My First Million - 10 Startups w/ Stock Grants That’ll Make You A Millionaire | Sara’s List 2024

Episode Date: September 13, 2024

Episode 629: Sam Parr ( https://x.com/theSamParr ) and Shaan Puri ( https://x.com/ShaanVP ) bring you the third installment of Sara’s List. A path to wealth that doesn’t involve insane amounts of risk, luck, or burnout. Just get a job at the right company. The criteria? Growth-stage startups that have the potential to 5-10x over the next 5 years. — Show Notes:  (0:00) Auditing Cohort 1 (9:56) OpenAI (12:07) Retool (17:04) Mercury (23:04) Cursor (27:28) Epirus (33:30) Wiz (42:52) Neuralink (46:00) Perplexity AI (49:43) Traba (54:54) Replit — Links: • OpenAI - https://openai.com/ • Retool - https://retool.com/ • Mercury - https://mercury.com/ • Cursor - https://www.cursor.com/ • Epirus - https://www.epirusinc.com/ • Wiz - https://www.wiz.io/ • Neuralink - https://neuralink.com/ • Perplexity - https://www.perplexity.ai/ • Traba - https://traba.work/ • Replit - https://replit.com/ — Check Out Shaan's Stuff: Need to hire? You should use the same service Shaan uses to hire developers, designers, & Virtual Assistants → it’s called Shepherd (tell ‘em Shaan sent you): https://bit.ly/SupportShepherd — Check Out Sam's Stuff: • Hampton - https://www.joinhampton.com/ • Ideation Bootcamp - https://www.ideationbootcamp.co/ • Copy That - https://copythat.com • Hampton Wealth Survey - https://joinhampton.com/wealth • Sam’s List - http://samslist.co/ My First Million is a HubSpot Original Podcast // Brought to you by The HubSpot Podcast Network // Production by Arie Desormeaux // Editing by Ezra Bakker Trupiano

All right, today is everybody's favorite episode. It is the Sarah's List episode. So we're talking about 10 companies that you can become wealthy with without having started it or invested in it or joined early. I feel like I can rule the world. I know I could be what I want to. I put my all in it like no days off on a road. Let's travel.

I've got a little presentation for you. If you're on audio, get over to YouTube right now because I have slides that are going to be fun. So it's called Sarah's list. This is Sam's wife, Sarah. That's hilarious. She is on the cover of my first million. And the reason why is because she has an unlikely story, a story that I hadn't really heard. And when I heard it for the first time, it kind of shocked me, which is, I think when I heard this, she was about 30 years old at the time.

She was a self-made millionaire. But she didn't start a company. She wasn't killing herself working 100 hours a week like we were. She wasn't paying herself scraps. She was getting paid a nice salary with nice benefits. She worked at a great company that had good culture. She didn't have to make risky angel investments and get lucky. She was not a high profile exec that just got some huge pay package.

And she wasn't lucky like the Facebook graffiti guy that just got a bunch of stock from Facebook and made $70 million. And so her story was almost incredibly boring. It was incredibly simple. And I just couldn't believe it. I was like, I'm trying so hard to make a million bucks here. That was such a better path. And so just to recap, you know, self-made. millionaire, didn't have to start the business, didn't have to do risk angel investing.

It wasn't a high profile exec, wasn't the graffiti guy. What she did was she joined Airbnb. And so if you look at this chart, this is Airbnb's valuation over time. And there was a period when Airbnb started, that was the high risk period. That's the flat part of this curve. And to join Airbnb then, you had to see something that was not obvious. You had to believe something that took a huge leap of faith. You had to work like crazy in a tiny apartment.

There's a fun video, by the way, of them taking like midday dance breaks where they just played a bunch. Everyone stands up for the desk and there's dancing. You had to do weird startup stuff. There's a guy with stinky feet probably. That's not even what we're talking about, right? She joined after it had crossed, you know, a 10, even, right, Sam? 20 billion dollar valuation. Yeah. And if I remember, like, they already had that huge office. Do you remember that huge office had 888 Brandon? And I imagine there was like a thousand people plus working there. Like, it wasn't small. And you and I were living in San Francisco at the time. And it was stupidly obvious. You could have slapped me in the face and they said, what's a company that's a winner?

And I would have been like, Airbnb is a company that's a winner. It was like obvious at the time. I had friends at Uber, same thing. Uber was obviously a winner at the time where they were already multi-billion dollar companies. But because of the space that they were in and how dominant they were, it was clear that they still had room to run. And what we call Serious list is basically a function of using your time as your investment. Most people don't think of their job as an investment decision, but your time, your talent, where you're going to spend four years working is a investment decision.

You should be thinking about it like a venture capitalist, and especially if you're working in the tech scene. And so these are all venture, you know, venture back tech companies that we're talking about. So the criteria for Sarah's list, it's a company that has product market fit. It's just a clear, obvious, successful company. It doesn't mean it can't fail, but it just means it has product market fit. It's not in the scrappy, figure it out phase and, you know, wandering phase of startups. It's funded. It's growing and you get a nice salary.

benefits. They got oat milk in the fridge. And that if you joined and you got a $200,000 stock package, so that's like, you know, getting $50,000 a year of stocks. Maybe you got $150,000 salary and $50,000 of stock. That could become worth a million plus in five years. So can it five X in five years? We're not looking for max upside. We're looking for lowish downside and enough upside where you can turn, you know, a $200,000 stock package into, you know, $1, $3 million would be the outcomes that we're looking for. we did this once in 2021, three years ago.

And before we tell you what we picked and how we did, we got a time travel back real quick. So let's do this fast. So back in 2021, this NFT sold for $69 million. Those were the good old days. Tom Brady was a football player. SBF was a hero. People cared about whoever these people are. It was a simpler time.

And the stock market was running up. It was on a 10 plus year bull run. It had its peak in 2021. For the listener, people cared about, quote, these people. These people was Prince Harry and his wife. I don't even know who it is. Point proven. Thank you.

I rest my case. By the way, did you know this? Sesame Street and 7-Eleven launched VC funds during this time. And so they had their own venture funds. Everybody was getting in on the game. But nothing lasts forever. And so since then,

just to give you some data here. So since then, about 36% of startups who have raised money since then had raised at a lower valuation. That's not to count the companies that do. or the companies that are avoiding raising because they don't want to raise down rounds. This is like transactions that cleared, one third of them are clearing at a lower price of all startups.

It's even worse if you look at late stage startup. So later stage startups, which are the ones we're talking about, Series C, Series D. They're down between 30 and 60 percent on average. That's what you're seeing across the board. Sad news. Two thirds of employees right now that are working at these companies are working for options

that are actually worth zero. And they probably don't even realize it yet, meaning they got a pay package of stock options at a $24 strike price. That stock is currently trading in secondary for $8. So all of their shares are underwater. Currently only 33% of the shares are in the money, as they say. All right. So what did we pick? We picked about 11 companies.

I think we shared one company, but we had each picked around here. Here's how we did. So it's not great. All the stuff I just told you is basically our big fat excuses as to why it wasn't great. We both had two hits, so two things that did that did go up in a sort of step change way, you know, sort of three, four X so far in the three years. I had two that were down, like valuation lower than it was previously. You had three that were down. And then there were some pushes.

And a push basically is like, has the same valuation as it had before. But that's actually sort of a win because you beat the market. So you didn't achieve the Sarah's list dream, but you didn't take the huge right down that a bunch of. You're wrong about next health. Next health is wrong. Next health is wrong. Is it wrong on here? Oh, is it actually up?

Well, the word neck. There's two companies. One is next. One is next. So I think you, there was a little confusing. Someone in the research department's getting fired here. No, they're just missing a T. Open store and, well, so open store is down?

It's unclear, but I mark it as down. And it's a little intellectual honesty. I don't think, I don't believe that it is achieved. It's, it's, it's, it's status to be called up. We have it as a TBD. I gave it a less generous interpretation of down just to make my own grading harsher. This is not about them. It's about me grading my own picks more so.

And you think Figma's down too? Well, Figma tried to, it's not a down. It's a push here. It tried to sell for $20 billion didn't clear that the transaction didn't go through. So that would have been a 2X. But then the last, I believe, round of funding. And this, by the way, this is not all very obvious. So companies don't always announced their valuations.

There's leaked valuations to the media, which are not always true. There's valuations that come with a bunch of strings attached. So maybe you've got a good number, but there's all these caveats and liquidation preferences. And a lot of this was we asked people who own secondary stock marketplaces. We said, hey, what is this company trading at right now? And so it's incomplete information, right?

