#87 with Greg Isenberg - The Millions to be Made Unbundling Reddit
All right, all right, play the intro music.
We are back.
We have Greg Eisenberg on. We're going to make this a two-part episode because we went a little long. So watch out for this back-to-back with Greg. Greg's been on the podcast before. He's a friend of the house. He's got great ideas today. He want— he texted me, he said, hey, I got to come back on. I got a bunch of ideas about building startups off the back of Reddit. And so that's what we talk about amongst other things. So this is part one.
Enjoy.
Cool. What up? We're here, uh, Sam and Greg Eisenberg back, back as a guest on the podcast.
Welcome back, Greg. Thanks.
What's up? And Sam said he had a juicy question to ask you.
So, well, we were just talking about StumbleUpon. Greg, I don't know, you— if you can't talk about something, just say you can't talk about it. Who owns StumbleUpon? Greg used to work for or owned, or what did you do with the startup?
Got bought by StumbleUpon.
Yeah, exactly. We, we started a company which was kind of like StumbleUpon for video, and they bought us. We were their first acquisition and the only acquisition. And then what ended up happening is StumbleUpon got bought by Garrett Camp and Expa, which is his product studio.
And, uh, so what's it do now?
Yeah. So he, he's relaunching StumbleUpon as a product called Mix.com, which is supposed to be like StumbleUpon, but more modern.
Okay, cool. Well, we should start because there's a bunch of ideas to go, but before we do, Greg, we're trying to rename the podcast and it used to be called, or it is called still, My First Million, which was because I was, I started off just interviewing people like, hey, how'd you make a million bucks? How'd you make your first million? And then they would tell their story, like, I made it by being a poker player, I made it by selling my company to StumbleUpon, whatever. And now it's changed into this kind of brainstorm idea session kind of weird thing, and so we want to rename it. And so we just put out a little poll. I don't know if you like any of these names. All right, so one is, it's kind of what we refer to it now as Million Dollar Brainstorm, kind of close to what we have, not that exciting as a rebrand. Another one we had was Ideaholics, but nobody voted for that, so that's losing right now. There's The Brainstormers, so a couple people have voted for that in our podcast group. Do you have a genius name for us? And also, do you remember your hilarious naming advice that you used to have regarding a certain Spanish word?
Ah, it's scary that I don't remember that.
Okay, so I remember somebody was trying to come up with their domain name and you were like, oh, oh, I got you. What's your business? And he's like, uh, you know, insurance. And you're like, Insurance Bueno. You were just putting bueno at the end of every name. You're like, oh, Hotel Bueno, Haircut Bueno. Like, the domains are all available. It sounds pretty good.
I do have a list of probably 350 names, and, and I do come up with like, like a bunch of words, and I'll just add it, like space this, or ski, you know, street that, or avenue this, right? Just kind of play around with it. Idea Street. Yeah, yeah, exactly. I mean, I can pull it out.
Bueno, let's just do Bueno. Let's just add Bueno to stuff. I love that idea.
So first of all, I don't really love any of the names, to be honest.
Thank you for the honesty.
One of them kind of reminds— what's the, what's the first one again? Go through it and I'll tell you why I don't like them.
All right, Million Dollar Brainstorm.
It's too much of like, I mean, we're trying to 10x the name here, you know, right? So it's too much of that. Yeah.
Yeah. Um, the next one was The Brainstormers.
You sound like startup Mythbusters and I'm not into it.
Then there's Ideaholics.
I mean, I think we're more than just ideaholics and, you know, I'd like to give us a little more credit.
Okay, so those are the 3, those are the 3 we have right now.
Well, come on, Greg, bring something to the table then.
I mean, I got us, I got a lot here. I just got a lot of names I can go through.
I mean, you have like the suffix and prefixes basically that you—
yeah, exactly—
remix names with.
Okay, After Party, Broken Suit, Prince Preston. So you can make Prince this, King this, anything LTD, Days of anything. Fresh Laundry, Anything Weekend, Make Believe, Visiting Day, Saint Anything, Cottage Industries, Deer Anything.
What's a Cottage Industry?
Cottage Industry, I think is, you know, let's say you, you know, built an F1 Formula track, Formula One track in your city. Like, what are all the other industries that are going to support Cottage industry.
So I thought it just meant niche, like kind of like a sub-niche or whatever. But when I Googled it, it said a business or manufacturing activity carried on in a person's home, which I think is like a specific version of that. But Greg's right, it is about the things that pop up around, like Airbnb wins, there becomes a cottage industry of like cleaning your Airbnb, helping you decide your price on your Airbnb. That's the cottage industry that pops up around that.
Oh, I like that.
Yeah, that's a good one.
