#152 with Trung Phan - Sam Talks About the Hubspot Deal & Ideas With Trung Phan
Uh-huh. Yeah. I feel like I could rule the world. I know I could be what I want to.
I put my all in it like no days off. On the road, let's travel, never looking back. Uh-huh. Feeling like gold. I don't wanna hide it. Uh-huh. All right, we're live. We're on.
Okay, we're on, man.
Um, listeners, uh, so Sean is— had a little work emergency. Not like a— not like a real emergency. Just couldn't join the podcast today. So we have Trung.
What up, man?
So Trung is a writer for The Hustle. He wrote for Trends. Now he basically writes the Daily Email by himself to close to 2 million people a day. He is big on Twitter. What's your handle?
Trung T. Phan.
So he's around. A lot of you guys hopefully know him, but he's been wanting to come on the podcast. Sean wasn't here, so I'm going to be grilling Sam for everyone.
And I just want to clarify, we, we do have some other hitters on the Daily Email. I mean, I did some heavy lifting in Q4 2020, but we got some hitters now. Jacob Cohen, I gotta give a shout out to the young one. He does great stuff. But yeah, I'm here for the listeners to ask Sam when he was selling hot dogs in Missouri, if he ever thought he'd be selling a media company to a SaaS firm.
We have this group on this app called Apex, and it's like a private group where a bunch of My First Million listeners are on this group and they anonymously say stuff. All of them make fun of me for talking about hot dogs too much. So I don't think I could talk about that anymore because they say I talk about it too much. So I don't know if you can go the hot dog route, but you know what we should do one day, Abreyu? We should have Trung and his team come on and actually talk about how they write the daily email. I feel like a lot of people ask me that all the time, but it's way less sexy because it's basically Trung just locks himself in a room and does it. One time I talked to Trung at like 11 AM his time and he was like outside with his kid at the playground and I was like, Trung, don't you got to write the email? He goes, I was like, dog, it's done. I did it already. He said we just took the day off. I was like, all right. We'll have to do that sometime. But yeah, the, our deal was announced, I think last Wednesday. The company, The Hustle, has been sold to HubSpot. That includes this podcast and we're gonna do a ton of cool stuff. I actually think we're having Kieran on, the guy who was like the champion of the deal at HubSpot. He's gonna be on this podcast tomorrow to talk about from his perspective why they did it. But today we could talk a little bit about our company's perspective and some things like that. Just so everyone knows, and so Trung knows, because we got bought by a public company, we're definitely not allowed to talk about certain things or to like, I'm going to try my hardest not to make a joke like, oh, you got to go out and buy the stock, right? Because that's illegal. And I'm still learning all this as I go. I'm not as I go. I mean, I've learned a lot already, but it's definitely new to me. I have to make sure I don't do anything unethical or illegal on this podcast. So Trung, hopefully you'll be able to—
Well, just for anybody that's wondering, the ticker is HUBS. So is that going to have to get bleeped out?
No, you're not. I don't think you're saying anything wrong.
You're just saying the ticker. I mean, this one might have to get bleeped out, but I was telling Sam that of all of the hub companies that purchased The Hustle. I'm glad it was HubSpot. Versus who? Well, you guys can do the math on the other hub companies. What do you think, Abreyu? No idea what you're talking about, dude. There's a big one based in Montreal. We'll just leave it at that.
Well, so what do you want to talk about? What should we talk about with this deal?
Well, why don't you tell the listeners? I mean, no one's heard from you other than that thread. Just tell them, download on them right now, your feelings.
Yeah, so we, a while back, So we've always had people wanting to buy us. A lot of media companies and mostly all media comp— or all media companies and private equity firms. And I was never gonna sell to a private equity firm. Like, no, not a chance. Wasn't gonna be part of that. Media companies, I thought it was cool. So I went to like the offices of like a lot of these cool New York publishers in Brooklyn or some of the older ones that own lots of brands in Manhattan. I went to a lot of these companies. And they were lovely, nice people, but it was just not a culture fit. It was like, I remember I was like in this boardroom or it felt like a boardroom. Like you imagine like boardroom in like a, just picture like an old white dude with a tie overlooking Central Park and me telling him when I was 26 or 27 about like this email where it's kind of funny because we could say the F word and we just do crazy stuff and yada, yada, yada. We one time wrote an article about doing a bunch of LSD, like And I'm like, this guy does not get it. Like, I'm just a line item to him. And, and I didn't want to be part of that. I also felt that a lot of the media companies out there, they were dying and they thought that buying us or buying a bunch of businesses like us would somehow save them. And I did not want to be part of that. So we never— like, Trunk, name one media company that's doing great, like publishing media company who you'd want to own stock in. Are there any?
No. Well, I mean, I think you've talked about this before, but like the— I mean, what the ones that raised major venture like 4 or 5 years ago, like the Vices, BuzzFeed, the Voxes, just like those business models aren't going to be able to last in 2020 and beyond, right? They're all tons of venture, uh, tons of growth expectations that there's never going to be able to meet. So to answer your question, no.
