My First Million - SVB Collapse Explained, D2C Brands That May Fail, And Suli's Next Venture

Episode Date: March 14, 2023

Episode 430: Shaan Puri (@ShaanVP) and Sam Parr (@TheSamParr) are joined by Suleman "Suli" Ali (@sulemanali) to talk about the fail of Silicon Valley Bank, the D2C brands that may fall next, reverse Robinhood, going on good quests, and Suli's next business venture. Bonus: Listen to the end for a job opportunity. Want to see more MFM? Subscribe to the MFM YouTube channel here. SHAAN'S NEW DAILY NEWSLETTER --> shaanpuri.com ----- Links: * Figs * Allbirds * Grove Collaborative * Squarespace * Wish * Nelk Boys * Do you love MFM and want to see Sam and Shaan's smiling faces? Subscribe to our Youtube channel. ------ Show Notes: (01:20) - Sam's and Shaan's most heroic moments (12:00) - Silicon Valley Bank Collapse (43:45) - Allbirds: The SVB of footwear? (55:20) - Chamath and the Reverse Robinhood (01:03:25) - Going on Good Quests (01:16:20) - Distribution before product ----- Past guests on My First Million include Rob Dyrdek, Hasan Minhaj, Balaji Srinivasan, Jake Paul, Dr. Andrew Huberman, Gary Vee, Lance Armstrong, Sophia Amoruso, Ariel Helwani, Ramit Sethi, Stanley Druckenmiller, Peter Diamandis, Dharmesh Shah, Brian Halligan, Marc Lore, Jason Calacanis, Andrew Wilkinson, Julian Shapiro, Kat Cole, Codie Sanchez, Nader Al-Naji, Steph Smith, Trung Phan, Nick Huber, Anthony Pompliano, Ben Askren, Ramon Van Meer, Brianne Kimmel, Andrew Gazdecki, Scott Belsky, Moiz Ali, Dan Held, Elaine Zelby, Michael Saylor, Ryan Begelman, Jack Butcher, Reed Duchscher, Tai Lopez, Harley Finkelstein, Alexa von Tobel, Noah Kagan, Nick Bare, Greg Isenberg, James Altucher, Randy Hetrick and more. ----- Additional episodes you might enjoy: • #224 Rob Dyrdek - How Tracking Every Second of His Life Took Rob Drydek from 0 to $405M in Exits • #209 Gary Vaynerchuk - Why NFTS Are the Future • #178 Balaji Srinivasan - Balaji on How to Fix the Media, Cloud Cities & Crypto * #169 - How One Man Started 5, Billion Dollar Companies, Dan Gilbert's Empire, & Talking With Warren Buffett • ​​​​#218 - Why You Should Take a Think Week Like Bill Gates • Dave Portnoy vs The World, Extreme Body Monitoring, The Future of Apparel Retail, "How Much is Anthony Pompliano Worth?", and More • How Mr Beast Got 100M Views in Less Than 4 Days, The $25M Chrome Extension, and More

Sean, you want to set us up? What are we doing? What are we doing here? Well, this is the first time the three of us have been on a pod? So Sulees come on, I think, three or four times. Somehow, you've never been here during those, even though y'all are friends. You know each other, and that's just strange to be.

But I think this, we'll see how this goes. I mean, I think this will be fun, the three of us here. I wanted Sully to come on because there was a whole bunch of, like, rich people, smart people shit that was going on over the weekend. there was the Silicon Valley Bank disaster, bank run, all that good stuff. There's stuff going on to the stock market. And so as soon as the guy I go to whenever I have questions, I said, all right, well, just bring them on the pod.

Instead, I'll ask you the questions here instead of just texting or calling. And so that was my idea. Did you guys get impacted by this at all? I had money in Silicon Valley Bank through my fund. So our venture fund had money through Angel West. Angelis keeps all their money or kept all their money in Silicon Valley Bank. And so we were lucky that I started hearing about it. And I was like, yeah, I think we should get out.

And so we ended up, we had like $1.5 or $1.6 million in that account, maybe a little more, actually, because they hold some for management fees. And then we got it all transferred out to a bank I've never heard of. They were like, you want to move to Grasshopper Bank? I was like, you could put it in the fucking field outside your office. You can put it anywhere. Just don't leave it in the bank where it's like a bank run is going on. Yeah, exactly.

Couch, dude, but we fine. So we got out, like, literally in the nick of time. So, yeah, we were almost impacted, but not in a, like, major, major, major way. Like, there were some people that were stuck tens of billions or even $100 billion. Sully, I'm sure you heard some crazy stories. Like, what did you hear? How did it play out from your perspective? Yeah, I was at this SV Angel founder event, founder summit in San Francisco on Thursday when the bank run was happening.

and people all around me were on their phones trying to take all their money out of SVB and transfer it. And people walked out of the sessions and were sitting on their laptop trying to do that. One guy told me that he wired $70 million out of his SVB accounts that morning into his personal Morgan Stanley account

because he didn't want to wait for a bank account in the business name to open because that would take 24, 48 hours. Which in normal circumstances, that would be maybe not illegal, but hugely frowned upon. Definitely ill-advised, yeah. Looks like you're about to steal $70 million of other people's money and put in your pocket. But I think in this case there's- Right away.

Was it like, let's see what happens because, you know, the series of steps was I saw the stock price go down. That was the first text I woke up to, Sam, in our group chat. Somebody showed the stock was down 30 or 40 percent. And it just seemed like a stock problem. seemed like, oh, the company is, you know, getting hammered. But like, dude, I feel like I've seen that five times in the last, you know, five months. But not a bank. It's down 40%.

But then somebody was like, oh, yeah, could this mean that the bank goes under? And then the wheel started turning in my head. And fortunately, I had seen, I had seen and not acted on two crypto, like, bank runs in the last year and been burned by those. So my, I'm a criminal under, underreactor. I don't really react, even in. of emergency, which is good because in normal life, usually things are not an emergency. And it serves me well. But when there is an emergency, I'm also pretty laid back. And so this time, I was smart enough to be like, hey, we should do something right now. Don't wait. Don't wait to

see how this plays out. There is no upside in waiting to see how this plays out. Did people recognize it right away where you were sully like, hey, this could trigger a bank run? Yeah. And I think in the beginning of the day, no, everyone was kind of chill about it. but a ton of VCs, I think starting with Peter Thiel, said to their portfolio companies, if you have money in SVB, take it out and take it out immediately. Like right now, do whatever you need, get it out of SVB. And let me explain, I'm the least educated on finance stuff here. So let me explain from a five-year-old's perspective what happened here.

So basically, Silicon Valley Bank, it's like the 19th largest bank in America, something like that, top 20. 16th. 16th. And it's usually used by, you know, Silicon Valley based startups and other people who related to startups. And so what happened was during 2021, 22, when VCs were going crazy and startups were raising a huge amount of money, they used Silicon Valley Bank. So they took on tens of billions of dollars of new bank accounts.

And so they had all this new money. And so what they did was they bought long-term bonds that yielded a rate of like 1.5 percent, which in a way, it was them thinking like, we're just going to be conservative and not do anything crazy here with all this extra money. Then Fed increases the rate to 3 and 4%. And their customers, which is startups with new cash, are burning tons of money and lowering their deposits or their savings and checkings accounts. And then it became public on Wednesday at the quarterly earnings at the earnings report that they said, we bought these 1.5% bonds, which is not good because the Fed recently raised the rates to 3 and 4%. Which means, are 1.5% long-term bonds are now devalued. We have to sell a bunch of them at a huge loss.

