew people would like it because we had built Blab and Blab was so similar to Clubhouse and there's differences, right? Like, you know, there was no pandemic happening during Blab where people like needed to connect, kind of like the whole world, you know, my mom does Zoom calls with the family now, right? Like, so everybody searched for some digital solution to talk to other people. So that was different. We were also, you know, video and Clubhouse's only audio. And that's, you know, could be a difference. We saw very similar things, which is that like some group of people, Narendra's of the world, they will make friends with a whole bunch of like semi strangers who they start to get along with on the platform and then a bunch of inside jokes emerge and then this habit forms where they start every night, 8pm, they just want to see what's going on. They get the notification that four people

• 24:06Shaan Puri?

  are talking and then they, they join in and, oh shit, four hours have flown by, six hours have flown by and like, I'm still on Clubhouse and like, wow, this is kind of addictive. And I still don't think this is going to work. In fact, I was debating a friend. I have a friend who's an investor in a bunch of social companies that were like the big winners, right? Like the, I can't say what companies this will give him away, but like, you know, many of the multi-billion dollar social networks. And I said, you know, are you a believer? And he said, I said, would you invest at this valuation? Because I think investing in a billion dollar valuation is, I wouldn't do it right now. The first round was at a hundred million dollar valuation. I also wouldn't have done that. He said, yeah, I would. It's a, you know, asymmetric bet, meaning small chance of success, but the success would be so huge, it's still the right bet to take.

• 24:48Shaan Puri?

  And I was like, yeah, but you can kind of talk yourself into that for like, any social product, right? Sure, if the social product, if Apex works, it's going to be massive. But if it doesn't, it's, you know, you just lose your size of your bet. And he's like, yeah, but like, this has a bunch of things that might actually work. And I was like, cool. I think I'm just too jaded. So my own failure with Blab has made me think that this can't work. And I think that's kind of a dangerous position to take.

• 25:10Sam Parr?

  When they announced this round, it says there's a million subscribers.

• 25:13Shaan Puri?

  Yeah, we hit four million, right? We had four and a half million when we shut it down. Those weren't all active. That was like total users within, and it was, I think, 16 months after we started.

• 25:22Sam Parr?

  So you guys had four million?

• 25:22Shaan Puri?

  Four million users. And I think on a monthly basis, we had 400,000 active. That's why we knew this is not going to work, because 10% of your user base being active every month is too low. And we also knew that like, the problem with some of these apps is, it would be one thing, if everyone was using Clubhouse with their friends, right? If we were using Clubhouse to shoot the shit, because oh, Sam's in Austin and Jackson somewhere else, and Sean's in California, you know, we need this Clubhouse to bring us together. That will grow like crazy, because everybody will invite their friends or their family to the app. The app will grow like crazy and it'll be super sticky. But apps like Clubhouse and what Blab did was, the fun was meeting a whole bunch of new people that you were hanging out with. Now, the problem with that is that doesn't scale, because you're not bringing your friends to the network. You're coming to the network to make friends. That's why Narendra likes it.

• 26:07Shaan Puri?

  He made a bunch of friends. Like, if you go on and see the rooms he hangs out with, I bet you those are people he's never met in real life. Like, they're cool people. They're people who has things in common with, but they were not his IRL friends. And so because of that, you don't grow virally, because people aren't bringing their own friends. And then it's also not sticky for most people, because most people will have the reaction you had, Sam. You go in, And you're like, if you don't immediately find a live chat room that's interesting to you. And also you don't have like the time and the bandwidth because it's like, there's no editing, right? So it's, it's gotta be like good right away and get to like something that hooks you. Otherwise you're going to bounce and you do that three times. You're gonna be like, why am I opening this app? I should just open Instagram. Every time I open Instagram, the top photo on my feed is on

• 26:50Shaan Puri?

  point. It's awesome. Even if that photo was taken three days ago, but the algorithm knows this is juicy. You're gonna, you're gonna get some dopamine hit of like pleasure or laughing or whatever from this photo. And here's the next photo, next photo. So that's the thing that those apps have that apps like Clubhouse and what killed Blab, they don't. So I would still be betting heavily against it. Now, that's not a cool position to take because like who, you know, what's the fun in rooting against a startup? Like, there is no market for me to go short the startup or bet against it because everyone's like, yeah, duh. Like, it's hard to build the next Twitter, but like, maybe this can be it.

