This Week in Startups - Andrew Wilkinson on bringing the Buffett approach to startups, WeCommerce, Slack & more | E1174

Episode Date: February 17, 2021

Check out Tiny: https://www.tinycapital.com FOLLOW Andrew: https://twitter.com/awilkinson FOLLOW Jason: https://linktr.ee/calacanis

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Welcome to another episode of This Week in Startups today on the program. Andrew Wilkinson is with us. He is the founder of MetaLab, which is owned by Tiny. And he has used the profits for Metal Lab to make Tiny into a really interesting, I guess, holding company of a bunch of other businesses that many of us know, like Dribble or We Work remotely. So welcome to the program, Andrew Wilkinson. Thanks, Jason.

It's great to be here. Am I correct in understanding that what you've built was since you've been doing Meta Lab in 2006, you started with an agency that helped build beautiful products, famously Uber-R-R-R-R-Eats, Google, and Slack work. I don't know what you did for Google, but I remember the Slack work and Uber-Eats work. And that agency did so well, you had profits that let you start tiny, which I guess some people refer to as tiny capital, but you buy businesses with the profits from your consulting business.

Is that correct? Yeah, that's right. I started my business kind of by accident. In 2007, I started freelancing, and I realized nobody wanted to hire some 19-year-old. And so I came up with the name Meta Lab, started calling startups. And within a couple months, I was making way more money than I would at a normal job. And so I just never stopped. And we ended up going on to work with a lot of really successful startups like Coinbase and Slack.

and got Fortune 500 clients, et cetera. And in about 2010, I started taking my profits and diversifying. So I built some SaaS software businesses. I partnered with Shopify about 10 years ago and built a bunch of businesses there. And in 2013, I realized, you know, our cash flows were too big. We couldn't just keep starting startups. So we started buying businesses. And we've been doing it ever since.

So tell me about the work on Slack. I know if you go to MetaLab.com slash project slash Slack, you can see the work there. They approached you to do the design or the interaction. I know there was a little bit of a back and forth there on Twitter recently. I guess when things are successful, a lot of people like to take credit for it or maybe diminish other people's credit for it. But what was the work you actually did there? How did you meet Stewart and tell us about that project? Because Slack was kind of known for a beautiful design and making IRC beautiful.

So Stewart's actually from my hometown, Victoria, Canada. And we were kind of tangentially aware of each other. And he had been off building glitch, raised a ton of money from Andresen, a bunch of other people. And the startup just failed. And so he had to lay a ton of people off. And he was trying to figure out what to do with it. I think he had a couple million bucks in the bank. And he emailed me and he said, hey, we've got this internal tool that we've built,

which is like an RAC chat client. We're thinking about spinning it up. into a product we're going to call Slack. Would you guys help us design the product? And so we ended up getting deeply involved in kind of the original formation of the design and kind of the logo, the marketing site, the web app, the mobile app. And we designed the first version of it. And then we passed it to their team.

And their team did an incredible job turning it into the, you know, $27 billion business that it is today. And Johnny Rogers, I guess, who was, product and engineering at Slack came at you when you were sort of taking a victory lap and talking about your

history with Stuart and he said Meta Labs did zero development work on Slack, certainly not mobile and web apps, the works. We contacted you for branding

and visual design pass. Meta Labs was not our first beta user. The UI skin and early branding, the team did were great and there have been

durable over time. Purple was a great car. but don't overstate your claim in order to mythologize your own role in the creation of this company. Too many other people have worked too hard. Your reaction to his reaction. Well, I think it goes back to on Twitter, you say anything and you're going to get the least charitable interpretation. So I tweeted, I thought I was kind of eating humble pie. I said, hey, I missed this. Stuart offered me equity. And I said, oh, this has already been done. Jason and David had already built campfire. There was hip chat. I was kind of thinking this is

going to have a hard path ahead of it. And that was my post, but in the post I wrote, we did, we did quote unquote, the mobile app. They came to us for design. We did the mobile app and web app. And I just typoed. I wasn't trying to ever imply that we did the development. We didn't do the development back then. We didn't do dev work. And so he latched on to that, thought I was taking credit for building the entire thing. And then everyone piled on. I didn't see it for six hours. and by the time I saw it, it had got a life of its own. So we don't take any credit for what happened from the moment we passed it to Slack, but for three, four months, I mean, we designed the original logo,

entire color palette, all the UX, we have all the PSDs to back it up. So it was just crappy. I get it. People are kind of protective of their work and they think someone else is taking credit, so they pile on. But it was kind of crappy. It felt bad. And they paid you a quarter million dollars.

or something to do a design project like this? What is this kind of thing? I think we got paid 80 grand. I don't even think we made a profit on the projects. We worked on it so much. So you get 80 grand. They offered for you to take that in equity or some portion of that in equity. I think at one point, Stuart, just said,

hey, what about doing some of this for equity? And I said, oh, we only do cash. So if you had done, let's just say, half an equity of the 40K, It would have been 40K. I don't even want to do the math because it'll make me cry. All right, let's do it then. I mean, it would have been like what percent of would it have been. The valuation would have been maybe 20 or 30 million bucks if it was the same.

So it would have been 25 basis points or something of the company. And so one percent of a $27 billion company is $270 million. A quarter of that would have been $50 million, $75 million. So it would have been about $75 million if you taken half in cash. Yeah. And so do you take equity now? We do sometimes. I mean, it's hard.

It's hard when you're running an agency up in Canada and you don't have investors. We couldn't get investors if we wanted them in 2007. We couldn't get banks to look at us. So at the end of the day, we lived and died on our P&L. We had to build a profitable business. So it was a decision. I mean, we worked with Pinterest early on. We worked with Shopify early on, Tumblr, all sorts of Coinbase,

all sorts of down billion dollar businesses. But we ended up deciding that we would go and compound our own capital and invested in our own businesses. And it's worked out really well. So no regrets. But yeah, there's certainly a big anti-portfolio. Tell me about this process of buying companies. How do you go about buying a company?

