My First Million - #207 - How to Make Millions by Unbundling Etsy

Episode Date: August 6, 2021

In this episode Sam (@theSamParr) and Shaan (@ShaanVP) break down a multi-million dollar opportunity to unbundle Etsy ($24B market cap). Shaan also shares how he would approach it if he were doing it himself. The guys also talk about the multi-billion dollar elevator industry, a training program to become an MMA fighter, and whether tax incentives make Canada an attractive place to run a startup. --------- * Want to be featured in a future episode? Drop your question/comment/criticism/love here: https://www.mfmpod.com/p/hotline/ * Support the pod by spreading the word, become a referrer here: https://refer.fm/million * 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. --------- Show notes: * (1:10) Intro * (3:30) The elevator industry * (11:08) Unbundling Etsy * (22:43) A crash course to become an MMA fighter * (28:02) Mental Fitness * (39:01) Moving to Canada + SRED credits * (45:53) Reese Witherspoon's massive exit * (51:45) Delta airlines meet Delta variant

That's exactly how it works, is people think, oh, if I practice stoicism, I'll become that person who is calm mind and able to just operate and doesn't have these sort of like massive swings. And it's like, no, it's the other way around. Once you learn to tame the mind, once you learn to master the mind, you'll naturally become a stoic person. 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. What up?

All right, what's going on? I'm in Nashville. Wait, is it eight or seven where you are? Seven. Oh, it's seven? Wow, it's really. So I woke up a little bit late and I texted you and I go, you just want to record something right now?

And you said, yeah, I'm thankful you said yes. Yeah, let's give it a shot. You're at a podcasting conference, which sounds like not a ton of fun. Is it a ton of fun, though? So it's educational and I'm happy and I'm learning but it's just like nerdy stuff and you know there's not like I can't absorb it for that long but I'm happy that I would love yeah it's worth it's cool. People like know us and that's crazy like it's crazy just to walk around it's at a hotel and like so everyone's staying and it's kind of funny to be walking around

and just people come up to you and say that they like listen so that's kind of neat because it's all podcast nerds. Yeah. Okay. I like that. You learn anything cool? Any hacks? Any growth hacks for us or what?

I think YouTube is just the way to go. And that's what we'll be doing with this show is going hard. Podcasting is for nerds. We're going to YouTube. No, I mean, well, that's the way to go. Some of these people spend, so for the listeners, Sean and I, well, it's not our money anymore. But when we were doing this, like, we were like so cheap.

And I actually think too cheap. about starting this podcast. I mean, I think it was right how we did it with like really bad at first and then it got a little bit better and a little bit better. But people spend so much money on recording their stuff.

And I actually don't think that's important. But when you have something like we have, which is like you kind of hit this lick, it's important to invest. And I think we've underinvested, which is crazy. Yeah, maybe. I don't know. I was renting a studio the first 10, 10, 20 episodes,

$100 an hour. So that was a, that was like professional setup. I went, I thought I was, going, I thought I was over investing at that time because I had zero listeners when I recorded those. Yeah, no, but that's my point is that my perspective has changed when I'm seeing like some of the budgets that people have. But for this episode, I, like, I called you because I saw like three amazing things that I wanted to bring up to you and you have one, two, three, four, five interesting things. And I just wanted to talk to you about them. All right, let's do them.

What do you want to start? Give me your first one. Okay, the first one that I, we didn't get to last time, but I wanted to fill you in about it. and it's about the, oh, I'm just writing notes, it's about the elevator business. So I told you a little bit about this. So I, like, there's, this was one of these moments, and I've had them with you a ton where you explain something and you're like, I didn't even know that this was a problem. I didn't even know this was an industry, but now I'm totally bought in and I think it's amazing. And this particular company, well, in this particular company, I'm not sure.

I don't, it's not because I think that they're bad. I just don't know them well enough to actually believe that. they're going to win. But, like, it was pretty amazing. So let me set the stage. So I believe there's something like, I might be off by a little bit, but I believe there's something like two million elevators in America. And only four companies basically control the whole elevator business.

Have you ever been on an elevator and looked at your feet where the doors open and seen the names? Yeah, there's this little, like, plaque there. But I don't remember any of their names. I don't, I can't recall. I went through my key in the crack and had to call one of the companies to be like, hey, how do I get under your elevator? Wow. So it's Otis.

You probably recognize Otis. That's the big one. Yeah. Otis, Schindler, Cone, and Mishibi. Is that? Mitsubishi. Yeah, Mitsubishi are the big ones. I know of Otis because I've already, I've looked into them a bunch.

They're not technically, these four aren't technically a monopoly because there's more than one. But basically, they control just about everything. And what that means is when you buy an elevator, I'm not actually sure how much an elevator costs, but something like Target might have six or seven thousand elevators. And when you buy an elevator from them, it's a like 10 year or 20 year contract. It's a really long contract.

And it's almost like buying a car. So when you buy a car, you get a 50,000 mile warranty. And except imagine buying 5,000 cars. And it's incredibly challenging to know, when each car needs to be serviced, what type of service the car company is actually going to pay for and what they're not going to pay for, what falls under it.

It's kind of a pain in the butt. And so what happens is oftentimes a company like Target, they employ a whole team to manage their elevators and escalators. And they don't know, like, you know, what they have to do. And instead of fighting with Otis and deciding they just go, ah, fuck it. We're just going to call service people and we're going to figure out on our own. And there's two new companies.

One is called AuditMate. That's who I talked to. But there's one in Britain called We Maintain that's raised $40 million. And basically, what they do is they manage your elevator and escalator. It's like fleet management. You know what I mean? And I thought that this was so fascinating and very interesting. And when I heard about this company, I was like, well, I don't necessarily want,

I'm not sure if I ever want to invest in anything like this, but I would love to own it. And so the way it works is they charge $50 to $60 a month per elevator. And the name of the game is you just go out and find all the elevators and you say, look, we're going to be your agent, which means we sign on to speak on your behalf. And we're going to negotiate with Otis. And we're going to make sure that your shit's maintained. It doesn't break down. And we're going to handle all of it. And I thought that was amazing.