We're doing the best we can here with private stock information that you don't always have. By the way, Sarah, my wife, who this is about, had a job offer at Figma, like three months before their acquisition offer, which, like, had that gone through, I believe it would have been a 2x return based off the valuation. So we almost had a mini hit again, but not quite. Yes, exactly. All right, let's get to the 2024 picks.

We're going to try to do better now. The good news is the pick, any picks you made, anything in the vintage of 2021, like I said earlier, all the companies basically got shellacked. Everything got re-underwritten. Everything got corrected. But now where we're at, I think we are at a less hypey period of, time. And so this cohort of picks, I think should be better. But again, not financial advice. Really, neither me nor Sam actually are trying to go get jobs. This is kind of like what we

would do if we were going to get a job. Sam did this with Sarah when she was looking for jobs. So this is for fun. Let's put that out there. We're not giving financial advice here. So I have like five or six, but then I got a bunch of other ones that were like, it's like scrap. Like I didn't quite get to. What do you think is the, let's say we each bring five to the table. I bet you there's going to be at least three that we are overlapping on. What do think. Yeah, two, I'm guessing two overlaps. And by the way, I'll say, I think a good hit rate on this, good hit rate would be six out of ten. Six out of ten have a step up where five years later, we're not even five years after the 2021 ones yet, we're only three years in, but five years later,

that they're sort of like a four or five X in valuation. If six out of ten did that, I think that would be a great thing. I think three out of ten would be sort of the lowest bar that I would accept. All right. You want to go first. All right. I'm going to go first. I'll start with an obvious one. It's probably one that you have two. Open AI.

And by the way, there are no bonus points for difficulty in business. The fact that everybody knows Open AI, I'm not trying to give you a secret company, a secret stock tip you've never heard of. The point of this often is that the companies that are going to be big juggernauts are hidden in plain sight. So Open AI currently valued at $103 billion. It's doing about $3.5 billion a year in revenue already.

The bull case. So what do you need to believe if you're going to join this? company that you think it's a service list contender. It's the first credible Google competitor in about 20 years. It is something that actually could displace, replace, search, which is like, you know, when people need an answer to something or they need help with something, where do they go? It's the fastest growing company ever. That's nice. So it took them, you know, two or three months to reach 100 million users. It's five times faster growing than the next fastest product ever. It reached three billion in revenue in the last, you know, in like three years, it's pretty

crazy. And it's unique because it's an enterprise company. It's a consumer company and it's a dev tools company at the same time. I think that's pretty unique and gives it a lot of upside. What you would be worried about if you were looking at Open AI is it's probably the most competitive market on earth right now. You are getting competition from every, the most well-funded startups are the most brilliant people as well as the biggest tech companies the world, Facebook, Google, Amazon. Everybody is coming after this market. So that's the downside is will Open AI retain their lead or not? Yeah, the problem with OpenA, can you get a job at Open AI?

Not only is it the most competitive, like, not only is it the most competitive space. Like, I imagine they have to have one of the more competitive, like, job applicant pools. Dude, I read some crazy stat that Tesla has something like 50,000 people a day applying to work there. And I have to imagine that Open AI, it's somewhat similar, where they are just like inundated with applications. Well, yeah, I mean, but we're talking our listeners, the cream of the crop here. This is the crem della crem. So, yeah, of course they can get a job wherever they want. So would, well, OpenAI 5X, the current valuation?

Yeah. I mean, yeah, yeah. Yep, I agree with you. All right, you want me to do one? Mm-hmm. All right, I've got one called Retool. Do you know what Retool is? I know Retool.

I use Retool, and I wish that I invest in Retail. I tried to invest in Retool early on, and I missed it. I'm not a user of it. So it actually would be best as a user explain what it is. So every technology company has the same situation that they would all homebrew a solution for. The situation is you need a back-end admin panel. So you have this, I'm sure, with Hampton where, oh, we need to add or remove a member or, hey, this person changed companies. They're asking if we can update their thing?

Or, hey, can we change their membership status from active to suspended or whatever, whatever, some admin function that you need to do? and it doesn't come out of the box with whatever, you know, you're using 10 tools to run your business, but like this is the, what's the tool for your business? And so retool is a simple way to make the admin, you know,

a panel for, admin system for your, for your company where anybody in the company who's not a developer can actually go in and, you know, add, remove, you know,

make changes to essentially the database. That's like the simplistic way of saying it. It's basically a backend tool for any business that you can customize and your developers can build once. so that anybody in the team can use. So it's an internal tool. And here's this crazy stat. So the founder, his name's David.

David, David, David's a baby genius. So David started this when he was like at the University of Cambridge when he was like 21 years old. And he's like, he's got one of these like stories where he basically, before this business, he had a payments app that I think did okay, but whatever, he quit working on it. But like when you see like a 19 year old kid do that, you're like, okay, this. If you have a payments app at 19, you already want it.

Yeah. And you're going to one of the best. universities on earth. Like, all right, something is interesting here. He gets into YC, comes up with this idea. And here's this crazy set. 50 or 60 percent, like, between 50 and 60 percent of all software in the world is internal-facing tools, meaning employees who use internal-facing tools. That's a one-chart business right there. That's a one-chart business. And not a lot of people focus on that because you kind of focus on things that you see and use versus things on the back end that you maybe you kind of get, you don't really touch that often. But the business has

crushed it. And so they launched in 2017. Their latest valuation is 3.7. They've raised $150 million from Sequoia and a bunch of other great companies. Listen to this growth. First nine months, $500,000 in revenue. In 2018, they hit $2 million in ARR. In 2024, they hit around $100 million in recurring revenue. So it's got to be one of the faster growing businesses out there. And I've been watching interviews with this guy, David, the founder, dude, he's amazing. He's an amazing company. So at a valuation of 3.7, I think there's room to run. I think there's a five or 10x potential here. I mean, that's got to be a big business, but the market is just massive. And I like the guy.

I think that's something we're going to see in a bunch of these, which is that the CEOs seem to be remarkable in all these businesses. And that's just, if you're going to make a bet on a private company, you want to be at one with like one of these all-star CEOs. My retail story, I, two lessons learned here. One, invest in your P&L. So I had this problem. We were always, we were was trying to build these things internally. The devs never wanted to work on it enough because it's an internal tool, so who cares? And when we got retool, it was like, oh, this is great. This is a no-brainer.

And so the first lesson I always remind myself is the best place to invest is in your P&L, meaning look at your expenses and go figure out which of those companies you think other people. You wouldn't want to cancel and other people are going to have as their expense to go invest in that company. Retool is one of those. And then second thing was once we got acquired by Twitch years later. So the first one was probably 2017, 2018. The second one was 2020 or 2019. I met Twitch and Emmett, who was a YC partner, was like, I was at a meeting or he was coming to a meeting with me and he was running a little late.

And he's like, oh, yeah, sorry, I was doing office hours with this YC company that just had, they just hit this point. He's like, there's this thing that happens where you go through YC, it's all good. Then you have after YC where, you know, you're just like, you're back to being like a normal struggling company. He's like, and then sometimes you hit. at this inflection point and shit just really starts to work. He goes, yeah, this company retool, this is really starting to work. When a really smart friend tells you that something is hitting an inflection point, like drop everything and go, go hunt that down.

I remember at the time thinking, I shouldn't invest at this. I saw the guy David in the cafeteria because he had just met with Emmett and wearing his retool shirt. And I went up to him and I was like, nice shirt, love retool. And then that was it. That was my, all I needed was that. Was he like a little guy? How do I invest?

He's young. I think he, I think he was like a college kid. almost. Yeah, he looked like you just could have been any employee at the company. He was wearing his own shirt. Anyway, so Retool, I like the pick. Valuation is high. So I think four or five X is tough. To become a $15 billion company is tough. But I think it's a good, really good company. All right, let me give you my next one. The next one, Mercury. You're nodding. Do you have this one? It was on my, I had it on my list and then I removed it because I thought you were going to pick them. I did pick Mercury. So Mercury is a company that I use. So I'm a, again,

look at the tools you use that you don't want to change. So I use Mercury for, I think, not one, too, but like six of my companies now. It's just an amazing product. So the valuation is still in that sweet spot range where it's, I think it's $1.6 billion right now. So the valuation is, here's the bull case. Here's what you need to believe. It has a rare combination. Well, hold on. Mercury is just a bank that is built for small businesses and it's easier and simpler to use. It's basically just a normal bank, just easier and better. If you're a startup and you need to have a bank account, which every startup does, you can use a bank from like, you know, Bank of America or whatever, like, you know, some traditional bank where you're going to

use their product and it's going to feel like, you know, a bunch of 50-year-olds hired some web shop to, you know, outsource this tool that they needed, like the second class citizen. Whereas Mercury is like, oh, a founder made this. I get it. It solves all of the founders, all of the problems that a founder would have, I get it. And it's true. Imaud was a founder of multiple startups before he made this. And now it's like the best product for startups. So product's amazing. It has a rare combo. It's growing fast and it's profitable, which is great because a lot of the companies that get written down or the risk comes from, they're not profitable. They're burning so much cash that if the growth ever slows, all of a sudden you get this huge discount in the valuation.