What was the first company you bought? And then how do you go about managing this collection of 30 assets? Well, it was really born out of my own. experience dealing with private equity firms. So I'm sure you know, but we would get these reachouts from some private equity firm. It would be, you know, a kid who's the summer intern. We wouldn't know that. We would exchange, you know, all of our financials. That would take two months. And then it would kind of wind through this really annoying, long process. And they would always tell us one thing in the beginning, like, hey, we'll, we'll buy your business for X hundred million dollars. And then

by the end, they'd always try to put a bolt in your head and change all the terms. And it would always take six or eight months, tons of meetings, tons of flying around. And we just felt it was so frustrating to have to do all that. And so, you know, we kind of said, like, well, what would happen if we just went out and became the acquire that we wanted to be? And we went to founders and we said, look, we're going to buy your business. We're going to tell you what we'll pay within seven days. We're not going to change that price.

We're going to close the deal on 30. And on day 31, when we're going to buy your business. own your company, your employees are going to wake up and nothing will have changed and you can leave if you want. So it was all the things we would have wanted as founders. We wanted someone to take care of our employees and leave our company alone, but we want to take some chips off the table. So we've been doing that now for about seven years. We own about 30 businesses, maybe a little more than that. I think we have about 700 employees across them. And it's really resonated with founders and worked out well for both parties. So it's been really fun. How do you

How do you set up the financing from that? I mean, buying something that's got a million dollars, two million dollars in revenue in today's market costs tens of millions. So how do you finance these things? Well, I mean, we've had a profitable business for 15 years and we banked our profits. We started more businesses. We sold a few back in the early days. And so everything that we've done up until pretty recently has been with our own money. And then about two years ago, for the first time, we took some outside capital. We partnered with Bill Ackman, Howard Marks, Shane from Farnham Street, Ryan Graves from Uber and a few other folks. And we went out, we started buying businesses in the Shopify ecosystem. That business, we just took public. It's got about a billion dollar market

cap up here in Canada. It's called Wee Commerce. So that's been really cool. And then we recently also raised a $150 million fund for Tiny. So that's the first time in 15 years we've had any outside capital at all. And up until then, it's been, you know, me and my business partner, Chris, taking money out of our bank accounts and taking out a little bit of debt here and there. The new year is here. It's 2021 and you got a fresh start for your business. You're probably thinking, my God, we had a great 2020. We're profitable. We got a little money in the bank. It's time to expand. It's time to build out the team. Well, we're doing that here at launch. This week in startups, doing so well, all in pockets, doing so well. We need a second.

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your mobile phone, no matter where you are. So go to LinkedIn.com slash twist and you can post your first job for free. Nothing to lose. LinkedIn.com slash twist to get a free job posting. Once again, LinkedIn.com slash twist to get a free job posting right now. Terms and conditions do apply because they're giving you that free job posting. Okay, let's get back to this amazing episode. So tell me about this we commerce business. This is a collection of assets that you bought and then took public. How did that all go down? And what do you actually do? Yeah, it's kind of a funny story. I met Harley from Shopify and Toby as well about 10 years ago at a conference. And at the time, Shopify was pretty small.

I don't even think they'd raise their Series A yet, maybe 15 employees. And they had a problem, which was, unless you were a developer, it was really hard to make your site look nice. And so they built a templating language, and they basically wanted us to come in and be their first partner and bring great design to the platform. So with one click, anyone could install a theme and make their Shopify site look beautiful. And so we ended up starting a business called Pixel Union to do that. We started a

whole bunch of, we built a whole bunch of themes. And it was a great success. And before we knew it, you know, that business was doing hundreds of thousands of dollars of revenue a month. And in 2013, I had, I, you know, was still running the agency. I had a whole bunch of SaaS businesses and other stuff I was running. And honestly, I was just exhausted. And so I decided to sell the business for the first time. ever. I'd never sold a business before. And so I sold, sold that business. And when the money hit my bank account, I was like, okay, I need to learn investing and stocks and all this conservative stuff. And so I picked up a book about Warren Buffett. And when I read about Buffett, I was like, holy crap, this is amazing and, you know, got really into investing. And so I actually stayed on the

board of the business until 2019. And I saw an opportunity to buy back the business from the private equity firm that bought it for me. This is pixel union. This is pixel union. And so we, we bought it back. This is the business we did with Bill Ackman and Howard Marks and all those people. And we bought it back and we formed Wecommerce.

And the idea was basically just to use our playbook that we use a tiny of just buying the best businesses and various ecosystems in a very founder friendly way. And we wanted to make a long term bet on Shopify. And so we ended up raising 60 million bucks and taking the business public. And now we're out there just looking to buy more incredible businesses in Shopify in the Shopify ecosystem. And so the whole business just is dependent on Shopify. So you rise and fall with Shopify's incredible ascension right now. But doesn't that create a massive liability or, you know, risk factor?

Like what if Shopify, I don't know, Amazon comes into their business or whoever comes into their business and makes it more difficult for them? what do you do? Well, it's very much a bet on the future of e-commerce and Shopify. And I think that e-commerce is such a massive market and Shopify is such a dominant player within it that that's a whale. I'm very comfortable being a barnacle on. And I mean, you can make the same argument for all sorts of businesses that are in the Salesforce ecosystem or the Microsoft ecosystem. At the end of the day, you're always tied to somebody, Facebook, Apple, Amazon, whoever it is. And we have a lot of trust and a lot of, a lot of experience working with Toby and Harley, so we feel very comfortable being a part of that ecosystem. We recently had the pitch.com founder on the pod. Tell me about that business and what

you did there. Yeah, Christian's amazing. So Christian and I were actually competitors. So one of my first businesses I started was a business called Flow, which is a task management software product for teams. And Christian was my mortal enemy. We started at the same time. He had Wonderlist. And one day I was in San Francisco and he happened to be there too. And so we decided to meet up for a coffee. And I walked in expecting to stare him down and kind of glared him. And we just hit it off. He was such a nice guy.