And it's one of these business models where it's kind of like the way that they charge right now, or a lot of these companies charge is a subscription fee, which is fine. But this is one of those business models that we've talked about, like, TurboTax, where they take a percentage of all savings. So it was like the easiest shit ever to sell. Right. And so anyway, they're basically saying, hey, you have no risk, no loss because we're going to save you money. You know, you sign up to pay with, you sign up with us. We're going to save you money and we'll take, we'll take out of it in the same way that, you know, like Main Street does this with tax savings, basically for it for you. They'll be like, all right, we'll take a percentage of whatever we save you.

It's like, oh, okay, sounds like I have no downside. And even if that percentage is large, it's like found money. So they feel good about it. I thought, and I thought this was cool. I've never, have you ever even heard of anything like this? No, dude. So I'm just looking at some of your notes. Otis, 12.5 billion in revenue. Schindler, 11.6 billion. Cohn, basically the same 10 billion in revenue. It's huge. Those are huge revenues for these companies. Now, I don't know how profitable

the elevator business is, but I'm very interesting. Otis is like a family-owned business. I'm almost positive. Otis has been around since the 1800s. I mean, these are like huge, huge family-owned businesses. So they definitely are, I believe they have to be profitable. here. Otis. Otis does 12 billion. Otis is publicly traded. So what do you think their market cap is for $12 billion in revenue?

Okay, I'm going to guess they are a $22 billion company. Might be less. I think it could be less. You think less? I think less. It's about 40. 40. Okay, so I was 22.

I was off. So, okay. Pretty crazy, right? Like, who would have thought? And so this is just software that lets you help you negotiate. Twitter is like 50, 75 or something like that. Is it really? Otis the elevator company.

Yeah, Twitter had been hovering below that. And then now it's at 55, 60 or something like that because the stock went up recently. But basically, Otis the elevator company is worth almost as much as Twitter. Which is insane. And not only that, I believe, let's see, it's been around since 1853. Yeah. Amazing. So it's, the funny thing is this is named after like a guy's first name.

It sounds like it's not even. It's just, it was, it was, the, the company was, uh, invented in Yonkers, New York in 1853. And they've been around since then, fucking elevators. And so this fascinates me when I like learned about this because, you know, I like old shit. When I think about you and I and I and a bunch of friends were taught. What is yonkers? Is yonkers a place? You know, is somebody born in Yonkers?

Because that's amazing. I want to say I'm from Yonkers now. Yeah. It's in, uh, it's in the, I believe it's in the Bronx in New York. It's like a, it's like, I don't know. It's in New York. I'm from Yonkers. In the Bronx. All right.

So this company, but what you're saying is that this company is a SaaS company on top of those, right? Yeah, it's a SaaS company that lays at top of it.

And here's why this fascinates me. I love old shit, things that last a long time. And we were talking about like the creator economy substack. I don't remember what we were talking about. Something like involving like one of these newsletter like one off creators.

And it's like, yeah, I think you can make a lot of money, but can you do that for 20 or 30 years? It's really, really challenging, I think. Right. Basically, Sam's type on companies. Did you start in the 1800s in some way?

Did you have a physical product that you could touch and feel? Were you started in the Midwest or some part of America? You know, are you named after a family like Rockefeller or Shindler or Otis or something like that? Let's see. What else is it? You know, are you absurdly profitable? Those are your type, essentially. Yeah.

Look, I think it's cool. that's something that, to build something that can last a really long time. Yeah, that interest me. Because that, that, that, that, like you, you optimize for excitement, I think, or, uh, interest. I optimize for what's the least amount of work I can do in order to, like, have freedom. And you're just more like durability. And, uh, and, I feel like durability is like number one. It's like, yeah, you just, if you have this, you win. And I'm like, if you have this, you might win for an hour. And then you might lose the next hour. And like, I'm cool with that.

So both work, but they're both work. They're just different. What do you have? What do you have? Let me give you one. All right. So what I want to do? Let's do.

Let's do. Let's do. Okay, let's do this unbundling Etsy one. So I'm really interested in the second tier or like what I'll call B class marketplaces. I don't mean that as an insult. I mean it more like if you're in real estate, you're like, oh, do I buy an A class property, which is like it's a modern building fully leased up, blah, blah, blah, or do you go for like an older thing that has upside, right?

Do you go for something that has some hair on the deal that you might be able to do? And so you go, you know, this is not New York, right? Like that marketplace might be Amazon. Etsy or Poshmark are these like second tier marketplaces, but I see a lot of opportunity in them. We talked about, I think we talked about this, about building SaaS tools for sellers on those marketplaces. So you brought that up.

And I thought that was a pretty revolutionary thing. That was a big idea. And so these exist, but they're not great. And there's not a lot of competition. And so, like, I think we talked about Jungle Scout, which sold for some large amount of money that you knew. Jungle Scout is a tool for sellers on Amazon. And I was thinking, okay, who's building stuff like this on these second tier marketplaces like Etsy or Poshmark? So that was the first idea.

Then I started thinking, okay. Wait, are you going to elaborate on that? Because that's pretty amazing. Well, I think, didn't we talk about it? Maybe we talked about it. No, if not, then that's an idea. I think, I don't know if you phrased it that way. I think the story telling here that you just said is actually wonderful.

So I think that's actually brilliant. We had, so at HustlCon, we had Poshmark, thread up, and one more of these companies speak. And I think they were some of the biggest. Mercari. McCarrari's a big one. Yeah, they're huge. Second-hand sales.

The Real Real. You know, there's all these like other marketplaces, basically. There's all these other places. So Ben's wife, Tiffany, she is a poshmark like super seller or something like that. And so she like, she sold so much that like when they IPO, they invited her and like whatever, the top other thousand sellers to be like, do you want to buy the IPO? You can buy the reserve price basically. We're reserving some shares for you because you've helped build this thing.