Cool. All right, well, we could skip the naming for now, but, uh, I might need that list to—
yeah, same—
riff off of. Um, okay, Greg, you, you said you had some ideas. You said you came knocking back on the door of the Brainstormers. I don't know, some name. Uh, you came knocking on our door and you said, I got some ideas that I got to get off my chest. Yeah, I can't sleep at night. I got to get back on the pod. What are the ideas?
Well, you know, I don't know if you saw, but I started a Substack and I wrote about the unbundling of Reddit.
Yeah, I just did a big course, like a lecture series, and I talked all about that topic. So you want to explain what that is?
Yeah, totally. So there's this concept called unbundling, there's this concept called bundling. It's a famous thing, I think in the '90s, that Jim Barksdale, Marc Andreessen's partner, co-founder of Netscape, basically said there's only two ways to make money. You can either buy bundle or unbundle. And just, you know, there's, I think, a post by Andrew Parker from— he was at Spark Capital, 2012 maybe. He wrote this post about the unbundling of Craigslist. Yeah. And you know how, like, if you look at Craigslist and you can unbundle, like, reservations for houses and sublets, that's Airbnb. You know, there's, you know, ticket sales, that's StubHub. And the aggregate of the market caps of all these unbundlings is actually way greater than the market cap for Craigslist itself.
And you can unbundle Craigslist, eBay, Zillow now, newspapers, anything that's large, cable companies.
Yep. Yeah, exactly. My belief is that like there's unicorn status and then there's unbundling status. Anything big enough is gonna get unbundled.
So Reddit obviously has a bunch of vertical communities. That are all aggregated together in one platform. So what you're saying is that you think some of these communities could be off on their own. So for example, there's like a writing prompt one, and that could be like a Wattpad or something like that. That— is that what you're thinking about?
Yeah. So, um, obviously Reddit— Reddit and Facebook groups have gotten extremely big as, as of recently. Facebook groups had a billion monthly active users, um, and Reddit is completely surging in traffic right now. My belief is that since, you know, 2016-ish, Discord was the first example of the unbundling of Reddit. Then Discord was built on top of Reddit. It started in the League of Legends subreddit. It was a product for that community. Then they went to CS:GO, then they went to Dota. They just basically looked at what they needed. They spread themselves on top of that network. They recruited mods from that network and kind of went horizontally. Have you guys seen redditlist.com? I think it's—
yeah, I'm a big fan of that. It tells you which are the fastest growing subreddits.
Exactly. So I'm gonna pull it up right now.
While you're pulling that up, here's a few examples of businesses that have been launched on top of Reddit through unbundling them. So there was Grailed. Do you know Grailed? I bet you do, you look fashionable. Yeah. So Grailed is a men's, um, streetwear marketplace that was launched on top of What was it? Male fashion marketplace, maybe? Imgur was launched on Reddit.
Yeah, I think that's just been like this low-key thing that no one's really been talking about. And now, you know, in this COVID land, you know, I think there's so much opportunity to bring people together and people are looking for support communities, either to earn, learn, or get paid or get laid, whatever you want to, however you want to put it. And I don't know why more people aren't just like going on top of Reddit lists. And so that's what I've been doing basically, is basically going in with my team and scraping Reddit lists and speaking to literally people on the subreddit. So like just pulling it up, like in the last 24 hours, what are the biggest growth subreddits? So you have like, you know, Ninjala the game, no idea what that is, but there's probably an opportunity there. OnlyFans promos, huge growth. Bender Boys, you know, Watch Reddit Die, K-pop thoughts, Avatar memes, SPACs, right? Special— what does that stand for?
Special Purpose Action Company.
That's it, right? So you get this amazing sense as to like what's trending, And my thesis on all of this is Reddit, Facebook groups, they're at this size where people are looking for these like bespoke experiences for these subreddits.
But are you describing, um, building specialty communities or building products and services for this group?
Right. So for example, Grailed is the products and services. Hey, this is men's fashion. We can set, we can create a men's fashion brand, speak to this audience, launch on there.
So they were trying to do it in the comments and these guys said, hey, let's build a website that makes that.
Exactly. And so Greg, are you describing that or the second thing that Sean was about to say, which was?
Yeah, just like, you know, creating a, oh, this community really likes K-pop art. Cool, I'll create a K-pop art brand as it's more e-commerce selling to that and advertising on that channel. But it's less about taking that behavior you see and productizing it, which I think is really the bigger opportunity.
