My First Million - MFM x Trends - Ryan Hoover of Product Hunt Breaks Down the Biggest Opportunities He Sees

Episode Date: February 22, 2021

In today's episode Sam Parr (@theSamParr) interviews Ryan Hoover (@rrhoover). Ryan has seen thousands of companies launch since founding Product Hunt in 2014. He shares dozens of places that he sees opportunities, including several of his own investments. Listen to the rest of the episode at http://trends.co/.  See acast.com/privacy for privacy and opt-out information.

Hello, everyone. This is Sam Parr from The Hustle and My First Million. If you're hearing this, I hope you've already heard an episode and you know who I am. So I'm going to get past that. So today we have a special episode. This one's for Trends members only, but we do these things a bunch and we don't always announce them. But for this one, I wanted to share it with you all and give a little bit of it for free. So you can listen to the first 20, 30 minutes of it. And then after that, you'll have to sign up for Trends to hear the rest. I know we are such a tease. But there's a ton of value early on. And that's what we're trying to give to you for free. So if you want to hear the rest, go to trends.co and you could hear it. But today, we have Ryan Hoover on the podcast. And Ryan Hoover

is a friend of mine because we used to live near each other in San Francisco. And Ryan Hoover started this great company called Product Hunt. ProductHunt.com. It started as a project. I was actually with him the day before it launched. And it was a little side project he had where people would post products on their website. And I thought it was a horrible idea. And it completely worked. And was a huge hit and people love it. And the reason why I had him come on the podcast is because Ryan has seen, uh, probably products is probably four years old now. He's seen a ton of products launch off a product time. And now he has a venture capital firm that he runs. And so he's got really, really, really good insight and intel into what he thinks is going to be popular,

um, what he thinks is going to blow up before most people even know that the particular company exists. And he's got a good eye for things. And so in this podcast, we break down four different categories that he thinks are going to explode. And he gives examples of each company and explains why he thinks it's going to be big. So, listen up. Here it is. Let's get to it. So right now, I'm talking to Ryan Hoover. It's 3 o'clock on February 4th. The leak of our deal went out yesterday about 4 o'clock. And so, yeah, it was a little nutty. We were going to do it on Monday. They always get leaked. We had a leak of our Series A product hunt back in the day. And I was so scared because it was like the term sheet was signed, but it wasn't done.

And it sounds like yours has been done, done, though. It closes Monday, but everything's signed. All right. So similar boat. But we're all, I mean, everything's fine. But who do you think did it? Leaked your news? What do you think leaked yours?

Oh, leaked mine? No, yours. That's a good question. I never found out, Alexia at TechCrunch when she was there. She was the one that wrote about it. And we now become good friends. And even the day before she published it, she texted me, asking for like a comment. And then, of course, I was like, I don't know what to say.

I don't know, though. I don't know who leaked it. If you're out there, if you're listening to this podcast and you leaked it, Just let me know. I'm not going to be mad. I'm just curious. Wait, so you wouldn't be mad? When I find out, I think I've caught out a little bit. I get angry. I would have been angry back then, but now I'm, it's, I was like, what, six and a half years ago? Time has passed, so I'm okay.

So let me do like a short introduction, but basically Ryan Hoover started this company called Product Hunt, which was a big deal. It still is a big deal. He's since sold it to Angel List. Now he has a fun. Wait, do you call it the weekend? What's your fund saying? Weekend fun, yeah. Weekend fun. How big is it? Do you say? Yeah, yeah. We're in the second fund, $10 million fund. Pretty great. Ryan's been in this space for a while. And I have a funny story about you, Ryan. I don't think I've ever said this to you in person, but maybe you've heard me talk about it about you. But basically, so before I started my business and before Ryan started his business, I used to have this book club. And I frankly, I don't even know how we connected. And I frankly, I don't even know how we connected. But you came and spoke about something just with 10 of us, you were like leading the book club. I think it was when I was doing startup edition maybe. And maybe it was like through that that we got connected or maybe it was when I was writing the book hooked with near. I think that's. I think that's. I No, it was hooked. It was hooked because we were talking about habits.

