My First Million - #128 - Open Startups, A Mysterious Bag Lady, and Gamifying Facebook Ads

Episode Date: November 13, 2020

Shaan Puri (@ShaanVP) and Sam Parr (@TheSamParr) host the podcast together today with no guest. In today’s episode you’ll hear: An update on Sam’s whereabouts and how he ended up buying a house in Austin (0:30), Shaan pitches an idea about “Class Pass for Billionaire’s Houses” (5:30), the best ad read in the history of MFM and how to growth hack your ads (11:00), Sam and Shaan talk about the pros and cons of a business like Baremetrics (14:25), Shaan contemplates publishing his total financial snapshot over the past year (20:35), Shaan pitches an idea on a Shopify app that connects all DTC brands (26:40), how Italic made smart deals with luxury Chinese suppliers (37:45), Sam and Shaan think someone should gamify a Facebook Ad learning program (42:37), Why Mario Level One is genius (51:27). Thank you to Lemon.io for sponsoring today's episode! They are offering a 15% discount for the first 6 weeks of work for all MFM fans. Go to Lemon.io/mfm to claim the offer! Companies mentioned: - Simon's Escapes: https://www.simonescapes.com/ - Inspirato: https://www.inspirato.com/ - Sponstayneous: https://www.sponstayneous.com/ - List of open startups: https://openstartuplist.com/ - Coop Commerce: https://www.coopcommerce.com/ - The Fascination: https://thefascination.com/ - B8ta: https://b8ta.com/ - Italic: https://italic.com/ - The genius of the first level of Mario: https://www.youtube.com/watch?v=zRGRJRUWafY Have you joined our private FB group yet? It's a page where people share each others million dollar ideas or what they're already working on: https://www.facebook.com/groups/ourfirstmillion.  See acast.com/privacy for privacy and opt-out information.

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. I'm recording. What's up, Sam? What's going on? You bought a house?

Yeah. Did you really? I thought you were bluffing when you sent that to me. No, I've got the inspection right after this. So I went out to, like, I'm in Austin because in my company's based here. some of the guys took me out to like dinner or something and I was walking around the neighborhood and I was like this is amazing I want to move here and so that was on Thursday on Saturday I looked at a house on Sunday I made the offer Monday was accepted so we're good I I'm gonna rent it out for some of the

year and live in it some of the year wow okay I love it is it like kind of residential neighborhoody family or is it like cool near 6th Street like where are you where are you doing it here's the cool they call like the grimy area. It's, or I don't know what the stereotype is. I frankly know very little about it. It's in, it's in East Austin. It's off a 6th Street. It's like a 22, 2,300 square foot house. It's really nice. It's very nice. And we got approved. I got a little bit of a little bit more, a little bit of a mortgage. And we just got approved fast and bought the damn thing. And Sarah's cool with it. Yeah, definitely. We, I think you're my hero because you live like, You make decisions like an independent person while being happily married.

It seems that way. It's definitely not. I mean, I do a lot of the talking, but it's a team. And so we both agreed. But yeah, we go, hey, you want to do this? We go, yeah, we're it. We make decisions quickly or I make decisions quickly. I think that's it.

You found somebody who's compatible with you in that way, making decisions quickly and valuing similar things so that your decisions are aligned. Like when we bought a car, it was like on a Thursday. It's like, let's buy a car. What type? Well, I don't know. Let's just go look at them. And we just bought it on a Friday.

So that's how we roll. That's how I did with my dog. I woke up at the morning, Christmas Eve, and I said, let's go dog shopping. And she's like, what? No. And like, we had agreed. Now's not the time for the dog. And then that morning was like, today's the day for the dog.

And we went, we saw three different dogs and we bought the third dog and came home. That's the way to go. And I also, when I was looking at the house, I wore a mask the entire time. But one of the agents who was showing it messaged me the next day was like, I just tested positive. And I'm, so that's why I'm home because I can't, I'm not, I'm not going anywhere. But I went and got tested. I'm negative, but I'm still better safe and sorry.

That's good that they called you. I had a friend in college who got the HIP and his doctor was like, hey, you need to call all your, you know, girlfriends and you need to tell them like, what's up? And he's like, oh, shit, why? Like, are they going to die? And he's like, no, but, you know, it's respectful. Still serious and it's respectful. And, you know, this type of thing can stick around and it can be passed on to babies in the future. And he was like, oh, wow, okay.

Came home. Called nobody. I told nobody. That sounds like shit. Yeah. There's a scene in the office where Michael gets herpes and he calls people. He goes, I don't know how to say this. So I'm just going to spell it out.

I've tested positive for H-I-R-P. And he spells herpes. Like, Michael. herpes is spelled with an E, not an I. Why didn't you do that? That's kind of how I felt. I had to call my coworkers and I'm like, just so you know, I was around someone who tested positive, but I'm not about, anyway, we're good.

All right, that's great. All right, let's jump into some topics. So congrats on the house. And let's talk about barometrics. By the way, so I intend to Airbnb this home. And I'm going to reveal, well, I'll reveal the numbers once we do it. And I think that will be a fun little segment. Right.

I like that. Let me tell you something really quick about this. There's this company that I love. It's called Super Money Market. Is that what it's called? Yeah, you've talked about that once before. Yeah. Is it?

Sorry, money super market. It's like NerdWall, but it is in Britain. And it's been around for longer than NerdWalt. It's been around for, I think, since the beginning of the web. And the guy who started it, his name is Nixon. Simon, Simon Nixon, big billionaire. and when he, it went public and when he sold it, he went and bought a vacation home, and then his friends wanted to, like, stay there. And he went and bought another one. And his

friends wanted to stay there. So we created this website called Simon's Escapes. And it's, I think it's like a, I don't know if it's like a profit making business, but it's like a legit business. And you could go out and rent a variety of his homes. And the whole schick is that this is his personal collection. I don't know if that's true, if it's like part of the stick, but it's kind of interesting. And I called Ryan Beagleman. I was like, hey, this is pretty interesting. He goes, yeah, this is actually pretty common. A lot of billionaires, like even Bill Gates and Richard Branson, you can go and rent their private estates. And Ryan told me, he was like, yeah, but I'm pretty sure a lot of them are wildly unprofitable. Like, for example, the founder of

Circus Tollay, I think he has a bunch of them. And he's like, they really just do it just to lower, reduce their burn. But it's kind of a neat idea, like, one day to be rich enough to like, just, you know, own so many homes that you can rent out. It's, it's, it's, it's, it's, It's cool. Yeah, I think you could do like a membership, like a class pass, but for staying in billionaires' houses. And so you pay the membership just to be, just to get access to the Airbnb platform where you could rent only, you know, chateaus and villas and ski houses of rich people. That's a thing. I've just, I learned about this last year. What's that called?

