#29 - Powder Diets, Instagrammable Experiences & Distribution First

Okay, quick break to talk about our sponsor for today. That's right, a few weeks ago I did a fake ad read where I said this episode is brought to you by nobody, and ever since then people just email reaching out to advertise on the podcast, which is great. And this is a really cool company. The sponsor for this week's podcast is SuperCast. So, you know, if you want to cash in on your podcast SuperCast can help you unlock predictable recurring revenue from your audience. How is that? By cutting out the middleman and turning listeners into paying subscribers. In fact, podcasters using a subscription model can make twice as much versus advertising alone. I like that. Visit supercast.com/hustle to learn and earn more. All right, I'll have to check that out after this. I do love me some subscriptions. So me and Sam met, actually we met in a really fucking random way. So we met because Sam was hosting HustleCon and he was, I get an email from Sam Parr that says, "Hey Sean, heard great things about you. Heard great things about your space, Monkey Inferno. Office is so dope. Hey, you know what? I have HustleCon coming up like in a week from now and I need a space to host my speaker dinner." It's gonna have badass speakers. This guy, this guy, this guy, this guy, that guy. You know, all these people are coming. You know, would you be down to host it? And I read it and I was like, I don't know this guy. There's nothing about, you know, like, I was like, this is, he's full of shit. Like, he hasn't heard anything about me. And, but he probably saw our space because our space was really cool.

And for the record, I had.

It wasn't, I wasn't lying. I assumed it was bullshit, but I was like, still, this is high-class bullshit. And so I was, I was like, I was like, "Yeah, this sounds great." And he was bringing some value to the table. He was like, "You can attend the dinner. You'll meet all these people." So I tried to negotiate back. I was like, "Cool. As long as I could speak at HustleCon, I'll do it." And he was like, "No, there's no spots left." And I was like, "All right, fair play. You could still do it." And so that's actually how we met that night at the speaker dinner. And I met a few of my best friends there, which is like testament to the idea of like just show up. Has become like a motto of mine, which is showing up, like, it's just 80%. And like, for you guys who came here, you could have done anything. You could have stayed home, Netflix, gone on dates, you know, you could have done whatever you guys do, you know, you could have done tonight, but you showed up. And so good things can happen when you show up.

And that's— and, and so, uh, we used to do a weekly— weekly or monthly— where it was Sean and 3 of our friends, and we would meet up every single week and then eventually every single month for Years, it felt like.

Yeah, it was like 7 PM once a week or once every 2 weeks we would get together. And, um, it was, uh, it's what we call a junto now, which is basically like a meeting of the minds. And Sam was in it and you invited a couple friends that were really good. And, uh, the idea was like, hey, you spend most of your time where you have to sell. If you, you know, if you're doing a business, you gotta sell to investors, you sell to your customers, you sell to your teammates that, hey, things are going great. Um, but in reality, things are usually not going great. Default by most, most of the time, things are not going great. And so, uh, we wanted a group of people that you could talk to and it's like, you know, 30% therapy or it's actually probably like 70% therapy, 30% strategy. Uh, but we like told ourselves it's all about the strategy, which was that, hey, if I say I'm having trouble with this thing, uh, turns out Sam's really good at marketing and he could be like, dude, why don't you just do this, this, and this? Go read this blog post. It's awesome. It'll help you out.

But then also we would have like insider knowledge. Because of, because I host conferences, you, uh, you're just very personable, you know everyone. And then we have investor friends and like we had this network of, we were like, I felt like one step away from anyone we ever wanted to speak with. And so we would also like hear rumors and we'd bring up those rumors. Like I heard this person was doing this. Right. And that's kind of what the podcast, one, this part of the podcast turned into.

Yeah, exactly. Uh, so that's how we got to know each other and that's why I knew Sam would be good to do these, uh, brainstorms with. So I'm curious, for people who are— did anybody come from out of town? You came from out of town, right? You came from San Diego. San Diego. Livermore. Livermore. Malibu. Malibu.

Love it.

Sacramento. Sacramento. Who came the furthest? Who thinks they came the furthest? Los Angeles. Los Angeles. Okay. Very good. San Diego. San Diego's the furthest. All right. Round of applause for the guy who came from San Diego. On like 10 days' notice, I think.

Yeah, whenever I hear that, I'm like, "Why?" Yeah, we don't say that part out loud.

What is the answer? Why?

I just have some questions I want to ask you guys.

Okay. Should we start with that? What's the question? I feel like you came from San Diego. I owe it to you.

And before we actually get to the question, I do want to preface this by saying, I feel like because of the— we've created the— you created this podcast, I created The Hustle. People think that like we have answers, and that's definitely not the truth. But what is the truth is though that I like, because of the business— opinions, well, very opinionated— because of the business that I've created, and you as well, I've met so many freaking people and seen so many patterns and have heard of all these stories. And so I would say if for questions, that's where the answer is coming from.

Yeah, what I always tell people is if you know, uh, there's a lot, a lot of people out there are smarter and wiser than me, But you probably don't know him, so I'm the best you got. So go ahead.

Yeah, so I wanted to ask you about your startup with Blab. I know that started in what, 2014? Yeah. And so I was reading your podcast, or sorry, your Medium post about why it failed and how it failed, and I know you mentioned that churn rate was one of the main issues, but what other issues did you see coming and like what other reasons What reasons besides the churn rate did you have that came to the failure of Blab?

I blabbed with him on your show.

Yeah, so if you don't know, I didn't know who this guy was, but he came on. I was like, wow, who's this guy Martin? He's the biggest user we have. This guy's got thousands of people watching him, and we were this tiny service at the time. And it turns out, I Googled him, and it has like the first thing that comes up is Martin Shkreli, most hated man in America. And I was like, uh-oh, that's not a good thing. And basically he was the guy who had bought a He bought some drug and jacked up the price, which is like—

Pharma bro.