Yeah, so that's what I'm saying. So I'm saying like the Discord model is this: you look, you, you go to, you go to Reddit, you see what's trending, you go and you have this community of thousands of people who are talking about a subject. They need stuff, they want to buy stuff. There's a lot of energy that you can capitalize on, and there's an opportunity to build software And that software could either be an e-commerce site, it could be a media site, it could be whatever. It's not necessarily like you're trying to compete with Reddit. You're not trying to compete with Facebook groups. You might have a community layer on top of it, but that's not the point. That's not the point of the unbundling of Reddit. And that's the Discord model, right? They looked at it, they looked at League of Legends, people were using TeamSpeak and a few other products to communicate. It was legacy. They knew that from speaking to people, they knew that from looking on Reddit, and they just, you know, like, if you think about what is the frame— like, we can talk about it, but like, what is the framework for creating a product and service for community? Like, it's a brand. Number one, you have to have a brand that people resonate with. Discord. Like, look at— I mean, I don't know what you guys think, but it definitely like speaks. I mean, Sean, obviously you have—
It's more like just like nerds, like geeks.
It's for gamers, and, um, and gamers tend to like have kind of this like really specific cross-section of interests which will span into some movie stuff, some specific type of humor, whatever. But if you go like—
we were in the same space as them, so we would watch how they dripped out. When they do an update, they don't just put the patch notes out there. They would make these videos, and the videos themselves were so entertaining that it didn't matter if you used the feature or not. You, you know, your love for Discord went up because they knew how to speak to you, because it felt like they came from the community and they felt in touch in a way that most the other brands felt totally out of touch. Like Skype, Skype would never speak to gamers in the way that Discord did. And so Discord just over time just sucked in every gamer who was trying to decide between a Skype or a TeamSpeak or Discord.
Can I give some small examples of what you're talking about, Greg, and you tell me what you think? So yeah, I am a massive Redditor. I have, I've got like 50,000 karma points. It's like, it's my, it's my life. I love Reddit. I've even attended Reddit meetup. So I'm a big Redditor. The subreddits that I noticed that are growing significantly since I've joined is a few things and they're all related. And Sean and I were actually just talking about this, but mobility-related things. So Bodyweight Fitness is huge. I think it has over a million subscribers. And then Scoliosis is another one, and that's about posture. And then Good Posture is another one. And these are all related around this weird group of people who I'm part of that don't really care about big muscles, but like getting strong and fit for the sake of just being, um, like longevity.
It's like what the human body should be.
Yeah. What the human body should be. So like wearing shoes, like I'm wearing now that have like no heels on them. So you like have good Achilles flexibility, just like things like that. And there's a company, I don't know how you pronounce it, but I, but it's spelled ROMWOD, R-O-M-W-O-D, like a workout of the day for CrossFit. I don't know what the ROM means. It's an app. I bought it. It's $100. And I did research. These guys do close to $1 million a month in revenue with only 8 employees. And it's a $100 app. And all it does is it teaches you, say, like where you're tight, like your hips or your shoulder. And it just has videos and you just do a 20-minute workout with it. Very easy app to build. Big fan of that one. The second one is, it's— and clearly I'm on a fitness kick— is when I built my home garage, there's a whole subreddit called— I forget what it's called. Is it called Garage Gym or Gym Garage. And there's this guy named Cooper that goes, all right guys, I'll create a website. And he created the Wirecutter for garage gyms. And it's crazy how fanatical these people are about this. He probably makes a few million dollars a year just off affiliate fees. And there's one for Philips Hue light bulbs where I see people creating services where they come to your house and they make your Philips Hue light bulbs, like they have, like they set lightscapes for it, so it's like, you want your living room to be Hawaii? We'll come set it up so it feels that way.
So, the first thing is, Reddit is an amazing source of content, so every news person, like Sam, you guys do this at The Hustle, all the viral news sites were doing this, they hunt for viral content on Reddit, 'cause it's amazing at surfacing content. There's one layer below that, which is like, kinda like the 4chan message boards, IRC, that's really where this stuff originates, but then it gets surfaced to Imgur, then it gets surfaced to Reddit, and then it gets taken mainstream. So it's always been a farm for content. We, and everyone kind of knows that you can export Reddit ideas and you can just take it off Reddit and it can go viral on BuzzFeed and other places. What you guys are saying is that's cool as a very, you know, that's cool if you're farming for likes, but let's say you're farming for dollars. You can look at some of these subreddits and there's not gonna be like, to be clear, there's not gonna be 1,000 businesses like this probably that are gonna start, but there's probably 100 that are in the vein of what Sam was talking about, which are these kind of like kind of e-commerce.
Well, I definitely think there'll be 1,000 small ones, right?