People heard about that. Social media went crazy. VCs tweeted, get your money out immediately. Everyone starts pulling their money out. And then by Friday, the government steps in and says, we got to stop this. They're going to run out of money. This is not good. Everyone's going to get hurt. Is that a good summary from a, from a dummy's perspective of what happened? Yeah, I think that's pretty good. I think that all of those things could have happened. except if, you know, Silicon Valley is just such a insular place, but also such a viral place where everyone talks to each other. So I think if it wasn't for the fact that it was Silicon Valley and everyone talks to each other, there wouldn't have been a bank run this fast. Like,

um, on Thursday when the bank run happened, $42 billion, people tried to wire out $42 billion in one day out of Silicon Valley Bank. How much money did they have? 100 billion? They have something, 200. Yeah, something like $180 billion in deposits. So about 25 percent, 25 cents on every dollar was tried to be wired out in one day. And what happened when people tried to do that? It just said, no. I mean, what was the, what did they see on their screen? In the beginning of the day, it was working. So this guy wired out $70 million, a bunch of other people at that SV Angel event were wiring money out, no problem. Come the afternoon, they couldn't log in to Silicon Valley Bank.

So it just wouldn't let you log in. In fact, I tried to log in yesterday. I have a Silicon Valley Bank personal account. And it also said, you can't log in until Monday. And were you affected by this, Sully? Because you've, I know in the past, your companies used Silicon Valley Bank. I think you raised money from them. So first, were you affected?

And second, why does everybody use Silicon Valley Bank? I think they said 50% this is on their website. I don't know if it's true, but 50% of venture back startups use Silicon Valley Bank. That's crazy. Is it just the brand

or did they do something that was like advantageous to startups? Yeah, they do a couple of things. So one, they have strong relationships with all the VCs. Or so they thought. Yeah, so they thought. So they've had strong relationships with everybody.

So all the VCs are like, doing their own banking, all the venture funds are doing banking at Silicon Valley Bank already. And then they host tons of events around Silicon Valley and sponsor tons of events. So you just see their brand name everywhere as the bank that you should use.

And it kind of has like an elite vibe a little bit, which is stupid because, or that's not stupid, but a lot of media headlines were like, bank used by the rich and famous, or tech elite is, going under. And so the sentiment was like, oh, screw them, which maybe that is part the reality. A lot of rich people do use them, but like payroll companies use them. And when you, there was a lot of companies like Rippling that the hustle used for payroll years ago where you pay your payroll

to pay your employees, Rippling is the middleman. They hold on your money for three or four days. And then they pay your employees. Rippling used them. And so three or 400, 500,000 employees of companies, both blue collar and white collar, weren't going to be able to, pay their bill or weren't going to be able to receive their paycheck. So it's not just like, you know, the elite. Yeah, it's kind of a, the name's a little bit of a misnomer for who it represents. Yeah, the other reason we use them at TinyCo, and this might be my greatest personal achievement, was I got free tickets to the NBA finals from Silicon Valley Bank, where they invited me to hang out in their box and watch the game. So, you know, there's a bunch of perks like that for using Silicon

Valley Bank. And then also if you raise any debt, they're a huge venture debt provider in Silicon Valley. So oftentimes when companies will raise an equity round, they'll also raise a little bit of debt. So they'll raise, you know, $10 million of equity and $5 million of debt sometimes, depending on kind of what their capital needs are. And so when you raise debt from Silicon Valley Bank, they require that Silicon Valley Bank is your exclusive banking provider. So all of your deposits have to be at Silicon Valley Bank as well. That way they've got visibility into it and that kind of thing. So a ton of startups will get debt and then they have to use Silicon Valley Bank as their bank. So they have no other choice. And over the weekend, basically, there was a bunch of people,

a bunch of our mutual friends where they were just like sitting there Friday to Saturday and Sunday morning thinking, I think I just had all my money's gone. I don't know what's going to happen. I was with like maybe a dozen people and they're like, you know, I've had hundreds of thousands or tens of millions of dollars. I just don't have that. And I have no idea how I'm going to pay my employees. I don't know what's going to happen. Sunday night, we find out that everything's going to be fine. The corporation, Silicon Valley Bank, is going under. If you're a stockholder in that, I think you're going to lose everything. If you're a bondholder in that company, I think you're going to lose everything. But if you're a depositor, if you were a customer, you're going to be made whole. And so it's no

big deal. I think you can access your money now. Is that right? Is that how this is currently being resolved? Yeah, that's exactly right. So the federal Reserve and U.S. Treasury Department were like, if Silicon Valley bank depositors lose their money, this is going to create a systemic risk. That systemic risk is everyone who has money in these 2,000 local community regional banks is going to take their money out Monday morning because they're afraid that their personal bank will have a bank run also. So this is literally bank run also, right? Like, anybody being proactive would be triggering an actual bank run across many, many other

banks. And so they had to basically get people to chill before Monday morning. Yeah, exactly. Like First Republic Bank is a bank that I use and a ton of other startups use. And in fact, First Republic Bank provides, is the bank that Mark Zuckerberg uses to get loans from for buying a house or just getting a loan. loan against his stock. And there were rumors over the weekend. A bunch of my finance friends in New York texted me and said, hey, do you have any money at First Republic Bank? If so, get it out

Monday morning. Well, so today it's down 65%. So even though this happened, why is it still down so bad? I think people are just still afraid that there's going to be, the depositors still going to take money out of First Republic Bank. There was a funny, there was a funny headline that it said that you know, when you think of this, you think of like literal pitchforks and like guys wearing straw hats and like

torches standing outside of the bank because there was like a headline that says people are rallying outside the bank just banging on doors to get in and you think like, you know, like a pitchfork mob and it was really, it was like eight or nine like Asian guys wearing Facebook book bags and like North Face sweaters.

And they were smiling at the camera. Like this article, like, they look really happy. And they are like waving at the camera. And I saw that because it was a pretty funny thing. Well, I think that was part of the problem here was like, like you said, in Silicon Valley, everybody so tightly networked that like words spread like wildfire. And then back in 2008, when the global financial crisis happened, the sort of the other bank failures happened, there wasn't really like, Twitter was very new at that point in time. smartphones had only come out that same year. So it wasn't like as fast.

So this was basically like a bunch of people who are all incestuous and all talk to each other a ton. On top of that, you can now do online banking and just quickly log in your phone or your laptop and wire out $70 million. You don't even need to go to the bank. Like normally it's like bank run. There's going to be a huge line. And that huge line itself is a like barrier to this happening. But in this case, everybody talked about it. Everybody moved it out digitally.

and word started spreading, you know, basically fear started spreading across Twitter, TikTok and other places. And it just felt like it's the end of the world, you know, move now. And that sped this whole thing up into a one day like tsunami, financial tsunami that hit. What do you think about like? It's crazy because the, I bet the CEO of Silicon Valley Bank woke up Thursday morning and was like, what's the big deal, guys? This is going to be fine.

And was it a big deal, Suli? Like besides the fear, was it actually that big, like was the business itself at risk? There is some, there's a real problem with the Silicon Valley balance sheet because of the sort of depositors taking money out in general. So even before Wednesday, because of all of the startups that, because of the startups are the ones that bank at Silicon Valley Bank, they were withdrawing money. every week to pay payroll and because of their burn rates. So there was already a problem, but I think that, you know, regulators are monitoring bank balance sheet on a monthly basis very closely. So they were like, this is all fine up until that point.

And so nobody thought this was a problem. Like the Silicon Valley Bank CEO was like, this isn't a problem. Regulators thought this isn't a problem. Yeah, but he had one line that was bad. he goes, don't panic. I think he said, don't panic. Exactly. He did such a terrible job of PR and the way that they came out on Wednesday and said, hey, we're

going to raise $1.8 billion, we are going to raise $2 billion because we lost $1.8 billion. Like, they just mismanaged this from a PR perspective. And I think if they'd done a better job of that, they wouldn't have gone, wouldn't be dead today. And to Sean's point around just the speed of this happening. So the biggest bank failure in American history is Washington Mutual in 2008. And in 2008, $17 billion was removed from Washington, withdrawn from Washington Mutual in 10 days. And in Silicon Valley Bank, it was $42 billion in one day on Thursday.

So just the speed with which business happens is like, you know, so much faster now. And I want to get your reaction to two people. So Peter Teal, some people are like, oh, Peter's Teal strikes again. He's the, you know, this guy's the menace. And then they're like, he brought down Gawker. He got Trump elected. And now he triggered the bank run of Silicon Valley Bank. So Peter Thiel, you know, do you think that that's a, is there, is there any truth to that?