The thing was supposed to go an hour long, but we served beer and like some people just hang out. And you were antsy. Your legs were shapen. And I was like, what's that going on? Yeah, you were like, I was like, what's going on? He's like, I'm sorry, I got to run. I'm launching this thing tomorrow. And you said, was it called Product Hunt at first?

It was, yeah. Product Hunt I.O. You're like, I'm watching this thing tomorrow and it does this thing and this thing. In my head, this is an insult. I'm sorry. But in my head, I was like, this is not going to work. What does he doing? This is so silly.

And from the beginning, it took off. And I was wrong about everything because I became a huge user. And so I was with you like 12 hours before he launched it. And I remember you're all antsy and stuff. It was pretty funny. I remember being there, but I forgot the sequence of events. I totally forgot about that. I bet it was around that time.

That was a fun chat. I remember being in like a really weird, weird. I don't even know it was called it. Really weird space. So it was called the anti-MBA. It was my book club. And I knew a guy who ran a scavenger hunt business. I've done that.

I did the scavenger hunt. The same one? Yeah. So companies pay them like a couple thousand dollars to like do a city scavenger hunt. Somehow I became friends with them and he had this like office that was kind of like a bar pretty much and it's kind of dirty and he would let me use it for book club. So there was like ski ball machines and there was a dingy room and that's how we all met. And I met a lot of people that way.

So the reason I wanted to have you on is because one, I haven't talked to in a while. Though we exchanged texts or Twitter stuff. I hear your voice a lot though in my ears. I listen to your podcast all the time. So I feel like you. That's awesome. That's so cool. That makes me feel great.

But we wanted to have you on because with my job doing trends and the hustle, I see a lot of really cool stuff that I think is I see before it gets popular. You do the same thing, but probably times like 100 because on product, you see what's going to get popular. You probably have an idea of like what's going to hit. Not going to hit. You're an investor. So you kind of do what I do, but times 100.

And so that's why I wanted to have you on to talk about cool stuff that you're seeing and why you think it's cool. And Ryan has a little. of like 20 different stuff that he wants to talk about. Well, we don't even talk about all of it. Leading up to this, I was actually thinking, like, what topics are interesting to talk about? So I felt like this was actually a good opportunity for me

to reflect on certain themes anyway. So, but yeah, excited to chat. With your fund, what has been some of the most successful, or not even your fun, you personally, but of all your investments into private companies, what are some of the most successful ones? If I was to choose, like, a category, FinTech has been the most successful from both a revenue generation,

but also from like a markup perspective, we're investors in a few companies, Deal is one of them, which is like remote payroll. The insight was that there's this compliance issue and challenge that a lot of people have when hiring remotely across different countries. And deal is basically just, it's like gusto, but for international contractors. So that's one, we're investors in Pipe, Harry Hurst Company. I've known Pipe since the skirt days when he was working in that company, which is doing some really interesting things around kind of debt financing.

They won't call it that exactly, but it's in that space because they're kind of reinventing the category in some respect. And then we're also investors in Main Street, which is like the value prop is free money, which is great for startups. And they're doing great. They advertised with us. And I think it went really well because basically what Main Street does, it goes through your QuickBooks, I think.

It goes through something and finds out where you've overpaid in taxes so you can get tax rebate. Some of that, it's a lot of it's, what's crazy is a lot of startups and companies, including like myself up until until now, don't realize that you can actually get actually government grants and incentives per engineer hire and other things like that. And one, people don't know about it. Two, it's a pain in the ass to actually apply for. And three, you then have to wait for the government to send you money like several months in the future. So they basically, you plug in your QuickBooks or your payroll and it just like automates that entire process for you.

They take like a small sliver of that money. And so it's like literally free money, which is like a crazy sell. But yeah, they're growing really fast. So one thing on the podcast that I've talked about a lot, and I think I've oversimplified it a bit, but job boards. And on your list of things that you want to talk about, you have this thing called vertical. whole job marketplaces. So I'll read off actually the write up that Ryan said to me. So we saw a massive shift in how millions of people, millions of work people, sorry, actually, why don't you just, I think you jotted it down. There's some typos. So why don't you actually just read what you have?

