Are tariffs good or bad for founders?

💰 Steal Shaan's [free] Episode 696: Sam Parr ( https://x.com/theSamParr ) and Shaan Puri ( https://x.com/ShaanVP ) talk about what they’re doing about the tariffs. — Show Notes: (0:00) Intro (3:13) Tariffs (22:00) Medieval Times (27:48) Shaan's process for finding edges — Links: • Shaan's $20M Pitch Deck: https://clickhubspot.com/uve • Medieval Times - https://www.medievaltimes.com/ — Check Out Shaan's Stuff: • Shaan's weekly email - https://www.shaanpuri.com • Visit https://www.somewhere.com/mfm to hire worldwide talent like Shaan and get $500 off for being an MFM listener. Hire developers, assistants, marketing pros, sales teams and more for 80% less than US equivalents. • Mercury - Need a bank for your company? Go check out Mercury (mercury.com). Shaan uses it for all of his companies! Mercury is a financial technology company, not an FDIC-insured bank. Banking services provided by Choice Financial Group, Column, N. A., and Evolve Bank & Trust, Members FDIC — Check Out Sam's Stuff: • Hampton - https://www.joinhampton.com/ • Ideation Bootcamp - https://www.ideationbootcamp.co/ • Copy That - https://copythat.com • Hampton Wealth Survey - https://joinhampton.com/wealth • Sam’s List - http://samslist.co/ My First Million is a HubSpot Original Podcast // Brought to you by HubSpot Media // Production by Arie Desormeaux // Editing by Ezra Bakker Trupiano

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

• 0:00Shaan Puri?

  For all my friends, this is their only business. This is literally their lifeline. And so I find it very not cool is my official diagnosis.

• 0:12Shaan Puri?

  Super uncool by the orange guy.

• 0:24Sam Parr?

  All right, Sean, mahalo. My first question is, what's it feel like to be an extra on the set of White Lotus?

• 0:34Shaan Puri?

  As long as I'm not the guy who dies, I'm good. All right, so that's my, that's my White Lotus game plan. I thought I'd be festive for you.

• 0:41Sam Parr?

  I think you look good.

• 0:43Shaan Puri?

  Dude, I was, as you know, I don't leave my house. And took the family on vacation, so we're in Hawaii. And I texted Ben, I go, dude, I'm getting recognized left and right. And he goes, really? That's awesome. Like, how many times? Like 10, 11? And I go, no, dude, two, left and right. Like, it happened twice just now. Had to text you right away. This is amazing.

• 1:05Sam Parr?

  Where did you get recognized? At the airport?

• 1:07Shaan Puri?

  Dude, someone voice recognized me. I was like coming around the corner somewhere. I'm talking to my kids. And some guy just runs around the corner. He goes, hey, are you Sean? I go, did you just recognize my voice? He goes, yeah. I've listened to, like, I've listened to the podcast a bunch.

• 1:22Sam Parr?

  Dude, there's been so many times where like I've met someone and I like, we should hang out. And then they text me.

• 1:28Shaan Puri?

  You want to get on this flight?

• 1:29Sam Parr?

  Yeah.

• 1:29Shaan Puri?

  Do you have a ticket?

• 1:31Sam Parr?

  Well, if I'm like flying home and like someone's sitting near me, I'm like, do you want to like be friends and like get together sometimes? And then they'll message me a week later. I'm like, what was I doing? It's like going to the grocery store hungry. Like, I'm just like making bad choices.

• 1:46Sam Parr?

  Can we talk about tariffs really quick? First of all, I want to let people know, I don't know anything about this. Like, I'm not like an economist, which everyone is all of a sudden. But I want to know, did you go to Hawaii because you were sweating? And you're like, I need to find peace or what?

• 2:00Shaan Puri?

  Dude, the last time I came to Hawaii, I don't know if you remember this, was in 2022.

• 2:04Sam Parr?

  Wasn't it like a, some crypto thing? Like you crashed?

• 2:07Shaan Puri?

  I landed and the same day I landed, crypto had the biggest crash. Like Luna basically went broke and it brought down Bitcoin with it. And I basically landed and then lost a million dollars. And it was just trying to hang out with my wife and just be like, okay, cool. I'm just not gonna mention this, like how expensive this vacation just got. And the worst part was because I was on vacation, I didn't have like any of my normal like computer hardware or anything. Your gear. I couldn't sell. Your gear. I couldn't do anything. Yeah, like, you know, this cold storage is working out great. So I was, I was basically stuck. And then to this time, same thing, went on vacation. Oh, the S and P 500 has had the worst like three day losses since like the bubonic plague. And I was like, oh, great. Here we go again.

• 2:53Shaan Puri?

  I'm not coming to Hawaii anymore.

• 2:54Sam Parr?

  When I've been going through this, as everyone knows, I'm, I'm heavy on index. And when I have been going through this, my, I've just, I just don't look. I just, I just don't look. I don't look. I just, I pretend it doesn't exist and I don't look. Although I did, I, I invested a little bit more than normally I do every month. And I went a little bit heavier, but I just didn't look. I just, I can't log in. It, it, it makes me too anxious and it really ruins my day.

• 3:19Shaan Puri?

  Yeah. Well, I asked a simple question. Am I gonna do anything? Is my plan, do, do I have some trade I'm trying to make right now? Is there some, some genius move? Am I just trying to panic sell? No. Okay. If not, then there's really no point in even looking. It's just gonna ruin my vacation. So I, I don't look. But when I landed, there was something I had to look at, which is these tariffs. So not only did the stock market crash, or maybe because of this, the stock market has been crashing, which is that Donald Trump has created a new holiday, Sam. Liberation Day.

• 3:47Sam Parr?

  Yeah.

• 3:48Shaan Puri?

  Happy libs. Happy lib day.

• 3:50Sam Parr?

  Somebody was like, maybe he meant liberation day in the sense of liberation like the Buddhists think, where we are being liberated of all of our possessions. And we just aren't gonna owe anything anymore.

• 4:00Shaan Puri?

  I don't have any material goods anymore. Thank you. So he came out and he has this giant poster board slam to every country. That's basically like his slam board where he's like, China, you're getting tariffed.