Pharma bro. And then he did all kinds of other stuff. He's now in jail. So that's like the— that's where the story ends. But he was on our service and he would blab every night. He was actually our star user. He used it as like— he used it perfectly. We had other celebrities try to use it, but it was like very inauthentic. This guy, he would use it all the time and he would use it every single night. He was driving hundreds of thousands of people to us. So we were growing, but if you guys know about 4chan or some of these other like internet like troll groups or hacking groups. Actually, I shouldn't say anything. Don't attack me anymore. I am scarred. But there was a group called Lizard Squad at the time who did not like Martin Shkreli. And they did not like that we were letting him broadcast on our platform. And so they started DDoSing us basically like Like, you wouldn't believe. Every day for, I don't know, Jake, how many months straight did we fight this?

As long as Martin's show is on.

Yeah, as long as Martin was on, they would do this. And, um, it was, it was unbelievable. So the other reason it failed was that we had one of the most prolific internet hacking groups attacking us with their full force while we were like this new startup and was not ready for this.

There was maybe a third reason, and as one of my best friends, I saw like this whole thing is that his setup as an entrepreneur was like way different than most people. They basically—

too nice.

Yeah, they're the Monkey Inferno. Was— so there's this billionaire named Michael Birch, or he's close to a billionaire. And most people, when they get a little bit of money, maybe they'll buy a nice car or a nice watch. This billionaire had probably a 5— I don't know what your budget was, but let's say $5 million a year incubator where Sean was the boss. And got to spend this money on launching cool stuff. And I think it created a little distraction because like you had the freedom to every 3 months try something new.

Yeah. We had a private chef every day and we have like, you know, a bar, an office in the bar, uh, sorry, a bar in our office. Now these weren't, in my opinion, I don't think they were the reason we failed, but they do create a sense of security and comfort that like, you know, who's running a business that's like, your office is embarrassing. Like you are, your daily conditions are, Nobody raised their hand. Yeah, thank you. Like, just be honest here.

What I mean is like your back was against the wall.

I used to take dates to my office to impress them. I don't think most entrepreneurs would take their dates to their garage to try to impress them, right?

When a lot of people start companies, their back's up against the wall. They're like, I gotta make this work. You never really had your back up against the wall, which I thought was awesome. And maybe it is awesome. It could be awesome.

But yeah, that might have been a factor for sure. But it's hard to say, right? When you fail, it's hard to say why exactly you failed. You try to pinpoint point reasons, but it's usually a multitude of things. Same thing with success. If you ask successful people, how'd you do it? Usually they don't even remember the hard times. They sort of blacked out and forgot about all those things they used to do when pre-success. And so I, in general, I try not to take, put too much weight in, you know, why did you fail or why did you succeed? Because it's so nuanced. And sorry, that's not a great answer, but yeah. Cool. Yeah.

What's up? Question for you.

So you've like run startups, you've built great companies, and now you're like an employee and running a startup. So I'm curious. Yeah, don't remind me. What about balance? Like how do you make sure that you're a good employee when you have a startup?

I asked him that the other day.

So the question, if you didn't hear on the podcast, uh, was you've done startups, now you're an employee at, at a company. How do you— what was it? How do you balance? How do you make sure you're a good employee?

Well, how about even first of all, What did it, what was the almost the difference of running versus not having to?

Major difference, right? So like, so right now I have a baby, a 2 and a half month old baby. And like, you gotta keep the baby alive. That's like the only job. The job is keep the baby alive and you gotta do stuff. You can't, the baby's not just gonna stay alive. You gotta actively do things all times a day. Like my wife wakes up panicked just every hour just to be like, I don't know what I'm supposed to be panicked about, but I gotta keep this baby alive. That's how a startup felt to me, which was like, by default, we were failing every single week. You know, today I'm at Twitch and we have a, you know, what you would consider like a high-pressure job. Like I'm basically running international growth for them, but Twitch is not going to fail tomorrow or the next week, you know, pretty much regardless of what I do. If I do something great, it's going to be additive. But if I do an okay or mediocre job, the company doesn't fail. And so there's just a different level of pressure when Literally the whole thing's gonna fail. You're gonna owe people money who you raised money from. Your employees who took a bet on you and came to work for you, they're gonna be out of a job. That's just a different level of pressure. And if, if you can see, I have like sort of gray hairs on the side here, even though I'm 31 years old, because I think that was the, the pressure then. So to me, that's the difference. I don't know if you've tasted the difference.

Uh, she wants to know how you balance it, but I would, I, I would say that, uh, I, our company is, uh, a good business. I don't like running a company. I really like starting a company. And they're way different. Yeah.

And it takes two different skills to do it. And you either have both or you don't. The other thing, which was how do you make sure you're a good employee? I don't know. I don't know if I'm necessarily a great employee, to be honest with you. In fact, like, when we got, we got acquired to do one thing within the company, and then within two months, uh, I'm like, no, we should do this other thing that's like really important. And I pivoted, which like, I thought my days of pivoting were over when I left my startup. But, um, so I think in some ways I was a bad employee. I didn't do the job I was meant to do, but maybe there's a trade-off, which was, um, you know, the project we're working on now is a startup type project. It's more of an entrepreneurial type of project within a big company.

I think it's possible to balance that because that's how I started this was when I had another business and we sold it and then started this. The, the things that are built between like 6:00 PM and 1:00 AM are pretty amazing.

Um, and to be, to be honest, now those hours are for my family. They're for working out. They're for the podcast. They used to be for the business, those same hours. Um, and so I don't give those hours to my job. And that's, that's why I said I'm not sure if I am a great employee.

And we can keep doing questions or go through some of the stuff we had here.

Yeah. Do you guys wanna hear, uh, I guess show of hands who wants ideas and then we'll do who wants question more questions. So if you want to hear Brainstormed ideas? Hands up now. Okay. And if you want Q&A now. Just— do you want to just ask a question? Oh, okay. The meta question. All right. We'll do some ideas. And then— and you guys can tell us because, you know, when we do these ideas, we literally let just like throughout the week take notes of interesting stuff I'm hearing that other people are doing, or stuff— trends I'm noticing, or stuff I read in the, in the Trends group. Um, I'm curious also, who here is a subscriber to Trends? That's pretty good.

Yeah, to Trends.

Yeah, uh, pretty good. You want to— yeah, who's going to HustleCon? I'm going. All right, okay. Um, we're just gonna do polls all night. That's, that's the whole thing.

