The Pomp Podcast - 344: Sahil Lavingia On Building Technology Companies

Episode Date: July 24, 2020

Sahil Lavingia is the co-founder and CEO of Gumroad, a technology platform that helps creatives earn a living selling the stuff they make directly to their audience. He was previously the number two employee at Pinterest.  In this conversation, we discuss the Gumroad story, the pros and cons of raising venture capital, why Sahil operates with such transparency, how he decided to start a fund, the economics of a VC fund, how to evaluate product-market fit, the no code movement, and his thoughts on Bitcoin and crypto. When the New Yorker magazine asked Mark Zuckerberg how he gets his news he said the one news source he definitely follows is Techmeme. For more than two years and nearly 700 episodes, The Techmeme Ride Home has been Silicon Valley’s favorite tech news podcast. The Techmeme Ride Home is a daily podcast, only fifteen to twenty minutes long, and every day by 5pm eastern its ALL the latest tech news.  =============================== The Trends premium weekly report helps you understand market trends poised to skyrocket and how you can pounce. Join the private network of 5k+ builders, founders, and investors spotting tomorrow’s trends. Expand your network, and discover the next big business idea before it explodes: https://trends.co/pomp/ =============================== Pomp writes a daily letter to over 50,000 investors about business, technology, and finance. He breaks down complex topics into easy to understand language, while sharing opinions on various aspects of each industry. You can subscribe at https://www.pompletter.com

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off. Sahil Lovinga is the co-founder and CEO of Gumroad, a technology platform that helps creatives earn a living selling the stuff they make directly to their audience. He was previously the second employee at Pinterest. In this conversation, we discuss the Gumroad story, the pros and cons of raising venture capital, why Sahil operates with such transparency, how he decided to start a fund, the economics of a VC fund, how to evaluate product market fit, the no-code movement, and his thoughts on Bitcoin and crypto. I really enjoyed this almost two-hour

long conversation, and I hope you do as well. Before we get into the episode, though, I want to quickly talk about our sponsors. The first is a new podcast. When The New Yorker magazine asked Mark Zuckerberg how he gets his news, he said the one news source he definitely follows is TechMeme. For more than two years and nearly 700 episodes, the TechMeme ride home has been Silicon Valley's favorite tech news podcast. The TechMeme ride home is a daily podcast, only 15 to 20 minutes long. And every day by 5 p.m. Eastern, it's all the latest tech news.

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while sharing my opinion on various aspects of each industry. You can subscribe at pompletter.com. Again, pompletter.com. All right, let's get into this episode with Sahil. I hope you guys enjoy it. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only.

All right, guys. Bang, bang. Man, do I have a treat for you guys today. All right, sir. Thank you so much for doing this. Let's do it. You're welcome. Thanks for having me. For sure. All right, Sahil. So people who do not know who you are, there's like two people listening who don't know who you are. Let's go through your background and kind of what you did up until Pinterest and Gumroad. Where were you born and how do you get to Pinterest? Yeah, yeah. That's 18 years. I'll compress into three minutes or less. I was born in New York on Long Island to two immigrant parents from India who came to the US for their master's degrees. They were both, they both got into finance. My mom was a CPA. My dad became an

investment banker. I ended up growing up mostly abroad in Singapore, which is where my parents are still at uh went to USC for computer science and computer engineering I had started in in high school making iPhone apps that was sort of the big aha moment for me is when I saw that sort of famous Steve Jobs presentation in 20 2007 uh you know the internet communications device or whatever he called it at the time uh which uh you know made it made it possible for me to basically sell directly to to to the internet like just people you know i didn't even know right i could just make an app and then apple would handle like sort of all the other stuff but it's sort of i didn't realize was sort of a fundamental theme in my life was kind of trying to make that happen

for other people uh until recently uh got so i started making iphone apps uh went to usc uh ben the ceo of pinterest emailed me one day he saw an app that i made got to the top of happy news this app called data which i built to sort of track all the numerical data points in your life on a daily basis sort of quantified self that so sort of movement uh he sent me an email saying hey you know we work on this thing called pinterest it helps you collect organize share the things that you love you know just a few people at the time you know this is uh fall of 2010 so they didn't have an iphone app instagram and just sort of launched around then and i said sure like i'll charge you four thousand dollars uh make pinterest for iphone uh that was uh not enough time nor

money for me to actually finish the project i was uh didn't really know what i was doing at the time but i ended up joining full-time in january and moved up to the to the bay uh was uh employee number two over there built pinterest for iphone uh among a few other things and yeah that's kind of how I got to uh how I got to uh Silicon Valley why did you leave school and move to Silicon Valley and actually go join Pinterest yeah I mean I so I really believed when I went to USC I was gonna finish like I was not that kind of person it was like I'm just gonna go and join a startup or do my own thing I was very sold on the degree at that point uh what changed things was I mean one I didn't really know like wow these startups would have really genuinely just like reach out

to a freshman right uh it turns out in hindsight like there was so like so much demand so little supply on the ios engineering and design side that that they they had sort of capped out on people in the bay and they had to kind of find these these other folks uh and uh but yeah i mean the way i sort of pitched it to my mom and and myself was look i'm gonna i don't know if this is the path for me right like i still don't know if like if startups or whatever this thing ends up being it's where I want to be in 10 years and it's going to take me 10 years to go like I'm going to go I'm just going to take four years to graduate then I'm going to go work at like Google or something for like three or four years I'm going to go to as like a startup you know for

like three or four years I'm going to start my own company like that's sort of like the flow that I saw uh and and how like how bad would it be if I sort of spent 10 years and then realized like actually no this is not what I want to do at all uh and I don't know if that was me just like playing games to myself or like I was trying to like come up with a reason to sort of I've noticed myself doing that in a couple other life instances as well but yeah I was kind of like I can find out now I can get paid for it instead of paying for it right uh and uh and yeah I just thought you know like worst case this is like a gap year right like I joined this company I get paid I do it for a year if it works it works if it doesn't work I can go back to school right like I have a sort of

a newly established safety net at this point uh and you know usc is not going to say no to that and so yeah that's kind of how i pitched a pitch to everybody and uh and uh yeah it was a it worked you know i have yet to go back i think i'm technically still on a leap of absence like usc you know gives me a phone call asking for money so i think they can spare me an alumni but also i don't know i don't know how over there what was it like when you got to pinterest right so you get there uh people see this you know massive company and great success story today but you got there you're employee number two but what is it like yeah i mean people ask me this all the time like how was it like working you know in the early days of and it's like well like i was i was just

watching hamilton and it's like it's it reminded i don't want to make this kind of i don't maybe this is not the most uh part of a coup analogy but like they didn't know what they were doing right like they didn't know what would have happened later right and so I think there is there's this sort of like when you're in it you're just in it like you're just spending time like you're just building stuff it's like four or five people in a room right in like a living room of like a Palo Alto apartment with a roommate right and we're just like building you know we're just like shipping a website right like we're just it's like a Django app and you know we have a bunch of users at the time even right so early but we had you know tens of thousands of users

engagement was really cool we had some money in the bank but it was you know it's like especially consumer it's like you don't you don't know what works in that in that space it's really hard to predict so it's like okay yeah we'll just you know keep doing this thing like I was just shipping you know features every day I'd come in you know like 9 10 in the morning like work you know get launch work until 6 7 and then leave you know like it was just not that different than what you do anywhere else right it's just like and it's interesting even gumroad now like people ask me and I'm like look it's the same like Gumroad could be 30 times bigger in volume and scale and my job would roughly be identical that's the beauty of software like that's the point of

automation right is to to make it so that you can do these things that are affecting you know way more people but it's like the factory doing all the work right you're still hitting the stop start button like you normally would right just like the throughput is is a lot higher obviously it's not identical but it becomes uh it's it's sort of like a 20 bump in your sort of like to your organizational competency to get to a 10x sort of bump in like you know the sort of value creation metric right the kpi that you're going after it's really normal you know it's really normal uh at least in my in my world and you know vcs will come by and like meet the company and i would like chat with like Matt Kohler from Benchmark or whatever, but it was very normal, right? I think that's

actually a problem that I have because I've never experienced anything except that, right? Like I was at Pinterest and I started Gumroad and that's all. And I remember even at Pinterest, I was like, this thing's going to be massive. Like, I think this is going to be a multi-billion dollar company. And even like other employees were like, yo, like we've been at companies before and we know this is your first run, but this happens calm. This is a common occurrence where you get super excited. you have all these crazy metrics in the beginning and then for whatever reason it doesn't work and so just like you know like just hold up hold on to your horses we're like a five million dollar company at this point right uh and i was like no this is it this is and it it was it right but

yeah i mean who knows right was that me like with this crazy insight or did i just kind of get lucky and now i got lucky so that's why you're listening to me talk today right like it's hard to it's hard to kind of detach those things it's not falsifiable yeah and so what's What's so interesting to me about your story is you were there early. You did see the metrics like you did have that insight of, hey, this is going to be a billion dollar company or whatever. But then you chose to leave. Right. And maybe talk a little bit about like when you first started to think about potentially leaving, like what was the thought process there? And then was there some event or idea or something that kind of pushed you over the edge and said, I got to go do this right now?

yeah i mean i really built gumroad as a weekend project i had a bunch of these weekend projects that every few weeks i would sort of like hack on something just to learn like python or learn a skill you know i would basically do that and i'd meet sort of random people from hacker news and mountain view and stuff like those were my weekends and uh and i built gumroad and that was the first project where the next weekend when i had sort of blocked off the time to work on a new thing I was more excited about going back to that old thing that was the first time out of I don't know 10 20 different little little ideas and so there was something there right there was something really interesting about there was something about that idea and and sort of like now it might be

more obvious like the app store basically solved all these logistical problems for me so I could just go make stuff and sell that stuff I think there was sort of a connection that I didn't really see there uh with Gumroad and sort of enabling that same sort of thing for creators uh content creators mostly but yeah I just I it was really it wasn't about leaving Pinterest right it was it was like I want to I have this opportunity to start a company and similar similar to like Pinterest bringing me out of school it was like such a good opportunity for me uh that it just was hard to say no to and I wouldn't have said yes to like a subpar company right just like oh this is only worth it if it really is like the activation energy has to sort

of like supersede all of that and i think gumroad was kind of like that and the investors had started pinging me about it saying hey like we saw this thing on actor news like we see you're an early employee at pinterest would you ever consider leaving and then honestly i'd say the third sort of element was i think i was just like a kind of a young stupid kid right like i joined a pinch a startup right out of you know i was 18 second employee at this company that was you know on this crazy growth trajectory uh you know and so i was like i did it once like why can't i do it again right and i'm gonna have like 100x the amount of options in this other company right so like i don't even have to get that close it's going to be worth more and you know and it's

actually interesting i think i think what will probably happen is they will roughly net out in value it might like if i just stayed at pinterest and but but but like the amount of learning that i've had is just fundamentally different right like there's something about starting a company and being the being the first you know sort of the being responsible for everything that uh you know you uh you just learn way more and like way more people know who i am than if i was just like you know sort of an early employee at pictures as you went through the decision making process like what was the original idea for gumroad and what kind of um did you actually when you left what was built and kind of what was more of a vision, but not yet built?