But then there will be a couple, a handful, maybe 3 or less that are the Discord-sized, you know, huge opportunities that you can see. And so I think it's good to set the expectation that like that's the case. Now I'll give you an example of one that's interesting, right? I'm on RedditList, I see, um, "GIF recipes." This might be a stupid one, but whatever. Here's one that popped out. So "GIF recipes" is a subreddit with 2.2 million members. It's kind of in the top 100 list. And all it is is like kind of a cooking recipe that's delivered in the format of a GIF. So it's really quick to watch and it's a super efficient way of getting the information onto the screen. And so I could see, for example, a mobile app that's all about, you know, a foodie community or cooking at home community. And this is the core format that they use instead of long text posts or long videos that you have to watch. To try to get the content.
To that point, one of the ways I look at some of these subreddits is like, what is GIF recipes actually telling us? Well, it's kind of telling us that there's this, the way people are searching for recipes right now might not be great. Like going on Google and being like, I wanna make a meatloaf and like getting this SEO-based content. I hate those sites.
I hate it though. They are such a pain in the ass. And I bet you that like Rap Genius was founded on this idea that lyric song lyric sites make up like a significant chunk of the web. I bet you the same could be said for recipes.
Yeah, the Rap Genius guys used to say I think 1 or 2% of all Google searches are for lyrics, and that was like kind of the core insight why, hey, this is bigger than you think, um, this opportunity. And yeah, I would guess that recipes the same way. And I also just have a theory that in general Stories have been shown to be like the superior communication format. Like, there's a reason that Instagram Stories, Snapchat Stories, these have taken off, and it's because it's a really quick way to get entertainment or information. It's a great way to communicate from one human to another. And I just think more, more things that are in long-form text or long-form video, you could just convert to story-based formats and do really well. So like Wikipedia today is all about an encyclopedia with long-form text. I wonder if you could create a modern-day Wikipedia using stories as your way of explaining what something is, or, you know, just as a silly example. But recipes would be another one.
And I think with recipes, would you say 2.2 million subscribers in that Reddit? Yeah, I mean, you look at that, it's like, okay, 1% of 2.2 million is 22,000. Can you get 22,000 people to pay you $5 a month for better recipes, right? And it's like, the answer is probably. And that's why I actually disagree. I think like there's— I disagree in terms of the amount of businesses that you can create. I actually think that there's probably 1,000 businesses that you could create on top of subreddits and using subreddits as your like idea source. By the way, Idea Source, good idea for a podcast name.
You are correct. That is a great idea.
Ideasource, subreddit, and 1,000 businesses you can create that could do at least $1 million a year. And yes, maybe a few of them could be your Discords, but like, I don't know why more people aren't just like doing that and just being like, and that's what, that's what I'm doing, but I don't know why more people aren't. Yeah.
I agree with you. I actually, it doesn't matter, but I think it would be way more than 1,000. I mean, there's so many things that you don't even know about. Like because it's not in your— you don't care. But like, for example, my wife subscribes to like Black hair care and r/curlyhair. And like, these are things that like you would never even worry about right now.
And I brought up curly girl hair as an idea 10, 20 episodes ago.
I think, yeah, you did, Sean. You're right. I remember we talked about this, but there's like things like that where you don't even realize Like, I didn't even know. I didn't even know this was a problem.
Like, I—
you guys don't have just like, nor— like shampoo that, you know what I mean? There's all these things. So I— and, and examples of those businesses are billion-dollar companies like that thing Drunk Elephant or some bullshit like that. What was that thing called? You know what I'm talking about?
Drunk Elephant?
Yeah, Drunk—
I don't know if it's Elephant, Drunk Hippo, or there was some like, uh, women's, uh, shampoo company that sold.
So Greg, what you're saying is first Reddit as an idea source, so mining for, okay, what are topics that people care about? What are communities that are super active and super like kind of trading information, trying to communicate, trying to organize themselves to do stuff? So that's one, is like you find markets basically. And then what's your process right now for like finding products on top of those markets?
Okay, so you start with You start with the market, basically the subreddit, right? The other really, um, you know, you start with the idea source number one, then you go to your name source, which is like, you know, I'm just scrolling through, it's like casual conversation saved you a click. There's literally name gold in these subreddits, right? Like, and you know me, like, you know, one of our projects is You Probably Need a Haircut.com. Like, why did that The name itself, we're pitching for reality TV show right now because it's so good. And, you know, so part of that—
care a lot about names.
Oh yeah, I think names is one of the most underrated aspects of building internet products.
That's so funny. I so disagree with you.
And that's— James Currier has a great post on, on this. I don't know if you've ever read it, Greg, but he's the only other person besides you I've heard be like, hey, everybody in Silicon Valley thinks this is overrated and whatever, change it later, figure it out later. And he's like, no, and a name can be a game changer.
Well, I always say a name could make you, but it likely won't break you.