Yeah. I didn't even reread my own writing. Tell the overarching theme here. Even from like taking a step back, I am personally too many people hate their job and do something that they don't like. Maybe they make a little bit of money. Maybe they make very little money. And ultimately, I would love to see more people find a job that maximizes, like, in both their skill set, but also like that's something that they enjoy. And so we've seen this huge shift with regards to like the gig economy. And that's enabled a lot of people to have a lot more flexibility, whether you like Uber or not, like Uber has, you know, essentially employed millions and millions of people and given them a lot more freedom and

flexibility than they have before with, you know, typical 9 to 5. And so I think this next big shift in some respect is, you know, vertical job marketplaces in different forms. There are general purpose job boards and those have existed. Those will continue to be valuable in many ways. But if you really build a company around like a very specific vertical, you can ultimately serve both the supply and demand, the talent and the people looking to hire that talent, much better than you would typically with like a horizontal job board. So anyway, I include a few examples, but I just find that category really interesting because

I think it's really impactful for people, but also potentially very lucrative. So a great example of this one that I know a fair bit about because I researched it. It's not inside information. It's top. Tau, you know Taptow. So a lot of people know them because they got in trouble for the founder kind of maybe lying to people. But besides that, I didn't know about that.

Yeah, he didn't like, something involving people's shares. He like, he lied about granting shares. And so it was all over the news. But that's not important for what we're talking about, which is the business. They claim to have scaled to like $100 million in revenue for their job. And I think they are the perfect example of this, right? Yeah, and they're, for those that, no, no, correct me if I'm wrong, you probably know more about them. They're basically outsourced engineering talent, right? Is that they're primarily focused on right now?

Yes, but it's very similar as marketer hire, which you have listed here. So basically, they have pre-vetted, it was just pre-vetted particular types of engineer. Now they have pre-beded finance people, pre-bedded marketing people, and you pay, let's say, $200 an hour, and they give half of that to the vetted person who you've interviewed and approved. So it's a little bit different, but of similar mechanics and they scale to like $100 million in revenue with close to no funding. It's a pretty lucrative business. When I hear about some of these like freelance marketplaces, particularly like market or hire, I think maybe that can work. They seem like really hard businesses to get right. Yeah. Do you agree? I agree. I mean, market or hire in particular, I met Chris Toy,

the CEO a while back and we've been chatting. And then advisable is also a very similar company in the same space thing based out of Europe. And they're really difficult. I think the part of thing with these businesses oftentimes is how do you avoid people going off platform? And then how do you also keep companies retained? So one of the challenges is, let's say you work with a marketer and you like them. And either you work with them on with them on a project basis. And so there's ultimately going to be churn in three to six months, like no matter what, or they try to like take them off platform and just work with them full time. So that is a challenge. I am attracted to the opportunity to like overcome those challenges though,

because I think market or higher in particular or marketing, let's say in general, I think is actually a really good role to be hiring for, like on a contract or project basis for early stage companies because a few reasons. One is there's so many different channels that you could be acquiring users through. And it's really, as a small team, you really don't have experts who really understand like TikTok and understand like maybe SEO and understand Facebook advertising, Instagram advertising. In many ways, I think it's actually advantageous to hire like an expert who really understands a space to come in, not only do it, but then teach you as a company. And so I think from, if I was building a new company, I need marketing help, I would certainly look to those

platforms to make progress rather than trying to hire like a generalist who's probably not going to be as good and might not be the right person for like where we actually figure out like what channel we want to focus on down the road. I think that the first example you have pattern, I think that and it looks like you invested in it, I would put my money on pattern above market or hire or any other white collar job. I would put pattern over it. Yeah. Then a white collar job. What's pattern? Yeah. And I have. So, as you mentioned, I'm an investor in Pattern, met Wilson back when he was, he's actually asking for feedback on his YC application. And I was like, damn, this company is like really compelling

and soft to a good start. And now, I don't know if I can share in numbers, but like they've grown significantly in revenue over the past year or so. And basically what pattern is, it's a marketplace for hourly workers. They started off initially with like hospitality. And an example here is let's say you're doing an event and you need two bouncers, you need some weight staff, you need a few cooks. You need all these people to assemble at this particular time that have the right skills. And you need them to be reliable because you don't want one of the cooks not to show up on your event day. And so if you think about the logistics challenges of like bringing all those people together is really challenging.