And then like, is there any public company that is a, like a traditional acquirer of us that you'd want to own stock in?
Have you ever spoken to the Times?
New York Times? Yeah. Not in this capacity. You're right. So that's one I would want to own New York Times stock, but there's not many.
No, there isn't. I mean, the other one is a, I mean, it's a private company and it's at this point, it's like kind of a nonprofit is whatever whatever Steve Jobs's widow is doing, Laurene Powell Jobs.
I've talked to them, but not in this regard. Do you believe that those companies can like 3, 4, 5, 6, 7x their—
Oh, on the valuation? It's impossible. I mean, what's Vice? It was at its peak, it was a $5 billion company. It's insane.
Yeah. So when we met with these companies or just like thought about these companies selling to them, it destroyed me. I also think that a lot of media companies, particularly in the New York scene, and I like, I make fun of New York. I love a lot of these people. A lot of them are my friends, but You know, just like in Silicon Valley, there's negative stereotypes. The New York media scene has these negative stereotypes. And in my head, it's the same people, revolving doors at companies, building the same shit. And most of it is horrible. They all say, oh, let's go to video, let's do this, let's do that. Now they're all saying, let's go to newsletters. It's like, dog, that was 6 years too late. But they're all saying the same stuff. And I didn't want to be part of that. And so in my head, I always thought, you know who should buy us? WeWork. I thought WeWork should buy us, like when they— before we found out that they weren't that great. And then I thought, um, LinkedIn should buy us. And then I started thinking, oh, what about like a Salesforce or like companies like this? And then last fall, HubSpot reached out to me and I was like, oh my God, this is finally happening. One of you companies that I, that I always thought should buy us is showing interest. And so that was quite interesting. And then they kind of explained their plan and it made a ton of sense. And I was like, all right, this is great. We gotta keep talking.
Why don't you explain just like briefly before Kieran gives the full download, I mean, top level, what is the value prop for them?
Yeah. So basically The Hustle, our vision from day one, here's been our vision from day one. We said that we wanted to build up this really large email list and we're going to do it for like these, this entrepreneurial business-minded person. We're going to make profits early on, which we did with advertising. We had about an 8-figure advertising business. And then as we grow, we're going to use those profits to launch more stuff that we could sell directly to them. And our first thing was Trends, which was a massive hit. I think it's a massive hit, but, and then eventually it was like, all right, that's working. Let's launch another, let's launch another. And then it was like, all right, we're making all this profit. Let's invest in some of these cool companies that our Trends members or Hustle readers are making. That was kind of the long-term goal. And HubSpot came to us and they go, yeah, we wanna do this thing. And they basically described what I described. They're like, we have these products, but a lot of media companies who have these great audiences, they haven't made like the really high margin stuff and we could partner with them and kind of have a 1 1 3 type of thing. And so that's what they said to us. And I go, well, we are already gonna do this. Maybe it is a good idea to partner so we can just get to it right away. So the idea with HubSpot is like, they have like 90,000 customers or something like that. And a lot of their customers, I think, are not a lot, but some portion of their customers are small to medium-sized businesses. Well, The Hustle has like a million and a half, almost 2 million of those people. And then we have tens of thousands of Trends members and they're all that person. And so they're like, well, if you could get us like 2,000 or 3,000 new customers, we're talking like, you just gave us like a 3% bump in our customer base. That's awesome. And so like, we don't need to sell that much stuff eventually. I mean, the way that we're going to look at this is just brand awareness. Can we like get the brand well known? But this allows us to buy the best or hire the best writers, the best creators. I mean, the life that Trung is going to have starting, I guess today, whenever we— that starts, is going to be probably better than everyone who works at the New York Times.
I mean, I like some of those Twitter followings, but, uh, I get to your point. I get it. I actually wanted to add something that, afford you something that Ross Simmons wrote from Foundation. I know you know Ross, he's a Trends member. He did a quantitative fact check on what you just said about the audience that were, that the HubSpot's getting with the Hustle. So he looked at the most frequently used words in the bios of the HubSpot followers, marketers, digital marketing, SEO. And then he looked at the most followed, the most used terms in the bios of Hustle followers, co-founder, product, growth, strategy, data, completely different subset, right? But also somebody that HubSpot was going after. I mean, there's literally numbers put behind this that they found a very yin yang kind of acquisition here.
Yeah, it was great. And then here's what's something funny. As we were talking, the founders were like kind of stalking us a little. Like I could see Dharmesh was like friending me on Facebook and following me. Brian was doing the same thing. They were just wanting to check in and make sure we were legit. And I know Dharmesh, I don't know him, uh, well, but we run in the same circle. I've never met Brian, uh, up until recently, and I saw Brian joined Trends. He must have bought it with just his company credit card, and he was trying to fly under the radar. And I saw that shit, and I immediately—
you put him on—
I went to the group and I said, hey everyone, Brian Halligan from HubSpot just joined the group. And he got like 300 replies in like an hour.
That was hilarious.
And I told all my friends, I go, hey, comment on this for me, will you? There was reasons like— and people were saying like, oh, HubSpot rocks, I use HubSpot, yada yada yada, that's so cool you're here. And I was hoping that in his head he would feel like, oh, this is perfect.