And we've been friends ever since. And I don't know if your audience knows, but he sold the business to Microsoft. And when he left Microsoft, he called me up and he said, hey, I've got a couple product ideas. I'd love for you to help me build them. And so we brainstormed, you know, what's wrong with power. PowerPoint and came up with a whole bunch of great ideas for Pitch. And then my agency, Meta Lab helped build, or sorry, helped design the first version of it.

Do that mean you have equity in pitch.com? You get to participate in the upside of that. I do. I do. Do you invest in companies just as a straight angel investor or venture investor? You said this, have this $100 million fund you raised. That $100 million fund is to buy businesses, do you invest in businesses or both? Yeah, it's $150 million.

and it's just to buy businesses. I look at, you know, buying majority of, or control interests and businesses, that's my primary business. Venture is something I do off the side of my desk for fun. You know, I meet somebody interesting, a friend starts a business, you know, I'm kind of interested in an area.

It's a way for me to make a small bet. It's a roulette chip. It's not something that I take very seriously. And Pitch hired you to sort of benchmark there. your designs against the internal team's design, how did that wind up going? Did you win or did the internal team win or did everybody win? I think it was a bit of both. I think the metal ab team pushed them and vice versa. To be honest, I wasn't super involved though in the actual day to day. You know, we have so many businesses now. I can't be involved in individual projects.

Which business is driving the most revenue and the fastest growth right now in this portfolio of 30 companies that obviously includes dribble and we mentioned flow the product management software. We work remotely. You bought from Jason Freed and David Hamar Hansen over 37 signals. I know that business was doing well as well. What business is doing the best right now objectively? Well, I mean, when we started, we just had the agency that was profitable and we slowly started diversifying and up until probably five or six years ago, the agency was still the largest thing. And now what we're seeing is a lot of the other businesses are reaching maturity and we're much more well diversified. And I would say, I mean, Dribble, since we acquired it, we have, I think, 10 or 12x the revenue in, what is it, five years.

So we're incredibly excited about what's happening there. And I mean, there's lots of amazing growth stories within. We work remotely. I think we've 10x that business. What is the footprint of a business like Dribble? Is it $100 million in revenue? What's the ballpark? Tens of millions.

Tens of millions. When you bought it, what was it at? Everybody knows dribble is a place just, you know, three-bees. Single-digit. Single-digit millions. Wow. And so somebody was running dribble as a side hustle or as a business and they just ran out of steam running it? How do you wind up buying something like that?

Well, I think you talk to any founder in gear one and they say, I love my business. I'm in it forever. I'm going to run it until I'm 80. and then you talk to them year five, year six, especially if their business has done well and they've took some chips off the table. Often they kind of start to slow down. Often by year eight, 10,

they're kind of exhausted. They want to do something new. They've got some new ideas. And that's kind of where we come in. So with dribble, for example, founders have been doing it for about eight years. They were a designer and a developer, and they really loved building the product,

but they didn't love doing marketing, HR support. you know, they felt like they couldn't go on vacation and they were just kind of exhausted. And so we basically came to them and we said, look, why don't we buy 80%? You guys keep 20% and we'll fight really hard to make that 20% worth way more than, you know, if you'd own the whole thing. And I think we've been successful in doing that. And then what is the outcome for a business like that?

I mean, the market is incredibly hot right now. Are you thinking about putting more things together and taking them public since our SPACs? And the Canadian market seems to be a little bit easier to go public on. Companies can be smaller. Yeah, it can be small. Is that right? Explain the difference between the two markets. Well, in Canada, you can take a lot, you can take a business public a lot earlier.

The regulatory environment is a little less aggressive. There's what's called a venture exchange here where you don't have to do quite as much regulatory approval and all that kind of stuff. and then you can graduate to be like being like a, you know, big board kind of company. We're considering taking more stuff public. But I mean, to be honest, we just did this RTO in December. It's called a reverse takeover instead of a spack up here.

And we're still evaluating. I mean, it's been an incredible outcome. Financially, the valuation that we've gotten has been amazing. This is for Wee Commerce you're talking about. For We commerce. But, you know, the bet there was, what is the market cap of Wee Commerce?

It's about a billion dollars. Canadian. So weird. When you look these things up on Google and the stock market, so this is the over-the-counter market in Canada. Is that right? The market. Yeah, it's not even really trading in the States yet.

It's only OTC. Got it. So people can make trades, but they're generally like private trades. You wouldn't trade it on Robin Hood or something? You have to use a broker. It's not on Robin Hood yet. I think we will be in some couple months. Got it.

So you can do this over-the-counter thing, get people trading in the stock. but then to be fully liquid on a big market or on like trading platforms, you have to get off the OTC? Is that what happens? Yeah, exactly. So, I mean, with a business like Dribble, dribble doesn't really need capital. It's profitable.

It can keep reinvesting its capital and growth. We can make more acquisitions and stuff. And so in order for us to take it public, we would need to see an opportunity to buy, you know, something really sizable or see a massive growth opportunity. where we need tens of millions of dollars of capital. We just don't, we haven't needed it yet.