I think in startups you're just looking for as much chance of success as possible. And I think that the name, especially when it comes down to like getting free customers, which I love doing, is so important. Right. So for, so for example, like you probably need a haircut. Dot com is on one hand kind of a dumb name, but on the other hand, like, people remember it and people talk about it. Then you spend days and you read everything, and you go to the next page and the next page and down the threads, and you look at people's usernames and you understand what's trending. Like, you become one with the subreddit.
What I always tell people is you click top, so you rank by order, and then you should rank it by month, year, and all time. And then you go through the first 5 pages and you click comments and you read the top 30 or so comments for everything.
That's brilliant, right?
And then you understand, you're like, all right, I understand the demand here. Yeah, I understand the, I understand the culture of this community.
Yeah, these are my people. You have to be like, okay, I get these people. And then you have to map out the ecosystem. So you have to look at in the week of a life of a, you know, Animal Crossing person, user, whatever.
What the hell are they?
I don't know, just, you don't know what happens.
Mega popular game.
It's a game?
Yeah.
Oh, 1.3— 1.282 million subscribers. Super popular social game on Nintendo Switch, really interesting social experiences around it. I think it's blowing people's minds on what's coming out of it. And it's one of those things, like, I love social products like that because, like, you know, people are looking for ways— like, right above Animal Crossing on this Reddit list is TikTok tips, which is like another business right there. It's like, oh, how do I create you know, a product that allows me to do TikTok better.
You could pretty much do that for every subreddit. That's what I'm like, 1,000? It's more like one for every subreddit that has north of 20,000 users.
Yeah, it's, it's, it's, there's a, and that's why, I mean, I, that's why I hit you up, Sean, because I was like, are you not sleeping? Because I'm not. So where were we? So, you know, you're at one with the community, you map out the ecosystem, and you should do it like visually, like work with a designer, 'cause I think like actually like seeing it visually is gonna help you. And then you spend some time doing like speaking to people about like, hey, what do you think, you know, in the case of let's say Discord, when Discord was coming out, say, hey, what do you think of TeamSpeak? Do you like TeamSpeak? You know, how often do you use it? Oh, you know, what would you— and ask open-ended questions. Oh, what would you change? And you just write stuff down. You spend 2 to 3 weeks just writing stuff down. And at the end of it, if you can come up with an idea based on community, you have a good name, you understand the ecosystem, you probably have a pretty good shot at creating something. And then the one thing I would add is how do you create it with no code?, which is pretty easy right now.
Yeah. So what I'm trying to, what I'm building actually, so I started a product studio called Late Checkout and we're kind of like almost like an expo, like a product studio. Yeah. With latecheckout.com. And what we're doing is it's kind of like an expo, but we're kind of looking— we're unbundling Reddit in sort of a systematic way, and we're trying to like launch a thing a month.
Who's funding that, Greg?
We're self-funded.
How many people?
A dozen people.
Full-time?
Full-time.
That's crazy. And so what— so does self-funded mean that you're bankrolling it, or people are working without a salary?
That means everyone has— everyone is getting paid. I'm self-funding it, but we do have an agency part of the business where we work with just a few clients that are helping fund some of that.
Is that paying the bills?
It's paying some of the bills, but it's not paying all the bills.
How much are you willing to burn until you get a hit?
How much are you willing to burn?
I'm willing to burn it all.
Burn it all, dude.
Honestly, I would burn it all. I took out all my money from the stock market. I think the stock market's overvalued, um, and it's gone up since then, right? But I, you know, I'd burn it all. I put it all into this thesis of, about the unbundling of Reddit.
When do you— this is interesting. Okay, so you're living a lot of people's dreams, I think, where you're just like creating shit and you're putting your money where your mouth is. Um, 12 people would be like, uh, 100 100 grand, 150 grand a month, right?
You know, one thing we do have is we do some sort of profit sharing stuff. You know, that's another interesting thing is I think that a lot of people, a lot of companies are all about stock. And as you guys know, like common stock could get, you know, who knows when liquidity is. And I think what you have is a huge generation of people who are kind of like, I've worked for a couple startups. It's kind of not really gone anywhere, even if it's been a big exit. Like, we sold for a quarter of a billion dollars. A quarter of a billion dollars was put in by investors, so I saw nothing. So I think there's actually a huge interesting opportunity to offer— I know it sounds old school, but like good old-fashioned profit sharing.
That's what my company's gonna do, probably.
I don't think there's great software to do profit sharing, to sell easy, like Here's, here's Carda for profit share. I don't think that there's a great solution for that. Granted, haven't looked, but, uh, I know several people that kind of like home cook these things and it's a kind of a pain in the ass.