Well, I mean, clearly something worked.
Yeah, that's what I was hoping for. But anyway, so that's kind of how it came to be.
Well, let's just add this. This was— I mean, I don't think you noted this, but it was completely unsolicited, the cold approach you got over the fall.
Yeah, yeah. It was just a cold email.
They must have saw your lecture.
Yeah. And I was not intending to sell at all. I was never going to sell. There was a few reasons that when I decided to sell, I had just recovered from a really bad illness. I was in a weird state and I was like, you know, like if there's like a horrible emergency, like it would be nice to have this like a win under my belt. And I was just like really sick and I just recovered from Lyme disease where I'd spent a ton of time in the hospital and I was like, you know what, let's just guarantee a win and keep building it. And I think that could be fun. And that's kind of like where I was when they called, but it was just a cold email.
Have you in the last week, like, mentally changed at all? Or, I mean, you've been telling me, yeah, it's not really just more of the same, but like, to be honest, there— anything, anything changed? You're wearing a gray shirt on Friday. It's black today, man. Like, something's going on.
Are you asking like if I bought something?
No, just in general, man. Like, you can't tell me that nothing mentally has not changed.
I don't know how most people are in the situation, but my— like, I don't know how to put this in a non-douchey way, but like, I had a fair bit of money before this. I had enough money that my— that I was on like the high— one of the hierarchy of needs where I was like, I didn't need to worry about stuff. The thing that I've changed is that's changed is just the fact that like I proved to myself that I could start something and end it. And that is the thing that has changed. The money doesn't really matter because I already live a nice life. I already owned a nice home. I have cars and I've got, and I don't really buy fancy stuff. So there's, I mean, I'm not wearing a watch.
You're a gym guy. You spend all your money on fitness.
I spend all my money on fitness and that's not that much money. You know, I've, I built out a gym for $5,000. I'm going to buy a rowing machine. That's $2,000. That's like what I'll buy because I normally would try to get them to give it to me for free, but now I'll buy it. But, um, no, I think the biggest relief is that I started something and it ended. And also the second biggest relief is that I don't have to worry about the stuff that I used to have to worry about. So during this process, we are going to hire a CEO. And don't say his name, by the way, because Trung, because we haven't announced who— we never actually said who the guy's name was, and I don't want to call him out. He was awesome. I loved him. And we almost did it. And then when this thing happened, I had to fill him in. I'm like, hey man, I think we're going to do this thing. So anyway, the reason I was going to hire a CEO is I hate doing stuff like managing payroll, negotiating with people about raises, checking in with people to make sure they're like just traditional managing stuff. I hate it. I hated it so much to the point where there were some days where I'm like, I'm not going to work. I don't want to do this. I called in sick every once in a while because I'm like, I've got 8 meetings. I can't do it.
Like, was Lyme disease one of the times you called in sick for 6 weeks? Was that a fake one?
That was a real one. My face didn't work. Remember? I was looking like this. No, I hated that. You know, someone tweeted something. You tweeted something, Trung, today where you like talked about MBAs and someone said founders found, managers manage. And that's the truth. And when I was managing stuff, I was horrible at it and I hated it. It felt like it sucked. Sucked the life out of me. And so I'm so thankful that I don't have to do the type of managing of like worrying about like looking at balance sheets and things like that and making decisions. I can't, I'm so bad at it and I hate it.
Well, actually, uh, now that you mentioned that tweet, I think it's pretty funny to talk about because the content of the tweet was basically like, look at all the big FAANG M companies, whatever, like Facebook, Apple, Amazon, Microsoft, Google. They're all run by MBAs now. I didn't realize Satya at Microsoft was an MBA until I Googled it and it made the tweet way more fire.
So no, managers manage, founders found.
And like, if you're Larry Page and Sergey Brin and you're worth like $80 billion or whatever they're worth, you just want to go off somewhere and do peyote, right? Like, they don't give a shit.
No, like, that's not where I was. You know what I wanted to do? I wanted to be locked in a room. I wanted no one to talk to me, and I wanted to make, right? I wanted to create stuff. That's what I was creating.
Like, they're doing peyote and like trying to do crazy like moonshot stuff, right?
I wanted to make stuff. So like, when we launched Trends, it was me— and I'm not like bragging here, but I'm just telling a story— it was me who made, literally designed the page, ran the paid marketing to it to get a little bit of traffic, called the customers to figure out what did you like about that, what did you not like about it. And I did that for about $50,000 worth of customers. And then we decided to launch it and I kind of helped people figure out the vision. And then I gave it to other people like Trung and Steph who are way better than me at it. And then they made it awesome. And I just wanted to only do that all the time.
You're a starter guy. You're, you like starting stuff.
Yes. I cannot run stuff. I love starting. I mean, I can run stuff, but I, I like starting.
How comparable would you say, like, you want the Portnoy rule where you just get to be on Twitter 10 hours a day? He's creating, he's creating all day, man. That's all he's doing. He's not— he's creating.