I think that if we did. Got like a bad name in Canada for a while. It was like oil companies and drilling and weird stuff, right? Yeah. There's a lot of, there's a lot of crap that goes public this way. Mining, you know, weird junior mining companies or food product companies

with a million dollars of revenue kind of stuff. Do you think that can be cleaned up and do what Chimov did for SPACs, but in Canada? Is that like part of your, vision for this? I think part of the reason we've been rewarded so so well by the market has been that we came in and we've legitimized that in a big way. I mean, there were already sizable companies going public via reverse takeover. But the fact we're bringing investors like Bill

Ackman and Howard Marks and Ryan Graves to the table, I think really bolstered it. And we had a business that was in an extremely hot space, Shopify, e-commerce, SaaS. And we had a a consolidation play. I think people are really excited about it because of that. And what was the revenue footprint there for something like Wee Commerce? I think at the time we took a public, maybe a $20 million run rate. Wow. And so it's obviously doing a little bit better now, I would assume, but 50 times revenue, pretty amazing for a valuation. Yeah. I mean, we try and ignore the valuation, to be honest, like it's kind of a distraction. We're just focused on making good investments and putting one

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How do you find them? Is it now that, or is doing podcasts like this and sort of putting out the shingle, hey, we're buying companies, how are you doing it? Or are you just like, you have a team of researchers who look on the web and find stuff people are talking about on message boards? How do you do it? Yeah, I mean, we focused really on writing and then that kind of evolved into Twitter. and podcast interviews and other ways that people become aware of us.

And you know, you do this for long enough. You do enough good deals. You have enough happy founders where it gets around and people start saying your name. And so it's all just been word of mouth. We probably get about 50 companies reaching out to us a month. And we do maybe a deal every three or four months. There's no rule around that. What you really do something when it's logical.

But yeah, we've been really lucky in that way. How do you evaluate? which company to buy and which one not to? Well, at the end of the day... Because you said you're inspired by Warren Buffett, yeah. So I'm curious, like, what Charlie Munger and Warren Buffett influenced you at all in this regard, because they do like to buy businesses famously, like they own the Seas Candy Company, I think, was one of their first businesses that they still love.

So tell us about how you pick those businesses. Well, we're first and foremost looking for a business that's well designed. you know, I'm a designer. I want a great product. And there's a lot you can do when you have a great product that's organically growing. I'm looking for something that's not dependent on Google or Facebook for all of its revenue that's profitable, where the employees are happy, where there's a good culture. And I have to feel that at the end of the day, they're doing something positive in the world. You know, I don't want to be doing some sketchy affiliate marketing or, you know, something like that. So yeah, I mean, and then it's got to be something we can buy for a fair price.

And, you know, that's something that in this environment is challenging sometimes where founders see these billion dollar valuations, but sometimes reality isn't quite there. So, yeah, we've got to find someone who's willing to sell at a fair price. Yeah, I guess they own fruit of the loom, Doriselle, Dairy Queen, Geico, NetJets, a bunch of different companies. And then I guess they just find great management and get it out of the way. So tell me, after you buy them, what is your process for managing these businesses? Do you try to hire a higher CEO for them?

Do you centralize all the accounting sales back office in one place? Or do they each run independently and have their own finance, their own sales, whatever, accounting? Or is there some common infrastructure? How do you manage them? It's funny you mentioned Berkshire and Buffett. I mean, we literally just copied them precisely. So everything down from,

You know, the way that we do our M&A process to the way that we structure the businesses is almost identical to Berkshire. So when we buy a business, typically the founder, sometimes the founder stays on. I'd say that's more rare. If the founder stays on, we just leave them alone. They keep doing their thing. We say call us if you need us and send us a quarterly report via email and that's it. And otherwise, we're bringing in a CEO.

And that's the hardest part of our job is finding somebody. who will not only be a fit for the business, you know, and has the right experience, but also is kind of going to get the DNA of the business and the culture of the business. Putting in a new CEO is like doing brain surgery and the body can reject the organ frequently, so you have to be very careful. And then from there, we really just leave the businesses to do their thing and be what they are. And each business has its own culture. It's got its own management team.

It's got its own finance, you know, accounting. Have you had to get involved where things aren't going well? And then how do you address that? Because, yeah, I'm assuming if things are going well, yeah, just send me an email with a quarterly. It's up and to the right. We're good. What happens when it's not good?

Well, I mean, I've learned the hard way I can't get involved, right? If I go in and start solving problems, it doesn't really help anyone. At the end of the day, my job is to hire and fire CEOs. So if things aren't going well, you know, every couple years at some point, I have to let a CEO go, which is the hardest part of my job. I'm not getting involved in the businesses operationally. You're putting up fires. I just think that's like swoop and pooping.

I've still little context given how many businesses we own. Swoop and pooping. Swoop in and then poop. I mean, this goes for the fun stuff too. I've never heard this term. Is this a Canadian term? Or did you make this one of?

Well, it's like it's in the in the creative world. It's like the art director comes over and he swoops and poops all over your work. And he doesn't have context for why you made all the decisions. So, I mean, it's the hard part is like, you know, I'm an entrepreneur. I've founded a lot of businesses. I have a lot of ideas. And it's very tempting to swoop in and say, oh, you know, dribble, why don't you go launch this? And why have we done this yet?