• 4:16Shaan Puri?

  Everybody's getting tariffed. And, and then since then, so he came out with like a 50% or whatever. It was like a 35% plus 20% tariff on China. So it's like, wow, 54%. That's, it's gonna be crazy. And then since then, he added another 50% on top. So now we're at 104. And I suppose there's just no upper limit as to how hard, how high this could go. Cause this morning, as of this morning, China retaliated with its own. Escalating retaliation, 80 something percent tariff. So we're in a trade war.

• 4:48Sam Parr?

  And does that mean for you as an e-comm owner, when you buy $10,000 worth of goods from China, if you do buy them from China, that now you're going to pay $20,000?

• 5:00Shaan Puri?

  Yes, exactly.

• 5:01Sam Parr?

  Okay, so it's as simple as that. Got it.

• 5:03Shaan Puri?

  It's as simple as that. So basically, and the reason to talk about this is not because I'm a tariff expert, which I'm not, but because I have an e-comm store and I have a lot of friends in e-commerce as well. And for all of them, this is like D-Day, basically. So most of us manufacture in China, not because we're like, oh, I really want to have the lowest cost goods from China. That wasn't really the impetus. In fact, when I started our company, we first looked at manufacturing in the US. We were like, oh, that'd be great. It'd be great to manufacture in the US. It'd be a great story to tell to customers. Also, maybe we'll be faster lead times because we're not having to put every item on a boat and sail it across the sea. So I called all the manufacturers I could find in the US and I was like, hey, like, do you think you could do this?

• 5:48Shaan Puri?

  And most of them were just like, no. And one guy in LA was like, oh, yeah, we could do this. Do you want it for double the price, half the speed and half as good?

• 5:59Shaan Puri?

  Is that your sales pitch? He's like, look, I'm just being honest with you. He's like, because if you're comparing factories, you're going to find this. He's like, I was like, how could it be half the speed? There's no boat. There's no sitting on a boat for a month. And what he explained was he was like, number one, all of the inputs to anything you're going to make. So even if we make it, we're going to import all the parts. So we still have the parts on a boat for a long period of time. Secondly, we don't have the labor that's skilled at doing this. Third, we don't have the machines. He was like, actually, it's the machines, not the labor that's the problem. He's like, basically, when we kind of de-industrialized, all of the best machinery to do this work went to China. There's only like so many machines that do this right now. To get a new machine takes like a year and blah, blah, blah. It costs a bunch of money. And so we don't even have the machines.

• 6:44Shaan Puri?

  And I was like, okay, so then.

• 6:46Sam Parr?

  Dude, how does this guy answer the phone? Is he like, F you, this is Derek?

• 6:52Sam Parr?

  You know what I mean? Like, I don't want your business. How are you?

• 6:57Shaan Puri?

  Is there anything I cannot get for you?

• 6:58Sam Parr?

  Yeah, like, all right, have a good day. Bye bye now. Go F yourself. Like, that's just how, that's just how they answer their phones.

• 7:05Shaan Puri?

  Honestly, great gig, as far as I'm concerned. Like, maybe he's like a retired guy and he just wanted to keep that going.

• 7:13Shaan Puri?

  I feel like my dad would like to do that in retirement. Turn people down all day.

• 7:18Sam Parr?

  And so, uh, what are your friends thinking in the industry? Cause it seems, dude, you guys just get beat up constantly. You know what I mean? You just get punched all the time.

• 7:29Shaan Puri?

  Yeah, it's like, okay, make America great again. Where's, where's the great part? What's happening? Where, all we're doing is putting like all these small businesses out of business and raising the price on consumers, right? So here's what's happening. So just to give you a scenario, I have a friend who is doing really well with his business. And the business has been growing. And so prior to Trump taking office, he's, you know, he was growing the business. Trump takes office, he says he's gonna have a tariff. He says it's gonna be a 20% tariff. So we're like, okay, mentally prepared for 20% tariff. So he places an order now. Just to give you a sense, like, orders have like a, forget about moving your manufacturing, which is a multi-year process that may not even work, by the way. Just like changing your like sourcing from one place to another is, you know,

• 8:14Shaan Puri?

  six months to a year to get it up to scale. This guy, you know, basically he's operating on a four-month lead time. Meaning from the day he knows he needs, he needs a, an order, he has to place it four months in advance. So he placed it four months ago. Now, four months ago is basically, you know, before Trump even took office.

• 8:31Sam Parr?

  Right.

• 8:32Shaan Puri?

  So he placed that order. And now, as that order is, he's got five containers out at sea about to land.

• 8:39Sam Parr?

  It's like on this ship and they're like.

• 8:41Shaan Puri?

  Yeah, it's 100% tariff now. So he has to pay a million dollars in tariff. He doesn't have a million dollars. So he's like, he's like, dude, I literally don't know what I'm gonna do. I, I don't have a million extra dollars lying around in my business that I could just pay this tariff. I also have five containers, I have thousands of units just sitting there. They can't be rerouted. I can't tell them to go back to China. I can't, I can't. He's like, what do I do? Shut down my business? Like, he's basically like totally screwed. And so, and this is common. There's a lot of people are dealing with this.

• 9:13Sam Parr?

  You and I have a mutual friend. He said the same thing. He was like, uh, he's like, my container, you know, the price for a container got screwed during a bunch of stuff in the last two or three years. There were so many different things. There was the Panama Canal or what, Suez Canal, I forget, whatever there was the.

• 9:25Shaan Puri?

  Ship got stuck.

• 9:26Sam Parr?

  Yeah, a ship got stuck. Then there was this, and there was that. And then now he's like this thing. He's like, I don't have enough money to buy the goods that I have coming in because I placed the order like a month ago. Like, all like, it was like in transit, it changed the price. It's sort of, it's like when a parent's like, ah, you say another word, five more minutes, a timeout. Oh, there's five. What, what did you? Yeah.

• 9:47Shaan Puri?

  Five more.

• 9:47Sam Parr?

  Five more. You just got yourself five more.

• 9:50Shaan Puri?

