My First Million - #113 - From Furniture Store to Water Delivery: The Millions in Boring Businesses

Episode Date: September 23, 2020

(0:46) The guys break down Frank Slootman (Snowflake founder’s) Linkedin post, (7:45) Sam brings up Rocket Internet, a German company that clones mainstream startups in smaller geographic markets. They scale quickly and are formulaic, (8:30) Sam is fascinated by Danny Meyer, founder of Shake Shack among other places, (10:05) Shaan shares his story about the Melman’s and their empire, Lettuce Entertain You, (13:38) The guys discuss Hamdi Ulukaya the founder of Chobani, (17:50) The guy’s talk blue collar businesses, including Waste Management and its founder Wayne Huizenga, (19:30) The story of Rose Blumkin, founder of Nebraska Furniture Mart, (21:11) Shaan talks about his water problem and subscription water companies like ReadyRefresh and Culligan, (27:40) The Uber for evictions: Civvl, (31:26) The student debt market explained, (34:42) B2B vs consumer businesses Check out this week's sponsor: Ourcrowd. They make it easy to invest in early startups. Go to ourcrowd.com/thehustle to get started. Have you joined our private Facebook group yet? Go to https://www.facebook.com/groups/ourfirstmillion and join thousands of other entrepreneurs and founders scheming up ideas.  See acast.com/privacy for privacy and opt-out information.

Uh-huh. Yeah. 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 on. On a road, let's travel, never looking back. Oh, yeah. Sam Barr.

What's going on? You know, it's another day, another, I don't know, what's the phrase? Another day, another dollar or something like that? That sounds weird. I just meant, it's another day. That's kind of the end of the phrase for me. I have some stuff I wanted to talk to you about. Did you see there's this blog post, maybe a LinkedIn post by this guy, by the guy Frank

Sluteman, the guy we were talking about the CEO of Snowflake. Did you read this blog post? I saw you link to it and I hadn't read it yet. What's the summary? It's amazing. So this guy, Frank Slutman, who's the CEO of Snowflake now, but he was the CEO of Service now, which is a public enterprise company and data domain, which is another one. he put this thing on LinkedIn, which, you know, LinkedIn content, not usually the best.

But he just wrote like kind of his philosophy on building a company and building it. Like he's like, he was basically like, look, a lot of people ask, okay, what did we get right? What do we do differently? Is there some silver bullet? He's like, no, not really. He's like, but he's like, I think in most organizations, there's basically like slack in the rope. And he's like, if we did anything, it was that we took all. all the slack out.

And he calls that amping it up. He's like, I just think you can amp up the pace and intensity in the company. And here's how we did it. Here's how we thought about it. Wow, this is long. I loved this blog post.

It was like, by the end of it, I was like, all right, I want to work 10 times as hard. And I'm in on this guy. You know, I'm all in on this guy. So I really liked it. If you didn't read it, you know,

hard to talk too much about it. But a couple of the things that he talked about, which I think were good was, I guess there was a couple of things that were, were obvious, but he said it in a good way. And then there's some things that he said that most people don't say.

Like, for example, he talks about diversity and inclusion. And let me... He says, well, he previously, he goes, he said something like, if you're on our ship, you're included. He has a few more great lines. It says, organizations are not getting killed by C players. Everyone knows who they are. And the performance is eventually addressed.

The people who kill organizations are your B players. It's a scourge of the enterprise because there are many and they are generally accepted. Often they're seeing not as bad enough to fire but not good enough to keep. They are the ultimate passengers.

Yes, exactly. And he was basically just like, a passenger is deadweight along for the ride and we shed that dead weight. He talks about like for A players, he talks about how they like they compensated the whole service now exact team on one metric.

And it was the pure like kind of the performance metric of a cloud software company. like the board fought me on this. They were convinced that a grown-up company had to have a balanced scorecard. He's like, and this is arguably the worst idea ever to come out of academia, which was say it again. I didn't quite understand it. Can you say it again?

So I'll give you an- By the way. Look, where I'm sitting, I'm in an Airbnb. Look at the award that is on the Snowflake Award. Nice. It's like some ballet thing. I don't know. It's not like a mock award. Okay, that's great.

So a balanced scorecard would be like, oh, you know, we're not just concerned about revenue. We're also concerned about net promoter score, and we're also concerned about user growth, right? All three things are super important. We have three top-level metrics. And he was basically saying, we had one metric that mattered.

Everybody got compensated on that. Like in most companies, sales team will get compensated on sales. Maybe the safety team will get compensated on it, you know, will assess their performance on a different thing altogether. And you want to have balance between, you know, growth and revenue and, and maybe like customer, you know, satisfaction or whatever.

And so he's like, the board fought me on this. They were convinced a grown-up team had to have a balanced scorecard, which arguably the worst idea to ever come out of academia. People say they want focus, but their actions do not bear it out. Quite the opposite. Focus is hard once you understand what it really means. It means what are you not going to do? And he talks about gender, diversity, and inclusion.

