My First Million - #38 - Truth about ad agencies with Brendan Gahan + Brainstorming with Daniel Gross

Episode Date: January 26, 2020

The Hustle's My First Million presents: Million Dollar Brainstorm is back. Host Shaan Puri (@ShaanVP) and The Hustle CEO Sam Parr (@theSamParr) sit down and discuss what side hustles, trends and big business ideas that's keeping them up at night. Long episode today! First half is with 8-figure ad agency founder Brendan Gahan to talk biz models, overhead and profitability. Then the second half is with Daniel Gross who sold his startup to Apple in his twenties and rolled that win into multiple unicorn investments. Enjoy!  See acast.com/privacy for privacy and opt-out information.

And I'll tell you why I wanted you on. So with this podcast, we talk about a lot of people starting cool stuff. And there's like three things or four things that like every person who graduates college, what they're going to start. And it's like a roommate matching app, which I did. It's like a way to like buy and sell stuff from college kids. And then it's like an agency. And interestingly, I've actually noticed that a lot of my friends who started companies

and sold them, they're starting an agency because agencies are interesting ways to make money while learning. And so what I wanted to know, I just wanted to ask you questions about the agency business. And I think you should. Yeah. And we had sort of, we had a debate a couple podcasts ago. We were talking about Vayner Media. And it's like sort of is this a good business or bad business.

And so one thing is like, obviously it's not a shit business in the sense that like it, you know, they have happy customers. They've got people. They employ a bunch of people. They make a lot of revenue. But we, you know, we're sort of talking on our ass in terms of agency. Like, you know, what does an agency business model look like, right? I know what a software company looks like.

I know what a restaurant looks like because I started one of those. I don't know what an ad agency business looks like. So, I don't know. Talk us through, like, very simple. You start an agency, you know, even maybe the one you sold before the one you're currently at. What is that, what is like the first level of success look like? Yeah, yeah. Yeah, all guys being kind of like the typical agency model.

But I think that's a good place to start for. shirt so when I started an agency I actually didn't mean to set out and start an agency I had joined a startup and left that but throughout my like entire career I'd been like the YouTube guy I was always pushing like let's work with influencers but you know you've got to like implement best practices on your YouTube channel and this is starting back in my 2006 so when When I left my job and I thought I was going to consult and stuff, it was like, this was maybe seven, eight years ago. And it was like right at, like I totally caught the wave of when all of a sudden brands and ad agencies were paying attention to influencer marketing.

They all needed this strategy. And like I'd just been kind of hammering on that for years. So like kind of out of the woodwork, like all my old agency friends and friends that had been at brands were hitting me up. and they're like, hey, can you help us with this project? Can you help us with this project? And so pretty quickly, I just kind of realized there's a bigger opportunity than consulting. And so what I did was, like, I would take on these projects

and hire on, you know, I hired on a few people over time and help them with really two services. One is influencer marketing. So I, you know, work with them on, like, developing a strategy in terms of how to integrate the brand into YouTube channels. I do all the influencer identification, contracting, all that. And then the other aspect of the business was basically implementing a lot of YouTube best practices for brand channels. You brand spent a ton of time focusing on their Twitter,

Facebook, Instagram, but they don't really put a lot of time other than the video itself into their YouTube channels. So that was my model. Is that a good summary, by the way? Do you want me to go in deep? Oh, okay, cool, cool. That makes sense. I'm curious, like, when you get a, you get your first client, like, with your other agency, how big was your first client? Were they a small startup or were they, like, an established company? So, uh, pretty big companies right off of that. Like, um, one of my first clients was like Mountain Dew and Pepsi, um, Uniclo, and I was your Bush and Bev. Um, why are they going with you kind of like new guy, new agency? There's a lot of other options. Yeah. I think because there weren't a lot.

other options back then. Like, obviously there were social agencies and you guys talked about Vayner and stuff. I carved out a nice white space for myself in the sense that, like, there weren't really that many people just solely focused on, for example, like YouTube optimization. So, like, I got in with a lot of the brands

on, like, a really small retainer where, like, that was, like, our entire role. What type of retainer? Yeah, what's a small retainer? Oh, oh, like, this is when I was just getting started. So it was, like, very, very small. It was like, you know, three to five grand for that service. And how many clients could you have at one time, five or six?

Yeah, we probably had five or six going at one time on that part of the business. And then the other part was the influencer marketing part. And then if you fast forward to like, okay, agency's mature now. You sold the agency. Same types of clients, I assume, because you started sort of at the top of the food chain there. and what are these clients paying you on retainer by the end by the time the agency is sort of mature? Oh, before I sold it?

Yeah, like if you started off with humble beginnings at 5K 5K monthly. Oh, yeah, yeah, yeah. What does the mature look like? Is that 50? Is it 500? Like, what does an agency typically get from these type of big brands? Yeah, so I mean, the high end of the big brands is, you know,

millions in retainer fees a year. And that's covering everything from, you know, they're doing strategy to the creative development, helping them plan production, you know, doing social media and community management. So, you know, I mean, there are agencies getting paid tens of millions of dollars by, you know, massive Fortune 500 brands. And that's definitely like the top end. Obviously, I didn't get to that level. I sold my agency when we're still relatively small.

And so fast forward to now, you said, you don't even have to refer to your company. I don't care. A company that is a $50 million range, what are the economics like these businesses? I mean, with like a really profitable software company, you could have massive margins. Would that be the same for?

Yeah, what's good margins, right? Like when I ran a restaurant, if you could get to 20% margins, you're crushing it. 10%. Like on net income? on like net margin? What would it, what would be good for an agency?

Yeah, good for an agency is 15 to 25%. Like that's, that's all that's generally accepted as like the goal. Well, 25's good. 15's right. But that doesn't sound bad. I mean,

so then is that before and as these, let's say that you have partners in the business, is that where all of your guys's income or an owner's income come from is out of that 25% or is that before you calculate your net income? It varies depending on the agency, so I'll like sidestep like us specifically. But generally, you know, I know with like a lot of big agencies. And so there's like two types of agencies first off. There's like independent agencies and then there's agencies that are part of like a holding company.

Yeah, the big two or three Omni-Gy. Yeah, the WPs. Yeah, all those. Exactly. And so I would say generally is probably, you know, with a lot of the more independent agencies, it's going to be a combination of they, you know, get a salary and then out of that profit, get some sort of profit. What would the safe cut on a $100 million agency, $25 million in income owned by one person,

what do you think? Would that person take $5 million of that $25 million home? That's a good question. I actually wouldn't know that for sure, but I would imagine if I was making that much money and I was a sole owner, that's probably the way I would approach it. And are agencies trying to, like, is the end game to be an agency, or is it like, you know, agency and then as we get sort of these clients, we start to see opportunities and we start investing off the balance sheet or we start creating our own products or like, what do you think

is the sort of end game for the smart people that are in this business? Yeah, that's a good question. There are more agencies now starting to, like, diversify and, like, develop products. I'm trying to remember. But there was one agency, I think, out here in New York who recently got a bit of press. Jen Lane did that. Yes, yes, that's who was. And they did just that they were doing so much work with DTC brands and were seeing so much success.

They decided to develop their own products. And actually, we've got a mutual friend. I think, Tim, do you know Troy Offenoff? Yeah, I do. Yeah. He's got an agency. They're just a couple walks over. You know, they've got a nice agency, mostly focused on D to C clients.

They're about 20 people. And they've actually acquired a couple of their, the brands that they're working with. That's badass. And that's what I don't follow Gary Vaynerchuk too much, but I've heard that's what he's trying to do. And in my head, I'm like, that sounds good. What the hell you wait for, do it. What he says is he's by old IP that is like sort of,

low value now, but that carries... I heard him say that. I'm like, just do it now. What do you got a thousand people? What do you... Brands from the 80s, buy that IP and then relaunch it as a, you know, brand refresh with movies and products and whatever. Yeah.

But, you know, the thing that's interesting is like there's almost like... You can almost break the agencies up and, I mean, you could break it up a million ways, but I kind of think you could bring it up into two kind of almost like generations. And there's like the classic, uh, tradition. agency model where they want clients on retainer, they want to be focused on like the big brand kind of equity building work. And then there's like this, you know, over the last couple years, you know, as people are focused more on D to C, it's relatively simple to kind of get a small shop up and running. You've got a lot of entrepreneurial minded people who maybe

started out as, you know, they're just running, you know, Facebook ads for brands. And so they understand a little bit more kind of like how to sell things. And so I see more and more of those type of folks focused on broadening and building IP, maybe getting into software and expanding beyond the agency model. Because, I mean, full transparency of the agency model is. Yeah, I actually, I want to ask about that, which is, to me, this sounds like a cool business because you can kind of take whatever you're talented at and apply that to more people. That sounds cool.

But there's a lot of downsides. Can you talk about the downsides? Yeah. I mean, so yeah, at its core, you're selling through people's time. You know, like the traditional model is you get a client arm retainer and you basically assemble a team based on the client's needs and build people out kind of based on an estimate of hours and incorporate kind of overhead. and your profit margin into that.

Now, what's challenging is what if a client has a lot of ask, there's rounds of revisions, like, and then also, like, you know, oftentimes it's not like you're perfectly 100% having people sold through. Like maybe you need somebody who is like 50% on an account, and their skill set is perfect for that, but then you can't place them on another account. And so that balancing act of people is, It's just fucking brutal.

Like, there's no way around it. It's really hard, and especially if you scale up, because then you're trying to identify, like, it just becomes a giant puzzle of, like, how to place people and get their time sold through as efficiently as possible. And so that becomes really tough. It's a services business at the end of the day. So, yeah, I mean, you haven't worked in the restaurant industry. You know what that's like.

It's like, you know, you've got clients, they're people. you've got to keep them happy. So it's a lot of late nights. Pitching and winning business is a huge, huge undertaking. You know, especially with the big brands. Like they will go out and basically do, you know, RFPs with, you know, a handful of agencies and, you know, the whittle down from, you know, anywhere from five to ten, a handful that they like, you know, so maybe you're pitching against three to five other agencies for a retainer,

which oftentimes you don't necessarily 100% know what that final cost is that they're willing to pay. And so you spend at times several months working more often than not for free. I have two questions to wrap it up. The first one is, then why, you know, so the profit here is in charge is to outsourcing your people, so paying them $25 an hour and billing them out at $50 an hour. Why are you guys in New York then? I mean, why aren't you in Toronto or St. Louis or Detroit? That's a good question. I would say probably the simplest answer is the fact that all the brands are here.

But you don't have to be there, though, do you? The brands are here, and so you definitely know. need people, like you need boots on the ground, absolutely. The other thing is like this industry is super, like so much stuff just happens on the fly in the office. And so it definitely helps having people all in one place. And then the other thing is the talent. That said, I'm sure, and there are agencies that have a distributed workforce, there's not really any that are on kind of like, I would say like a big significant scale, but I think eventually somebody's going to have to crack it because the overhead is really, really high.

And but the other thing I was going to say is that there are other avenues to generate profit. It's, you know, you can mark up media, you know, production and various services. But yeah, nine times, you know, out of 10, 80% of the time you're marking up staff. And last question, and we've got to answer this in a short of of time because we're trying to keep this under a certain time um you did youtube in eight years ago what's the what's the niche that you think is going to expand the fastest now i mean ticot is the hot thing right now tic tic tic and live stream gaming which you you know quite well ticot and live stream gaming yeah i mean twitch obviously facebook gaming but oh yeah and the influencer stuff was going back to

2006 even hold on we have a slight debate here okay so our our Our next guest actually is joining us. He's in the seat. You can grab the mic. But Daniel can't hear him. He can't hear you, but you hopefully will be able to hear him or I'll relay it. So you said you have the opposite view. It's like my experience on the internet, basically.