  Totally. In fact, I'm gonna start calling it tariffs with my kids. I'm just gonna start using that lingo. Maybe, maybe it'll be fun to be on the other side of the tariff for once.

• 10:00Shaan Puri?

  And, and there's a little bit of, uh, so now people are trying to find, you know, whether it's workarounds or, you know, try to figure out, hey, does this apply? Cause it's kind of unclear even how this applies. You know, does it matter if I got my goods on the boat beforehand? Either way, whether, whether this shipment gets tariffed a million dollars or not. Point is, it's very hard to survive as a business when you're, you operated, let's say, an e-commerce business that has 10 to 15% profit margin, if you're doing things right.

• 10:27Shaan Puri?

  You know, 20, if you're really kicking ass and you've been business, been in business for a long time, and you have economies of scale, and you have a large returning customer base, but like 10 to 15% profit margins, and then your cogs go up by 100% is not gonna work. Like, they're gonna go broke. And so the only alternative is you have to pass that to the customer. So now you have to tell the customer, hey, what this, what this means to the customer, the math is. If a normal, let's say, a unit of your thing costs a dollar, and now it's gonna cost $2. Well, before you sold that $1 thing for, let's say, $3 or $4, let's just say $4, a 4X markup, right? So your COGS was 25%.

• 11:06Sam Parr?

  4X is, I would imagine, is very normal, yeah?

• 11:09Shaan Puri?

  A standard markup, let's say. And that sounds like greedy, oh, you're already marketing it up 4X. Well, no, because you have to pay for marketing and advertising and your staff and the fulfillment and all this other stuff. You end up with a 10%, 15% profit margin by the end of it, which is like restaurant territory. And so, you know, it's not some, we're not some fat cats over here in the e-comm land. Go look at e-comm, you just see a bunch of tired, scraggly fools who like are just playing the wrong game. And so you, you take that dollar item, now it's $2. Well, that means you have to raise the price instead of being, instead of being four originally, now you gotta raise it to five to make up for that, right? So your, all your goods are gonna go up by 25 to 30%. So that's inflationary, right? So if you thought, you know, inflation was bad before, the price of eggs and all this stuff,

• 11:53Shaan Puri?

  well, wait till Christmas season comes and nobody could buy a toy, because all the toys are made in China, right? Like this is things, all the shirts are made in China, all the toys are made in China. And if they're not made in China, they're made in Vietnam, which also got tariffed. And so it's like, you know, there's a few countries that make all the stuff. And this plan really doesn't make a lot of sense to me. Now, maybe I'm just being sensitive because I have a business in this space.

• 12:16Sam Parr?

  This is your lifeline, yeah.

• 12:18Shaan Puri?

  Yeah, so, well, less so for me because I have a lot of businesses, but for all my friends, this is their only business. This is literally their lifeline. And so I find it very not cool, is my official diagnosis. Super uncool by the orange guy.

• 12:37Sam Parr?

  I think you need to create like a Sean's homie private chat lobby.

• 12:44Sam Parr?

  And you guys could spend literally thousands of dollars to lobby the government to change their opinion.

• 12:50Shaan Puri?

  Dude, I'm gonna go to the lobby of this hotel and just see if I can get someone to change their mind.

• 12:53Sam Parr?

  Is that what lobbying is?

• 12:55Shaan Puri?

  That's the only lobbying I'm doing.

• 12:57Sam Parr?

  And you'll declare bankruptcy down there by yelling it, declaring it?

• 13:01Shaan Puri?

  Exactly.

• 13:03Shaan Puri?

  And so, by the way, I don't know if you've read Molson, who, I don't know if you know Molson, Molson Hart, he wrote a great post on X that I think is worth reading. And it's basically called, "America Underestimates The Difficulty Of Bringing Manufacturing Back." And he gives 14 reasons about like, why, even if he took the generous side of this like, policy, and you're like, "Oh, you know what? Short-term pain for long-term gain." Right? Because I think we can all agree, there's short-term pain, right? The business owners have short-term pain, the consumers were gonna have their prices raised, short-term pain, the factories on the other side have short-term pain, the stock market is crashing, that's true, short-term pain, the 401ks are going down. So, that part's pretty unambiguous, the short-term pain. The question is, is there even long-term gain?

• 13:47Shaan Puri?

  And he wrote a post that basically outlines like, you know, very, you know, thoughtfully, why there's some problems with this. And he's basically like, you know, one, one argument after another. It's sort of like, not only does moving a manufacturing plant back to America take a long time, like, by the time somebody, by the time a business owner who today is gonna get hit by these tariffs, assuming they could somehow survive, spend millions of extra dollars, opening up manufacturing in the United States, which is not gonna happen, and it's a multi-year period before they get it all online, and then they magically find the labor to do this, because we don't really even train people in America to do this type of work anymore. There's gonna be a new president, and like, you don't even know what the tariff situation's gonna be,

• 14:31Shaan Puri?

  but then it might be a totally, a total fool's errand to do it by then. So, nobody's really gonna be able to make that move. Most likely, what's actually gonna happen is like, he's like, you know, "We tried to do this in Trump's first term, and all we did was make Vietnam great again." Like, basically, this manufacturer just shifts to one of the other low-cost Asian countries that has lower tariffs, is what's gonna actually happen. There's not gonna like magically bring jobs back. "Oh, and by the way, you don't wanna sit there and knit t-shirts either." Like, this is not a job you want. These are jobs China doesn't even want.

• 15:00Sam Parr?

  Yeah, Dave Chappelle was like, "I wanna wear Jordans. I don't wanna make them shits."

• 15:07Shaan Puri?

  Exactly. Perfectly said. Like, there's these memes going around of like, you know, it'll be like Chamath, like, out of like a sewing machine, trying to make a shirt. It's so true. It's like, is this what you think is gonna happen? Is this America being great again? I'm not sure. And so, you know, political stuff aside, I think that the... The tariff situation is really crazy right now. As a business owner, it is very, very tricky how to navigate this.

• 15:32Sam Parr?

  Amongst your friend group, is it going to put anyone out of business? Or is it just going to destroy their margins? Like, is this like a complete huge risk? Or is it like, you've just made my life more challenging?