You know who to talk to.

Um, so yeah, we, we do these ideas and, um, And I've actually found that there's this great practice. So I actually encourage you, even if you're not doing a podcast about new ideas, act like you are. Because now that I write down new ideas, 'cause I know, oh shit, we're gonna brainstorm on Thursday or Friday, it's got my brain constantly looking. And if I wasn't doing this podcast, I wouldn't be writing these notes down, my brain would kind of just start to ignore those interesting things. It would just think, oh, that's for other people to do. And I notice this a lot in our company, too. There's a lot of smart people, and I actually asked someone today, I said, So have you thought of any business ideas while you've been working here? And they like were confused I even asked the question. And it's because their brain wasn't thinking about that. And I encourage you to train your brain to look at this stuff.

I have a list forever. I just love— I do this. I do it all the time.

Yeah, you have a backlog. Okay, so what do we got? I got a couple ideas. I'm gonna tell you about one that I'm pretty bullish on. So anybody ever heard of Amazing Grass? It's— okay, so I wanna eat healthy. And eating healthy is basically, it's actually really fucking simple. You eat real food, not processed food, mostly vegetables, and just like don't eat too much. Like that's the whole, that's the diet book. But eating vegetables is like pretty tough. So I started taking this powder called Amazing Grass. And basically it's the equivalent of like, like I was too lazy to cook vegetables, so I started doing green smoothies. And now this is like, hey, you know what? Don't even do the smoothie. Just put this powder in water and chug. And I'm like, great, sign me up. If you could just inject it in my veins, I'll take that too. And so I don't know what you think of this, but—

Well, I want to know why you're bringing it up now. I feel like this is already a pretty popular thing, right?

It's new to me. I've never— so when I tried to like—

I don't know what they call it, like a green juice?

Are you talking about Athletic Greens? So Athletic Greens is similar.

That's what I said to him too.

So Athletic Greens I think is similar, but it's a green powder. And so I don't know if Athletic Greens is a green powder. I think it is. Um, it is, but I, I view this as, to me, this, when I saw this, I was like, the same way that the protein powder industry has just sort of like gone up and up and up and, um, has really, you know, if you're trying to bulk up, that's just becomes a part of your staple, like routine. I think that, uh, this is sort of the, it's the vegan version of it, right? It's basically, instead of trying to bulk up, it's about, uh, hacking your way into health. So it's about getting sort of everything you want from your greens. Faster. And the thing I like best about it is that it tastes like shit. So I believe that it actually works. Like, if this thing tasted good, I would be like, oh no, this is garbage. This is just sugary something something.

Also, Athletic Greens, I think—

I thought Adam brought you some right now.

No, it's really expensive. Is that stuff expensive?

So this little tub is like—

Is this a $100 million a year company? And they are acquired?

No, they got a private equity investment. So they're worth more than that.

Yeah.

Yeah, private equity.

You're very profitable typically.

I hate D2C.

Why would you hate D2C?

This is like the, a lot of these direct-to-consumer companies, which D2C, like, but you know how well our friends are doing with this.

So how could you hate that?

I think that this whole D2C, first of all, like everything's D2C. So we're just talking about like, basically it's like, in my mind it's white label. It's shitty products that are white labeled that are either pink, turquoise, or yellow. Use a lowercase font as a logo, and they triple the or quadruple the price of the normal.

That's like saying a tech company, you remove the vowels and you, you know, .ly and, you know, like .io, right?

Like, it's similar, and I would never—

I think that's stupid too.

But my take on the direct-to-consumer thing, which, like I said, it's not even like direct-to-consumer, it's whatever this like category is, All most like, like Away Travel. I think their suitcases suck.

You don't like the products?

I think most of these products are horrible because I have friends that own these companies and they print money. Yeah, but they just like find something shitty on Alibaba or whatever and they— it's just all market. It's a market. It's— I think it's a, it's a soulless marketing machine that will make you rich. But once when Facebook gets more expensive, which it is, we pay 4 times more than 5 times more than what we did 2 years ago.

Yeah.

It's gonna close.

Okay, fine. What ideas you got?

Yeah, we were looking at the stats and you guys launched it like 3 years ago.

I was like, holy shit.

And he's like, tell me all the, a little bit of the numbers.. And I was like, it's a plugin. And he's like, yeah, it's gonna be huge. And I think they actually just raised more money recently at some huge valuation. Stupidly big. Yeah. But the stickiness of plugins are crazy. And so in my head I'm thinking what server, like with the Hustle, we're just a news service or an information service and we just picked the mechanism of email cuz it's incredibly sticky. Chrome plugins, way stickier than anything I've seen.. And in my head, I'm constantly thinking of value that can be driven on it. Something that you need that each and every day, because a Chrome plugin is perfect for that. Gmail plugins too.

Yeah, you were saying for snippets, you were saying that you guys promoted it just once. And so the graph basically looked like launch day, there's a spike of users. Then no new users coming in, but the active users is just steady for 3 years straight. And this is like a very interesting graph.

Yeah, but I actually— what we could have done is it was an ad-based thing. I don't really like advertising as a business, but we very easily could have seen how much revenue we earned per, per page view and actually paid to promote it. We probably should have done it. We would have made probably millions of dollars because it's gotten like 100 or 150 million page views already. But if you look at Honey, I studied how they were growing. They were growing through Taboola and Outbrain. Those little art— those little images, thumbnails at the bottom of like CNN.com. Right. Because they calculated the LTV. And we're just spending like crazy to acquire users. I also think Google lets you pay to like app installs. Yeah.

You also— I like, I like how you think because you like to work backwards from distribution.

I think distribution first.

So you'll just think of distribution channel.

Okay.

Chrome extensions. And then work backwards until a product makes sense. Like you did that basically with email. For the, for the hustle. Yeah.

You know who taught me that was this guy that we had sort of NerdWallet. It's like a $200 million a year business. They bootstrapped it for a long time and they raised all this money. He taught me that.

How did they do that?