• 27:22Speaker 02

  Remind, do you guys remember Meerkat?

• 27:24Shaan Puri?

  Yep.

• 27:24Speaker 02

  Yeah. That was just as trendy as this, right? I think part of this valuation is just the market environments for funding at the moment. So I mean, Meerkat would probably have raised a billion dollar funding when it has peaked as well. So I think it's just too early to call it. I do agree with what you're saying, Sean, that what I don't like about it at the moment and what I think will be a challenge is that all of the content is ephemeral, like it just disappears, right? Other places, as you said, Instagram, Twitter, this content is like evergreen. Like, I can see a tweet from like six years ago, maybe Bellagio sent out that thing six years ago, and I can like it and resurface and it's evergreen content and they're getting more and more content all of the time. This, they need to make sure the content is a star at every minute of the day.

• 28:06Shaan Puri?

  Which it won't be, right? So this is the thing. I went to a brunch. I think you were there, Jack, actually. Those James Courier brunches that he used to throw, the NFX brunches. I went to one of them while we were working on Blab. And he was one of the lead investors of Meerkat. He was one of the guys who helped Meerkat figure out what it was going to be. And I talked to him. I was like, man, I was like, we're hitting this problem. Meerkat's hitting this problem. Like, everybody on the outside thinks this space is so hot, but all of us on the inside are fucking panicking because we know how hard this is to get users to stick around when it's live unpredictable And he was like, yeah, he's like, he drew this like diagram with his hands. He goes, think about it this way. Every network, every app that you're going to open has to be interesting. So there's like this interestingness scale. You gotta be high on the interesting scale.

• 28:48Shaan Puri?

  He's like, and YouTube has this problem. Instagram has a problem. Pinterest, Facebook, everyone's trying to show you something interesting. And they have like millions and billions of photos to pick from, but they're, you know, they're going to show you something interesting. The algorithm does that. The problem with Meerkat and Blab and all you guys is then you cross section that with something that's super interesting that's happening right now. And that right now problem, the evergreen problem you're talking about, it doesn't make the problem two X harder or four X harder. It makes it like two million times harder. And that's the main problem. That's the one reason that really Twitch is the only live network. That has worked unless you count live TV, which I guess is, you know, a different sort of outlier with like highly premium produced content.

• 29:29Shaan Puri?

  And so Twitch is the only one where it's users creating content live and it actually works. And one of the reasons why is because when you're streaming a game, the person can kind of just come in whenever. There was no beginning, middle and end of a conversation. You just hop in, they're playing the game and you're going to leave whenever you want. And the streamer stays live for like eight hours straight. You know, so the interesting people are online for eight hours a day because playing a game is easy. You can actually do it for eight hours. Whereas talking on Clubhouse for eight hours would be impossible to be interesting for eight hours. And so that's the problem with apps like Clubhouse. And that's why like the fundamentals to me don't make sense. I think the valuation and all this stuff is for people who don't really understand what's happening at like how hard this type of network is to make.

• 30:09Speaker 02

  I don't know, like the valuation, I'm not that concerned about. I did see another tweet, someone, a Googler asked Eric Schmidt when he was CEO, I don't know if you saw this, at the time they bought YouTube, he's like, did we buy YouTube for the right price? People are saying it's a bit expensive, like 1.5 billion or whatever. He said, no, we definitely didn't buy it for the right price. It was either way too cheap or way too expensive. Ask me in 10 years. So I don't think this one billion matters. It's a binary bet. It could get massive.

• 30:38Shaan Puri?

  YouTube was already working. YouTube was already massive. It just might've died because of the, you know, all the copyright lawsuits that they were getting hit with.

• 30:45Speaker 02

  Instagram was pretty early when it got bought by Facebook and stuff, right? I mean, Not as early as this, but.

• 30:52Shaan Puri?