Yeah, I mean, it was really simple. The way that I thought about it initially was it's Bitly plus a credit card form, right? So basically all of these people are building their audiences on social media directly. Some of them don't even have websites. You know, they just have a Twitter account, YouTube account, Pinterest account, Reddit account,

et cetera, et cetera, et cetera. And so like all of these e-commerce platforms, like they sort of acquired a website, right? like a paypal button where would you put it on your website like this where would you put it on your blog you know all these kind of things uh and so i was like this doesn't make sense for this new world where everyone is just getting started building an audience they might have millions of followers i want to give them money and yet don't have a website right and so that was like the thing was like okay what do people use to kind of share content bitly like okay bitly plus credit

card you know before they get to the sort of the end content like let's build that and so that's all gumroad was like super super simple i had all these ideas for like what could that enable but i think i think when you democratize something you just have no idea right like you you have no idea like what what the consumer sort of behavior is going to look like what the traction is going to be you're making something way easier way more accessible and then you do it and then you see it well okay like how because you don't know how many people like my my vision was like there's all this content out there that creators have sitting on their computers that they don't currently sell because they're not at that level that

activation energy to kind of like create a storefront get a domain do a brand logo you know have a bunch of skews right like really start a business effectively and they just want a lemonade stand right like that's all they want they want to kind of trial this thing out how much of that is there and i don't know because these people have done it privately they don't sort of share this stuff publicly and so that was kind of the thing was like i'm just going to go and that's how i kind of pitched to investors uh like nabal on my selection i was like look i don't know where this is going but there's something interesting about sort of just making it what what if it was you know five minutes to create a storefront right what what happens if you do that

uh and we'll see right this is sort of like heyday of bitcoin like i think when government started actually one of the guys who reached out to me in those days was this guy brian who was an engineer at airbnb who was interested he was like hey does have you ever thought about doing a bitcoin thing i really wanted to get into this crypto thing i think bitcoin was like 70 cents at the time and i said you know i'm not it's interesting but it's early and like i don't know what's going to happen so he ended up starting a company called coinbase uh which did pretty well uh but yeah it's just like there's you just don't know right like you don't know where the people keep it's like even the stock market right like people keep trying to say oh this is why

and it's just like no you don't know it's a complex system and if you knew why you know you wouldn't be telling anybody honestly like you know that you would you would be uh you know calling or shorting the market you know on a daily basis if you really if you really had this sort of conviction yeah the one thing though that i think you did have um at least it sounds like uh an idea that was going to continue was this like uh kind of idea of creators and audience building and and like you were basically betting on like a macro trend there and if that was going to go away, then this idea specifically probably wouldn't work. But if that accelerated as now with hindsight bias, like or hindsight clarity, like it did, this was going to be something that

could be very valuable, right? And so maybe talk a little bit like, why did you think that that was going to continue rather than disappear? Yeah, I mean, I think it's finding like the through lines, just like the trend lines of society, right? And it's like something that's hard is going to get easier over time. Something that's expensive is going to get cheaper over time something that only you know companies with 100 plus employees can do is is gonna companies with 10 employees or one employee eventually are going to be able to do right and so it's all it was it was like finding those those things and and and really I really believed like the insight I think I have I sort of had to sum it up in a sentence was everyone was connecting

directly to their audiences right musicians designers writers filmmakers stand-up comedians everyone was it was building a direct link to their audience right you imagine 10 15 years ago if you were justin bieber and you wanted to talk to your audience you'd have to do like an interview with like a people magazine right and now you can just go on twitter instagram as much as you want have a direct relationship with them and so but but all of the commerce was still traditional right so it's like you'd still sell through like like radio record store label publishing house there are all these sort of traditional things and and if you look at the economics of it right the artists make very little as a as a percentage of sort of the volume that they're really driving

and so i said this is weird like there's all of this this sort of like inefficiency in the commerce side there's all of this efficiency being brought into this sort of communication discovery side and so my guess is eventually this stuff is going to get disintermediated right like you're not going to need a middleman you're not going to need a label potentially you're not going to need a publishing house to do certain things because a lot of these ideas aren't going to make sense in this new world right where you where you just don't need it anymore right like to me that's always really interesting like what if you just yeah like who what do we not need like what is going away i think is a really interesting framing because that's that's a lot a lot of that is what

innovation is right like what if you don't need uh you know a dishwasher used to refer to a human being right it's often still does but you know what i mean like there's a computer actually used to be a human being right like these are people and jobs that we don't need for our society to function anymore and that's great because those people can go do something else right that that is sort of a better use of their time um more creative use of their time and so that was kind of the insight was like there's clearly this shift happening that i don't see slowing down which is every single person it's still happening right every single person is going to connect directly with their audience via their blog their newsletter and like the internet is going to get

better and better and better at finding the right connections uh you know you're gonna like it doesn't make sense to me that like your high school friends are your friends for life like what are the chances right that those are the perfect people for you and your tribe and your personal growth and development uh they're they're probably don't even speak your language to be honest right and so it's like over time my guess is that every single person will be able to communicate very effectively with everybody else that they want to right and and sell directly is sort of like the next step of that and so that was that that was the trend but even like gumroad before gumroad that you know that was happening too right like people had blogs instead of i guess

submitting op-eds to like their local newspaper or something right like this is a like and that's the other thing is I think there's this why now thing question people ask but I really think it's a slope and it's like it's like it should have already been happening and it will continue to happen like the creator economy is this big buzzword right now because of COVID and you know all these kind of things but it but like remote work for example has like been happening in Dreamweaver I mean I would say Excel is like the premier no-code tool right and that's been around for decades right uh it's a thing that's already been happening it's just continuing to happen and as it continues to happen it just makes it way it makes its way to different people right like that it's

like the william gibson quote the future is here it's just not evenly distributed right so it's like i was already communicating communicating directly with my audience you know on twitter 12 years ago it's a probably a pretty good bet that like i'm just early right and there's going be way more people doing this uh and it sort of goes in line with my philosophy around doing the fun and all these other things but it's like find the thing that you really believe you're early on ios development right for me it was that as well cryptocurrency might be that for for you or other people like there's it's so hard and it's just like follow your interests like go down the rabbit hole and if you if you sort of discover something and you're like there's something really interesting

here and at some point in the next it could be tomorrow it could be 30 years from now it's going to change the world or everyone's going to use this it's just so obvious to you like figure out a way to like invest in that thing right uh you know sort of start making big axes right if you find gold that kind of thing yeah and so what's really interesting is you have this insight uh you build kind of the side project that then all of a sudden starts to gain some traction and people start reaching out and saying hey do you want to raise money do you want to leave you know you obviously are watching the metrics. And at some point you do decide to leave. Now to clear up one of the, I think, misconceptions, being the second employee at Pinterest does not mean you get to be

rich forever if you leave before your stock fest, which is what you did. And so talk me through kind of the transition now. When did you raise money? Kind of what was that conversation like? And kind of in hindsight view now of having left before the stock vested like regret good decision kind of just talk me through all that yeah I mean probably not a good decision uh financially at least um yeah I mean I think I was just you know I I was not savvy enough I would say as a what I should have done in hindsight is I should have been quiet and been like I'm this thing is going to work and i should you know it would be nice to have some safety net here so like let me you know even though i have this cool idea you know and and pinterest is fine but not as cool

as starting my own company uh like let me just wait for a while right but again if i did that like i would hit my one year and then every month there's like this you know so i don't know i don't know if i if that would have been a better decision for me maybe i could have my presence sort of tanked the company and just wouldn't be anything today who knows uh but yeah i think it was it was just it was just i remember talking to josh ellman about this he's like look you when i was talking to him about gumroad and leaving and things and he was like look you can have a hundred percent of a small thing or one percent of a big thing right and i just like i'm just like the hundred percent of a small thing kind of person like i really want control i want to decide who

I work with where I work how I work what I work on and just the truth is you can't do that if you're working at a different at a company right like you just can't right ultimately you're gonna have you're gonna be you're gonna be put next to somebody and you're just like I don't really like this person that much right uh and I just I don't know I don't think I could ever do that again honestly right which is it I just I just think it wasn't about the financial thing but certainly it was stupid like I should have been smarter about it I should have probably negotiated with Pinterest or something but I just didn't know anything right and they didn't either I think it was like a sort of a new fresh situation for everyone involved and sort of a trial by fire but certainly I think I

could have probably figured out a way to keep you know uh afforded my stock which I think the math ended up being it would have been like you know 10 to 20 million dollars or something for staying in an extra you know like six months or three months or whatever it was Yeah. And look, it's also one of the things I love your perspective on just like, who knows what would have happened, right? There's a million different things that could have been, but you left and you said, Hey, look, I'm gonna go take a run at this. And you probably more so than anyone else I know of, have had the ups and downs of kind of the entrepreneur's journey. And so let's start with kind of the initial up, which was you walk out of Pinterest with Gumroad, you raise some money, kind of what are investors investing in? Who do you go talk to? Why take Kleiner's money? You know, what was that all like as you kind of started the company? Yeah, I mean, so I had a few investors who pinged me saying, hey, you know, if you do a company,

let me know. You know, a bunch of investors who followed me on Twitter. So when I said I was leaving Pinterest I got a bunch of email from that too and so I just started meeting with people and this is like the old school I mean especially with COVID like the way you fundraise it is a little different but back then right it was all kind of same hill road kind of Silicon Valley people and so I would just meet with a batch of people right like the first set of people would reach out to me I'd have like a little like I don't think I had a deck or anything I just had like the website I would just go to government.com on my laptop and just talk to them about it And it certainly helps being like employee number two at Pinterest and being a technical, you know, developer, etc.