And then the other side is Mark Suster, who's another VC down in L.A., who basically came out during the process. It was like, this is like, like, you should companies, you should keep your money there, support Silicon Valley bank, it supported us. There's, you know, we don't have to have this hysteria. If we don't do the bank run, there won't be a bank run. I'm, you know, keep your money there. And if, you know, for people who had listened, he could have caused them to basically, you know, lose or lose access to the majority of their money.

So what do you think about those two people and where do you place the sort of, how much blame or credit do you give to those people? I do think Peter Thiel has a ton of power. He's like this godfather of Silicon Valley. You know, we had at Tiny Coe, we had Mark Andresen on our board, and he would never mention what anyone else says, except he would constantly mention what Peter Thiel says. So I think he has it. What's an example? And why?

I think he just, Mark and Driesen, I think, just looks up to Peter Thiel and thinks that Peter Thiel has a bunch of good ideas. So, for example, one idea of what, one thing I remember him saying was Peter Thiel says, the best startups have one source of revenue, not eight sources of revenue. I'm sure you've seen this in startup pitch decks where they're like, we're going to generate revenue from ads, plus we're going to generate revenue from businesses, plus we're going to generate revenue from these customers. So having like eight different revenue streams is much worse than we're Facebook, we're going to generate revenue from ads, one single clear revenue source in the beginning. And do you think that, I mean, I don't think he's the bad guy in the situation,

because basically what happened with him was it'd be like if just a normal person went to the bank account and they tried to, or the ATM, they try to withdraw money and the ATM's glitching and they're like, this doesn't feel right. Hey, family, I think you should bounce and go get your money out of this.

This is like glitching. This does not look good because I believe Peter Thiel, he did a, I think Silicon Valley invested in Founders Fund or something like that. Is that the story? Or he did some type of capital call and Silicon Valley didn't pay up right away. Is that right?

I didn't see anything about that. And, yeah, I don't know what that is. What I know is that he basically, Peter Thiel was one of the people in Silicon Valley that was like, this is not good. Everybody take your money out. And then, you know, all the other venture firms heard that and sent emails to their portfolio companies saying the same thing. Like on Thursday, you know, I'm an investor in a bunch of venture funds. A bunch of them emailed their LPs and said, hey, this is our exposure to Silicon Valley Bank as a fund.

We're talking to all the portfolio companies and trying to get them to remove all of their money out of Silicon Valley Bank. So really, they cause the bank run. You're an LP in like, you're an investor in a bunch of funds, like maybe what, like 15 or so big venture funds. Yep. Did they have their money tied up?

And I'll tell you why I think this was, something was a little fishy here. So on that Thursday, Friday when he was all going down, VCs were simultaneously telling their portfolio companies, hey, get safe, but at the same time, we're basically saying, hey, the Fed needs to come in and ensure that all the depositors are going to be made whole. And they were saying it, anytime somebody uses the, like, what I call like the single mother story, it, like, makes me very suspicious.

And what I mean by that is they were like, you have to do this because jobs are at stake. These companies have to make payroll. And if they can't make payroll next week, you know, this is going to cause jobs to be lost. And you know who works those jobs? Single mothers. And like they basically was all about payroll, small businesses, jobs, saying all the political like buzzwords to get like Washington to do something. Because, you know, nobody wants to go be like, hey, I'm a venture fund. We had $90 million in Silicon Valley Bank because they gave us lines of credit and we were, we had to keep our money in there.

and we're stuck, you know, we're way above that FDIC limit. And if we're not made whole, we're screwed. Was that the case or is that just my conspiracy? Should I take off the conspiracy hat or is that, do you think, was that a part of it? Yeah, I mean, I saw a bunch of videos of David Sacks and Jason Calcanus and stuff saying that kind of thing. I'm skeptical that any of that matters. I think the way that Jay Powell and Janet Yellen look at this is, There is a systemic risk to the banking system.

So, you know, taking a step back from Silicon Valley Bank, like the American financial system is this amazing black magic that exists. And it is a source of tremendous amounts of prosperity in America and in the world. Like, if you go in places like Pakistan where I was born, you don't have a, you don't have access to a credit card. You don't have a FICO score. You don't have the ability to go get, buy a piece of property and get a 30-year mortgage on it that the government backstops. You are constantly worried about your currency being inflated because you're not sure that the government isn't going to just print so much money that your rupee that's worth a hundred rupees is worth. Yeah, your life savings basically disappears because of inflation. And you're not worried when a company that's a publicly traded company

reports earnings that those are lies in the United States. Like, there is so much stuff that is amazing in America from a financial infrastructure perspective that the rest of the world does not have. And the Federal Reserve coming in and bailing out Silicon Valley Bank and doing it without using any taxpayer money, making all the depositors whole, wiping out all the equity holders,

wiping out all the unsecured debt holders. Like, that's the right thing. And where did the money come from? Yeah, if it didn't come from taxers, which is that $25 billion back to come from. And also bail out, I don't think it's the right term, because they didn't bail out the bank. The bank is out of business or it's dead.

But they bailed out the depositors, right? The customers. Yeah. And, you know, what people were saying on the internet. They bailed out the single mothers. Yeah. Because they need that third home and truckie. Yeah, what people were saying on Twitter, which I agree with, is that, hey, when you put money into a bank, you're not thinking of this as buying a risk asset.

You're just thinking of it as, I literally have cash. I could store it under the mattress, but that would be silly. I'm going to store it with the bank. and the bank is going to do a better job of taking care of my money than me by storing it under my mattress. And that's an important American value. That is a super important American value. That is the product that the banks sell. Yeah.

It's safety and security and trust. Faith that you are, your money is safe. And if that product, if people start to question that product, the banking system doesn't work. And you're one step away from people saying, who cares about this little green. piece of paper, I don't know if anyone's going to care about this or if this is going to have any buying power tomorrow, right? Money also has the same thing where the only attribute that matters is belief in its value. And banks have the same thing. It's belief in the safety there.

And where the money come from, though? You didn't answer that. Yeah, the FDIC is basically, is funded by other banks. So think of it as an insurance fund and banks pay a premium to that fund. and the FDIC Insurance Fund has $100 billion in fees that it's collected from banks. And in fact, in the Federal Reserve letter that they printed, they released yesterday, they said any other fees, any other money that we need is going to come from a special assessment of other banks. Oh, wow. So they had this money and they said, we're going to make up to this much available,

not just a Silicon Valley Bank, but any bank that needs a loan against their other, like their long-term assets. the same kind of duration mismatch where they own like they're good for the money they just can't get it out today it's in 30 years they'll have enough money um for sure it's just that today the the value of that mortgage that they owned uh you know had gone down 30% or whatever yeah that's right they said they said we'll give you a loan against that asset uh in the meantime who are the uh who are the winners here um to me the winners are other community banks and other banks that have this problem so that the government announced this new, brand new program on like one sheet of paper. It was like a Google Doc. I saw it.

Yeah, yeah. It's so funny that they release stuff in the way that they do. They created a new program called the Bank Term Funding Program. And that's basically going to prevent the Silicon Valley Bank problem that they had with the long-duration bonds. So basically, Silicon Valley Bank had a $1.8 billion. loss because they sold a bunch of 10-year duration bonds, and they have to sell them for 70 cents on the dollar. And what the Fed announced is that if you're a bank and you've got a bunch of 10-year paper that's worth 70 cents on the dollar, you could get a loan from us for all of it.

You can get $1 for dollar loan. So if you've got $90 billion of 10-year paper that's now worth $1,000. $60 billion. We will give you a loan for $90 billion so that you can not have this problem. Yeah, you can basically not have liquidity problem.

And then the other winners were like, there's a lot of like startup banks, like Mercury. It seems like they were just like crushing it. I think Brex was another one. Like they're just killing it, right? Well, I think the best thing for them. So I think the real winners is First Republic

because they would have been wiped out today probably and many others like First Republic. So they got, you know, the bullet. just whizzed past their ear. And, you know, luckily, that was the last bullet. And now there's no more bullets coming today. And there's 2,000 community banks in America.

