#195 - A Discussion on Sam & Shaan's Recent Investments

Props to this guy for doing this. I got to give him credit. I'm more into this than you are. I kind of love that a guy's dreaming like this.

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. So we, we just did this other intro. Mike's got screwed up. We're going to do it again. We could say what we said even faster, though. We're talking about The stuff that we're— the startups that we're investing in, I actually put it into a format. Uh, so like the name of the deal, why each of us did it, why it can be great, but I also wanna say why it can suck, why it will fail.

Yeah.

This is like the, uh, disclaimer here. We have a stake in everything that you're gonna— we're gonna be talking about. Uh, I frankly don't care if people use it or not. I mean, this is more so entertainment. I have a feeling some people will use it, but that— and, and also this isn't like investment advice. A lot of these companies are very likely gonna go outta business cuz that's just how startup investing works.

Yeah, and you couldn't invest in them if you wanted to, most likely. The, the good outcome of this would be, A, you hear about some cool startups that are doing interesting things, and it just gets your wheels turning about like, oh shit, I never even thought about that, that's exciting. And then the other is you get a taste of what it's like to invest in deals and how you think, how, how an angel investor thinks about investing in early-stage startups.

All right, I also want to say really quick, that doesn't— I don't want people to know— I'll say, for me, I'm not necessarily I'm not saying I'm good at this, but I'm just kind of doing it like publicly. So people are watching me learn, like get in shape publicly. I've probably done 30 deals, but anyway, you want to— all right, let me go first because I have this deal that I have to make an introduction to because they specifically asked for you. It's the top one. It's called Abstract Ops. And I need to know if you want to join this or not. I actually—

I just emailed the guy today because I was like, shit, when I saw you write this, I was like, oh shit, I forgot to reply to that guy.

Did I introduce you?

You told me about it and I was like, I forgot to ask about it. So I emailed him.

Yeah, he, I offered you him or him one. Somehow you were already in the know and he said he wants to talk to you. So I know this guy, there's two guys. I don't know the second one. The first one, his name is Adam Spector. He's one of the founders. I think he's the COO. I've known him since 2014 or '15 maybe. Uh, I've been in a book club with them. There's four of us who have a book club and I invested in the seed round. I didn't have much money at the time, but I think I invested either $1,000 or $2,000. I don't remember., but I got pro rata. So when, what that basically means is when they were going to raise again, I got to invest again. And that's how I find out about this. Adam's amazing. I ended up investing around $400,000 and I got to preface this by saying that I do my own money that comes straight out of my checking account. And then I also have this thing called Hampton VC. So hamptonvc.com, or is it .com or .co? Uh, and you can, uh, it's where I use AngelList where I invest. It's hamptonvc.com. It's where I invest like my own money. And then if someone wants to join, they can. So in this deal, I did both my own and Hampton's money, and we invested about $400,000.

Basically, what it is— yeah, what's AbstractOps?

So have you— the— like, if you're like, know what you're talking about a little bit, you would say it's like NetSuite for startups. If you don't know what that is, which a lot of people don't know what that is, it basically—

I don't know what NetSuite is.

So when you start a company, there's all— I don't actually know if you had to do this because you actually had people earlier on on, but when I started my company, there's a lot of stuff that I would always forget to do because I'm just an absent-minded person. So for example, if you have, uh, employees in different states to file taxes into each state, or even just to register in each state, and it's not like a huge penalty, it's like a $100 penalty if you don't do it correctly and you get a notice, but it's important to do it all right. Um, otherwise it adds up. Or another example is like certain HR practices and certain backend practices, like onboarding contractors in a very particular type of way, getting them to sign like an intellectual property release. There's just 1,000 different things. And AbstractOps is software that helps you— that basically adds in what all those things are and its workflow so you can see which tasks need to get done. Does that make sense? It's a little bit fluffy, but does that make sense?

That's a little bit fluffy, but I recommend people actually go to their landing page, not because that has anything to do with the investment, but It's such a good landing page. So, so what you see if you go there, so it says, so I'm just gonna point out a couple of brilliant things. I'm gonna use this in my power writing course because this is an example of an amazing landing page for a fairly boring business that would normally have a cookie cutter, very boring stock photo type of, uh, of website. And so it says, stop running from your back office tasks, which is basically like they had a million ways they could explain their business. Like we make it easy to handle your back office tasks, or to handle HR, legal, and finance ops. And so stop running from it. I think it's great. It shows me this person understands how founders are, which is like, we put this shit off as far as we possibly can because it's a pain in the ass and we just don't want to think about it. And then it has this stick figure running away from a tornado, like a little hand-drawn tornado. And I love it. And then the first subheadline is, I started a company to do a bunch of back office work. Literally no founder ever. Right. And it's like, I just get that. I love the, that they have personality. I think what that does is it makes it way easier. It shows me that whoever's behind this knows marketing and they're going to have a much easier time recruiting, uh, like customers and users because they're taking the average mundane things and they're turning them into little sales moments where I start to love this brand. And, um, and I think Slack did this extremely well. If you open up Slack, there's like 10 little delightful details that make you kind of like Slack, even though it's a pretty boring, like, work chat tool. And, um, so, so that was something that stood out to me right away.