But I would just talk and be like, look, I'm building this. I'm really interested in this sort of democratization of commerce, starting with like the lemonade stand to the to the Shopify. Like, what does that look like? And I ended up. Yeah. And so I would meet with all these people and then they basically, you know, a few of them would say, I'm in. Like, let me know. By the way, you should talk to my friend. Right. And so that's, you kind of, there's this tree that kind of builds pretty quickly that you kind of meet with, you know, a bunch of people, 100, 200 people or something, you know, in a few months that are interested in investing in you. uh and i ended up raising a million bucks uh from you know nabal max leptin lowercase collaborative fund first round excel sb angel seth goldstein from turntable and and uh

maybe a couple other folks but uh a good list pretty pretty solid list uh around a million bucks and then incliner happened pretty soon after i started i moved up to the city got an office started building stuff and I don't really know what happened I mean I think I think there was you know like there's only one series a that a company can raise right and I think there's there so there are like eight to ten firms that are kind of tracking all these kind of pre-seed seed funded companies and I think I must have just been like one of those companies that you know was super hot came out of the gates and at least two firms were like you know if you want more money we will like do your series a and sort of preempt you know you doing it a year from now

right and so i sort of just had two meetings one with index one of the kleiner got two term sheets and ended up picking picking picking kleiner but the the reason was and i talked to like all my investors like what should i what should i do here and josh koppelman from first round he said he has this great quote he says there's nothing like numbers to have a good story which is to say you're hot right now like you can kind of raise on the story that you're telling and you're convincing but the minute you have a year or so where the data that maybe shows there's some holes in your story which might be true might not be true you might not be able to raise as easily you might you know so you're you're these people are paying up right now and they might pay up even

more but they also might see the data and be like oh there's nothing here right the emperor has no clothes. And, and, uh, and so I was like, yeah, I, you know, it was a seven on $28 million round. So it was like a pretty good round for a three day at the time. And then I wouldn't have to think about money for years. Right. Like I could just focus on building the team on, you know, talking to customers, doing that whole thing for two, three, four years before I really had to kind of like think about raising money again and all these things. And so that was the big reason I did it was like I could just sort of do it I just raised the seed around I was like I can just raise all of this money collectively and then I can just like go build stuff for years and really

figure this thing out and not have to context switch right into this fundraising cycle which in hindsight I think had some had some downsides to doing that too but I but you know I just it was just so the idea that I could just work on something for years and not have to sort of you don't talk to anybody else and just focus on building was just so appealing to me uh so that's kind of it's kind of what I ended up doing and so when you take venture money obviously they want venture growth they want venture exits and kind of slam on the gas is uh is a very kind of crude way to explain what they expect you to do with that money um as we fast forward in your story uh you end up buying Kleiner out for a dollar at some point um and so uh people who just heard you

So you raised $7 million shortly after raising a million dollars, kind of a who's who of Silicon Valley. And then you're buying Kleiner out for a dollar. What happens in between raising money from them to that moment? Yeah, I mean, we grew for, you know, we did okay. Like, I think we, as you mentioned, it's like, yeah, VCs, they kind of think of it like you, you know, like jet fuel, right? Like, just make sure your point is in the right direction before you use it.

And yeah, we did okay. like we we know we grew to a nice like probably one and a half to two million annual revenue uh business we're growing maybe like 60 80 a year at that point just not fast enough for vcs to say hey this is worth like a series b of like 10 15 million dollars right at like a whatever 100 million or 60 million dollar valuation or something like that just what we weren't there uh and i did the rounds like i met with all the investors and uh like all of them because that's what you have to do when the when the top ones say no and you kind of just start going down the list and it's uh it was it was it was good for me though right because i feel like i had the easy

way the first time the first couple times so it was nice to kind of not have that and learn learn about that obviously not nice entirely but but uh yeah we did that kleiner gave us a a bridge of two million bucks well when we realized it was going to be hard to raise more money to really sort of double down on on sort of growth uh and not have to do layoffs then which would have been kind of like a death meal for the company and so they gave us a two million dollar bridge at a 4x liquidation preference so at that point we had 16 and a half million dollars of preferences and it was like a kind of a hail mary right like we're gonna try to make this thing work and hopefully we can like find something that just like accelerates the business but we spend nine months you know january

2015 at october ish september october ish trying to trying to find that and we didn't uh it turns out if you didn't find it three years into that you're probably not going to find it in the next year uh something like covid kind of has to happen for that to change uh which you can't control right uh but yeah so we did this round of layoffs we went from 20 employees down to five employees and got to profitable because that was like the number one thing i wanted to do is like look we're paying like two two and a half million dollars a month to our creators right like we might not be like a crazy successful vc business but like we're still meaningful for these people and so like we need to get to profitable because i can't just turn off the faucet for them and so we did that

with five people got to profitable got rid of the san francisco office in 2016 and and then i left i ended up moving to provo utah i i told my investors like i'm burnt out like i worked on this thing for you know four plus years it's you know it's a it's a million and a half in revenue with basically no team like a skeleton crew growing 15 20 a year and with 16 and a half million dollars in preferences right like there's like for years and years and years there's no exit right like there's nothing if i sold the company for 16 and a half for folks that don't know what that means basically it means if i sell the company for 16 and a half they get 16 and a half and i get zero which is the deal that's i'm not complaining that's just the what we had what we got into but it basically

means like a 16 a 1.5 million dollar annual current revenue business growing at that rate is not worth that and will not be worth that for a long time and so i said look like i tried i'm gonna put this thing on autopilot i'm gonna try out the four-hour work week and then you know write and pay and kind of explore my life and just kind of take a sabbatical you know have a quarter life crisis uh etc so I ended up moving to Provo Utah did that for you know over two years so I left in in in uh yeah I guess that was late 2015 early 2016 and then uh I think it was late 2017 uh so two or three or maybe 2018 I can't remember exactly but Kleiner anyways they emailed me saying hey you know I had a couple I had some conversations I was like I'm gonna open source

this whole thing because like i want the we're never going to build this great business but like you know the world can benefit from all this technology that we've done uh and they were like well you know if you do that it kind of is a way to say look there's nothing here like let's just clean up the books and like this is like going to be some free software for people uh and they were like you know like that's still worth something like we still kind of you know kind of have the ip ownership of that and like um but then randomly kind of like three months or so later they were just like hey you know we're we're you know would you be willing to sort of write up you know we'd be willing to write off the investment effectively sell you all our shares back for a dollar

and i still don't know why necessarily like i don't they haven't they didn't give me a reason right they weren't like this is why we're doing it some i don't know if it's like some internal thing or it's like tax write-off thing or whatever um but i think it was probably just like you know just like like sort of married condos to have like cleaning up sort of anything that that could be cleaned up you know right before a taxi or something like that but yeah basically they wrote it off and then since then gumroad has sort of shifted a little bit um but but but i think that the sort of some of the context that gets missed here is like a lot of people like haha kleiner like they lost you know they basically wrote off this investment that might now be doing well but

it's gumroad is in this different place but the truth is like i think gumroad would not be in this place without that having happened right like they had kind of suffocated the company in in a sense because we raised all this capital and i couldn't work on it just didn't make sense for me to work on it and when that went away and down to two million dollars in preferences or so i was like oh like this is now interesting i started hiring a team started shipping again we went from 15 year over year to 25 to 40 to now over 100 uh year over year so but that wouldn't have happened right that wouldn't have happened if kleiner and you know i had you know that sort like level of preferences that like would have made it untenable for me to really work on it

so it's kind of this weird schrodinger's cat kind of thing right like that you don't really know um you know what's what's going to happen uh and or the heisenberg sort of uncertainty principle right like you kind of mess around with the experiment uh you never know like the sort of the position and speed or whatever kind of metaphor yeah so before we kind of start analyzing some of this just where is gumroad today like what metrics or kind of numbers how do you talk about where the business is today and how it's doing yeah so what i say is we're processing around 150 million dollars a year for creators uh which is you know smaller than patreon and teachable and larger than substack and everything else basically obviously we're a lot older too um we're at around 10

million dollars in in arr we're doubling year over year uh largely due to covid and i think we would have been maybe 60 or 70 percent without covid now we're at 100 with covid um and we just you know we're just focused we have a tiny team it's like 10 15 people and we just you know we're just going to build we're just going to keep building stuff and you know shipping software and making it better and better and better and we're kind of on the the faster horse kind of thing right like Steve Jobs has the quote I'm like look like we're happy building the fact that the the car could only have been invented by one person one time right and uh we're happy with the with the faster horse creators our creators are very happy with just you know focusing on the

problem and making it better and better and better and not trying to kind of go too big or try to you know bite off too much or or what happened yeah and so what it feels like is today you're running a business that you still have got some preference right in the capital stack you still have some of those early investors that still have exposure to the equity but where you kind of ended up is as if you didn't raise venture capital right and kind of that's the the business that you're building today which is you're using cash flow to grow and and kind of do that and so you've seen both sides right you've seen kind of the benefits of that and you've also seen the benefits and challenges of raising venture uh you talk all the time about should people raise money should they not kind of

what's the high level of how you break down like when do you raise venture and when does it maybe not make sense yeah i mean i think you raise venture if there's something you want to do that you just don't have sort of the profit uh sort of stream to do so right if you're like i need to solve this problem and i want to solve it now and i need some money to go solve that problem and i'm willing to sell like people always talk about it like oh you raised this much money right that's the term people use but you're selling a part of your company right like that's a big deal you can't you can't unsell that very easily and so i i i would say the way to think about it is like is this worth 10 of your company right like that's more expensive than a loan

that's more expensive than the debt that's more expensive expensive than almost anything right a piece of your company and so yeah just you know kind of just make sure that you yeah like this is the thing that you want to do and it's worth selling you know for average sort of round is around 20 of your company right and so you're selling you're getting a million bucks you're also selling 20 of your company for it and you just have to do the math is it worth it can you build this you know without uh without that you know maybe you should i think i always you know i i always try to ride the line between bc is bad and bc is good because i think both of those are are simplifications i think most people kind of understand that but especially people in

in the industry i think they do uh there's no one who will tell you to not raise money faster than a vc i feel like but they get this rap i think because they they kind of like push the companies in a certain direction there's sort of this one size fits all model but that's you know that's just what it is right that's just like understanding like yeah this is what vcs are going to want from you because this is their business model and just like understanding uh the incentives that they have is just you know a good thing to do and not just the vcs by the way right but early employees and executives and everybody you work with is trained around a certain incentive model around their they get a bunch of stock and then that stock appreciates in value and then at some point

they liquidate that stock which is a very different model from you work at this company you get a profit share right it's a fundamentally different different kind of business and gumroad kind of got lucky because we basically went down to zero and so when I rebuilt the company with new folks and everything I could say look this is not that kind of company right so don't join if you're looking for that because we have the numbers to f up a good story now and we don't have that right and it's been freeing right it's great like I can like employees aren't sort of obsessed about are we going to run out of money like are we going to need rate to raise you know like what should we work on like we should work on the thing that drives the most volume tomorrow because that's