And so obviously software is a great way to do that. And so they built really smart ways to like assemble people to bring them here at the same time to qualify and ultimately have a signal of quality for these people versus like just hiring people off Craigslist, you know, is one kind of extreme. So yeah, they're doing great. And it's also an industry that the tech world doesn't look at as much because it's it's for like hourly workers and like warehousing, hospitality, cleaning, things that I think are less top of mind for a lot of entrepreneurs. So yeah, they're great. What when the founder pattern is talking to you or maybe just in your own opinion, how big could that business get on a best case, middle case, worst case scale? Well, so pattern isn't necessarily the only one like building in this space. So sometimes when we look at investments, we, I mean, we obviously look at like who else is. doing this or has tried this, that's helpful in getting some sort of comps to understand, okay, well, if another company has reached this kind of scale, we have some sort of like indication of, is there a market for this? Sometimes often, often like early first-to-market players,

the ones who create markets or at least prove out markets exist. And so sometimes we look at that. Can you just look at like an old school staffing firm for nurses? Yeah. And that's another way of doing it. Like look at different industries, how many people are employed in those spaces, do some math around like the value of those contracts. So there's a few different ways to It was a while ago when we made the investment, so I don't remember exactly like our thought process then. These markets are just massive. I mean, people are always looking to hire, especially in this industry. There's a lot of turnover, typically.

We've actually spoken to some truck driving marketplace and staffing companies as well, which are also massive. You know, that's my thing, right? No. No. My next company's going to be in the truck industry because I, too, my family's in that industry and I know how high the turnover is for truckers. it's like crazy. Yeah. So with Tadder, could this be a multi-billion-dollar company?

Yeah, absolutely. I mean, it's early in that, like, I can't say like they're going to be that tomorrow or next year. But, you know, the market size is massive for these types of things. And this is also what we try to look at is it's hard sometimes to see like how big is this market. How big could this get sometimes, especially when it's like really early and it's like potentially creating a new market. Like Clubhouse, let's say. Clubhouse, in my mind, it's like talk radio and podcasting and a little bit of Twitter and one. and that market is massive.

But in some ways, they're also kind of defining a market. So it's not that clear, like, how big it is, really. I consider myself not to be that smart. And when I'm trying to, like, figure something out, I'm like, what's like the linchpin? What's like the one thing that matters to getting this right? With the hustle, it was, if I write good content, it'll be easier to get users for cheap.

So basically, my secret sauce is writing good content. And then my secret sauce is acquiring users. For product hunt, maybe, I'm guessing, maybe it was, I've got to convince lots of people to post their stuff on here every day. I don't know if that's a truth. For us, it was, yeah, something that I think about too is like, what is the big risk in this company? And I also make an assumption that everyone has tried everything.

And so either something has to change, whether it's like a consumer behavior shift or technology shift, and that founder of that team also has to have some sort of like unique ability to like solve for the biggest problem or risk. So with Productunt, Producton is the community piece. It's not hard to build Productant from a technical perspective. the product design is important, but fundamentally it's all in how you build the community in the beginning. And then once you build that and establish that brand and that that flywheel with the community, then it can work and grow. But that was the big risk ultimately.

With these vertical job marketplaces, what's the big risk there? Like, what's the thing that you have to solve? And then all the other things you have to solve are much easier. Is it convincing employers to hire these people? Is it being able to properly vet them? Is there, like, what's the hard part. I think there are nuances depending on which industry, but the, I mean, in those marketplaces, you basically have usually two different parties. You have people who are hiring and people who want to be hired. I tend to try to think about which is the harder side of the market and try to solve for that first. And so without giving information about like how pattern accomplished it, they were able to do it to find that balance and get both talent that seemed to be high enough

quality and also demand at the same time and then like balance that and scale that as they grew. But that's how we tend to think about it because marketplace models, risk of these is when people focus on the easy side of the market and ultimately you need both to work. But if you focus only on the easy side, you never get the hard side and you like delay the hard side in the sense, then you're almost like delaying failure. It's kind of how I see it. With like something market or higher, advisable or others like that, my assumption is actually that it's a talent is the harder thing to get because I think if you get high quality talent companies will come, especially when they're looking for people going to help the distribution, which is like such a hard thing