It's called a, is it Aviato or Elevate? Yeah, I've heard of Aviato. That's from the show of Silicon Valley. No, it's like a month, like you pay a monthly fee and you get access to high end, what's it called, Elevado or, okay, it's called something. And what is it? It's huge. I see commercials for it all the time.

And what they do, this is like totally, like we didn't plan any of this. So what they do is they buy vacation rentals and you pay a monthly fee and you get access to all of them. Right. It's called, I don't know what it's called. I'll have to look it up. But anyway, it's just like this cool that I saw this guy do that. I'm like, that'd be fun to do that. Right.

I think somebody could also, while we're just riffing off this, I think somebody could also do this for parties. So I think you could also create kind of like a high-end party club, which is basically like a membership fee you pay every year. And you get invited to parties in all these different cities. And the parties are part of the parties all are hosted at house parties of like baller houses. And so you take kind of like an elite crew. And I had a friend who was doing this in Moscow.

He basically was like, he's from Moscow and he traveled around the world. He got his MBA at that program called Encead. That was like, I don't know if you've ever heard of that. It's like half time in Singapore, half time in Paris or wherever it is. And so he had this kind of cool global network of like, you know, like successful, kind of successfulish people. And what he did was he created this party club in Moscow that only they would get text messages to these underground parties that were either at clubs, but often at non-club or bar venues. So somebody's house or, you know, outdoors in a field or whatever it was. And it was always like really cool events.

And so he had this list of like 3,000 members that would just get this text every single time. And he was making great money doing it. And he was just doing it because he built like the most powerful kind of like social scene. And he liked to be the kingmaker of that scene and, you know, meet girls. And he liked to do all that stuff. But I could see somebody. you know, connecting some of these cool venues together in unique ways, whether it's for rentals, vacation rentals or for partying. It's not a great business, but I think it could be a lot of fun for somebody who's just, you know, somebody's trying to have a good time.

So I want to riff on that for a second, but first, the company that I was referring to is called Inspirado. So Insperado.com, 500 employees, 200 million in revenue. You pay, you have two packages, one, $600, once $2,000 a month. I think the $600 one, you get reduced rates. $2,000 one, you get to stay. I think that's your rate. It's very expensive. Two grand a month. It's luxury, uh, luxury, uh, luxury, uh, luxury, luxury vacations, basically, luxury travel vacations. Yeah, I think it, and I don't think they've raised a lot of money compared to how big they are.

It's a subscription business. Anyway, pretty big, kind of interesting. Um, different take on the whole Sondre, Airbnb thing. And then the other one in this space that I think is going to be massive. I've been talking about this for a few months now. It's called Hello landing, which is kind of like this, but more low end. So you could spend $2,000 to $4,000. a month and you just get a furnished apartment in like 18 cities. Right. And so you could just live out of that. And it was started by the guy who started shipped, which is a like Instacart competitor,

but mostly in the South that he sold for 500 million bucks, a very successful guy. I'm very eager to see how that plays out. And then regarding what the idea you just had, we had a listener tweet at us and he basically made a Scots cheap flights, but for Airbnb's and rent. Did you see that? No. I'll bray you. You have to remind me what it was called.

It was called like serendipity or something like that. But basically you say like, I don't even know if you had it set up this much, but you say which cities interest you. It could be like a variety of cities. And he emails you out, cool Airbnbs that have been recent or hotels that have recently been. Right. Curated.

Yeah. So it's curated unique vacation stuff. So I think there's a lot of value in this, which is basically like, a combination of great deals and unique experiences and just doing the curation work so that people don't have to do all the research and be hunting and be finding all this stuff. I think that's a pretty simple way to build a list and build a business. And the name of that business that he just is called, the name's a little silly, but the links in there.

It's called spontaneous, like sponstaneous. Yeah, spontaneous, yeah. He's got to fix that name, but that's what it's called. Right. Yeah, probably not going to work. I said, oh, this guy, Zach. Okay, I've seen this guy. Yeah, the name is awful.

That's why he did message us. I didn't click the link because the name was so awful. No, it's a cool service. I signed up for it. And what's funny is that he just launched and he does so he doesn't have any testimonials. And he has a part on his website that says testimonials. And then there's an asterisk and it's like, no one has said this yet, but these will likely be what they say. Yeah, yeah.

It says, what we hope you'll be saying soon. Future subscriber testimonials. Okay, got to give credit more credits do. I like the, I like your spunk. And then he says, like, sponsors. And he lists a bunch of brands. And he goes, these people haven't sponsored us, but brands like this will probably sponsor us eventually. Dude, the best thing, the best ad sale we ever did for the podcast is one.

I don't know if you remember this. I think this might have been before you came on. But we had no sponsor for like two months or something like that. And so I just did an ad read in the, during the podcast, I just go, this product is brought to you by. No one. Think about this. This could be you right here. I said, we don't have an advertiser right now.

So email me if you want to advertise. And I got a ton of people. We have the book three sponsors and like from a 15 second joke basically. It works. It works. We did that when we started the hustle. I put this person, I think this is actually illegal or against the rules.

I put like this was sponsored by and then I put the name of a company and they didn't actually sponsor it. But I knew that their competitors would email me asking this. All right. You want to kick it off on what you have? Yeah. Yeah. Let's talk about barometrics.