• 15:46Shaan Puri?

  It's gonna for sure put some people out of business. Because you had to, like I said, my friend with the stuff already at sea, or who's trying to scale their business, they might not be able to sell their product for an extra, let's say they were a hundred dollar product before, and now they're a hundred forty dollar product in order to maintain, you know, still some profit. So on one hand, demand is going to go down, right? I'm gonna have less customers because I had to raise my price. My costs went up. My cash flow that I had in the business went down, and maybe down to a point where I'm needing to borrow money in order to just pay the tariff bills that I have of stuff I've already in flight. It's a very, very tricky situation. You know, what we did in our business was, I was like, okay, here's how you deal with situations like this.

• 16:31Shaan Puri?

  You have to create like an immediate SWAT team. And let's open up a Google Doc, let's make six bullet points. It's like, what are the six levers we could pull? Okay, so pricing, we're gonna have to create some sort of tariff surcharge. And we think it could be in this range that'll offset some, but not all of the amount. Because we can't pass a hundred percent of it to the customer. It'll kill demand. And so we're gonna pass, you know, a few bucks to the customer this way. The next thing we could do, we're trying to source from another country, okay? It looks like, you know, maybe it's Mexico, or it's India, or it's one of these lower tariff countries. Okay, you're working on that. You over here, you're gonna work on, you know, figuring out how we're going to lower our costs. Because you're gonna have to go negotiate with the factory, ask them to share some of the burden with you.

• 17:16Shaan Puri?

  You're gonna have to look up the, talk to the lawyers and see what's going on with the stuff that's already in flight. Hey, we're gonna have to bring down the purchase orders because we have to be way more conservative. Hey, you're gonna have to go secure more debt because we're gonna need a line of credit to make sure we can withstand the storm here. And so we created this plan. I was like, we're meeting every day. These five people, like the five core people in the company, whatever other priorities you had, they're gone. This is your priority now. We're gonna meet every day and we're gonna work on this plan for the next, you know, N number of days until this plan is executed. And I think it's gonna take that level of intensity. I think a mistake I made in the past is when things like this happen, you sort of take a little bit of a wait and see approach. I think that could be very, um, every day that you don't act could be very costly as a business owner.

• 18:01Shaan Puri?

  And so I think one of the key things to do, um, and like in our business, we have a CEO, we have a full exec team. But when I heard how they were planning to approach this, it was like, yeah, this is like really important. Just like these other four really important things we have. And I go, no, no, no. You need to like have a public, you know, PSA that this is the most important thing you could do. We're gonna wait every morning. There was, there's a name for this team. And this, this is the most important thing we're doing. And this is your top priority. You need to cut off some other shit, right? Like, I think just raising the level of intensity is very key in a situation like this, or people will go out of business.

• 18:36Sam Parr?

  So you gotta go snorkeling?

• 18:39Shaan Puri?

  Yeah.

• 18:42Shaan Puri?

  I'm on the call talking about how we have to like raise the intensity and there's literally just like, aloha, there's like, this is like calming like Hawaiian music behind me and like clearly like palm trees. And I'm like, guys, guys, this is life or death.

• 18:58Shaan Puri?

  And I like, I like, I'm going down a water slide on the Google Meet.

• 19:05Shaan Puri?

  I didn't plan it this way, alright?

• 19:08Sam Parr?

  You stop like mid-talk to like get your drink that has the umbrella on it and you're like looking for the straw with your mouth?

• 19:20Sam Parr?

  That's awesome. Well, that sucks. Is there a world where, is there any, you know how like, what did George?

• 19:28Shaan Puri?

  It's just like, is there anything I could do?

• 19:29Sam Parr?

  No.

• 19:30Shaan Puri?

  There's nothing you could do.

• 19:31Sam Parr?

  Dude, I met with a guy the other day and I thought, I was like, why do you want to, I never take phone calls with people, but he wanted to talk and I thought he was gonna end the conversation with like, "Look, like, you know, I've loved watching you get big and be on the pod and, you know, is there anything I can do?" And I thought he was gonna say, "could do to help," and he said, "Is there anything I could do to be a guest on the podcast?" And I was like, "Wait, what? I thought you were gonna ask me how you could help me," and then he just ended it with, "Is there anything I could do to be on your podcast and to have you promote me?"

• 20:04Sam Parr?

  I was like, "No, there's nothing that you could do."

• 20:08Shaan Puri?

  Wow. Hell of an ask.

• 20:09Sam Parr?

  Yeah, it was a bold ask. Do you want to talk about something more fun?

• 20:15Shaan Puri?

  Please.

• 20:16Sam Parr?

  All right, let's talk about something more fun. I think this is actually gonna be really fun. I'm gonna try and take your mind away from the fact that the company that you've spent decades trying to build, which are, I'm gonna try and take you, take your mind off of that. It just, you know, four decades you spent building this company now it's gonna vanish.

• 20:37Shaan Puri?

  Never send Sam to like the cancer ward.

• 20:43Shaan Puri?

  The bedside manner.

• 20:44Sam Parr?

  We don't have time, we don't have a lot of time left, so let's get to it.

• 20:50Sam Parr?

  Sorry, I meant, you don't have a lot of time left, so let's, sorry, let's get to it. All right, but I did, I did, I read something interesting that I, when I read it, I was shocked by it. And the reason I read this thing was because my company Hampton, it's basically like an events company. We host hundreds of events a year, and so I'm trying to learn how other like event-based businesses operate. And I found one that I totally didn't realize how amazing it was. And I just forgot about it. Have you ever heard of the medieval times?

• 21:19Shaan Puri?

  Generally, yeah, yeah, sure.

• 21:21Sam Parr?

  No, the restaurant series, like the restaurant franchise.

• 21:24Shaan Puri?

  No.

• 21:25Sam Parr?

  You've never, oh my god, you are gonna love this. Okay.

• 21:28Shaan Puri?

  Is it like Rainforest Cafe, but for like?

• 21:31Sam Parr?

  More.

• 21:33Shaan Puri?