what's gonna you know that's what matters and it's now just like let's just build a great product right everyone gets paid everyone you know does the work and you know it's a very low stress kind of environment but you lose things too right like you lose some of the the impact the urgency the sort of when you're fighting a war you know like there's there's there's some good things that come out of that too and i i have empathy for that as well um i just think it's like yeah if you could like if you have plenty of money and customers are paying you plenty of money you might not have to raise or you might be able to raise you know like one password did right like a lot of money at a very low dilution and sell a lot of secondaries to do it and i think it's just

it's just about optionality i think the biggest thing you lose you do lose when you raise bc is it is you're opting for the liquidity model you're stating to everybody the way that we end up making money here is we sell the business for you know a 10 or 100x on where we're at today and that's it that's the way that we're going to make 99 of the capital you know that come that sort of return on investment that's when it kicks in and so that is either an ipo or an m&a deal right that's about it uh those are the only two ways you're going to get liquidity on your on your on your stock in like a meaningful way and so just know that right just know that that's the and there's nothing wrong gumroad might still ipo one day right but you know but but yeah i just think a lot of people

get into it and they they go through yc they raise a couple million bucks and then they're like oh i didn't know that this is what that meant i actually have to go for this kind of home run strategy right otherwise it's it's it's not it's not meaningful one of the things i've always thought would be really interesting is if people talked about fundraising uh in reverse chronological order right which is normally they talk about it as i'm going to raise this money then i'm going to do x then i'm going to raise this money then i'm going to do y whatever what you're really talking about is like why don't you start from the finish line and then work your your way backwards right like if i told you you could have a business that throws off 20 million

dollars in cash and you and your employees put in your pocket at the end of each year like would you be interested in running that business or would you be interested in running a business where basically you have one big payday when it goes public by the way both are fine right neither one is wrong it's just the finish line of what makes you comfortable or not comfortable ends up actually dictating what you do on the fundraising side much much more than you know hey uh i need the money today because if not then i can't hire this employee yeah it's like a great tweet right he says like the only thing that sort of level of whatever measure of intelligence is did you get what you want out of life or whatever right which is just

to say like look like if you want you know to run like a hundred thousand dollar a year business that just turns cash and you're happy you want to go live in thailand and that's all you want to do and that's like the sort of the tim ferris-y kind of for our work week kind of thing like that's great just make sure that you sort of are thinking about that and planning you know that kind of future right and if you want the sort of crazy kind of like you know double or nothing sort of model and then maybe you get a bunch of money you know 10 years from now but that's the only way you're going to do it you're never going to be able to get to that scale or that level of impact or whatever but you're also almost definitely not going to get there anyways like uh just yeah just

know kind of know and i think the thing that a lot of people miss like some of the anti-vc crowd i think when they look at my journey they're like oh look at this person he got you know used or like he was like you know manipulated or and like i do think like one i have loved every moment of my life right like i'm i've never been in a place where i feel like oh i don't want to be here right now like i signed up for everything i knew kind of what i was getting into and every single time like i learned i met people i built my skill set my credibility so it's like i don't you know i don't regret it right like i i'm very grateful for everything that i went through sure i wish i maybe had some more nuance around around the edges but uh it's yeah it's way better than i think just

being you know at a company that i don't enjoy working at which is sort of an experience that way more people have right uh on a daily basis uh especially right now that um you wrote this blog post about uh not building a billion dollar business and not kind of being able to use venture capital to build a venture scale business uh the post goes viral and now you know you pretty much got a venture scale business right you're growing 100 year over year 10 million dollars in arr like it kind of looks like almost what a early stage investor was expecting or hoping that you would do his question is, did the blog post contribute to you becoming a venture scale business? But maybe talk a little bit about the blog post and kind of, you know, what transpired after you

wrote that and it went viral? Yeah. So I wrote this blog post really to sum up the last nine years of my life. Like it was kind of a capstone for me. I wanted to, I was just having conversations with people and, you know, people that I thought had kind of known what had gone down. And I realized even people like my mom like had no context on what had actually transpired like it just happened I kind of disappeared you know and everyone kind of let me be and and so people thought I'd sold the business people thought it was dead like everyone had their own kind of telephone game kind of going on and so I was like I'm just gonna write this piece kind of show it to everybody everyone can kind of know what happened right I can say that I don't have any

Pinterest stock and like I can just clarify all of these things and so I did that and then yeah it just kind of went went sort of super viral 800,000 people read it uh I gained a bunch of Twitter followers from that which kind of like started this like new sort of Twitter thing for me uh but I think the the the biggest thing I think that people appreciated was like there's just it was just the nuance of it right it was like it wasn't like I wasn't trying to sell anything. I wasn't trying to convince anyone that, you know, that like I was on the right path or the wrong path or like VC was good or VC was bad. People might've taken that message, but you know, it was just like, look, this is the story, right? Like I'm just going to go through what happened

and, you know, take it or leave it. Right. And there were a couple of lines in there that I think really resonated with people. But I think the biggest one was just that there is like some level of uncertainty here right and like you just need to be comfortable with building not knowing exactly what's going to happen right you can't predict like if this is going to be a billion dollar thing a hundred million dollar thing a 10 billion dollar thing like no one really knows like you should just really focus on building something you think is interesting and valuable for people that sort of gives you the lifestyle that you want and and then just be happy where you are right like just be happy where you are and then if it happens like these other things happen

like great you know but it's they're probably not going to change your life drastically right if you're if you're already pretty content with what you what you have which is kind of the model that i've been trying to live my life since which is to try not to do to set goals and do too much and just you know even now with gumroad right like i get vcs that are like hey gumroad like have you thought about raising money for this thing uh a lot of that's just bs like they haven't done their research they don't really know like the history of the company but even you know friends of mine at top tier firms are like hey you know but you know have you thought about this and i'm like look we're profitable we make money like money is not the bottleneck for us right now and i know

the creator economy is super hot i know these things are happening but we still don't know how this thing's gonna play out right and if you know i'm just not willing to like it's it's a very different deal for a vc right a vcc's a vc gets ir right so like their their their investment begins today right so like they actually love the fact that gumroad had this nine year journey because like they're just paying for now going forward right they're not paying you know like if they if they did this deal and then we had to wait nine years their their sort of annual return would be destroyed right um so now they see this great investment but like for me i'm like i finally got here you know like i the they the what i tell friends i'm like look i like spent nine years

building this business i finally have scale and freedom like i'm going to spend a couple years just building the stuff that i want to build for the people i want to build for with this you know a little bit more of like a vessel for me to kind of explore those kind of things and then i can say you know let's go big right let's let's let's find a new ceo who wants to go big like i don't know what that looks like um it probably doesn't look i've thought about doing a reggae plus like doing sort of a crowdfunding kind of fundraiser around it from our creators and the community that might be really interesting uh i just think they're i think of gummer like an experiment i think that the thing that i can do that very few other people

can do is because of my weird journey to where i am today i have this kind of weird neat place where i can basically do whatever i want i can run all these weird experiments with within the company i can like try out these sort of different processes and software tools and ways of working in a way that just most companies are either they either can do that but they don't have any scale or they have scale and therefore they can't do that right and i'm in this weird numbers in this weird spot where i so i'm i feel like it's almost like my duty to kind of just experiment a little bit and like kind of just push the envelope in ways that are probably bad right they're probably not going to lead to change so they're sort of like the lindy kind of effect

there right but but like i think it's worth it it's worth like sort of pushing the overton window a little bit like what if we don't need meetings what if we don't need this what if we do need that this other thing what if we open source all this stuff that no one does you know and i i just think that i i can add a lot more value to the world on these experimental kind of side effects of running gumroad almost than like gumroad itself and i think that's like a really interesting kind of placed place to be one of the things that people seem to be very fascinated about i think because it is so different is you've chosen to operate a business the metrics that you share the information that you put out there it's just so transparent where does that come from

it comes from I don't know I mean I I think one misconception is that I think people think I just started doing it right after the blog post or like I sort of like adopted this new style and I was thinking about these other folks who've done it like Justin does it really well Justin khan nabal apology and i and me i guess and and and i realized that like they've been doing it for a long time like you can go back i mean justin khan he literally had a camera taped to his head for 24 hours a day right so like it's not new it's not like oh twitter like we want to do this thing now because we want a bunch of followers like this is just what we do like we we like nabal has been writing like i started reading his blog in like 20 2000 set five seven something

like that you know uh i just think there's the i think you're probably similar i might just my guess like there's just a personality type that is like wanting to share all the time and it's not really about the sort of strategic value of doing it or not doing it it's just like i need to do it like i need to tell people because that's how i learned that's how i get feedback that's how i feel good about what i'm doing and i can like and it's just like a feedback mechanism it's like why would i like i can do a fund and i'm gonna have to spend all this time reading stuff and like talk to all these people one-on-one and like make progress or i can just tweet hey i have a fun no one does that like i'm it's not even closed i'm just gonna talk about it uh

and and then 100 people 200 people can be like hey what have you thought about this what about this you should talk to like to me like that it's about liquidity right it's when you get rid of some of this opaqueness it's like why all the startups switch like glass walls in their conference rooms right just like when you create that sort of that openness you can sort of create more of these serendipitous connections right because you can now see a lot of it it's just exposed uh it's like oh i didn't even know that you were next to me this whole time and you know we could work together on this thing or whatever and so i've always just been like a like a core believer in that philosophy of like and maybe that's because i grew up in singapore and there

was no tech real scene there and even when i got to usu as a minimal so i was always trying to like find my people online you know and hacker news and twitter and forums and things like that uh but i just i do think there's some sort of like fundamental personality trait that i don't know what it is like i don't consider myself an extrovert but there's this kind of like weird interesting version of an introvert or something that like just wants to make me like i started painting i'm like i'm going to create an instagram account and start posting my paintings because that's like i want to have a journal and i want people to see my improvement and again give me feedback and like it's been so great and i think all these people they wait until they're really

good before they start doing that kind of stuff right um there's like and i'm just like why like there's nothing to learn from someone who's really good to be honest like what are you going to learn from like jason calacanis at this point right like there's just he's off like you forget what you what you didn't know right like you just don't i can't even when people ask me about fundraising i'm like look i can tell you all i know about fundraising circa 2010 2011 2012 but like i didn't precedes didn't exist back then right like there's a new sort of sort of like you should actually just talk to someone who raised money yesterday like that would be a much better person to talk to about fundraising i'm happy to connect with them and so i think there is this idea that

like i don't know like there's this like strategy behind it but it's really just like i'm just doing what I do and it feels right to me and it you know just like I got into Iowa's development because it felt right not because I thought it was going to change like everything and and and it's that sensibility that I think is what's really important because I think you have to find that for for everybody right everybody has to find that thing that is kind of like driving them into an interesting place because I just I believe there are millions of those places right and I think you can make plenty of money in all of those places and you'll certainly be happier i think there's this worry i have that people kind of see some someone's success pattern and