For the record, Sam ate like 20 pieces of candy right before this. It was an incredible experience. I sat there and he, he just like a small child's Halloween loot, just downed it while we were talking. And then he had to like with two hands, get all the wrappers and throw it away. I was like, that was phenomenal.

But I think a business is just distributing distribution and then the product. And there's loads of examples of amazing products that completely die and become horrible companies because, you know, no one wants to go and buy it. But if an inferior product has great distribution, like what you see at the gas station, you're like, well, fuck, I just need this thing. I'm gonna— I don't care if it sucks, right? Obviously, if you have great distribution, great product, that's where magic comes.

Multiplies.

Yeah.

Yeah. I'm curious, does anybody here have an idea for the brainstorm? Like, have you Are you all just idealists? All right, here we go. What's your name?

Karen.

Karen, great. What's your idea, Karen?

The idea is to create—

you want to come up here and say it into the mic? You want to get on the podcast?

The idea is containerly. Oh, containerly. No, it's okay. Yeah, no disrespect.

Are you pitching your own business, or are you— you're pitching your own actual business?

Actual business.

Okay, this is actually an ad.

It's still an idea, you know. The idea is that we need to live more connected to nature, have places to co-work and co-live, you know, live an itinerant, crazy, you know, mobile-first lifestyle, you know. And that we can do that together by living in shipping containers in poorly performing RV parks that we purchase and then move everyone in, have a great co-working space And we're out there in nature going for a walk, breathing fresh air, eating food that we grow.

So I'll dumb it down. It's, without being disrespectful, container ships or container units.

Container units.

That people vacation in. I think it's vacation. They vacation or live.

Well, it's for short, medium term, short to medium term living. Okay.

Yeah.

Okay.

Yeah.

Thank you.

Thank you, Karen.

Thank you for bringing it down.

I was way too highbrow for that.

No, that's okay.

And Karen, what do you think of—

That's how I would tell my friends.

Have you heard of Auto Camp?

I sure have.

What do you think of Auto Camp?

Actually, I stayed there and it is absolutely gorgeous, but it doesn't allow any of you guys to buy into it. And we're giving the opportunity to co-own something, right? So Auto Camp's a great way to spend a lot of money on a glamping unit, right? But they're all stacked next to each other. So it's all about the re-layout of the space. Space so that there is actual nature involved.

How much does it cost to buy one of your things?

110,000.

Do you have to buy the land? No. So it's like an RV, it's like a trailer park, but you rent it out, you make money the whole time.

It's like a fancy trailer park.

Yeah, that's okay, I'm not being disrespectful. Fancy.

Got it. Um, but also we rent it out, we, um, get company offsites and yoga retreats.

Can you put $20,000 down, like 20% down? Sure can.

All right, looks like you got a sale.

And then, and then we rent it out, we so we should be earning about—

How many square feet are they?

They're 320 square feet, but plus the deck, plus the deck with a garage door that opens out.

So a small one-bedroom apartment, $650, right? Or no, studio is $450 probably, right? Okay, so it's a, it's a studio apartment.

It's a studio. Got it. Yeah, in nature.

Yeah, I like that. I actually like this general idea. First, I like that you, uh, pitch your business. That's hustling. I like it. Um, and then I actually like this idea, and The reason I asked about AutoCamp is because I'm fascinated by, um, say what AutoCamp is. So AutoCamp is basically, uh, glamping, which is like a glamorous camping, uh, experience. It's, it's Airbnb if you want to like go out in nature, but you're like me and you don't want to do any of the work that's involved with going camping. And, um, that's how I think about it. At least I'm sure they would pitch it slightly more like with more flowery words.

But this company raised money from private equity.

And does anyone know the difference between PE and VC? Yeah. Okay, so if you raise from PE, you're a good business. VC is— VC is more aspirational.

So if they raise from PE, in my head I'm like, Yeah.

Your shorthand for that means like they're already like, they already have earnings.

Most places about 80 units and, um, they range from $430 a night to $230 a night.

So I remember, uh, uh, you can sit back down. I don't want you to have to stand the whole time. Um, I remember reading, did anybody, did anybody remember when Sony's got, Sony got their emails hacked? So I read like all of them and I was like, uh, I was, I was trying to figure out like, is there any good stuff in here? Cause you know, an email hack, you would think some good stuff. The one thing I remember that stuck out was, um, well, there's some cool emails early on when Snapchat was on the rise, and I think the guy who was CEO of Sony or whatever at the time, he was like on the board of Snapchat. So he had some good, like, kind of raw thoughts of, you know, he didn't know these were gonna be public, so he was telling the truth about what he thought about the business. And, uh, the other thing that I thought was interesting was some guy wrote an email to the, to the top guy at Sony, and he was like a, like a trend spotter type of guy. I don't know if you know about this, but like record labels and fashion brands, they have people who are trend spotters that go all around the world and just try to look for what the trends are. And, um, this guy was like, he's like, 3 things. And he said, uh, EDM is the rock and roll of this generation. You need to know that.

Um, 2, uh, that was right.

There's a lot of men here. I don't know.

I saw some nods. They're either lying or they, are they, you know, it was like cheap earrings. Yeah. It's like where you go to get your ears pierced if you're like young, if you're like, you know, a tween. And so, so Claire's has like 4,000 locations around the world. They were doing like, you know, they sold it, you know, in 2007 for $3 billion. So they built a, you know, a sizable business.

They still had a billion and a half in sales last year.

Yeah. A billion and a half in sales last year. And, um, so it's a big business, but it's like kind of outdated, like Claire's, Hot Topic. These were all like popular mall stores back in the '90s. And so what Studs is doing is just reimagined it. So it's a cool looking place. Uh, like every part of the store is like Instagrammable. Like you would, you would want to take a photo of yourself there and share it out. And you're getting your ears pierced, which is something that's like internet resistant. Like it's not like, probably not gonna get like direct-to-consumer ear piercing. So, um, so you need to be, you need a physical location to do this. And when all of retail is dying, there's this small segment of retail that's thriving. And these are things that are, uh, that are essentially internet-resistant businesses. And so I'm very interested in those and thinking through what, what more those might be.

So like we, we should talk about things that we think won't work. And I would put that in my category.

Yeah. Why are you betting against?