right now. So I try to think through those dynamics and like which side is harder and how is the company, either how are they doing it now or how are they positioned to like take advantage of that. I'll use one example, Angelist, which I have obviously close connection with. Angelus is unique in its job marketplace and that it doesn't pay for talent unlike a lot of other platforms. It just has essentially free talent. People sign up. They create profiles. And it's very unique in these markets. And when you have to pay for talent, you start to run into really hard challenges with CAQ versus LTVs and all these other like variables which can get thrown out of whack if Facebook changes their algorithm or if another competitor comes in and throws much money

in the space. So I tend to invest in companies that are not reliant on paid advertising or paid acquisition in those types of places. That's exactly why I'm asking this. I forget the framework or something that he uses where he's like, is this a technical challenge or a marketing challenge? Like, which one is this going to be? And a lot of times it's like a marketing challenge. So for example, if I'm wanting to be a pattern and I want to appeal to the nursing industry and create like a vertical job marketplace for nursing, should I partner with a Facebook community that has a ton of nurses there? And like should I start building audience all around nurse?

And then once I, and then I can easily go and get hospitals to say, well, if they're, if they're qualified, we would take it for sure. It's like, boom, all I got to do is get the nurses then. Or is it like, oh, no, nurses are desperate. They're going to go anywhere that's work. And so I have to work my ass off and get, make sure that the hot, I got to go hospital first, hospital first. It's almost like where my, the reason I'm asking this is I'm like, where do I have to focus on,

assuming this is a marketing problem, where do I have to focus on building an audience in order to sell this so I can have a really cheap cat? Or is this something like marketing hire, which is a white collar job, do I have to come up with some type of really good tests or some type of really good pattern recognition that I can spot the winners from the losers and then I can put my brain on them and hire them out. You know what I mean? Yeah. I mean, and then a lot of this comes down to like optimize.

funnels when you get some sort of scale too where it's like okay how do I find good people qualify good people keep them around I'm a big fan big proponent of community driven like community driven strategies where maybe you don't even know the product is exactly but starting off with a community and building something for them or building an audience of some sort is super valuable because it'll give you two things like one it'll give you an audience for when you launch the thing and two it'll hopefully give you a lot of insight into like how you can build a great product for those people people probably ask you all the time Can you explain to me how to build community? I don't think I'm as good as you at it, but we do an okay job.

When people ask me, I'm like, I don't know how to teach you how to do this. I really don't know. Do you think you could teach someone to do this? I mean, I think you could teach anyone to do anything. It's just some people might pick it up more naturally or just be more organic. I don't know. I think I've never taught anyone. And I think a lot of community building wasn't, I never read anything about community building.

So it was sort of intuitive for me, probably for yourself as well. That's maybe why it's hard to like teach. Yeah. But I think there's some, like, things that you can understand, I think, to get your, well, first, I think it's important, like, define what community is. Because a lot of people think, like, oh, my audience, my Twitter followers are my community. And that's a community. I hate when people say that. Yeah.

It's, and no disrespect to them. Some times people just don't understand actually what community is. And part of the reason is because community is such a cool thing right now. So everybody throws that label on it. I mean, for me, community is a few things. It's one. I think by definition, a community requires people in. that community to interact with each other. It really isn't a community unless they're interacting

in some form or another. To community is really about a sense of belonging of some sort. And so if you go like an example, like church and religion is like the ultimate community. You go to, you know, Sunday service and you have this fellowship and you have this belonging and you have, you know, symbols in your home that represent your faith and all those things. And so like a sense of belonging, it might be represented maybe in a startup as like swag. If someone's wearing the hustle swag or trend swag, like that clearly means they're like into you. And so that's, like, they're into the community, they're in some ways putting their identity, associating their identity with your brand and your community.

The third piece, it technically actually isn't required to be like, I would say, part of the community definition. But I think it's really important to think through is like, what utility are these people getting out of this? So if they're just kind of like into it to be part of these people, interact with these people, there ultimately has to be some sort of utility or value that they're getting. And so with trends, it's like you would be able to define this better than I.