And he says, we ran our companies for attracting and, and retaining talent, regardless of gender, race, or ethnic origin. We valued people on the contribution to the goal, not because they had the preferred skin color, gender, or ethnic background. Either you're completely focused on your goals, or you lend in all kinds of noise that dilutes your limited resources. I have nothing against diversity and inclusion, as long as it results from the goal-oriented mode of execution.

We are not a university or nonprofit. This is business. If you lack focus at the top, it will be even more so at the bottom. I just love this, guys. I don't know, like I actually agree with that point, But even though I didn't agree with all his points, I loved his just straightforward ballziness. And I think this is a post worth reading.

I think it's great. And I agree with that sentiment as well. I think that as a, I still am a young leader, but as a younger leader, I was nervous to say that like, dude, all I care about is revenue growth and profit. Because in Silicon Valley, it's like, well, like, I knew these guys that, um, it was two co-founders and they were like, purposely were trying to hire their first engineer to be a female engineer. And I was like, why? And like, well, we need diversity.

I was like, ugh. And so anyway, like that kind of like stuck, snuck in a little bit to my thinking, not the diversity thing, but the, like, we care about like this and that and this and all these unimportant things. And I'm like, man, I really don't care about this thing, but I'm afraid to say it. Now what I've learned is that a lot of employees actually want you to be like that because they've all, many have worked somewhere where they didn't give a shit about revenue and profit and they get fired or laid off. Do you know what I mean? One thing this guy says in here is basically like if you take a strong point of view on how you're going to run your company, you will attract the people who want to be in a company

run that way. And you will repel people who do not want that in their company. And it will be painful. There will be turnover. But in the end, that's like how you get high performance. And so even at the very last paragraph, he goes, this performance-centric thinking does not trend well with the prevailing attitudes of today. Companies have become more fixated on their employee NPS.

score than their customers. They coddle their people. They get caught up in little things that have nothing to do with their mission. It takes conviction and courage to act like this. As they said, in Braveheart, people don't follow the title. They follow courage. You'll be immensely popular when the good results come in.

That's all people want from you anyway. Is this guy, was he the military? Is he American? I heard him. I've heard him talk and he didn't have an accent, but I thought he said he was like from somewhere. I don't know where he's from. He just looks kind of like a white guy in his 50s.

I don't know. He's Dutch. Yes. He, I then went and I was like, oh, shoot, I'm on the Frank Sloopman train.

Let me go to YouTube and let me see what this guy's all about in his talks. And then his talks were horrible. They were very boring. And he was like, not well-spoken at all. And I was like, oh, okay,

fuck that. I guess, you know, I'll just like this blog post and stuff. I saw some of his talks. They were fine. I saw his stuff when he goes on CNBC, and he was talking about Snowflake.

And he was not, if I had just seen that, I wouldn't be like, oh, this guy's the shit. What an interesting person. So that's what I've been asking myself. Like, I know a couple people like that. You know, my friend Roman is a, he is very intense. And whenever I'm around him, it increases up intensity. I'm like, oh, man, you could push it this, you could push it this hard. And then I love hearing stories about rocket internet.

Do you know who rocket internet is? For anyone who's listening, Google, Rocket Internet, the hustle. It's an article I wrote. Or you just Google Rocket Internet. I'm sure you could find a bunch of stuff. two or three brothers who scale rapidly like they've scaled multiple companies like 300 400 million dollars in sales and literally two years one they cloned eBay and sold it back to eBay in 90 days for 50 million so just in crazy intense and it is nice to I think

be around that but I don't want to be like that forever like I think even Sleutman was like I took off I think he said I took all I goes I have to take off two years after each one yeah and uh I can see that. You got to chill, but I do like him. I'm a big fan of him. Speaking, all right, since we're talking about people, let's talk about Danny Meyer. Do you know who Danny Meyer is? Shake Jack, right?

Yeah. So I like him because he's from St. Louis, but I'm quite fascinated with like brick and mortar companies. Like, I'm a little bored right now of digital because I don't know why. I just am. And he started a restaurant when he was 29. holiday now. So he was 27, 28. So that must have been 30 years ago. Or yeah. Anyway, he started this thing called Union. It's popular in New York. So all the New York people are going to laugh at me. If I don't know it, it's, is it called Union Square hospitality group, I believe? And they worked up to

have a chain of restaurants and then cater other place. Nothing interesting. Well, no, I mean, it's kind of sexy. Hospitality is kind of sexy. Catering's not, but owning restaurants is. then part laid that to Shake Shack and just a super fascinating, fascinating guy. Because he has like an empire. Union Square, what's it called, hospitality group? That does like 300 million. I mean, it's like multi-100 million dollars in sales. Then he has Shake Shack, which is $3 billion market cap.

I just love these people who just have a lot of hits. They're fascinating to me. Have you heard of the Melmans? No. the Melmans are like Danny Meyer for Chicago. They have this group called Let Us Entertain You. And so like lettuce like the food. And these guys create,

they're unique because, A, if you go to Chicago, everybody knows the Melmonds. It's just like family business, the brothers or whatever. And Let Us Entertain you, they have a bunch of different restaurants, all totally unique brands.

So only kind of like foodies know, oh, this is one of the new Lettuce Entertainment joints. But they'll do like a bar, cocktail lounge. And then they'll do like a tiny quick service, you know, Chinese Bao restaurant, like what called Wa Bao. And so they have all these different concepts. And they just make hit after hit after hit.