Okay. So we had referenced barometrics, which is a software that gives you kind of like a dashboard for your business. I use it for my subscription business. And it tells you. oh, here's your monthly revenue, here's your turn rate, here's, you have this many people cancel, this many people card declined, whatever. It gives you this very simple dashboard for your business, which is useful.

And he was kind of like a bootstrapper guy. So he just posted a blog that says, I sold Bear Metrics. And he says, after seven years of working on this company, Bear Metrics has a new home. And he just dove into all the details. So he goes, purchase price, $4 million of cash. What I walk away with, $3.7 million from cash. This is a 2.65 multiple of our annual recurring. revenue. And he said, here's the buyer. It's his private equity, a tech private equity firm.

The company that bought it, it's Zenith or Zenon. Zenon, yeah. The woman who is the co-finder, Terry, is one of my very good friends, Terry Wilson. They're all good people. And so it's at, you know, no earn out payment structure is three payments. There's, you know, at close, at 12 months and at 18 months, which is interesting because there's no earn out, but you also didn't get all the money up front. Well, that's not an earn out. That's just. He doesn't have to work there. Seller financed. Yeah, it's sort of like dripped, basically.

So he said, okay, how we got here, you know, been working on this. It's doing well in COVID, but I think it was just kind of like time to move on. So what did you think of this when you saw it? So Barometrics is a really cool company. They buffer used them at first. So I think we should, I hate this phrase. It's a cliche. Take a step back, which is this business is.

I don't think you've ever said that. I try never to say it. I think it's a stupid cliche. this business is that there's this whole group of people. They call them open startups. If you Google like open startups, I think there's a website that compiles all of them. And there's startups or companies that reveal their revenue in real time.

You could see their burn or not, I don't think you can't see profit. You can only see revenue. So you could see. Well, some do it all. There's degrees, right? So Buffer went crazy and they were like, here's everybody in the company's salary.

So they published their employee salary. Some people don't do that. information, everything. And others do kind of like the high level metrics. Like here's what our revenue is month by month. Here's what our growth was. Here's how our email list grew, but they don't show like employee salaries or profits. Yeah.

And there's a lot of sites that do this. There's start a story. That guy, he does that with people. There's indie hackers. And then there's people who do it on their own. The gum road guy. Yeah, the gumroad guy. Open startup list.

There you go. Open startup list.com has a list of them. So I think that as a business owner, I would never, ever do that. but I think it's cool. I think it's really cool. I love consuming it. So I think that's interesting. And Bear Metrics is like a really cool tool to get that done.

Yeah, I think that's a good move that this guy sold. He only sold, I imagine, because he had $850,000 in funding from major VCs. And it was like an easy out for him. So in the post, he says that the VCs, they're like, just forget. So they had put in $800,000 back in 2014, 2015, 2015. from two kind of like big VCs, General Catalyst and Bessemer. And basically it wasn't going to be like the home run. VCs are trying to get, you know, 10x, 100x on their money.

And so they want they want you to go basically when a VC invest in you, they're planning for you to try to become a billion dollar company. That's what a win looks like for them. And then there's sort of like smaller wins if you end up at 250 or 500 million. But a five, in this case, a $4 million outcome is, you know, it's a rounding error. It's a cost of doing business. I don't know if he said this in the blog post or if someone said in the comments, which is like the amount of time just for the lawyers on the VC's end to do the paperwork would be, would cost $800,000 or something like that. Yeah, I don't think that's quite true, but that, but I get the point.

So he basically, what he said was they, he said, I wanted to give them their money back. But ultimately for a $4 million purchase price, we would need to ask them to walk on their investment. Now, this didn't fully add up because. Yeah. you could have easily given back to 800,000 and walked away with, you know, whatever, 2.8 or 2.9 million instead of whatever he walked away with, and 3. Something million. But I guess he asked them like, hey, will you take less, then I'll do this deal? Or will you write it off so I can have an exit here? And they said yes, which is kind of amazing by them. And there was a lot of people on Twitter who were like, wait, what the hell? Like, this does not compute, especially people who come from other industries like real estate or whatever. They're like, you just, why would they? Why would they? write off their entire investment, I don't understand. And so what do you think about that reaction? And how would you explain it? Well, I do think it's hard to fathom because it's almost $1 million. It's a lot of money. I think that you have to look at it like who it, wait, who was it? General

Catalyst? General Catalyst, yeah. What's their AUM? Do you know? I think they have like a, they have multiple funds, but I think that they have like billion-dollar-sized funds. Yeah, so maybe like $10 billion they have. I think that the way that they probably, probably saw it was, let's just not cause a fuss. Be cool with this guy because he's public and he'll talk well about us and that's worth $800,000. So they just announced $2.3 billion in new capital commitments across three funds. So I think that's probably, let's call that their AU. I don't know if that's exactly it. But yeah, so I think that's, regardless, they're a billion dollar plus fund. I think that the way you look at it is like if you're in real estate, which I'm going to fluff,

I mean, I'm going to kind of bumble through this. I don't know how it works. But like, let's say it's like, you paid a little money to like inspect a property and turns out like, ah, it's not a good property. That's okay. It's part of doing business. Let's move on to the next one. That's kind of like what it is.

It's just when you have, you know, 10 billion in assets, 800K is the cost to do the inspection. Right. So here's what I think happened. So I think, uh, A, I think getting 800K back, um, is probably not that interesting to them. Um, and if they took any more, I think they would kill the motivation to do the deal. by the founder. So I think that would be the most that they could get. This is probably because it's seven years old. This fund has probably already done well and has profits. And they can actually just write off the 800K and just reduce their taxes, basically. So they can, they're going to effectively

still keep that amount of money by calling this a loss, by calling this a zero. And then they get that, you know, the founder might let them into their next, if they start another company. It might be great signaling or kind of PR because look, we're talking about it. Um, and, and then, And so I think that those are probably some of the reasons why between like the cost and the hassle versus the upside. The fact that they probably have a bunch of profit that they could just write this off into. And lastly, you know, the sort of branding and founder friendly story that they get to tell for every founder after this. Yeah. So that's why it's hard to fathom.