  Instagram was also sticky. And again, the like fundamentals of Instagram, you could see why that would work. You knew that people viewing photos on a feed, you know, that works. Oh, these guys have done it well on mobile and they're like faster than Facebook on mobile. They they sort of built Facebook for mobile. And so Facebook buying them made sense. I haven't seen the data, so maybe I'm wrong. Maybe maybe Clubhouse has some amazing retention metrics that have defied the odds of all the other others of us who have tried something similar. I doubt it.

• 31:19Speaker 02

  I think stuff points towards it not working. I'm just saying they're not judging the valuation based on data probably too much at this stage, right? It's it's like, oh, wow, this seems that this is a big opportunity thing.

• 31:31Shaan Puri?

  That means if it becomes a $10 billion company, you only 10 extra money. And I think that the risk reward there is so far off that, you know, to me, this is an example of investors, you know, just wanting to be the one who gets the hot girl at the dance. You know, like Clubhouse is the name everybody knows. And you can sort of talk yourself into it. Like becoming a $10 billion company is no fucking joke, you know? Like, I think Snapchat, when they went public, were what 10 or 20 like max? And that was 10 years in.

• 31:57Speaker 02

  Not to shit on him, because it seems like a great guy and some of his writings about his growth expert. But Andrew Chen has had a couple of big bet failures. Like he joined Andreessen a couple of years ago. His big bets are things like Atrium, which like died like 12 months later. Like, I can't remember his other bets, but some of them have like died.

• 32:17Shaan Puri?

  Yeah, I think he was also in Secret, which was like probably the last big social app to do this was Secret, where Secret comes out, it's in a small number of people's hands. It's super interesting and the tech guys love it. And, you know, it raised at $100 million valuation, boom, just like Clubhouse did. It didn't get to that next one at the billion. Yik Yak did, but Secret didn't. And then both of those died because of kind of fundamental problems, which were around, you know, like, you know, fully anonymous networks.

• 32:42Speaker 02

  What was interesting to me is like, I just don't really invest much in consumer apps because I just don't get it. And I think what is highlights that the most to me is that Sequoia. And I can't remember the other firm, but they are investors in WhatsApp, like the biggest consumer exit of all time. They're also investors in things like secret. So if these guys that have massive teams, they're looking at all the data, they're going to the board meetings of WhatsApp, they have all of these data points. If even them can pick a consumer app that like implodes like 12 months later, how am I gonna be able to pick the winner?

• 33:18Sam Parr?

  We talk a lot about a lot of cool stuff on here, but we never really talk about the social network, like these like poppy fun things. And is that, would you say it's because you, do you just hate that now? Because you see?

• 33:33Shaan Puri?

  No, no. So I'm not like, I'm not, I don't hate it. I am probably too scarred by it. So like, I'm scarred by it to the point where I would never go try to build another social app. I think it's like, just in terms of the risk reward ratio, I guess there's just so many better ways for me to have success than to try to be the genius who catches lightning in a bottle, you know, the lottery ticket winner who really comes up with the next Snapchat, the next Instagram, the next Pinterest, whatever, right? Like, I would love it, but damn, that's hard. And there's just so many other ways where I have a much higher chance of success. So I wouldn't do it again. But I love thinking about it. I love talking about it. I love using these apps. I try all of them, right? Like, I enjoy them. And I actually enjoy using Clubhouse sometimes. I actually thought that the real value of Clubhouse was for anybody who was on it during the first,

• 34:18Shaan Puri?

  like, three to five months, you could meet every single interesting person in tech, or even like Hollywood. Like, I had conversations with NBA players on there. I had conversations with, you know, Scooter Braun. I had conversations with, you know, from kind of like Justin Bieber's manager. All the tech people were on there. The VCs, again, I tweeted this yesterday, you can't get a meeting with these guys. If you try to schedule them, their EA will say, you know, they're booked till March. How's the third week of March for you? And then you have to fake also being busy and be like, let me check, even though you know, you have, you know, you don't schedule three months out. And then that guy will be on Clubhouse for three hours that night, you know, shooting the shit, doing nothing. So like, it was the best way to build your network and build your kind of friend group. And one, even one connection that came out of Clubhouse could really change the trajectory of your life, because all the people on it early

• 35:03Shaan Puri?

  on were heavy hitters. And then now, as it gets kind of like more opened up to more people, because they want more users. And now, you know, they send me a message that says, you have 30 invites. It's like, okay, they're trying to juice growth. They're trying to, trying to accelerate growth. Now that value is gone. So I don't think it's that interesting anymore.