But at the end of the day, I usually don't have context and the CEO knows better. And I mean, the hardest part is when I see the CEO doing something I don't agree with, our way of operating is actually to let them do it unless it's completely insane and it's going to destroy the business. So we don't actually intervene unless something is like a self-immolating event. What do you look for in a hired gun CEO? Because we all know founders are a specific breed. They have a certain passion for the business. They likely own 40% of it, 20% of it, 60% of it. They have founder authority. They can do what they want and the team listens to them. And they've been there since the beginning. They set the culture. When you bring in a hired gun CEO,

which is what you're doing, they probably own low single digit percentage. ownership in the company, and then how do you pick them and keep them motivated? Yeah, it totally varies. I mean, you got to remember, like, think about who runs private equity businesses. Think about who scaled, you know, LinkedIn or other venture-backed businesses. There's this whole world of executives who are highly paid and like to do the next scale, right? I think often a founder can get a business to a certain point, and not every founder is a Mark Zuckerberg or Bill Gates. A lot of them want to check out. They realize they're not the best person to run that business or, you know, to scale it or whatever. And so basically we go, we look for people

who have done something similar before where they've taken a business that's similar to the one we just bought and they've taken it from, say, $10 million revenue to $100 million revenue. And we incentivize them, align them as best we can. And, you know, the reason people like to work for us is because we have a lot of cool businesses, A, and B, we leave them alone. And C, we're not going to sell Do they have is sort of what I'm getting at? I know there's just a group of them out there who are kind of like Roanin or whatever. They're samurai for hire. But what makes them great?

Are they MBAs who they just have OCD and just focusing in on scaling the business, cleaning it up and obsessing about the earnings is more important to them than creating the next product? How do you optimize for picking them? It totally depends. I mean, often we have a, you know, these businesses are five or ten years old. So usually we have product market fit. We've got happy customers.

Something's really working. Often they're mechanics who are pulling levers, right? So they're going like, hey, the founders really loved product, but they weren't doing marketing. They weren't doing sales. Let's operationalize this business and let's really scale this and do all the best practices. You recently wound up acquiring Girl Boss. I thought that had been acquired by attention capital.

And obviously there was a high profile. founder involved in that who kind of was the brand. So how did that work out? And how do you replace somebody like Sophia who's kind of larger than life? Yeah. So we, I guess I met, I met Sophia at a conference, maybe five years ago, we became friends and I ended up investing just as an angel in Girl Bus's original round. And I followed it for a long time and, you know, just kept saying, like, look, if there's ever an opportunity to buy the business. And she ended up selling to attention. We couldn't get there on terms.

And when attention bought the business, you know, we were very supportive of that. And then at a certain point, attention said, hey, actually we're thinking about selling this. We're going to go in a different direction. And so we bought it, I think it was in March or April. And we've really just focused on base hits. So that business has a massive social following, a huge newsletter. we've brought in some great talent to run each of those divisions.

And then we just hired a CEO who we haven't announced yet, but who I'm really excited about it, I think it's going to be great. What is the business there? Is it advertising? I mean, I actually looked at investing in that business as well. And I never got there with Sophia, you know, I think she was oversubscribing.

Maybe that was more on me moving too slow. And there was just like a tiny amount available. But is it an advertising business? the social network didn't work. I think they spent a lot of time and money on building that social network. What is the business and the singles and doubles that are you working on? And what do you buy a business like that for, just ballpark? When it's sort of a distressed business and the leading founders gone.

Yeah, I mean, because they'd raised venture, they really had to shoot for the moon. And so they built the network and we're focused on the social network and doing big events and all that kind of stuff. And so, you know, we looked at the business and we went, hey, underneath all that, there's a really good, small or medium-sized business. It's not a venture-scale business. And so we've basically just been pivoting the business to focus on those core areas, which are the newsletter and social. We're selling

ads on those. We're about to relaunch the podcast. So at this point, it's a media business, but we see a lot of opportunities to get into other areas like hiring and even potentially, you know, relaunch the network in a more conservative way. So you think the business could be like we work remotely, basically the job board function. If you're a girl boss and you're looking for jobs and people are looking to increase the number gender diversity at their company, this could be an amazing niche way to, you know, run a hiring board. I think it's one of many ways the business could go.

We do have a job board already. We work remotely, right? It's been quite successful. No, no, no. I'm saying like girl boss has a job board now. Girl boss does already. Yeah, yeah. As someone who's invested in over 250 companies, advised,

many more, I want to get right to a serious pain point that I see all the time, and that's reducing your burn. And ask yourself, how much money are you spending right now on all the software products that you use? And how much time does it take to integrate them all together? Well, let me guess. Way too much is probably your answer. And O-D-O-O-O is here to change that.

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Your first app is free forever, and right now, O-Doo is offering a $1,000 credit on your first implementation pack. That's not a joke, not a Hyundai, 10-Hundies. 10-Hundies, if I do my math correctly, equals $1,000 off. So go to O-D-O-O-O-O-O-O-O-O-O-com.com slash twist, Odo.com slash twist and get the thousand dollars in credit right now. Do you like the ad businesses, the ad-based businesses, or are those challenging for you to run? It seems like a lot of your stuff is subscription-based and membership-based. But do you like the ad business as well? Well, no, I mean, we looked at, we actually looked at Morning Brew and the Hustle and many other

newsletter businesses. And I think they're incredible, incredible businesses. They're like the modern-day newspaper. but the issue I always had with them is that at the end of the day, ad rates can change and when one line on your P&L can just drop by 50% because a number changes, you know, a CPM rate changes or something,

that's a little scary. And the amount of head count required to sell ads and stuff freaks me out a little bit. But I don't think they're bad businesses necessarily. I just think you have to be careful if you're buying one. You can't pay too much and make the assumption that today's ad rates will stay the same for 10 years. they might drop by 70%, they might go up by 20%, they're unpredictable. Got it. Yeah, it's super tied to what's happening in the market.

And so Hustle, that's sold to HubSpot for something like $30 million or something. Did that include Trends.com or is that two separate businesses, I wonder? And then Business Insider Board, Mortingboro, is that right? Yeah, I think that encompassed everything. Included trends. They're great. I mean, I love the founders of both those businesses. They're phenomenal businesses.

And I think they got great deals. So I'm super excited for them. 30 million is a great deal. Yeah. I mean, it felt like Trends was doing maybe $10 million in business. What was it doing, do you think?