So I'll explain why I made the decision to invest. The first is I know the founder. His name is Adam, and he had previously sold the company to Twitter. I don't know if it was incredibly successful, but I don't care. To me, it's like, all right, it's in what we call the sweet spot.

Yeah. And so that's one of the reasons why. The second reason is the product. I like— I know, like, frankly, I think they're still figuring out the product. They have like close to 7 figures in recurring revenue, but I think they're still even figuring out the product, which frankly is a reason why you shouldn't have— I shouldn't have invested. It's like they're still kind of tinkering exactly what it's going to become. But I do know that when it comes to the back office of startups, Um, this was something that I failed at for years. Like I struggled so hard to like make sure I filed my taxes in Washington because we had one guy who was working more than 40 hours a week there.

Yeah.

Like it was just like a nightmare and it stressed me out. And there, when I was selling my company, there was so much stuff that was like loose paperwork. Um, the, um, the, um, the things that make me worried though, is that Zenefits, Gusto, or the thousand of other companies that they can just Once you— because like it's hard to get— once you start using Gusto or some payroll provider, getting out of that is a pain in the ass. So if these companies are smart, which some of them are, but they're still big, slow companies, then they're going to do a good job of ripping AbstractOps off and offering these features as an add-on. But I actually— I think that could be said for a lot of different companies. Also, because it's this like huge— it's kind of vague now because it's not a very narrow product because it's like huge idea. I get nervous that they're not going to be able to sell this to customers, but they've done a pretty good job of getting some of like the cooler, hipper companies already as beta customers. So it's incredibly interesting to me. What about you?

So, so I kind of agree. So I guess like the one thing for me is it's not super clear, like even on their website, they have a bunch of these like little examples. So it says, if you're a CEO, we handle and automate your HR, legal ops, finance, so you don't have to. And then I like how it says, be scrappy, not sloppy, which is definitely a distinction I've failed at many, many times. Falling into Sloppy but Calling It Scrappy, uh, as my, as my cover. But they have a bunch of like use cases, like pay legal invoice, send equity grant to advisor, set up health insurance, compose investor update. And so I'm not sure how one platform can either do all those things, or is it just a to-do list so that you actually do this? So I don't actually know the product well enough because I haven't used it, but I would say that's one challenge, is it seems like it's trying to do a whole bunch of things, which means it's either a very generic horizontal tool or it's a complicated tool? Which one is it?

I think it's going to be a complicated tool at first. That said, I think that like a company like a NetSuite, which does a little, which is like a net, you know, QuickBooks. Yeah. NetSuite is like that, but plus a lot more. And what I've noticed is that being particularly being at HubSpot, once I can get, if you can be a good enough salesman and get someone to start buying your shit, it's incredibly easy just to start selling them more and building more stuff on top of that. And I'm hoping that's what we can do with AppShark Ops.

And the one One of the kind of question marks here is, is this automated or are there just humans in the backend that are like helping do all this stuff?

A little bit of both.

Uh, currently, currently a little bit of both, but I think that's, that's the question is can they get it to be more software than, than humans so that it scales better?

Are you going to invest?

Uh, we'll see. I want to actually use the product because I, I'm guilty of this, like I said. So like I have a company that, um, basically my personal company that's like back office is kind of sloppy, is kind of a mess. Like our QuickBooks. I don't want to open any of those tabs. I don't want to open Gusto. I don't want to open QuickBooks. It's like something I choose to avoid. I'd rather put it off until shit breaks and then I know it's too late. But like, fuck, I hate thinking about this stuff. I only want to think about growth if I can. And so I actually think I would be a potential user for this. And so I'm going to use it and I'm going to see, is this magical for me or not? And that'll be the make or break for investing. Which is always the best. If you can be— if you are the customer, it's way easier to invest than things that you're guessing about.

Tell me about one that you're excited about.

All right, I'm gonna tell you about one called Jar. So I think I emailed you this deal because I think you should do it. Um, but what is it? So Jar is, uh, you know that app Acorns? Uh, it's like kind of a big fintech app.

Acorns go public.

I don't know if they— I think they're like SPACing or something like that. They're like a multi— they're like over a billion dollar valuation. And what Acorns The genius there was like, you would buy something and they would just be like, hey, do you want to— it would just tell you up front, do you want to be a saver? Okay, you want to be a saver. Great. Well, here's why we can make it easy for you. You don't have to think too much. When you buy Starbucks and your bill is $3.23, let's just round up to $4 and we'll just round up the savings and we'll just deposit that. And oh, look, over time, if we just keep rounding up, you'll save. That's how it started, at least. And it was a pretty clever idea. People like that. And so what these guys are doing is they're taking the Acorns model and tweaking a little bit, but they're doing it in India. And so here's what I like about it. Um, you, most apps, when you want to go invest, it's like you download some fintech app and then you got to like link your account. So you got to deposit money and then it's like, great, what do you want to invest in? Or how do you want to set this up? You know, do you want to do a mutual fund? Do you want to do an index fund? Like, what do you want to do? And it's like, shit, I need knowledge now. And then it's like, hey, by the way, you can't just start investing right away. Like we have to verify your identity. So like scan your driver's license, hold it up to the screen, you know, with a nude photo and whatever else, right? There's like all these steps that go into just getting started with any investing app because that's the law.