Yeah, but his creating is different than my creating. His creating is like performance art. I don't want to do that, that's for sure.
You want, you want to keep making cool products, like, oh, whatever, for the community. Keyword: for the community.
Yeah, I don't care if my name's on it. It's just fun to tinker, and that's just what I wanted to do more of. So yeah, the deal happened. It was cool. A lot of fear, a lot of excitement. It's just a lot of mixed feelings, right?
HubSpot, by the way, is like a $20 billion company. Like sometimes you have to check these things to realize how big these software companies are. Yeah.
And it was, it was badass. I've spent a little time with the CEO. The CEO came to our meeting today. That was cool, right? He's just like a normal guy, I guess. He's just really successful.
MIT dudes. I lived in Boston for 5 years. I lived in Cambridge. MIT and Harvard. It's a I'll tell you about living in Cambridge, what's interesting about that area. You'll never hear— actually, no, you live in San Francisco. Those two places, San Francisco and Cambridge in the States, are where you'll walk around the street and just hear, like, overhearing stuff will be like the craziest kind of random talk you'll hear. Like, somebody will be curing some random disease or launching some kind of program in the Middle East which will save the region. Like, these are the type of conversations that go on when you're just walking around. I mean, you know that.
Yeah. And so Abreu had a question and he wants to know what's going to change going forward. Is the pod going to be shit now? No. So over the last 3 months when I've been working on this deal, I unfortunately have kind of left Abreu and Sean hanging a little bit. I haven't been— people were criticizing the podcast. They're like, man, you guys aren't like focused enough and you're not preparing enough. Well, I'm sorry. It's because there was 90-hour work weeks for this deal. So no, I think actually the podcast is going to be even better. Because we're gonna hire some people to help even make it even better. We're gonna get more distribution cuz we're gonna spread it across our channels a little bit more than before. We're gonna spread it on HubSpot channels. We're gonna have some more money and budget to make it great. And then maybe we'll do it more often. I'm not sure yet, but we're also gonna be releasing a ton more podcasts. Maybe Trung's gonna have his own podcast. Maybe some other writer who we find is gonna have their own podcast. And so we're gonna actually have more. In terms of changing on the consumer's point of view for The Hustle or for the pod, nothing. I don't think anything is going to be changed except we're going to do more of it. And maybe you'll see a HubSpot logo on some stuff.
It's going to be more of the same. That's how I— when people ask me, like, I got a lot of congratulations. I'm sure you got like a multiple of 1,000, but they're like, hey man, how's this change for you? I'm like, honestly, nothing really. Just I still got to work on those 5 emails a week. And honestly, at the end of the day, nothing really changes for the content side.
Well, we're going to hire more people.
So right now, like we didn't hire people, but I mean, like the job's still the same, right?
Yeah. Like some great writers cost hundreds of thousands of dollars and like we could never afford that. Now we can, and hopefully we can go, or, you know, hopefully we can get any—
send those applications in.
Yeah. I don't want to give any applicant a false sense that they're gonna get hundreds of thousands of dollars. I just mean like we're working at a tech company now. It's a lot different than a 30-person media company. And that's interesting. Another thing is I think a lot of these media companies, because they're reliant on advertising, I think they're so screwed and they're not screwed like they're necessarily gonna die, but they're screwed in that it's a horrible place to work. Yeah. It's high, high pressure.
And you gotta deliver, like you said, these numbers. But you know, you've been, I mean, you've been a very even-keeled person about it because you run an advertising-based business, but you also have a subscription-based business. So I think, I mean, when you kind of opine on it, I'm like, oh, you know what, I'm gonna kind of take Sam's word on this because you've seen both sides of it. I've seen you on Twitter, like, argue both sides, right? Like, you're very balanced about it.
Look, it's not bad. It helped us get us to where we had to go. But if we wanted to be, it would be really hard to become I'm not saying advertising is bad to have. I'm saying it's great if it's part of your mix. But like, if we had Bonobo— one time we had Bonobos as an advertiser and there was a shooting that we covered and Bonobos was like, hey, like, we can't be running next to this like Nazi who just killed this. There was some like a shooting in New York where a guy shot like a— what's a Jewish church?
Synagogue.
Synagogue or something like that. And some brand, I don't remember if it was Bonobos, but they were like, you know, we don't want to advertise. So it's like, fuck, we just lost $30 grand that day.
Absolutely.
It changed.
Well, like you said, you could sell it. The backend's real good now. It's the software, man.
All right. So we just got done talking to the deal about the deal. We're actually going to talk about it more tomorrow or I guess in 2 days whenever these go live with Kieran from HubSpot. So we're going to talk about that a little bit more in detail, but I just want to give you a little bit preview on what happened with the deal. Now let's get back into it with the old stuff and we're going to have Trung tell us some interesting ideas that he's looking at. Trung is the writer of The Hustle, a writer at The Hustle. Let's do it.
So why don't we throw some ideas out there?
All right. I didn't prepare anything, did you?
I did. Well, it's because I've been writing so much the last couple of weeks. I got some ideas here. So I actually want to ask you a very specific specific one. When you hear the word financial engineering, what do you think?