I don't know. It was millions of, it must have been millions of dollars in business. So maybe they got five times revenue if they were doing five minutes. I mean, I was under NDA. Oh, right, right, right.

But you should have Sam on. Oh, it looks like Trends was at $2 million. is what Sam reported recently. One of my researchers told me. So that's pretty good. And then hustle, you know,

maybe a couple million. And then, yeah, 10 times revenue. That makes sense. What did morning brew get sold for, I wonder?

I don't know. It's publicly reported it at 60 or something. Oh, okay. 75 million, I heard, yeah. So that's pretty amazing.

I wonder what they're, they broke 10 million in revenue, I think, in ad revenue. I'm not sure. But you think subscription businesses are better than ad businesses.

Those are the prefer. ones you like to buy? Yeah, I mean, generally, I like a business. If it's not recurring, I want it to be kind of frictionless. So, for example, you know, a job board, we work remotely, for example. It's not recurring necessarily. There are recurring aspects to it. Like when you buy a job, it'll recur for 30 days a few times. But at the end of the day, you know, it's still a digital transaction, but it is frictionless. People come to your site, they self-serve and they buy an ad. and that's a lot better than having to have an ad sales team or a job sales team that goes out, calls all the hiring managers,

and tries to sell them individual jobs. It scales much better. Yeah, if people can just go and buy a job, I think we work remotely is like three or four hundred bucks for a job posting. Is that right? That's the upper bound of what you can charge, I guess. Yeah,

with all the fixings, I think it can come out over 500. What's the, you're still based in Canada, correct? and you're running all these businesses out of Canada or mostly out of Canada? I mean, they're located all over the world.

The teams are mostly remote. We've been really lucky through COVID because the teams are already remote. We've been running remote for 15 years. But yeah, everything via Canada and it's a great place to have a business up here. Well, you're collecting US dollars and you're spending Canadian

and that has to be like a pretty good arbitrage. Often. I mean, a lot of our employees are now in the States or elsewhere. We have a team in Spain and all over the world. But yeah, for the Canadian businesses, it's phenomenal. If these businesses are all run independently, is there no synergy across them? So if Girl Boss wants to do job boards, they can't just take the rework remotely job board software and plug it in because they're separate businesses.

You may own part of them. But if 20% of each one is owned by outside investors or the previous founders or whatever, that puts you in a bad position because you can't use one piece. of IP or one innovation from one at the other, right? You don't get those synergies. But it's super tempting, right? Because you'd think that would be a great idea until you go to the We Work remotely CEO. And he goes, hold on, you want me to spend a month and you want me to have my developers distracted, migrating over to this, you know, this other business. And then he's saying, well, I could have made an extra 100K this month, but you've distracted me. And then, you know, everyone's upset. So we generally say the companies are free to collaborate if they want to,

only if it makes sense and is logical for them. We don't force anything like that. Do you bring them all together and try to get them to trade best practices in some way or do Zoom calls with the leadership? No, I mean, we have an email group and various people know each other, but we don't get anyone together. They're also different a lot of the time. There's a lot of best practices that get shared between individual CEOs who build

relationships, but a lot of the businesses have different business models. So it's not like a constellation. software or something where they own a hundred identical or similar SaaS businesses and they can all share a CRM and best practices and stuff. What do you think about the consolidation of big tech companies and their dominance in terms of copying other people's products? We saw Clubhouse come out recently and Twitter's doing spaces. Facebook's obviously copying it. And, you know, people can argue Clubhouse copied some other formats and they're building off of other people. but there is something distinctly different about, let's say, Facebook copying, Snapchat's innovations,

three or four times each, right? People forget that before they put stories into Instagram, they did poke and other things and ephemeral messaging. I mean, they stole three or four ideas from Snapchat and they executed on them three or four times to get them right. And they finally did. And they obviously have many more stories in Snapchat as, not that Snapchat hasn't done well as a business. but now we're seeing Twitter getting good at copying ideas and innovations quickly. I've never seen Twitter actually get a product out as quickly as they got spaces out. And I don't know if that was tracking because of they saw Clubhouse siphoning off while their users and the entire graph getting taken off.

But I'm just curious, do you think now founders are getting knocked off super quickly and that's a problem? Or that's an opportunity? Well, I think like so many, one of the airs, that a lot of founders make is they make a feature not a product. And I think Clubhouse, I mean, the jury's out, but I think that Twitter has an amazing advantage in that that's where people hang out. And if you have a following, it's so easy to just go, well, I've already got 100,000 followers on Twitter.

Why would I go and try and recreate that somewhere else if I can essentially do the exact same thing as Clubhouse and bring my followers into that? So I think that, I mean, you can argue whether that's good or bad. I think as a founder, it feels horrible to be copied, but I think everyone's constantly copied everything, copying everything else in tech. So, you know, at the end of the day, it's kind of like too bad. That's just how things work. I've been really impressed to start to see Twitter actually innovating their product for the first time in seems like five years. Like, it feels like there's just been absolutely no feature development and seeing them built or by review and some of the other acquisitions they've made.

really interesting acquisition in your mind. Well, it goes back to that same thing of if you, I always love to buy businesses that are like airports, right? And what I mean by that is an airport is a place where there's very few options per city. If you're going to fly out, you're going to be a one of, one of two airports or something like that. You have to sit there for an hour before your flight. And so you have this, you have this captured audience, right?