  Oh, there's like basically, it looks like a small castle like the Excalibur Hotel in Vegas. And then inside, there's like people on horses jousting.

• 21:41Sam Parr?

  Dude, I always thought this was just like a joke. I thought this was a joke in like 90s movies, like for where people were going for dinner. I didn't realize it was a real thing. So let me tell you the story. So medieval times, it's basically dinner theater. And so they do a two hour show where you go with you, your wife and your two kids. And you spend something like $80 a head. And you see people host a medieval show. There's like 200 actors and they like do jousting. They do like some type of theater stuff. It's almost like circus delay, but it's medieval stuff. And it's like, it's like WWF or something like wrestling. Like it's all like acting. I did not realize how big this was. So let me tell you the story. So the guy who started it, his name was Jose.

• 22:26Sam Parr?

  He was a Spanish guy. He had a small restaurant in Spain where he would like have like medieval like circus performers, like doing juggling and just really small stuff and inside of a barbecue joint in Spain. In the eighties, for some reason, he decides to move to America. And he's like, I want to create what I did in Spain, which was a really small thing. I'm going to do it in America. And he convinces a couple bankers to invest $8 million into his first restaurant. And that first restaurant was in Florida. And he creates what is now medieval times. And he creates this thing where the idea is we're going to host something like 20 to 40 shows per month. I'm going to hire 200 actors.

• 23:06Sam Parr?

  He spent a year training these guys how to sword fight, how to joust, how to like be like legit actors. And he's like, we're going to serve you turkey legs and other medieval food, like whatever like the stereotype, like stereotypical medieval food is. And we're going to create this dinner experience. And that's where he launches in 1983. Well, fast forward almost 40 years now or 40 plus years. His son has taken it over and they were recently sued because a bunch of their performers tried to unionize. And apparently they were preventing them from unionizing. And so there was a ton of articles written about this company. And a lot of people were talking about their financials. They're enormous. So this company does, so basically they have, it's estimated around 2 to 2.5 million people

• 23:51Sam Parr?

  a year coming to their restaurants. And they make something like 150 to 200 million dollars a year in 10 locations hosting these dinner theater shows. It's amazing. I had no idea this was this big. And since 1983, they've hosted close to 80 million people at these events.

• 24:08Shaan Puri?

  Have you ever been to one of these?

• 24:10Sam Parr?

  No. So there's 10 locations and I haven't lived in any of the places. Dallas, Myrtle Beach, Scottsdale, like places that I haven't really lived in. So I've never been to one. Have you?

• 24:23Shaan Puri?

  No, I've never been to one. Say the numbers again. So how big is this? So just on 10, 10 locations?

• 24:30Sam Parr?

  On 10 locations, during the union lawsuit and things like that, reporters were doing back of the envelope math and they were like, we think the company does between 150 and 200 million dollars a year in revenue. And there's 10 locations and each location hosts something like, depending on the, how popular it is, but the lowest one does something like 20, 20 performances a month, all the way up to 60 performances a month. So two a day for 30 days. It's insane how much demand there is. And it was estimated that it was around 2 million people a year attending. And on their official website, they say something like 80, I think they say 76 million people have ever attended a medieval times restaurant for one of their performances.

• 25:16Sam Parr?

  Is that insane?

• 25:17Shaan Puri?

  So 10 to 20 million dollars per location and they might be making one to 2 million dollars of profit per location, something like that. So that's my guess.

• 25:26Sam Parr?

  Or more. So the way it works is it's not a normal restaurant. And so you don't order the food. It's all pre-selected. And so it's like, it's like an assembly line. At the same time, all 1,000 guests get the exact same food. So like, there's a lot of like, maybe potentially significantly more efficiencies than a normal restaurant because there's not like, you know, a whole menu of stuff to do. And get this, their performances, they only change their performances every five to seven years. So they spend a lot of time like making the performance and then everyone else just goes and learns it and they perfect it over the course of five to seven years. So they don't even change it that often. And it takes like 200 performers for every show.

• 26:05Shaan Puri?

  Yeah, it's pretty rough for, you know, night performers, right? Because you have like the step down between Game of Thrones and the medieval times restaurant. It's so vast. Like the second place is pretty rough out there.

• 26:20Sam Parr?

  A night's gotta do what a night's gotta do.

• 26:22Shaan Puri?

  So this is hilarious because you were like, you were like looking this up as an analog for Hampton. Are you thinking about getting in the turkey leg business? What's going on?

• 26:29Sam Parr?

  Well, the way that we are going to grow is through launching cities. And I'm like, you know, trying to study like how launches work. How do you have like general managers of each city of each region? Do you, I'm just trying to understand like the logistics of it. And I'm looking at a variety of unrelated, but still in the event space, just to figure out, how do they do it? How do people do it? And so I'm just looking at a ton of different ways. And I was just curious about, for some reason I came across these guys and I started thinking about it. I'm like, oh, they have 10 locations. Are they franchises? How do they work? And it just caught my eye and I was shocked at how big they were.

• 27:04Shaan Puri?

  Can I tell you a goofy story? That's kind of similar to what you just described. So I've been writing this book like on the side. I'm not sure if I'm going to actually publish it or not, like, but I kind of got, I went down a rabbit hole. I got interested in it and it was, it was around how creativity works. So how people, how to be more, how to be a more creative person and ultimately like make hits. So like, where do the hits come from?

• 27:27Sam Parr?

  What's the title?

• 27:29Shaan Puri?

  Bad art.

• 27:30Sam Parr?

  Bad art, okay.

• 27:32Shaan Puri?

  Yeah, so it's like, because there's one of the key like obvious, it sounds obvious in hindsight, but like, when you go look at the creative process of the world's most successful creative people, you would think, oh, wow, the ones who make the hits, the things that we all love, the high quality stuff, they just nail quality. And if you listen to any of their interviews, you watch their process, they don't give two shits about quality directly. What they do is they focus on quantity and their belief is basically that quantity is the only way to get to quality. So they're, they play a volume game and they're like, we produce a lot of bad art. And that's where the one or two things that are real gold come from. If you just sit down and try to make gold, it doesn't work. You actually end up not creating at all.