For which company? For Poshmark. And like Airbnb did the same, I think. I think for, they offered super host ability to buy some share, some small amount of shares. And so an Airbnb, by the way, another marketplace where could you build a jungle scout type of tool on top of Airbnb? There is that I'm a subscriber to. It's called AirDNA. It's amazing.

And what does that do? It tells you like what to price it at or? Yeah. So it's called AirDNA. And when I was, so I rent out my house when I'm not there. and I buy property to rent out and I use it as a research tool. And I guess it just crawls Airbnb and it determines what the average occupancy rate is, what you should charge, what the earning potential is.

It's just, it's tons of signals for buying properties to make into an Airbnb. And there might be other things like reporting, you know, tax, you know, some tax savings you can get or whatever if you, if you're an Airbnb host, it plugs into your Airbnb and it generates your report. So anyways, I was thinking, okay, you could build a Jungle Scout type of tool. And for those who don't know what Jungle Scout is, basically you go on Amazon. If you have Jungle Scout installed, it's a Chrome extension. And basically, when you are looking for products, you can just click Jungle Scout and it'll tell you, hey, here's how much search volume this has.

Here much monthly revenue this product makes. It's an estimate, but it's pretty good. Here's how fast it's growing. Here's how strong the competition is. And so what you want to find is something that there's a lot of search. and low competition. And if you find a combination like that, you're like, oh, nobody's searching for, you know, wooden spoons that are like wooden oversized spoons.

You don't want to build that because nobody's searching for it. But if you have, like, you know, wooden oversized baby spoons is high search, low, low competition, you could go to China, get that product made and become like the top result on Amazon, which is basically free traffic for you. So that's the idea. So I think you could do that for Poshmark. I think you could do that for Etsy. One thing that I was thinking about for Etsy is I think you could.

spin off a whole new marketplace, just unbundling Etsy. Etsy is now big enough. It's a public company, been around for a decade plus, and has all these different categories, right? So it's like, you can go and you can go to home, you can go to, you know, custom gifts, you can go to all these different categories on Etsy. And you could ask yourself, huh, could I make a marketplace or a service that just does this one thing better than Etsy's doing, marketed as that, and actually like, unbundle a piece of Etsy in the same way that people have got a lot of success, unbundling Reddit, unbundling Craigslist. If you haven't seen this, Google, Google, unbundling Craigslist and look at the diagram.

It's like it takes every part of Craigslist. And then it just shows how, oh, look, this housing part of Craigslist became Airbnb. And this became Etsy and this became this other thing. And so the same thing I think can be done here. So here's, that's the core idea, is unbundle one of the verticals of Etsy. What I would do, I was looking at the categories, I would do custom games. I would do custom gifts. So custom gifts is one of the top categories on Etsy.

And people go there because they want to send a thoughtful, kind of like what looks like a homemade, handmade gift to somebody. Or they're getting it made for like their wedding. And they want all their wedding coasters to have their names on them. Or their bachelor party and they want everybody to have matching shirts that say the bachelor's name on it or whatever. And so I think custom gifts could be spun out into a marketplace that's like five where you're basically just, here's a bunch of custom gifts, push a button and you get these

for, you know, 10 bucks or some flat rate, basically. So I think you could do a fiver or even like a cameo style thing for custom gifts. And that's the category I would go after. But I think generally, I think you could study their marketplace and find it, we'll find one that works because you can also see the shop sales. You can go into any shop on Etsy and you can see how many sales it's had, which is like an entrepreneur's dream. Yeah, this is part of Etsy. It's like, you know, here, this shop has had 6,000 orders. And you

can look at the price at the store and be like, oh, you know, average thing's $35. It'd be like $6,000 times 35. That's how much revenue. The shop is made in two years. Those are both two big ideas. So you're talking about building like the software that analyzes the sales and then the marketplace that sells the stuff, both actually pretty amazing. I go to Etsy sometimes. And I do. So if you scroll all the way to the bottom, you'll see how many sales they have. eBay does it too. But not as good. But that's actually a great idea. And by the way, I looked up AirDNA. So the thing about these software companies, you're talking about two different things. We'll call it one software, one marketplace. The software companies,

so if I told you, or if you told me about Jungle Scout a few years ago, I would say, like, oh, that's a nice little, that's a nice little thing. The hacker business. Yeah. Yeah. Well, it probably does like 80 or, I mean, If it's worth a billion, I wouldn't be surprised, but it's definitely worth nine figures. I know that for a fact, because it sold part of their company. So I told you just about AirDNA.

I thought that was just a small thing. How big do you think AirDNA is? By the way, Jungle Scout raised over $110 million, which gives you a sense of how big it is. Yeah, I think some of it was private equity, so I don't know how big the valuation was, but it's definitely huge. Right.

Okay, AirDNA, I don't even know what it does. I haven't ever been to the website, so I'm just going to say a random number. out of the air, I'm going to say 35 million. What is their DNA worth? Well, so they air DNA, so they charge, I think I pay $100 a month for it. In 2018, they did $4.9 million in revenue. In 2019, they did $8.4 million in revenue.

They said they were growing 100%. So you could probably assume that I would actually bet that in 2020, they probably did 16. And then 21, I wouldn't be surprised because there's a lot going on with investing in Airbnbs. I wouldn't be surprised if they're in the 30 million recurring revenue, annual recurring revenue range, and they raised $8 million in order to build up. They bootstrap to $9 million in revenue and then raised $8 million.