And what these guys figured out is a, um, did this used to be called Spenny?

No.

Are you sure?

Yeah, I think they're— I don't remember Spenny. Uh, they didn't mention that at least. It's called— their URL was like changejar.in. And so what they were doing is they were like, look, the average person in India is— this was like their story. They were like, I got my job when I was 21, like most people, but I didn't start saving anything or investing until I was 30. And when I was 30, it was like, oh shit, I want to buy a house sometime and I want to get married and I really should start doing adult stuff. And so he's like, that lost decade between 20 and 30, is like a huge difference in your net results if you had started saving earlier. Like, everybody's seen these compound savings charts where if you start at 21 versus 31, you know, you end up with millions of dollars more because you've been able to like save for an extra decade and even in small amounts. And so what they said was, how do we solve that problem? How do we get you to start investing at 21 instead of 31? And what they did was they're like, we're going to simplify the shit out of this. We're going to simplify it where in 45 seconds you can have your first investment done. I said, well, how do you do that? And they said, well, here's the thing. In India, everybody believes in gold. And I know this because my family in India has gold shops. They sell jewelry and whatnot. And gold is the thing. If you ask a mom there about stocks, they can't tell you a single thing. Stocks is not like a big thing there, but everybody has a gold set of jewelry as their safety net.

That's crazy to me.

You don't have to verify your ID.

Was this your own money that you invested or the fund's money?

Well, I put my own money into the fund, but then all my investments have to go through the fund unless, um, the founder itself won't let the fund invest.

And so it's only because that's like a, like an AngelList rule.

Well, that's the rule I set when I started the fund because I didn't want to have a conflict of interest where I'm doing the good deals in my own money and I'm doing the borderline deals in the fund's money. No, I wanted it to be clean so that, hey, every deal I do, I just do it through this one vehicle.

How much did you invest?

Do you— so are you totally okay with investing in India? Like, because I don't— I've only invested in American-based companies. I've had Australia, I've had all over Europe, and I'm like, for some reason that gap freaks me out a little.

It— yeah, it kind of does to me too, but I've been investing in India. And, um, and so, so when I do, when I invest in India, there is definitely like some trepidation. So that's my why it could fail. I just wrote India, question mark, question mark, question mark, like easy for me to be fooled, right? Like these guys could be well-known scammers in India that I don't know, right? These guys could be, I mean, they weren't right. They went through YC, I think.

So, so, so, so, you know, uh, I don't actually, I don't know if they went to YC, but I know the other, other companies I invest in know these guys and they went, their competitor went to YC, which is your second point why they could fail is there's a lot of people in the space.

I agree.

I build my brand bigger there. I can get into any deal I want there.

I agree. I think it's why I like, like Bruno Mars is like the most watched person on YouTube. It's because when you see— because in the— where's he from? Indonesia. Philippines, wherever he's from, if you see someone who you recognize in America who's crushing and kicking ass, everyone rallies around that person from the outside country to like, oh, he's one of us.

So it's like Manny Pacquiao in the Philippines. He's like the president there. And he's just because he's like a famous boxer here. They just want to go all out for their guy.

Yeah. Or Björk in Iceland. So you're like the, you're the, you're the Manny Pacquiao of India.

I'm saying if I keep betting, then I have a path to do that. But if I'm never investing there, then I can't build that like it takes a stack of reasons why you should be like known and respected in a place. And I think one of the reasons why you could be known and respected is having invested in some winners, but I got to plant those seeds now.

All right. Can I tell you one I'm really excited about? And I wasn't excited at first and then I started using it and I'm like, oh, I'm in. Okay. So the name is bad and they're going to change it. They're going to change the name. I think it's called— the name is really bad. It's called Rumr. So I'm actually highlighting it. You can see the memo that I wrote for it.

When you say it, the name's fine. When you spell it, you, you know, it sounds like you've got cotton in your mouth or something like that.

So I've talked about Bring a Trailer. Bring a Trailer is this website that originally started as like a car where they would show off cool cars that were on sale from around the web. They eventually launched their own auction platform, but they just did a really good job of making editorializing it, making it feel like a community. So you can buy classic or even newer cars that fit a certain demographic. Rumaar is doing that for houses. And by the way, if you want to invest, Sean, let me know.

Um, I, I wouldn't have been interested in this except for the Bring It— when you've educated me on how Bring a Trailer is a great business, and we've looked into different auctions through the podcast. So now when I look at this, I see it differently than like, oh, just another home buying website. Okay. I don't really— how are you different than Open Door?