So the fact that this is profitable means there's a margin of safety here. Silicon Valley Bank used to be the bank of choice for Silicon Valley startups, it imploded. It was a $34 billion company with $7 billion in revenue two years ago, and it imploded because they mismanaged risk. Nobody has really replaced them. I think Mercury is the best position to replace them. So if you think about what's the shoes they could fill, they could fill the SVB shoes as a $30 plus billion company. They're the category leader. I saw this great quote from a Sequoia partner. He said the category leader in any category tends to get something like 75% of the revenue and 50% of all profits that are going to be in a market, which I don't know if those numbers are

exactly right, but it's directionally correct, which is that the winners of every category take this lion's share of the rewards. And I think they have a good moat. I think they have a great brand. It's letting them get customers for free and regulatory moat as well, which is this is not a simple thing that any, you know, any person could go start. There's a lot of obviously like financial compliance and regulation. Now, one thing to caveat, we called them a bank. That's because to the customer, it feels like a bank. Technically, they're not a bank. Who do they use? So they use like choice bank, I think, and evolve bank underneath.

So they're what we call like a NeoBank, you know, just like a finance platform, basically. And the bare case, the other thing that, you know, the worry would be can they grow with their startups? So some products are great because you get them while they're young and you grow with them. And other products, you get them while they're young and then they graduate off you. And as soon as they become really valuable customers, they take their business elsewhere. I think they're going to be able to grow with startups, but that would be the risk here. I didn't find, honestly, much of a bear case. I don't know if you have a...

Yeah, I've got a bearer case. I think I almost always banquet chase because I'm just always been afraid of, can I access my money? And it happened recently where a lot of people were using Mercury as... I mean, not the shit on Mercury. They were using lots of different things. And they couldn't get their payments out or their payroll out because of the bank. The underlying bank.

And SFB was one of them. They're no longer a business because they're this huge company that mismanaged a bunch of stuff, and it did work out. And so, yeah, I think that's a massive bear case. I think that the reason I bake with Chase is because of Chase would go out of business and have the issue that Silicon Valley Bank had, America would basically go under. Too big to fail. Yeah, and I always knock on wood when I say that, but a little bit like that, where it's like, you know, I think Chase is like, I don't have to look at the stats, but it's something like 5% of, like, Americans use it. So it's like a pretty big deal. And so, yeah,

I think that's a bearish case as to why. So I don't think that's necessarily a bear case because, first of all they have like I think five million dollar FDIC insurance now like they offer like 20 times more FDIC protection than they need to or than the average bank does. So I think they've got some features that help with that. But the other thing is like I think the proof is in the pudding with this, which is that if while it's understandable to say, oh, you know, I choose to go with too big to fail bank. If you just look at kind of where the startups are voting with their feet, this thing is growing so fast that obviously people are making that. choice already. So it's not like a future scenario. It's like today that choice exists and people are making the choice to go to Mercury. So I don't see a reason why that would change later necessarily. Like usually when I think about a bear case, like what could go wrong in the future where is what

you're talking about, which is maybe people just prefer to use a traditional kind of 100 year old bank because of the track record. They have that choice today and people are like choosing to do the other one. So, you know, I think that's less of a bear case. Last weekend, because I'm a client at Chase, they gave me box seats to the U.S. Open. And it totally worked. I'm going to bake with Jakes for as long as they'll have me, so long as I get tickets to the U.S. Open. So as soon as Mercury starts doing these wide-died perks,

they ain't shit. Like, I want a fucking fruit basket. I want a gift basket. If I don't give a gift basket, you don't get my business. I've changed, man. I'll take a 20-piece nuggets from Chick-fil-A. I'm a simple man. I don't need the U.S. Open.

This is easy. Oh, my God. They took me. I got these like amazing seats to the U.S. Open. And it worked. It worked. It worked. I get it.

I fell for the trap. And so, but yeah, no, I think Mercury is a great business. I think the founder is pretty badass. So yeah, that one's good. All right. So you said that you were going to look at like the founders and in or no, sorry, you said you're going to use your P&L. So where you spend some of your money.

I like that. I also do like, where do I spend some of my time and where do people spend some other time? And so a tool that I'm playing with is called cursor. And I think cursor is pretty amazing. And so, and I'm going to tell you not my story, but the reason I've been using it, but there was this little girl, she's eight years old. Her father's on Twitter and her father's a developer, I guess. And her father tweeted something out saying, I'm trying to teach my little girl how to code.

And we're using cursor. and here's a FaceTime of her, like a loom, like a screen record, of her learning how to code. And within 12 minutes or something like that, she's built a website and she used cursor. So cursor is this really cool tool. It's got a lot of hype right now. It just kind of, the easiest way to describe it is it's sort of like Squarespace, Wix, or any of these other website builders, but it uses AI and you talk to it a little bit like a person, and it makes it really easy to edit code.

Now, there's a bunch of pros and cons of this business. The pro is, I think it's amazing. Like I think that this tool is awesome. I've been playing with it. It's super good. Their latest valuation is $400 million. I don't think that that's insane. So that's like, there's opportunity there.

I think that the con, and this is a big con, which is these website building tools, dude, their PE multiples are shit. So you look at like Squarespace, Wix, Weebley. Do you remember all these? Like, they don't trade that well so they can do billions. I think you're pigeonholing it as a website builder. not a website builder. It's a, it's an IDE. You can code anything in it. You can code anything in it. But it's still, I think, in that category in terms of, you don't think it's in that category in terms of when you look at competitors. I think it's a GitHub co-pilot, replet category where it's a

coding environment where a programmer can become now an AI assisted programmer. So however good you were, however efficient you were, however productive you were as an engineer as a programmer, you can now be, you know, some multiple more. Maybe it's one and a half X more productive. Maybe it's 10x more productive as the AI improves. And so I don't think because, you know, Wix and Webley, these are like, you know, my sister needs a website for her preschool. So she goes to Squarespace and makes a website.

She's not going to, she's not going to go to, well, today she's not going to cursor for that. And also those tools could never do what a cursor could do where it could build full applications, you know? Yeah, I feel you. I feel you. I still think that like, all right. So we use, I use bubble, you know bubble.

Bubble's like an app builder. This is a little bit of a competitor to bubble. And in my head as an investor and potentially as a user, I think it comes into like, it uses, it's like the same churn as a small business or a website builder where you spend $10 a month. And there's not always a massive reason to stay on the platform versus all the other competitors. Like it's pretty easy just like up and try different ones. Do you know what I mean? And so for that reason, I think it's a little bit similar in the terms of, in terms of valuation.

Right. Okay. I have a, I looked at cursor very close. In fact, they were on my first draft of companies to be on here. But then as I did more research, I went with another company that you'll see at the end of this. Okay, but what do you think about cursor? For a $450 million valuation, what do you think? I mean, I think you're getting high upside, high downside there because, you know, that valuation is not based on, it's not based on revenue. It's based on like, you know, this vision of what the future might look like. And that's, you know, that's great. And I think cursor is awesome right now. If I could invest in cursor, I would totally invest in cursor right now. But I think it is more risky than some of the other ones we've talked about so far. I think that's true. They're at a $10 million run rate, I believe. I don't know if it was run rate or that's actually what they did in revenue. But yeah, it's tiny compared to the valuation. What do you have? Then instead, what's your competitor to do it? I'll show you. It's my last one. But I can't rearrange the slides here. So you're going to have to wait on that. When you told that story about that little girl, I thought you were pulling a Kamala Harris and

you were going to say that little girl was me at the end, and I was pretty ready for that emotional landing. Instead, you were like, that was just somebody's daughter. I just follow grown men's daughters on Twitter. I don't know. Where are you getting your tech advice? Dude, did you see that video? I did not see that one, but I've seen some kind of amazing things. Cursor demos right now, all the rage. Dude, all the rage. All right. Keep going.

All right. My next one. I don't even know if you've heard of this company. Epirus. Do you know this company? No. Okay, so... I don't like that name. Epirus? Yeah, Epirus.