And so, like, all a bunch of those would have had a bank run today or this week if the Fed didn't do what they did. Mercury and a bunch of these other startup banks, basically when everybody needed to move out of Silicon Valley Bank, it's like, who's the fastest? What's the next bank name I know that I can open up an account now? And Mercury and others were beneficiaries of that. Now, they got billions of dollars, billions and billions of dollars of inflows yesterday, or sorry, Friday. Now, I think that a lot of that would have skipped town this week. I think they would have been a middleman because who the hell is going to keep their money in a startup bank when this is your fear? You're not going to keep $10 million or $20 million.

You might have moved it there just because you needed a quick safe haven, but you weren't going to move in there. you were going to still next week go to Chase or Wells Fargo or whatever and go put the bulk of the money there. So now I think they're in much better shape because instead of being just a middleman, they might keep a lot more of that depositor, you know, those depository relationships now. And is it possible that other than the equity holders and the people directly impacted by this, that just like the average American might be impacted positively by this in the next six to 12 months because maybe the Fed won't be. doing more rate increases. So then maybe you can get a mortgage for four and a half percent or four percent in six or 12 months because the, you know, the government is like, oh, hey, we kind of like achieved our mission because these guys screwed up.

Like inflation might not be as bad now because of this big loss. Is that accurate or is that too much of reach? I personally think that's too much of reach. I definitely see people saying that on Twitter and CNBC. But I think inflation is rampant and is. has nothing to do with the Silicon Valley Bank problem. And basically in two weeks, people will have forgotten Silicon Valley Bank problem. And they'll have all their money as of today.

So like it's back to businesses as usual. And business as usual still has massive inflation. And the Fed is going to continue to raise rates, in my opinion. This showed me how naive I am because I was under the impression that if I kept a bunch of cash in the bank, that was me doing the safe thing. I wasn't investing this money or trying to get yield on it. I was saying, look, you know, I just want to keep this in the bank so that, you know, just in case.

And the 250K FDIC thing was this like idea that existed. I had never heard it ever coming to play. Like in 2008, I was a sophomore in college. Like, I didn't care or no. I didn't have a bank account, you know? Like, I didn't do anything at that time. Yeah, you thought Lehman Brothers was where you like buy khaki pants. Like he thought it was like a clothing company.

I thought they were... Like, oh, you got that new pair of Libid? Exactly. I was like, are they hosting Thursday this week? What's going on? So it's like, you know, this is kind of my first time for this coming into play. Did you like... Because I was like, who the hell is going to take...

If you have $5 million, are you really going to go open up 20 bank accounts each with a $250K limit? Like, that sounds so inconvenient and outrageous to me. I think that's what a lot of people do. But did you see that Giannis does this? Giannis, the Greek, announced that he has 50 bank accounts. at different banks, each with up to $250,000. That's how he kind of secures against this. Well, I saw Jared Kushner, when he,

when Jared Kushner became whatever his role was in the government, I forget what he was, but he had a release like his income. And I remember, or his net worth, and I remember looking through it all. And he had dozens of bank accounts. And it just said $250,000 in each account. And I was like, why? And this is one of the reasons why. I mean, this seems, is this normal?

And I, you know, I'm just the only guy who didn't. do this? I try not to go above too much above $250,000. But for my business I did, but personally, no, I try not to go above $250. So you spread it across, you know, how many accounts exactly then, Sam? What would that be? Yeah, give us account. This is our new way to trick people

into telling us their liquid net worth is to be like, you're an FDIC, right? Right? Yeah, I was surprised at Giannis only as 50 banks. I was like, that that means. That story is from his rookie year. So he came from Greece, where Greece was like having the banking crisis. And so that was his rookie year that he and his agent did that.

Now he's worth like $200 million. There's no way he could be doing that at this point. He's got some other, you know, but rich people have this, right? Like if you're at JP Morgan and you got $20 million plus, they'll do an auto, like, sweep into a bunch of accounts for you, I think. I'm not sure exactly how it works, but I'm pretty sure there are, there are products that exist that will do this. They just seem niche to me and seemed like.

I don't know, a tool for the paranoid. It didn't seem like a thing that I needed to worry about personally. Yeah, it's so funny because my father, you know, immigrant to the U.S., always worried about the banking system and the U.S. dollar, is always like, let's go buy gold bars and bury them under the house just so that we know that our money is secured. And then he's also like, let's go open bank accounts in Swiss banks because those. Those are the safe banks and they're not going to have this problem. Because those also don't do fractional reserve, right? Like a Swiss bank is, I think, one for one. They don't keep, you know, just a fraction of your cash in the bank.

What's an example of a Swiss bank? And how do you, I mean, I've only seen like Wolf of Wall Street where they, like, go to Switzerland with like cash in hand. Is that, that's not actually how you do that. I mean, how do you open a Swiss, I don't even know how you would open a Swiss account. You know, I think Credit Suisse is actually a Swiss bank, but it also has a bunch of, was seen as dangerous for a while. I don't even know the name of a Swiss bank,

but I bet you can just open a bank account online and wire the money without having to attach cash to Margot Robbie and that hurt to Switzerland. But that would be cool if you could. I can't find this client info. Have you heard of HubSpot? HubSpot is a CRM platform, so it shares its data across every application.

Every team can stay aligned. No out-of-sync spreadsheets or dueling databases. HubSpot. Grow better. All right. I think we did a good job covering the Silicon Valley Bank. But, Suley, you actually had a few other things that I thought were interesting. One of them being the Albirds, right? What a shit company, man.

They are really, it's not working out for them, is it? Yeah. Allbirds is, in my opinion, the ugliest fucking shoe I've ever seen in my life. And I remember seeing these like five to seven years ago in Silicon Valley. Valley, all the venture investors that I knew were wearing them around town. And I was like, you are ugly. Your shoe is ugly. You're ugly. This sucks. This is not a good looking shoe. And I've heard, I saw this tweet that I think is the best way to describe it. Allbirds, socially acceptable sweatpants for your feet. Yeah, I'm not a big fan of them either. But basically,

they've raised two or three hundred million dollars in funding. They've done three, hundred million dollars in revenue. Market cap is down from $4 billion to $200 million. Is that right? It's $200 million right now? Yep. Yeah, down 95% from their IPO in November of 2021, from $4 billion to $200 million. How much of the founders do you think? How much do they own? I didn't look at how much the founders own. I bet they owned a lot of it before when it went public. And I didn't look at, you know, kind of how much have they sold off. But I bet a decent amount. So what's going to happen with that? So I think that, you know, the problem that they've been having is that their revenue is shrinking and their costs are really high. They've opened up a ton of stores, like 58 stores in the U.S. and abroad.

And I think that store strategy isn't working because not enough people know what all birds are and walk into the stores and want some. So they've decided they're going to stop opening stores. they're only going to open three more stores this year, and those are places where they've already signed leases. They're going to stop any international growth by, they're not going to open any more international stores. They're going to just find distributors internationally to try to grow. They're trying to contain costs by stuff.

They're manufactured today in New Zealand. They're going to stop manufacturing them in New Zealand and move it to one place in Vietnam. So, you know, my sense of what's going to happen to Allbirds is somebody. you're going to bring your own laces from now on. We're going to cut in every corner here. There's like, you know, we don't have running water in the office today. We're doing that every other day until this thing is profitable.

What do you think of this in terms of like D to C? So like I think people have basically, I think DDC got hot. People started a bunch of brands. A bunch of investors came in and funded these companies like they were tech companies, but they weren't tech companies. Casper, Albury. and then some like Warby Parker and others that they got that broke out and then you know so on one hand if I if that's all I knew if I was just sitting from a far I would have been like this space doesn't

make sense then and now it's playing out where it's like yeah these companies are not profitable they're not doing that well you know I think they're burning a hundred million dollars a year or something like that like they're just they're very mature companies that are still losing a ton of money and I would have just my opinion would have just been that but you and your brother's like your brother built native deodorant. It was a profit, you know, basically raised almost no money. What did he raise? Like 500 grand for that business?