I can't hear the people disagreeing with me. Right. Wait, Brendan, can you hear Daniel? Yeah, yeah, yeah, yeah. Oh, he can hear you. Okay. What's, Brendan? Yeah.

You're not going to be able to hear him. Nice to meet you. In theory, I mean, I'm sure you're wonderful. I was just curious to get your take and I won't hear your answer. But do you not, I mean, the U.S. military just banned TikTok for its soldiers and it does indeed seem, of course, that a lot of American software can't make it into China. Would you not take the view then that TikTok would at some point get banned? You know, if it's banned for the military, maybe that kind of expands over time. And if that is the case, how would it become kind of more popular?

Wouldn't it just be relegated to China? Or do you think that somehow the trade war doesn't shift from, how would you say, from Adams to bits? Yeah, I mean, I think that's, I actually just read the stealth war, which is all about that. I'm trying to remember the office name, but I mean, if that's just going to happen, then it's obviously gone, but there are alternatives like right now, like Triller is another one that's blowing up. I think that format, even if TikTok was to disappear, is going to continue. You know, there's, yeah, in addition to Trillers is also a firework, which is an even small one. band, everyone in America would move to the next closest thing to Vine. Yeah, Lassau.

Yeah, I don't think Lassow, but probably truly. Gotcha. Cool. Well, Brennan, thank you for the time. I'll holler at you after this, but this was a perfect segment. I really appreciate it. We're going to call this segment. We call you and you tell us all your numbers of the business.

Thank you for being the first of that segment because people like hearing what is the, what does the income sheet, income statement look like for these types of businesses. So appreciate the time, Brennan. All right, for sure. Thanks. Thank you, man. And I'll holler at you separately. Thanks. All right, cool, cool.

Peace, bye. Okay. I think we're still set up to just go, right? Can we just go? Wow. Hey, dude, I'm Sam. Hey, Daniel. Yeah, and we've actually never really met either.

I'm Sean. Oh, you guys haven't met? No, we're internet friends. And now we're real world friends. I am not internet friends with you, but I know you. We're not friends because you and I have never interacted, but I share your stuff. Well, now we get to be friends. It's great.

Okay, so for those who don't know, We need you to basically brag for two minutes. So like brag for two minutes. So people want to listen to you as kind of the shtick. And welcome to our ghetto studio. And then we'll explain what the hell this room is and what we do. Okay. Yeah.

So a bit about myself. So hi, my name is Daniel. I hope you're already listening to this at 2X. I'm going to talk as quickly as possible as you missed this boring introduction. But I came, I'm originally from Jerusalem, Israel. Came out to Silicon Valley when I was, I think, 18 or 19. I started a search engine called Q. which is kind of a machine learn powered search for kind of all your personal data

secretures Slack, Gmail, Salesforce, Dropbox, Evernaut, Basecamp all in one place. Got acquired by Apple in 2013 or ended up kind of running search and machine learning across the company, across iOS, OS 10, a bunch of other launched and unlaunched Apple platforms. A lot of our product basically turned into and blended into Spotlight Search. So that's kind of what we powered in addition to a bunch of other machine learning things. at Apple left Apple in 2017 was a partner at why combinator for about a year and a half ended up funding you know I don't know dozens maybe even hundreds of companies through that and then obviously he started angel investing along the way as well individually I'm an angel

investor in a bunch of different companies from you know crews to coinbase to Uber to Instacart Gusto a bunch of others figma and uh kind of I think most interestingly in last year I started a company called Pioneer which is kind of like part YC it's weird I guess merger mesh of my careers it's part search engine and part YC in the sense that we try to scout the internet for promising people around the world working on kind of interesting stuff and we spot them using psychometrics a little bit of machine learning a bunch of different things. And once we find them, we, if they seem good, we create a company for them on the spot and then fund them on the spot and then try to kind of push them over the edge. See, it's kind of my

view that one of the main constrictions on societal growth and also as well as kind of the number of start interesting startups we see every year is self-editing. A lot of people, you know, that have this shower thought that they don't ever pursue. And Pioneer is very much meant to be a kind of a platform where people can kind of experiment with their ideas and hopefully a sucking engine, if you will, I would say like a black hole force for good where we can kind of pull people into our orbit and really almost radicalize them into starting their company. Because I think the world could stand to have many more startups and many fewer kind of large companies. It's really a sad place where we are today where when you think of it, like there are basically five large

tech companies. And then even in the startup world, there's like three good deals a year. There's three good deals here. Why shouldn't there be 20 or 30? Why shouldn't there be kind of an hour per logo of startups? Many more people working on other things. And so, you know, a lot of people think of accelerators. I really hope Pioneer is a generator, a thing that creates founders that otherwise wouldn't have been.

So anyway, that's a bit about me. How old are you? Yeah. I am still hanging on to my 20s, but towards the end. I'm 28 years old. Wow. Bad ass. I discovered Pioneer.

I think I tweeted at you maybe a few months ago because on one of my internet rabbit holes, I went to Pioneer. How many other browser tabs did you have open? Like 65 of them. Actually, Pioneer caused me to open like 65 because it's like, meet the pioneers. And then it's like, here's a list of 18-year-olds. And each 18-year-old, it'll be like, I'm launching, you know, palm-sized satellites. I'm creating a microwave that makes things cold.

On our pioneer, they were saying that? Yeah, on Pioneer. All the ideas are like. the people we find it. Sort of more on the, you know, sort of crazy sci-fi, I felt like, that's the vibe I got. It's super interesting. Yeah. I mean, it's, it's, gosh, I do think it's important to stress that we try to have a mix.

I mean, I think the one of the lies that Silicon Valley is very good at spreading is that, you know, everyone's working on large moonshots. And the reason that's a lie is because every one of the successful moonshots, often starts as a small, fairly stupid project, right? Even SpaceX. Good God, SpaceX, the most moonshotted, literal moonshoty company that exists today. People forget, but it started as this thing called the Green Mars Oasis Project. Send a plant in a space. And put it on Mars, do everything using Russian rockets, be as lazy as possible.

Well, that's a huge project. But it sounds like a Hollywood stuntman. Shut the company down afterwards. Compared to like self-landing rockets. Compared to the largest private space company in the world. Yeah, I mean, it was basically like a rich guy's practical joke or a rich guy's project. It sounds like the type of thing. Like building a home gym in your house.

If we lived in L.A. and, you know, we had hundreds of millions of dollars, it sounds like the type of thing, you know, you shoot around with a bunch of friends over beers. But of course, Google was a Stanford University project called Back Rob. There's wonderful interviews of Mark Zuckerberg from, I think, 2005, six, whatever, saying there's no reason Facebook should expand B. This is a great interview. He's sitting on a couch in basketball shorts. with the Red Solo Cup and he's doing an interview and the guy's like, okay, you're in whatever, ex-college is now, what's next? High schools, you know, anybody.

And he's just like, why does it have to be more? Like, it could just be a cool thing for colleges. I think sometimes if you try to do too much, it makes it less cool. And then, like, now he's giving internet to people so that they can use Facebook, like, expanding beyond what you get. Totally. I mean, arguably, given the fact that they own Instagram and WhatsApp, the most important company in the world.

And so people look at that and they think, well, like, if you look at the fully-form, species, you're like, well, we're of a different genotype. I mean, there's no way I can do what Elon is doing. But if you realize where all of these people got started and you kind of look at the early variants of what they do, it's kind of silly almost. And if you look at the old home pages of all these websites, I mean, it looks like a joke. Go ahead. Sorry.

So what's something that you personally invested in? So, like, I like the story about Facebook and SpaceX, but what's that company you invest in that today is seen as big, but you remember how humble the beginning of it? were. So like, what's something that's big today that you remember how sort of small it was? The funniest example I have of this is a company called Notion. And Notion is kind of a next generation confluence or wiki. It's used by a lot of the companies here in Silicon Valley. I'm a user. That's not how I describe it. I describe it as like Asana, but better and a little bit different. Well, I'm certain Ivan, the founder would shoot me from my description and very much

endorse yours. I'm a user. I'm not affiliated. This is the website of our podcast. It's just a Notion doc. Oh, okay. That our domain points to. And it's just a Notion doc.

That's it. So, I mean, notion's kind of a funny one. Ivan and I, many, many years ago, briefly worked together, which is how I got to know him originally. And we kind of kept in touch over the years, and he mentioned he was kind of working on this thing. And, you know, you can envision this. The initial pitch as it comes through is like, we kind of want our separate ways.

He was kind of always very interested in the kind of cognitive kind of enhancing software, you know, hyper-productivity, that kind of thing. And for me, that stuff is super interesting, but kind of in kind of a weekend way, you know, during the weekday, I'm much more interested in figuring out how to like make something that will produce revenue, hopefully be successful that way. And so we kind of kept in touch and he mentioned he'd start to work on this. And, you know, Ivan is the type of person who is very brilliant, but very focused on making the perfect thing correctly. And in the back of my mind, I was thinking, well, there's no way.

Like, it'll just take forever. And, I mean, it did take him a couple of years to kind of, how would you say, 40 years in the desert of kind of, you know, wandering to Israel. But, you know, he got there four instead of 40 maybe. But it was definitely one of those things when I was started. I was like, I'm not quite sure this is going to work. In similar vein, I remember talking to Kyle Vote, to Kyle Vote, who two days ago, ago, Unveiled to the world, cruises private... So, Kyle's the guy who started, well, before that,

and Twitch. Co-founded Twitch, which they sold for a billion dollars. Co-found a Twitch. Now did Cruise, which I think was another billion-dollar self-driving car company. It got acquired, I believe, by GM for a billion dollars after 18 months or so. And I remember... He also bought the most expensive home in San Francisco, which made the news pretty funny. Yeah, well, sure.

But anyway, the point is, I remember him. kind of fundraising. And it was not an obvious thing back then. This was before the autonomy hype. He, I think in many ways, created the autonomy hype with the acquisition. And here's a guy who, like, previously worked on software. Twitch wasn't super popular yet. He'd, like, done, in MIT, he was a safecracker. That was his hardware experience. Who's pitching you on him building self-driving cars. And bear in mind, again, this is 2013. This is like before all the hype. And, you know, I very much believed that it would be an obvious market of the future. I remember that quote from Henry Ford of, you know, once the car was envisioned, it just had to exist. And I think that is the same thing is true

for self-driving cars. Like, once that concept leaves the drawing board and enters reality, mankind will create it. So what are you saying that? You weren't sure that you should bet on him? I think the question was, is one of those, it's very interesting situations where you kind of have a lot of emotional belief in the founder. The market is very unclear. And so, you know, at what point does the investor decide to kind of make the bet in on hard science on an unclear, capex intensive, you know, area because they believe in the person. And I think this is one of those things where you can afford to do this kind of stuff

if there's a path forward, if you really believe in the person. And notably, uh, if the price is low, where I probably would not do this as, you know, if you told me, oh, you know, I'm raising in the valuations a billion dollars. obviously it'd be very different if I was Andreessen Harwoods had a giant fund but for me the angel investor at that point I don't think that's so you were an angel in that one yes but it was one of those situations we're super tenuous super unclear I actually think all good investments at the beginning are super unclear um a lot of the great YC darlings almost didn't get into YC um Airbnb was super on the fence um I mean even Stripe didn't proper do. I see there's no actual batch they participated in. And this is the truth about the world, I think, is a lot of the stuff that is great always starts humble and small. Then, of course, their media teams get together and retrofit the whole narrative. And they'll tell you that,

oh, Jeff Bezos was always into books as a kid. But it's very unclear at the beginning whether something's going to turn into something. Let's fill him in on kind of who we are and what we're doing. And then I've got a few questions. Yeah, let's do it. So you want to go first, Sean? Yeah, so we, so I started this podcast when I was selling the company and I got really bored. And I was like, you know, what would be fun if we do exactly what we're doing right now. I was like, if I just take the interesting people that are all around me, some, you know, some I know, some I know, I know, I'll start with them. And then a whole bunch of other people who I just have like one degree away that I could reach out to. And let's shoot the shit together.