So this is a Joe Lonsdale company. It is a weapons company, a defense company. And I don't know enough about Epirus because it's a very secretive company and it's very private to tell you that this is the pick. What I actually did was I put this here as a placeholder as a general strategy. So one thing I would do if I was interested in this kind of seros-less concept, finding a company I can go join, that the stock is going to be, My stock package is going to be appreciating, you know, rapidly. I'll get a 5x in five years. I think that the way Anderil hit for us last time,

there are now like 10 more Anderil type of companies that exist that are inspired by Anderil that are worth checking out. Anderl itself might still be a contender, by the way. But there are more companies. So Epirus is basically as like long range, you know, like defense weapon or whatever. Dude, if you go to their website, it's Epirus Inc. it basically looks like some type of like electromagnetic thing that shoots like

radio waves into the sky and brings down drones and planes. That's exactly what it does. It's an EMP pulse that will take down, you know, a drone or a missile or something like that without being a bomb. Like you don't have to like, you don't have to bomb something. You could just disable it. It's just magic. There's a great story by the way. Is David Blaine the CEO?

Because this looks magical. Like when I see like invisible rays. It's such a good pickup line. I'm going to use that next time I'm trying to like talk to a founder. But are you related to David Blaine because this is magical. Is he a cousin? It does look like magic.

So he told the story where he's like, I was like, dude, how do you sell to these like three letter agencies? And he's like, it's very hard. You know, there's like decades long relationships

with the traditional companies. So like, how do you do it? He goes, well, the big thing we always try to do is get to a bakeoff. He's like,

we have to get to a point where they're willing to do a contest of our product versus their product because we can win on product. We have better product engineering, but we don't have better, you know, good old boy relationships here. So we have to get to a bakeoff. He's like, so we did a bakeoff for Epirus. And basically everybody went to this field and they're like, cool, I'll line up. And then you're going to go first and we're going to see how far away

you can, you know, disable this and how effectively you can disable this drone. That was the test. And they lined up and he's like handing out binoculars. And they're like, what was this? He's like, you're going to need these to see how far away we're going to be able to disable this thing. And then they like won the bakeoff, one the contract and all this stuff. So I don't know about this company specifically. I don't know enough. But I would go interview at the top 10 like defense slash weapons companies.

Go talk to all of them and then use your judgment on which of them is the winner. I know in that basket there's definitely one or multiple winners that are that are in this. But I from the outside. Dude, how do you even get that person? So let's say you're Joe Lonsdale, which like I guess that's kind of answers the question because he's a big shot. But if you're not a big shot and you want to get like some, some CIA buyer into a field in Texas to like show up like to wow him. Like who do you even

phone call? You know what I mean? Like who? Well, I think there's a multiple answers to this, but I'll just give you a couple of data points. So the very first thing is that there are bids. There are like RFPs that you can participate in. There are there are like, you know, the government has a process of procurement where they need to be able to go solicit proposals. So you can go look at those. You can go talk to those. The second thing is when we were at his house after we recorded the podcast with Joe, we were walking out and there was like 10 like senators there for lunch. And it's like, oh, this is how you build your network. He's like hosting a lunch for like 10. Did he like bring you out the back door? Like a like a little bit. Well, because

Elon was coming over and he was like, hey, it might be easier for you if you just want to go this way. And we were like, easier for you or easier for me? Like maybe for both of us. All right. Good. Fair enough. Because I'm literally in my basketball shorts. Did he hand you 20 bucks? He had you $2 and bought you an Uber. He's like, don't forget your lunchbox and then I like wandered off to a bus. Yeah. Yeah, was there apple juice waiting for you the doorway out?

It's truly how it felt. And by the way, I couldn't have been happier with the arrangement. I did not want to be a fish out of water either. Oh, my God. There's also a great story told on the pot about like how Peter Thiel was telling them like, dude, because when they started Palantir, he was like a couple years out of college. Like it wasn't that old. yet. And he had like a lot of like kind of like the pride in hubris of like a tech kind of like genius type of person. And he is, you know, a genius type of genius level person. But going in and saying you guys are dumb, we're smart is not the answer either to sell to these things. And so they hired this guy Alex Carp, who's still the CEO of Palantir. And one of the reasons why was like this guy was just like very, very good with relationship building, with networking, with being accepted by these buyers. And he recruited like ex government people to be.

like door openers, like warm handshakes to help them get in the room. And I think that that's how they got I want to do an entire podcast next time just on the New York Times article on Alex Carp. Very funny. Very good. Very interesting. Yeah. Very good. All right. I buy into that. To me, working at Epirus or any of these national or these defense businesses, it's sort of like working at a porn company where like you like probably most of the work might be like. You tell your mom you're working video entertainment. Well, yeah. Like most of the work is. like normal like just a normal job it's boring but then like you see the output and it's like fuck like death or destruction or like like pretty like raunchy shit if you're working fair their tool this epper's tool just in this case is like a non-death tool it's disabling

the electric without without bombing anything but yeah yeah i'm definitely some of the other ones are are a lot more like yeah this is war yeah we're like the output of this whether it's right or wrong it's still like a you go to bed every once in a while I imagine with a heavy heart even if you're doing everything right I have another one and I am

you know that what does that call that midwit mean where there's people who are on like the dumb guys are at the far end where they just don't think things or how does it go? You're on one of them let's just put it that way

you're showing that you got one of those sides nailed there's the beginning of the caveman who's just like, you know, build product, talk to customers, right? And then the Jedi is also like, you know, I should just build a good product, talk to customers. And then the guy in the middle is doing like overanalysis, overthinking over everything. But I feel like you did a good job, like, you know, like a mime. You like acted out the beam.

It was great. I am what I am. I took that approach with a couple of these. Dude, have you heard of this company called The Whiz? I've heard of Wiz. I don't know what Wiz does. I looked at it and I was like, I don't understand this enough. Dude, all right. So check this out. So it was, WIS is a cybersecurity company for enterprise company. So, or enterprise customers. So basically, if you have, if you're using like large cloud tools, it, the tool, like, WIS's tool like scans it and be like, all right, you have a potential threat here, here,

and here for cybersecurity issues. It's the fastest company ever to get to a hundred million in annual revenue. It took about 18 months. The guy who started it, now, this is why, where like, that meme comes to play here because he's kind of amazing. I read this article about him a couple years ago and the opening line is, I guess his first name is Asaf, so he's Israeli. And he was like an Israeli defense guy in the military. And it said, don't mistake Asaf's gentleness for someone who's willing to play by the rules. That was the opening line. I was like, okay. What does that even mean? Yeah. It's like a Tinder bio. Jesus. All right. I'm interested. And so basically this guy, He previously had another company that he scaled and sold to Microsoft.

It was also a cybersecurity cloud company. He sold to Microsoft for a billion dollars. He gets through his warm-up company. Yeah, his warm-up company. He's only 38 years old. He gets through his non-competor ever, spends the time at Microsoft. Things go well. And then he starts his next company called Wiz.

So far, they've already raised $2 billion, of which one billion of that came in one round. And the company's only 18 months old, which is absolutely ridiculous. They've done something. I think they're already at $350 million in revenue in just three years, 350 annual recurring revenue in three years. Something like 80% of the Fortune 100 companies are already using the tool. So they've killed it already. Now, here's where things get interesting.

Their last valuation was $12 billion, but there was a rumor that Google was going to buy them for $23 billion. And so there's all these rumors that this was happening. And so he sends an email to the entire company. And let me read you a quote. he goes the first line let me cut to the chase our next milestones are a billion dollars in an arr and an IPO and he explains how they aren't accepting this offer from google because they want to like make it big and be this huge thing and i love this guy i think he is just one of the

coolest like most interesting CEOs out there right now what do you look at what do you think when you look at him well he looks not like what i thought uh actually your first line about like don't let my gentle whatever fool you like I'm here to whatever handcuff here to the bed I don't know what he said but like something like that that's what I heard he's he just looks like a good it looks like a Midwest nice guy when I look at these photos I was really expecting a lot more hardcore looking at a guy which is just for my Google image search dude when you see a guy wearing a t-shirt who sells to like suits or the NSA or whatever like these like big big shots I think that like you are secretly very dangerous

You know what I mean? Let me tell you something here. Okay, so check this out. There's a part of the whiz story that I think is pretty interesting. First of all, interesting pick. I think they have such a high valuation that you're really betting this is like one of the mega cap tech companies to do this. Okay, fair enough. The thing that scares me is anything that grows this fast, you know, what goes up must come down in a way.

This is not as Lindy. It's not as, you know, when something is a slow compounder, you actually trust it more than a explosive but not like doesn't have a long track record dude but that's the goal of this thing is things like at five x in three years that's fast growth five years five years yeah uh yeah true uh true but i guess what i'm saying is like it might be priced in i don't know so let me tell you something that's interesting about this so when i saw this company's growing so fast it's a natural question of well how have you heard about the story about this guy named gilly that's associated with whiz no but i'm in all right so who is gilly i don't even know how you say his last

name Rannan, Rana, something like that, Gilly Rannanan, let's call them. Dude, all these guys, by the way, they're Israeli, like, special force guys. Yeah, so they all... This guy's ex-Israeli military intelligence, yes. He also invented Captcha. He invented Waf, which is web application firewalls.