then they say oh that's the that's the way that i need to become successful but the truth is if you're starting out today the way that you become successful is going to look very different right because the platform the growth the macro trends are different right like though and i can't tell you what those are like you have to be a kid who's like in the middle of nowhere messing around with like ar stuff or like you know audio social networks or whatever and be like oh this is a really interesting idea and then spend you know a few years and it's like all of a sudden the whole world is like paying attention right and i think john colson says just you know you have to be willing to go down the rabbit hole and you just have to because if truly if you want to be on the

frontier which is what you kind of need to be at if you're building something interesting sort of by definition right like there's not gonna be a lot of people there like no one's there to come back and tell you by the way this is the path right you have to kind of be the one going into the forest and like finding the weird thing and you don't know when you're going to find it right that's the kind of the other thing it's kind of stochastic like you don't know like oh on the other side of this is like the number zero or gravity or like you know or the sort of evolution right like it's just like no you just got to do it because it's interesting and weird and like it just it's fun and it's satisfying to you and then you might discover something like like the united states

of america right like that wasn't their goal they weren't trying to do this thing they were just trying to solve a problem that they had and then whoa holy crap it turns out that this was like a massive you know massively sort of important evolution in human history to get to this sort of like liberal democracy but you couldn't have planned for that right you couldn't have had a business plan that's like our goal is to create america and we're this is the way we're going to do it it was like this very trial and error thing uh and and that's sort of just what i think sort of innovation and invention kind of need that it's just like this sort of constant sort of trying to solve our problems and we solve our problems and those lead to like an interesting life a new

different life that has other problems that need solving and then you solve those and then you have other problems that need solving that you solve those and like and i i assume that like human history like i i really believe going back to that whole early thing i think that's a fundamental sort of belief that i have is that we're super early right like i think humans if we make it for an extra thousand two thousand ten thousand hundred thousand years like i can't imagine what that war looks like but i assume it's going to be insane right in a way that i can't comprehend just like a phone if you showed a phone or a gun or something to someone you know a couple hundred years ago i mean not a gun but you know what i mean like it would be they would just they wouldn't

know what to do they'd be like this is magic like we're gonna burn you at the stake right like well forget even a couple hundred years ago i mean literally there's videos of people who went to jail in the 1980s or 1990s come out and they look at an iphone like that right so you just forget hundreds of years we're literally two three decades right so i'm still blown away like i just got a magic keyboard for my ipad and i'm like this is insane like this is the trackpad like it's it's mind-boggling like we're so and that's why i'm excited to be an investor but i'm just excited to be alive because i just think there's just so much more i think there's this we always talk about the black swan right like these events like covid and these other things

that kind of like tank sort of like the tail risk right but i just think we also we don't spend enough time thinking about like what does the upside look like like what are the what are the white swans right like what are like the crazy things that we're going to discover and it's like oh that problem that we thought we had to solve we solved it right like that like penicillin right or the transistor or plastic like there are a lot of these things that like like stripe has totally changed the game for these sort of startups getting you know getting online and and that didn't exist you know 15 years ago right and so like what what is that next thing and what is that going to enable us to do and even things like climate change like i'm i'm obviously like

it's a thing we should we should work on and it's not going to get solved unless we work on it but i'm also incredibly hopeful that we will solve it like i just believe that sort of fundamentally maybe that's not good but like i just really believe that we just don't know that that's sort of what's on the other side right like what are we going to invent what are we going to discover what two things are we going to put together that very quickly will seem obvious and and become universal and it's like can you believe that like back then we had a problem like back then people just used to this is how toilets worked not that long ago and now like you know we don't even think about it or or food production like there's just so much

uh there's so much i think there's so much to be to be discovered even like i i had this moment very recently when i saw the the what is that like the starship or something right like the and I was just like this is insane like this thing is like and I could like visualize in a little bit of a future where we're just going to Mars and back or moving it back like over and over again like an elevator effectively and then you realize like that's all it is like it's incredibly it's rocket science is actually incredibly simple which is you just take like a heavy thing and then you just like have to move it like into space with a lot of it takes a lot of work right so you it's not easy obviously but like it's a kind of a simple physics problem

where you just have to take this thing and like if you could you would just you know you just have to move it there like you're just trying to get this thing to point it from point a to point b and then when i saw it i was like oh yeah that's all it is it's just like a lot of fire like you know a lot of explosions effectively uh and i could just like and i'm like oh there's the there's this is the future or or like the future this has hints of the future it's like when you see a painting and you're like you sort of you inspire right you're like there's something we're like unlocking something like we're about to we're soon we're going to know why this is interesting we just know that it is interesting we haven't figured it out yet you know so you've

obviously spent the last nine ten years uh building gumroad um you've made a couple of angel investments along the way but now we're going to dive kind of deeper into investing One, maybe talk a little bit just about some of those angel investments you made, how they went, and then why focus on actually putting together a fund and going and kind of being more organized and serious about the investing activities. Yeah. So I did just a little bit of angel investing previously, especially before Gumroad. I did five deals before Gumroad when I was at Pinterest. And that was really for me to build like a mental model of the industry, right? I was like okay i'm a founder i'm an early employee i was an early employee i want to be a founder at

some point one great way to learn about this model is to basically take the money i didn't give usc and invest it into startups so i did i invested in five companies uh in 2011 uh two of them did quite well hello sign ended up selling to dropbox for 230 million and one movable ink is gonna do something pretty well as well and so I had just like from five I'd had two good two good hits and so that was like okay I have some sensibility some taste maybe here uh and then I did my sixth deal was Lambda School I did 2017 their seed round that's also looks like it might be good we'll see again like you don't really know right it's it could be massive it could go to zero uh but that was an interesting bet um and then in 2019 and 2020 i did a bunch more like 10 or 15 but it's

it's been too early to really say what's going to work but i did figma clubhouse house uh the aperitif brand uh circle this new uh creator community thing um squad like but just a bunch of small smaller small ones uh that are just so early to to really know if they're going to work or not. Um, but I had some sort of like some track record and like some interest in really learning about, about this, this kind of space. Cause it's, it's fundamentally important. Like if you're interested in startups, like a lot of the startups do raise capital, they do raise money from VCs and angels. And, and, and there aren't that many people who are those people. And so like, you can be a meaningful part of like business creation engine, uh, you know, if you

participate in that. And so that's kind of how I thought about it. And then I did after the George floyd stuff i i there was that meme going around about higher wire and i was like i can do these i can hire people and i did and we'll continue to do so and i can also write checks and so i just tweeted out this is the power of twitter uh you know i just tweeted out hey i've done some of these investments i'm looking for more i'd love to invest in black founders and i did four deals from that and two others since indirectly um and basically i just run out of ran out of money like I can't I don't again I don't have picture stock I don't I'm not uh you know I still pay myself like a salary I haven't sort of exited any liquidity on the government stock side so it's

not like I have a ton of money um but you know I did a few deals and I and some of them were looking for more money so I emailed a few friends including Nabal I was like hey I did a couple deals you know you want to co-invest in these they're looking for more more money and he effectively just says you know like I'd love to just give you money and then you can just choose where you want invest in i'll pay you to do that and help you sort of advise you on that uh so like let me know if you're interested like we have this new product at angel list called rolling funds sort of like lowers the barrier of entry as a as a fund manager you can sort of try it out ping a few friends i'll anchor you you know you can start at like a hundred thousand dollars a quarter do a couple

deals a quarter and then you know see how it goes and you can use twitter you can do whatever you want because it's kind of this new model um that's a little different than how it's been done in the past and I was like oh this is interesting like I'm not going to be a full-time VC I don't want to deal with any of that stuff and I don't have the time I don't want to go on like this road show for months uh or zoom show now and uh but I can you know I can send some emails and these things right so I so I talked to AngelList set up like a little rolling fund and uh put together a brief memo on Notion that just sort of like my track record who I am like what I'm interested in uh my little fund strategy and just send it out to you know 50 100 people did a webinar about it

a couple tweets and now i have over a million dollars a quarter committed so it'll be it's a sizable it's a sizable fund it'll be a four million dollar a year fund or something like that which you know if you have a normal fund with all these different things that's sort of the equivalent of like a 12 million 20 million dollar fund depending on how much you allocate for follow ons and xyz walk us through the math um i know you've done the math in terms of like how that works but walk us through like if you raised a 40 million dollar fund previously like we're talking earlier yeah through the math of how that works yeah i mean i was kind of mind blown because even though i'd raised money from vcs and things and been an angel like i never really

knew what what are the economics of the vc right and so i yeah i was like 40 million dollar fund that is you know first of all you're not investing the 40 million you take it typically take a two percent management fee over ten years so that's twenty percent gone so you're really investing thirty two million dollars then typically half of that or two-thirds of that is often reserved for follow-on capital for this sort of the first rounds of these companies their second and third it's at our rounds typically it's pretty common wanted one to one or one to two ratio so let's be conservatives let's say one to one so that's half the capital so sixteen

million is going into early stage first rounds of these companies and then then that's over many years often right so that might be over three years typically right three to five years or something like that for a fund of that size so really that 16 million dollars is split over three years it's around five million dollars a year right so this 40 million dollar fund that i see this big announcement i'm like wow i would never do that that's insanely massive and like it's they're probably so wealthy and making all this money and they can do all these deals you know and I'm like wait that's like like five and a half million bucks 5.333 million a year into new companies like that's that's that's a very different like five to fifty forty that's a huge

difference right and so I just started doing the math and I was like wow like I can with the rolling fund which like dramatically makes it easier for me to to do this and because of Twitter and the sort of the sort of direct to sort of invest LP kind of relationship I can have with everybody uh because that's kind of my shtick like i can raise a fund that's you know probably on the size of a lot of these early stage funds but it's part-time for me i can and i don't have any overhead right 100 of my management pm just putting back into the company into the fund is lp capital so you know of the 4.4 or whatever i'm at now per year like you know basically besides angel list's fees that's all going to go to companies uh so over four million dollars will

go straight to the companies uh and uh and and that's it right you know like it just keeps the model incredibly simple you don't have to do any math on like any costs to the to the fund in terms of like dinners or employees or associates or an office space or any of that stuff like i don't need any of that right like all i need is some money goes into an angel list bank account and then i talk to companies and say hey can i give you money and then if they say yes i just you know do a cc and then the deal gets done and i think that is going to be really interesting over the next few years like kind of being early that same idea i just i just like as i when i discovered this and i talked to nabal about it i was like i was like this is really interesting and like i