Maybe they'll tell their story. Maybe we'll just talk about whatever the future looks like. I don't know. It'll be fun for me. I don't know if anyone will listen. Partner up with Sam because he's already got a bunch of people listening. He's got a million people on his list who want to listen to him, tell about the news. and we said, hey, let's do this together.

You know, let's partner up on this. So we started this podcast and it's grown pretty quickly. But we started this. Normally it was like the traditional interview style. Hey, tell me what you did. How did you start? How did you get your first hundred customers? Real tactical stuff.

We just started coming to this office here, which is outside of the normal studio we do, the interviews in. And we started shooting the shit and we call it a million dollar brainstorm. Where basically we just say, hey, here's something that's kind of interesting. You ever notice this? Here's a problem I saw. And, you know, they're actually pretty happy. baked ideas.

They're, you know, the name is sort of goofy. They're not million-dollar ideas. They're like zero-dollar ideas. But we, but we're having a lot of fun with it. And this actually is what listeners like way more than the interviews. And so they're sort of, what I thought would be fun is take people out there who, take people who like to look into the future, people who are on the edge and observing new things, have them join us as guests because, A, we're going to run out of ideas pretty quickly.

And B, is just more fun to get better ideas. I feel like if you're one of those people that have ideas, you do not run out of them. Yeah. Well, you just see them every single day. Yeah. You're like, man, that restaurant concept had it with this. That might be cool. Okay, so here's kind of an interesting thing at a meta level.

What do you guys think of? Is it possible to give someone a startup idea or does it really have to, does the person really have to feel like it's their own? No. It is possible to give ideas. And I'll tell you, I'll give you my reasoning. So the hustle, we have millions of people who sign up. We give them news.

And then we also have trends or we just explore different stuff and we charge a premium. It's like the hustle, but more in depth, like Harvard Business Review. It's like this, it's a cool thing. I'll show you later. And in doing that, I've met all types of cool people. Me and Sean have a circle of friends. They're very badass. But they're a different badass than you're badass.

You are friends with these guys who. You're Silicon Valley badass. Yeah. I would call this like Austin badass. Yeah. And so we have loads of friends that have started and sold companies in the $1 million to $100 million range. Very successful, but nearly all of them bootstrapped. Yeah.

And what they do constantly. And I do as well. I've bought and sold companies with these guys or on my own is they're businessmen or business women. And they seek opportunity. They make the products better by either buying or selling other companies. And then they can sell the businesses. And for many of them, they don't give a shit about the product. I mean, they do.

It's not like they're a scam artist. They like building things. Product agnostic. And they're totally product agnostic. And so if you want to build a nine-figure company this way, it works for sure. I see. So the other way I'd put it is we talked about this last time during we did a live show and a whole bunch of people showed up. And one guy was like, you know, do you have to be passionate about the idea or somebody said something like that?

Somebody else raised their hand and said, you should absolutely be solving a problem that you're passionate about. That's the way to do companies. And we disagreed. And he was like shocked that his, you know, why would this person say no? That seems like an unpopular thing to disagree with. And what we said was the top of the hierarchy is you're solving a real problem. You're very passionate about it. It scratches a personal itch.

That is best case scenario. That's the Gartner Quadrant where you're winning all things. But your success bar is lower than that. But if you want to make a lot of money and have fun doing it, you don't necessarily have to have that. You can, and that may it will maybe be better, but you don't have to. And last thing I would say is when we say these ideas, we don't, I don't think the people listen to this even expect to take that idea and go do it. It just trains their brain to constantly seek out ideas.

And that's the real value of it. That's why I even like doing it because now all week. I'm just jotting down ideas. I'm training my brain because I know every Thursday I got to come with something good. So all the other days, I'm like my radar's on. I've been thinking about on the whole jotting things down. So I, like you guys, I actually few it. It's funny.

I view this is somewhat of a problem and a disease. I have this text file of ideas. I've been maintaining, I think, for 20 years now. It's probably megabytes in size. And for me, it's an important outlet. Otherwise, I literally cannot stop thinking about whatever that thing. is. And it's actually a little bit more acceptable now in my profession. But, you know, I still run Pioneer. I have like things I need to do. I, you know, I have tasks. I can't start off,

you know, just thinking about some, this random idea that I just had. So I write it down. But here's what I'm wondering on writing things down in general. Okay, here's my contrarian, Silicon Valley contrarian view. Is writing down a terrible idea? Because I find the moment I write down an idea, it exits the rock tumbler in my brain and I get peace which is the great thing but I stop thinking about it no I don't think it's a problem

in my opinion is because Shouldn't you just keep it in your head No jumbling around I think you should research it because and I think that you should research it okay so there's two types of people those who like you're that that actually will do shit and those who won't

right right right I mean like there's people who just take action and there's those who just talk what's going on with the talkers Are they too extroverted? No. Are they just talking? Well, because they're afraid.

They're afraid. I think they're afraid. Or they don't really want it. Or they think it's cool to do this, but they don't want it. They don't actually like it. But my opinion is like, look, like, I think most cool ideas or successful things, they're probably not that original. They're probably, if you wanted to, you could be like, oh, well, I stole that feature from that, that from that. iPhone wasn't the first phone.

Right. Facebook, not the first social network. Yeah, you just steal a bunch of cool parts and you can. package it in a really interesting, creative, unique way. And so what I think it's good is to actually write those down and do, you can even do a little bit of research

knowing that you're not going to execute on any of them, but what you do is you start seeing interesting patterns and best practices. Sounds like for you, when you write it down, you're assuming the creative process stops at that point. I find once I write, I have this for posts, for her posts I'd like to write as well. Once I write the thing down,

it going back to it yeah it becomes like a thread task almost this is like when so we both like the UFC a lot we like you know fighting and this is old wives tale that they tell the fighters which is don't have sex leading up to a fight and they're basically like no you need that pent up you know sort of testosterone aggression there's no real science to this but they but the fighters

follow it and they sort of feel like okay if you have sex if you get that release you won't have that same sort of hunger that same tension built up sounds like it's basically that like you know blue balls for the brain, essentially. To that extent, yeah, I guess. Yeah, I don't know. It's been something on my mind.

Actually, I think I will do a post about this, and so I haven't written it down. But, you know, I grew up, I am not today, but I grew up as an Orthodox Jew. And in Orthodox Judaism, there's a very interesting concept of the oral kind of Torah and kind of mosaic code is much larger than the Bible. and for many years that was not written down by like sheer law. And then at some point they decided to write it down. And there are a bunch of reasons that are given as to why they didn't write it down. Some obvious ones, like they just wanted to keep it private from the Christians, whatever.

But there's some kind of counterintuitive ones there. One being that effectively things are much more plastic and malleable when you keep them in your head or when you just discuss them. and writing has this kind of calcifying effect to it where you put it down. One thing I was actually talking about to a founder recently of a fairly large multi-thousand-person company and they were trying to figure out, you know, the typical thing you're trying to figure out at that company, that size of culture and values. And, you know, I always send people who go through this process the link to Enron's culture and values.

Enron, for those who don't know, is what used to be the largest, one of the largest companies in the United States, a little on the large energy company trying out to be a giant fraud and, you know, put thousands of people out of business. But of course, they had wonderful values. they wrote on a piece of paper. I think it's like, you know, excellence and integrity and honesty. None of that matters, but I also wonder in general with values whether that whole thing, that whole

process of writing it down doesn't work because again, I think writing's strength is its weakness, which is it really calcifies things. It instills things and sometimes you want things to be a bit more than. Can I, um, this is a giant I want to ask you a couple questions. Yeah, yeah. So what is your, your,

you took time away from, when did you quit working at YC full time? I quit. YC, about a year and a half. What is your day job now? It's kind of split. A lot of my time has spent on Pioneer. Who runs it?

Me. Who works on it? It's about four, six other people. So you're the boss, but your hands off? Yeah. Yeah. Sounds like your hands on, or you're not hands on? Both.

I don't know. You jump in and out. Yeah, you should really ask them. Does it make revenue, or do you fund it yourself? We have a bunch. Well, it means it's, partially funded by me with two other investors, Stripe and Mark Andreessen individually. It's a venture capital shop fundamentally. I mean, it's powered kind of by software, not by people. So if you ask

if it makes revenue, no, but, you know, Pioneer holds equity positions in companies that have since got to... So you have a fund? Basically, it's a small fund on paper, I guess. It has markups, but, you know. As a business, it looks more like an accelerator than other things. A generator, please, but yes. Yeah, yeah. Right, right. So have you... How much money have you angel invested on your own? Can you reveal that? Oh. I mean, in aggregate, large number.

Large number. South of 10 million? Yeah. Like much, significantly south of it. Seven figures? A decent chunk of change. Has it returned? I've had some returns, yeah.

Has it returned to all of it? Or have you had a positive ROI across all? I have invested more than it has returned, if that's what you're asking. That was a really inefficient way of being asking. Sorry, what's your average check size? It depends. It depends. So I should really classify two things.

I mean, if I'm kind of investing for me, for myself, it's fairly varied. It's anywhere from, you know, $20,000 to a million dollars. or if the company's really large, tens of millions of dollars. But Pioneer's investments, very interestingly are much, are significantly smaller, but significantly larger. Wait, did you just say your investments are tens of millions? I think that's what you said. I don't know if that's what you met, though. Yeah, yeah, yeah.

But I very rarely will do those. So those will be very, very small. But before you, do you catch it up saying? Yeah, basically, earlier you said my total, I agree, angel investing under 10 million. No, I didn't say under. I didn't say under. Okay. I thought when you said South, that's what you meant, like under 10 million.

I've invested north of $10 million, just to clarify. You're saying Pioneer is different than that, and that it takes a smaller bets in but takes a larger position because it's early. Yeah, I mean, I think it'd be quite useful to clarify this. I tend to do personally Angel Invest fairly rarely. We'll do a fairly small number of deals of people that I happen to know or not know, but really believe kind of in the company and want to help. The majority of kind of the outbound investments that I'll end up doing are through Pioneer,

which are very small in size, you know, tens of thousands of dollars, but much larger by total volume. So Pioneer last year invested in about 90 people. So the reason I'm asking this is I'm just trying to understand the structure of angel investing as a business. Yes. I've had a few, I've done a few deals, Sean has done a few deals. I'm up, but hopefully we'll be up a lot. We'll see if it works. Yeah, that hopefully is the important bit.

Hopefully is the very important bit. Basically, I did one deal in the earnings. I just put all that back into different ones. And so what I want to know is how... Did you roll that over with QSBS? No, nope, because it was under five years. Yeah, and so what I want to know is Angel investing in business, how that works for you.

And I imagine you get deal flow that's phenomenal given YC connections and things like that. But that's what I'm getting at. Yeah, I mean, I think as an angel investor, I'm probably, look, I'm probably not as efficient as it could be because of really two things. One, you know, Pioneer and two, I'm a bit of an introvert. And so for me, it's actually much more satisfying to do a small number of deals a year where I have the opportunity to work really closely with the team to have fairly significant ownership in the organization as opposed to kind of doing, you know, every single deal that comes out, you know, through my inbox and chasing things around Silicon Valley. Even though that latter format would probably or maybe be better depending on who you ask, you know, for me it's much more satisfied. to kind of work closer with a small people. Who's the best angel investor you know?