I think it's too cute. And I think that— I think there's a problem with people, particularly in San Francisco and New York, who build things only for San Francisco, New York, or LA people. So one of my favorite companies is Wish, Wish.com. Has anyone not heard of Wish? Some people, not that many though. Okay. Last year it would have been— or a few, like a few years ago. Yeah. Okay. But Wish.com, they have offices nearby. They've been popular for 5 years now. And not just popular, like, I think like 10 billion users a month. Like one of the most popular websites on Earth.

Not 10 billion users, but something else.

10 billion users. Sorry, not users. Sorry.

It's more than the human population.

Sorry, I meant like sessions, like web sessions. I have, sorry. Yeah. I have a tool that gets, web sessions. Yeah. So that would potentially be a billion users, right? But it was big enough that I'm friends with the founder on Facebook. I don't actually know him, but we became Facebook friends somehow and he always shares like a screenshot. He's like, we're— we were downloaded more than Instagram this month, right? So that's how big it is. Anyway, I love them because they made stuff that teenagers in Middle America, where I'm from, would buy, would buy. And what always angers me about these companies—

so you don't like the SoulCycle type of like Barry's Bootcamp type of companies?

No, I like them. I just think that not everything works that way. Like, the whole point of Claire's was that it was like shitty stuff that young people don't have any money want, and there's— that serves a purpose. Yeah. Um, but a lot of new companies don't make stuff for that demographic. But my thing is, and I think that like, that's— it doesn't make sense to me. Yeah, this— it's like a high-end— it's like got that millennial pink thing.

It's like, right, it's too— it's too— you're like, get off my lawn.

Yeah, no, I just think that there's a gap. I think that most people start too high-end and too coastal when there's, you could just crush, like, it's like, you know what I would, I love way more than that? It's Fashion Nova. You guys know Fashion Nova? Okay, Fashion Nova.

Explain the business model.

Fashion Nova, who doesn't know Fashion Nova? Wow, okay.

It's the new Wish.

And they just went crazy on the influencer side. So like if you go down the right Instagram rabbit hole, you will see Fashion Nova everywhere.

But that's an example of people selling to relatively normal folks.

Right.

It's affordable. It's kind of funny. They put themselves in the middle of culture. I like that. Gymshark's another cool one that did the same thing.

Yeah, yeah, I like those businesses too. Um, all right, I want to turn it over.

Questions? Do you want to do things that we don't think will work?

Okay, let's do it. What do you got?

Uh, why don't you see yours? So we always talk about things that we think will work. Let's talk about things we think won't work.

Hater mode.

And I try never to do this because I always respect someone who tries something, even if it is stupid, right? You want to start with yours?

Well, to be clear, they have our respect. Yeah, but we think it's stupid. Yeah. Okay. Um, so the, the, the way you qualify for this is most people think this is a good business, but we actually think it might be a bad business.

Uh, and I agree with you on most things that you've said. I think you do me.

So we were doing this, uh, kind of in the back, just shooting the shit. Turns out Sam wrote them down and now we're doing it live. Okay. Um, so Patreon. So, uh, Patreon is, is not a cool business to hate on because it's like the nicest business.

Say what it is.

Uh, Patreon basically lets any indie creator, so you're a blogger, a podcaster, whatever, you can say, hey fans, support me directly, give me $5 a month, that'll help me do my art. So I could do that with this show, for example. I think that's a really cool thing. I think Patreon is gonna be a bad business, even though that's a cool thing.

And I think it's gonna be the worst business.

Do you know how many, can you say how many people? So the reason I think it's bad is I've seen media companies when they ask for donations, it's a horrible business, right? Like very few people ever. The only reason Wikipedia does it is because it's the most popular website in the country or the world. Like, or one of— I don't think that people donate money. I like Substack, which is a newsletter subscription company, because people give— you give— it's not, please give me money, it's I'll allow you to get my information if you give me money, right?

Yeah, it's different. It's paying for a product versus, uh, like tipping.

Yeah, I think—

and so my question is, so from Twitch I can tell you people definitely do tip, like, a lot. Uh, people definitely just voluntarily give money to things that they could also get the content for free. Free. The whole Twitch business model's off that, uh, based off that, uh, premise.

Well, their business model isn't, is it?

The majority of revenue will, will come through.

Yeah.

So a lot of people do this behavior. But, uh, what I would say is that, uh, the bad part is when you're taking like a 5% cut of, of that, you have such a small, um, you have such a small share. And so like, you know, for Twitch, I think the default share is 50/50. 50% is way more than the sort of, 5%, and I think Patreon tried to up it to like 7% once and everyone revolted. And so that shows they basically have no like headroom to, to take a bigger cut of this.

Yeah, and there's a huge difference because they're like artists. So like, if we're going to stereotype them, they probably don't have a lot of money in the first place. And so any percentage more—

Right. And some guy went and scraped all the top Patreon pages to see who's making the most. And like the top people are not very big. And so it just, to me, it's like, I don't know, it doesn't add up. Doesn't pass the sniff test.

Let's do one more. Yeah. Firefly. So have you guys seen these Ubers with the— oh, you worked at Uber, so you maybe know a little bit.

Ubers with the ad on the top. It's like, it's like making an Uber look like a taxi.

We talked— I talked to those. We— yeah, yeah. Okay. So we talked to these guys when they were first raising their seed round. Yeah. And we saw the deck and good. It was promising. I don't think it's going to work though.

You didn't think so at the time either?

Yeah, because you didn't invest on it. Yeah, on it. They have since raised money, hundreds of millions.

Yeah, it looks like they're doing phenomenal, and they might be. I always just thought it was weird because, like, you used to work at Uber. I always just thought this is a huge platform risk.

Uber, I would say get off.

Yeah, because if Uber ever decides— if the bigger this gets, Uber might say, hey, that looks like a good revenue stream we should own.

And the learning of this, I think— but I'm wrong still, but I might be right— is I think you— it's impossible to build a— it's very unsafe But it's doable. Zynga did it. It's very unsafe to build a business on top of one platform. And they only have two platforms, Lyft and Uber.

Right. Yeah, exactly. I don't love this business at all.