Is that all he ever raised? Yeah, about 500,000. Yeah. Raised $500,000. Built it up basically by himself with like, you know, a very, very small lean team, you know, packing deodorant like, you know, at your kitchen table in your apartment and sold that thing for $100 million when it was highly profitable, that whole way. You know, then you have that model.

You've had a, you know, we don't talk too much about your business, but you've been involved in a very different style of DTC that is highly profitable, lean and mean raise zero capital or very minimal capital. And I feel like nobody even knows about those businesses. Those are like, you know, more under the radar. Everybody only hears about the big VC ones, you know, like away luggage and stuff like that. What is your take? Are you sort of like that other way is dumb or are they actually just two different games and,

you know, both both are valid? Yeah, I think they're two different. games, the native playbook of Raise Little Capital, Focus on Profitability, Acquire Customers, so that your break-even on the first purchase or profitable on the first purchase and scale through repeat purchases that are generating a ton of profit, using that to either reinvest in the business to launch new products or just take distributions. So I think that's a super valid playbook. And I think there is a valid approach to the,

raise a bunch of venture capital and try to build a business at a much larger scale. Who's doing that, that you think that they have a good shot? Figs, maybe? Yeah, figs, in my opinion, is a great example because they're, like, one of the problems with Allbirds is they're a fashion brand, and at some point the world turns against you,

and, like, I believe that Allbirds are ugly. I think other people are going to arrive at a similar conclusion at some point. And then Allbirds is going to have to find the next style to get to that place to kind of continue to succeed. Figgs is basically a uniform. So it doesn't need to be better looking over time. Yeah, but that's a bullshit.

I think you're wrong there. I think that that strategy is not bad. Like look at Louis Vuitton. You know, they've been around for 300 years and it's always been cool. I think that their execution, they just picked a lame thing. So I don't think it's a bad strategy. I think it's just stupid shoe. At least that's what a lot of people think.

Yeah, I mean, Nike is a great example of a business that has scaled to more than a hundred billion market cap, I want to say. And they're a fashion brand that serves the super high end as well as the low end. So they figured out how to do it. So I think there is a playbook to go raise venture money. or private equity money and get to scale. I just think a lot of the companies that have raised money have been undisciplined. They've hired too many people, like Grove Collaborative.

What do they do? Grove Collaborative is a San Francisco-based startup that's 10 years old. It's also publicly traded. They started out being this marketplace of kind of natural product. So I saw them as, I would see ads. for them saying get free Mrs. Myers kit.

And I'd click on those ads because I was like, free stuff, sign me up. And they're basically trying to get you involved in a, get you enrolled in a subscription of buying a bunch of home products. Got it. Okay. Cool idea. Cool idea. Yeah, great idea.

And it went public through a SPAC. And it has the same problem as Allbirds and Away. luggage, although away is private. Grove Collaborative stock is down 96% and has a market cap of $70 million. It's worth, you know, way less than the cash that they've raised. That's crazy. Yeah. And the stock is sub $1.

They have to do a reverse stock split to avoid being delisted. And, yeah, they basically have to fire a bunch of people and stop spending as much money on marketing so that they can be profitable. They basically have to accept declining revenue to get to profitability, and that's what Grove Collaborative just did in the third quarter of last year. It was their first profitable quarter ever. So what companies do you like?

They're saying all the companies you hate. On here, you have Wish, you have Grove, you've talked about Auburds. You don't like Box. Yeah. Which is like Costco online. Yeah. What do you like?

I think there's some of, bunch of companies that are awesome businesses that are worth less than they were in March of 2020. So they're trading it less than pre-COVID evaluations. And I love those companies. But some of them are the ones you hear about all the time, which is Facebook, Amazon. I think those are two great businesses. And they're... I was... You and I were walking in Soho in New York and after some meetup. And I won't say the amount. You can say the amount if you want. But you said, I just bought blank amount of stock in Squarespace. And my jaw, like, kind of dropped.

I was like, what? Did you really? Why? And you told me how much you love that company. And it was a very large amount. And so are you still into Squarespace? Yeah, I bought a million dollars of Squarespace stock. I still own it.

I don't know if I made any money on it. At some point, it turned into like $250,000 because Squarespace stock went down. So I'd lost $750,000. But I think it has since turned around. You know, it's up 15% year to date. I think Squarespace is super undervalued as a business, but I'm not sure it's a great stock to buy. Yeah, you have like a long history with Squarespace.

Let me ask you a different question. At one point, you tweeted out something like, hey, if a guy happened to have 50 million liquid and wanted to double it, you know, what's your best idea? and you got like 100 replies. I remember going through them and being pretty unimpressed with most of the ideas.

It didn't seem like, I thought, you know, some great stuff would come out of there. But maybe in something like this, 100 people reply and it's really three interesting ideas. Did you get anything interesting? Or what did people say when you tweeted that out? And did you get any interesting ideas

on what to do with your money from that? I got one interesting idea, which was try to go buy all of wish or, you know, 51% of wish. wish has $700 million in cash and its market cap is $286 million, so it's trading it less than cash. So, you know, buy enough stock that you can convince management to distribute the stock, distribute the cash and shut the company down. Right.

And can you, and I remember seeing that, why doesn't that happen in practice, right? company's got $700 million in cash. It's trading at $300 million. Why doesn't, you know, it seems like the, like the video game move is you buy the $300 million company, you shut it down tomorrow so it stops burning cash and you distribute $700 million out, you profited $400 million. Why doesn't that happen in practice or does it happen in practice? So there are people like Bill Ackman, Carl Icon, that are activist investors that do this

kind of thing. You know, they do it with Apple, even Netflix, like Carl Icon. We'll basically go by 5% of a company and then call up management and say, hey, we want you to do X, Y, and Z. And if you don't, we're going to just keep being a thorn in your side. And we're going to try to remove your board directors and put our board directors in. We're going to threaten to fire you a CEO. They do a bunch of this kind of stuff.

And generally what will happen is the CEOs will just listen to Carl Icon, and do what he says or do something else that makes their stock price go up 10, 15, 20%, that, and then Carl Iconn will sell us position, make billions of dollars, and be like, great, that was fun. With something like Wish, it's, if you tried to go buy up Wish stock, it's so thinly traded that you would basically drive the price up and you would never be able to buy 51%. you'd have to pay, you know, $700,000, $800 million market cap to basically own 51% of it. Dude, it seems like most of the companies that you've mentioned, or a lot, many of the companies

you mentioned went public via SPAC. Has there been one SPAC that has worked out? That is a great question. I have no idea. And for the, like, I remember Chimov was all about SPA. I don't pay attention to the public market, so I'm a little, I'm definitely out of my depth here. But I know enough to know that, he was big on SPACs. What are these guys? What's their reputation right now, which is they got,

and did they make money, they made money going up, making it happen. And so now are they just like, oh, fuck y'all. Like, you know what I mean? Like, are they just like, they don't care?

Yeah, the way the SPACs work is if you're the sponsor, which is with Chamath was in a bunch of these, like he took Open Door Public through SPAC, SOFI public through SPAC, you end up getting a percentage of the company without taking any real risk. So Chimath has made out like a bandit in, I think he's done five to ten spas. He's made money in each one of those spacks.

And I think every other, how much? More than a billion dollars across all of those for sure. Wow. And so how does the math work? So I remember, I think I had heard at one point, you have to put up three percent of the capital to own, but you own 20 percent of the company when it goes. public. Is that right or did I misunderstand? Yeah, I don't remember the math, but it's something along those lines, which is for taking

the company public, you get, it's probably not 17%, but you get something like 5% or 10% of the company's stock for basically taking it public. And you don't take any risk. You basically raise money from a bunch of institutions. You hold that money for up to 18 months. You you have 18 months to find a target that you want to take public, you find a target, you make a deal with them to take them public, all those investors that have gave you money 18 months ago, they can either keep their money in the deal or sell it and get their $10 back. And so a bunch of people will sell because they're like, oh, this isn't going to work, I want to sell my stock.