So these are like these things that you would think are small, insignificant stuff that could actually be quite big. So that's a $50 to $100 million of your valued business at that, roughly those numbers you just told me. Yeah, it's a huge thing. And who would have thought? I never would have thought that. If you told me you're going to build this thing that analyzes Airbnb, I'd be like,

not a chance. Side hustles are cool. Yeah, yeah. You should be able to bring in the 4, 5K a month, you know, with your little Airbnb DNA tracker, whatever the hell you're talking about. And I would say, if you had to guess, what's bigger, Etsy sellers or Airbnb, I would think there'd be more Etsy sellers than Airbnb hosts. Well, the thing with Etsy sellers is that, so Airbnb is very much, it's a lot more set it

and forget it. and there's less leveraged poll, and there's less like categories and things like that. Whereas Etsy has like multiple different categories. Each one has its own little nuances. And then there's like such a wide variety of sellers where, yes, there's many people have houses, but they're all doing the same. They're offering the same service. Etsy's offering like a million different services to people.

And so I think that's why it has probably a little more opportunity. What would you do? Why did you call it cameo? Well, I was just thinking custom gifts. If custom gifts is this big of a market, I would just start with that. I'd say custom gifts. Maybe the end product wouldn't be a physical gift like Etsy. Maybe it would be something like a cameo where it's a video or making a jingle for somebody

or it could be with celebrities or non-celebrities. But basically some way to send a custom gift to somebody. If that's such a big part of Etsy, maybe you could rank for it in search or run Google lads and hijack some of that traffic of people looking for custom, you know, handmade, whatever, custom name, blah, blah, blah, and be like, yeah, we do that. We'll put your name on a shirt. Yeah, it's not as nice as Etsy. It's, you know, we just took the generic Etsy look and we just mass produce it, basically.

That, that'd be one way of doing it. I'm not bored with that. You want to move on to another one? Yeah, yeah. All right. So I'm going to weave to one of mine and one of yours. I'm a big UFC fan. So are you.

So DC, Daniel Cormier, he is retired now, but he's a big fighter. And he posted this thing, and I'd seen ads for it, but he posted that he's now going to endorse this thing called Fit to Warrior. And I went and looked at it. So Fit to Warrior, it's incredibly interesting. And so what they do is you spend $2,200. And in six months, they take you, is it six months? Maybe three months. I think six months.

They take you from being a complete noob. So you're just a guy off the street. Isn't it Wimp to Warrior? Oh, sorry. I spelled it. Yeah, it's Wimp, my bad. That fit to warrior wouldn't make sense. It's called Wimp to Warrior.

Wimp to Warrior. They take just you off the street, you give them $2,200, and I think you get like 100 classes or 50 classes. What did I write? So it's a 20-week program. How many months is 20 weeks? Five. Five months, yeah.

Okay, so you have five months. And what they do is you sign up and you have a fight, you have a fight scheduled. five months from the day you sign up. And it's like cohort-based. You pay like $2,500 or something like that. It's a cohort-based course. Yeah. Yeah, it's a cohort-based thing.

And they say, in the next five months, we're going to take a guy off the street and you're going to have an MMA fight. Now, it doesn't take a rocket scientists understand that the goal of this is not necessarily to get you fit or to like get in a fight. The goal of this is to have like a pivotal change in your life to be more confident to say like, look, I've said I'm going to lose weight forever. Now I have a fight in five months. If I don't get my act together, like, I'm really, it's not a good, it's not going to be good.

So this is like a pivotal, life-changing thing. And I love this business. They just raised $8 million from a bunch of PE people. It was launched in Australia. And basically what they're doing is they came up with this name, went to Warrior. They come up with this program and they work with loads of different MNMA and I guess boxing gyms. And they license out their program. And now they are paying kind of McGregor's coach.

John Cavanaugh is on board, D.C., all these coaches to, like, promote it, and they give them some type of fee. I thought this was amazing. And I think this is amazing for a couple of reasons. One, it's a business that I actually think this would change your life. If I told you you had to,

if I told you had to fight in five months, would that be the one thing that finally, like, said, like, I got to take this. Am I wrong that you think, basically this should be mandatory part of the education system? Well, so look, here's the thing. Everybody to do this. Here's what, here's, here's why,

this has always fascinated me. So women have this because they have like a biological, like you are now officially a woman. But men, we've lost like a rite of passage. We've never had this like, all right, now I'm officially a man.

Like I guess if you're Jewish and you have a bar mitzvah, maybe that's like the crossing of the chasm. I'm like, all right, you're no longer a boy. Now you're a man. And like we had this like I love the Spartans because they do this thing where they like you'd go,

they'd say, all right, you're 14 or whatever. Now you've got to go out in the wild for five days. and you've got to survive and just come back when you're done. Right. Men, American, we don't really have this like this, this, this, modern day. Yeah.

Yeah. And so I love these type of transformational, like, all right, it is official. You have, there's a start beginning and then like an end type of thing. So I love that. And you up here, you want to talk about mental fitness. I've also done like yoga or not yoga, meditation. I love headspace. I love calm.

I try to, I do buy into mental fitness stuff, but it's a little bit tough because it's not like intense. And so I love these intense programs, and I think that they can be great businesses and incredibly fun and fulfilling to run. Yeah, so I think there's a couple things. First, I had seen this. I thought McGregor's coach, John Kavanaugh, I thought he invented this because he was the first one always talking about, oh, we're doing Wim to Warrior. It's so good. We have 200 people doing it this season.

And he just kept doing it. And it was like, they take average Joe's. You come in and you basically say, cool, I'm going to turn into a fighter. I'm going to train like a fighter for X amount of weeks. and then it end the kind of the graduation, the culmination, the right of passage at the end, is you do the like the amateur exhibition fight or whatever with somebody else from the program, I think. So it's not like you're not in a ton of danger.