• 28:13Shaan Puri?

  And so one of the things I've been looking at is like how some of the big breakthroughs came from doing what you're talking about, which is like you learn from an adjacent space. So you go and you, you know, the Wright brothers who ended up creating the first airplane.

• 28:27Sam Parr?

  Dude, George, I, I read their book and they're amazing, but George Mack summarized their book amazingly in his high agency blog post.

• 28:34Shaan Puri?

  Yeah, yeah, exactly. And so they, you know, they were, they were not funded. They had no education. They had no team. They had no, no specialty, no experience doing this, no nothing. And like meanwhile, there was a guy over there funded by the Smithsonian, had $2 million in funding, had tons of engineers and scientists on his team. Had all the press and the fanfare. It was clear that he was going to be the win. He was the favorite. So how did the underdog win? Why did the underdog have the creative breakthrough? And like, one of the reasons why is the two brothers, the Wright brothers, they owned a bike shop. And so they, they, because they had no money, they did like 200 prototypes in the time that the other guy did two. And their 200 prototypes were basically like, they weren't even, didn't even look like planes. They were just testing like individual parts of a plane.

• 29:18Shaan Puri?

  Like they'd make a glider or a wing and then they would make the wheels and they would try to find different ways to test these things out. And even Kitty Hawk, even the selection of where to go, they were like, thought from first principles, like where should we launch this thing? Like, oh, maybe we should launch it from this spot where we're going to the best way and that, et cetera. Right? So they, they weren't like tied to anything that was like, there was, they were not tied to anything. Everything was first principles thinking. Similarly, I don't know if you've heard this story about the, the Yankees bats. Have you seen this?

• 29:45Sam Parr?

  You'll have to enlighten me, but basically the bats are heavier in the area where the ball mostly hits. Is that right?

• 29:52Shaan Puri?

  Yeah, like this story, I mean, take the physics of it aside, like the story is just kind of interesting because here you have baseball, this game that's been around for like, I don't know, 100 plus years or whatever. And then, you know, just kind of in a, a bit of a high agency way, the Yankees were like, hey, can we just make a better bat? Like within the rules of the bat, like, you know, we're not going to make a heavier bat. We're not going to cheat. And they hired this MIT guy to think about it and he was like, oh yeah, you could just like move more of the barrel to this one sweet spot. And if you hit that, it's going to go way further, way harder. And you, you'll have less misses, uh, less near misses because you're going to have the thicker part of the bat right there.

• 30:33Shaan Puri?

  And you'll have more barrels. And sure enough, the Yankees start the season off with like way more home runs than anybody else this year.

• 30:40Sam Parr?

  I don't know anything about baseball, but is it statistically significant or do they just have ballers on their team this year? Is it like, it is the bat?

• 30:48Shaan Puri?

  I think it's the bat, but I don't know if it's statistically significant. I can't, I don't know if you could say that, right? Cause it was like, they started talking about this when it, when they like jumped out to a big lead in home runs, like 14 home runs already. And it was like, nobody else was even close. So we'll see, you know, we'll see if this, this lands. But the important part, cause like, who gives a shit about baseball? The important part was like, dude, if, if baseball, that's like 100 year old sport that like, you know, people spend, the team spent hundreds of millions of dollars a year trying to like, find any edge they can. If there's still like an edge like this to be found, it just proves how like, so much of the world is like un- unoptimized and under thought about. And like, if you actually just took a lot of focus and intensity to any one problem, and you don't assume that people have already figured it out.

• 31:31Shaan Puri?

  That's, you know, one of the key things you need to have a breakthrough. And so like, the way you're talking about studying these other models. I think it's so important to do that. I remember when we did our, our restaurant, this is my first startup, but we did pretty much everything wrong. Like every, now that I look back, I'm like, oh my God, so embarrassing. Every, like the way we did our business plan, we wrote a 300 page business plan. It's like, dude, nowadays I write one page if that, if that. We literally printed it out in a binder. We were so proud of it and we thought that that was like, you know, a mark of our brilliance, when actually it was just a mark of our stupidity. Our marketing, you know, I used to just go door to door, knocking on doors, trying to sell sushi like an idiot. Like I didn't know anything about Facebook ads or Google ads. I didn't know anything about anything.

• 32:12Shaan Puri?

  But one smart thing we did was we were like, we were a delivery only restaurant. So today they call that Cloud Kitchen. It's back then that didn't exist.

• 32:18Sam Parr?

  Door to door sushi, I think is the worst idea I've ever heard.

• 32:23Sam Parr?

  Right?

• 32:24Shaan Puri?

  But I was like, oh, let's try it. Actually, by the way.

• 32:27Sam Parr?

  Who doesn't want to eat this at 10:30 and when it's 95 degrees in Dallas?

• 32:32Shaan Puri?

  No, what we did, I did was I went door to door, uh, I went floor to floor, really. I went into a skyscraper. I went, I just went in the elevator, pushed a button, one, two, three, four, I'd get out and I would just talk to the office manager of each floor. And if I could get her to cater the lunch, it was like getting 50 orders. And it actually, it actually worked pretty well. So that was kind of like a bit of a, bit of example of this, of ignorance is bliss. So the, the other thing that we did was we looked at delivery. So traditional food delivery, like you were talking about city to city expansion. We looked at how all the, all the big restaurant chains did the delivery. And what they did was they would basically have a delivery driver at the restaurant. Kind of waiting and waiting for a batch of orders. So you would order, but they wouldn't just take your one order. They wait till there's like five or six orders to go, right?

• 33:14Shaan Puri?

  Because if I leave, then with one order, that's inefficient. So they would first wait for five or six orders. Then they would drive out, they'd go one place at a time trying to deliver these things. And then they would drive back. And what I was so confused about, I was like, how is this restaurant that's one mile away? Why does delivery take 40 minutes? It just didn't make any sense. Like, the route is like two minutes. So like, how is it possible that it takes 40 minutes for the order? And so I watched them and I studied them and we had our buddy Dan become one of them. And it was like, Dan, you're you work for Noodles and Company now? You've got to figure this out.