totally imagine in five years there are going to be hundreds of these people like what i'm doing now who are having these rolling funds able to collect you know commits on a quarterly basis able to do it publicly raise any time raise anywhere and you you know like i wonder what that does to like sort of traditional sandhill road clearly sandhill road's out of commission right now with covid right but like i wonder if like this is just the the end of it right like why would you why would you need to if you can just raise from all these people you can do it over zoom you no founder wants to raise money right like even if if you're you want to go down the VC route, it's a necessary evil still, right? And so I just think if you can get coalitions of

these founders, operators, people who actually understand sort of what it is to be a founder or have some domain expertise, I just think that that's sort of the career VC. Again, like it's a curve. It's not like a binary instance. It's on its way out. It's been on its way out for a long time. You saw this with syndicates. You saw this with super angels. You saw this now with Rolling funds my guess is over time the sort of traditional partnership model is going to go away uh and you see it in politics right like i think politics is a really interesting analogy because you have bernie sanders and trump who basically can raise directly from people they don't have their their teams are tiny they have incredibly low overhead they're super scalable and they they

can use it as a as a marketing thing like i don't have to do super packs i don't have to have dinners with rich people behind closed doors every two years which is what bcs do right like that's what bcs have this like two-year fundraising kind of process they talk to all these rich people you know that i don't i still don't know most of their names like i kind of people have been like oh you should you know and i'm like oh i didn't even know that there are all these people out here a lot of them you know they're like they're like family offices a lot of them are in like china know like the money it's not as it's not as like sort of like a bunch of tech people giving other tech people money there's a there's a there's a lot more happening uh that i've sort of started

learning about but you know a lot of them have access rights like you know if if some family office writes you a 10 million dollar check into your fund to anchor you like you're gonna have to you know give them updates right you're gonna have to kind of give them some things have a call with them once a month which is actually not that dissimilar probably from politics right like there's probably some soft commitment that if you if you bundle and you get you know you give the you know the clinton campaign or the biden campaign or the trump campaign or whatever like a million bucks they're gonna pick up the phone call right uh and so they're there's like interesting to see that kind of play out so my guess is just like in politics you're gonna see

way more aocs way more bernies way more trumps right uh i don't know if that's good or bad like not a statement on that just it's just gonna happen like that's what i believe and that's the beauty of democracy and like you're just gonna get democracy you know people want democracy and they're gonna get right inevitably uh and uh and i think the same thing will happen on the on the venture side which by the way i think you know this whole conversation about diversity and inclusion like a lot of founders they race from vcs these vcs race from lps these lps look very you know there's a there's a path right uh uh you know that sort of that cuts through harvard and stanford and i think if you can have all of these fund managers from all over the place from all different

backgrounds and all the levels of domain expertise all having these small funds you know like that's just better for everybody it's like more diverse lps more diverse founders more diverse gps more diverse employees like i i see this all the time like i'm you know a dude i like started a company and like people will you know like like women will be like you know it's weird that like this company I worked at like did this or didn't do that and I was like holy crap I had no idea I didn't even know that's a thing that women would want or not want or whatever you know I just had so little context for it uh like tampons in the bathroom like it's so cool and I'm like oh that's a great idea like I didn't I wouldn't have thought of that obviously I was 21 at the time a

little different life experience now so I know some of these things but but uh I just think it's so much better to just give people money to go solve the problems that they already know about than try to spend all this time you know trying to like learn about this thing it's like no i'd just rather give you money and you can go solve it right and i think the same thing with these with the sort of like the venture capital kind of community is like all these all these funds are trying to do all these things but i really think the answer is just like give people a bunch of money and then like they'll do it they'll do a great job they'll do a better job than you reading 10 books and a bunch of blog posts and then trying to solve the problem like that you just don't know

it's not it's like like i can talk about indian culture i've never lived in india but like i just know it because i've i've learned i've just grew up in that sort of environment right uh and and just it doesn't matter how awesome you are and like unless you have like a master's degree you're just not going to know as much as i do because of all the little things i picked up and it's kind of like that right and so i just believe so much in like a bunch of diverse lps picking a bunch of diverse GPs and those GPs picking a bunch of diverse founders and those founders building companies that are just better at all these other things solving all of these different problems and I'm just I'm super excited about

because I do think it's going to be like a really interesting trend that's going to lead to a lot of interesting interesting companies in the next you know five to ten years one of the most popular questions that these two are kind of related that I got when I asked for questions to talk to you about was sitting in the investor seat now how you think about product market fit and evaluating that right as an investor versus an operator and let's start there and then we can get into there's another question about community building versus product development but just in the investor seat how do you think about

product market fit maybe either similarly or differently than you would as an operator yeah I mean I really think about product market fit there so there's two types of there's sort of two distinct businesses people typically built there's like b2b businesses and b2c businesses right uh and i think like i have much more context on the b2c side even though gumroad is kind of a b2b ish company the creator economy kind of is a little bit murky in the middle but the way i think about it is do people use this that's sort of number one and then do these people share it with other people right um b2b it's even simpler it's like do these people pay for your service uh and it's surprising to me how sort of

how little like one how easy it feels like it should be to get to that but then how hard it actually is in practice and so i think i'm hopefully going to have a superpower like we were one of the first users of stripe first hundred users or something like that um and that's sort of with a bunch of different startups just because we were an early tech company so we would honestly we constantly use stuff right like figma and notion and slack all of these kind of things because we needed to solve problems right and so i hope to have like a really good kind of insight into one picking the right people because i can see oh they're going to solve this problem because as someone who needs this problem solved like i'm waiting with my credit

card here right and if i don't have that inclination i'm not going to invest it's like i'm either going to be a customer and an investor or neither right sort of no conflict no interest uh so that's i think a big one on the b2b side i think on the b2c side i think people really like i saw this at pinterest i really believe in clubhouse i think it's gonna work uh and and the reason is like you get a sense of like the the way that the sort of behavior pattern of someone who uses this product and the fact that they want all of their friends on it right now and not only do they want that but they're actually gonna go do it right like there are all these decks and all these things i get that are like oh we have these metrics and this and that but like it's just

clear that like they don't really have like that profound like i need to get my friend on this platform and like i think people don't realize how hard that is in in the sense that like when they see it in a little you know a couple instances of that they put it in their deck and they put it like a testimony on there they think that's what it is but really it's like literally it's like coronavirus like everyone that gets it gives it to somebody else kind of thing right like that's virality virus right like is and so like pinterest i saw that with 17 000 users doing 60 million page views a month like just the engagement was insane i saw that at instagram when they launched you know i see that with clubhouse now where it's like everyone that joins is like i need i know

immediately who to bring on next and i i think nothing reaches scale without that especially on the consumer side right because otherwise you're spending money to grow right and so you're just not going to get to billions of people without you know 100 million people telling you know 900 million people and the 10 million telling 100 the 90 million and then the 1 million telling the 9 million you know etc etc etc right um and so i think i hope to have like pretty good intuition both on the consumer side and on the b2b side um and i can also help them right because as gumroad i can literally pay for the service integrate them and say look this is not where it needs to be like if i wasn't like i'm going to cancel i'm not going to pay for this um i think

that's good like i really believe in notion i think notion will be a you know 20 billion dollar company someday because it's so essential to government that's it like i have no idea anything about the company but like the one more thing like i don't think people understand like if i use a product like let's say it's the government ceo i find a product online because i have a problem i google for it i go to their home page i read their thing i sign up i integrate it like which requires writing some code, like putting that into our sort of security process, getting that deployed, making sure it works, you know, getting all that code peer reviewed before that and then paying for it, right. And getting value out of it enough that I'm continuing to pay for

it. That is an insanely hard thing to do. And which means it's an insanely high signal. Like every time that happens, I'm going to email the company and be like, Hey, can I put 250K into this company? Right. Because it's so rare. And it's also so indicative because it's so rare, the companies that get there it means you you basically solve the problem so well and the problem was so was so it needed to be solved so badly that i just went through that whole funnel right uh without talking to a single human being which i think is like an incredibly a good signal for for a company if you can do that right like i i should have when i started using stripe and like i accepted my first payment on stripe i should have been like can i please give you

ten thousand dollars because I didn't realize at that time like how how significant it was because as a user that's all I was doing because obviously if I didn't use the service I didn't use the service so every service I used I had to go through that flow to kind of do it but like I used Twilio I used Stripe I used SendGrid like these you know at the time these were all worth you know low hundreds of millions if that in valuation right um and so I'm hopeful that like just being in the game is going to give you insights like when i when you know when i meet with with uh with certain people like you know they're like it was obvious like we had the internal numbers we were in the in the thing like pinterest was obvious and i just think vc is when

you operate at this like distant level you just don't know you're like looking at different things you're looking at like how beautiful the home page is or like how awesome the team is or like the name and the domain and like these other signals like their twitter follower account and like the quality of the content like it's like a it's like a peer-reviewed it's like an academic view of it right it's like people being like oh this isn't interesting because donald trump isn't like a you know a career politician it has this and doesn't do this so obviously he's not gonna win but that's like the wrong view because the right view is what does the market want the market doesn't give a crap about any of this other stuff like you can have typos all over the home page

you could have a thing that's laggy it doesn't work in internet explorer all these things that developers might be up on you about but it's like well people are paying for it you know people people need it badly right like only fans is like a terrible product but it's growing like crazy it will probably be the largest company in this whole space uh because there's a use there's a need for that kind of thing especially right now with covid and people need to make money and like it's not that great of a product and guess what doesn't even need to be they will probably be you know processing hundreds of millions billions of dollars a year pretty soon uh and that's i think the takeaway from that blog post right there was that line that went viral which is it doesn't

matter how amazing your team is or how fast you ship features the market you're in is going to determine most of your growth which i still believe and i think it really resonated because there are all these people who built these phenomenal products and it was like not enough and then there are all these people who honestly build terrible products and twitter is a great example of this right like twitter has succeeded despite itself in my opinion like i feel like they made so many mistakes so many blunders the fail whale they were down all the time they still don't have like certain functionality that people expect uh but the truth is the market needs it's just so valuable to people that you know it's gonna succeed it's gonna succeed in

despite of all of its failings and then you have other i know plenty of companies that are phenomenal teams phenomenal products like just beautiful and then no one uses them right uh because the thing like the market didn't care and and so i think it's just like really being diligent about like does the market really want this problem solved and the answer is often like no the market works right this is kind of a lindy thing it's working everyone's living like coronavirus has also not like stopped people from doing what they like to do it's people are just going to do what they do and so they're pretty happy with what's what the current state of the world is right they're like they're living in it they're not maybe looking all day long for like

new software to use right and so so i i think people underestimate like how hard it is to reach product market fit and then also how how once you reach it literally like nothing else really matters like at that point you're just scaling right so this gets at this question of like community development versus product development right and i think that there's a bare bones like set of quality that you have to have on the product side like the product has to quote work it might not then that'd be perfect but it's got to work and be functional um but twitter's you know one example there's many others of like part of twitter's magic is the product and how it works but then there's the community side and it's the people who are there and the content they're