I think it's really cool. I didn't realize that there was like a business underneath this. And so just to do the math. So basically what they're doing is they're licensing this out to gyms. And they're saying, hey, this is a great customer recruitment like, So you run a WIMP to Warrior program. We'll give you the branding. We'll give you the business in a box kit. And what you're going to do. And we'll send you the customers. And we'll send you customers because we have star athletes and coaches promoting this because it's a feel good thing for them too. And so we'll send you a bunch of interest people. They'll find a Wimta Warrior program near them and you be my operator. So it's asset light. You do all the work. We will just do the marketing and create the brand on top of this. I think this is a Wimpton Warrior program near them. I think this is a wind to work. I think this. is actually really, really smart. I would invest in this company, even though it seems like so crazy fringe. I think that actually there's a very nice model. It's better than tough mudder,

better than Spartan race, better than all those, because they take on a ton of operational overhead. They're a traveling circus. And so I like this model a lot better. So, okay, I think WIP to Warriors cool. I think that your right of passage thing is interesting. And especially we talked early on about Boy Scouts and like the downfall of the Boy Scouts program and what you would do if you were going to buy it or reinvented or make a new Boy Scouts. And I think we were on to something with this. And we should keep looking for the opportunities that are here. I'll tie this into the mental fitness thing.

We did a segment on Simone Biles in a podcast two episodes ago or one episode ago. Yeah. And we ended up cutting it. So it's only, it's in the lost archive, lost files, along with me and Sam sparring footage from when I went to his house in Austin. And the reason we cut it is because I had a strong take. I was pretty like so, but we didn't, I didn't have, I didn't have all the details of the story. I didn't realize that there, I thought this was, when she said I had like a mental

breakdown, I was like, oh, that's like crazy. Like, that's nuts. But then. Yeah. Yeah. And then there's like these like the twist these things. I'm like, all right, well, that's like, that's like an injury. That's like, your leg's broken type of thing. So my opinion changed. And I was like, ah, I didn't actually have all the facts when I was. was when I was kind of explaining my opinion. Yeah. Yeah, that's true. And so we basically were like, we sent it to Sam's wife and we were like, hey, what do you think?

Too much? And she was like, yeah, a little too much. So we kind of, but I thought there was one part of it that was interesting, right? Like so, yeah, nobody really cares about Sean and Sam's opinion on Simone Biles, even though kind of that's whatever, it can be interesting. The more crazy your reaction, the more interesting it gets. I thought the more interesting, I thought the real part is. And it was there's going to be a trend.

I'm calling it now. Over the next five to seven years, people are going to start to really give a shit about mental fitness. And it's a very different thing than mental health. Just like for your physical body, you have health. Like, do you have a disease? Are you ill? Like, no, I'm not sick.

You can be not sick, but you can be not fit at the same time. And right, so you could be healthy but not fit. And in the same way, you could have mental health, meaning you don't, You're not suffering from, you know, depression, severe anxiety, bipolar, anything like that. But you can also not be mentally fit. And, you know, so what's a fit person, right? Sam's a really fit person, you know, really physically fit. If you work out with Sam, you go for a run with Sam, you'll be like, God damn, this guy can run.

He's, you know, he can go long distances. He's fit. And so similarly, there's mental fitness, which is basically just like in physical fitness, it's about overcoming some adversity. So a mentally fit person is somebody who can overcome a high-year-old. high degree of and variety of adversity and intensity of diversity. And so, you know, shit not going your way, getting in sticky situations, being out of your comfort zone. These are all areas where mental fitness matters, relationships, different challenges that come your way is where mental

fitness matters. And I think right now this is something that is very poorly understood. It's rarely talked about. It's almost never taught. But I would say mental fitness, is, in my opinion, the most important skill one can have, right? The most important thing is the little voice in your head that's talking all day, nonstop, this chatterbox we have in our head. And what is it telling yourself? Is it telling yourself that you suck, that you can't do it? Is it telling yourself that you should give up? This is too hard. Is it telling yourself that, you know, don't do it. Things might go wrong. Or is it saying the opposite? Is it saying, you know what? You could figure this out. Hey, even if it doesn't work out, no problem. You know, everything will still

be okay. Hey, even though this person just cut you off on the road, look at the, look around, the sky is blue, the air is crisp. Your family is happy and healthy. You have a lot to be grateful for, right? Like, the voice in your head dictates the quality of your life. And the voice in your head is your mental fitness. It is, it is the manifestation of your mental fitness. And so I think we're going to be seeing a lot around this. I think we're going to be seeing growth in services, content, thought leaders, whatever, around mental fitness. What do you think? Am I overblowing this? Or is that, are you a believer? I'm a believer. I think that what you're doing with this title of mental fitness is I think you're just rebranding something that's been around for a long time.

This is like a Tony Robbins book. So I totally buy in to what you're saying. And I, and I, and I 100% agree with it. I think there's a few opportunities here. The first is, so I'm reading this amazing book called Human Nature. I've been reading it for a long time for like six months, and it's very dense, but I'll read it and read it over and over and over again,

and I take notes, and I'm trying to, like, master it. Because to me, it's like a handbook on how to, like, handle my emotions and how to handle other people. Now, what I would do with this is, what I would want to do is almost have, like, a Wimp to Warrior type of person,

program where I can spend a fair bit of money and have a very intense program. And I think that a mental fitness type thing, I think that's a lifetime of learning. That's like a lifetime journey. But I do think that there is like transformational moments and series of your life that could actually level you up significantly. And I think that there's an opportunity to build something like that in this weird kind of fucked up way. I've always been a little bit jealous of people who went to the military or at least people who went to military school. Because like there's this like classic like I was undisciplined. I was fat. I was unhealthy. I wouldn't wake up early. Now I make my bed. I know how to like show respect to each other to people. I have self confidence. I know I

have a new level of discipline. And I'm like, oh my God. I know what I made of. I went through Hell week and I made it. So I have been to my breaking point beyond my breaking point where there was just no way. And and I did it. And you know, they don't brag about it. But you could tell there's a level of confidence that people have by discovering your bottom, right? What is your actual rock bottom? Not not in terms of your money, but in terms of like your mental, your mental game. Where you break, you break physically, yeah, sure, but when you break mentally, it's over. And, and so they've been there because, you know, that's what the military does to challenge you in that way. And I've always been jealous of that. I'm like, man, I wish that, like I make a, I, like, I say it in a

joking way, but I'm not actually joking. When I'm with my wife, I'm like, I wish I would have went to military school because, like, there's some, like, discipline stuff that I don't have, that I wish I would have had. And it's almost like, I've searched for, like, what type of program's going to go to where it's like, uh, it's like basically like the, like the, the soft version of that. It's like a, like a fat camp version of that where I can just like spend money and they just like insult me for a week. But, uh, anyway, I think that's like, I think there's something there with that. And I also think that there's something there with mastering some of these books and some of these things and doing this mental fitness type of type of stuff. And so I'm on board with this.