It's a huge pain in the ass. It's a huge pain in the ass.
So there you go, product, product one.
Would you ever consider, Sean, would you ever consider profit sharing in a future company?
Uh, yeah, right now it's happening right now. So yeah, now it's a little bit messy in the sense of Okay, when do we declare profits? So, you know, to what extent do we reinvest into new things versus actually take profits out of the business? I think that's the only murky thing that, like, you know, so right now I have a— I have one person who's an operator of a business and excited about profit sharing as the model here. But the question is, cool, so when, when do— not when do profits arrive, but when do we decide to take them out of the business versus not? I think that's the only—
typically it's pretty small though. It's like 10%. A lot of people do 10% of profits.
Sure.
So you can set up some rules like that. It's going to be 10% of profits once we hit this point or at this point in time. But that's the only gray area that I haven't sort of figured out yet with my model. But yes, actively doing it right now too and want to figure out a software solution for it.
Yeah. We've built it on top of Notion and I don't think it's perfect, but I think like, you know, one of the ways we look at it is like, imagine you have like an L1, L2, L3 type person and based on like rankings, right. Based on contributions. But I'd love to see, I'd love to see, like, I would pay for software that would do this.
My friend Nathan Barry, you guys probably have it, ConvertKit is the name of his company. And he's one of these radical transparency type of guys. And he, so all of his company's revenue is on bare metrics and they do, I think, $22 million a year in recurring revenue. It's a really great company. And he revealed his profit sharing methodology. If you Google Nathan Barry profit sharing, you'll be able to see, and he like reveals his spreadsheet and like how he allocates money to different employees. And I think that what he ended up doing was just saying like, we're just gonna, we're just gonna do it strictly on tenure. So people who have stayed here for 1 year get this, people who have stayed here for 2 years get this, and it doesn't matter how much money you make, like how much salary or what position you have.
Okay, so I have a Reddit-based idea that, um, it's not a new idea, it's an idea I saw that I'm connecting the dots here. So when we were building Blab, this really interesting thing would happen like once a week or once a month, I don't remember the cadence exactly, but all of a sudden the top watched stream, it would have like, I don't know, like 1,000+ people watching it in that moment, and it was all new users, all new accounts, and they were kind of like, uh, I was like, what the hell is going on? Who are these people? And the screen was just a screen share, it wasn't a person on screen talking, so They were kind of hacking our system to use it for what they wanted. And it was— I don't remember the name of it, but there's some kind of like Reddit millionaire game or Reddit lottery game that happens on some frequency. Some— it's either once a week, once a month. And basically someone in the subreddit wins and that's kind of it. It's like you don't have to pay, I don't think, to enter. You just— you might win. And I think they either crowdsource the funding or something like that. And, um, I saw this product come out recently that's very similar. It's called Yotta Savings. Did you guys see this?
Ah, yeah, they're running commercials.
Oh, so, so I don't know the backstory of this, but it was a clever idea. Basically, they created a savings account. So they wanted a whole— they wanted— they created like a, you know, a savings account. They wanted a bunch of people to deposit with them. And so what they did was they were like, hey, you could win up to $10 million just for saving your money in our FDIC-insured account. So you don't have to buy into the lottery, but it's sort of a trade. It's like, put your money in our savings account so they can become essentially like a little mini bank. And then if you have a savings account, and for every dollar you have in, I think you get entries into a weekly lottery which will let you win X, Y, X, Y, or Z amounts of money. And you get more tickets the more you— you get more tickets to win the more you've deposited. And I thought it was a very clever mechanic to try to like solve the chicken and egg problem of of starting a, you know, a financial services company. And it reminded me of the sort of the, the idea on Reddit of, of like, well, what if you just had a chance to win? You don't have to buy a lottery ticket. And then is there, is there a way you could make the economics work? And I think these guys have a method that might work. What do you guys think of this idea?
That's awesome. And when you decided to do that, it's obviously a big risk because you have to declare—
it's not that big a risk, it's $25,000.
Okay, you gave away Model 3. So, um, did you set a benchmark early on? You were like, okay, this is what success is, is 50,000 users, or what'd you say?
Yeah, um, I don't want to reveal that number, but we looked at like what the lifetime value is of a user and then we gave it a huge discount.
You worked back from that.
Okay. Yeah. And now there's a ton of legal implications here, right? Doing giveaways is fucking hard. Yeah. And it's full of scammers. So if you're going to do it, you have to, A, follow the law. So like, for example, in California, you can't use the word— it's like there's word— like verbiage you have to use, like a giveaway versus a lottery versus raffle versus raffle. Yeah, it's all— it's very— you have to use a certain terminology.
But did you restrict who could enter to like certain geographies?