It'll be cool because look at some of the example auctions and then click comments and read the comments. That's kind of like why it's neat.

How do I go to an auction?

I don't even know if those are fake auctions or what. The founder bought a bunch of homes just to put on that site for auctions. Right. Um, and so go to the website.

He bought a bunch of homes to succeed the marketplace.

I think he like owns like 20. He's like a, he was like a, he's a property owner. Like he owns, uh, he's like a landlord.

So let's just, let's just explain it. So I'm on Rumr. It's R-U-U-M-R.com right now. They might change the name. So I go, Washington looks to be the only market that's open. So I'm there right now and I'm just looking at this for the first time. So I see that there's this house in Washington. There's a bunch of pictures and, um, it's on sale for $103,000. And it says that there's 13 hours left. Presumably in this auction. And then there's some details about it, like all the normal house details. And then I can log in, I can make an offer, and then I see people who are making offers. But then I see people who are also commenting like, is the electric heating system baseboard or something else? And then you see replies from, like, I assume either the owner or the agent, like, answering questions in the chat here while people are bidding $100,000, $101,000, $102,000. And it's currently at $103,000 is the—

You know, Stay Alfred, by the way, we should, we should highlight the groups that we are inherently biased to invest in. Mormons, military guys, Russians, Jews. What else we got?

Israeli Jews is what we said, right?

You know who else? Immigrants.

I'm always partial to immigrants.

Any, any immigrant, anybody who's lived in the US illegally, you know, for a period of time. Anybody who is, you know, single parent, uh, I'm in. You did, you already did the hardest thing of your life.

McKenzie.

Oh, McKenzie. No, that's, that's a, that's a no for me. The, um, the other ones that I guess like are, are, I'm always like, I lean in. I'm a little bit interested. It's like, oh, how'd you, what were you doing? Like when you were younger? And it's like, well, I was like, you know, flipping cars or I was flipping shoes on eBay or, uh, I kind of don't want to say, cause I was like this affiliate marketer for these like shady dating sites. I'm like, no, no, no. You don't understand. That's like shady internet stuff. I like shady internet arbitrage.

So why would I— okay, so let's say, let's say I'm a seller. So why would I sell here when I feel like, okay, I'm gonna have this 13-hour auction, I don't know what's gonna happen. Do I have to take the offers or I can just reject all?

Yeah, you can have a reserve.

Okay, great. And then, um, is it because I think I'm gonna get a higher price or because I save money through the fees, or what's the reason I choose this over like traditional listing?

Yeah, the higher price. That's the goal. Higher price by creating like a, like a—

Do they take the same fee as like a normal 5% or whatever agent fee?

If your competitors respect you, like I'll bet on your next thing, that means something.

And they were all real estate guys. So this is still related to that business. So I was like, that's intriguing. Second, so I invested and then I get a call. Jordan calls me, the guy who's starting this. He goes, Adam Neumann just put $2 million in. I was like, fucking A, got it. I think that's pretty good. I think that's a good sign.

Why is that a good sign? Because some people would think that's a bad sign.

No, no, no, no. First of all, I'm not saying what Adam did is great.

I frankly don't even know the entire story, but I'm pretty sure he's the founder of WeWork, who kind of like whatever, did a bunch of shit and ended up walking away kind of like drove the company into a weird spot and was accused of a lot of things. And then he walked away, you know, pretty wealthy as part of his agreement to leave.

And my thing is Adam Neumann, regardless, let's say he did a lot of bad stuff. Let's say he was unethical. Let's say all that's true. I'm not saying it is, but let's just for argument's sake say it is. He still built something huge and amazing in a very short amount of time and has access to all types of stuff and sees all types of stuff. So I think if he's interested, it's a good—

right.

Um, and then why can they fail? I think if they execute this poorly, it's gonna, uh, it's gonna be bad. I also think that, um, like, oh, I put, I put it could be if they raise too much money. I actually don't think that's going to be the case. I think they have to actually— this company's gonna have to raise a ton, a ton, a ton, a ton of money. Um, what can make this fail? I don't know, maybe if Zillow offers this.

Well, also, I think it's a new behavior, and anytime you're betting on a new behavior, that's like the risk of it failing is that Maybe people won't want to buy the house sight unseen, or maybe people won't want to sell the house in this way. They want their hand held through a traditional process because it's the biggest asset in their life and they, uh, they don't want to risk it, which is traditionally what homes have been bought one way.

You can buy this, you can go, this is not entirely sight unseen. Um, but yeah, it's a new behavior. There's a lot of new stuff about it. But my thing was like, when I was doing the math, I'm like, you don't need that much volume to build something quite large. And once you have the home on there, you could upsell like property, uh, assessment or what's it called? Um, inspections. I think you can upsell. I just thought it was interesting.

Do you, did you do SAAS? Yes. Does that interest you to talk about or no?

Um, we've kind of talked about them before.