And when I was doing the restaurant thing, we stopped on, we, we road trip from North Carolina to Colorado, which is where we were going to start our first restaurant in Colorado. And we literally drove like two days off track to go to Chicago to try to meet the Melmans. We had no introduction. And we were like, we got to meet these guys. We got to see what's up. And we ended up getting in touch with one of their guys. This guy, I think his name is Jeff Alexander. And he took us around to three of his restaurants in the day

and was given us kind of the like the breakdown of like how they do it, what they do and how they do it. What did they say? So what's the deal? What's the shit? You know, the thing I remember was at that time, he was super interested in Wau Bow, which was their latest concept. And it was really, really supposed.

They only had one location, I think, or two locations at the time. Now, Wow, Bao is nationwide. and has actually gone all in on cloud kitchens. But at the time, he was like, look at this restaurant. And we're standing there and he's like, this is a 10 by 10 square foot, 10 by 10 restaurant. He's like, this is the smallest footprint you can do with a restaurant.

And we started with that question. How can we make a restaurant so small? It could fit in this one tower's lobby, where it was like there's only this tiny space that used to be just for like, I don't know, like greeting cards or something. It was like so small. And he's like, we just work backwards from that question.

and they just had this standard of excellence and they had this great culture and they had all these great people because once you started getting hits there's this flywheel where the best people want to go work for you. And so he was just sort of explaining like we cared about these things.

Once we got momentum, we parlayed our momentum like this. And when it comes to new concepts, we just go completely fearless and we always just try to do something unique. And when we do something unique, people want to go check it out and want to see it and it becomes,

you know, that builds the brand again. And so I just liked this energy. I like the, and I like that they had, this little mini empire in Chicago that I had never heard of. What's it called? I'm going to write it down. Let us entertain you. Let us entertain you.

Do you think those are good? I mean, did you like that? Do you think they're good businesses or no? Yeah, they're doing great. Like, you know, they're big in the restaurant space, which is not like. By the way, it's lettuce. It's lettuce like the food. Let us.

Oh, my God. Okay, I get it. So, yeah, they're like 120 restaurants or something like that. And this is not in that long of a time. I think they're, yeah, like open, open on earth since 1971. Like, 1971 is not like this, like, 100-year-old family business. That's like one person's lifetime that they've built this empire.

And I think it's pretty... According to Wikipedia, 300 million in revenue, 50 million is profit. 2005, though. 2000, that was 2005, so it could be, who knows? I'd double that by now. Yeah, or, well, not right now. but who knows what it is prior to this year. So I don't.

You like brick and mortar now. What else have you liked in brick and mortar? Yeah. So here's what's interest to me. Okay. Did you see that thing? I did. Well, first of all, let's talk about,

I'll talk about her in a second. Chabani yogurt, crazy fascinating to me. Do you know that guy? I think you've told the story of him once on here before. He's like, I don't know, I'm going to butcher it, but like some Israeli guy who started this thing.

No. billion dollar company or something right? I think, I think he's Turkish. Is he Turkish? Hamdi Yulukaya. What name is that? Turkish-born American billionaire.

So, oh, he's Turkish-born. Okay, he's not American-born. Turkish-born, yeah, because I thought he had a small accent. Came here, he must have been, he was not, I mean, he'd been here for probably a decade plus, but then eventually somehow, like, saw an ad in the newspaper for a yogurt. Was it a yogurt?

No, it was a craft food factory that was for sale up in upstate New York and somehow was like had the idea of I grew up in Turkey eating goats using goats milk I believe to make yogurt and was like this should be popular here in America and he I have no idea how he financed this I'm pretty sure this guy doesn't come from wealth and started Chabani yogurt out of there and I think that he owns most of it I think that he's taken on debt, but I'm pretty sure that he owns 90% of the company, and it does like a billion and a half in sales. It's probably one of the larger privately owned companies in America.

Just a badass baller dude. They now have a venture, like a fund that they invest in other companies. They invest in kettle and fire at my friend's business. And just crazy fascinating. And I think that there's something, I don't know, I think that there's something a little like sexy and cool about hiring the type of people who work at brick and mortar stores more so than dealing with tech employees. You're such an all-American for wanting to like do brick and mortar hire 3,000 residents in a state and be their biggest employer and have a factory that's like

so different than what I think is awesome. And like I think that's cool for people who do it. I have zero desire to go that path. But I feel like there's something that you love because you've read so many biographies, you're like, yeah, that's awesome. Well, because I did it, right? I had a chain of hot dog stand, so I did do it. But, like, I had multiple locations. But I will say that there's two things that you said there that are true. The first is, like, be the biggest employer in a state.

That is actually cool. I actually think that it's far better to be like the big dog in Montana or the big dog in some small town than the medium dog in a big city or small. Yeah, for sure. It's like epic, that health care company that has like a full campus in Wisconsin. and they're just like the shit in Wisconsin and bought all the land and created like a university campus and they're like, yeah, this is where we are. All right.