Okay, so you think financial engineering, it's a negative connotation.
When I think financial engineering, I think of a thief.
Okay, I think that characterization is pretty much out there. Uh, a lot of financial engineering happened in '08 with the mortgage-backed securities. Goldman was involved in a deal where they put a mortgage-backed security, uh, bond together and they basically bet against it. This is actually one of the most famous financial engineering, which is a lot of fuckery involved. Probably have to bleep that out, but when Greece tried to join the EU, you have to hit certain debt numbers, and Goldman basically said, listen, we can do some kind of financial instrument for you which will make it look like you have a lot less debt than you do. Goldman made like $700 million on this deal, and they basically lied to get the Greek government and Greece into the EU, and that basically led to the European financial crisis, right? So to your point, financial engineering, Very negative.
Okay. But where are you going with this?
There's a very positive story I just wrote about it, and it involves a professor at the school of our co-founders now of the company we work for, HubSpot, MIT. His name's Andrew Lo. Andrew Lo created a new financing mechanism for the biotech industry, which has now led to a company that's worth over $8 billion. And essentially what he did was he put financial engineering to the biotech industry. 'Cause you know, for example, what do you know about the drug creation process? It's expensive.
It's expensive and it's hard and it fails a lot.
Exactly. It's a lottery, right? So you'll spend $200 million for a chance, a 5% chance at getting a blockbuster drug, which might be worth $20 billion. So Andrew Lo, about a decade ago, this professor lost 6 people very close to him, including his mother, to cancer over the span of 4 years. And this like made him to reassess his life and like look at his field and be like, What can I use my expertise with? He's like, he's like a godfather in the industry. A whole generation of quants were taught by him. And he's like, I'm going to look at biotech to figure out what the issue is. And you're probably familiar with this term. Do you know the term, uh, you know, the valley of death and funding? Some industries are unfundable, right? Like, solar reached the valley of death like a decade ago. It's just very difficult to fund these like long-shot things with long-off payoffs. He goes, I'm gonna find a way to make biotech funding more viable. So he went and said, what if we got 150 startups to get $200 million each? And that's a $30 billion fund. And he ran the numbers and said, if on this fund there is a 90% chance that you'll be able to get 5 blockbuster drugs out of it. So the key being this though, each startup has to go after a different disease, be completely uncorrelated. And he ran the numbers and he's like, this now can make financial sense for an investor.
So explain this again.
What do you do? You bundle, you, you pool risk together. So instead of— you fund 150 startups attacking 150 diseases.
But isn't that what a biotech VC firm would do anyway?
No, he— the thing is this, you have to specifically go after different diseases.
But wouldn't a fund— and wouldn't any smart fund already do this?
No, but this is the thing, is like the, the industry it just hasn't been doing it. Like, this is what he discovered.
And how's it going?
One of his students took his model and he went out, raised money from KKR, raised money from Sequoia. It's a public company now, is worth almost $9 billion. They have 20 drugs in the pipeline and 4 of them are in phase 3. So they literally applied his model and they're curing rare diseases and rare cancers.
Is that his name, Loeb? Andrew Loeb?
Andrew Loeb.
So he's like the fund manager?
No, he— the, the company's not a fund, it's just a biotech firm that treats his model like this. They have a centralized research, centralized operations. Each new drug that they create, they spin, spin it off as subsidiary.
So where's the opportunity here?
Basically, he created this funding model where you can attract money from conservative investors that wouldn't put it into biotech, which is otherwise way too risky, because he's saying it's actually de-risked by doing it with this model. So to your point, you would think that it has been done, but it hasn't. And he created kind situation and went out, was a champion for it. And now he can get old guard money and potentially pension insurance money into this type of system. Before, it'd just be venture VC kind of biotech risky money. But now he's going to pour all this other money into it. And with this proven model, the company's called Bridge Biopharma.
Bridge Biopharma.
Yeah, check them out. So to answer your question, there seems to be a little bit of minutiae of confusion here. You're like, aren't they already doing this? I think that the— my rebuttal to that is the amount of money needed isn't going into it because it's still too risky. Let's say a biotech fund is like $100 mil. Andrew Lo's like, no, no, we need tens of billions of dollars. And he's out here championing this model. It's like, you got to think bigger. You can't just diversify across 10 startups looking at 10 different diseases. He's like, I want 150 startups looking at 150 diseases. And looking at my model, I can get the probability of 3 blockbuster drugs which is probably worth $50 to $60 billion over a lifetime, is like 90-plus percent. So he's de-risking for a conservative investor. If you're an insurance company, you can actually look at this now and be like, you know what, this is viable, whereas before you would not.
So we had, um, we had Jason Calacanis on here a few days ago. He might be worth $100, $200 million. I'm not sure. I mean, he's, he's up there because he's invested in Robinhood, Calm, Uber, all these great things. And he says that that's his strategy with angel investing is like a little bit of a shotgun approach. I don't think he said this explicitly, but if you look at his track record, it appears as though he's like, I meet with tons of people and I invest in a ton of stuff. It has worked for him. I mean, it seems like a pretty common model for high-risk investing. It's just quantity over quality because it's too hard to tell the quality early on.