So oftentimes the SPAC, which is publicly traded, will be trading at $10, and then the target will get announced. We're going to take Grove Collaborative Public. And then the stock will drop immediately when the target gets announced, because everyone is selling and is like, this isn't going to, this isn't a good target. So what's his reputation then? I mean, or is he just like, so, I mean, he saw Rich, and give a fuck about his reputation?

Did you guys say the thing that's on this doc, which was the reverse Robin Hood, steal from the poor and make himself rich? No, no, yeah, I was waiting for you because I know. I mean, I don't know enough to know about him and like this whole shtick, but Sean, you have a strong opinion about it. I mean, I want to hear Suu's opinion, but I don't think I have that strong of opinion. Yeah, I'm so. You give him a hard time, dude.

You give him a really hard time. You know, I think Chimath is super smart, super successful. I love his, you know, those cashmere sweaters that he wears on the All-On podcast. They look dope. I got to buy me some. But what he's done with the SPACs is literally the opposite of Robin Hood. He's stolen from the poor and given to himself. And I'm surprised that his reputation is not tarnished in the public markets or in on CNBC.

Let me ask you a question. Is it that he ended up, you know, dumping on retail because it was always designed. It was kind of designed that way. It was going to be that way. Or, oh, well, the market's just turned and everything's down. You know, like I don't fault Jeff Bezos because my Amazon stock is down. You know, like that's out of their control.

It's a good business, blah, blah, blah, versus no, the way these were set up, it was a bit of a house of cards, you know, he was going to make money. And at some point this was going to happen because these fundamentally didn't make sense. Which one, which one is it more? Yeah, you're asking, what's the intention? Yeah, do you think he knew and that the intention was, this is probably how it's going to play out, but let's just see? To me, these are pump and dump schemes, like in Wolf of Wall Street.

If the company is sound and going to go public, generally the companies will go public on their own using the traditional IPO path or a direct listing, you know, that's what Squarespace, Spotify, Slack, all these companies that went public during the same era that he was doing these SPACs. The companies that go public through SPACs are trying to rush to get public. And it's not the Airbnbs of the world. It's the Grove Collaboratives of the World and SOFIs of the world that are doing it. Yeah, businesses that are not as sound.

Now, what they would say was, like the very first one I think he did was Virgin. And it was, look, this is a company that you'd have to be a real, like, you know, a tech investor to understand. It's got a really long-term, huge vision. And, you know, they needed somebody who believed and they didn't want to, you know, take their chances with the short-term minded stock, you know, IPF stock market. So some version of that was like, you had to be a true believer in technology, innovation, and you had to be smart enough to understand how big this business could be.

That's why I'm taking it public. And so it kind of made sense on the first one. And then pretty soon it was like, just putting lipstick on the pig. and selling it. And that's how it felt to me, at least. And so I'm kind of of the same opinion, which is I think obviously he's smart and obviously he's successful. I don't think those are arguable. I think that he's also very pompous. You know, I don't love his personality. I also think that what he did with the SPACs, I think, you know, seems to be more like, like the pump-and-dub or putting lipstick on a pig. Like, you know, these weren't great businesses. It was,

what can I do to just, you know, to get something to cash here because, again, he had a free role in a lot of these. Exactly. And so, you know, and I find him to be, you know, somewhat disingenuous when he talks. Like, you know, I remember before he took Metromile public, it was Buffett had Geico, I have Metromile. And here's why it's better, blah, blah, blah. Fast forward, like less than a year and Metromile is, you know, sold for 30 cents on the

to lemonade because it was whatever, not in good shape at that time. And then, you know, no mention of it ever again. Yeah. It's like, on to the next. Yeah, the thing, you know, there's a bunch of people that were pumping Bitcoin or other crypto products.

And when they tweet, there's a ton of people that reply to their tweets saying, fuck you, I lost my life savings because I took your financial advice. When Chimath tweets, I look to see what the responses are. There aren't many people that are like, hey, you screwed all the, you know, the public moms and single moms and families on these specs. Dude, I was with your brother one time, Suley, and we were hanging out and someone was talking about a get rich quick scheme and how like, I think, someone, they were like saying, like, you know, no one likes a great get rich quick scheme.

And your brother goes, whoa, whoa, whoa, whoa, whoa, whoa. Getting rich quick is the best way to get rich. And your brother's pretty funny because sometimes they'll say funny stuff, but it's like, oh, yeah, you're right. That is, like, that's way better. And Sean was talking about Shemath and Virgin. He's like, you know, we don't care about these short term. It's for the long term. And a lot of times when I read about these public markets and they talk about long term, I'm like, yeah, I think you're, I kind of care about the short term.

I definitely care about the short term a bit. too. And they like use that word long term to disguise like bad shit. Like, you know, it's not about the short term. It's not about the short term. Just hold. It's a long term. I'm like, I don't know. Getting rich quick and in a short amount of time, that sounds nice too. I would like it not to fail in the short term. That would be nice. There's this Warren Buffett quote where somebody is like, some reporters like, hey, what you talk about is pretty simple and sounds like anyone can do it. Why aren't more people applying the Warren Buffett strategy and becoming billionaires? And his response was, everyone wants to get rich quickly. I'm about getting rich slowly and nobody has

the patience to do it. Yeah, but here's my issue with that when he talks about that. He keeps talking about the long term and he's 95. It's like, bro, there, there ain't a long term. Have some fun. Yeah, you don't have long term anymore. Stop talking about long term. Maybe, maybe, Long term stops when you're 60. It's like, enjoy it. Yeah, I was talking to these 25-year-olds, and I was like $2 million when you're 25 is more valuable than $20 million when you're 45 because you can basically do awesome stuff at 25 that you're not going to be able to do at 45.

Yeah, dude, I agree. I agree. Sean, what are you going to say? I was going to say you had shared this blog post about a good, a good quest, which is, I think, a guy from Founders Fund, I think, wrote it a while back. I remember reading it and me, like, this is actually pretty interesting. It seemed like something that maybe resonated with you. Can you explain the idea of a good quest, and then I want to hear you guys talk about it?

Yeah, it's kind of like, this guy basically was like a ton. Some guy Founders Fund. Trace Stevens, I think. he was basically like a bunch of the brightest minds in Silicon Valley and in America and in the world are focused on bad quests. So kind of in a game you can, in the game of life, you're either focused on something that is noble and honorable and makes the world a better place or in his language you're focused on short-term things that are going to make you rich quickly. even if they're incremental improvements,

so a slightly better mousetrap. And he basically is like, we're wasting society and people are wasting their energy. Brilliant people are wasting their brilliance on dumb problems. And we should be trying to solve the greatest problems that we have in our lifetimes.

And that is the noble work. everything else is bullshit. And he points out he's like, most... I don't know, man, but this guy... Look, but to our pro, his former job, he used to work at Mike's Hard Lemonade. I don't know if I could trust this guy. Did he really?

That's how he knows, dude. That's the experience. He did the total opposite. He works at Andrel, a defense company. But like, I don't know, man. This guy worked for Nerf. Sorry, go ahead. I'm an idiot.

Yeah, he's a co-founder of Andrew. So he points out this thing, which is like, you know, the average person is not capable of going on one of these good quests. So if you're brilliant, if you really are in the kind of like top 1% of talent and motivation and ability, it's kind of like your moral imperative. Like you kind of got to be the ones doing this because who else, if not you, then who? It's sort of the mindset that he has. And Suey, I would say that, like, you know, I think you're awesome, but you, you yourself are like, I want to go on a good question.

You've been telling me this for like five years. Yes. And you're like, I spent my whole life building these like mousetraps that make a bunch of money. Because I just see them. I just see them. They're obvious. This widget. And I could sell this widget and make a bunch of money.