He did a bunch of other stuff in cybersecurity. He was a partner at Sequoia, very well respected in the cybersecurity world, and he started a VC firm called CyberStarts, and they're the first investor in WIS. Now, check this out. So, let me just read you, this excerpt. The numbers for the VC fund, cyberstats are phenomenal. The fund that specializes

cybersecurity funded by Gill only six years ago, here's how goes. So 22 companies combined value $35 billion. Five of the 22 are unicorn, so a higher hit rate than YC. First and foremost is Wiz, who's breaking all the records. Four of them were sold in the last 12 months, so, you know, like successful exits for a total amount of $1.5 billion. In the last three months, their companies have raised $1.8 billion, blah, blah, blah. His portfolio shows it IRR of more than 100%, which is unusual for even the best performing funds. Not a single company has failed so far in his portfolio,

and it is currently ranked at the top five of all VC funds in the world due to these achievements. Okay, so then you say, well, hold on, what's working? What's actually happening here? And then you say, then there's something called the Gil Rananan model. And basically what he does is he's got this mafia of the chief,

the CISOs. the chief security officers at all these enterprise companies, and they're all in his pocket. They all respect him. They think he's got the Midas Touch. He's done so much in the space. He builds a relationship with them. But then he makes them essentially partners,

I think like carry partners in his fund. And so what he does is he basically has like a bribery network is why my understanding of this. This is not what they called it. Dude, this is what was published. Corruption's awesome. It's causing.

So it is referred to as the Gill run and on a model. It is causing more, I got to stop saying this guy's last name because I'm probably butchering it. Caused more discomfort amongst Israeli competitors and portfolio companies, which are all jealous for obvious reasons. It has reached the U.S. where company executives who are purchasing cybersecurity systems are as committed to Gilly as they are to their own company. And basically what he does is he goes to them and he winds and dines them with dinners and

conferences. But according to several sources, he promises teams of fresh graduates from tech units, not only investment support in the startup, but initial revenues of $2 million a year. This is usually their first year of revenue, which is intended to boost them above their competitors and help them get the next round of funding. And the way he does that is by using his network of loyal CSOs. And so the first sales come from the loyal CSOs who work with the fund. It might be considered small money, but the jumps in the, the jumps in fundraising for cybersecurity

is difficult. If you can get to that $2 to $10 million range, you've like, you have escaped velocity to get to the next round of funding and all that. He creates a mechanism that is difficult to compete with because the companies immediately jumped to a valuation of 100 to 200 million, raise more money and have more resources to compete later. The seemingly small purchase of $100,000 by the CSO will increase the startup's value dozens of times. This is known as the Gilly model. And I think what he says, there's something here about like the kickback that they get. So there's some, here's what he emailed them. It is difficult to predict the performance of the fund.

But according to our forecast, the points you have accumulated in the fund so far are valued at X dollars. You can expect additional allocations in the coming years and in the new funds we'll raise later. So it's kind of a, you scratch my back, I'll scratch yours model. I pick winners. I just thought this guy was awesome because he wrote cool emails and he's got a dope smile. Turns out, you know, there's a good reason. A wolf backing him, yeah. Well, a lot of them are from, I think it's called Unit 8200, something like that. It's like the NSA of Israel. And so if you look at like some of the largest security companies, So it's like, I don't want to talk totally out of turn here.

But I think it's like Pal Alto networks and all these like multi-billion dollar companies. They all came from that unit. And so it turns out with this guy, it's more of a, they're, they're definitely working together. But I thought they were just working together because they were all from like the same crew. You know, it's like they all went to high school together. Turns out, there's like a blood oath. Neither you nor I know jackshade about this, but it sounds like a movie and we're pretty fascinated. I think that's what's happening here.

It sounds like some ocean's living ship. A big dummy like me came to the great conclusion as this fucking smart dude. All right, what do you got? All right. My next one is a quick one, NeuroLink. So NeuroLink is currently valued at $5 billion. He's got like pretty much no revenue. Here's the case.

Elon. They put a chip in a guy's head and he's like playing video games on a Twitch stream now. It's pretty crazy. the first patient, they have a huge technical milestone. Was he paralyzed or he had MS? Yeah, he's a quadriplegic. So I think he can't move his arms or his legs, I believe. And now with his brain, he's this playing chess.

And he basically can use a computer with his brain now, just by thinking. Okay. And he's like, wow, my life just got so much better. This is amazing. And they successfully implanted the chip in the guy's brain, and he can now use computers. It is incredible. I cannot believe more people are not talking about this. I'm going to do a whole deep dive on Neurlink just because I think that

I'm blown away by the videos I've seen and the nerdy rabbit holes I've been down for it. To me, this is a question of when, not if, meaning the next platform shift is probably glasses, but the one after that or the big one is just put the computer in the brain. That will happen. It's just maybe it's 10 years, maybe it's 100 years. I have no idea. The other pool case is, look, even if this doesn't 5X in five years, you're going to be helping a lot of people out because all their initial customers are people who are, you know,

severely disabled can't see and they're going to make them see. They can't hear. They're going to make them here. They're going to make them be able to use computers. It's really incredible. So I think they're doing incredible work and that you're probably working with really smart people on a mission that matters. And you're probably going to make a lot of money doing it. The bear case, of course, revenue. Question mark, question mark. They have like one customer right now. So like it's going to take time, long path to success. They're kind of at the, they made the first Tesla roadster. That's where they're at in the Tesla journey. right now. Dude, but you're missing the whole point of this list, which is like, how do you, like,

not, like, stress out all the time and, like, things like that and have a good job. All these companies need the, they need the personality hire. They need the guy who's bringing smoothies to the office. They need the guy who's a good time to be around. They need the guys willing to do the dirty work and go clean up the files and go organize things. Do you think that Elon has a personality hired? Yeah, I think he does, dude. I think he's got, like, literally like meme lords that work for him. I think he's definitely got personal. I don't know, man.

I agree with you on so many things. I know some dummies that work at Tesla. Let me put it that way. I have some like, who's this guy? My cousin works at Tesla that you meet the cousin. It's like, does he work like in the tire shop?

Like, who's this guy? Yeah, I feel that. But Neurilink's not that. How many employees do you think they have? I have no idea. I would guess like probably like 100 is my guess or somewhere like in plus or minus 50. I have no clue. small to hide.

You're assuming, I didn't say Sarah's list is the chill life. It's not the vested rest and vest life. I think maybe we have a misunderstanding there. Maybe Sarah wasn't doing as much work as I thought. No, it's like a 40-hour work week. I don't know if Neurrelink is a 40-hour work week. If it is, then I'm on board.

Okay, fair enough, fair enough. All right, I'll do, I've got two more maybe. All right, you had Open AI. Now, I want to vote with my attention a little bit. use Open AI every day, but you know what else I use a ton is perplexity. Do you use that? Me too. Yeah, I use perplexity as well. Now, how do I explain the difference between the two? I think perplexity is when you need the answer to be right. Yeah. Chat GPT is when you have a variety of random things and when you want to brainstorm. It's not as important. Yeah. If I'm doing

research for this pod and I need to say a number that's not going to be wrong, perplexity is a better bet than chat GPT. So perplexity, I think their latest valuation was $3 billion. They raised $415 million. So it's already like very big. But I think the market's huge. I also think when I find like interesting stories about the founders and I love it. So what's the CEO of perplexity? I know how you spell it. Arvin, I think is his name. Arvin. All right. So there's a funny story about Arvin. He grew up in the same area as the Google CEO. And he grew up vegetarian and his mom wouldn't let him eat eggs, the perplexity CEO. And he like grew up and like, no, you can't have eggs.

And he's like, I need more protein. She's like, you can't have eggs. So he sees a YouTube video of Sundar from Google saying, yeah, I introduce eggs to my diet in order to like get more protein. And then the mother's like, okay, you may have eggs. And so the fact that, and he goes on. He's not where I thought you were going with the story. That's why?

Dude, listen, he goes on to like have this story where like they're like, dude, Sundar and my household was like God, where it was like, well, if he, does this and you must do this. So imagine being raised in such a toxic environment where you are either him or you are a failure. And so far he's doing pretty good. So like that's again, that's like Sam being a dummy and voting on a company just because the founder of matching.

The founder is trying to like prove his mother, you know, make his mother proud. That's a strong, that's a strong motivation. No, but I do think the company is going. to get significantly larger. This is like the episode of like Always Sunny where Charlie's trying to date and they're like, Charlie, what about her? She's great. She's got a good job.