I wanna talk about it. Oh, we'll do another one. All right.

I wanna do one.

Okay.

You'll kind of, I think you'll like this one. I think you'll want in on this one, although it might be too late. Um, so it's called OneBuild. So what OneBuild is, is here's the problem as the guy describes it. So I talk, so I meet the guy.

How'd you meet him?

Ben or Zach found him, and then they really liked him, and they were like, hey, you really got to talk to this guy. So I said, okay, great, let's do it. And I forgot, I don't know how they found him. I think he was like in some YC batch or something like that. So basically I talked to this guy and he's like, yeah, I was working at CloudKitchens, the startup started by Travis Kalanick. He's like, I was one of the first like 20 people there. And my job was like, you know, they wanted to go build out all these CloudKitchens, all these kitchens around the world. And they were like, all right, You know, we want to build this $10 million project. We want to build this $20 million project. And he's like, I'm a data guy. Like, my background is like data science. And they were like, look, we need you to like be intelligent about how we're going to like plan out these builds. We're trying to spend this much this year. It's a big number. So like, help us out with the data side of building out. So he's like, all right, no problem. How hard can it be? And, uh, he goes into it and he's like, okay, great. So, um, we have this, let's say we're doing this deal and we're trying to build out this kitchen in Seattle. And the estimate is like $10 million, but it could be plus or minus like $4 or $5 million. And that's a pretty big difference. If it's $15 million, it's different than $10 million, which is different than $6 million. So which one is it? And the guys were like, well, it depends. It depends on what? He's like, it depends on the cost of construction. And he's like, okay, well, what does that depend on? And it all comes down to one of the biggest variables is material costs. So there are many ways that your construction costs can go out of whack. Like, you don't get the permits in time, and so this, it gets delayed. Labor errors. But one big one is materials. And so what he was like, he's like, okay, well, how hard can that be? Like, let's just figure out the material cost and let's just spec it out. And they're like, no, no, no, it doesn't work like that. Like, here's the spec, here's the plan, like a construction plan. And now to cost this, you either, you need to hire a cost estimator. And what they do, and what you would do if you wanted to do this yourself, is there's this book that gets printed once a year, which is like This is like the blue book of like what all materials cost. Like if you want a 3-foot piece of lumber, it's going to cost you this much. But like, as anybody's seen, especially during COVID like material costs, like lumber has like had huge amounts of variance. I don't know if you've seen this, but like, yeah, yeah, yeah. Like, you know, a truck carrying lumber is like, like right now it's like a truck carrying bricks of gold. Uh, it's like if you rob that truck, you would have like so much value right now because lumber was so expensive. And so he's like, the problem is that there's no real-time data. And he said, so that's what I decided to leave and go build is basically an API, um, that will give you real-time material pricing for construction. So all you do is you upload what your, what your, um, your construction plan is. And then it basically gives you an accurate real-time cost of it. And if that's changing over time, you'll see how it's changing week by week, day by day.

And companies who are building, um, I don't know any of the companies, but companies who are building, um, construction companies who work in the construction business who are, who are designing stuff, they will use OneBuild software to integrate with their software. So it says in real time how much this is costing.

Exactly. So, so basically you upload the construction plan and they're—

yeah, they're selling straight to the, to the company.

This is amazing.

The thing you can fail, right? So why would I hesitate? Uh, first, the valuation was higher, so it was like at a over $50 million valuation. Um, you know, so I put in $100K. I don't own a big piece of this, but I want it in rather than being on the outside. And then the second thing is I think construction is a pretty old-school industry. It's all pen and paper, like That trillion dollars of material purchasing is all done just through pen and paper offline right now. And so bringing it online can be a brutally hard thing to do.

I'm looking at— well, MetaProp, I'm seeing who all invested in these folks. I think maybe I know some of these people. Uh, who's leading this Series A?

Uh, you know, I don't actually know. I don't remember off of my head.

Um, wow, this is sick. This is great.

This is a cool one.

If they're still raising, I would talk to them in a heartbeat. My fear about this like, if I had to, like, say what the downsides are, is can you easily replicate this? Like, can—

I don't think so, because what they're doing is not just the— it's not just the app that says, great, you know, upload your thing and get your cost. It's like, where does that data even live? So this is like, you know, that company Climate Corporation that basically, uh, uh, uh, like, what they did was they basically organized all that agriculture weather data, sold for billions, sold it for billions. And basically what they offered to, like, you know, Hey farmers, like here's all, you know, farmers and others. It's basically like we took this unstructured offline data and we made it structured and online. So for example, they're first taking all of the material cost, all of the materials, and they're turning them into SKUs. Like if you've ever done e-commerce, a SKU is just like, you know, if you're at a grocery store, a Hershey's chocolate bar, that's one SKU. And then a Twix bar will be another SKU. And the large Twix bar is another SKU. So basically they took every thing you can buy in construction, and they're turning them all into SKUs first. So first, that's the first step. Then they have to get the price feeds. Okay, how are we going to get real-time price data on all these things when prices vary from supplier to supplier, vendor to vendor? And so then they have to do that. And then they have to turn that whole thing into an API that can be queried easily and get accurate price data. And so I think that's the real innovation here, is being the one to organize and collect all that data. Um, then after that, really anybody can build an app that just asks them, hey, what's the price of lumber right now in Tucson, Arizona for this size of this type of lumber? And they should get back an answer. And then if that changes in 3 months, they should get that change notification that the price is increasing.