And you've done that. Are you, did this blog post tip you over the edge to do a good quest? Or did it have the opposite? effect and turn you off and say actually, you know, F this guy and F this whole like noble quest bullshit. Maybe next week. You know, I went to this SV Angel event in San Francisco last week. And I'd been to San Francisco in a really long time because I was having this like existential

question myself of should I be going on good and hard quests versus easy quests? And, you know, EasyQuests are great because you have a great quality of life. Like, you don't work that hard. You can go play tennis in the middle of the day or work out at noon. Like my brother every day at noon will go work out for two hours in the middle of the day. You could have a sick pad in New York and maybe a place in L.A. and travel all over the place. I mean, you guys have a pretty nice life. Yeah, yeah.

like he's going to go to Japan next week, just for fun, to look at, go to the Cherrybottom Festival. So, you know, he's, it's very easy to be seduced by, like, quality of life and easy quest, in my opinion. I like how you're using your brother here instead of yourself. You do all the same things. You're just like using him as like this guy. Way easier to use him than kind of look in the mirror more closely. And so, you know, I went to that event and Sam Altman spoke, and he was basically like, everyone thinks Open AI is an overnight success.

I've been working on this for seven years, God damn it. And so have all of these other AI scientists and AI engineers. And it took us seven years to make chat GPT what it is today. That's not that long. It's not that long, but it's a really long time. like basically they didn't launch a product for maybe five years or something along those lines. And, you know, now he had every quest at his disposal. He could have just simply sat back and an angel invested and done, you know, become, you know,

as proficient at pickleball as one can be, right? Like, he had, he was running YC at the time and he left probably, you know, the best job in Silicon Valley, which is running YC, probably the highest paid lowest effort job. you could have. Like, it's up to you how hard you want to work there. And exposure to new people, new entrepreneurs, new ideas constantly. You get to do all the fun shit. You get to see all the smartest people.

You get to be the kingmaker. You know, you have the infinite money glitch if you're doing that. And everyone in South Carolina is coming to kiss your ring. He quit to go do this nonprofit AI thing. And I remember at the time, I remember literally at the time, this was like, what did you do this? Like 2016 or 2019 or something like that. He left. He had been funding it as his own.

like, you know, personal passion project, basically, up until then, then he left YC to do that. And I remember thinking at the time, I should probably just go follow Sam Altman. Like, if he is going to do this with his time, there's really no better signal in the world that this is like the right place to be. Unfortunately, I didn't act on that. But I remember having that thought back in, you know, 2018, 2019. Yeah, it's funny to me that you say that like seven years is not a long time. Because, yeah, I guess in a sense it's not.

but seven years at the same time seems like infinity when you're working on a startup and there's no immediate gratification. I can't think of the last time I was able to work on something for seven years without some form of immediate gratification. I mean, there was. There was milestones.

Look at this guy. Did Trace Stevens who started Andrel? Like funding rounds, winning certain contracts, some type of press. That's like pretty cool. You know, you got, you can get your dopamine hit. But what are you going to do? Are you going to quit doing this small boy shit that makes a lot of money?

You're going to start doing something like legitimate that like actually matches your IQ. Yeah, I want to try and do a hard quest. But what's the, what are the handful of ideas or industries that tickle your fancy? I think doing something in healthcare would be really amazing and transformative. I think healthcare in America is so bad. It's shocking to me, like, you know, my mom had a bunch of medical problems last year, and just getting access to doctors is insane. Like, if you want to see a specialist, you have to wait 60 or 90 days to go see a specialized doctor.

And a friend of mine who's a doctor was like, here's how you solve this, here's a concierge medicine practice. You pay them $30,000 a year. I had one. It was $25,000 a year. Yeah, you pay them 25 grand, 30 grand a year, whatever it is. And all they do is they are able to get you appointments faster because they're able to text the doctors because they know the doctors personally because they used to work with them and say, hey, can you do me a favor and see my guy next week instead of three months from now? It's kind of like gangster a little bit. Like it's like the doctors are, it's run by the streets.

You know what I mean? It is pretty weird. It's not cool. Yeah, it's not cool. It's broken. And then the other really fucked up thing is if you have a medical problem and a neurologist will be like, this is a cardiologist problem. And the cardiologist will be like, this is a neurologist problem.

And the two of them are like Superman and Clark Kent, which is they're never in the same room at the same fucking time. So you can't actually get real information about what the problem is. And they never talk to each other. They talk to each other through like handwritten notes. in the dark of night. So it doesn't work. And do you have a tangible idea on this or you're just like healthcare?

Healthcare is just too big of a word. Doesn't mean anything. Yeah, it is too big of a word. One idea that I've been thinking around with is like remote monitoring of patients. So, you know, my mom lives in Dallas, sometimes there, sometimes traveling. And I want to have some device that she has that is like monitoring. her blood pressure, her blood sugar, her heart rate, and reporting that to me and to all these other doctors

in real time so that if there's a problem, you know it faster. And so that you can go track this stuff. Right now when you go to the doctor, and if you have blood sugar problems or high blood pressure problems, they're like, what was your blood pressure last week versus what is it right now? what was your blood sugar last week versus what it is right now that we...

It's always reported. It's self-reporting is always wrong. Yeah, it's always wrong. Yeah, it's self-reported, and it's just so broken. And I think being able to track this stuff in a more automated, seamless way, seamless way would be really interesting. Yeah, like I got a whoop and, you know, that's doing some extra tracking. But, yeah, some kind of embedded device that's like continuous glucose monitor plus,

some way to measure your blood pressure and kind of keep it in one place. The other thing that I think is a really interesting idea is that I went to Georgia Tech in 2003, and at the time they were working on building a smart home, and one of the ideas they had for a smart home was a smart toilet. So imagine when you're using the toilet, every time you use the toilet, it texts you and says, dude, you're eating too many French fries. right stop stool sample basically yeah stool and urine sample and uh are measuring in real time what's up wasn't there a company that was doing that in san francisco that was totally a fraud was it u biome is that what

they were doing it wasn't a smart toilet though i think you had to send it to them uh okay well fuck that that's that's kind of weird right i can't even how do you get a well i don't know but uh no those are interesting i've seen people like tinkering around with this idea i do think it's very fascinating i have no idea how you do it what do you shit a net and it like takes a little strain? I don't know. I don't know what the mechanics are, but I think it's an interesting idea that like...

Let me ask you a different way. I think you have a very good way of thinking about problems. And what I beat by that is every time I've come to you with an idea, like two things happen that are different with you than with both people. One is you're like, I'm not, you don't sit there and ask like, is this feasible? How would we? do it, you know, like, that question comes later. It's like, first let me decide on like the big idea.

And, you know, how could, you know, would this be amazing if it happened? Okay, then I'll go find a way to make it happen. Or like, you know, your brother when he started the deodorant company, I remember somebody was like, Moise, do you, do you know anything about deodorant? He's like, no, I know nothing about deodorant. But in six months, I don't know everything there is to know about deodorant. And sure enough, you know, built a very big deodorant. So like the kind of like not being limited by what I know today is like, you know, I would

say one factor. And the other is like, you're not one, at least from what I can tell. Like, you don't really consider like plan B's or like if this fails or why would this fail. You, I remember when we started a thing together,

you were like, yeah, I was trying to do that. And you were like, I don't know, man, I don't really think that way. I just sort of, I decide to win and then I do it.

And I just plan to win. And I don't really focus on the rest. Am I, am I correctly understanding that or no? Yeah, I think starting with starting with is, if, can this work and, or like, you know, what are, so many people when they're evaluating an idea are immediately are like,

no, this is not going to work for reason X, Y, and Z. Actually, my brother is like this. And so I hate talking to him about new ideas because he's always just like shitting on them. is just kind of a skeptic by nature. So I definitely start with the, if this works, what does the world look like? And can this be a big deal if it actually works? So when I think about the smart toilet, I'm like, cool.

Right now to figure out if you have colon cancer, they do a, you have to poop in an envelope and send it to a lab. What happens if this is automated? Right now, like, there's all these medical things that I should probably be doing differently. I just have no idea what they are. And even if I knew them, I don't have a good way to, like, have somebody enforce it in an automated way. If that happened across America, we could solve diabetes, because oftentimes diabetes is a disease that you choose instead of a disease that you're forced with. So yeah, definitely start with the, if this works, is it going to be a big deal? And then I'm kind of like, cool, could I get customers for this?