There are a bunch. This is like asking what's the best movie you've seen. It's hard. But if you ask me what's a good movie you've seen. Rather, who's someone you look up to? There are a bunch of, I would say, look, in my view, an investor I look up to just not necessarily, just because of his legendary picking ability,

his ability to kind of be helpful to companies on boards, but more importantly, just someone super interesting. I can't quite figure out in an interesting way is Mike Moritz, who is one of the preeminent partners at Sequoia Capital. I find a very interesting and in many ways kind of endearing person

who obviously has his fair share of correct bets, be it Yahoo, Stripe, Google, and Cisco, I believe, a bunch of others. In the angel investing world, I think there's a lot of good people. I mean, I think, you know, why combinator is probably the most durable animal you can kind of look to, and I think it's probably the most interesting thing

in the sense that it is a platform. And it seems to produce returns regardless of the partners that are there. And that's quite interesting. No one's really managed to do something like that. I think Eliad Gill is quite good. It's top of mind just also because I happen to sit. I got a different question for you. Fairly closely to him in the office.

So in the brainstorm vein, you posted this thing, which is why I reached out to you, said 2020 themes. Yes. Oh, I read that. And your blog is good. So shout out, what's your blog? What's the website? It's DCgross.com. Dcgross.com.

Okay. So you have a bunch of good blogs. This was one of them where you had a bunch of themes. And I want to hop around a couple of them and let's just chat about them. Sure. So one that you had there was say yes to no code. Yeah. That was a theme. And we had, on the podcast, the founder of WebFlow came on and we've been talking a little bit about no code. But I thought one of the examples you talked about, which most of called, you know, the average people don't know too much about. It's a UI path, right? Yes. So UiPath. Talk about what is UiPath and what is that sort of what is RPA. It's a branch of no code that's not consumer facing in the same way as WebFlow and Zapier and other things that we talk often about. So talk about those. The whole no code thing is a circle jerk right now. I can't solve it's a real legit. or a circle of...

Oh, I called... Yeah, well, I didn't use those creative words, but yeah, I made very clear that it's overhyped, which is, I believe, my view. I still think there's more to be done there, but you have to be fairly careful when you're picking in an overhyped market, because one of the things I tried to flag, fortunately, I put this at the end of the post, and given, you know, if I had my own attention span, I wouldn't make it to the end of my own post. But one thing I tried to say at the end is, I think one of the most...

important things for the asset allocator to realize is selection pressure. And one of the great things about underrated markets is you get free selection pressure there in the sense that if you're working on it, you're already interesting by virtue of the fact that you're working on it. And if you're working on a hot market, you get the opposite effect. One of the coolest things about Pioneer is no one really knows about it. And so if you manage to make your way to a goddamn website of a company that doesn't even own the dot com, it's pioneer.com, for Christ's sake, and you apply and you play, like you're interesting through that effect alone. And as Pioneer becomes more successful, selection will get harder.

Counterintuitively, right? Selection is really hard for Harvard because it's the preeminent brand. It used to be amazing. Harvard used to be really weird. What, you're going to go to the new world, you're going to leave Oxford. Let me get this straight. You're going to leave Oxford and you're going to sail to the new world and go to this weird ass thing.

Same thing for Princeton, Sanford, Neal. And so selection pressure is the most important thing. the RPA scene, and we'll tie this into your point now, the RPA scene and the no-cote's and used to have great selection pressure even 18 months ago because no one knew what it was. And RPA stands for robotic process automation. And now, of course, everyone's talking about it. We're about to talk about it on this podcast. So you've got to be careful once the club becomes popular.

I very much want to leave. I'm very much looking for the next club that no one's in right now. That being said, we should still talk about it. So RPO, robotic process automation is a similar concept to no code. But as you flagged, it's a little bit more enterprise-facing. And the darling of this world is a company called UiPath, which is a European company funded by Sequoia and a bunch of others. And what they do and a bunch of others do is... It's like a $7 billion company in where, like Ukraine or something.

I don't think it's Ukraine. We're insulting them now. But it's, let's just say it's in Europe. Let's focus on continents here. We're in America after all. We don't know where the rest of the world is. and what it does is the idea is this. The idea is basically macros.

I don't know if you ever use that on your computer. So, you know, you can kind of, let's imagine there's a task you do repetitively at, you know, your large company. So you're going through LinkedIn and you're copying the name from LinkedIn and you're pasting the name into the, you know, a Google spreadsheet. So what they're going to do is they're going to write a macro that will basically watch what you're doing and then at some point just do it itself automatically. And that is much easier than writing software that does it. I mean, it's basically click record, click play. So the pitch sounds pretty compelling, pretty interesting, right? Like, we've all done this in like in music, where you have kind of loops and they're made,

you know, by just watching you play and then playing it back. And so doing that with software is interesting. Okay. So the twist is this. The twist is that the macros are really brittle. They're really brittle in the sense they don't really understand what you're doing. Like if I watched you do something on a computer and then you said, just copy me. There's so much I'm able to do because I've used computers in the past. I understand

what LinkedIn is. It's a website. And so like if the name of the person that I'm copying is a little bit different on that web page, I'll figure it out. The computer, most RPA is fairly brittle. It won't figure that out. Now, UiPaths work around for this is they have a lot of engineers do kind of the last mile, if that makes sense. So it's kind of mostly recorded and learned by the computer. And then an engineer kind of comes in and makes it a little bit more. Quality check. Quality check. Quality check it, make it a little bit smarter, a little bit of code dressing around the main dish to make sure the steak's not too bland, if that makes sense. Now, UiPath can afford to do this because their deal is so big and the margin is so big they can afford to pay an engineer to kind of take it the last mile. There's a bunch of little teams and startups in Silicon Valley here trying to do UiPath but not brittle.

Okay, so instead of having an engineer go the last mile, we're going to get some fancy machine learning to do it. And I actually think there's a lot of interesting things you can do that aren't being done today. We'll go into the details. So that's kind of an interesting avenue. But the thing to realize about UiPath, the thing to realize about UiPath that I feel like a lot of people miss in enterprise startups is the innovation here is not the software. The innovation is the sales machinery and the sales channel. And a lot of people, for every sales company, a common meme amongst founders is a look at it and say, dude, the software's awful. we're going to make better software.

And you forget, Salesforce, the software is just as good as it needs to be. And the reason Salesforce is awful is because the innovation of that company is in its sales team. It is not in the quality. Salesforce is a database for Christ's sake. And so you've got to be mindful of that.

So UiPath does a lot of channel sales successfully. And that's one of the reasons why they got big. I don't think it's because they're like... Well, what's the path? I mean, what's the... Did they really innovate or they just did it well? They did it first-ish. they did it well enough

and what's their sales system they have a sales team but they for the most part do a lot of channel sales they do a lot of reseller sales through a lot of other folks so then why did you say say yes to no code well sounds like you're hating on it mostly

I'm not hating on it or you're just not that into it I think it will continue to be a fairly strong meme yeah as far as I'm concerned I think it's somewhat comical how hot it's gotten I mean, just literally in, through Pioneer, through my inbox, there's like, you know, a dozen companies or teams a month working on some type of no-cody thing.

Now, I wouldn't become a bear on that because I do think Chris Dixon made this point about cryptocurrency in 2012. You cannot ignore a market if there's a lot of smart humans working on it. You cannot laugh at it. Like something will emerge. There's just too many, there's too much IQ working on this problem. So I'm sure there more stuff will emerge there. I think that world is infinitely vast. You know, I believe Deloitte does $43 billion of revenue every single year.

That's not their valuation. That's what they do in revenue. And like 12 billion of that is in software consulting. All of that can be eaten away by software that is kind of like no code style software or RPA style software. So the market is giant. And it's quite possible. You know how Mark Andreessen said software is eating the world in, I think, 2007. We may kind of continue to see software eat away at the fringes of the world through things like no code.

Right. And just to clarify, the themes that when you wrote this post, you're saying, what's going to continue to emerge? What are we going to see a lot of? That doesn't necessarily mean there's good investment opportunities or entrepreneurial opportunities because maybe that window was in the previous 18 months or 24 months where that was hottest. and now the popularity will surge, but the opportunity window might be smaller than the popularity. I think that's right. I mean, I really wrote the post as an observer, hopefully sitting maybe not front row on the court, but somewhere hopefully where I could still see the sweat on the player's faces.

And I'm just trying to give people a sense of what's going on here. And you're very correct. Not all of them correlate, I think, to ripe areas investment. Another one I spoke about that I think is super interesting, but I think it may be hard for a startup today to succeed it in as radar. There's a lot of interesting radar companies, and there's a lot of interesting radar technology that the large companies are working on. Project solely from Google allows you to effectively manipulate your iPhone

with micro gestures from even across the room just by sensing the position, say that your hand is in by using radar. This company is called Zendar, which is building a better version of LiDAR for self-driving cars, one that can see through snow, which traditional LiDAR can't. That being said, you know, is from an investment standpoint, well, you've got to ask yourself kind of a question of like, that's capital intensive. The use cases aren't that clear. And mainly the thing that's changed is the regulatory environment around various areas of spectrum has changed over the years. So when someone's working on that?

So like a lot of the companies that we've started, it's like, I can spend this up on a weekend and see if it's interesting or not. With these companies that you're describing, how on earth does someone even spot that that's a problem? Right. That sounds really hard, right? And that's kind of interesting. Most of we don't even know it exists, let alone that there's an opportunity. Right. And that is, you know, kind of, to me, one of the most kind of meta-interesting things of, you kind of, I feel like if you're trying to figure out what company to start, it is very interesting to find some type of community where you could be at the real frontier of a thing.

And so, for example, the two guys that started the radar company were previously working on radar. So they were sitting at the front of the radar game at Zendar. So they're very aware of what's going on. If you're sitting at like, how would you say in the club or in the chat room of Python, just Python. That's what you got. There's a lot of people there. And so you really want to find some type of pocket of the world where you can be at the real edge where there are very few people there. And I think actually a lot of enterprise software is like this.

Sometimes you'll meet these guys where they'll go, you know, they start one enterprise company. They like sell it to Cisco. And then there's literally like over the course of their career three or four of these spinouts where they leave and then they start the same thing and it gets required. And so you what's going on here? Okay. So one traditional answer is like great man theory. The guy maybe just has an IQ that I don't have sad. Okay.

I don't really believe that. I think what's going on here is very few people. are aware of the problems. And so very few people build the software. I actually encourage a lot of people shoot me emails and they're like, what should I do? I think a very... Look around. Well, it's kind of look around at a meta level of get yourself into a place where you can be looking around where there are few people looking around.

So what does that mean in practice? You may want to go work at a large enterprise company and just observe what's broken there. And then you could literally leave after six months and start a company to fix the number one. thing and you'll observe it and kind of at an experiential painful level where you'd be like wow it's really broken i'll give an example um i'll give an example so Sean's actually doing this yeah okay so we just got acquired so Twitch is now like about 2,000 people so that's uh I don't know 100 times bigger than any other company I've ever worked for we've only run my own companies and the max we got to was like 20 something yep and um so I sat there and I told the team on the

first day because they're you know they just went in with the mindset of like okay we're here to fit in, do a job. I told him, I said, you know, you're going to get several valuable things out of this experience. In my opinion, the most valuable thing that can happen in this experience is you sit at this company for this for a year and you observe and I said, we're going to make a list and we're going to share this list. It's called import export export. Import. What are things that we see problems where we would buy the solution within this company? We would import a solution to this if somebody could solve this problem. Export. What's some hacky thing that we built internally to solve our own problem, that we're not productizing and packaging for the thousand other

companies that are going to experience a similar thing. So we have this import, export list. I'm basically the only one adding to it. I've asked for so long for you to give me that. Yeah, I haven't given it out to anybody yet. But that's my mindset around it, which sounds similar to the advice you're giving somebody. I think you're going to discover a lot of interesting business. I'll give you an example.