That's sick. I'm into this. I'm looking at all this now. I'm taking down notes. I think this is amazing. I'm into this one a lot.

Um, you want to do one more you like?

Or one more interesting one? Yeah. Okay. Here's a boring one. Wait, let me look. Let's do a boring one. Okay. So I actually included this email in here because I wanted to show it and I blacked out a couple of things. So don't read those things. But this one's like boring. It's not a seed investment, but I just wanted people to see how this worked. So my friend Nathan Barry, Nathan Barry started this company called ConvertKit. You know, ConvertKit?

I'm a user. Yeah, I pay them $1,000 a year.

Love ConvertKit. If you Google ConvertKit revenue, you can see all their metrics, all their numbers. It's amazing. Nathan is, you know, he's young, he's like 28 maybe, right? But he like comes off way older. He owns, I think, almost the entire company. So ConvertKit is like a MailChimp competitor, but slightly different. I don't— it's hard to explain unless you're an email marketing nerd, but it's just like MailChimp, it's just like HubSpot, it's just like a lot of these companies, but geared particularly, I believe, towards bloggers. And he has grown the company very steady for about 2 years. And he asked me if I wanted to buy some secondary at a 7x multiple. So their revenue is $28 million and he's raising at 7x that. What's that? I don't even know. Um, $300—

$200 million.

$200 million. Um, I invested. I thought— I invested $50,000 of my own money. And the reason I would do that—

I would do that in a heartbeat.

Yeah. Well, you want to?

Yeah, I do want to. That's great. It's like no-brainer.

All right, I'll make an intro. Hold on, let me write this.

I, I know the guy, but yeah, uh, I, I didn't know.

My thinking is I'm super safe, right? Like the, the odds of this going south are under sub 5% easily.

It's more of the boring stuff. This goes in your boring stuff budget.

Yes, but it's not quite boring. Like I can't sell it overnight. But I know Nathan, he's trustworthy, he's ethical, he's amazing. I've been asking to invest in him since he started the company, right? So I put $50 grand of my own money in this, and this is going to come straight from— this is coming out of like the Boring Pool. What do you think about this? You like this?

I like it a lot. Yeah, I think that, uh, this is a really defensible, stable company. Um, there's a lot of people that are super interested in, you know, email software. There's like bigger companies, and then there's like the Substacks of the world that are trying to do things, but, uh, I've used all their products. ConvertKit is the best product out there of this batch. Once you're hooked on it, it's hard to stop paying. In fact, I told my team, I was like, hey guys, our ConvertKit bill is like $2,000 to $3,000 a year. Isn't there like a free thing that will just let us do all this? I feel like email software is everywhere. And then sure enough, they go kick the tires of a bunch of different things. They're like, ah, we can switch, we can get it cheaper, but we're going to give up X, Y, and Z. It's like, well, X, Y, and Z all seem like the important things. I don't want to give those up. And so So I think he's built a very steady business that, you know, today I think ConvertKit could sell for more than $200 million. I think, I think if you wanted to sell this business today, you could probably sell it for somewhere like 30 to 40% higher than that. That's, that'd be my guess. Um, and it's just going to keep growing, I think 25 to 35% a year. Uh, and there's a world compounding.

I can see Nathan being the type of guy, and a lot of people say this, but I actually believe if he told me this is what he wanted to do was he was like, uh, I think I'll run it for 25 years and try to grow it 25% every single year through buying different companies. I'd be like, oh, okay, cool. I believe you in, right? I believe you're going to try that. And I believe you're capable of that.

And we see pretty much every major like creator economy deal and they're all just like, like you, I think you're sick of creator economy at this point.

I'm very sick of it.

There's just so many creator tools and creator economy startups. And honestly, most of them are not very good. It's like there's more funding in the creator economy startups than there is like actual revenue in the creator economy right now. So, so there's like this There's like this, I don't know, overhype in that space, but this is an actual bit. This is a real business in the creator economy, right? This is like independent creators use this as their like backend for sending emails to their audience, bloggers and newsletter folks. And, um, and I think that there's a lot of room to run. Like the thing I would do if I was him is I would figure out, I would go into the ClickFunnels market. I think ClickFunnels is a bigger company. I think ClickFunnels does over $100 million a year.

Yeah. But their churn is shit.

They're trying to ship, but you know, the— I think as an upsell, I think there's a lot of people who use ConvertKit that also create landing pages and try to like sell stuff. And I think that ClickFunnels is actually one of the better products for doing that, even though it's very janky. It's just, it's very effective at actually converting people. And I think that that's the way I would go with this as a like, as a route to getting bigger. But yeah, I think there's a pretty safe bet.