I actually think this is quite amazing. Yeah. And I think the word is amazing in this concept, this concept of, look, you're healthy. You're not like ruined, but you're not fit. I think that's amazing. I love, um, you know who could like crush us if they wanted to, but I don't think they, they do. Have you paid attention to what Ryan Holiday has done with his stoic brand? No. Like I'm from afar, but I don't know anything specific. I've seen his books, but tell me what's interesting. So Ryan Holliday is an author.

His first book was called How to Get Famous or What was it called? It's like news jacking or whatever. Yeah, I forget what it was called. Then he's got like the obstacle is the way ego is the enemy or something like that. He's got a bunch. Yeah, so he's got obstacles, way ego. And this whole idea is based on stoicism, which is this, what are they Greek? I don't know. Marcus Aurelius, these philosophies of basically like you're going to face hardship in your life.

And it's not about avoiding them, but it's about embracing them and finding meaning in them. And it's probably predominantly male, young males who listen to his stuff. I'm one of them. And he's built this brand called the Daily Stoic. So I believe it's called Daily Stoic.com. And he sells $25 stoicism coins, which I own one. He sells like a $19 email course where every 14 days he teaches you like a new Stoicism. thing on how to read more. And it's pretty amazing. And like if I don't think he would ever want to do this because he seemed like he's got a good life and he doesn't want to work much harder.

But I would imagine that if Ryan Holiday had like a stoism boot camp for like a month and he charged like 10 grand and like it was around this mental fitness idea, I think loads of loads of people, including me, would pay to go. Yeah. By the way, I heard something that I thought was great. They go, a lot of people get it backwards. I forgot who said this. They were talking about stoicism.

And I was like, yeah, you know, stoicism, I get it. You're supposed to be stoic. And then that brings you sort of this calm and this piece and it's like sort of like really stable mental game. And he goes, no, it's the other way around. When you calm the mind, you become stoic. You don't become stoic to calm the mind. And I thought, oh, that's so true, which is that you, um, That's exactly how it works, is people think, oh, if I practice stoicism, I'll become that person who is calm mind and able to just operate and doesn't have these sort of like massive swings.

And it's like, no, it's the other way around. Once you learn to tame the mind, once you learn to master the mind, you'll naturally become a stoic person. You have to get the order back, get the order right. And so that was like a big breakthrough for me because I know a lot of people that have tried to get into stoicism. They have this anxiety. They have this sort of mental lack of clarity and calmness. They get into Stoicism thinking it's the answer. And they get sort of disillusioned very quickly.

They're like, oh, yeah, it wasn't for me. And it's like, well, that's true because Stoicism is almost a state you get to after you learn out of calm the mind. It's not the method you use. You know, so I've read a lot of Stoicism books. And I like it from just a history perspective. And I like it from a practical life philosophy's perspective. I think it's one of the very few, like, philosophical things that you could apply to your daily life. You know whose book changed my, it kind of changed my life on it.

And it was shocking. It was Naval. That Naval Almanac. What's it called? Right. The Navalmanac. It's so good. It's so good.

So the first half is all about making money and the second half is all about being happy. And the first half is like, that's just normal, whatever. Who cares? The second half I felt was pretty game changing. And he talks about stoicism and a lot about mental fitness. And he was basically like, the summary is basically happiness is a choice that I made. And here's some of the strategies that I use. And it's very stoicism.

And I thought it was very useful. All right. Let's jump to a different topic real quick. Can I, wait, let me quick tell you really quick about one of the greatest hacks that I've seen. So a financial hack. So when starting a company. So the first one that I always tell people, and this is something that's new to me that a lot of people, or it was new to me, a lot of people don't know.

about it's called QSBS so it's probably the greatest American tax ad basically when you sell your company if you have QSBS which basically is like the it basically means qualified small business tax so if you sell a business and you've owned the business stock for five years and it's a C corp if you sell your company the first 10 million dollars in sales or in uh in and profit that you make for selling your company you don't pay taxes on so it's amazing but i think i found something that's even better that's even better. Moving to Canada. So I talked to this company the other day,

and they were building this amazing thing. And I was like, how many people work there? You're like a really new company. And they're like, well, we have about 18 people who work here. And we only spend about a million dollars a year in total cost.

And that's kind of, so basically when you're starting a company, I started my company in San Francisco. If you're starting your company, I would imagine that you would, when I started it, it was $10,000 ahead. but I was hiring like young people who didn't pay much.

But I imagine you'd want to you'd want to bake in $15,000 ahead, right? Easily. Especially if it's engineers, yeah. So maybe more. So, but let's just say 15,000. So 15,000 times 12 is, let's see, 15,000 times 12 is, so that's 180 grand ahead. Oh, I think it's even more than that. It's probably 200.

So that number you're talking about is basically seven years ago and non-engineers. And now you fast forward. seven years double it and then engineers basically double it again and so you know what what was maybe let's say 10 grand is actually you should be buck you should be budgeting almost 30 grand 30 grand per per head is probably closer to reality now 30 grand you think okay so 30 grand engineers yeah so 30 grand times 12 is 360 so 360 thousand dollars an employee so 360 times 15 if you have 15 employees That's going to be around $5 million a year. And by the way, so that's not just their salary.