It's so funny you mentioned that. I had something fairly similar to Apple for me, which is I had this folder of manager scripts. And all the manager scripts I wrote are ultimately really good companies. should exist. So here's one very simple one. Broadly speaking, all internal HR software is awful. And as a manager, I just wanted this very simple thing. I ended up writing in software, which is I just wanted to know for everyone in my org, I want to know what are their important financial milestones. This is Apple, 100,000 person company, there's no software that could tell me this, which is I want to know, like, when are you, is most of your stock going to cliff? Because you

would get these refresher grants every single year at Apple and they themselves are on four to six month milestones. And so every single employee has secretly done this math where they're like, oh, January 12th is when most of the money is coming in. And so like I'm going to quit January 13th. And so who wants to know that? Every manager wants to know like what are the troops leaving? Got it. Especially with software engineers in San Francisco who are constantly, you know, looking over their shoulder to extend for another job, which is. is another terrible cultural affect. But given the fact, what you want is a piece of software that just gives you this data of like,

here is when you need to be checking in with people. Because if they're financially motivated, here's when they're going to leave. No one really does that. Yeah. And there's a lot of this stuff. Performance review software. We literally had to write our own performance review software at my startup and then subsequently at Apple because all the internal stuff is bad.

And another fairly classic. one, stack ranking performance reviewing. This doesn't exist at large companies and people will never build it internally because they don't like stack ranking because it inherently pushes some people to the top, some people to do that. But it's the best way to figure out who's the best performer. But again, I was never exposed to this stuff before I worked at a large company. So you have a list like Sean does?

I have a general startup idea list. You should share that. Do you do that like request for startup sort of meme? Yeah, we have also a little bit of that. Pioneer's website where we put up a bunch of like fairly tractable simple I could do this in a weekend style and I saw your face just now when he said you should share that

you were like you internally you didn't want to what's the reason you I'm happy to like I so I'm trying to figure out no I would I'm trying to figure out how to convince myself to have your view that like you can actually give people startup ideas and maybe I'm talking to the wrong people but I've generally found that it's

well it's more hard than not well but my point is though that you have people who will and will not, the wills are, it's just a very few people. But the will nots, they can still apply that across other things that they're doing. Totally. Or you could be like,

so at which they have this phrase, it's like, what a creators care about? And really this is what do people care about? Which is, Emmett discovered early on, he's like money, fame, and love. And actually it's sort of the same meme that Dave McClure once said, people want to get paid, they want to get made,

want to get laid. It's sort of the same thing just repackaged. And so, And so, and there's a specific order for Twitch where it works, which is like you first want to grow your audience. And then you want to make money so you can do this sustainably. And then that all starts to feel shallow if you don't feel the love from your community. And so, and he discovered a fourth one from the founder of Vine, I think. He told him, he's like, there is a fourth one, which is inspiration. And then it was like, oh, that's very true because anytime one creator sees another creator doing something interesting or they hear about an opportunity, it just gets them that motivation to just continue on.

because these are always long journeys. I think Silicon Valley does a good job of inspiration because we tell stories through the media. Sometimes this creates skewed versions of reality. But there's a reason that exists is because, A, it's interesting. And B, people take a lot of inspiration from it. And what I view when you share an idea that it's not so literal that you're trying to get somebody to do this exact idea. It's trying to get people to see the types of problems you see, use these as sort of starting points, and then riff on it and end up wherever they will end up.

And so I would think about it that way rather than saying, am I going to give this person idea? Are they really going to go be able to do anything with this specific idea? Yeah. I think that makes it down a sense. And I think that's right. I mean, I think maybe the best outcome is someone finds some adjacency to the idea that you give them. And so, you know, maybe this HR performance thing, you know,

you don't end up precisely building that, but you build some other related piece of, I don't know, HR. You said something earlier, you go, You can't ignore, you know, sort of the Chris Dixon. What the nerds are doing on the weekend is where the trends are going. You said something like, if there's a lot of IQ at a problem, something's going to happen. What problem doesn't have enough IQ on it, in your opinion? Give us some things where you think IQ should go. Well, okay.

So, I mean, one broad area is kind of the one we spoke about, which is I do think that, like, the kind of 20, 30-year-old person who's kind of, maybe even technical really wants to do a thing, is just not exposed to enough enterprise life. So there's a lot of unmet enterprising. I'll give you another fairly simple example. If you're a sales team, really anywhere, you were trying to figure out the org chart or the company you were trying to sell to.

There's one company called the org that tries to do this. I tried to do this. I had the same problem when we were trying to sell. There's org. And we actually, we pay for software that does this, but it's all industry-specific. It's industry-specific, and it's like a weird sneaker net style.

thing and like I think I think someone could really knock it out of the park here and build something that over time maybe even becomes the next LinkedIn just org chart as a service and the information does something like that it's only executives it needs to be UGC right it needs to be where it's like like a wiki that you want to even think of it as a little bit of a deeper level which is what is the incentive for the employee at the company just kind of pseudo-anomously update their own profile much like they do on LinkedIn and so I think if you could figure that out this is a great idea If you could figure that out of the line on the future, you may build the next big social network. We use media radar and we pay them thousands of dollars and it's only people at ad agencies.

It's the same playbook as LinkedIn, right, which was, let's put your resume online. Certainly you want that so that you can get jobs. Oh, what happens when everybody's put the resume here? We can create the network of people on here and make this, you know, sort of the professional network. Totally. And so, like, that's a thing. Another one that I think is super tractable. I don't know how mixed money is.

Why are you guys familiar with SciHub? What's it now? Science Hub. Science Hub is a very interesting thing. It is Napster for research papers. Okay, so it is used by a small number of very smart, potentially very high net worth people, but a small number. So you can kind of think of the Tam math here, of the total addressable market math here, is much similar to like Gulfstream Jets as opposed to Priuses. small number of people, potentially verify pay.

And basically, if you work at a university and one axis kind of a research paper, then your university paste for it. If not, you're basically screwed. And so Sihab is Napster for this. It's a terrible website. Like the domain is in Taiwan or somewhere. It's not really hosted well. If you were to build a better alternative for Sihab that had all the research papers,

I don't know about the legality of it. I certainly think it would be moral. That would be a separate issue. I think you could, you would basically have the highest kind of intellectual under management website on the planet. Right. Like, you would have hedge fund managers, you know, kind of leading scientists, all using your website. And you'd have to get clever on how you'd monetize them. But boy, like, I think that's a, if you want to become the star of the internet, to the people that matter,

that would be the number one thing to build. There's a company that was doing something similar. They were actually on Incs 500 fastest growing companies by revenue. I'll have to remember what it was later. This would be a little bit of a weird project because it's not going to be legal because SIEHB itself is not legal. But again, I think things that are at the intersection of morally acceptable and illegal are often quite interesting.

You know, that's always an area where, of course, crypto has, you know, some space to shine. Let's see. What else? We're playing the game of you're the asset allocator of IQ. You're just shuffling IQ around to different areas where you're like, we need some Mike's you over here. Yeah, totally. I mean, there's another thing, which is, I think,

a pet peeve amongst a lot of us, which is just like better Goodreads. Goodreads is this company that was doing quite well until Amazon acquired it and folded it into Kindle, it's been awful since, but inherently, the experience of kind of reading material online today is very single player and should be significantly more multiplayer. I mean, every time I highlight something or you highlight

something on your Kindle should be shared kind of automatically into a group and we should be able to talk about it and I think this thing Executed properly again would be a social network for the erudite so like I don't think you would get a billion people But you could probably get a hundred million people that you could charge like I don't know a hundred bucks a month from So you'd end up in the same revenue math or you'd end up actually with an audience base that you could sell incredibly high-end ads too like like the same way town country does But again, you could literally do that in a weekend. You know, Mozilla owns this thing called Pocket. Mm-hmm. Which, like...

Oh, they bought Pocket? They bought Pocket. What do they pay for it? I don't know. A lot. But it's like... No shit, really? Just make a better pocket, for Christ's sake.

It's not that hard. And Pocket is not that good. I think you... I don't agree with you on that. Because there's... Those types of businesses work really well. They've worked so far really well in Japan and in China. So smart news.

Pocket? I see. So there's this thing. called Smart News in Japan. Have you heard of them? They either are valued or public at a billion dollars. There's a three or four more. Anyway, in America, we've tried to do that three or four different times. Not once, I don't think, has it made a good business? Maybe they've sold for a lot of money, but it's not made high revenue and profit. Of course, that doesn't mean it can't be done. but I think there's a class of products in

you guys familiar with Superhuman superhuman. Superhuman is this email client and it's like 20 bucks a month for an email client like a quick reminder Gmail's free. Do you use it? No but for separate reasons. It is used by a lot of people. I don't think they're profitable but they're definitely doing quite well and I think to me that that is kind of a model here going back to our Gulfstream. Luxury software.

luxury software is a great way of putting it. And I think no one's executed a pocket on that thing. So that's cool. Super high-end, super fast, charge a thousand bucks a month. And you're not going to get a lot of users, but you're going to get a few super high-paying. I think the high-end businesses are better than... Certainly easier. I'd rather have less customers who charge or charge more than a lot of customers who charge little. But that's like not what most people people tend to do, it seems. I think that's right. Another thing on the spirit of high-end is I think better software for people to interface with our admins with on I think should exist in the world. So like today really you're actually things again really easy to do.

There's basically a messaging app that's really durable, really stable. And the main difference, you may ask, why is it different than WhatsApp? It's because the only person on the messaging app is your admin. It's like you call the bat phone, whatever you want. But basically, I think messaging goes through these ebb and flows of saturation and desaturation. And right now everything is incredibly oversaturated. And messaging in many ways is kind of. becoming the next social networks of these private groups.

And so it's really hard to keep track of everything. And so you get messages six different times, six different channels. But if you just have one app where it literally is the only way to reach you, I think that alone you could charge people for. That's a cool idea. You would only see that if you're at a big company, probably, right? Like, I didn't have it EA till I left Twitch. I wasn't going to have one at my start.

You have one now? Yeah. Awesome or not awesome? Well, it's great. Like, you know, it's a free perk, right? Which is awesome. And like, I told you, I hired my chief of staff now. So, like, I need the bat phone for him.

We have a slack, which is just me and him. But that's like five layers I have to do to just get to my conversation with him, which is slow. Yeah. And also doesn't have any of the features that we would want for that use case, I guess. I think now I'm just really brainstorming into deep space. There's a lot of online forms that are still quite active. I'm talking things like Flyer Talk or this is a similar one for running, let's run.com. I'm a huge let's run guy.

I've been on the front page four times. There you go. Okay. So, okay, so this will be contextual. Bulletin. It's Bolletton. V-Bolitan. Software that was literally built when, you know, we were still.

I was going to ask you if you're a runner. You look like one. Yes, very much I'm a runner. But the, like, V Bulletin. V-Bolitan is like the Blank 182 of software. It's awesome. Like, let's run. Of all the new forums, that one that was launched in maybe early 2000, I think it's still the best.

the software is the best or the community is the best. The community is amazing. Please don't tell me the software it's good. If you tried using it on your phone. Yeah, if you use it on your phone, it sucks. Yes, but when it allows you to post without signing up. Yeah, it's very much kind of no... Old school internet.

Yeah, and I think that's like way... I love that. Anyway, what I would build is I would literally build a app that all it did was it was a professional scraper of V Bulletin. So you get really good at scraping all that stuff, and then you turn all those things into like a wonderful, beautiful mobile app. It's just a client, a reader client. I'm a reader client for all this stuff.

Oh, that's really smart. That's really smart. And I think if you did this correctly, you can start building the next Reddit. Yeah, because it's not owned by like a company that's just going to shut off your client. Yeah, it's owned by the let's run. I don't even know who the let's run guy is. Wojo, Weldon Johnson. I only have one forum that I used to go to.