Well, I already made an introduction, Nathan. It's in your inbox.

Awesome.

Um, you wanna do one more?

Yeah, let's do one more. Okay. I have a crazy one. Um, yeah, I have a crazy one. Actually, can we talk about that other crazy one that you were telling me about? Let's do that one. Let's do that one.

Okay. So, uh, what, uh, Cam, his name's Cam. I had this guy, uh, reach out to me because he was a volunteer at HustleCon years ago and I've always stayed in touch with him. I love Cam. He's a nice guy. And I, I, I thought he would always go places. He emailed me like a week ago or 5 weeks ago, like maybe a month ago. And he's like, I got this idea. I'm going to build a, build a world fair. And I, you and me, Sean, are way different. Immediately I said, nope, nope, I'm out. Like I was never even entertaining this.

Explain, because I didn't even really know what the World Fair is. So explain what that even means. I'm going to build a World Fair.

No, you do it. Because it's like, it's, I'm just not imaginative or smart enough to understand these things. You go ahead.

So, um, and actually if you can link me the, link the, uh, the memo in here, uh, cause I think it'll be, it'll be useful to talk about. But basically what I understand is a World Fair is an event. That happens, has happened like 70 years ago and then 20 years before that or whatever. It's sort of like the Olympics. It's basically this world-scale event. And in the same way that the Olympics, every 4 years it happens and it goes into some country and some city and takes over the whole city and it brings like tons and tons, millions and millions of tourists. And so the previous World Fairs. So here's the previous World Fairs. So Seville, 1992 had 42 million attendees. Attendees. Shanghai 2010 had 73 million, and Milan in 2015 had 23 million attendees. So basically, this guy's trying to throw an event with 50 million attendees. And so that's the premise, is, hey, I'm going to build this event and it's going to have 50 million people attend, and I think I can make billions of dollars. He estimates over $5 billion per fair that he'll generate in some combination of tickets plus additional spend when you're there, um, as well as like, you know, the virtual livestream media rights to the, to the thing. And, um, and forget about the fact that like, you know, the, like, the city itself gets like this huge amount of economic activity when you get 50 million people coming to town. That generates a lot of economic activity for the city. So his idea is basically go city to city and say, hey, do you want this like jumpstart of economic activity? Host the World Fair, like put up, put your city up and put funding up and put resources up. Let me host a World Fair here. So, and it's like Disney World on crack.

I told Cameron this earlier today and, uh, so he's a listener, so I want to let him know I love this guy and I think he's very competent. I just think this idea, I think it's stupid, particularly for, uh, like a VC-funded thing. I have hosted a, like, we're calling this a World's Fair Venture thing. This is a conference. This is a trade show. Can conferences and trade shows make money? Yeah, they can. But like to start Coachella, Coachella makes $100 million a year and they've been around for like 30, no, 20 years now, or Lollapalooza, 20 years. Like, this is—

oh my God. The degree of difficulty on this is, uh, like at an insane level, I would say.

Insane level.

So that's the reason not to invest. The reason to invest is also that the degree of difficulty is insane and the person behind this is insane and it's going to compete against nobody. And it's sort of this—

what do you mean against nobody? There's tons of these. Like, like, this is what we try to do this— I mean, Web Summit did something like this. Like, dude, do you want to compete against the Olympics? What happened to the Olympics last year?

Yeah, that's the thing. Who is competing against Olympics? Nobody. It's like when Elon goes and competes against NASA. It's like nobody else is competing against—

sure, there are. There's a Commonwealth Games, there's world championships in different sports, there's all types of stuff.

Uh, there, there, uh, you know, nobody entrepreneurial, nobody who's, who's trying to do it for capitalism, basically. Nobody's trying to make a profit.

There was one person Ted Turner. He launched, uh, the common— or, uh, what did Ted Turner launch? Uh, the Goodwill Games.

Yeah, I don't— I mean, is that even— did that work? Did it not work? What do you know about that? I don't know everything about it.

I don't know if it made profit, but I know that it was a thing. He invented it because he needed, uh, programming for his TV station, for TV stations. Yeah, I believe it was called the Goodwill Games. Anyway, no, I mean, like, do they work? Yeah, they don't not work. It's kind of like, um Does the American Pageant work? Like, well, it kind of probably makes money. It's like an annuity. It kind of works like every year for 40 years and it does only okay.

So is your— okay, what's your criticism? Is your criticism that he's not going to be able to do it at the scale or that even if you do it at the scale, it's not going to make that much money?

It will never, ever, ever happen at that scale. I'm just saying that like, look, like, and this is me saying someone betting my own money, like I'm not willing to bet my money that it will. I'm willing to bet my money that Cam will do many amazing things. I just think it's like, literally, like, it's, this is like, this is like against physics. I think like, like, do you know what I mean?