But when you like, you're like, look, this is like 0.001 of their money. Like this is just, that's the cost to do in business. And I imagine that's how they saw it. It just so happens that there's a lot of zeros behind it. but it's the same thing if it's whether it's 800 or 800,000. Right. And I encourage everyone, go check out OpenStartopList.com and go look. So you can see Ghost is on here, buffers on here, Barometrics, Convert Kit, Gumroad.

There's a bunch of interesting companies that you can go and you can actually go and understand their business, right? Like, as if the CEO took you aside and opened up their books. And I love looking at this type of stuff because it helps me, you know, clear, you know, paint to picture and understand different business. with very little effort. Yeah. You see what's possible. And so I was thinking about this the other day. So I was very close to just publishing my like I just did an annual review for myself about

like everything. Like I had these goals. You know, what changed for me in my life? You know, did I, my kind of personal development? Then my financial picture. And I was like, should I just publish this whole thing? And I was like, you know, finger trembling on the button where I was about to click it. And then I was like, okay, let me think about it before I put.

Because once you put your financial picture out there, you can't undo it. Can I give you my opinion? Yeah, tell me what you would do. Don't do it. I don't think you should do it. I think that maybe you can give it increased by this much or like it's going well or like seven figures, maybe do that. But I definitely think you should not do it. I think that there's a few things.

One, if you're a company, so people have told me about Nathan Latka and then Cortland, the founder of Indie hackers, has told me about him. He's like, founders give him numbers and then they like regret it because people start copying them. and they go to Cortland and like, hey, can you delete that? And he's like, well, no, I mean, you like knew what you were getting into and you asked me to do this interview. So, no, I'm not going to delete it. Like, we agreed this is fair, which he's right. But it's like, so it just like brings unnecessary attention. The only up, and then if for personal wise, one time when I did hustle con, I like wrote a blog post saying like the first hustle con made like, you know, in one year we did $300,000 in revenue and it was like all profit. And I was using,

that money to like grow a business and people were like, oh, nice, you have that much money. I was like, well, I mean, like, it's the business. And I felt like that attention was actually really, I didn't, it didn't attract a type of person who I wanted to attract. And then also, but I would say that if you're trying to use it for marketing, it's, it is an awesome tool for marketing. Like this made, that's, that's the upside, right? Like, you give up some privacy and, and, you know, I don't know, whatever, I guess privacy. And you gain, it's juicy. A bunch of people want to know about your kind of like your picture. And if you, if you're going to give somebody a snapshot into your finances and how it's growing and how it's going, then that's a good way to kind of hook

people into the wider world of your content. Right. But I would do is, that's the upside, but the downside, I think is real. Then you should do that with your fund. I don't think you should do it with your personal money. I think say like, we have this much money in the bank. We've sent the checks to this. We're going to reserve it for this. Like that would be cool. That would be a cool schick, but I don't think, I think that you would be unhappy if you did it for your personal life. And even Buffer, they wrote about it. They're like, yeah, this was like a cute thing that we did. And it got us popular because that was like our only marketing channel. But we actually don't want to reveal salaries anymore and things like that because it causes tension and it's just not worth the

headache. Right. Yeah, I think you're right. I still might do it because it's just, I, you know, I'm curiously what happens. But I do think your logic is right. So I agree with you. Well, so what are you going to reveal? Like, you're like literally your, W-2 income? Yeah, like I would reveal everything. I'd reveal what I earned across the board. What is your wife say? How my assets grew.

Oh, well, this is, you know, I'm not going to ask her about this. She doesn't use Twitter except for, she went on Twitter one time and was like, yo, who told my husband to buy a bidet? He said if somebody on Twitter told him, you know, leave him alone. He's buying all kinds of shit that we don't need. You should look up financial samurai. So financial samurai, I know I'm friends with him. because he came to HustleCon and we became buddies, like internet buddies.

So I know his identity. And I don't, I think that you can find it if you wanted to. But Financial Samurai is a personal finance blogger. He's a little crazy, but he's cool. I love him. I like him a lot. He runs in our circle. And he reveals his assets and his income and office portfolio.

But you only know his name is Sam. And it's really, you can't, I don't think you could find a photo of what he looks like on the internet. I don't think you can find his last name. Maybe, but maybe not. Yeah, right. But he does this all anonymously, and I think that's pretty cool. Right. Yeah, that's cool. I like that. Okay, what else we got to talk about?

So, I thought this was kind of interesting. Actually, I'll do an idea first. So I call, you know, this is D to C super retailers. So what is this? Right now, there are so many DDC brands. and if you look at the kind of the framework of, you know, all businesses essentially bundling and unbundling, which I don't think is really true, but it's catchy. You know,

what's happened is you used to go to a retail store, Target, you know, whatever, Macy's, wherever you're going. And the retail store bundled all these different brands together. And cool, that's how people shopped. And then right now what's happening is this big unbundling where people create, you know, there's thousands of thousands of brands.

They don't worry about getting into retail. right now. They just sell individually online. They acquire customers themselves through Facebook. And Facebook is essentially the retailer right now. That's where you find these products is on the Facebook shelf. And so everybody's doing this. And now if you go talk to any DDC company, they spend like 90% of their time, not on their product, not on their customer service, but on their marketing plan. Like they're all their, you know, their Facebook ads, their Google ads, their Pinterest ads. Like this is where they spend their email marketing. They spend all their time on customer acquisition and increasing the lifetime value of the

customers. And so what's happening is I think there's a movement back towards, hey, let's say I'm, I don't know, what's a sexy DTC brand right now? Maybe it's, let's take away luggage, right? So I'm away luggage. I'm trying to acquire this customer that's kind of like this professional, millennial who wants like a high quality thing and doesn't want to buy their dad's brand. They don't want to buy Samsonite. Okay, cool. Why don't I, you know, sort of share my marketing efforts, co-market with other D2C brands, right? So why isn't OA luggage doing this with Warby Parker and Casper mattresses and everybody else? Because we're all spending the same amount of money to acquire the same person. And so there's a couple different interesting takes on this. One is there's one

Shopify app that is a post-purchase Shopify app where you install it in your store. And after someone buys from you, you upsell someone else's product. And if you do it, you get money from that retailer instead of from the customer as like an affiliate fee. So I thought that was kind of clever. And I don't know how well adopted that is or some gives and takes there. But the other is to just create a destination, an Amazon-like destination that is just a curated set of all the best new brands. And you say, okay, I'm going to find the best two or three brands in luggage and handbags and the next two or three brands in shoes and the next two or three best brands of socks. and you only have, let's say, the three best brands of every category, and you invite those

e-commerce players onto your platform, and you go acquire customers for your kind of like retail store that has many things. You market to them all the different products, and you get a 15% cut of everything you sell for these people because, hey, they're going to pay Facebook for that customer anyways. They might as well pay, you know, a little bit less for you because average store might be spending about 30% of their revenue on customer acquisition through Facebook. So if they can get a customer for 15%, they've cut their acquisition costs in half. And what do you think of this idea?