She's nice. He's like, she doesn't like milk. It's like, what? Charlie's like, no, she's lack of us and tolerated. It's like, what is your criteria, Charlie? What are you doing here? Is this a ridiculous pick or what? No, I think a lot of people would say perplexity.

So I don't think your, your logic, I think is ridiculous. I think you're somehow landing at the same conclusions as the genius is. But the way you get there is unique, I would say. No, I picked it because I use it. I've, like, in terms of getting, in terms of valuation right now, three, three billion bucks. So a lot, but, I mean, I don't know. It's like a fast-growing space. Well, perplexity also seems like a company that could get bought.

So, like, you know, OpenAI, chat GPT is like aligned with Microsoft. And Google's trying to do Gemini and all this stuff. If Proplexity keeps executing, you know, it's the way that Facebook bought WhatsApp for $20 billion, right? Like at a certain point, if you are a better version of their core product of one of these large companies, Google being the kind of the main one, you know, you're a very good acquisition target. Even if your standalone business may or may not reach there, I have no idea, but like it gives you multiple outs. The downside is like it seems like no tech company could do big M&A anymore. So maybe that path is not as realistic. But I don't think it's a bad pick.

I think Poplexy is an interesting pick. Do you want to do your other one? And then I have one last one. Well, my last one is Trava. Have you heard about Trava? I've heard a lot about Trava because there's like a Trava. There's like a Trava PR mafia that's out there. I am not.

All right. So let me start with, I'm not part of that mafia because I do not want to work there. I think it sounds miserable. But there's a bunch of freaks who do want to work there. And if you are one of these freaks, This is a place to let your freak flag fly. I'm not a fan of it.

Can you explain that? So I think it's kind of like, here's a simple explanation of the culture. Most tech companies are like, we value diversity and balance, and we want, you know, well-rounded people. And Trouble's like, yo, we're doing China in America. They're like, yeah, we're working like the Chinese over here. Like, we're doing the 996 model. We're here to create a trillion-dollar company.

We are going to just like compete ruthlessly to get there. and that's pretty awesome. Let me explain what it is. And then I have some of their, I have a little bit from their deck on when they onboard employees. But basically, Traba is software. I guess, would you, it's not just software. You wouldn't categorize as just software.

It's a little bit of everything. But it's software and a way to get part-time or fast workers when you are a manufacturer or a big company like that. Staffing. Industrial staffing. Yeah. So it's software plus like actually getting the people to show up. to if you're a big factory, if you're something where you need, you know, 100 new employees

or something like in a week to do X, Y, and Z, they make it really easy to find and get those people to actually show up on time. I think they're Trauma.com, their website, I think that's their tagline, which is get workers to show up on time tomorrow or something like that. Trava.com. Yeah. Trava.com. Sorry. Now, here's the part where they're kind of interesting. So founders fund, who I do respect, they're like, this is probably our highest potential startup. they've said that these crazy stories, like they've showed up at the office at 10 p.m. And what we've noticed is like the office is still buzzing with people. And it feels like the golden days of PayPal. And they have these values. These values are dream big, have an Olympian's

work ethic, which is inspired by China's 996 mentality, which I'll talk about, have a growth mindset and be customer obsessed. And so basically they say, dream big. We want you to be the number 1% in terms of ambition plus the number 1% of attitude, which is going to allow us to get It's the number one percent outcome. We want you to have an Olympians work ethic. And they basically, I think they explicitly said this on their website. We have a 9-96 culture, which means working 9 a.m. to 9 p.m. six days a week. And there's like these interviews with these employees that are like, I really wanted that type of work culture.

And I googled where can I find that? And you guys had it on your website. And so that's why I decided to apply and work there. And so they're pretty fucking insane. Suckerborn every day. It's like I googled where I could work the most hours. and I found you guys. Yeah, they're pretty insane.

I think they only have like 150 employees. I think the valuation is something like $150 million, I think. No, no, it's got to be higher than that. I don't, I only saw a handful of numbers on their valuation. Is it higher than that? Maybe I'm wrong. Maybe it is. The valuation isn't public.

I think I was trying to like triangulate a bunch of old articles. And I don't know if there's a current one out there. so I can't say exactly what it is. Yeah, all I'm seeing is the founder's fund $22 million around, which, yeah, that would probably be more like what you're talking about. So it could be worth more. I don't have the information. I just am doing a bunch of guesswork out of just articles that were live.

But people say that it's growing like 5X per year, which is like huge. And a lot of smart people who, even though I think they're douchebags like Keith Ravoy, they're behind the company and they're definitely smart. Yeah. Okay. All right. I like the pick here. I didn't realize their valuation was what it is.

Looks like it's around 200 million. Yeah, I think this is a bet on people, right? So I think the people behind this company are pretty remarkable. They do seem like the Olympians of founders. Now, the market opportunity is difficult here because there's a lot of companies that get valued as tech companies that are actually something else. We work was valued as a tech company, but it's actually a real estate company. There's e-commerce companies where they're, you know, DTC companies where they were valued like they were tech startups, but they were actually, you know, selling suitcases and shoes and things like that.

And eventually those corrections do come. And so I think the question here is like, is this a tech, is it a tech company or is it a staffing company that uses tech and started by tech people? And, you know, I'm not in the weeds enough to know, but I do know what you said, which is that they seem to have a very unique culture. It seems like very smart people are very bullish on them. And it seems like the founders are in that elite, elite level of both ambition and, um, drive. And those are good things to bet on in general. But you did definitely just hypocritically tell me that like two of my picks were too hard to work at. And then you picked like literally the one that's like, yo, our thing is that we're the hardest to work at. Yeah. All right.

Moving on. All right. What do you have? All right. My top pick, my finale. I don't want a drum role because it's going to seem anti-clamatic because it's the same company I picked last time that is not that was not a winner in the last one meaning it didn't five X in the last one it's it's replet oh man I think I am more bullish on replet than any uh any tech company right now are you so bullish on it that if you could bet all of the money that you have into that company you would do it no I'm not foolish but I would I did invest in the company and I then on top of my fund investment I wrote a personal check on top of that which probably the only only only one I've done that with. So, you know, my actions do line up with this, but I wouldn't bet

all of my money on this because I don't need to do that. So here's, here's my case. So three years ago when we did this episode, Replit was at about a one billion dollar evaluation. It had five million developers. At the time, it really had no like AI story or tailwind. And revenue was small to non-existent. What was it then? They don't announce. They don't say. But it's because it wasn't a priority and it wasn't meaningful. So now everything has changed except for the price. So the 5 million developers has become 20 million developers. No AI tailwind has become a huge AI tailwind.

And small revenue has become scaling revenue. He, Amjad came out and said, 2024 is basically like has been our commercial year. Like revenue is scaling rapidly. Dude, what's it do? Okay. So what does, by the way, here's the, do you know the replica story? It's kind of amazing to be honest.

So the rep, but story is, I'm John grew up in Jordan, which is a place I've never been. And it's sort of this like, you know, the world is very large. And there's people, there's talent everywhere, but the opportunity is not as evenly distributed. And so he used to code, he used to love programming, but he didn't have his own computer at first. And so he would go to internet cafes, basically borrow a computer and he would code, he'd learn to code. But the problem with that was that every time you go to an internet cafe, you're going to a different computer. And you're not, like, none of your stuff is saved.

from last time. And if you ever learned to code, like, one of the first things you do is you first have to, like, set up your environment. And so you need like your IDE. You need to install all the packages for the language that you're going to be using. If it's Python, you need to install those files on your computer for it to work. And you need to save those somewhere. You need to host it somewhere. There's all these things that go into coding. And so he had this unique problem, which was he wanted to code. And he was so disenfranchised where he didn't have his own computer that he was doing at internet cafes for a while. And then even after that, you know, he worked at Yahoo briefly, like once he you know, kind of graduated.