There's all these people sitting there waiting for their planes. And when you own an airport business, you can choose what stalls. go in. You've got all these empty stalls. And so you can create all these new business lines. You can say, oh, let's sell them massages and let's give them grilled cheese sandwiches and a fancy restaurant, et cetera, et cetera. And so I think Twitter's kind of like that. They've got this huge captured market of all these people hanging out there every day. And there's infinite numbers of businesses that can be built on top of that. So, you know, for example, even as an influencer or as a business person, you know, I want a way more in-depth analytics on my Twitter

and I'd happily pay 10 bucks a month for Twitter pro. Or I want to have an easy way to send an email to all my Twitter followers and do a substack. Okay, that's a product and they've bought review to do that. I want to be able to do audio chat. Great, let's add spaces. I think there's probably 20 or 30 more products they could tack on. And I think Twitter's just incredibly under monetized.

Twitter is definitely undermonetized. What do you think the opportunities are with Twitter with paid? because review obviously is paid newsletters. It was like the original substack, I guess. They came up before Substack, I believe. So now Twitter source Substack pulling their social graph off. I know because I logged into Substack and created a newsletter. And then every day I get like five new subscribers.

And if you log into Substack, it's like, here's who you follow on Twitter. Would you like to click and sign up for their newsletter? So I see what's happening is people are going to sign up for somebody else's. I'm one of their followers. I probably have a high follower count as one of their, what are they called? call it verified users maybe with high counts come up top and people sign up for my newsletter even though I don't publish one on substack but I have like a landing page there. It's really fascinating. So Twitter could for the first time officially share revenue or help their customers officially

build revenue. How crazy would that be? Well, I think there's just so there's infinite possibilities. I mean, everything from helping you make your tweets more engaging, giving you analytics, who unsubscribed when, you know, you made X or Y tweet, what kind of topics resonate, who the most influential people you could get to tweet your stuff are. I mean, that's just the basics. And then stuff like just going out and duplicating clubhouse. I mean, there's, there's so many, there's so many different things you can do there. The substack thing, I think is just, I think it's a, I don't think there's a ton of money to be made there for substack, because as many smart people have pointed out. Substack charges 10%. And as enough people get to scale, they're all

going to go, well, geez, I don't want to give substack 500K for email software. I'm going to switch off. Twitter doesn't need to think about it like that as a cash flowing business. They can almost give that functionality away and just create more lock-in for their platform. Right. If I've got all my followers on Twitter, plus I have half of them subscribe to an email newsletter and it's dependent on the Twitter integration and I get more subscribers as a result of being part of the network. I'm going to stick with that over substack. Yeah, I mean, it would be amazing if everybody who logged into Twitter, all of a sudden, it said, turn my newsletter on, and you just click turn your newsletter on. And when people click follow,

it says, would you like to get their newsletter as well? Now, every time I get a follower, I get their email address, and I own that newsletter. No, like YouTube doesn't let you do that. Facebook doesn't let you do that. Instagram doesn't let you do that. Clubhouse doesn't let you do that. They never give you the emails of the people who follow you or subscribe to you. But this could be Jack's huge innovation and this would change everything, right? Well, and even look at Medium, right? So why do I post on Medium? Well, it's easy. It's, you know, clean. I can link to it easily. Twitter could easily spin up, hey, do you want to make a post, a text post, it's unlimited size. And it just appears as an embed in a tweet or something

like that. And immediately you'd have way more post engagement, subscribers, just keeping people on the platform for all the things they're linking up to, I think creates way more lock-in. What do you think about Clubhouse? You think that's going to be a big business? Do you think it's overvalued at a billion? What do you think of that? I mean, I think it's cool. Five million downloads, one billion dollar valuation.

I think it's cool. I think it's, it feels kind of cool, right? It feels like you're hanging out in a room with a bunch of people and it simulates that. I think the problem is that as they open the gates to everybody, there's going to be a lot of noise. I don't know if you remember, but about 10 years ago, there was this business call or startup called Turntable FM. And it was super cool, right?

You'd get like, they would get like Diplo to DJ in it, or you'd have cool celebrities and stuff. But then they opened it up. And before you knew it, you know, as you go through each room, there's lame music playing. There's people you don't know. And there's a lot of noise. And so I think the challenge on Clubhouse is going to be,

how do you make the really high quality content rise above all the else, all the other stuff? And how do you make it easy to explore? And so I think they've got a challenge. And then also Twitter can roll out spaces. Instagram can roll out spaces. I mean, just very quickly they can be copied. So I don't know, juries out.

I think I wish them the best. I do think it's a great product and I enjoy using it myself. But I do think it's a little challenging. What are your thoughts on cryptocurrency, if any, in looking at all these businesses and watching crypto as this like little side show over here? Everybody's talking about crypto, maybe for a third option. You've got advertising.

you've got subscriptions is that like maybe this is the third way to do monetization. Maybe people are participating in ecosystems and they're earning cryptocurrency as part of building them out, maybe with dribble. If somebody's portfolio got them points or something, do you think any of this is legit or do you think it's all nonsense? Well, I think the biggest test of crypto. So crypto has been hot for what, eight years, 2013, 2012. I haven't seen a single business that's at scale.

that isn't involved in speculation. So buying things, hoping the value will go up. They use is crypto. Maybe I'm wrong. Maybe there is something secret. No, I think I don't know about. But it seems like the money is being made by running an exchange,

selling speculative collectibles or that sort of thing, or selling cryptocurrencies themselves. And then actually being treasury, so holding the cryptocurrency and storing them securely for people. But I haven't seen, you know, all these ideas like earn or, you know, marketplaces for micro transactions where, you know, the future of work, you get paid by the second to complete different tasks or being able to donate, you know, microcredits or something.

I think all that is hypothetically really cool and I got excited about it. But the fact that I haven't seen a real business get built here yet is a little concerning. And what do you think that is? Is it just that the people who are drawing to crypto are kind of incompetent and people who are super competent can make money with actual real currency? they're like, you know, dollars, therefore they don't bother with imaginary money, or is it just it's not going to happen? The last speculative mania, the web startup boom in 1999.com.