Yeah, we say— I, I forget, but yes, I think like, I don't think Puerto Rico can enter. I don't think international can enter.
Um, the two smart things I saw you guys doing that, I was like, this is fucking great, this will work. And then the other one was sponsoring Dave Portnoy's stream. I was like, this is also great, this will work. And then taking the Dave Portnoy stream and turning that video clip into an ad, I was like, yes, this is why Sam's my boy. Yeah, great shit like this.
It worked. That was very expensive. That was 6 figures. That was expensive. But anyway, the giveaway worked. And also, you know, Publishers Clearing House?
I've heard the word. I don't actually know what the hell that means.
Greg, you know, Greg, are you Canadian or American? Canadian. Okay. Publishing Clearing House was a business that was— it might have been around forever, but it was particularly popular in the '80s and '90s. And do you remember like how they would show up at people's homes with a big fat check?
Right.
Yes. I forget the history of it, but basically it started literally like magazine publishers would do like a giveaway. And then now it's its own thing and it's a multi-billion dollar company and it's just a big lotto, like a raffle. And they still do it and it still makes billions of dollars in revenue. It's his own company. I think it makes— it's quite large. But anyway, Sean, my point is these giveaways definitely work.
Yeah, that's amazing. How do you do that digitally? That's kind of my question.
Well, have you seen the million dollar San Francisco house raffles?
No, what's that?
There's billboards on bus stops for it. It's called, uh, San Francisco— I'll bring you— see if you can find it, like San Francisco Raffle House or something like that, where it's $25 a ticket and you get entered to win a million-dollar home. A million-dollar home.
Who's running this?
I don't know, but I always see billboards for it. You've never seen these? They're all over, dude.
I haven't left my house in like, you know, 4 months, so no, they've been It's called SF Raffle. Dude, how are you bringing your Google skills? Okay, go ahead.
The idea is this. Okay, actually before we get to the idea, here's what I'm learning. Number one is that people's lives are probably pretty boring and they wanna make things interesting. Yes. Number two. Number two is that people love slot machines, essentially. Which is you do something, person does something, and something with chance might happen. So it's like, how do you— and I know this is a big gambling me, but like, how do you apply slot machines to everything? Chat roulette? No, in the sense of like, okay, I'm buying a, you know, I just bought this white t-shirt at James Perse, but for an extra X amount of dollars, I could put into something to get a FaceTime from James Perse or something like that.
So I think you could do this as a Shopify add-on to a post-purchase. So I think you could say, cool, I got to the point you bought a thing, your credit card's in, and hey, here's a chance to get X. And you could possibly apply something sort of at that point when they're already so far down the funnel that you're just trying to basically increase the average order value by Introducing a little game of chance where some people get a, get like a ton of value and then a lot of people lose a little bit of value as one mechanic for it. I did this with— I think I talked about this podcast— there used to be this Penny, the sports betting site that was genius, where they basically said, okay, to get around the illegality of this, you come on the site, everybody gets 10 cents for free to bet, and you can— so everyone gets 10 cents free, you can only cash out when you get to $10. And of course it's really hard to climb to $10, but you start betting. And then when you would stop, uh, sorry, when you would place a bet, it would say, cool, do you want a 2x multiplier? So you put down 10 cents, this could be worth 30 cents if you watch this ad. And then you would watch the ad and the thing would like variably spin and tell you what your multiplier is. And like sometimes you'd get like, you know, just a 1.5x multiplier. So it's like, try again, watch another ad. And these guys were just arbitraging the shit out of this where people would just watch a bunch of ads in order to get their multiplier higher. And eventually they would just make a bad sports bet and lose it all back to the bank anyways. And so they never were actually giving out— like, very few people ever, ever cashed out. And I just remember in college being like, this guy, whoever this is behind this, is my hero.
Okay, you guys, listen to this. Publishers Clearing House— did you guys look it up? Publishers Clearing House reportedly did $1 billion in sales in 2018. And the way that it works is they own 8 different websites, one of them being, uh, Publishing Clearinghouse, like their main website. And you can see giveaways that they're doing. Like right now, there's one, win a $3 million dream home, and you enter your email. And in order to get more entries, you have to buy a magazine subscription or a piece of merchandise, and they take a massive amount of affiliate revenue. Um, That's all, that's all it does. So these—
so that's insane, by the way. This is insane. So what— I'm— through my mind, I don't— my mind is literally exploding right now.
This has existed since the '50s.
I mean, dude, you want to— you want it to explode more? Go to pch.com, their website. Look at this fucking awful website. It's just all black with one old guy holding a check and it says "you" on the check, and then it says win $7 million a week or $7,000 a week for life. That's the whole website. What's going on?