And he was still just sort of always annoyed with this like, this like friction that it takes to get set up. And so he as a side project created this thing that was, it was called something else, Repel something at the time. And Repel is this like programming term. But basically what he wanted to do was he's like, can I make a cloud,

cloud based programming environment? Basically like my environment, but instead of it being local to my computer, have it be in the cloud. It's because he saw Google Docs. He's like, oh my God. Google Docs is amazing. This is, instead of having to have Microsoft Office,

have this software in my computer, have the file on my computer, I can just go to any computer anywhere, go to a dock. The whole editor is built into the website, which is amazing. I didn't even realize websites could do this. And wow, multiple people can edit the same Google Doc

at the same time. This is incredible. Can I do that for coding? So that's where he started. And so he built it as a side project for many years. So he worked at Yahoo as a side project. then he worked at Facebook and it was a side project. He worked with the guy at Facebook on the team that the infrastructure team and the guy who created React,

which is like now like the huge programming framework React. And somewhere along the way like Replit basically starts to get a little bit momentum. It's like 100,000 users as his like side project. And he worked at Code Academy and Code Academy was teaching people to code online. And they discovered his project. They're like, dude, some random guy from Jordan created a programming thing that like all our customers who are coming to learn at Code Academy, they could just code in the browser. They don't need to have like their own thing. And so it's a side project for many years. And he

wants to make it a main project. He's not taken very seriously. He can't raise any money for it. And he applies to YC three times. It gets rejected three times. And after getting rejected the third time, he's pretty discouraged. He's like, all right, man, whatever, FYC. Who cares? And but the thing was that developers really thought this was cool because it was like kind of a technical achievement to do this. To do this, he had to like write his own compile. and write his own shit that like would work in the browser. It worked with any language. And so there was, for example, a Atlassian created a competitor to this called Glitch.

And Atlassian had like a good track record of like Trello and Jira. Like they built like developer friendly tools. So glitch comes out, huge PR move raises a bunch of money. And they said it's coding in the browser. He's like, oh no, they're doing it. He goes, but they're like, it's all JavaScript because JavaScript is everything. He's like, well, I made this choice, this technical choice to support any language. And these guys are saying it's all JavaScript.

And initially they got this huge boost. But he started to notice that like this little language Python started to get really popular on Replit. And he's like, I think they're missing the boat. I think Python is the thing. And Python became the language of choice for machine learning. It became the language of choice for back-in development. It became the language of choice for a bunch of like big waves. And he was the only one that could support Python.

So glitch ends up dying that Lassian company ends up failing on. in it, he just keeps chugging along. And so along the way, he had this like kind of indie support. So it was used by a lot of students, a lot of teachers, a lot of coding boot camps. But that was kind of looked at like a toy. Like, oh, that's cute. But those are just like beginners who have no money, who whatever. Yeah, I'm reading about him on Hacker News.

Like he was controversial there, but a lot of people loved him. Some people disliked him. So early on, he was really loved on Hacker News. Not him, but like Replit was really loved because it was like kind of cool that you could do this. And it actually worked really well because he's, he's a great programmer. And one person who was reading Hacker News really liked it. And that person was Paul Graham.

Now, Paul Graham had retired from YC. He was living in the UK in this mansion. And he's not a part of YC anymore. And I'm John got rejected from YC three times. But Paul Graham was like, dude, I think this is awesome. And he tells Sam Altman, who's running YC at the time, he's like, you got to talk to this company Replit. So he goes to meet Sam at the time was a hybrid office of OpenAI and Neurrelink.

before opening I was a big deal. Back when opening I was just a research nonprofit. And he meets Sam and Sam's like, hey, I don't know anything about you, but Paul really likes your thing. And he wants me to check this out. And you know what? You should just talk to Paul.

He told me, but I'm not the guy for this. You should talk to all. Here's his email. So Amjad ends up trading emails, like long emails. He said, like, I should turn this to a book someday of like,

my email's back and forth with Paul. Like the philosophical foundation of Replit, which was like, what if you could enable, like 10 times more programmers in the world because this whole thing was out opportunity. So how do you make a programmer who doesn't even have their own computer, who doesn't know how to start, who doesn't know how to get everything installed in their environment and all this stuff?

How do you decrease all the friction? And eventually, even in his initial plan was like, we'll have AI that will help you code. It'll be your programming assistant. This was back before AI was a thing. It was like 2014, right? Like people weren't even talking about AI back then. And it's in his original slide deck. I have a slide here for you.

Let me show you. This was his master plan. a seed deck. We're going to grow by building tools signing up teachers and students. We're going to build a simple network and an AI-assisted interface that blurs the distinction between learning and building. And eventually we'll become a platform where people come to learn how to code, code, explore, and host their code. This is exactly what they've done. It's like the Tesla master plan 10 years later. This is his master plan. 10 years later, they've done exactly this. The company's 10 years old now? More than 10 years old, basically. I think he started this stuff

like before 2014. And so it was again, it was a side project for a long time. Only became like a full-time project and there's like he shared the email like hey got rejected again from yc um and he's emailing christina who was his first investor christina is the founder of vanta another company i was going to put on this list she wrote the first check into replet um as a scout and vanta is a company that you know in five years has reached 100 million dollars she went through yc but the way she did it was she just yolode it she just like moved to a city and he he writes this email to christina he's like got rejected again hard to raise money right now i might just yolo just move move somewhere low cost and just start building this thing.

That's that and then maybe what I'll do. And so look at this chart now. So this is Replit developers year over year. It's literally like a perfect hockey stick. And Paul Graham posted this and he's like, the crazy thing about this is that this is an impressive chart for any company, let alone a company where the users are developers, meaning all of these developers are going to build things that has their own user base.

That is crazy. And so this is the growth. So back when we did this in 2021, we were here. And now we're here. How many developers are there? So GitHub has about 100 million users. Wow. Wow, wow, wow, wow.

By the way, GitHub, some crazy stats on my research of GitHub. GitHub is used by 90% of the Fortune 500. It probably has like the most enterprise penetration of anything besides Microsoft office. Like Salesforce is 80%. GitHub is 90%, which is pretty insane. What did they get sold for? So GitHub sold back in 2018 for $7.5 billion.

And at the time, they were doing about $250 to $300 million in revenue. GitHub now does about a $2 billion run rate. And by the way, the fastest growing feature, the thing that makes up 40% of the growth of GitHub's revenue growth, is co-pilot, is the AI-assisted coder that now does, you know, a few hundred million a year in revenue already after, you know, just a couple of years, profitably. And so that is the most successful, you know, AI implementation in any, in any company so far is GitHub's copilot. And why do people, 400, 400 million of your product? Why do people dislike this guy? Is he aggressive? Well, he said something, which is just like, you know, hacker news is, you know, when you're the underdog, they love you. And then as soon as they hear your big funding round, they go and they just say how terrible you are.

There's all, there's, you know, whatever. There's people I've ever, I actually included, this is part of my bull case. is they got the kiss of death. Yeah. So it says they raise this money. And then here comes this guy, B. Feynman, who says, this is another company I felt skin implode.

They don't do anything that's interesting, let alone proprietary. The CEO is an ass and everybody knows it. He acts as if a browser, a browser repel is going to change the world. I have no idea how their valuation is so lofty, but the core technology is so easily duplicated. Yeah, go ahead.

Go ahead. Go try it. Since the heavy listing, the lifting they used to do has become obsolete. So, classic, you know, go read the launch of Dropbox. and Airbnb and other companies like this. This is like, you know, there's always one of these comments at the top of their, their post that you want to frame.

So check this out. This is the AI growth. So the thing of the criticism of Replit would have been great. You're getting a bunch of developers, but they're all young. And how are you going to make money off of students and teachers? And I think the, the misunderstood part of this, right? Because if you want to find something at a low valuation, it's not that, low valuation is just another way of saying misunderstood and misprice.

So what it would be misunderstood here? What would you need to believe? The thing you need to believe is that this is a leapfrog technology. So like, I don't know if you've ever seen those graphs of like in Africa. It's like landlines, like landline adoption of phones in your home was like really, really low. Or bank accounts was really, really low. It was like, you know, some 10% of the population had bank accounts and landline phones. But then, and so you would think, oh, if this is linear, you start with the landline phone, then you get a cell phone.

or you start with the bank account, then you start getting mobile pay like Venmo or whatever. Actually, those are easier to adopt because they're on your phone, they're quicker, they're lighter way. And so cell phones and mobile payments became this like huge adoption.

And Africa actually has a higher rate of mobile payments than America. It has a higher rate of cell phone adoption than America did at the time because it was a leapfrog technology. It was easier to adopt the smaller thing, the newer thing than it was to adopt the old thing. And so one of the things that Hamjan said, I really like, he goes, you know, people will, all the criticism of Replit is great. Beginner,

people use Replit because they learn how to code and it's just really easy to get started. And the criticism is that like, you're not going to get like big developers to switch, you know, you know, 20 year vets to switch to Replit. And he goes, the better question is, if I have 20 million, you know, sort of earlier on in their coding career coders right now, and this is a place where they can get started with no friction, build, in any language that they want. They have AI co-pilot built in. They can host it.

They don't need to know how to set up their servers. And there's a community of other people that they can borrow code from and share from and answer questions with. Why would they ever switch? Like you're saying people will never switch from that to this. These people will never switch back to, oh, actually, go make your life harder.

What did you? What valuation did you invest in? I think like 900 million. How'd you meet them? I've never met him in person. This is a company I kind of admire. I used it and I went, you know, just looked at him and read about it. And it just immediately was, it ticked my boxes.