This is a typical shown idea that I think is potentially a big idea, but my default is like, sounds like a lot of work. So to default to optimism, it's quite interesting. I think that you're talking about two different things. The first one is incredibly fascinating about the upsell. So like if you buy in a way bag, you're going to be upselled, upsold like, I don't know, a blanket? I don't know what...

Sure. It could be like, you know, gravity blanket. Or it could be Warby Parker glasses or it could be Allbirds' shoes or, you know, whatever, something like that. Something that a traveler, I don't know. That's an easy thing to figure out. That's pretty fascinating. I think that when I've talked to people who do brand partnerships, I think that they said in general they don't move the needle.

But I would like to figure out which ones actually do, because some of them clearly do. That's an interesting idea. I think that's really fascinating. I love that idea. I think that's really cool. The second one, I think as a user, would be cool, but I have no idea why would a D2C brand want to put their product there?

Like, wouldn't they just want to own the whole relationship? Isn't that the whole point of being direct to their own consumer? Well, you do get the customer relationship. So they come and they buy, but the DTC retailer would share the customer inside, unlike Amazon, it would share the customer info with that. brand. That's kind of the, I think you would have to do that. Otherwise, I think it's quite tough. But if you, if you agreed to do that, right? So like, I'll find, I'll find, okay, so let me, let me give you the two names of companies I think are doing something like this. So one,

I believe, is called co-op commerce. So if you go to co-op commerce, so just C-O-O-P Commerce.com, I think that's the one where it's the upsell, um, upsell. Um, sell with something else. There's, there's probably another one, besides that. The second one, it's spelled, it looks like coop commerce. I'm there. It looks pretty cool. And so, you know, you're going to, you're going to acquire new customers through by putting yourself on this network. It's like an ad network, right? So like bloggers used to do this. They used to create like blog roles where it's like, cool, I joined the blog role network. It'll put me on other blogs like me. Like, if I'm a tech blogger, it'll put me on other tech blogs. And then I get traffic. And then I give traffic as

well and I get sort of a proportional share. And link share was like another one like this. I think the guy from Zappos started something like this before Zappos. Yeah. Yeah, yeah, yeah, yeah. Yeah, yeah, yeah. So the other one is called the fascination.com. And so the fascination is, is trying to build this, is trying to build that super

store. I don't think it works exactly by the rules I mentioned, like three, three brands or whatever, but it's basically saying we're going to curate the best DTC brands. We're going to offer, you know, great deals on those products, you know, on our website. And as if you choose to be one of those brands, you're going to get a whole bunch of exposure because we're going to get popular and you're going to get free customers from us. But you just have to give us a kickback of about 15% on the on anybody we send. Wait, so what's the website? Fascinations.com is sex toys. Fascinations.com is metal stuff. The fascination.com.

The fascination. Lose the the the. Sell sex toys instead. Let me see. Okay. Yeah, it's brand new. It doesn't even rank in Google. It's not launched yet. So this is coming soon.

I think it's cool. I like this stuff. I think this is so cool. Have you seen this company called Beta? Is that the pop-up? Yeah. Yeah. Which Beta does, and they're probably getting crushed right now,

is they had these badass stores that they had in cool locations. in San Francisco, L.A., New York, and probably many other countries or states. And those are the ones that I saw. And you, I think the way it works is like boosts. Like anyone who has a nifty gadget. It's almost like the new version of sharper image. Anyone that has a nifty gadget. It could have been like cute new brands like all birds,

but also like some fancy TV that you didn't know was cool until you saw it. You're like, oh, wow. Something that like demos well. Yeah, that demos well. And you pay a rental fee to be there and you go in and you could, you can buy it. on the spot straight and it's badass that uh i don't know if that's a good business but this is kind of similar to that and it looks similar actually and it's quite quite interesting so i have friends that invested in beta and i think they were doing well obviously covid i think is you know

one of the worst things that could happen to them but it's b8 ta so the the e is replaced with a eight so bata.com and um i like this idea because let's say you're a brand and a lot of brands open up these like kind of flagship or like uh for what they call them like try on stores where it's basically look we're not trying to sell here we sell online but if you want to come and you know try our stroller out or like you know sit on our couch that we're selling we have a showroom in your city and those was really expensive and a really big undertaking for them to be like okay guys 2021 that's the year we're going to open up our showrooms in new york and l.a and in san francisco and it's going to cost us like three million four million dollars and it's going to take a

lot of time and all this stuff and so what beta let them do is be like push a button and you're in our locations or however many locations they have. And it's like, okay, you're, you now have a store presence. You can send your customers there to try out your products or feel it out. And you'll get new customers just walking in who like to see kind of new cool stuff. And it's sort of a modern, modern day version of like Sharp Image, like you said. I really like that idea. I think the idea of curating good products. I mean, that is not even remotely new. I love that business. I think that is just the coolest business. I love those businesses. I'm in that business. I curate stuff. I love curation businesses. I think that they're.

Low cost, start fast. We talked about a curated airline or Airbnb business. We talked about a curated cool, nifty products. Gear Patrol does curation for outdoor stuff. Then there's, you know, is it called whoop? Not whoop the band, but like, wasn't there one called whoop? Woot. Yeah, Woot.