So let's say their salary is $200 something K. Then you have to pay all the like, you know, kind of additional overhead on salaries, which is about 20%. That's your FICA. That's your Social Security, all that good stuff. You have your rent. You have your free catered lunches. You have your snacks in the office.

You have all the other bullshit that you got to do if you're going to hire in this, like, extremely competitive hiring environment. Signing bonuses, recruiter fees. It all rolls up. So if that number sounds high, if that number sounds high, you'd be surprised. If that number sounds low, you're probably right. And so let's just say, like, $3 to $5 million is a huge range to have a team of 15, engineer heavy, highly competitive startup to get going.

It's a lot of money. I talked to this guy the other day, and he had 15 people, and he told me he was spending a million dollars a year. And I was like, wait, what? He goes, yeah, so here's how it works. In Canada, we have these things called research and development credits. And basically what that means is if you are engineering, what's it called? They're called them shred credits, even though it's SRED, but I think they just, when people talk about it, they call them shred.

Yeah, I heard people mention it, but I didn't actually look at the mechanics of it. And I'm not an expert on it, but he was reading it to me. And I was amazed. And basically what happens is he pays their full salary. So he pays some engineer 150 grand a year. And at the end of the year, I think he literally gets like deposited money back, 50% of the cost that, he's paid them, he gets that money back at the end of the year. So $160,000 salary is actually only $80K to him. And also, in order to manage cash flow, there's these loans. There's loans that you can,

so he has to pay the $160,000, so 160,000 biweekly. So he pays that out. So you have to have cash up front. But he was able to get a loan against that. And so he gets a loan up front. And then at the end of the year, after paying taxes and things like that, he gets the salary money back. This was amazing. And he was telling me all about it. And this guy was based in Toronto. And I've never been to Toronto, but it sounds like an amazing place. There's a company that you should check out for this. That's kind of cool. So most companies aren't going to make the drastic move to go move to Canada. So there's a company, it's part of Atomic, if you've ever seen it. And while you're talking, pulling that up, I think the best arbitrage to do this in, or one of the easiest,

is service-based businesses. So, okay. So, But I think you can't do it unless they're engineering. I feel like it's only engineering roles. It's, I believe it's for anything that's research and development. Right. Which usually I think is. No. No, because at the hustle, we got a, we got a tax credit for some type of research and development stuff.

And I had to go through each employee and like kind of guesstimate what percentage of the time is on like research and development. And you can do this for agencies. you can get a fair bit of money back. So agencies that do a certain type of thing. And I was at my friend's office who has a New York agency, and their office was like lavish. And they spent, I think they sent half a million dollars decorating it. And I was like, well, why do you guys do it?

And he's like, well, this is just what you got to do to keep up with everyone. And I was like, well, fuck, I don't want to play this game. I'd rather keep up with other people in other places. And I think that we have a friend who has an agency and he sells the Silicon Valley in New York companies, but he does this. arbitrage thing and he makes way more profit than most huge agencies. The company I was talking about is terminal. Terminal.com.

I think they basically, their startup is a smart idea. They basically were like, hey, we will spin up a Canadian engineering office for you. So you want these credits. You want these cheaper engineers, but you don't want to relocate yourself in your whole business and figure out shred credits and figure out where to go find engineers and figure out, you know, the best coffee shop in Toronto. Cool. We will do the engineering office for you.

you just pay our bill and like basically they're kind of like a recruiting slash spin-up agency for for talent in in this region which i think is pretty smart a smart arbitrage that they're doing it in kind of a fancy way i think anybody could really do this i think it's a smart idea yeah and uh so anyway this guy like made this like i had this whole conversation and then you like kind of he like made this off-haded comment and i'm like wait wait wait wait what and that like it totally was like there was a big shift there um and i was like i'm sorry i know we're not That's what's like this isn't like the main point in this conversation, but can you tell me everything about this? Right. And that was pretty, that was pretty amazing. You want to do one more? Yeah, let's do one quick one.

All right, what's fun. Did you see that Reese Spood sold her production company for $900 million? Yeah, and a lot of people cause a fuss about that. And I don't entirely understand the business, but I don't think, I think people cause the fuss because they don't understand what the buyers were getting. But I don't understand what they're getting. Why is this worth $900 million? They get three TV shows. and her team? Well, so this is like kind of bro science. So I want to preface. Like, I haven't done like entirely a bunch of research on this. But Reese Witherspoon has had this production company, I think, since like the earlyish 2000s.

So for a long time, what that means is I believe that she owns the rights. You know, do you realize that Reese Witherspoon is like, like she's gross like over a billion dollars? I mean, she's like one of those people that she's like the killers. Like the killers is a band that like maybe not everyone says it. It's their favorite brand. but like everyone knows like Mr. Brightside. And they like, you know, they, they're quietly in the background, just always the best in the most popular, even though they're no one's favorite.

That's kind of what Reese Witherspoon is. It's like everyone that at least kind of likes her and will go to her movies. And so with, uh, with the deal, I believe what they're buying is like a lot of IP from years and years of production work. So, uh, okay, so I'm looking up, I'm looking up right now. So it says that she started Hello Sunshine, the company. that got bought in 2016. Before that, she had another one

called Pacific Standard in 2012. That's a subsidiary of it, so she kind of rolled that in. So 2012, so that's only a decade. I guess in 2000, she had another production company called Taipei Films, and they made, I don't know, some Oscar gone girl. They made, you know, nothing too big. Big Little Lies was their hit recently,

and then they had the morning show, which is on Apple TV. but this is wild. This is like, so she has a book club and the book club has over 500,000 followers on Instagram. That's pretty amazing. She also owns a... Dude, good for her. She's a filmmaking lab that teaches 20 girls

that are 13 to 18, the art of filmmaking. Like, this is great. Dude, be like Reese. She also has a clothing brand. I think it's called Draper James and they have brick and mortar stores all over the country. What a powerhouse. Reese is kind of like an Oprah.

thing where she's kind of got a web of like a variety of different things. She's, she's a, she's a baller. She's also kind of a baller because a few years ago, her husband, her and her husband ran out of party and they drove home and her husband was got pulled over and I think he got DUI. And she got out of the car and like, uh, confirmed the cop and she's like, I'm going with him. So she got arrested with her husband. So she, she's kind of a, she's kind of a boss. No, it's amazing. I think if I remember correctly, I believe her company was bought by Kevin Mayer who recently was the CEO of TikTok America but got fired because of all the stuff and before that was he's a CEO.