So by the way, this is kind of interesting. So JetBrains, which is another one of these, like the probably the most popular coding environment for Java developers. It's a bootstrapped company that does 270 million in revenue, 100 million in profit, 134 million a year in free cash flow with six million users, zero dollars raised since it started in the year 2000. And so, like, I think, you know, when you look at what is Replitt's revenue potential, I think it's a lot bigger than this, because this has multiple things.

So what do you think they're worth right now? What is Replit worth? What do you think they're worth today? Well, their last valuation was $1.1 billion. I know, but what do you think is like, if they were to raise again, it would be at what valuation? You couldn't buy my stock. You'd have to pay, you'd have to pay like a $50 billion valuation to take my stock right now. Like, I would rather just hold the stock and see where it goes.

Why? Because you're looking ultimately in tech investing for giant winners. I think a VC once he told me, he's like, everyone's talking about unicorns, I want Godzilla. And he's like, basically a Godzilla company is that, you know, a company that becomes worth 50 to 100 billion plus. And he's like, those are the ones that make your career. And so I was like, cool, cool branding. But what do those companies have? Network effects.

This is a network effect business where it's a network of developers. It's growing like a staff infection at spring break, so it's growing really fast. Since the last time we did this, Sarah's list, it's grown 4X in terms of the number of developers who have signed up with. You should call the founder, but like,

looks like you got a real ring rim on your hands. Congrats, dude. Exactly. I think it's misprice and misunderstood. I think it gets discounted for being just something for beginner coders when I think actually it's like a Snapchat or whatever. It's a product where that's the generation you want is the people who are going to be using this.

thing for the next, you know, 20, 30 years. It's writing a huge tech wave in that, like, it is perfectly positioned to ride the AI wave because AI programming is a thing. Yesterday, Sergey Brand was at the all-in conference, and he's like, yeah, I code with AI. Like, he's like, yeah, I got back into coding. I use AI. Basically, I just kind of tell the AI what to do.

It's like, dude, the founder of Google is like, yeah, I wanted to build this thing, but I just, it's easier, actually, just for me to just tell AI to do it. It kind of wrote all the code for me. It was awesome. He's like, then I showed it to my team. at the like Google like AI thing. He's like he's like I told them I said more of you need to be using this. He's talking to like the top programmers in Google, which is kind of amazing.

Dude, this is awesome. I think you got to ask this guy out for prom. I think I just did. I think you just did. Is this like you asking Taylor Swift? You know, like someone. This is, um, you've convinced me. What's the downside?

I mean, what is the downside? I mean, you had that for every company. that they're not going to be able to make as much revenue as you think that people will graduate off of Replit and decide that are they remote are they remote company no actually another another sam bull signal they're not remote and not only that they move from sff to foster city to like build their own cult there and he's like why wouldn't we why wouldn't we move 40 40 minutes out and just make be like the kings of this little area and have like the best the best environment without the problems of san francisco but still being in still been close enough to the talent density I think that you used all this great logic and all these silly arguments and all these numbers and facts and data. You should have just told me that he wanted to build a commune in Foster City. I would have been on board. I do. Any deadlifts?

You like that? I know you like that. Does he really deadlift? Yeah. He's a power lifter. Yeah. I mean, power lifter, power gains. Like, it makes sense.

I think my simpleton strategy can almost be as effective as yours. If you look at our last I think our lives would say yes, it does. Right? There's no knock on that. I strive to be more like you. I think you have it right.

No, I'm only teasing. Part of me is being simpleton just because I literally don't understand that. When you're explaining that to me, I'm like, I have to learn what all this means as we go. Yeah.

It's fucking complicated. They ever tell you the story about my dad. Dude, these guys are geniuses, by the way. These guys are geniuses to like and be able to invent things like this. I just think I just like, I'm like, we're not the same. Well, I wrote two words that I would almost never write in a side deck. I wrote mission driven and visionary for replica. And those are so cringe. You're not even really allowed to say those unless it's an exception, which is this dude

from Jordan who was like, God, I really want to increase access to for kids like me, built us as a side project when there was no money on the line. There was nothing for years. Just kept, kept tinkering way building it, building it, building it, building it. In his master plan from 10 years ago in the seed deck was talking about how he's going to have an AI assistant in your coding terminal that's going to help you write the code and did exactly what he wrote, you know, 10 plus years ago, that is mission driven and that is visionary to me. Well, mission driven, being into mission driven and visionary stuff, that's only cringe when it's not

true. When it's true, it's awesome. Well, it's because it gets abused, right? It gets used and abused by everybody. There's no, like, there's no, there's no earning that badge, right? You just get to use it if you want, which bastardize it. But, like, you know, you look at something like Neurilink or whatever. And you got to give credit to these people.

Like, you know, when there's videos of Elon talking like, you know, decades ago about the four or five, like, most important things to do. And he's like, you know, the advent of the internet, you know, creating clean, you know, sustainable energy future, creating artificial general intelligence safely. He literally was saying these things for so long. But you don't need to be mission driven and a visionary on world changing things to be intoxicating. That makes it awesome. But if I meet someone who's into something relatively trivial and they're passionate about it,

I still get like turned on. You know what I mean? Dude, the great episode. It's like this guy, his rockets to Mars is like the two-hour cocktail party, right? It is helping people tooth their harmonica and have a good time for two hours and much strangers make some friends.

And he is more into that than anybody I know than probably anybody that there is. He wrote a book about the thing for God's sake. And then on top of it, even though I literally don't want to do that. Like I would hate if I had to host one of those things. I love being around Nick because that energy is so, like you said, intoxicating.

It's the perfect word for it. Yeah, when I am. And so when I see a guy like this replica thing, I'm like, I don't really care about any of that stuff, but I care that you call you. shot and I'm into it. During COVID, when we all had to work from home, I got to hear Brian Chesky give these like monthly or weekly meetings. And he was like in his bedroom and he looked horrible. He looked like shit. Because like his business was like on top of the world and that it's like,

I don't know if we're going to be in business. And I have like 3,000 employees and like travel is literally the worst thing on earth. Like Airbnb is paused. And I remember seeing his talks. And I thought like, dude, I will, I want to fight for this guy. Like if I was on his team, he has got me bought in. And that, and so my point being is that mission driven and visionary attitude, that is actually really important when it comes to a value, how valuable a startup can get. I think it is if you're making your bet, which is what we talked about, basically taking your time of your talents and betting on one company, a super concentrated portfolio where you're going to, and you basically are getting a,

hundred to $200,000 bet that you get to make on a company when you take a job at one of these tech companies. You might as well bet on the most talented, most driven, mission oriented, sees the future more than anybody else type of founder because there are decisions that are going to trickle down. I remember I made a Ethereum and, well, Ethereum is probably one of the best investments I ever made and I made it more on the same criteria. I was like, this gangly ultra nerd who's saying words that I barely understand. The Spander's got the thinnest neck I've ever seen. I'm in.

And everything I read about the guy, I was like, so at like 16, he's like, or whatever, 18, he's writing articles for Bitcoin magazine because he was so enthusiastic about it. And he was getting paid for Bitcoin, which at the time was like $12 per article. And that's kind of like how he, you know, he is, he's truly like of this. He didn't come when it was time to get rich. He was there before. And then I remember when Ethereum hit an all time high. and everybody on Twitter was basically like Lambos and yachts and they're like pumping their bags. He posted a Twitter thread that was like, hey, this is great.

But like how many of the unbanked have we banked? How many people have we actually helped? How much of the mission are we actually doing? Like, yeah, the price went up, but who gives a shit? And that is, you know, the best founders do that. When morale is low, like the Brian Chesky example, they give you that confidence. They never let you get that low. They like bring you up.

and when hype is high, they bring you back down to reality of like, what are we here to do? And when I saw that, and I was like, this guy is, crypto is full of potential,

but it's full of pumpers. It's full of, you know, people are going to take advantage of this. I at least trusted that the person who was stewarding that project was not, you know,

to use bachelor terms, they were here for the right reasons. Vitalik is here for the right reasons. He was there to actually, you know, like help humanity and build, build a free economic system. To use what terms?

The Bachelor. You don't know that. Every contestant. I play sports. I don't watch Bachelor. You're like, I have triceps and biceps. My T levels are over 300. I can tell you the difference between a barbell or a dumbbell bench press

and why each is good. You can tell me all about the Golden Bachelor. Just I can. You're absolutely right. priorities. All right, that's the pod. That was good. Thank you, Sean. Thank you, Ari. Thank you to everyone listening. I feel like I can rule the world. I know I could be what I want to. I put my all in it like no days off. On a road, let's travel, never looking back.