That was bought by Amazon for like, I think like $100 million. I love that. I think it's cool. And let me tell you one more that is cool. Sarah just bought a gift or a jacket out of here. Have you heard of Italic? Yes. I'm friends with Jeremy, the founder.

So the premise, and I don't think that this is particularly unique, but I had never heard of it, and it seems badass to me, is they're like basically we make, and I think a lot of retailers say this, that's why it's not particularly unique, but they've done it well. They're like, we make Montclair or Canada Goose, which are like $2,000 coats. We make those same exact coats, but without the brand, and it's $200 instead of $2,000. or we make these fancy knives, which is the same, but no logo. Yeah, luxury quality without the luxury label.

That's the stick. And ironically, that's like an even more high status thing to do is be like, yeah, this is a, I'm wearing a, you know, Prada level product, but I didn't have to put Prada on it. I'm understated like that. So we bought, I bought, or someone in my family bought another family member, a like a $20,000 purse, but it was fake. It was from China. And it even came with like a fake, like a certificate. Like, no, like a authentic, like it was like it came with the box.

Right. And still had plastic on it. And you open up and you had the label and like a certificate that says it's real. Like they just copied it perfectly. And then we had a real one laying around and we like, like, no one could tell the difference. And so basically he's just made that. Dude, this is a, well, so these are, yeah, I guess these are kind of those are. Minus the logo. Those are really knockoffs. So I lived in China. for a couple years when I, when I finished high school.

And my mom was like super into like luxury bags, but was like, you know, cheap Indian woman who was not going to buy a Louis Vuitton bag. Like a $6,000 bag, loved it, but wanted it, but would never buy it. And so when we moved to China, they had knockoffs everywhere, right? You could go to the market and you would see, like, you know, that same Louis Vuitton bag for $7. But it was like clearly fake. It was like, you know, the quality was just not the same. and so there wasn't in-between market, and they called her the bag lady.

And this lady was ahead of her time. So she only worked through Blackberry Messenger. Today, that would be like, you know, WhatsApp or WeChat is probably what she'd be using. But it was BBM only. Nobody knew her name. And she had no steady location because, like, they were always after her to find her. So she would do these pop-ups where she would just DM and she would BBM an address. She's going to be there for the next two hours.

It was usually in someone's apartment, one of the first. of her customer's apartment where there's like a doorman and like they can kind of screen who's coming in and who's not so she can't get like rated. And she had the most high quality knockoffs that were the her claim to fame was you could take this to Louis Vuitton and at the time this worked. Now I bet they have some chips inside that like you, you know, they can validate it. But at the time this was you could take this to Louis Vuitton and you could say, is this authentic? And they would say, yes, this is authentic. And so she would sell hers for $400, $500 bag. So you're getting the, not the 6,000, and not the $6,

but you're getting the $600 bag that looks and feels like the packaging is identical. It was amazing. And she would text out her location and a swarm of moms would come. And this lady would probably make $10,000 in a two-hour period. And then she would pack up and disappear. And she wore these like masks and glasses and stuff like that.

So you never knew who she was. And I just thought this lady was like the ultimate dollar. Dude, if my mom, I don't know if she did that or not. But if she did do it, whenever I got in trouble for doing anything, I'd be like, dude, you're part of a fraud ring. Like you, like you're like, like you, like you, like you, you, like, you, like, you, like, you, like, you, like, you, so I hope you would have used that, uh, uh, that, uh, that,

I thought, I thought it was amazing what she was doing. And so I, one of the interesting thing about this italic model, by the way, uh, and I hope I could say this. So I'll, I'll, I'll ask him. But the cool thing I think they innovated on was not just finding supply the same supplier or like, you know, an identical supplier who could make, who make the same quality. But they actually went to them with a kind of no-brainer offer. So every supplier in China is constantly getting hammered on their unit price.

So it's like, oh, we make this thing for $20. And the customer's always asking for $18. And they're just, you know, they're always like pushing that down. So what they did was smart was they went and said, hey, look, we don't want to hold inventory because that takes a lot of money and it's hard. So why don't we do this? Instead of $20, how about you get $40? $50 per unit sold.

And manufacturer's like, what? And he's like, yeah, you get $40, but I'm not going to buy the inventory. You make it and you take the risk with us and you get double. And they said to start with, let's only do, you know, a little bit of the inventory this way. And you can see that this actually works. And as you get trust that we can sell the product, basically you're going to build it. I'm sure there's some manufacturing term for this like consignment or like, you know, on spec or some shit like that. But I thought that was really smart.

So they've been able to bootstrap this business or not. bootchrap, they've raised money. But like, they've been able to be very capital efficient because they're not putting out, you know, five million dollar purchase orders to factories. Instead, they're telling the factory, hey, share some of the upside, but you make it at your risk. And if we don't sell it, you're out. But, but you can take that risk with us for more upside. And the factories are more entrepreneurial who try to do that. I think that what we need to do is like break down the economics of that model of like, what's better to be like Walmart and just sell cheap stuff or to be like, Costco or Sam's Club and sell a membership and sell it at cost.

Right. I think it would be interesting to see what that needs to become like. And I don't know what business is better. I would think the membership thing would be far better. Well, I don't know. On Italic, do you have to be a member? I don't think you do. Yeah.

Maybe you can be. Oh yeah, $10 a month. That is it. So they still make money on the product itself. So they're not like Costco where it's at cost. But what I like is it's asset light. So even though the total money captured might be less, their growth is going to be faster and require less investment, and therefore they're going to own more of the pie

because they're an asset light model. They're not holding and buying all this inventory. And so I think that there's, you know, that's the pros and cons where they can just specialize in being an amazing marketing company. And they don't have to worry about being a, you know, a full stack, you know, a company that that's getting stuff made, holding it in their warehouses and fulfilling it, all that. Yeah, I think it's cool. I like these businesses. I don't know how we're going to categorize. them. But I think that what Italic is doing, have they raised a lot of money? Are they big? I don't know anything about them. They raised like, I think, $10, $13 million or something like that. Is it going well? Yeah, it's going well. I think it's awesome. I love this thing. I think it's so cool. 13 million bucks. But that's like the same thing. Like Sarah. If you go to their website right now, I'm just sorry, one example for people who haven't been there. So it says, here's the November new member gift. This leather zip cart, like a wallet, basically. It's like St. Laurent. I don't know how

how you say these fancy brands, but I think it's that YSL brand. 295 is their price. Cuyana, I don't know what that is. Maybe it's some like secondhand marketplace is like $75. Dude, all like the women listening to this are like, oh, my God. Yeah, it's like me saying like the Dallas coboys. And anyway, that italic, it's $35, right? So it's 10 times cheaper than the normal retail price for the same product without the label.