I want to take a quick break to talk about startup investing. You know, I'm a big fan of startup investing. I do it myself, but there's many different ways for people to get involved in startup investing. This week's sponsor, Our Crowd is a new way that I just heard about. You know, if you wish you were early in some of the best performing IPOs of 2019 or 2020, our crowd investors were and you could join them to see what's next. With Our Crowd, any accredited investor can have access to invest directly, easily, and most importantly, early. Our Crowd investments have IPOed like Beyond Meat or been bought by companies like Intel, Nike, Microsoft, and Oracle.

Today, you can join Our Crowd's investment in TechSe, a software startup revolutionizing how leading enterprise companies provide remote customer support. You can get early into companies like TechCee or other companies if you go to OurCrow.com slash The Hustle. If you're interested in investing, your account is free. Just go to O-U-R-C-R-O-W-D. That's our crowd.com slash The Hustle. So when a lot of people are like, you know, should I leave and move to San Francisco or New York, wherever, I'm like, maybe, but then maybe go back and like be the baller in like Omaha or be a baller in, you know, Birmingham.

Like I think there's like way, it's actually far easier, I think, to be the top dog in those cities. then blue collar shit yeah i think it sounds cool but then if i had a deal with them i'd be like too many fucking headaches but it does sound cool like from the on the on the surface uh to work with those types of folks the other one that i like is waste management do you know waste management the company yeah is this the one that that same guy owns like he's done like three or four were these huge roll-ups yeah check this out this dude's names wayne hisinga he's dead now but he originally started waste management as a young person like 21 it was a truck one truck that he like scaled to like many trucks and then eventually waste management the plot of that story is that it's the

greatest acquisition companies of all time so they just bought other companies so that's not quite interesting but whatever it's cool he did they crushed it but then he went and started uh auto nation which i think today is the largest reseller i think it's the largest used car dealership in the world. Then, whatever, that's great killer. Then from there, he started Blockbuster. Who would have thought? And then he owned like the Carolina. I bought this guy's book. I haven't read it yet, but it's badass. Yeah. So he started care. Then he owned Carolina Panthers and dolphins and all that. So I like waste management as a Brickmore thing because I actually think that, I think that there's still some room in that space because, like particularly in recycling,

do you know that most recycling like is just don't know. Unusible. Yeah. It's just trash. basically like pretty much all of it so like that's kind of fascinating to me and then finally um did did you see the tweet storm i little i did about this lady named rose this lady who owned umaha or what is it no Nebraska furniture mart no Russian lady Russian or no sorry Bulgarian Bulgarian Jewish lady came over here when he was 45 started a furniture store really small built it up to hundreds of millions they it's a one-page agreement they just shake hands on it He doesn't audit any numbers. At the age of 89, she sells to him for like a couple billion dollars.

Then she works at her four more years. At the age of like 94, her family's like, look, you got to retire. Retires for three months. And it goes, fuck it. I got to get back into it. Starts a competitor down the block. And Warren Buffett also buys that because he didn't have a non-compete clause in her contract because he was like, well, she's just going to die.

never underestimate the 90 year old lady she she might still have another run in her okay i like that that's i mean just amazing a pretty remarkable story for that lady when you're saying you like these caveat what does that mean that means i like hearing these stories that means i like i want to do this that means i want to invest in this that means what does that mean i think that i get lately i've been so bored just working behind a computer a desk and I'm like I want to be able to like and I want to I want to be able to see what I'm making and touch it and I find that to be kind of fascinating. Have you ever, have you felt the same? No, I never felt that. And anytime I've been in that position, whether it's like doing a brick and

order restaurant or an e-commerce company that has inventory, I hate it. I hate every aspect of it. And we're just having a ton of employees. Hate that also. So I feel zero urge. to the grass is always greener that's for sure yeah but maybe maybe that's just me i mean obviously a lot of people do businesses like that they love it uh so it's you know to each their own but um let me give you an example of one of these small local businesses that i think would be a good business to start let's give an idea out here so uh move to the burbs and you know had this problem i almost hesitate to even say it's a problem because it's so minor we moved out to this new house and in the fridge of this new house,

there's no like built-in water and that's all right. We used to use a Britta, but then our Brita doesn't fit in this new fridge, which sounds like nothing, but what that basically meant was that we never had cold water for the first like month that we lived here. And I only drink water.

I drink no soda, no coffee, no nothing. I only drink water. And so not having cold water was kind of a fucking buzzkill. And I was like, and it really highlighted to me that like most of the things that like, change the like quality of life are these like small irritants that happen frequently rather than like big things that happen in frequently. So like needing water five to 10 times a day and not getting not having an easy way to get it was kind of annoying. And so I was like, all right,

I'm going to buy one of those like water dispenser things that you get like if you go to Costco, it's like, you know, there's a there's like a tower and they deliver jugs on your doorstep every so often. And I went to the website to go buy this thing and the website looked ancient. This is this thing called Ready Refresh or Direct Refresh or something like that. And then I was like, this is great. This is a subscription water company. They're going to sign me up. And like, you know, they probably have this like a local monopoly in my little city here.

