Hidden in plain sight

Charles River Labs: a $4B/year near-monopoly on drug testing

Charles River Labs does animal testing as a service for biotech companies, using mice, rats, dogs and monkeys. Shaan says it works with about 80% of biotech companies and tests around 80% of drugs that reach market. It also paid roughly $500 million for a monkey-breeding supplier so it controls its own primate supply.

“So they basically have all the, like, the mice and the rats and the dogs and the monkeys all there, and they do this testing. They work with like 80% of biotech companies. Like, it's crazy. Like, the scale is pretty crazy. Even crazier, I think it's like 80% of drugs that go to market get tested with them. Like, they just have this absolute monopoly. They do $4 billion a year in revenue.”

Nothing is here by accident: every object has an entrepreneur behind it

The monkey-testing business reminds Shaan that the podcast rewired how he sees the world. Even something as small as mechanical pencil lead has a supplier who knows that business inside out, so there is a business behind everything around you.

“it rewired my brain to understand that when I look around the room, nothing is here by accident. Nothing just appeared, you know, like the, the little, like the lead that goes in this, this mechanical pencils. There's a company that makes that. There's a guy. Who you'll meet on a boat somewhere, whose business is just to provide these lead, and he knows everything about the lead business. And he goes to meet sits in meetings, and they talk about three millimeter lead and six millimeter lead, and everything is a business. It would not exist if there wasn't an entrepreneur behind it making it exist.”

Buffett's AmEx trade: asking waiters after the soybean oil fraud

A fraudster borrowed from dozens of banks against tanks of soybean oil that were actually full of seawater. American Express had vouched for the inventory, so when the scheme collapsed it was liable and its stock fell. Buffett (as told in the biography Snowball) checked with restaurants and waiters, saw that cardholders still trusted AmEx, and bought in. It became one of his best trades.

“And Warren Buffett goes around and he was like, you know, American Express stock is down right now. And a lot of people have no idea that they even like were in the soybean oil checking business. Right. But I have a feeling based off of going to restaurants and I'm talking to waiters, I have a feeling that the people who are using American Express, they don't really give a shit about this. They still trust that American Express is good for, you know, credit cards.”

Skip the problems every smart person has; go where competition is weak

Shaan says programmers keep building to-do and dating apps because those are the problems smart people run into themselves. The opportunity is in odd corners of the economy that smart, high-agency people never encounter, where the competition is weak.

“There's a lot of money to be made doing things that are just off the beaten path because there's this arbitrage between what smart people learn about in their day-to-day life or school, which is why you'll see a lot of programmers who will build to-do list apps and, you know, dating apps and things that it's like, what's a problem that every smart person runs into? You simply want to just stay away from that. and go into things that they just haven't heard about. They don't know too much about, you know what I mean? Like go into a category that is just not ripe with really smart, you know, high agency people and you're playing against weak competition.”

Steal thisList the industries your smart friends have never worked in, and look for problems there instead of in software you use every day.

The Ferreros: Nutella, Tic Tac and Kinder made Italy's richest family

Shaan's Billy of the Week is the Ferrero family, the secretive Italian dynasty behind Ferrero Rocher, Nutella, Tic Tac and Kinder. The family-owned company does roughly $20B a year in revenue, and the third-generation heir who runs it, worth about $32B, is the richest man in Italy.

“Turns out this family invented Nutella. They invented Tic Tacs. They invented like a whole bunch of Kinder, the Kinder bars and Kinder eggs. They invented like several of these like really big things. And now they own a whole bunch of other businesses. So I want to tell you the story of this, this company that's, it's one of the most secretive family-owned businesses in the world. They do like $20 billion a year in revenue. The founder is the, the, main guy, the, the heir, he runs the company and is the richest man in Italy.”

'How did this get here?' — find the business under every object

Shaan's repeatable idea-generation drill: look at any ordinary object (a patch of grass, a laminated HR labor-law poster) and ask how it got there. There is a business under every single thing; the labor-law poster, for example, is a huge business.

“when you look around the world and you see some item or object or patch of grass, just think to yourself, how did this get here? And what you realize is there is a business underneath every single thing.”

Steal thisTrain your brain to ask 'how did this get here, who wanted it here, what are the economics?' for every mundane object you see.

Unclaimed Baggage: turning the 0.3% of lost luggage into a retail business

Shaan describes Unclaimed Baggage, which partnered with airlines to take the roughly 0.3% of luggage that's never claimed, then resells, recycles, or donates the contents from a physical store in Scottsboro, Alabama.

“What they have done is they went and they partnered with every airline and they said, hey, we will take the unclaimed baggage”

Steal thisLock up an exclusive on a waste stream nobody wants, then resell, recycle, and donate it as a feel-good retail brand.

Doyle Owens: the Alabama everyman who turned lost luggage into gold

Sam celebrates Doyle Owens, the late founder of Unclaimed Baggage — a normal-looking old Southern guy who, in Alabama, built a wildly simple waste-reduction business while the Silicon Valley set looked down on it.

“This fucking guy, this is like the definition of just like turning shit into gold of just like, he's just like, it's a super simple, it's not fancy. It's in Alabama”