sharing and kind of all of the non-product features to it. How do you think about that balance, especially in the earliest stages of a business? And just kind of when do you optimize for the product building versus more of like the community or the non-product type features that end up pulling people in and holding them there and making it valuable? Yeah. I mean, I think that's super essential, especially on the B2C side, because the truth is you can send someone a message on slack on twitter on whatsapp on facebook on facebook messenger post on their wall like there's there's like hundreds of ways if i wanted to send you a message email you uh etc but each one has a different connotation right like it has a different meaning it has

like a different place in our society and our etiquette and so i think that's why consumers so difficult is because people build the products their focus uses like the y combinator make something people want and everyone obsesses about the something like we got to make something awesome but it's like the people right that's super key and and and really figuring out i think who you're building for who's going to benefit the most from this right like who who's really has like the deep deep pain like who's going to use this first because they need it solved so badly and then the rest of the world will sort of slowly catch up over time uh and figuring out like the demographics of that right and and and a community i think simply is just a group of people

that have something in common right so if you find out what that group of people is they will have something in common they will be a community by default right building for everybody is just not something anyone does because just not you know less than half the world speaks any language right so you're already starting with like a max of like a billion two billion people or whatever when you build the most broad platform ever like coke might have four billion customers or something right ever and nobody else does right no tech tech company does um so i think it's it's i was talking to brad actually from first round about this he's like so many startups they don't even know who their customer is they still like they know they've solved the problem and then

it's like okay who has this problem and then it's just like really difficult to even stripe in the early days it's like people are like oh this is for developers right but like uber and airbnb they're not going to use stripe like they're going to use off net or like data you know first data or like one of these core things and like square right square was like we're for farmers markets and like you know like you just no one knows like you think you know the right people but you just you know you don't really it takes a long time to really figure i'm shopify right they were a public company at a billion dollars and it's like oh this is for snowboards and like you know like selling this kind of stuff and then like you know tens of millions hundreds of

millions in GMB businesses are now on Shopify and it does I mean Shopify could probably power Macy's at this point right probably will in like five years uh and so I think I think people like sort of don't really have a clear view of of who the right customer is uh and I think Pinterest we did that really well with like sort of midwestern moms and things like that uh you know Ben was really savvy about figuring that out I think Clubhouse has done a really good job of like kind of sort of like built it yeah it sucks if you're not part of it but like they're really just careful about growing the community over time because i do think it matters i do think people think oh you can just solve the problem and it's great but it's like no you need to know twitter

needed to know it's for this group of people in the early days some stacking snow is for this group of people in the early days um and and it's also like a an overhead problem too right because if you don't get the right people even though they could use it you don't have to train all these new people they use it very differently they're affecting the norms this way um there's like a cultural inertia that builds up and you want to make sure that that is going in the right direction before you onboard all these people otherwise it's gonna they're gonna shift it into this other thing that you really don't want right like patreon for example they see only fans they see the crazy growth and they've made a conscious decision saying we don't want to go that route

we don't you know we that's not what we want and patreon is big enough that they can kind of do that but if you know patreon just got started and it just became the default for this kind of thing like they wouldn't be able to stop it right if that makes sense like there's sort of like the the parasite becomes the host kind of thing right like you want to maintain that um but yeah that's kind of how i think about it i do think like to your point there's this interesting shift you can now do that wasn't really possible five to ten years ago which is you can actually build an audience before you have a product and that's super fascinating because you can actually really figure out who who cares about you who are your super fans what problems do they have uh you know

and then they already know like yeah i'm waiting for him to build it like this is the right person to build the thing we're all waiting for them to build the thing it's even like this venture firm i'm doing right like it kind of came out of nowhere but i think it's because i built a community of followers and founders and other investors and designers and engineers and writers who a lot of them followed me because of this journey that i went through they want to kind of go through a similar thing and like a big part of that journey might be for some people certainly not all or even most but for them some of them it's like I need some money to get started and so now I can go do that I can kind of if you know I think my fund might be a great example of like a community first

kind of business or product right like I didn't go out I wasn't like I need to be a VC I want to be a VC right it was like oh there are all these people that I want to give money to and there are all these people who want to give money to people that but they don't know they don't you can't like they don't know who these people are and i can go connect that i can kind of i'm like a one-man marketplace effectively right uh and so yeah no i think it's a and and really that's a lot of consumer products like they're really marketplaces right they're like creators and consumers and you're trying to kind of connect them to to each other i want to switch gears and talk a little bit about crypto and bitcoin what are your thoughts there you told a uh amazing story earlier of a

random person at airbnb named brian who ended up being the founder of coinbase uh reaching out to you but uh what's kind of been your journey with bitcoin and crypto and kind of where do you sit with it now yeah i bought a bunch not that early unfortunately but i have i have some uh i think i i really do believe that crypto will change everything uh i just think it's like who knows when right it's kind of like that kind of tinkering thing like clearly it's at least to me it seems whenever you have that many smart people interested in something it's really an inevitability it's like a bunch of people thinking about food science or any of these things like it's going to happen like clearly there's something here climate change etc like there's there's there's

like something with within smart people that's kind of driving them to this area uh and i just don't know when yeah i mean i i think the difficulty with with something like crypto is it's so fundamental like you have you kind of have to build rebuild everything in crypto in this new model because you kind of it's like when gumroad went from like the you know the vc back to the non i had to go down to zero you're kind of you have to kind of like build like new nation states and new cities and new sort of economic infrastructure and new you know regulations and new everything effectively to kind of a new police force that you know like all of these things have to be thought of in a very different way and I think it's inevitable like I really

believe like anything that looks the same pre-internet and post-internet is just is sort is not going to look the same for for much longer right like the internet is software is eating the world it's sort of like going to change everything that it touches eventually because it's just so fundamental as an innovation uh as an invention and and i mean like i can look outside my window and like everything looks roughly the same as it looked 40 years ago you know there's like roads and there's fences and there's cars with four wheels and there's a pool and there's you know buildings or whatever and like telephone poles right and like that's not that's not going to be the view outside my window 50 years from now right there's going to be like drones flying

around and like weird looking car things and like i don't know who knows you know like i'm sure all of this a lot of this stuff is just going to go away like there might not be roads we might just who knows i don't know uh but my guess is that all the all of this stuff is going to change and in a world like going back to that liquidity thing i just think increased liquidity is so so important and i think what crypto does is it just massively increases liquidity because it allows everyone to become a financial player and sort of to transact directly all the time uh and i yeah i think you know people always talk about like taxes like taxationist theft or whatever right and like but if you think about it like a huge amount of america's is sort of

credit card based and every credit card transaction has roughly two to three percent uh tacked onto it right and so that's a two to three percent tax that like effectively all of us are paying every time we use postmates or uber which by the way like is a much larger percentage of our economy than it's ever been uh and so i just think like clearly that's a middleman that will go away eventually like it's just an inevitability to me that that will you know that will go away i mean someone who runs gumroad i mean i see it i'm like yeah obviously there's going to be a future where you know you can go to any website and pay the person directly like you wouldn't even pay gumroad right you would pay the creator directly and then gumroad because we're facilitating

it you know there'd be a sort of a smart contract or something that would allow us to get this you know this kind of thing uh some percent or whatever it's just it's just inevitable like i i think in the future gumroad won't even need to exist you know because like it will become so liquid that even the middleman that we disinmediated we will be a middleman that gets disinmediated like that's inevitable to me uh and that's great that's a good thing i'm not attached i don't need to be like if we can solve the problem to a point where we don't need to exist like that's awesome right like that would be great for me and help me help me understand how you guys have thought about that uh in terms of like take bitcoin for example yeah accept bitcoin don't

accept bitcoin haven't tried it before just take dollars like how is that then yeah we just currently just stick to dollars i think the the biggest issue we have with with supporting bitcoin is everyone that wants bitcoin wants to get paid in bitcoin that's the issue that we have is like we get creators all day long that are like hey we want crypto and i'm like all you got to do is find me five people that want to pay in bitcoin and i'll build it because the truth is everyone wants it no one wants to give it right uh and so i think that's sort of like the problem with bitcoin is it is so interesting and it is so it's sort of an investment vehicle right uh for for for folks that like it doesn't have it's not like usd or something right and i know there's sort of like

usd coins and stuff like that that i think are interesting too but i think that that's sort of like the fundamental issue is that people people there's this like supply demand problem where everyone wants it no one wants to give it to anybody else no one wants to be the person who bought a pizza for you know one bitcoin or 50 bitcoin whatever it was uh and so i think there's that sort of risk aversion that everyone is kind of very fearful of so i mean it might not even be bitcoin it might be like a new fork or something like that to kind of you know solve some of these other problems but i do i still i still believe it's inevitable right and that might require like the browsers that we use to be different and like you know like the there but it seems yeah what i

tell people is like when my mom wants to pay with bitcoin i'm sold right like the minute again like the market wants what it wants and the minute the market wants to pay with bitcoin like we'll support it you know the next day and my guess is we'll support apple pay and other things that we'll just we won't even have to think about it eventually that like it just is handled by stripe or apple or whatever and it's just a part of the nature of doing business uh and i'm just really fascinated like i actually think one of the things this is like kind of a tangent but one of the things i'm really interested in with self-driving cars is is the sort of uh the nexus problem right which is basically if you start if everyone has self-driving cars my my guess is people are going

to be a lot more mobile and going to move around a lot more like for example if you're an nba player you basically have to file taxes in like 50 states or whatever right because you're you're sort of making revenue and doing your job in all these different places and there's people that just like do this for nba players right and every sort of athlete uh and and eventually if it's something driving cars in this sort of like other future uh this new future like that's going to happen that that's going to happen to a lot more people and you're going to have to start collecting taxes like right now for example you can get a bunch of stock in california working california And then you can like move to Florida and then the company IPOs and you,

you pay no taxes to Florida, right. Or whatever. And so like that's an inefficiency in the market that will eventually get resolved. And my guess is that like one of the accelerants to that is going to be all these people moving around all the time. And a lot of these transactions are going to have to be kind of like at point of sale, right. Where it's like, where were you at the time? And the way that, you know, that sort of tax and all these things are collected,

that's all visible on that transaction. It's not per transaction amount. it's not like every once a year you pay your taxes kind of thing uh i believe at some point that will be the future we live in uh and the really interesting thing about that is then you can unbundle the government right because you can actually see like oh this is it's not just like all this money going into like this account and then the fed kind of decides what they want to do with it they it's really like oh you paid for coffee at this place this much goes to the city this much goes to the county this much goes to the you know to the fed or not even the fed directly but it goes directly into you know this the military or like you know uh department of