It's like a basketball one called the Collie and there's Colceum. And they basically, they switched off V-Bold into some other also really bad one. and I remember over, I've never seen a community to do this. Literally overnight, someone was like, you know what, we're tired of this. Mobile app sucks, and this thing always crashes during big games. I'm making a new one. Come over here, everybody. And literally overnight, everybody deserted that first place, went to the second place,

and they sort of refer to the old one like the hamsters are still running the wheel, trying to keep that other one still up. Okay, so that's very interesting. And that should remind us of a point that I think should inspire anyone who's thinking of building stuff. Everyone forgets, everyone forgets that this exponential social network growth cuts both ways. Yeah, the decay. The decay. And I don't know how you guys think about this at Twitch, but I actually think these whole network effects, the concept of a network effect super overrated. I think if you build

a better experience, people will just swim there immediately. But yeah, I agree with you, but that just proves their strong network effects. No, no, I see, you're saying, you're saying if you build something better, people will swim there immediately. I totally disagree with that one. But I do agree that if you do the voodoo magic to get to the tipping point where the decay begins. We've seen the mass migration happen a couple of times, right? Dig to Reddit sort of thing. Wow.

That was like one of them. But they're very, very rare when they happen. And that's why, but I believe that people are building better software solutions. Like right now I'm at Twitch, and I shouldn't say this, but like there's competing products that I think have cleaner interfaces, load faster. And, you know, if you just compare feature to feature, better products. So you're right. Like, you have to be in a club that is also getting bad and there has to be a better club available.

Maybe it's a composite function. But here's, so here's the interesting thing. I think, well, hopefully this doesn't happen to Twitch. I am, and this was kind of in the post we were talking about earlier, I think we can have a guaranteed bet that all the giants, all the large companies, that their software will get worse over time. It must get worse over time. As durable as like Newton's law, as durable as gravity,

these guys must produce more revenue quarter after quarter after quarter. I don't know if you saw someone actually posted this the other day. It's amazing graphic of how Google has changed its ads over time from like at the extreme when they got found it. It was very clear it's an ad. Today you literally cannot help. The first page is like. You cannot tell.

Try buying something on Amazon. Try buying like an electronic product on Amazon. it is like stepping into a flea market in the middle of Shenzhen. You have no clue what you're buying. Resellers, fake products, no products. Why do they do this? They do this because in the short term it creates more revenue. In the long term, it creates this kind of weird sense of like, fuck.

Disatisfaction. Right. And I think. I don't, like, I don't follow Amazon reviews. You don't trust Amazon reviews. It used to be like Amazon rules, it was life. Now it's. Well, the Google search thing is interesting, right?

Because you could see how much, what percent of the screen? is an ad over time. It starts with 0%, goes to 10%, and now it's basically like 80% of the results you'll see on a, like without scrolling, are going to be an ad, you know, from Google, which is crazy. You go back, of course, to 1992 and you can read the memo written by Larry Page and Sergey Brin about how our advertising models are at odds with a customer, I'm almost quoting verbatim, are at odds with the customer experience and search engines. But of course, these guys are checked out, and now their own company is headed in that same exact direction. So here's another tractable idea on this very concept.

Super simple to do. Build the wirecutter for one specific domain. I've talked about this constantly on this podcast. What do you mean by this? Go on. Well, like Amazon reviews are bad, and what are reviews? In a sense, it's you, how would you say, sequestering your thinking on a particular topic to another brand where you say, like, okay, this brand.

brand is trusted. And so like, I don't have to think I will just trust that brand. So you need to recreate that. And you could potentially recreate that in many different ways. But I think the simplest way is you focus on nailing it really in one particular domain. Maybe one way to bootstrap this is you can get kind of celebrity endorsements because that's really what celebrities are. They're known brands that people appreciate it. No, these are bootchrapable companies.

So maybe you don't even need that. Wirecutter was bootstrapped. They sold way too early. They sold for $30 million. and they should have sold for 200 million. So a lot of people try to do wirecutter for business software. That's what I've talked about forever. What email provider should I use?

Yeah. What chat client should we use? What HR software should use? Well, if you go to like bestCRM.com, it's people who only talk about or I bet you there's, if you type it in, I bet you there's pipe drive versus Salesforce.com. Right. And I bet you that can make a million dollars here. Yeah.

People try to SEO game that, you know, X alternatives. The problem is two problems. One, you should never, or you could have in the past, I think it's skis. carry you to rely on Google now and two you have to look at who your affiliate is if your affiliate is Amazon Amazon could just say all right we're not giving for we're not going to get Amazon gets four percent affiliates to wirecutter they would say all right we're done with this program and you lost yeah I would I would actually propose with a little bit of ambition that the person doing this um tries to do without Amazon you just try to sell the

product yourself and that's why I think it's super helpful to focus on vertical and topic of running. Like, I think if you focus on sneakers, which by the way... I totally agree. You have tremendous margin in sneakers. Holy shit. But if you Google, like, best cycling equipment or best running shoes... D.C. Rainmaker. It's so... It's so... D.C. Rainmaker. He's your answer.

Oh, I know. I read him. He's great, but he's good for, like, Garmin. In Paris, just uttering away. But he's just a blogger. And it's a horrible site, and I love it. And it's, yeah, I'm sure the bank account's not horrible. I totally agree. And what I would do is... Basically, Joe Rogan needs to launch this.

Joe, is somebody who's like an Oprah level, Oprah level character. With the Chaga supplements. And, yeah. No, I think that they're, that's interesting. I've never thought about shipping it out, though. That's kind of, that sounds like a pain in the ass, but it could be worth it. Yeah, you know, at the end of the day, like, life's an adventure and you have to do some of the pain in the ass stuff if you want, I think if you want to take some of these guys down.

And I think the trick, the reason why you want to focus on a vertical is I think it's quite important as quickly as possible if you're doing a company in any related area to this do what Amazon did very effectively, just to get to become a destination and to get out of Google's social deals. I mean, we forget. Before Prime, Amazon had this giant existential threat, which is, I think 60 to 80 percent of its traffic came from Google. And this is what killed Yelp at the end of the day, because at some point Google was like, we're unigrate into maps and just promote maps to over Yelp. And then, you know, Jeremy Stoffelman went to Congress to complain, but that never works. Or it didn't work for him. Amazon did something much better, right, where they became a destination.

Now when you buy something, you go to Amazon.com and then you search there. Oh, Amazon's, I think, the fourth largest search engine now. So, I think you must pick a vertical because it is easier to become, in the consumer's mind, a destination if you're a particular vertical. Like, I associate this, this is the app that I go to to get sneakers. This is the app that I go to, to get, I wouldn't even say electronics, too big, to get, like, cables and dongles. Cablesandongles.com. And then I think you can become the destination, and if you picked a small vertical, you can also. will handle all the shipping.

Their companies like Shippo, which will take care of the logistics for you. It'll be hard to compete on the two-day thing with Prime that maybe over time you get. Here's a different angle at this. What we talked about earlier about luxury software. So sometimes when I want something, I just want to know what is the actual best? What is the best that money can buy? And like what are the top three of like the best money can buy? And so, you know, whether it's socks or anything else, you basically just start to curate.

So it's not necessarily a vertical of products, but it's a vertical of like buying habits. Literate top 3.com. What's that? That's like a top 3. Right. Top 3. Exactly. What are the top 3?

And we go to extraordinary lengths to identify, test, and sort of, and ensure that these are the top 3 at any given time. Michelin ratings, but for products. Yeah, that's interesting. And to extend on the wire cutter point, the funny thing is, you know, you have to go to the bottom, actually, to get the best, best thing. Because they actually focused on value. Right. Well, they have a budget pick. Right.

A best for most people pick and an upgrade pick. I remember I was buying an air filter and I was like, you know what? It's the air that I'm breathing it now. I'm willing to pay. Well, I did this with a mattress. I was like, I don't want an $800 mattress. Like what's like the fanciest one I could ever get? And will that actually make me sleep an hour extra?

Which, by the way, I mean, yeah, if that math is true, you should invest half your earnings in that because like, you know, compound over time. It's like the drug everyone forgets to take. So yeah, top three is interesting because, yeah, you'd also attract like, you know, the best customers. The extreme variant of this topic, if you read it, what the craziest version of this,

is I think there's a, if you really shoot for super high end, I think you can take down all the traditional blogs that are covering like the latest on private aviation, the latest on like crazy homes. I don't think those guys are at the top of their game. Right. And I think you'd probably build an alternative.

again, you're going to get like 10,000 visitors a month, but I'd imagine it could monetize it. So there's this company I've brought up before. It's called Informa. It has a market cap of $10 or $15 billion, $3 or $4 billion a year in revenue, and they own roughly 100 brands, and it's all high end. So it's like they own like, I could be wrong, but the idea is right, like Monaco Yacht Week. Right. And they own like, they own a magazine that probably reaches only 10,000 people a month. and it's up for people who are buying hundreds of semi-trucks.

And so they update you on manufacturers and things like that. I think so at Hustokon, one guy, I think his name's Eric Ryan or something, the founder of Method. Hustokalcon is the big event we host. Yeah. Conference. So he had this talk that I thought was the best talk there. And he said something at the beginning. It's like, yeah, he created Method soap and like, you know, won in the soap category.

Then he created all E vitamins and he won in the vitamin category. Now he's doing Wellie. He's going to win in the Band-Aid category. and it's like, okay, what's the formula here? Is it just like walk down the aisle and pick one of Target? And he said, yeah, pretty much. You know, he's like, I look for a sea of sameness. And he said, every time I see a sea of sameness in the aisle, I start to do it.

And he goes, the second thing is then I have to pair that with, what's the culture shift? Where's the culture going? That these brands that succeeded 50 years ago when the culture was different that they don't understand. So for method, it was, hey, the culture shift is now when we pick up a product, we don't look at the brand name. We turn around and read the ingredients. And hey, look, all these soap brands, you can't recognize one ingredient because there are toxic chemicals that we use to clean our house.

So we should have, you know, chemical, you know, we should have cleaning products with chemicals you understand and trust. For Allie on vitamins, it was like the culture shift is around, you know, getting these benefits around like, you know, I don't take biotin. I want thicker hair. You know, I don't do this. I want better sleep. You know, personal wellness as personal fitness, basically. And so he started talking about this. like this concept. And I see this with like when you talk about taking down the incumbents.

So the way I look at this was Snapchat was probably the last big, let's say threat to one of the big companies, the most recent big threat to one of the big companies because A, they wouldn't sell to Facebook. And B, they took them on at social and succeeded. And what I think they did was they recognized that the pendulum had swung where Facebook was everything's public. You're connected to everybody and everything's permanent. We save all your photos forever and your post forever. And Snapchat just went and zagged. You know, they zigzagged where it was like, how about private? How about photos that delete and they're not permanent?

And because the culture is going this way where when everything's online, you sort of want to be, you know, not everything wants to be sort of public and plastered everywhere. And so I think an important thing when you look at this is like, where's the culture going? So when you said this about luxury brands, what I was thinking was I couldn't give less of a fuck about yachts or private planes or anything. So what is luxury for somebody who, who's going to be, who's 25 and getting wealthy. And over the next 10 years, they're not going to buy fancy watches maybe.

They want, what are the luxury experiences? Right. Like, I think Fire Festival was closer to what people actually want. Well, it's that supreme shit. Well, Supreme on scarcity, right? But that's still, like, I think, sort of part of the old world of, like, it's a physical, material good that's scarce. Now, they did some things differently.

But I'm curious what, like, we know our generation cares more about experience. the material goods than any generation in the past. So what is a luxury experience, right? We've talked about Museum of Ice Cream and all this other stuff. What are these luxury experiences? What's super luxury? I'm very curious about ideas around that. That seems like a fun company to run.

Yeah, yeah, yeah. Yeah, I mean, I think there's a, I mean, in many ways, the real kind of rent seeker in this world is my whole company with Apple. I mean, I think ultimate luxury is being, you know, I'm having the AirPods Pro to whatever when it comes out. And I mean, I think Apple will do well to price discriminate even more. They should have some crazy AirPods variant that's like $1,000. Right.