But like in my estimation, it's people who are really curious, people who want to start companies, people who are already building companies, people who want to know what's like next. Like that's utility. That's super valuable for them. My definition of community is not nearly as thorough. What I always tell people, I'm like, you probably have an audience. And if you don't know if it's an audience or community, stop creating content for about three weeks

and tell me, does it grow or does it die? If it goes down and there's less interaction, then you have an audience. If it keeps on going as if you're not even there, that's a community. Yeah. That's how you know the difference. Yeah, I think that's, just don't make content. It also touches on like why communities are so powerful. So an audience is great too.

Like an audience, just pure audience business is fantastic. However, that requires you to keep building stuff, keep creating content. And once you stop, you know, go on vacation, then it stops. But a community, like with products, I don't post a product really at all. Like in terms of like posting new products, I don't have to. I actually intentionally don't do it all that often. You don't even work there anymore either. Yeah, technically I'm not a CEO anymore there.

So not my problem anymore. But yeah, I mean, the community is. are powerful because they scale and they allow you to reach new people and I like to create, I put air quotes for those that aren't watching or looking at me, but effectively like scale to other communities and other people that you personally wouldn't be able to create content for. To wrap up this vertical job marketplace bit, which other industries do you think are interesting to you?

Like where should the next pattern or marketing hire? Where should the next industry be? You said trucking. A lot of people listening to the podcast make fun of me because I always say that. So I agree with you. Is there anything else? What's it called? Oil.

Rig up. Rig up is doing something like this for. oil for oil workers. Yeah. Is there any other? You know, I'll be honest. I haven't thought deeply enough to have a good answer for that. But one thing that I think is interesting, if we were to like say, I want to build a,

you know, vertical job marketplace, but I'm not sure where. I think one thing to do is just like which industry is going through the biggest shifts and which industry will benefit the most from technology and software. And there's a bunch still that haven't been really reshaped through software today. So, yeah, I don't know specifically what market to go after, but that's kind of what I would think of. I was thinking about this a lot about this topic, and I think about it all time. And I'm like, what is the value equal?

Like, what are the variables that combine equal value? And it's like hourly pay of the worker times number of workers, times quantity, like how often they get a new job. And so I'm like, all right, oil workers. Like there's a fair bit of them. They make $50 an hour and they're always getting new jobs. Oh, that's a big one. Like truck drivers, their pay's low, but there's like millions of them. and they get new jobs all the time.

So that's interesting. Do you know what I mean? I've been doing like that a quote or like marketers. Like not that many of them, but you pay them like $100,000 a year and they do probably two jobs the year. Okay, the math works out. Like that's how I've been thinking about like the is this interesting or not. Do you agree with that?

I think it's useful. I think another variable is which market has really low trust. So meaning right now if you're to hire someone and there really isn't a great way to trust or have some sort of verification of this person's like abilities, I think that's also a really interesting place because theoretically, you could start building trust, essentially, through a marketplace. And that also lends itself to potentially higher retention. If this person, this talent is relying on this marketplace where they've built an identity

and this maybe reputation of some sort, that also helps them, like, you know, get more jobs or get more money. I think that's another variable that's worth exploring. Let's talk about this no code thing. And no code at this point is almost like a joke, right? Like everyone says no code. It's like calling, it was like, you know, saying cloud. a few years ago.

Like, you know, it's a very buzzy word, but I actually remember you were talking about this for a long time. Kind of lines actually with Productin's journey because the theory of Productant was, well, this is sort of in retrospect. At the time, it was just like, I love products. I want to share products with friends.

And that was the only thought in my head. But after the first three or four months, I realized, holy shit. Like, all right, that's the end of the episode. Sorry to cut it short. Sorry to be a tease. I know. Hopefully you got a lot of value.

So if you want to hear the rest, go to trends.co. If you don't want to sign up, that's cool too. We're going to keep doing this podcast, and that's free. But check it out. Trends.com and you can click podcast and you can hear the rest of the episode as well as the whole archive of more episodes just like this, most of which we haven't announced, but there's a lot on there. See ya.