And if I could, then I'm kind of like, that's all you really need to start. You don't really need any more information about, like, how to build a toilet or any of the science. Like, I think you can figure that out later. But can this be big? Would this be big if it worked? And can I get customers? Yeah. Yeah.

Those are the two. And often what, you know, one thing that happens, I look at a lot of startup like investment deals with suey and it'll be like, here's these great people. There's this great technology, great product, blah, blah, blah. And he'll just be like, cool. So how are you going to get customers? And like you think like this appears to be like a baffling question to so many founders or they'll say something. And he'll be like, okay.

What do you mean? So what do you mean? Like, where are you going to go? Or like, you know, have you done that? Tell me about three times in your life that you've done that. And then he's sort of like, you know, I'm in or out based on their ability to get customers. And I think, you know, it's like the, I told you that my meme of the year is that midwit meme. It's like the genius and the idiot, the way they think is aligned.

And the analyzer who's taking into account 75 variables actually ends up with the wrong answer more often than not. And like this idea of like, can it be big, you know, if it worked, would it be big? And can I get customers is the sort of the midwit meme, like, you know, in real life. Yeah, I don't think you need to know more than that. In fact, Sam and I were on this call where this guy was pitching, I think it's the company was called Firefly.

It was pitching ads on top of Uber's and taxi cabs in like this physical device that was on top of the- And they're around now. I think at the time, he wanted $100 million or maybe $60 million valuation. And it was crazy. I remember being off that call and I was like, huh? Yeah, Sam messaged me and was like, this is bananas. Can you believe this guy's valuation and the audacity?

And he was, I think at the time, losing money on each individual device for years. So, yeah, there are oftentimes where people, I'm shocked by how many people are like, Like, cool, I've figured out what the product is, but I have no idea how to get customers. I have no idea what the economics of that look like, and that's where companies go to die. How that company end up, by the way? Did it do? It still exists, but I have no idea. Got it.

I'm drinking this water here. This is a $25 bottle of water because it's like pure water that's been filtered. I'm in L.A. right now. It turns out that if you drink tap water in L.A., supposedly, according to this guy, it has pharmaceuticals in the water. What's that from Irwan or something? Yeah, I think this is from Irwan. And this water is basically pure in a way that, like, you can't get water anywhere else these days.

And so it costs $25 a bottle. This is insane. And it tastes just like water. And your point is so? Yeah, so, you know, super interesting idea. I didn't talk to this guy or anything, but I wonder what their distribution strategy is because I think putting $25 water at Irwan or Whole Foods is like an inadequate distribution strategy to get to meaningful scale for that.

Well, I'll give you the counter example. I was doing some research on the Nelk Boys, who, and I won't do the full thing about the Nelk Boys in their kind of business empire, but one thing that stood out was I was watching this clip, and it was John Shahidi, who you guys might know, because he's like kind of came, He was like in Silicon Valley. Then he transitioned into like Hollywood influencers stuff when he had his like mobile app shots get popular from like a bunch of Vine Stars. Is John their manager? And he's now their manager.

So like shots didn't work out. He didn't build the next Snapchat even though he had every influencer and Justin Bieber and Floyd Mayweather and like all these people using it and investing in him. But he was like, cool, I can help these influencers out. So he started managing influencers. And now he just is the manager of the note boys. And they were like. So they're there's hard. brand Happy Dad, which is basically like it looks literally like a bun light.

Like just like it looks like the right product. It's towards the right market. And they value the company, I think, at $250 million right now. They're doing like, I forgot how much. Exactly. I'll pull it up. It's getting close to $100 million in revenue. Yeah, it's close to $100 million in revenue.

So somewhere between $50 and $100 million in revenue. So the brand is doing really well. And it's very young. It's like a very new brand. but they were like, oh, so for Happy Dad, like, you know, what's the next product? Are you coming out with a new flavor or like a hard alcohol? Like, what do you get to do? Because, no, we have basically foot, so we've done all the hard work to get foot soldiers to get into gas stations, 7-Elevens, and whatever.

And so rather than compete with ourselves and like the fiercest competition in the drink market in those, we just looked around the store. We just sent people into the stores that were like doing these like gas station sales for us. and they looked around and we're like, what's the easiest category we can win? And they're like, so we're doing beef jerky. They're like, beef jerky is like a really stale category. We already have this distribution channel into these gas stations and convenience stores like hundreds,

if not thousands of these stores across the country. That is the edge. All we have to do is work backwards from that. Like we have the front end sales. Now we just need to figure out the back end product that should go into that sales channel. And when I hear that, I'm like, the NELC boys run a more sophisticated business operation than like 95% of Silicon Valley in just that one way of thinking. Yeah, it's amazing. Yeah, there's this Justin Kwan quote, first time founders are obsessed with product.

Second time founders are obsessed with distribution. Now I think there's this concept of I just focus on distribution. The product comes after I have distribution. Yeah, that's what we did with the audience, right? It's like, cool, I'm going to build up a big podcast. We didn't sort of intentionally go about it this way. We just wanted to do a podcast. But once you realize, oh, cool, I could just build up a huge audience.

I can come up with great products after. I don't even need to, like, know what product it would be going in. Yeah. I didn't understand that with the hustle. I was like, why are you guys investing? And they're like, because building an audience is really hard. And I was like, that's not that hard. I just do this, this, this, beep, boop, boop.

And you got it. And then I kind of later on, I realized that to build an audience that's engaged, It is a little formulaic, but it's also a lot of luck and kind of catching lightning in a bottle where, and then once you have it, it's very, very, very, very valuable. Now that I don't have it anymore, I'm like, ah, I get it. That was hard. Yeah, it's amazing to see people all around the world doing this now

and all these verticals. Like, you know, Doug DeMuro did this, then got an audience, then started Cars and Bids. Dude, I was early on that, man. Sean, I was telling you, Doug DeMorrow, that Cars and Bids, it's going to be big. Now his competitor was just in the New York. times last week for selling a billion dollars with the cars.

Congrats on investing on that when you called it. Yeah, about that. Did you try to invest in Doug Demir's thing? Maybe like a DM on Twitter was about the extent of it. But all, so no, it was most, I just, it was, I talked to talk, I didn't walk the walk. And also, I didn't have a lot of money at the time. I think it's about four years old, but no, I, I, I talked to talk. That's about all I did.

It's also amazing because these guys will, um, are often. bootstrap, right? Because they basically start with no audience. They just start making an audience. And then once they have an audience, they're generating so much profit from the audience or YouTube videos or whatever. So they don't even need outside capital. So I think even if you chase them down, he might have been like, I'm already making money. I don't need to raise money. So it just turns a lot of Silicon Valley stuff upside down of like, you know, distribution first, that generates profit, then use that profit to make product. Suley, did you look at the feedback from your last episode?

People loved you. They liked your voice. They say that you're calming, and I agree. Right. All right. I only listened to feedback that, like, Sean or Ben Levy, text to me. You had very positive feedback. People liked you.

They said that you're calming, that they would do anything that you'd say, things like that. It got a little weird by the end of it. Yeah. Thanks for doing this. Thanks for doing this. Hopefully, people enjoyed the Silicon Valley Bank breakdown in a few other things. And if you made it this far, we're doing a meetup, actually, Sean, tomorrow. You're not going to make it.

We have, it like sold out right away, 500 people. But we'll be doing another one April 28th-ish, and we'll announce that. More info on that soon. Yeah. I got one quick thing I want to plug, which is, you know, Sean has this guy who's his right-hand guy who helps him on all these different projects. I want to find a right-hand guy to help me with a bunch of projects. So like source and diligence investments, research, random business ideas I have, come work for me full time for the next five or ten years, and let's go do something amazing. And what do they find you?

You can find me on Twitter. DM me. All right. And what's your handle? It's S-U-L-I? No, it's my full name, S-U-L-E-M-A-L-L-I. All right. That's good.

You're one of the very few people that has taken advantage of. of this to actually promote something. But you did it at the end. You could have done in the beginning, but that's all right. Fuck it. Only the strong made it here. He filtered out. That's right.

He filtered out the weak, the weak people. All right, we're out of here. That's the pod. Cool.