So the most, most relatable version of this is the, um, uh, Summit, right? So, so the guys who created Summit and then they bought the mountain and they're like, you know, doing that. I think that's sort of like the closest analog that I know and I've personally seen.

And it's not a good business.

As that was not a great business.

The horrible business.

It was nowhere near— well, okay, why are you saying it's a horrible business?

They ran out of money multiple times. It doesn't make a profit.

The event part, or are you talking about the mountain part?

The event? Both.

All.

What are you talking about? Ryan will tell you firsthand. Ryan made all his money selling trade shows and ads for a real estate newsletter and trade show business. That was a killer business. Then they invested it in this other thing and it was just okay. Like, would you want to have invested your money? Like, I just— this boggles my mind. I have only a few dollars to pick between X, Y, and Z. This like doesn't even come up on the— like, I'd rather go all in on Abstractox. Just like, give me some boring-ass software that's just going to make money for 50 years.

So I agree with you from that point of view. If I'm going to invest, I'm not personally going to invest in this. But I think from his point of view, from the guy who's building this point of view, I don't know, you could be— if you're a lunatic, you can do some kind of amazing things. You can really exceed like where others have gone. For example, I know Paddy, who started Web Summit, and, um, you know him?

That's cool. What's he like?

Awesome, awesome guy. Like, you know, should be the whatever of Ireland someday— prime minister, president, or whatever they have over there. Uh, he's amazing. He's a really amazing guy. But at the same time, if you are trying to build a huge conference, you're going to approach it very differently than trying to create than trying to create like an Olympics. And so I think it is really not that much harder. I think maybe it's harder, but it's not that much harder than pulling off what Paddy did over 7 years of Web Summit. The good thing with Web Summit is he was able to iterate. So he was able to start super small, like, oh great, I got 100 people to come to Ireland for this conference. And the next year I got 1,000. Next year I got 10,000. Then I get 100,000. Like he was able to step it up. Whereas I don't, I think with the World Fair thing, there's no like tiny World Fair, I don't think. So I'm not sure, you know, how he's going to possibly do this.

I, yeah.

His two phases are phase one, host 25 million guests. Phase two, host another 25 million guests.

I don't want to.

I got to say props to this guy. Is he like young? I hope he's young.

He's 26. He—

props to this guy for doing this. I gotta give him credit. Uh, I'm, I'm more into this than you are. I kind of love that a guy's dreaming like this. I also think it's insane and slightly, you know, impossible.

I bet you, you don't put your money in it.

I will not put my money into it, but I did put my money into something slightly crazy also. Uh, I put a very small amount, put $25K into a, uh, which is like below what I would invest in any other startup, into a guy trying to build a startup city. So, uh, but I think that that has better odds of succeeding than this World Fair.

Yeah, because you have rent every month.

Theoretically, I'm into this. I would have to— I would want to know, are the people like buttoned-up real estate people, or are they like people from Burning Man who wear like Coachella hats all the time and You know, like leather shoes, like, like, like, like leather, like pants. Like, I need to, I need to know like what they look like and what they're about. If they're buttoned up, maybe you want one of both. You want one of both.

I agree. Who's just going to, he's going to be out there recruiting the community and then you need the real estate guy who's like, yeah, yeah, yeah, go do your thing. Let me, let me actually set this thing up so that this works.

Right. So, and by the way, on their website for practice, Cameron Weiss from the last company, he, he's a member. He started blogging about the World's Fair on March 16th, 2021. I linked it to you.

Yeah, he's a member. That's, that's, that's the kind of dreamers you'll get in this community. So I put a small amount of money into it because I'm just really interested to learn. And like, this is a, this is a wild idea that, um, you know, I think the portfolio has to have some wild ideas. It cannot just be, um, like things that are easy to understand and easy to like imagine working because I think we'll miss out on the, the large outlier winners.

So, all right, pimp your, uh, can people still sign up for your rolling fund?

Yeah, go to, uh, go to AngelList, just type my name in, and then you could just, you don't even need to email me, you could subscribe to my rolling fund and then I'll email you so you can invest with me. We're doing, we have about $4 million, uh, and $4 million a year we invest across about 30 startups.

And for me, I don't do a rolling fund. I have a syndicate. If you go on to AngelList and type in like, it's called Hampton VC because I used to live on a street called Hampton, not because I'm from the Hamptons, but hamptonvc.com. If you just go there and then just click learn more, you'll get taken straight to the AngelList page and just click apply. And then whenever I have a deal, you just are notified and you can invest or not invest. It's up to you.

And Sam's memos are dope, so you should go subscribe.

Well, thank you. By the way, everyone's saying great stuff about Power Writing.

Oh yeah, they love it. I'm putting my heart into it. I, I, I like, I was like too embarrassed if it sucked, so I like really, really tried.

Well, everyone's saying great things. Sarah's class is going live soon, but they're saying great things about it.

All right.

We'll talk to you soon. I want to. I put my all in it like no days off. On the road, let's travel, never looking back.