Yeah, absolutely. I think the thing I really want to emphasize here is that the low to no correlation, I think that is really what 'Cause if you're looking at, like, for example, the biggest killer in the United States is probably heart disease. If you're just trying to attack heart disease in different parts of it, they probably have the same underlying causes. So that model wouldn't work, right? You have to be very specifically— you're searching for diseases and maybe single gene mutations that are completely uncorrelated. Listen, I'm probably completely chopping up Andrew Lo's paper here, but I thought it was super interesting because financial engineering gets such a bad reputation as when I ask you what your first instinct is to that word.
All right, what else you got, idea guy?
So the other thing we wrote, and I think you saw this, you retweeted it, but I know you retweet a lot of my stuff without reading it, which I do appreciate. Uh, Marcus Bullock, the CEO and founder, former inmate, uh, turned CEO of, uh, what they call—
yeah, that's a crazy business. Let's talk about that.
Yeah, so Do you remember?
You read the story? Yeah, yeah, yeah, yeah. So basically there's like a sob story along with it. I say that just— I don't mean that disrespectfully, but like there was like— it was like a sad story. I think if I remember correctly, he screwed up, got locked up, and, uh, at 15, I imagine like he did what he did and so he just spent some time in jail and they make a collect call, went to the point of he almost like bankrupt his mother, right?
His mom had to move from an apartment to a studio just to be able to afford to communicate with him.
Yeah. And what did he get locked up for?
Armed carjacking.
Got it.
And this happened 6 years, about 6, 7 years after the 1989 Central Park rape case. Remember, the jogger was raped by 5. Well, the jogger was raped by 5 minority youths was what they were charged with. But it turned out to be not true at all. But in the aftermath of that, the start of that case, every state in the United States basically said, we're going to start trying youth as adults. So he got really fucked.
Bankrupt his— not bankrupt his mom, but depleted her funds. She had to completely change her lifestyle just to talk on the phone with him once a week, however long it was. How much did it cost to make a collect call? Like $12 a minute?
$18 for 15?
Yeah. Insane.
Yeah. And that was in the '90s, right? Yeah. So a lot of money.
A lot of money. And it's because the telephone system for prison system in America is run by basically two private equity-backed telecom companies.
Okay, and what is it? What did he create?
He created something that, uh, he just looked around, he's like, everybody's using their phone for social media. Prisoners obviously don't have access to Twitter and Facebook, but what if I could create something that would be similar from the family side and you can kind of still communicate with them? So it's very simple. You open an app on your phone, it's called Flikshop, F-L-I-K-S-H-O-P, and you basically do whatever you do with Twitter or Facebook You click on an image and you send it, but instead of sending an image between phones, you are sending it to Flikshop and they're going to write a postcard for you with the image and the text. And what's amazing about the story is the hustle involved for him to get into like over 2,700 prison systems in America. He was like meeting these wardens and administrators like in person, trying to convince them that they should allow Flikshop. And for the administrators of these prisons, it actually makes a lot of sense.
Prisons.
They want to reduce recidivism, inmates that go out and commit crimes again. But one way to do that is just keep them mentally healthy, right? Let them communicate with their family. Let them know there's job opportunities. A lot of corporations use Flickshop to send job opportunities and ideas. And the other thing that's a benefit to the prisons is Flickshop is a known vendor quantity. So you're not going to be getting ketamine laced into these postcards.
What and how big is the business now?
I don't— I haven't gone through the full numbers. I know he's sent— I think he's sent maybe hundreds of thousands, if not millions of postcards already. And I'm look— just looking at the landscape. I know that there are kind of these like on-demand, I think Fluttershop or something. I don't know if that's right.
Fluttershop. That's an interesting industry. Can, let me tell you a story real quick. So about 2 years ago, one of our investors and now a mentor and great friend of mine, his name's Chris Redlitz. Chris like helped start Reebok and then he, uh, was the first investor in Wish. He's been around. He's, he's very successful, real low key though. But about 15 years ago, someone asked him to go volunteer at a prison to talk to them about technology. And he was like, what? I don't want to do this. What am I doing? And then he gets there and he does the presentation and he's like, I'm going to dedicate my life to this. He starts this thing called The Last Mile. And I went and volunteered at it. And basically I went there. He took me out to San Quentin. And this guy, he's met— I think he's met with like the Clintons and the Trumps. He's met with, like, on both sides of the aisle. They all support this program and it's this in-depth program and it teaches inmates WordPress basically, relatively simple things, but it allows them to get jobs. Some of them have gotten jobs at Slack. He teaches them like front-end stuff. I think a lot of WordPress, a lot of just basic web building stuff so they can get gigs. And I went out to this prison and I'm a big crime guy. Like, I love, like, crime. I love, like, prison TV shows and, like, cops and all that stuff. And so like, I knew what San Quentin was because, you know, that's like, oh, you're going to San Quentin. That was like the, you know, that's a big deal. And I was just walking around the yard. We go up there, we show up, we walk around these yards and imagine just exactly what San Quentin is. It's like all dirt. It's kind of overlooks water and there's these huge dudes shirtless lifting weights, mean looking dudes. And me and Chris walk in there. And they part. They're like, get out of the way. It's like the Red Sea for Chris. And they all go, hey, Chris, man, how are you? And he goes, what's up, Darren? Like, what's up? Like, he was a god there because everyone knows if you get into his program, they have a 0% or they had a zero recidivism rate, meaning everyone over the last 10 years who went through their program, not one of them went back to prison.