Like, Amazon was doing hundreds of millions of dollars of revenue. They had a product market fit. There was a real business. It wasn't profitable on a P&L basis, but they had people using it in a legitimate way. And I think what seems to be different about the crypto boom is, there is no revenue other than speculation, right? And so that's what I want to see. I want to see someone do real revenue.

And I don't know why that hasn't happened. When I talk to smart developers, they often say, yeah, it's called a database. We've had these for a long time. And I think that's a little glib. But I'm just waiting. I think it's very interesting, but I'm just waiting to see how it plays out. And then we're lucky to own a lot of businesses where if cryptocurrency take hold, we can implement them on our various platforms.

We were talking a little bit about, I don't agree with you, I think cryptocurrency is fascinating and just waiting for something to actually make something beyond speculation as well. Yes, I know Steamit is, Steamit was like the Reddit version of, you know, crypto and I don't think it's gone anywhere. It's still very niche and it doesn't really work. And then, you know, Reddit itself did Reddit gold. That didn't work. Cora did its own version of, you know, I guess what we used to call virtual currency and that

didn't work. Amazon today, as we're taping this podcast, Acquired Sales, which is an e-commerce business out of Australia. Amazon obviously sees Shopify as a threat. What do you think? Well, I think the big issue is that Shopify has no incentive to compete with its independent retailers, whereas Amazon, you know, if you go on Amazon marketplace and you sell a laptop stand that you've made very quickly, A,

everybody sees that your success and copycats you and then sells against you, uses, they hack the ratings and reviews to make sure they outrank you or they outspend you or whatever it is. And it's kind of a race to the bottom where the cheapest, highest quality product wins. So the consumer wins, but you as a retailer suffer.

And then Amazon often also competes against you directly. So that's Amazon's incentive. Amazon in Amazon world, you know, it's all about maximizing the best product at the cheapest. rate and basically cutting out anyone making any margin. And I don't think that really works well for independent retailers, which is why they don't want to sell on Amazon.

So if Amazon goes and creates a Shopify competitor, I think a lot of people in the back of their head will be going, well, what are they doing with my data and what's their plan for me? And, you know, am I just kind of making a bed with a wolf, right? And I don't know. I don't know how they're going to roll this out. they just announced the acquisition. But that would be my quick take. Yeah, it is interesting.

Amazon made this really bizarre and inspiring or confounding move to allow third-party sellers on their platform, which is kind of like allowing a flea market in the, you know, in half of your parking lot at Walmart. It's like, okay, why would people go inside and buy stuff if you can buy it cheaper outside in this flea market? And it's like, well, inside you. have some sort of standard and you can put 20 things in a shopping card and leave at once.

They're not there. Maybe not. I don't know what the analogy is perfect. But it really is interesting what Amazon did. It's almost as if they don't care about the profitability of the Amazon store. And they just care about the scale of it. Well, they realize it's far more, it's almost like they have the store, they have the Walmart and they have all these empty shelves.

And they've said, well, we could go buy the inventory or we could let other retailers come in, pay for the inventory and store it on our shelves and then we'll do the fulfillment which they can make a profit on. So I think it actually is, I think at this point it's a more profitable business than the core retail business or e-commerce business. Yeah. There's something about scale which is worth doing, right? Like scaling in and of itself works for so many reasons. Because once you have all the people there, the ways to be profitable will emerge, right? And you don't need to make a profit off of everything. As we wrap here, what have you learned from Charlie Munger and, you know, if you could get

into specifics and Warren Buffett's business approach, you know, top three or four things. Take a moment to think about it. But if there were heuristics that, you know, just seared into your memory, what are they? Well, Charlie Munger likes to say fish where the fish are, which really stuck with me. So our approach, you know, a lot of Silicon Valley is about trends. And so it's like you find this huge fishing hole and there's a ton of big fish in it, but there's a thousand fishermen all elbowing each other out of the way using the newest lures and competing. And Munger advocates finding a quiet fishing hole off the beaten path with two old fishermen.

And, you know, a couple fish and, you know, you go and, uh, you do okay by default. You have a 98% chance of success versus a 5% chance of success. That's really stuck with us and that's really informed our approach to business. Um, then the other is inversion. So thinking about, not about what could go right, but what could go wrong and kind of trying to work around that. So in my own life, uh, I always ask, well, what makes me most miserable and how do I avoid it? And I know what is, what is my worst possible day look like?

It's a day full of meetings. I've got people demanding things of me. I've got deadlines. You know, my wife is angry at me, et cetera, et cetera. And so I take that and I work backwards and I try and figure out how do I avoid all that stuff? Yes, he's the opposite for me. I just like to know, like in my investment thesis, at least, what could go right. But I do like the idea of what could go wrong and just eliminating from that.

So I understand your counter. And I did the similar thing. We're still, I'm very optimistic and I'm very excitable and I love ideas and stuff. but I always try and flip it on its head to make sure that I'm not doing something really stupid. Yeah, I mean, I'm always trying to not do the things I hate every day, which would be like legal accounting and other nonsense. And I figured out ways to make it really, really like a small amount of my time and outsource that stuff. All right, listen, great job on the pod today.

Andrew Wilkinson, you can follow him on Twitter. He's a good follow. A. Wilkinson, W-I-L-K-I-N-S-O-N, founder of Meta-L-L-L-L-L-L-L-L-E-N, which is owned by Tiny, not tiny capital, just tiny, but their website is tinycapital.com, correct? Couldn't get tiny.com. Yeah. So you refer to it as tiny. Yes.

But it's tiny capital. So if you have a business that you want to sell, Andrew's looking for businesses. All right, we'll see you all next time.