And it turns out there's two companies that service everybody who wants this in our city in my city. And I bet they just. What are they called? So the one is called this Ready Refresh. I don't know what the other one. I don't remember the other one off top of my head. But it's like ready for. or ready refresh.

But anyways, I was like, this has got to be a great business, right? Because I'm paying, you know, 40 bucks a month for the rest of my life. And then so will the next household and the next household and the next household. And, you know, I bet these businesses can get to like kind of low seven figures

per geographic area. And that might be either something that you could improve on because it's not like the customer experience is great. Like the dispenser looks crappy and cheap. And the website sucked. And, you know, there's not like other options. I can't do anything cool.

I can't get like, I don't know, flavored water or like smaller jugs or whatever. There's nobody competing with them. It seemed like nobody, nobody moderners competing with them. Dude, there are. Okay, so when I was a kid, we had this thing called call again. You know what that is? No, let me Google. What was your thing called?

I want to make sure it's the same thing. Uh, I'll find the name. Ready. What's it called? Ready fresh, one word. Ready refresh. Ready refresh.com. Wait, let me look at these things.

Okay. So yeah, okay, same thing. So when I was a kid, we had this thing called a call, what's it called? Calligan, yeah, call again. Okay, so it was like, yeah, it was like a massive jug. I don't know how many gallons that was, have been 10 or 20 gallons of water. And you put it on that machine, right? And that machine, okay.

Oh, this thing looks cool. This Culligan machine. I like this. Yeah, dude, I looked it up. These are huge. Colligan bought their competitor for $1.1 billion. So these aren't like tiny-ass things. These are massive.

I mean, let's see. So do they just make the device or they are the local service provider? You have to rent it. And so it's a, how did it work? I was a kid. I think it was only $10 a month. Like, I don't, okay, here's the thing. All right.

So if I'm a DDC player, so let me go to, let me go to the Facebook ad library. Does Kulligan advertise? On TV and shit. Yeah. Not TV. I'm talking about the new TV. Well, I don't know. I don't know if they do it.

Facebook. How much does it even cost? I don't even know. I don't see Colligan advertised, but also my ad library has been broken. So I don't know if it's going to work at all. Bray, I don't know if you have access to ad library.

For some reason, my account's like fucked up. But check if Culligan advertises. I think somebody should make a DDC version of this and have subscription revenue coming from, you know, a basic utility that you're providing. So what Colgan is famous for is they have,

so it looks like costs like $10 or $30 a month. So they have, it was real famous. They would have the Coaligan Man. So like they have all these trucks. And I think that was their whole ad campaign was like, say hey to the Colegan Man or something. And this guy would drop off water to us every two weeks or however much it was. I think so. I think it's a far bigger operate.

Like it's a far more challenging operation than we think because it's pretty expensive. For the customer or you mean for them? Sorry, not expensive, but not, I mean, like, it's, it's a sink. It's a five-gallon bottle of water. Can you ship that? To deliver. No, no, no, no. You can't ship it.

You have to have local delivery people. Yeah, dude, it's like a big, I think it's like a big deal. Yeah. Yeah, so that's not really sophisticated. So they're running two ads, as we can see. Yeah, I think, yeah, sure, you have to deliver water bottles. That's fine. Do it.

That's great. It's a pretty, it's a fascinating. or maybe even just be an affiliate. Maybe you can contact the local provider and be like, how much will you pay per customer? And I'll just do the marketing engine on top and then you go fulfill it. And the truth is, is that I had one of those machines,

you have one of those machines, they're really awesome. They're like the best. It's a game changer. I love it. I got water on taps, like cold water on tap. And it's always cold.

And if you want it to be hot, it's like steaming hot. Right, like instantly super hot. And I don't understand how. There's like no machine. sheetery inside the damn thing. It's like a plastic. And it's not even that bougie. Like I wasn't rich growing up. And we had it from the day I remember. Like we've always had it at my home. And and it was awesome. And that's the one thing that I didn't think was great about this if I was

going to do this as a business because the price point was kind of low. Like each of these giant jugs. So the five gallon jug is $8. So that's like, you know, this doesn't seem like a great, like great value when bottled water like you know one bottle of water sells for like four dollars all right let's talk about another one this one's going went viral today and i have an opinion that very few people that i've read have but that's obvious it's called civil it's spelled really dumb civvv so okay so the haters which i actually who cares what i think but the haters just explain it first Yeah, the haters call it Uber for evictions. And basically what it means, what in reality is, is you hire people to do

like a, you like serve people court documents like an eviction. And so landlords are using it to evict people. But I believe they also clean up a house after attendant has left it in a really bad state. But they also do, they definitely like send eviction. So they serve papers. They post eviction notices. They do cleanouts for foreclosures. And they do eviction standby with standby extraction,

which looks like a cop that takes you out of the place. Exactly. And it's all on demand. And they seem to be doing really well. They're hiring people like crazy to do this. When you say this went viral, you tweeted something about this? No.

Like Vice covered it and the Business Insider. And then we'll probably cover it. A lot of people have covered it. it. Gotcha. Interesting. And this is not a Silicon Valley company. This is just like,

it certainly doesn't look like it. But they, I mean, like, it's so dumb the way they spelled it. C-I-V-V-L, civil. I thought you're going to say the idea was dumb or

no, the ethics are bad. It's like, it's so dumb the way they spelled it. Yeah, it's so dumb. Nothing pisses someone off more than business and it.