Do you know how many have gone through?
I think thousands. Thousands. I think you could look it up. And so it was crazy. I was just walking around with these guys. I mean, these are— many of them were just killers, right?
To be honest, were you scared? Like, you must have been extremely uncomfortable.
I was scared at first. And then you start talking to them and it's like, I start talking to this guy. I'm like, hey, what did you do? He's like, I beat up a guy 20 years ago. He goes, I caught a guy cheating with my wife and I beat him up really bad and he almost died. He was like, I was just so angry and I just lost my temper and I flipped. And in my head I'm like, yeah, I mean, you deserve to be here, but that was 20 years ago. You're doing better. So he was just a guy to me. He was wearing you know, his, his inmate clothing. But besides that, he was just a nice, smart dude. And we were just talking about stuff. And for the most part, it felt like normal guys who did bad stuff like years ago. And I don't want to generalize. I mean, obviously there's a lot of bad people there who deserve to be there, but it was crazy. And so what he's working on now is there— what he discovered was the same thing. It's really hard to communicate and very expensive to communicate, and it's hard to track people. And he said that like— I forget who it was exactly, but a lot of these private equity companies have like these prepaid cell phones or something like that, that— and they were gouging these, these families like crazy to use them. And so his new startup, I don't know if it's launched yet, but when you think about it, it makes sense. But it's crazy on the surface. He wants to give an iPhone to all the prisoners. Now, I don't know if this means like low security, high security. I don't know which prisoners exactly, but he wants to give an iPhone to all of them. They won't be able to use the internet, but it's a way to track them, to send them education stuff so they can learn how to prepare for work a lot of really cool stuff. It's very fascinating. It's called The Last Mile and The Hustle. We actually did a great story on it. Super interesting space. And he says that this business, he goes, it's going to be massive. He goes, we're going to be as big as T-Mobile.
He's looking at it like a businessman, right? He's not looking at this. I mean, both parts. He's also looking at it.
It's both. I mean, he runs a nonprofit that he raised money for and it just doesn't make any money. It's a, you know, they just pay, they cover their ass. But he's like, I want to make a business for this. And he's like, I want to come at it at the right direction. So it's like good for customers. It doesn't completely screw them. But if I make it for profit, that allows me to expand faster and reach more people. And it's a crazy unique situation, this whole private prisons and that whole space. It is quite fascinating. It's really corrupt, but it's very interesting.
Well, your friends at the Cicero Institute, you remember, remember the Cicero Institute? Yeah. So they sent us a bunch of stats about the prison industry. I mean, 2.2 million incarcerated. And what Marcus said was essentially when you go to prison, your whole family goes to prison, right? So 2.2 million times what— call it the average family is 4 or 5 people, maybe extend is 10. You're talking 20, 30 million people directly affected by the prison industrial complex, right? That's 10% of the US population. US expenditure, government, state and federal, spent $81 billion on the prison system. So huge industry that needs a ton of change. And then you get the social good out of it. The lowering recidivism is huge.
Yeah, super interesting space. We should actually do more research on this space and come back. If you want to learn about this, Google, uh, probably The Hustle. What would they Google?
The Hustle: The Last Mile. Zach wrote about it, right?
Well, Zach did The Last Mile, so Google The Hustle: The Last Mile. The Last Mile is 3 words. The Last Mile. And then for Trung's story, Google, um, The Hustle, and then what was it called? Flikshop.
F-L-I-K-S-H-O-P. I mean, we could probably throw these in the notes, but yeah, this— and Marcus is crazy, is insane. He actually, one part of the story that I just want to add before we jump into something else was I asked him, I'm like, in your late teens, 16, 17, 18, and you're in prison, who are your mentors? How did you even become an entrepreneur? He literally said he got hold of Jay-Z's album, his first album, and Jay-Z was rapping about these non-traditional paths to entrepreneurship. And the line that he said was from the song You Don't Know, he goes, You can make $40 off a brick, but one rhyme can beat that. So he's like, why be in the street hustling if there's these other paths that you can possibly use, right? And I mean, I'm sure Jay's influenced a lot more and inspired a lot more people.
And let's go to one more idea, but to wrap it up, what did that guy get from the article? Did he get a bunch of customers or anything?
Well, I'll tell you, that one was, he wrote me and he said a state government reached out to him and they wanted to put him, the Flick Shop, in a lot of institutions. So I mean, like, honestly, that was amazing, man, to get that message from him. He's like, I'm like, and he wrote to me, he's like, Trung, you know, this is amazing. Dude, like, what did I do? Like, this is your journey, man. Like, I didn't spend 8 years in prison, right?