I know the one you're talking about. It's a media company, right?

Yep. Yep. Yeah, we won't say it. Yeah. Um, but it's a true story. It was in the news probably. And I think that's exactly what will happen to Firefly and any company that builds on top of a platform.

I remember when you were starting The Hustle, I was like, you need to do Facebook video, Snapchat, go to Snapchat. Snapchat's where it's at. Cause all these things were hot and trendy and you were very adamant. You're like, I'm going to do email because I'm not, you know, I'm not susceptible. You know, I own my community then, right? Like, These are people I have a direct relationship with. I'm not dependent on Facebook.

And it makes Uber stupid. It makes them trashy. And also, I think it's—

Firefly Planet, there you go. One point for Sam. They're still up like 100, but like, you know.

I don't want them to fail. Right. I just think that—

Not even a little bit? No.

I don't want anyone who's taking a risk to fail. Fail, but I think they will. And it sucks because the drivers make— they prom— I think they promised $200 or $300 a month to drivers. So of course I want all these guys to win. I want it to be great. I also think that in a— when a recession happens in 2 or 3 years, brand advertising, which is what that is, it won't— it's going to go away. It's going to shrink. And I think that the stock— I think that more people are going to pay money on Facebook and Instagram and whatever is going to exist, TikTok, and that type of advertising is going to go away. The valuation that they eventually raised that I bet you was more revenue than all the taxi advertising did as a whole.

Right. Yeah. Is there any way they can pivot? Is there any way they can pivot? There's always a way you can pivot. Can you pivot successfully? Uh, what would you do?

I, I don't.

So you, let's say you get, they have some assets, right? Let's say they're gonna have, they have money in the bank. They have, uh, a network of drivers. Let's call it 10,000 drivers that have their unit installed on top. What does that allow them to do? How do they— how can they leapfrog from that to something else interesting? Is there anything that comes to mind?

They said they had loads of information on where the cars were going. You're trying to build a driverless car company. Maybe there's something there. What about the device inside the car?

What about a device that's still on the platform?

You're still platform dependent, but that's way less obnoxious.

That's way— yeah, you're not— the city's not gonna— the city's not gonna get it. The advertising is not horrible, honestly.

I actually— You think they look good?

I like them. I just like ads in general. What about on commuter cars? You like ads? Okay.

Would you put that on your car for an extra $300?

Personally, I would not. But I can imagine people who need an extra $300 during the commute probably pay for it.

I could see that too.

Yeah, the reason it works is they're on the road.

And they install them for free.

There's a lot of cars driving to San Francisco. And you can probably write it off your taxes. Your car for business expenses.

Quick question about— you were mentioning platforms and staying sort of not too reliant on them. But what about something like Shopify or Amazon? That's a different kind of—

So there's two types of platforms. I remember there's a story of Facebook back in the day released their Facebook platform, which was like, hey, you can build games on Facebook. This is going to be awesome., and they were being hailed as like the next great platform. And, uh, the story, I don't know if this is true or not, but the story I read was, uh, Zuck goes and meets with Bill Gates and is showing about Facebook platform. And really Microsoft was the last, the, the previous like, uh, huge platform, right? The, the Microsoft operating system that had all these different apps you can, you can use on, on it. And, um, and Bill Gates was like, this is horseshit. Like, this is not, uh, this is not a platform. He's like, what do you mean? Like, developers can build on this. He's like, that's not what a platform means. A platform is where the, the strategy is for the all, for the sum of all the apps that get built on this to be worth more than the platform itself. So like, although Microsoft was always a huge company, if you added up the value of all the different programs that could run on Microsoft, the total enterprise value of those was greater than, than the value of Microsoft. And that was, that was their strategy was like, We will be able to sell more operating systems if we have more apps. Therefore, we need to make sure the apps win on our platform. Otherwise, we can't sell our operating system.

And the second one?

It was very different. The second is like more like what Facebook did, what Twitter did, which is like, hey, we got a whole bunch of users, um, and we got people trying to build stuff because they're all enthusiastic. We'll give them some access to try to build some things.

And for the record, huge companies have been built in the second. The idea though is you got to get in while the getting's good., and you got to be really good at diversifying, getting out. So for example, MVMT Watches, one of our friends who spoke at HustleCon, bootstrapped the company for $100 million. They built a brand and young people like that brand. Blue Apron and Plated, what are those all? Whatever those— also HustleCon speakers. I was talking to him and he was like, we couldn't build that thing now because the cost to acquire customers way too expensive. And we didn't get in early enough to build this brand equity. So the idea is Amazon's a good example. Amazon totally got big because of Google AdWords, or whatever the ads platform— AdSense, whatever it is. They got big. They were the biggest customer of Google, but they built a brand. Yeah. So it is possible.

We grew a lot from Facebook, and when we were doing that, an advisor told me, "Get paranoid." And I was paranoid the whole time, and we began diversifying, and it has worked. It hurt us, but it worked.

Right. Like Native, who was on the podcast, when he was talking, he talks about how they use Facebook, and that's how they sell the majority of their product, but they're constantly trying to grab customer email addresses, and then they remarket via email, so they're not relying on the newsfeed. They diversify through like now they're in stores. So now that they're in stores, they're less reliant on the Facebook relationship. So they're always trying to build those different assets and different relationships with customers so that you're not one channel.

If I had to start from scratch, I think one of the platforms that's best right now is Facebook groups. Is everyone who's in Trends, are you guys in our Facebook group? Does our stuff show up at the top all the time? Every group I have shows up at the top. Yeah, man.

Well, they publicly announced, they were like, our strategy is to promote groups. So that means right now, like, don't make a page, make a group. It's the algorithm is favoring it, but also don't try to live there forever because the day that they decide that it's not the thing—

I know this works because Zuckerberg said this in an announcement last February. This was the same announcement, like I said, that killed my friend's company. They said we're prioritizing group content among other things. But if you go down to BART and all the other places, and the commercials, they're advertising groups. And so whatever they're spending on their brand advertising, that's the thing they want to succeed most.