Well, it looks like, what it looks like is like a non-silican valley guy thinking that he has to play startup and also this website is like completely bogus like there's no like about there's no like terms and conditions there's no like there's no anything on this website it's such a simple ass website looks very cheap it looks like it's crazy right but i bet it crushes i bet it does well yeah this is obviously you can do well it's fascinating right so i saw that that was kind of cool and it kind of reminded me a banner man Do you know Banner Man? That was Uber for bodyguards, right?

Yeah, which we used. I used one time for an event or what? Yeah, you need security for like when you rent certain events venues, you have to have a security team. And I don't think that company did well or does well, but I kind of like these little small things. Maybe I clicked Be Hired as an eviction crew. I just want to see what their process is here to become a victor.

they should just make you submit a photo. That should be the whole, the whole application is if you take your shirt off and take a photo. What I was trying to think about was like the repossession industry. Like surely that's huge, right? Like there has to be massive companies.

I mean, I was doing, I would do research. One time I got, like I hit my head. When I was 21, I like, we were skiing and I like fell down. It explains so much. Well, yeah, we were like, I was on a company trip when I, when I had a job.

about apartment list and I fell and hit my head and had to go to the doctor and I thought the hospital I thought the apartment list covered it turns out they didn't and it was on me and so the collections agency was calling me and I was doing research on them and I couldn't find anything about it but I could tell by how many people were calling me and how many people were in the background that they had hundreds of people working there right and I was so curious I was it was called like account services like that was the name of the company right right and I was so curious and I'm like I get why they don't have anyone any information out there I wanted to know all about it. So there's another industry that's like this. Now, I don't, I haven't fully looked into

this. So I'm going to talk out of my ass for a second. Might be wrong on some of this. But so the student debt market is really interesting to me because obviously there's like whatever a trillion dollars of outstanding student debt or something. And student debt, the reason we have so much student debt is because, you know, I forgot when it was 30, 40 years ago, maybe 50 years ago, the government basically decided everybody has the right to an education and therefore anybody who wants funding, uh, everybody who wants debt for university can get it, right? And so, you know, universities like University of Phoenix, they make all their money because you can use the, you know,

student debt to pay for University of Phoenix, and they basically just convince you to do that rather than paying out of pocket. And then, you know, you can't even like declare bankruptcy on your student debt and all that good stuff. So in terms of paying back student debt, because, you know, Fannie Mae and Freddie Mac are the issuing agencies, they're the ones who actually, I think, originate the loans. you, they don't collect.

And so there's a like a, some absurd amount of money, two or three billion dollars a year, just in collector's fees for different agencies that go out and collect student debts. And so just in the fees for collecting was multi-billion dollar, multi-billion dollar industry. I don't know if that's split amongst tons of small companies

or if there's some large ones. I would expect it some kind of split. But I found that to be quite interesting. Would you do that? You've been driven today. If it was, like, if it would provide you a good lifestyle, would you do that? Now, no. Before, yes.

So I'll just say like before, my general philosophy is like, yeah, I'm not like uppity about what business I pick. Like, I go for a business that I think will work and I have fun building it. Now I've realized, well, I really only get time to do so many of these in my life. and there's a whole bunch of things that could be successful. Might as well pick the ones that I'll enjoy versus ones that I probably won't enjoy bring me no like, you know, satisfaction or intellectual stimulation. Or I shouldn't say that, but there's low creativity type businesses. And so now I prefer to find one that does both that I enjoy and can work.

I don't think I could do it. I think that even though like I hate when, I hate when people say like, you know, we got to forgive the debt. And I'm like, well, I mean, dude, if someone fucking takes it. alone. They should pay it back. Like just, you know, you're an adult. You got to make your, even if you're close to an adult, you did it. Anyway, but I wouldn't want to be doing that all day. I would just want to kill myself. Like, how about I like, like, hey, pay me my money. Like, I just would hate doing that. It would be so exhausting. I don't think I could.

But you're not necessarily the one doing it. So really the question is, would you want a company where there are people who are doing that in your company? And that's the problem you have to think about. But that's not the reality, you know. even if you hire people to run shit, you start something, you still have to be heavily involved. Yeah, when you start, that's true. But pretty quickly you can hire out of those

sort of repetitive tedious tasks, you know, if you're doing it right. So, okay, yeah, I feel you. What else did you find that was interesting? We have probably one more topic. Okay, I can tell you one thing, but I don't know if you're going to be able to contribute it to this, but maybe.

Go for it. Okay. So I saw these snowflake things and unity and like these B2B companies are crushing it like getting valued like a hundred or no, not a hundred. Yeah, maybe a hundred times north, a hundred times revenue. Just like killing it. Right. Versus I have a beat. I guess my company's both. I mean, we some of our customers are advertisers who spend north of seven figures. Some are trend subscribers who spend hundreds of dollars, which are small. Anyway, the difference between selling through Salesforce and large ticket items versus consumer. I've been thinking about which is the best. And I do think that the business model that you choose, I just read this great article that agreed that said this and I kind of stole it, the business model that you choose dictates the company culture.