And it's not quite gold trim, not tacky, but it looks cool in some way. The watch is a beautiful kind of exploitation of this. So that's probably the millennial luxury. Like Uber and Postmates, I think, are millennial luxuries where it's like hyper-convenience, like ludicrous convenience. There's a company called Puffs or Go Puffs, you know this company. They basically, it's a little mobile vending machine that rolls around college campuses and will bring you like, you know, Cheetos and Red Bulls and condoms or whatever.

Yeah, it's awesome. And they're doing like, I don't know the exact numbers, but I saw at one point, you know, hundreds of millions of dollars in revenue on this very simple business, which is what if the vending machine in your college dorm? What if you didn't have to like go across the quad and walk into that building and get it? What if it just rolled up to your door? That's awesome. I was thinking about that at the airport last night. I was like, oh, I don't want to walk all the way.

I saw some investor who was like, when I saw that the convenience store was literally like steps away and still this goddamn machine kept rolling up to a dorm, he's like, I knew that was like some weird phenomena that I didn't understand, but I needed to invest in. But just on the Apple Point, here's an idea. I have to, I've written down multiple times. I cannot get out of my head. I have to really just, I usually tell the team it's a struggle. I mean, it's my goal. I have to stay focused, but boy, I think it'd be relatively easy and so much fun to build a new laptop.

To build a new laptop. Actually, don't think it would be that hard. And I think you could fairly easily, if you focus on a niche here of kind of the innovator, creator, creator, founder, developer. We'd have built in LTE. It would have like... LTE is a... So wireless, you don't need to Wi-Fi. Build in, yeah, you don't need to...

The tethering always works. That sucks. own sin chip inside. It has all the right cables. It's a little bit thicker because the battery will last all goddamn day. And it has some type of notable color. I think you could build something where, again, you won't find this, you know, in Mumbai, but you will find this in every single coffee shop in New York City in San Francisco. And I think that would be quite fun to do. I like this idea. Yeah, that's a great one. I think it would be, yeah, to your point about luxury, I think that that would be the real luxury.

I think you build a really good operating system. This is where things get a little bit. You would build the operating system and not just use Apple? Well, you wouldn't be able to use Apple. I think you'd have to use Linux, but I think you could build something really fast where everything was just focused on autocomplete. And again, it would be the type of thing your mom's never going to use. But I think that's okay.

I think we can totally discriminate and, you know, build the right software for the right person. The related thing to do is to, I think, to build a brand new messaging up. And of course the one point you may bring up is, when we spoke about this a little bit with the admin messaging app, but it's directionally kind of the same idea. I think messaging apps are basically like bars. And so even if like the feature of one bar over the other bar is like the Delta is nothing. They're both going to serve you the Moscow mule. But one bar just has a different community of people in it, different vibe, different feeling.

And so again like actually I actually think Slack's position is quite vulnerable. Like I mentioned, this stuff moves fairly quickly. I hate Slack. There you go. Why do you hate it? I hate it. Oh, my God. I don't have it on my phone.

Did you hear when we were talking? It was going off. I hate that noise. It's so annoying. Turn off the noise. I have the no noise. It's made so many fights with me and my coworkers because I get reactive. I find it.

So don't you, I don't know if you have this experience. Sometimes I'll come by. I'll sit by a colleague's desk. And they have Slack on with the notifications and the dings on every single message. Oh, it's horrible. And then I got Messenger up. Then I got texting, so I'm texting him.

I'm writing this other guy and I'm, oh, fucking hate it. I hate Slack. I want to get rid of it. Well, so speaking to a counterculture, that's, I don't think you're alone. Email is, I think, better because you have to, it, you don't write like a, hey, you there. Or like, are you awake? Like, let's talk. Like, you can't really do that in email.

It's more thoughtful. Hmm. I can't stand email or Slack. I mean, that's very interesting. So maybe we can envision. I don't have it on my. sponsor Slack. No.

Even if it was, I wouldn't care. That's not what we do. That's real sponsorship, Black, Pritz. I'll, I could, we, I would endorse it because we've paid them a lot of money. I mean, and there is some cool stuff about it, but I fucking hate Slack and I don't want to use it ever. I don't have it on my phone. I don't think you're alone, by the way. One lens on how to kind of do startup ideas is really just focus on the kind of, the kind of

the availability cascade, if you guys are familiar with that, or the meme that's exciting. Like, I think if you, if, a simple way of thinking about this, maybe, or a better way I think about this is,

what is a good stand-up comedy joke? Like, I think if you went up on stage and you say, Who here hates Slot? Don't you hate it? When Slack sends you to everyone's laughing. And so there's something there. There's a lot of driving there.

And I think you can light it up on fire. And so what would this be? So maybe the messaging app is called like quiet. And, And yeah, maybe you need to send things longer form. I don't know exactly what it is, but you can take advantage of that energy somehow. I have a hard issue coming up with those product ideas.

Those are, I think, are hugely challenging. Like when I think of how they create Slack, I'm like, man, I created that from scratch is challenging. Whereas creating something else that's like slightly better version, like, we were talking about sweet greens earlier. And I was like, oh, I could totally see how to that's so easy to make. envisioning software from scratch is so challenging. Well, there's a difference, right? So we talk a lot on this podcast about two types, two types of businesses,

but we use them interchangeably. There's businesses in the traditional sense, and then there's like startups, which end up trying to be hypergrowth, dominate their market, you know, the goal is monopoly, and the outcome is like multi-billion dollars, right? I would say that for you and your world,

you're geared to the YC world. It's all geared to focusing on these hyper-growth startups, as most of Silicon Valley should be, and it's very exciting. And then there's like, you know, we have friends that go on Flippa and will buy a shitty FBI business and be like, oh, let me double the prices. And great, I turned a $1 million business into a $2 million business. But they'll have like 10 of them. Yeah, and they'll do that five times and whatever.

It's very, it's just two different worlds. I like them both. I like them both, too. We got to call them what they are. He told it. He said it took two or four years for Ivan. I think of his name is to make a notion. I'm like, fuck.

I can't even imagine what to start. Very different. Yeah. I think it's a very good distinction. Really, the main thing going on here is, yeah, I think you put it very well. Startups are, once they work, just meant to grow at a much faster clip. You know, we talk about 5, 10% week over week, none, stop, relentless growth. Whereas traditional businesses, I mean, they may start that way, but they usually

asymptote over time. And both are fine, right? the thing the startup world needs to be careful of is venture funding is the incorrect financial instrument for most businesses. I actually think there's a lot of founders that made the mistake of taking venture funding where they have been much happier off taking debt funding from a bank, owning much more of the business and just leading an amazing life that many founders would secretly wish they have of just like, you know, I have a thing and it minced, you know, $10 million of free cash flow a year, and that's kind of it, and I own it, goodbye.

Startups, you know, are a thing where owning 2% of it should be, you know, enough to never work again another day in your life because it really has to achieve tectonic scale for a tour. Did your search engine grow like that? In many ways, yeah, I did. We face this interesting challenge, which is it's a very, the way we're ended at a startup, all of our, of the entire search engine was hosted on AWS and Amazon Cloud Services. It became really expensive to run.

And the way it runs on your iPhone today is it runs on your iPhone. So it's much more efficient, if that makes sense. So we came up with, we had a terrible business model. We ended up selling, obviously. You know, I think we could have crafted the company in other ways and potentially taking it to greater heights. But yeah, I mean, it was my first radio. And so by no means that I know how to run a PNL properly.

I'd imagine your audience was probably better at me and, you know, properly running a PNL. Because I was very capable of taking all the venture money that we had and sending it directly to Amazon, right? A broker. My makeup. I mean, yeah. The real liberal rent seekers, by the way,

that are basically taking venture capital money, not stop, and not producing much societal value with it, are landowners in sandwiches go. That's really where... My bet is I'm buying multifamily units in fast-growing B-C-and-B cities, like Nashville, things like that, because I think that remote work is going to change everything. Yeah, remote work, that's an interesting one.

Certainly, I mean, I think you went other way because whether it's remote or whether it's other startup hubs, I don't think we'll be able to pop the blister of San Francisco, so it's clear that the pressure is going to go elsewhere. I think it'll be interesting to see how many companies are successful. That's one of those, by the way, reverse network effects. If the tide shifts and people from here leave but go to a single destination rather than dispersing. It'll happen quick, and people forget. But it is very clear that the decade of 2009 to 2019 was the decade.

of San Francisco. But like prior to that, it wasn't SF. All the cool kids were in Mountain View. All the cool kids were in Palo Alto. And what really happened is there was a point, a tipping pointed about from 2000, I think actually 10 to 2012 maybe where it all very quickly moved to SF because Airbnb was here, Dropbox was here, and then Stripe moved here. And Zinga, later on, maybe Pinterest. And because they all moved. and they became unicorns. People just assumed, oh, okay, Mountain View pretty much gone back to SF. But it could tilt very easily, again. It could tilt to, like, Redwood City. It could tilt to Austin. It could tilt to London. So if you were a city, what would you do? Right. So that's funny. I was going to mention to you guys, the other podcast format that doesn't exist, I think that would be very interesting is, in addition to brainstorming ideas, if you are the CEO of X, what do you do? So if you're Evan Spiegel, what do you do? So you're asking, yeah, if you're the mayor of a city, what do you do? we get Evan Spiegel and say if you're the CEO of this company of that company. Hey, CEO of X. If you were your competitor

CEO, what would you do? What do you do, what do you do? Fucking retire. Bail. Like, hide. Yeah, I mean, the guy is knee deep in a video game. He's not shutting it down right now. Anyway, to your point. So, okay, so if you're the mayor, I think let's take the most difficult version of this question. Like, you're the mayor of a small town literally nowhere, but you're a really good mayor. Because London's kind of easy. Lander, Wyoming. Yeah, exactly. What do you do? So, I think you need, I think the way this, so, so, you know, a lot of people will say, well, you know, first you've got to bring in the money and then everything will follow wrong, in my opinion. I think the money pretty much follow, venture capital

money at least follows wherever the startup seem to be emerging from. Venture capitalists, they're like water. They'll take the shape of exactly, of whatever, um, cup they're being molded against. So you have to very quickly get to a point where you can say, oh, we are a startup hub, look at X and Y and Z. So how are you going to get X and Y and Z? In many ways,

it's the strategy Andresen Horowitz took. So Andreessen Horowitz is the largest, newest venture capital firm to come out of Silicon Valley, really the only successful kind of mega launch in the last decade. And what they did is to get big quick. The testosterone they took, the human growth hormone they took,

is they did a call buy the brand strategy where he went out of the gate and he put up on his website Skype and Facebook. I think they bought secondary in both companies which is not too far

for me saying, welcome to my venture capital Amazon. Apple, Amazon. Yeah, exactly. Because I own equity in those companies that I mentioned.

I bought it last quarter but nothing to see here. So I think if you're a city who try to do that and so what you try to do is you call up maybe stripe is too big, but, you know, Stripe through four years ago, and you say, look, you guys will move...

Hey, air table. You're going to make your main engineering office here. I had people who recruited me and tried to do that. Bend, Oregon. They did the exact same thing. They flew me up for free and hosted me for five days. And the pitch is what? Okay.

Okay. So you're going to make what you're going to call your engineering capital here. I don't care if you have larger engineering offices elsewhere. We will, um, uh, forego taxes for you, for you for, I don't know, five years. or whatever, forever, and housing for your employees, and I don't know, some, well, I think if you gave companies the ability to control and truly build a campus, especially those that have been dealing with the legendary California regulation kind of department and environment, and you tell them, look, we'll just work with you and move quick here, you'd be done.