So you know that fancy brand? There's a fancy brand of pots and pans. brightly colored. Again, everyone listening to this is like, you idiot, it's called. It's like croquette or you don't have to talk about. We should just bleep all these out so that we save ourselves the embarrassment. But yes, I know what you're talking about.

Is it a little lay crusette or something? Anyway, they make a knockoff and it's $95 as opposed to $400, which is awesome. And then my friend had it and I saw it. And then they also used, he bought the knives from them. And I was like, Jack, this is a super sharp knife. what is this? And he's like, oh, I got it from Italic.

Right. So I think it's great. And sorry, Italic, sorry all the brands and the people listening. We're just a bunch of basic-ass dudes who can't say. Right. All right. Dude, that's like worst of the time that someone was like, it's called Tully. I'm like, it's spelled like Thule.

I think it's Thule. Yeah. The Swedish, they got a different word for everything. I tell you. They should have. Don't spell it like it rhymes with mule if it's going to if you're going to pronounce it Tully. All right.

A couple other interesting things. Okay, here's another idea for you. So I've been playing around with Facebook ads, you know, on and off for many years, but more seriously this year than any year before that. And Facebook, I would say, is probably the greatest marketing engine, maybe of all time, definitely of our era, you know, is creating. created so much opportunity. If you can take your product and be able to market it effectively on Facebook, you're able to reach, you know, the whole world at, you know, in one of the most

efficient mediums possible, right? Because it's all measured, attributed. And it's all, you know, you could use their, their algorithm to figure out who's your buyer, all that good stuff. So if you use Facebook ads, it's like easy enough to get started, but it's not that easy. and I think there's an opportunity for somebody to create essentially a course, but it's not a course. It's not me saying, I'll teach you to do Facebook ads. It's a game. It's called the marketing game. It's basically a simulator that dumps down the Facebook ad UI and UX and just like it gives you a chance to get reps at driving growth through marketing.

And so. Totally agree. Great idea. So what I would say is I would say, oh, hey, you created this shoe. You want to sell the shoe. Okay, so you don't have to take the time to like build the ad creative, but it's like, here's six ad creatives. Pick one you want to run. And it's like set up your campaign.

Who are you going to target? You know, so it's like the dumb down UI. It saves you all the time. You don't have to actually go to Photoshop and create ads, but you have them there. And you get to guess like, oh, maybe the one where there's the discount or the one with the text on top or no, it should be the video. And then you click Go. And it's like, you know, SimCity or whatever. It's like, it simulates.

It's like, here's your return. What are you going to do? Take this money and do the next thing. I think you're on and you're off. way that I would do it, this is a brilliant idea, but I would do it differently. Here's what I would do. Because there has to be a category of learning that this is under. But this type of learning always works best for me. And I'm pretty sure it's the best for most humans, which is like, you know, when you learn how to play guitar, you copy other people's work, right? Yes. Yeah, you go look up the

chords to Ed Shearin, you know, if you want to go play guitar. And you do that for years. And then after a while, you're like, all right, I understand what works and what doesn't work. I can make my own stuff. That's the best way to learn. I think that's the best way to learn writing. You're right. You're right. And so what I would do is I would get a list of all the most successful campaigns. So like different ad campaigns that probably Trump or Biden used, different ad campaigns that native deodorant use. And I would say, all right, you see this campaign? It worked really well. Recreate it. Yes. First step. Exactly. So so you start and in the game, it's like, what do you want to be? Do you want to be the founder of native? Do you want to be the founder of Allbirds? Do you want to be the founder of Allbirds? Do you

want to be the founder of the hustle? Do you build an email list? Do you want to... Who are you targeting? And what are you selling? Great. We got that category here. This is the best campaign that we've ever found.

Right. Now, first thing, you need to come up with an image. The image that works best for them was this. Now go out and find it. Yeah, I totally. We're going to call it Code Academy for Facebook. Bray, you said, that's exactly what I have Code Academy logged up here. Code Academy is a thing where you just log in and they're like, all right, we're going to make

this game. Type in this. Exactly. So many people have done these Code Academy, kind of like learn to code platforms. And they also made it easy. So let's say you actually want to learn how to code. It's like, oh, install the Python library in your computer. Go get a text editor.

You know, that's going to be where you're going to write your code. And then learn how to compile it, learn how to get it onto a website. It's like, fuck, this is all so complicated. Just the infrastructure is so complicated just to start. And so what Code Academy did brilliantly that other people did too is they made it like, hey, you go to the website and here's like, on the right side is the output and the left side is where you type. And it's like, cool.

First, it's like in gray. it tells you exactly what to type. You literally just have to retype what they already have. It's like variable equal, you know, var equals six. It's like, oh, you just set a variable. Great. You know, like now learn how to add two variables together. And that like teaches you step by step how to do it.

And so I think that's really great. It was a great way for somebody like me to actually like try to learn and get my feet wet a little bit. I think somebody needs to make Code Academy for selling or for marketing. And so the way you would do it is I think you put a great twist on it. But I got really excited about this idea the other day because I was, I've been finding, because I've been doing a lot of blogging to my, my audience. Like I've done probably 50 posts in 60 days or something crazy, like some crazy volume. And one of the consistent questions is around this, around Facebook ads.

And I myself have trouble with it. And I'm like, fuck, where do I even send these people to learn? And I was like, shit, I'm just going to start building tools for my audience to like, to solve the problems that they have that we have, right? It's like, I'm just going to build a set of tools that solved this problem. And so this was the one that I was most excited about. I think in the list of six, this is the one I'm most excited about. Look, I think that's cool.