And it dictates like your lifestyle, things like that. And the business model is basically, do you want customers who are spending, you want a lot people spending a little money or a little people spending a lot of money. And what is your take on which you prefer? Okay, so prefer, I think is the right thing. Because you started by saying which one is best and I was going to be like, well, that's like saying what's better, a plane or a car. Well, it's like, well, it depends, what you need, right?

Right. But then it's like, do you prefer to fly or do you prefer to go on road trips? Okay, that's actually, you know, a question I can try to answer. I prefer a consumer by far. I think consumer is more interesting, more fun in terms of building myself. In terms of investing, I love investing in B2B because why? Very strong, very durable companies. Because the inertia to switch once your company has decided to buy a thing is, you know,

it's just so strong, so hard to get companies to change the services they use. They have big budgets. And it's also hard to get them to use it. And generally speaking, so generally speaking, I think that B2B companies are able to ramp sales quickly and very durably. Now, there are certainly consumer companies that are similar. So these aren't really like that useful at this level of abstraction. But what I'd say is for me personally, I like business models that require very few people that don't require you to create new things all the time. So I like software more than content.

I like software more than physical products. I like software that's given to a small set of customers that are self-serve rather than sales in order to generate revenue. So, you know, for example, I would rather build a dev tool that is basically used by small developers who pay a subscription and they discover it because when they Google for something or they read a blog post, they find my tool. Why would you prefer that though? because then the likelihood, the likelihood that they churn and the likelihood that they pay a little bit of money is quite high. I think most subscription things have low churn in general. You know, it's pretty rare to, like most subscription businesses I see that have churn,

it's still better than consumer, sorry, than businesses that are non-subscription that are sort of, you know, reliant. Dude, I think you're way off base. What do you consider to be a good annual churn? Well, I usually think about it like monthly. All right. What about monthly? So, you know, if something is churning less than 2% monthly,

I know that that compounds and it's like that's a 2% even 2% monthly would compound and become quite a large number at the end of the year. But most things that a person just buys, like there's exceptions like Atlassians like a crazy exception, Slack's a crazy exception, but even they have a sales team. But most things like, for example, convert kit, which is the site I love, you know, convert kit. Yeah. You can Google convert kit bear metric. and you can go and look at their churn numbers, and they'll tell you.

Anyway, turn for a lot of these small, so if you're self-serve, you're going to be small to medium business focus, more likely than not, and your churn will thus be higher. Yeah, so I guess what I'm saying is, if I could pick software, so let's just compare to business models, D to C e-commerce, which is a popular, you know, thing a lot of people are doing,

or a SaaS dev tool. D-to-C e-commerce, well, I have to continually buy inventory. So it's going to be very capital intensive. D to C e-commerce. I'm not on subscription, so I need my customers to remember to come back and repeat purchase. And a repeat purchase rate might be like 30% of my customers ever come back. And that's like a healthy repeat purchase rate.

Versus in SaaS, I'm going to have 98%, 99% of my customers from one month were new to the next. That's just a much healthier monthly return rate. So software over physical products, subscription over non-subscription. These are my like rules of them. And then self-serve over Salesforce. That's just a preference because I don't want to have a lot of people in my company. And so I'd rather not have a sales team.

I'd rather have. I'm going to, I hear that for lifestyle preferences. It's going to be my goal to convince you that you're wrong over some period of time. I think that having a sales team is like the greatest. Having a sales team creates demand. If you're a business owner and you just don't want to deal with it, I get it. That's cool. I don't want to deal with it a lot of times either. But in terms of creating revenue, dude, it's the best. Okay. I can see that. Now, let's take, you know, convert kit right here.

Convert kit, no, no sales, no sales force, right? I'm on their dashboard right now. Yeah. Two million a month in recurring revenue. Yeah, great company. Great company. And they're generating all their leads from some combination of SEO content, maybe some digital ads. word of mouth, right? Like referrals. And I just think this is really, and let me try to find their churn because you talked about it. Okay, so they're at 4.9% per month.

High for a SaaS business to churn 5% of your user base per month. Revenue churn is 4.5%. Now, and look at this active subscriptions line. That's great, just going up. Anyway, so I think, yeah, sure, maybe that's effective. I don't doubt. The sales team? My company right now has a sales team.

Yes, that's true. I guess, like, here's what happened at our company. And I've talked to so many people that it said the same thing. So I, some people think I'm a sales guy. I fucking hate salespeople. I mean, I don't hate them. I love our guys, but, like, I hate what it represents of, like, a bunch of, like, slightly overweight dudes wearing jeans that are too tight with brown

leather shoes and, like, a collared shirt tucked into their jeans and, like, slicked hair, right? Is that like what every sales guy looks like? Not the overweight part. It's not been in my experience. Oh, yeah, they are like a lot of bros. Yeah, there's a lot of bros. It's like a 35 year old dude who like has got a little bit of stuff. Definitely the loafers. Definitely the loafers. Definitely the color shirt tucked in. Yeah, it's like, uh, like I see you from a mile away. And like you're going to like, whine and dye me and talk about all this shit that I think is this fucking bullshit. And

you're probably good at your job. Whatever. That's how I pegged it. And I'm pinging them as accurate, by the way. That's how most are. But I thought you were going to hedge. Instead, you fucking double down right from the moment where I thought you were going to be like, no, they're all that way. No, I'm right. They're all that way. But they're nice guys mostly. Like our sales guys are all like that, but they're like good-hearted people. So we could accept that. Anyway, I sold the first quarter of a million dollars with the stuff at my company. And I was like, I don't want to hire a salesperson. Like they're obnoxious, yada, yada, and then we hired someone and he was like, yeah, we're going to go get three more. I was like, this is like you guys know like you're just going to drink beer and you stop working at 4 p.m.