• 33:48Sam Parr?

  Well, you were doing the deal move before Deal did it? You had a

• 33:51Shaan Puri?

  Yeah, we sent it, we sent it to spy.

• 33:53Sam Parr?

  Yeah.

• 33:54Shaan Puri?

  All he came back with was just like, dude, don't eat the food at Noodles. There was so much salt. And we're like, but what about the delivery? He's like, oh, I didn't even get delivery. I gotta sign soup. So I could make a tomato soup. And he's like, so much salt in this soup, it's insane. So, but we figured out a breakthrough. The breakthrough was basically, we realized that it was at the slowest part of the delivery was not the drive. It was the driver doing that last kind of, not even last mile, like the last 200 feet to your door. So like finding the exact house or apartment and you go there and you knock and you wait and then they come out and then whatever. That was the way the slow part was. And so what we did was in downtown Denver, we created something called the drop zone. So in between a whole bunch of skyscrapers, we just had one guy stand there.

• 34:36Shaan Puri?

  He was our delivery guy on the ground and then the driver just kept going back and forth, dropping off orders to him nonstop. And this sped up deliveries like crazy. And suddenly our delivery times were like 15 minutes, 16 minutes, 18 minutes. And we were just crushing everybody on delivery. And like, the restaurant failed, but the learning of like, you can't really take for granted that like, everything's just figured out. And if you just do the first principles, thinking of like, you watch, you look for the slowest part. Then you think, okay, what can we do? Even if it sounds a little weird that we're gonna have a, we're just gonna put a dude there at the bottom and he's gonna stand there holding the orders. The delivery guy is just a stationary dude. But that would eliminate all of the lag of the driver having to wait for that last, you know, to do all those last mile deliveries. That was the key for us.

• 35:19Sam Parr?

  I found when doing this, there's a few hard parts, like just doing the exercise. The hard part one is knowing what things to question and what things to accept. For example, Let's say you're creating Tesla and you're like, well, an electric battery, that probably can go long enough. Like if I look at the math behind it. But they didn't like change the shape of the wheel. That's a very obvious one, but when you're running a company, it's very hard to decide what to question and what not to question. It's also incredibly challenging to get yourself into that mindset of first principles thinking and more challenging to convince your staff or your coworkers, whoever, to just like come with like an open mind

• 36:02Sam Parr?

  and actually get on board and being open minded to try in this exercise. I found that to be hard.

• 36:07Shaan Puri?

  What's hard about it and then how did you try to tackle that?

• 36:09Sam Parr?

  For example, just like the people saying like, well, it has to be this way for these reasons. And it's like, you have to say to them, I know, but just like, I know you think that, but just try to get beyond that just for a few minutes. And let's just have a conversation where it doesn't happen that way. What would happen? There's this book called The Six Ways of Thinking for Design. I forget exactly. Do you know what I'm talking about, that book?

• 36:32Shaan Puri?

  No, I haven't read that.

• 36:33Sam Parr?

  Basically, it's like an exercise where there's six different colored hats. And you're like, all right, your green hat, when you put your green hat on, that means you're just thinking of profit. When you put your red hat on, that means you're going to come and be very pessimistic and poke holes in everything. Your black hat means you're open minded. And so it's this way of saying, right now, I'm going to put this hat on, which means I'm going to, by default, I'm not going to hate on anything. Cause a lot of people default to, this is why you can't do it. To, I'm going to figure out all the reasons why this could work.

• 37:01Shaan Puri?

  Yes. Yeah. And so you did that, you tried that?

• 37:04Sam Parr?

  Yeah, and it helps, but it's still, I guess what I'm saying is-

• 37:06Shaan Puri?

  You're like, no, I didn't have any hats.

• 37:08Sam Parr?

  No, it helps, but there's still like, it's still a challenge to get into that mindset, at least for me, and also to like convey that to teammates. Having an open mind and questioning everything is actually way harder to do than it sounds. You know what I mean?

• 37:22Shaan Puri?

  Yeah, yeah, yeah, yeah. I feel that people like it. Like so, once you give people permission to do it, they actually get excited about it. You're right that you have to sort of like frame it the right way. If you just go into a meeting and your hope and expectation is that people are going to be like open minded and creative and come up with a novel solution, it's like, that can't happen at all. Like you have to either tell a story at the beginning that gets them in the mindset. I've done that before.

• 37:47Sam Parr?

  Which is basically the Yankee bat thing. I mean, that was pretty good.

• 37:51Shaan Puri?

  Yeah, like it'll be one like that, or it'll be like, I remember back in the day, I watched this thing on YouTube that was like really inspiring to me. I don't know if you've ever seen it. It's the IDEO Grocery Cart Challenge. So IDEO was just this design thinking lab, this group. So companies go and pay them lots of money to come up with like novel innovative solutions and designs. So I think 60 Minutes or somebody went to them, some TV show, and they were like, hey, we want to understand how you guys think. And so we have a challenge for you guys as part of the show. And they were like, we want you to redesign, reimagine the grocery cart in a day. You have 24 hours, 40 hours to do this. And so they break up into two teams and they show their process of how they do it, right?

• 38:33Shaan Puri?

  So like, there's like a process of like fact gathering. So they first they go get a grocery cart, right? Or they go watch it in a grocery store. They want to see how the customer uses it. They don't want to take anything for granted. So they're like, oh, like certain set of customers actually use this as like a kid babysitter. It's like their kid sits inside it, they need a thing to play, and that's like a key part of this. Like if you lost the kid's seat, you would lose that mom as a customer. But other people are loading up and they need the two racks and then, you know, so you're seeing how people use it. Then they were like, cool, and you state those observations, they put them on index cards, you start throwing them on the wall. And the guy sets the tone, he's like, we're in the diverge phase. And basically, he draws this little cone. I don't know if you've ever seen it, it's like a, like a cone going out. And he's basically like, during the diverge phase, it's like, whatever.

• 39:15Shaan Puri?