So you have at least 2 years where that is still gonna be like the focal point, and then who knows after that. And so that's one of those, we say work backwards from distribution. It's like, well, if I knew this is gonna work great on Facebook through groups, which is not even paid, you're not paying for ads, you could just work backwards from that. Like, what's a great group I could build? And then based off that group, what's a great, you know, sort of product or sort of off-platform commerce I could do?

5 or 10 more minutes of questions.

Cool. Amazon.com. How do you survive now? Their PE level, like, you know, they would look at this number, they're doing great, they're 98%.

If anyone—

and put that in perspective, our company, 4 or 5x, Scott? 5. So we spend 5 times more to acquire one customer as we did one year ago.

That's crazy. Malibu, what you got?

No, I think that they're gonna continue continue innovating for another many decades. Scott, is Instagram cheap? So when I started the company, I don't want to reveal too much, but let's just say that, like, I'm gonna make up these numbers. Let's say one subscriber to us is worth $20. We were able to acquire acquire a customer for $1.50. Now it's 5 or 10 times that. Some days it's 10 times. In my opinion, that just means that a company like mine cannot be— it'd be really expensive to start again now. That said, there's all these other ad products on Facebook that are really good. For example, like I said, groups. Groups are awesome. You can acquire— you can advertise on Facebook and get someone to join your group for really cheaply. I think that there's other things. I spent hours on Oculus this this weekend, and I think that's gonna have so many ads in it. So my opinion is that the normal Facebook ad placements are definitely getting more expensive, but it's not definitely, there's still a lot of juice left in there. Particularly for you guys if the margin's there.

We'll do a couple more questions.

Political ads? So Instagram is banned, political ads, Facebook has them? No, I don't care about that stuff. I stay in my lane.

What's up? I have a quick question about the Facebook groups.

Not that I don't care, I just don't know anything about it.

So I'm curious how you guys would think about this. I work with a stay-at-home mom and working moms as well, and she's having a really hard time. Group members have been demonetized. And how would you think about that kind of problem? And then as well as how do you take them off?

Our friend had a company that Ramon had a— you want to tell the story? What? Well, Ramon had— our friend had a business built on top of that same demographic. And he had 400,000 people in his groups. And he started with one group and made it like sub-interests. Now it was mostly soap operas.

Yes. So he basically drove them to a blog. There he captured their email address. And the blog, he just did advertising. Because he had enough scale where he could do it that way.

But one of the major— the way that he did it was he got people to a blog. And then to a Facebook group. And then from a Facebook group, he would post articles in there and then collect emails and then back to the blog and then back to the group. And it's very circular to the point where he sold it. His traffic was like perfectly broken evenly. So to me, starting with a large Facebook group is the same as starting with a large email list. You can like segment it out pretty good into different interest groups, literally and figuratively. Anyway.

Yeah, I don't have too many answers. You got to know the customers really well, like why they're in the group in the in the first place, what they're interested in, that sort of thing. But I would say generally people err on the side of being too afraid to charge, too afraid to ask. They think it's gonna offend people and everyone's gonna run away and all this stuff. And turns out if you're pretty honest about what you, about the value you think you're providing and you say, hey, would you guys be interested in this? That's a very easy way to start. And I think people overcomplicate it and just do, I would do that. I would take your best idea. I would say, hey, we're thinking about doing this. You know, this is what it would cost. Would you guys be interested? And that doesn't mean that necessarily it's gonna work, but you'll know the opposite. If no one even says they're interested, then, then don't bother with that. Numbers about 1,000 mile radius.

Best you could knock it out the park by having a premium one that's $20 a month and you do special stuff for them in the group. What we learned about our trends thing, which I thought was amazing, is more people have been buying because of the group as opposed to the content. I didn't realize that.

Jason, what you got?

Yeah, so what I like about you guys, you're very no bullshit, and that's really great. And I know both of you see a lot of talks from founders, you read VC founder Twitter, you read blogs. I wonder if there's any conventional wisdom out there about habits for founders or things like that that always rubs you the wrong way, totally disagree with every time you encounter it. Can I say one? Yeah, and we were just talking about this. I think that there's a huge misconception about this like idea of like this person who starts something and then grows it to a huge publicly traded company. I actually think that it's better for most people to find professional managers. And that is like not popular. Like, is it Andreessen Horowitz? They say that they want the founders to be the CEO. I think that most founders would not want to be CEO and would suck at it. And there's been a lot of companies that have been completely run in the ground because someone who starts a company, maybe be a visionary or creative and really bad at operating. And I think that a lot of people don't acknowledge that.

I agree with you.

Okay. Let me, let me, let me tell you why I think it's bad. So, uh, if you're a great employee, you might be 2, 3, 5 times more productive or have higher output than the person next to you, but you'll never really get paid 2, 3, 4, 5x somebody who's in your peer group, uh, at your company. Companies sort of—

have you ever met salespeople? Yeah.

Yeah. Salespeople. But what, what they do is they just raise the quota. It's like, okay, fantastic. You did it. Here's your new way to get that same bonus. Like companies go broke if they do performance.

If you are paid on performance, then you can knock it out the park.

Maybe. I think most jobs are not from my experience, sales jobs, uh, they also Basically, they just keep raising your quotas so that, you know, you, you can't continue to earn at the same rate.

I would say there's, there's only a few ways to get rich. It's you get lucky, which includes marrying into it, inheritance, or lottery.

The best way.

Yeah, the best way. You start a business or you become a salesperson. Okay. Salesperson includes anything that is like performance related. That's typically sales in tech world. It could be like growth as well. Right.

Have you guys read the book Rich Dad Poor Dad? I'm just curious. So, so, so when I read that, that was one of those like, I'm gonna write that in my Bible. Like that one resonated with me. I was like, this makes absolute sense. And if you haven't read the book, I don't think he's a crook. Yeah. I don't know if I do this with a lot of people like Elon Musk. A lot, some people think he's like a hero and super genius. Some people think he's a fraud.

Didn't he go to jail?

He's not a— my point is this is like, I don't really care about a person because From what I've encountered here in Silicon Valley, I've met my heroes, and they're just— people have flaws, people are weird, people have strengths and weaknesses, and I don't judge their philosophies or wisdom based off of their totality as a person. And so, this guy, his philosophy around— in Rich Dad Poor Dad, it resonated with me, and so that's one that I've let in that I don't think most people here in Silicon Valley talk about.