And I sold the first quarter of a million. And then after that I had this like base where I was like, all right, I think it would work. And hiring a sales team, it was like putting a match onto it in a barrel of gasoline. It just like went up significantly. And I was like, oh my God, you guys totally drew up demand. You totally created demand. Another person that said this on a great podcast was either the founder of Squarespace or the founder of Wix. I forget which one, but one of the website builders, I think it was SquareSpace. And he was like, oh, or maybe WordPress. Like one of these website developers that's created by a tech guy who like is anti-sales. And he said the same thing. And he was like, I was so anti-sales because of all the reasons I just said, but they created demand and it's awesome. Right. And I think

that's how most people feel and I get it. But they should get over it. Yeah, I think that's a good point. The salesperson I want is, you know, 125 pounds soaking wet sitting behind a laptop with Facebook ad manager open and has, you know, three people in the Philippines and in India making ad creative for a product that they don't even know what the heck it is. And every and they're controlling, you know, a quarter million dollar a month budget. That's the sales person. I'm on board. I'm on board. I just don't think you're going to do that with a software product. I mean, if only fans of software, then yeah, you could do it with only fans. But can you do it with something that costs like hundreds to hundreds of thousands of dollars a year? I don't know. I don't think

you can't do it on high ticket items. That's true. But again, you don't have to build a company that's based around that. So you don't have to. But I, hey, look, I'm, I'm team nerd all the way. I just, I do understand. You've had an amazing experience with your sales team. I appreciate that. I think that's awesome. I love how much revenue you all make. That's great. And I think, think for if that's your win presented that problem, then you got to take that key off the key chain and be like, cool. That's kind of my general mindset is, wait, wait, wait, wait, what is that analogy? A door is locked. You got to unlock it. So you got to find the key that fits that keyhole. So where did you make that up? What? I don't know. In my head, I was just thinking about like, you know,

you got to use the tool to solve the problem. That's kind of interesting. For you guys, you had that problem. So you found the key that unlocks that door. If you're saying, hey, at the beginning of your business, you can choose because you kind of know which key you're going to need, I like, like the blue key and I'm going to choose businesses generally that do that, unless I just love an idea so much. And then, of course, I'll pick whatever business model makes sense for it, you know? Totally. Well, do we have anything else to say? No, we got to roll out of here. Cool. Okay. Good episode. I like it. I'm going to keep my eyes peeled for more of your brick and mortar stuff because you've, that's what you're interested in nowadays. So I'm going to keep my eye open for

I think it's cool. I think it's cool. You know, and typically they seem to be like, I love the immigrant entrepreneur, even though I'm like the exact opposite of an immigrant. There's a guy DMing me right now that has this flooring company and has to a couple million dollars a year and he's like, we're going to get to 100. He was just like, you raised how much money for what? Like, dude, my flooring company is going to get to $100 million and everybody needs floors. He's like going off about flooring. I mean, he's right. He's probably right. He's probably right. Yeah, he's absolutely right. You guys have to check out a blue collar millionaires on CNBC. It's a bunch of stories.

Is that a show? Yeah. And it's everybody who's made their money off like blue collar jobs. like flooring, roofing, all that kind of stuff. Dude, the greatest company that we had was, or one of my favorite companies that we had was 1-800 got junk. And, you know, when people hear this, I think some people are going to be like, wow, Sean and Sam discovered what business is. Yeah, I people mess to me that all the time.

It's like, dude, I know. We're just talking about it. The reason we're talking about it is not like, dude, did you know there's flooring companies that are big? It's more of we're trying to break our own filter bubble sometimes and be like, yeah, we're always thinking about this. and all of our friends do X,

but there's a whole other world of Y that I'm, obviously I knew about, but I'm getting more and more interested in. I'm meeting more cool people. I'm hearing more stories about that thing because I'm just, that's the flavor of the month for me right now. And anyone who wants to criticize,

like, Sean, do you know what my parents do? Have I ever told you that? They're like kind of farmer brokers, right? Dude, my dad started a fruit stand. Daddy, like, eventually expanded to like selling wholesale.

But like, my parents are like, this is what I grew up around. like I grew around truckers and fruit stand like produce shit. So like it's like anyone who's like making fun of like a tech bro. I was like I grew up around this shit. So I know it's just it is fun to, you know, jumped from bubble to bubble to bubble. Yeah, exactly.

Cool. All right. We got to roll out of here. But good stuff.