And I think a lot of people would be like, well, but how many people are running Facebook ads? It's like, well, one million people. Right. A lot? The most? Yeah. I mean, how many people are running Google ads? Like, five million people?

I mean, like, what, like, enough. And this should be a part of every school. One million companies, let alone all the employees doing it. Enough. enough that you could build a big business by charging $30 a month. Exactly. And this should be a part of like every, you know, college curriculum, high school curriculum, something like that.

They should make this type of experience accessible to them if somebody built a good one. And I think you kind of got to build it a little bit like a game. The Code Academy types try to gamify their stuff a little bit. But the best ones make it where you get a sense of progress. You feel like you're making more money or you're leveling up in some way. And it keeps you motivated to like, you don't want learning the tool to be the end game. You want to have to learn the tool in order to get the outcome you want.

In business, that's why it works, right? I don't want to learn Facebook ads. I want to make more money. Facebook ads is my way to make more money. So you've got to design this the same way where the prize is the fun of seeing your character progress. And the way to get there is to actually figure out better how to actually use these marketing tools. I think it's awesome.

Code Academy, by the way, how much does it cost? They have 100,000 paying customers, they say. How much does it cost? It costs $20 a month. So what's that mean? 200,000? Is that 200,000? 100,000? Or is that 2 million? How many customers is it? 20,000?

100,000. I can't do math. I got to carry my zero. Two million a month. It's a 24 million year. It's a 24 million dollar business. That's a hundred million dollar business. A hundred million dollar company probably, yeah. I don't know how many people there are who code versus marketing.

I have to think there's more marketers. Yes, I would agree. It doesn't even matter. It doesn't have to be the biggest thing. in the world. There's enough. There's more than enough to build a viable business doing something like this. It's hard. I would say this is actually really hard to build, though. That's the caveat. I think it's tricky to get it right. In terms of like the psychology and how the product feels, I actually disagree with you.

I like it like there's all these like interactive things where you're just like looking at a screen and like the cursor needs to be moving and it's got a point like point. You know, it's like it's like Microsoft clip or what's that thing called? It's like the paper clip needs to be They're just pointing. Yeah, I think you can make it easy for people to go through. But just like for Code Academy, right, it says seven years and 45 million learners later. So 45 million learners have like gone through the system at least. And, you know, they have 100,000 paying customers per month.

So you're going to get a shit ton of churn, just like for Code Academy, right? I churned out of Code Academy too because shit, it actually is pretty hard to learn how to code and keep going and keep the motivation there. And that's why I think this is hard to build because it's hard to build it where you keep somebody engaged and they get to like, you know, they get through the program essentially. I don't think this would be a monthly thing forever. I just think it could last for like, like Code Academy's been around for 10 years. Do you say seven or?

Yeah, seven years. I think Code Academy could be around for another 10. Right. So I think it's good. I think we should do. I mean, that was a pretty good one. Do you want to end there? Yeah.

If somebody wants to build this with me, ideally somebody like somebody good. So I get a lot. I always ask that question. I get one good person and I get 10 like, complete jokers. How do you know if you're good? You're good if you've actually like built stuff before that people have used. And ideally in this case, you understand the problem of trying to learn Facebook ads. So you've gone down and like, it's kind of like how I've tried

to learn how to code four times. I'm actually the right person to build a learn to code product if I paired with a technical person because I know I've tried this. I have had, I am the customer. I understand it. So ideally it's somebody who's tried that. And also best case would be somebody who understands games, like you play games, at least, if not have built a game before, because I think you need those mechanics in order to give it to games are amazing lead-designed products. This is awesome YouTube video. If you go watch, it's called, you know, Mario, like the genius of the first level of Mario or something like that.

I don't remember what the video is called, but basically it shows how. Yeah, it's like a Vimeo video. It shows how Mario has no tutorial, right? Most popular game, no tutorial on how to play, how to jump, what's the objective? am I trying to get coins? How do you learn all this? Well, the way he designed it. So first, it shows you're Mario, you're standing there. And all of a sudden, the screen starts moving. It's pushing you forward. So you already know, okay, got to run to the right. Like the motion of the level tells me where I'm trying to go. Go right. Then this Gumba comes and he's got this angry face. So you know,

this is probably not a friend who's going to give me some potion. There's probably an enemy that I need to do something with, but I don't know what to do. And then they showed that like where the Gumba meets you, you also have these boxes above you, the coin boxes that have question marks. It's like, well, that's intriguing. I'm going to want to hit the question mark. And so you jump, you get the coin, and then you almost always will land on the Gumba's head and kill the Gumba. And then you see the satisfying Gumba's gone and you're like, oh, good, I know what to do now.

And then you see two more question mark boxes. And you're like, huh, how do I get to those? I guess I could jump on this to get to there. And it's like, with no tutorial, you've now learned all the mechanics of the game. You're trying to go to the right to the end of the level. You got to kill these Gumbos by jumping on their heads and you want to collect as many coins as you can in these boxes. And sometimes there's other stuff in the boxes.

Like a mushroom comes out of one of the first four boxes of Mario. And that's how you want to design great products is where you actually don't need clipy. You just make it where there's really only one thing you could do. And that's the next action you need to learn as a player in the game of like, oh, click this, good thing happens. Great. Now I know when to use that technique.

Abreu just shared it. It's called How Nintendo Made Mario's Most Iconic level. and it looks like two, they're speaking in Japanese, it looks like the developers are explaining it all. Right. I don't think it's the developer, but it's some guys explaining it.

Yeah, it says, they're using the word we. Like, you know, we made it this way. Oh, really? That's amazing. Okay, great. What's his name, Marimoto or something like that, Miyamoto.

Miyamoto, yeah. What a legend. Billy Mario. Fucking amazing. Yeah, those guys are legends to me. I mean, it's just so cool. Like, I think about these Japanese guys making Mario, it's like kind of mythical to me.

Right. Okay, great. I got to run. Good stuff. Enjoy your new house. Good episode.