• 35:18Sam Parr?

  So I know Jack has to leave probably pretty soon.

• 35:21Speaker 02

  Sorry, Sam. I was just gonna say, like, if there was anything else you wanted to talk about with the tabula thing, there was one or two points I had in. And also kind of felt like you should mention GameStop today. I don't know if you've been following it, but the craziest.

• 35:33Sam Parr?

  Yeah, go for it.

• 35:34Shaan Puri?

  Explain what's going on for people who don't know.

• 35:36Speaker 02

  Uh, well, with GameStop, I saw a chart saying that trading volumes for stocks are approaching what they were in the dot com bubble. Basically, for GameStop, BlackBerry, and like some of these other junk, what the professional investors would say are like junk, the fundamentals, like these are dying stocks. Like, GameStop is like a Pokemon card store, basically. At the moment, it's dying. So hedge funds were basically saying, hey, we think you should short this stock, like, the numbers are trash. People on Reddit in this group, Wall Street Bets, they basically clapped together. And they were like, hey, let's just screw these hedge fund guys and let's just pump this stock.

• 36:16Speaker 02

  Now, GameStop, the guy, this other actor, the founder of Chewy, had become an activist investor like six months ago, just saying, oh, I think I can improve them. He invested seventy five million. It's gone to over a billion in six months. The stock was up at one point over like a hundred percent today alone. Like, if you look at the stock chart, it just went up like down.

• 36:38Shaan Puri?

  It's a straight line.

• 36:39Sam Parr?

  It's a twelve hundred percent gain, seventeen hundred percent gain.

• 36:42Speaker 02

  I mean, like a hundred plus percent today alone, because everybody is like just buying like options calls that expire on Friday. Because basically what happens is all these people shorted the stock. But then if the stock goes up, they kind of have to cover their short positions. Because everyone's pumping this one stock, basically treating the stock market like a game. Kind of funny to see, but like, yeah, is approaching like dot com bubble levels of stuff. Because people were posting like really scientific sounding stuff in on the Reddit group, like, oh, yeah, this is called like a quantum short freeze, where there's not enough stocks. And then this, like, they're basically were chatting shit. If people even knew they were chatting shit in the comments, they were like. You formatted your post very professionally with like bullet points. Sounds legit. I'm in.

• 37:26Shaan Puri?

  Right.

• 37:26Speaker 02

  And then they're posting screenshots that he's putting like a hundred thousand dollars.

• 37:29Shaan Puri?

  Buy orders.

• 37:30Speaker 02

  So it's kind of like the dot com thing where everyone was just buying stock, any stock that's was called dot com. Now everyone's buying, oh, someone's shorted a stock. Let's just pump it. Like hedge fund people are saying, short this, let's just buy that.

• 37:44Sam Parr?

  Do you think that this is all from Robinhood that these people are using?

• 37:47Speaker 02

  Like BlackBerry, et cetera, like even they're putting out announcements like we have no material news while our stock is up forty percent. Because even though Robinhood users, you'd think like, oh, wait, they maybe don't have as much money as hedge funds. So how can they move the stock so much? It's because they're all buying crazy leveraged options. They're buying options that expire on Friday, which moves that you can essentially move the needle of the stock. Just by putting in like one dollar, you can move it massively because you're basically doing a game of roulette. You're like, hey, yeah, I know I'll lose all my money, but I have a small chance of winning. So basically they can increment, they can move the stock much more because they're just buying these super risky,

• 38:30Speaker 02

  crazy options because they don't give a shit if they lose all their money. So it is Robinhood, it looks like to me.

• 38:35Sam Parr?

  It's so crazy what Robinhood has become. I actually can't stand it. It's funny, yeah. But I definitely am sorry. I'm gonna, I feel kind of sad for people because I think it's gonna mess up a lot of people.