homeland security or whatever it is and then people should be able to see that right because i think people don't have a problem paying taxes it's just like when you walk down the road and you see a bunch of construction you have no idea what the hell's going on it's like that opaqueness that i think irritates people and people were like oh this is cool this is like what the government like what i get for this this money great right uh i think it would be great but but i think yeah that whole crypto is it feels to me like a fundamental importance like i was reading this book about uh the genome and like you know like the sort of bodies are bodies are kind of decentralized they feel centralized but like they're sort of this decentralized like bottoms

up approach to solving problems that has taken billions of years right and and they're very efficient like decentralized bottoms up sort of organisms or or companies or whatever are much are much better at solving problems because they're sort of anti-fragile like the head can get cut off and these other things can keep going and and you don't have this problem where you have someone who sort of builds power over time and sort of like it's trying you know it's sort of in service of themselves and the whole organism etc right um and so i just really believe that humanity in the future if we want to get to whatever like the paragon of civilization is it will be decentralized right it's like the fundamental problem with communism is you have

to have someone who enforces equality right like how do you that's a kind of oxymoronic and the only way you can really do that is by literally never giving anyone that much power it has to just be built into the model that like no one can do certain things in my opinion uh and i'm sure they're experts and i'm getting a lot of this wrong and i don't really know what i'm talking about but like that idea is really interesting to me that sort of decentralized bottoms up sort of and and the internet's gonna allow for that right because like before you kind of needed the bundling because you needed the economies of scale to kind of solve certain problems at certain scale but if you can really increase the liquidity and the transparency and everyone can

see everything uh i just think just like you're gonna have a startup that solves a problem with five people or one person instead of 100 or 200 right because you don't have to give dvds and deal with shipping fulfillment and like all of these things are just handled by other people and those people make more money than they would if they were working at your own company that's kind of like firm outside and center firm thing uh it's just going to be better it's just going to lead to a much more efficient sort of system uh systems of government governance you know everyone's going to be safer like i just think ultimately like a decentralized something is going to be better than the decentralized version of it right just like the internet is better than

like your local library or something like that right like the you're getting billions of people to curate for you instead of like three, right? I think that you're more right than wrong, right? I mean, all the details are where the nuance is, but for sure, I think that you're more right than wrong. Before I get into the rapid fire set of questions, somebody asked, what is some popular advice that you hear often that you think is wrong or it sucks? Like what is the advice that gets shared all the time and you think people maybe shouldn't actually listen to it or it's misleading yeah i i think there's it's ironic because i feel like i helped contribute to this uh but there's this like make a living doing what you love right there's that's a creator economy

i think gumroad we kind of invented the term make a living doing what you love not that that really means anything but uh there's i think there's this idea that like you should only pursue the things that you love and are passionate about uh you know like you've also is like you know find the thing that you that you do endlessly effortlessly or whatever and i i think there are things like that for some people but there are a lot of things that i think i'm really good at and i love doing but it's like the it's a cause and effect switch it's like i am really good at doing it which is why i love doing it but there was a period of time where i wasn't good at it and i kind of pushed through and it became good at it and then started like i love

the idea of it. And I knew that if I got good enough at it, I would also, I would just love it entirely. Does that make sense? Right? Like there's just like growth is uncomfortable, right? Like your, your body doesn't like to expend energy. It doesn't need to expend, right? Sort of like survival of the fittest or whatever, right? Like it's sort of a defense mechanism and, you know, just in case. And, uh, and I think the same thing with a lot of these, like, you don't need to learn how to paint. You don't need to learn these skills to survive. And so I think it does hurt and so I think there's like sometimes this rhetoric especially because the successful people often are the ones that say it all the time right but are like no you should only do what you love

and only work this much and like you should prioritize your family and your friends and ultimately there is like a sort of a two marshmallow kind of thing right like ultimately you do probably want to work a little bit harder than most people do if you want to get to some point and you might not like doing a lot of the things right like I think being a solo founder was like the best thing ever because I had to learn everything like starting this fund yeah there's like a lot of weird stuff that I don't care about but like I learned those things and those things inherently because they're annoying to learn like very few people learn them and so like I can talk about this kind of fun stuff and like teach people and gain an audience from doing

that and founders like me for doing that and I might they might want to let me onto their you know cap table because of that and so I just think it's like it's sort of beneficial um but yeah there's just there's there's just like this rhetoric I think that like you need to love all the bits of it like writing I don't know dude like writing sucks sometimes man like I'll stare at this thing be like I don't want to do this I don't like doing it but but but then I post something and it does really well and everyone loves it and it feels amazing and the worry I have is that people think that that is like that that that was like a labor like just love it was just like oh I love you know it's like no it's like brutal like working through this thing

outlining it re-editing it like they don't see the seven eight nine drafts of like oh this didn't work it wasn't effortless at all actually for me right like it was brutally difficult and it got better and I could see and I had the confidence because I'd done it before that I would get through it eventually uh but yeah I just think there's that kind of like that advice that people share because it sounds good but it's like no sometimes you just you know you just need to spend a couple years you know being bad I think that's fair uh two questions and then you get to ask me one to wrap up the first is what is the most important book that you've ever read I really liked uh how to win friends and influence people which has a terrible title

but I love that book maybe it's just because I was not a good person like before I read that book or something some people are like this is all obvious I was like damn my bad uh but I really like that book I think it really helped me think about like other people in my conversations you know like you it's so easy to like you like you have a different person it's like when you hear yourself talk right like you realize like oh my gosh like I'm a very different person like I'm inverted like there are all these things about the way other people sort of like interface with me that i've never thought about and that book really like helped me think about like oh wow like i'm actually i'm just like an npc in somebody else's story right like they don't think about me like

like i know all these things going around in my head and sort of my environment and it just really made me aware that like i i really don't matter to anybody else like i i'm like a little person that gives them a quest or gives them some money or whatever but they're they're they're they care about them right and maybe a couple other people but their family or something like that so that book I think really helped me kind of like sort of like get humble I guess about it and be like no my job is to like provide value and then like go on my way and I don't have to like pretend that it's some grand relationship that we have you know it's been really freeing it's one of the best books in the world and most popular for a reason for sure uh aliens believer or non-believer

I am definitely a believer why yeah I you'd have to be so cocky to think that that there's only one of one planet and we're the we got lucky you know it's like it's like when you win the lottery or something you know it's just like no like there's probably my guess is that there are there are a lot of them uh they might be really far away uh but man i yeah i just want to be hopeful man like you know like i imagine that like thinking about the sort of the crazy future right like what it you know like there was a time where like we were discovering new human beings on earth like how crazy would that be to like just be like holy crap there's like a whole group of people here that are like us that we like but in other ways

are totally not and speak a different language and all these things and like my guess is how cool would it be to have that happen on an interstellar level right like at some point in the future to like and that would be freaking scary i mean i can't imagine like how nerve-wracking that would be for both you know like if we get there but like i don't know i'm hopeful for that happening at some point in the future it'd be amazing i i feel like we need to start thinking about is it uh are we going to discover the aliens or the aliens going to discover us you get you could ask me one question to finish up what you got for me yeah i mean how do you think about i mean you do so many different types of content which is awesome like how do you like

have you thought about like what's next in terms of like the type type of content and like how you yeah like how do you think about exploring you know new mediums things like that especially with covid and like yeah i think that there's like major inflection points so like audio was one right there's kind of this resurgence on video you see spotify adding like video podcasts which is really just a video uh youtube's kind of you know popular you get with tiktoks and things like that so the major ones i think are what people really focus on because they're the easy ones to see but the micro um kind of evolutions if you will in content i think are much more interesting And actually, that's where a lot of the value gets captured. So if you think about in written form right now, like you've got Eric Stromberg, doing these like screenshot essays, right? And then Patrick O'Shaughnessy with invest like the best, like they've now incorporated it. And they're calling on business cards, right? But there's just this idea of like, hey, wait a second, there's something between a tweet and like a blog post. And it literally fits all on the screen of an iPhone. Right? And like, that's, that's a pretty interesting, like nuance thing.

If you look at, you know, audio, you could say all of the podcasts and make that whole rise. Well, Clubhouse is kind of like a micro kind of live drop in version of really kind of a podcast and, you know, conference call kind of mixed together. And so as you kind of go through the micro pieces of these types of content, it just feels like that's where a lot of the value gets captured. What I think is much harder to understand is when it relates to content, like where are the platforms that are going to accrue a lot of the value versus kind of the non-venture backable type just content providers, right? So the screenshot essays, not really a venture backable type business, but if there was a platform that then aggregated them all and created a marketplace and a follow graph and you know what I mean? Like, okay, like there's a, there's something else there. And so I think that it's, you got to see the micro evolution happen in a certain type of

media format and then really look for like the platform type companies. But at the end of the day, like I think you and I see very kind of eye to eye on, I call them personal media companies where people just build these massive audiences maybe multi-platform and may not be uh and then they're going to go and they're going to create products right and whether that's a physical product like you see you've had a youtube star selling merchandise or you see people actually creating software or you see the kim kardashians and kylie jenner's creating makeup like they're going to sell products through that audience and and as they do that i think you're going to see really really valuable companies get built over time

yeah how do you think about gpt3 to throw another question so i'm not technical right and so in kind of a at a high level like it looks like magic as you kind of unpack more and more of kind of the use cases and you see everything from the you know learn from anyone or the figma design you know all these kind of applications we've all seen flying around on twitter um it feels like we're teetering on the edge of being able to use this stuff in production for real products built on top of it but we maybe we're not quite there yet like we're really really damn close and i think that's why everyone's kind of like leaning in and excited about it um the other piece of it uh to me that's really interesting is

can you basically start to use it to uh to put it in people's hands so they can start using it for things you and i can't imagine right so already like i've seen five or six demos online or prototypes where I'm like I would have never thought of that right and so it's like you know you kind of talked about it earlier it's just like we don't know what it becomes and so just like get it in as many different types of people's hands as possible and like just let them like go to work right and then you and I'll turn around be like whoa did you see this or did you see that and we'll be like damn that was pretty cool and that's how I think real innovation and value gets uh gets to create it awesome yeah i agree i have no idea i see it i'm like this is crazy i would love to

integrate into gumroad somehow i don't know what it looks like but yeah it's going to be like obvious you know like a year from now it's like oh of course that's absolutely where where can we send people to find you online learn more about gumroad or uh or the investing um side yeah i mean follow me on twitter that's the best place at shl i also have a gumroad newsletter gumroad.com where i kind of write once a month about just like all the random stuff gumroad the fun other things in my life um yeah those are sort of the two the two best places to find me awesome man listen we went almost two hours you're a legend uh we are definitely gonna have to do this again thank you so much for your time yeah thanks for doing it man