These guys, these guys do a billion— this is a billion-dollar company.
Yeah, man, you're a Canadian, and Sean, you've lived all over the world, but if you grow up, like, if you go to your grand— like, when I was a kid, I go to my grandmother's house and watch TV. Like, this is what the grandmas would watch, and they had a TV show where they would take that big fat check and bring it to you. Like, it was like a famous thing, and like the commercials were famous.
This is also— the big check is just a genius move by whoever was like, you know what, you know what, you know what we're gonna do? There's a lot of money, that's a little check. We're gonna go with a jumbo jumbo check. And the jumbo check is like embedded in my brain from like, you know, my childhood. Like, that's the— what, you know what winning feels like at the highest level? Like, I wish when we sold our company Amazon handed me a big check. I would have taken less money if they were like, but we'll throw in the big check.
I pray you— I pray you— were you raised in America?
I was, yeah. And I remember the commercials. It'd be like, thank you, when, when like 1 grand, 2 grand per week for life. I remember those.
Yeah, yeah, this is like a huge thing. It's still big. I mean, this company has probably made like $20 or $30 billion in profits since its inception.
We just spawned like, you know, 2,000 more schemers out there who are going to create little crummy knockoffs of this.
Old women love this shit. Me and my grandma used to watch this shit all the time. It was great. I mean, it was like fun for us.
So there's a product we meant to talk about a couple weeks ago called Hybe. Greg, you heard of Hybe? I feel like this might be kind of on your radar if you've heard of this. H-Y-B-E.com.
Uh, yeah, the box mystery box mystery drop company.
So if you go to Hybe.com, you see a whole bunch of boxes. I like the design of the site and it's like Louis Vuitton box, Nike box, uh, you know, an Off-White box, like these exclusive boxes.. And so you buy these boxes and there's some item inside and it's gonna either be worth the same amount that you paid for the box, 'cause like the Louis Vuitton box, for example, one of them is for $25 and the other one's for $250 to buy the box. And you might get something worth way more, you might get something worth that same amount or less. It's a game of chance. And when you first join, they're like, here's your first box, open it up. I won an AirPod case or something like that., and it's like, awesome, do you wanna just recycle, like, do you not want this product? You can just recycle it into HYBE credits or pay for shipping and you can get this product. And I was like, man, this is like the same flow that wish.com or the Wish app uses. And I was like, this is a great product. And I tried to find who are the founders of this. I could not find who's behind this thing, but respect, 'cause I think this is very interesting.
I'd invest, I'd invest.
Yeah, exactly, that's why I was trying to find the founders. I was like, how do I invest in this thing?
So these guys have been around for a minute. There was a mystery, it was called mysterybox.com, I believe. And they would advertise like crazy with the Logan brothers, Logan Paul, right? Those two kids, they would advertise with them like crazy. All right, here's another take on this, guys. This is actually a legit business. This isn't a scam. This one lady had this candle company and it was doing okay. And what she decided to do was put a diamond in one of the candles and every other, one candle had a $20,000 diamond. The rest had, like a cheap stone, and it's huge.
It's a—
I forget what it's called, but we covered it, I believe. And that's another take on this. People would buy these candles just to see if they got the winning one, right?
The Willy Wonka method.
It's—
and it was pretty cool. Like, it's kind of like, it makes it fun. Like, it's a fun gift.
Yeah, so many ideas, dude. Okay, dude, this is great. I'm glad you came back on. We should wrap it up, but If you have ideas for subreddit ideas, I want you to actually tweet it @Greg. So your Twitter handle, I think it's just your name, right? It's @GregEisenberg?
Yep.
@GregEisenberg. We'll put it in the comments of this. Let us know what you think. If you guys love Greg, let us know, then we can have Greg on more. If you hate Greg, let us know, then we'll never let Greg on again. You know the deal. But at least we got our new name, Podcast Bueno. So Greg, good times, man.
Bueno, Idea Zone. Idea Source.
Idea Source, yeah.
All right, thanks, man. I appreciate it. Cool. Take care.
See ya.
All right, that's gonna be it for part 1 of the episode with Greg Eisenberg. Part 2 is coming on Friday, so it's a back-to-back brainstorm. We went long, and so we decided, hey, let's keep it all in, let's cut it up into a two-parter. So hope you enjoyed this one. More is coming on Friday. And, um, if you're not already in the Facebook group, well, what are you doing? Get in the Facebook group. I don't know why you wouldn't be in the Facebook group if you listen to the podcast. Uh, the group has a ton of cool people. People share what projects they're working on, they get ideas, they find partners, they get investment, they get advice. A bunch of good things happen in there. So join the group and I will see you on Friday.