• 38:45Shaan Puri?

  It's funny, scary. Yeah, it's funny, scary. I actually had a funny story. So three days ago, I, I'm in this like chat group. And I posted, I said, hey, who's got a hot stock tipped for me? I feel like gambling. And I told her, I said, I got a hundred K. I'm gonna gamble. Yeah, give me, give me some, give me your recommend, best recommendation. And so people were just responding. There's like six, seven people in this group. They were like, you know, this because of this back because of this reason, you could just speculate on this. And you know, just funny things. And Greg Eisenberg, who's been on the pod a couple of times, he goes, oh, I think GameStop still has a twenty X to go. And I actually didn't know what was going on with GameStop at the time. This was, I think, the first day of the pump, like when it was like fifty percent or something like that.

• 39:28Shaan Puri?

  And I looked at it. I was just like, what is he talking GameStop? I just like, he was like, you know, just referencing some, again, some obscure old dead thing as whatever. And so anyways, I picked one, I put an okay into it and then fucking GameStop has been up.

• 39:42Shaan Puri?

  Had like $700,000 or something crazy if I had literally just taken his like his joke recommendation to be serious. It was crazy.

• 39:50Speaker 02

  Yeah, it's it's messed up. It's funny. Kind of like Elon Musk pumping Dogecoin just because it's like funny meme.

• 39:57Shaan Puri?

  Yeah, it's it's wild how. And so is there something, I actually don't know, is there something when the shorts cover their position that boosts the stock more because they had to cover? Is that why it's like double pumps?

• 40:07Speaker 02

  Yeah, because when you cover a short, you have to buy the stock at any market price. So these guys, one of the analogies had is like, actually Warren Buffett said that he doesn't like shorting a stock because then he's like, you can't sleep at night. Because here's an analogy, let's say X stock is, um, GameStop is $10. If I buy the stock, I kind of have infinite upside, right? Like it could go to 100,000 or whatever. But if the stock goes bankrupt, I only lose my $10. I have a capped downside, but if I short the stock, I actually have a capped upside. I can only make a certain amount. If it goes to zero, I only can make $10. But then if it keeps going up, I actually have an unlimited upside.

• 40:52Speaker 02

  That's why on Robin Hood or any of these platforms, you have to have special permissions to short a stock because you actually can lose an infinite amount of money beyond the capital that you assign to that trade.

• 41:03Shaan Puri?

  I was just looking at Tesla's short position. So at one point Tesla was the most shorted stock in the market. Uh, and then Tesla stock obviously has gone insane. And so just in the last, uh, what is this? So this is the last, actually is the short position up? I think there might be a larger short position. So, uh, January of 2020, it was 25 million of short interest. And now, and at the end of the year, it was 60 million. So, so even, even with the, the massive run up and people certainly covering their positions, it looks like the short position is still huge against Tesla, which is interesting. It makes sense to me.

• 41:35Speaker 02

  I mean, it could be new people buying in, you know, like Tesla at an all time high. Let's have new people come in. But the people that shorted it before, if their hedge fund is a billion dollars and they put a lot of money to this, if the stock's gone up 10x, they could have lost 10x their money. So they need to get out of the position at any price. And that's what kind of creates somewhat of a spiral that the price could keep going up as shorts have to cover.

• 41:59Shaan Puri?

  One more little thing. I don't know how much time you have, Jack, but are you paying attention?

• 42:03Speaker 02

  I do need to jump off.

• 42:03Shaan Puri?

  Okay, one minute. Okay, maybe we can't do this one minute. All right, I'm just gonna give you the short version of it. Actually, let's do this one. I'll do a shorter one. Are you familiar with Grayscale BTC?

• 42:11Speaker 02

  Uh, yeah.

• 42:12Shaan Puri?

  Grayscale. So Jack, explain Grayscale to Sam real quick.

• 42:15Speaker 02

  I mean, I'm not totally familiar with it, but the stock ticker is GBTC. And I believe that it's just like a derivative of Bitcoin at like a premium. So it's kind of like an ETF for Bitcoin. ETFs for Bitcoin are not legal, so these guys have launched something else so that institutional people can buy it without having to create an account on Kraken or something.