This is— gotta be like, yeah, I helped you a ton, man. You got some equity or what?
All right, man.
All right, well, let's do one more.
All right, well, this one will be an easy one for you. I'm sure you got a million ideas on it. Tell me what you think about Twitter's subscription business.
Tell me about exactly what's going on. So basically, Twitter bought this company called— is it Revue? It's spelled like a really cute way.
It was a newsletter business. I don't know if you saw then yesterday, Twitter said that they were going to put subscription offerings potentially in this upcoming year. So you can pay for the following things, it looks like, potentially. I don't want to front run a fake story here. You could pay for TweetDeck, which I don't use, but I hear really good things about. You can pay for a pro features, which is like more customization on your profile and something about undoing sends, which doesn't really make a lot of sense to me because I just delete tweets I don't like.
Okay, so that one I might actually pay for. And then the other one was tipping. You can tip accounts you like for extra content. I think that one's a no-brainer.
And they also bought a newsletter business. Yeah, Revue. Not a newsletter business, but a software that makes newsletters. Yeah. And didn't Facebook say they're going to do paid newsletters as well?
Yeah, Facebook has a team doing paid newsletters. So, I mean, you're the guru here. Tell us what you think.
I'm happy we sold. That's a lot of competition. I think Twitter will work before Facebook works because Facebook's in the shitter right now. You know, a lot of the people who make paid content, I think, are on Twitter and trust Twitter far more than Facebook. I think that's amazing. I think I should go buy Twitter stock. I think it's awesome. I think that's a great, great, great idea. I think it's going to be a massive, massive success. Yeah, people are going to rely on Twitter more, which is probably not good if you're a creator, but I think it's going to make a lot of people millionaires. If there was some stock guru, like, and he was like, hey, I'm going to tweet out like whatever I'm buying each day.
Yeah, pay for the— tip me for the exclusive content.
Yeah, I mean, that's going to be the biggest thing there is. So obviously that's going to be awesome if Elon has Elon would never do this because he doesn't want that money. But if he just is to say like, I'm going to tell you my inside thoughts once a week or something. Yeah, it's going to be the best. I think it's such a great idea.
Actually, now that you mentioned that train of thought, the amount of sketchy insider stuff that could go on now is actually pretty insane. People that you know can move the market can just be like, all right, now you get to pay tipping to see me move the market beforehand. Whatever. I mean, I'm just putting it out there.
I think it's great. So we have Trends. It's trends.co. You have to go to trends.co in order to buy it. There's some special stuff on Facebook where we can get people to purchase it in the content. If you're on your phone and you see Trends.co, sometimes you can buy it right there in the app, and that's great. But trying to get new users, we post on Facebook and Twitter. The user has to click off, try to be sold on it, buy it, sign up, and each week they're sent information in their email. And we know that removing a little bit of friction can increase the amount of users you get by 2 or 3 times. So you could have a 1% conversion rate, and then if you change just a few things, you can have a 3 or 4% conversion rate. And if Twitter can make this so my credit card is on file with them and I'm just doing this like, oh, I want this, pop up, done, got it, it's going to go through the roof. And I could tell you that the people who buy with Apple Pay convert at a much higher rate. Of course, people aren't always using Apple Pay on their computer, so we don't get that all the time. But I do know that having payments like that is going to be a huge win and it's going to make it really easy. Also, I didn't know this and this isn't like me joking. Do you know that there's like nudity on Twitter?
I'm actually just— no, I did not know that.
Yeah, you can get nudity on Twitter. I had no idea either until the other day. Someone told me, I'm like, wait.
That would be the other hub company we're talking about.
Yeah, it is. There's nudity on Twitter. I had no idea. I don't know if it's softcore or hardcore. I don't know what the deal is, but obviously we've seen OnlyFans take off.
Dude, I didn't even think about that. Twitter literally might have just doubled its market cap based on this potential.
It's super interesting. I think that's a really smart, smart play. I don't think it's going to work as well for Facebook. It's wise.
I think the running joke, probably even on last thought, is it took him this long to figure it out.
Yeah. The thing about Twitter is like they don't innovate. I think if I was working at Twitter or if I had power there, I would fire Jack Dorsey right away. Or I would say, you know, you're demoted to this thing and we're going to put a new CEO in place. 'cause they don't ever innovate or do anything new. So I think it's badass. What do you think?
No, dude, I'm 100% on board. It's a little bit fair to them. I mean, they did have Vine. They just have a history of crushing things. Periscope, Vine. So, ah, I'm on board, man. I like that take.
All right, so today's episode, a little— not entirely all over the place, a little new. Trong, this was your first— we're wrapping up. This is your first time on the podcast. Say your Twitter handle again. We need all the hate mail, but hopefully way more fan mail to go to you. So what's your Twitter handle?
All right, that's @trungtphan. That's T-R-U-N-G-T-P-H-A-N.
Hopefully the people love it and, uh, you can keep coming back, but it's up to them.
Yeah, no, that's fine, man.
All right, thank you. All right, talk to you soon. Yeah.