If you really want to light this on steroids, the really crazy thing to do would be to do some type of special economic zone. I mean, that's how nations think about this stuff. You set up a special economic zone, and you can actually do interesting stuff here. That's a little, like, a lot of the stuff is federally regulated. So, like, if you wanted to make- So which means what? It's not a taxation thing. You're talking about you can, it's more like zooms here left and right all day, you know, up and down in the air. Basically, the internet. You can think of the internet as the ultimate special economic zone where you can do whatever the heck you want pretty much on the internet, but when the physical world is a little bit harder

to do. So, for example, the airspace is heavily regulated. There's a lot of things in biology that are heavily regulated, a lot of things in chemistry that are heavily regulated. Now we've kind of gone from what should the mayor of a city do to like, what should Kyrgyzstan do? What should a country do? But if you had a special economics somewhere, you could do more experiments with CRISPR, you could fly weird planes, you could really advance the frontier there. And that would attract a lot of founders. Self-driving cars that don't work yet. Let's go.

Bumper cars. You know, you read research about, you know, America in its kind of frontier. 1960s and to some extent the 80s, there was a lot of this kind of squash buckling style of research. Literally, every single artificial sweetener that exists today has the same origin discovery story, which would never happen in modern day world, which is scientists working on some other drug, like trying to develop something else. She's like, oh, it's sweet. Oh, it looks their finger and it's like, oh, that tastes good.

That's sweet. That's interesting. And so we have oscar tane. And so we have sucralose. And saccharine's the same discovery story. And so things you see. Same with LSD, I believe. Alfred Hoffman literally like drank it like a Diet Coke one day.

The microwave itself, by the way, the microwave itself is a way to kind of heat up food. I'm forgetting the name of the guy, but he's basically walking around chocolate bar in his front pocket. And it melted. By the way, always important to keep a chocolate bar in your front pocket. And it melted. By the way, you know what else was melting? His heart probably. But this used to be the way we ran research where things were a little bit more kind of...

Fast and loose. Yeah, fast and loose. So this is like for crypto when crypto took off in Zug Switzerland, whatever that is. I don't know. I've never been. But they were like, yeah, crypto, we love it. And Iceland, I think. Right?

I think Iceland too. Yeah, but I just remember like, where is the Ethereum Foundation? Zug. Where is this new ICO happening? Zook, why? Because like, free shelter for all of you crazy crypto kids. And like, you know, it brought innovation because those are, that's the edge that those people were on.

And, you know, an incumbent did not want to take additional risk. But a challenger would take that risk. I think it's very interesting to apply the models that we think of that we think of so clearly for like companies, but to cities and two countries. And they're not always the same, but there are some similarities there where, Yeah, I mean, SF is basically an incumbent city. It's very risk-averse, moving is slow. You know, kind of New York with all of its dynamism somewhat similar.

I was reading the other day, okay, I was reading the origins of HBO, which started out as a company laying cable underneath Manhattan. And they're laying cable at, you want to guess the cost per mile. I have no idea. I don't even have a range. I don't know. Okay. Cost per mile? Millions?

Okay, so he's laying cable at $300,000 per mile, which inflation adjusted is about $1.8 million per mile. If you try to do it in Manhattan today, I guarantee you probably can't do it, but even if you could, it would literally be $50 million. Well, Google bailed on it because they're like, even this is too expensive. Well, this is with Elon with the tunnels, right? He's like, look, the tunneling today costs, I don't know, whatever it was, $100 million a mile. Yeah. That's ridiculous. There has to be a better way.

Yeah, I find the most... Wait, what are you getting at? The thing I was getting at is, well, there's general kind of cost disease that get everyone in the U.S., but like, that's in many ways. Because it's kind of an incumbent city. People are risk-averse. It's harder to change things once you set them. Got it. When Manhattan's kind of originally getting started, I mean, Chicago itself, the city, I believe late 19th century, literally the entire city was lifted three inches.

into the air so that they could build a sewage system and then like put back down again building by building block by block by block um you cannot do that uh i think today in any modern city but you can do that in the kind of early stage Chicago so so cities in many ways are like startups and you know an early stage startup it's kind of hard to compete with on speed they're moving quickly they have no state whatever large city like a large organism in any ways like a large human body like you develop a lot of cells and it's just like harder to do new things right um so So, yeah, special economic zone, I think would be the real trippy thing to do as a city. But I think going all the way back, pulling the stack all the way back, your idea of just buying

property in other cities is quite good. And I think the related kind of interesting startup ideas, what is other, if you have the money to buy real estate, that's easy. If not, I think there's a lot of other kind of adjacent stuff you can be building within those cities to prepare for the, how would you say, San Francisco going from like the sole capital of startups to one of many. So. Dude, that was great.

Daniel Grosser president. Yeah. For mayor. I mean, I could do it. I wasn't born here. Born in Israel. I'm a citizen,

but I wasn't born here. So sad. So was this what you expected? Yeah. Yeah. I mean, I didn't realize. And I'm in fact happy that

that this was going to have the shape of like very tractable startup idea. That's very kind of inspiring to me. I think you stay in San Francisco for too much you get stuck with. I spend a lot of time trying to tell people, you know, stop trying to do this like crazy, highfalutin, intellectually pleasing idea, just build a goddamn website that does 10K MRR and call me afterwards.

Well, that's step one. The high-end stuff is like, cool. I'll worry about that at step 15. Yeah. Or even, I actually think it's fine to have a big, dream, it's just like, what are you doing day one? Right. That's what I mean. Yeah. I think that's right. And I think the problem that a lot of people get caught in is at the end of the day, like the interesting question, I think for every

single person that I at least ask myself in my head when I meet people is, look, who are you performing for? Who are you trying to please at the end of the day? And the problem in SF, the strength of the culture is the weakest, which is that a lot of people are performing for kind of intellectual approval from the elders of the community. I want to be known as the person who's working on the space satellite thing. And a lot of those people get stuck in a black hole where they don't produce anything, which is of course the real way to get approval, but they kind of produce status

in the form of Twitter likes and whatever. And the problem with status is that it's infinite. So it's very easy for me to give you a like. It costs me almost nothing. It's much harder for me to give you money. That's why I think at the end of the day revenue is a much healthier thing to chase because that's how you know you're creating something really useful for people. Chasing status, you don't really know if it's valuable. Oh, you know, Paul Graham liked my tweet.

That didn't cost them anything. Try to get Paul Graham to give you $100 for a thing you made. So what's your answer to that question? Who are you performing for? For me? You mean, I don't know. I think it kind of shifts. Early on, who did you perform for?

Look, well, I'll tell you the, the, um, so I, I, I, I, although I grew up in Israel, I was kind of born online, a child of the internet, was reading a lot. And I remember, I came to Silicon Valley, I was 18, and I met, I met Mark Zuckerberg for the first time. He came to speak somewhere. And I viscerally I remember kind of minute by minute that entire evening because I felt like I was experiencing my entire brain reform itself. Because I have gone from Mark Zuckerberg. I mean, it's basically not human, as far as I can tell, from Israel, to, oh, my God, this guy sitting in a room and, oh, my God, he's just okay. That's actually...

That's the greatest thing that's ever happened to me about moving to San Francisco. Same exact thing. And you think you're human. Yeah, I'm like, you're smart. Not that much smarter. I can do it too. Yeah, you're like, you're smart, but it's like the same thing that when you go up... Don't meet your heroes, because people say, you'll give you.

be disappointed. I had the exact opposite reaction, which is absolutely meet your heroes. You'll realize they're not superheroes. It's why a lot of professional athletes come from one neighborhood or why the four-minute mile. Three guys broke it in a couple months. Yeah. By the way, forgetting the name of Bannister, when he broke it, the story is amazing. It was literally like, had a bunch of work at university, ate lunch. He only ran 35, 40 miles a week. And then was like, yeah, I'm there. I'll go take a another stab that broke it, broke a four minute a mile, and then went back to class afterwards. But you're very, yeah, yeah, I completely agree with that.

I've met a lot, I've had a lot of my heroes actually invest in our company, and I talk to them, and sometimes they'll ask me for advice, and I'm like, wait a minute, you're rich in Prince, and why are you doing? I'm like, what are you, what are you doing? The best one you said, you and the Pandora guy, you went to go get a haircut together. Yeah, that was awesome. Yeah. So I want you to finish the loop on this. the question I like, which is who you're performing for.

So early on, you were forming for who, and then what do you think is the right answer now? Like something that people can, because I think everybody, if they answer that for themselves, the first answer is kind of the embarrassing one, which is, you know, some people perform for their parents, they crave their love. Some people crave the love of their boss, their manager, their friend who's more successful, their mentor, whatever it is. I find what's the answer. Yeah, what's happened for me is it's kind of, I mean, it just, it just, you know, it's,

It shifts over time. My goal, my dream for myself is I really care little. In fact, I would prefer not to be known by the masses. I really struggle with, I mean, in all honesty, I'm kind of walking on the way over here, psyching myself up even for just a podcast like this, because I don't like the attention of the masses. But there are kind of a few people in my world that I think have been very successful, you know, with Moritz, as we mentioned, is one of them.

that I very much kind of look up to. And the way I benchmark myself as a human in terms of whether my career at least is going in the right place is I think, what would they think of kind of where I stand, where I am? But it's very much not the masses, very much the few. And I think it would do well for everyone to figure out who that is.

And to realize, OK, here's the most important thing, to realize that the correct way to, like, you have to figure out what type of performer you are. If the way you're going to perform is, through like tweeting or sending people ideas. Like that's one thing. But I think the correct way to perform, and the reason I know this is when I think of people

that I find interesting, what I find interesting about them is their career success. It's not that they wrote a really nice tweet or that they sent me a joke or a cute thing on WhatsApp, it's that they've made a successful thing. They're captains of a successful ship. And so like my performance, if you will, you know, is the work that I'm

make, are the investments that I make, is pioneer. And so that, I use that as my North Star. Not as I think the important part of the conversation, it's like, regardless of who you're performing for, your performance should hopefully be, you know, I think, in a thing that plays in the world of money. Again, because money is scarce. And so that's how you really know that the thing you're doing is useful, important and interesting. More action, less captions, basically. you just make that up? It's a Drake line. Oh, okay.

Nice. If you didn't know that, you can attribute it to me. I recognize the greatness of that line and brought it up. I like that. Hey, man, we're going to wrap up because we went way over, but it was good. So I know you don't want the attention of everybody, but where do they follow you? Check out Pioneer. That sounds like something you're interested in.

Yeah, okay. So I think the easiest top-level thing to find that we'll give you links to everything else is just on Twitter, Daniel Gross. and then Pioneer is pioneer. One day we'll buy the dot com. Who owns it? The Japanese company? Speakers. Yeah, the speaker guys.

Yeah, it'll take a while. Got some ways to go. Exactly. So it's a good goal. And then, yeah, I'm scattered on the internet. Everything's linkable. But I thank you so much for having me on. This was a lot of fun.

I mean, for me, it's quite interesting. Maybe the listeners will experience this too. I felt like, it's always funny when podcast start, I almost feel like it's the first few miles of run when you're a little bit... Yeah, you get into it after about 20 minutes. And I don't know what that is, that warming. But anyway, I felt like it happened. Thank you.

Yeah. There's a, I bet this dude, and he gave me this great insight. He goes, there's two types of friends. There's friends that you consume with. This is how most your friendships are. You go watch movies together. You eat food together. You're just consuming stuff.

And he's like, but the best friends I have, and this was true for me, too, is the ones you create with. is like the simplest version of creation is just a conversation. Yes. Which is what this is essentially. But like people, you start companies with teams you're on where you create like a culture and you know, you go and you play games or whatever. And those end up being the strongest and best friendships that you end up having. So so find friends that you create with, not just consume.

I think that's wonderful advice. And I'm going to hit it. Yeah, we can end it. We're going to end it in a second, I think right now.