Was he the CEO of Disney or president? But he was president and he like was the president I think of Disney Plus before when they launched or whatever. Yeah. So he's a big swing and dick and he yeah and he basically they bought this company to build a conglomerate of like some type of media company. I don't entirely understand the structure. These deals to me always seem very complicated and they seem very like deal-making-y.

I just don't understand the numbers, right? Because like I'm looking at the, so I'm looking at the assets. So they have Gone Girl, which bade $360 million gross in the box office. Then the next highest one was $50 billion. So they have four films of which, you know, nothing, nothing huge. And then they have on TV, they got big little lies, the morning show, little fires everywhere. Those are the three shows you know, and then there's six that have been bought or sold to either Apple TV Plus, Amazon, ABC, Netflix, whoever. I just don't get how you get to that number because I feel like to do that, you basically need to, like, the office was getting $100 million a year of like streaming royalties.

That's like, you know, the top or friends, you know, those are getting $100 million a year. I feel like there's a pretty deep drop off after that. So I think this is like this is like a Beats by Dre acquisition is kind of what I see it as, which is basically somebody being like, cool. We get Reese. We get Reese and then some stuff. Great. I think that's basically like when Apple bought beats and they're like, great. We get, you know, we get Dr. Dre and we get whatever his name is Jimmy Iveen or whatever.

Plus we get some headphones. All right. Three billion. Yeah. We'll pay three billion for that. But I think. It's like the most expensive. The company that bought it was Blackstone.

They're the funding. And they, I would imagine they don't, they're pretty savvy. I don't know if they overpay for a lot of stuff. Blackstone is funding that guy, Kevin Mayer, Kevin Mayer. Kevin Mayer's company is the one who bought this. So I think it's more like Kevin, I think it's more like a Quibi thing where Kevin Mayer in this case, Quibi was started by what's the name, Jeffrey Katzenberg.

Katsenberg, the guy who started DreamWorks. So he was able to go raise $2 billion because he's like, I'm Jeffrey Katzenberg, I started Dreamworks. And then he used it to go buy a bunch of content and it all evaporated into zero dollars. I think that's more like what this is like versus some like real asset that you can analyze and say yeah it's worth that um dude congratulations to reese for getting that bag we i would that she is actually amazing reese witherspins pretty amazing have you seen have you seen what she you know she's like

i think she's in her mid 50s isn't she i don't know but she's killing it and uh she looks exactly the same well that she looks exactly the same they get like you know shot up all over their face and you know they look the same or or or it goes the other way and they just look super weird And they're like, yeah, it's just gone wrong. You know, we'll end on this one last thing. You know, the new COVID strain is called like whatever, Delta, the Delta variant, Delta Plus is the new one. I was thinking about this this morning. First, Delta, how shitty for Delta Airlines, just for the new COVID strain to get named after you?

God, that's a tough, that's a tough loss to just wake up to. It's like, yo, which scientist just decided to name this? Delta. Like, that's not cool. And then I was thinking, it's a scary name. It's a scary name. I was thinking, what would that be worth to them? If you were Delta, Delta's, if you were Delta, what would you pay some lobbyist, some, some bribery to some scientists? How much money would you shove in the briefcase for this to not be called the Delta variant? It's like, you know, call this the United variant. Call this the Southwest variant. Don't call this the Delta a variant. So I'm staying

at this hotel. It's called the, I don't know what it's called Gaylord Opry land or I don't know what it's called, but I think it's called Gaylord. I mean, Gaylord Opry land. That wasn't like a joke. That's what it's called. And I'm in this like wing of the hotel called the Delta Wing. And it

has like a bright red sign that says Delta Wing. And I'm just like when I'm seeing this, I'm like, oh man, this is just like not good. They're like a hospital wing. But yeah, I don't, did you associate Delta Airlines with the variant. I didn't, I didn't, I didn't, it's going to happen. I mean, Corona, like, Corona beer with the coronavirus. Like, you know, that can't have been good for them. I didn't associate Corona beer too much with that. Did you? I mean, yeah, people did. It's like

that it became the word of the year and it's associated with like the deadliest virus in a hundred years is the coronavirus. Who owns Corona? You know, except for, you know, nothing could come from that except for, you know, the, like, college bro, who's like, bro, I've had, I've had the coronavirus for, you know, five years, been loving corona. So, you know, ever since, it's like that joke. That's the only upsides you get. Everything else is downside. And so, I don't know, I feel like Delta should pay, you know, they're worth, I think,

like $25, $30 billion or something like that. Who do you pay? No, you can't. You can't pay anybody. I'm saying, what would they pay if they could push a button and make this go away? I feel like this is worth a billion dollars to Delta. Like easily, this is worth 1.25th of their market cap. This is worth a 4% swing in like brand value perception.

You know, who's going to want to fly on Delta with the Delta variant going on? I just feel like that's a, there's some weird association. I flew here on Delta. That's my airline. And you're staying in the Delta wing. And I'm selling them the Delta wing. You're just helping Delta. All right.

Yeah, anyways, I feel like if I could secretly present the CEO with a button that said pay a billion dollars. this goes away. This doesn't, this isn't called Delta. I think he pushes that button. Yeah, I would agree. All right. I think that, I think we had an action-packed episode. We'll see what people think. I think we gave like eight good things. Good. All right. And, uh, early morning episode in the books. Enjoy the podcast conference. All right. I'll see you. See you. I put my all in it like no days off. On the road, let's travel, never looking back.