  A predetermined set of time, our team knows how to do this, which is when your super crazy, wacky ideas, free play, what if mode. And you don't judge the ideas during this phase, you're just trying to riff off, riff as many ideas as you can. And then we're going to switch modes, switch hats, and going to go to converge, where we're basically ruthlessly narrowing down the set of possibilities of where we might go with this. But we distinctly have two phases, because you don't want, in the one phase, the one brave person to be courageous and throw out a half-baked idea. And then somebody immediately, smart guy slam them and be like, why that wouldn't work? And now nobody wants to suggest ideas again for the rest of that hour. So you have to like really explicitly do like, what you're allowed to say during this hour is only, you know, yes, ands, and then during this one, it's a no, but.

• 40:00Shaan Puri?

  And then they end up with this redesigned grocery cart, where it's like, It was basically like, I don't know, you could look up the image of it online, but it was like a thing that was designed for a new type of grocery cart. And I thought about that. I was kind of inspired by that because A, I just thought, wow, what a cool job. These guys get to be creative for a living.

• 40:15Sam Parr?

  The top, this video is 15 years old and it says the top comment is they're still making us watches for school, by the way, in 2024.

• 40:24Shaan Puri?

  Yeah, I actually think there should be a Netflix show of this. Like, you know that we have chopped where they give them a random basket of ingredients. You gotta make a meal out of it. I would love to see like two teams that are like, you know, engineer designer types. And you basically give them like a challenge, like redesign the grocery cart, like redesign, make the inside of an elevator more entertaining. And just see what they do. Like I would find that super fascinating as like a TV show. And I think it would inspire a lot of people to become like engineers or designers. If you watch that, the same way like Shark Tank, although it's like totally like bogus in terms of like the entrepreneurship that they show. It's super accessible and it gets people excited about the idea of entrepreneurship.

• 41:02Sam Parr?

  This book sounds pretty great. Bad art. It sounds like a pretty good idea.

• 41:06Shaan Puri?

  It's a great book. I'm excited about it. My, my only hesitation I had on it was like, I feel like I already got a shit ton of value out of it. Doing the like research and the kind of the prep, like of outlining like, oh, here's the big ideas and like crystallizing them in my mind.

• 41:19Sam Parr?

  So you're gonna be like Derek from LA and you're gonna just say, F you, reader. I don't care about you. It's already.

• 41:24Shaan Puri?

  Do I need to go the extra mile of publishing it for other people to benefit? I'm not sure that I care about that. Like, I'm not gonna, I'm not gonna make any money off this. I'm not trying to get famous off a book. What do I, why do I need to do that? So I might publish it. The other problem is like, I'm not sure how many other people nerd out about this idea of making great art, making, making great products, just insanely great things. And caring about being the like, wanting to learn the creative process. Cause you know, what I, what I figured out during this.

• 41:51Sam Parr?

  That's obviously foolish. What about that guy? Like, that's a foolish thought. Yeah, yeah, yeah. You, you got, you caught, you got me on the hook. You got the compliments on the hook. Because what about that Austin guy? Like, you know, artist, what was it called?

• 42:03Shaan Puri?

  Great Art of Steel.

• 42:04Sam Parr?

  Is that what it's called?

• 42:05Shaan Puri?

  Do I want to just be that Austin guy? You didn't even know this guy's last name.

• 42:08Sam Parr?

  I know the book cover. What's, isn't it like, uh, what's it called?

• 42:11Shaan Puri?

  Great artist steal.

• 42:12Sam Parr?

  Yeah, like, I know that a lot of smart people whose books I read, they always say that that, like, we had, uh, Jack Carr on the podcast, who wrote all these amazing fiction books I love, and he talked about it. Ryan Holiday talked about it. Mark Manson, who I know you like, talked about that book. Everyone likes that book.

• 42:26Shaan Puri?

  That's the thing. It's a lot of authors. Like, I wrote this, I wrote this thing because I was studying how to do this because I wanted to write a book. I didn't want to write the book about this, but that, that's just where I landed. It's for sure super important for anybody who's like an author, screenwriter type of person. It's just that's such a small percentage of population that I'm not sure it's worth the pain of, of publishing, but...

• 42:45Sam Parr?

  Dude.

• 42:46Shaan Puri?

  I don't know, if you, if the comments on YouTube persuade me enough, I might be open to publishing this.

• 42:53Sam Parr?

  If Sahil Bloom can convince everyone on Twitter to share his book, you can too.

• 42:59Shaan Puri?

  What he's, it's hilarious about Sahil, because Sahil's great, and Sahil's such an achiever.

• 43:03Sam Parr?

  He brought the PE energy to, to author him.

• 43:06Shaan Puri?

  He brought the Ivy League energy, right? He like, PE, like, achievered his way into Stanford, achievered his way to being a good athlete, like a, like a D1 athlete, achievered his way into private equity successfully, achievered his way into a six-pack, achievered, like, he just basically, he's like, "All right, give me a target, and like, show me, show me a ladder, and I shall climb." And it was like, when we were like, "Yo, you should do Twitter, dude. Like, your, your posts are kind of interesting. I think you could do this." He's like, "Cool. Monday through Friday, 6 a.m. I would get up, cold plunge, write thread, publish thread, every day for the next 900 days straight." And he did, he got like a million followers. He achievered the shit out of Twitter, too. It's amazing.

• 43:46Sam Parr?

  Yeah, now you're gonna have to do the same with bad art.

• 43:48Shaan Puri?

  As Elon once said when they asked him, "Are you afraid of failure?" He said, "It is not in my nature." That's how I feel about achievering. It is not in my nature to do this.

• 44:02Sam Parr?

  Is that gonna be, that should be the reply to everything though. As the great Elon Musk has once said, "This is not in my nature." Dude, how sick is that phrase? How, how, how like timeless and alpha is that phrase? Alright, is that it? Are you gonna go and enjoy the, um, enjoy the sand or doing whatever you do? Do you even leave your apartment when you're in Hawaii? Yeah dude, I'm in the ocean, I'm in the, I'm at the beach. I got kids, dude, they wanna do everything. Are you gonna wear a Tweety Bird shirt at the pool? Every day for six days straight. Like, it's the same day, but they love it so much that I can't help but love it too. Alright, that's it, that's the pod.