• 42:36Shaan Puri?

  So the guys who started Grayscale, I think one of them was the former co-founder of Coinbase, I believe.

• 42:40Sam Parr?

  The Barry Silbert guy?

• 42:42Shaan Puri?

  Yeah, Barry Silbert's involved. Maybe I got it wrong. Maybe he's doing a separate one, but basically, you know, the Winklevoss and others have been trying to start a Bitcoin ETF to make it easier for a normal investor to go into E-Trade and buy into Bitcoin without having to figure out how to hold it or figure out how to start an account on Coinbase or whatever else. And it just keeps getting rejected. And I think, Jack, last time you were on, you mentioned an idea like this. You were like, why doesn't somebody create a Bitcoin index fund? Like, just do it in the Middle East. Do it somewhere else that's like, just not on the US, you know, on the NASDAQ.

• 43:10Speaker 02

  Well, I think I was saying that my friend is doing it in the Middle East. Oh, not my friend, a guy I had known.

• 43:15Shaan Puri?

  Right. And so Grayscale, I mean, it's been so crazy successful. So basically, this thing has grown like crazy. So they now have 24 billion in assets under management as like a pretty new thing. They are buying some sick amount of Bitcoin. I think they hold over 3% of all Bitcoin now. And the crazy thing is, everybody who's buying Bitcoin from there is buying it at a premium because they have not only like a management fee of 2%. They literally, they just trade at a higher price than their underlying Bitcoin holdings. So you're paying a premium for that convenience. And I just think this is like one of the like, like, these guys are They're gonna make the guys in charge of this, you know, probably gonna make over a billion dollars doing one of the simplest, simplest in terms of like, they didn't build a product, they didn't invent Bitcoin.

• 43:58Speaker 02

  They probably had to do a lot of regulatory work, though, because otherwise I've someone else would have done it.

• 44:01Shaan Puri?

  I think they paid some lawyers basically to say, hey, could we do this? And yeah, let's go ahead and list this and see what happens on, you know, on the OTC. And I just think it's it's insane that it's trading. I don't know what the premium is. I believe it's.

• 44:13Speaker 02

  I do need to jump now, guys, but this was super fun as always, so.

• 44:17Shaan Puri?

  All right. Thanks for coming, Jack.

• 44:18Speaker 02

  Take care, guys.

• 44:19Sam Parr?

  Thank you, Jack. Sean, I want to bring one more thing up to you.

• 44:21Shaan Puri?

  Okay, I'm also supposed to jump, but yeah, let's do it.

• 44:23Sam Parr?

  Oh, well, really quick. Andreessen Horowitz.

• 44:26Shaan Puri?

  Yeah.

• 44:26Sam Parr?

  So they, Andreessen Horowitz is regarded as one of the best, maybe the best VC firm out there.

• 44:32Shaan Puri?

  By people in the know, it's not, it's not the best, but it is definitely tier one.

• 44:36Sam Parr?

  But it has a brand name that is, it's like, who knows what's better, Princeton and Harvard, but it's like, has that, has that name. So they got popular because they had podcasts. My friend just texted me, Maggie, who's the head of content at Nerd Wallet, you know, a multi hundred million dollar business. And she just got recruited and hired there. So.

• 44:55Shaan Puri?

  I love this idea that they're doing.

• 44:56Sam Parr?

  They're building out their media arm. I don't know if that makes money. I think it does. There might be ads on it. Pretty interesting. What do you think about this?

• 45:04Shaan Puri?

  So I don't think they have a media business today. I think they put out content, just like most VCs do. They have podcasts and stuff to like be thought leaders so they get better deal flow. But now they're like, no, why do we need to go to the Wall Street Journal when we want to write an opinion piece? Let's just make a media company and we will write opinions into that. And like, let's actually blow this thing up. I think this is a really smart idea. Kind of a no lose situation. Like they have multiple billion dollar plus funds. So the media business doesn't need to be a big business for them, for this to add value to them.

• 45:34Sam Parr?

  No, it could easily pay for itself, though. Just what they have now, it would pay for itself.