Do him and then Mike, and then we'll talk about them.

Okay. Ideally, yes. The reality is a lot of people do the opposite too, right?

So I agree with you, but I'm gonna add a second perspective. You're working— so this is, uh, I'm gonna— I don't want to call you Anant. How do you pronounce it? Anant. Okay. I have a friend who spells the same way. We call him Anant. He's working on a self-driving car. That's like a go big or go home. I think that's awesome. I think that you'd be— I'm from Missouri, so I've got a lot of— people aren't as smart as you, but my friends are not as smart as you, but there's people who are rich because they start a small business that makes $500,000 to $1 million a year in profit, and that just goes straight to their pocket. I would argue though that I agree with you. I think I will— if you would accept my money, I will bet money on you. And I think that you will win, but I think that you can make—

you just meet this guy.

Yeah.

Did you spend 3 minutes?

Yeah, he's great.

This guy's going to win. I would— I think that a lot of people are surprised that— so we have this database that we surveyed 600 people, and there's people who own restaurants that are making $600,000 a year on a $2.5 million thing. Now, who knows what type of life you want? That's pretty cool for a lot of people. That's great for most people, but I do agree with you. But that is probably why you're probably going to be the best. Even the folks on this, they solved the problem so they're able to put the pocket change into their pocket because they actually did solve the problem. Not that they went out there and said, I want to make a million a year. They actually genuinely solved the problem for themselves. Yeah, yeah, I feel you. I feel you.

You won't get rich if you're— Aside from the lucky tier, you won't get rich unless you're solving somebody's problem, unless you're giving value to other people. You're just gonna capture some percentage of that value back. Now, the thing you said, which was, and if, if you're listening to this, you probably didn't hear what he said, which was, uh, don't go try to start, start a business to make money. Uh, go out there, start a business to solve problems and money will come. Uh, I call, you know, that's the top of the pyramid. And if you're living by that, I think that is amazing. I also know many people who start businesses because they enjoy the act of starting a business and they try to find different problems to solve. And, and they don't necessarily know which problem ahead of time. They just decide that's who I am. I'm a business person. I'm going to make it happen. And I think that while what you're saying is amazing, I think what it does is it isolates people out who don't feel that true calling of which problem to solve. And it's okay to know that there's many different styles.

My father owned a company that sold onions. He was an onion salesman. That's what my dad did. And he knocked it out of the park because we were poor and he wanted to send me to private school. I think that is possible. That's my point. Though, I think that your thinking is gonna make you a home run versus whatever is successful but not a home run.

I wanna leave everyone with one little exercise that I think is an amazing one to do yourself. I'm gonna do it to you. It's a— I wrote down, we're gonna play the game real quick. Oh, sorry, Mike, one last question. Hold on, show your shirt. So his shirt says Southern Sam's Wieners as big as a baby's arm.

My first company was a hot dog cart called Southern Sam's Wieners as Big as a Baby's Arm.

This is how famous Sam is.

I was solving a problem.

You made this shirt.

I wasn't trying to get more, get people to eat hot dogs. I was doing it because I wanted to get paid and I wanted to work outside.

You guys talked about the one from Cardi B perhaps that is making it big on Instagram. I've gotten obsessed lately with TikTok, and I've noticed ads right up there, like Robin Hood. It actually looks like content, it doesn't feel like that. I just saw that Walmart was trying to create a meme, so I'm kind of curious what your thoughts are on how people are dealing with TikTok and generating revenue.

Yeah, is it my next—

Wherever the attention is, That's if you're trying to get people's attention, that's where you got to go and you got to figure out how to play that game. So now it's on TikTok. Fantastic. Now you got to learn how to do music videos and get people's attention.

I think it's freaking awesome. Yeah, it is so cool. I think that the 16-year-olds of today are amazing. I think that their bullshit detector is going to be higher than any other generation's bullshit detector. And that I think that the only way you're going to be able to circumvent that is by not bullshitting. And so it's going to be really hard, I think, for a Walmart to advertise there unless they do something hip and cool, which big brands are able to do that, like a Nike or something. But I think that with Facebook, not so much Instagram, but with Facebook, it was really easy to scam people. Before I started a legitimate company, I, like most internet people, I did scams. Facebook was easy to do that. I mean, everyone, everyone, right? Everyone who has made money on the internet, they're gonna leave you hanging. I'm not talking like real scams, but like, you know, you hawk bullshit. Anyway, it was easy to do on Google. It was a little less, but still easy to do on Facebook. Kind of hard on Instagram. I think with TikTok, it's gonna be very, very, very, very hard. That's my opinion.

So I think TikTok is amazingly fun to use. I also feel like a perv when I'm on it, 'cause there's also like a lot of like just 16-year-old girls, no matter what I'm trying to watch. Like, I like basketball, but it's like, no, here's what you like. I'm like, oh God, this algorithm. I don't know how I feel about this. But the other thing is I also don't know how long this lasts because I know TikTok is pouring so much money into buying users. And usually apps like TikTok don't have great retention. So I'm curious in the long haul, apps that don't typically— I think, right. But the sort of the wave and the critical mass of users is really like 18 months old. And because they're buying so much, you can't tell how much is leaking out.

Is it popular in China?

Like, they've spent over $1 billion It's popular in China.

I knew it was a Chinese company, but I wasn't sure if it was a— yeah, dude, I'm bullish on—

Okay. Game.

Okay. The game, the game's real simple. Uh, this is a game you can play with, you can do to yourself, you can play with other people. It tells you a lot about people. So I interview and hire a lot of people, and I found that this 3-line test, uh, tells me a lot about the way somebody thinks. So I'm gonna play with you. So all you gotta do is just answer first thing that comes to mind when I'm gonna say a sentence and I'm gonna fill in, I'm gonna leave a blank. That's where you say your thing.

Okay.

Um, uh, people are friendly. Life is Adventurous.

I am— an animal.

Cool. Thanks for coming.

All right.