• 45:38Shaan Puri?

  And so I think that it will, I think it will be successful, you know, financially, but at a a scale that's for them, for probably pretty small, but the impact and the influence and the ability to like dictate their own terms and not be beholden to. The media and having to like play nice with journalists and do all this stuff. They're like, no, we'll just be the journalists. Why not? And this has already been a trend, right? Like Marc Andreessen on Twitter will get millions of impressions. But I think it's smart of them to go straight into the media business and compete. And I love how the media people are all so upset about this.

• 46:09Sam Parr?

  Yeah, it's stupid for anyone to be upset about it. I can't stand that. It's awesome. I can't stand the elitism of people like gatekeeping around who can and cannot share their opinion, who can and cannot have quote news or be a quote journalist. I think it's awesome. I'm on board. I think it's great.

• 46:24Shaan Puri?

  By the way, I think this is a general trend for VC, which is that not this is not exactly the case for Andreessen, but it's a good example. VC is going to shift, I think, to businesses that startups need that happen to invest, that have basically that have a venture arm. So I'll give you an example. Have you ever heard of Tusk Ventures?

• 46:41Sam Parr?

  No.

• 46:41Shaan Puri?

  So this guy, I think he's Bradley Tusk. He's like a kind of a big dog in the like, kind of like lobbying world, kind of like the legal, political world. So he was an early investor in Uber, Airbnb, and a handful of other really big winners because he was the guy who was helping them go into cities, lobby with the cities and and get, you know, their kind of like new product, you know, like Airbnb or Uber was a new idea, get it through with governments. And so he was a service provider that they would normally pay for for their servant, for their startup. And he was like, yeah, but I'm a venture investor. So if you want me to work with you on this, let me invest. And so this guy's made a killing on Airbnb and Uber and these other guys. And I think the same thing is going to happen for lawyers.

• 47:24Shaan Puri?

  Like every startup today goes to one group of people for investment and another group of people for legal services. Somebody, and you know, maybe it's me, that somebody's going to go buy a law firm and be like, hey, here's what we're doing. We're cutting prices down to the bare minimum. We're going to be ultra client friendly and we're going to just invest off, we're going to, we're going to raise a fund out of this legal, you know, this law firm to invest in all the companies that we work with, that, that, that we do this for.

• 47:46Sam Parr?

  I think it's a good idea. I think legally, I think you can't do that for a law firm, but I understand your point.

• 47:51Shaan Puri?

  I think, but they take equity right now in some startups. Some do. They take instead of cash, they take equity.

• 47:55Sam Parr?

  I don't think they have owners, do they? They have partners.

• 47:57Shaan Puri?

  Yeah, there's like a partners. Yeah. The other thing that that works there is like recruiting. So every startup wants to recruit engineers. So instead of being a recruiting firm that makes all your money, your business model is give me 20% of the first year's salary. It's going to be a business model that is basically like, I will do the recruiting for you, but we invest in your company. We would invest and then we are your recruiter firm at cost.

• 48:17Sam Parr?

  I'm on board with this. I think it's great, although I would wanna, I've never taken money from any of these big guys. I would want to ask them, do you actually use the services they provide?

• 48:24Shaan Puri?

  It's different from, oh, I'm Andreessen Horowitz and we have some marketing people on staff to being like, no, we're a badass ad agency with a venture arm. You know, we are a badass legal firm with a venture arm. We're a badass recruiting firm with a venture arm. I think it's a different thing and I think founders are going to start taking that because they're going to be like, hey, I get two for one here.

• 48:42Sam Parr?

  Yeah, like it was kind of like that Reed who came on.

• 48:44Shaan Puri?

  Reed?

• 48:45Sam Parr?

  What's that YouTuber guy's name?

• 48:46Shaan Puri?

  Ah, yeah, yeah, yeah. Mr. Beast Manager. Yeah, that's right. Uh, yeah, that's, that's a good example. Cool. I gotta jump. Uh, so.

• 48:51Sam Parr?

  All right.

• 48:52Shaan Puri?

  I'll see ya.

• 48:52Sam Parr?

  See you.